ALVI TECH SERVICES P.LTD, KALYAN V. DCIT CIR 1, KALYAN

ITA 7481/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3108 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Unexplained cash credit; Gift; Principle of natural justice; Additional evidence
• Section: 143(3); 68

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.7481 /MUM/2013 ( / ASSESSMENT YEAR : 2010-11) ALVI TECH SERVICES PVT. LTD., SHIVAM PALACE, G-3, CHINCHPADA ROAD, KALYAN (EAST) 421 306. / V. DY. COMMISSIONER OF INCOME TAX CIRCLE 1, KALYAN. ./ PAN : AAFCA5622A ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY DR. K. SHIVARAM REVENUE BY : MS. KUSUM BANSAL / DATE OF HEARING : 29-6-2016 / DATE OF PRONOUNCEMENT : 22-09-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 7481/MUM/2013, IS DIRECTED AGAINST THE APPELLATE OR DER DATED 25 TH SEPTEMBER, 2013 PASSED BY LEARNED COMMISSIONER OF I NCOME TAX (APPEALS)- 1, THANE (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2010-11, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 14 TH FEBRUARY, 2013 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 7481/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS.3,19,35,000/- MA DE U/S 68 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT N O AMOUNT WHATSOEVER HAS BEEN RECEIVED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT S.68 OF THE INCOME-TAX ACT, 196 1 IS NOT APPLICABLE TO FACTS OF THE PRESENT CASE AS THE PROVISIO N PRESUPPOSES ACTUAL RECEIPT OF AMOUNT/SUM. 3. THE APPELLANT PRAYS THAT ADDITION MADE OF RS.3,19,35 ,000/- MAY BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS IN THE BUSINESS OF ENGINEERING, ERECTION AND COMMISSIONING AND CONSULT ANCY IN OIL AND GAS INDUSTRY. THE ASSESSEE WAS ASKED TO PRODUCE THE BO OKS OF ACCOUNTS BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT WHICH WAS PRODUCED BY THE ASSESSE E ALONG WITH THE BILLS BEFORE THE AO. THE A.O. DURING THE COURSE OF ASSES SMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT OBSERVED THAT THERE WAS AN INCREASE IN ISSUED SHARE CAPITAL OF RS. 70 LACS WHICH WAS SU BSCRIBED BY SHRI KRISHNANAND TRIVEDI (RS. 42 LACS) AND SHRI ALOK KR ISHNANAND TRIVEDI (RS. 28 LACS). FURTHER IT WAS OBSERVED BY THE AO THAT THER E WAS AN INCREASE IN SHARE APPLICATION MONEY AMOUNTING TO RS. 2,49,35,000/- WH ICH IS WHOLLY SUBSCRIBED BY SHRI KRISHNANAND TRIVEDI. THE ASSESS EE WAS ASKED TO EXPLAIN REGARDING THE SOURCE OF SHARE SUBSCRIPTION AND SHAR E APPLICATION MONEY OF RS. 3,19,35,000/-. THE ASSESSEE IN REPLY SUBMITTED THAT SHRI KRISHNANAND TRIVEDI WAS ONE OF THE DIRECTORS OF THE ASSESSEE CO MPANY WHO WAS EARLIER RUNNING A PROPRIETARY CONCERN NAMELY M/S ALVI TECH SERVICES WHICH WAS ENGAGED IN THE BUSINESS OF ERECTION OF ENGINEERING AND ELECTRICAL INSTALLATION ITA 7481/MUM/2013 3 ETC. . IT WAS SUBMITTED THAT THE SHARES SUBSCRIBED OF RS. 70 LACS AND SHARE APPLICATION SHOWN AT RS. 2.49 CRORES REPRESENTS MAC HINERY, TOOLS , EQUIPMENTS ETC. TRANSFERRED FROM ALVI TECH SERVICES WHICH STANDS REPRESENTED IN THE CAPITAL BALANCE OF SHRI KRISHANAND TRIVEDI, PROPRIETOR OF M/S ALVI TECH SERVICES. IN NUTSHELL, THE A.O. OBSERVED THAT THE A SSESSEE HAS CLAIMED THAT WHAT HAS BEEN TRANSFERRED IS THE ACCUMULATED CAPITA L BALANCE OF M/S ALVI TECH SERVICES ALONG WITH PERSONAL CAPITAL OF SHRI K RIHNANAND TRIVEDI. THE ASSESSEE SUBMITTED THE CAPITAL ACCOUNT OF SHRI KRI SHNANNAND TRIVEDI WHICH IS AS UNDER:- CAPITAL ACCOUNT OF THE YEAR ENDED 31.03.2006 TO DRAWING 375,000.00 BY BALANCE B/D 5,33,01, 281.48 TO BALANCE C/D 5,37,21,502.84 BY NET PROFIT 668, 366.36 BY FDR INTEREST 126,855.00 . .. 54,096,502.84 54,096,502.84 ============ ============ THE ASSESSEE CLAIMED THAT THE ABOVE IS THE PERSONAL CAPITAL BALANCE OF SHRI KRISHNANAND TRIVEDI. THE ASSESSEE HAS FURTHER STATED THAT THE CAPITAL 'B ALANCE OF SHRI KRISHNANAND TRIVEDI AS ON 31/03/2007, 31/03/2008, 31/03/03/2009 AND 31/03/2010 AFTER CONSIDERING THE INCOME OF RESPECTIVE YEARS AR E AS UNDER: I) AS ON 31/03/2007 RS 5,38,21,502/- JJ)AS ON 31/03/2008 RS 5,39,21,502/- III)AS ON 31/03/2009 RS 5,43,19,002/- IV) AS ON 31/03/2010 RS 5,47,16,502/- ITA 7481/MUM/2013 4 IN THE BALANCE SHEET OF SHRI KRISHNANAND TRIVEDI AS ON 31/03/2009 THE CAPITAL BALANCE OF RS 5,47,16,502/- REPRESENTS FOLLOWING ITEMS: FLAT AT GANESH KRUPA RS. 5,25,000.00 IMMOVABLE PROPERTY RS. 10,02,545.00 MOVABLE ASSETS RS. 35,02,525.00 INVESTMENT IN ALVI TECH RS. 75,00,000.00 SERVICES PVT. LTD. LOAN TO ALVI TECH SERVICES PVT. LTD. ALOK RS. 50,00,000.00 LOAN TO ALVI TECH SERVICES PVT. LTD. RS. 51,78,000.00 ALVI TECH SERVICES PVT. LTD. SHARE APPLICATION MONEY RS. 31,500,000.00 ICICI BANK RS. 7,049.69 TDS RS. 301,506.00 TDS 2008-09 RS. 56,135.00 CASH BALANCE RS. 143,742,15 RS. 54,716,502.84 =============== IT WAS OBSERVED BY THE A.O. ON VERIFICATION THAT TH E ASSESSEE HAS NOT SHOWN THE FIGURES MENTIONED IN THE CAPITAL BALANCE AND BA LANCE SHEET IN THE RETURN OF INCOME FILED FOR THE RESPECTIVE YEARS. ON VERIFICATION OF THE RETURN OF INCOME FILED BY S HRI KRISHNANANAD TRIVEDI, PROPRIETOR OF ALVI TECH SERVICES, THE FOLLOWING IN COMES WERE SHOWN DURING PERIOD ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2 011-12:- ITA 7481/MUM/2013 5 A.Y. RETURNED INCOME IN RS. 2001-02 50,000/- 2002-03 85,580/- 2003-04 1,47,524/- 2004-05 1,77,340/- 2005-06 4,02,090/- 2006-07 6,95,840/- 2007-08 2,00,000/- 2008-09 2,00,000/- 2009-10 4,97,500/- 2010-11 4,97,500/- 2011-12 4,97,500/- FURTHER FROM THE RETURN OF INCOME FILED BY SHRI KRI SHANAND TRIVEDI, IT WAS OBSERVED BY THE AO THAT CAPITAL BALANCE SHOWN B Y SHRI KRISHNANAND TRIVEDI AS PROP. OF ALVI TECH SERVICES ARE VERY LESS. CAPITAL BALANCE SHOWN BY SHRI KRISHANAND TRIVEDI AS PROP OF ALVI TECH SERVICES IS AS UNDER:- F.Y. A.Y. OPENING CAPITAL BALANCE IN RS. INCOME OF THE YEAR IN RS. DRAWING IN RS. CLOSING CAPITAL BALANCE IN RS. 2001-02 2002-03 1,08,970/- 85,571/- 50,875/- 1,43,6 66/- 2002-03 2003-04 1,93,666/- 1,48,149/- 71,196/- 2,70 ,619/- 2003-04 2004-05 2,70,619/- 1,79,077/- 1,18,403/- 3,31,293/- 2004-05 2005-06 3,71,293/- 4,06,349/- 2,41,159/- 5,36,983/- 2005-06 2006-07 14,36,983/- 7,95,710/- 3,54,551/- 18,77,653/- THUS, IT WAS OBSERVED IN NUTSHELL THAT THE CAPITAL BALANCE FILED ALONG WITH THE RETURN OF INCOME BY SHRI KRISHNANAND TRIVEDI WAS RS . 18,77,653/- WHILE THE ASSESSEE HAS CLAIMED CAPITAL BALANCE AS ON 31 ST MARCH, 2006 OF RS. 5,37,21,502/-. THE ASSESSEE WAS ASKED TO FILE THE DETAILS OF CAPITAL BALANCE OF RS. 5,37,21,502/- AS ON 31 ST MARCH, 2006 ALONG WITH THE LIST OF MACHINERIES, TOOLS, EQUIPMENTS ETC. TRANSFERRED TO THE ASSESSEE COMPANY ALONG WITH THE BILLS, DATE OF ACQUISITION & BANK STATEMENTS TO PRO VE THE SOURCE OF ACQUISITION ITA 7481/MUM/2013 6 OF MACHINERIES. IN RESPONSE, THE ASSESSEE FILED AN AFFIDAVIT DATED 12 TH OCTOBER, 2012 WHEREBY SRI KRISHNANAND TRIVEDI AFFIRMED THAT HE RETIRED FROM INDIAN NAVY ON 31 ST MARCH, 1994 WHEREBY HE GOT HANDSOME AMOUNT OF RETI REMENT BENEFITS WHICH HE INVESTED IN HIS PROPRIETARY CONCE RN AS A CAPITAL. HE STATED THAT HE WAS HOLDING A DEGREE OF CHARTER ENGINEER (I NDIA) AND GRADUATED IN ELECTRICAL ENGINEERING AND HAD WORKED WITH VARIOUS COMPANIES DURING THE PERIOD FROM 1996 AND HE GOT A HANDSOME SALARY PLUS PERQUISITES AND OTHER BENEFITS AND ALSO THE GRATUITY, PF AMOUNT WHICH WAS CONSIDERABLY A GOOD AMOUNT TO START BUSINESS OF HIS PROPRIETARY CONCERN M/S ALVI TECH SERVICES IN THE FIELD OF ERECTION, COMMISSIONING AND CONSULTANC Y IN THE FIELD OF OIL AND GAS INDUSTRIES. HE STATED THAT THE SHARE APPLICATION MO NEY OF RS.3.15 CRORES REPRESENTS TOOLS, EQUIPMENTS, MACHINERY ETC. USED B Y ALVI TECH SERVICES , A PROPRIETARY CONCERN WHICH WAS MERGED WITH ALVI TECH SERVICES PVT. LTD. HE FURTHER STATED THAT DOCUMENTARY PROOF OF TRANSACTIO NS OF M/S ALVI TECH SERVICES WAS DESTROYED BY THE ACT OF GOD IN YEAR 20 05. STATEMENT OF SHRI KRISHNANAD TRIVEDI WAS RECORDED ON 26 TH NOVEMBER, 2012 BY THE AO WHEREBY HE STATED THAT AT THE TIME OF RETIREMENT FROM INDIA N NAVY IN THE YEAR 1994, HE HAD GOT NEARLY RS. 15 LAKHS AND HE WAS EARNING MONT HLY SALARY OF RS. 30,000/- PER MONTH FROM COMPANIES DURING 1995 TO 20 00. IT WAS STATED BY HIM THAT NO DOCUMENTARY EVIDENCE TO PROVE THE FINA NCIAL ASSISTANCE RECEIVED FROM THE FAMILY MEMBERS IS AVAILABLE. THUS, THE A. O. HELD THAT SHRI KRISHNANAND TRIVEDI WAS NOT HAVING ENOUGH SALARY TO SUBSTANTIATE SUCH A CAPITAL BALANCE AND THE INCOME DISCLOSED IN THE RET URN OF INCOME BY SHRI KRISHNANAND TRIVEDI IS VERY LESS AS COMPARED TO THE CAPITAL BALANCE. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO HOW SUCH A HUGE CAPITAL HAS BEEN BUILT UP AND ALSO ASKED TO EXPLAIN THE SOURCE OF THE SAI D CAPITAL. THE ASSESSEE, IN REPLY HAS FILED CAPITAL ACCOUNT FOR THE PERIOD 1990 TO 2005 CLAIMING TO BE PERSONAL CAPITAL ACCOUNT OF SHRI KRISHNANAND TRIVED I WHEREBY HE HAS RECEIVED RS. 75 LAKHS AS SHARE FROM FAMILY SETTLEMENT IN THE FINANCIAL YEAR ENDED 31- 03-2000 AND ALSO RECEIPT OF RS. 18.75 LACS AND RS 3 1.87 LACS AS CAPITAL ITA 7481/MUM/2013 7 RECEIVED FROM SH. ALOK K. TRIVEDI AND SH. RAJKUMAR K TRIVEDI. THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED ANY DO CUMENTARY PROOF IN SUPPORT OF THE INCOME CREDITED TO THE CAPITAL ACCOU NT. IT WAS ALSO OBSERVED THAT THE ASSESSEE HAS CREDITED PROFESSIONAL FEES DU RING THE YEAR 1990 TO 2000 WHILE IN FACT DURING THAT TIME THE ASSESSEE WAS WOR KING WITH INDIAN TILL 1994 AND THEREAFTER WITH OTHER COMPANIES. SIMILARLY , NO EVIDENCE WAS BROUGHT ON RECORD REGARDING THE RECEIPT OF FAMILY SETTLEMENT N OR THERE WAS EVIDENCE WITH REGARD TO RECEIPT OF RS 15 LACS AT THE TIME OF RETI REMENT FROM INDIAN NAVY ALTHOUGH THE AMOUNT STOOD CREDITED IN CAPITAL ACCOU NT IS MUCH HIGHER AT RS.21,60,000/- . THE ASSESSEE FILED REVISED CAPITAL ACCOUNT FOR THE PERIOD 01- 04-1990 TO 31-03-2000. THE ASSESSEE SHOWED CAPITAL BALANCE AS ON 31-03- 2000 AT RS. 3,85,02,875/- FOR WHICH NO DOCUMENTARY EVIDENCES WERE SUBMITTED TO SUBSTANTIATE THE CREDIT IN THE CAPITAL ACCOUNT. THE ASSESSEE CREDITED HUGE FIGURES AS PROFESSIONAL RECEIPTS, A ND RS. 2,63,73,430/- AS FAMILY SETTLEMENT IN THE YEAR 1995, RS. 25,00,000/- AS GIFT FROM FATHER IN THE YEAR 1990, AGAINST WHICH AGAIN NO DOCUMENTARY EVIDE NCES WERE SUBMITTED BY THE ASSESSEE BEFORE THE AO. THUS, IT WAS OBSERVED B Y THE AO THAT THE ASSESSEE COOKED UP THE CAPITAL ACCOUNT TO EXPLAIN THE CAPITA L BALANCE . IT WAS OBSERVED THAT THE CAPITAL BALANCE AS AT 31-02-2005 WAS RS.1, 79,60,974/- WHEREAS THE OPENING CAPITAL AS ON 01-04-2005 WAS SHOWN AT RS.5, 33,01,281.48 AND THUS THE ASSESSEE HAS INCREASED THE CAPITAL BY RS.3,53,4 0,307/- WITHOUT ANY BASIS. THE A.O. RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ROSHAN D HATTI V. CIT 107 ITR 938 (SC) AND KALE KHA N MOHAMMAD HANIF V. CIT, 50 ITR 1 (SC) WHEREIN IT WAS HELD THAT THE ONU S OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY THE A SSESSEE IS ON HIM. THUS, THE A.O. HELD THAT THE CLAIM OF THE ASSESSEE FOR SU CH HUGE CAPITAL BALANCE IS THEREFORE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE . THUS, THE SHARE SUBSCRIBED OF RS.70,00,000/- AND SHARE APPLICATION MONEY OF RS.2,49,35,000/-, TOTALING TO RS. 3,19,35,000/- REP RESENTING MACHINERY VALUE OF ALVI TECH SERVICES WHICH IN TURN IS CLAIMED TO B E CAPITAL BALANCE OF SHRI ITA 7481/MUM/2013 8 KRISHNANAND TRIVEDI WAS FOUND TO BE AN UNEXPLAINED CREDITS IN THE HANDS OF THE ASSESSEE COMPANY AND THE SAME WAS BROUGHT TO TA X BY THE A.O. IN THE HANDS OF THE ASSESSEE COMPANY AS UNEXPLAINED CASH C REDIT U/S. 68 OF THE ACT VIDE ASSESSMENT ORDER DATED 14.02.2013 PASSED BY TH E AO U/S 143(3) OF THE ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 14.02.20 13 PASSED BY THE A.O. U/S. 143(3) OF THE ACT , THE ASSESSEE FILED FIRST A PPEAL BEFORE THE LD. CIT(A). 5. THE ASSESSEE DURING PROCEEDINGS BEFORE LEARNED C IT(A) SUBMITTED THAT WHILE GOING THROUGH THE OLD RECORDS, MR. KRISHNANAN D TRIVEDI FOUND DETAILS OF SOME OLD AGRICULTURAL LAND WHICH HE HAD INHERITED F ROM HIS FATHER WHICH IS AROUND 10 HECTARE AND VALUE OF LAND IS RS. 10 CRORE S FOR WHICH THE ASSESSEE FILED LAND RECORDS BEFORE THE LEARNED CIT(A). THUS, THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) THAT THE ADDITION TO CAPI TAL ACCOUNT OF MR KRISHNANAND TRIVEDI FOUND STOOD EXPLAINED. THE LD. CIT(A), HOWEVER, REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM OF INTRODUCTION OF SHARE CAPITAL/SHARE APPLICATION MONEY TO THE TUNE OF RS.3 ,19,35,000/- DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR WHERE BY THE BUILT UP CAPITAL IN THE CAPITAL ACCOUNT OF SHRI KRISHNANAND TRIVEDI HAS ALSO BEEN FOUND TO BE FACTUALLY INCORRECT AS COMPARED TO THE RETURN OF IN COME FILED BY THE ASSESSEE WITH THE REVENUE. THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF SH KRISHNANAND TRIVEDI , NOR THE ASSESSEE WAS ABLE TO PROVE THE GENUINENESS OF THE TRANSACTIONS REGARDING ADDITION OF MACHINERY , EQUIPMENT, TOOL ETC.. THE LD. CIT (A), THEREFORE HELD THAT THE A.O. HAS RIGHT LY TREATED THE CREDITS ON ACCOUNT OF SHARE CAPITAL/SHARE APPLICATION MONEY TO THE TUNE OF RS. 3,19,35,000/- IN ASSESSEES BOOKS OF ACCOUNT AS UNE XPLAINED CASH CREDITS U/S. 68 OF THE ACT AND THE ADDITIONS OF RS. 3,19,35 ,000/- MADE BY THE A.O. ITA 7481/MUM/2013 9 WAS CONFIRMED BY THE LEARNED CIT(A) VIDE APPELLATE ORDERS DARED 25.09.2013 PASSED BY LEARNED CIT(A). 6.AGGRIEVED BY THE APPELLATE ORDER DATED 25-09-2013 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ADDITIONS HAVE BEEN MADE U/S 68 OF THE ACT AS UNEXP LAINED CASH CREDIT WHEREBY AN AMOUNT OF RS. 3,19,35,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE AS THE ASSESSEE BECAUSE THE ASSESSEE WAS N OT ABLE TO EXPLAIN THE SOURCES OF THE BUILT UP OF THE CAPITAL OF MR KRISHN ANAND TRIVEDI, THE PROMOTER-DIRECTOR OF THE ASSESSEE COMPANY . THE LD . COUNSEL FILED ADDITIONAL EVIDENCES BEFORE THE TRIBUNAL WHEREIN APPLICATION D ATED 26.11.2015 WAS SUBMITTED REQUESTING THE TRIBUNAL FOR ADMISSION OF THE ADDITIONAL EVIDENCES UNDER RULE 29 OF INCOME TAX (APPELLATE TRIBUNAL) RU LES, 1963 AS THESE ADDITIONAL EVIDENCES ARE SUBMITTED FOR THE FIRST TI ME BEFORE THE TRIBUNAL AND THEY GOES TO THE ROOT OF THE MATTER AND HENCE , IT WAS PRAYED THAT THESE ADDITIONAL EVIDENCES SHOULD BE ADMITTED IN THE SUB STANTIAL INTEREST OF JUSTICE. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED ANY MONEY TOWARDS SHARE CAPITAL OF RS. 3,19,35,000/- DURING T HE ASSESSMENT YEAR AS IS REFLECTED IN THE BOOKS OF ACCOUNT. IT IS THE SAY O F THE LD. COUNSEL THAT THESE ARE FICTITIOUS ENTRIES MADE BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WHICH DOES NOT EXIST AND THE SAME WAS UNDERTAKEN WITH A VIEW T O AVAIL BANK LOAN FROM BANK OF BARODA IN ORDER TO BE ELIGIBLE TO GET THE S UFFICIENT ADDITIONAL LOANS FROM THE BANK. IT WAS ALSO SUBMITTED THAT THE ASSE SSEE HAS REVISED AND RE- CASTED THE ACCOUNTS WHEREBY ALL THE FICTITIOUS ENTR IES WERE DELETED FROM THE BOOKS OF ACCOUNT , WHICH ARE NOW DULY AUDITED BY TH E AUDITORS OF THE COMPANY BEING QUALIFIED CHARTERED ACCOUNTANTS WHO H AVE ISSUED AUDIT REPORT DATED 20-07-2015 ALONG WITH RE-CASTED AUDITED FINAN CIAL STATEMENTS WHICH IS PART OF ADDITIONAL EVIDENCES FILED FOR THE FIRST TI ME BEFORE THE TRIBUNAL . THE ITA 7481/MUM/2013 10 LD. COUNSEL SUBMITTED AN AFFIDAVIT OF SHRI K.N. TRI VEDI DATED 21 ST NOVEMBER, 2015 WHICH IS PLACED ON RECORD AS ADDITIONAL EVIDEN CES VIDE PAPER BOOK PAGE NO. 43 TO 46 AND FURTHER PRAYED THAT THE SAID ADDIT IONAL EVIDENCE SHOULD BE ADMITTED AND ADJUDICATED ON MERITS. THERE ARE ADDI TIONAL EVIDENCES FILED FOR THE FIRST TIME BEFORE THE TRIBUNAL WHICH ARE PART O F THE PAPER BOOK-II/PAGES 43-148. THE LD. COUNSEL FURTHER REQUESTED THAT THE MATTER MAY BE REMANDED BACK TO THE CIT(A) FOR VERIFICATION OF ALL THESE AD DITIONAL EVIDENCES AND CLAIM OF THE ASSESSEE MAY BE ADJUDICATED ON MERITS. HE S UBMITTED THAT THE ADDITION U/S 68 OF THE ACT IS NOT SUSTAINABLE AS THERE ARE I N-FACT NO CASH CREDITS TO THE TUNE OF RS.3.15 CRORES WHICH IS SUPPORTED BY AFFIDA VIT FILED AS ADDITIONAL EVIDENCE OF MR K.N.TRIVEDI ALONG WITH RE-CASTED AUD ITED FINANCIAL STATEMENTS. THE REVISED AUDITED ACCOUNTS ARE ALSO DULY FILED WI TH THE GOVERNMENT AUTHORITIES (WHICH ARE PLACED IN PAGE NO. 65 TO 68 OF THE PAPER BOOK) I.E. MINISTRY OF CORPORATE AFFAIRS AND RECEIPTED CHALLAN S ARE ENCLOSED AS ADDITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL. THE RESOLUTION IS ALSO PLACED ON RECORD VIDE PAPER BOOK-II/ PAGE 69 TO 72 ENABLING T HE ASSESSEE TO RECAST AND REVISE ITS FINANCIAL STATEMENTS. 8. THE LD. D.R. RELIED ON THE ORDER OF THE LD. CIT( A) AND SUBMITTED THAT THE MATTER CAN BE REMANDED TO THE FILE OF THE LD. CIT(A ). 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS RAISED SHARE CAPITAL/SHARE APPLICATION OF RS. 3,19,35,000/-, HO WEVER, THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE SOURCES OF THE INTRODUCTION OF FRESH SHARE CAPITAL/SHARE APPLICATION AS PER THE PROVISIONS OF SECTION 68 OF THE ACT AND ADDITIONS WERE MADE BY THE A.O. U/S 68 OF THE ACT A S UNEXPLAINED CASH CREDIT WHICH WERE CONFIRMED BY THE LD. CIT(A). IT IS THE SAY OF THE ASSESSEE THAT THE ENTRIES OF RAISING OF SHARE CAPITAL AND SHARE APPLI CATION MADE IN THE BOOKS OF ACCOUNTS TO THE TUNE OF RS.3,15,00,000/- WERE BOGUS AND FICTITIOUS ENTRIES ITA 7481/MUM/2013 11 AND WAS MADE IN ORDER TO RAISE MORE LOANS FROM THE BANK WHILE THE FACT OF THE MATTER IS THAT NO SUCH SHARE CAPITAL WAS EVER RAISE D BY THE ASSESSEE COMPANY AND THESE ENTRIES TO THE TUNE OF RS.3.15 CRORES WER E BOGUS ENTRIES . IT IS FURTHER THE SAY OF THE ASSESSEES COUNSEL THAT ALLO TMENT OF RS. 70 LACS OF SHARE CAPITAL DURING THE YEAR IS GENUINE WHICH IS SUPPORT ED BY RECEIPT OF FUNDS IN IMMEDIATELY PRECEDING YEAR. IT IS FURTHER STATED TH AT THE MANIPULATIONS IN THE BOOKS OF ACCOUNTS AS TO INTRODUCTION OF FICTITIOUS SHARE CAPITAL/SHARE APPLICATION MONEY TO THE TUNE OF RS. 3.15 CRORES AR E NOW ELIMINATED AND THE ACCOUNTS/FINANCIAL STATEMENTS ARE RECAST AND REVISE D BY THE ASSESSEE NOW WHICH ARE DULY AUDITED BY THE AUDITORS OF THE ASSES SEE COMPANY WHO ARE QUALIFIED CHARTERED ACCOUNTANTS AND WHO HAVE ALSO I SSUED AUDIT REPORT DATED 20-07-2015 WHICH IS PART OF ADDITIONAL EVIDENCES FI LED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL ALONG WITH COMPLETE RE-CASTED AND REVISED FINANCIAL STATEMENTS FOR THE IMPUGNED PREVIOUS YEAR 2009-10. THE APPLICATION DATED 26.11.2015 FOR ADMISSION OF ADDIT IONAL EVIDENCES HAVE BEEN FILED BY THE ASSESSEE BEFORE THE TRIBUNAL UNDER RUL E 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 WHEREIN ADDITIONAL EVIDENCES FILED WITH THE TRIBUNAL ARE PLACED AT PAGE NO 43-148/PAPER BOOK-II AND IT IS PRAYED THAT THE SAID ADDITIONAL EVIDENCES BE ADMITTED AND ADJUDICAT ED ON MERITS. THE SAID ADDITIONAL EVIDENCES CONSISTS OF AFFIDAVIT OF SHRI K.N. TRIVEDI DATED 21 ST NOVEMBER, 2015 WHICH IS PLACED ON RECORD AS ADDITIO NAL EVIDENCE BEFORE THE TRIBUNAL VIDE PAPER BOOK PAGE NO. 43 TO 46 WHEREIN HE ADMITTED OF MANIPULATING THE ACCOUNTS AND INTRODUCING OF FICTIT IOUS ENTRIES IN BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. THE COPIES OF RE VISED AND RE-CASTED AUDITED ACCOUNTS FOR THE FINANCIAL YEAR 2009-10 ARE PLACED AS ADDITIONAL EVIDENCES PAGE 47-64/PAPER BOOK-II. COPIES OF RESOL UTIONS ALONG WITH FORMS FILED WITH MINISTRY OF CORPORATE AFFAIRS FOR FILING REVISED AND RE-CASTED AUDITED ACCOUNTS FOR FINANCIAL YEAR 2009-10 ALONG WITH PAID CHALLANS ARE ENCLOSED IN PAPER BOOK-II/PAGE 65-68. THE COPY OF NOTICE OF EXT RA-ORDINARY GENERAL MEETING(EGM) , BOARD RESOLUTIONS AND RESOLUTIONS PA SSED AT EGM ARE ALSO ITA 7481/MUM/2013 12 FILED AS ADDITIONAL EVIDENCES BEFORE THE TRIBUNAL. SANCTION LETTERS FROM BANK OF BARODA IS ALSO FILED AS ADDITIONAL EVIDENCES TO SUBSTANTIATE THAT THE LOANS/LIMITS WERE ENHANCED BY THE BANK IN FAVOUR OF THE ASSESSEE COMPANY WHICH WAS MADE POSSIBLE ONLY BECAUSE THE ASSESSEE M ANIPULATED ITS ACCOUNTS TO SHOW HIGHER SHARE CAPITAL/SHARE APPLICATION MONE Y TO THE TUNE OF RS. 3.15 CRORES WHICH WAS FICTITIOUS ENTRY. IT IS ALSO SUBMI TTED THAT NO SUCH MACHINERY, TOOLS AND EQUIPMENTS WERE HELD BY THE PROPRIETOR OF ALVI TECH SERVICES WHICH WAS INTRODUCED IN THE ASSESSEE COMPANY AND IT WAS A LL BOGUS/FICTITIOUS ENTRIES. THE ASSESSEE HAS ADMITTED THAT THESE SHARE CAPITAL/SHARE APPLICATION MONEY RAISED BY THE ASSESSEE TO THE TUNE OF RS.3,19 ,35,000/- WERE FICTITIOUS AND BOGUS ENTRIES AND IN-FACT NO SUCH SHARE CAPITAL /SHARE APPLICATION MONEY WAS EVER RAISED BY THE ASSESSEE AND THE FICTITIOUS ENTRIES IN THE BOOKS OF ACCOUNTS ARE NOW REMOVED/ELIMINATED TO REFLECT TRUE AND FAIR STATE OF AFFAIRS OF THE ASSESSEE COMPANY WHICH HAS NOW BEEN AUDITED BY AUDITORS OF THE ASSESSEE COMPANY AND THE SAME HAS BEEN FILED WITH M INISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA O/O REGISTRAR OF COMPA NIES AND RECEIPTED CHALLANS ARE ENCLOSED IN THE PAPER BOOK-II FILED WI TH THE TRIBUNAL CONTAINING ADDITIONAL EVIDENCES . IT IS SETTLED POSITION OF L AW THAT ONLY REAL INCOME CAN BE BROUGHT TO TAX AND MANDATE IS TO BRING INCOME TO TA X AS PER AUTHORITY OF LAW. THESE ADDITIONAL EVIDENCES IN OUR CONSIDERED VIEW G OES TO THE ROOT OF THE MATTER AND NEEDS TO BE ADMITTED AND ADJUDICATED ON MERITS IN ORDER TO ADVANCE SUBSTANTIAL JUSTICE AND WE ADMIT THESE ADDI TIONAL EVIDENCES FILED BY THE ASSESSEE VIDE PAGE 43-148/PAPER BOOK-II . HOWEV ER, THE CONTENTIONS OF THE ASSESSEE AND THE ADDITIONAL EVIDENCES SO FILED BY THE ASSESSEE NEED VERIFICATION BY THE AUTHORITIES BELOW AND HENCE WE ARE OF THE CONSIDERED VIEW THAT IN ORDER TO IDENTIFY AND ASSESS THE REAL INCOM E OF THE ASSESSEE AND TO ADVANCE SUBSTANTIAL JUSTICE, TH MATTER/ISSUE UNDER THIS APPEAL NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE LD. CIT(A) FO R DE-NOVO DETERMINATION OF THE ISSUE ON MERITS AFTER CONSIDERING AND EVALUATING TH ESE EVIDENCES AND EXPLANATIONS SUBMITTED BY THE ASSESSEE DURING THE S ET ASIDE PROCEEDINGS . ITA 7481/MUM/2013 13 NEEDLESS TO SAY THAT PROPER AND ADEQUATE OPPORTUNIT Y OF BEING HEARD SHALL BE GRANTED TO THE ASSESSEE BY THE LEARNED CIT(A) IN AC CORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LA W. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 7481/MUM/2013 FOR THE ASSESSMENT YEAR 2010-11 IS ALLOWED FOR STAT ISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2016. # $% &' 22-09-2016 ( ) SD/- SD/- (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 22-09-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI A BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI