M/S MOONGIPA DEVELOPMENT AND INFRASTRUCTURE LTD, MUMBAI V. DCIT CENTRAL RANGE -7(3), MUMBAI

ITA 625/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1465 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Source of fund; Corroborative evidences; Retraction; Documents seized; Set aside
• Section: 143(3); 142(1); 133(6); 143(1); 195; 143(2); 139(1); 13; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM / I .T.A. NOS. 625 & 626 /MUM/20 1 9 ( / ASSESSMENT YEARS: 2009 - 10 & 2010 - 11 ) M/S. MOONGIPA DEVELOPMENT AND INFRASTRUCTURE LTD. 203/204 RAIGAD DARSHAN, OPP. INDIAN OIL COLONY, JP ROAD, ANDHERI WEST, MUMBAI - 400053 . / VS. DCIT CENTRAL RANGE - 7(3) ROOM NO.655, 6 TH FLOOR, AAYAKAR BHAVAN, CHURCHGATE, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAFCM1616E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 13 / 10 /2020 / DATE OF PRO NOUNCEMENT : 04 / 12 /2020 / O R D E R PER AMARJIT SINGH, J M: THE ASSESSEE HAS FILED THE ABOVE MENTIONED APPEAL S AGAINST THE DIFFERENT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 49 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A) ] RELEVANT TO THE A.Y S . 2009 - 10 & 2010 - 11 . ITA. NO.625/M/2019 2. THE ASSESSEE HA S FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 05 . 12 .201 8 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 49 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2009 - 10 . ASSESSEE BY : SHRI VIMAL PUNAMIYA REVENUE BY: SHRI A. H. ANSARI (SR. AR) ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 2 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE IA. CIT(A) ERRED IN CONFIRMING THE REOPENING THE CASE U/S 148 WHICH IS BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IA. CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE INCOME ACT 1961 BY THE LXI. ASSESSING OFFICER IS AGAINST THE PRINCIPAL OF NATURAL JUSTICE, HENCE BAD - IN - LAW. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE IA. CIT(A) ERRED IN DELETING ADDITION IN RESPECT OF THE SHARE CAPITAL AND SHARE PREMIUM OF RS.50,00,000/ - AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME TAX ACT, 1961 WITHOUT CORROBORATIVE EVIDENCES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE IA. CIT(A) ERRED IN NOT PERMITTING OF PARTLY BUSINESS LOSS OF RS. 2,00,000/ - AS AGAINST THE TOTAL LOSS OF RS. 3,14,419/ - 5. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING INITIATION OF PENALTY PR OCEEDING U/ S.274 R.W.S. 271 (1) (C) OF INCOME TAX ACT 1961. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LD. CIT (A) ERRED IN SET A SIDING FOR FRESH CALCULATIONS OF INTEREST UNDER SECTION 234A, 2343 AND 234C OF THE INCOME TAX ACT, 1961. 7. TH E ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 . 09 .20 09 DECLARING TOTAL INCOME TO THE T UNE OF RS. NIL AND CURRENT YEAR LOSS IN SUM OF RS.3,14,419/ - . THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE I. T. ACT, 1961. NOTICE U/S 148 OF THE ACT DATED 28.03.2016 WAS GIVEN. THE CASE OF THE ASSESSEE WAS REOPENED ON THE FOLLOWING GRO UNDS.: - 2. DURING THE COURSE OF A SEARCH CONDUCTED IN THE LOUTUS/KAMDHENU/GREENVALLEY GROUP OF CASES. DURING THE COURSE OF SEARCH IT WAS NOT:CED THAT THE ASSESSEE, DURING THE YEAR UNDER ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 3 CONSIDERATION, HAD RECEIVED SUM OF RS. 45,00,000/ - FROM VARIOUS KOLKA TA BASED COMPANIES. ONE SHRI RAJESH AGARWAL, AN ASSOCIATE OF THE GROUP, WAS FOUND TO HAVE RECEIVED SUM OF RS. 30 CRORES IN 4 CORPORATE ENTITIES INCLUDING THE ASSESSEE ACROSS FYS. 2008 - 09 TO 2011 - 12. OUT OF THIS SUM, SHRI RAJESH AGARWAL ADMITTED THAT SUM OF PS. 11,13,30,000/ - WAS THE UNDISCLOSED IR..OMC OF THE GROUP IN A STATEMENT RECORDED UNDER THE PROVISIONS OF SECTION 131 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER, 'THE ACT') WHICH HAD BEEN RECORDED ON 09.10.2014. FURTHER ANALYSIS OF THE DOCUMENTS SEIZED / IMPOUNDED DOCUMENTS INDICATES THAT THE ASSESSEE COMPANY. 3. THE PR. CIT 2, KOLKATA, ON 11.12.2015 PASSED AN ORDER UNDER SECTION 127 OF THE ACT CENTRALIZING THE CASE WITH THIS OFFICE. IN VIEW OF THE ABOVE FACTS, REASONS WERE RECORDED AND THE PRINCIPAL COMM ISSIONER OF INCOME TAX (CENTRAL) - 4, MUMBAI ACCORDED THE APPROVAL FOR REOPENING OF THE ASSESSMENT OF THE ASSESSEE VIDE LETTER DATED 28.03.2015 BEEFING NO. PR.CIT(C) - 4/MUM U/S. 147/2015 - 16. NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 28.03.2016. THIS NOTICE WAS SERVED ON THE ASSESSEE ON 31.03.2016. VIDE THIS NOTICE, THE ASSESSEE WAS REQUESTED TO FURNISH A RETURN WITHIN 30 DAYS FROM THE DATE OF THE SERVICE OF THE NOTICE. 4. THE ASSESSEE RESPONDED VIDE LETTER FILED IN THIS OFFICE ON 06.04.2016 REQUESTED THAT THE RETURNED TILED ON 30.09.2009 (UNDER SECTION 139(1) OF THE ACT) BE TREATED AS RETURN IN RESPONSE TO THE NOTICE DATED 78.03.2016. IN THE SAME LETTER THE ASSESSEE REQUESTED THAT THE REASONS RECORDED PRIOR TO THE ISSUE OF THE NOTICE BE AVAILABLE. THE REASONS WERE CONVEYED TA THE ASSESSEE VIDE LETTER DATED 22.08.2016. THIS LETTER WAS SERVED ON THE ASSESSEE ON 23.08.2016. 5. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 1.05.2016 AND THE SAME WAS SERVED ON THE ASSESSEE. IN RESPONSE THE ASSESSEE, VIDE LETTER DATED 06.06.2016, OF MIS VASUDEO AGARWAL, ADVOCATE REQUESTED FOR AN ADJOURNMENT. NOTICE UNDER SECTION 142(1) OF THE ACT, CALLING FOR DETAILS WAS ISSUED ON 21.09.2016 AND WAS SERVED ON THE ASSESSEE ON 23.09.2016. IN RESPONSE TO THE NOTICES SHRI BASUDEV AGARWAL CA AND THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED FROM TIME TO TIME ALONG WITH SHRI YOGESH DAVE, ACCOUNTANT OF THE ASSESSEE, FILED DETAILS CALLED FOR AND DISCUSSED THE CASE. THE DETAILS FILED BY THE ASSESSEE VIDE LETTER FILED IN THIS OFFICE ON 17.10.2016 ARE PLACED ON RECORD. ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 4 5 . THEREAFTER, THE NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSE E. IT WAS OBSERVED THAT THE ISSUED SHARE CAPITAL OF THE ASSESSEE STOOD AT RS.43,00,000/ - COMPRISING OF 430,00 0 EQUITY SHARES OF RS.10/ - EACH. THE ASSESSEE DURING THE YEAR ISSUED 50,000/ - EQUITY SHARES OF RS.10/ - EACH. THESE SHARES WERE ISSUED AT A PREMIUM OF RS.90 PER SHARE. ACCORDINGLY, THE ASSESSEE ISSUED SHA RE CAPITAL AS ON 31.03.2009 STOO D AT 480,000/ - EQUITY SHARES AT RS.10/ - EACH. THE ASSESSEE HAS ALSO OBTAINED SHARE PREMIUM OF RS.45,00,000/ - DURING THE YEAR UNDER CONSIDERATION. THERE WAS NO BUSINESS RECEIPT IN THE YEAR UNDER CONSIDERATION. THE COMPLETE DETAILS U/S 133(6) OF THE ACT WERE ASKED AND AFTER THE REPLY OF THE ASSESSEE AND EXAMINING ALL THE NECESSARY DOCUMENTS, I T WAS OBSERVED THAT THE ASSESSEE HAD INTRODUCED 50,00,000/ - ITS SHARE CAPITAL AND 45,00,000/ - WAS FOUND AS SHARE PREMIUM. A CCORDINGLY 50,00,000/ - AMOUNT WAS ADDED TO THE INCOME OF THE ASSESS EE AND TAXED. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.46,85,580/ - . FEELING AGGRIEVED, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) WHO PARTLY ALLOWED THE CLAIM OF THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APP EAL BEFORE US. ISSUE NO S .1 & 2 6. THESE ISSUES HAVE NOT BEEN PRESSED BY THE LD. REPRESENTATIVE OF THE ASSESSEE, THEREFORE, THESE ISSUE S ARE BEING DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED. ISSUE NO.3 ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 5 7 . AT THE VERY OUTSET, TH E LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUE D THAT THE CASE OF THE ASSESSEE HAS DULY COVERED BY ASSESSEES SISTER CONCERN UNIT NAMELY M/S. BINI BUILDERS PVT. LTD. ITA. NO.631 & 632/M/2019, THEREFORE, IN THE SAID CIRCUMSTANCES, THE ISSUE IS LIABLE TO BE D ECIDED IN FAVOUR OF THE ASSESSEE. IT IS S PECIFICALLY ARGUED THAT THE PRESENT CASE IS ON SIMILAR FOOTING AND HAVING SIMILAR FACTS AND CIRCUMSTANCES, THEREFORE, THE ISSUE IS LIABLE TO BE DECIDED IN FAVOUR OF THE ASSESSEE IN ACCORDANCE WITH LAW. HOWEVER, ON T HE OTHER HAND, THE LD. REPRESENTATIVE OF THE REVENUE HAS REFUTED THE SAID CONTENTIONS. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ADDITI ON OF SHARE CAPITAL OF RS.50,00 ,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IN THE CASE OF THE ASSESSEES SISTER CONCERN I.E. M/S. BINI BUILDERS PVT. LTD. ITA. NO.631 & 632/M/2019 , THE ISSUE HAS BEEN DECIDED BY HONBLE ITAT IN FAVOUR OF THE ASSESSEE. THE COPY OF ORDER DATED 12.03.2020 IS ON THE FILE AND THE RELEVANT FINDING IS HEREBY REPRODUCED AS UNDER.: - 6. 3 ON MERITS, THE ASSESSEE ASSAILED THE QUANTUM ADDITION BY WAY OF ELABORATE SUBMISSIONS WHICH HAVE BEEN EXTRACTED IN PARA 7.1 OF THE IMPUGNED ORDER. THE ASSESSEE DREW ATTENTION TO THE DOCUMENTS SUBMITTED BY THE ASSESSEE WITH RESPECT TO INVESTOR ENTITIES TO ESTABLISH THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IT WAS SUBMITTED THAT EACH AND EVERY SHAREHOLDER CONFIRMED THE STATED TRANSACTIONS THEREFORE, FINDINGS RENDERED BY LD.AO RUN CONTRARY TO THE PROVISIONS OF SEC. 68. THE ASSESSE E MAINTAINED THAT BY SUBMITTING THESE DETAILS, IT HAD DISCHARGED THE PRIMARY ONUS OF PROVING THE STATED TRANSACTIONS. ALL THE INVESTOR ENTITIES HAD ENOUGH FUNDS TO INVEST IN THE ASSESSEE COMPANY. RELIANCE WAS PLACED ON CATENA OF JUDICIAL PRONOUNCEMENTS TO SUPPORT THE SAID SUBMISSIONS. THESE HAVE ALREADY BEEN TABULATED IN ASSESSEES SUBMISSIONS. THEREFORE, THE ASSESSEE SUBMITTED THAT ADDITIONS AS MADE BY LD. AO WERE UNCALLED FOR IN THE LIGHT OF DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE. 6.4 THE LD. CIT (A), AT PARA 7.3 OF THE IMPUGNED ORDER, NOTED THAT THE ASSESSEE HAD SUBMITTED SHARE APPLICATION FORM, COPY OF CHEQUE, CHEQUES DEPOSIT SLIPS, COPY OF ASSESSEES BANK STATEMENT, COPY OF SHARE CERTIFICATES, COPY OF SOURCE OF FUNDS, COPY OF BOARD RESOLUTION, C ERTIFICATE OF INCORPORATION, COPY OF MEMORANDUM OF ASSOCIATION (MOU) ETC. WITH ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 6 RESPECT TO 11 INVESTOR ENTITIES. HOWEVER, THE SAME WOULD NOT PROVE THE GENUINENESS OF THE TRANSACTIONS. IT WAS OBSERVED THAT INVESTOR ENTITIES DID NOT HAVE ANY GENUINE BUSINESS ACTIVITY WHICH WAS EVIDENT FROM THE FACT THAT MAIN OBJECT OF THE INVESTOR ENTITIES CONTAINED ALL ACTIVITY POSSIBLE AND WOULD INDICATE THE MALA - FIDE INTENTIONS OF THE ASSESSEE. ANY GENUINE COMPANY WITH A REAL MOTIVE OF DOING BUSINESS WOULD HAVE A CONCRETE O BJECT TO BE FOLLOWED. FURTHER, THERE WAS NO JUSTIFICATION FOR KOLKATA BASED ENTITIES TO MAKE INVESTMENT IN MUMBAI BASED ENTITY AND THAT TOO, AT A PREMIUM OF RS.90/ - PER SHARE. AT PARA 7.6, IT WAS NOTED THAT ALL THE ENTITIES PURCHASED THE SHARES OF THE ASSE SSEE AT PREMIUM OF RS.90/ - PER SHARE BUT THEY EXITED AT FACE VALUE OF RS.10/ - PER SHARE. FURTHER, THE RETRACTION WOULD NOT HAVE ANY RELEVANCE IN THE LIGHT OF DECISION OF MUMBAI TRIBUNAL IN HIRALAL MAGANLAL AND CO V/S DCIT (97 TTJ 377). THE CASE LAWS BEING R ELIED UPON BY THE ASSESSEE WERE HELD TO BE DISTINGUISHABLE RATHER RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN NOVA PROMOTERS & FINLEASE PVT LTD. 342 ITR 169 TO CONFIRM THE ADDITIONS. FINALLY, THE ADDITIONS WERE CONFIRMED BY OBSERVING AS UNDER: - 7.8 THE LEARNED COUNSEL ALSO ALLEGED THAT THE AO MADE THE ADDITION ON THE BASIS OF SUSPICION AND NOT EVIDENCES. THIS ALSO IS NOT CORRECT AS THE AO HAD BROUGHT IN ENOUGH EVIDENCES BOTH DIRECT AND CORROBORATIVE TO COME TO THE CONCLUSION THAT TH E SHARE CAPITAL AND PREMIUM RECEIVED BY THE ASSESSEE ARE NOT GENUINE. AS COULD BE SEEN FROM THE ASSESSMENT ORDER AND FROM THE DISCUSSION MADE ABOVE, THE LEARNED COUNSEL FURTHER ALLEGED THAT THE AO HAS NO MATERIAL IN HIS POSSESSION TO PROVE THE SAME AND THA T HE MADE THE ADDITION OF THE BASIS OF INFORMATION FROM INVESTIGATION WING AND WITHOUT ANY INDEPENDENT ENQUIRY MADE BY THE AO. THIS ALSO IS INCORRECT AS THE AO HAD IN - DEPTH INFORMATION NOT ONLY ABOUT THE 11 COMPANIES WHICH HAVE INVESTED IN THE ASSESSEE COM PANY BUT ALSO ABOUT THE 67 COMPANIES WHICH HAVE INVESTED IN THE SAID 11 COMPANIES. THE AO HAD MADE EXHAUSTIVE ENQUIRY AND ANALYSIS BEFORE REACHING TO THIS CONCLUSION. THE LEARNED COUNSEL HAS ALSO ALLEGED THAT THE THIRD PARTY UNILATERAL ACT CANNOT BE THE BA SIS OF ADDITION BUT THE ADDITION, IN THIS CASE, HAS BEEN MADE NOT ON THE BASIS OF THIRD PARTY UNILATERAL ACT BUT ON THE BASIS OF THE ASSESSEE'S OWN ADMISSION SUPPORTED BY OTHER CORROBORATIVE EVIDENCES. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES, THE ADD ITION MADE BY THE AO IS CONFIRMED. THE GROUNDS OF APPEAL ARE DISMISSED. AGGRIEVED THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. 7. WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED BY RESPECTIVE REPRESENTATIVES AND PERUSED RELEVANT MATERIAL ON RECORD INCLU DING DOCUMENTS PLACED IN THE PAPER - BOOK. WE HAVE ALSO DELIBERATED ON VARIOUS JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. WE HAVE ALREADY APPRECIATED THE SETTLED LEGAL POSITION REGARDING ADDITION U/S 68 AS ENUMERATED BY US IN ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 7 THE OPENING PARAGRAPHS. OUR ADJ UDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 8.1 UPON CAREFUL CONSIDERATION, THE FACTS THAT EMERGES ARE THAT THE ASSESSEE HAS ISSUED 20.70 LACS SHARES TO AS MANY AS 11 CORPORATE ENTITIES DURING THE YEAR AS TABULATE D IN PARA 5.3 ABOVE. AS EVIDENT FROM DOCUMENTS ON RECORD, THESE SHARES WERE ISSUED AT FACE VALUE OF RS.10/ - PER SHARE. THE SHARE CAPITAL OF THE ASSESSEE INCREASED BY RS.207 LACS DURING THE YEAR UNDER CONSIDERATION. IN THE LIGHT OF SETTLED LEGAL POSITION AS ENUMERATED BY US IN THE OPENING PARAGRAPHS, IT IS QUITE EVIDENT THAT THE PRIMARY ONUS WAS ON ASSESSEE TO PROVE THE FULFILMENT OF THREE INGREDIENTS OF SEC. 68 VIZ. (I) IDENTITY OF THE INVESTOR; (II) CREDITWORTHINESS OF THE INVESTORS; & (III) GENUINENESS OF THE TRANSACTIONS. 8.2 TO DEMONSTRATE FULFILLMENT OF THESE INGREDIENTS, THE ASSESSEE HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS, FURNISHED FOLLOWING BROAD DOCUMENTARY EVIDENCES WITH RESPECT TO ALL THE 11 ENTITIES: - ( I) SHARE APPLICATION FORM (II) COPY OF CHEQUE (III) COPY OF CHEQUE DEPOSIT SLIP (IV) COPY OF INVESTORS BANK STATEMENT (V) COPY OF SHARE CERTIFICATE COUNTERFOIL (VI) COPY OF AUDIT REPORT ALONG WITH FINANCIAL STATEMENTS OF THE INVESTOR ENTITY (VII) COP Y OF ITR ACKNOWLEDGEMENT OF THE INVESTOR ENTITY (VIII) COPY OF CERTIFICATE OF INCORPORATION OF INVESTOR ENTITY (IX) MEMORANDUM & ARTICLES OF ASSOCIATION OF INVESTOR ENTITY (X) COMPANY MASTER DATA SHOWING STATUS AS ACTIVE (XI) COPY OF BOARD RESOLUTION TH E ASSESSEES OWN BANK STATEMENT WAS ALSO PLACED ON RECORD WHICH WOULD SHOW THAT ALL THE TRANSACTIONS HAVE TAKEN THROUGH BANKING CHANNELS. UPON CAREFUL CONSIDERATION OF THESE DOCUMENTS, WE FIND THAT SO FAR AS THE IDENTITY OF THE INVESTOR ENTITIES ARE CONCER NED, THE SAME STAND PROVED BY CERTIFICATE OF INCORPORATION WHICH IS HELD TO BE CONCLUSIVE PROOF OF REGISTRATION OF A CORPORATE ENTITY. THE CREDITWORTHINESS OF THE ENTITIES WOULD STAND SATISFIED BY THE FINANCIAL STATEMENTS OF THE INVESTOR ENTITIES, WHICH AR E ALSO PLACED ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 8 ON RECORD. THE GENUINENESS OF THE TRANSACTIONS WOULD STAND PROVED BY THE FACT THAT THE TRANSACTIONS WERE DULY SUPPORTED BY SHARE APPLICATION FORM, SHARE CERTIFICATES, COPY OF BOARD RESOLUTION AND BY THE FACT THAT ULTIMATELY THE SHARES WERE AL LOTTED TO ALL THESE ENTITIES. THE ASSESSEE HAS TABULATED THE NET WORTH OF ALL THESE ENTITIES IN THE FOLLOWING MANNER: - THE PERUSAL OF NET WORTH CHART WOULD REVEAL THAT ALL THE INVESTOR ENTITIES HAD SUFFICIENT NET WORTH TO MAKE STATED INVESTMENT IN THE ASS ESSEE COMPANY. UPON PERUSAL OF ALL THESE DOCUMENTARY EVIDENCES, IT COULD SAFELY BE CONCLUDED THAT THE ASSESSEE HAD SUCCESSFULLY DISCHARGED THE ONUS CASTED UPON HIM U/S 68 AND THE ONUS WAS ON REVENUE TO REBUT ASSESSEES EVIDENCES. 8.3 PROCEEDING FURTHER, W E FIND THAT THE SOLE BASIS OF MAKING IMPUGNED ADDITION IS THE STATEMENT OF ONE OF THE DIRECTORS AS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A. HOWEVER, THIS STATEMENT HAS BEEN RETRACTED WITHIN A SPAN OF 7 DAYS. IT IS SETTLED LAW THAT STATEME NTS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS WOULD NOT HAVE MUCH EVIDENTIARY VALUE UNLESS THE SAME ARE BACKED BY CREDIBLE EVIDENCES. THIS POSITION HAS BEEN SETTLED BY HONBLE SUPREME COURT IN THE CASE OF CIT V/S S.KHADER KHAN & SONS (25 TAXMANN.COM 413). THE CBDT INSTRUCTIONS NO. F.NO.286/98/2013 - IT (INV. II) DATED 18/12/2014 ALSO DISCOURAGES CONFESSIONAL STATEMENTS WITHOUT ANY CREDIBLE EVIDENCES. NO INCRIMINATING MATERIAL IS SHOWN TO HAVE BEEN FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. 8.4 WE ALSO FIND THAT LEARNED CIT(A) HAS GONE BY IRRELEVANT CONSIDERATIONS TO CONFIRM THE IMPUGNED ADDITIONS. THE OBJECT CLAUSE OF THE INVESTOR ENTITIES WOULD HAVE NO RELEVANCE VIS - - VIS PROPOSED ADDITIONS IN THE HANDS OF THE ASSESSEE U/S 68. IT IS TRITE LAW THAT NO ADDITIONS COULD BE MADE MERELY ON THE BASIS OF SUSPICION, CONJECTURES OR SURMISES. 8.5 THE LD. DR HAS RELIED UPON THE CASE OF HONBLE SUPREME COURT IN SUMATI DAYAL VS CIT (80 TAXMAN 89) & DURGA PRASAD MORE (82 ITR 540 26/08/1971). NO DOUBT THAT THE RE VENUE AUTHORITIES WERE NOT REQUIRED TO PUT BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE DOCUMENTS PRODUCED BEFORE THEM. HOWEVER, WE FIND THAT NO S UCH INQUIRIES HAVE BEEN MADE BY THE AUTHORITIES EXCEPT FOR THE ALLEGATIONS THAT THE SHARE CAPITAL WAS BOGUS IN NATURE. NOTHING WAS BROUGHT ON RECORD THAT TO SUBSTANTIATE THE FACT THAT THE ASSESSEES UNACCOUNTED MONEY WAS ROUTED IN THE BOOKS IN THE GARB OF SHARE CAPITAL. 8.6 THE ENTIRETY OF FACTS AND CIRCUMSTANCES AS ENUMERATED HEREINABOVE DO NOT CONVINCE US TO CONCUR WITH THE STAND OF LD. CIT(A). THE IMPUGNED ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 9 ADDITIONS, IN OUR CONSIDERED OPINION, COULD NOT BE SUSTAINED UNDER LAW IN THE LIGHT OF BINDING JUD ICIAL PRONOUNCEMENTS AS ENUMERATED BY US IN THE OPENING PARAGRAPHS. THEREFORE, WE DELETE THE SAME. CONSEQUENTLY, THE SET - OFF OF LOSSES, AS ALLOWABLE UNDER LAW, WOULD BE AVAILABLE TO THE ASSESSEE. GROUND NOS. 4 STAND ALLOWED. GROUND NO.5 STAND ALLOWED FOR S TATISTICAL PURPOSES. GROUND NOS. 6 TO 8, BEING CONSEQUENTIAL IN NATURE, WOULD NOT REQUIRE ANY SPECIFIC ADJUDICATION ON OUR PART. 8.7 SO FAR AS THE LEGAL GROUNDS ARE CONCERNED, WE FIND THAT THE ORIGINAL RETURN WAS PROCESSED U/S 143(1) AND THE ONLY REQUIREME NT IN LAW TO TRIGGER ASSESSMENT WAS THAT LD. AO CERTAIN REASONS TO BELIEVE THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. WE FIND THAT LD. AO WAS CLINCHED WITH TANGIBLE INFORMATION FROM INVESTIGATION WING WHICH SUGGESTED POSSIBLE ESCA PEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. IN OUR OPINION, NOTHING MORE WAS REQUIRED AT THIS STAGE SINCE LD. AO HAD SUFFICIENT REASONS TO FORM SUCH A BELIEF. THEREFORE, WE DO NOT FIND MUCH SUBSTANCE IN ASSESSEES LEGAL GROUNDS. GROUND NOS. 1 TO 3 STAND DISMISSED. 8.8 THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. 8. IT IS LEGAL PREPOSITION IS THAT THE ASSESSEE HAS TO PROVE THREE INGREDIENT TO DISCREDIT THE ADDITION RAISED U/S 68 OF THE I. T. ACT. (I) IDENTITY OF THE INVESTOR (II) CREDIT WORTHINESS OF THE INVESTOR (III) GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS FURNISHED THE ADDRESS, PAN, CERTIFICATE OF INCORPORATION, MOA & AOA OF THE SUBSCRIBERS WHO SUBSCRIBE THE SHARES. TO PROVE THE CREDIT - WORTHINESS THE ASSESSEE HAS GIVEN THE CE RTIFICATE SOURCE OF FUND, BALANCE SHEET, PROF IT & LOSS ACCOUNT AND RETURN OF INCOME OF SHARE APPLICANTS. THE ASSESSEE HAS SUBMITTED THE FOLLOWING DATA FOR THE ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 . NO . NAME OF INVESTORS COMPANIES NO OF SHARE S SHARE CAPITAL @ RS.10 PREMIU M @ RS.90 TOTAL AMOUNT SHARE CAPITAL OF IC RESERVES OF IC NETWORTH OF IC INVESTMENT/NETW ORTH % 1 M/S. APAR FINLEASE P. LTD. 25000 25000 0 225000 0 2500000 5876675 0 50102450 8 55979125 8 0.40 2 M/S. KAMAKHYA GOODS P. 20000 20000 0 180000 0 2 000000 772000 32945132 33717132 5.34 ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 10 LTD. 3 NEXTGEN TRADECOM PVT. LTD. 30000 30000 0 270000 0 3000000 5765000 10763500 0 11340000 0 2.38 4 30000 30000 0 270000 0 3000000 1810350 0 26227998 6 28038348 6 0.96 5 M/S REXNOX TREXIM P LTD 37000 37000 0 333000 0 3700000 8742 100 10590660 8 11464870 8 2.90 6 M/S. SSA MOTOR FINVEST P LTD. 30000 30000 0 270000 0 3000000 2960300 0 24129867 6 27090167 6 1.00 7 M/S. PRIYAMVAD A FINVEST P LTD. 25000 25000 0 225000 0 2500000 2928800 0 21860013 2 24788813 2 0.91 8 M/S. MOTOCAB FINANCE P LTD. 25 000 25000 0 225000 0 2500000 2123000 0 32802076 7 34925076 7 0.64 9 M/S. BALAJI DEALCOM P LTD. 25000 25000 0 225000 0 2500000 9035000 80426195 89461195 2.52 10 M/S. DEEPA HOLDING PVT. LTD. 25000 25000 0 225000 0 2500000 651800 27049015 27700815 8.12 11 M/S. DEEPA HOLDING P. LTD. 30000 30000 0 270000 0 3000000 2441800 0 19303531 0 21745331 0 1.24 12 M/S. HILL VIEW HIRE PURTCHASE P LTD. 30000 30000 0 270000 0 3000000 4737700 0 38420822 4 43158522 4 0.63 13 M/S. LIMELIGHT COMMOTRA DE PVT. LTD. 10000 10000 0 900000 1000000 1685000 30124341 31809341 2.83 14 M/S. MANDYATI DEALCOM PVT. LTD. 30000 30000 0 270000 0 3000000 4356920 0 35075874 9 39432794 9 0.68 ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 11 15 M/S. SUMANGAL COMMOTRA DE P. LTD. 25000 25000 0 250000 0 2500000 1039000 0 92614563 10300456 3 2.18 TOTAL 39700 0 39700 00 357300 00 3970000 00 3093963 50 29559272 06 32653235 56 1.22 THE INVESTOR COMPANIES HAVE POSITIVE NET WORTH AND ONLY INVESTED 1.6% AND 1.2% OF THEIR NET WORTH . THE ASSESSEE SUBMITTED FO RM OF APPLICATION OF SHARES, PHOTOCOPY OF THE CHEQUE RECEIPT TOWARDS THE SHARE APPLICATION, PHOTO COPY OF THE BANK DEPOSIT SLIP REFLECTING TH E DEPOSIT OF THE ABOVE CHEQUE, E XTRACT OF BA NK STATEMENT OF ALL SUBSCRIBERS DULY HIGHLIGHTING THE ENTRIES OF SHARE MONEY AND PREMIUM MONEY GIVEN BY THEM TO THE APPELLANT COMPANY ALONG WITH COPY NO. NAME OF INVESTORS COMPANIES NO OF SHARES SHARE CAPITAL @ RS.10 PREMIUM @ RS.90 TOTAL AMOUNT SHARE CAPITAL OF IC RESERVES OF IC NETWORTH OF IC INVESTMEN T/NETWORT H % 1 CHERRY TIE UP PVT. LTD . 7000 70000 630000 700000 7048200 28645400 35693600 1.77 2 CROWN TIE UP PVT. LTD. 6000 60000 540000 600000 5629600 10308644 15938244 3.39 3 DEEPA HOLDING PVT. LTD. 10000 100000 900000 1000000 24418000 193030784 217448784 0.41 4 MANGALAM COMMERCIAL P. L TD. 5000 50000 450000 500000 1670000 0 1670000 26.94 5 SHIVPUJAN COMMODITIES PVT. LTD. 7000 70000 630000 700000 5241000 4538154 9779153.6 6.44 6 SIMPLEX MERCHANTS PVT. LTD. 5000 50000 450000 500000 980000 7922013 89022013 5.06 7 WELLPLAN CORPORATE M PVT . LTD. 10000 100000 900000 1000000 3223100 9321859 12544959 7.17 TOTAL 50000 4500000 5000000 4820990 253766854 301976754 1.65% ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 12 OF BOARD RESOLUTION, RESOLVING THE DECISION OF INVESTMENT INTO APPELLANT COMPANY. TO PROVE THE GENUINENESS OF THE TRANSACTION THE ASSESSEE PRODUCED THE CONFIRMATION, BANK STATEM ENT, FINANCIAL OF THE LENDER. NOTHING CAME INTO NOTICED THAT THE TRANSACTION WERE FOUND BOGUS. RETRACTED STATEMENT OF SHRI RAJESH AGARWAL WAS NOT LIABLE TO BE RELIED UPON THE UNLESS CORROBORATED BY THE SUFFICIENT EVIDENCE ON RECORD. MOREOVER NO OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE. HOWEVER, IN SUPPORT OF THIS CONTENTION, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING LAW.: - 1. CIT VS. LOVERLY EXPORTS PVT. LTD. (2008) 216 CTR 195 (SC) 2. PCIT VS. HIMACHAL FIBERS LTD. (2018) 98 TAXMANN.COM 173 (SC) 3. PCIT VS. BHARAT SECURITIES P. LTD. (2020) 13 TAXMANN.COM 32 (SC) 4. PCIT VS. ROHTAK CHAIN CO. P. LTD. (2019) 110 TAXMANN.COM 59 (SC) 5. PCIT VS. AMI INDUSTRIES PVT. LTD. 1231 OF 2017 6. CIT VS. GAGANDEEP INFRASTRUCTU RE PVT. LTD. ITA. NO.1613 OF 2014 (BOM) 7. CIT VS. ORCHID INDUSTRIES PVT. LTD., I. T. APPEAL NO. 1433 OF 2014 8. JASAMRIT CONSTRUCTIONS PVT. LTD. VS. ITO, ITA. NO. 1091/M/2016 ITAT MUM DATED 8 FEB, 2018 9. PR. CIT VS. M/S. APEAKINFOTECH, NAGPUR ITA. NO. 26 /2017 (BOM. HC) DATED 8 JUNE, 2017 10. UMBRELLA PROJECTS PVT. LTD. VS. ITO 18(1) ITA. NO. 5955/DEL/2014 DATED 23 FEB, 2018. TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE AND ALSO RELYING UPON THE DECISION OF THE HONBLE ITAT IN THE SI STER CONCERN CASE M/S. BINNI BUILDER PVT. LTD. (SUPRA) IN WHICH THE ISSUE HAS BEEN DECIDED ON THE BASIS OF SIMILAR FACTS AND CIRCUMSTANCES, WE SET ASIDE THE FINDING OF THE ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 13 CIT(A) ON THIS ISSUE AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REV ENUE. ISSUE NO.4 8 . THIS ISSUE HAS NOT BEEN PRESSED BY THE LD. REPRESENTATIVE OF THE ASSESSEE, THEREFORE, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED. ISSUE NO. 5 9 . THIS ISSUE HAS NOT BEEN PRESSED BY THE LD. REPRESENTATIVE OF THE ASSESSEE, THEREFORE, THIS ISSUE IS BEING DECIDED IN FAVOUR OF THE REVENUE AGAINST THE ASSESSEE BEING NOT PRESSED. ISSUE NO. 6 10 . ISSUE. NO. 6 IS CONSEQUENTIAL IN NATURE AND NOWHERE REQUIRED ANY SPECIFIC ADJUDICATION. ITA. NO. 626/M/ 2019 11 . THE FACTS OF THE PRESENT CASE ARE QUITE SIMILAR TO THE FACT OF THE CASE AS NARRATED ABOVE WHILE DECIDING THE ITA. NO.625 /M/2019, THEREFORE, THERE IS NO NEED TO REPEAT THE SAME. HOWEVER, THE FIGURE IS DIFFERENT. THE MATTER OF CONTROVERSY IS ALSO TH E SAME. THE FIN DING GIVEN ABOVE IN ITA. NO.625 /M/2019 IS QUITE APPLICABLE TO THE FACTS OF THE PRESENT CASE AS MUTATIS MUTANDIS AND ACCORDINGLY WE PARTLY ALLOWED THE CLAIM OF THE ASSESSEE. ITA NO S . 625 & 626/ M/201 9 A.Y S . 2009 - 10 & 2010 - 11 14 12 . IN THE RESULT, THE APPEAL S FILED BY THE ASSESSEE ARE PARTLY A LLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04 / 12 /2020 SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 04 /12 /2020 VIJAY PAL SINGH /SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE AP PELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI