ITO 9(2)(1), MUMBAI V. BANAS FIANCE LTD, MUMBAI

ITA 5952/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6632 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 20-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Retrospective amendment; Valuation report; Onus to prove; Sham transactions; Set aside
• Section: 271(1)(c); 143(3); 133(6); 205; 195; 250; 201; 251; 143(2); 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI , . , , BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER, ITA NO.5952/MUM/2017 ASSESSMENT YEAR: 2013-14 ITO - 9(2)(1), R. NO.601/A, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. M/S BANAS FINANCE LTD. E-109, CRYSTAL PLAZA, NEW LINK ROAD, ANDHERI (W), MUMBAI-40053 ( / REVENUE) ( !'# /ASSESSEE) P.A. NO.AAACB2236J $ %# / DATE O F HEARING : 10/01/2019 %# / DATE OF ORDER: 27/02/2019 / O R D E R PER G. MANJUNATHA (ACCOUNTANT MEMBER) THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T ORDER OF THE LD. CIT(A)-16, MUMBAI, DATED 12/06/2017 AND IT PERTAINS TO AY. 201 3-14. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- !' / REVENUE BY S . PADMAJA - CIT !'# !' / ASSESSEE BY SHRI PRAKASH JHUNJHUNWALA 2 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE IN THE ASSESSMENT ORDER EVEN THOUGH THE ASSESSEE HAD NOT DISCHARGED T HE ONUS TO PROVE THE GENUINENESS OF THE INVESTMENT MADE BY THE PARTI ES CONCERNED AND THEIR CREDITWORTHINESS. II. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF MONEY LENDING AND SHARE TRADING ACTIVIT Y, FILED ITS RETURN OF INCOME FOR AY 2013-14 ON 30/09/2013 DECLARING TOTAL INCOME OF RS. 1,38,990/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 14 2(1) OF THE INCOME TAX ACT, 1961, WERE ISSUED. IN RESPONSE TO NOTICES, THE LD. AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS AS CALLED FOR. DU RING THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS ISSUED 1,17,60,000 EQUITY SHARES OF RS.1 EACH (FACE VALUE) AT A PREMIUM OF RS.16/- PER SHARE AGGR EGATING TO RS.19,99,20,0000/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON TO EXPLAIN THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHARE APPLICANTS WITH NECESSARY EVIDENCES. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS INCLUDING NAME AND ADDRESS OF SUBSCRIBERS ALONG WIT H APPLICATION FOR ISSUE OF SHARES, PAN NUMBERS, AND OTHER DETAILS TO PROVE THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES. IN ORDER TO VERIFY THE CORRECTNESS OF CLAIM MADE BY THE ASSESSEE, NOTICES U/S 133(6) OF THE ACT WERE ISSUE D TO ALL THE SHARE APPLICANTS, FOR WHICH, MOST OF THE SHARE APPLICANTS HAVE FILED COMP LETE DETAILS ALONG WITH ITR COPIES, BANK STATEMENTS AND OTHER DETAILS TO PROVE THE CRED ITWORTHINESS AND GENUINENESS OF 3 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. THE TRANSACTIONS. THE ASSESSEE ALSO FILED COMPLETE SET OF DOCUMENTS INCLUDING PERMISSION OF SEBI AUTHORITIES REGARDING ALLOTMENT OF SHARE ON PREFERENTIAL BASIS. THE COPY OF APPLICATION FILED BEFORE THE AUTHORITIES H AD BEEN FILED. THE ASSESSEE ALSO FILED A DETAILED VALUATION CERTIFICATE ISSUED BY AN INDEP ENDENT AUDITOR M/S PRAVIN CHANDAK & ASSOCIATED, WHERE THEY HAVE VALUED THE PRICE OF S HARES ON THE BASIS OF AVERAGE WEEKLY HIGH AND LOW OF THE CLOSING PRICES OF THE EQ UITY SHARES ON THE BSE DURING THE LAST TWENTY SIX WEEKS PRECEDING THE RELEVANT DATE. 3. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO BY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF MAJOR METALS VS UNION OF INDIA (207 TAXMAN 185) OBSERVED THAT AL THOUGH THE ASSESSEE HAS PROVED THE IDENTITY OF THE SHARE SUBSCRIBERS, BUT FAILED T O PROVE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES WHICH IS EVIDEN T FROM THE FACT THAT THE INTRINSIC VALUE OF SHARES AS ON 31/03/2012 IS AT RS.1.97 PER SHARES, WHEREAS, THE ASSESSEE HAS ISSUED SHARES AT A PREMIUM OF RS.16 PER SHARES, WHICH IS FAR MORE THAN INTRINSIC VALUE OF SHARE, THEREFORE, OPINED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE AO FURTHER OBSERVED THAT AS PER PROVISIONS OF SECTION 68 OF TH E ACT, THE ASSESSEE REQUIRES TO PROVE THE SOURCE OF THE CREDIT ENTRIES ALONG WITH N ATURE. THE EXPLANATION AND DETAILS FILED BY THE ASSESSEE REGARDING THE NATURE OF CREDI T ARE FOUND TO BE NOT SATISFACTORY IN GENERAL AND MORE PARTICULARLY FOR THE REASONS THAT ON PERUSAL OF BANK STATEMENT OF THE 4 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. SHARE APPLICANTS, IT WAS FOUND THAT IN ALL THE BANK ACCOUNTS THERE WERE IMMEDIATE CREDITS FROM OTHER PARTIES, WHEN THE MONEY HAS BEEN TRANSFERRED TO ASSESSEES ACCOUNT EXCEPT THIS NO FURTHER DEBITS AND CREDITS I N THE ACCOUNT. THE AO FURTHER OBSERVED THAT SOME OF THE PARTIES HAVE NOT FILED BA NK STATEMENTS. IN CERTAIN CASES, THERE WAS NO CONFIRMATION FILED FROM THE PARTIES. T HE AO FURTHER OBSERVED IN MOST OF THE CASES, THE SUBSCRIBERS AND SHARE APPLICANTS ARE THE FEMALE MEMBER AND HOUSE WIVES DO NOT HAVE ANY REGULAR SOURCE OF INCOME, THE REFORE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENE SS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ACCORDINGLY, BY FO LLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MAJOR METALS VS UN ION OF INDIA (SUPRA) HELD THAT TRANSACTION BETWEEN THE PARTIES DID NOT PASS THE TE ST OF GENUINENESS AND ACCORDINGLY MADE ADDITIONS TOWARDS SHARE CAPITAL ALONG WITH SHA RE PREMIUM U/S 68 OF THE ACT. RELEVANT OBSERVATIONS OF THE ASSESSMENT ORDER ARE A S UNDER:- 4.13 ON VERIFICATION OF THE BANK STATEMENTS OF THE PREFERENTIAL SHARE ALLOTEE, THE FOLLOWING POINTS ARE NOTED: I) IN SOME OF THE CASES, THERE IS NO BANK STATEMENT S FILED BY THE PARTIES ONLY LEDGER ACCOUNTS HAVE BEEN FILED. II) IN CERTAIN CASES, THERE WAS NO CONFIRMATION FRO M THE PARTIES, WHO HAVE SUBSCRIBED THE SHARES IN RESPONSE TO THE NOTIC ES ISSUED U/S 133(6) OF THE IT ACT. III) IT IS NOTICED THAT IN MOST OF THE CASES, THERE WERE NO PRIOR AND SUBSEQUENT CREDIT AND DEBIT ENTRIES IN THE BANK ACC OUNTS OF THE SAID PARTIES AND THE SOURCE OF CREDIT ENTRIES IN THE BAN K ACCOUNT OF THE SHARE SUBSCRIBERS NOT EXPLAINED AND THE EQUAL AMOUNT OF C REDIT ENTRY WAS MADE AND THEREAFTER, THERE WAS NO SUCH HUGE AMOUNT OF DE BIT AND CREDIT ENTRIES AND A MERE AMOUNT OF CLOSING BALANCE IS SHOWN. THER EFORE, THE SOURCE AND GENUINENESS OF THE SAID FUND IS NOT CONCLUSIVELY ESTABLISHED. 5 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. IV) THERE WAS MEAGRE AMOUNT OR NO OPENING AND CLOSI NG BALANCE AND THE BANK STATEMENTS REFLECTS THAT SIMILAR AMOUNTS W ERE CREDITED AND IMMEDIATELY AFTER I OR 2 DAYS THE SAME WAS DEBITED IN THE NAME OF M/S. BANAS FINANCE LTD. AND PRIOR AND SUBSEQUENT TO THAT DATE THERE WAS NO MAJOR CREDIT AND DEBIT ENTRIES. V) THE PARTIES WHO HAVE SUBSCRIBED THE SHARES AND P REMIUM ARE MOSTLY HUSBAND AND WIFE AND THE FUNDS CREDITED ALSO FROM SAME SOURCE AND ON SAME DATES. VI) IN MOST OF THE CASES, THE OTHER SUBSCRIBERS OF SHARES AND PREMIUM ARE THE FEMALE MEMBERS AND HOUSE WIVES AND THEY DO NOT HAVE ANY REGULAR SOURCE OF INCOME VII) IN SOME OF THE CASES, THE OCCUPATION OF THE PA RTIES WHO SUBSCRIBED THE HUGE AMOUNT OF SHARES ARE SHOWN AS 'HOUSE WIFE' , THEREFORE, THEY DO NOT HAVE REGULAR SOURCE OF INCOME. HENCE, THE CAPAC ITY AND CREDIT WORTHINESS FOR SUBSCRIBING LACS OF SHARES AND ITS S OURCE NOT FOUND CONVINCING AND ACCEPTABLE. VIII) IT WAS OBSERVED FROM THE BANK STATEMENTS OF T HE PARTIES THAT THERE WAS NO REGULAR FLOW OF FUNDS IN THE BANK ACCOUNTS A ND THE FUNDS HAVE BEEN RECEIVED AT THE4IME OF ALLEGED SUBSCRIPTION OF SHARE APPLICATION MONEY AND SUBSEQUENTLY THERE WERE NO SUCH HUGE AMOU NT OF CREDITS IN THE BANK ACCOUNTS. IX) THE NET INCOME OF THE PARTIES SHOWN IN THE RETU RN OF INCOMES, WHO HAVE SUBSCRIBED THE SHARES ARE NOT COMMENSURATE WIT H THEIR EARNING AND THEY COULD NOT HAVE AFFORDED TO MAKE SUCH HUGE INVE STMENTS IN SHARES OF UNKNOWN COMPANY. X) THE SURROUNDING CIRCUMSTANCES AND HUMAN PROBABIL ITIES AND DETAILS FILED NOT ESTABLISHED THAT THE GENUINENESS OF SHARE APPLICATION MONEY AND PREMIUM AMOUNT AND THE SAME WAS NOT FULLY EXPLAINED WITH SOURCE OF THE SUBSCRIBERS. XI) A CLOSER LOOK AT THE SAME IN THE LIGHT OF SURRO UNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES REVEAL THA T THE BANK STATEMENT AND THE PURPORTED DETAILS FILED IN RESPECT OF SHARE APPLICATION MONEY WITH PREMIUM CANNOT BE ACCEPTED. XII) IN ASSESSEE'S CASE THERE WAS INFORMATION AND D ETAILS RECEIVED IN THIS OFFICE FROM DIT(INTELLIGENCE & CRIMINAL INVEST IGATION UNIT), MUMBAI, AND AS COLLECTED FROM REGISTRAR OF COMPANIES, WHERE IN ASSESSEE'S NAMES HAS BEEN MENTIONED REGARDING THE ISSUE OF SHARES AT EXCESSIVE SHARE PREMIUM AMOUNT AND CONVEYED THAT THE SHARE PREMIUM RECEIVED BY THE ASSESSEE COMPANY IS EXCESSIVE AS COMPARED TO THE IN TRINSIC VALUATION OF THE SHARES. XIII) THE SUBMISSIONS FILED BY ALL THE ASSESSEE SAY THAT THEY ARE NOT RELATED IN ANY WAY TO THE DIRECTORS OR THE ASSESSEE COMPANY. THE 6 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. ALLOTMENT OF SHARES WERE MADE ON PREFERENTIAL BASIS . IN THIS REGARD, THE ASSESSEE COMPANY COULD NOT EXPLAIN AS TO HOW THESE PERSONS WERE SELECTED FOR ALLOTMENT ON PREFERENTIAL BASIS WHEN T HERE WAS NO RELATION - EXISTS BETWEEN THEM. HOW THESE INVESTORS WERE CONTA CTED AS THE COMPANY SAYS NO ADVERTISEMENT AS SUCH WAS MADE FOR PREFEREN TIAL ALLOTMENT OF SHARES. XIV) IT IS ALSO OBSERVED FROM THE SUBMISSIONS GIVEN BY MANY ALLOTEES OF THE SHARES ON PREFERENCE BASIS THAT SIMILAR AMOUNT, WHICH HAS BEEN INVESTED IN THE ASSESSEE COMPANY, HAS BEEN CREDITED IN THEIR BANK ACCOUNT FROM THE SAME SOURCE/CONFIDENCE TRADING COM PANY AS HIGHLIGHTED ABOVE EVEN THOUGH THERE IS NO RELATION BETWEEN THE ALLOTEES. 414 ON GOING THROUGH THE RECORDS OF THE ASSESSEE WI TH RESPECT TO THE DETAILS OF SHAREHOLDERS HOLDING MORE THAN 5% SHARES , IT WAS OBSERVED THAT ARIHANT CAPITAL MARKET LIMITED WAS HOLDING 11.955 O F SHARES OF THE ASSESSEE COMPANY TOTALLING TO 1,21,93,451 WHICH WA S SOLD DURING THE CURRENT F.Y. 2012-13. KEEPING THIS IN MIND M/S. ARI HANT CAPITAL MARKETS LIMITED WAS ISSUE WITH NOTICE U/S 133(6) TO ASCERTA IN AMONG OTHER THINGS THE DETAILS OF SALE OF SHARES MADE IN THE PRO-FORMA ENCLOSED THEREIN TO ASCERTAIN THE PROFIT AND THE HOLDING PERIOD OF THE S THE ARIHANT CAPITAL MARKETS LIMITED DID NOT RESPOND IN THE MANNER ASKED FOR. HOWEVER, AS PER THE BALANCE SHEET FOR THE F.Y. ENDING MARCH 2012 A ND MARCH 2013, IT IS 'OBSERVED FROM THE SCHEDULES OF THE BALANCE SHEET T HAT THERE WAS NO INVESTMENT AS ON 31.03.2012 AND AS ON 31.03.2013 AL SO THERE IS NO INVESTMENT IN THE NAME OF M/S. BANAS FINANCE LTD: I N VIEW OF THIS IT IS EVIDENT THAT THE ASSESSEE HAS MISREPRESENTED ITS HO LDINGS OF SHARES DURING THE FINANCIAL YEAR ENDING 31.03.2012. 4.15 ON GOING THROUGH THE DETAILS FILED AND THE REP LIES RECEIVED IN RESPONSE TO NOTICE U/S.133(6), AND FROM THE ABOVE B ANK STATEMENTS, IT CAN BE SEEN THAT THE EQUIVALENT AMOUNT OF SHARE APPLICA TION MONEY WAS CREDITED ON THE DATE OF SUBSCRIPTION OF SAID SHARES AND THERE WERE NO OTHER TRANSACTIONS IN THE SAID BANK ACCOUNTS OF THE ARTIE S EXCEPT THE SAME. THEREFORE, THE SOURCES OF FUND FOR SUBSCRIPTION OF SHARES REMAINED UNEXPLAINED AND NOT CORROBORATED. HENCE, THE QUESTI ON OF GENUINENESS AND CAPACITY OF THE SUBSCRIBERS REMAINED UNEXPLAINE D. IT WAS ALSO OBSERVED FROM THE BANK STATEMENTS OF THE PARTIES TH AT THERE WAS NO REGULAR FLOW OF FUNDS IN THE BANK ACCOUNTS AND THE FUNDS HAVE BEEN RECEIVED AT THE TIME OF ALLEGED SUBSCRIPTION OF SHA RE APPLICATION MONEY AND SUBSEQUENTLY THERE WERE NO SUCH HUGE AMOUNT OF CREDITS IN THE BANK ACCOUNTS. IT IS CLEAR AND SETTLED POSITION OF LAW T HAT THE ONUS SOLELY LIES UPON THE ASSESSEE TO PROVE THE GENUINENESS CAPACITY AND CREDIT WORTHINESS OF THE SHARE APPLICANT, WHO HAS SUBSCRI BED THE SHARE CAPITAL HAS NOT BEEN CONCLUSIVELY ESTABLISHED BY THE ASSESS EE. 4.16 THERE ARE CERTAIN FEATURES OF THE CASE WHICH B ELIES THE DOCUMENTARY EVIDENCE SO FURNISHED BY THE ASSESSEE. EVEN IF THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUE, IT IS NOT SACROSANCT AND I T WOULD NOT MAKE AN OTHERWISE NON-GENUINE TRANSACTION AS GENUINE CASE O F THE ASSESSEE COMPANY. THESE PRINCIPLES APPLY TO THE PRESENT CASE ALSO WHERE THE DOCUMENTARY EVIDENCES PRIMA FACIE SUPPORTS THE ASSE SSEE'S CASE BUT A CLOSER LOOK AT THE SAME IN THE LIGHT OF SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES REVEAL T HAT THE DOCUMENTARY 7 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. FAADE CANNOT BE ACCEPTED. THE ASSESSEE RELIES ON S ELF SERVING RECITALS BY WAY OF DOCUMENT, IT IS FOR THE ASSESSEE TO ESTABLIS H THE TRUTH OF THESE RECITALS. THE REVENUE AUTHORITIES ARE ENTITLED TO L OOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF SUCH RECIT ALS. 4.17 THE FACE VALUE OF SHARE OF RE. 1/- HAS BEEN SO LD AT A PREMIUM OF RS. 16/-, WHEN THE INTRINSIC VALUE OF SAID SHARES WERE LESS, AND THE VALUATION REPORT FOR DETERMINATION OF THE SAME IS ALSO NOT CO NVINCING AND NOT BASED ON ANY SCIENTIFIC METHOD. IT IS UNIMAGINABLE HOW TH E FACE VALUE OF A SHARE OF RE.1/- BE PURCHASED AT A PREMIUM OF 16/- PER SHA RE BY 44 PARTIES THAT TOO OF A COMPANY, WHICH HAS NOT CARRIED OUT ANY BUS INESS ACTIVITY DURING THE YEAR AND MERELY EARNED OTHER INCOMES AND NO BUS INESS PROFIT DECLARED BY THE ASSESSEE COMPANY. THE ASSESSEE HAS DIVERTED ITS OWN FUND BY WAY OF SHARE APPLICATION MONEY AND USED THE COLOURA BLE DEVICE TO CLAIM THE SAID AMOUNT AS SHARE APPLICATION MONEY RECEIVED . 4.18 IT IS BEYOND COMPREHENSION HOW A PRUDENT INVES TOR AND BUSINESS MAN INVEST SUCH HUGE AMOUNT OF MONEY BY WAY OF SHAR E APPLICATION MONEY IN A NON-PERFORMING AND NON-PROFIT EARNING CO MPANY AND NO DIVIDENDS HAVE EVER BEEN DECLARED BY THE ASSESSEE C OMPANY. NEITHER THE PAST PERFORMANCE OF THE ASSESSEE COMPANY NOR ITS PR ESENT EARNING JUSTIFY THE AMOUNT OF PREMIUM WHICH IT HAD CHARGED. THE NET WORTH AS DISCLOSED BY THE ASSESSEE IN THE BALANCE SHEET, THE POTENTIAL EARNING AS DISCLOSED BY EARNING PER SHARE OR EVEN THE VAGUE PROTESTATION S OF FUTURE PROSPECTS WOULD NOT JUSTIFY THE SUBSCRIPTION OF SHARES AND PA YMENT OR PREMIUM PER SHARE. FURTHER, IF SUCH PREMIUM WAS FIXED IN CONSUL TATION WITH EXPERTS OR FINANCIAL INSTITUTIONS, IT IS INCONCEIVABLE AS TO W HY THE ASSESSEE WAS UNABLE TO PROVIDE EVEN THE BAREST OF DETAILS THAN T HE MERE VALUATION OF REPORT OF OWN CHARTERED ACCOUNTANTS. THE SHARE PREM IUM WAS FIXED UNILATERALLY BY THE ASSESSEE WITHOUT ANY REFERENCE POINT TO PAST RECORDS, PRESENT EARNINGS, FUTURE PROSPECTS. THE OBJECT WAS NOT TO ATTRACT GENUINE INVESTOR BY PAYING THE PREMIUM AT A REALISTIC LEVEL BUT TO BRING IN LARGE AMOUNTS OF UNACCOUNTED FUNDS IN THE GUISE OF SHARE APPLICATION MONEY WITH PREMIUM. THERE WERE NO INDICATORS AS TO THE BA SIS OR THE DATE AND ON THE BASIS OF WHICH THE SHARE PRICING WAS ARRIVED AT . THERE WERE NO SHARE APPLICATION FORMS SUBMITTED BY THE SUBSCRIBERS FILE D. 4.19 MOREOVER, THE BANK ACCOUNTS, COPIES OF WHICH F URNISHED REVEALED THAT ALTHOUGH HUGE SUMS WERE DEPOSITED AND WITHDRAW N, A MAJOR PORTION OF THE INCOME WAS FROM SALE OF SHARES OF WHICH THER E WERE NO DETAILS FILED. THE NET INCOME IS MEAGER IN BOTH THE CASES AND IS N OT COMMENSURATE WITH THEIR INCOMES FROM WHICH IT COULD HAVE AFFORDED TO MAKE SUCH HUGE INVESTMENTS IN SHARES OF AN UNKNOWN, LESS TRADED CO MPANY ON BSE, BY MAKING PAYMENT OF SUCH HUGE PREMIUM. THE PARTIES WH O SUBSCRIBED THE SHARE AND PREMIUM OF THE ASSESSEE COMPANY A CREDIT STANDING WHICH WOULD HAVE ENABLE THEM TO PAY LARGE AMOUNTS TOWARDS SHARE AND SHARE PREMIUM ON A FACE VALUE OF RE. 1/- PER SHARE. NEITH ER THE PAST PERFORMANCE NOR THE FINANCIAL POSITION OF THE ASSES SEE WOULD JUSTIFY THE PAYMENT OF SUCH PREMIUM BY THE PARTIES. 4.20 IN THIS REGARD RELIANCE IS PLACED ON THE LAW L AID DOWN BY THE HON. SUPREME COURT IN SUMATI DAYAL V/S CIT, WHEREIN IN A PPLYING THE TEST OF 8 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. HUMAN PROBABILITIES, SECTION 68 OF THE IT ACT PROVI DES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE FOR A NY PREVIOUS YEAR, THE ASSESSEE OFFERS NO EXPLANATION AND THE EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY IT IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D CAN BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. NONE OF THE PARTIES STATED TO HAVE FINANCIAL STANDING OR CR EDIT WORTHINESS WHICH WOULD JUSTIFY PAYMENT AND SUBSCRIPTION OF SUCH A LA RGE INVESTMENT IN SHARES AND AT A PREMIUM IN THE ASSESSEE COMPANY. IN ABSENCE OF ANY COGENT EVIDENCES, A BALD EXPLANATION AND SELF SERVI NG DETAILS FURNISHED BY THE ASSESSEE ABOUT THE SOURCE OF CREDITS IN QUESTIO N, WAS NOT SATISFACTORY. 4.21 IT IS WELL SETTLED POSITION OF LAW THAT IN VI EW OF SECTION 68 OF THE IT ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR, THE SAME CAN BE BROUGHT TO TAX AS TH E INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IN THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFACTORY. THEREFORE, LOOKING AT FROM THE PERSPECTIVE OF THE TEST OF HUMAN PROBABILITIES LAID DOWN BY THE SUPREME COURT AND ON THE TOTALITY OF THE EVIDENCES, THE CONTENTION OF THE ASSESSEE THAT IT HAD GENUINELY RECEIVED SUCH SHARE APPLICATION MONEY AND SHARE PRE MIUMS IS NOT FOUND ACCEPTABLE. 4.22 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE WAS CONFRONTED WITH THE FACTS. HOWEVER, EVEN AFTER AVAI LING AMPLE OPPORTUNITIES AND ISSUE OF SHOW CAUSE NOTICE TO THE ASSESSEE, THE ASSESSEE COMPANY COULD NOT DISPEL THE SUSPICION OVER THE GENUINENESS AND APPLICATION MONEY WITH PREMIUM RECEIVED BY IT AS SHOWN IN THE B OOKS OF ACCOUNTS. 4.23 IT IS ALSO SEEN FROM THE RECORD OF THE ASSESSE E THAT IN THE SUBSEQUENT YEAR ALSO, THE ASSESSEE COMPANY HAS USED THE SAME M ODUS OPERANDI BY ISSUING SHARES AND SHARE PREMIUM AS PER REPORT AND INFORMATION RECEIVED IN THIS OFFICE. 4.24 ON THE FACT OF THE CASE, RELIANCE IS PLACED ON THE DECISION IN THE CASE OF CIT V/S SOPHIA FINANCE LTD. (1994) 205 ITR 98(DE L)(FB), WHEREIN IT HAS BEEN HELD THAT THE USE OF THE WORD ANY SUM FOUND CR EDITED IN THE HOOKS OF ACCOUNT INDICATES THAT THE SECTION IS WIDELY WORDED AS TO THE TRUE NATURE AND SOURCE THEREOF EVEN IF THE SUM CREDITED IS BY W AY OF SHARE APPLICATION MONEY. 4.25 FURTHER IN THE CASE OF CIT VS RATHI FINLEASE L TD. (2008) 215 CTR 429(MP), IT WAS HELD THAT EVEN THOUGH THE AMOUNT WA S PAID BY CHEQUE, IT WAS HELD BY THE HON. COURT THAT BURDEN OF PROOF WAS NOT DISCHARGED BY THE ASSESSEE WITH REGARD TO THE CREDIT ENTRIES IN THE B OOKS OF THE ASSESSEE BY WAY OF SHARE APPLICATION MONEY AND THE ADDITION MAD E U/S.68 WAS UPHELD BY THE HON. COURT. 4.26 IT WILL NOT BE OUT OF PLACE TO MENTION HERE TH AT ON VERIFICATION OF THE TRADING OF THE SHARES OF THE ASSESSEE COMPANY THROU GH NSE/BSE IT WAS OBSERVED THAT THERE HAS BEEN VERY INSIGNIFICANT VOL UME OF SHARES BEING TRADED FROM 01.04.2012 ONWARDS. BUT THERE HAS BEEN VERY LARGE FLUCTUATION 9 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. IN THE PRICE OF THE SHARES. THERE HAS BEEN CONTINUO US INCREASE OR DECREASE IN THE PRICE OF THE SHARES OF THE ASSESSEE COMPANY WITHOUT ANY VOLUME. THIS IS BEING DONE INTENTIONALLY TO PROVIDE FOR THE EXEMPT LONG TERM CAPITAL GAIN/LOSS. THIS MODUS OPERANDI HAS ALS O BEEN A FINDING OF SIT ON BLACK MONEY AS CONTAINED IN THE THIRD SIT REPORT . THE RELEVANT PORTION IS REPRODUCES AS FOLLOWS:, 'INVESTMENTS ARE MADE IN THE SECONDARY SHARE MARKET S WITH A VIEW TO CAPTURING GAINS. IN THIS MARKET, OUT OF NEARLY 8,00 0 LISTED COMPANIES, SEVERAL SCRIPS ARE NOT TRADED REGULARLY. WITH THE C OLLUSION OF PROMOTERS, SOME BROKERS ARRANGE FOR PRICE(S) WITH PURCHASE OF SUCH SCRIPS AT NOMINAL COSTS, AND SALES AT EXORBITANT PRICES, WITH A VIEW TO RECEIVING MONEY ON SALE AS 'CAPITAL GAIN' WHEN THE LONG TERM GAIN IS S UBJECTED TO A 'NIL' OR NOMINAL RATE OF TAX. THE ADVANTAGE FOR MANIPULATIVE TAXPAYER IS THAT HE CAN LAUNDER SUCH SALE RECEIPTS THROUGH PAYMENT OF N O TAX.' SEB1 HAS RECENTLY BARRED MORE THAN 250 ENTITIES, IN CLUDING INDIVIDUALS AND COMPANIES, FROM THE SECURITIES MARKET FOR SUSPECTED TAX EVASION AND LAUNDERING OF BLACK MONEY THROUGH STOCK MARKET PLAT FORMS IN ONE SUCH INSTANCE PRICE OF A SCRIP ROSE FROM RS. 10.20 TO RS . 489 IN 150 TRADING DAYS A RISE OF 4694%. THE SIT OBTAINED THE BACKGRO UND DETAILS OF THESE CASES AND STUDIED THEM. A TYPICAL PATTERN IS OBSERV ED TO BE FOLLOWED IN SUCH CASES. A COMPANY WITH VERY POOR FINANCIAL FUNDAMENTS IN TE RMS OF PAST INCOME OR TURNOVER IS ABLE TO RAISE HUGE CAPITAL BY ALLOTMENT OF PREFERENTIAL ALLOTMENT OF SHARES IS MADE TO VARIOUS ENTITIES. THERE IS A SHARP RISE IN PRICE OF SCRIP ONCE THE PR EFERENTIAL ALLOTMENT IS DONE. THIS IS NORMALLY ACHIEVED THROUGH CIRCULAR TR ADING OF SHARES AMONG A SELECT GROUP OF COMPANIES. THESE GROUPS OF COMPAN IES OPEN HAVE COMMON PROMOTERS/DIRECTORS. THE SCRIPS WITH THUS ARTIFICIALLY INFLATED PRICE AR E OFFLOADED THROUGH COMPANIES WHOSE FUNDING IS PROVIDED BY THE SAME SET OF PEOPLE WHO WANT TO CONVERT BLACK MONEY INTO WHITE.' 4.27 IN VIEW OF THE ABOVE FACT AND CIRCUMSTANCES OF THE CASE, THE SAID SHARE APPLICATION MONEY RECEIVED BY ASSESSEE AMOUNT ING TO RS. 19,99,20,000 IS TREATED AS UNEXPLAINED CASH CREDITS U/S.68 OF THE IT ACT AND ADDED TO ASSESSEE'S TOTAL INCOME AS THE NATURE AND SOURCE OF THE INVESTMENT REMAINED UNEXPLAINED. PENALTY PROCEEDING S U,/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE INITIATED SEPARATELY F OR FURNISHING INACCURATE PARTICULARS/CONCEALMENT OF PARTICULARS OF INCOME IN RESPECT OF THE ABOVE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED AN ELABORATE SUBMISSIONS ON THE ISSUE WHICH HAS BEEN REPRODUCED AT PARA 1 TO 6 AT PAGE 4 TO 14 OF THE ORDER OF THE LD. CIT(A). THE SUM AND SUBSTANCE OF ARGUMENTS OF T HE ASSESSEE BEFORE THE LD. 10 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. CIT(A) ARE THAT THE ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS INCLUDING THE NAMES AND ADDRESS ALONG WITH PAN NUMBERS OF SHARE HOLDERS , THEIR ITR ACKNOWLEDGMENTS RECEIPTS. THE ASSESSEE ALSO FILED CLIENT MASTER DAT A ISSUED BY NSDL AND CSDL, PROVING THE CONFIRMATION OF KYC. THE ASSESSEE ALSO FILED D-MAT STATEMENTS OF SHAREHOLDERS DISCLOSING THE ALLOTTED SHARES, CREDIT ED TO THEIR RESPECTIVE D-MAT ACCOUNTS. THE ASSESSEE IS BEING A LISTED COMPANY AN D ITS SHARES ARE REGULARLY TRADED IN BSE, WHERE IT WAS SUBJECT TO STRINGENT REGULATIO NS OF SEBI AND AS PER WHICH ANY PREFERENTIAL ALLOTMENT OF SHARES HAS TO BE IN ACCOR DANCE WITH SEBI REGULATIONS ACT, 2009 AND ALSO WITH PRIOR APPROVAL OF SEBI, THEREFOR E, MERELY FOR THE REASON THAT THE SUBSCRIBERS ARE FEMALE MEMBERS AND FAMILY MEMBERS, NO ADVERSE INTERFERENCE CAN BE DRAWN TO HOLD THAT TRANSACTION BETWEEN THE ASSESSEE AND THE SHARE HOLDERS ARE SHAM TRANSACTIONS. THE ASSESSEE ALSO RELIED UPON VARIOUS JUDICIAL PRECEDENCE INCLUDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS LOVELY EXPORT PVT. LTD. 5. THE LD. CIT(A), AFTER CONSIDERING THE ELABORATE SUBMISSIONS OF THE ASSESSEE AND ALSO RELIED UPON THE DECISION OF THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT. LTD. IN ITA NO.161 3 OF 2014 HELD THAT HAVING REGARD TO THE DOCUMENT FURNISHED BY THE ASSESSEE, THE IDEN TITY OF THE INVESTOR, GENUINENESS OF TRANSACTION ALONG WITH CREDITWORTHINESS OF THE S HARE HOLDERS HAVE BEEN PROVED AND HENCE, THE FACTS DO NOT WARRANT ADDITIONS U/S 68 OF THE ACT. THE LD. CIT(A) FURTHER HELD THAT ONCE THE IDENTITY AND GENUINENESS OF THE TRANS ACTION AND CREDITWORTHINESS HAVE 11 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. BEEN PROVED THEN THERE IS NO REASON FOR THE AO TO M AKE ADDITIONS MERELY FOR THE REASON THAT THE SHARES HAS BEEN ISSUED AT HIGHER PR EMIUM BECAUSE THE PROVISIONS OF SECTION 68 OF THE ACT HAS INTRODUCED BY FINANCE ACT (2012) W.E.F. 01/04/2013 DOES NOT HAVE RETROSPECTIVE EFFECT, ACCORDINGLY, NO ADDITION COULD BE MADE U/S 68 OF THE ACT. THE LD. CIT(A) ALSO DISCUSSED THE PARTY-WISE SHARE APPLICANTS ALONG WITH DOCUMENTS FURNISHED BY THE ASSESSEE AND COME TO THE CONCLUSIO N THAT THE TRANSACTION BETWEEN THE PARTIES HAVE PASSED TEST OF GENUINENESS AND ACC ORDINGLY, DELETED THE ADDITIONS MADE TOWARDS SHARE CAPITAL AND SHARE PREMIUM U/S 68 OF THE ACT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) IS REPRODUCED HEREUN DER:- 6.1.4. IN THE INSTANT CASE, HAVING REGARD TO THE DOCUMENTS FURNISHED BEFORE ME, I AM CONVINCED ABOUT THE IDENTITY OF THE INVEST OR, GENUINENESS OF TRANSACTION ALONG WITH CREDITWORTHINESS OF THE SHAREHOLDERS AND THE S HARE SUBSCRIPTION MONEY PAID BY THEM DULY REFLECTED IN THE BANK ACCOUNT OF THE APPE LLANT COMPANY. HENCE, THE FACTS DO NOT WARRANT AN ADDITION UNDER SECTION 68 OF THE ACT . FURTHER, IN THE CONTEXT OF SHARE CAPITAL RECEIVED FROM ALLEGED BOGUS SHAREHOLDERS, T HE HONBLE SUPREME COURT HAS UNEQUIVOCALLY LAID DOWN THE LEGAL POSITION AS TO WH ETHER ADDITIONS CAN BE MADE UNDER SECTION 68 OF THE ACT, AS UNDER IN CASE OF LOVELY E XPORTS (P) LTD. 216 CTR 195. 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GI VEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO P ROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT THIS AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOM E UNDER SECTION 68 OF THE ASSESSEE COMPANY. ' 6.1.5 FURTHER, SIMILAR ISSUE HAD AROSE IN AY 2011-1 2 WHEREIN ADDITION ON ACCOUNT OF INCREASE IN SHARE CAPITAL WAS ADDED BY THE LD. AO U /S 68 OF THE ACT. ON APPEAL THE SAME WAS DELETED BY THE HON'BLE CIT(A)-4, MUMBAI VI DE HIS ORDER NO. IT(A)-4/11 - 02/ITO.2(1)(1)/2014-15 DTD. 11.12.2015. I HAVE PERU SED THE SAME AND FIND THE FACTS AND THE NATURE AND ARGUMENTS OF THE CASE SIMILAR. FURTH ER, I AM ALSO MADE AWARE THAT NO APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT BEFORE THE TRIBUNAL. 6.1.6 RECENTLY THE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. GANGADEEP INFRASTRUCTURE PVT. LTD. VIDE ITS ORDER DATED 20.03 .2017 HAS HELD AS UNDER: 12 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. 'THE PROVISO TO S.68 (WHICH CREATES AN OBLIGATION O N THE ISSUING CO. TO EXPLAIN THE SOURCE OF SHARE CAPITAL AND PREMIUM) HA S BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 01.04.2013 AND DOES NOT HAVE RETROSPECTIVE EFFECT. PRIOR THERETO, AS PER LOVELY EXPORTS 317 ITR 218 (SC), IF THE AO REGARDS THE SHARE PREMIUM AS BOGUS, HE HAS TO ASSESS THE SHAREHOLDERS BUT CANNOT ASSESS THE SAME AS THE ISSUING COMPANY'S UNEXPLAINED CASH CREDIT.' 6.1.7 FROM THE DETAILS FILED, THE APPELLANT HAD NOT ONLY PROVED THE GENUINENESS OF TRANSACTION AND IDENTITY OF THE INVESTORS BUT IT HA S ALSO PROVED THE CREDITWORTHINESS OF INVESTORS. IN VIEW OF THESE FACTS AND RESPECTFULLY FOLLOWING VARIOUS JUDGMENTS OF HONBLE ITAT AND HON'BLE COURTS AS DISCUSSED IN PARAS ABOVE , APPEAL OF THE ASSESSEE IS ALLOWED AND ADDITION OF RS.19,99,20,000/- MADE BY T HE AO U/S.68 OF THE ACT IS DELETED. 6. THE LD. DR, SUBMITTED THAT THE LD. CIT(A) WAS ER RED IN DELETING ADDITIONS MADE BY THE AO TOWARDS SHARE CAPITAL U/S 68 OF THE ACT, WITHOUT APPRECIATING THE FACT THAT MERE FURNISHING CERTAIN EVIDENCE TO PROVE THE IDENT ITY WOULD NOT SUFFICIENT ENOUGH TO COME OUT TO PROVISIONS OF SECTION 68 OF THE ACT AND WHAT IS TO BE SEEN IT WHETHER THE ASSESSEE HAS DISCHARGED ONUS CAST U/S 68 OF THE ACT IN ORDER TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. IN THIS CASE, ALTHOUGH THERE IS NO DOUBT IN THE IDENTITY OF THE SUBSCRIBER S, BUT THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF TRANSACTIONS AND CREDITWORTHIN ESS OF THE PARTIES IN VIEW OF CLEAR FINDING RECORDED BY THE AO WHERE HE HAS RECORDED CA TEGORICAL FINDING THAT THE SUBSCRIPTION OF SHARE CAPITAL DO NOT HAVE ENOUGH IN COME TO EXPLAIN SOURCE AT AMOUNT INVESTED IN THE ASSESSEE COMPANY. THE LD. DR FURTH ER SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 68 OF THE ACT, IT IS FOR THE ASSESSEE TO DISCHARGE INITIAL ONUS, ONCE ASSESSEE DISCHARGED ITS ONUS THEN THE ONUS SHIFTED TO THE AO. IF THE AO DID NOT SATISFY WITH THE EXPLANATION OF THE ASSESSEE AND ASKED FURT HER MORE DETAILS THEN IT IS FOR THE 13 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. ASSESSEE TO PROVE THE CREDIT TO THE SATISFACTION OF THE AO .THEREFORE, MERELY FOR THE REASON THAT IDENTITY IS NOT IN DOUBT, THE WHOLE TRA NSACTION CANNOT BE ACCEPTED AS GENUINE TRANSACTION, MORE PARTICULARLY WHEN THE ASS ESSEE HAS FAILED TO JUSTIFY CHARGING HIGHER PREMIUM WHICH IS OVER AND ABOVE INTRINSIC VA LUE AS ON DATE OF ISSUE. THE LD. DR STRONGLY SUPPORTED THE DECISION OF THE HONBLE B OMBAY HIGH COURT IN THE CASE OF MAJOR METALS LTD. VS UNION OF INDIA (2013) (359 ITR 450)(207 TAXMAN 185) AND SUBMITTED THAT THE CASE LAWS RELIED UPON BY THE ASS ESSEE INCLUDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORT (PVT.) LTD. HAS NO APPLICATION IN CASE OF SHARES ISSUED ON PREFERENTIA L SHARES ALLOTMENT. IN CASE OF CIT VS LOVELY EXPORT PVT. LTD. (SUPRA), THE FACTS ARE E NTIRELY DIFFERENT. IN THE CASE BEFORE HONBLE SUPREME COURT , THE FACTS ARE THAT THE ASSE SSEE HAS MADE PUBLIC ISSUE OF SHARES WHERE LARGE NUMBER OF SUBSCRIBERS ARE MAKING APPLICATION FOR ALLOTMENT OF SHARE FOR WHICH THE ASSESSEE DOES NOT HAVE ANY CONT ROL, IN THOSE FACTS, THE COURT CAME TO THE CONCLUSION THAT ONCE IDENTITY HAS BEEN PROVED, NO ADDITION CAN BE MADE U/S 68 OF THE ACT, BUT THE DEPARTMENT IS FREE TO AS SESSEE INDIVIDUAL SHAREHOLDERS RATHER MAKING ADDITIONS IN THE HANDS OF THE ASSESS EE. THE LD. DR ALSO DISTINGUISHED THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT. LTD. AND ALSO CIT VS GREEEN INF RA LTD. VS ITO TO ARGUE THAT THE FINDINGS OF THE FACT IN BOTH CASES IS ON THE BASIS OF SHARE HELD BY IDFC PVT. EQUITY FUND, WHICH IS A FUND MANAGER OF IDFC LTD, MOREOVER , THE CONTRIBUTIONS IN THE IDFC PVT. EQUITY FUND ARE ALL BY A PUBLIC SECTOR UNDERTA KINGS. UNDER THOSE FACTS, THE COURT 14 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. CAME TO THE CONCLUSION THAT ONCE IDENTITY HAS BEEN PROVED, NO ADDITIONS COULD MADE U/S 68 OF THE ACT, FOR ISSUING SHARES ON HIGH PREMI UM. IN THIS CASE, ONE OF THE SUBSCRIBERS ARIHANT CAPITAL MARKETS LIMITED DID NOT RESPOND IN THE MANNER ASKED FOR. HOWEVER, AS PER THE BALANCE SHEET FOR THE FINANCIAL YEAR ENDING MARCH 2012 AND MARCH 2013, IT IS OBSERVED FROM THE SCHEDULES OF TH E BALANCE SHEET THAT THERE WAS NO INVESTMENT AS ON 31/03/2012 ALSO. THERE IS NO INVES TMENT IN THE NAME OF BANAS FINANCE LTD., THEREFORE, IT IS VERY CLEAR THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWOR THINESS OF THE PARTIES. UNDER THESE CIRCUMSTANCES, THE AO HAS RIGHTLY CAME TO THE CONCL USION THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDIT TO THE SATISFACTION OF THE AO. THE LD. CIT(A), WITHOUT APPRECIATING THE FACT, HAS SIMPLY DELETED THE ADDITION MADE BY T HE LD. AO. HENCE, THE ADDITIONS MADE BY THE AO SHOULD BE UPHELD. 7. THE LD. AR, ON THE OTHER HAND, SUBMITTED THAT T HE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT IN ASSESSEES OWN CASE FOR EARLIER YEAR WHERE ON IDENTICAL SET OF FACTS, T HE ITAT HELD THAT ADDITION COULD NOT BE MADE MERELY ON THE BASIS OF SUSPICION, DOUBTS, CONJ ECTURES AND SURMISES, WHEN ASSESSEE HAS FILED ENORMOUS DETAILS TO PROVE THE ID ENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE LD. AR FUR THER SUBMITTED THAT THE ASSESSEE IS A PUBLIC LISTED COMPANY AND MADE PREFERENTIAL ALLOT MENT OF SHARES HAVING FACE VALUE OF RS.1 EACH WITH PREMIUM OF RS.16 PER SHARE AND TH E ISSUE PRICE IS MORE OR LESS 15 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. EQUIVALENT TO PRICE PREVAILING IN THE MARKET AT THE TIME OF ISSUE IN THE STOCK MARKET, WHERE THE PRICE OF SHARES ARE TRADING BETWEEN 16 TO 19 RUPEES PER SHARE. THE ASSESSEE ALSO FILED COMPLETE DETAILS OF IDENTITY AL ONG WITH THEIR CREDITWORTHINESS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. IN FACT, THE AO HAS NOT DOUBTED THE IDENTITY OF THE PARTIES. NOTICES ISSUED U/S 133(6) WERE FULL Y COMPLIED WITH ALL DETAILS. THE PARTIES HAVE FILED THEIR BANK STATEMENT ALONG WITH ACKNOWLEDGMENT OF ITR COPIES. NO CREDITS FOUND IN THE FORM OF CASH IN THE BANK ACCOU NTS. THE ASSESSEE ALSO FILED VALUATION REPORT, FROM INDEPENDENT AUDITOR TO PROVE THE VALUE OF SHARES AS ON THE DATE OF ISSUE. THE ASSESSEE ALSO FILED COMPLETE DETAILS OF APPLICATION FILED BEFORE SEBI AND OTHER AUTHORITIES AND ALSO IN PRINCIPLE APPROVAL IS SUED BY THE SEBI FOR ISSUE OF SHARES AT A PREMIUM OF RS.16 PER SHARE. THE LD. CIT(A) AFT ER CONSIDERING ALL THE EVIDENCES CAME TO THE CONCLUSION THAT NO REASON TO MAKE ADDIT ION TOWARDS SHARE CAPITAL AND SHARE PREMIUM U/S 68 OF THE ACT. THEREFORE, THE ORD ER OF THE LD. CIT(A) SHOULD BE UPHELD. IN THIS REGARD, THE ASSESSEE HAS RELIED UP ON FOLLOWING JUDGEMENTS:- 1. CIT VS. GAGANDEEP INFRASTRUCTURE PVT LTD ITA 1613 O F 2014 (BOM-HC) 2. CIT VS. ORCHID INDUSTRIED PVT LTD 397 ITR 136 (BOM- HC) 3. PR. CIT VS. APEAK INFOTECH 397 ITR 148 (BOM-HC ) 4. PR. CIT VS. LAXMAN INDUSTRIAL RESOURCES LTD 397ITR1 06(DEL-HC) 5. CIT VS. EXPO GLOBE INDIA LTD 361 ITR147(DEL-HC) 6. CIT VS. LOVELY EXPORTS LTD 216 ITR 195 (SC) 16 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. 7. CIT VS. STELLAR INVESTMENT LTD 251 ITR 263 (SC) 8. CIT VS GREEN INFRA LTDITA NO.1162 OF 2014 9. CIT VS. ORCHID INDUSTRIES PVT LTD 397 ITR 136 (BOM- HC) 10. PR. CIT VS. VAISHNODEVI REFOILS & SOLVEX 96 TAXMANN .COM 469 (SC) & 100 CCH 288 (GUJ-HC) 11. PR.CIT VS. PARADISE INLAND SHIPPING PVT LTD 98 CCH 417 (BOM-HC) 12. MOD CREATIONS PVT LTD VS. ITO 354ITR282(DEL-HC) 8. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE CASES RELIED UPON BY THE ASSESSEE. FIRST OF ALL, WE FIND THAT THE IDENTICAL ISSUE HAS BEEN CONSIDERE D BY THE CO-ORDINATE BENCH OF THE ITAT, MUMBAI, B BENCH, IN ASSESSEES OWN CASE IN ITA NO.1096/MUM/2016 FOR AY 2011-12 WHERE THE BENCH, AFTER CONSIDERING THE RELE VANT FACTS, HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS FILED VOLUMINOUS D OCUMENTARY EVIDENCE BEFORE THE AUTHORITIES BELOW, WHICH PROVED THE FULFILMENT OF C ONDITIONS PRESCRIBED U/S 68 OF THE ACT. THE CO-ORDINATE BENCH FURTHER NOTED THAT THE P ROVISIONS OF SECTION 68 OF THE ACT INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 01/04/20 13 IS PROSPECTIVE IN NATURE AND CANNOT BE APPLIED PRIOR TO AY 2014-15 IN VIEW OF TH E DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CTI VS GAGANDEEP INFRASTR UCTURE PVT. LTD. (80 TAXMANN.COM 272). THE BENCH ALSO ANALYZED THE PROVISIONS OF SEC TION 56(2)(VIIB) AND HELD THAT THESE PROVISIONS DO NOT APPLY TO THE ASSESSEE, SINC E THE ASSESSEE IS A PUBLIC LISTED COMPANY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 17 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING WRITTEN SUBMISSIONS / DOCUMENTS PLACED IN THE PAPER-BOOK & JUDICIAL PRONOUNCEMENTS CITED BEFO RE US. SOME UNDISPUTED FACTS TO BE NOTED ARE THAT THE ASSESSEE IS A PUBLIC LISTED COMPANY AND THE MADE PREFERENTIAL ALLOTMENT OF SHAR ES HAVING FACE VALUE OF RS.10/- PER SHARE TO AS MANY AS 49 INVESTO RS AT A PREMIUM OF RS.10/- PER SHARE. THE LD. AO HAS DOUBTED THE VALUA TION OF SHARES ON THE PREMISE THAT THE MARKET VALUE WAS MUCH LOWER THAN T HE ISSUE PRICE AND THE FINANCIALS OF THE COMPANY DID NOT JUSTIFY ISSUE OF SHARES AT HIGH PREMIUM. HOWEVER, WE FIND THAT NOTHING IN LAW PROHI BITS ISSUE OF SHARES AT PRICES HIGHER THAN THE PREVAILING MARKET PRICES. THE REVENUE, BY QUESTIONING THE WISDOM OF THE INVESTOR, COULD NOT M AKE ADDITION IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/ S 68 UNLESS IT WAS ESTABLISHED THAT THE ASSESSEES UNACCOUNTED MONEY W AS ROUTED IN THE BOOKS THROUGH THE MECHANISM OF FICTITIOUS SHARE ALL OTMENT. NOTHING ON RECORD DEMONSTRATE SUCH EXCHANGE OF CASH BETWEEN TH E INVESTOR AND THE ASSESSEE. 5.2 IT IS NOTED THAT THE ADDITION HAS BEEN MADE AS UNEXPLAINED CASH CREDIT U/S 68 WHICH CAST ONUS ON THE ASSESSEE TO DE MONSTRATE FULFILMENT OF THREE PRIMARY CONDITIONS VIZ. IDENTITY OF THE IN VESTOR IS ESTABLISHED BY THE ASSESSEE, THE INVESTORS HAD CREDITWORTHINESS TO MAKE THOSE INVESTMENT AND THE TRANSACTIONS WERE GENUINE. SO FA R AS THE FULFILMENT OF THESE PRIMARY INGREDIENTS OF SECTION 68 IS CONCERNE D, WE FIND THAT THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THE FULFILME NT OF THE SAME WHICH IS EVIDENT FROM THE ORDERS OF BOTH THE LOWER AUTHOR ITIES. THE TRANSACTIONS HAVE DULY BEEN CONFIRMED BY THE INVEST ORS IN RESPONSE TO NOTICE U/S 133(6). THE ASSESSEE HAS FILED VOLUMINOU S DOCUMENTARY EVIDENCES BEFORE BOTH THE LOWER AUTHORITIES WHICH P ROVE THE FULFILMENT OF THESE CONDITIONS. EVEN THE ASSESSMENT ORDER U/S 143(3) OF AN ENTITY WHO MADE AN INVESTMENT OF RS.290 LACS HAS BEEN PLAC ED ON RECORD WHEREIN NO ADVERSE VIEW HAS BEEN TAKEN AGAINST THE INVESTOR. THE SHARE ALLOTMENT HAS BEEN MADE AFTER FOLLOWING DUE PROCEDU RE OF LAW AND AFTER OBTAINING STATUTORY APPROVAL FROM THE CONCERNED GOV ERNMENT AGENCIES VIZ. SEBI & STOCK EXCHANGES. THE COMPLETE DETAILS O F THE SAME, AS REQUIRED BY LAW, HAS BEEN FILED WITH REGISTRAR OF C OMPANIES AND THE NEW SHARES HAVE SUBSEQUENTLY BEEN LISTED ON THE STOCK E XCHANGE. THE NATURE OF DOCUMENTS FILED BY THE ASSESSEE, TO SUPPORT THE TRANSACTIONS, HAVE ELABORATELY BEEN GIVEN ON PAGE NUMBERS 22 TO 24 OF THE IMPUGNED ORDER AND THE SAME ARE NOT UNDER DISPUTE. 5.3 THE LD. CIT-DR HAS ALLEGED PRICE RIGGING /MANIP ULATION ON THE PART OF THE ASSESSEE TO SUBMIT THAT THE SAME WAS DONE TO GE NERATE FICTITIOUS LTCG FOR THE INVESTORS. HOWEVER, WE FIND THAT THIS MATTER IS THE DOMAIN OF SEBI / STOCK EXCHANGE OR OTHER CONCERNED GOVERNM ENT AGENCIES AND THIS FACT, ALONE, COULD NOT BE THE BASIS FOR MAKING ADDITION IN THE HANDS 18 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. OF THE ASSESSEE UNLESS THE AFORESAID FACT OF PRICE MANIPULATION IS ESTABLISHED CONCLUSIVELY AND IT COULD BE DEMONSTRAT ED THAT THE ASSESSEES UNACCOUNTED MONEY GOT ROUTED IN THE SYST EM THROUGH THIS MANIPULATION. IT IS TRITE LAW THAT THE ADDITIONS CO ULD NOT BE MADE MERELY ON THE BASIS OF GUESS WORK, DOUBTS, SUSPICION, CONJ ECTURES OR SURMISES. NOTHING ON RECORD ESTABLISHES THIS FACT AND SECONDL Y, IT WAS NOT THE CASE OF THE LD. AO TO MAKE THE ADDITIONS IN THE HANDS OF THE ASSESSEE ON THE BASIS OF SUBSEQUENT PRICE MANIPULATION IN THE MARKE T. THE LD. AO HAS DOUBTED THE TRANSACTIONS PRIMARILY BY QUESTIONING T HE HIGH SHARE PREMIUM. HOWEVER, TO REITERATE, THE REVENUE, BY QUE STIONING THE WISDOM OF THE INVESTOR, COULD NOT MAKE ADDITION IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT U/S 68 UNLESS I T WAS ESTABLISHED THAT THE ASSESSEES UNACCOUNTED MONEY WAS ROUTED IN THE BOOKS THROUGH THE MECHANISM OF FICTITIOUS SHARE ALLOTMENT. NOTHING ON RECORD ESTABLISHES THIS FACT. 5.4 SO FAR AS THE NATURE OF PROVISO TO SECTION 68 A S INTRODUCED BY FINANCE ACT, 2012 WITH EFFECT FROM 01/04/2013 IS CONCERNED, THE SAME HAS APTLY BEEN SETTLED BY JURISDICTIONAL BOMBAY HIGH COURT IN CIT VS. GAGANDEEP INFRASTRUCTURE PRIVATE LIMITED [80 TAXMANN.COM 272] WHEREIN IT HAS BEEN HELD AS UNDER: - (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSE SSMENT YEAR 2013-14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF TH E REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJEC T YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQU ENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO I NTRODUCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR T HAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITIO N OF THE PROVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER TH E THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE-PROVISO SECTION 68 O F THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUINENESS OF THE TR ANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SU SPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THE Y ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P.) LTD. (SUPRA) IN T HE CONTEXT TO THE 19 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. PRE-AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHE RE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FO R THE INCOME TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO TAX IN ACCORDANC E WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. RESPECTFULLY FOLLOWING THE SAME, WE FIND SUBSTANTIA L FORCE IN THIS ARGUMENT ADVANCED BY LD. AR THAT THE ASSESSEE WAS R EQUIRED TO PROVE THE SOURCE OF THE MONEY ONLY AND NOTHING BEYOND. WE FIND THAT THE ASSESSEE HAS DEMONSTRATED THE SAME BY FILING BANK S TATEMENTS, INCOME TAX RETURNS, FINANCIAL STATEMENTS & VARIOUS OTHER D OCUMENTS AS NOTED BY LOWER AUTHORITIES AND WHICH ARE NOT UNDER DISPUT E. 5.5 SO FAR AS THE PROVISIONS OF SECTION 56(2)(VIIB ) ARE CONCERNED, WE FIND THAT THE SAME DO NOT APPLY TO THE ASSESSEE IN VIEW OF THE FACT THAT THESE PROVISIONS ARE INSERTED BY FINANCE ACT, 2012 AND AP PLICABLE WITH EFFECT FROM 01/04/2013 ONLY. SECONDLY, THESE PROVISIONS DO NOT APPLY TO THE ASSESSEE SINCE THE ASSESSEE IS A PUBLIC LISTED COMP ANY. 5.6 THE CONSIDERATION OF THE TOTALITY OF ABOVE FACT S AND CIRCUMSTANCES LEAD US TO INEVITABLE CONCLUSION THAT LD. CIT(A) WA S JUSTIFIED IN PROVIDING RELIEF TO THE ASSESSEE IN TERMS OF CATENA OF JUDICI AL PRONOUNCEMENTS AS DISCUSSED IN THE IMPUGNED ORDER. FINDING NO INFIRMI TY IN THE SAME WE DISMISS THE APPEAL. 9. THE FACTS OF THE PRESENT APPEAL FOR THE YEAR UND ER CONSIDERATION ARE IDENTICAL TO THE FACTS WHICH HAVE ALREADY BEEN CONSIDERED BY THE CO-ORDINATE BENCH FOR AY 2011- 12. IF ONE ANALYZES THE FACTS OF THE PRESENT YEAR IN THE LIGHT OF FINDINGS RECORDED BY THE TRIBUNAL FOR THE PRECEDING YEAR, WE FIND THAT FOR T HE YEAR UNDER CONSIDERATION, FACTS ARE MUCH BETTER WHEN COMPARED TO PREVIOUS FINANCIAL YEA R. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED ENORMOUS DETA ILS IN ORDER TO PROVE THE IDENTITY OF THE SUBSCRIBERS. IN FACT THE LOWER AUTHORITIES NEV ER DISPUTED THE IDENTITY OF THE PARTIES. IN SO FAR AS GENUINENESS OF TRANSACTION AND CREDITW ORTHINESS OF THE PARTIES, MONEY HAS BEEN ROUTED THROUGH PROPER BANKING CHANNEL. THE ASS ESSEE HAS ALSO TAKEN APPROVAL 20 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. FROM SEBI FOR PREFERENTIAL ALLOTMENT OF SHARES AS P ER SEBI REGULATIONS 2009, AS PER WHICH, BEFORE ISSUE OF PREFERENTIAL ALLOTMENT OF SH ARES, THE ASSESSEE NEEDS TO TAKE APPROVAL FROM SEBI WITH NECESSARY DETAILS. THE RULE S FURTHER PRESCRIBED THAT SHARES CANNOT BE ISSUED AT A PRICE NOT LESS THAN THE HIGHE R OF THE AVERAGE WEEKLY HIGH AND LOW OF CLOSING PRICES OF RELATED EQUITY SHARES QUOT ED IN THE RECOGNISED STOCK EXCHANGE, DURING LAST SIX MONTHS OR THE AVERAGE OF WEEKLY HIGH AND LOW OF CLOSING PRICES OF RELATED EQUITY SHARES. THE ASSESSEE ALSO FILED COMPLETE DETAILS OF CLIENT MASTER DATA ISSUED BY NSDL AND CDSL ALONG WITH KYC OF SHARE APPLICANT FOR ALLOTMENT LETTERS, BANK STATEMENTS, DE-MAT ACCOUNT STATEMENT ETC. THE SHARES ISSUED ARE CREDITED TO DE-MAT ACCOUNTS OF THE SHAREHOLDERS . THE ASSESSEE ALSO FILED VALUATION REPORT ISSUED BY AN INDEPENDENT AUDITOR W HERE THEY HAVE ARRIVED AT A VALUE OF SHARE AS PER THE PREVAILING RATE QUOTED IN THE R ECOGNISED STOCK EXCHANGE. AS REGARDS, CREDITWORTHINESS OF THE PARTIES, THE ASSES SEE HAS FILED COMPLETE SET OF INCOME TAX RETURN ALONG WITH BANK STATEMENTS OF SUBSCRIBER S. ALL THE SUBSCRIBERS HAVE FILED THEIR RETURN OF INCOME AND ALSO EXPLAINED THE SOURC E OF INCOME TO EXPLAIN AMOUNT INVESTED IN SHARES OF ASSESSEE COMPANY. IT IS NOT T HE CASE OF THE AO THAT THERE ARE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE SUBSCRIBE RS IMMEDIATELY PRECEDING TRANSFER OF AMOUNT TO THE ASSESSEE. NO CONTRARY OR ADVERSE MATERIAL BROUGHT ON RECORD TO SUSPECT THE GENUINENESS OF TRANSACTIONS AS WELL AS CREDITWORTHINESS OF THE PARTIES. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT 21 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE L D. CIT(A) IN ARRIVING AT CONCLUSION THAT THE AO WAS ERRED IN MAKING ADDITIONS TOWARDS S HARE CAPITAL U/S 68 OF THE ACT. 10. THE LD. CIT(A) HAS TAKEN SUPPORT FROM PLETHORA OF JUDICIAL PRECEDENCE INCLUDING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT. LTD.216 CTR 195 (SC), WHEREIN, IT WAS HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THE ASSESSMENT IN ACCORDANCE WITH LAW, BUT THESE AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME U/S 68 OF THE ACT. THE LD. CIT(A) HAVE ALSO TAKEN SUPPORT FROM THE DECISION OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD, WHERE IT WAS CATE GORICALLY HELD THAT PROVISIONS OF SECTION 68 OF THE ACT, INTRODUCED BY FINANCE ACT, 2 012 W.E.F. 01/04/2013 DOES NOT HAVE ANY EFFECT TO THE CASE. THE COURT FURTHER OBSE RVED THAT PRIOR TO THERE TO AS PER LOVELY EXPORT (P) LTD., THE AO HAS TO ASSESSEE THE SHAREHOLDERS BUT CANNOT ASSESS SAME AS UNDISCLOSED INCOME OF ASSESSEE AS UNEXPLAIN ED CASH CREDITS. IN ANOTHER DECISION, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ORCHID INDUSTRIES PVT. LTD. (2017) 397 ITR 0136 (BOM.) HELD THAT ONCE IDEN TITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES ARE PROVED BY F ILING ENORMOUS DETAILS, THEN THE AO CANNOT MAKE ADDITIONS MERELY FOR THE REASON THAT SO ME PARTIES ARE NOT APPEARED BEFORE THE AO WITH REFERENCE TO SECTION 133(6) NOTI CES. THEREFORE, WE ARE OF THE 22 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. CONSIDERED VIEW THAT THE AO WAS ERRED IN MAKING ADD ITIONS TOWARDS SHARE CAPITAL U/S 68 OF THE ACT. THE ACTION OF THE AO IN TAXING SHARE CAPITAL U/S 68 OF THE ACT IS NOTHING BUT MERE SUSPICION AND SURMISES WITHOUT ANY BASIS O R FINDINGS AS TO ASSESSEES UNACCOUNTED MONEY WAS ROUTED IN THE BOOKS THROUGH T HE MECHANISM OF FICTITIOUS SHARE ALLOTMENT. 11. COMING TO THE ARGUMENTS OF LD. AR, IN THE LIGH T OF DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GAG ANDEEP INFRASTRUCTURE PVT. LTD.(SUPRA) AND THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS LOVELY EXPORT (P.) LTD. (SUPRA). WE FIND THAT ALTHOUGH THE LD. DR TRI ED TO DISTINGUISH THE ABOVE TWO CASES IN THE LIGHT OF FACTS OF PRESENT APPEAL, WE FIND T HAT THAT THE FACTS OF THE PRESENT CASE ARE MUCH STRONGER THAN FACTS ALREADY CONSIDERED BY THE HONBLE COURTS IN THE ABOVE CASES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THA T THERE IS NO MERIT IN THE ARGUMENTS ADVANCED BY THE LD. DR THAT RATIO LAID DO WN BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORT (P) LTD.(SUPRA) HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 12. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH VIEWS TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEE OWN CASE FOR EARLIER YEAR AND ALS O BY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORT (P) LTD.(SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED ADDITIONS MADE BY THE AO 23 ITA NO.5952/MUM/2017 BANAS FINANCE LTD. TOWARDS SHARE CAPITAL U/S 68 OF THE ACT. HENCE, WE ARE INCLINED TO UPHELD THE DECISION OF THE LD. CIT(A), RESULTING INTO DISMISSAL OF APPE AL OF THE REVENUE. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/02/201 9. SD/- SD/- ( SANDEEP GOSA IN ) (G. MANJUNATHA) #'$ /JUDICIAL MEMBER %'$ / ACCOUNTANT MEMBER /MUMBAI; & DATED : 27/02/2019 F{X~{T? F{X~{T? F{X~{T? F{X~{T? P.S / /. .. &#'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. ' () / THE APPELLANT (RESPECTIVE ASSESSEE) 2. *+() / THE RESPONDENT. 3. ,, -# ( ' ) / THE CIT, MUMBAI. 4. ,, -# / CIT(A)- , MUMBAI, 5. /0 *#1 , ,''1 2 , / DR, ITAT, MUMBAI 6. 3!4 / GUARD FILE. ' / BY ORDER, /' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI