VITRAG METAL P. LTD, MUMBAI V. ITO WD 5(3)(3), MUMBAI

ITA 680/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2160 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 03-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2012
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Unexplained cash credit; Bogus Share capital; Share purchase agreement; Opportunity of cross examination; Capital receipt; Reassessment proceedings
• Section: 143(3); 142(1); 133(6); 131; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.680/MUM/2012 ASSESSMENT YEAR: 2007-08 VITRAG METAL P. LTD. 315 KANJI MANSION, S.V.P. RD. KHETWADI, MUMBAI-400004. / VS. ITO WD 5(3)(3), AAYAKAR BHAVAN, 5 TH FLOOR, M.K. RD. MUMBAI- 400020 (ASSESSEE ) (REVENUE) P.A . NO. AACCV1422A / ASSESSEE BY SHRI SANJIV M. SHAH (AR) / REVENUE BY SHRI ARVIND KUMAR (DR) ! ' # $ / DATE OF HEARING : 03/09/2015 # $ / DATE OF ORDER: 30/11/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-9, MUMBAI {(IN SHORT CIT(A)}, DATED 08.11.2011 FOR T HE VITRAG METAL P. LTD. 2 ASSESSMENT YEAR 2007-08, DECIDED AGAINST THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) R.W.S. 147 OF THE ACT, ON THE FOLLOWING GROUNDS: '1.ON THE FACTS AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF SHARE APPLICATION MONEY OF RS.55,25,000/- AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME TAX ACT 1961 ON THE GROUND THAT GENUINENESS OF THE TRANSACTION COULD NOT BE ESTABLISHED AND THE AM OUNT RECEIVED WAS NOT FULLY EXPLAINED TO THE SATISFACTIO N OF THE LEARNED AO. 2. ON THE FACTS AND IN LAW, THE LEARNED AO ERRED IN REOPENING THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT,1961, WITHOUT APPRECIATING THE FACT THAT THE CO NDITIONS PRESCRIBED UNDER THE SAID SECTION WERE NOT SATISFIE D.' IN ADDITION TO THE ABOVE, FOLLOWING GROUND WAS FILE D AS ADDITIONAL GROUND: ON THE FACTS AND IN LAW, THE LEARNED AO ERRED IN RE OPENING THE ASSESSMENT U/S.147 OF THE INCOME TAX ACT, WITHO UT APPRECIATING THE FACT THAT THE CONDITIONS PRESCRIBE D UNDER THE SAID SECTION WERE NOT SATISFIED. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI SANJIV M. SHAH, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI ARVIND KUMAR, DEPARTMEN TAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. VITRAG METAL P. LTD. 3 3. GROUND NO.1: IN THIS GROUND THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF SHARE APPLICATION MONEY OF RS. 55,25,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT 1961. 3.1. IN THIS CASE THE BRIEF FACTS ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 21.10.2009, ACCEPTING THE RETURNED INCOME OF THE AS SESSEE. SUBSEQUENTLY, THIS ASSESSMENT WAS REOPENED ON THE G ROUND THAT THE SHARE CAPITAL RECEIPT FROM M/S BUNIYAAD CH EMICALS LTD. WAS BOGUS. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO REQUIRED THE ASSESSEE TO SUBSTA NTIATE THE TRANSACTIONS OF SHARE CAPITAL OF RS.55,25,000/- REC EIVED FROM THE AFORESAID COMPANY. 3.2. IN RESPONSE TO THE QUERY OF THE AO THE ASSESSEE SU BMITTED ITS DETAILED SUBMISSIONS VIDE LETTER DATED 20.10.20 10. THE CONTENTS OF THE SAME ARE REPRODUCED HEREIN FOR THE SAKE OF READY REFERENCE: THE ASSESSEE COMPANY SUBMITTED THAT SUFFICIENT EVIDENCE HAS ALREADY BEEN FURNISHED AT THE TIME OF ASSESSMENT IN TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND THE COPIES OF THE BANK STATEMENT WERE SUBMITTED, CONFIRMATION OF PURCHASE OF SHARE WAS FI LED BY M/S. BUNIYAAD CHEMICALS LTD. IN RESPONSE TO NOTICE U/S 133(6) ALONG WITH COPY OF' BALANCE SHEET AND SCHEDULES THEREOF WHERE THE NAME OF THE COMPANY AND THE AMOUNT INVESTED WAS REFLECTED. THE VITRAG METAL P. LTD. 4 ASSESSEE FURTHER SUBMITTED THAT ADDITION CANNOT BE MADE MERELY ON THE BASIS OF THE STATEMENT OF ONE OF THE DIRECTORS OF THE INVESTING COMPANY WHICH IS A GENERAL STATEMENT AND NOT A SPECIFIC STATEMENT AND ALSO THAT ON THE BASIS OF THE STATEMENT IT CANNOT BE PRESUMED THAT ACCOMMODATION ENTRY HAS BEEN GIVEN ALTER ACCEPTING CASH, ESPECIALLY WHEN TH E WHOLE TRANSACTION WAS MADE THROUGH PROPER BANKING CHANNELS. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE IDENTITY OF THE INVESTOR HAS BEE N PROVED BY FURNISHING INCOME TAX ACKNOWLEDGEMENT, THE GENUINENESS OF THE TRANSACTION IS PROVED BY THE ENTRIES REFLECTED IN THE BANK ACCOUNTS AND THE CRED IT WORTHINESS OF THE INVESTOR HAS BEEN PROVED FROM THE BALANCE SHEET AND THEREFORE, NO ADDITION CAN BE MAD E ON THE BASIS OF INFORMATION RECEIVED FROM DIT 2(3), AHMADABAD. 3.3. IN ADDITION OF THE ABOVE, THE ASSESSEE SUBMITTED F URTHER SUBMISSIONS VIDE LETTER DATED 09.12.2010 AND THE RE LEVANT ABSTRACT OF THE SAME IS REPRODUCED HEREIN: 2. IN THIS REGARD WE SUBMIT THAT THIS FACT DOES NO T ESTABLISH THAT THE SAID COMPANY HAS NOT INVESTED IN THE SHARES OF THE ASSESSEE COMPANY ESPECIALLY WHEN THE PAYMENTS FOR SHARE APPLICATION WERE MADE FROM THEIR BANKS ACCOUNTS AND NO CASH WAS PAID BACK TO THEM BY THE ASSESSEE COMPANY. VITRAG METAL P. LTD. 5 3. ASSESSEE COMPANY DO NOT HAVE ANY CONTROL OVER TH E FILING OF FINANCIAL STATEMENTS OF BUNIYAAD CHEMIC ALS LTD AND DO NOT KNOW WHAT FIGURES WERE FILED BY THEM BEF ORE THEIR ASSESSING OFFICER. HOWEVER, IN RESPONSE TO NO TICE U/S 133(6) THEY HAVE FURNISHED AUDITED BALANCE SHEET AN D PROFIT AND LOSS ACCOUNT. 4. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, EVEN IF SOME DISCREPANCIES ARE FOUND IN THE FINANCIAL STAT EMENTS OF BUNIYAAD CHEMICALS LTD THEN THE ADDITIONS SHOULD BE MADE IN THEIR HANDS FOR SETTING RIGHT THE DISCREPAN CIES AND THE ASSESSEE COMPANY SHOULD NOT BE PENALIZED FOR TH E SAME. 5. ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSE SSEE COMPANY AS IDENTITY AND GENUINENESS OF THE INVESTME NT MADE IS ESTABLISHED BY PRODUCING THE DOCUMENTARY EVIDENCES AS REFERRED ABOVE AND A CONFIRMATION LETT ER FROM THE DIRECTOR MUKESH CHOKSI ON THE BASIS OF WHO SE GENERALIZED STATEMENT ADDITION IS PROPOSED TO BE MADE IS ALSO FURNISHED. FOR THE ABOVE CONTENTION RELIANCE I S PLACED ON THE DECISION OF THE HON. RAJASTHAN HIGH COURT IN THE CASE OF SHREE HARKHA SYNTHETICS LTD. 155 TAXMANN 28 9, WHERE IT IS HELD THAT ONCE THE RECEIPT OF CONFIRMAT ION LETTERS FROM THE CREDITORS IS PROVED AND THE IDENTI TY AND THE EXISTENCE OF THE INVESTOR HAS NOT BEEN DISPUTED, NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE NAME O F SUCH INVESTOR CAN BE MADE IN THE HANDS OF THE COMPANY. VITRAG METAL P. LTD. 6 6. IN ASSESSEES CASE IDENTITY OF THE SUBSCRIBERS, GENUINENESS OF SHARE APPLICATION AND CREDIT WORTHIN ESS OF THE SUBSCRIBERS ARE ESTABLISHED. 7. ADDITION CANNOT BE MADE MERELY ON THE BASIS OF STATEMENT OF AN INDIVIDUAL WITHOUT ANY EVIDENCE T O SHOW THAT CASH WAS ACTUALLY PAID AGAINST THE RECEIPT OF CHEQUES. 8. SO FAR, AS THE ASSESSEE COMPANY IS CONCERNED THE RE IS NO UNDISCLOSED INCOME EARNED FROM ANY SOURCES WHICH COULD BE SAID TO BE UTILIZED FOR TAKING ACCOMMODATI ON ENTRIES FROM MEHUL CHOKSHI OR BUNIYAAD CHEMICALS LT D. IF AT ALL MEHUL CHOKSHI OR BUNIYAAD CHEMICALS ARE NOT IN A POSITION TO EXPLAIN THE SOURCES OF THE INVESTMENTS MADE, THEN THE ADDITIONS U/S 68 CAN BE MADE ONLY THEIR HA NDS AND NOT IN THE CASE OF COMPANY WHERE THEY HAVE INVE STED. FOR THESE SUBMISSIONS, RELIANCE IS PLACED ON THE DE CISION OF THE HON. SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS P LTD 216 CTR 195 3.4. IT IS NOTED THAT AO PREFERRED TO RELY UPON THE ST ATEMENT OF MR. MUKESH CHOKSI AND DISREGARDED ALL THE EVIDEN CES FILED BY THE ASSESSEE AS WELL AS EVIDENCES COLLECTED BY H IM DIRECTLY FROM THE SHAREHOLDER COMPANY WHICH CONFIRMED CLAIM OF THE ASSESSEE, AND ACCORDINGLY TREATED AMOUNT OF SHARES CAPITAL AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT, AND ADDE D SAME TO THE INCOME OF THE ASSESSEE. 3.5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER B EFORE THE LD. CIT(A), WHEREIN THE ASSESSEE FILED DETAILED SUBMISSIONS VITRAG METAL P. LTD. 7 AND RELIED UPON THE EVIDENCES FILED BY IT BEFORE TH E AO FOR THE PURPOSE OF DISCHARGING ITS BURDEN U/S 68, BUT LD. CIT(A) WAS NOT SATISFIED WITH SUBMISSION AND EVIDENCES OF THE ASSESSEE, AND ENDORSING THE OBSERVATIONS OF THE AO, HE CONFIR MED THE ADDITION MADE BY THE AO. 3.6. BEING AGGRIEVED THE ASSESSEE HAS FILED APPEAL BEFOR E THE TRIBUNAL. 3.7. DURING THE COURSE OF HEARING BEFORE US, IT WAS SUB MITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT COMPLETE EV IDENCES WERE SUBMITTED BY THE ASSESSEE TO THE AO TO PROVE T HE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE CAPIT AL RECEIVED BY THE ASSESSEE COMPANY. IT WAS FURTHER SUBMITTED B Y HIM THAT THE AO ALSO MADE DIRECT INQUIRY FROM THE AFORE SAID SHAREHOLDER COMPANIES, AND THEREFORE, WHATEVER WAS FURTHER REQUIRED TO CLEAR DOUBTS TO THE AO, THE SAME SHOULD HAVE BEEN ASKED BY THE ASSESSING OFFICER, FROM THE SAID COMPA NY DIRECTLY. WITHOUT BRINGING ANYTHING CONTRARY TO NEG ATE THE EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE, THE AO MADE ADDITION ON THE BASIS OF GENERAL AND VAGUE STATEME NT OF MR. MUKESH CHOKSI. IT WAS SUBMITTED THAT THE STATEMENT OF MUKESH CHOKSI WAS NOT RECORDED IN THE PRESENCE OF T HE ASSESSEE NOR WAS IT RECORDED BY THE AO OF THE ASSES SEE. UNDER THESE CIRCUMSTANCES, THE AO COULD NOT HAVE BLINDLY RELIED UPON THE SAID STATEMENT AND THAT TOO AFTER DISREG ARDING DOCUMENTARY EVIDENCES PLACED ON RECORD BY THE ASSES SEE. IT WAS FURTHER SUBMITTED THAT IN ANY CASE NAME OF THE ASSESSEE VITRAG METAL P. LTD. 8 COMPANY HAS NOT BEEN TAKEN SPECIFICALLY, AS MAY BE SEEN FROM THE PERUSAL OF THE STATEMENT, AS HAS BEEN PRODUCE D BY THE AO IN THE ASSESSMENT ORDER. HE HAS DRAWN OUR ATTENTION TO VARIOUS EVIDENCES FILED BY THE ASSESSEE TO SUBSTANT IATE THE IMPUGNED TRANSACTIONS. LASTLY, HE PLACED RELIANCE V ARIOUS JUDGMENT IN SUPPORT OF HIS CLAIM. RELIANCE WAS PLAC ED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. CREATIVE WORLD TELEFILMS LTD. 12 TH OCTOBER 2009, CIT VS LOVELY EXPORTS P LTD (SUPRA) AND DECISION OF THE COORDINAT E BENCH OF ITAT IN THE CASE OF ACIT VS. KRISHNA SHEET PROCESSO RS PVT. LTD. 44 CCH 0280 MUM TRIB. IT WAS SUBMITTED THAT IN THE CASE OF KRISHNA SHEET PROCESSORS PVT. LTD.(SUPRA), COORDINA TE BENCH OF TRIBUNAL MUMBAI, THE ISSUE INVOLVED WAS IDENTICAL I .E. ADDITION WAS MADE ON ACCOUNT OF SHARE CAPITAL ON THE BASIS O F STATEMENT OF MR. MUKESH CHOKSI. IT WAS THUS, ARGU ED THAT CASE OF THE ASSESSEE WAS DIRECTLY COVERED WITH THE JUDGMENT OF THE COORDINATE BENCH, ON FACTS AND LAW. 3.8. ON THE OTHER HAND, LD. DR HAS SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND PLACED RELIANCE ON THE DECISI ON OF TRIBUNAL IN THE CASE OF DCIT VS. PRATIKSHA MERCANTI LE P. LTD ITAT NO.2096/MUM/2011 DATED 10.08.2012 WHEREIN JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. LOVELY EXPORTS P LTD (SUPRA) HAS BEEN DISCUSSED AND DISTINGUISHED THE SAME ON FACTS. IT WAS REQUESTED T HAT THE ORDERS OF THE LOWER AUTHORITIES SHOULD BE UPHELD. VITRAG METAL P. LTD. 9 3.9. WE HAVE GONE THROUGH THE SUBMISSION MADE BY BOTH T HE SIDES, ORDERS OF THE LOWER AUTHORITIES, THE MATERIA L PLACED BEFORE US FOR OUR CONSIDERATION AS WELL AS JUDGMENTS RELIE D BEFORE US. WHILE MAKING THE FACTUAL ANALYSIS OF THIS CASE, IT WAS NOTED BY US THAT FOLLOWING EVIDENCES HAS BEEN PLACED BY THE ASSESSEE ON RECORD TO SUBSTANTIATE THIS TRANSACTIONS. (I) CONFIRMED COPY OF ACTION FROM M/S. BUNIYAAD CHE MICALS LTD. CONFIRMING CHEQUE-WISE DETAIL OF THE PAYMENTS BY TH E SAID COMPANY TO THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION FOR AN AMOUNT AGGREGATING TO RS.55,25,000/- (II) COPY OF INCOME TAX RETURN OF THE SAID COMPANY (III) COPY OF BANK STATEMENT OF THE SAID COMPANY SHOWING PAYMENT TO THE ASSESSEE COMPANY BY CHEQUE, IT WAS A LSO SHOWN THEREIN THAT NO AMOUNT OF CASH WAS DEPOSITED PRIOR TO ISSUANCE OF CHEQUE IN FAVOUR OF THE ASSESSEE COMPANY. (IV) COPY OF BANK STATEMENTS OF ASSESSEE COMPANY SH OWING RECEIPT OF CAPITAL BY CHEQUES. (V) COPY OF STATUTORY REGISTER OF MEMBERS MAINTAINE D BY ASSESSEE COMPANY SHOWING THE NAME OF M/S. BUNIYAAD CHEMICALS LTD. IN THE LIST OF MEMBERS. (VI) COPY OF SHARE APPLICATION FORM DULY SIGNED BY THE SAID COMPANY AND ALSO GIVING OTHER PARTICULARS (VII) COPY OF LETTER ISSUED BY THE ASSESSEE COMPANY IN FAVOUR OF THE SAID COMPANY, SHOWING ISSUANCE OF SHARE CERTIFI CATE TO THE SAID COMPANY. (VIII) COPIES OF SHARE CERTIFICATES ISSUED BY THE A SSESSEE COMPANY IN FAVOUR OF THE SAID COMPANY. (IX) COPY OF BALANCE SHEET OF THE SAID COMPANY. VITRAG METAL P. LTD. 10 (X) COPY OF CERTIFICATE IN CERTIFICATE OF INCORPORA TION, CERTIFICATE OF COMMENCEMENT OF BUSINESS AND MEMORANDUM AND ARTI CLES OF ASSOCIATION OF THE SAID COMPANY TO SHOW THAT THE SAID COMPANY WAS REGISTERED WITH THE REGISTRAR OF COMPAN IES, GOVERNMENT OF INDIA. 3.10. IT IS FURTHER NOTED BY US THAT THE AO HAD ISSUED S HOW CAUSE NOTICE U/S 142(1) DATED 03.12.2010 TO THE ASS ESSEE, WHEREIN THIS FACT WAS ACKNOWLEDGED BY HIM THAT HE H AD MADE DIRECT INQUIRIES WITH THE SAID COMPANY, AND IN RESP ONSE TO THE SAME, HE HAD RECEIVED CONFIRMATION FROM THE SAID CO MPANY AND VARIOUS OTHER SUPPORTING DOCUMENTS. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS SUBMITTED ALL THOSE PRIMARY E VIDENCES WHICH THE ASSESSEE IS EXPECTED TO HAVE IN ITS POSSE SSION AND WITH THE HELP OF THAT ASSESSEE HAD ESTABLISHED IDEN TITY AND CREDITWORTHINESS OF THE SHAREHOLDER. THE LOWER AUTH ORITIES HAVE DOUBTED THE GENUINENESS OF THE TRANSACTIONS AND MAD E ADDITION MAINLY ON THE BASIS OF STATEMENT OF MR. MUKESH CH OKSI. IN THIS REGARD, WE FIND THAT THIS ISSUE HAS BEEN DEALT IN MANY JUDGMENTS AVAILABLE BEFORE US. THE COORDINATE BENCH OF THE TRIBUNAL HAS DEALT THIS ISSUE IN NUMEROUS CASES WHE RE ADDITION WAS MADE BY THE AO ON THE BASIS OF STATEMENT OF M R. MUKESH CHOKSI. 3.11. FIRST OF ALL, WE REFER TO THE DECISION OF MUMBAI B ENCH OF TRIBUNAL IN THE CASE OF ACIT VS. KRISHNA SHEET PROC ESSORS PVT. LTD.(SUPRA). IN THIS CASE ALSO, THE ADDITION WAS MA DE ON THE BASIS OF STATEMENT OF MR. MUKESH CHOKSI. AFTER CONS IDERING VITRAG METAL P. LTD. 11 ENTIRE FACTS OF THE CASE, THE COORDINATE BENCH DELE TED THE ADDITION MADE BY THE AO WITH THE FOLLOWING OBSERVAT IONS:- WE HAVE HEARD THE RIVAL SUBMISSIONS AND GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHO RITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL, W E HAVE CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUG HT ON RECORD AND REFERRED TO BEFORE US. THE UNDISPUTED FA CTS ARE THAT OUT OF SIX COMPANIES VIZ., M/S. KAYCEE SHARE B ROKING PVT. LTD., M/S. MIHIR AGENCIES PVT. LTD. M/S. ALLIA NCE INTERMEDIATERIES & NETWORK PVT. LTD.,M/S. MAHASAGAR SECURITIES PVT. LTD., BELONG TO SHRI MUKESH CHOKSI GROUP. THE ONLY REASON FOR MAKING THE ADDITION WAS THAT DU RING THE COURSE OF SEARCH OPERATION SHRI MUKESH CHOKSI ADMITTED THAT HE IS A NAME LENDOR AND ARRANGING PROFITS/LOSS/SHARE APPLICATION MONEY TO VARIOUS PER SONS. EXCEPT FOR THIS, THERE IS NOTHING ON RECORD BROUGHT BY THE AO TO JUSTIFY THE ADDITION. IT IS ALSO AN UNDISPUTE D FACT THAT TRANSACTIONS WITH THESE COMPANIES HAVE BEEN DONE THROUGH ACCOUNT PAYEE CHEQUE, RESPECTIVE BANK STATEMENT HAVE BEEN BROUGHT ON RECORD BEFORE US. EVEN IF WE CONSIDER THE STATEMENT OF SHRI MUKESH CHOKSI RECORDED U/S. 132(4) OF THE ACT AND ALSO SUBSEQUENT LY U/S. 131 OF THE ACT, WE DO NOT FIND ANY REFERENCE TO THE ASSESSEE COMPANY, NOWHERE SHRI MUKESH CHOKSI HAS SA ID THAT HE HAS ARRANGED SHARE CAPITAL FOR THE ASSESSEE COMPANY. MERELY BECAUSE SHRI MUKESH CHOKSI IS INDUL GED IN CLANDESTINE ACTIVITIES WOULD NOT MAKE THE TRANSA CTIONS VITRAG METAL P. LTD. 12 WITH THE ASSESSEE COMPANY NON GENUINE. THE TRANSACT IONS HAVE BEEN DONE THROUGH ACCOUNT PAYEE CHEQUE AND IT IS NOT A CASE OF THE REVENUE AUTHORITIES THAT PRIOR TO ISSUING THE CHEQUES THE APPLICANTS HAVE DEPOSITED CASH IN T HEIR RESPECTIVE BANK ACCOUNT. THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORT PVT. LTD. 216 CTR 195 HAS HEL D THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANC E WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOM E OF THE ASSESSEE COMPANY. 6.1. IN RESPECT OF OTHER TWO COMPANIES VIZ., (1) M/ S. PREMIER SOYA LTD.,(2) M/S. INDO CON CORE PVT. LTD., THE AO AT PAGE-19 OF HIS ORDER HAS OBSERVED THAT ON VERIFI CATION OF THE DETAILS SUBMITTED BY THE ASSESSEE IT IS SEEN TH AT THE MONEY HAS BEEN ADVANCED BY THE ASSESSEE THEMSELVES WHICH HAVE BEEN PLOUGHED BACK AS SHARE CAPITAL IN T HE BOOKS OF THE ASSESSEE. THE TRANSACTION IS THEREFORE , APPEARS TO BE NOT GENUINE. 6.2. WE HAVE CAREFULLY PERUSED THE BANK STATEMENT BROUGHT BEFORE US WHICH ARE PLACED IN THE PAPER BOO K. WE DO NOT FIND ANY STRENGTH IN THE ALLEGATION MADE BY THE AO. ALLEGATIONS ARE BASELESS AND WITHOUT ANY SUPPORTIVE EVIDENCE. ON THE CONTRARY, THESE TWO COMPANIES HAVE PAID SHARE APPLICATION MONEY FROM THEIR BANK ACCOUNTS TH ROUGH ACCOUNT PAYEE CHEQUE, THEREFORE THE TRANSACTION CAN NOT BE TREATED AS BOGUS. SINCE THE AO HAS NOT MADE ANY FUR THER VITRAG METAL P. LTD. 13 ENQUIRY, MERELY BECAUSE OF THE FALSE ALLEGATION, A GENUINE TRANSACTION CANNOT BECOME NON GENUINE TRANSACTION. 6.3. THE FIRST APPELLATE AUTHORITY HAS CONSIDERED T HE FACTS IN THE LIGHT OF THE PROVISIONS OF SEC. 68 OF THE AC T AND HAVE DELETED THE ADDITIONS IN RESPECT OF THESE SIX COMPA NIES. ON THE BASIS OF SAME DOCUMENTARY EVIDENCES BROUGHT ON RECORD BEFORE US, WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE FINDINGS OF THE LD. CIT(A). 6.4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 3.12. IN ANOTHER CASE, SIMILAR VIEW HAS BEEN TAKEN BY TH E COORDINATE BENCH IN THE CASE OF M/S. YAMUNA ESTATE PVT. LTD. IN ITA NO.2672/M/2012 09.09.2015. WE FIND IT APPROP RIATE TO REPRODUCE HEREUNDER RELEVANT OBSERVATIONS BY THE HO NBLE BENCH:- 12. IN THE CASE OF THE ASSESSEE BEFORE US, THE AO HAS NOT POINTED OUT ABOUT ANY DIRECT OR MATERIAL EVIDENCE A GAINST THE ASSESSEE TO HOLD THAT THE SHARE TRANSACTIONS WERE N OT GENUINE. THE ASSESSEE HAD FURNISHED BEFORE THE AO ALL THE NE CESSARY DETAILS AND EVIDENCES RELATING TO THE SHARE TRANSAC TIONS IN QUESTION. THE AO DID NOT RAISE ANY QUERY OR DOUBT A BOUT THE GENUINENESS OF THE DETAILS AND EVIDENCES SUBMITTED BY THE ASSESSEE. THE AO HAS MADE ADDITIONS ON THE BASIS OF GENERAL STATEMENT OF MR. CHOKSHI MADE BEFORE THE INVESTIG ATION WING. THE NAME OF THE ASSESSEE DID NOT APPEAR SPECIFICALL Y IN ANY OF THE STATEMENTS OF MR. CHOKSHI. THE ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CONFRONT MR. CHOKSHI IN RELATION TO TRANSACTIONS VITRAG METAL P. LTD. 14 RELATED TO THE ASSESSEE. THE ASSESSEE BEFORE THE CI T(A) HAS ALSO SUBMITTED THE CONFIRMATION OF SH. MUKESH CHOKS HI ABOUT THE SHARE TRANSACTIONS DONE THROUGH HIS SHARE BROKI NG COMPANY. THE AO IN THE REMAND PROCEEDINGS, HOWEVER, INSISTED TO PRODUCE SAID MR. CHOKSHI FOR EXAMINATIO N AS A WITNESS BEFORE HIM. THE ASSESSEE THOUGH COULD REQUE ST MR. CHOKSHI TO APPEAR BEFORE THE AO, HOWEVER HAD NO AUT HORITY OR POWER TO FORCE MR. CHOKSHI TO APPEAR BEFORE THE AO. ON THE OTHER HAND, THE AO U/S 131 OF THE ACT HAS BEEN GIVE N POWERS AS ARE VESTED IN A CIVIL COURT TO SUMMON AND ENFORC E THE ATTENDANCE OF WITNESSES OR TO COMPEL THE PRODUCTION OF RECORDS BEFORE HIM. HENCE UNDER SUCH CIRCUMSTANCES, MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE MR. CHOKSHI BEFORE T HE AO, THAT ITSELF IS NOT A SUFFICIENT GROUND FOR THE CONFIRMAT ION OF THE ADDITIONS. IF THE AO REQUIRED THE PRESENCE OF MR. C HOKSHI BEFORE HIM, HE COULD HAVE EXERCISED HIS POWERS UNDER THE A CT TO SECURE THE PRESENCE OF MR. CHOKSHI BEFORE HIM. EVEN THE LD. AO, IN HIS REMAND REPORT, HAS NOT CONTROVERTED THE EVIDENCES FILED BY THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION OF THE MATTER AND A LSO RESPECTFULLY FOLLOWING THE ABOVE NOTED DECISIONS OF THE CO- ORDINATE BENCHES OF THE TRIBUNAL, WE HOLD THAT ADDI TIONS MADE BY THE AO U/S 68 ARE NOT WARRANTED IN THIS CASE AND ARE ACCORDINGLY ORDERED TO BE DELETED. 3.13. IT IS NOTED THAT IN THE CASE BEFORE US, GIST OF TH E SUBMISSIONS MADE BY THE ASSESSEE WAS THAT THE ASSES SEE HAD DISCHARGED ITS ONUS BY PLACING COMPLETE EVIDENCES O N RECORD, AND IF AT ALL SOME DISCREPANCY WAS NOTED IN THE ACC OUNTS OF SHAREHOLDER COMPANY, THEN ADDITION COULD BE MADE IN THE VITRAG METAL P. LTD. 15 HANDS OF THE SHAREHOLDER ONLY AND NOT IN THE ASSESS EE COMPANY. IN SUPPORT OF ITS CLAIM, THE ASSESSEE RELI ED UPON JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS P LTD 216 CTR 195. BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSES SEE, HE POINTED OUT SOME DISCREPANCY IN THE BALANCE SHEET O F M/S. BUNIYAAD CHEMICALS LTD. AND TREATED AMOUNT OF SHARE S CAPITAL AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT, AND A DDED SAME TO THE INCOME OF THE ASSESSEE. BUT BEFORE DOING SO, THE AO NEITHER PROVIDED OPPORTUNITY OF CROSS EXAMINATION O F HIS WITNESS, AS WAS DEMANDED BY THE ASSESSEE, NOR HE BR OUGHT ON RECORD ANY OTHER ADVERSE MATERIAL TO CONTROVERT THE EVIDENCES PLACED ON RECORD BY THE ASSESSEE. IT IS WORTH NOTIN G HERE THAT THE AO HAD MADE DIRECT INQUIRIES WITH M/S BUNIYAAD CHEMICALS U/S 133(6), IN RESPONSE TO WHICH CONFIRMA TION WAS FILED BY THE SAID COMPANY. BUT LD. AO PREFERRED TO RELY UPON THE STATEMENT OF MR. MUKESH CHOKSI AND DISREGARDE D ALL THE EVIDENCES FILED BY THE ASSESSEE AS WELL AS EVIDENCE S COLLECTED BY HIM DIRECTLY FROM THE SHAREHOLDER COMPANY WHICH CONFIRMED CLAIM OF THE ASSESSEE. THUS, RESPECTFULLY FOLLOWING AFORESAID DECISIONS OF COORDINATE BENCH, WE FIND TH AT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AS PER LAW AND TH E SAME IS DIRECTED TO BE DELETED. 3.14. SINCE, WE HAVE GIVEN THE RELIEF ON THE MERITS, WE REFRAIN OURSELVES FROM DECIDING OTHER GROUNDS. VITRAG METAL P. LTD. 16 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER ! ' MUMBAI; & DATED : 30/11/2015 CTX? P.S/. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ()* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. - - ! . ( ( ) / THE CIT, MUMBAI. 4. - - ! . / CIT(A)- , MUMBAI 5. 12 +3 , - ($ 3 4 , ! ' / DR, ITAT, MUMBAI 6. 5 ' / GUARD FILE. / BY ORDER, ,1( + //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! ' / ITAT, MUMBAI