ASST CIT 1(3)(1), MUMBAI V. REALTY CHECK PROPERTIES P.LTD, MUMBAI

ITA 5955/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2949 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 06-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH R AJORA
• Keywords: Reopening of assessment; Unexplained cash credit; Business income; Search and seizure; Source of fund; Deemed to accrue or arise in india; Question of law; Fair market value; Capital receipt; Onus to prove
• Section: 131; 68; 148; 56; 143(3); 56(2); 133(6); 143(1); 205; 195; 250

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE SHRI SANDEEP GOSAIN, JM & HONBLE SHRI N. K. PRADHAN , AM ./ I.T.A. NO . 5955/MUM/2016 ( / ASSESSMENT YEAR: 20 09 - 10 ) AC IT 1(3) (1 ) , ROOM NO. 540, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. REALTY CHECK PROPERTIES PVT. LTD. 1 ST FLOOR, 35 COURT CHAMBERS, SIR V.T. MARG, NEW MARINE LINES, MUMBAI - 400 020 ./ ./ PAN/GIR NO. A A DCR7160A ( / APPELLANT ) : ( / RESPONDENT ) & C.O. . NO . 6664 /MUM / 2017 ( / ASSESSMENT YEAR: 20 09 - 10 ) REALTY CHECK PROPERTIES PVT. LTD. 1 ST FLOOR, 35 COURT CHAMBERS, SIR V.T. MARG, NEW MARINE LINES, MUMBAI - 400 020 / VS. ACIT 1(3)(1), ROOM NO. 540, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ABI RAMA KARTHIKEYAN, DR / RESPONDENTBY : SHRI JITENDRA JAIN & SHRI MAHESH RAJORA, AR / DATE OF HEARING : 20/02 /201 9 / DATE OF PRONOUNCEMENT : 01.03.2019 2 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT A PPEAL AS WELL AS CROSS OBJECTION HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 21, MUMBAI DATED 29.07.16 FOR AY 2009 - 10. 2. SINCE, THE FACTS RAISED IN THE APPEAL FILED BY THE REVENUE AS WELL AS C.O. FILED BY THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. FIRST OF ALL WE TAKE UP APPEAL IN ITA NO. 5955 /MUM /201 6 FILED BY REVENUE FOR AY 2009 - 10 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1 . WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN JAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 3 CRORE AS UNEXPLAINED CASH CREDIT IN RESPECT OF THE SAID AMOUNT RECEIVED AS SHARE CAPITAL AND SHARE PREMIUM FROM M/S BEPL WHEN 3 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. IT WAS NOT FOUND TO BE CREDITWORTHY TO MAKE SUCH A HUGE INVESTMENT.' 2. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) WAS JUSTIFIED IN IGNORING THE FINDING OF THE AO THAT THE ONUS OF PROVING CREDITWORTHINESS OF THE INVESTOR AND GENUINENESS OF TRANSACTION WAS NOT DISCHARGED BY ASSESSEE, DUE TO FAILURE ON ITS PART TO PRODUCE THE PRINCIPAL OFFICER OF THE INVESTOR CO MPANY AS DEMANDED BY THE AO DURING ASSESSMENT PROCEEDING FOR EXAMINING CREDITWORTHINESS OF THE INVESTOR.? 3. WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT (A) WAS RIGHT IN DELETING THE ADDITION ON THE BASIS OF SUBMISSIONS MADE BY ASSES SEE WITHOUT MAKING AN INQUIRY AS ENVISAGED U/S 250 EITHER HIMSELF OR THROUGH THE AO BEFORE DECIDING THE ISSUE THEREBY RENDERING THE APPEAL ORDER AS BAD IN LAW AND PROCEDURE WHICH NEED TO BE QUASHED/SET - ASIDE. ? THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND O R WITHDRAW THE AFORESAID GROUND OF APPEAL. COPY OF THE CIT (A)'S ORDER IS RECEI VED ON 0810812016. LAST DATE FOR FILING APPEAL IS 06.10.2016. 4 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 4 . AS PER THE FACTS OF THE PRESENT CASE, THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED ON 29.09.2009 D ECLARING TOTAL INCOME AT RS. 1,85,71,005 / - THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, ON RECEIPT OF CERTAIN INFORMATION FROM DGIT(LNV), MUMBAI, THE ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 28.03.2014 . THEREAFTER PROVIDING SUFFICIENT OPPORTUNITY OF HEARING AND SEEKING REPLY OF THE ASSESSEE, ASSESSMENT ORDER U/S 143(3) R.W.S 147 OF THE I.T. ACT WAS PASSED THEREBY MAKING CERTAIN ADDITIONS /DISALLOWANCES. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE THEREBY DELETING THE ADDITIONS MADE BY AO U/S 68 OF THE ACT. HOWEVER, THE ORDE R OF REOPENING OF ASSESSMENT WAS UPHELD. NOW BEFORE US, THE REVENUE AS WELL AS ASSESSEE HAVE PR EFERRED THEIR APPEAL AND CROSS OBJECTION RESPECTIVELY . FIRSTLY WE ARE DEALING WITH THE APPEAL FILED BY THE REVENUE. 5 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. GROUND NO. 1 TO 3 5 . SINCE ALL THESE GROUND S RAISED BY THE REVENUE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 3 CRORE AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY THE ASSESSE E , THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 6 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD , JUDGMENT CITED AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 7 . LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED UPON THE ORDER PASSED BY AO AND SUBMITTED THAT THE CASE OF ASSESSEE WAS REOPENED AFTER RECEIVING INFORMATION FROM THE OFFICE OF CCIT, MUMBAI TO THE EFFECT THAT THE ASSESSEE HAD RECEIVED PREMIUM FOR ALLOTMENT OF SHARES AMOUNTING TO RS. 7,60,00,000/ - WHICH COMES TO RS. 190 PER SHARE. THE INTRINSIC VALUE OF SHARES WERE MUCH LESS 6 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. TO COMMAND SUCH A HUGE AMOUNT OF PREMIUM AND THUS THE PURPORTED TRANSACTIO NS WERE NOT GENUINE. IT WAS SUBMITTED THAT IN ORDER TO VERIFY THE NATURE AND SOURCE OF THE RECEIPT OF FUNDS, NECESSARY NOTICES U/S 133(6) WERE ISSUED TO ALL THE FIVE PARTIES INCLUDING THE TWO CONCERNS FROM WHOM THE SHARE PREMIUM WAS RECEIVED. IT WAS ALSO S UBMITTED THAT AFTER VERIFYING, THE AO CAME TO THE CONCLUSION THAT THE CREDITWORTHINESS OF ONE OF THE CONCERN I.E. BEPL WAS NOT GENUINE AND THE DETAILED REASON IN THIS RESPECT HAS ALREADY BEEN GIVEN IN PARA NO. 6.3 OF ITS ORDER AND THUS ADDITIONS WERE MADE. LD. DR ALSO RELIED UPON THE JUDGMENT IN THE CASE OF MAJOR METALS VRS. UNION OF INDIA 207 TAXMAN.COM 185 (BOM HC) AND CIT VRS. P. MOHANKALA (2007) 161 TAXAMAN. 169. IT WAS ALSO SUBMITTED THAT PREMIUM RECEIVED BY THE ASSESSEE WAS UNREASONABLE AS THE SHARES WERE ISSUED AT UNJUSTIFIABLE AMOUNT OF PREMIUM AND THE ENTIRE TRANSACTIONS WERE NOT GENUINE. THEREFORE, LD. CIT(A) HAD ERRED IN DELETING THE ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT. 7 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 8 . ON THE OTHER HAND, LD. AR RELIED UPON THE ORDERS PASSED BY THE LD. CIT(A) AND REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ADMITTEDLY ASSESSEE HAD RECEIVED SHARE P REMIUM FROM TWO CONCERNS I.E. SBPL AND BEPL, BUT THE ADDITIONS WERE MADE ONLY IN RE SPECT OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM BEPL. IT WAS ALSO SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE BEPL HAD UNDERTAKEN SUBSTANTIAL INVESTMENT BUSINESS, BY MAKING INVESTMENT IN VARIOUS COMPANIES AS IS REFLECTED IN ITS BALANCE S HEET, THEREFORE MAKING HIGH RISK INVESTMENT AND MAKING INVESTMENT IN FIX ASSETS HAD NO RELEVANCE FOR CREDITWORTHINESS OF THE COMPANY. IT WAS FURTHER SUBMITTED THAT THE CREDITWORTHINESS CAN BE SEEN FROM THE BALANCE SHEET AND BANK STATEMENT. EVEN OTHERWISE, ALL SUPPORTIVE DOCUMENTS HAD BEEN MADE AVAILABLE BEFORE THE AO FOR PROVING THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE INVESTORS. THE SOURCE OF INVESTMENT WAS ALSO SHOWN TO BE SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY BEPL. LD. AR FURTHER SUBMITTED THAT THE CASE OF M/S MAJOR METAL LTD. VRS. UNION OF INDIA 359 ITR 450 (BOM) HAD BEEN EXPLAINED AND DISTINGUISHED BY THE HONBLE 8 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. HIGH COURT IN THE CASE OF KHUBCHANDANI HEALTH PARK PVT. LTD. VRS. CIT (WTA NO. 3027/2015). THE ASSESSEE HAD ALSO RELIED UPON THE DECISION OF CIT VRS. LOVELY EXPORT PVT. LTD. 319 ITR 5 (SC) , GREEN INFRA LTD. 7762/MUM/2012, GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014 TIOL - 656, UMACHARAN SHAH VRS. CIT 37 ITR 271 (SC), CIT VRS. DWARKADISH INVESTMENT PVT. 330 ITR 298, ETC . 9. AFTER HAVING HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND AFTER APPRECIATING THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT B EFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE OR DERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 6.1 TO 6.19 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 6.6 TO 6.19, WHICH IS REPRODUCED BELOW: - 6.6. I HAVE CONSIDERED THE FACTS ON RECORD AND SUBMISSIONS CAREFULLY. THE CASE OF MAJOR METAL LTD. LARGELY REVOLVED ON THE ISSUE OF PREMIUM. HOWEVER, IN THE PRESENT CASE THE ASSESSING OFFICER HAS ACCEPTED THE 9 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. INVESTMENT BY M/S. SBPL INFRASTRUCTURE LTD. WHICH HAS ALSO SUBSCRIBED TO THE SHARE CAPITAL OF THE APPELLANT AT A PREMIUM AMOUNTING TO A TOTAL OF RS 500 LAKHS. THUS, THE FACT THAT SHARES WERE ISSUED AT PREMIUM AND THE ISSUE OF GENUINENESS ARISING FROM LACK OF JUSTIFICATION FOR THE PREMIUM DOES NOT SURVIVE. 6. 7. I DO NOT FIND ANY MERIT IN THE CONTENTION OF THE APPELLANT THAT THE INVESTMENT BEING A SHARE CAPITAL IS A CAPITAL RECEIPT AND THEREFORE CANNOT BE CONSIDERED AS INCOME IN THE HANDS OF THE APPELLANT. THE CREDITS FALL WITHIN THE SCOPE OF SECTION 68 WHICH I S A DEEMING PROVISION. SEVERAL CASE LAWS INCLUDING THOSE OF THE APEX COURT AND HIGH COURT HAVE CONSIDERED CREDITS MADE TO CAPITAL ACCOUNT OF THE ASSESSEE'S TO BE COVERED UNDER THE PROVISIONS OF SECTION 68 AND THEREFORE DEEMED INCOME. THE RULE FOR APPLICATI ON OF SECTION 68 IS THAT THE IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR/LENDER /CREDITOR HAS TO BE ESTABLISHED AND THE GENUINENESS OF THE TRANSACTION HAS TO BE ESTABLISHED. 6.8. THE APEX COURT UPHELD THE ADDITION U/S 68 IN THE CASE OF CREDITS AS SHARE CAPITAL IN THE CASE OF N. TARIKA PROPERTY INVEST. (P.) LTD. V. COMMISSIONER OF INCOME - TAX*[2014] 51 TAXMANN.COM 387 (SC) BY DISMISSING THE SLP FILED BY THE APPELLANT. 10 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 6.9. IN CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98/[1993] 70 TAXMAN 69 (DELHI) THE HON' BLE DELHI HIGH COURT HELD THAT IN THE CONTEXT OF SECTION 68 OF THE ACT THAT: (I) 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 BAN KING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (II) IF THE RELEVANT DETAILS OF THE ADDRESS OF 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. (III) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES. (IV) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONST RUE IT, WITHOUT MORE, AGAINST THE ASSESSEE. 11 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. (V) THE AO IS DUTY - BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND VERACITY OF THE REPUDIATION. 6.10. IN CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 2 87/59 TAXMAN 568 (DELHI) IT WAS OBSERVED: 'EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES, CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SOME BOGUS SHAREHOLDERS IN WHOSE NAMES SHARES HAD BEEN ISSUED AND THE MONEY MAY HAVE BEEN PROVIDED BY SOME OTHER PERSONS.' 6.11. BOTH THE AFOREMENTIONED DECISIONS WERE AGAIN CONSIDERED BY THE DIVISION BENCH OF HON'BLE DELHI HIGH CO URT IN CIT V. LOVELY EXPORTS LTD. 120081 299 ITR 268. THEREAFTER, IN CIT V. NOVA PROMOTERS & FINLEASE (P.) LTD. [20121 342 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI) IT WAS OBSERVED AS UNDER: 38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRE CIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND 12 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. S HAREHOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACT ED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC. 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BR ING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PREMEDITATED PLAN A S MOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO.' 6.12. IN CIT V. NIPUN BULIDERS & DEVELOPERS [2013] 350 ITR 407/214 TAXMAN 429/30 TAXMANN.COM 292 (DELHI) IT WAS HELD THAT THE POI NT AT WHICH THE INITIAL ONUS ON THE ASSESSEE TO PROVE THE UNEXPLAINED DISCREDIT WOULD STAND 13 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. DISCHARGED DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IT WAS POINTED OUT THAT WHERE THERE IS PRIVATE PLACEMENT OF SHARES 'THE ASSESSEE CANNOT SIMPLY FUR NISH DETAILS AND REMAIN QUIET EVEN WHEN SUMMONS ISSUED TO SHAREHOLDERS UNDER SECTION 131 RETURN UNSERVED AND UNCOMPLIED. THIS APPROACH WOULD BE UNREASONABLE AS A GENERAL PROPOSITION AS THE ASSESSEE CANNOT PLEAD THAT THEY HAD RECEIVED MONEY, BUT COULD DO NO THING MORE AND IT WAS FOR THE ASSESSING OFFICER TO ENFORCE SHAREHOLDERS ATTENDANCE. SOME CASES MIGHT REQUIRE OR JUSTIFY VISIT BY THE INSPECTOR TO ASCERTAIN WHETHER THE SHAREHOLDERS/ SUBSCRIBERS WERE FUNCTIONING OR AVAILABLE AT THE ADDRESSES, BUT IT WOULD B E INCORRECT TO STATE THAT THE ASSESSING OFFICER SHOULD GET THE ADDRESSES FROM REGISTRAR OF COMPANIES' WEBSITE OR SEARCH FOR THE ADDRESSES OF SHAREHOLDERS AND COMMUNICATE WITH THEM. SIMILARLY, CREDITWORTHINESS WAS NOT PROVED BY MERE ISSUE OF A CHEQUE OR BY FURNISHING A COPY OF STATEMENT OF BANK ACCOUNT. CIRCUMSTANCES MIGHT REQUIRE THAT THERE SHOULD BE SOME EVIDENCE OF POSITIVE NATURE TO SHOW THAT THE SAID SUBSCRIBERS HAD MADE A GENUINE INVESTMENT, ACTED AS ANGEL INVESTORS, AFTER DUE DILIGENCE OR FOR PERSONAL REASONS. THUS, FINDING OR A CONCLUSION MUST BE PRACTICABLE, PRAGMATIC AND MIGHT IN A GIVEN CASE TAKE INTO ACCOUNT THAT THE ASSESSEE MIGHT FIND IT DIFFICULT TO UNIMPEACHABLY ESTABLISH CREDITWORTHINESS OF THE SHAREHOLDERS.' 14 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 6.13. IN CIT V. N.R. PROTFOLIO (P .) LTD. [2014] 222 TAXMAN 157/42 TAXMANN.CORN 339 (DELHI) THE NEED OF THE ASSESSEE TO SATISFY THE AO ABOUT THE 'IDENTITY, CREDITWORTHINESS AND GENUINENESS' OF THE CREDITORS WAS REITERATED. IT WAS POINTED OUT THAT 'MERE PRODUCTION OF INCORPORATION DETAILS, PAN NOS. OR THE FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER PAPER WORK OR DOCU MENTATION BUT GENUINENESS, CREDITWORTHINESS, IDENTITY ARE DEEPER AN D OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSONS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 6.14. AS PER VARIOUS JUDICIAL PRONOUNCEMENTS, THE ASSESSEE'S ONUS COMPRISES OF PROVING ( THE IDENTITY OF CREDITOR, (II) CREDIT WORTHINESS, AND (III) GENUINENESS OF THE TRANSACTIO N. RELIANCE IS PLACED ON CIT V. KORLAY TRADING CO. LTD. [1998] 232 ITR 820 (CAL.), C. KANT & CO. V. CIT [1980] 126 ITR 63 (CAL.) AND SHANKAR INDUSTRIES V. CIT [1978] 114 ITR 689 (CAL.). IN VIEW OF DELHI HIGH COURT FULL BENCH DECISION IN THE CASE OF CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98, THE ASSESSING 15 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. OFFICER IS EMPOWERED TO LOOK INTO THE SOURCE OF MONEY RECEIVED BY THE APPELLANT ON SHARE APPLICATION AND IF THE SOURCE IS NOT PROVED SECTION 68 CAN BE MADE APPLICABLE. FURTHERMORE, THE DISTINCTION BETWEE N A PRIVATE LIMITED COMPANY AND A PUBLIC LIMITED COMPANY HAS BEEN CONSIDERED AND IT IS NOTED THAT THE ONUS IN THE CASE OF A PRIVATE LIMITED COMPANY IS DIFFERENT AND SIGNIFICANTLY HIGHER THAN SAY IN THE CASE OF PUBLIC ISSUE MADE BY A PUBLIC LIMITED COMPANY, AS WAS THE CASE IN SOME OF THE CASES RELIED UPON BY THE APPELLANT. 6.15. THUS, IT CAN BE SAFELY CONCLUDED THAT EVEN IN CASE OF CREDIT APPEARING AS SHARE CAPITAL AND PREMIUM, SECTION 68 CAN BE INVOKED IN THE I CASE OF A PRIVATE LIMITED COMPANY. NOW COMING TO THE FACTS OF THIS CASE, THE INVESTMENT HAS BEEN MADE BY BEPL. BEPL HAS RESPONDED TO THE NOTICE U/S 133(6) IN THE COURSE OF ASSESSMENT PROCEEDINGS AND FILED THE DETAILS OF NAME, ADDRESS, PAN NUMBERS, AUDITED ACCOUNT FOR THE FYRS 2008 - 09, 2009 - 10 , COPY O F ACKNOWLEDGEMENT OF RETURN OF INCOME FILED BY THE BEPL, EXTRACT OF MINUTES OF MEETING OF THE BOARD OF DIRECTORS OF BEPL, RELEVANT EXTRACT OF BANK STATEMENT OF BEPL SHOWING THE PAYMENT TOWARDS SHARE SUBSCRIPTION, FORM 23AC FILED BY BEPL FOR FILING OF BALAN CE SHEET AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES AND ALSO BASIS OF SHARE VALUATION. THE SAME WAS BEFORE THE ASSESSING OFFICER. THE TRANSACTION 16 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. HAS BEEN CONFIRMED. THUS, THE ONUS OF EXPLAINING THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF T HE CREDIT AS SHARE APPLICATION HAS BEEN DISCHARGED BY THE APPELLANT AND THE BURDEN SHIFTS ON THE ASSESSING OFFICER TO SHOW THAT THE AMOUNT RECEIVED IS INCOME OF THE APPELLANT. 6.16. THE ASSESSING OFFICER HAS DOUBTED THE CREDIT WORTHINESS OF BEPL. THE ASSES SING OFFICER HAD ASKED THE APPELLANT TO PRODUCE THE PRINCIPAL OFFICER OF BEPL WHICH THEY COULD NOT. IT IS NOTED THAT THE APPELLANT DID NOT ISSUE ANY SUMMONS TO BEPL U/S 131. NOR DID HE CALL FOR ANY OTHER INFORMATION FROM BEPL. BEPL IS A COMPANY REGISTERED AND OPERATING FROM KOLKATA. THE ASSESSING OFFICER CONCLUDED THAT BEPL DID NOT HAVE CREDIT WORTHINESS SINCE IT DID NOT HAVE SIGNIFICANT BUSINESS ACTIVITY AND BUSINESS INCOME. THE COPY OF AUDITED ACCOUNTS OF BEPL WAS AVAILABLE BEFORE THE ASSESSING OFFICER. H E IGNORED THE FACT THAT THE COMPANY HAD SHARE CAPITAL AND RESERVES OF RS 35.30 CRORES AND CURRENT LIABILITIES OF RS 12.50 CRORES AS ON 31.03.2009. IT HAD MADE INVESTMENTS IN VARIOUS COMPANIES AMOUNTING TO RS 42.85 CRORES INCLUDING THE INVESTMENT OF RS 3 CR ORES IN THE APPELLANT COMPANY. THE ASSESSING OFFICER DID NOT CALL FOR ANY FURTHER DETAILS FROM BEPL. BEPL IS ASSESSED TO TAX. THE ASSESSING OFFICER HAS NOT PROVED THAT THE MONEY RECEIVED BY BEPL IS UNEXPLAINED MONEY WHICH IS ROUTED TO THE APPELLANT. THE MO NEY HAS BEEN RECEIVED BY THE 17 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. APPELLANT THROUGH BANKING CHANNELS. IF THERE IS ANY DOUBT AS REGARDS THE MONEY RECEIVED BY BEPL, ADDITIONS CAN BE MADE, IF PROVED AND JUSTIFIED, IN THE HANDS OF BEPL BUT NOT THE APPELLANT HERE. BEPL IS ASSESSED TO TAX. 6.17. I AM AWARE THAT THE RECEIPT TOWARDS SHARES ISSUED BY A PRIVATE COMPANY IN EXCESS OF ITS FACE VALUE TO THE EXTENT IT EXCEEDS ITS FAIR MARKET VALUE IS TAXABLE AS INCOME FROM OTHER SOURCES AS PER SECTION 56 (2)(VIIB). HOWEVER, THIS SECTION IS W.E.F. 1 - 4 - 2013 AN D THUS NOT APPLICABLE TO CURRENT ASSESSMENT YEAR 2009 - 10. IT IS ALSO TO BE NOTED THAT SECTION 68 AND SECTION 56 (2)(VIIB) OPERATE IN DIFFERENT FIELDS. THUS, IF ANY CREDIT GETS HIT BY SECTION 68 ON FAILURE TO DISCHARGE THE ONUS OF SHOWING IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF TRANSACTIONS, THE SECTION 56(2) (VIIB) NEED NOT BE INVOKED AND THE ENTIRE CREDIT IS DEEMED TO BE THE INCOME. HOWEVER, EVEN IF CREDIT MEETS THE REQUIREMENT OF SECTION 68, IF THE SHARES ISSUED AT A PREMIUM EXCEEDS THE FAIR MARKET VALUE, SUCH EXCESS OVER FAIR MARKET VALUE WILL BE ASSESSABLE AS INCOME FOR AY 13 - 14 ONWARDS. IN THE PRESENT CASE THE ASSESSING OFFICER HAS ACCEPTED THE PREMIUM SINCE THE SHARE APPLICATION BY SBPL INFRASTRUCTURE LTD. OF RS 500 LAKHS HAS BEEN ACCEPTED. THE P ROJECTIONS GIVEN BY THE APPELLANT BASED ON WHICH THE PREMIUM WAS COMPUTED HAS ALSO NOT BEEN QUESTIONED. 18 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 6.18. IN THE FACTS OF THE PRESENT CASE, THE IDENTITY OF THE INVESTOR BEPL IS NOT IN DOUBT. IT HAD SHARE CAPITAL AND RESERVES AND LOANS OF RS 3530 LAKHS OUT OF WHICH INVESTMENT OF RS 300 LAKHS WERE MADE IN THE APPELLANT COMPANY. THE SAME WERE MADE THROUGH BANKING CHANNELS. THE INVESTMENT IS REFLECTED IN ITS AUDITED ACCOUNTS. IF THERE ARE DOUBTS REGARDING THE AMOUNT RAISED BY BEPL THE CORRECT COURSE IS TO I NVESTIGATE THAT AND IF JUSTIFIED, MAKE ADDITIONS IN THE HANDS OF BEPL. SUCH ADDITION CANNOT BE MADE IN THE HANDS OF THE APPELLANT. THIS IS THE VIEW SUPPORTED BY THE DECISIONS IN THE CASES OF CIT VS LOVELY EXPORTS PVT. LTD. 216 CTR 195 (SC) AND CIT VS DIVIN E LEASING & FINANCE LTD. 299 ITR 268 (DEL). 6.19. IN THIS FACT MATRIX, THE GROUND OF APPEAL NO 2 IS ALLOWED AS ABOVE. 10 . WE HAVE GONE THROUGH THE ABOVE ORDER PASSED BY LD. CIT( A) AND WE FIND THAT THE ASSESSEE HAD MET ALL THE OBJECTIONS RAISED BY THE AO WHILE FRAMING ORDER OF ASSESSMENT. IT IS AN UNDISPUTED FACT THAT IN FACT THE ASSESSMENT WAS REOPENED ONLY ON THE GROUND THAT THE INTRINSIC VALUE OF SHARES WERE MUCH LESS TO COMMAN D TO A HUGE AMOUNT OF PREMIUM, THUS THE AO HAD FORMED 19 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. THE BELIEF THAT THE PURPORTED TRANSACTIONS WERE NOT GENUINE. IN THIS CASE, THE SHARE PREMIUM WAS RECEIVED FROM TWO CONCERNS I.E. SBPL AND BEPL. HOWEVER, ADMITTEDLY, NO ADDITIONS WERE MADE IN RESPECT OF PREMIUM RECEIVED IN THE CASE OF SBPL. IT IS IMPORTANT TO MENTION HERE THAT FROM THE ABOVE CONCERNS, SAME SHARE PREMIUM @ 190 PER SHARE WAS RECEIVED BY THE ASSESSEE, BUT FOR THE REASONS BEST KNOWN TO THE AO, NO ADDITIONS WERE MADE IN THE CASE OF PREMIUM REC EIVED FROM SBPL. ON THIS ASPECT, NO SATISFACTORY REPLY WAS GIVEN BY LD. DR, WHICH GOES TO SHOW THAT THE AO CANNOT BE ALLOWED TO APPROBATE AND REPROBATE IN SAME BREATH AND CANNOT HAVE TWO DIFFERENT TREATMENTS IN THE CASE OF SAME TRANSACTIONS. OTHERWISE ALSO , THE CREDITWORTHINESS OF BEPL WAS DOUBTED ONLY ON THE GROUND THAT BEPL HAD MADE HUGE INVESTMENTS IN SHARES OF VARIOUS CONCERNS WHICH ARE HIGH RISK AND HAD NOT MADE ANY FIXED ASSETS. WHEREAS FROM THEIR OWN ADMISSIONS, THE AO HAD FOUND THAT BEPL HAD RECEIVE D FUNDS ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM AND OUT OF SUCH FUNDS, INVESTMENTS HAVE BEEN MADE IN THE ASSESSEES COMPANY, WHICH GOES TO SHOW THAT AO ACKNOWLEDGES THE SOURCE OF SOURCE OF BEPL FOR INVESTING IN THE ASSESSEE COMPANY. THE ASSESSEE HAD 20 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. PRODUCED RECORD IN ORDER TO SHOW THAT INVESTING CONCERN WAS ASSESSED TO TAX, THEREFORE IN SUCH A CIRCUMSTANCES AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF PCIT VRS. PARADISE INLAND SHIPPING (2018) 93 TAXMAN.COM 84 (SC), IT COULD BE CONCLUDED THAT A SSESSEE HAD PROVED THE GENUINENESS OF SHARE TRANSACTIONS. 11. APART FROM THIS, LD. AR HAS ALSO RELIED UPON ORDER IN THE CASE OF PSYCHOTROPIC LEASING & FINANCE VRS. ITO (2019) 173 DTR (DEL) 358, WHEREIN IT HAS BEEN HELD THAT MEAGER INCOME /LOSS DECLARED BY THE INVESTOR COMPANY IS NOT A SOLE CRITERIA TO EXAMINE THE CREDITWORTHINESS OF THE SHAREHOLDERS . 12. THE AO HAD LOST SIGHT OF THE FACT THAT HIGH PREMIUM CHARGED BY THE ASSESSEE CANNOT BE A GROUND FOR MAKING THE ADDITION, BECAUSE WHAT SECTION 68 OF THE ACT, PRE - SUPPOSES TO CHARGE TO THE INCOME TAX, IS THE SUM FOUND TO BE CREDITED IN THE BOOKS OF THE ASSESEEE IF, (I) THE NATURE AND SOURCE OF THE SAME IS NOT EXPLAINED BY THE ASSESSEE, (II) THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY BY THE AO. IT FURTHER STATES THAT WHERE THE ASSESSEE IS A PRIVATE COMPANY AND THE SOME SHOW CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE 21 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, THEN ANY EXPLANATION OFFERED BY SUCH ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM, SO CREDITED, WHICH IS FOUND TO BE SATISFACTORY BY THE AO. THEREFORE, IN SUCH CIRCUMSTANCES, WHAT ASSESSEE NEEDS TO PROVE IS, (1) NATURE OF RECEIPT, (2) SOURCE OF RECEIPT AND (3) SOURCE OF INVESTOR. 13 . FROM THE RECORDS, WE OBSERVED THAT ASSESSEE HAD DULY PROVED THE ABOVE INGREDIENTS. MOREOVER, IN THE PRESENT CASE, THE SHARE PREMIUM WAS PAID BY TWO PARTIES BUT THE ADDITION WAS MADE ONLY IN RESPECT OF ONE CONCERN. THUS IT CAN BE CONCLUDED THAT AO HAD ACCEPTED THE RECEIPT OF SHARE PREMIUM IN CASE OF OTHER CONCERN. 14 . IN THE CASE OF GREEN INFRA LTD, GAGANDEEP INFRASTRUCTURE PVT. LTD. (SUPRA) , IT HAS BEEN HELD THAT THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION, WHICH DOES NOT 22 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. REQUIRE ANY JUSTIFICATION. FURTHER, THE PREMIUM IS A CAPITAL RECEIPT WHICH HA S TO BE DEALT WITH IN ACCORDANCE WITH SECTION 78 OF THE COMPANIES ACT 1956 . 15 . WE HAVE ALSO CONSI DERED THE SUBMISSION, WHEREIN THE ASSESSEE HAS DISTINGUISHED THE JUDGMENTS RELIED UPON BY THE REVENUE AND WE ARE IN AGREEMENT WITH THE SAID REASONING. MORE PARTICULARLY IN THE CASE OF ITR VRS. M/S SRINGERI TECHNOLOGIES PVT. LTD. ITA NO. 3924/MUM/2014 DECIDED ON 29.12.17, THE COORDINATE BENCH HAD DISTINGUISHED THE FACTS OF M/S MAJOR METALS VRS. CIT(SUPRA) , IT WAS OBSERVED THAT ALL THE SUBSCRIBERS OF SHAR E CAPITAL IN THE ABOVE CITED CASE WERE NOT EVEN ASSESSED TO INCOME TAX. 16. LD. AR HAS ALSO SU BMITTED THAT IDENTICAL ISSUE HAD ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF ITAT IN ITA NO. 3212/MUM/ 2014 IN THE CASE OF SUNSHINE METALS AND ALLOYS VRS. I TO DECIDED ON 12.10.18 AND IN ITA NO. 2317/MUM/2017 IN THE CASE OF DCIT VRS. PIRAMAL REALTY PVT. LTD , WHEREIN IN PARA NO. 5 TO 16 IT WAS HELD AS UNDER: - 23 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ISSUED 59,850 1% NCCPS HAVING FACE VALUE OF 10/ - AT A PREMIUM OF 99,990/ - TO PCPL. THESE SHARES WERE ISSUED IN TWO TRANCHES OF 20,000 AND 39,850/ - SHARES RESPECTIVELY. IN RESPECT OF FIRST TRANCHE OF ISSUE OF SHAR ES WAS APPLIED BY PCPL AND MONEY FOR THE SAME WAS RECEIVED IN EARLIER YEAR I.E. YEAR ENDED 31ST MARCH 2011, WHICH WAS DISCLOSED AS APPLICATION MONEY RECEIVED PENDING ALLOTMENT UNDER THE CURRENT LIABILITIES IN THE FY ENDED 31.03.2011. THE SECOND TRANCHE WAS RECEIVED IN THE PREVIOUS YEAR 2011 - 12 RELEVANT TO AY 2012 - 13. THE ASSESSEE COMPANY FILED STATUTORY FORMS WITH ROC IN FORM NO. 2 FOR EACH TRANCHE SEPARATELY DISCLOSING THE NUMBER OF SHARES, FACE VALUE AND PREMIUM PER SHARE AND ALSO THE NAME OF THE ALLOTTEE . THE ASSESSEE ALSO FILED ITS ANNUAL RETURN OF WITH ROC IN FORM NO. 20B DISCLOSING THE DETAILS OF ACCOUNTS OF NUMBER OF SHARES, FACE VALUE AND PREMIUM OF SHARE, NAME AND ADDRESS OF SHAREHOLDERS. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSUED NOT ICE UNDER SECTION 133(6) OF THE ACT DATED 28.03.2014 REQUIRING THE ASSESSEE TO FURNISH DETAILS IN RESPECT OF SHARES ISSUED AT PREMIUM. THE ASSESSEE REPLIED AND FILED FOLLOWING DETAILS: - 24 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. ANNEXURE1 - DETAILS OF SHARE ALLOTMENT ANNEXURE 2 - FORM 2 FILED FO R EACH TRANCHE OF ALLOTMENT FILED WITH ROC ANNEXURE 3 - ANNUAL RETURN FILED IN FORM 20B FILED WITH ROC ANNEXURE 4 - DETAILS OF APPLICANT (INCLUDING PAN AND ADDRESS) SHARES ALLOTTED, CONSIDERATION, ETC.' 6. THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SHARE PREMIUM IS NOT ADDED TO THE RETURNED INCOME OF THE ASSESSEE. THE ASSESSEE FILED ITS REPLY DATED 16.03.2015, WHEREIN IT IS SUBMITTED THAT THE RETURN OF INCOME FILED BY PCPL AND ALSO AUDITED FINA NCIAL STATEMENT FOR THE AY 2012 - 13. THE AO INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND ADDED SHARE PREMIUM OF 598,44,01,500/ - , WITHOUT DISPUTING THE FACE VALUE OF SHARES TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS FAIL ED TO ESTABLISH THE NATURE AND SOURCE OF THE CREDIT ON THE ACCOUNT OF THE SHARE PREMIUM. THE CIT(A) DELETED THE ADDITION AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS NOTED ABOVE. 7. WE HAVE NOTED THAT DURING THE COURSE OF HEARING OF THIS APPEAL, THE LD CIT - DR IN ALL FAIRNESS ADMITTED THAT THE IDENTITY, SOURCE AND CREDITWORTHINESS OF THE 25 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. TRANSACTION IS NOT IN DOUBT BUT ONLY DISPUTE OF THE DEPARTMENT IS AS REGARDS THE NATURE OF THE TRANSACTION IN LIGHT OF THE HUGE PREMIUM CHARGED BY THE ASSESSEE. TH E LD CIT - DR PLACED HEAVY RELIANCE ON THE DECISION OF CO - ORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF PRATIK SYNTEX (P.) LTD. VS. ITO (2018)94 TAXMANN.COM 12. THE LD COUNSEL FOR THE ASSESSEE SH THAR EXPLAINED THAT THE SAID DECISION CANNOT BE APPLIED IN THE PRESENT CASE ON FACTS OF THE CASE. HE EXPLAINED THAT THE SAID DECISION IS RENDERED ON DIFFERENT SET OF FACTS AS COMPARED TO THE PRESENT CASE. HE STATED THAT THE VALUATION OF THE SHARE PREMIUM IS TO BE LOOKED INTO FOR THE PURPOSE OF SECTION 68 OF THE AC T. THE FACTS IN THAT CASE WERE THAT EQUITY SHARES WERE ISSUED IN THE YEAR UNDER CONSIDERATION TO THE PROMOTERS AS WELL AS THREE NEW PARTIES. BOTH THESE CLASSES OF SHAREHOLDERS WERE ISSUED EQUITY SHARES. PROMOTERS WERE ISSUED SHARES AT PAR WHEREAS PREMIUM O F RS. 4901 - PER SHARE WAS CHARGED FROM THE NEW PARTIES AND FOR THIS THE TRIBUNAL HAS MADE SPECIFIC NOTE OF THE FOLLOWING: DESPITE MAKING SUCH HUGE INVESTMENT IN THE COMPANY, THE COMPANY DID NOT KNOW THE WHEREABOUTS OF THOSE SHAREHOLDERS (PARA 6, PAGE 10 OF THE ORDER). 26 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. LD COUNSEL STATED THAT NO JUSTIFICATION FOR SUCH DIFFERENT ISSUE PRICE EVEN WITHIN THIS RELEVANT YEAR UNDER CONSIDERATION IS BROUGHT ON RECORD. THE TRIBUNAL NOTED THAT NO DOUBT THE PRICE CAN BE DIFFERENT IN GENUINE TRANSACTIONS AS WELL HOW EVER THE CASE GOT AGGRAVATED SINCE THE SHAREHOLDERS TO WHOM PREMIUM WAS CHARGED COULD NOT BE TRACED (PARA 6, PAGE 10 OF THE ORDER). THE AO DEPUTED AN INSPECTOR TO MAKE FIELD INQUIRIES WITH RESPECT TO THE SHAREHOLDERS. THE INSPECTOR REPORTED THAT THESE THRE E NEW SHAREHOLDERS ARE NOT AVAILABLE AT THE GIVEN ADDRESSES AND THEIR WHEREABOUTS ARE NOT KNOWN. THE ASSESSE IN THAT CASE WAS CONFRONTED WITH THE ADVERSE INSPECTOR REPORT BUT THE ASSESSEE COULD NOT PRODUCE CURRENT ADDRESSES OF THESE THREE NEW SHAREHOLDERS (PARA 6. PAGE 10 OF THE ORDER). THE CREDITWORTHINESS OF THE SHAREHOLDERS WAS ALSO NOT PROVED SINCE THE SHAREHOLDERS DID NOT HAVE THEIR OWN MONEY AS EVERY PAYMENTS MADE BY THEM TOWARDS SHARE MONEY IN THE FAVOUR OF THE ASSESSEE IS PRECEDED BY DEPOSIT IN THE HANK ACCOUNT AND THE BALANCE MAINTAINED REGULARLY BY THEM WAS MINISCULE (PARA 6, PAGE 14 OF THE ORDER). THE CONFIRMATIONS RECEIVED FROM THREE PARTIES WERE SIGNED BY THE SAME PERSON. THE ASSESSEE IN THAT CASE COULD NOT JUSTIFY THE CHARGEABILITY OF SUCH A HU GE SHARE PREMIUM RECEIVED FROM THREE NEW SHAREHOLDER VIS - A - VIS ISSUING SHARES AT PAR TO THE 27 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. ORIGINAL PROMOTERS WITHIN THE SAME RELEVANT YEAR UNDER CONSIDERATION. TO CONTEND THAT SECTION 56(2)(VIIB) R.W.S. 2(24XXVI) OF THE ACT ARE PLACED IN STATUTE BY FINAN CE ACT, 2012 W.E.F. 01 - 04 - 2013 AND NO QUESTION CAN HE RAISED AS TO THE VALUATION OF SHARES AT AN HUGE SHARE PREMIUM IS NOT CORRECT AS IN THE INSTANT CASE, THE GENUINENESS OF THE TRANSACTION OF RAISING OF SHARE CAPITAL INCLUSIVE OF SHARE PREMIUM TO THE TUNE OF RS. 300 LACS FROM THESE THREE NEW SHAREHOLDERS IS ITSELF NOT PROVED. 8. WE HAVE GONE THROUGH THE CASE LAWS RELIED BY THE ASSESSEE HAVE BEEN DISTINGUISHED BY THE TRIBUNAL WHILE RENDERING THE AFORESAID DECISION. WE SEEK TO SPECIFICALLY ADDRESS HOW THE TRIBUNAL DEALT WITH THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE (P.) LTD. (2017) 394 ITR 680. THE HONBLE TRIBUNAL HAS HELD THAT IN THE CASE OF GAGANDEEP (SUPRA) THE HON'BLE BOMBAY HIGH COURT CONSIDERED THE FACTUAL MATRIX OF THE CASE WHEREIN IT WAS OBSERVED THAT THE TAXPAYER SATISFIED THE THREE INGREDIENTS OF SECTION 68 OF THE ACT WHICH STOOD PROVED NAMELY IDENTITY AND CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF THE TRANSACTION AND ON THAT FACTUAL MA TRIX DECISION OF THE TRIBUNAL WAS ACCEPTED WHEREIN TRIBUNAL RULED IN FAVOUR OF THE 28 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. ASSESSEE BY HOLDING THAT THE TAXPAYER DID SATISFIED ALL THE THREE INGREDIENTS OF SECTION 68 OF THE ACT. 9. NOW LET US GO THROUGH THE DECISION RELIED ON BY THE ASSESSEE OF HON'BLE BOMBAY HIGH COURT IN CASE OF GAGANDEEP (SUPRA) WHICH READS AS UNDER: - (C) BEING AGGRIEVED, THE REVENUE CARRIED THE ISSUE IN THE APPEAL TO THE TRIBUNAL. THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE RESPONDENT ASSESSEE HAD ESTABLISHED THE IDE NTITY, GENUINENESS AND CAPACITY OF THE SHAREHOLDERS WHO HAD SUBSCRIBED TO ITS SHARES. THE IDENTITY WAS ESTABLISHED BY THE VERY FACT THAT THE DETAILED NAMES, ADDRESSES OF THE SHAREHOLDERS, PAN NUMBERS, BANK DETAILS AND CONFIRMATORY LETTERS WERE FILED. THE G ENUINENESS OF THE TRANSACTION WAS ESTABLISHED BY FILING A COPY OF SHARE APPLICATION FORM, THE FORM FILED WITH THE REGISTRAR OF COMPANIES AND AS ALSO BANK DETAILS OF THE SHAREHOLDERS AND THEIR CONFIRMATIONS WHICH WOULD INDICATE BOTH THE GENUINENESS AS ALSO THE CAPACITY OF THE SHAREHOLDERS TO SUBSCRIBE TO THE SHARES. FURTHER THE TRIBUNAL WHILE UPHOLDING THE FINDING OF CIT(A) ALSO THAT THE AMOUNT RECEIVED ON ISSUE OF SHARE CAPITAL ALONGWITH THE PREMIUM RECEIVED THEREON, WOULD BE ON CAPITAL RECEIPT AND NOT IN T HE REVENUE FIELD. FURTHER RELIANCE WAS ALSO 29 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. PLACED UPON THE DECISION OF APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) TO UPHOLD THE FINDING OF THE CIT(A) AND DISMISSING THE REVENUE'S APPEAL. 10. NOW, IN THE PRESENT CASE OF THE ASSESSEE, THE MAIN CRUX OF THE FACTS THAT THE ASSESSEE FILED SUFFICIENT EVIDENCES VIZ, RETURN OF INCOME, SHARE ALLOTMENT, ANNUAL RETURN, DETAILS INCLUDING NAME, ADDRESS AND PAN OF THE SHAREHOLDER WHICH ARE NOT NEGATED BY THE AO. THE AO IN THE PRESENT CASE HAS HIMSELF ASSESSED THE PREFERENCE SHAREHOLDER FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND AFTER SCRUTINY HAS PASSED THE ORDER U/S 143(3) OF THE ACT AROUND THE SAME DATE AND HAS NEITHER MADE ANY ADDITION NOR MADE AN Y ADVERSE REMARKS. THE AO HAS NOT QUESTIONED THE PREFERENCE SHARE CAPITAL TO THE EXTENT OF THE FACE VALUE BUT HAS ONLY QUESTIONED THE SHARE PREMIUM. BY THIS ACTION OF THE AO HIMSELF, THE 'NATURE' OF TRANSACTION AS THAT OF 'PREFERENCE SHARE ALLOTMENT' IS PR OVED BEYOND DOUBT AND MERELY BECAUSE HE FEELS THAT THE SHARE PREMIUM IS HIGH THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED FOR THE PURPOSE OF SECTION 68 OF THE ACT. 11. WE FIND THAT IN THE GIVEN FACTS OF THE CASE THE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT IN CASE OF GAGANDEEP (SUPRA) SQUARELY APPLIES TO THE 30 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. ASSESSEE'S CASE. THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS GREEN INFRA LTD 78 TAXMANN.COM 340 IS SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE. DESPITE BEING T HE SPECIFIC ARGUMENT OF THE CIT - DR THAT THE SHARE PREMIUM DEFIES COMMERCIAL PRUDENCE, HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT GENUINENESS OF THE TRANSACTION IS PROVED SINCE THE ENTIRE TRANSACTION IS RECORDED IN THE BOOKS OF THE ASSESSEE AND THE TRA NSACTION HAS TAKEN PLACE THROUGH BANKING CHANNELS. THE DECISION OF THE HONBLE HIGH COURT HAS SPECIFICALLY HELD THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHAREHOLDERS WHETHER TH EY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE TRIBUNAL AFTER EXAMINING THE INGREDIENTS OF SECTION 68 OF THE ACT HELD THAT THE ADDITION OF SHARE PREMIUM UNDER SECTION 68 OF THE ACT CANNOT BE SUSTAINED. WE HEREUNDER REPRODUCE THE RELEVANT PARAGRAPH OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN EASE OF GREEN INFRA (SUPRA) FOR READY REFERENCE: 3.REGARDING QUESTION NO. (II): 31 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. (A)BEFORE THE TRIBUNAL, THE REVENUE RAISED A NEW PLEA VIZ. THAT THE SO CALLED SHARE PREMIUM HAS ALSO TO BE JUDGED ON THE TOUCHSTONE OF SECTION 68 OF THE ACT WHICH PROVIDES FOR CASH CREDIT BEING CHARGED TO TAX. THE IMPUGNED ORDER OF THE TRIBUNAL ALLO WED THE ISSUE TO BE RAISED BEFORE IT FOR THE FIRST TIME, OVERRULING THE OBJECTION OF THE RESPONDENTASSESSEE. (B)THE IMPUGNED ORDER EXAMINED THE APPLICABILITY OF SECTION 68 OF THE ACT ON THE PARAMETERS OF THE IDENTITY OF THE SUBSCRIBER TO THE SHARE CAPITA L, GENUINENESS OF THE TRANSACTION AND THE CAPACITY OF THE SUBSCRIBERTO THE SHARE CAPITAL. IT FOUND THAT THE IDENTITY OF THE SUBSCRIBERS WAS CONFIRMED BY VIRTUE OF THE ASSESSING OFFICER ISSUING A NOTICES UNDER SECTION 133(6) OF THE ACT TO THEM. FURTHER, IT HOLDS THAT THE REVENUE ITSELF MAKES NO GRIEVANCE OF THE IDENTITY OF THE SUBSCRIBERS. SO FAR AS THE GENUINENESS OF THE TRANSACTION OF SHARE SUBSCRIBER IS CONCERNED, IT CONCLUDES AS THE ENTIRE TRANSACTION IS RECORDED IN THE BOOKS OF ACCOUNTS AND REFLECTED IN THE FINANCIAL STATEMENTS OF THE ASSESSEE SINCE THE SUBSCRIPTION WAS DONE THROUGH THE BANKING CHANNELS AS EVIDENCED BY BANK STATEMENTS WHICH WERE EXAMINED BY THE TRIBUNAL. WITH REGARD TO THE CAPACITY OF THE SUBSCRIBERS THE IMPUGNED ORDER RECORDS A FINDING THAT 98% OF THE SHARES IS HELD BY IDFC PRIVATE 32 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. EQUITY FUND WHICH IS A FUND MANAGER OF IDFC LTD. MOREOVER, THE CONTRIBUTIONS IN IDFC PRIVATE EQUITY FUNDII ARE ALL BY PUBLIC SECTOR UNDERTAKINGS. (C) MR.CHHOTARAY THE LEARNED COUNSEL FOR THE REVENUE STATES T HAT THE IMPUGNED ORDER ITSELF HOLDS THAT SHARE PREMIUM OF RS.490/ PER SHARE DEFIES ALL COMMERCIAL PRUDENCE. THEREFORE IT HAS TO BE CONSIDERED TO BE CASH CREDIT. WE FIND THAT THE TRIBUNAL HAS EXAMINED THE CASE OF THE REVENUE ON THE PARAMETERS OF SECTION 68 OF THE ACT AND FOUND ON FACTS THAT IT IS NOT SO HIT. THEREFORE, SECTION 68 OF THE ACT CANNOT BE INVOKED. THE REVENUE HAS NOT BEEN ABLE TO SHOW IN ANY MANNER THE FACTUAL FINDING RECORDED BY THE TRIBUNAL IS PERVERSE IN ANY MANNER. (D) THUS, QUESTION NO.(II ) AS FORMULATED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW AND THUS NOT ENTERTAINED. 12. IN VIEW OF THE AFORESAID, WE ARE OF THE VIEW THAT VALUATION IS NOT RELEVANT FOR DETERMINING GENUINENESS OF THE TRANSACTION FOR THE PURPOSE OF SECTION 68 OF THE ACT. WE ARE OF THE VIEW THAT CIT(A) HAS RIGHTLY DELETED THE ADDITION ON ACCOUNT OF THE SHARE PREMIUM RELYING ON THE DECISION OF HON'BLE JURISDICTIONAL TRIBUNAL IN 33 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. CASE OF GREEN INFRA LTD. VS. ITO (2013) 145 ITR 240. IT IS A SETTLED POSITION THAT WHA T IS APPARENT IS REAL UNLESS PROVED OTHERWISE. IT IS A SETTLED LEGAL POSITION THAT 'APPARENT IS REAL' AND THE ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PARTY WHO CLAIMS IT TO BE SO AS HELD BY HON'BLE SUPREME COURT IN CASE OF CIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 349. 13. IN THE PRESENT CASE, THE OVERWHELMING EVIDENCE PROVES THAT THE 'NATURE' OF RECEIPT IS SHARE PREMIUM. THE AUDITED ACCOUNTS OF BOTH PARTIES, THE STATUTORY SINCE IT WAS THE DEPARTMENT WHICH CLAIMED THAT THE SHARE PREMIUM I S NOT IN FACT SO, DESPITE THE STATUTORY FORMS VIZ. FORM 2 FOR RETURN OF ALLOTMENT AND FORM 20B FOR ANNUAL RETURN FILED WITH THE ROC ALL SHOW THE 'NATURE' AS SHARE PREMIUM. IF THE DEPARTMENT WANTS TO CONTEND THAT WHAT IS APPARENT IS NOT REAL, IT IS THE ONUS OF THE DEPARTMENT TO PROVE THAT IT WAS ASSESSEE'S OWN MONEY WHICH WAS ROUTED THROUGH A THIRD PARTY. ONLY THEN CAN THE PROVISIONS OF SECTION 68 OF THE ACT BE INVOKED. THIS ASPECT IS CONSIDERED IN THE DECISION OF MUMBAI TRIBUNAL IN CASE OF GREEN INFRA LTD. VS. ITO (2013) 145 LTD 240, WHEREIN TRIBUNAL HAS HELD THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF THE SHAREHOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT 34 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. QUESTION THE CHARGING OF SUCH OF HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE SAID DECISION HAS BEEN AFFIRMED BY HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF GREEN INFRA LTD (SUPRA). 14. THE LD. COUNSEL FOR THE ASSESSEE MADE ANOTHER ARGUMENT THAT THE POWER OF CARRYING VALUATION IS NOT ENVISAGED BY THE LEGISLATURE FOR THE PURPOSE OF SECTION 68 OF THE ACT. HE ARGUED THAT, WHEREVER THE LEGISLATURE INTENDED TO GIVE THE POWER TO DETERMINE THE VALUE TO THE AO, IT EITH ER PRESCRIBES RULE FOR VALUATION OF A PARTICULAR THING OR VESTED UPON THE AO THE POWER TO REFER TO THE VALUATION OFFICER. THE POWER OF AO TO MAKE A REFERENCE TO THE VALUATION OFFICER IS CONTAINED IN SECTION 142A OF THE ACT. SECTION 142A OF THE ACT AS IT ST OOD FOR THE YEAR UNDER CONSIDERATION READS AS UNDER: 142. (1) FOR THE PURPOSES OF MAKING AN ASSESSMENT OR REASSESSMENT UNDER THIS ACT, WHERE AN ESTIMATE OF THE VALUE OF ANY INVESTMENT REFERRED TO IN SECTION 69 OR SECTION 6911 OR THE VALUE OF ANY BULLION , JEWELLERY OR OILIER VALUABLE ARTICLE REFERRED TO IN SECTION 69A OR SECTION 6911 OR FAIR MARKET VALUE OF ANY PROPERTY REFERRED TO IN SUB - SECTION (2) OF SECTION 56 IS REQUIRED TO BE MADE, THE ASSESSING OFFICER MAY REQUIRE THE 35 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. VALUATION OFFICER TO MAKE AN E STIMATE OF SUCH VALUE AND REPORT THE SAME TO HIM. 15. WE HAVE CONSIDERED THE ISSUE AND FIND THAT THIS SECTION DOES NOT COVER SECTION 68 OF THE ACT. THUS, THE LEGISLATURE DOES NOT ENVISAGE ANY SORT OF VALUATION FOR THE PURPOSE OF SECTION 68 OF THE ACT. I NDEED, VALUATION OF PREFERENCE SHARES IS A COMPLETELY DIFFERENT EXERCISE AS COMPARED TO VALUATION OF EQUITY SHARES. THE AO MAKES THE MENTION OF THE RESERVES AND LOSS WHILE CHALLENGING THE CHARGE OF SHARE PREMIUM ON PREFERENCE SHARES. 'RESERVES' COULD BE RE LEVANT FOR VALUING EQUITY SHARES. THEY ARE NOT RELEVANT FOR VALUING PREFERENCE SHARES. PREFERENCE SHAREHOLDERS GET PRIORITY OVER THE EQUITY SHAREHOLDERS IN TERMS OF PAYMENT OF DIVIDEND AND DURING WINDING UP. THEY GET ONLY A FIXED RATE OF DIVIDEND. THE REDE MPTION AMOUNT DEPENDS ON THE TERMS OF ISSUE. THE CONVERSION DEPENDS ON THE TERMS OF ISSUE. THE TERMS OF ISSUE ARE RELEVANT FOR VALUING PREFERENCE SHARES. EVEN THE PRESENT RULE 11UA OF THE INCOME TAX RULES 1962 ARE APPLICABLE ONLY TO SECTION 56(2) OF THE AC T, REQUIRES VALUATION OF PREFERENCE SHARES BY THE MERCHANT BANKERS. THE AO HAS NOT EVEN ATTEMPTED TO DO ANY SORT OF VALUATION OF PREFERENCE SHARES. HIS ADDITION IS BASED ENTIRELY ON CONJECTURES AND SURMISES. IT IS A SETTLED IAW THAT THE 36 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. ASSESSMENT CANNOT H E MADE ON MERE SUSPICION, CONJECTURES AND SURMISES. 16. EVEN AMENDMENT TO SECTION 68 BROUGHT BY FINANCE ACT, 2012 DOES NOT REFER TO VALUATION. THE INSERTION OF THE PROVISO TO SECTION 68 OF THE ACT BY FINANCE ACT, 2012 CASTS AN ADDITIONAL ONUS ON THE CLOS ELY HELD COMPANIES TO PROVE SOURCE IN THE SHAREHOLDERS SUBSCRIBING TO THE SHARES OF COMPANIES. DURING THE COURSE OF THE HEARING, THE LD COUNSEL EXPLAINED THAT THE EXPLANATORY MEMORANDUM TO THE FINANCE BILL 2012 MAKES IT CLEAR THAT THE ADDITIONAL ONUS IS ON LY WITH RESPECT TO SOURCE OF FUNDS IN THE HANDS OF THE SHAREHOLDERS BEFORE THE TRANSACTION CAN BE ACCEPTED AS A GENUINE ONE. EVEN THE AMENDED SECTION DOES NOT ENVISAGE THE VALUATION OF SHARE PREMIUM. THIS IS FURTHER EVIDENT FROM A PARALLEL AMENDMENT IN SEC TION 56(2) OF THE ACT WHICH BRINGS IN ITS AMBIT SO MUCH OF THE SHARE PREMIUM AS CHARGED BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, AS IT EXCEEDS THE FAIR MARKET VALUE OF THE SHARES. IF ONE ACCEPTS THE LD CIT - DR'S CO NTENTIONS THAT SECTION 68 OF THE ACT CAN HE APPLIED WHERE THE TRANSACTION IS PROVED TO BE THAT OF A SHARE ALLOTMENT THAT HERE THE VALUATION FOR CHARGING PREMIUM IS NOT JUSTIFIED, IT WILL MAKE THE PROVISIONS OF SECTION 37 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 56(2)(VIIB) OF THE ACT REDUNDANT AND N UGATORY. THIS CANNOT BE THE INTENTION OF THE LEGISLATURE ESPECIALLY WHEN THE AMENDMENTS IN THE TWO SECTIONS ARE BROUGHT IN AT THE SAME TIME. IN VIEW OF THE MATTER, THE LD COUNSEL EXPLAINED THAT IT IS A SETTLED LAW THAT WHERE TWO VIEWS ARE POSSIBLE, THE V IEW FAVORABLE TO THE ASSESSE SHOULD BE ADOPTED AS HELD BY HONBLE SUPREME COURT IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (1973) 88 ITR 192. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY ADEQ UATELY DISCLOSING THE TRANSACTION IN ITS BOOKS OF ACCOUNTS, FILING STATUTORY FORMS AS REGARDS ALLOTMENT OF SHARES, PROVIDING NAME, ADDRESS AND PAN OF THE SHAREHOLDERS, ETC. THE ASSESSEE HAS SUFFICIENTLY DISCHARGED THE ONUS CAST UPON IT FOR THE PURPOSE OF S ECTION 68 OF THE ACT AND NO ADDITION CAN BE MADE ON THIS ACCOUNT. HENCE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE CONFIRM THE SAME. THIS ISSUE OF REVENUES APPEAL IS DISMISSED. 17 . AFTER HAVING CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDERS PASSED BY THE REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) HAD PASSED A DETAILED ORDER WHILE RELYING 38 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. UPON VARIOUS JUDGMENTS CITED BY THE PARTIES AND ALSO CONSIDERING THE PRINCIPLES LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD.(SUPRA) AND M OREOVER, N O NEW FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND RAISED BY TH E REVENUE STANDS DISMISSED . N OW WE TAKE UP C.O. NO. 23/MUM/2018 FILED BY ASSESSEE . 18 . SINCE WE HAVE ALREADY DE CIDED THE APPEAL FIL ED BY REVENUE IN ITA NO. 5955/MUM/2016 FOR AY 2009 - 10 AND UPHELD THE ORDER OF LD. CIT(A) ON MERITS . THEREFORE IN VIEW OF OUR ABOVE FINDINGS IN ITA NO. 5955/MUM/2016 , THE PRESENT APPEAL FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS . 39 I.T.A. NO. 5955/MUM/2016 AND ITA NO. 23/MUM/2018 REALTY CHECK PROPERTIES PVT. LTD. 19 . IN THE NET RESULT , BOTH THE APPEAL S FILED BY THE REVENUE AND ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH , 2019. SD/ - SD/ - ( N. K. PRADHAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 01 .0 3 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI