ANUSHA TRADING P.LTD, MUMBAI V. ITO 9(1)(3), MUMBAI

ITA 5754/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6689 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Unexplained cash credit; Income from undisclosed sources; Bonafide belief; Valuation report; Assessment record; Reason to believe
• Section: 143(3); 133(6); 68; 148; 6

Judgement Text

P A G E | 1 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, M UMBAI BEFORE SHRI G.S.PANNU , AM AND SHRI RAVISH SOOD, JM ITA NO. 5754/MUM/2016 ( / ASSESSMENT YEAR:2009 - 10) M/S ANUSHA TRADING PRIVATE LIMITED, NITYANAND SADAN, PLOT - 133, BARDWADI, CROSS LANE, ANDHERI (WEST), MUMBAI 400 058. / VS. ITO 9(1)(3), MUMBAI. ./ ./ PAN NO. AAHCA5317L ( / APPELLANT) : ( / RESPONDENT ) ITA NO. 5183/MUM/2016 ( / ASSESSMENT YEAR:2009 - 10) ITO 9(1)(3), ROOM NO. 206, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400058 / VS. M/S ANUSHA TRADING PRIVATE LIMITED, NITYANAND SADAN, PLOT - 133, BARDWADI, CROSS LANE, ANDHERI (WEST), MUMBAI 400 058. ./ ./ PAN NO. AAHCA5317L ( / APPELLANT) : ( / RESPONDENT ) / A SSESSEE BY : SHRI SATISH MODY, A.R / RE VENUE BY : SHRI RAJESH KUMAR YADAV, D.R / DATE OF HEARING : 06 .06.2018 / DATE OF PRONOUNCEMENT : 2 9 .06.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE IN THE PRESENT CASE ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 16, MUMBAI, DATED 31.05.2016, WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER P A G E | 2 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) SEC. 143(3) R.W.S. 147 OF THE INC OME TAX ACT, 1961 (FOR SHORT ACT), DATED 30.03.2015 FOR A.Y 2009 - 10. WE SHALL FIRST TAKE UP THE APPEAL OF THE REVENUE WHICH HA S ASSAILED THE ORDER OF THE CIT(A) BY RAISING BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3.50 CRORES MADE U/S 68 ON ACCOUNT OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WHEN THE GENUINENESS OF THE INVESTMENT WAS NOT PROVED AS THE SAME WAS RECEIVED FROM COMPANIES WHICH HAD NO BUSINESS ACTIVITIES? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN IGNO RING THE FACT THAT THE INVESTOR COMPANIES HAD NEGLIGIBLE INCOME AND HAD THEMSELVES RECEIVED SHARE PREMIUM WHICH WAS IN TURN INVESTED IN THE ASSESSEE COMPANY? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT EXAMINING WHETHER THE HIGH PREMIUM OF RS.115/ - ON SHARES HAVING FACT VALUE OF RS. 10 WAS JUSTIFIED? THE APPELLANT PRAYS THAT THE ORDER THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A . O BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN COMMODITIES AND DEALING IN SHARES HAD E - FILED ITS RETURN OF INCOME FOR A.Y 2009 - 10 ON 26.08.2009, DECLARING TOTAL INCOME OF RS.4,711/ - . THE RETURN OF INCOME FILED BY THE AS SESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. ON THE BASIS OF INFORMATION RECEIVED BY THE A.O THAT THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION ISSUED 2 , 90 , 000 EQUITY SHARES OF THE FACE VALUE OF RS.10 / - EACH AGGREGATING TO RS.29,00,000/ - AND FURTHER COLLECTED A SHARE PREMIUM OF RS.3,22,00,000/ - I.E @ RS. 111/ - PER SHARE , THE CASE OF THE ASSESSEE WAS REOPENED UNDER SEC. 147 OF THE ACT. THE ASSESSEE IN COMPLIANCE TO THE NOTICE ISSUED BY THE A.O UNDER SEC. 148 OF THE ACT, REQUESTED THAT ITS ORIGINAL RETURN OF INCOME FILED UNDER SEC. 139(1) BE TREAT E D AS HAVING BEEN FILED IN RESPONSE THERETO. THE COPY OF THE REASONS TO BELIEVE ON THE BASIS OF WHICH THE CASE OF THE ASSESSEE P A G E | 3 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) WAS REOPENED FOR THE YEAR UNDER CONSIDERAT ION AS MADE AVAILABLE TO THE ASSESSEE, READ AS UNDER: 1. THE ASSESSEE HAD FILED RETURN OF INCOME FOR A.Y.2009 - 10 ON 26 . 08.2009 DECLARING TOTAL INCOME AT RS.4711/ - AND THE RETURN WAS PROCESSED ON 0 6.09.2010 U/S 143(1) OF THE IT A CT ACCEPTING THE RETURNED INCOME, DECLARED BY ASSESSEE. 2. INFORMATION WAS RECEIVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ISSUED SHARES AT A PREMIUM UNREASONABLY HIGHER THAN ITS INTRINSIC VALUE OF SHARES IN THE PRECEDING YEAR. 3.1 IT IS OBSERVED FROM THE RETURN OF INCOME OF THE ASSESSEE THAT THE COMPANY WAS INCORPORATED ON 03.02.2009 3.2 DURING THE YEAR UNDE R CONSIDERATION, I.E. ENDING 31. 03 . 2009, THE ASSESSEE ISSUED 2,90,000 EQUITY SHARES OF RS.10 EACH AGGREGATING RS,29,00,000/ - A ND THE SECURITIES PREMIUM COLLECTED THEREON WAS RS.3,22,00,000/ - . THE VALUE OF NEW SHARES ISSUED BY THE ASSESSEE WORKED OUT TO RS.121/SHARE (RS.10 EQUITY SHARES ISSUED AT A PREMIUM OF . RS. 111/ - PER SHARE) 4. FROM THE ABOVE, IT IS CLEAR THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ISSUED 2,90,000 SHARES AT A PREMIUM, UNREASONABLY HIGHER CONSIDERING THE FACT THAT THE THIS IS THE FIRST YEAR OF OPERATION WHEREIN THERE WAS A MEAGER INCOME OF RS.23,000/ - AF TER DEDUCTION OF EXPENSES OF RS. 18,289/ - THERE WAS NET PROFIT OF RS.4711/ - . 5. SINCE THE ASSESSEE HAS NO INCOME DURI NG THE YEAR AND ALSO THIS BEING THE FIRS T YEAR OF OPERATION, THERE IS NO RECORD OF PROFIT EARNING OF THE ASSESSEE AS SUCH, ACCEPTANCE OF SUBSTANTIAL AMOUNT OF SHARE PREMIUM GIVES RISE TO THE LOGICAL CONCLUSION THAT THE SHARE PREMIUM SHOWN BY THE ASSESSEE IS NOT COMMENSURATE WITH THE NET - WORTH OF THE ASSESSEE COMPANY. ALSO THE RECEIPT OF SUCH HIGH PREMIUM IN THE YEAR UNDER CONSIDERATION AND ALLOTMENT OF SHARES AT A HIGHER PREMIUM CAST A SERIOUS DOUBT IN RESPECT OF GENUINENESS OF THE T RANSACTIONS. THEREFORE, THE TRANSACTIONS REPORTED FOR THE YEAR UNDER CONSIDERATION APPEARS TO B E NON - GENUINE WITHIN THE MEANING OF SECTION 68 OF TH E ACT. 6. THE FINANCIAL STATEMENTS 2009 - 10 SHOWS THAT ITS PROFITABILITY PER SHARE W AS VERY SMALL I.E. RS . 0. 01/ - . H E N CE, IT COULD NOT HAVE COMMANDED SUCH A HIGH SECURITY PREMIUM PER SHARE. THIS VIEW ALSO FIND SUPPO RT WITH THE VIEW OF THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF MAJOR METALS LTD. VS. UNION OF INDIA WHEREIN IT HAS BEEN HELD THAT THE P A ST PERFORMANCE OF THE ASSE E SSE COMPANY DID NOT JUSTIFY SUCH HUGE PREMIUM AND THE PURPORTED TRANSACTION WERE N OT GENUINE. P A G E | 4 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) 7. HENCE, AMOUNT RECEIVED BY ISSUE OF EQUITY SHARES AT UNREASONABLY HIGH SECURITIES PREMIUM, IS NOTHING BUT UNACCOUNTED INCOME OF THE ASSESSEE, WHICH IS OTHERWISE CHARGEABLE TO TAX U/S. 6 8 OF THE I. T . ACT, INTRODUCED INTO THE BUSINESS IN THE FORM OF SHARE CAPITAL AND SECURITIES PREMIUM. 8. IN VIEW OF THE ABO VE, I HAVE A REASON TO BELIEVE THAT IN THE CASE OF THE ASSESSEE INCOME IN FORM OF UNREASONABLE SHARE PREMIUM CHARGEABLE TO TAX H A S ESCAPED ASSESSMENT FOR A.Y. 2009 - 10 WITHIN THE MEANING OF SEC. 147 OF THE I.T. ACT AND THEREFORE , IT IS A FIT CASE FOR ISSUE OF NOTICE U/S.148 OF THE I.T. ACT, 1961. THE ASSESSEE FILED HIS OBJECTIONS TO THE REOPEN ING OF ITS CASE UNDER SEC. 147 OF THE ACT, WHICH HOWEVER WERE REJECTED BY THE A.O VIDE HIS LETTER DATED 08.01.2015. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION VIZ. A.Y 2009 - 10 I SSUED 2,80,000 SHARES OF A FACE VALUE OF RS.10 / - EACH AT A PREMIUM OF RS.115/ - PER SHARE , AS UNDER: NAME OF THE COMPANY NO. OF SHARES TO BE ALLOTTED TOTAL AMOUNT PAYABLE AND PAID BY PARTIES (RS.) FACE VALUE PREMIUM BANGUR TRADING PVT. LTD. 80000 800000 9200000 DISCORD EXIM PVT. LTD. 80000 800000 9200000 MRINAL EXIM PVT. LTD. 120000 1200000 13800000 TOTAL 2,80,000 28,00,000 3,22,00,000 THE A.O ON THE BASIS OF THE AFORESAID INFORMATION CALLED UPON THE ASSESSEE TO FURNISH DOCUMENTARY EVIDENCE AS REGARDS THE IDENTITY AND CREDITWORTHINESS OF THE AFOREMENTIONED SHARE APPLICANT S . THE ASSESSEE IN COMPLIANCE TO THE DIRECTIONS OF THE A.O SUBMITTED WITH HIM THE JUSTIFICATION FOR SHARE PREMIUM, COPY OF THE VALUATION REPORT, COPY OF SHARE APPLICATION S, NAMES, ADDRESSES , PAN NUMBERS, COP IES OF BOARD RESOLUTION S , CONFIRMATION S P A G E | 5 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) ALONGWITH THE RESPECTIVE BANK STATEMENTS, BALANCE SHEET S AND RETURNS OF INCOME OF THE INVESTOR COMPANIES . IT WAS THE CLAIM OF THE ASSESSEE THAT ISSUING OF SHARE S AT A PREMIUM WAS A C OMMERCIAL DECISION OF THE BUSINESS OF THE ASSESSEE COMPANY AND INTERFERENCE IN ITS BUSINESS DECISIONS WAS OUTSIDE THE SCOPE OF LAW. THE A.O AFTER DELIBERATING ON THE CONTENTION S ADVANCED BY THE ASSESSEE BEFORE HIM WAS HOWEVER NOT PERSUADED TO BE IN AGREEME NT WITH THE SAME. ON THE BASIS OF THE DETAILS MADE AVAILABLE ON RECORD BY THE ASSESSEE , IT WAS OBSERVED BY THE A.O THAT THE FACTS PROJECTED BY THE ASSESSEE COULD NOT BE ACCEPTED FOR THE FOLLOWING REASONS: I ASSESSEE HAS NOT PROVIDED ANY JUSTIFICATION AND SUPPORTING SHOWING PROMOTER'S RELEVANT INDUSTRY EXPERIENCE OR ANY TRACK RECORD TOWARDS MANAGING SUCCESSFUL BUSINESS(ESS). II. NO JUSTIFICATION MADE AVAILABLE IN RECORD TOWARDS HEAVY PREMIUM COMPARABLE WITH INDUSTRY. [ III. FURTHER IT MAY BE NOTED THAT COMPANY HAS NOT PROVIDED ANY PROJECTIONS IN IT VALUATION REPORT FOR F.Y 2010 - 11 WHEREAS THEY HAVE ISSUED SHARES IN FY 2008 - 09. IV. ITS PROJECTION COMPARABLE WITH ACTUAL RESULT FOR ASSESSMENT YEAR 2012 - 13 AND 2013 - 14 TO SUPPORT HEAVY PREMIUM. V. DETAILS OF ALL THE 3 PARTIES SUBMITTED BY THE ASSESSEE ON THE SAME COMPUTER GENERATED PAPER. ALL THE 3 PARTIES DON'T HAVE THE PROPER LETTERHEAD OF THE COMPANY. VI. ASSESSEE COULD NOT PRODUCE ANY OF THE MEMBERS OR AUTHORIZED PERSON OF THE ABOVE 3 PARTIES WHO MA DE INVESTMENT AT HEAVY PREMIUM. THOUGH ALL THOSE PARTIES ALREADY HAD THEIR OWN INTEREST AS THEY HAD THEIR INVESTMENT. FURTHER, ASSESSEE FAIL TO FURNISH THE VALU ATION AND JUSTIFICATION FOR HIGH PREMIUM OF SHARES. THE A.O AFTER NECESSARY DELIBERATIONS WAS ALSO NOT IMPRESSED WITH THE CREDITWORTHINESS OF THE AFORESAID SUBSCRIBER COMPANIES . THE FINANCIAL CREDENTIALS OF THE SAID SUBSCRIBER COMPANIES, AS GATHERED BY T HE A.O ON A PERUSAL OF THEIR RESPECTIVE BALANCE SHEETS, EMERGED AS UNDER: PARTICULARS BANGUR TRADING PVT. LTD. DISCORD EXIM PVT. LTD. MRINAL EXIM PVT. LTD. EQUITY AND LIABILITIES SHARE CAPITAL 29,00,000 29,00,000 29,00,000 P A G E | 6 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) PROFIT AND LOSS 3,711 3,884 3,211 SECURITIES PREMIUM 32200000 32200000 32200000 CURRENT AND NON - CURRENT LIABILITIES 3,309 3,309 3,309 TOTAL 351,07,020 351,07,193 351,06,520 ASSETS NON - CURRENT ASSETS 35000000 35000000 35000000 CURRENT ASSETS 47,100 47273 46600 MIS S. EXPENSES 59,920 59920 59920 TOTAL 35107020 35107193 35106520 IT WAS FURTHER OBSERVED BY THE A.O THAT THE I NVEST OR COMPANIES HAD SHOWN MEAGRE INCOME IN THEIR RESPECTIVE RETURNS OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. (I). M/S BANGUR TRADING PVT. LTD: RS. 3,711/ - ; (II). M/S DISCORD EXIM PVT. LTD. : RS. 3,884/ - ; AND (III). M/S MRINAL EXIM PVT. LTD. : RS. 3,211/ - . ON THE BASIS OF THE FACTS MADE AVAILABLE ON RECORD BY THE ASSESSEE , IT WAS FURTHER OBSERVED BY THE A.O THAT NEITHER OF THE INVEST OR C OMPANIES HAD THEIR OWN FUNDS AND HAD MADE INVESTMENTS WITH THE ASSESSEE COMPANY FROM BORROWED FUNDS OR SHARE CAPITAL RECEIVED BY THEM . STILL FURTHER, THE A.O WAS OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE FACT THAT THE ASSESSEE COMPANY HAD NEITHER IN THE YEAR UNDER CONSIDERATION NOR IN THE PAST YEARS HAD ANY INCOME, THUS THE ISSUANCE OF THE SHARES BY IT AT A HIGH PREMIUM WAS BEYOND COMPREHENSION. ON THE BASIS OF THE AFORESAID FACTS, THE A.O FURTHER OBSERVING THAT THE INVEST OR COMPANIES WERE NEITHER CARRYING ON ANY BUSINESS ACTIVITIES NOR HAD ANY ACCUMULATED RESERVES, BUT RATHER HAD IN ITSELF RECEIVED SECURITY PREMIUM, THUS CONCLUDED P A G E | 7 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) THAT THEY HAD MERELY ACTED AS A CONDUIT CHANNEL TO PASS ON THE UNEXPLAINED MONEY. THE A.O ON THE BASIS OF HIS AFORESAI D DELIBERATIONS , HOLDING A CONVICTION THAT THE ASSESSEE HAD FAILED TO SUBMIT EVIDENCE TO ESTABLISH THE NATURE AND SOURCE OF THE FUNDS OF RS.3,50,00,000/ - , ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE UNDER SEC.68 OF THE ACT. 4. AGGRIEVED, THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE BEFORE HIM IN THE BACKDROP OF THE FACTS AVAILABLE ON RECORD, OBSERVED THAT THE ASSESSEE HAD PROVIDED THE PAN DETAILS , COPIES OF THE INCOME TAX RETURN S , COP IES OF BANK ACCOUNT S AND OTHER NECESSARY DETAILS IN RESPECT OF THE SUBSCRIBER S OF THE EQUITY SHARES. THE CIT(A) FURTHER OBSERVING THAT AS THE A. O HAD NOT POINTED OUT ANY DISCRE PANCY IN THE BALANCE SHEET S OF THE INVESTOR COMPANIES , THEREFORE WAS NOT PERSUADED TO SUBSCRIBE TO HIS CLAIM THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE CREDITWORTHINESS OF THE SHARE APPLICANT S. ON THE BASI S OF HIS AFORESAID OBSERVATIONS THE CIT(A) DELETED THE ADDITION OF RS.3,50,00,000/ - AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HA S CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) AT THE VERY OUT SET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE FACT THAT THE RESPECTIVE INVEST OR COMPANIES HAD MADE PAYMENT S OF THE SHARE APPLICATION MONEY AND SHARE PREMIUM BY CHEQUES COULD NOT BE CONSTRUED AS SACROSANCT EVIDENCE. THE LD. D.R IN SUPPORT OF HIS AFORE SAID CONTENTION RELIED ON THE ORDER PASSED BY THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD (1994) 208 ITR 465 (CAL). IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT THE ASSESSEE HAD ALSO FAILED TO SUBSTANTIATE THE CREDITWORTHINESS OF THE SAID RESPECTIVE COMPANIES. IT WAS FURTHER AVERRED BY THE LD. D.R THAT THE ASSESSEE COULD NOT JUSTIFY THE BASIS FOR CHARGING OF THE HIGH S HARE PREMIUM. ON THE BASIS OF HIS AFORESAID CONTENTION S, IT WAS THE CLAIM OF THE LD. D.R THAT THE CIT(A) ERRED IN VACATING THE WELL REASONED ORDER PASSED BY THE A.O AND HAD WRONGLY DELETED THE ADDITION OF P A G E | 8 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) RS.3,50,00,000/ - MADE BY HIM. PER CONTRA, THE LD. A UTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE SUBMITTED THAT AS THE ASSESSEE HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDING DULY SUBSTANTIATED ALL THE THREE INGREDIENTS CONTEMPLATED UNDER SEC. 68 OF THE ACT , VIZ. (I) IDENTITY OF THE SHARE SUBSCRIBERS; (II) CREDITWORTHINESS OF THE SHARE SUBSCRIBER S ; AND (III) GENUINENESS OF THE TRANSACTION , THEREFORE, THE SAME COULD NOT BE ASSESSED AS AN UNEXPLAINED CASH CREDIT IN ITS HANDS . IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT ALL OF THE SAID RESPE CTIVE INVESTOR COMPANIES HAD FURNISHED THEIR REPLIES IN RESPONSE TO THE NOTICE S WHICH WERE SENT TO THEM BY THE A.O UNDER SEC. 133(6) OF THE ACT. THE LD. A.R FURTHER VEHEMENTLY SUBMITTED THAT THE A.O HAD WRONGLY OBSERVED THAT THE ASSESSEE HAD FAILED TO PROD UCE BEFORE HIM THE MEMBERS OR THE AUTHORIZED PERSON OF THE INVESTOR COMPANIES. IT WAS SUBMITTED BY THE LD. A.R THAT AT NO STAGE DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS EVER CALLED UPON BY THE A.O TO PRODUCE THE MEMBERS OR THE AUTHO RIZED PERSON OF EITHER OF THE AFORESAID THREE INVESTOR COMPANIES. THE LD. A.R FURTHER SUBMITTED THAT THE ASSESSEE HAD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS PLACED ON RECORD A VALUATION REPORT WHICH DULY JUSTIF IED THE BASIS FOR CHARGING OF THE SHARE PREMIUM BY THE ASSESSEE COMPANY . IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O HAD AT NO STAGE EVER DISPUTED THE VALUATION REPORT AS WAS PLACED ON HIS RECORD. THE LD. A.R VEHEMENTLY SUBMITTED THAT THE ADDITION WAS CLEARL Y PRE - EMPTED AND HAD NO LEGS TO STAND UPON. ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE IDENTITY OF THE SHARE APPLICANT COMPANIES WAS ESTABLISHED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THEREFORE, IF THE SAID COMPANIES WERE STILL TO BE HELD BY THE REVENUE AS BOGUS SHAREHOLDERS, THEN THOUGH IT WAS OPEN FOR THE A.O TO PROCEED WITH AND REOPEN THE ASSESSMENT OF THE SAID SHAREHOLDER S AND ASSESS THE AMOUNT TO TAX IN ACCORDANCE WITH LAW IN THEIR HANDS, HOWEVER THE SAME COULD NOT BE ASSESSED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE COMPANY. THE LD. A.R TO DRIVE HOME HIS AFORESAID CONTENTION PLACED RELIANCE ON THE JUDGMENT OF THE H ONBLE HIGH COURT OF BOMBAY IN THE CASE OF COMMISSIONER OF INCOME TAX - (1) VS. M/S GAGANDEEP INFR ASTRUCTURE P A G E | 9 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) PVT. LTD. ( 2017) 394 ITR 680 (BOM). THE LD. A.R FURTHER SUBMITTED THAT AS THE ASSESSEE COMPANY HAD DULY PRODUCED SUBSTANTIAL DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE INVEST OR COMPANIES AND THE GENUINENESS OF THE TRANSACTIONS , THEREFORE, THE BURDEN SHIFTED ON THE REVENUE AUTHORITIES TO DISPROVE AND DISLODGE THE SAID CLAIM OF THE ASSESSEE. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION TOOK SUPPORT OF THE JUDGMENT OF THE HONBLE HIGH COURT OF BO MBAY IN THE CASE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, PANAJI VS. M/S PARADISE INLAND SHIP P ING PVT. LTD. ( 2018) 400 ITR 439 (BOM) . THE LD. A.R ALSO RELIED ON THE ORDER OF A COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT MUMBAI BENCH H, MUMBAI, IN THE CASE OF DY. CIT - 1(1)(1) MUMBAI VS. M/S ALCON BIOSCIENCE P VT . LTD. (ITA NO. 1946/MUM/2016, DATED 28.02.2018 ) . THE LD. D.R IN HIS REJOINDER REBUTTED THE CASE LAW S RELIED UPON BY THE COUNSEL FOR THE ASSESSEE. TH E LD. D.R TAKING SUPPORT OF THE JUDGMENT OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. SUMATI DAYAL (1995) 214 ITR 801 (SC), SUBMITTED THAT THE FACTS BORNE FROM THE RECORDS IN THE CASE OF THE PRESENT ASSESSEE, ON BEING VIEWED IN THE BACKDROP OF THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY , CLEARLY REVEALED T HE FALSITY OF THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED THE AFORESAID AMOUNT BY WAY OF SHARE APPLICATION MONEY AND SHARE PREMIUM FROM THE AFOREMENTIONED COMPANIES . THE LD. D.R TAKING SUPPORT OF THE ORDER OF THE ITAT, KOLKATA C BENCH , KOLK A TA IN THE CASE OF ADVANCE POWER INFRA T ECH LIMITED VS. DY. CIT, CIRCLE - 8, KOLKATA (ITA NO. 605/KOL/2015, DATED 23.08.2017 ) SUBMITTED THAT THE ASSESSEE HAD NOT EVEN ATTEMPTED TO JUSTIFY THE AMOUNT OF SHARE PREMIUM OF RS.11 5 / - PER SHARE IN RESPECT OF THE SHARE S OF THE FACE VALUE OF RS.10/ - EACH. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT THE ASSESSEE HAD ALSO FAILED TO PLACE ON RECORD ANY DOCUMENTARY EVIDENCE WHICH COULD REVEAL THE ACTIVIT IES OF THE AFOREMENTIONED THREE INVEST OR COMPANIES . THE LD. D.R ON THE BASIS OF HIS AFORESAID CONTENTIONS SUBMITTED THAT THE AMOUNT OF RS. 3,50,00,000/ - PROJECTED BY THE ASSESSEE COMPANY AS HAVING BEEN RECEIVED BY WAY OF SHARE APPLICATION MONEY AND SHARE PREMIUM FROM THE AFOREMENTIONED COMPANIES, IN THE TOTALITY OF THE FACTS WAS AFTER NECESSARY DELIBERATIONS RIGHTLY ASSESSED BY THE A.O AS AN P A G E | 10 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) UNEXPLAINED CASH CREDIT UNDER SEC. 68 OF THE ACT. IT WAS AVERRED BY THE LD. D.R THAT AS THE CIT(A) HAD ERRED IN VACATING THE ADDITION OF RS. 3,50,00,000/ - MADE BY THE A.O ON THE BASIS OF A WELL REA SONED ORDER , HENCE THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE A.O BE RESTORED. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE REVENUE BY FILING THE PRESENT APPEAL H AS SOUGHT OUR INDULGENCE FOR ADJUDICATING THE VALIDITY OF THE DELETION BY THE CIT(A) OF THE ADDITION OF RS.3,50,00,000/ - THAT WAS MADE BY THE A.O UNDER SEC.68 OF THE ACT. WE FIND THAT THE ASSESSEE BY ISSU ING 2 , 8 0 ,000 SHARES OF A FACE VALUE OF RS. 10 / - EACH AT A PREMIUM OF RS.11 5 / - PER SHARE, HAD RECEIVED AN AMOUNT AGGREGATING TO RS.3,50,00,000/ - . THE A.O BEING OF THE VIEW THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE SHARE A PPLICA NTS A S WELL AS THE GENUINENESS OF THE TRANSACTION S UNDER CONSIDERATION , HAD THUS BROUGHT THE AFORESAID AMOUNT OF RS.3,50,00,000/ - TO TAX AS AN UNEXPLAINED CASH CREDIT UNDER SEC.68 IN THE HANDS OF THE ASSESSEE. HOWEVER, T HE CIT(A) NO T BEING PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE A.O HAD DELETED THE ADDITION OF RS.3,50,00,000/ - 7. WE HAVE DELIBERATED AT LENGTH ON THE MATERIAL AVAILABLE ON RECORD AND FIND THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED SHARE CAPITAL AN D SHARE PREMIUM FROM THREE INVEST OR COMPANIES, VIZ. (I) BANGUR TRADING PVT. LTD.(RS.1,00,00,000/ - ); (II) DISCORD EXIM PVT. LTD. (RS.1,00,00,000/ - ); AND (III) MRINAL EXIM PVT. LTD. (RS.1,50,00,000/ - ). THE AFORESAID AMOUNT AGGREGATING TO RS.3,50,00,000/ - WAS RECEIVED BY THE ASSESSEE FROM THE INVEST OR COMPANIES ON ACCOUNT OF APPLICATION/ALLOTMENT MONEY FOR 2,80,000 FULLY PAID UP EQUITY SHARES OF A FACE VALUE OF R S . 10/ - EACH AT A PREMIUM OF RS.115/ - PER SHARE . WE FIND THAT THE ASSESSEE DURING THE COURSE OF THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES HAD PRODUCED THE BANK STATEMENTS , WHICH CLEARLY SUBSTANTIATED THE FACT THAT THE AMOUNTS FROM THE INVESTOR COMPANIES WERE RECEIVED THROUGH BANKING CHANNELS. RATHER , A PERUSAL OF THE ORDER PASSED BY THE A.O REVEALS THAT THE RELEVANT P A G E | 11 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) EXTRACTS OF THE BANK STATEMENT S WERE ALSO PROCURED BY THE A.O U NDER SEC.133(6) FROM THE AFOREMENTIONED INVEST OR COMPANIES. WE THUS , FIND OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT AS THE CREDIT AND DEBIT ENTRIES WERE CLEARLY REFLECTED IN THE BANK STATEMENT S OF BOTH THE PARTIES AND THE TRANSACTIONS WERE CARRIED OUT THROUGH CHEQUES, THEREFORE, THE GENUINENESS OF TRANSACTIONS CANNOT BE DOUBTED AND THE ONUS AS REGARDS P ROVING THE SAME STOOD DULY DISCHARGED BY THE ASSESSEE. WE FURTHER FIND FROM A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES , THAT THE AFORESAID INVEST OR COMPANIES WERE REGULARLY FILING THEIR RETURNS OF INCOME. RATHER, THE CASE OF ONE OF THE INVEST OR COMPA NY VIZ. M/S DISCORD EXIM PVT. LTD. FOR A.Y 2009 - 10 WAS SELECTED FOR SCRUTINY ASSESSMENT BY THE ITO - 1(1)(2), MUMBAI AND AN ORDER UNDER SEC. 143(3)/147 OF THE ACT WAS PASSED ON 28.03.2015. WE FIND THAT THE ASSESSEE HAD PLACED ON RECORD OF THE LOWER AUTHORITI ES THE COPY OF THE ASSESSMENT ORDER PASSED IN THE CASE OF M/S DISCORD EXIM PVT. LTD. FOR A.Y 2009 - 10 , AS WELL AS THE COPIES OF THE LATEST INTIMATION S ISSUED UNDER SEC. 143(1) OF THE ACT IN THE CASE OF THE OTHER TWO COMPANIES VIZ. (I) M/S BANGUR TRADING PVT . LTD. ; AND (II) M/S MRINAL EXIM PVT. LTD. FOR A.Y 2013 - 14 AND A.Y 2014 - 15. WE FURTHER FIND THAT ALL OF THE AFORESAID THREE INVEST OR COMPANIES WERE REGULARLY FILING THEIR RETURNS WITH THE REGISTRAR OF COMPANIES. ON THE BASIS OF THE AFORESAID FACTS , WE ARE OF THE CONSIDERED VIEW THAT THE IDENTITY OF THE AFOREMENTIONED INVEST OR COMPANIES VIZ. (I) M/S BANGUR TRADING PVT. LTD; (II) M/S DISCORD EXIM PVT. LTD; AND (III) M/S MRINAL EXIM PVT. LTD. STANDS CLEARLY PROVE D BEYOND ANY SCOPE OF DOUBT . 8. WE SHALL NOW ADVERT TO THE ADVERSE INFERENCES DRAWN BY THE A.O AS REGARDS THE CREDITWORTHINESS OF THE AFORESAID THREE INVEST OR COMPANIES. WE FIND THAT THE A.O HAD DOUBTED THE CREDITWORTHINESS OF THE INVEST OR COMPANIES MAINLY ON TWO GROUNDS VIZ. ( I) THAT A PERUSAL OF T HE INCOME RETURNED BY THE SAID COMPANIES F OR A.Y 2009 - 10 I.E. BANGUR TRADING PVT. LTD. : RS.3,711/ - ; DISCORD EXIM PVT. LTD. RS.3,844/ - ; AND MRINAL EXIM PVT LTD. : RS.3,211/ - , DID NOT INSPIRE ANY CONFIDENCE AS REGARDS THEIR FINANCIAL CREDIBILITY; AND (II) THE SAID INVEST OR COMPANIES DID NOT HAVE THEIR OWN FUNDS AND HAD MADE THE INVESTMENTS WITH THE ASSESSEE C OMPANY EITHER ON THE P A G E | 12 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) BASIS OF BORROWED FUNDS O R SHARE PREMIUM RECEIVED BY THEM FROM OTHER COMPANIES. WE HAVE DELIBERATED ON THE AFORESAID OBSERVATIONS OF THE A.O , AND ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE VIEW ARRIVED AT BY HIM AS REGARDS THE CREDITWORTHINESS OF THE INVEST OR COMPANIES . WE FIND THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS NOT ONLY THE ASSESSEE HAD FURNISHED WITH THE A.O THE COMPLETE NAME S AND ADDRESSES OF THE INVEST OR COMPANIES, BUT RATHER THE SAID RESPECTIVE COMPANIES IN COMPLIANCE TO NOTICES ISSUED TO THEM BY THE A.O UNDER SEC.133(6) OF THE ACT, HAD PLACED ON HIS RECORD THE COPIES OF THE ACKNOWLEDGMENT SLIP S OF THEIR RETURNS OF INCOME FOR A.Y 2009 - 10 , COPIES OF COMPUTATION OF INCOME, COPIES OF AUDIT REPORT AND AUDITED BALANCE SHEET AS ON 31.03.2009 , COPIES OF RELEVANT EXTRACT OF THEIR BANK STATEMENTS, COPIES OF ACCOUNT OF THE ASSESSEE COMPANY IN THEIR BOOKS OF ACCOUNT AND THE COP IES OF BOARD RESOLUTION ALONGWITH OFFER AN D ALLOTMENT LETTER. RATHER, FROM A PERUSAL OF THE ORDER PASSED BY THE A.O , IT EMERGES THAT HE HAD WHILE FRAMING THE ASSESSMENT OBSERVED THAT THE AUDITED BALANCE SHEET S OF THE AFOREMENTIONED TH REE INVEST OR COMPANIES DID NOT REVEAL ANY BORROWINGS AS ON 31.03.2010. WE FURTHER FIND FROM A PERUSAL OF THE ASSESSMENT ORDER THAT THE A.O HAD CATEGORICALLY OBSERVED THAT THE NET WORTH OF THE EACH OF THE INVEST OR COMPANY WAS IN EXCESS OF RS.3,50,00,000/ - , WHILE FOR THE CORRESPONDING INVESTMENT IN THE ASSESSEE COMPANY BY EACH OF THE M WAS LESS THAN OR EQUAL TO RS.1,50,00,000/ - . WE THUS , ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTS , IT CAN SAFELY BE CONCLUDED THAT THE AFOREMENTIONED THREE INVEST OR COMPANIES HAD SUFFICIENT CREDITWORTHINESS FOR MAKING THE RESPECTIVE INVESTMENTS IN THE ASSESSEE COMPANY . 9. WE ARE FURTHER UNABLE TO FIND OURSELVES TO SUBSCRIBE TO THE ADVERSE INFERENCES DR AWN BY THE A.O , ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PRODUCE BEFORE HIM ANY OF THE MEMBERS OR AUTHORIZED PERSON S OF THE AFOREMENTIONED THREE INVEST OR COMPANIES. WE FIND FROM A PERUSAL OF THE ORDER OF THE CIT(A) THAT THE ASSESSEE COMPANY WAS NEVER ASKED TO PRODUCE EITHER OF THE AFORESAID INVESTOR COMPANIES BEFORE THE A.O. DURING THE COURSE OF THE APPELLATE PROCEEDINGS , THE CIT(A) IN ORDER TO VERIFY THE FACTUAL P A G E | 13 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) POSITION, HAD CALLED FOR AND PERUSED THE ASSESSMENT RECORDS IN THE PRESENCE OF THE A.O . ON THE BASIS OF THE AFORESAID VERIFICATIONS, IT WAS OBSERVED BY THE CIT(A) THAT THE A.O HAD AT NO OCCASION DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, EITHER BY WAY OF ANY ORDER SHEET ENTRY OR A LETTER EVER DIRECTED THE ASSESSEE TO PRODUCE THE MEMBERS O R AUTHORIZED PERSONS OF EITHER OF THE AFOREMENTIONED THREE INVESTOR COMPANIES. WE MAY HEREIN OBSERVE , THAT THE LD. A.R HA D DURING THE COURSE OF THE HEARING OF THE APPEAL BEFORE US VEHEMENTLY STRESS ED ON THE SAID FACTUAL POSITION TO DISLODGE THE SAID PERVER SE OBSERVATION OF THE A . O . THE LD. D.R DID NEITHER CONTROVERT THE SAID CONTENTION OF THE COUNSEL FOR THE ASSESSEE, NOR PRODUCE D BEFORE US ANY SUCH MATERIAL WHICH COULD PERSUADE US TO HOLD OTHERWISE. WE THUS , IN THE BACKDROP OF THE AFORESAID FACTS ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD DULY SUBSTANTIATED THE GENUINENESS OF THE TRANSACTION AS WELL AS THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS OF THE SHARES. WE THUS IN TERMS OF OUR AFORESAID OBSERVATIONS, ARE PERSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT AS ALL THE THREE INGREDIENTS CONTEMPLATED UNDER SEC. 68 H AD DULY BEEN SATISFIED BY THE ASSESSEE, HENCE THE AMOUNT OF RS.3,50,00,000/ - RECEIVED BY THE ASSESSEE COMPANY FR OM THE SHARE SUBSCRIBER COULD NOT HAVE BEEN BROUGHT TO TAX IN ITS HANDS AS AN UNEXPLAINED CASH CREDIT. 10. ALTERNATIVELY, WE ARE OF THE CONSIDERED VIEW THAT EVEN OTHERWISE AS THE ASSESSEE HAD DULY SUBSTANTIATED THE FACT THAT IT HAD RECEIVED THE SHARE APPL ICATION MONEY FROM THE AFOREMENTIONED THREE INVEST OR COMPANIES THROUGH BANKING CHANNELS, THEREFORE, IN CASE THE A.O STILL WAS OF THE VIEW THAT THE SAME WAS RECEIVED BY THE ASSESSEE FROM BOGUS SHAREHOLDERS, THEN THOUGH IT WAS OPEN FOR HIM TO HAVE PROCEEDED WITH AND ASSESSED THE SAID AMOUNT IN THE HANDS OF THE SAID RESPECTIVE SHAREHOLDER S IN ACCORDANCE WITH LAW, BUT HE WAS NOT ENTITLED TO ADD THE SAME AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. WE FIND THAT OUR AFORESAID VIEW STANDS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT - (1) VS. M/S GAGANDEEP INFRASTRUCTURE PVT. LTD. (2017) 394 ITR 680 (BOM). WE THUS , IN TERMS OF OUR AFORESAID OBSERVATIONS , FINDING NO INFIRMITY IN THE ORDER P A G E | 14 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) OF THE CIT(A) , THEREFORE , UPHOLD HIS ORDER DELET ING THE ADDITION OF RS.3,50,00,000/ - MADE BY THE A.O 11. THE APPEAL FILED BY THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA NO. 5754/MUM/2016 AY. 2009 - 10 12. WE SHALL NOW ADVERT TO THE APPEAL FILED BY THE ASSESSEE. THE ASSESSEE HA S ASSAILED THE ORDER OF THE CIT(A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE LAW THE LD. AO HAS ERRED IN REOPENING THE ASSESSMENT OF THE ASSESSEE COMPANY U/S 148 OF THE ACT, AND CIT(A) - 16, MUMBAI HAS ERRED IN CONFIRMING THE REOPENING THE ASSESSMENT OF THE ASSESSEE COMPANY U/S 148 OF THE ACT . 2. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR SUBTRACT ANY GROUND OF APPEAL AT ANY STAGE OF HEARING. 13 . BRIEFLY STATED, AS OBSERVED BY US HEREINABOVE , THE RETURN OF INCOME FILED BY THE ASSESSEE WAS INITIALLY PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. THE CASE WAS SUBSEQUENTLY REOPENED UNDER SEC. 14 7 AND ASSESSMENT WAS FRAMED BY THE A.O UNDER SEC.143(3) R.W.S. 147 OF THE ACT , VIDE HIS ORDER DATED 30.03.2015 . 1 4 . THAT AS OBSERVED BY US HEREINABOVE , THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION ISSUED 2,80,000 SHARES OF A FACE VALUE OF RS. 10/ - AT A PREMIUM OF RS. 115/ - PER SHARE. WE FIND FROM A PER USAL OF THE REASONS TO BELIEVE, THAT T HE GENESIS OF REOPENING OF THE CASE OF THE ASSESSEE WAS THE BONAFIDE BELIEF OF THE A.O THAT THE ACCEPTANCE OF THE SUBSTANTIAL AMOUNT OF SHARE PREMIUM BY THE ASSESSEE COMPANY, WHICH WAS INCORPORATED AT THE FAG END OF TH E YEAR UNDER CONSIDERATION ITSELF I.E ON 03.02.2009 AND HAD NO RECORD PROFIT EARNING, GAVE RISE TO A LOGICAL CONCLUSION THAT THE SHARE PREMIUM SHOWN WAS NOT COMMENSURATE WITH THE NET WORTH OF THE ASSESSEE COMPANY. RATHER, THE A.O FORTIFIED HIS AFORESAID BE LIEF BY RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MAJOR METALS LTD. VS. UNION OF INDIA (2013) 359 ITR 450 (BOM). P A G E | 15 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) 15. THE LD. A.R ASSAILING THE VALIDITY OF THE REOPENING , HAD SUBMITTED BEFORE US THAT THE REASONS TO BELIEVE ON THE BASIS OF WHICH THE CASE OF THE ASSESSEE WAS REOPENED DID NOT MAKE ANY MENTION OF THE SOURCE FROM WHICH THE AFORESAID INFORMATION PROMPTING THE REOPENING WAS RECEIVED BY HIM . IT WAS AVERRED BY THE LD. A.R THAT THE COMPLETE DETAILS AS REGARDS ISSUANC E OF 2,80,000 EQUITY SHARES OF THE FACE VALUE OF RS.10 / - EACH AT A SHARE PREMIUM OF RS.115/ - PER SHARE WAS ALREADY DISCLOSED BY THE ASSESSEE , AND WAS CLEARLY DISCERNIBLE ON A PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE COMPANY ENCLOSED ALONGWITH ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2009 - 10 . IT WAS THE CONTENTION OF THE LD. A.R THAT NOW WHEN THE COMPLETE DETAILS HAD ALREADY BEEN DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME, THEREFORE, IT WAS NOT PERMISSIBLE FOR THE A.O T O HAVE REOPEN ED THE CASE OF THE ASSESSEE IN ORDER TO FACILITATE CARRYING OUT OF FISHING AND ROVING INQUIRIES. THE LD. A.R IN SUPPORT OF HIS AFORESAID CONTENTION RELIED ON THE JUDGMENT OF THE HIGH COURT OF GUJARAT IN THE CASE OF PRINCIP A L COMMISSIONER OF IN COME TAX - 5 VS. MANZIL DINESH KUMAR SHAH (TAX APPEAL NO. 451 OF 2018, DATED 07.05.2018 ) . PER CONTRA, THE LD. D.R SUBMITTED THAT AS THE A.O ON THE BASIS OF INFORMATION RECEIVED BY HIM HAD ARRIVED AT A BONAFIDE BELIEF THAT THE INCOME OF THE ASSESSEE CHARGEABL E TO TAX HAD ESCAPED ASSESSMENT, THEREFORE, THE REOPENING OF ITS CASE WAS VALIDLY CARRIED OUT BY HIM AND NO INFIRMITY DID EMERGE FROM THE SAME. THE LD. D.R IN SUPPORT OF HIS AFORESAID CONTENTION , RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE C ASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD.( 2007) 291 ITR 500 (SC) AND THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF AMIN S. PATHOLOGY LABORATORY VS. P. N. PRASAD, JCIT (2001) 252 ITR 673 (BOM). 16 . WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE PERUSED THE COP Y OF THE REASONS TO BELIEVE ON THE BASIS OF WHICH THE CASE OF THE ASSESSEE WAS REOPENED. WE ARE OF THE CONSIDERED VIEW THAT AS AVERRED BY THE LD. A.R , THE FACT THAT THE ASSESSEE COMPANY HAD ISSUED 2,80,000 EQUITY SHARES OF THE FACE VALUE OF RS.10 / - EACH AT A PREMIUM OF RS.11 5 / - PER SHARE , AND RECEIVED AN AMOUNT OF RS. P A G E | 16 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) 3,50,00,000/ - DURING THE YEAR UNDER CONSIDERATION, WAS DULY DISCLOSED AND WAS DISCERNIBLE FROM THE BALANCE SHEET OF THE ASSESSEE COMPANY ENCLOSED ALONG WITH ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. A. Y. 2009 - 10. WE HAVE DELIBERATED ON THE REASONS TO BELIEVE AND FIND FROM A PERUSAL OF THE SAME THAT IN SUM AND SUBSTANCE, THE A.O HOLDING A BONAFIDE BELIEF THAT THE ACCEPTANCE OF THE SUBSTANTIAL AMOUNT OF RS. 3,50,00,000/ - TOWARDS SHARE APPLICATION MONEY AND SHARE PREMIUM BY THE ASSESSEE COMPANY, WHICH WAS INCORPORATED AT THE FAG END OF THE YEAR UNDER CONSIDERATION ITSELF I.E ON 03.02.2009 AND HAD NO RECORD PROFIT EARNING, GAVE RISE TO A LOGICAL CONCLUSION THAT THE SAME WAS NOT COMMENSURATE WITH THE NET WO RTH OF THE ASSESSEE COMPANY. ON THE BASIS OF THE AFORESAID DELIBERATIONS, THE A.O HOLDING A BONAFIDE BELIEF THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THUS REOPENED THE SAME UNDER SEC. 147 OF THE ACT. 17. WE HAVE GIVEN A THO UGHTFUL CONSIDERATION TO THE FACTS BEFORE US AND ARE OF THE CONSIDERED VIEW THAT AS THE FORMATION OF BELIEF ON THE PART OF THE A.O WAS CLEARLY BACKED BY THE MATERIAL AVAILABLE ON RECORD , THEREFORE, THE SAME CANNOT BE FAULTED WITH. IN THIS REGARD , IT WOULD BE RELEVANT TO OBSERVE THAT THE FORMATION OF A BONAFIDE BELIEF ON THE PART OF THE A.O ONLY PRESUPPOSES THE EXISTENCES OF AN INEXTRICABLE NEXUS WITH THE MATERIAL AVAILABLE ON RECORD , WHICH WOULD JUSTIFY FORMATION OF THE BELIEF BY THE A.O THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. WE MAY HEREIN OBSERV E, THAT IN NO WAY THE A.O IS REQUIRED TO CONCLUSIVELY PROVE AT THE STAGE OF REOPENING OF THE ASSESSMENT THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSES SMENT . R ATHER , WHAT ALL THAT IS REQUIRED IS A BONAFIDE BELIEF ON THE PART OF THE A.O ARRIVED AT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD , JUSTIFYING THE FORMATION OF SUCH BELIEF. WE MAY FURTHER OBSERVE , THAT THOUGH THE EXISTENCE OF A NEXUS BETWEEN THE FORMATION OF BELIEF AND THE MATERIAL AVAILABLE ON RECORD IS OPEN FOR SCRUTINY BY THE APPELLATE AUTHORITY, HOWEVER, QUALITATIVE ASPECT OF THE BELIEF ARRIVED AT BY THE A.O CANNOT BE LOOKED INTO IN THE COURSE OF THE APPELLATE PROCEEDINGS. WE HAVE PERUSED THE REASONS TO BELIEVE AND FIND THAT THE A.O TAKING SUPPORT OF P A G E | 17 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF MAJOR METAL LTD. VS. UNION OF INDIA (2013) 359 ITR 450 (BOM) , HAD A VALID REASON TO BELIEVE THAT AS THE PAST PERFORMANCE OF THE ASS ESSEE COMPANY DID NOT JUSTIFY THE SHARE PREMIUM OF RS.11 5/ - PER SHARE RECEIVED BY THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION, THEREFORE, THERE WAS EVERY REASON TO BELIEVE THAT THE SAID TRANSACTION WAS NOT GENUINE. WE THUS , IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO PERSUADE OURSELVES TO BE IN AGREEMENT WITH THE CLAIM OF THE LD. A.R THAT THE A.O HAD WRONGLY ASSUME D JURISDICTION TO REOPEN THE CASE OF THE ASSESSEE UNDER SEC.14 7 OF THE ACT. WE ARE OF THE CONSID ERED VIEW THAT THE A.O REMAINING WELL WITHIN THE REALM OF HIS JURISDICTION , HAD RIGHTLY REOPEN ED THE CASE OF THE ASSESSEE UNDER SEC.147 OF THE ACT. 18 . WE THUS , NOT FINDING OURSELVES TO BE IN AGREEMENT WITH THE CLAIM OF THE ASSESSEE THAT THE A.O HAD WRONGL Y ASSUMED JURISDICTION AND REOPENED THE CASE OF THE ASSESSEE UNDER SEC. 147 OF THE ACT, DISMISS THE APPEAL FILED BY THE ASSESSEE. 19 . TH AT THE APPEAL FILED BY THE ASSESSEE I.E. ITA NO. 5754/MUM/2016 AND THAT FILED BY THE REVENUE I.E. ITA NO. 5183/MUM/2016 ARE DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 29 . 06.2018 SD/ - SD/ - (G.S.P ANNU ) (R AVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 29 .06.2018 PS. ROHIT P A G E | 18 ITA NOS. 5754 & 5183/MUM/2016 A.Y. 2009 - 10 M/S ANUSHA TRADING PVT. LTD. VS. ITO - 9(1)(3) * / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI