M/S SHIVA SHAKTI ENCLAVES PVT. LTD, Mumbai V. DCIT CENTRAL RANGE 7(3), Mumbai

ITA 629/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3694 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Reopening of assessment; Search and seizure; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Source of fund; Accommodation entries; Reassessment proceedings; Set aside
• Section: 271(1)(c); 143(3); 142(1); 234B; 133(6); 143(1); 195; 250; 143(2); 13; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 629/MUM/2019 (A.Y: 2010-11) M/S. SHIVA SHAKTI ENCLAVES PVT LTD., 203/204 RAIGAD DARSHAN, OPP INDIAN OIL COLONY, JP ROAD, ANDHERI WEST, MUMBAI 400053. VS. DCIT CENTRAL RANGE 7(3) R.NO. 655, 6 TH FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI 400020. PAN/GIR NO. : AAGCS5014B APPELLANT .. RESPONDENT APPELLANT BY : SHRI VIMAL PUNMIYA, AR RESPONDENT BY : SHRI VIJAY KUMAR MENON, DR DATE OF HEARING 15 .0 4 .2021 DATE OF PRONOUNCEMENT 04 .0 6 .2021 / O R D E R PER PAVAN KUMAR GADALE, JM: THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -49 MUM BAI, PASSED U/S. 143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE REOPENING THE CASE U /S 148 WHICH IS BAD IN LAW. ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 2 - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER PA SSED U/S. 143(3) OF THE INCOME ACT 1961 BY THE LD.L ASSESSING OFFICER I S AGAINST THE PRINCIPAL OF NATURAL JUSTICE, HENCE BAD-IN-LAW. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT(A) ERRED IN CONFIRMED THE PASSING ASSESSMENT ORDER WITHOUT PROV IDING OPPORTUNITY TO REBUT THE MATERIAL RELIED BY LD ASSE SSING OFFICER DURING THE REASSESSMENT PROCEEDINGS EXAMINATION WHICH IS A GAINST THE PRINCIPAL OF NATURAL JUSTICE AND HENCE THE SAID ORD ER IS LIABLE TO BE QUASHED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DELETING ADDITION IN RESPECT OF THE SHARE CAPITAL AND SHARE PREMIUM OF RS. 92,00,000/- AS UNEXPLAINED CASH CRED IT U/S. 68 OF THE INCOME TAX ACT, 1961 WITHOUT CORROBORATIVE EVIDENCE S. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN NOT PERMITTING OF BUSINESS LOSS OF RS. 2,5 3, 121/- 6. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, LD. CIT(A) ERRED IN CONFIRMING INITIATION OF PENALTY PROCEEDING U/S.274 R.W.S 271 (1) (C) OF INCOME TAX ACT 1961. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LD. CIT (A) ERRED IN SET - A SIDING FOR FRESH CALCULATIONS OF INTERES T UNDER SECTION 234A, 234B AND 234C OF THE INCOME TAX ACT, 1961. 8. THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DAT E OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPERS. THE ASSESSEE HAS FILED THE RETURN OF IN COME ELECTRONICALLY ON 14.09.2010 WITH A TOTAL INCOME OF RS. 2,53,121/- ON 14.09.2010, AND THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE A.O ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 3 - FOUND CERTAIN INFORMATION WAS NOT DISCLOSED BY THE ASSESSEE AND THEREFORE THE INCOME HAS ESCAPED THE ASSESSMENT. THE A.O. AFTER RECORDING THE REASONS FO R REOPENING HAS ISSUED NOTICE U/S 148 OF THE ACT. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED A LE TTER DATED 21.03.2017 TO TREAT THE RETURN OF INCOME FILE D ON 14.09.2010 AS DUE COMPLIANCE AND REQUESTED FOR REAS ONS RECORDED FOR REOPENING OF ASSESSMENT. THE ASSESSEE HAS ALSO FILED A RETURN OF INCOME ON 11.09.2017 WITH A TOTAL INCOME OF RS.2,53,121/-.SUBSEQUENTLY, THE A.O. HAS ISSUED NOTICE U/S 143(2) AND 142(1) OF THE ACT. IN COMPLIANCE, THE LD. AR OF THE ASSESSEE APPEARED FRO M TIME TO TIME AND FURNISHED THE DETAILS AND REPLY T O THE QUERIES AND ALSO SUBMITTED THE DOCUMENTARY EVIDENC ES IN RESPECT OF THE INFORMATION. THERE WAS A SEARCH AND SEIZURE OPERATIONS CONDUCTED IN THE LOUTUS/KAMADHENU/GREEN VALLEY GROUP CASES. AND DURING THE FINANCIAL YEAR 2009-10 THE ASSESSEE COMP ANY HAS RECEIVED A SUM OF RS.92,00,000/-AS SHARE CAPITA L INCLUDING SHARE PREMIUM. ONE SHRI RAJESH AGARWAL, AN ASSOCIATE OF THE GROUP FOUND TO HAVE RECEIVED SUM O F RS. 30 CRORE IN 4 CORPORATE ENTITIES INCLUDING ASSESSEE COMPANY IN THE F.Y 2008-09 TO 2011-12 AND THE STATEMENT WAS RECORDED U/S 131 OF THE ACT. THE A.O ON PERUSAL OF THE BALANCE SHEET OF THE COMPANY FOUND T HAT ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 4 - THE ASSESSEE HAS ISSUED 92,000 EQUITY SHARES OF RS. 10/- EACH PAID UP AT A PREMIUM OF RS. 90 PER SHARE. THE A.O HAS OBSERVED THAT THE ASSESSEE COMPANY DERIVES INT EREST AND RENTAL INCOME. THE A.O. REQUIRED THE ASSESSEE T O SUBMIT THE DETAILS IN RESPECT OF SHARE APPLICATION, ALLOTMENT AND PREMIUM COLLECTED. THE A.O FOUND THA T THE INVESTORS WHO HAVE MADE AN APPLICATION FOR ALLOTMEN T OF SHARES ARE RELATED TO ONE OF THE GROUP CONCERN. WHE REAS THE A.O HAS RELIED ON THE STATEMENT OF MR. RAJESH A GARWAL WHO IS ASSOCIATE OF LOTUS GROUP AND HAS RECEIVED TH E SHARE APPLICATION MONEY FROM VARIOUS KOLKATA BASED COMPANIES. THE A.O ON PERUSAL OF THE FACTS, IS OF T HE OPINION THAT THE ASSESSEE IS ASSOCIATED WITH MR. RA JESH AGARWAL IN AVAILING ACCOMMODATION ENTRIES IN THE GU ISE OF SHARE APPLICATION MONEY. THE ASSESSEE HAS RECEIVED THE SHARE APPLICATION MONEY ALONG WITH PREMIUM FROM THE EXISTING SHARE HOLDERS REFERRED AT PAGE 3 PARA 3.1. 5 OF THE ORDER AS UNDER: 3.1.5 ON PERUSAL OF THE DETAILS FILED DURING THE A SSESSMENT PROCEEDINGS IT IS SEEN THAT THE FOLLOWING ENTITIES HAD BEEN ALLOTTED SHARE DURING THE YEAR; SR.NO NAME AND ADDRESS NO OF SHARE ALLOTTED MONEY RECEIVED AS SHARE MONEY RECEIVED AS SHARE PREMIUM TOTAL MONEY RECEIVED 1 M/S ANMOL COMMERCE PVT LTD., KOLKATA 26000 260000 2340000 2600000 2 M/S 25000 250000 2250000 2500000 ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 5 - PRIYAMADA FINVEST PVT LTD, KOLKATA 3 M/S MOTACAB FINANCE PVT LTD, KOLKATA 28500 285000 2565000 2850000 4 M/S DEEPA HOLDINGS PVT LTD., KOLKATA 4500 45000 405000 450000 5 M/S REXNOX TREXIM PVT LTD, KOLKATA 8000 80000 720000 800000 TOTAL 92000 920000 8280000 92,00,000 3. THE A.O TO VERIFY THE CLAIM OF GENUINENESS ISSUE D NOTICE U/S 133(6) OF THE ACT TO THESE 5 ENTITIES AN D THE A.O. HAS DEALT ON THE FACTS, DETAILS, INFORMATION AND AFFIDAVIT OF THE MR RAJESH AGARWAL AND OBSERVED TH AT THE ASSESSEE HAS NOT ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THE A.O FOUND THAT NO INFORMATION WAS RECEIVED FROM THE PARTIES IN RESPECT OF NOTICE ISSUED U/S 133(6) OF T HE ACT. THE A.O. IS OF OPINION THAT THE ASSESSEE COMPANY HA S FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE HOLDERS/INVESTORS IN SPITE EVIDENCES/ FINANCIAL STATEMENTS OF THE INVESTORS AR E FILED. FINALLY THE A.O. CONCLUDED THAT THE ASSESSEE COMPAN Y HAS FILED THE DETAILS/EVIDENCES BUT COULD NOT SATISFIED THE TEST OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TH E TRANSACTIONS AND RELIED ON THE JUDICIAL DECISIONS A ND ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 6 - TREATED THE AMOUNT CREDITED IN THE BOOKS OF ACCOUNT AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SEC. 68 OF THE ACT AND ASSESSED THE TOTAL INCOME OF RS94,53,12 0/- AND PASSED THE ORDER U/S 143(3) R.W.S 147 OF THE AC T DATED 22.12.2017. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED A N APPEAL WITH THE CIT(A) AND FIRST CHALLENGED THE REASSESSMENT PROCEEDINGS. THE CIT(A) DEALT ON THE F ACTS AND OBTAINED INFORMATION ON THE REPORT OF SEARCH A ND SEIZURE AND THE REASONS RECORDED ON THE INVESTMENT S. THE CIT(A) FOUND THAT THE ASSESSMENT IS VALID AND D ISMISS THE GROUNDS OF APPEAL ON THE VALIDITY OF RE ASSESS MENT. ON THE SECOND DISPUTED ISSUE, THE ASSESSEE HAS FILE D THE ELABORATE SUBMISSIONS REFERRED IN THE APPELLATE ORD ER. THE ASSESSEE HAS SUBMITTED THE DOCUMENTS/EVIDENCES IN RESPECT OF INVESTORS TO SUBSTANTIATE THAT THE SHARE HOLDERS HAS SATISFIED IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF THE TRANSACTIONS AND COMPLIED WITH THE REQUIREME NT OF SEC. 68 OF THE ACT. THE LD.AR CONTENTIONS ARE THAT THE INVESTORS HAVE SUFFICIENT/SURPLUS FUNDS TO INVEST IN THE ASSESSEE COMPANY. THE CIT(A) NOTED THE INFORMATION AND CONSIDERED THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN RESPECT OF 5 SHAREHOLDERS. THE CIT(A) HAS GONE THRO UGH THE ACTIVITIES OF THE INVESTOR COMPANIES AND FORMED AN OPINION THAT THE INVESTOR COMPANIES COULD NOT MAKE THE ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 7 - INVESTMENT IN THE ASSESSEE COMPANY. FINALLY CIT(A) HAVING DEALT ON THE CATENA OF JUDICIAL DECISIONS H AS OBSERVED THAT THE ASSESSEE COMPANY CANNOT SUBSTANTI ATE ITS CLAIM AND CONFIRMED THE ADDITION U/S 68 OF THE ACT AND GRANTED RELIEF IN OTHER GROUNDS OF APPEAL AND P ARTLY ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE ORDER , THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HONBLE TRIB UNAL. 5.AT THE TIME OF HEARING, THE LD.AR SUBMITTED THAT THE CIT(A) HAS ERRED IN NOT CONSIDERING THE VARIOUS AS PECTS OF INVESTMENTS AND THE ASSESSEE HAS FILED THE FINANCIA L DETAILS IN RESPECT OF THESE COMPANIES WHICH CANNOT BE OVERLOOKED. THE LD.AR REFERRED TO THE PAPER BOOK AN D DEMONSTRATED THE SUBMISSIONS MADE BEFORE THE CIT(A).THE LD.AR MENTIONED THAT THE ASSESSEE HAS SUBMITTED THE DETAILS/EVIDENCES IN RESPECT OF THE F IVE SHAREHOLDER COMPANIES TO SATISFY THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND SUBSTANTIATED WITH SHARE APPLICATION FORM, COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE, COPY OF BOAR D RESOLUTION, COPY OF AUDIT REPORT AND AUDITED BALANC E SHEET AND ENCLOSURES, COPY OF CERTIFICATE OF INCORP ORATION, AND ACTIVE STATUS OF COMPANY FROM MCA WEB SITE. THE LD. AR RELIED ON THE CATENA OF HONBLE HIGH COURT AND HO NBLE TRIBUNAL DECISIONS. THE LD.AR EMPHASIZED THAT ON SI MILAR AND IDENTICAL FACTS, THE HONBLE TRIBUNAL HAS CONFI RMED ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 8 - THE GENUINENESS, IDENTITY AND CREDITWORTHINESS OF T HE INVESTORS FOR THE SAME ASSESSMENT YEAR. FURTHER THE LD.AR SUBSTANTIATED HIS ARGUMENTS WITH PAPER BOOK, JUDICIAL DECISIONS AND ORDERS OF THE HONBLE TRIBUN AL AND PRAYED FOR ALLOWING THE APPEAL .CONTRA, LD.DR RELIE D ON THE CIT(A) ORDER. 6.WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE AS ENVISAGED BY THE LD.AR IS WITH RESPECT TO ADDITI ON U/S. 68 OF THE ACT ON THE AMOUNT RECEIVED ON THE SH ARE APPLICATION FROM FIVE INVESTORS FOR ALLOTMENT OF SH ARES DURING THE FINANCIAL YEAR. WE FIND THAT THE ASSESSE E HAS SUBMITTED THE SUBSTANTIAL DETAILS BEFORE THE ASSESS ING OFFICER AND APPELLATE AUTHORITY. THE LD.AR SUBMITTE D THAT THESE 5 INVESTOR COMPANIES HAVE MADE INVESTMENT IN THE ASSESSEE COMPANY CONSIDERING THE FUTURE PROSPECTS. WE FIND THAT NO STATEMENT HAS BEEN RECORDED IN RESPECT OF THESE COMPANIES IN THE ASSESSEMENT PROCEEDINGS. THE A.O WITHOUT GOING INTO THE DETAIL ASPECTS HAS MADE ADDI TION AND FURTHER WE FOUND THAT THAT THE A.O HAS DEALT ELABORATELY ON THE STATEMENT OF SHRI RAJESH AGARWAL WHO WAS CONNECTED TO THESE SHAREHOLDER COMPANIES AND FURTHER SHRI RAJESH AGARWAL HAS RETRACTED HIS STATE MENT AND IT WAS ALSO BROUGHT TO THE KNOWLEDGE OF THE A.O . THE A.O HAS MADE ADDITION BASED ON SURMISES AND ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 9 - CONJUNCTIONS WITHOUT PROPER VERIFICATION AND ENQUIR Y. DURING HEARING PROCEEDINGS, IT WAS BROUGHT TO THE KNOWLEDGE OF THE BENCH BY THE LD.AR THAT THESE COMPANIES FINANCIAL STABILITY WERE ALREADY TEST CH ECKED AND DEALT BY THE HONBLE TRIBUNAL IN THE CASE OF M /S. BINI BUILDERS PVT LTD VS DCIT IN ITA NOS. 631 & 632/M/2019 FOR THE A.Y 2009-10 2010-11 DT 12-03-202 0 AND SIMILARLY IN THE CASE OF M/S. MOONGIPA DEVELOPM ENT AND INFRASTRUCTURE LTD. VS DCIT IN ITANO. 625 & 626/M/2019 FOR THE A.Y 2009-10&2010-11. THE HONBL E TRIBUNAL HAS DEALT ON THE IDENTICAL ISSUES COVERED IN FAVOUR OF THE ASSESSEE. WE FIND THAT 4 INVESTOR COM PANIES FINANCIAL STATEMENTS WERE DEALT AND THE FINDINGS AR E THAT THE INVESTORS COMPANIES HAVE A POSITIVE NET WORTH A ND ONLY A SMALL PERCENTAGE OF INVESTMENTS WERE DEPLOYE D WHICH CANNOT BE DISPUTED. WE CONSIDERED IT APPROPRI ATE TO REFER THE HONBLE TRIBUNAL OBSERVATIONS AT PAGE 11 AS UNDER: THE INVESTOR COMPANIES HAVE POSITIVE NET WORTH AND ONLY INVESTED 1.6% AND 1.2% OF THEIR NET WORTH. THE ASSE SSEE SUBMITTED FORM OF APPLICATION OF SHARES, PHOTOCOPY OF THE CHEQUE RECEIPT TOWARDS THE SHARE APPLICATION, PHOTO COPY O F THE BANK DEPOSIT SLIP REFLECTING THE DEPOSIT OF THE ABOVE CH EQUE, EXTRACT OF BANK STATEMENT OF ALL SUBSCRIBERS DULY HIGHLIGHTING THE ENTRIES OF SHARE MONEY AND PREMIUM MONEY GIVEN BY THEM TO THE APPELLANT COMPANY ALONG WITH COPY OF BOARD RESOLUTION, RESOLV ING THE DECISION OF INVESTMENT INTO APPELLANT COMPANY. TO P ROVE THE ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 10 - GENUINENESS OF THE TRANSACTION THE ASSESSEE PRODUCE D THE CONFIRMATION, BANK STATEMENT, FINANCIAL OF THE LEND ER. NOTHING CAME INTO NOTICED THAT THE TRANSACTION WERE FOUND B OGUS. RETRACTED STATEMENT OF SHRI RAJESH AGARWAL WAS NOT LIABLE TO BE RELIED UPON THE UNLESS CORROBORATED BY THE SUFFICIE NT EVIDENCE ON RECORD. MOREOVER NO OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE. HOWEVER, IN SUPPORT OF THIS CONTENTION, T HE 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 TAX MANN.COM 32 (SC) 4. PCIT VS. ROHTAK CHAIN CO. P. LTD. (2019) 110 TAX MANN.COM 59 (SC) 5. PCIT VS. AMI INDUSTRIES PVT. LTD. 1231 OF 2017 6. CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. ITA. NO.1613 OF 2014 (BOM) 7. CIT VS. ORCHID INDUSTRIES PVT. LTD., I. T. APPEA L NO. 1433 OF 2014 8. JASAMRIT CONSTRUCTIONS PVT. LTD. VS. ITO, ITA. N O. 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 HON BLE ITAT IN THE SISTER CONCERN CASE M/S. BINNI BUILDER PVT. LTD . (SUPRA) IN WHICH THE ISSUE HAS BEEN DECIDED ON THE BASIS OF SI MILAR FACTS ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 11 - AND CIRCUMSTANCES, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS AND DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AG AINST THE REVENUE 7.SIMILARLY THE HONBLE TRIBUNAL IN THE CASE OF M/ S.BINI BUILDERS P. LTD VS DCIT IN ITA NO.630/MUM/2019 DAT ED 05.05.2021 HAS DEALT ON THE COMMON FACTS, BEING IDENTICAL AND SIMILAR RELATING TO THESE FIVE INVEST OR COMPANIES AT PAGE 7 PARA 6 AND 7 OF THE ORDER WHI CH IS READ AS UNDER: 6. UPON CAREFUL CONSIDERATION, AS RIGHTLY POINTED O UT BY LD. AR, THE ISSUE IS SQUARELY COVERED IN ASSESSEES FAVOR BY THE EARLIER DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A YS 2011-12 & 2012-13, ITA NOS. 631 & 632/MUM/2019 COMMON ORDER DATED 12/0 3/2020. THE RELEVANT FINDINGS OF THE BENCH WERE AS UNDER: - 7. WE HAVE CAREFULLY HEARD THE ARGUMENTS ADVANCED B Y RESPECTIVE REPRESENTATIVES AND PERUSED RELEVANT MATERIAL ON RE CORD INCLUDING 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 ENUMERA TED BY US IN THE OPENING PARAGRAPHS. OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 8.1 UPON CAREFUL CONSIDERATION, THE FACTS THAT EMER GES ARE THAT THE ASSESSEE HAS ISSUED 20.70 LACS SHARES TO AS MANY AS 11 CORPO RATE ENTITIES DURING THE YEAR AS TABULATED IN PARA 5.3 ABOVE. AS EVIDENT FRO M DOCUMENTS ON RECORD, THESE SHARES WERE ISSUED AT FACE VALUE OF RS.10/- P ER 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 ENUMERATE D BY US IN THE OPENING PARAGRAPHS, IT IS QUITE EVIDENT THAT THE PRIMARY ON US 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) GENUINEN ESS OF THE TRANSACTIONS. ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 12 - 8.2 TO DEMONSTRATE FULFILLMENT OF THESE INGREDIENTS , THE ASSESSEE HAD DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APP ELLATE PROCEEDINGS, FURNISHED FOLLOWING BROAD DOCUMENTARY EVIDENCES WIT H 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 ST ATEMENT (V) COPY OF SHARE CERTIFICATE COUNTERFOIL (VI) COPY OF AUDIT REPORT A LONG WITH FINANCIAL STATEMENTS OF THE INVESTOR ENTITY (VII) COPY OF ITR ACKNOWLEDGEMENT OF THE INVESTOR ENTITY (VIII) COPY OF CERTIFICATE OF INCOR PORATION OF INVESTOR ENTITY (IX) MEMORANDUM & ARTICLES OF ASSOCIATION OF INVESTOR EN TITY (X) COMPANY MASTER DATA SHOWING STATUS AS ACTIVE (XI) COPY OF BOARD RE SOLUTION THE ASSESSEES OWN BANK STATEMENT WAS ALSO PLACED ON RECORD WHICH WOULD SHOW THAT ALL THE TRANSACTIONS HAVE TAKEN THROUGH BANKING CHANNELS. U PON CAREFUL CONSIDERATION OF THESE DOCUMENTS, WE FIND THAT SO F AR AS THE IDENTITY OF THE INVESTOR ENTITIES ARE CONCERNED, THE SAME STAND PRO VED BY CERTIFICATE OF INCORPORATION WHICH IS HELD TO BE CONCLUSIVE PROOF OF REGISTRATION OF A CORPORATE ENTITY. THE CREDITWORTHINESS OF THE ENTIT IES WOULD STAND SATISFIED BY THE FINANCIAL STATEMENTS OF THE INVESTOR ENTITIES, WHICH ARE ALSO PLACED ON RECORD. THE GENUINENESS OF THE TRANSACTIONS WOULD S TAND PROVED BY THE FACT THAT THE TRANSACTIONS WERE DULY SUPPORTED BY SHARE APPLICATION FORM, SHARE CERTIFICATES, COPY OF BOARD RESOLUTION AND BY THE F ACT THAT ULTIMATELY THE SHARES WERE ALLOTTED TO ALL THESE ENTITIES. THE ASSESSEE H AS TABULATED THE NET WORTH OF ALL THESE ENTITIES IN THE FOLLOWING MANNER: - N O. NAME OF INVESTOR AMOUNT OF SHARE CAPITAL INVESTED SHARE CAPITAL OF INVESTOR ENTITY RESERVES OF INVESTOR ENTITIES NET WORTH OF INVESTOR ENTITIES 1 LIMELIGHT DEALCOM P LTD 15,00,000 16,85,000 3,01,30,806 3,18,15,806 . 2 CLASSIC COMMOTRADE P LTD 5,00,000 6,51,800 2,70,49,045 2,77,00,815 3 DIVYA PRAKASH SUPPLIERS PVT LTD 25,00,000 1,00,02,450 33,68,50,695 34,68,53,145 4 GOLDY DEALCOM P LTD 25,00,000 7,21,000 3,04,44,166 3,11,65,166 ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 13 - 5 NEXTGEN TRADECOM P LTD 20,00,000 57,65,000 10,76,35,000 11,34,00,000 6 REXNOX TREXIM P LTD 18,00,000 1,15,57,100 15,93,97,977 17,09,55,077 7 RAJLAXMI DEALCOM P LTD 18,00,000 60,10,000 11,22,95,755 11,83,05,755 8 VANILLA TIE UP PVT LTD 15,00,000 13,50,000 6,12,92,989 6,26,42,898 9 KAMAKHY GOODS P LTD 24,00,000 7,72,000 3,29,46,126 3,37,18,126 1 0 CAMELLIA COMMERCIAL P LTD 10,00,000 8,32,280 3,58,97,644 3,67,29,924 1 1 ANMOL COMMERCEP LTD 32,00,000 1,81,03,500 28,24,38,553 30,05,42,053 TOTAL 207,00,000 5,74,50,130 1,21,63,78,635 1,27,3 8,28,765 THE PERUSAL OF NET WORTH CHART WOULD REVEAL THAT AL L THE INVESTOR ENTITIES HAD SUFFICIENT NET WORTH TO MAKE STATED INVESTMENT IN T HE ASSESSEE COMPANY. UPON PERUSAL OF ALL THESE DOCUMENTARY EVIDENCES, IT COUL D SAFELY BE CONCLUDED THAT THE ASSESSEE HAD SUCCESSFULLY DISCHARGED THE ONUS C ASTED UPON HIM U/S 68 AND THE ONUS WAS ON REVENUE TO REBUT ASSESSEES EVIDENC ES. 8.3 PROCEEDING FURTHER, WE FIND THAT THE SOLE BASI S OF MAKING IMPUGNED ADDITION IS THE STATEMENT OF ONE OF THE DIRECTORS A S RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A. HOWEVER, THIS STATE MENT HAS BEEN RETRACTED WITHIN A SPAN OF 7 DAYS. IT IS SETTLED LAW THAT STA TEMENTS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS WOULD NOT HAVE MUCH EV IDENTIARY VALUE UNLESS THE SAME ARE BACKED BY CREDIBLE EVIDENCES. THIS POS ITION HAS BEEN SETTLED BY HONBLE SUPREME COURT IN THE CASE OF CIT V/S S.KHAD ER KHAN & SONS (25 TAXMANN.COM 413). THE CBDT INSTRUCTIONS NO. F.NO.28 6/98/2013-IT (INV. II) DATED 18/12/2014 ALSO DISCOURAGES CONFESSIONAL STAT EMENTS WITHOUT ANY CREDIBLE EVIDENCES. NO INCRIMINATING MATERIAL IS SH OWN TO HAVE BEEN FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. 8.4 WE ALSO FIND THAT LEARNED CIT(A) HAS GONE BY I RRELEVANT CONSIDERATIONS TO CONFIRM THE IMPUGNED ADDITIONS. THE OBJECT CLAUSE O F THE INVESTOR ENTITIES ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 14 - WOULD HAVE NO RELEVANCE VIS--VIS PROPOSED ADDITION S 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 REVENUE AUTHORITIES WERE NOT REQUIRED TO PUT BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE DOCUMENTS PRODUCED BEFORE THEM. HOWEVER, WE FIN D THAT NO SUCH INQUIRIES HAVE BEEN MADE BY THE AUTHORITIES EXCEPT FOR THE AL LEGATIONS THAT THE SHARE CAPITAL WAS BOGUS IN NATURE. NOTHING WAS BROUGHT ON RECORD THAT TO SUBSTANTIATE THE FACT THAT THE ASSESSEES UNACCOUNT ED MONEY WAS ROUTED IN THE BOOKS IN THE GARB OF SHARE CAPITAL. 8.6 THE ENTIRETY OF FACTS AND CIRCUMSTANCES AS ENUM ERATED HEREINABOVE DO NOT CONVINCE US TO CONCUR WITH THE STAND OF LD. CIT(A). THE IMPUGNED ADDITIONS, IN OUR CONSIDERED OPINION, COULD NOT BE SUSTAINED U NDER LAW IN THE LIGHT OF BINDING JUDICIAL PRONOUNCEMENTS AS ENUMERATED BY US IN THE OPENING PARAGRAPHS. THEREFORE, WE DELETE THE SAME. CONSEQUE NTLY, 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 STATISTICAL 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 F IND THAT THE ORIGINAL RETURN WAS PROCESSED U/S 143(1) AND THE ONLY REQUIREMENT I N LAW TO TRIGGER ASSESSMENT WAS THAT LD. AO CERTAIN REASONS TO BELIE VE THAT CERTAIN INCOME ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. WE FIND THAT LD. AO WAS CLINCHED WITH TANGIBLE INFORMATION FROM INVESTIGATI ON WING WHICH SUGGESTED POSSIBLE ESCAPEMENT OF INCOME IN THE HANDS OF THE A SSESSEE. IN OUR OPINION, NOTHING MORE WAS REQUIRED AT THIS STAGE SINCE LD. A O 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 OU R ABOVE ORDER. THIS DECISION HAS SUBSEQUENTLY BEEN FOLLOWED BY ANOTHER COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEES SISTER CONCERN N AMELY M/S MOONGIPA ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 15 - DEVELOPMENT & INF. LTD. FOR AYS 2009-10 & 2010-11, ITA NOS.625 & 626/MUM/2019 COMMON ORDER DATED 04/12/2020 ON IDENT ICAL FACTS AND CIRCUMSTANCES. 7. WE FIND THAT FACTS IN THIS YEAR ARE QUITE IDENTI CAL TO THE FACTS OF EARLIER YEARS. IN FACT, LD. AR HAS DEMONSTRATED THAT 13 ENT ITIES OUT OF THE 16 ENTITIES ARE COMMON ENTITIES AS DEALT WITH BY THE TRIBUNAL I N THE CAPTIONED APPEALS AS IS EVIDENT FROM THE FOLLOWING TABULATION: - NO. NAME OF INVESTOR ENTITY BBPL* 2011- 12 & 2012-13 MDIL** 2009-10 MDIL** 2010-11 1 ANMOL COMMERCE P LTD YES YES 2 REXNOX TREXIM P LTD YES YES 3 SSA MOTOR FINANCE P LTD YES 4 PRIYAMVADA FINVEST P LTD YES 5 MOTOCAB FINANCE P LTD YES 6 CAMELLIA COMMERCIAL PVT LTD YES 7 CHERRY TIEUP P LTD YES 8 DEEPA HOLDING P LTD YES YES 9 HILL VIEW HIRE PURCHASE PVT LTD YES 10 MANDYATI DEALCOM P LTD YES 11 NEXTGEN TRADECOM PVT LTD YES 12 VANILLA TIE UP PVT LTD YES 13 KAMAKHYA GOODS P LTD YES YES *BBPL - ASSESSEE (M/S BINI BUILDERS PVT LTD) **MDIL - SISTER CONCER OF ASSESSEE (M/S MOONGIPA DEV. & INF. LTD ) ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 16 - REGARDING REMAINING 3 ENTITIES I.E. (I) M/S GORSIA MARINE EQUIPMENT PVT. LTD.; (II) M/S SITARAM INVESTMENT PVT. LTD.; (III) M/S MARUDHAR SUPPLIERS PVT. LTD., WE FIND THAT THE ASSESSEE HAD FURNISHED SIMIL AR SUFFICIENT DOCUMENTARY EVIDENCES AS FOLLOWS: - (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 SOURCE OF FUNDS CERTIFICATE (VII) COPY OF AUDIT REPORT ALONG WITH FINANCIAL STA TEMENTS OF THE INVESTOR ENTITY (VIII) COPY OF ITR ACKNOWLEDGEMENT OF THE INVESTOR ENTITY (IX) COPY OF PAN CARD (X) COPY OF CERTIFICATE OF INCORPORATION OF INVESTO R ENTITY (XI) MEMORANDUM & ARTICLES OF ASSOCIATION OF INVEST OR ENTITY (XI) COMPANY MASTER DATA SHOWING STATUS AS ACTIVE (XII) COPY OF BOARD RESOLUTION (XIV) COPY OF RBI CERTIFICATE OF REGISTRATION UPON PERUSAL OF THESE DOCUMENTS, IT COULD BE SAID T HAT THE PRIMARY ONUS AS CASTED ON THE ASSESSEE IN TERMS OF THE REQUIREMENT OF SECTION 68, WAS DULY FULFILLED AND THE ONUS WAS ON REVENUE TO CONTROVERT THE EVIDENCES FURNISHED BY THE ASSESSEE. HOWEVER, WE FIND THAT NOTHING HAS BEE N BROUGHT ON RECORD BY THE REVENUE TO SUBSTANTIATE THE FACT THAT THE ASSES SEES UNACCOUNTED MONEY WAS ROUTED IN THE BOOKS IN THE GARB OF SHARE CAPITA L. IT IS TRITE LAW THAT NO ADDITION COULD BE MADE MERELY ON THE BASIS OF ALLEG ATION, SUSPICION, CONJECTURES OR SURMISES. UPON PERUSAL OF ASSESSEES WRITTEN SUBMISSIONS AS PLACED ON RECORD, ANOTHER PERTINENT FACT TO BE NOTE D IS THAT ALL THE 16 INVESTOR ENTITIES HAS SUFFICIENT NET WORTH (SHARES CAPITAL + RESERVES & SURPLUS) TO MAKE INVESTMENT IN THE ASSESSEE AND THE PERCENTAGE OF IN VESTMENT MADE BY THEM IN THE ASSESSEE COMPANY IS MERELY IN THE RANGE OF 0.47 % TO 5.45% OF THEIR RESPECTIVE NET WORTH. ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 17 - 8.WE FIND THESE FIVE INVESTORS COMPANIES INVESTED I N THE SHARE CAPITAL AT SHARE PREMIUM IN THE ASSESSEE COMP ANY REFERRED AT SR. NO. 1,2,4,5 AND 8 OF THE CHART REFE RRED AT PAGE 15 ABOVE, WHERE THE HONBLE TRIBUNAL HAS CONSIDERED THE FINANCIAL ASPECTS AND OBSERVED THAT THESE COMPANIES CAN MAKE INVESTMENTS AND THE INVESTMENTS PERCENTAGE RANGE FROM .47% TO 5.45%. FURTHER, WE F IND THAT ALL THE FIVE INVESTOR COMPANIES CONTRIBUTED TH E SHARE CAPITAL AND PREMIUM WERE SUBJECT MATTER OF ADJUDIC ATION BY THE HONBLE TRIBUNAL AND WAS TREATED AS GENUINE IN THE ABOVE CASES. WE FIND THAT THESE FIVE INVESTOR COMPA NIES ARE PART OF THE DECISIONS OF THE HONBLE TRIBUNAL FOR THE SAME ASSESSMENT YEAR. WE CONSIDERING THE OVERALL FA CTS, CIRCUMSTANCES, SUBMISSIONS AND HONBLE TRIBUNAL DECISIONS, ARE OF THE SUBSTANTIVE OPINION THAT TH E ASSESSEE COULD ABLE TO SUBSTANTIATE ITS CASE AND S ATISFY THREE INGREDIENTS BEING IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS. THE HONBLE TRIBUN AL HAS DEALT ELABORATELY ON THE NET WORTH OF THESE COM PANIES AND PERCENTAGE OF THE INVESTMENTS ARE COMPARATIVELY LOWER THAN TOTAL NET WORTH OF THE INVESTOR COMPANIE S. ACCORDINGLY, WE RESPECTFULLY FOLLOW THE JUDICIAL PR ECEDENCE AND SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT TH E ASSESSING OFFICER TO DELETE THE ADDITION AND ALLOW THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 18 - WHEREAS, THE GROUND OF APPEAL NO 1,2,3 AND 5 ARE NO T PRESSED AND ACCORDINGLY ARE DISMISSED. THE GROUND O F APPEAL NO 6 ON PENALTY LEVIED U/SEC 271(1)(C) OF TH E ACT IS PREMATURELY RAISED AND IS DISMISSED. THE GROUND OF APPEAL ON LEVY OF INTEREST U/SEC234A,234B & 234C OF THE ACT IS CONSEQUENTIAL IN NATURE AND REQUIRES NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.06.2021 SD/- SD/- ( M BALAGANESH ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 04.06.2021 KRK, PS ITA NO. 629/MUM/2019 SHRI SHIV SHAKTI ENCLAVE PVT LTD., MUMBAI - 19 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. !!' , $ % , / DR, ITAT, MUMBAI 6. () * + / GUARD FILE. / BY ORDER, ! //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBA I