M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, JAIPUR

ITA 733/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6768 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 21-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAM SWAROOP JAJU
• Keywords: Unexplained cash credit; Fair market value; Onus to prove; Set aside
• Section: 133(6); 13; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 733/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR CUKE VS. ACIT, CIRCLE-04, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACJ8517G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. SUNIL PORWAL (CA) & SH. RAM SWAROOP JAJU (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : MS CHANCHAL MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 19/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 07/02/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), AJMER DATED 25.01.2019 WHEREIN THE ASSESSEE HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL:- UNDER THE FACTS & CIRCUMSTANCES OF CASE, THE LD. C IT(A) HAS ERRED IN:- 1) CONFIRMING THE ADDITION OF RS. 80.00 LAKHS (OUT OF TOTAL ADDITION OF RS. 1,11,42,000/-) U/S 68 OF INCOME TAX ACT, 1961 FOR S HARE APPLICATION AND SHARE PREMIUM MONEY RECEIVED FROM VARIOUS ENTIT IES. 2) CONFIRMING THE 50% ADHOC OF DISALLOWANCE OF VARIOUS EXPENSES (50% OF RS. 1,24,906/- BEING RS. 62,048/-) WITHOUT VERIF YING THE FACTS. ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 2 2. REGARDING GROUND NO. 1, BRIEFLY STATED, THE FACT S OF CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING AND TR ADING OF CHEMICALS, BORIC ACID, NON EDIBLE OIL, MILL BOARD, SILICO MANGANESE, FERRO SILICON ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE COMPANY HAS RECEIVED SHARE CAPITAL FROM TH E FOLLOWING ENTITIES/CONCERNS:- S. NO. NAME OF COMPANY SHARE APPLICATION SHARE PREMIUM TOTAL AMOUNT 1 SESUM MARKETING PVT. LTD. 60/1, CHOWRINGHEE ROAD, KOLKATA-200020(WB) 60,000 29,40,000 30,00,000 2 SUNDRAM CONSULTANTS PRIVATE LIMITED P-41, PRINCEEP STREET, 6 TH FLOOR, KOLKATA-700072 (WB) 100,000 49,00,000 50,00,000 3. IN ORDER TO VERIFY THE IDENTITY & CREDITWORTHIN ESS OF THE INVESTOR COMPANY, M/S SESUM MARKETING PVT. LTD AND THE GENUINENESS OF TRANSACTION, INFORMATION WA S SOUGHT U/S 133(6) FROM THE SAID INVESTOR COMPANY . NO REPLY WAS RECEIVED FROM THE SAID COMPANY, HOWEVER, THE ASSESSEE COMPANY SUBMITT ED THE COPY OF THE INCOME TAX RETURN AND AUDIT REPORT OF THE INVESTOR COMPANY FOR THE A.Y 2012- 13. ON PERUSAL OF THE SAME, THE ASSESSING OFFICER O BSERVED THAT THE RETURNED INCOME OF SAID INVESTOR COMPANY WAS ONLY RS. 2,61,7 80/-. FURTHER, INCOME TAX RETURNS FOR EARLIER TWO YEARS WERE ALSO EXAMINED TH ROUGH ITDMS OF INCOME TAX DEPARTMENT AND IT WAS OBSERVED BY THE ASSESSING OFF ICER THAT IN VIEW OF THE LOW RETURNED INCOME FOR THE PAST YEARS AS WELL, THE CREDITWORTHINESS OF M/S SESUN MARKETING PVT. LTD. CANNOT BE ESTABLISHED. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAS NOT DECLARED ANY DIVIDEND FOR ITS SHAREHOLDERS NOR ANY BONUS SHARES OR INTERE ST WAS PAID TO SHAREHOLDERS (INVESTOR) COMPANIES AND TOTAL WORTH OF COMPANY BEF ORE RECEIVING SHARE CAPITAL ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 3 AND PREMIUM WAS JUST RS. 9.30 CRORES AS ON 31 ST MARCH, 2011. IT WAS ACCORDINGLY OBSERVED BY THE ASSESSING OFFICER THAT THE INVESTOR COMPANY HAS BEEN WRONGLY CAUGHT BY MAKING INVESTMENT IN THE ASS ESSEE COMPANY AND SINCE IT HAS NOT RECEIVED ANY RETURN ON SUCH INVESTMENTS, IT MUST HAVE SOLD ITS SHAREHOLDING EITHER TO ASSESSEE COMPANY OR TO SOME OTHER INVESTORS, HOWEVER, NOTHING OF THIS SORT TOOK PLACE. EVEN WITHOUT RECEI VING ANY RETURNS, STILL INVESTOR COMPANY HAD KEPT ITS HARD EARNED MONEY/FUNDS BLOCKE D WITH ASSESSEE COMPANY WHICH IS AGAINST NORMAL BUSINESS PRUDENCE. IT WAS ACCORDINGLY HELD THAT THE INVESTMENT WAS NOT MADE WITH THE MOTIVE OF EARNING ANY PROFITS BUT IT MUST HAVE SOME OTHER PURPOSE WHICH WAS NOT DISCLOSE D BY EITHER ASSESSEE COMPANY OR BY THE INVESTOR COMPANY AND IN VIEW OF T HE SAME, THE GENUINENESS OF THE TRANSACTION WAS NOT ESTABLISHED. FURTHER, TH E COMMISSION U/S 131(1)(D) WAS ISSUED TO ACIT AT KOLKATA AND THE INSPECTING AU THORITY ALSO FURNISHED A REPORT STATING THAT NOBODY WAS FOUND AT THE ADDRESS FURNISHED BY THE ASSESSEE COMPANY. FURTHER, THE ASSESSEE WAS REQUESTED TO PRO DUCE THE DIRECTORS OF THE INVESTOR COMPANY FOR EXAMINATION BUT THEY HAVE NOT BEEN PRODUCED FOR VERIFICATION. IT WAS ACCORDINGLY HELD THAT THE EXPL ANATION OFFERED BY THE ASSESSEE COMPANY REGARDING THE GENUINENESS OF THE T RANSACTION AND IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR COMPANY IS NO T SATISFACTORY AND HENCE, AMOUNT OF RS. 30,00,000 (WRONGLY WRITTEN AS 34,20,0 00/-) WAS ADDED BACK TO THE TOTAL INCOME OF ASSESSEE AS UNEXPLAINED CASH CR EDIT U/S 68 OF THE ACT. 4. SIMILAR FINDINGS WERE RECORDED IN RESPECT OF THE OTHER INVESTOR COMPANY NAMELY M/S SUNDRAM CONSULTANTS PVT. LTD. WHICH HAD INVESTED RS. 50,00,000/- BY WAY OF SHARE CAPITAL IN THE ASSESSEE COMPANY THO UGH IN THIS CASE, THE NOTICE U/S 133(6) WAS DULY COMPLIED WITH BY THE INVESTOR C OMPANY AND NECESSARY REPLY WAS FURNISHED TO THE ASSESSING OFFICER. ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 4 5. BASIS AFORESAID FINDINGS/OBSERVATIONS, IT WAS HE LD BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD INTRODUCED ITS OWN UN ACCOUNTED CASH IN FORM OF SHARE APPLICATION MONEY/SHARE PREMIUM THROUGH THESE COMPANIES BASED AT KOLKATA AND THE SAME WERE TREATED AS UNEXPLAINED CA SH CREDIT U/S 68 OF THE ACT AND BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE COM PANY. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A) WHO HAS HELD THAT IN VIEW OF THE FACTS DISCUSSED BY THE ASSESSING OFF ICER AND BASIS THE OUTCOME OF THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER , THE ASSESSEE HAS FAILED TO EXPLAIN SATISFACTORILY THE NATURE AND SOURCE OF THE CREDIT OF RS. 80,00,000/- MADE BY THE AO U/S 68 OF THE ACT AND THE ADDITION S O MADE BY THE AO WAS CONFIRMED. AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT IN SUPPORT THE DISCHARGING INITIAL ONUS CAST ON THE ASSESSEE COMPA NY, IT HAS FURNISHED THE FOLLOWING DOCUMENTS BEFORE THE LOWER AUTHORITIES: S. NO. NATURE OF DOCUMENTS 1. COPY OF COMPANIES AUDIT REPORT, TAX AUDIT REPORT AND OTHER FINANCIAL STATEMENTS FOR YEAR ENDED 31.03.2012 2. M/S SESUN MARKETING (P) LIMITED (A) COPY OF CERTIFICATE OF REGISTRATION WITH RBI FOR N ON BANKING FINANCIAL CORPORATION (B) C O P Y O F C E R T I F I C A T E O F I N C O R P O R A T I O N (C) COPY OF MEMORANDUM & ARTICLES OF ASSOCIATION (D) COPY OF ANNUAL RETURN, FILED UNDER COMPANIES ACT, F OR YEAR ENDED 31.03.2012, 31.03.2013 & 31.03.2014 WITH REGI STRAR OF COMPANIES. (E) COPY OF APPLICATION FOR EQUITY SHARES IN M/S JAJOO RASHMI REFRACTORIES (P) LTD. DATED 23.06.2011 (F) COPY OF CONFIRMATION FILED TO ACIT U/SEC. 133(6) OF INCOME TAX ACT, 1961 (G) COPY OF BANK STATEMENT (KOTAK DALHOUSIE, KOLKATA BR ANCH) (A/C NO. 11092) ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 5 (H) COPY OF AUDIT REPORT, DIRECTORS REPORT AND OTHER FI NANCIAL STATEMENTS FOR YEAR ENDING 31.03.2012, & INCOME TAX ACKNOWLEDGEMEN T (I) COPY OF SEARCH REPORT BY COMPANY SECRETARY FROM THE PORTAL OF MINISTRY OF CORPORATE AFFAIRS ABOUT THE EXISTENCE AND FINANCIAL ACTIVITIES (J) COPY OF SEARCH REPORT AOC-4, FOR 31/03/2017 FROM MC A PORTAL 3. M/S SUNDRM CONSULTANTS (P) LIMITED (A) COPY OF CERTIFICATE OF REGISTRATION WITH RBI FOR NON BANKING FINANCIAL CORPORATION (B) COPY OF MEMORANDUM & ARTICLES OF ASSOCIATION (C) COPY OF SEARCH REPORT BY COMPANY SECRETARY FROM THE PORTAL OF MINISTRY OF CORPORATE AFFAIRS ABOUT THE EXISTENCE AND FINANC IAL ACTIVITIES (D) COPY OF APPLICATION FOR EQUITY SHARES IN M/S JAJOO RASHMI REFRACTORIES (P) LTD. (DATED 09.04.2011) (E) COPY OF CONFIRMATION FILED TO ACIT U/SEC. 133(6) OF INCOME TAX ACT, 1961 (F) COPY OF BANK STATEMENT - KARNATAKA BANK, CENTRAL AVENUE, KOLKATA (G) COPY OF AUDIT REPORT, DIRECTORS REPORT, AND OTHER FINANCIAL STATEMENTS FOR YEAR ENDING 31.03.2012, 31.03.2013, 31.03.2014 (H) COPY OF ANNUAL RETURN FILED UNDER COMPANIES ACT FO R YEAR ENDED 31.03.2012, 31.03.2013 (I) COPY OF SEARCH REPORT MGT-7 FOR 31/03/2018 FROM MCA PORTAL 7. IT WAS SUBMITTED BY THE LD AR THAT M/S SESUN MAR KETING PVT. LTD. IS REGISTERED AS A NON BANKING FINANCIAL COMPANY (NBFC ) WITH RBI VIDE REGISTRATION DATED 10.07.2003 AND ALSO REGISTERED U NDER THE COMPANIES ACT, 1956. THE REGISTERED OFFICE OF THE COMPANY WAS INIT IALLY AT 60/1, CHOWRINGEE ROAD, FLAT NO. 31, 2 ND FLOOR ALLEXENDRA COURT, KOLKATTA (WB) AND SUBSEQUE NTLY, GOT CHANGED TO 78, BENSTICK STREET UNIT-50, 4 TH FLOOR, BLOCK-B, KOLKATTA (W.B). THE COMPANY IS HAVING PAN NO. AADCB4126E AND REGULA RLY FILING ITS INCOME TAX RETURNS AND HAS FILED A CONFIRMATION LETTER WITH TH E AO FOR THE SOURCE OF THE FUNDS OUT OF WHICH AMOUNT HAS BEEN INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY AND THE FACT THAT THE AMOUNT HAVE BEEN PAID TO THE ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 6 ASSESSEE COMPANY THROUGH BANKING CHANNELS TOWARDS S UBSCRIPTION OF SHARE CAPITAL AND IN SUPPORT, COPY OF BANK STATEMENT WAS ALSO SUBMITTED. IT WAS FURTHER SUBMITTED THAT AS PER THE COMPANYS AUDIT R EPORT FOR YEAR ENDED MARCH, 2012, IT HAS PAID UP SHARE CAPITAL OF RS. 1,97,00,0 00/- BESIDES RESERVES AND SURPLUSES OF RS. 12,64,25,246/- AND THE COMPANYS I NCOME FROM OPERATION FOR THE YEAR UNDER CONSIDERATION IS RS. 18,01,115/-. TH US COMPLETE IDENTITY, GENUINENESS OF TRANSACTION & CREDIT WORTHINESS OF T HE INVESTOR COMPANY HAS BEEN PROVED. IT WAS FURTHER SUBMITTED THAT AS PER S HARE VALUATION OF THE ASSESSEE COMPANY, NET WORTH OF THE ASSESSEE COMPANY IS WORTH RS. 500/- AND ACCORDINGLY THE SHARE OF RS. 10/- EACH HAVE BEEN IS SUED AT A PREMIUM OF RS. 490/- PER SHARE THUS LOOKING AT HIGH CAPITAL APPREC IATION, THE INVESTOR COMPANY HAS DECIDED TO INVEST IN THE ASSESSEE COMPANY AND T HERE IS THUS NO BASIS FOR ALLEGING THAT THERE WAS NO BASIS FOR MAKING INVESTM ENT IN THE ASSESSEE COMPANY. 8. REGARDING M/S SUNDRAM CONSULTANTS PVT LTD, IT W AS SUBMITTED BY THE LD AR THAT IT IS REGISTERED AS AN NON BANKING FINANCIA L CORPORATION WITH RESERVE BANK OF INDIA VIDE LICENSE NO. B-05-04216 DATED 13. 04.2001 AND ALSO WITH THE REGISTRAR OF COMPANIES VIDE INCORPORATION CERTIFICA TE NO. 709424 DATED 19.04.1996. THE REGISTERED OFFICE OF THE COMPANY W AS INITIALLY AT P-41; PRINCEP STREET R. NO. 611, 6 TH FLOOR, KOLKATA (WB) AND SUBSEQUENTLY, GOT CHANGED TO B/1; LAL BAZAR STREET BIKANER BUILDING SUIT NO. 28, 2 ND FLOOR, KOLKATA (W.B). IT IS HAVING PAN AAES1225L AND REGULARLY FILLING ITS R ETURN OF INCOME WITH THE INCOME TAX AUTHORITIES AS WELL AS MAKING THE NECESS ARY FILINGS WITH THE REGISTRAR OF THE COMPANY, KOLKATTA. THEREFORE, THER E CANNOT BE ANY QUESTION OF ITS IDENTITY NOT BEEN ESTABLISHED. IT WAS FURTHER SUBMITTED THAT AS PER THE AUDITED FINANCIAL STATEMENTS OF THE COMPANY AS ON 3 1.03.2012, IT HAS EQUITY FUNDS OF RS. 1,40,37,250/- AND RESERVES OF RS. 1,65 ,770,594/- AND HAS OPERATING INCOME OF RS. 1,78,74,907/-. IT WAS FURTH ER SUBMITTED THAT THE ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 7 AMOUNT HAS BEEN INVESTED THROUGH BANKING CHANNELS A ND SOURCES OF CREDIT IN INVESTORS COMPANYS BANK ACCOUNT HAVE BEEN DULY SU BMITTED TO THE ASSESSING OFFICER ALONG WITH COPY OF BANK STATEMENT. 9. IT WAS FURTHER SUBMITTED BY THE LD AR THAT DURIN G THE COURSE OF APPELLATE PROCEEDINGS, ALL THE DETAILS WERE AGAIN SUBMITTED T O THE LD. CIT(A) WHO HAS CALLED FOR THE REMAND REPORT AND THE ASSESSING OFFI CER IN ROUTINE MANNER HAS SUBMITTED HIS REPORT DATED 24.08.2019 WHEREIN NO SP ECIFIC DEFECT HAS BEEN HIGHLIGHTED BY THE ASSESSING OFFICER. REGARDING NON VERIFICATION OF THE INVESTOR COMPANIES AT ITS REGISTERED ADDRESS, IT WAS SUBMITT ED THAT THE ADDRESS OF THE SAID COMPANIES HAVE CHANGED WHICH THE AO HAS NOT TR IED TO VERIFYING DURING THE PROCEEDINGS U/S 131(1)(D) OF THE ACT NOR ANY CR OSS EXAMINATION OPPORTUNITY WAS GRANTED TO JUSTIFY THE SAME. REGARDING NON-APPE ARANCE OF DIRECTORS OF THE INVESTOR COMPANIES, IT WAS SUBMITTED THAT THE ASSES SEE COMPANY HAS TRIED CALLING THE DIRECTORS WHO WERE BASED OUTSIDE OF JAI PUR, SO IT IS NOT A CASE THAT THE ASSESSEE COMPANY HAS NOT TRIED. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO NOT ISSUED THE SUMMONS T O THE DIRECTORS AND HAD THE SUMMONS BEING ISSUED, THE DIRECTORS WOULD HAVE APPE ARED BEFORE HIM AND MERE NON-APPEARANCE OF THE DIRECTORS CANNOT BE HELD AGAINST IT. IT WAS ACCORDINGLY SUBMITTED THAT WHERE THE COMPLETE DETAI LS IN FORM OF NATURE OF CREDIT, IDENTITY AND CREDITWORTHINESS OF INVESTOR C OMPANIES & MODE OF TRANSACTION WAS WELL EVIDENCED BY ASSESSEE BEFORE T HE AO AND MERE DOUBT AND SUSPICION IN THE MIND OF THE ASSESSING OFFICER CANN OT JUSTIFY THE ADDITION OF THE SHARE CAPITAL IN THE HANDS OF THE ASSESSEE COMPANY AND BRINGING THE SAME TO TAX THUS DEFEATING THE WHOLE PURPOSE OF SEEKING FRE SH INVESTMENT WHERE SUCH FUNDS ARE AGAIN BLOCKED AND CANNOT BE USED FOR BUSI NESS PURPOSES. IT WAS FURTHER SUBMITTED THAT THERE WAS NO BASIS WITH THE AO BESIDES MERE SUSPICION TO HOLD THAT THE AMOUNT SO RECEIVED IS ASSESSEES O WN UNACCOUNTED CASH IN FORM OF SHARE APPLICATION MONEY/SHARE PREMIUM THROU GH THESE COMPANIES ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 8 BASED AT KOLKATA AND THUS, THERE WAS NO BASIS TO TR EAT SHARE CAPITAL AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 10. PER CONTRA, THE LD. DR RELIED ON THE FINDINGS OF THE ASSESSING OFFICER. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSING OFFI CER HAS CARRIED OUT NECESSARY VERIFICATION IN TERMS OF ISSUANCE OF NOTI CE U/S 133(6) AND ALSO ISSUING COMMISSION U/S 131(1)(D) OF THE ACT AND BASIS SUCH INQUIRY AND INVESTIGATION HAS GIVEN A FINDING THAT THE ASSESSEE COMPANY HAS F AILED TO JUSTIFY AND PROVIDED SUITABLE EXPLANATION REGARDING IDENTITY, C REDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER WHI CH HAS BEEN RIGHTLY CONFIRMED BY THE LD. CIT(A). HE ACCORDINGLY REQUESTED FOR CON FIRMATION OF THE ORDER OF THE LOWER AUTHORITIES. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS A SETTLED LEGAL PROPOSITION THAT W HERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE COMPANY, SECTION 68 REQUIRES THAT THE ASSESSEE COMPANY SHOULD OFFER AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM FOUND CREDITED IN ITS BOOKS OF ACCOUNTS TO THE SATISFACTION OF THE ASSESSING OFFICER. THE PRIMARY REQUIREMENTS, WHICH SHOULD BE SATISFIED CUMULATIVELY BY THE ASSESSEE IN SUCH C ASES IS IDENTIFICATION & CREDITWORTHINESS OF THE SHAREHOLDER/INVESTOR COMPAN Y AND THE GENUINENESS OF THE SHARE TRANSACTION. THE EXPLANATION OFFERED AND MATERIAL SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS EXPLANATION SHOULD BE WH OLESOME, CREDIBLE AND VERIFIABLE. THESE THREE REQUIREMENTS THEREAFTER HAV E TO BE TESTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN THE EXPLANATI ON AND THE MATERIAL/DOCUMENTATION SUBMITTED BY THE ASSESSEE AT THIS STAGE PASSES THIS MUSTER THAT THE INITIAL ONUS PLACED ON THE ASSESSEE COMPANY CAN BE SAID TO BE SATISFIED. WHILST IT IS TRUE THAT THE ASSESSEE CAN NOT BE CALLED UPON TO ADDUCE ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 9 CONCLUSIVE PROOF ON ALL THESE THREE REQUIREMENTS, I T IS NONETHELESS LEGITIMATE EXPECTATION OF THE ASSESSMENT PROCESS THAT HE WOULD BRING IN SUFFICIENT PROOF, WHICH IS CREDIBLE AND AT THE SAME TIME VERIFIABLE, SO AS TO DISCHARGE THE INITIAL BURDEN PLACED ON IT. THE DEGREE OF BURDEN OF PROOF WILL VARY FROM ASSESSEE TO ASSESSEE AND WHETHER INITIAL ONUS STANDS DISCHARGED WOULD DEPEND UPON FACTS AND CIRCUMSTANCES OF EACH CASE. 12. IN THE INSTANT CASE, WE FIND THAT BOTH THE INVE STOR COMPANIES ARE IN EXISTENCE FOR PAST MANY YEARS AND REGISTERED WITH T HE RESERVE BANK OF INDIA AS NON BANKING FINANCIAL CORPORATION MEANING THEREBY T HEY ARE ENGAGED IN BUSINESS OF FINANCING AND INVESTMENT. BOTH THESE C OMPANIES ARE REGULAR IN FILLING THEIR ANNUAL RETURNS WITH REGISTRAR COMPANI ES AS APPARENT FROM THEIR ANNUAL FILINGS FOR THE YEAR ENDED 31 ST MARCH, 2012, MARCH, 2013 AND MARCH, 2014 RESPECTIVELY. THESE COMPANIES WERE ALSO REGULA RLY FILLING THEIR INCOME TAX RETURNS WITH THE INCOME TAX DEPARTMENT AND HAVE BEE N REPORTING OPERATING REVENUES FROM THEIR REGULAR BUSINESS ACTIVITY OF FI NANCING AND INVESTMENT. FURTHER, INFORMATION SOUGHT BY THE AO U/S 133(6) HA VE BEEN SUBMITTED BY M/S SUNDRM CONSULTANTS PVT LTD. GIVEN THE SAME, MERE NO N-APPEARANCE OF DIRECTORS ESPECIALLY WHERE NO SUMMONS WAS ISSUED BY THE AO CANNOT BE HELD AGAINST THE ASSESSEE. REGARDING ISSUE OF COMMISSIO N U/S 131(1)(D) TO ACIT CIRCLE 35, KOLKATA, IN HIS REPORT, HE HAS STATED TH AT THE INSPECTING AUTHORITY HAS REPORTED THAT NOBODY WAS FOUND AT THE ADDRESS AND B ASIS THE SAME, HE HAS SUBMITTED HIS REPORT STATING THAT IDENTITY, CREDITW ORTHINESS AND GENUINENESS OF THE TRANSACTION NOT CONFIRMED. IN THIS REGARD, THE LD AR HAS SUBMITTED THAT THERE HAS BEEN A CHANGE IN THE ADDRESS OF THESE TWO COMPANIES AS APPARENT FROM THEIR FILINGS WITH THE ROC AND THERE HAS BEEN NO FURTHER ENQUIRY CONDUCTED BY THE ASSESSING OFFICER. THEREFORE, AS FAR AS THE IDENTITY AND EXISTENCE OF THESE INVESTOR COMPANIES ARE CONCERNED , THEIR REGISTRATION AND REGULAR FILINGS WITH THE APPROPRIATE REGULATORY AUT HORITIES DULY DEMONSTRATE THE ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 10 SAME. REGARDING GENUINENESS OF THE TRANSACTION WHE REIN THEY HAVE INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY, IT IS NO TICED THAT INVESTMENT IS PART OF THEIR CORE BUSINESS ACTIVITY AND AS PART OF SUCH BUSINESS ACTIVITY, THESE COMPANIES HAVE DECIDED TO INVEST IN THE ASSESSEE CO MPANY AND AMOUNT HAS BEEN TRANSFERRED THROUGH BANKING CHANNELS INTO THE ASSESSEE COMPANYS BANK ACCOUNT AND BASIS THE SHARE APPLICATION REQUEST REC EIVED BY THE ASSESSEE COMPANY, THE SHARES HAVE BEEN ISSUED TO THESE INVES TOR COMPANIES. FURTHER, AS PER THE FINDING OF THE ASSESSING OFFICER, THE AMOUN T HAD REMAINED INVESTED IN THE ASSESSEE COMPANY AS ON THE DATE OF THE ASSESSME NT ORDER AND THEREFORE, IT IS NOT A CASE THAT THE MONEY HAS BEEN INITIALLY INV ESTED BY THESE INVESTOR COMPANIES AND THEREAFTER, WITHIN A SHORT PERIOD, TH ERE HAS BEEN SUBSEQUENT TRANSFER OR BUYBACK OF THESE SHARES BY THE ASSESSEE COMPANY. THE ISSUE OF SHARES HAS BEEN DULY INFORMED BY WAY OF REGULATORY FILINGS WITH THE REGISTRAR OF COMPANIES. REGARDING VALUATION OF SHARES AND THE RE CEIVING THE SHARE PREMIUM BY THE ASSESSEE COMPANY, WE FIND THAT THE ASSESSEE COMPANY HAS DETERMINED SHARE VALUATION AS PER THE FAIR MARKET VALUE OF ITS UNDERLYING ASSETS AND BUSINESS, AND BASIS THE SAME, THE INVESTOR COMPANIE S HAVE DECIDED TO INVEST IN THE ASSESSEE. THOUGH ONE CAN DEBATE ABOUT THE VALU ATION BEING HIGHER OR LOWER, THE FACT REMAINS THAT THE SHARE VALUATION IS SUPPORTED BY VALUATION DONE BY THE ASSESSEE COMPANY AND HAS THUS A REASONABLE A ND RATIONAL BASIS FOR ISSUE OF SHARES AT PREMIUM. THEREFORE, WE FIND THA T THE SHARES HAVE BEEN DULY ISSUED BY THE ASSESSEE COMPANY AS REFLECTED IN ITS FILINGS WITH THE REGISTRAR OF COMPANIES, THE MONEY HAS BEEN RECEIVED THROUGH BANK ING CHANNEL IN ASSESSEES COMPANY BANK ACCOUNT AND THESE TRANSACTI ONS ARE DULY REFLECTED IN THE BOOKS OF ASSSESSEES COMPANY AS WELL AS INVESTO R COMPANIES AND THEREFORE, THE GENUINENESS OF THE TRANSACTION HAS BEEN DULY ES TABLISHED. FURTHER, REGARDING THE CREDITWORTHINESS OF THESE COMPANIES, WE FIND THAT AS PER THE AUDITED BALANCE-SHEET OF M/S SUSUN MARKETING PVT. L TD AS ON 31 ST MARCH, 2012, IT HAS SHARE CAPITAL OF RS. 1.97 CR AND RESERVES AN D SURPLUS OF RS. 12.64 CR AND ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 11 HAS OPERATING REVENUE OF RS. 18 LACS BESIDES OTHER INCOME OF RS. 3 LACS WHICH IS SUFFICIENT TO DEMONSTRATE THE FINANCIAL CAPABILI TY AND CREDITWORTHINESS TO INVEST RS 30 LACS IN THE ASSESSEE COMPANY. IN RESPE CT OF M/S SUNDRAM CONSULTANTS, WE FIND THAT AS PER ITS AUDITED BALANC E-SHEET AS ON 31 ST MARCH, 2012, IT HAS SHARE CAPITAL OF RS. 1.40 CR AND RESER VES AND SURPLUS OF RS. 16.57 CR AND HAS OPERATING REVENUE OF RS. 1.46 CR BESIDES OTHER INCOME OF RS. 3 LACS WHICH IS SUFFICIENT TO DEMONSTRATE THE FINANCIAL CA PABILITY AND CREDITWORTHINESS TO INVEST RS 50 LACS IN THE ASSESSEE COMPANY. THE B ANK STATEMENTS OF THESE TWO COMPANIES WERE ALSO SUBMITTED EXPLAINING THE SO URCE OF SUCH INVESTMENTS. THEREFORE, WE ARE UNABLE TO ACCEPT THE FINDINGS OF THE ASSESSING OFFICER THAT THESE INVESTORS COMPANIES ARE NOT HAVING SUFFICIENT CREDITWORTHINESS TO INVEST IN THE ASSESSEE COMPANY. IN LIGHT OF SAME, WE ARE O F THE CONSIDERED VIEW THAT THE ASSESSEE COMPANY HAS DISCHARGED THE INITIAL ONU S CAST ON IT IN TERMS OF IDENTITY AND CREDITWORTHINESS OF THESE TWO INVESTOR COMPANIES AS WELL AS DEMONSTRATING THE GENUINENESS OF THE TRANSACTION. THE EXPLANATION OFFERED AND MATERIAL SUBMITTED BY THE ASSESSEE COMPANY IN S UPPORT OF ITS EXPLANATION IS WHOLESOME, CREDIBLE AND VERIFIABLE AND WHICH HAS NOT BEEN CORRECTLY APPRECIATED BY THE LOWER AUTHORITIES AND IN LIGHT O F THE SAME, THE ADDITION SO MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT IS NOT JUSTIFIED IS HEREBY SET ASIDE. IN THE RESULT, THE GROUND NO. 1 OF ASSESSEE S APPEAL IS ALLOWED. 13. IN GROUND NO. 2, THE ASSESSEE COMPANY HAS CHAL LENGED THE SUSTENANCE OF ADHOC DISALLOWANCE OF VARIOUS EXPENSES AMOUNTING TO RS. 62,048/- BY THE LD. CIT(A). WE FIND THAT THERE ARE NO SPECIFIC FINDINGS BY THE ASSESSING OFFICER IN TERMS OF THE EXPENSES NOT BEEN INCURRED FOR THE PUR POSE OF BUSINESS OR BOGUS IN NATURE. THEREFORE, IN ABSENCE OF SPECIFIC DEFECT BEEN HIGHLIGHTED BY THE ASSESSING OFFICER, THE ADHOC DISALLOWANCE SO MADE A ND CONFIRMED BY THE LD. CIT(A) IS HEREBY DELETED. ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 12 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/02/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/02/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S JAJOO RASHMI REFRACTORIES PVT. L TD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-04, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 733/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 13 ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 14 ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 15 ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 16 ITA NO. 733/JP/2019 M/S JAJOO RASHMI REFRACTORIES PVT. LTD., JAIPUR VS . ACIT, JAIPUR 17