M/S.KRISNAPING MINERALS PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, PANVEL CIRCLE, PANVEL

ITA 607/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7303 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Keywords: Unexplained cash credit; Gift; Search and seizure; Share purchase agreement; Source of fund; Retrospective amendment; Question of law; Fair market value; Valuation report; Accommodation entries; Onus to prove; Set aside
• Section: 271(1)(c); 142(1); 56(2); 133(6); 205; 195; 131; 263; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI G MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 607/MUM/2019 ASSESSMENT YEAR: 2012-13 KRISHNAPING MINERALS PVT. LTD., 1001, 10 TH FLOOR, PINNACLE CORPORATE PARK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. PAN AADCK0611M VS. DCIT, PANVEL CIRCLE, PANVEL. (APPELLANT) RESPONDENT) ITA NO. 608/MUM/2019 ASSESSMENT YEAR : 2012-13 KRISHNAPING ALLOYS PVT. LTD., 1001, 10 TH FLOOR, PINNACLE CORPORATE PARK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 400 051. PAN AACCK0121F VS. DCIT, PANVEL CIRCLE, PANVEL (APPELLANT) RESPONDENT) APPELLANT BY : SHRI NEEL KHANDELWAL RESPONDENT BY : SHRI B SRINIVAS & SHRI MANOJ KUMAR SINGH DATE OF HEARING : 0 3 .0 6 .201 9 DATE OF PRONOUNCEMENT : 17 .0 7 . 201 9 ITA NOS.607/MUM/2019 & 608/MUM/2019 2 O R D E R PER G MANJUNATHA, ACCOUNTANT MEMBER THESE TWO APPEALS FILED BY DIFFERENT ASSESSEES AR E DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A)-17, MUMBAI DATED 28.12.2018 AND 17.01.2019 PERTAINING TO A.Y. 2012-13. SINCE, FACTS ARE IDENT ICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD T OGETHER AND ARE DISPOSED OFF, BY THIS CONSOLIDATED ORDER. 2. ITA NO. 607/MUM/2019 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL MONEY RECEIVED OF 10,65,00,000/- U/S. 68 OF THE INCOME TAX ACT 1961, WITHOUT CONSIDE RING THE FACTS OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY, ENGAGED IN THE BUSINESS OF TRADING IN MINERALS, FILED ITS RETURN O F INCOME FOR A.Y. 2012-13 ON 29.09.2012 DECLARING TOTAL INCOME OF 1,08,14,510/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S. 143(2) AND U/S. 142(1) OF THE ACT, WERE ISSUED. IN RESPONSE TO THE NOTICE, THE AR FOR THE ASSESSEE APP EARED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM SEVEN SUBSCRIBERS AS LISTED IN PARA 3 OF HIS ORDER AND, ACCORDINGLY, CALLED UPON THE ASSESSEE TO EXPLAIN AND FURNISH NEC ESSARY DETAILS IN RESPECT OF SHARE APPLICATION MONEY AND ALSO JUSTIFICATION FOR ISSUE OF SHARES AT PREMIUM. IN ITA NOS.607/MUM/2019 & 608/MUM/2019 3 RESPONSE, THE ASSESSEE HAS FILED DETAILS OF SHARE A PPLICATION MONEY RECEIVED FROM THOSE SEVEN COMPANIES ALONG WITH APPLICATION FOR AL LOTMENT OF EQUITY SHARES, PAN, FINANCIAL STATEMENTS AND THE CONFIRMATIONS FROM THE PARTIES. THE ASSESSEE HAS ALSO FILED VALUATION REPORT FOR JUSTIFYING ISSUE OF SHAR ES AT PREMIUM. THE ASSESSING OFFICER, IN ORDER TO ASCERTAIN CORRECTNESS OF DETAI LS FILED BY THE ASSESSEE CALLED UPON THE ASSESSEE TO PRODUCE THE PERSONS FOR VERIFICATIO N. THOUGH, THE ASSESSING OFFICER HAS GIVEN OPPORTUNITY TO THE ASSESSEE TO PRODUCE TH E PARTIES, THE ASSESSEE COULD NOT PRODUCE THEM. THE ASSESSING OFFICER THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSEE COULD NOT PROVE THE IDENTITY OF THE PARTIE S, GENUINENESS OF THE TRANSACTIONS AND CREDIT WORTHINESS OF THE PARTIES. ACCORDINGLY, AFTER ANALYZING THE FINANCIAL POSITION OF EACH OF THE SUBSCRIBERS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT NONE OF THE SUBSCRIBERS WERE IN A POSITION TO INVEST IN ASSESSEE COMPANY IN SHARES ISSUED AT HIGH PREMIUM, WHICH IS EVIDENT FRO M THE FACT THAT ALTHOUGH THEY HAVE SHOWN HUGE RESERVES AND SURPLUS IN THE BALANCE SHEET, BUT THEIR NET PROFIT IS EITHER NIL OR NEGLIGIBLE. THE ASSESSING OFFICER FU RTHER OBSERVED THAT ALTHOUGH THE ASSESSEE HAD ISSUED SHARES AT HUGE PREMIUM, ON PERU SAL OF THE FINANCIAL STATEMENT OF THE ASSESSEE REVEALS THAT IT IS PREDOMINANTLY A TRADER WITH NOMINAL PROFIT MARGIN. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT WITHOU T PREJUDICE TO THE ABOVE FINDING, IN THE LIGHT OF PROVISIONS OF SECTION 68, THE PROVI SIONS OF SECTION 56(2)(VIIB) OF THE INCOME TAX ACT, WHICH HAS BEEN INSERTED BY THE FINA NCE ACT, 2012, IS APPLICABLE TO THE ASSESSEES CASE. THEREFORE, HE OPINED THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDIT FOUND IN THE FORM OF SHARE APPLICATION MONEY RECEIVED FROM VARIOUS PARTIES TO ITA NOS.607/MUM/2019 & 608/MUM/2019 4 THE SATISFACTION OF THE ASSESSING OFFICER AND, ACCO RDINGLY, MADE ADDITIONS OF 10,65,00,000 U/S. 68 R.W.S 56(2)(VIIB) OF THE I.T. ACT, 1961. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS, WHICH HAS BEEN REPRODUCED IN PARA 3 AT PAGES 2 TO 8 OF THE OR DER OF THE CIT(A). THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE C IT(A) IS THAT THE ASSESSEE HAS DISCHARGED THE GENUINENESS OF SHARE PREMIUM AND ALS O CREDIT WORTHINESS OF THE SHARE HOLDER BY FILING VARIOUS DETAILS INCLUDING NA ME, ADDRESS, PAN OF THE SHARE HOLDER, THEIR INCOME TAX ACKNOWLEDGMENT ALONG WITH FINANCIAL STATEMENTS FOR RELEVANT ASSESSMENT YEAR, CIN MASTER DATA OF THE SH ARE HOLDER OBTAINED FROM THE REGISTRAR OF COMPANIES, SHARE APPLICATION FORMS, BO ARD RESOLUTION OF SHARE HOLDER COMPANIES TO INVEST IN EQUITY SHARES OF THE ASSESSE E COMPANY, FORM NO.2 (RETURN FILED IN ROC), BANK STATEMENTS OF THE SHARE HOLDER COMPANIES AND CONFIRMATION FROM THE INVESTORS. THE ASSESSEE HAS ALSO FILED VALUATI ON REPORT OBTAINED FROM INDEPENDENT VALUER, WHERE THE VALUATION HAS BEEN MA DE BY FOLLOWING DCF METHOD. ALTHOUGH, ASSESSEE HAS FILED COMPLETE DETAILS OF TH E SHARE APPLICATION MONEY RECEIVED FROM THE ABOVE COMPANIES, THE ASSESSING OF FICER WITHOUT CARRYING OUT ANY FURTHER INQUIRIES IN ORDER TO ASCERTAIN THE TRUE NA TURE OF THE TRANSACTIONS, SIMPLY MADE THE ADDITIONS ON THE BASIS OF FINANCIAL STATEM ENTS OF THE ASSESSEE TO COME TO THE CONCLUSION THAT NONE OF THE SHARE HOLDERS HAVE THE CAPACITY TO EXPLAIN HUGE INVESTMENTS MADE IN THE ASSESSEE COMPANY. IN THIS REGARD, HE RELIED UPON PLETHORA OF JUDICIAL DECISIONS INCLUDING THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. 216 CTR 195. ITA NOS.607/MUM/2019 & 608/MUM/2019 5 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO ON ANALYZING THE FACTS BROUGHT OUT BY THE ASSESSING OF FICER IN RESPECT OF EACH OF THE SUBSCRIBER COMPANIES CAME TO THE CONCLUSION THAT TH E ASSESSEE HAS FAILED TO PROVE CREDIT FOUND IN FORM OF SHARE CAPITAL WITH NECESSAR Y EVIDENCE, MORE PARTICULARLY ON THE ASPECT OF CREDIT WORTHINESS OF THE SUBSCRIBER, WHICH IS EVIDENT FROM THE FACT THAT ALL COMPANIES HAVE DECLARED EITHER NIL INCOME OR LO SS FOR THE YEAR UNDER CONSIDERATION, EVEN THOUGH THEY HAVE CARRIED HUGE R ESERVES AND SURPLUS IN THEIR FINANCIAL STATEMENTS. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS BROUGHT OUT FACTS IN THE LIGHT OF BANK STATEMENTS T HAT THERE ARE HARDLY ANY TRANSACTIONS EXCEPT DEBIT AND CREDIT ON THE DATE OF TRANSFER TO THE ASSESSEE COMPANY AND, THEREFORE, FROM THE ABOVE IT IS CLEAR THAT ALL INVESTOR COMPANIES APPEAR TO BE SHELL COMPANIES. THEREFORE, THE CIT(A ) OPINED THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITIONS TOWARDS SHARE APPLICATION MONEY RECEIVED FROM SEVEN SUBSCRIBER COMPANIES AS UNEXPLAINED CRED IT WITHIN THE MEANING OF SECTION 68 OF THE INCOME TAX ACT, 1961. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSING OFFICER HAS ALSO RIGHTLY INVOKED PROVISIO NS OF SECTION 56(2)(VIIB) OF THE I.T. ACT, 1961, BECAUSE FROM A.Y. 2012-13 ONWARDS, THE P ROVISIONS HAVE BEEN AMENDED SO AS TO BRING ANY RECEIPT WITHOUT CONSIDERATION. SINCE THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION IN RESPECT OF SHARE PREMIUM, THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITIONS TOWARDS SHARE PREMIUM UNDER THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE I.T.ACT, 1961. THE RELEVANT FIN DINGS OF THE CIT(A) ARE AS UNDER: 4.2.4 ARGUMENT DURING THE APPELLATE PROCEEDING : , I) FIRST OF ALL IT HAS BEEN ARGUED THAT THE INFORMATION LIKE PAN , COPY OF INCOME TAX ACKNOWLEDGMENT , MASTER DATA, COPY OF SH ARE APPLICATION FORMS, ITA NOS.607/MUM/2019 & 608/MUM/2019 6 BOARD RESOLUTION, CONFIRMATION OF ACCOUNT ETC., HAV E BEEN SUBMITTED BEFORE THE AO WHICH TANTAMOUNT TO DISCHARGING THE ONUS CAST UP ON THE APPELLANT COMPANY. QUESTION ARISES, DOES ABOVE SUBMISSIONS A RE SUFFICIENT ENOUGH TO DISCHARGE THE ONUS ON PART OF THE APPELLANT COMPANY . 1. THERE ARE ENOUGH JUDICIAL PRONOUNCEMENTS FAVOU RING REVENUE WHERE IT HAS BEEN ACKNOWLEDGED THAT THE BURDEN DOES NOT SHIFT ME RELY BY PROVIDING PAN OF THE CREDITORS OR BY SIMPLY IDENTIFYING THE SOURCE O F CASH CREDIT. MORE SO, IN THE CASES WHERE EFFORTS HAVE BEEN MADE BY THE ASSESSING OFFICERS TO GATHER EVIDENCES BY CONDUCTING ENQUIRY TO EXAMINE THE TRUT H IN RESPECT OF THE CASH CREDIT. IN CIT VS. BHAN& SONS (2005) 273 ITR 206 (P & H), IT WAS FOUND THAT THE CREDITS WERE RECEIVED BY ACCOUNT PAYEE CHEQUES AND THE CREDITORS WERE INCOME TAX ASSESSEES. BUT THE CONTENTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE DID NOT RESPOND TO THE REQUIREMENTS OF THE PRODUCTI ON OF CREDITORS BEFORE HIM FOR VERIFICATION. THE FIRST APPELLATE AUTHORITY AND THE HIGH COURT FELT THAT IT WAS POSSIBLE FOR THE ASSESSING OFFICER TO HAVE ACCEPTED THE SAME OR MAKE FURTHER ENQUIRIES WITH REFERENCE TO THE FILES OF THE CREDIT ORS, SINCE THEY WERE ASSESSEES. EVEN SO, THE HIGH COURT REVERSING THE FINDING OF TH E TRIBUNAL OBSERVED AS UNDER: 'THE APPELLATE AUTHORITIES HAVE FAILED TO APPRECIAT E THAT IN THE PRESENT CASE THE ASSESSEE HAD TOTALLY FAILED TO RESPOND TO THE NOTIC E OF THE ASSESSING OFFICER. FURTHER, EVEN IF THEY WERE OF THE VIEW THAT THE ASS ESSING OFFICER SHOULD HAVE MADE CROSS VERIFICATION WITH THE RECORDS OF THE CRE DITORS AVAILABLE WITH HIM, THEY OUGHT TO HAVE DIRECTED THE ASSESSING OFFICER TO DO SO INSTEAD OF STRAIGHT WAY ACCEPTING THE ASSESSEE'S VERSION WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO MAKE THE VERIFICATION. IN THE ALTERNATIVE, THE APPELLANT AUTHORITIES COULD HAVE THEMSELVES VERIFIED THE MATE RIAL PLACED BEFORE THEM WITH THE RECORDS OF THE CREDITORS. THIS HAS NOT BEEN DON E. ACCORDINGLY, WE ARE SATISFIED THAT THE APPELLATE AUTHORITIES HAVE NOT D EALT WITH THE MATTER PROPERLY.' 2. THE PRINCIPLE, AS ENVISAGED BY THE HON. HIGH CO URT IN THE ABOVE CASE, IS ONE OF ABSOLUTELY LIABILITY, IN WHICH CASE THE BURDEN D OES NOT SHIFT. FURTHER, MERE MENTION OF INCOME-TAX FILE NUMBER OF CREDITOR WILL NOT SUFFICE TO DISCHARGE THE ONUS AS HELD IN THE CASE OF CIT V. KORLAY TRADING CO. LTD. [1998] 232 ITR 820 (CAL.), WHERE IN IT WAS HELD THAT WHERE, WITHOUT FILING CO NFIRMATION LETTER FROM THE CREDITOR, THE ASSESSEE MERELY MENTIONED TH E INCOME-TAX FILE NUMBER OF THE CREDITOR (WHICH WAS ALSO NOT SUPPORTED BY ANY A FFIDAVIT FROM THE CREDITOR), THE GENUINENESS OF THE CASH CREDIT CANNOT BE SAID T O HAVE BEEN PROVED BY THE ASSESSEE. 3. IN FACT, THE PRINCIPLE OF ONUS, THAT THE ASSESSEE I S REQUIRED TO ESTABLISH THE IDENTITY, PROVE THE GENUINENESS OF TH E TRANSACTION AND ESTABLISH THE CREDITWORTHINESS THE DONOR, HAS BEEN REITERATED EVEN IN A RECENT DECISION OF HON. DELHI HIGH COURT IN THE CAS E OF CIT VS. OASIS HOSPITALITIES PVT. LTD., 333 ITR 119 (DELHI)(201 1) . IN THIS CASE IT WAS HELD BY THE HON. COURT THAT 'THE INITIAL ONUS IS UP ON THE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MIS CHIEF OF SECTION 68. THOSE ARE: (I) IDENTITY OF THE INVESTORS; (II) THEI R CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, THE DEPARTMENT IS REQUIRED TO UNDERTAKE FURT HER EXERCISE. ' ITA NOS.607/MUM/2019 & 608/MUM/2019 7 4. NOVA PROMOTERS & FINLEASE 342 ITR 169 (2012). IN VIEW OF LINK BETWEEN ENTRY PROVIDERS AND INCRIMINATING EVIDENCES , MERE FILING OF PAN, ACKNOWLEDGEMENT OF RETURN, BANK STATEMENTS ARE NOT SUFFICIENT TO DISCHARGE THE ONUS. 5. HON'BLE DELHI HIGH COURT IN CASE OF N. TARIKA PROPE RTY INVEST. (P) LTD. (201 3} 40 TAXMANN.COM 525, WHICH HAS BEEN APP ROVED BY HON'BLE SUPREME COURT, (2014) 51 TAXMANN.COM 387, H ELD AS : AS WE HAVE HELD THAT PAN NUMBERS ARE ALLOTTED ON TH E BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATION OF THE IDENTIT Y OR ASCERTAINMENT OF THE ACTIVE NATURE OF BUSINESS ACTIVITY. PAN NUMBER IS ALLOTTED AS A FACILITY TO REVENUE TO KEEP TRACK OF TRANSACTIONS. THE PAN NUMBER CANNOT B E BLINDLY AND WITHOUT CONSIDERATION OF SURROUNDING CIRCUMSTANCES TREATED AS SUFFICIENTLY DISCLOSING THE IDENTITY OF THE INDIVIDUAL. THE MERE FILING OF SHAR E APPLICATION IS NOT ENOUGH AS THE SAID APPLICATION IS NOT AN UNIMPEACHABLE DOCUME NT AND DOES NOT ON ITS OWN PROVE THE GENUINENESS OR AUTHENTICITY OF THE TRANSA CTION. IT CAN AT BEST BE TREATED AS A CORROBORATIVE DOCUMENT. SINCE THE SHAR E APPLICATION FORM IS NOT AN UNIMPEACHABLE DOCUMENT, IT CANNOT ON ITS OWN BE TRE ATED AS SUFFICIENT FOR CROSS- VERIFICATION OF THE TRANSACTION. WE HAVE ALREADY HE LD THAT THAT MERE PRODUCTION OF PAN NUMBER OR ASSESSMENT PARTICULARS DOES NOT ES TABLISH THE IDENTITY OF A PERSON. THE IDENTIFICATION OF A PERSON INCLUDES THE PLACE OF WORK, THE STAFF AND THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND FURTHER RECOGNITION OF THE SAID NEMPANY/INDIVIDUAL IN THE EYES OF PUBLIC. II) IT HAS FURTHER BEEN ARGUED THAT SUBMISSIONS OF DETAILS SHOWING IDENTITY, BANK DETAILS AND DETAILS RELATED TO ROC ARE SUFFICIENT COMPLIANCE FOR INGREDIENTS OF SECTION 68 OF THE ACT. PRIMA FACIE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE CASH CREDIT ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE . IN LAND MARK CASES LIKE KALE KHAN MOHAMMAD HANIF V CIT[1963] 50 ITR 1 (SO. ROSHAN DI HATTI V CIT [1977] 107 ITR 107 (SC) IT HAS BEEN HELD THAT T HE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FO UND TO HAVE BEEN RECEIVED BY AN ASSESSEE, IS ON HIM. WHERE THE NATURE AND SO URCE THEREOF CANNOT BE EXPLAINED SATISFACTORILY, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSEE AND NO FURTHER BURDEN IS ON THE REVENU E TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. IN CASE OF SHANKAR GHOSH V. ITO [J19851 13 IIP 440 (CAL.) THE ASSESSEE FAILED TO PROVE THE CAPACITY OF THE PERSON FROM WHO M HE HAD ALLEGEDLY TAKEN LOAN. FURTHER, ASSESSEE COULD NOT EXPLAIN THE NEED FOR LOAN AND THE MANNER IN WHICH THE LOAN AMOUNT WAS SPENT. THE CRED ITOR HAD ISSUED TWO LETTERS DEMANDINQ REPAYMENT BUT DID NOTHING ON NON-COMPLIANCE THEREWITH . SUCH LETTERS DID NOT, THEREFORE, CARRY ANY CONVICT ION ABOUT THE EXPLANATION OF THE ASSESSEE. THE BURDEN NOT HAVING BEEN DISCHARGED BY ASSESSEE, LOAN AMOUNT WAS RIGHTLY HELD AS ASSESSEE' S OWN UNDISCLOSED INCOME. CASE OF SIKRI & CO. (P.) LTD. V. CIT [1977] 106 ITR 682 (CAL.)- IN CASE OF CASH CREDIT THE ASSESSEE HAS TO PROVE TH E GENUINENESS OF CASH CREDITS. IN THIS CASE SUMMONS ISSUED BY ITO TO CRED ITORS WERE NOT SERVED AS ITA NOS.607/MUM/2019 & 608/MUM/2019 8 CREDITORS WERE NOT TRACEABLE AND THE ASSESSEE GAVE NO FURTHER INFORMATION- REGARDING WHEREABOUTS OF CREDITORS. NO OTHER EVIDEN CE WAS PRODUCED BY THE ASSESSEE TO SHOW CREDITWORTHINESS OF CREDITORS. THE CREDITORS WERE ALSO SHOWN TO HAVE DENIED ADVANCING ANY LOAN TO ASSESSEE BEFOR E J THEIR RESPECTIVE ITOS. HELD THAT CASH CREDIT WAS RIGHTLY ASSESSED AS INCOM E FROM UNDISCLOSED SOURCES. CASE OF CIT V. KORLAY TRADING CO. LTD. [1998] 232 I TR 820 (CAL.) - MERE FILING OF THE INCOME-TAX FILE NUMBER OF THE C REDITORS WAS NOT ENOUGH TO PROVE THE GENUINENESS OF THE CASH CREDIT. THE CREDITOR HAD TO BE IDENTIFIED. THERE SHOULD BE CREDITWORTHINESS. THERE SHOULD BE A GENUINE TRANSACTION. 4.2.6 IT HAS FURTHER BEEN ARGUED THAT NEGATIVE WO RTH OF INVESTOR COMPANY DOES NOT HAVE ANY BEARING ON THE INGREDIENT S OF SECTION 68. IT HAS BEEN ARGUED THAT EVEN IF THE APPELLANT COMPA NY HAS ALSO A NEGATIVE NET WORTH IT CAN STILL FETCH HIGHER PREMIU M. THE PRINCIPLES LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN CASE OF GAGAND EEP INFRASTRUCTURE HAS BEEN QUOTED BELOW. FIRST OF ALL THE HUGE NEGATIVE NET WORTH OF APPE LLANT COMPANY RAISES SERIOUS QUESTION ON THE PREMIUM WHICH HAS BEEN CLAI MED ( RS.90 FOR EACH SHARE OF FACE VALUE OF RS.10). SIMILARLY THE NEGATIVE NET WORTH OF THE INVESTOR COMPANY RAISES QUESTION ON THE CREDITWORTHINESS. ON THE ISSUE OF EXAMINATION OF CREDITWORTHINESS OF INVESTOR , THE QUESTION HAS BEEN RAISED THAT SOURCE OF SOURCE CANNOT BE EXAMINED AMENDED PROVISION OF SECT ION 68. SOURCE OF SOURCE CAN BE EXAMINED EVEN UNDER UNAMEND ED PROVISION OF SECTION 68 OF THE ACT. IF IT IS A SIMPLE CASE, THE DETAILED SUBMITTED LIKE PAN, BANK STATEMENT, ITR ETC CAN BE ACCEPTED ON FAC E VALUE. HOWEVER, IF IT IS ASSOCIATED WITH SOMETHING MORE LI KE ACCOMMODATION ENTRY, CAPITAL GENERATION, ENTRY FROM SHELL COMPANY , THE AO IS WELL WITHIN ITS RIGHT TO EXAMINE SOURCE OF SOURCE. A) PRAGATI FINANCIAL MANAGEMENT (P.) LTD. V. COMMISSIO NER OF INCOME- TAX-11 [2017] 82 TAXMANN.COM 12 (CALCUTTA) :- 'A COORDINATE BENCH OF THE COURT IN DEALING WITH AN ALMOST IDENTICALLY WORDED OVER OF THE COMMISSIONER IN THE CASE OF RAIMANDIR ESTATES (P.) LTD, V. PR, CIT [2016L 386 ITR 162/240 TAXMAN 306/70 TAXMANN.COM 124. CONSTRUED THE PROVISIONS OF SECTION 68 AS IT WAS BEFORE THE AMENDMENT BEING THE LAW WHICH PREVAILED IN THE RELEVANT PREVIOUS YEAR IN THAT PROCEEDING, AND HELD THAT 'TH E USE OF THE WORDS 'ANY SUM FOUND CREDITED IN THE BOOKS' IN SECTION 68 INDICATES THAT THE SAID SECTION IS VERY WIDELY WORDED AND AN INCOME-TA X OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NAT URE AND SOURCE THEREOF EVEN IF THE SAME IS CREDITED AS RECEIPT OF SHARE APPLICATION MONEY. MERE FACT THAT THE PAYMENT WAS RECEIVED BY C HEQUE OR THAT THE APPLICANTS WERE COMPANIES, BORNE ON THE FILE OF REG ISTRAR OF COMPANIES WERE HELD TO BE NEUTRAL FACTS AND DID NOT PROVE THA T THE TRANSACTION WAS GENUINE. THE ITO MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE ITA NOS.607/MUM/2019 & 608/MUM/2019 9 OF DEPOSITOR'. THEREFORE, THE SUBMISSION THAT THE S OURCE OF SOURCE IS NOT A RELEVANT ENQUIRY DOES NOT APPEAR TO BE CORRECT. T HE EXERCISE OF POWER UNDER SECTION 263 BY THE COMMISSIONER WAS NOT AN AC T OF REACTIVATING STALE ISSUES.' [PARA 10] THIS JUDGMENT WAS CARRIED UP IN APPEAL BY THE ASSES SEE BEFORE THE SUPREME COURT AND THE SUPREME COURT DISMISSED THE S PECIAL LEAVE PETITION FINDING NO REASON TO ENTERTAIN THE SAME. [ PARA 11] B) CIT V. SOPHIA FINANCE LTOJ. [1994] 205 ITR 98 :- '11. FURTHER EVEN PRIOR TO THE AMENDMENT, THE SPECI AL BENCH OF DELHI HIGH COURT IN THE CASE OF CIT V. SOPHIA FINANCE LTD. [19 94] 205 ITR 98 [1993] 70 TAXMAN 69 HELD THAT 'THE ITO MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE OF DEPOSITOR'. THE HIGH COURT HELD: 'AS WE READ SECTION 68 IT APPEARS THAT WHENEVER A S UM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE THEN, IRRESPECTIVE OF THE COLOUR OR THE NATURE OF THE SUM RECEIVED WHICH IS SOUGHT TO BE GIVEN BY THE ASSESSEE, THE INCOME- TAX OFFICER HAS THE JURISDICTION TO ENQUIRE FROM TH E I ASSESSEE THE NATURE AND SOURCE OF THE SAID AMOUNT. WHEN AN EXPLANATION IN R EGARD THERETO IS GIVEN BY THE ASSESSEE, THEN IT IS FOR THE INCOME-TAX OFFICER TO BE SATISFIED WHETHER THE SAID EXPLANATION IS CORRECT OR NOT. IT IS IN THIS R EGARD THAT ENQUIRIES ARE USUALLY MADE IN ORDER TO FIND OUT AS TO WHETHER, FIRSTLY, T HE PERSONS FROM WHOM MONEY IS ALLEGED TO HAVE BEEN RECEIVED ACTUALLY EXISTED O R NOT. SECONDLY, DEPENDING UPON THE FACTS OF EACH CASE, THE INCOME-TAX OFFICER MAY EVEN BE JUSTIFIED IN TRYING TO ASCERTAIN THE SOURCE OF THE DEPOSITOR, ASSUMING HE IS IDENTIFIED, IN ORDER TO DETERMINE WHETHER THA T DEPOSITOR IS A MERE NAME-LENDER OR NOT.' THE COURT FURTHER HELD, '...IT IS CLEAR THAT THE INCOME TAX OFFICER HAS JURISDICTION TO MAKE ENQUIRI ES WITH REGARD TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE BOOK S OF ACCOUNT OF AN ASSESSEE AND IT WOULD BE IMMATERIAL AS TO WHETHER T HE AMOUNT SO CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REP RESENTING THE SALE PROCEEDS OR EVEN RECEIPT OF SHARE APPLICATION MONEY . THE USE OF THE WORDS 'ANY SUM FOUND CREDITED IN THE BOOKS' IN SECT ION 68 INDICATES THAT THE SAID SECTION IS VERY WIDELY WORDED AND AN INCOME-TA X OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SO URCE THEREOF EVEN IF THE SAME IS CREDITED AS RECEIPT OF SHARE APPLICATION MO NEY.' 12. FROM THE ABOVE DISCUSSION IT IS SEEN THAT THE L EGISLATIVE INTENT WAS ALWAYS TO PROTECT AGAINST BENAMI TRANSACTIONS DONE WITH A VIE W TO EVADE IDENTIFYING THE REAL CONTRIBUTOR OF FUNDS. HOWEVER, SUCH AN INTERPR ETATION, ESPECIALLY IN THE PRE- AMENDMENT REGIME, HAS NOT BEEN CONSISTENT. ANY RELIANCE ON THE DISMISSAL OF SLF BY THE SUPREME COURT IN THE CASE OF CIT V. L OVELY EXPORTS (P) LTD., [2008] 216 CTR 195, WHICH IS USED AS A TOOL T O DEFEND AGAINST THE 'SOURCE OF SOURCE' INQUIRY, IS WRONG. THEREIN T HE SC HELD: 'WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIM PLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE -COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR ITA NOS.607/MUM/2019 & 608/MUM/2019 10 INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT.' IT IS TO BE NOTED THAT THE VERDICT WAS PASSED IN THE PRE-AMENDMENT REGIME ON 11.01.2008. C) HON'BLE DELHI HIGH COURT IN CASE OF NOVA PROMOTERS & FINLEASE 342 ITR 169 HELD : THE DECISION IN THE CASE OF C/TV. LOVELY EXPORTS [2 008] 216 CTR 195 (SCT WAS CONSIDERED IN C/TV. NOVA PROMOTERS & FINLEASE (P.) LTD. [2012] 342 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI) AND I T WAS ELUCIDATED : 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND AP PRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL B E SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR N AMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APP LICATION FORMS AND SHAREHOLDERS' 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 POS SESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTE D UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UN DER SEC. 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE S HARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT A PPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PART ICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWE EN SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMEN T OF THE ASSESSEE IN SUCH MODUS OPERAND! IS CLEARLY INDICATED BY VALID MATERI AL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CAR RIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROV IDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHAR E SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE-MEDIATED PLAN - A SMOKES CREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, T HE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESS EE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC. 68 TO PROVE AND E STABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BA CK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE C ASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. D) THE HONBLE DELHI HIGH COURT IN CIT V. NAVODAYA CAS TLES (P.) LTD. [2014] 367 ITR 306/50 TAXMANN.COM 110/226 TAXMAN 19 0 (MAG) ITA NOS.607/MUM/2019 & 608/MUM/2019 11 FOLLOWING THE PRINCIPLE LAID DOWN IN NOVA PROMOTERS &FINLEASE (P.) LTD..(SUPRA) HAS HELD THAT THE SHARE CAPITAL IN CASE OF A CLOSEL Y HELD COMPANY IS REQUIRED TO BE EXAMINED BY THE AO IN TERMS OF SECTION 68 AND TH E FAILURE OF THE ASSESSEE TO SATISFY THE AO, CALLS FOR ADDITION U/S 68. IT IS US EFUL TO MENTION THAT THE SLP FILED BY THE ASSESSEE AGAINST THIS JUDGMENT HAS BEEN DISM ISSED BY THE HON'BLE SUPREME COURT WHICH HAS BEEN SINCE REPORTED AS NAVO DAYA CASTLES (P.) LTD. V. CIT [2015] 230 TAXMAN 268/56 TAXMANN.COM 18 (SC). E) THE HON'BLE CALCUTTA HIGH COURT IN CIT V. ACTIVE TRADERS (P) LTD. [1995] 214 ITR 583/[1993] 69 TAXMAN 281 (CAL) HAS HELD THAT THE ASSESSING OFFICER IN THE ASSESSMENT OF THE COMPANY HAS JURISDICTION TO ASK FOR THE INFORMATION FROM THE SHAREHOLDERS REGARDING THE SOURCE OF INVESTMENT MADE IN THE COMPANY. LT\ SET ASIDE THE VIEW OF THE TRIBU NAL THAT THERE COULD BE NO ENQUIRY REGARDING THE SOURCE OF INVESTMENT OF THE S HAREHOLDERS IN THE SHARES OF THE COMPANY. THEIR LORDSHIPS OBSERVED THAT : 'IF A CASH CREDIT IS SHOWN BY THE COMPANY IN ITS BOOKS OF ACCOUNT AND IF THE SOURCE C ANNOT BE EXPLAINED PROPERLY THE ITO MAY ASSESS THE SUM AS INCOME OF THE COMPANY FROM UNDISCLOSED SOURCE.' F) HON'BLE CALCUTTA HC IN CASE OF MAITHAN INTERNATI ONAL(2015) 375 ITR 123 HELD : WE ARE CONSCIOUS OF THE DOCTRINE OF 'SOURCE OF SOUR CE' OR 'ORIGIN OF ORIGIN' AND ALSO POSSIBLE DIFFICULTY WHICH AN ASSESSEE MAY BE F ACED WITH WHEN ASKED TO ESTABLISH UNIMPEACHABLE CREDITWORTHINESS OF THE SHA RE SUBSCRIBERS. BUT THIS ASPECT HAS TO BE DECIDED ON FACTUAL MATRIX OF EACH CASE AND STRICT OR STRINGENT TEST MAY NOT BE APPLIED TO ARMS LENGTH ANGEL INVEST ORS OR NORMAL PUBLIC ISSUES. DOCTRINE OF 'SOURCE OF SOURCE' OR 'ORIGIN OF ORIGIN ' CANNOT BE APPLIED UNIVERSALLY, WITHOUT REFERENCE TO THE FACTUAL MATRIX AND FACTS O F EACH CASE. THE SAID TEST IN CASE OF NORMAL BUSINESS TRANSACTIONS MAY BE LIGHT A ND NOT VIGOROUS. THE SAID DOCTRINE IS APPLIED WHEN THERE IS EVIDENCE TO SHOW THAT ASSESSEE MAY NOT BE AWARE, COULD NOT HAVE KNOWLEDGE OR WAS UNCONCERNED AS TO THE SOURCE OF MONEY PAID OR BELONGING TO THE THIRD PARTY. THIS MA Y BE DUE TO THE NATURE AND CHARACTER OF THE COMMERCIAL/BUSINESS TRANSACTION RE LATIONSHIP BETWEEN THE PARTIES, STATUTORY POSTULATES ETC. HOWEVER, WHEN TH ERE IS SURROUNDING EVIDENCE AND MATERIAL MANIFESTING AND REVEALING INVOLVEMENT OF THE ASSESSEE IN THE 'TRANSACTION ' AND THAT IT WAS NOT ENTIRELY AN ARM' S LENGTH TRANSACTION, RESORT OR RELIANCE TO THE SAID DOCTRINE MAY BE COUNTER-PRODUC TIVE AND CONTRARY TO EQUITY AND JUSTICE. THE DOCTRINE IS NOT AN ELDRITCH OR A C AMOUFLAGE TO CIRCULATE ILL GOTTEN AND UNRECORDED MONEY. WITHOUT BEING OBLIVIOUS TO TH E CONSTRAINTS OF THE ASSESSEE, AN OBJECTIVE AND FAIR APPROACH/DETERMINAT ION IS REQUIRED. THUS, NO ASSESSEE SHOULD BE HARASSED AND HARRIED BUT ANY DIS HONEST FACADE AND SMOKESCREENS WHICH MASQUERADE AS PRETENCE SHOULD BE EXPOSED AND NOT IT HAS FURTHER BEEN ARGUED THAT IRRESPECTIVE OF THE CHARACTERISTICS OF INVESTOR COMPANY, IT IS THE BOARD OF DIRECTOR, WHO PASSES RE SOLUTION WITH RESPECT TO INVESTMENT IN A COMPANY AND SUCH DECISIONS OF BOARD OF DIRECTORS CANNOT BE CHALLENGED BY THE AO. THERE IS NO DENIAL OF THE FAC T THAT THE COMMERCIAL DECISIONS ARE TO BE MADE BY THE BOARD OF DIRECTOR O F THE COMPANY. HOWEVER, THESE DECISIONS CAN CERTAINLY BE EXAMINED IF THE IN VESTMENTS IN THE GUISE OF ITA NOS.607/MUM/2019 & 608/MUM/2019 12 SHARE CAPITAL APPLICATION MONEY/PREMIUM ARE BEING R ECORDED IN THE BOOKS OF ACCOUNT FROM SUSPICIOUS BUSINESS ENTITY. THE BUSINESS ENTITIES THREADBARE EXAMINED BY THE AO ARE CHARACTERS OF THE SHELL COMPANY. 4.2.7 IT HAS FURTHER BEEN ARGUED THAT THE RECENT AM ENDED PROVISION U/S.56 (2)(VIIB) AND PROVISO TO SECTION 68 CANNOT H AVE A RETROSPECTIVE APPLICATION AND THEREBY THE SHARE APPLICATION MONEY /PREMIUM , CREDITWORTHINESS ETC., CANNOT BE EXAMINED UNDER UNA MENDED PROVISION. (IV) SHARE CAPITAL/ S.APPLICATION MONEY/SHARE PREMI UM/ CREDIT WORTHINESS/SOURCE OF SOURCE CAN VERY WELL EXAMINED EVEN UNDER AMENDED PROVISION. PEE AAR SECURITIES LTD. 96 TAXMANN. COM 602 (DELHI TRIBUNAL) HELD : BEFORE PARTING WITH THE MATTER, WE MAY BRIEFLY DEAL WITH THE CONTENTION OF THE ASSESSEE THAT SINCE AMENDMENT IN SECTION 68, WITH R ESPECT TO ADDITION FOR UNVERIFIED SHARE CAPITAL SUBSCRIPTION, WAS EFFECTIV E FROM 1ST APRIL 2012, IT CAN ONLY BE PROSPECTIVE AND IT WILL JNOT APPLY FOR THIS ASSESSMENT YEAR. ON A CONCEPTUAL NOTE, EVERY SPECIFIC AMENDMENT TO THE LA W, PARTICULARLY WHEN IT IS DISADVANTAGEOUS TO THE TAXPAYERS AND IS ENACTED EX ABUNDANTI CAUTELA (AS A MEASURE OF ABUNDANT CAUTION) IS GENERALLY, FRAUGHT WITH, WHAT TAX ACADEMICIANS AND POLICYMAKERS TERM AS, THE RISK OF ITS 'KILL EFF ECT'. THE RISK IS THAT WHEN A SPECIFIC PROVISION, TO MAKE THE THINGS CLEAR AND BE YOND ANY DOUBT, IS ENACTED WITH RESPECT TO A PARTICULAR POINT OF TIME AND A PA RTICULAR CONSEQUENCE IS ENVISAGED BY THE PROVISION, INTERPRETATION OF THE L AW OR TREATY WILL INVARIABLY BE INCLINED TO DRAW TO THE INFERENCE THAT NO SUCH CONS EQUENCE WAS ENVISAGED BY THE LEGISLATURE OR THE TREATY PRIOR TO THE AMENDMEN T COMING INTO FORCE. THAT IS A COMMON AND FAIRLY WELL ACCEPTED APPROACH. THERE IS, HOWEVER, A RIDER. THE RIDER IS THAT EVEN ON THE FIRST PRINCIPLES AND IN A SITUA TION IN WHICH A BINDING JUDICIAL PRECEDENT OR JUDICIAL ANALYSIS OF THE PRE-AMENDMENT LEGAL HAS ALREADY COME TO THE SAME CONCLUSIONS, AS INDICATED BY THE SPECIFIC AMENDMENT AS A MEASURE OF ABUNDANT CAUTION, SUCH A 'KILL EFFECT' IS RULED OUT . THAT PRECISELY IS THE SITUATION BEFORE US. IN SUCH CASES, THE IMPACT OF AMENDMENT R EMAINS CONFINED TO THE AREAS ON WHICH EITHER (I) ON THE AREAS ON WHICH, WI TH THE HELP OF PRE- AMENDMENT PROVISIONS, THE JUDICIAL CONCLUSIONS ARE AT VARIANCE WITH THE CONCLUSIONS ARRIVED AT WITH THE HELP OF AMENDMENT; OR (II) SUCH AREAS HAVE REMAINED INTACT FROM THE JUDICIAL PRECEDENT. VIEWED THUS, MERELY BECAUSE THERE IS A SPECIFIC AMENDMENT TO SECTION 68 WITH EFFECT F ROM 1ST APRIL 2012, IT DOES NOT AFFECT THE INTERPRETATION OF SECTION 68 ON | BA SIS OF THE BINDING JUDICIAL PRECEDENTS, DE HORSE THIS AMENDMENT, AND THE FIRST PRINCIPLES. EVEN UNDER UNAMENDED PROVISION OF SECTION 68, AN IN COME-TAX OFFICER WAS NOT PRECLUDED FROM MAKING AN INQUIRY ABOUT TRUE NATURE AND SOURCE OF SUM FOUND CREDITED IN BOOKS EVEN IF SAME WAS CREDITED AS RECE IPT OF SHARE APPLICATION MONEY. ITA NOS.607/MUM/2019 & 608/MUM/2019 13 4.2.8 THE RELIANCE HAS ALSO BEEN PLACED UPON THE JU DGMENT OF HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS (SUPRA) AND OTHER JUDGMENTS/DECISION BASED ON LOVELY EXPORTS. LOT WATER HAS BEEN FLOWN IN GANGES SINCE THE JUDGME NT OF HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORT WAS DELIVERED. THIS JUDGMENT WAS GIVEN UNDER A PECULIARS FACT OF THE CASE WHICH IS NOT AT ALL APPL ICABLE IN PRIVATE COMPANY AS SPECIFIED BY VARIOUS HIGH COURTS. RELIANCE HAS BEEN PLACED ON THE JUDGEMENT OF THE HO N'BLE APEX COURT IN CASE OF LOVELY EXPORTS LTD. (2008) 299 ITR 268 , TO CLAIM THAT 'SOURCE OF SOURCE' CAN'T BE ASKED TO BE PROVED. IF THE ASSESSEE IS ABL E TO PROVE IDENTITY AND GENUINENESS OF SHARE INVESTORS, THEN REVENUE SHOULD EXAMINE SHARE INVESTOR IF THERE IS ANY DOUBT, IS ITS CREDITWORTHINESS. NUMBER OF HIGH COURTS HAVE EXAMINED THE RATIO OF LOVELY EXPORTS LTD. (SUPRA) A ND HAS HELD INAPPLICABLE IN PRIVATE LIMITED COMPANY. ( A) COMMISSIONER OF INCOME-TAXV. N.R. PORTFOLIO (P.) LTD. [2014] 42 TAXMANN.COM 339 (DELHI) :- IN LOVELY EXPORTS LTD. (SUPRA), A DIVISION BENCH EX AMINED TWO EARLIER DECISIONS OF THIS COURT IN CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287(D ELHI) AND CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98(DE LHI) (FB). THE DECISION IN STELLER INVESTMENT'S CASE (SUPRA) WAS A FFIRMED BY THE SUPREME COURT BUT, BY OBSERVING THAT THE CONCLUSION WAS ON THE FA CTS AND NO INTERFERENCE WAS CALLED FOR. LOVELY EXPORTS LTD. (SUPRA) WAS A CASE OF PUBLIC LIMITED COMPANY WHERE SHARES WERE SUBSCRIBED BY PUBLIC AND IT WAS A CCORDINGLY OBSERVED: 'THIS REASONING MUST APPLY A FORTIORI TO LARGE SCAL E SUBSCRIPTIONS TO THE SHARES OF A PUBLIC COMPANY WHERE THE LATTER MAY HAVE NO MATER IAL OTHER THAN THE APPLICATION FORMS AND BANK TRANSACTION DETAILS TO G IVE SOME INDICATION OF THE IDENTITY OF THESE SUBSCRIBERS. IT MAY NOT APPLY IN CIRCUMSTANCES WHERE THE SHARES ARE ALLOTTED DIRECTLY BY THE COMPANY/ASSESSE E OR TO CREDITORS OF THE ASSESSEE. THIS IS WHY THIS HAS ADOPTED A VERY STRIC T APPROACH TO THE BURDEN BEING LAID ALMOST ENTIRELY ON ASSESSEE WHICH RECEIV ES A GIFT.' B) NOVA PROMOTERS & FINLEASE (P.) LTD. (2012) 342 I TR 169 (DELHI) :- THE DECISION IN THE CASE OF LOVELY EXPORTS LTD. (SUPRA) WAS CONSIDERED IN NOVA PROMOTERS AND FINLEASE (P) LTD. (2012) 342 ITR 169 (DELHI) AND IT WAS ELUCIDATED: 38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD , IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SU CH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWOR THINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER R EGISTER 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 ACTED UPON, THEN NO ADDITIO N CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC. 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO ITA NOS.607/MUM/2019 & 608/MUM/2019 14 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 IM PEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIE S THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF T HE ASSESSEE IN SUCH MODUS OPERAND! IS CLEARLY INDICATED BY VALID MATERIAL MAD E AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT B Y THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXIST ENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WE RE COLLECTED AS PART OF A PRE- MEDITATED PLAN - A SMOKESCREEN -CONCEIVED AND EXECU TED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICA BILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHE RE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLAC ED UPON HIM UNDER SEC. 68 FO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTH INESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A C ASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY IN TO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CA TEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY.' ( C) IN MIMEC (INDIA) (P.) LTD. V. DY. CIT [2013] 353 ITR 284 / ALSO, THE ASSESSEE RELIED ON THE RATIO IN THE CASE OF LOVELY EXPORTS (P.) LTD. (SUPRA) FOR CONTENDING THAT IF SHARE APPLICATION MONEY WAS RECE IVED EVEN FROM BOGUS SHAREHOLDERS, THE DEPARTMENT COULD NOT REGARD IT AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. REPELLING SUCH CONTENTION, THE HO N'BLE HIGH COURT OBSERVED THAT : 'THE JUDGMENT IN LOVELY EXPORTS (P.) LTD. (S UPRA) WAS RENDERED IN THE PARTICULAR FACTS AND CIRCUMSTANCES OF THAT CASE. TH E JUDGMENT MAY NOT LAY DOWN ANY PROPOSITION OF LAW THAT OPERATES AS A BINDING P RECEDENT ON THIS COURT....'. THE APPELLANT COMPANY HAS SUBMITTED VIRTUALLY ALL T HE CASE LAWS ASSOCIATED WITH SECTION 68 IN A FORM OF COMMENTARY. I. AM AFRAID, S UCH APPROACH DOES NOT HELP THE CAUSE OF THE APPELLANT. MANY OF THE CASES HAVE BEEN DISCUSSED IN ABOVE PARAGRAPH. IN REST OF THE CASE, THE FACTS AND CIRCU MSTANCES ARE CLEARLY DISTINGUISHABLE AND JUDGMENTS CANNOT BE HELD AS A C ARDINAL .PRINCIPLE FOR INVOCATION OF SECTION 68.UNDER THE FACTS AND CIRCUM STANCES OF THE APPELLANTS CASE. IN VIEW OF THE ABOVE DISCUSSED FACTS, ANALYZED CASE LAWS AND REFERENCES OF THE AO'S EXAMINATION IN THE ASSESSMENT ORDER, I HAVE NO REASONS TO DEVIATE FROM THE FINDING OF THE AO. THE APPELLANT COMPANY HAS FA ILED TO PROVE ALL THE THREE INGREDIENTS OF SECTION 68, PARTICULARLY, THE NEGATI VE WORTH OF THE INVESTOR COMPANY, THE TRANSFER OF FUND TO THE APPELLANT COMP ANY IMMEDIATELY AFTER RECEIPT OF CERTAIN CREDIT IN THE BANK ACCOUNT, TOTA L CHARACTERISTICS OF INVESTOR AS A SHELL COMPANY ETC,, ARE CLEAR EVIDENCE TO SHOW THAT THE APPELLANT COMPANY HAS LAUNDERED ITS OWN MONEY IN THE GUISE OF SHARE MONEY /PREMIUM. THUS, THE ITA NOS.607/MUM/2019 & 608/MUM/2019 15 ADDITION MADE BY THE AO IS CONFIRMED AND THEREFORE GROUND OF APPEAL FILED ON THIS ISSUE IS DISMISSED 6. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED AR FOR THE ASSESSEE SUBMITTE D THAT THE LD. CIT(A) WAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING O FFICER TOWARDS SHARE APPLICATION MONEY RECEIVED FROM SEVEN SUBSCRIBERS AMOUNTING TO 10,65,00,000/- U/S. 68 OF THE I.T.ACT, 1961 WITHOUT APPRECIATING FACT THAT TH E ASSESSING OFFICER NEVER DISPUTED IDENTITY OF THE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTIONS. THE AR FURTHER SUBMITTED THAT ALTHOUGH THE ASSESSING OFFICER HAS A CCEPTED IDENTITY OF THE SUBSCRIBERS, HE DISPUTED CREDIT WORTHINESS OF THE S UBSCRIBERS ON THE BASIS OF FINANCIAL STATEMENTS WITHOUT CARRYING OUT FURTHER E NQUIRIES EITHER BY ISSUE OF NOTICE U/S. 133(6) OR SUMMONS U/S 131 TO ASCERTAIN TRUE NA TURE OF TRANSACTIONS BETWEEN THE PARTIES. ON THE OTHER HAND, THE ASSESSEE HAS D ISCHARGED ITS INITIAL ONUS BY FILING ENORMOUS DOCUMENTS, INCLUDING CONFIRMATION FROM THE PARTIES WHERE THEY HAVE CATEGORICALLY STATED THAT INVESTMENTS IN ASSESSEE C OMPANY IS GENUINE TRANSACTION AND HAS BEEN ROUTED THROUGH BANKING CHANNELS. THE ASSESSEE HAS ALSO FILED COMPLETE DETAILS ABOUT IDENTITY OF THE SUBSCRIBERS INCLUDING THEIR PAN, ADDRESS ETC. THE ASSESSEE HAS ALSO FILED INCOME TAX ACKNOWLEDGME NT OF THE SUBSCRIBERS ALONG WITH FINANCIAL STATEMENT AND BANK STATEMENTS. THE ASSESSING OFFICER NEVER DISPUTED THE FACT THAT THE ASSESSEE HAS FILED NECESSARY DOCU MENTS IN ORDER TO PROVE IDENTITY OF THE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTI ONS. ONCE, THE ASSESSEE DISCHARGES INITIAL BURDEN PLACED UPON HIM, THEN THE ONUS SHIFTS TO THE SHOULDER OF THE ASSESSING OFFICER TO PROVE OTHERWISE. IN THIS CASE, THE ASSESSING OFFICER NEITHER CARRIED OUT ANY FURTHER ENQUIRIES, NOR CALLED UPON THE ASSESSEE TO EXPLAIN THE CREDIT ITA NOS.607/MUM/2019 & 608/MUM/2019 16 WITH FURTHER EVIDENCES. THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE TRANSACTION BETWEEN THE PARTIES ARE NOT GENUINE MER ELY ON THE BASIS OF FINANCIAL STATEMENTS OF THE ASSESSEE, MORE PARTICULARLY ON BA SIS OF INCOME DECLARED FOR THE YEAR UNDER CONSIDERATION WITHOUT APPRECIATING THE C ORRECT LEGAL POSITION OF LAW THAT IN ORDER TO BRING ANY CREDIT WITHIN THE AMBIT OF SE CTION 68 OF THE ACT, THE ASSESSING OFFICER SHOULD PROVE THAT THE CREDIT IS, IN FACT, T HE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. IN THIS CASE, NOTHING HAS BEE N POINTED OUT BY THE ASSESSING OFFICER. THE LEARNED AR FURTHER REFERRING TO VARIO US JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. CREATIVE WORLD TELEFILMS LTD. (333 ITR 100) SUBMITTED THAT ONCE TH E ASSESSEE HAS DISCHARGED INITIAL ONUS OF PROVING IDENTITY, GENUINENESS OF TRANSACTIO N AND CREDIT WORTHINESS OF THE PARTIES, THEN THE ASSESSING OFFICER CAN PROCEED TO RE-OPEN THE ASSESSMENT OF THE CREDITORS, BUT SUM SO RECEIVED FROM THE CREDITORS C ANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE HAS FURTHER R ELIED ON THE FOLLOWING JUDICIAL PRECEDENTS: A) GREEN INFRA LTD VS. ITO 38 TAXMANN.COM 253 (MUM- LTAT) DATED 23/8/2013 B) CIT VS. GOA SPONGE AND POWER LTD TAX APPEAL NO. 16 OF 2012 (BOMBAY HIGH COURT) C) CIT VS. CREATIVE WORLD TELEFILMS LTD 333 ITR 100 (BOM-HIGH COURT) D) CIT VS. LOVELY EXPORTS (P) LTD 216 CTR 195 (SC) E) CIT VS. STELLER INVESTMENT LTD 251ITR 263 (SC) F) SDB ESTATE PVT LTD VS. ITO ITA NO.584/M/2015 G) CIT VS. EXPO GLOBE INDIA LTD 361 ITR ( 0147 (DEL-HIGH COURT) H) CIT VS. VICTORY SPINNING MILLS LTD (2014) 90 CC H 55 (MAD -HIGH COURT) ITA NOS.607/MUM/2019 & 608/MUM/2019 17 I) CIT VS. DWARKADHISH INVESTMENT (P) LTD (2011) 3 30 ITR 298 (DEL-HIGH COURT) J) CIT VS. NISHAN INDO COMMERCE LTD 101 DTR 0413 (C AL - HIGH COURT) K) CIT V. VACMET PACKAGING (INDIA) PVT LTD (2014) 8 8 CCH 065 (ALL-HC) L) CIT VS. GANGESHWARI METAL PVT LTD (2014) 361 IT R 10 (DEL-HIGH COURT) M) ACIT VS. VENKATESHWAR ISPAT PVT LTD (2010) 319 I TR 393 (CHHATISGARH-HIGH COURT) N) CIT VS. NAV BHARAT DUPLEX LTD (2013) 35 TAXMANN. COM 289 (ALL-HIGH COURT) O) CIT VS. SAMIR BIO-TECH PVT LTD (2010) 325 ITR 29 4 (DEL-HIGH COURT) P) MOD CREATIONS PVT LTD VS. ITO (2011) 354 ITR 282 (DEL-HIGH COURT) Q) CIT VS. JAY DEE SECURITIES & FINANCE LTD 32 TAXM ANN.COM 91 (ALL-HIGH COURT) R) JAYA SECURITIES LTD VS. CIT (2008) 166 TAXMAN 7 (ALL-HIGH COURT) (SLP FILED BY DEPT DISMISSED) 7. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUPP ORTING ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS BROUGHT OUT CLEAR FACT TO THE EFFECT THAT ALTHOUGH THE ASSESSEE HAS FILED NUMBER OF DOCUMENTS TO PROVE IDENTITY OF THE CREDITORS, REMAINING TWO ASPECTS OF THE ISSUE I.E. GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SUBSCRIBERS ARE IN DOUBT. THE DR FURTHER SUBMITTED THAT MERE FURNISHING OF DOCUMENTS TO PROV E IDENTITY IS NOT ENOUGH TO COME OUT OF THE SHADOW OF PROVISIONS OF SECTION 68 OF THE I.T.ACT, 1961. BUT, WHAT IS RELEVANT IS TO DISCHARGE THE ONUS BY FILING NECE SSARY EVIDENCE TO PROVE TRUE IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANS ACTIONS AND CREDITWORTHINESS OF THE PARTIES. IN THIS CASE, ALTHOUGH THE ASSESSEE HAS F ILED NUMBER OF DOCUMENTS TO PROVE THE IDENTITY, HE COULD NOT PRODUCE CREDITORS IN PERSON WHEN CALLED UPON BY ITA NOS.607/MUM/2019 & 608/MUM/2019 18 THE ASSESSING OFFICER, THEREFORE, IT IS VERY CLEAR THAT IDENTITY OF THE PARTIES IS IN DOUBT AND THEIR CREDITWORTHINESS IS ALSO NOT PROVED TO THE SATISFACTION OF THE ASSESSING OFFICER. ALTHOUGH, THE SUBSCRIBERS HAVE F ILED THEIR ACKNOWLEDGMENT OF INCOME TAX RETURN, THE PROFIT DECLARED FOR THE YEAR UNDER CONSIDERATION ARE EITHER NIL OR NEGLIGIBLE WHEN COMPARED TO THE HUGE AMOUNT OF S HARE CAPITAL INVESTED IN THE ASSESSEE COMPANY. ALTHOUGH, THE ASSESSEE HAD FILED BANK STATEMENTS OF THE SUBSCRIBERS, A PERUSAL OF BANK STATEMENTS REVEAL TH AT EXCEPT DEBIT AND CREDIT IN RESPECT OF MOVEMENT OF FUNDS BETWEEN THE ASSESSEE C OMPANY AND THE INVESTORS, NO SIGNIFICANT TRANSACTIONS WAS THERE TO PROVE THAT IN FACT, THEY ARE INTO BUSINESS ACTIVITY. SIMILARLY, THE ASSESSEE HAS FAILED TO EX PLAIN CHARGING OF HUGE PREMIUM WITH NECESSARY BUSINESS ACTIVITIES AND VALUATION. ALTHO UGH, VALUATION REPORT HAS BEEN FILED TO SUPPORT ISSUE OF SHARES AT PREMIUM, ON A P ERUSAL OF VALUATION REPORT, IT IS FOUND THAT VALUATION OF SHARES HAS BEEN ARRIVED AT ON THE BASIS OF DCF METHOD ON ESTIMATED EARNING OF SUBSEQUENT YEARS WITHOUT ANY S UPPORT FROM THE EXISTING BUSINESS OF THE ASSESSEE AND ALSO FINANCIAL STRENGT H TO SUPPORT SUCH VALUATION. THEREFORE, THE ASSESSING OFFICER AS WELL AS THE CIT (A) HAVE CLEARLY REJECTED THE ARGUMENTS OF THE ASSESSEE TO COME TO THE CONCLUSION THAT CREDIT FOUND IN THE FORM OF SHARE CAPITAL HAS NOT BEEN EXPLAINED TO THE SATI SFACTION OF THE ASSESSING OFFICER AND, ACCORDINGLY, MADE ADDITION U/S. 68 OF THE ACT . IN THIS REGARD, HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DC IT VS. NRA IRON & STEEL PVT. LTD (2019) 412 ITR 161(SC). 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE ASSESSING OFFICER HAS MADE ITA NOS.607/MUM/2019 & 608/MUM/2019 19 ADDITIONS TOWARDS SHARE CAPITAL FROM SEVEN SUBSCRIB ERS ON THE GROUND THAT NONE OF THE SUBSCRIBERS HAVE ENOUGH SOURCE OF INCOME TO EXP LAIN HUGE AMOUNTS OF SHARE CAPITAL INVESTED IN THE ASSESSEE COMPANY. THE AO FU RTHER OBSERVED THAT ALTHOUGH THE ASSESSEE HAS FILED CONFIRMATIONS FROM THE PARTI ES, ALONG WITH FINANCIAL STATEMENTS, HE COULD NOT PRODUCE THE PARTIES FOR VE RIFICATION AS AND WHEN CALLED FOR. THEREFORE, HE OPINED THAT MERE FURNISHING OF CERTAI N DOCUMENTS IS NOT SUFFICIENT ENOUGH TO PROVE IDENTITY OF CREDITORS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE AO HAS EXAMINE D EACH OF THE SEVEN SUBSCRIBERS AND NARRATED FACTS IN THE LIGHT OF FINANCIAL STATEM ENTS FILED BY THE ASSESSEE TO COME TO THE CONCLUSION THAT THE SUBSCRIBER COMPANIES ARE IN FACT PAPER COMPANIES WITHOUT ANY CREDIBLE BUSINESS ACTIVITY. THE AO HAS ALSO QU ESTIONED SHARE PREMIUM CHARGED BY THE ASSESSEE IN LIGHT OF BUSINESS ACTIVITY AND F INANCIAL STRENGTH. ACCORDING TO THE AO, ALTHOUGH THE ASSESSEE HAS FILED VALUATION REPOR T IN SUPPORT OF SHARE PRICE, SUCH REPORT HAS BEEN PREPARED ON THE BASIS OF FUTURE EAR NINGS OF THE ASSESSEE WITHOUT ANY SUPPORT FROM EXISTING BUSINESS ACTIVITY AND ASS ET BASE. 9. THE AO HAS MADE ADDITIONS TOWARDS SHARE CAPITAL U/S. 68 OF THE I.T.ACT, 1961, ON THE GROUND THAT THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION WITH REGARD TO CREDIT FOUND IN THE NATURE OF SHARE CAPIT AL. THE PROVISIONS OF SECTION 68 DEALS WITH A CASE WHERE ANY SUM FOUND CREDITED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE IN ANY PREVIOUS YEAR, FOR WHICH THE ASSESS EE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATIONS OFFERED BY THE ASSESSEE IN THE OPINION OF THE AO IS NOT SATISFACTORY, THEN SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PREVIO US YEAR. A PLAIN READING OF ITA NOS.607/MUM/2019 & 608/MUM/2019 20 SECTION 68 MAKES IT CLEAR THAT TO FIX ANY CREDIT WI THIN THE AMBIT OF SAID PROVISION, THE AO HAS TO EXAMINE THREE INGREDIENTS I.E. IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. IF THE ASSESSEE P ROVES ALL THREE, THEN THE ONUS SHIFTS TO THE AO TO PROVE OTHERWISE. IN THIS CASE, ON PERUSAL OF FACTS BROUGHT OUT BY THE AO AND THE LEARNED CIT(A) IT IS ABUNDANTLY CLEA R THAT THERE IS NO DISPUTE OF WHATSOEVER WITH REGARD TO THE IDENTITY OF THE PARTI ES. THE ASSESSEE HAS FILED COMPLETE DETAILS OF THE SUBSCRIBERS INCLUDING THEIR NAMES, ADDRESS AND PAN. THE ASSESSEE HAS ALSO FILED IT ACKNOWLEDGMENT COPIES FO R THE RELEVANT FINANCIAL YEAR. ONCE THE ASSESSEE HAS FILED DOCUMENTS TO PROVE THE IDENTITY, THEN IT IS FOR THE AO TO ASCERTAIN WHETHER THE PARTIES ARE, IN FACT, GENUINE OR NOT IN THE LIGHT OF THE EVIDENCES FILED BY THE ASSESSEE FOR WHICH THE AO HA S TO CARRY OUT NECESSARY INQUIRIES IN ORDER TO ASCERTAIN THE TRANSACTION BET WEEN THE PARTIES. IN THIS CASE, THE AO HAS FILED TO DO SO HIS DUTY, WHICH IS EVIDENT FR OM THE FACT THAT HE HAS NOT ISSUED NOTICE U/S. 133(6) OR SUMMONS U/S. 131 OF THE I.T. ACT, 1961. ALTHOUGH, THE AO HAS CALLED UPON THE ASSESSEE TO PRODUCE PARTIES IN PERS ON, THE FACT OF THE MATTER IS THAT ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS, THEN THE AO HAS TO DO HIS PART OF THE JOB BEFORE HE REACHES A CONCLUSION WITH REGARD TO THE I DENTITY OF THE PARTIES. 10. COMING TO THE OTHER ASPECT OF PROVISIONS OF SEC TION 68 OF THE ACT. THE AO HAS DOUBTED GENUINENESS OF TRANSACTION AND CREDITWO RTHINESS OF THE PARTIES. ACCORDING TO THE AO, NONE OF THE SUBSCRIBERS HAVE E NOUGH SOURCE OF INCOME TO EXPLAIN HUGE INVESTMENTS MADE IN SHARES OF THE ASSE SSEE COMPANY. TO COME TO SUCH A CONCLUSION, THE AO HAS BASICALLY ANALYZED TH E FINANCIAL STATEMENTS OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS FILED INCO ME TAX ACKNOWLEDGMENT COPIES OF ITA NOS.607/MUM/2019 & 608/MUM/2019 21 THE SUBSCRIBERS ALONG WITH THEIR FINANCIAL STATEMEN TS AND BANK STATEMENTS FOR THE RELEVANT YEAR. ON PERUSAL OF BANK STATEMENTS, WE F IND THAT ALTHOUGH THE SUBSCRIBERS COMPANIES DO NOT HAVE SUFFICIENT INCOME FOR THE YEA R UNDER CONSIDERATION; BUT WHEN IT COMES TO AVAILABILITY OF SOURCE THERE IS NO DOUB T OF WHATSOEVER WITH REGARD TO PAYMENTS MADE TO THE ASSESSEE COMPANY. IN FACT, TH E AO HAS NEVER DISPUTED THE ASPECT OF PAYMENT THROUGH BANKING CHANNELS. WE FUR THER NOTED THAT THE AMOUNT IS PAID THROUGH PROPER BANKING CHANNELS. IN THE BANK STATEMENTS OF THE SUBSCRIBER COMPANIES THERE IS NO CASH DEPOSIT EITHER BEFORE TH E DATE OF TRANSFER OF FUNDS TO THE ASSESSEE OR SUBSEQUENT TO THE DATE OF TRANSFER. FU RTHER, THE SUBSCRIBER COMPANIES HAVE ENOUGH RESERVES AND SURPLUS IN THEIR BOOKS OF ACCOUNTS. ALL THESE EVIDENCE GO TO PROVE BEYOND DOUBT THAT THE ASSESSEE HAS DISCHAR GED ITS ONUS OF PROVING THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS, THEN IT IS FOR THE AO TO A SCERTAIN CORRECTNESS OF CLAIM OF THE ASSESSEE BY CARRYING OUT FURTHER INQUIRIES. IN THI S CASE, THE AO HAS FAILED TO DO SO. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO MERI T IN THE FINDINGS RECORDED BY THE AO OR THE CIT(A) THAT THE ASSESSEE HAS FAILED TO DI SCHARGE ITS ONUS OF PROVING THE THREE INGREDIENTS PROVIDED U/S. 68 OF THE I.T. ACT, 1961. 11. COMING TO THE OTHER ASPECT OF THE ISSUE, THE AO HAS INVOKED THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE I.T. ACT, 1961. WE FIND THAT THE SAID PROVISION HAS BEEN INSERTED BY FINANCE ACT, 2012 W.E.F 10.04.2013, WHE RE IT PROVIDES THAT WHERE A CLOSELY HELD COMPANY ISSUES ITS SHARES AT A PRICE W HICH IS MORE THAN ITS FAIR MARKET VALUE, THEN AMOUNT RECEIVED IN EXCESS OF FAIR MARKE T VALUE WILL BE CHARGED TO TAX IN THE HANDS OF THE COMPANY AS INCOME FROM OTHER SOURC ES. WE, FURTHER NOTED THAT ITA NOS.607/MUM/2019 & 608/MUM/2019 22 THE PROVISIONS OF SECTION 56(2)(VIIB) WAS INSERTED BY FINANCE ACT,2012 W.E.F. 1.04.2013 IS APPLICABLE FROM A.Y. 2013-14 ONWARDS. IN FACT A SIMILAR AMENDMENT HAS BEEN MADE IN SECTION 68 BY INSERTION OF A PROVI SO BY THE FINANCE AT 2012 W.E.F. 01.04.2013 AS PER WHICH THE ASSESSEE COMPANY (NOT B EING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED) AND SUMS SO CR EDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL , SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESS EE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON BEING, A RES IDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED AND SUCH EXPLANA TION IN THE OPINION OF THE AO AFORESAID HAS BEEN FOUND TO BE SATISFACTORY. ON PE RUSAL OF AMENDMENTS BROUGHT OUT BY FINANCE ACT 2012, W.E.F. 01.04.2013 TO THE P ROVISIONS OF SECTION 56(2)(VIIB) AND SECTION 68 OF THE ACT, IT IS VERY CLEAR THAT WH ERE THE ASSESSEE HAS ISSUED SHARES AT PREMIUM AND ALSO RECEIVED SHARE CAPITAL AND IF SUCH COMPANY DO NOT OFFER ANY EXPLANATION ABOUT THE NATURE AND SOURCE, THEN SUM S O RECEIVED MAY BE REGARDED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. I N OTHER WORDS, THE PURPOSE OF INSERTION OF PROVISO IS TO EXAMINE THE SOURCE OF IN VESTMENT BY SUBSCRIBER TO THE SHARE CAPITAL. THIS AMENDMENT HAS BEEN EXAMINED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTU RE (P) LTD. (2017) 394 ITR 680, WHERE THE COURT OBSERVED THAT PROVISO INSERTED TO S ECTION 68 W.E.F. 01.04.2013 IS CONSIDERED TO BE PROSPECTIVE IN NATURE AND IS APPLI CABLE FROM A.Y. 2013-14 ONWARDS. FROM THE ABOVE, IT IS VERY CLEAR THAT SIMILAR AMEND MENT HAS BEEN MADE TO PROVISIONS OF SECTION 56(2) BY INSERTION OF CLAUSE (VIIB) SO AS TO BRING SHARE PREMIUM ITA NOS.607/MUM/2019 & 608/MUM/2019 23 WITHIN THE AMBIT OF SECTION 56(2) OF THE I.T ACT, 1 961. SINCE, THE PROVISO INSERTED TO SECTION 68 IS CONSIDERED TO BE PROSPECTIVE IN NATUR E, OBVIOUSLY SUB CLAUSE (VIIB) INSERTED TO SECTION 56(2) IS ALSO CONSIDERED TO BE PROSPECTIVE AND CANNOT BE APPLIED TO THE ASSESSMENT YEAR IN QUESTION. EVEN OTHERWISE , ASSUMING FOR A MOMENT THAT ABOVE PROVISIONS ARE APPLICABLE FOR THE YEAR UNDER CONSIDERATION, IN ORDER TO APPLY SAID AMENDED PROVISIONS, THE AO HAS TO PROVE THAT T HE ASSESSEE HAS NOT PROVED CAPACITY OF THE INVESTORS AND ALSO NOT OFFERED ANY JUSTIFICATION FOR ISSUE OF SHARES AT PREMIUM. IN THIS CASE, FROM THE FACTS ON RECORD, I T IS CLEAR THAT THE ASSESSEE HAS PROVED IDENTITY AND GENUINENESS OF THE TRANSACTIONS BY FILING NECESSARY EVIDENCES. THE ASSESSEE HAS FILED VALUATION REPORT FROM REGIST ERED VALUER AS PER WHICH THE SHARE PRICE OF THE COMPANY IS OVER AND ABOVE PREMIU M CHARGED BY THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT PROVI SIONS OF SECTION 56(2)(VIIB) HAS NO APPLICATION. 12. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSEE. THE ASSESSEE HAS RELIED UPON PLETHORA OF JUDGEMENTS, INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). IN THE CASE LAWS RELIED UPON BY THE ASSESSE E, THE ISSUE HAS BEEN DEALT AS UNDER:- CIT VS. GOA SPONGE AND POWER LTD (13/02/2012) TAX A PPEAL NO. 16 OF 2012 (HIGH COURT-BOMBAY) 'ONCE THE AUTHORITIES HAVE GOT ALL THE DETAI LS, INCLUDING THE NAME AND ADDRESSES OF THE SHAREHOLDERS, THEIR PAN/GIR NUMBER , SO ALSO THE NAME OF THE BANK FROM WHICH THE ALLEGED INVESTORS RECEIVED MON EY AS SHARE APPLICATION, THEN, IT CANNOT BE TERMED AS 'BOGUS'. THE CO NTROVERSY IS COVERED BY ITA NOS.607/MUM/2019 & 608/MUM/2019 24 THE JUDGEMENTS RENDERED B Y THE HON'BLE SUPREME COU RT IN THE CASE OF LOVELY EXPORTS PVT LTD, VS. CIT, (2008) 216 CTR (SC) 195, AS ALSO BY THIS COURT IN CIT VS. CREATIVE WORLD TELE FILMS LTD, (2011) 333 ITR 1 00 (BOM). IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE TRIBUNAL 'S FINDING THAT THERE IS NO JUSTIFICATION IN THE ADDITION MADE UNDER S ECTION 68 OF THE INCOME TAX ACT,, 1961 NEITHER SUFFERS FROM ANY PERVE RSITY NOR GIVES RISE TO ANY SUBSTANTIAL QUESTION OF LAW.' CIT VS. CREATIVE WORLD TELE FILMS LTD (2011) 333 IT R 100 (BORN-HIGH COURT) 'THE QUESTION SOUGHT TO BE RAISED IN THE AP PEAL WAS ALSO RAISED BEFORE THE TRIBUNAL AND THE TRIBUNAL WAS PLEASED TO FOLLOW THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P ) LTD. (2008) 216 CTR (SC) 195. WHEREIN THE APEX COURT OBSERVED THA T IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, TH EN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS O F THE SHAREHOLDER, THEIR PAN/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE AO TO MA KE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE AO DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN EN DORSEMENT 'NOT TRACEABLE IN OUR CONSIDERED VIEW, THE AO OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THE IR BANKERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MATER IAL DETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE AO. IN THE ABOVE CIRC UMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED.' CIT VS. LOVELY EXPORTS (P) LTD (2008) 216 CTR 195 ( SC) 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEI R INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARD ED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY.' CIT VS. STELLER INVESTMENT LTD (2001) 251 ITR 263 ( SC) (CIVIL APPEAL) 'THAT THE INCREASE IN SUBSCRIBED CAPITAL OF THE RESPONDENT COMPANY COULD NOT BE A DEVICE OF CONVERTING BLACK MONEY INTO WHIT E WITH THE HELP OF FORMATION OF AN INVESTMENT COMPANY, ON THE ROUN D THAT, EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED CAP ITAL WERE NOT GENUINE, TINDER NO CIRCUMSTANCES COULD THE AMOUNT OF S HARE CAPITAL BE REGARDED AS UN DISCLOSED INCOME, AN APPEAL WAS TAKEN B Y THE DEPARTMENT TO TH E ITA NOS.607/MUM/2019 & 608/MUM/2019 25 SUPREME COURT. THE SUPREME COURT DISMISSED TH E APPEAL HOLDING THAT THE TRIBUNAL HAD COME TO A CONCLUSION ON FA CTS AND NO INTERFERENCE WAS CALLED FOR.' CIT VS. NAV BHARAT DUOLEX LTD (2013) 35 TAXMANN.COM 289 (ALL-HIGH COURT) 'WE HAVE CONSIDERED THE ARGUMENTS OF THE COUNSEL FO R THE PARTIES. CIT(A) FOUND THAT FIVE COMPANIES SUBSCRIBING THE EQU ITY SHARES AMOUNTING TO RS. 25,00.000/- WERE IDENTIFIED AND THEY HAD SUBMITTED THEIR BANK STATEMENTS, CASH EXTRACTS AND RETURNS FILING RECEI PTS. AS SUCH IDENTITY OF THE SHARE APPLICANT COMPANIES AND PURCHASE OF SHARE HAD BEEN PROVED BY THE ASSESSEE. SUPREME COURT IN THE CASES OF CIT V. STELLER INVESTMENTS LTD. [2001] 251 ITR 263 AND LOVELY EXP ORTS CASE (SUPRA), HAS HELD THAT THE IDENTITY OF THE SHAREHOLDER ALO NE IS REQUIRED TO BE PROVED, IN CASE OF THE CAPITAL CONTRIBUTED BY THE S HAREHOLDERS. ACCORDINGLY CIT(A) AND THE TRIBUNAL HAS NOT COMMITTED AN Y ILLEGALITY IN ALLOWING THE APPEAL OF THE ASSESSEE. WE DO NOT FIND ANY ILLEGAL ITY IN THE JUDGMENT OF THE CIT(A) AND THE TRIBUNAL.' CIT VS. JAYDEE SECURITIES & FINANCE LTD (2013) 32 T AXMANN.COM91 (ALL-HIGH COURT) 'THE TRIBUNAL RECORDED FINDINGS THAT THE ASSE SSEE HAD PRODUCED THE RETURN OF INCOME FILED BY THE RELEVANT SHAREHOLDERS WHO HAD PAID SHARE APPLICATION MONEY. THE ASSESSEE HAD ALSO PROD UCED THE CONFIRMATION OF SHARE HOLDERS INDICATING THE DETAILS OF ADDRE SSES, PAN AND PARTICULARS OF CHEQUES THROUGH WHICH THE AMOUNT WAS PAID TOW ARDS THE SHARE APPLICATION MONEY. THE TRIBUNAL THEREAFTER RELIE D UPON THE JUDGMENT OF THE SUPREME COURT IN CIT V. LOVELY EXPORTS (P.) LT D WHEREIN IT WAS HELD THAT IF THE ASSESSEE PRODUCES THE NAMES, ADDRESSE S, PAN DETAILS OF THE SHARE HOLDERS THEN THE ONUS ON THE ASSESSEE TO PRO VE THE SOURCE O F SHARE APPLICATION MONEY STANDS DISCHARGED. IF THE A SSESSING AUTHORITY WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE SHA REHOLDERS, IT WAS OPEN TO THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE HANDS OF THE SHAREHOLDERS CONCERNED, THE TRIBUNAL HAS RELIED UPON AN ORDER OF THE SUPREME COURT IN CASE O F CIT V. DIVINE LEASING & FINANCE LTD. IN VIEW OF THE DECISION 'OF THE SUPREME COURT, WE DISMISS THE AP PEALS WITH OBSERVATIONS THAT THE DEPARTMENT IS FREE TO PROCEED TO REO PEN THEIR INDIVIDUAL ASSESSMENTS OF THE SHAREHOLDERS WHOSE NAMES A ND DETAILS WERE GIVEN TO THE ASSESSING OFFICER.' ACIT VS. VENKATESHWARLSPAT PVT LTD (2009) 319 ITR 3 93 (CHHATISGARH-HIGH COURT) ITA NOS.607/MUM/2019 & 608/MUM/2019 26 'IF THE SHARE APPLICATIONS ARE RECEIVED BY THE ASSE SSEE FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEI R INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS T HE UNDISCLOSED INCOME OF THE ASSESSEE.' MOD CREATIONS PVT LTD VS. ITO (2013) 354 ITR 282 (D EL-HIGH COURT) 'HELD, ALLOWING THE APPEAL, (I) THAT THE ASS ESSEE HAD DISCHARGED THE INITIAL ONUS PLACED ON IT. IN THE EVENT THE REVENUE STILL HAD A DOUBT WITH REGARD TO THE GENUINENESS OF THE TRANSACTIONS IN ISSU E OR AS REGARDS THE CREDITWORTHINESS OF THE CREDITORS, IT WOULD HAV E HAD TO DISCHARGE THE ONUS WHICH HAD SHIFTED ON TO IT. A BALD ASSERTION BY THE ASSESSING OFFICER THAT THE CREDITS WERE A CIRCULAR ROUTE ADOPTED BY THE ASSESSEE TO PLOUGH BACK ITS OWN UNDISCLOSED INCOME INTO ITS ACCO UNTS, COULD BE OF N O AVAIL. THE REVENUE WAS REQUIRED TO PROVE THIS ALLE GATION. AN ALLEGATION BY ITSELF WHICH IS BASED ON ASSUMPTION WILL NOT PASS M USTER IN LAW. THE REVENUE WOULD BE REQUIRED TO BRIDGE THE GAP BETWEEN THE SUSPICIONS AND PROOF IN ORDER TO BRING HOME THIS ALLEGATION. THE TRIBUNAL W ITHOUT ADVERTING TO THE PRINCIPLE LAID STRESS ON THE FACT THAT DESPITE OP PORTUNITIES, THE ASSESSEE AND/OR THE CREDITORS HAD NOT PROVED THE GENUI NENESS OF THE TRANSACTION. BASED ON THIS IT CONSTRUED THE INTENTIONS OF TH E ASSESSEE AS BEING MALA FIDE. THE TRIBUNAL OUGHT TO HAVE ANALYSED THE MATERIAL RATHER THAN BE BURDENED BY THE FACT THAT SOME OF THE CREDITORS HAD CHOSEN NOT TO MAKE A PERSONAL APPEARANCE BEFORE THE ASSESSING OFFICER. I F THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE MATERIAL PLACED ON R ECORD, WHICH WAS LARGELY BANK STATEMENTS OF THE CREDITORS AND THEIR INCOME- TAX RETURNS, IT COULD GATHER THE NECESSARY INFORMATION FROM THE SOUR CES TO WHICH THE INFORMATION WAS ATTRIBUTABLE......IF IT HAD ANY DOUBTS WITH REGARD TO THEIR CREDITWORTHINESS, THE REVENUE COULD ALWAYS BRI NG THE SUM IN QUESTION TO TAX IN THE HANDS OF THE CREDITORS OR SUB- CREDITORS .' CIT VS. AL ANAM AGRO FOODS (P.) LTD (2013) 38 TAXMA NN.CORN 375 (ALL-HIGH COURT) TRIBUNAL, HOWEVER, HELD THAT SINCE IDENTITY OF SHA RE HOLDERS STOOD PROVED ON RECORD, AMOUNT OF SHARE APPLICATION MONEY COULD NOT BE ADDED TO INCOME OF ASSESSEE. ACCORDING TO TRIBUNAL, IN SUCH A CASE AMO UNT COULD BE TAXED IN HANDS OF PERSONS WHO HAD INVESTED' CIT VS. DWARKADHISH INVESTMENT (P) LTD (2011) 330 I TR 298 (DEL- HIGH COURT) 'JUST BECAUSE THE CREDITORS/SHARE APPLICANTS C OULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE S. 68 REVENUE HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON ITA NOS.607/MUM/2019 & 608/MUM/2019 27 MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE N EED NOT TO PROVE THE 'SOURCE OF SOURCE' IN THE INSTANT CASE, THE TRIBUNAL HAS CONFIRMED THE ORDER OF THE CIT(A) DELETING THE IMPUGNED ADDITION HOL DING THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE SHAR E APPLICANTS AND THE SHARE APPLICATION MONEY HAS BEEN RECEIVED BY WAY OF ACC OUNT PAYEE CHEQUES.' CIT VS. NAMASTEY CHEMICALS PVT LTD (2013) 33 TAXMAN N.COM271 (GUJ-HIGH COURT) 'IN THE PRESENT CASE ALSO, THE RESPONDENT AS SESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM DIFFERENT SUB SCRIBERS. IT W AS FOUND THAT LARGE NUMBER OF SUBSCRIBERS HAD RESPONDED TO THE LETTERS ISS UED BY THE ASSESSING OFFICER OR SUMMONS ISSUED BY HIM AND SUBMITTE D THEIR AFFIDAVITS. IN SOME CASES SUCH REPLIES WERE NOT RECEIVED THR OUGH POSTS. RS. 9 LACS REPRESENTED THOSE ASSESSEES WHO DENIED HAVING MADE ANY INVESTMENT ALTOGETHER. THE ISSUE THUS WOULD FALL SQ UARE LY WITHIN THE AMBIT OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE NF LOVELY EXPORTS (SUPRA). NO ERROR OF LAW CAN BE STATED TO HAVE BEEN COMMITTED BY THE TRIBUNAL. TAX APPEAL IS THEREFORE DISMISSED.' CIT VS. PEOPLES GENERAL HOSPITAL LTD (2013) 356 ITR 65 (MP-HIGH COURT) ' HELD , DISMISSING THE APPEALS , THAT IT THE ASSESSEE HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSUE T HROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE TINDER SECTION 68 OF THE INCOME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART O F THE SHARE CAPITAL REPRESENTED THE COMPANY'S OWN INCOME FROM UNDI SCLOSED SOURCES. IT WAS NOBODY'S CASE THAT THE NON RESIDENT INDIAN CO MPANY WAS A BOGUS OR NON-EXISTENT COMPANY OR THAT THE AMOUNT SUBSCR IBED BY THE COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE M ONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE I NVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONTENTION WAS THAT THE CREDITWORTHI NESS OF THE CREDITOR WAS ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHMENT O F THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS, THE ADDITION WAS RIGHTL Y DELETED.' CIT VS. SHREE RAMA MULTI TECH LTD (2013) 34 TAXMANN .COM177 (GUJ- HC) 'IT IS NOTED THAT COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAVE DULY CONSIDERED ISSUE AND HAVING FOUND COMPLE TE DETAILS OF THE RECEIPTS OF SHARE APPLICATION MONEY, ALONG WITH THE FORM N AMES AND ADDRESSES, PAN AND OTHER REQUISITE DETAILS, THEY FOUND COMPLETE AB SENCE OF THE GROUNDS ITA NOS.607/MUM/2019 & 608/MUM/2019 28 NOTED FOR INVOKING THE PROVISION OF SECTION 68. MOREOVER, BOTH RIGHTLY HAD APPLIED THE DECISION OF CIT VS. LOVELY EXPORTS (P) LTD TO THE CASE OF THE ASSESSEE. THEREFORE, NO REASON WAS FOUND IN ABSEN CE OF ANY ILLEGALITY MUCH LESS ANY PERVERSITY TOO TO INTERFERE WIT H THE ORDER OF THE BOTH THESE AUTHORITIES, WHO HAD CONCURRENTLY HELD THE DUE DETAILS HAVING BEEN PROVED. THE ASSESSEE COMPANY HAD PRESENTED THE NECESSARY WORTH PROOF BEF ORE BOTH THE AUTHORITIES AND IT WAS NOT EXPECTED BY THE ASSESSEECOMPANY TO FURTHER PROVE THE SOURCE OF THE DECEASED.' CIT VS. NIKUNJ EXIMP ENTERPRISES (P.) LTD (2013) 35 TAXMANN.COM384 (BOM) 'WHETHER MERELY BECAUSE SUPPLIERS HAD NOT APP EARED BEFORE ASSESSING OFFICER OR COMMISSIONER (APPEALS), IT COULD N OT BE CONCLUDED THAT PURCHASES WERE NOT MADE BY ASSESSEE - HELD, YES.... FURTHER, THERE WERE CONFIRMATION LETTERS FILED BY THE SUPPLIE RS, COPIES OF INVOICES FOR PURCHASES AS WELL AS COPIES OF BANK STATEMENT ALL OF WHICH WOULD INDICATE THAT THE PURCHASES WERE IN FACT MADE. IN OUR VIEW, MERELY BECAUSE THE SUPPLIERS HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER OR THE CIT(A), ONE CANNOT CONCLUDE THAT THE PURC HASES WERE NOT MADE BY THE RESPONDENT- ASSESSEE' CIT VS. SAMIR BIO- TECH PVT LTD (2010) 325 ITR 294 (DEL-HIGH COURT) 'IDENTITIES OF THE SUBSCRIBERS ARE NOT IN DO UBT. THE TRANSACTIONS HAVE ALSO BEEN UNDERTAKEN THROUGH BANKING CHANNELS I NASMUCH AS THE APPLICATION MONEY FOR THE SHARES WAS GIVEN THROUGH ACCOUNT PAYE E CHEQUES. THE CREDITWORTHINESS HAS ALSO BEEN ESTABLISHED, AS INDI CATED BY THE TRIBUNAL. THE SUBSCRIBERS HAVE GIVEN THEIR COMPLETE DETAI LS WITH REGARD TO THEIR TAX RETURNS AND ASSESSMENTS. IN THESE CIRCUMSTANCES, TH E DEPARTMENT COULD NOT DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE ONLY BECAUSE THE SUB SCRIBERS DID NOT INITIALLY RESPOND TO THE SUM MONS. THE SUBSCRIBERS, HOWEVER, SUBSEQUENTLY GAVE THEIR CONFIRMATION LETTERS AS WOULD BE APPARENT FROM THE IMPUGNED ORDER. THE IDENTITY OF T HE SUBSCRIBERS STANDS ESTABLISHED AND IT IS ALSO A FACT THAT THEY HAVE SH OWN THE SAID AMOUNTS IN THEIR AUDITED BALANCE SHEETS AND HAVE ALSO F ILED RETURNS BEFORE THE IT AUTHORITIES. THE DECISION OF THE TRIBUNAL DELET ING THE ADDITION CANNOT BEFAULTED. 13. COMING TO THE CASE LAWS RELIED UPON BY THE LEAR NED DR. THE DR, HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF DCIT VS. NRA IRON & STEEL PVT. LTD. (SUPRA). WE FIND THAT CO-ORDINATE BENCH OF ITAT VIDE ITS ORDER DATED 03.05.2019 IN THE CASE OF SHREE LAXMI ESTATE PVT. L TD. IN ITA NO. 6557/MUM2017 ITA NOS.607/MUM/2019 & 608/MUM/2019 29 FOR A.Y. 2013-14 HAD CONSIDERED THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF NRA IRON & STEEL P. LTD. AND HELD THAT THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT ARE ENTIRELY DIFFERENT, WHERE ON THE BASIS OF FACTS OF THAT CASE HONBLE SUPREME COURT CAME TO THE CONCLUSION THAT M ERE FURNISHING OF CERTAIN DOCUMENTS IS NOT SUFFICIENT ENOUGH AND WHAT IS RELE VANT IS ALL THREE INGREDIENTS, I.E. IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES SHOULD BE PROVED BEYOND DOUBT. WE FIND THAT IN THE CASE BEFO RE THE HONBLE SUPREME COURT THE PARTIES NEVER RESPONDED TO 133(6) NOTICES. THE AO HAS CARRIED OUT INQUIRIES BY ISSUING NOTICES U/S. 133(6), FOR WHICH NONE OF THE COMPANIES HAVE REPLIED. NONE OF THE COMPANIES PRODUCED BANK STATEMENTS TO ESTABLISH SOURCE OF FUNDS FOR MAKING SUCH HUGE INVESTMENTS IN SHARES, EVEN THOUGH THEY W ERE DECLARING A VERY MEAGRE INCOME IN THE RETURN. NONE OF THE INVESTORS APPEARE D BEFORE THE AO, BUT MERELY SENT RESPONSE THROUGH DAK. IN THIS CASE, FROM THE FACTS ON RECORD, IT IS CLEAR THAT THE ASSESSEE FILED COMPLETE SET OF DOCUMENTS, BUT T HE AO NEITHER CARRIED OUT ANY INVITATION NOR ISSUED NOTICES U/S. 133(6) OR SUMMON S U/S. 131(1) TO EXAMINE THE VERACITY OF DOCUMENTS FURNISHED BY THE ASSESSEE. U NLESS, THE AO CARRIED OUT FURTHER INVESTIGATIONS TO ASCERTAIN TRUE NATURE OF TRANSACT IONS, HE CANNOT COME TO THE CONCLUSION MERELY ON THE BASIS OF DOCUMENTS SUBMITT ED BY THE ASSESSEE. THEREFORE, AFTER CONSIDERING RELEVANT FACTS, THE CO -ORDINATE BENCH CAME TO THE CONCLUSION THAT DECISION RENDERED BY HONBLE SUPREM E COURT IN THE CASE OF NRA IRON & STEEL PVT. LTD. (SUPRA) HAS NO APPLICATION, WHERE THE AO HAS NOT CARRIED OUT ANY INQUIRIES. THE RELEVANT FINDINGS OF THE TRIBUNAL R E AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD BORROWED LOANS ITA NOS.607/MUM/2019 & 608/MUM/2019 30 FROM THE AFORESAID LOAN CREDITORS AND HAD DULY REPA ID THE SAME IN SUBSEQUENT YEARS BY ACCOUNT PAYEE CHEQUES, FOR WHICH EVIDENCES ARE ALREADY ON RECORD BEFORE US. IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE HAD PAID INTEREST ON THE AFORESAID LOANS WHICH HAD BEEN ALLOWED AS A DEDUCTI ON BY THE LOWER AUTHORITIES. WE ARE UNABLE TO PERSUADE OURSELVES AS TO HOW THE I NTEREST PORTION ON LOAN ALONE COULD BE TREATED AS GENUINE TRANSACTIONS AFTE R TREATING THE PRINCIPAL PORTION OF LOAN AS INGENUINE. WE ALSO FIND THAT TH E INTEREST PAID ON SUCH UNSECURED LOANS TO AFORESAID LOAN CREDITORS HAVE BE EN DULY SUBJECTED TO DEDUCTION OF TAX AT SOURCE. NOTICE ISSUED U/S 133( 6) OF THE ACT BY THE LD AO HAD BEEN DULY REPLIED BY THE CONCERNED LOAN CREDITORS D IRECTLY BEFORE THE LD AO AND NO DEFICIENCIES WERE NOTICED BY THE LD AO THEREON. AFTER THIS, THE LD AO DID NOT PROCEED TO MAKE FURTHER ENQUIRY ON THE SUBJECT MENT IONED LOAN CREDITORS. IT IS NOT IN DISPUTE THAT THE ASSESSEE AND THE CONCERNED LOAN CREDITORS HAD DULY FILED THEIR RESPECTIVE BANK STATEMENTS TO PROVE THE IMMED IATE SOURCE OF CREDIT FOR ADVANCING LOANS TO THE ASSESSEE COMPANY, CONFIRMATI ON OF HAVING GIVEN LOANS TO THE ASSESSEE COMPANY, TOGETHER WITH THEIR INCOME TA X RETURN ACKNOWLEDGEMENTS AND OTHER REQUISITE DETAILS CALLED FOR BY THE LD AO IN THE NOTICE U/S 133(6) OF THE ACT. IN CASE IF THE LD AO HAD ANY DOUBT ON THE VERACITY OF THE DOCUMENTS SUBMITTED BY THE LOAN CREDITORS, T HE SAME COULD HAVE BEEN CONFRONTED ON THE SAID LOAN CREDITORS BY ISSUING SU MMONS U/S 131 OF THE ACT AND EXAMINE THEM ON OATH OR CORRESPONDINGLY VERIFY THE SAME THROUGH THE ASSESSING OFFFICERS OF THE CONCERNED LOAN CREDITORS THROUGH THE INTERNAL SOURCE OF THE DEPARTMENT. THE LD AO DID NOT DO EITHER OF THESE IN THE INSTANT CASE AND MERELY DISREGARDED THE EVIDENCES SUBMITTED ON RECOR D BEFORE HIM BOTH BY THE ASSESSEE AS WELL AS BY THE LOAN CREDITORS DIRECTLY TO HIM. THE WRITTEN SUBMISSIONS FILED BY THE LD DR IN THIS REGARD IS RE PETITION OF VARIOUS CONTENTIONS ALREADY AVAILABLE ON RECORD BY THE LOWER AUTHORITIE S, APART FROM PLACING RELIANCE ON CERTAIN DECISIONS. WE FIND THAT BOTH THE AFORES AID LOAN ADDITIONS WERE CONFIRMED BY THE LD CITA BY PLACING RELIANCE ON THE DECISION TAKEN BY HIS PREDECESSOR IN ASST YEAR 2012-13. WE FIND THAT THI S TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2012-13 IN ITA NO. 5954/MUM/ 2016 DATED 29.12.2017 IN RESPECT OF LOAN TRANSACTIONS OF ENTITIES CONTROLLED BY SHRI PRAVIN KUMAR JAIN AND OTHERS HAD ELABORATELY DEALT THIS ISSUE AND HELD AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE AO MADE ADDITION TOWARDS UNSECURED LOANS RECEIVED FROM JOSH TRADING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LTD ON THE BASIS O F INFORMATION RECEIVED FROM INVESTIGATION WING WHICH REVEALED THA T THE ASSESSEE IS THE BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROV IDED BY SHRI PRAVEENKUMAR JAIN THROUGH HIS BOGUS COMPANIES. THE AO HAS MADE ADDITIONS U/S 68 OF THE INCOME-TAX ACT, 1961 ON THE GROUND THAT THOUGH THE ASSESSEE HAS FURNISHED NECESSARY EVIDENC ES TO PROVE IDENTITY OF THE PARTIES, BUT FAILED TO ESTABLISH GE NUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PARTIES IN THE BACKDROP OF CLEAR FINDINGS OF INVESTIGATION WING THAT THOSE COMPANIES ARE HAWALA COMPANIES INVOLVED IN PROVIDING M/S SHREE LAXMI DEV ELOPERS ACCOMMODATION ENTRIES. THE AO HAS BROUGHT OUT FACTS IN THE LIGHT OF STATEMENT OF SHRI PRAVINKUMAR JAIN DEPOSED BEFORE T HE INVESTIGATION WING TO MAKE ADDITION. EXCEPT THIS, THERE IS NO CON TRARY EVIDENCE IN THE POSSESSION OF THE AO TO DISPROVE THE LOAN TRANS ACTIONS FROM JOSH ITA NOS.607/MUM/2019 & 608/MUM/2019 31 TRADING COMPANY PVT LTD AND VIRAJ MERCANTILE PVT LT D. ON THE OTHER HAND, THE ASSESSEE HAS FURISHED VARIOUS DETAILS INC LUDING CONFIRMATION LETTERS FROM THE PARTIES, THEIR BANK STATEMENTS ALO NGWITH THEIR FINANCIAL STATEMENTS TO PROVE IDENTITY, GENUINENESS OF TRANSA CTIONS AND CREDITWORTHINESS OF THE PARTIES. THE ASSESSEE ALSO FURNISHED EVIDENCES TO PROVE THAT THE PARTIES HAVE RESPONDED TO THE NOT ICES ISSUED U/S 133(6) BY AO BY FILING VARIOUS DETAILS. THE ASSESSE E ALSO FILED BANK STATEMENTS TO PROVE THAT THE SAID UNSECURED LOANS H AVE BEEN REPAID IN THE SUBSEQUENT FINANCIAL YEARS. THEREFORE, WE ARE O F THE VIEW THAT THERE IS NO REASON FOR THE AO TO DOUBT THE GENUINEN ESS OF TRANSACTIONS DESPITE FURNISHING NECESSARY EVIDENCES INCLUDING TH EIR FINANCIAL STATEMENTS, BANK STATEMENTS AND IT RETURNS. 6. THE AO HAS MADE ADDITION U/S 68 OF THE ACT, ON T HE GROUND THAT THE UNSECURED LOANS ARE BOGUS ACCOMMODATION ENTRIES PRO VIDED BY SHRI PRAVINKUMAR JAIN THROUGH HIS HAWALA COMPANIES. THE PROVISIONS OF SECTION 68 DEAL WITH CASES WHERE ANY SUM FOUND C REDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN ANY FINANCIAL Y EAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE AO, SATISFACTORY, THEN SUM SO CREDITED MAY BE CHARGED T O INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. A PLAIN READING M/S SHREE LAXMI DEVELOPERS OF SECTION 68 MAKES IT CLEAR THAT THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE. IT IS WELL SE TTLED LEGAL POSITION THAT THE ASSESSEE HAS TO DISCHARGE 3 MAIN INGREDIEN TS IN ORDER TO DISCHARGE THE INITIAL BURDEN OF PROOF, I.E. THE IDE NTITY OF THE CREDITOR, THE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE CREDITORS. ONCE THE ASSESSEE DISCHARGES INITIAL BURDEN PLACED UPON HIM, THEN THE BURDEN TODIS PROVE THE SAID CLAIM SHIFTS UPON THE A O. IN THIS CASE, THE ASSESSEE HAS DISCHARGED HIS ONUS CAST U/S 68 BY FIL ING IDENTITY OF THE CREDITORS, GENUINENESS OF TRANSACTIONS AND CREDITWO RTHINESS OF THE PARTIES WHICH IS EVIDENT FROM THE FACT THAT THE ASS ESSEE HAS FURNISHED FINANCIAL STATEMENTS OF THE CREDITORS WHEREIN THE S AID TRANSACTION HAS BEEN DISCLOSED IN THE RELEVANT FINANCIAL YEARS. WE FURTHER NOTICE THAT THE ASSESSEE ALSO FILED FINANCIAL STATEMENTS OF THE CREDITORS WHICH ARE ENCLOSED IN PAPER BOOK FILED. ON PERUSAL OF THE FIN ANCIAL STATEMENTS FILED BY THE ASSESSEE, WE FIND THAT BOTH THE COMPAN IES ARE ACTIVE IN THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS. THIS FACT HAS BEEN FURTHER SUPPORTED BY THE LETTER OF AO WHEREIN THE AO HAS AC CEPTED THAT BOTH COMPANIES, VIZ. JOSH TRADING COMPANY PVT LTD AND VI RAJ MERCANTILE PVT LTD ARE ACTIVE IN MCA WEBSITE. WE FURTHER NOTICE TH AT BOTH THE COMPANIES HAVE FILED FINANCIAL STATEMENTS FOR THE Y EAR ENDING 31-03- 2006. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN CAST U/S 68 BY FILING IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ONCE, THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN, THE BURDEN SHIFT S TO THE AO TO PROVE OTHERWISE. IN THIS CASE, THE AO MADE ADDITION ONLY ON THE BASIS M/S SHREE LAXMI DEVELOPERS OF INFORMATION RECEIVED FROM INVESTIGATION WING, BUT NOT BASED ON ANY EVIDENCE TO DISPROVE THE LOAN TRANSACTION FROM ABOVE COMPANIES ARE INGENUINE. THEREFORE, WE A RE OF THE VIEW ITA NOS.607/MUM/2019 & 608/MUM/2019 32 THAT THERE IS NO REASON FOR THE AO TO TREAT LOANS F ROM ABOVE 2 COMPANIES AS UNEXPLAINED CREDITS U/S 68 OF THE ACT. 7. COMING TO THE CASE LAWS RELIED UPON BY THE ASSES SEE, THE ASSESSEE HAS RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD (2017) 3 94 ITR 680 (BOM). WE HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY T HE ASSESSEE IN THE LIGHT OF THE FACTS OF THE PRESENT CASE AND FIND THAT THE HON'BLE HIGH COURT CATEGORICALLY OBSERVED THAT THE PROVISO TO SE CTION 68 HAS BEEN INSERTED BY THE FINANCE ACT, 2012 WEF 01-04- 2013 I S APPLICABLE FROM AY 2013-14 ONWARDS. THE COURT FURTHER OBSERVED THAT THE PARLIAMENT DID NOT INTRODUCE THE PROVISO TO SECTION 68WITH RET ROSPECTIVE EFFECT NOR DOES THE PROVISO INTRODUCED STATES THAT IT WAS INTR ODUCED FOR REMOVAL OF DOUBTS. THEREFORE, IT IS NOT OPEN TO GIVE RETROS PECTIVE EFFECT. THE RELEVANT PORTION OF THE ORDER OF HIGH COURT IS EXTR ACTED BELOW:- 'THE PROVISO TO SECTION 68 HAS BEEN INTRODUCED BY T HE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013. THUS, IT WOULD BE E FFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT W AS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 AS IN FORCE DURING T HE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED S UBSEQUENTLY EFFECTIVE ONLY FROM 1-42013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCED TO PROVISO OF SECTION 68, WITH R ETROSPECTIVE EFFECT NOR DOES THE PROVISO TO INTRODUCED STATES THAT IT W AS INTRODUCED 'FOR REMOVAL OF DOUBTS' OR THAT IT IS 'DECLARATORY'. THE REFORE, IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING THE BAS IS THAT THE ADDITION OF THE PROVISO TO SECTION 68IS M/S SHREE LAXMI DEVELOP ERS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 BO TH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHI LE CONFIRMING THE SECTION 68 LAID DOWN BY THE COURT NAMELY THE GE NUINENESS OF THE TRANSACTION, IDENTITY AND THE CAPACITY OF THE INVES TOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACT IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEH ALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS, I.E., T HEY ARE BOGUS. THE APEX COURT IN A CASE IN THIS CONTEXT TO THE PRE- AM ENDED SECTION 68 HAS HELD THAT WHERE THE REVENUE URGES THAT THE A MOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAR EHOLDERS THEN IT IS FOR THE INCOME-TAX OFFICER TO PROCEED BY REOPENI NG THE ASSESSMENT OF SUCH SHAREHOLDER AND ASSESSING THEM TO TAX IN AC CORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT.' [PARA 3] 8. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION O F HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ARCHID INDUSTRIES PVT LTD IN ITA NO1433/MUM/2014 DATED 5TH JULY, 2017. THE HON'BLE B OMBAY HIGH ITA NOS.607/MUM/2019 & 608/MUM/2019 33 COURT, AFTER CONSIDERING RELEVANT FACTS AND ALSO BY FOLLOWING JUDGEMENT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD (SUPRA) HELD AS UNDER:_ 6] THE TRIBUNAL HAS CONSIDERED THAT THE ASS ESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE G ENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH T HE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATIO N MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARE I.E. ALLO TMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOT MENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BAL ANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT TH ESE PERSONS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY E VIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE A SSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDG MENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P) LTD (SUPRA) WOULD M/S SHREE LAXMI DEVELOPERS BE APPLICABLE IN THE FACTS AND CIRCUMSTA NCES OF THE PRESENT CASE.' 9. THE ASSESSEE HAS ALSO RELIED UPO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). THE HON'BLE APEX COURT WHILE DELETING THE ADD ITION MADE U/S 68 OBSERVED THAT IF THE SHARE APPLICATION MONEY IS REC EIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WH OSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PRO CEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT THIS AMOUNT OF SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDIS CLOSED INCOME U/S 68 OF THE INCOME-TAX ACT, 1961. 10. COMING TO THE CASE LAWS RELIED UPON BY THE LD.D R. THE LD.DR RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COUR T IN THE CASE OF PRINCIPAL CIT VS BIKRAM SINGH IN ITA NO.55/DEL/2 017 DATED 25-03- 2017. WE HAVE GONE THROUGH THE CASE LAW RELIED BY T HE LD.DR IN THE LIGHT OF FACTS OF THE PRESENT CASE AND FIND THAT TH E FACTS OF CASE BEFORE HON'BLE DELHI HIGH COURT ARE ENTIRELY DIFFERENT FRO M FACTS OF THE PRESENT CASE. THE HON'BLE DELHI HIGH COURT, HAS CONSIDERED THE FACT THAT THE INDIVIDUALS, WHO ADVANCED LOANS HAD NO FINANCIAL ST RENGTH TO LEND SUCH HUGE SUM OF MONEY TO THE ASSESSEE, THAT TOO, WITHOU T ANY COLLATERAL SECURITY WITHOUT INTEREST AND WITHOUT A LENDER AGRE EMENT. UNDER THESE FACTS, THE HON'BLE COURT HELD THAT MERE ESTABLISHIN G OF THEIR IDENTITY AND THE FACT THAT THE AMOUNTS HAVE BEEN TRANSFERRED THROUGH CHEQUE PAYMENT DOES NOT BY ITSELF MEAN THAT THE TRANSACTIO NS ARE GENUINE. IN THIS CASE, THE ASSESSEE HAS FURNISHED ALL EVIDENCES AND ALSO THE PARTIES PERSONALLY RESPONDED TO THE NOTICES M/S SHREE LAXMI DEVELOPERS ISSUED BY THE AO U/S 133(6) BY FILING VARIOUS DETAILS, THE REFORE, CASE LAW RELIED UPON BY THE LD.DR CANNOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11. IN THIS VIEW OF THE MATTER AND CONSIDERING THE RATIO OF THE CASE LAWS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED IDENTITY, GENUINENESS OF TRANSACTION S AND ITA NOS.607/MUM/2019 & 608/MUM/2019 34 CREDITWORTHINESS OF THE PARTIES. THEREFORE, THERE I S NO REASON FOR THE AO TO MAKE ADDITION TOWARDS LOAN U/S 68 OF THE ACT. HENCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS LOANS ALONGW ITH INTEREST U/S 68 OF THE ACT. 8.1. WE FIND THAT THE LD DR VEHEMENTLY PLACED RELI ANCE ON THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF PC IT VS NRA IRON & STEEL PVT LTD ARISING OUT OF SLP(CIVIL) NO. 29855 OF 2018 DAT ED 5.3.2019 IN SUPPORT OF CONTENTIONS OF THE REVENUE ON THE IMPUGNED ISSUE. IN THIS REGARD, WE FIND THAT THE FACTS BEFORE THE HONBLE SUPREME COURT ARE CLEA RLY DISTINGUISHABLE ON THE FOLLOWING GROUNDS:- A) IN PARA 3.6. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE ENTIRE SHARE CAPITAL HAD BEEN RE CEIVED BY THE ASSESSEE THROUGH NORMAL BANKING CHANNELS BY ACCOUNT PAYEE CH EQUES / DEMAND DRAFTS, AND PRODUCED DOCUMENTS SUCH AS INCOME TAX RETURN AC KNOWLEDGEMENTS TO ESTABLISH IDENTITY AND GENUINENESS OF THE TRANSACTI ON. IT WAS SUBMITTED THAT, THERE WAS NO CAUSE TO TAKE RECOURSE TO SECTION 68 O F THE ACT, AND THAT THE ONUS ON THE ASSESSEE COMPANY STOOD FULLY DISCHARGED. B) IN PARA 3.7. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE AO HAD ISSUED SUMMONS TO THE REP RESENTATIVES OF THE INVESTOR COMPANIES. DESPITE THE SUMMONS HAVING BEEN SERVED, NOBODY APPEARED ON BEHALF OF ANY OF THE INVESTOR COMPANIES . THE DEPARTMENT ONLY RECEIVED SUBMISSIONS THROUGH DAK, WHICH CREATED A D OUBT ABOUT THE IDENTITY OF THE INVESTOR COMPANIES. C) IN PARA 3.8. OF THE SAID JUDGEMENT OF HONBLE SU PREME COURT, IT WAS MENTIONED THAT THE AO INDEPENDENTLY GOT FIELD ENQUI RIES CONDUCTED WITH RESPECT TO THE IDENTITY AND CREDIT-WORTHINESS OF THE INVEST OR COMPANIES, AND TO EXAMINE THE GENUINENESS OF THE TRANSACTION. ENQUIRIES WERE MADE AT MUMBAI, KOLKATA AND GUWAHATI WHERE THESE COMPANIES WERE STATED TO B E SITUATED. IN THE AFORESAID CASE BEFORE THE HONBLE SUPREME CO URT, THE RESULT OF THE ENQUIRY BY THE AO REVEALED THE FOLLOWING:- A) NOTICE WERE DULY SERVED ON CERTAIN INVESTOR COMPANI ES, BUT NO REPLY WAS RECEIVED FROM THEM ; B) SOME OF THE INVESTOR COMPANIES WERE FOUND TO BE CL OSED AT THEIR CORRECT ADDRESS ; C) NOTICE COULD NOT BE SERVED ON SOME OF THE INVESTOR COMPANIES ; D) SOME OF THE INVESTOR COMPANIES REPLIED TO NOTICE U/ S 133(6) OF THE ACT WHEREIN THEY HAD CONFIRMED HAVING MADE INVESTMENT IN SHARE APPLICATION MONEY IN NRA IRON & STEEL PVT LTD BUT HAD LIMITED INCOME AS PER THEIR INCOME TAX RETURNS WHICH IN TURN RESULTED IN DOUBTING OF CREDITWORTHIN ESS ; E) MOST OF THE INVESTOR COMPANIES THOUGH CONFIRMED THE FACT OF HAVING MADE INVESTMENT IN SHARE APPLICATION MONEY IN NRA IRON & STEEL PVT LTD , BUT HAD NOT ITA NOS.607/MUM/2019 & 608/MUM/2019 35 FILED THEIR BANK STATEMENTS TO PROVE THE IMMEDIATE SOURCE OF CREDIT AVAILABLE TO THEM FOR MAKING THE SAID INVESTMENT. 8.1.1. IN THE INSTANT CASE BEFORE US, THE LD AO DID NOT ISSUE ANY SUMMONS U/S 131 OF THE ACT OR MAKE FURTHER ENQUIRIES TO EXAMINE THE VERACITY OF THE EVIDENCES FILED ON RECORD BEFORE HIM BY THE ASSESSE E AS WELL AS BY THE LOAN CREDITORS IN RESPONSE TO NOTICE U/S 133(6) OF THE A CT. MOREOVER, ALL THE LOAN CREDITORS HAD DULY FURNISHED THEIR RESPECTIVE BANK STATEMENTS PROVING THE IMMEDIATE SOURCE OF CREDIT FOR THEM TO JUSTIFY THAT THEY HAD SUFFICIENT CREDITWORTHINESS TO ADVANCE LOAN TO THE ASSESSEE CO MPANY. FROM THE PERUSAL OF THE BALANCE SHEET OF ALL INVESTOR COMPANIES, ALL TH E LOAN CREDITORS HAD SUFFICIENT OWN FUNDS IN THEIR KITTY WHICH PROVE THEIR CREDITWO RTHINESS TO ADVANCE LOAN TO THE ASSESSEE COMPANY. AS HAS BEEN STATED HEREINABOV E, THE MOST EXCRUCIATING POINT OF DIFFERENCE IN FACTS VIS A VIS THE FACTS OF THE CASE BEFORE THE HONBLE SUPREME COURT SUPRA THAT THE INVESTOR COMPANIES HAD NOT EVEN FURNISHED THEIR BANK STATEMENTS TO PROVE THEIR IMMEDIATE SOURCE OF CREDIT FOR MAKING INVESTMENT IN SHARE APPLICATION MONIES OF NRA IRON & STEEL PVT LTD. FROM THE BANK STATEMENTS FURNISHED BY THE LOAN CREDITORS IN THE CASE OF THE ASSESSEE HEREIN, WE FIND THAT THERE WERE NO CASH DEPOSITS IN THE BANK ACCOUNTS OF THE LENDERS PRIOR TO ISSUANCE OF LOAN TO THE ASSESSEE C OMPANY. IN THE CASE BEFORE THE HONBLE SUPREME COURT, THE AO IN THAT CASE HAD MADE FIELD ENQUIRIES AT MUMBAI, KOLKATA AND GUWAHATI WHERE THOSE INVESTOR C OMPANIES WERE STATED TO BE SITUATED TO EXAMINE THEIR IDENTITY AND CREDENTIA LS AND THE RESULT OF SUCH ENQUIRY HAD BEEN SUMMARIZED HEREINABOVE. WHEREAS I N THE INSTANT CASE BEFORE US, NO SUCH ENQUIRIES WERE CONDUCTED BY THE LD AO T O DOUBT THE VERACITY OF THE DETAILS AND EVIDENCES FILED BY THE LOAN CREDITORS I N RESPONSE TO NOTICE U/S 133(6) OF THE ACT DIRECTLY BEFORE HIM. IN THE INSTANT CAS E BEFORE US, ALL THE NOTICES U/S 133(6) OF THE ACT WERE DULY SERVED ON ALL THE AFORE SAID LOAN CREDITORS AND ALL OF THEM HAD INDEPENDENTLY FILED THEIR REPLIES DIRECTLY BEFORE THE LD AO. THE BANK STATEMENTS WERE ALSO DULY FURNISHED BY THE LOAN CRE DITORS TO PROVE THAT THEY HAD SUFFICIENT CREDITWORTHINESS TO ADVANCE LOAN TO THE ASSESSEE COMPANY AND SINCE ALL THE TRANSACTIONS WERE ROUTED THROUGH REGULAR BA NKING CHANNELS BY ACCOUNT PAYEE CHEQUES AND IN VIEW OF THE FACT THAT THERE W ERE NO CASH DEPOSITS PRIOR TO ISSUANCE OF LOAN TO THE ASSESSEE COMPANY, THE GENUI NENESS OF TRANSACTIONS ALSO STAND CLEARLY ESTABLISHED. THIS GOES TO PROVE THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS OF ALL THE LOAN CREDITO RS. IN THIS SCENARIO, IT COULD BE SAFELY PRESUMED THAT THE LD AO WAS APPARENTLY SATIS FIED WITH THE REPLIES GIVEN THEREON BY THE LOAN CREDITORS DIRECTLY BEFORE HIM I N RESPONSE TO NOTICE U/S 133(6) OF THE ACT AND HENCE THERE IS NO NEED TO MAK E ANY EXAMINATION FURTHER. 8.2. IN VIEW OF THE AFORESAID DISTINGUISHING FEATU RES ON FACTS OF THE ASSESSEE COMPANY VIS A VIS THE FACTS BEFORE THE HONBLE SUPR EME COURT, WE HOLD THAT THE RELIANCE PLACED BY THE LD DR ON THE DECISION OF HON BLE SUPREME COURT SUPRA DOES NOT COME TO THE RESCUE OF THE REVENUE. 8.3. AT THE COST OF REPETITION, WE WOULD LIKE TO S TATE THAT THE LD CIT(A) HAD MERELY PLACED RELIANCE ON THE DECISION TAKEN BY HIS PREDECESSOR IN ASST YEAR 2012-13 IN ASSESSEES OWN CASE IN SIMILAR SET OF FA CTS. WE FIND THAT THIS DECISION FOR ASST YEAR 2012-13 IN ASSESSEES OWN CASE HAS BE EN REVERSED BY THIS TRIBUNAL VIDE ITS ORDER DATED 29.12.2017 REFERRED TO SUPRA. IN VIEW OF OUR AFORESAID FINDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FO R ASST YEAR 2012-13, WE HOLD ITA NOS.607/MUM/2019 & 608/MUM/2019 36 THAT THE ASSESSEE COMPANY HAD DULY PROVED THE NATUR E AND SOURCE OF CREDIT IN THE FORM OF UNSECURED LOAN AND HAD DULY SATISFIED T HE THREE NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT VIZ, THE IDENT ITY OF THE LOAN CREDITORS , CREDITWORTHINESS OF LOAN CREDITORS AND GENUINENESS OF LOAN TRANSACTIONS. HENCE WE DIRECT THE LD AO TO DELETE THE ADDITION MADE IN THE SUMS OF RS 50 LACS AND RS 25 LACS TOWARDS UNSECURED LOAN U/S 68 OF THE ACT . ACCORDINGLY, THE GROUNDS 1 TO 6 RAISED BY THE ASSESSEE ARE ALLOWED. 14. IN THE CASE OF PCIT VS. HI-TECH RESIDENCY PVT. LTD. (2018) 257 TAXMAN 335, HONBLE SUPREME COURT HAS CONSIDERED IDENTICAL ISSU E AND HELD THAT WHERE AN ASSESSEE COMPANY HAD DISCHARGED THE ONUS OF ESTABLI SHING IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF INVESTORS, NO A DDITIONS COULD BE MADE U/S. 68 OF THE I.T. ACT, 1961. WE, FURTHER, NOTED THAT ALTHOU GH THE APEX COURT HAS NOT EXPRESSED ANY OPINION, BECAUSE OF DISMISSAL OF SLP FILED BY THE ASSESSEE, THE FACT OF THE MATTER IS THAT THIS ISSUE HAS BEEN CONSIDERED B Y THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD (SUPRA), WHERE THE ISSUE HAS BEEN THOROUGHLY EXAMINED IN THE LIGHT OF PROVISIONS OF S ECTION 68 OF THE ACT, AND HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS, WHOSE NAMES ARE GIVEN TO THE A O, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR ASSESSMENT IN ACCORDANCE WITH LAW, BUT SUM RECEIVED FROM SHARE HOLDERS CANNOT BE REGARDED AS UNDISCLOSE D INCOME OF THE ASSESSEE. 15. IN THIS VIEW OF THE MATTER AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO TAKING INTO CONSIDERATION VARIOUS CAS E LAWS AS DISCUSSED HEREINABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CRE DITWORTHINESS OF THE PARTIES BY FILING VARIOUS DOCUMENTS. THE AO, WITHOUT CARRYING OUT FURTHER INQUIRIES IN ORDER TO ASCERTAIN THE CLAIM OF THE ASSESSEE, JUMPED INTO CO NCLUSION ON THE BASIS OF FINANCIAL ITA NOS.607/MUM/2019 & 608/MUM/2019 37 STATEMENTS OF THE SUBSCRIBERS THAT NONE OF THEM HAD ENOUGH SOURCE OF INCOME TO ESTABLISH CREDITWORTHINESS. THEREFORE, WE ARE OF T HE VIEW THAT THE AO AND THE LEARNED CIT(A) ERRED IN MAKING ADDITIONS TOWARDS SH ARE CAPITAL RECEIVED FROM SEVEN SUBSCRIBERS U/S. 68 OF THE I.T. ACT, 1961. HENCE, WE DIRECT THE AO TO DELETE THE ADDITIONS MADE TOWARDS SHARE CAPITAL U/S. 68 OF THE ACT. 16. IN THE RESULT, THE APPEAL IS ALLOWED. 17. ITA NO. 608/MUM/2019. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY TH E LEARNED ASSESSING OFFICER ON ACCOUNT OF SHARE CAPITAL MONEY RECEIVED OF RS. 12,35,00,000/- U/S 68 OF THE INCOME TAX ACT 1961, WITHOUT CONSIDER ING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LE ARNED ASSESSING OFFICER ON ACCOUNT OF NON-EXISTING LIABILITY OF RS. 1,76,72,533/- U/S 41(1) OF THE INCOME TAX ACT 1961, WITHOUT CONSIDERING THE FACTS OF THE CASE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LE ARNED ASSESSING OFFICER ON ACCOUNT OF NON-EXISTING LIABILITY OF RS. 1,29,16,133/- U/S 41(1) OF THE INCOME TAX ACT 1961, WITHOUT CONSIDERING THE FACTS OF THE CASE. 18. THE FIRST ISSUE THAT COME UP FOR CONSIDERATION FROM GROUND NO.1 IS ADDITION TOWARDS SHARE APPLICATION MONEY OF RS. 12,35,00,000 /- U/S. 68 OF THE I.T. ACT, 1961. SIMILAR ISSUE HAS BEEN CONSIDERED BY US IN THE PREC EDING PARAGRAPHS WHILE DISPOSING OF THE APPEAL IN ITA NO. 607/MUM/2019. THE ISSUE H AS BEEN DISCUSSED IN THE LIGHT OF FACTS BROUGHT OUT BY THE ASSESSING OFFICER AND S UBMISSIONS OF THE ASSESSEE ALONG WITH CERTAIN JUDICIAL PRECEDENTS AND HELD THAT THE ASSESSEE HAS DISCHARGED ITS ONUS ITA NOS.607/MUM/2019 & 608/MUM/2019 38 OF PROVING IDENTITY, GENUINENESS OF TRANSACTIONS AN D CREDITWORTHINESS OF THE PARTIES. IN THIS CASE FACTS ARE PARI-MATERIA WITH THE FACTS WHICH WE HAVE ALREADY CONSIDERED IN ITA NO. 607/MUM/2019. THE REASONS GIVEN BY US I N PRECEDING PARAGRAPHS SHALL APPLY MUTATIS MUTANDIS . WE, THEREFORE, FOR THE DETAILED REASONS GIVEN BY US IN THE PRECEDING PARAGRAPHS, DIRECT THE AO TO DELETE THE A DDITION OF . 12,35,00,000/- MADE U/S. 68 OF THE I.T.ACT, 1961 TOWARDS SHARE CAPITAL. 19. THE NEXT ISSUE THAT COME UP FOR CONSIDERATION I N GROUND NOS. 2 & 3 OF THE ASSESSEES APPEAL IS ADDITION TOWARDS NON-EXISTING LIABILITY U/S. 41(1) OF THE INCOME TAX ACT, 1961. THE FACTS BORNE OUT FROM RECORD IN RESPECT OF IMPUGNED DISPUTE ARE THAT FROM THE BALANCE SHEET FOR A.Y. 2011-12, IT WA S SEEN THAT THERE WERE SEVERAL CREDITORS SINCE 01.04.2010 AND THEY WERE CONTINUING DURING THE YEAR UNDER CONSIDERATION WITHOUT THERE BEING ANY TRANSACTION F OR TWO YEARS. THEREFORE, A SHOW CAUSE NOTICE DATED 23.03.2015 WAS ISSUED TO THE ASS ESSEE AND ASKED AS TO WHY NON-EXISTING CREDITORS SHOULD NOT BE TREATED AS REM ISSION/CESSATION OF LIABILITY U/S. 41(1) OF THE INCOME TAX ACT, 1961. IN RESPONSE, TH E ASSESSEE VIDE LETTER DATED 27.03.2015 FILED COMPLETE DETAILS OF CREDITORS AND SUBMITTED THAT ALL THESE CREDITORS WERE ROUTINE AND ARISE OUT OF REGULAR BUSINESS ACTI VITIES OF THE ASSESSEE AND SOME HAD BEEN PAID IN SUBSEQUENT FINANCIAL YEAR. HE FUR THER SUBMITTED THAT OUT OF TOTAL CREDITORS OF 2,90,22,124/- A SUM OF 1,76,72,533/- WAS NOT PAID AND THE SAME HAS BEEN WRITTEN OFF IN THE F.Y. 2017-18 AND OFFERED TO TAX. THE BALANCE AMOUNT HAS BEEN PAID DURING THE SUBSEQUENT FINANCIAL YEARS FOR WHICH NECESSARY EVIDENCE HAS BEEN FILED BEFORE THE AO. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE IS CONTINUING NON-EXISTING L IABILITY IN BOOKS OF ACCOUNT FOR A ITA NOS.607/MUM/2019 & 608/MUM/2019 39 LONG PERIOD WITHOUT THERE BEING ANY BUSINESS WITH T HEM. HE FURTHER NOTED THAT THE SAME WAS NOT WRITTEN OFF OR PAID TO THE CREDITOR. THEREFORE, HE OPINED THAT NON- EXISTING LIABILITY CONTINUING IN THE BOOKS OF ACCOU NT AMOUNTS TO REMISSION/CESSATION OF LIABILITY AND ACCORDINGLY, MADE ADDITIONS U/S. 4 1(1) OF THE I.T.ACT, 1961. THE RELEVANT FINDINGS OF THE AO ARE AS UNDER: IN RESPONSE THE AR OF THE ASSESSEE VIDE LETTER DAT ED 27.03.2015 HAS ADMITTED THAT OUT OF THE CREDITORS OF RS 2,90,22,12 4/- SHOWN IN THE LETTER DATED. 23.03.2014, 1,76,72,533/- IS YET TO BE PAID. THUS THESE PAYMENTS ARE OUTSTANDING FOR OVER 5 YEARS AND THE ASSESSEE H AS NOT PAID THEM TILL DATE. IT IS MERELY STATED IN THE LETTER THAT THERE IS A DISPUTE. NO EVIDENCE IN SUPPORT OF THE DISPUTE IS FURNISHED. IT HAS BEEN ADMITTED BY THE AR VIDE ORDER SHEET ENTRY DATED. 27.03.2015 THAT, HE D OES NOT HAVE ANY EVIDENCE IN SUPPORT OF THE DISPUTE RELATING TO THE CREDITORS OF RS. 1,76.72,533/-. THUS IT IS OBVIOUS THAT GENUINELLABI LITY DOES NOT EXISTS IN THIS CASE. THEREFORE RS 1,76,72,533/- IS TREATED AS INCOME OF THE ASSESSEE. THEREFORE PENAL PROCEEDINGS U/S. 271(1)( C) IS SEPERATELY INITIATED. 5.1 BESIDES THIS THERE WAS A PAYABLE OF RS. 1,29,16 ,133/-- TO M/S. B.C. BIYARIL PROJECTS PVT LTD. THE ASSESSEE WAS ALSO ASK ED TO GIVE ITS SAY ON THESE PAYABIES. IN RESPONSE THE AR VIDE LETTER DATE D. 27.03.2015 HAS ADMITTED THAT THE PAYMENT IS OUTSTANDING SINCE F. Y . 2007-08. THE AR HAS CONTENDED THAT THERE IS A DISPUTE. HOWEVER NO D OCUMENTARY EVIDENCE RELATING TO THE DISPUTE HAS BEEN PRODUCED. VIDE ORD ER SHEET ENTRY DATED. 27.03.2015, THE AR OF THE ASSESSEE HAS EXPRESSED HI S INABILITY TO FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM RE LATING TO DISPUTE. IN THIS CASE PAYMENTS HAVE NOT BEEN DONE FOR OVER 7 YE ARS. THERE IS NO EVIDENCE IN SUPPORT OF ANY LITIGATION. THEREFORE TH E LIABILITY DOES NOT APPEAR TO BE GENUINE. THEREFORE RS. 1,29,16,133/- I S HELD TO BE A LIABILITY WHICH IS NOT GENUINE AND IS TREATED AS INCOME OF TH E ASSESSEE. THEREFORE PENAL PROCEEDINGS U/S. 271(1)(C) IS SEPERATELY INIT IATED. 20 AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE MADE SUBMISSIO NS TO ARGUE THAT IN ORDER TO BRING ANY LIABILITY U/S. 41(1) OF THE ACT, THE SAME SHOULD BE WRITTEN OFF IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND ASSESSEE SHOULD DERI VE BENEFITS. UNLESS THERE IS A REMISSION/CESSATION OF LIABILITY, BY ACT OF PARTIES , THE SUM CANNOT BE CONSIDERED TO ITA NOS.607/MUM/2019 & 608/MUM/2019 40 BE DEEMED REMISSION/CESSATION OF LIABILITY, WHEN TH E ASSESSEE HAS FILED NECESSARY DETAILS TO PROVE THAT THE SAME HAS BEEN PAID OR WRI TTEN OFF IN SUBSEQUENT YEARS. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS AND ALSO BY FOLLOWING DECISION OF ITAT AHMEDABAD BENCH IN THE CASE OF DATTATRAY POULT RY BREEDING FARM (P) LTD. 95 TAXMANN.COM 130 HELD THAT THE ASSESSEE HAS FAILED T O FILE ANY PROOF TO JUSTIFY EXISTENCE OF LIABILITY. THE TRADING LIABILITY OF TH E NATURE OF ASSESSEES BUSINESS CANNOT BE HELD AS GENUINE SIMPLY BECAUSE OF THE FACT THAT IT IS RECORDED IN THE BOOKS OF ACCOUNT AND NOW WRITTEN OFF. THEREFORE, HE OPINED T HAT THERE IS NO ERROR IN THE FINDINGS OF THE AO AND HENCE, CONFIRMED THE ACTION OF THE AO U/S. 41(1) OF THE I.T. ACT, 1961. 21. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITIONS TOWARDS SUNDRY CREDITORS U /S. 41(1) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT LIABILITY I S CONTINUED IN THE BOOKS OF ACCOUNT FOR RELEVANT FINANCIAL YEAR AND ASSESSEE HAS PAID L IABILITY IN THE SUBSEQUENT FINANCIAL YEARS. HE FURTHER SUBMITTED THAT WHEN THE ASSESSEE HAS PAID TO THE CREDITORS AND ALSO SOME CREDITORS HAVE BEEN WRITTEN OFF IN THE BO OKS OF ACCOUNT AND OFFERED FOR TAX IN SUBSEQUENT YEARS, THE SAME CANNOT BE CONSIDE RED AS CESSION OF LIABILITY U/S. 41(1) FOR THE YEAR UNDER CONSIDERATION, UNLESS THE AO HAS BROUGHT OUT CERTAIN EVIDENCE TO PROVE THAT ASSESSEE HAS IN FACT DERIVED BENEFIT OUT OF CESSATION/REMISSION OF LIABILITY. IN THIS CASE, TH E AO HAS MADE ADDITIONS PURELY ON SUSPICION AND SURMISES BY INVOKING DEEMING FRICTION TO SECTION 41(1) OF THE ACT. IN THIS REGARD, HE RELIED UPON THE DECISION OF ITAT H BENCH IN THE CASE OF NATIONAL BUILDING CORPORATION VS. ADDITIONAL CIT (2017) 84 T AXMANN.COM 235 AND THAT OF A ITA NOS.607/MUM/2019 & 608/MUM/2019 41 BENCH OF THE TRIBUNAL IN THE CASE OF LOTUS INVESTME NTS LTD. VS. ACIT IN ITA NO. 1417/MUM/2014. 22. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING ORDER OF CIT(A) SUBMITTED THAT THE AO HAS BROUGHT OUT CLEAR FACTS T O THE EFFECT THAT LIABILITIES ARE CONTINUING IN THE BOOKS OF ACCOUNT FOR MORE THAN TW O YEARS WITHOUT THERE BEING ANY BUSINESS ACTIVITY. FURTHER, THE ASSESSEE HAS NEITH ER PAID THE AMOUNT TO THE CREDITOR NOR WRITTEN OFF IN THE BOOKS OF ACCOUNT. THEREFORE , MERELY FOR THE REASON THAT LIABILITY IS CONTINUED IN THE BOOKS OF ACCOUNT, IT CANNOT BE CONSIDERED AS LIABILITY FASTENS ON THE ASSESSEE, UNLESS THE ASSESSEE PROVES THAT THESE ARE GENUINE CREDITORS, WHO WERE PAID IN THE SUBSEQUENT FINANCIA L YEARS. 23. WE HAVE HEARD BOTH THE PARTIES, CONSIDERED THEI R SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN ORDER TO B RING ANY CREDITS WITHIN THE AMBIT OF SECTION 41(1) OF THE I.T. ACT, 1961, THE FIRST COND ITION SHOULD BE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN RESPECT OF LOSS, EXPENDI TURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE IN EARLIER YEARS. SECONDLY, THE ASS ESSEE SHOULD DERIVE SOME BENEFIT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SUCH TRAD ING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THEN SUCH AMOUNT OR BENEFIT OBTA INED BY ASSESSEE IN A SUBSEQUENT YEAR MAY BE TREATED AS CESSATION OR REMI SSION OF LIABILITY. IN THIS CASE, ON PERUSAL FACTS AVAILABLE ON RECORD, WE FIND THAT THE AO HAS MADE ADDITIONS TOWARDS CERTAIN CREDITORS ON ASSUMPTIONS OF NON-EXI STING LIABILITY MERELY FOR THE REASONS THAT THEY ARE CONTINUING IN THE BOOKS OF AC COUNT FOR MORE THAN TWO TO THREE YEARS AND EXCEPT THIS THE AO HAS NOT POINTED OUT AN YTHING ABOUT REMISSION/CESSATION OF LIABILITY AND BENEFIT DERIVE D BY THE ASSESSEE OUT OF SUCH ITA NOS.607/MUM/2019 & 608/MUM/2019 42 REMISSION/CESSATION. ON THE OTHER HAND, ASSESSEE H AS FILED COMPLETE DETAILS ABOUT THE LIABILITIES AND PROVED THAT OUT OF TOTAL OUTSTA NDING AMOUNT, PART AMOUNT HAS BEEN PAID IN SUBSEQUENT YEARS AND THE REMAINING AMO UNT HAS BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT FOR A.Y. 2011-12, 2015-16 AND 2017-18. ONCE LIABILITY CONTINUES IN THE BOOKS OF ACCOUNT AND SUCH LIABILIT Y HAS BEEN DISCHARGED IN SUBSEQUENT FINANCIAL YEAR BY MAKING PAYMENTS OR WRI TTEN OFF IN THE BOOKS OF ACCOUNT AND CREDITED TO PROFIT & LOSS ACCOUNT, THEN THE SAME CANNOT BE CONSIDERED AS REMISSION/CESSATION OF LIABILITY FOR THE YEAR UN DER CONSIDERATION AND BROUGHT TO TAX U/S. 41(1) OF THE ACT. FURTHER, IN ORDER TO BR ING ANY CREDIT UNDER THE AMBIT OF SECTION 41(1), THE AO IS DUTY BOUT TO EXAMINE WHETH ER THE CONDITIONS LAID DOWN U/S. 41(1) ARE FULFILLED OR NOT. AS PER SECTION 41(1) A ND EXPLANATION, IT IS VERY CLEAR THAT LIABILITIES CEASE TO EXIST IN BOOKS OF ACCOUNT OF T HE ASSESSEE IF SUCH LIABILITY IS CEASE TO EXIST IN BOOKS OF ACCOUNT ON ACCOUNT OF WAIVER O R WRITTEN OFF OF SUCH LIABILITY BY EITHER PARTY OR UNILATERAL WRITING OFF BY THE ASSES SEE IN ITS BOOKS OF ACCOUNT. IN THIS CASE, THE ASSESSEE HAS FILED NECESSARY EVIDENCE TO PROVE THAT FOR THE YEAR UNDER CONSIDERATION IT HAS NOT DERIVED ANY BENEFIT EITHER IN CASH OR KIND AND ALSO IT HAS ALSO NOT DERIVED ANY BENEFIT BY WRITING OFF SUCH AM OUNT IN THE BOOKS OF ACCOUNT. SUCH LIABILITY HAS BEEN PAID IN SUBSEQUENT YEAR AND ALSO WRITTEN OFF IN SUBSEQUENT FINANCIAL YEARS AND OFFERED TO TAX. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT ONCE IT HAS BEEN PROVED THAT LIABILITY HAS BEEN CON TINUING IN THE BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION, THE AO WAS INCORR ECT IN MAKING ADDITIONS TOWARDS LIABILITIES U/S. 41(1) OF THE ACT. ITA NOS.607/MUM/2019 & 608/MUM/2019 43 24. THE ASSESSEE HAS RELIED ON THE DECISION OF ITAT , MUMBAI BENCH H IN THE CASE OF NATIONAL BUILDING CORPORATION (SUPRA), WHER EBY THE CO-ORDINATE BENCH HAS CONSIDERED IDENTICAL ISSUE IN THE LIGHT OF THE PROV ISIONS OF SECTION 41(1) OF THE ACT AND HELD AS UNDER: FOLLOWING CONDITIONS MUST BE FULFILLED BEFORE SECTI ON 41(1) OF THE ACT COULD BE HELD AS APPLICABLE: (I)IN THE ASSESSMENT OF AN ASSESSEE, AN ALLOWANCE O R DEDUCTION HAS BEEN MADE IN RESPECT OF ANY LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY HIM. (II) (A)ANY AMOUNT IS OBTAINED IN RESPECT OF SUCH L OSS OR EXPENDITURE, OR (B)ANY BENEFIT IS OBTAINED IN RESPECT OF SUCH TRADI NG LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. (III)SUCH AMOUNT OR BENEFIT IS OBTAINED BY THE ASSE SSEE, AND (IV)SUCH AMOUNT OR BENEFIT IS OBTAINED IN A SUBSEQU ENT YEAR PROVISIONS OF SECTION 41(1) OF THE ACT HAS TWO EFFE CTS, NAMELY:- (I)THAT ALTHOUGH ORDINARILY THE AMOUNT OF REMISSION OR CESSATION, ETC., WOULD NOT BE PROFITS AND GAINS, IT HAS TO BE REGARD ED AS SUCH PROFITS AND GAINS, AND (II)SUCH AN AMOUNT SO FORGIVEN BY WAY OF REMISSION OR CESSATION, ETC., HAS TO BE REGARDED AS PROFITS AND GAINS OF BUSINESS OR PROFESSION ACCRUING OR ARISING IN THE PREVIOUS YEAR WHEREIN IT IS OBTAI NED. IN EITHER OF THESE EVENTS HAPPENED, THE DEEMING PRO VISION ENACTED IN THE CLOSING PART OF SECTION 41(1) OF THE ACT COMES INTO PLAY. ACCORDINGLY, THE AMOUNT OBTAINED BY THE ASSESSEE OR VALUE OF BENEFIT ACCRUING TO HIM IS DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION AND IT BECOMES CHARGEABLE TO TAX AS THE INCOME OF THAT PRE VIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE PRESENT CASE BEFORE US, ADMITTEDLY IN THE YEAR UNDER CONSIDERATION I.E. THE ASSESSMENT YEAR 2010-11 BY WAY OF REMISSION OR CESSATION NO GAIN HA S ACCRUED OR ARISEN TO THE ASSESSEE IN THE GIVEN FACTS AND CIRCUMSTANCE S OF THE CASE. ADMITTEDLY, AS GIVEN IN THE CHART ABOVE BY THE ASSE SSEE BEFORE US, THE ASSESSEE HAD ALREADY DECLARED THE CREDIT TO THE PRO FIT AND LOSS ACCOUNT ON ACCOUNT OF CESSATION OF LIABILITY UNDER CESSATIO N OF LIABILITY U/S 41(1) OF THE ACT ON ACCOUNT OF SUNDRY CREDITORS AND OFFERED TO TAX. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY AGREED THAT THIS FA CT CAN BE VERIFIED BY THE ITA NOS.607/MUM/2019 & 608/MUM/2019 44 AO. IN VIEW OF THE ABOVE GIVEN FACTS AND THE FACT T HAT ASSESSEES COUNSEL FAIRLY AGREED FOR VERIFICATION OF FACTUM OF OFFERIN G OF THIS AMOUNT OF SUNDRY CREDITORS AS INCOME IN THEIR RESPECTIVE YEAR S, THE AO CAN VERIFY THE SAME. HOWEVER, IN THIS YEAR NO ADDITION CAN BE MADE U/S 41(1) OF THE ACT AND WE DELETE THE ADDITION AND ALLOW THE APPEAL OF THE ASSESSEE. 25. IN THIS VIEW OF THE MATTER AND BEING CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE VIEW THAT THE AO E RRED IN MAKING ADDITION TOWARDS CREDITORS U/S. 41(1) OF THE ACT, UNLESS HE BROUGHT OUT ANY MATERIAL TO THE EFFECT THAT SUCH LIABILITY HAS BEEN IN FACT CEASED TO EXIST DUR ING THE RELEVANT FINANCIAL YEAR. HOWEVER, IT IS NOT CLEAR WHETHER THE DETAILS WITH R EGARD TO PAYMENT OF SUCH LIABILITIES /WRITTEN BACK IN SUBSEQUENT YEARS WERE BEFORE THE A O OR NOT. THEREFORE, FOR THE LIMITED PURPOSE OF VERIFICATION OF THE FACTS WITH R EGARD TO PAYMENT OF SUCH LIABILITIES AND ALSO WRITTEN OFF SUCH LIABILITIES IN SUBSEQUENT FINANCIAL YEAR AND OFFERED TO TAX, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DI RECT HIM TO MAKE NECESSARY INQUIRIES AND ALLOW RELIEF IN TERMS OF OUR DISCUSSI ON HEREINABOVE. THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPO SES. 26. IN THE RESULT, APPEAL IN ITA NO. 607/MUM/2019 I S ALLOWED AND THAT IN ITA NO. 608/MUM/2019 IS PARTLY ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 17 TH JULY 2019. SD/- SD/- (RAVISH SOOD) (G MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 17 TH JULY, 2019. SA ITA NOS.607/MUM/2019 & 608/MUM/2019 45 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI