AI Insights
The case involves the Income Tax Department appealing against the decision of the CIT(A) which had deleted an addition of Rs. 20 Crores made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The addition was initially made on the grounds that the assessee, M/s SNS Real Estate LLP, failed to prove the identity, creditworthiness, and genuineness of the transactions concerning the share capital and share premium received from six parties. The CIT(A) had deleted the addition, which the Revenue contested, leading to this appeal. The Tribunal, after considering the submissions and evidence, reinstated the addition and directed the CIT(A) to re-examine the matter.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123410 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 3 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-04-2023
Appeal Filed By
Department
Order Result
PartlyAllowed
Bench Allotted
E
Next Hearing Date
08-03-2023
Assessment Year
2012-2013
Appeal Filed On
22-01-2020
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI ABY T VARKEY (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 543/MUM/2020 Assessment Year: 2012-13 ITO-13(2)(3), Room No. 147, 1 st floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. Vs. M/s SNS Real Estate LLP, 102, Jn. Of 11st Road, Central Avenue Road, Ghanteshwar Mandir, Khar (W), Mumbai-400052. PAN No. AAMCS 6550 L Appellant Respondent Assessee by : None Revenue by : Mr. Sanjeev Kashyap, CIT-DR Date of Hearing : 09/03/2023 Date of pronouncement : 24/04/2023 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 31.10.2019 passed by the Ld. Commissioner of Income-tax (Appeals)-21, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds: 1. On the facts and circumstances of the case and in Law, the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr. without appreciating the fact that the assessee has received 20 Cr. as share capital and share premium from six parties and the assessee has not discharged its onus of producing the investors who has subscribed the share capital and share premium. Thus, the identity, creditworthiness an transaction has not been established. 2. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr., without giving due consideration to the judgment of Hon'ble Supreme Court in and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated 05.03.2019 on the similar issue, confirming the addition of entire share capital and share premium as the assessee failed to discharge his onus required under section 68 of the 2. Despite notifying neither anyone attended on behalf of the assessee nor any adjournment was filed occasions i.e. 28.06.2021 also no compliance of assessee. Notice for hearing dated 09.03.2023 i.e. the date on which case is final heard, was also served through the Ld. Departmental Representative (DR).In the circumstances, we that the assessee was not interested in prosecuting therefore, the appeal was heard hearing the arguments of the Ld. DR. 3. In the case the Assessing Officer passed u/s 143(3) r.w.s. 147 of the I ‘the Act’) dated 26.12.2016, share capital and share premium Ld. CIT(A) deleted the addition observing as under: M/s SNS Real Estate LLP from six parties and the assessee has not discharged its onus of producing the investors who has subscribed the share capital and share premium. Thus, the identity, creditworthiness and genuineness of the transaction has not been established. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr., without giving due consideration to the judgment of Hon'ble Supreme Court in the case of M/s. NRA Iron and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated 05.03.2019 on the similar issue, confirming the addition of entire share capital and share premium as the assessee failed to discharge his onus required under section 68 of the income tax Act, 1961. Despite notifying neither anyone attended on behalf of the assessee nor any adjournment was filed. We noticed occasions i.e. 28.06.2021; 12.08.2021; 09.09.2022 and 12.01.2023 of notices for hearing was made on behalf of the for hearing dated 09.03.2023 i.e. the date on which was also served through the Ld. Departmental In the circumstances, we were was not interested in prosecuting therefore, the appeal was heard ex-parte qua the assessee after hearing the arguments of the Ld. DR. In the case the Assessing Officer,in the assessment order passed u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short ‘the Act’) dated 26.12.2016, has made addition for unexplained share capital and share premium received . On further appeal the Ld. CIT(A) deleted the addition observing as under: M/s SNS Real Estate LLP 2 ITA No. 543/M/2020 from six parties and the assessee has not discharged its onus of producing the investors who has subscribed the share capital and share premium. Thus, the d genuineness of the On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr., without giving due consideration to the judgment the case of M/s. NRA Iron and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated 05.03.2019 on the similar issue, confirming the addition of entire share capital and share premium as the assessee failed to discharge his onus required under Despite notifying neither anyone attended on behalf of the . We noticed that on last 09.09.2022 and 12.01.2023, made on behalf of the for hearing dated 09.03.2023 i.e. the date on which was also served through the Ld. Departmental were of the opinion was not interested in prosecuting the appealand qua the assessee after ,in the assessment order tax Act, 1961 (in short has made addition for unexplained . On further appeal the “5.11 I have carefully considered the entire and circumstances of the case and have carefully perused the assessment order, written arguments of the appellant, counter arguments of the AR and have considered the evidences on record, I find that the AO has doubted the share applicati View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. Ltd. of Rs.20,00,00,000/ admitted in assessment order that the appellant has issued shares to these 6 companies and as per the counter representation of the AR when in response to notices u/s 133(6) of the Act filed the details by these 6 companies, then there is no reason for doubting the existence of investors. I therefore, find force in the argument of AR. It is very important to mention that the appellant has discharged its onus and the AO has not proved otherwise than doubting the investment made by the compa Dilip Mehta. The AO had asked the appellant to furnish the details related to Share application, Share Allotment, and issue of share certificates and in compliance the appellant has furnished all the required details. While fur required details the appellant has also furnished confirmations from these 6 companies and also submitted copy of Form No 2 which in return of allotment filed with ROC of the companies. After receipt of information/ evidences /documents from th nothing. It is to be kept in mind that, earlier the AO had issued a letter requiring the appellant to prove the identity, genuineness and creditworthiness of these 6 parties and also communicating that these compan at their given address. In compliance of the letter, the Appellant has provided new addresses of these 6 parties. However the AO did not proceed further. Finally the AO issued a show cause notice. 5.12 In response, the appellant subm AO has not refuted with any contrary evidence/finding and has proceeded to mention the Modus Operandi of accommodation entry operation. Apparently, AO has not substantiated his presumption, his doubt with any verifiable documents. M/s SNS Real Estate LLP 5.11 I have carefully considered the entire spectrum of facts and circumstances of the case and have carefully perused the assessment order, written arguments of the appellant, counter arguments of the AR and have considered the evidences on record, I find that the AO has doubted the share application money and premium or investment of M/s View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. Ltd. of Rs.20,00,00,000/-. The Assessing Officer has admitted in assessment order that the appellant has issued shares to these 6 companies and as per the counter representation of the AR when in response to notices u/s 133(6) of the Act filed the details by these 6 companies, then no reason for doubting the existence of investors. I therefore, find force in the argument of AR. It is very important to mention that the appellant has discharged its onus and the AO has not proved otherwise than doubting the investment made by the companies owned/related with Shri Dilip Mehta. The AO had asked the appellant to furnish the details related to Share application, Share Allotment, and issue of share certificates and in compliance the appellant has furnished all the required details. While fur required details the appellant has also furnished confirmations from these 6 companies and also submitted copy of Form No 2 which in return of allotment filed with ROC of the companies. After receipt of information/ evidences /documents from the appellant and also investors the AO did nothing. It is to be kept in mind that, earlier the AO had issued a letter requiring the appellant to prove the identity, genuineness and creditworthiness of these 6 parties and also communicating that these companies were not available at their given address. In compliance of the letter, the Appellant has provided new addresses of these 6 parties. However the AO did not proceed further. Finally the AO issued a show cause notice. 5.12 In response, the appellant submitted the reply, but the AO has not refuted with any contrary evidence/finding and has proceeded to mention the Modus Operandi of accommodation entry operation. Apparently, AO has not substantiated his presumption, his doubt with any verifiable documents. He has merely described the statement of Shri M/s SNS Real Estate LLP 3 ITA No. 543/M/2020 spectrum of facts and circumstances of the case and have carefully perused the assessment order, written arguments of the appellant, counter arguments of the AR and have considered the evidences on record, I find that the AO has doubted the on money and premium or investment of M/s View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. ssing Officer has admitted in assessment order that the appellant has issued shares to these 6 companies and as per the counter representation of the AR when in response to notices u/s 133(6) of the Act filed the details by these 6 companies, then no reason for doubting the existence of investors. I therefore, find force in the argument of AR. It is very important to mention that the appellant has discharged its onus and the AO has not proved otherwise than doubting the nies owned/related with Shri Dilip Mehta. The AO had asked the appellant to furnish the details related to Share application, Share Allotment, and issue of share certificates and in compliance the appellant has furnished all the required details. While furnishing the required details the appellant has also furnished confirmations from these 6 companies and also submitted copy of Form No 2 which in return of allotment filed with ROC of the companies. After receipt of information/ evidences e appellant and also investors the AO did nothing. It is to be kept in mind that, earlier the AO had issued a letter requiring the appellant to prove the identity, genuineness and creditworthiness of these 6 parties and ies were not available at their given address. In compliance of the letter, the Appellant has provided new addresses of these 6 parties. However the AO did not proceed further. Finally the AO itted the reply, but the AO has not refuted with any contrary evidence/finding and has proceeded to mention the Modus Operandi of accommodation entry operation. Apparently, AO has not substantiated his presumption, his doubt with any verifiable He has merely described the statement of Shri Dilip Merita& his associates as communicated by the Investigation Wing Mumbai. Thus, it is very evident that the C has not made any independent enquiry in order to establish the non any contrary evidence. Opportunity for cross examination was also not given. Hence such statement could not be utilised against the appellant without giving full and proper opportunity of cross examination as held in the caseof Mahesh Gulabrai ITAT and Mon'ble Supreme Court decision in the case of KisinchandChellaram V CIT (125 IT 713 SC) A perusal of the documentary evidences brought on record by the appellant shows that the onus of proving the genuineness of transaction, identity and capacity of the lenders and share applicants has been discharged by the appellant. The same is evident from the list of documents submitted by the appellant before the AO as well as before me with respect to money received f Appellant has placed on record the copies of Annual audited report, Directors' Report, PAN, Share certificates issued, bank statement showing payments received, ROC filings, copy of income tax returns of share applicants, return of al shares etc which is mentioned in the assessment order. From the details submitted it can be seen that the share applicants have made payments from their bank accounts through account payee cheques, therefore these transactions cannot be treated as bogus. The AO has not been able to bring on record any valid material or evidence to discredit the evidences and explanation given by the appellant other than merely relying on discreet information received from investigation wing. Mumbai without himsel other efforts to bring on record any valid or corroborative or concrete evidence against the appellant. The other reasons adduced by the AO have no real connection with the addition under section 68 of the Act made in case of the appellant. To prove all the ingredients of section 68 appellant company had submitted the following documents pertains to investors which have also been filed before me: 1) Certified copy of Memorandum of Association 2) Certified copy of Articles of Association. M/s SNS Real Estate LLP Dilip Merita& his associates as communicated by the Investigation Wing Mumbai. Thus, it is very evident that the C has not made any independent enquiry in order to establish the non-genuineness of investment, if any, with any contrary evidence. Opportunity for cross examination was also not given. Hence such statement could not be utilised against the appellant without giving full and proper opportunity of cross examination as held in the caseof Mahesh Gulabrai Joshi Vs CIT(A) (2005) 95 ITD 300 Mumbai ITAT and Mon'ble Supreme Court decision in the case of KisinchandChellaram V CIT (125 IT 713 SC) A perusal of the documentary evidences brought on record by the appellant shows that the onus of proving the ss of transaction, identity and capacity of the lenders and share applicants has been discharged by the appellant. The same is evident from the list of documents submitted by the appellant before the AO as well as before me with respect to money received from share applicants. Appellant has placed on record the copies of Annual audited report, Directors' Report, PAN, Share certificates issued, bank statement showing payments received, ROC filings, copy of income tax returns of share applicants, return of al shares etc which is mentioned in the assessment order. From the details submitted it can be seen that the share applicants have made payments from their bank accounts through account payee cheques, therefore these transactions cannot as bogus. The AO has not been able to bring on record any valid material or evidence to discredit the evidences and explanation given by the appellant other than merely relying on discreet information received from investigation wing. Mumbai without himself making any other efforts to bring on record any valid or corroborative or concrete evidence against the appellant. The other reasons adduced by the AO have no real connection with the addition under section 68 of the Act made in case of the appellant. prove all the ingredients of section 68 appellant company had submitted the following documents pertains to investors which have also been filed before me: 1) Certified copy of Memorandum of Association 2) Certified copy of Articles of Association. M/s SNS Real Estate LLP 4 ITA No. 543/M/2020 Dilip Merita& his associates as communicated by the Investigation Wing Mumbai. Thus, it is very evident that the C has not made any independent enquiry in order to f any, with any contrary evidence. Opportunity for cross examination was also not given. Hence such statement could not be utilised against the appellant without giving full and proper opportunity of cross examination as held in the caseof Joshi Vs CIT(A) (2005) 95 ITD 300 Mumbai ITAT and Mon'ble Supreme Court decision in the case of A perusal of the documentary evidences brought on record by the appellant shows that the onus of proving the ss of transaction, identity and capacity of the lenders and share applicants has been discharged by the appellant. The same is evident from the list of documents submitted by the appellant before the AO as well as before rom share applicants. Appellant has placed on record the copies of Annual audited report, Directors' Report, PAN, Share certificates issued, bank statement showing payments received, ROC filings, copy of income tax returns of share applicants, return of allotment of shares etc which is mentioned in the assessment order. From the details submitted it can be seen that the share applicants have made payments from their bank accounts through account payee cheques, therefore these transactions cannot as bogus. The AO has not been able to bring on record any valid material or evidence to discredit the evidences and explanation given by the appellant other than merely relying on discreet information received from f making any other efforts to bring on record any valid or corroborative or concrete evidence against the appellant. The other reasons adduced by the AO have no real connection with the addition under section 68 of the Act made in case of the appellant. prove all the ingredients of section 68 appellant company had submitted the following documents pertains to investors 3) Copy of Incorporation certificate issued by Registrar of companies. 4) Copy of Resolution of the company grating companies permission to make investment. 5) Copy of confirmatory letter. 6) Details of cheque issued alongwith copies of Bank statement duly marke 7) Copy of Audited P&L A/c, Balance sheet, Directors Report & Schedules thereto. 8) Copy of PAN Card. 9) Copy of Acknowledgement of ROl filed. The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onu assessee to prove the genuineness of the same and on failure of the assessee, the presumption us. 68 becomes absolute and the credits are treated as 'income' of the assessee. The assessee can discharge the onus by producing year is confirmation the source of the credits. Itis submitted by the AR that, when the share applicants accept/own the share application money paid, theassessee is deemed to have discharged his onus and no further responsibility lies on prove the source from where the share applicants have acquired the amounts advanced to the assessee and in this regard, the AR appropriately placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Orient Trading C 5.13 As is evident, the assessee has produced all evidences to prove the identity, source and the genuineness and credit worthiness. It is submitted that the assessee has done everything in its control to establish the submitted that, even if it proved that the creditor has advanced funds from undisclosed sources, then it would be the income of the creditor. M/s SNS Real Estate LLP y of Incorporation certificate issued by Registrar of 4) Copy of Resolution of the company grating companies permission to make investment. 5) Copy of confirmatory letter. 6) Details of cheque issued alongwith copies of Bank statement duly marked. 7) Copy of Audited P&L A/c, Balance sheet, Directors Report & Schedules thereto. 8) Copy of PAN Card. 9) Copy of Acknowledgement of ROl filed. The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onu assessee to prove the genuineness of the same and on failure of the assessee, the presumption us. 68 becomes absolute and the credits are treated as 'income' of the assessee. The assessee can discharge the onus by producing year is confirmation from the share applicants, and proving the source of the credits. Itis submitted by the AR that, when the share applicants accept/own the share application money paid, theassessee is deemed to have discharged his onus and no further responsibility lies on the assessee to prove the source from where the share applicants have acquired the amounts advanced to the assessee and in this regard, the AR appropriately placed reliance upon the decision of the Hon'ble Bombay High Court in the case of Orient Trading Co. Ltd. VIs. (1963)49 ITR 723 (Bom.). 5.13 As is evident, the assessee has produced all evidences to prove the identity, source and the genuineness and credit worthiness. It is submitted that the assessee has done everything in its control to establish the bonafides. It is aiso submitted that, even if it proved that the creditor has advanced funds from undisclosed sources, then it would be the income of the creditor. M/s SNS Real Estate LLP 5 ITA No. 543/M/2020 y of Incorporation certificate issued by Registrar of 4) Copy of Resolution of the company grating companies 6) Details of cheque issued alongwith copies of Bank 7) Copy of Audited P&L A/c, Balance sheet, Directors Report The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onus is on the assessee to prove the genuineness of the same and on failure of the assessee, the presumption us. 68 becomes absolute and the credits are treated as 'income' of the assessee. The assessee can discharge the onus by producing from the share applicants, and proving the source of the credits. Itis submitted by the AR that, when the share applicants accept/own the share application money paid, theassessee is deemed to have discharged his the assessee to prove the source from where the share applicants have acquired the amounts advanced to the assessee and in this regard, the AR appropriately placed reliance upon the decision of the Hon'ble Bombay High Court in the case of o. Ltd. VIs. (1963)49 ITR 723 (Bom.). 5.13 As is evident, the assessee has produced all evidences to prove the identity, source and the genuineness and credit worthiness. It is submitted that the assessee has done bonafides. It is aiso submitted that, even if it proved that the creditor has advanced funds from undisclosed sources, then it would be 5.14 The assessee has produced all the details, confirmation with PAN, even the return of i When such material is produced the assessee can be said to have discharged his onus and the onus would shift to the AO to bring some material on record which would prove that the material's produced by the assessee is either are insufficient. The AO's response to the assessee's submission of details was only that the assessee has not proved the genuineness of the transaction. The AR also submitted and referred that, in the case of CIT VIs. U.M. Shah, Proprietor, Hon'ble jurisdictional High Court held that once credible material is produced before the AQ, the AQ is expected to make efforts to dislodge the explanation given by the assessee. No such thing has been done by th cannot simply reject explanation/materials produced by the assessee without bringing any contrary findings on record. It is seen from the assessinent order that in the statement recorded, Shri. Amar Natwarlal Shall, Directur of the appellant company categorically stated that the amounts received were actual payments but not accommodation entries (statement dated 23/03/2015 answer to question no 28) The AO has not been able to refute the clear cut and cogent evidence submitted by the appellant a record, testifying to the genuineness of the share application money. The source of the said money thus stands proven. As has been held in several decisions of judicial authorities (Murlidhar Lahorimal Vs CIT 280 IT 512 (Gui).CLabhchand Dhwarkadhish Investment Pvt Ltd (299 ITR 268 (Del)), the assessee cannot be called to prove the source of the source of this money. Nevertfeless, it is submitted that the appellant produced the bank account copies ofall the investor companies, and it can be seen from these bank accounts, that there were no cash deposits in the bank accounts of the investor companies during the relevant period. Moreover all the companies have been incorporated way back in 2007 and are M/s SNS Real Estate LLP 5.14 The assessee has produced all the details, confirmation with PAN, even the return of income of the share applicants. When such material is produced the assessee can be said to have discharged his onus and the onus would shift to the AO to bring some material on record which would prove that the material's produced by the assessee is either not genuine or are insufficient. The AO's response to the assessee's submission of details was only that the assessee has not proved the genuineness of the transaction. The AR also submitted and referred that, in the case of CIT VIs. U.M. Shah, Proprietor, Shrenik Trading Co. 90 IT 396 (Bom.). the Hon'ble jurisdictional High Court held that once credible material is produced before the AQ, the AQ is expected to make efforts to dislodge the explanation given by the assessee. No such thing has been done by the AQ. The AO cannot simply reject explanation/materials produced by the assessee without bringing any contrary findings on record. It is seen from the assessinent order that in the statement recorded, Shri. Amar Natwarlal Shall, Directur of the ompany categorically stated that the amounts received were actual payments but not accommodation entries (statement dated 23/03/2015 answer to question no The AO has not been able to refute the clear cut and cogent evidence submitted by the appellant and available on the record, testifying to the genuineness of the share application money. The source of the said money thus stands proven. As has been held in several decisions of judicial authorities (Murlidhar Lahorimal Vs CIT 280 IT 512 (Gui).CLabhchandbohra v ITO (219 ITR 571 (Rai) and CIT v Dhwarkadhish Investment Pvt Ltd (299 ITR 268 (Del)), the assessee cannot be called to prove the source of the source of this money. Nevertfeless, it is submitted that the appellant produced the bank account fall the investor companies, and it can be seen from these bank accounts, that there were no cash deposits in the bank accounts of the investor companies during the relevant Moreover all the companies have been incorporated way back in 2007 and are carrying on business as per the objects M/s SNS Real Estate LLP 6 ITA No. 543/M/2020 5.14 The assessee has produced all the details, confirmation ncome of the share applicants. When such material is produced the assessee can be said to have discharged his onus and the onus would shift to the AO to bring some material on record which would prove that the not genuine or are insufficient. The AO's response to the assessee's submission of details was only that the assessee has not proved the genuineness of the transaction. The AR also submitted and referred that, in the case of CIT VIs. U.M. Shrenik Trading Co. 90 IT 396 (Bom.). the Hon'ble jurisdictional High Court held that once credible material is produced before the AQ, the AQ is expected to make efforts to dislodge the explanation given by the e AQ. The AO cannot simply reject explanation/materials produced by the assessee without bringing any contrary findings on record. It is seen from the assessinent order that in the statement recorded, Shri. Amar Natwarlal Shall, Directur of the ompany categorically stated that the amounts received were actual payments but not accommodation entries (statement dated 23/03/2015 answer to question no The AO has not been able to refute the clear cut and cogent nd available on the record, testifying to the genuineness of the share application money. The source of the said money thus stands proven. As has been held in several decisions of judicial authorities (Murlidhar Lahorimal Vs CIT 280 IT 512 bohra v ITO (219 ITR 571 (Rai) and CIT v (299 ITR 268 (Del)), the assessee cannot be called to prove the source of the source of this money. Nevertfeless, it is submitted that the appellant produced the bank account fall the investor companies, and it can be seen from these bank accounts, that there were no cash deposits in the bank accounts of the investor companies during the relevant Moreover all the companies have been incorporated way carrying on business as per the objects mentioned in the MO & A registered with Registrar of companies. Hence, it cannot be said that these companies have been formed / incorporated recently to subscribe to the share capital of the appellant company. The AR has made further submission and brought te my notice the decision of Hon'ble Jurisdictional Bombay High Court decision in the case of M/s Aditya Birla Telecom Ltd IT No. 1502 of 2016 dated 26.03.2019 and submitted that merely because huge premium has be investing company is not receiving any return on investment made, account has been closed after making investment, and the source of source is not explained cannot be the reason for treating the transaction suspicious when the appellant company had provided all the evidences to prove the transaction as genuine by providing all the necessary evidences in respect of identity, bank alc proof to prove creditworthiness and evidences in respect of genuineness. During the appellate proceedings, the submitted a note with regard to the judgment of Hon'ble Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 taxmann.com 48. The gist of the difference between the assessee and NRA Iron & Steel are that the address are incorrect, failure to investors to respond to the notices issued by the Assessing Officer, non by the investors in support of their creditworthiness. In the instant case such features are not there. Therefore, the Hon'ble Supreme Court Steel Pvt Ltd is not applicable to the facts of the appellant's case. During the course of appellate proceedings the AR filed copies of decisions of Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Realty Ltd., (Formerly known as Ellora Electricals Ltd.) v/s ITO 15(1)(1), Mum order dated 21/04/2017, M/s Reliance Corporation v/s ITO Ward 32(3)(2), Mumbai 12/04/2017 and M/s Laxman Industrial resourc Pr CIT-5 M/s SNS Real Estate LLP mentioned in the MO & A registered with Registrar of companies. Hence, it cannot be said that these companies have been formed / incorporated recently to subscribe to the share capital of the appellant company. AR has made further submission and brought te my notice the decision of Hon'ble Jurisdictional Bombay High Court decision in the case of M/s Aditya Birla Telecom Ltd IT No. 1502 of 2016 dated 26.03.2019 and submitted that merely because huge premium has been received the investing company is not receiving any return on investment made, account has been closed after making investment, and the source of source is not explained cannot be the reason for treating the transaction suspicious when the appellant pany had provided all the evidences to prove the transaction as genuine by providing all the necessary evidences in respect of identity, bank alc proof to prove creditworthiness and evidences in respect of genuineness. During the appellate proceedings, the appellant has also submitted a note with regard to the judgment of Hon'ble Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 taxmann.com 48. The gist of the difference between the assessee and NRA Iron & Steel are that the address are t, failure to investors to respond to the notices issued by the Assessing Officer, non-submission of bank statement by the investors in support of their creditworthiness. In the instant case such features are not there. Therefore, the Hon'ble Supreme Court judgment in the case of NRA Iron & Steel Pvt Ltd is not applicable to the facts of the appellant's During the course of appellate proceedings the AR filed copies of decisions of Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Ltd., (Formerly known as Ellora Electricals Ltd.) v/s ITO 15(1)(1), Mum-ITA No.6492/Mum/2016 AY 2007 order dated 21/04/2017, M/s Reliance Corporation v/s ITO Ward 32(3)(2), Mumbai -1069 to 1071/Mum/2017 dated 12/04/2017 and M/s Laxman Industrial resourc M/s SNS Real Estate LLP 7 ITA No. 543/M/2020 mentioned in the MO & A registered with Registrar of companies. Hence, it cannot be said that these companies have been formed / incorporated recently to subscribe to the AR has made further submission and brought te my notice the decision of Hon'ble Jurisdictional Bombay High Court decision in the case of M/s Aditya Birla Telecom Ltd IT No. 1502 of 2016 dated 26.03.2019 and submitted that en received the investing company is not receiving any return on investment made, account has been closed after making investment, and the source of source is not explained cannot be the reason for treating the transaction suspicious when the appellant pany had provided all the evidences to prove the transaction as genuine by providing all the necessary evidences in respect of identity, bank alc proof to prove creditworthiness and evidences in respect of genuineness. appellant has also submitted a note with regard to the judgment of Hon'ble Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 taxmann.com 48. The gist of the difference between the assessee and NRA Iron & Steel are that the address are t, failure to investors to respond to the notices issued submission of bank statement by the investors in support of their creditworthiness. In the instant case such features are not there. Therefore, the judgment in the case of NRA Iron & Steel Pvt Ltd is not applicable to the facts of the appellant's During the course of appellate proceedings the AR filed Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Ltd., (Formerly known as Ellora Electricals Ltd.) v/s ITA No.6492/Mum/2016 AY 2007-08 order dated 21/04/2017, M/s Reliance Corporation v/s ITO 1069 to 1071/Mum/2017 dated 12/04/2017 and M/s Laxman Industrial resources Ltd VIs Mumbai- ITA No. 169/2017, CM Appl 7385/2017 dated 14/03/2017. Judgement of Hon'ble Jurisdictional High Court in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd in ITA No. 1613 of 2014 dated 20/03/2017. These are extracted as under: [TO 15(1)(1). Mum order dated 21/04/2017 the under: 2.22. If the totality of facts and the judicial pronouncements, discussed hereinabove, are analyzed, we are of the considered opinion that the provided u/s 68 of the Act, has been duly discharged by the assessee as the identity of the share subscribers, creditworthiness and genuineness of the transaction is not in doubt or it can be said that the same has been proved/explained by the assessee. Now, The onus has reverted back upon the Revenue to prove otherwise. The Ld. Assessing Officer merely relied upon the information received from the investigation wing and did not made any independent enquiry. The Assessing O disprove the claim of the assessee with the help of evidence, if any, received from the investigation wing, as has been claimed by the Revenue. The Revenue has nowhere proved that any malafide is done by the assessee. Failure to do s vitiate the addition made under the set of facts. Reference can be made to the decision in CIT vs Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Construction vs CIT 227 ITR 900(Guw.). The satisfaction has to be derived from the relevant facts and that to on the basis of proper enquiry by the Assessing Officer and such enquiry must be reasonable and just. In the present case, the Assessing Officer has not brought any evidence on record that the amounts received from M/s Industries Ltd. and M/s Yash accommodation entries. As mentioned earlier, the Ld. Assessing Officer has acted merely on the basis of information received from the Investigation wing. The ratio laid down by Hon'ble Del Farms Pvt. Ltd. squarely gives shelter to the assessee, M/s SNS Real Estate LLP ITA No. 169/2017, CM Appl 7385/2017 dated 14/03/2017. Judgement of Hon'ble Jurisdictional High Court in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd No. 1613 of 2014 dated 20/03/2017. These are extracted as [TO 15(1)(1). Mum-ITA No.6492/Mum/2016 AY 2007 er dated 21/04/2017 the Hon'ble ITAT has held as 2.22. If the totality of facts and the judicial pronouncements, discussed hereinabove, are analyzed, we are of the considered opinion that the onus caste upon the assessee, as provided u/s 68 of the Act, has been duly discharged by the assessee as the identity of the share subscribers, creditworthiness and genuineness of the transaction is not in doubt or it can be said that the same has been oved/explained by the assessee. Now, The onus has reverted back upon the Revenue to prove otherwise. The Ld. Assessing Officer merely relied upon the information received from the investigation wing and did not made any independent enquiry. The Assessing Officer was expected to disprove the claim of the assessee with the help of evidence, if any, received from the investigation wing, as has been claimed by the Revenue. The Revenue has nowhere proved that any malafide is done by the assessee. Failure to do s vitiate the addition made under the set of facts. Reference can be made to the decision in CIT vs Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Construction vs CIT 227 ITR 900(Guw.). The satisfaction has d from the relevant facts and that to on the basis of proper enquiry by the Assessing Officer and such enquiry must be reasonable and just. In the present case, the Assessing Officer has not brought any evidence on record that the amounts received from M/s Alka Diamond Industries Ltd. and M/s Yash-V-Jewels Ltd. are merely accommodation entries. As mentioned earlier, the Ld. Assessing Officer has acted merely on the basis of information received from the Investigation wing. The ratio laid down by Hon'ble Delhi High Court in CIT vs Vrindaban Farms Pvt. Ltd. squarely gives shelter to the assessee, M/s SNS Real Estate LLP 8 ITA No. 543/M/2020 ITA No. 169/2017, CM Appl 7385/2017 dated 14/03/2017. Judgement of Hon'ble Jurisdictional High Court in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd No. 1613 of 2014 dated 20/03/2017. These are extracted as ITA No.6492/Mum/2016 AY 2007-08 Hon'ble ITAT has held as 2.22. If the totality of facts and the judicial pronouncements, discussed hereinabove, are analyzed, we are of the onus caste upon the assessee, as provided u/s 68 of the Act, has been duly discharged by the assessee as the identity of the share subscribers, creditworthiness and genuineness of the transaction is not in doubt or it can be said that the same has been oved/explained by the assessee. Now, The onus has reverted back upon the Revenue to prove otherwise. The Ld. Assessing Officer merely relied upon the information received from the investigation wing and did not made any fficer was expected to disprove the claim of the assessee with the help of evidence, if any, received from the investigation wing, as has been claimed by the Revenue. The Revenue has nowhere proved that any malafide is done by the assessee. Failure to do so, vitiate the addition made under the set of facts. Reference can be made to the decision in CIT vs Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Construction vs CIT 227 ITR 900(Guw.). The satisfaction has d from the relevant facts and that to on the basis of proper enquiry by the Assessing Officer and such enquiry must be reasonable and just. In the present case, the Assessing Officer has not brought any evidence on record Alka Diamond Jewels Ltd. are merely accommodation entries. As mentioned earlier, the Ld. Assessing Officer has acted merely on the basis of information received from the Investigation wing. The ratio hi High Court in CIT vs Vrindaban Farms Pvt. Ltd. squarely gives shelter to the assessee, wherein, it was held that if the identity and other details of share applicant are available, the share application money cannot be treated as undisclosed income in t company. In the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative World Telefilms Ltd. (supra) by Hon'ble jurisdictional High Court squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the tran channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rathe information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The princi demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. Even otherwise, as per Article India, only legitimate taxes has to be levied and collect our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the Ld. Commissi ground of the assessee is allowed. (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation v. ITO Ward 32(3)(2), Mumbai dated 12/04/2017 has held as under: 8. We have heard the ri placed before us including the orders of authorities below and orders relied upon by the parties. We find that M/s SNS Real Estate LLP wherein, it was held that if the identity and other details of share applicant are available, the share application money cannot be treated as undisclosed income in the hands of the company. In the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative World Telefilms Ltd. (supra) by Hon'ble jurisdictional High Court squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. Even otherwise, as per Article-265 of the Constitution of India, only legitimate taxes has to be levied and collect our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the Ld. Commissioner of Income Tax (Appeal), resultantly, this ground of the assessee is allowed. (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation v. ITO Ward 32(3)(2), Mumbai – 1069 to 1071/Mum/2017 dated 12/04/2017 has held as under: 8. We have heard the rival contentions perused the material placed before us including the orders of authorities below and orders relied upon by the parties. We find that M/s SNS Real Estate LLP 9 ITA No. 543/M/2020 wherein, it was held that if the identity and other details of share applicant are available, the share application money he hands of the company. In the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative World Telefilms Ltd. (supra) by Hon'ble jurisdictional High Court squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, saction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is r it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom ple of natural justice, demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. 265 of the Constitution of India, only legitimate taxes has to be levied and collected. In our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the oner of Income Tax (Appeal), resultantly, this (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation 1069 to 1071/Mum/2017 val contentions perused the material placed before us including the orders of authorities below and orders relied upon by the parties. We find that undisputedly the assessee has borrowed money by way of loan from three aforesaid three parties i.e M/s Laxmi Company, M/s Rose Impex and Megha Gems from whom the assessee borrowed the money and total outstanding including the interest as on 31.3.2010 were amounting to Rs.1,29,04,231/ upon receiving the information the assessee was one of the beneficiary of the said accommodation entries provided by Mr.Bhanwarlal Jain and group. We find from the record that the assessee filed during the course of assessment proceedings all the details lik confirmation letters from the creditors, PAN of the creditors, bank statements og the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, and ITR etc. M before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all these details and facts on record, we has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been established by the assessee. So much so that the loan creditors in response to the notice issued under section 133(6) appeared before the AO and confirmed the that they have given interest bearing loans to the assessee on which TDS have been deducted and paid and to the loan creditors also filed before the AO. Once the assessee has filed all the necessary documents before the AO then the onus is shifted to the department to disprove the stand of the assessee, which department has failed to do so in the present case. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee on record by cont during the course of appellant proceedings. No cross M/s SNS Real Estate LLP undisputedly the assessee has borrowed money by way of loan from three aforesaid three parties i.e M/s Laxmi Company, M/s Rose Impex and Megha Gems from whom the assessee borrowed the money and total outstanding including the interest as on 31.3.2010 were amounting to Rs.1,29,04,231/-. The case of the assessee was re upon receiving the information from DGIT(Inv), Mumbai that the assessee was one of the beneficiary of the said accommodation entries provided by Mr.Bhanwarlal Jain and group. We find from the record that the assessee filed during the course of assessment proceedings all the details lik confirmation letters from the creditors, PAN of the creditors, bank statements og the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, and ITR etc. Moreover, the loan creditors also appeared before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all these details and facts on record, we find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been hed by the assessee. So much so that the loan creditors in response to the notice issued under section 133(6) appeared before the AO and confirmed the that they have given interest bearing loans to the assessee on which TDS have been deducted and paid and form no.16A issued to the loan creditors also filed before the AO. Once the assessee has filed all the necessary documents before the AO then the onus is shifted to the department to disprove the stand of the assessee, which department has failed to do so in the present case. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee on record by contrary to the defense put up by the assessee during the course of appellant proceedings. No cross M/s SNS Real Estate LLP 10 ITA No. 543/M/2020 undisputedly the assessee has borrowed money by way of loan from three aforesaid three parties i.e M/s Laxmi Trading Company, M/s Rose Impex and Megha Gems from whom the assessee borrowed the money and total outstanding including the interest as on 31.3.2010 were amounting to . The case of the assessee was re-opened from DGIT(Inv), Mumbai that the assessee was one of the beneficiary of the said accommodation entries provided by Mr.Bhanwarlal Jain and group. We find from the record that the assessee filed during the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, bank statements og the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, oreover, the loan creditors also appeared before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been hed by the assessee. So much so that the loan creditors in response to the notice issued under section 133(6) appeared before the AO and confirmed the that they have given interest bearing loans to the assessee on which form no.16A issued to the loan creditors also filed before the AO. Once the assessee has filed all the necessary documents before the AO then the onus is shifted to the department to disprove the stand of the assessee, which department has failed to do so in the present case. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee rary to the defense put up by the assessee during the course of appellant proceedings. No cross examination was allowed to the assessee and information was used against the assessee causing violation of natural justice. The FAA dismissed the appeal of the exparte for non attendance of the ld.AR. (iii) In the case of MIs Laxman Industrial resources Ltd VIs Pr CIT-5 Mumbai 14/03/2017, the Hon'ble Delhi High Court has observed as under: Reliance is placed on Court and the jurisdictional High Court of Delhi: (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (Del). Hon'ble Delhi HighCourt in paras 13.& 16 ha under: “13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equ indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue. the Company concerned cannot b know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutor the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to t assessee: if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he c treat the subscribed capital as the undisclosed income of the Company M/s SNS Real Estate LLP examination was allowed to the assessee and information was used against the assessee causing violation of natural justice. The FAA dismissed the appeal of the exparte for non attendance of the ld.AR. ) In the case of MIs Laxman Industrial resources Ltd VIs Pr 5 Mumbai- ITANo.169/2017, CM Appl 7385/2017 cated 14/03/2017, the Hon'ble Delhi High Court has observed as Reliance is placed on the following decisions of the Apex Court and the jurisdictional High Court of Delhi:- (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (Del). Hon'ble Delhi HighCourt in paras 13.& 16 ha “13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue. the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hilt by the assessee: if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the M/s SNS Real Estate LLP 11 ITA No. 543/M/2020 examination was allowed to the assessee and information was used against the assessee causing violation of natural justice. The FAA dismissed the appeal of the assessee ) In the case of MIs Laxman Industrial resources Ltd VIs Pr ITANo.169/2017, CM Appl 7385/2017 cated 14/03/2017, the Hon'ble Delhi High Court has observed as the following decisions of the Apex (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (Del). Hon'ble Delhi HighCourt in paras 13.& 16 has held as “13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the ally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a e expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information y share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The he hilt by the assessee: if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty- bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal annot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the Income T (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable channels: (3) the creditworthiness or financi creditor/subscriber: (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices: (6) the onus woul creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Offic creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. 4. Before us, the Ld. DR submitted that the Ld. CIT(A) has decided the appeal assuming wrong facts that new address of the share applicant the Act by the Assessing Officer. However, after noticesissued u/s 133(6) summons u/s 131 of the Act a provided the same to the assessee for service on those share M/s SNS Real Estate LLP 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the Income Tax act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable (3) the creditworthiness or financial strength of the creditor/subscriber: (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices: (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. Before us, the Ld. DR submitted that the Ld. CIT(A) has decided the appeal assuming wrong facts that the assessee provided new address of the share applicants for issuing notice u/s 133(6) of the Act by the Assessing Officer. However, after returned back of u/s 133(6) forfirst time the , Assessing Officer summons u/s 131 of the Act and at the request of the assessee, the same to the assessee for service on those share M/s SNS Real Estate LLP 12 ITA No. 543/M/2020 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of ax act. The assessee has to prima facie prove (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable al strength of the (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails d not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation.” Before us, the Ld. DR submitted that the Ld. CIT(A) has the assessee provided for issuing notice u/s 133(6) of returned back of Assessing Officer issued at the request of the assessee, the same to the assessee for service on those share applicants. However, compliance to summons issued nor assessee before the Assessing Officer a Officer held the amount unexplained cash credit u/s 68 of the 5. We have heard submission of the Ld. DR para 5 referred the fact that notice u/s 133(6) of the Act were issued by the Assessing Officer on the new address parties filed their corresponding replies to the Assessing Officer. Further, in para 5.7 also the Ld. CIT(A) noted that notice u/s 133(6) of the Act were duly served upon the share applican finding of the Ld. CIT(A) is reproduced as under: “5.7. Further, it is submitted that at the first stage the appellant had submitted to Assessing Officer, the addresses of share applicants based on the addresses those appearing in share application forms and those appearing in Share Holders Register. It is not informed by the share applicants of changes in their addresses, that is why, when Assessing Officer informed to the appellant that notices us 133(6) issued to the share applicants at addresses given by the appella returned unserved, with the offices of share applicants provided the changed addresses of share applicants to the Assessing Officer and thereafter, Assessing Officer issued fresh Notices us 133(6) of the Ac addresses which have been duly served upon.It is further submitted that the respective share applicants thereafter filed all the relevant evidences directly te the Assessing Officer to prove identity, creditworthiness and genuineness. It is al that notices us. 131 issued to the appellant, also M/s SNS Real Estate LLP applicants. However, neither those share applicant compliance to summons issued nor were not produced by the assessee before the Assessing Officer and therefore, the Assessing Officer held the amount of share subscription received as unexplained cash credit u/s 68 of the Act. We have heard submission of the Ld. DR.The Ld. CIT(A) in para 5 referred the fact that notice u/s 133(6) of the Act were issued by the Assessing Officer on the new addresses parties filed their corresponding replies to the Assessing Officer. Further, in para 5.7 also the Ld. CIT(A) noted that notice u/s 133(6) of the Act were duly served upon the share applican finding of the Ld. CIT(A) is reproduced as under: 5.7. Further, it is submitted that at the first stage the appellant had submitted to Assessing Officer, the addresses of share applicants based on the addresses those appearing in share application forms and those appearing in Share Holders Register. It is also submitted that the appellant was not informed by the share applicants of changes in their addresses, that is why, when Assessing Officer informed to the appellant that notices us 133(6) issued to the share applicants at addresses given by the appellant have been returned unserved, the appellant after making inquiries with the offices of share applicants provided the changed addresses of share applicants to the Assessing Officer and thereafter, Assessing Officer issued fresh Notices us 133(6) of the Act at the new addresses which have been duly served upon.It is further submitted that the respective share applicants thereafter filed all the relevant evidences directly te the Assessing Officer to prove identity, creditworthiness and genuineness. It is also submitted that notices us. 131 issued to the appellant, also M/s SNS Real Estate LLP 13 ITA No. 543/M/2020 those share applicant attended in were not produced by the nd therefore, the Assessing share subscription received as he Ld. CIT(A) in para 5 referred the fact that notice u/s 133(6) of the Act were es and all those parties filed their corresponding replies to the Assessing Officer. Further, in para 5.7 also the Ld. CIT(A) noted that notice u/s 133(6) of the Act were duly served upon the share applicants. The relevant 5.7. Further, it is submitted that at the first stage the appellant had submitted to Assessing Officer, the addresses of share applicants based on the addresses those appearing in share application forms and those appearing in Share also submitted that the appellant was not informed by the share applicants of changes in their addresses, that is why, when Assessing Officer informed to the appellant that notices us 133(6) issued to the share nt have been the appellant after making inquiries with the offices of share applicants provided the changed addresses of share applicants to the Assessing Officer and thereafter, Assessing Officer t at the new addresses which have been duly served upon.It is further submitted that the respective share applicants thereafter filed all the relevant evidences directly te the Assessing Officer to prove identity, so submitted that notices us. 131 issued to the appellant, also enclosing notices us 131 to the witnesses to produce them before the Assessing Officer. The AR submitted that the summons were forwarded to the witnesses and it appears they filed all the deta Assessing Officer in response to the earlier notices issued u/s. 133(6). Officer did not issue any notice to the appellant. Without prejudice to the above, the appellant relied on the decision of H'ble high court of Bombay in the case of CIT vs. Nikunj Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held that non appearance to notices should not result in addition. 5.1 Relying on this assumption of facts, the Ld. CIT(A) concluded the appeal in favour of the assessee in para 13 has recorded that despite specifically assessee to produce share applicants before him for cross Assessing Officer is repr “13. The assessee has claimed that it has genuinely received the share premium of Rs. 20 crores from these business entities. Hence, these parties are its own witnesses. It was the primary onus of the assessee to justify the amount credited to its books of account and to establish the genuineness of transaction and creditworthiness of the investors. Rather than discharging this onus, it is amazing that the assessee wanted to cross to establish the genuineness of its As the assessee was failed to discharge its onus to establish the genuineness of transaction and creditworthiness of investor parties, the assessee was asked to produce its investors for examination and to ascertain the genuineness of transaction. an opportunity was given to the assessee to establish identity and genuineness and creditworthiness of its investors. Summons us 131 were issued to assessee and principal officers of all the six investor and to five people viz. Shri Dilip Mehta, Shri Mahaveer M/s SNS Real Estate LLP enclosing notices us 131 to the witnesses to produce them before the Assessing Officer. The AR submitted that the summons were forwarded to the witnesses and it appears they filed all the details to the Assessing Officer in response to the earlier notices issued u/s. 133(6). After receiving the details the Assessing Officer did not issue any notice to the appellant. Without prejudice to the above, the appellant relied on the decision of igh court of Bombay in the case of CIT vs. Nikunj Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held that non appearance to notices should not result in addition. Relying on this assumption of facts, the Ld. CIT(A) concluded ur of the assessee, whereas the Assessing Officer in para 13 has recorded that despite specifically assessee to produce share applicants, same were not produced him for cross-examination. The relevant finding the Assessing Officer is reproduced as under: 13. The assessee has claimed that it has genuinely received the share premium of Rs. 20 crores from these business entities. Hence, these parties are its own witnesses. It was the primary onus of the assessee to justify the amount d to its books of account and to establish the genuineness of transaction and creditworthiness of the investors. Rather than discharging this onus, it is amazing that the assessee wanted to cross-examine its own witness to establish the genuineness of its transaction. As the assessee was failed to discharge its onus to establish the genuineness of transaction and creditworthiness of investor parties, the assessee was asked to produce its investors for examination and to ascertain the genuineness ion. Further, as a principle of natural justice, an opportunity was given to the assessee to establish identity and genuineness and creditworthiness of its investors. Summons us 131 were issued to assessee and principal officers of all the six investor and to five people viz. Shri Dilip Mehta, Shri Mahaveer M/s SNS Real Estate LLP 14 ITA No. 543/M/2020 enclosing notices us 131 to the witnesses to produce them before the Assessing Officer. The AR submitted that the summons were forwarded to the witnesses ils to the Assessing Officer in response to the earlier notices After receiving the details the Assessing Officer did not issue any notice to the appellant. Without prejudice to the above, the appellant relied on the decision of igh court of Bombay in the case of CIT vs. Nikunj Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held that non appearance to notices should not result in addition.” Relying on this assumption of facts, the Ld. CIT(A) concluded whereas the Assessing Officer in para 13 has recorded that despite specifically asking the same were not produced examination. The relevant finding the 13. The assessee has claimed that it has genuinely received the share premium of Rs. 20 crores from these business entities. Hence, these parties are its own witnesses. It was the primary onus of the assessee to justify the amount d to its books of account and to establish the genuineness of transaction and creditworthiness of the investors. Rather than discharging this onus, it is amazing examine its own witness As the assessee was failed to discharge its onus to establish the genuineness of transaction and creditworthiness of investor parties, the assessee was asked to produce its investors for examination and to ascertain the genuineness Further, as a principle of natural justice, an opportunity was given to the assessee to establish identity and genuineness and creditworthiness of its investors. Summons us 131 were issued to assessee and principal officers of all the six investor and also to five people viz. Shri Dilip Mehta, Shri Mahaveer Duggar, Umesh C Mehta, Shri Girishchand Yadav and Smt. Sangeeta J Sawant on 30.11.2016.Copy of summons were given to assessee in case of all the six investors as well the summons was given to the assessee. The assessee was required to produce its own witnesses and itself for verification and cross examination. Neither the assessee nor the investor parties and above five persons attended on the stipulated date for verification. that the assessee and its own investors were hand in gloves in avoiding the scrutiny in the eyes of the law as their so called transaction was bogus. The Hon'ble Delhi High Court's Decision in the case of N.R. Portfolio fits to the assessee when it comes t liability of onus as under: "An assessee's duty to establish that the amounts which the AO proposes to add back, under section 68 are properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars of relying Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are issued on private placement or even discuss the balance sheet of investors in question from whom the assessee has received the share premium of Rs.20 crores. The balance sheet for F.Y. 2011 not provided in case of 1)Anuva Mercantile, 2) Sarang Mercantile, 3)La Limited. The balance sheet of rest three parties are discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited :For A. Y. 2.012 investment are Rs.7.34.00,000/ creditors are income is NIL. It has invested in share premium from sundry creditors. Therefore the source of the share premium and creditworthiness is sham. M/s SNS Real Estate LLP Duggar, Umesh C Mehta, Shri Girishchand Yadav and Smt. Sangeeta J Sawant on 30.11.2016.Copy of summons were given to assessee in case of all the six investors as well the summons was given to the sessee. The assessee was required to produce its own witnesses and itself for verification and cross examination. Neither the assessee nor the investor parties and above five persons attended on the stipulated date for verification. This clearly establish that the assessee and its own investors were hand in gloves in avoiding the scrutiny in the eyes of the law as their so called transaction was bogus. The Hon'ble Delhi High Court's Decision in the case of N.R. Portfolio fits to the assessee when it comes to the assessee's liability of onus as under: "An assessee's duty to establish that the amounts which the AO proposes to add back, under section 68 are properly sourced, does not cease by merely furnishing the names, addresses and PAN particulars of relying on the entries in a Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are issued on private placement or even15. It is felt necessa discuss the balance sheet of investors in question from whom the assessee has received the share premium of Rs.20 The balance sheet for F.Y. 2011-2012 (A.Y. 2012 not provided in case of 1)Anuva Mercantile, 2) Sarang Mercantile, 3)LakshMerchantile Pvt. Limited. The balance sheet of rest three parties are discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited :For A. Y. 2.012-2013, the Reserve and surplus is 5230, the investment are Rs.7.34.00,000/- against which trade creditors are Rs.7,33,34,750/-. The sales turnover is NIL and income is NIL. It has invested in share premium from sundry creditors. Therefore the source of the share premium and creditworthiness is sham. M/s SNS Real Estate LLP 15 ITA No. 543/M/2020 Duggar, Umesh C Mehta, Shri Girishchand Yadav and Smt. Sangeeta J Sawant on 30.11.2016.Copy of summons were given to assessee in case of all the six investors as well the summons was given to the sessee. The assessee was required to produce its own witnesses and itself for verification and cross examination. Neither the assessee nor the investor parties and above five persons attended on the This clearly establish that the assessee and its own investors were hand in gloves in avoiding the scrutiny in the eyes of the law as their so The Hon'ble Delhi High Court's Decision in the case of N.R. o the assessee's "An assessee's duty to establish that the amounts which the AO proposes to add back, under section 68 are properly sourced, does not cease by merely furnishing the names, on the entries in a Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are 15. It is felt necessary to discuss the balance sheet of investors in question from whom the assessee has received the share premium of Rs.20 2012 (A.Y. 2012-2013) was not provided in case of 1)Anuva Mercantile, 2) Sarang Limited. The balance sheet of rest three parties are discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited 2013, the Reserve and surplus is 5230, the against which trade . The sales turnover is NIL and It has invested in share premium from sundry creditors. Therefore the source of the share premium and b) MIs View Marchantile Put. Limited: For A.Y. 2012 the Reserve and surplus is 33300 the investment are Rs. 1,34, 10,000/ 10,000/- . The sales turnover is NIL and income is NIL. It has invested in share premium from sundry creditors. Therefore the source of the share p creditworthiness is sham... c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012 Reserve and surplus is 6268, the investment are Rs.3,97,00,000/ Rs.3,96,41,658/ NIL. It has invested inshare premium from sundry creditors. Therefore the source of the share premium and creditworthiness is sham. Apart from this, details of no other investors for A.Y were submitted by the assessee. The directors of above six companies viz. Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Computer and entry operator are working in the office of Shri Dilip Mehta and they do not know anything about the share premium transactions and or about any of the companies It is beyond co companies run by the peon and computer operator with nil income had made all these huge investments in the assessee company as well as other concerns. 16. Modus Operandi of entry providers: The modus operandi of ac also discussed here. The beneficiary seeking entry of a particular natureapproaches the accommodation entry provider directly or through intermediary broker. The entry providers received the commission equivalent of the share beneficiary. After routing the money through various group concerns, the cheque is issued to the beneficiary. This explains the frequent debit and credits in the bank account in M/s SNS Real Estate LLP b) MIs View Marchantile Put. Limited: For A.Y. 2012 serve and surplus is 33300 the investment are Rs. 1,34, 10,000/- against which trade creditors are Rs. 1,34, . The sales turnover is NIL and income is NIL. It has invested in share premium from sundry creditors. Therefore the source of the share premium and creditworthiness is sham... c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012 Reserve and surplus is 6268, the investment are Rs.3,97,00,000/- against which trade creditors are Rs.3,96,41,658/-. The sales turnover is NIL and income is It has invested inshare premium from sundry creditors. Therefore the source of the share premium and creditworthiness is sham. Apart from this, details of no other investors for A.Y were submitted by the assessee. The directors of above six anies viz. Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Computer and entry operator are working in the office of Shri Dilip Mehta and they do not know anything about the share premium transactions and or about any of the companies It is beyond comprehension that these so called investor companies run by the peon and computer operator with nil income had made all these huge investments in the assessee company as well as other concerns. 16. Modus Operandi of entry providers: The modus operandi of accommodation entry providers is also discussed here. The beneficiary seeking entry of a particular natureapproaches the accommodation entry provider directly or through intermediary broker. The entry providers received the commission equivalent of the share premium from the beneficiary. After routing the money through various group concerns, the cheque is issued to the beneficiary. This explains the frequent debit and credits in the bank account in M/s SNS Real Estate LLP 16 ITA No. 543/M/2020 b) MIs View Marchantile Put. Limited: For A.Y. 2012-2013, serve and surplus is 33300 the investment are Rs. against which trade creditors are Rs. 1,34, . The sales turnover is NIL and income is NIL. It has invested in share premium from sundry creditors. remium and c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012-2013, the Reserve and surplus is 6268, the investment are against which trade creditors are . The sales turnover is NIL and income is It has invested inshare premium from sundry creditors. Therefore the source of the share premium and Apart from this, details of no other investors for A.Y- 2012-13 were submitted by the assessee. The directors of above six Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Computer and entry operator are working in the office of Shri Dilip Mehta and they do not know anything about the share premium transactions and or about any of the companies It mprehension that these so called investor companies run by the peon and computer operator with nil income had made all these huge investments in the assessee commodation entry providers is The beneficiary seeking entry of a particular natureapproaches the accommodation entry provider directly or through intermediary broker. The entry providers received premium from the beneficiary. After routing the money through various group concerns, the cheque is issued to the beneficiary. This explains the frequent debit and credits in the bank account in the account of the entry provider.The money is introduced in the books of account of Entry Provider by way of some fictitious sale of goods or other dubious credits. The said sale consideration so received by the Entry Provider is given by way of cheque to the beneficiary for shares as per requirement of the benefi the interest is charged upon the beneficiary, which is returned to him in the form of cash.Inthis case, the similar patter was adopted. The sources of funds was shown as sundry debtors in the companies, with nil turnove income. Modus operand of investment in the assessee's own case: Similar to above, Share capital of Rs.20 crore was introduced in the assessee's case i.e. ShubhMerchantile private limited. The director of this company are Mrs Sangeeta J sawant and Mr Girish Chandra Yadav. The shareholding of the company was gradually trAnsferred to directors of SNS Real Estate LLP from Mrs Sangeeta J sawant and Shri Girishchandyadav at a nominal face value of Rs. 10. This company is ShubhMerchantile Private Limited amalgamated into SNS Real Estate ILLP. Thus all the funds present in the company ieShubhMerchantile private limited was automatically owned by SS Real Estate LLP. Thus through this modus operandi large amount of funds were introduced in SNS Real holding as well as without raising any liability of paying amount back to the investing company. When the source of funds in Shubh Mercantile Private Limited was gathered it is found that all the company managed by Shri introduced funds in the company, in fact this company Shubh Mercantile Private Limited had initially managed by Shri Dilip Mehta only. 17. Section 68 Before proceeding with the concluding part, for the sake of brevity, section 68 of the Income as under: "Where any sum is found credited in the booksof an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source M/s SNS Real Estate LLP the account of the entry provider.The money is introduced in the books of account of Entry Provider by way of some fictitious sale of goods or other dubious credits. The said sale consideration so received by the Entry Provider is given by way of cheque to the beneficiary for shares as per requirement of the beneficiary.In respect of share preiniums, the interest is charged upon the beneficiary, which is returned to him in the form of cash.Inthis case, the similar patter was adopted. The sources of funds was shown as sundry debtors in the companies, with nil turnove Modus operand of investment in the assessee's own case: Similar to above, Share capital of Rs.20 crore was introduced in the assessee's case i.e. ShubhMerchantile private limited. The director of this company are Mrs Sangeeta J sawant and Mr Girish Chandra Yadav. The shareholding of the company was gradually trAnsferred to directors of SNS Real Estate LLP from Mrs Sangeeta J sawant and Shri Girishchandyadav at a nominal face value of Rs. 10. This company is ShubhMerchantile Private Limited amalgamated into SNS Real Estate ILLP. Thus all the funds present in the company ieShubhMerchantile private limited was automatically owned by SS Real Estate LLP. Thus through this modus operandi large amount of funds were introduced in SNS Real Estate LLP without altering earlier holding as well as without raising any liability of paying amount back to the investing company. When the source of funds in Shubh Mercantile Private Limited was gathered it is found that all the company managed by Shri Dilip Mehta had introduced funds in the company, in fact this company Shubh Mercantile Private Limited had initially managed by Shri Dilip Mehta only. 17. Section 68 - Cash credits: Before proceeding with the concluding part, for the sake of section 68 of the Income-tax Act. 1961 is reproduced "Where any sum is found credited in the booksof an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source M/s SNS Real Estate LLP 17 ITA No. 543/M/2020 the account of the entry provider.The money is introduced in the books of account of Entry Provider by way of some fictitious sale of goods or other dubious credits. The said sale consideration so received by the Entry Provider is given by way of cheque to the beneficiary for shares as per ciary.In respect of share preiniums, the interest is charged upon the beneficiary, which is returned to him in the form of cash.Inthis case, the similar patter was adopted. The sources of funds was shown as sundry debtors in the companies, with nil turnover and nil Modus operand of investment in the assessee's own case: Similar to above, Share capital of Rs.20 crore was introduced in the assessee's case i.e. ShubhMerchantile private limited. The director of this company are Mrs Sangeeta J sawant and Mr Girish Chandra Yadav. The shareholding of the company was gradually trAnsferred to directors of SNS Real Estate LLP from Mrs Sangeeta J sawant and Shri Girishchandyadav at a nominal face value of Rs. 10. This was later amalgamated into SNS Real Estate ILLP. Thus all the funds present in the company ieShubhMerchantile private limited was automatically owned by SS Real Estate LLP. Thus through this modus operandi large amount of funds were Estate LLP without altering earlier holding as well as without raising any liability of paying amount back to the investing company. When the source of funds in Shubh Mercantile Private Limited was gathered it is Dilip Mehta had introduced funds in the company, in fact this company Shubh Mercantile Private Limited had initially managed by Before proceeding with the concluding part, for the sake of tax Act. 1961 is reproduced "Where any sum is found credited in the booksof an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offer opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income assessee of that previous year:" 18. Conclusion: From the foregoing discussion, following uncontroverted and undisputed facts emanate which are summarized as under: 1) Assessee Company is a closely held private limited company. On the balance sheet for the instant year, the balance sheet contains signature of Sangeeta J. Sawant (Computer operator) and Girishchand Y ill) Assessee has not produced any responsible person from lender Companies for examination during the course of the assessment proceeding. iv) From the Bank Statement of the lender companies, layering of the transactions are found evident. There is no communication on record placed either by the subscribing company or the assessee to demonstrate as to how the whole transaction was conceptualized, discussed and concluded. Bank statement of the investing companies shows that the transactions of very strange way. Almost the entire $ as sums credited in the Ac of lender companies are instantly being transferred to some other concerns/ accounts. In the survey, it is established that the lender companies are belonging to Shri Dilip Mehta and that they are providing accommodation entries. There is norequest basis. If the assessee has access to the share applicants PAN particular, or bank account statement, surely its relationship is closer than arm's length. That apart, the concept of "shifting onus" does not mean that once certain facts are provided, the assessee's duties are M/s SNS Real Estate LLP thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:" 18. Conclusion: From the foregoing discussion, following uncontroverted and disputed facts emanate which are summarized as under: Assessee Company is a closely held private limited On the balance sheet for the instant year, the balance sheet contains signature of Sangeeta J. Sawant (Computer operator) and Girishchand Yadav (peon). ill) Assessee has not produced any responsible person from lender Companies for examination during the course of the assessment proceeding. iv) From the Bank Statement of the lender companies, layering of the transactions are found ere is no communication on record placed either by the subscribing company or the assessee to demonstrate as to how the whole transaction was conceptualized, discussed and concluded. Bank statement of the investing companies shows that the transactions of large sums deposits are taking place in a very strange way. Almost the entire $ as sums credited in the Ac of lender companies are instantly being transferred to some other concerns/ accounts. In the survey, it is established that the lender companies are belonging to Shri Dilip Mehta and that they are providing accommodation entries. There is norequest basis. If the assessee has access to the share applicants PAN particular, or bank account statement, surely its relationship is closer than arm's length. at apart, the concept of "shifting onus" does not mean that once certain facts are provided, the assessee's duties are M/s SNS Real Estate LLP 18 ITA No. 543/M/2020 ed by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so tax as the income of the From the foregoing discussion, following uncontroverted and disputed facts emanate which are summarized as under:- Assessee Company is a closely held private limited On the balance sheet for the instant year, the balance sheet contains signature of Sangeeta J. Sawant (Computer ill) Assessee has not produced any responsible person from lender Companies for examination during the course of the assessment proceeding. iv) From the Bank Statement of the lender companies, layering of the transactions are found ere is no communication on record placed either by the subscribing company or the assessee to demonstrate as to how the whole transaction was conceptualized, discussed Bank statement of the investing companies shows that the large sums deposits are taking place in a very strange way. Almost the entire $ as sums credited in the Ac of lender companies are instantly being transferred In the survey, it is established that the lender companies are belonging to Shri Dilip Mehta and that they are providing accommodation entries. There is norequest basis. If the assessee has access to the share applicants PAN particular, or bank account statement, surely its relationship is closer at apart, the concept of "shifting onus" does not mean that once certain facts are provided, the assessee's duties are over. If on verification, or during proceedings, the A cannot contact the share applicants or that the information becomes unverifiable, details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under section 68." The details such as balance sheet, profit and loss account, one page bank statement received from the lenders will reveal that these parties have no locus stand as far as financial grounds are concerned. 5.2 In view of the above factual observation, we find that the order of the Ld. CIT(A) is perverse aside and matter is restored back to the Ld. CIT(A) for deciding accordance with law on record. The grounds of appeal of the Revenue are accordingly allowed for statistical 6. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (ABY T VARKEY JUDICIAL MEMBER Mumbai; Dated: 24/04/2023 Rahul Sharma, Sr. P.S. M/s SNS Real Estate LLP over. If on verification, or during proceedings, the A cannot contact the share applicants or that the information becomes unverifiable, or there are further doubts in the pursuit of such details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under The details such as balance sheet, profit and loss account, bank statement received from the lenders will reveal that these parties have no locus stand as far as financial grounds are concerned.” In view of the above factual observation, we find that the order of the Ld. CIT(A) is perverse on facts and therefore, same is set aside and matter is restored back to the Ld. CIT(A) for deciding accordance with law afresh, after correct appreciation of the facts The grounds of appeal of the Revenue are accordingly allowed for statistical purposes. In the result, the appeal of the Revenue is allowed for Order pronounced in the open Court on 24/04/2023. Sd/- Sd/ ABY T VARKEY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER M/s SNS Real Estate LLP 19 ITA No. 543/M/2020 over. If on verification, or during proceedings, the A cannot contact the share applicants or that the information becomes or there are further doubts in the pursuit of such details, the onus shifts back to the assessee. At that stage, if it falters, the consequence may well be an addition under The details such as balance sheet, profit and loss account, bank statement received from the lenders will reveal that these parties have no locus stand as far as In view of the above factual observation, we find that the order facts and therefore, same is set aside and matter is restored back to the Ld. CIT(A) for decidingin after correct appreciation of the facts The grounds of appeal of the Revenue are accordingly In the result, the appeal of the Revenue is allowed for 04/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s SNS Real Estate LLP Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s SNS Real Estate LLP 20 ITA No. 543/M/2020 BY ORDER, (Assistant Registrar) ITAT, Mumbai
Other Referred Cases
NRA Iron and Steel Pvt. Ltd, M/s. NRA Iron and Steel Pvt.Ltd, M/s. Gagandeep Infrastructure (P) Ltd, M/s. Reliance Corporation v/s ITO Ward 32(3)(2), Mumbai, M/s. Arceli Realty Ltd., (Formerly known as Ellora Electricals Ltd.) v/s ITO 15(1)(1), Mumbai, CIT v/s M/s Gagandeep Infrastructure (P) Ltd, CIT v/s Lovely Exports (P) Ltd, CIT v/s Divine Leasing & Finance Ltd, CIT v/s U.M. Shah, Proprietor, CIT v/s Nikunj Eximp Pvt Ltd
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Tax Litigation
₹1
1:1 Consultation on Salary Structuring
₹1
1:1 Consultation on Business Development
₹1
Research Collaboration Agreement
₹0
Income Tax Act 2025
₹0
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