Brash Steels Pvt Ltd, Faridabad V. ITO WARD - 1(2), Faridabad

ITA 6181/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6333 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 22-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: FARAT KHAN
• Keywords: Opportunity of being heard; Fair market value; Valuation report; Set aside; Bogus
• Section: 68; 56; 143(3); 133(6); 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, SMC-2: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.6181/DEL/2019 ASSESSMENT YE AR : 2015-16 M/S BRASH STEELS PVT. LTD. FF-9, VISHNU PLACE, NEAR NEELAM FLYOVER, SECTOR-20B, FARIDABAD, HARYANA-121002 PAN-AAFCB0204R VS. ITO, WARD-1(2), FARIDABAD, HARYANA-121002 (APPELLANT) (RESPONDENT) APPELLANT BY : SH . RAJIV SAX ENA, ADVOCATE RESPONDENT BY : SH. FARAT KHAN , SR. DR DATE OF HEARING : 08.06.2021 DATE OF PRONOUNCEMENT : 17.08.2021 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 29.03.2019 OF THE LEARNED CIT(A), FARIDABAD, RELATING TO AS SESSMENT YEAR 2015-16. 2. FACT OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INCOME ON 10.09.2015, DECLARIN G TOTAL INCOME OF RS.1,35,560/-. THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS, NOTED THAT THE ASSESSEE COMPANY HAS RECE IVED AN AMOUNT OF RS.40,07,500/- AS SHARE PREMIUM DURING THE YEAR ON 57250 SHARES AT A PREMIUM OF RS.70/-. HE NOTICED THAT THE SHARES HAVE BEE N ALLOTTED ON 31.03.2015 TO THE FOLLOWING COMPANIES:- ITA NO.6181/DEL/2019 2 NAME OF PERSON NAME OF SHARES NOMINAL VALUE PER SHARE (RS.) PREMIUM PER SHARE (RS.) AMOUNT OF PREMIUM (RS.) TOTAL AMT. PAID INCLUDING PREMIUM (RS.) BEST BUILDMART PVT. LTD. 12500 10 70 875000 1000000 PALANI BUIKDERS PVT. LTD. 7500 10 70 600000 TEXCITY CONSTRUCTIONS (KOVAI) PVT. LTD. 25000 10 70 2000000 LEKH NATH PANDEY 8625 10 70 690000 RISHI CREDIT & INDUSTRIES PVT. LTD. 3625 10 70 290000 TOTAL 57250 4007500 4580000 3. THE AO CALLED FOR INFORMATION U/S 133(6) FROM THE ABOVE REFERRED INVESTORS. SOME OF THE INVESTORS RESPONDED BY GIVING VAR IOUS DETAILS EXCEPT MR. LEKH NATH PANDEY AND M/S BEST BUILDMART PVT. LTD. F ROM THE PERUSAL OF THE INFORMATION, THE ASSESSING OFFICER OBSERVED THAT THE CO VERING LETTER OF ALL THE COMPANIES IS OF SAME FONT AND NONE OF THE COMPANIES H AVE ANY TELEPHONE NUMBER AGAINST THEM. THE FINANCIAL STATEMENT OF THESE COM PANIES INDICATE THAT THESE ARE SHELL COMPANIES AND HAVE NO REAL BUSINES S. THE ASSESSEE ALSO DID NOT FILE THE BANK STATEMENT OF THE ABOVE COMPANIES. F ROM THE VARIOUS DETAILS FURNISHED BY THESE COMPANIES, THE AO NOTED THAT T HOSE DETAILS ARE OF TYPICAL PAPER COMPANIES HAVING NO REAL BUSINESS BUT ONLY CREDIT AND EQUAL AMOUNT OF DEBIT ENTRIES. HE, THEREFORE, WAS OF THE VIEW THA T THE CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS REMAIN HIG HLY SUSPICIOUS. HE, THEREFORE, CONFRONTED THE SAME TO THE ASSESSEE AND ASKED IT TO SUBSTANTIATE THE INGREDIENTS OF SECTION 68 OF THE IT ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND FOLLOWING THE DECIS IONS OF THE HONBLE ITA NO.6181/DEL/2019 3 SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE REPORTED IN 82 ITR 540, MCDOWELL & CO. LTD. VS. CTO (1985) 154 ITR 148 AND SUM ATI DAYAL VS. CIT (1995) 214 ITR 802, THE AO MADE ADDITION OF RS.45,80,0 00/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE IT ACT BEING THE WH OLE OF SHARE CAPITAL AND SHARE PREMIUM. WHILE DOING SO, THE AO FURTHER OBSERVED THAT SINCE THE ADDITION ON ACCOUNT OF SHARE PREMIUM AND SHARE CAPITAL HA S ALREADY BEEN MADE U/S 68 OF THE ACT, NO SEPARATE ADDITION IS BEING MAD E U/S 56(2)(VIIB) OF THE ACT. WHILE HOLDING SO, HE REJECTED THE CALCULATION MADE BY THE ASSESSEE IN TERMS OF SECTION 11UA FOR CALCULATING THE SHARE PREMIUM ON THE GROUND THAT THE COMPANY IS NOT HAVING ANY WORTH OF RECEIVING ANY SHARE PREMIUM. 4. SO FAR AS THE ADDITION OF RS.45,80,000/- MADE BY THE ASS ESSING OFFICER U/S 68 OF THE IT ACT 1961 IS CONCERNED, THE LEARNED CIT(A ) DELETED THE ADDITION TO THE EXTENT OF RS.22,90,000/- AND SUSTAINED AN AMOUNT OF RS.22,90,000/- BY OBSERVING AS UNDER:- HOWEVER, IT IS NOTED FROM THE PERUSAL OF MATERIAL ON RECO RD THAT AMOUNT IN REFERENCE OF RS.22,90,000/- HAS BEEN RECEIVED BY TH E APPELLANT DURING F.Y.2013-14 AND SHARES HAVE BEEN ALLOTTE D ON THE PREMIUM TO THE INVESTORS DURING THE PREVIOUS YEAR UNDER CONSIDERATION. THUS, FROM THE FACTS, IT HAS BEEN FOUND THAT NO CREDITS HAVE BEEN INTRODUCED IN THE BOOKS OF ACCOUNT OF THE APPELLANT DURING THE YEAR UNDER CONSIDERATION FOR RS.22,90,000/-. IN THE CIRCUMSTANCES, IT IS HELD THAT NO ADDITION U/S 68 CAN BE MADE OUT OF OPENING BALANCES F OR ASSTT. YEAR 2015-16. UNDER THE FACTS IT IS HELD THAT THE ASS ESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.22 ,90,000/- U/S 68 OF THE ACT. THE SAME IS HEREBY DELETED AND ADD ITION OF RS.22,90,000/- IS HEREBY CONFIRMED U/S 68 OF THE ACT RE AL WITH PROVISO. GROUND NO.3 AND ADDITIONAL GROUND ARE PARTLY ALLOWED. ITA NO.6181/DEL/2019 4 5. HE HOWEVER, ENHANCED THE INCOME OF THE ASSESSEE BY A SUM OF RS.40,07,500/- BY INVOKING PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT BY OBSERVING AS UNDER:- 12.10 IT HAS BEEN FOUND ABOUT THAT THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS HAS NOT BEE N PROVED AS REQUIRED U/S 68 OF THE ACT IN THIS CASE. IT IS FURT HER NOTED THAT THE APPELLANT HAS JUSTIFIED THE SHARE PREMIUM ON THE BA SIS OF VALUATION REPORT UNDER RULE 11UA(2). THE SAID VALUATION REPOR T FOR THE SHARES AS FURNISHED BY THE APPELLANT UNDER RULE 11UA(2) HA S BEEN PERUSED. IT IS NOTED THAT THE APPELLANT IN THE SAID REPORT FOR THE DCF HAS CONSIDERED CASH FLOW FROM THE EQUITY FOR RS .90 LACS FOR THE FINANCIAL YEAR 2015-16 RELEVANT TO ASSTT. YEAR 2016-17. ON THIS BASIS VALUE OF EACH SHARE HAS BEEN DETERMINED @ RS. 40/- PER SHARE. NO CORROBORATING DETAILS HAVE BEEN FURNISHED TO SUBSTANTIATE THE CASH FLOW OF RS. 90 LACS FROM THE EQUITY FOR THE F.Y. 2015-16. FROM THE ABOVE FACTS IT HAS BEEN NOTE D THAT THE APPELLANT HAS NO BUSINESS WORTH. THERE IS NO TANGIB LE BUSINESS ACTIVITY BEING CARRIED OUT BY THE APPELLANT SINCE I NCORPORATION. THERE ARE NO FIXED ASSETS OR ANY OTHER INTANGIBLE A SSETS IN POSSESSION OF THE APPELLANT TO JUSTIFY SUCH KIND OF CASH FLOW IN THE SUBSEQUENT YEARS. IN THE ABSENCE OF ANY BUSINESS WO RTH OF THE APPELLANT, THE RELIANCE OF THE APPELLANT ON THE VAL UATION REPORT FOR THE PREMIUM CHARGED OF RS.3G/- ON EACH SHARE UNDER RULE 11UA DOES NOT CARRY ANY FORCE. SUCH VALUATION REPORT HAS BEEN FOUND WITHOUT ANY BASIS AND THUS IS REJECTED. RELIANCE IS HEREBY PLACED UPON THE DECISION OF HON'BLE ITAT DELHI IN THE CASE OF AGRO PORTFOLIO PVT. LTD. VS. ITO 2018, 171/ITD/74 (DEL). IN THE CI RCUMSTANCES THE APPELLANT WAS REQUIRED TO SUBSTANTIATE THE SAME AND WAS FURTHER REQUIRED TO EXPLAIN WHY THE SHARE PREMIUM CHARGED SH OULD ALSO NOT BE CONSIDERED AS INCOME OF THE APPELLANT U/S 56 (2)(VIIB) OF THE ACT AND ACCORDINGLY INCOME ENHANCED U/S 251(1) OF T HE ACT. IN THIS REGARD, THE APPELLANT HAS FURNISHED ITS REPLY ON 1 4.03.2018. VIDE WRITTEN SUBMISSION DATED 13 23.2019, AS PLACED ON R ECORD. THE SAME HAS BEEN PERUSED. HOWEVER, THERE IS NO NEW FAC T IN ADDITION TO WHAT HAS BEEN DISCUSSED AS ABOVE. 12.11 THUS IT IS NOTED THAT THE VALUATION REPORT FU RNISHED BY THE APPELLANT U/S RULE 11UA(2) UNDER THE DCF METHOD HAS BEEN FOUND TO BE SUFFERING FROM DEFECTS. IN THE CIRCUMSTANCES, AFTER CONSIDERING THE DETAILED FACTS OF THE CASE AS DISCUSSED ABOVE, THE ENTIRE SHARE PREMIUM RECEIVED HAS BEEN FOUND WITHOUT ANY CONCRET E BASIS AND BOGUS. THEREFORE, SUCH SHARE PREMIUM RECEIVED BY TH E APPELLANT FOR RS.4007500/- DURING THE F.Y. 2014-15, RELEVANT TO A.Y. 2015- 16 IS CONSIDERED AS INCOME OF THE APPELLANT AS DEFI NED U/S 56(2)(VIIB) OF THE ACT. ACCORDINGLY INCOME OF THE A PPELLANT IS ENHANCED BY RS.4007500/- FOR THE A.Y. 2015-16 U/S 2 51(1) OF THE ACT. IT IS FOUND THAT THE APPELLANT HAS FURNISHED I NACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE AMOUNT OF RS.40,07,500/- IN TERMS OF SECTION 271(L)(C) OF THE ACT, THEREFORE , PENALTY ITA NO.6181/DEL/2019 5 PROCEEDINGS U/S 271(L)(C) ARE BEING INITIATED FOR F URNISHING INACCURATE PARTICULARS OF THE INCOME ON THE ABOVE A CCOUNT. ACCORDINGLY,, NOTICE U/S 274 READ WITH SECTION 271( L)(C) OF THE ACT, IS BEING ISSUED SEPARATELY TO THE APPELLANT. THE AO IS DIRECTED TO GIVE APPEAL EFFECT ON THIS ACCOUNT AND ISSUE DEMAND NOTICE U/S 156 OF THE ACT AFTER COMPUTING TAX AND INTEREST PAY ABLE UNDER RELEVANT PROVISIONS OF THE ACT. 6. AGGRIEVED WITH SUCH ORDER OF THE LEARNED CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEA L:- I. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ASSESSMENT FRAMED BY LD. AO U/S 143(3) OF THE I NCOME TAX ACT 1961. II. THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FACT S IN CONFIRMING THE ADDITION OF RS. 22,90,000/- U/S 68 O F THE ACT ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE PREMIUM AND SH ARE CAPITAL. III. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN ENHANCING THE INCOME OF APPELLANT ASSESSEE BY SUM OF RS. 40,0 7,500/- BY INVOKING SECTION 56(2)(VIIB) OF THE ACT WHEREIN REJ ECTING THE VALUATION METHOD TAKEN BY APPELLANT ASSESSEE. IV. THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FACT S IN ENHANCING THE INCOME OF APPELLANT ASSESSEE BY NOT I SSUING VALID SHOW CAUSE NOTICE AS MANDATED. V. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING AND ENHANCING THE ADDITION WITHOUT GIVING COGENT RE ASONS AND BY RECORDING INCORRECT FACTS AND BY DISREGARDING TH E ALL THE DOCUMENTARY EVIDENCES FURNISHED BY ASSESSEE. VI. THAT, THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND OR WITHDRAW ALL OR ANY GROUND EITHER BEFORE OR DURING THE HEARING OF THESE GROUNDS. 7. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGE D THE ORDER OF THE CIT(A) IN UPHOLDING THE ADDITION OF RS.40,07,500/- LAKH U/S 56(2)(VIIB) OF THE ACT. REFERRING TO THE ABOVE PROVISION WHICH WAS IN SERTED BY THE FINANCE ACT, 2012 AND AS EXISTED DURING THE RELEVANT ASSESSMENT YEAR, THE LD. COUNSEL SUBMITTED THAT AS PER THE SAID PROVISION WHERE A CO MPANY RECEIVES ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE ITA NO.6181/DEL/2019 6 AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE TAXABLE AS INCOME FROM OTHER SOURCES. FURTHER, CLAUSE (A)(I) OF EXPLANATION PROVIDES THAT FAIR MARKET VALUE OF T HE SHARES SHALL BE THE VALUE AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED. HE SUBMITTED THAT FOR THE PURPOSE OF SECTION 56(2)(VII B) OF THE ACT, THE VALUATION OF THE SHARES HAS TO BE DONE IN ACCORDANCE WITH RULE 1 1UA OF THE INCOME TAX RULES. THE LD. COUNSEL ALSO REFERRED TO THE PROVIS IONS OF RULE 11UA AND SUBMITTED THAT AS PER THE AFORESAID RULES, THE FAIR MARKET VALUE OF UNQUOTED EQUITY SHARES FOR THE PURPOSE OF SUB-CLAUSE (I) OF CLAUSE (A) OF EXPLANATION TO CLAUSE (VIIB) OF SUB-SECTION (2) OF SECTION 56 SHAL L BE DETERMINED UNDER CLAUSE (A) OR CLAUSE (B) AT THE OPTION OF THE ASSESSEE. HE SU BMITTED THAT AS PER CLAUSE (B) VALUE HAS TO BE DETERMINED BY THE MERCHANT BANKER A S PER DISCOUNTED FREE CASH FLOW METHOD, WHEREAS AS PER CLAUSE (A) THE FAIR MAR KET VALUE OF UNQUOTED EQUITY SHARES SHALL BE EQUAL TO: BOOK VALUE OF ASSETS BOOK VALUE OF LIABILITY X TOTAL AMOUNT OF PAID UP PAID UP VALUE OF SUCH SHARES EQUITY SHARE CAPITAL 8. HE SUBMITTED THAT THE ASSESSEE IN THE INSTANT CA SE HAS ISSUED SHARE CAPITAL @ 80 PER SHARE, I.E., FACE VALUE OF 10 + PREMIUM OF 70 PER SHARE) AS ON 31.03.2015. HE SUBMITTED THAT THE VALUE OF EACH SH ARE WAS IN ACCORDANCE WITH RULE 11UA OF THE IT RULES AND IN SUPPORT OF VALUE O F EACH SHARE THE ASSESSEE HAD ALSO FURNISHED VALUATION CERTIFICATE OF A CHART ERED ACCOUNTANT. THE LD. COUNSEL DREW THE ATTENTION OF THE BENCH TO THE FOLL OWING DETAILS/CALCULATION:- ITA NO.6181/DEL/2019 7 BOOK VALUE OF ASSETS BOOK VALUE OF LIABILI TY X TOTAL AMOUNT OF PAID UP PAID UP VALUE OF SUCH SHARES EQUITY SHARE CAPITAL I.E., 1,88,83,443 45,67,232 X 10 17,55,000 = RS.81.57/- BOOK VALUE OF ASSETS AS ON 31.03.2014: CASH AND CASH EQUIVALENT- RS. 3,62,445/- SHORT TERM LOANS AND ADVANCES- RS. 1,85,20,998/ - TOTAL RS. 1,88,83,443/- BOOK VALUE OF LIABILITY AS ON 31.03.2014: TRADE PAYABLES- RS. 46,90,000/- OTHER CURRENT LIABILITIES- RS. 1,655/- SHORT TERM PROVISIONS FOR: RS. (-)1,24,423/- TOTAL: RS. 45,67,232/- PAID VALUE OF SHARES : RS. 17,55,000/ TOTAL AMOUNT OF PAID UP EQUITY SHARE: RS. 10 /- 9. REFERRING TO THE ABOVE, HE SUBMITTED THAT THE AF ORESAID VALUATION WAS FURNISHED BEFORE THE AO TO JUSTIFY THAT THE SHARES ISSUED BY THE ASSESSEE WAS AT FAIR MARKET VALUE WHICH WAS COMPUTED IN ACCORDANCE WITH THE RULE 11UA(2)(A) OF THE IT RULES, 1962. HOWEVER, THE AO ARBITRARILY REJECTED THE VALUATION FURNISHED BY THE ASSESSEE BY HOLDING THAT THE ASSES SEE IS NOT HAVING ANY WORTH OF RECEIVING ANY SHARE PREMIUM. HE SUBMITTED THAT THE AO HAS ADOPTED THE FMV OF SHARES AT RS.10/- (AT THE FACE VALUE) WITHOUT AP PRECIATING THE FORMULA PROVIDED IN RULE 11UA AND HAS COMPLETELY GIVEN A GO BY TO TH E VALUE OF ASSETS AND LIABILITIES SHOWN IN THE BALANCE SHEET. HE HAS NOT MADE ANY ATTEMPT TO COMPUTE THE VALUE OF SHARES OF THE ASSESSEE IN ACCORDANCE W ITH RULE 11UA OF IT RULES, ITA NO.6181/DEL/2019 8 1962. HE SUBMITTED THAT THE ADOPTION OF THE FAIR M ARKET VALUE OF SHARES @ RS.10 PER SHARE AS AGAINST RS.82 PER SHARE AS COMPUTED BY THE ASSESSEE WITHOUT RECOURSE TO THE FORMULA AS PROVIDED IN RULE 11UA IS UNSUSTAINABLE IN LAW AS FOR THE PURPOSE OF SECTION 56(2)(VIIB) OF THE ACT, THE FAIR MARKET VALUE OF THE SHARES HAS TO BE COMPUTED ONLY IN ACCORDANCE WITH RULE 11U A. FURTHER, THE LD. CIT(A) WITHOUT CONSIDERING THE STATUTORY PROVISION AND WIT HOUT COMPUTING THE FAIR MARKET VALUE OF SHARES AS PER RULE 11UA, ARBITRARIL Y UPHELD THE FINDING OF THE AO. 10. REFERRING TO THE ORDER OF THE CIT(A) AS WELL AS THE ASSESSMENT ORDER, THE LD. COUNSEL SUBMITTED THAT NONE OF THE AUTHORITIES BELOW HAS FOUND ANY FAULT IN THE COMPUTATION OF FAIR MARKET VALUE PRODUCED IN TH E ASSESSMENT PROCEEDINGS. BOTH THE LOWER AUTHORITIES HAVE SUMMARILY REJECTED THE COMPUTATION ON ASSUMPTION AND PRESUMPTION AND WITHOUT ANY BASIS. REFERRING TO VARIOUS DECISIONS, THE LD. COUNSEL SUBMITTED THAT THE ADDIT ION U/S 56(2)(VIIB) OF THE ACT CAN BE MADE ONLY ON THE GROUND THAT CONSIDERATION F OR ISSUE OF SHARES EXCEEDS THE FAIR MARKET VALUE OF THE SHARES. HOWEVER, WHAT WILL BE THE FAIR MARKET VALUE OF THE SHARES, THE STATUTE HAS PROVIDED A MECHANISM UNDER RULE 11UA AND FAIR MARKET VALUE HAS TO BE DETERMINED ONLY ON THAT BASI S AND NOT ON ASSUMPTION AND PRESUMPTION. HE SUBMITTED THAT WHEN THE STATUTE PR OVIDES FOR A PARTICULAR PROCEDURE, THE AUTHORITY HAS TO FOLLOW THE SAME AND CANNOT BE PERMITTED TO ACT IN CONTRAVENTION OF THE SAME. ITA NO.6181/DEL/2019 9 11. SO FAR AS THE DECISION RELIED ON BY THE CIT(A) IN THE CASE OF AGRO PORTFOLIO PVT. LTD. VS. ITO VIDE ITA NO.2189/DEL/2018, ORDER DATED 16 TH MAY, 2018 IS CONCERNED, HE SUBMITTED THAT THE FACTS OF THAT CASE IS CLEARLY DISTINGUISHABLE AS, IN THAT CASE, THE SHARES WERE VALUED ON THE BASIS OF D ISCOUNTED CASH FLOW METHOD AND THE TRIBUNAL NOTED THAT THE ASSESSEE DID NOT PR ODUCE ANY EVIDENCE TO SUBSTANTIATE THE BASIS OF PROJECTIONS OF CASH FLOW BUT RELIED ON THE VALUERS REPORT VEHEMENTLY CONTENDING THAT SUCH A REPORT CANNOT BE DISTURBED BY THE LD. AO AND AT NO POINT OF TIME THE ASSESSEE TRIED TO EXPLAIN W HERE DID THE LD. AO WENT WRONG IN HIS COMMENTS ON THE FIGURES REFLECTED IN THE ABO VE VALUATION REPORT OF THE EXPERT. THE LD. COUNSEL SUBMITTED THAT SINCE THE A SSESSEE HAD ISSUED SHARES AT FAIR MARKET VALUE COMPUTED IN ACCORDANCE WITH RULE 11UA OF THE RULES, NO FAULT HAS BEEN FOUND IN THE METHOD APPLIED BY THE ASSESSE E AND THE ADDITION U/S 56(2)(VIIB) WAS MADE MERELY ON ASSUMPTIONS AND PRES UMPTIONS, THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE CIT(A) BEING NOT IN ACCORDANCE WITH THE LAW SHOULD BE DELETED. REFERRING TO THE D ECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF MANTARAM COMMO DITIES (P) LTD. VS ITO VIDE ITA NO.6170/DEL/2019, ORDER DATED 12.02.201, H E SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES, THE ADDITION SUSTAINED U/S 56(2)(VIIB) HAS BEEN DELETED. 12. SO FAR AS THE ADDITION OF RS.22,90,000/- SUSTA INED BY THE LEARNED CIT(A) U/S 68 OF THE ACT IS CONCERNED, HE SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT BY PROVING THE THREE INGREDIENTS OF SECTION 68 I.E. THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPL ICANTS & GENUINENESS OF THE ITA NO.6181/DEL/2019 10 TRANSACTION. THE SHARE APPLICANTS HAVE DIRECTLY RES PONDED TO THE ASSESSING OFFICER IN THEIR RESPONSE TO NOTICE U/S 133(6) OF T HE ACT. THE ADDITION WAS MADE BASICALLY ON PRESUMPTION & SURMISES AND THEREFORE, THE SAME IS LIABLE TO BE DELETED. 13. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED O N THE ORDER OF THE CIT(A). REFERRING TO PARA 12.2 OF THE ORDER OF THE CIT(A), THE LD. DR DREW THE ATTENTION TO THE SAME WHICH READS AS UNDER:- 12.2 THE VALUATION REPORT FOR THE SHARES AS FURNIS HED BY THE APPELLANT UNDER RULE 11UA(2) HAS BEEN PERUSED. IT IS NOTED THAT THE APPELLANT IN THE SAID REPORT HAS CONSIDERED SHARE PREMIUM OF RS.1,28,28,9 24/- AS ON 31.03.2014. FROM THE ABOVE FACTS IT HAS BEEN NOTED THAT THE APP ELLANT HAS NO BUSINESS WORTH. THERE IS NO TANGIBLE BUSINESS ACTIVITY BEING CARRIED OUT BY THE APPELLANT SINCE INCORPORATION. THERE ARE NO FIXED A SSETS OR ANY OTHER INTANGIBLE ASSETS IN POSSESSION OF THE APPELLANT TO JUSTIFY SUCH KIND OF CASH FLOW IN THE PRIOR YEARS. IN THE ABSENCE OF ANY BUSI NESS WORTH OF THE APPELLANT, THE RELIANCE OF THE APPELLANT ON THE VAL UATION REPORT FOR THE PREMIUM CHARGED OF RS.70/- ON EACH SHARE UNDER RULE 11UA DOES NOT CARRY ANY FORCE. SUCH VALUATION REPORT HAS BEEN FOUND WIT HOUT ANY BASIS AND THUS, IS REJECTED. RELIANCE IS HEREBY PLACED UPON THE DEC ISION OF HON'BLE ITAT DELHI IN THE CASE OF AGRO PORTFOLIO PVT. LTD, VS. I TO 2018, 171/ITD/74 (DEL). THEREFORE, IN THE ABSENCE OF BUSINESS WORTH OF THE APPELLANT THE RELIANCE OF THE APPELLANT ON THE VALUATION REPORT F OR THE PREMIUM CHARGED OF RS.70/- ON EACH SHARE UNDER RULE 11UA DOES NOT CARR Y ANY FORCE. 14. REFERRING TO THE ABOVE, HE SUBMITTED THAT THE L D.CIT(A) WHILE SUSTAINING THE ADDITION MADE U/S 56(2)(VIIB) HAS GIVEN JUSTIFI ABLE REASONS AND, THEREFORE, THE SAME SHOULD BE UPHELD. 14.1. SO FAR AS THE ADDITION U/S 68 OF THE ACT SUBM ITTED BY THE LEARNED CIT(A) IS CONCERNED, HE RELIED ON THE ORDER OF THE LEARNED CI T(A) ITA NO.6181/DEL/2019 11 15. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE ASSESSING OFFICER AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND, THE AO, IN THE INSTANT CASE, MADE ADDI TION OF RS.48 LAKHS U/S 68 OF THE IT ACT ON THE GROUND THAT THE ASSESSEE COULD NO T SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION REGARDING THE CREDIT WORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION. THE AO, FURTHER HE LD THAT THE ASSESSEE IS NOT HAVING ANY WORTH OF RECEIVING OF SHARE PREMIUM AND THE CALCULATION MADE BY THE ASSESSEE IN TERMS OF RULE 11UA FOR CALCULATING THE SHARE PREMIUM IS TO BE REJECTED. SINCE THE AO MADE ADDITION U/S 68 OF THE ACT, HE DID NOT MAKE ANY SEPARATE ADDITION U/S 56(2)(VIIB) OF THE IT ACT. I FIND THE LD.CIT(A) DELETED THE ADDITION MADE BY THE AO U/S 68 OF THE IT ACT TO THE EXTENT OF RS.22,90,000/- AND SUSTAINED THE BALANCE AMOUNT OF RS.22,90,000/-, THE REASONS OF WHICH ALREADY REPRODUCED IN THE PRECEDING PARAGRAPH. HOWEVER, T HE LD.CIT(A) HELD THAT THE ASSESSEE HAS NO BUSINESS WORTH AND THERE IS NO TANG IBLE BUSINESS ACTIVITY BEING CARRIED OUT BY THE ASSESSEE SINCE INCORPORATION. T HERE ARE NO FIXED ASSETS OR ANY OTHER INTANGIBLE ASSETS IN POSSESSION OF THE ASSESS EE TO JUSTIFY THE PREMIUM CHARGED BY THE ASSESSEE ON ISSUE OF SHARES. HE, TH EREFORE, HELD THAT THE RELIANCE OF THE ASSESSEE ON THE VALUATION REPORT FOR THE PRE MIUM CHARGED AT RS.70/- ON EACH SHARE UNDER RULE 11UA DOES NOT CARRY ANY FORCE . RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF AGRO PORTFOLIO PVT. LTD. VS. ITO, ITA NO.6181/DEL/2019 12 171 ITD 74, THE LD.CIT(A) HELD THAT THE VALUATION R EPORT FOR THE PREMIUM CHARGED OF RS.70/- ON EACH SHARE UNDER RULE 11UA DO ES NOT CARRY ANY FORCE. 16. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FOR THE PURPOSE OF SECTION 56(2)(VIIB) OF THE ACT THE VALUATION OF THE SHARES HAS TO BE DONE IN ACCORDANCE WITH THE RULE 11UA OF IT RULES, 1962. AS PER THE SAID RULE, THE FAIR MARKET VALUE OF UNQUOTED EQUITY SHARES FOR THE PURP OSE OF SUB-CLAUSE (I) OF CLAUSE (A) OF EXPLANATION TO CLAUSE (VIIB) OF SUB-S ECTION (2) OF SECTION 56 SHALL BE DETERMINED UNDER CLAUSE (A) OR CLAUSE (B), AT THE O PTION OF THE ASSESSEE. IT IS HIS SUBMISSION THAT THE ASSESSEE IN THE INSTANT CASE HA S ISSUED THE SHARE CAPITAL @ RS.80 PER SHARE (FACE VALUE OF RS.10 PER SHARE + PR EMIUM AT RS.70 PER SHARE) AS ON 31.03.2015 AND THE VALUATION OF EACH SHARE WAS I N ACCORDANCE WITH RULE 11UA OF THE ACT. IT IS ALSO HIS SUBMISSION THAT WH EN THE STATUTE PROVIDES FOR A PARTICULAR PROCEDURE, THE AUTHORITY HAS TO FOLLOW T HE SAME AND CANNOT BE PERMITTED TO ACT IN CONTRAVENTION OF THE SAME. 17. I FIND MERIT IN THE ABOVE ARGUMENT OF THE LD. C OUNSEL. THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE ACT READS AS UNDER:- ( VIIB ) WHERE A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN ANY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDERATION FOR ISSUE OF SH ARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION R ECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: PROVIDED THAT THIS CLAUSE SHALL NOT APPLY WHERE THE CONSIDER ATION FOR ISSUE OF SHARES IS RECEIVED ( I ) BY A VENTURE CAPITAL UNDERTAKING FROM A VENTURE CAPITAL COMPANY OR A VENTURE CAPITAL FUND; OR ITA NO.6181/DEL/2019 13 ( II ) BY A COMPANY FROM A CLASS OR CLASSES OF PERSONS AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS BEHALF. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, ( A ) THE FAIR MARKET VALUE OF THE SHARES SHALL BE THE VALUE ( I ) AS MAY BE DETERMINED IN ACCORDANCE WITH SUCH MET HOD AS MAY BE PRESCRIBED 9 ; OR ( II ) AS MAY BE SUBSTANTIATED BY THE COMPANY TO THE SAT ISFACTION OF THE ASSESSING OFFICER, BASED ON THE VALUE, ON TH E DATE OF ISSUE OF SHARES, OF ITS ASSETS, INCLUDING INTANGIBLE ASSE TS BEING GOODWILL, KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS , LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE, WHICHEVER IS HIGHER; ( B ) 'VENTURE CAPITAL COMPANY', 'VENTURE CAPITAL FUND ' AND 'VENTURE CAPITAL UNDERTAKING' SHALL HAVE THE MEANINGS RESPEC TIVELY ASSIGNED TO THEM IN CLAUSE ( A ), CLAUSE ( B ) AND CLAUSE ( C ) OF EXPLANATION TO CLAUSE ( 23FB ) OF SECTION 10 ; 17.1 SIMILARLY, THE PROVISIONS OF RULE 11UA OF THE ITAT RULES, 1962 READ AS UNDER:- (2) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-CLAU SE ( B ) OF CLAUSE ( C ) OF SUB-RULE (1), THE FAIR MARKET VALUE OF UNQUOTED EQUITY SHARES FOR THE PURPOSES OF SUB-CLAUSE ( I ) OF CLAUSE ( A ) OF EXPLANATION TO CLAUSE ( VIIB ) OF SUB-SECTION (2) OF SECTION 56 SHALL BE THE VAL UE, ON THE VALUATION DATE, OF SUCH UNQUOTED EQUITY SHARES AS D ETERMINED IN THE FOLLOWING MANNER UNDER CLAUSE ( A ) OR CLAUSE ( B ), AT THE OPTION OF THE ASSESSEE, NAMELY: ( A ) THE FAIR MARKET VALUE OF UNQUOTED EQUITY SHARES = (AL) (PV), (PE) WHERE, A = BOOK VALUE OF THE ASSETS IN THE BALANCE-SHEET AS RE DUCED BY ANY AMOUNT OF TAX PAID AS DEDUCTION OR COLLECTION AT SOURCE OR AS ADV ANCE TAX PAYMENT AS REDUCED BY THE AMOUNT OF TAX CLAIMED AS REFUND UNDER THE IN COME-TAX ACT AND ANY AMOUNT SHOWN IN THE BALANCE-SHEET AS ASSET INCLUDIN G THE UNAMORTISED AMOUNT OF DEFERRED EXPENDITURE WHICH DOES NOT REPRESENT TH E VALUE OF ANY ASSET; L = BOOK VALUE OF LIABILITIES SHOWN IN THE BALANCE-SHEE T, BUT NOT INCLUDING THE FOLLOWING AMOUNTS, NAMELY: ( I ) THE PAID-UP CAPITAL IN RESPECT OF EQUITY SHARES; ( II ) THE AMOUNT SET APART FOR PAYMENT OF DIVIDENDS ON PR EFERENCE SHARES AND EQUITY SHARES WHERE SUCH DIVIDENDS HAVE NOT BEEN DECLARED BEFORE THE DATE OF TRANSFER AT A GENERAL BODY MEETING OF THE COMPANY; ( III ) RES ERVES AND SURPLUS, BY WHATEVER NAME CALLED, EVEN IF THE RESULTING FIGURE IS ITA NO.6181/DEL/2019 14 NEGATIVE, OTHER THAN THOSE SET APART TOWARDS DEPREC IATION; ( IV ) ANY AMOUNT REPRESENTING PROVISION FOR TAXATION, OTH ER THAN AMOUNT OF TAX PAID AS DEDUCTION OR COLLECTION AT SOURC E OR AS ADVANCE TAX PAYMENT AS REDUCED BY THE AMOUNT OF TAX CLAIMED AS REFUND UNDER THE INCOM E- TAX ACT, TO THE EXTENT OF THE EXCESS OVER THE TAX PAYABLE WITH REFERENCE TO T HE BOOK PROFITS IN ACCORDANCE WITH THE LAW APPLICABLE THERETO; ( V ) ANY AMOUNT REP RESENTING PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES; ( VI ) ANY AMOUNT REPRESENTING CONTINGENT LIABILITIES OTHE R THAN ARREARS OF DIVIDENDS PAYABLE IN RESPECT OF CUMULATIVE PREFERENCE SHARES; PE = TOTAL AMOUNT OF PAID UP EQUITY SHARE CAPITAL AS SHO WN IN THE BALANCE-SHEET; PV = THE PAID UP VALUE OF SUCH EQUITY SHARES; OR ( B ) THE FAIR MARKET VALUE OF THE UNQUOTED EQUITY SHARES DETERMINED BY A MERCHANT BANKER AS PER THE DISCOUNTED FREE CASH FLOW METHOD. 18. A COMBINED READING OF SECTION 56(2)(VIIB) READ WITH RULE 11UA STATES THAT FOR THE PURPOSE OF SECTION 56(2)(VIIB) OF THE ACT THE VALUATION OF THE SHARES HAS TO BE DONE IN ACCORDANCE WITH RULE 11UA AND THE FAIR MARKET VALUE OF UNQUOTED EQUITY SHARES FOR THE PURPOSE OF SUB-CLAUS E (I) OF CLAUSE (A) OF EXPLANATION TO CLAUSE (VIIB) OF SUB-SECTION (2) OF SECTION 56 SHALL BE DETERMINED UNDER CLAUSE (A) OR CLAUSE (B), AT THE OPTION OF TH E ASSESSEE. I FIND, IN THE INSTANT CASE THE ASSESSEE HAS VALUED ITS SHARES AT RS.81.57 AS PER THE VALUATION CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT. ALTHOUGH THE S AID VALUATION REPORT WAS SUBMITTED BEFORE THE AO TO JUSTIFY THAT THE SHARES ISSUED BY THE ASSESSEE WAS AT FAIR MARKET VALUE AND IT WAS COMPUTED IN ACCORDANCE WITH RULE 11UA(A) OF IT RULES, 1962, HOWEVER, I FIND, THE AO REJECTED THE S AME HOLDING THAT THE ASSESSEE IS NOT HAVING ANY WORTH OF RECEIVING ANY SHARE PREM IUM. HE HAS IGNORED THE VARIOUS ASSETS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET SUCH AS CASH AND CASH EQUIVALENT OF RS.3,62,445/- AND SHORT-TERM LOANS AN D ADVANCES OF ITA NO.6181/DEL/2019 15 RS.1,85,20,998/-. THE AO DID NOT APPLY THE FORMULA PROVIDED IN RULE 11UA AND DID NOT MAKE ANY ATTEMPT TO COMPUTE THE VALUE OF SH ARES OF THE ASSESSEE IN ACCORDANCE WITH RULE 11UA OF IT RULES, 1962 WHICH H AS BEEN UPHELD BY THE LD.CIT(A). IN MY OPINION, WHEN THE STATUTE PROVIDE S FOR A PARTICULAR PROCEDURE, THE AUTHORITY HAS TO FOLLOW THE SAME AND CANNOT BE PERMITTED TO ACT IN CONTRAVENTION OF THE SAME. IT HAS BEEN HELD BY HON BLE SUPREME COURT IN THE CASE OF A.K. ROY VS. STATE OF PUNJAB AIR 1986 2160 THAT WHERE A STATUTE REQUIRES TO DO A CERTAIN THING IN A CERTAIN WAY, TH E THING MUST BE DONE IN THAT WAY OR NOT AT ALL. OTHER METHODS OR MODE OF PERFORMANC E ARE IMPLIEDLY AND NECESSARILY FORBIDDEN. 19. SO FAR AS THE DECISION OF THE TRIBUNAL IN THE C ASE OF AGRO PORTFOLIO PRIVATE LTD. (SUPRA) RELIED ON BY THE LD. CIT(A) IS CONCERN ED, THE SAME IN MY OPINION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. I N THAT CASE, THE SHARES WERE VALUED ON THE BASIS OF DISCOUNTED CASH FLOW METHOD AND IT WAS FOUND BY THE TRIBUNAL THAT THE ASSESSEE DID NOT PRODUCE ANY EVID ENCE TO SUBSTANTIATE THE BASIS OF PROJECTIONS IN CASH FLOW BUT RELIED ON THE VALUE RS REPORT CONTENDING THAT SUCH A REPORT CANNOT BE DISTURBED BY THE AO AND AT NO PO INT OF TIME THE ASSESSEE TRIED TO EXPLAIN WHERE DID THE AO WENT WRONG IN HIS COMME NTS IN THE FIGURES REFLECTED IN THE VALUATION REPORT. HOWEVER, IN THE INSTANT C ASE, THE ASSESSEE HAS ISSUED THE SHARES AT FAIR MARKET VALUE COMPUTED IN ACCORDANCE WITH RULE 11UA(A) OF THE IT RULES 1962 AND NO FAULT HAS BEEN FOUND IN THE METHO D APPLIED BY THE ASSESSEE ITA NO.6181/DEL/2019 16 AND THE LOWER AUTHORITIES HAVE MADE THE ADDITION U/ S 56(2)(VIIB) PURELY ON PRESUMPTIONS AND SURMISES. THEREFORE, IN MY CONSIDE RED OPINION, SUCH ACTION OF THE LOWER AUTHORITIES BEING NOT IN ACCORDANCE WITH LAW IS UNSUSTAINABLE. I, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DI RECT THE AO TO DELETE THE ADDITION. THE GROUNDS RAISED BY THE ASSESSEE ON THI S ISSUE AS PER GROUNDS OF APPEAL NO. 3 TO 5 ARE ACCORDINGLY ALLOWED. 20. SO FAR AS GROUND OF APPEAL NO.2 IS CONCERNED, THE SAME RELATES TO THE ADDITION OF RS.22,90,000/- SUSTAINED BY THE LEARNED CIT(A) U/S 68 OF THE ACT. AFTER HEARING BOTH SIDES, I FIND THE ASSESSEE DURIN G THE YEAR HAS RECEIVED SHARE CAPITAL AND SHARE PREMIUM OF RS.45,80,000/- FROM VA RIOUS PARTIES, THE DETAILS OF WHICH ARE GIVEN BY THE LEARNED CIT(A) AT PAGE 34 OF HIS ORDER WHICH IS AS UNDER:- NAME OF ALLOTTEES DATE NET AMOUNT RECEIVED DURING THE YEAR NET AMOUNT RECEIVED IN EARLIER YEARS PAGE NO. BEST BUILDMART PVT. LTD. 16/01/2015 10,00,000 PALANI BUILDERS PVT. LTD. 17/11/2014 6,00,000 TAXCITY CONSTRUCTIONS (KOVAI) PVT. LTD. 10/05/2013 20,00,000 LEKH NATH PANDEY 16/01/2015 6,90,000 RISHI CREDIT & INDUSTRIES PVT. LTD. TOTAL 22,90,000 21. A PERUSAL OF THE ABOVE SHOWS THAT HE HAS DELET ED THE ADDITION OF RS.22,90,000/- RECEIVED BY THE ASSESSEE IN THE PREC EDING YEAR BUT SUSTAINED THE ITA NO.6181/DEL/2019 17 AMOUNT OF RS.22,90,000/- RECEIVED BY THE ASSESSEE D URING THE YEAR. THUS, THE AMOUNT SUSTAINED BY THE LEARNED CIT(A) OF RS.22,90, 000/- RELATES TO THREE PARTIES NAMELY BEST BUILDMART PVT. LTD. OF RS.10,00,000/-, PALANI BUILDERS PVT. LTD. RS.6,00,000/- AND SHRI LEKH NATH PANDEY RS.6,90,000 /-. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THERE WAS NO RESPONSE T O NOTICE ISSUED U/S 133(6) OF THE ACT TO SH. LEKHA NATH PANDEY (RS.6,90,000/-) AN D BEST BUILDMART PVT. LTD. (RS.10,00,000/-). 22. SO FAR AS THE PALANI BUILDERS PVT. LTD. IS CON CERNED, IT IS NOTED THAT THE SAID COMPANY HAD RESPONDED TO THE NOTICE U/S 13 3(6) OF THE ACT. THE COMPANY HAS PAID UP CAPITAL OF RS.6.56 LAKHS WITH S HARE PREMIUM OF RS.1.28 CRORES AS ON 31.03.2015. THE ASSESSEE HAS FILED ALL THE REQUISITE DETAILS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPL ICANTS AND GENUINENESS OF THE TRANSACTIONS. MERELY BECAUSE THE EQUIVALENT AMOUNT HAVE BEEN RECEIVED BEFORE TRANSFERRING THE CHEQUES IN FAVOUR OF THE ASSESSEE LEAVING VERY PETTY BALANCE IN MY OPINION CANNOT BE A REASON FOR ADDITION U/S 68 O F THE ACT ESPECIALLY WHEN THE ASSESSEE HAS FILED REQUISITE DETAILS TO PROVE THE I DENTITY AND CREDITWORTHINESS OF THE SAID PARTY AND GENUINENESS OF THE TRANSACTION A ND THE SAID PARTY HAD DIRECTLY RESPONDED TO NOTICE ISSUED U/S 133(6) OF THE ACT BY THE ASSESSING OFFICER. ENTIRE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINE D BY THE LEARNED CIT(A) IN THIS CASE IS MERELY BASED ON PRESUMPTION AND SURMIS ES. THE VARIOUS DETAILS FURNISHED BEFORE THE ASSESSING OFFICER WERE NEITHER PROVED TO BE FALSE OR UNTRUE. ITA NO.6181/DEL/2019 18 I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.6,00,000/- IN RESPECT OF M/S PALANI BUILDERS PVT. LTD. 23. SO FAR AS THE SHARE CAPITAL AND SHARE PREMIUM FROM MR. LEKH NATH PANDEY (RS.6,90,000/-) IS CONCERNED, NEITHER THE SA ID PARTY RESPONDED TO THE NOTICE U/S 133(6) OF THE ACT NOR THE ASSESSEE FILED ANY SUPPORTIVE DOCUMENTS AND FAILED TO EXPLAIN TO THE SATISFACTION OF THE LOWER AUTHORITIES. SIMILARLY, IN THE CASE OF M/S BEST BUILDMART PVT. LTD., THE SAID PARTY ALS O DID NOT RESPOND TO THE NOTICE U/S 133(6) OF THE ACT ISSUED BY THE ASSESSING OFFIC ER. ALTHOUGH THE ASSESSEE HAD FILED CERTAIN DETAILS/DOCUMENTS TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE ABOVE TWO PARTIES AND GENUINENESS OF THE TRA NSACTION, HOWEVER, THE FACT REMAINS THAT BOTH THE PARTIES DID NOT RESPOND TO T HE NOTICE U/S 133(6) OF THE ACT. 24. FOR EXPLAINING ANY CASH CREDIT AS GENUINE, TH E ONUS IS ALWAYS ON THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATIS FACTION OF THE ASSESSING OFFICER REGARDING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS/SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS. IN THE INSTAN T CASE, THE ASSESSEE HAS FAILED TO DISCHARGE THE SAME IN RESPECT OF THE ABOVE TWO PART IES. ALTHOUGH SOME DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER, THEY D ID NOT RESPOND TO THE NOTICE ISSUED U/S 133(6) NOR THE ASSESSEE PRODUCED THEM BE FORE THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THE ISSUE RELATING TO THE SHARE APPLICANTS IN RESPECT OF M/S BEST BUILDMART PVT. LTD. AND SHRI LEKH NATH PAN DEY TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE ITA NO.6181/DEL/2019 19 TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION R EGARDING THE IDENTITY AND CREDITWORTHINESS OF THE ABOVE TWO SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. I HOLD AND DIRECT ACCORDINGLY. GROUND NO.2 FILED BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSE. 25. GROUND NO. 1 AND 6 BEING GENERAL IN NATURE ARE DISMISSED. 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 17/08/2021 SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI/DATED-17.08.2021 F{X~{T F{X~{T F{X~{T F{X~{T? ?? ? FA CAFA FA CAFA FA CAFA FA CAFA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR, ITAT, DELHI