Jagati Publications Limited, Hyderabad V. ACIT, Circle-2(1), Hyderabad

ITA 790/Hyd/2013

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5692 (ITAT-HYDERABAD)
• Duration Of Justice: 8 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.V. ARAVIND
• Keywords: Unexplained cash credit; Gift; Business income; Depreciation; Income from undisclosed sources; Opportunity of cross examination; Additional evidence; Question of law; Wholly owned subsidiary; Third party statement; Valuation report; Assessment record; Capital receipt; Onus to prove; Set aside; CHAPTER IV
• Section: 131; 56; 263; 28; 271(1)(c); 92C; 56(2); 133(6); 250; 251; 264; 192; 113; 48; 13; 119; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B‘ BENCH HYDERABAD THROUGH VIDEO CONFERENCE BEFORE: SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M.BALAGANESH, ACCOUNTANT MEMBER ITA No.18/HYD/2012 (Assessment Year :2008-09) M/s. Jagati Publications Limited 6-3-249, Sakshi Towers, Road No.1, Banjara Hills Hyderabad – 500 034 (Formerly known as M/s. Jagati Publications Pvt. Ltd.,) 8-2-696 Carmel Point, Road No.12 Banjara Hills, Hyderabad-500034 Vs. ACIT, Circle 2(1) Hyderabad PAN/GIR No.AABCJ7667G (Appellant) .. (Respondent) ITA No.790/HYD/2013 (Assessment Year :2008-09) M/s. Jagati Publications Limited 6-3-249, Sakshi Towers, Road No.1, Banjara Hills Hyderabad – 500 034 (Formerly known as M/s. Jagati Publications Pvt. Ltd.,) 8-2-696 Carmel Point, Road No.12 Banjara Hills, Hyderabad-500034 Vs. ACIT, Circle 2(1) Hyderabad PAN/GIR No.AABCJ7667G (Appellant) .. (Respondent) Assessee by Shri Jehangir D. Mistry, Sr. Advocate, Shri Sashi Tulsiyan, Advocate, Shri C.P. Ramaswamy, Advocate on record Revenue by Shri K.V. Aravind, Sr. Standing Counsel Shri Y.V.S.T. Sai, CIT(DR) ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 2 Date of Hearing 26/10/2021 Date of Pronouncement 23/12/2021 O R D E R PER BENCH: ITA No. 18/HYD/2012 – A.Y. 2008-09 – QUANTUM APPEAL This appeal in ITA No.18/HYD/2012 for A.Y.2008-09 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-III, Hyderabad in appeal No.0235/CIT(A)-III/10-11 dated 30/12/2011 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/12/2020 by the ld. Asst. Commissioner of Income Tax, Circle-2(1), Hyderabad (hereinafter referred to as ld. AO). ITA No.790/HYD/2013 (A.Y.2008-09)-Assessee appeal against Section 263 Order This appeal in ITA No.790/HYD/2013 for A.Y.2008-09 preferred by the assessee against the revision order of the ld. Commissioner of Income Tax-II, Hyderabad u/s.263 of the Act dated 28/03/2013. 2. These appeals of the assessee pertain to ITAT Hyderabad ‘B’ Bench numbered as ITA No. 18/Hyd/2012 and ITA No. 790/Hyd/2013. CBDT made a request for hearing of this appeal by a Special Bench and accordingly on 14/12/2012, this matter was fixed under the caption ‘Other Matters’ for hearing as a Special Bench Reference. Finally, the Bench referred the matter to the President, ITAT with their comments. Finally, the Hon’ble President constituted the Special Bench vide order dated ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 3 05/03/2013. The assessee challenged the order constituting Special Bench of Hon’ble ITAT before Hon’ble Bombay High Court. Hon’ble Bombay High Court vide order dated 10/08/2015 reported as Jagati Publications Ltd., vs. President, Income Tax Appellate Tribunal and Others in (2015) 377 ITR 31 (Bom) quashed the constitution of Special Bench by observing in para 57 as under:- “57. To sum up, the president was under obligation to give hearing to the parties.. The Regular Bench had not unequivocally recommended constitution of the special bench and it had merely recommended that the matter be heard outside Andhra Pradesh. Since the Regular Bench had not recommended constitution of the special bench, no reason at all is found in the order of the president in constitution of the special bench. The president entertained a request in a matter which was seized by the Regular Bench, from a party to the litigation, passed an order without hearing the other side, without any reasons, and posted the entire matter before the special bench. This course of action was in breach of principles of natural justice and lacking in fairness. The Vice president, who played a dominant role in decision making, entertained the representative of one party to the litigation privately without notice to the other side, and introduced a completely irrelevant concept of 'political sensitivity' in the process, which by itself vitiates the decision making. Even otherwise, all the factors cumulatively, it has to be declared that the entire course of action adopted to constitute a special bench was opposed to the rule of law, fairness, transparency and cannot be sustained. We do so declare accordingly.” 2.1. We also noted from the judgment of Hon’ble Bombay High Court that they had taken into consideration the recommendation of the Bench. For the sake of convenience and clarity, the relevant observations of the Hon’ble Bombay High Court including the recommendations of the Division Bench of the Hyderabad Tribunal are reproduced hereinbelow:- 29. According to Mr. Rana, it is not necessary to consider any of these points as the Regular Bench had suggested constitution of a special bench and the observations made by the Regular Bench were sufficient for the president to constitute a special bench. However, the order of the president discloses no reason. If it is to purely base on the opinion of the Regular Bench, then the opinion must be clear and unequivocal. We reproduce the relevant observations of the Regular Bench: ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 4 "16. The main reason for which the Department seeks reference of this case to a special bench is that the issues involved are complex, and involves interpretation of the provisions of S.56 and 68 of the Act and the decision of the Tribunal would have far reaching consequences in similar matters. It is also the case of the Revenue that the case of the assessee is very sensitive and involves peculiar features of quid pro quo and so on and the view that the Tribunal may take in this appeal, would have its impact on the investigation being carried out by CBI and Enforcement Directorate and so on. Last but not the least, the Revenue impact on the appeal is also very huge and the matter requires in depth and exhaustive consideration. 17. In this context, we observe that most of the appeals coming before the Tribunal, involve complex facts and intricate questions of law. If we go by the argument of the Department, then every such appeal has to be decided by a special bench. In all such cases, any one of the parties to the litigation will seek resolving the issue by constituting a special bench. This would create serious impediment in the functioning of the Tribunal. Similarly, the contention of the learned Departmental Representative that a decision of the division Bench of the Income Tax Appellate Tribunal is not followed by another Bench of Income Tax Appellate Tribunal and, therefore, the appeal has to be heard by a special bench is also not correct. The decision of a Division Bench certainly has a binding effect and is generally followed by other division benches of the ITAT unless it is factually distinguishable or there is a contrary decision of a higher court. Huge revenue impact also cannot be a reasonable ground for constitution of a special bench to hear the appeal. So far as the contention of the learned Departmental Representative that the decision of the Tribunal will have serious on the proceedings before the CBI and Enforcement Directorate, we are to say that while the CBI and Enforcement Directorate are investigating and prosecuting agencies, the Tribunal is a quasi-judicial body adjudicating on disputes arising out of assessments made under direct tax laws. The decisions of the Tribunal rendered upon considering the facts and materials on record, the statutory provisions and the law laid down by the Supreme Court and High Courts and also different benches of the Tribunal. The degree of appreciation of evidence varies between the proceedings before the Tribunal and the proceedings initiated by the CBI and Enforcement Directorate. 18. At the same time, however, there is enormous political sensitivity involved in the present appeal filed by a company, whose chief promoter is a Member of Parliament and son of former Chief Minister, facing serious charges of quid pro quo and so on, with the ongoing investigations by CBI and Enforcement Directorate. In the circumstances, any decision of the Tribunal on the issues involved in the appeal - one way or the other- may have wide spread ramifications in similar matters across the country. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 5 19. It is also worthwhile to point out at this juncture that the hearing of the appeal at Hyderabad Bench may generate widespread attention of the local media as well as certain sections of the general public, and may even generate avoidable heated debate over the subject, because of the sensitivity of the case and the personalities involved, which would, in turn, may have an effect on the smooth hearing and decision making by a regular bench of the Tribunal. 20. For this reason, and considering totality of facts and circumstances of the case, we are of the considered view that in order to ensure wide spread consideration of the matter before any decision is rendered on the issues involved in this appeal by the Tribunal, and to ensure the continued trust of the taxpayers, tax administrators and people at large that this Tribunal has been enjoying over the decades as to the impartiality of its decisions, the Hon'ble president may constitute an appropriate Bench outside Andhra Pradesh, specifically at Head Office level, for the hearing and adjudication on this appeal. Such a step would snuff out even a slightest doubt and apprehension in the mind of any of the party to the litigation with regard to the fairness of the proceedings and the ultimate decision making process. 21. With the above comments, this proposal is forwarded to the Hon'ble Vice president, to place the same with his comments, before the Hon'ble president, for appropriate decision in the matter." (Emphasis Supplied) Based on those observations Mr. Rana submitted that when the Regular Bench stated that an 'Appropriate Bench' may be constituted outside Andhra Pradesh, it meant a 'special bench'. Mr. Mistri submitted that the Regular Bench had categorically opined that a 'special bench' is not necessary and all that it recommended was that the matter be heard outside Andhra Pradesh. 30. We have perused the observations carefully. In the context of the Act, special bench is not a term of common parlance. It is a statutory phrase. A special bench is constituted under Section 255(3). The Regular Bench was not expected to use this term in vague sense leaving the reader to debate as to whether when it said an Appropriate Bench it actually meant a 'special bench'. In fact, the reading of order shows that the Regular Bench negatived almost all grounds urged by the Board for constitution of a special bench. Thereafter it stated that since there was 'political sensitivity' and the decision would have widespread ramifications. The Regular Bench opined that it will be advisable to have the matter heard outside Andhra Pradesh. The Bench opined that, to ensure the continuous faith of taxpayers and tax administration and people at large that the Tribunal has been enjoying over decades, the president may constitute appropriate Bench outside Andhra Pradesh. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 6 2.2. We find that this decision of Hon’ble Bombay High Court was contested by ITAT by filing a Special Leave Petition (SLP) before the Hon’ble Supreme Court in 2015 and registered as under:- Diary No. 42483/2015 filed on 18/12/2015 04:00PM (Section-IX) Case No.: SLP(c) No.005296/2016 Registered on 19/02/2016 SLP(c)No.CC No.001974/2016 Registered on 29/01/2016 The aforesaid SLP is pending and there was no stay of operation of order of Hon’ble Bombay High Court dated 10/08/2015. 2.3. Subsequently, an early hearing petition was filed in these two appeals by the assessee i.e. for ITA No.18/Hyd/2012 and ITA No,790/Hyd/2013 for A.Y.2008-09 before the Hyderabad Tribunal. Pursuant to the said early hearing petition dated 27/01/2021, the Division Bench of Hyderabad Tribunal vide its interim order by way of order sheet noting dated 24/03/2021 referred the matter to the President, ITAT for guidance and direction. The relevant observation of the Hyderabad Tribunal Order sheet noting dated 24/03/2021 reads as under:- 7. Keeping in mind all these facts narrated in preceding paras, we are of the opinion that even if these appeals carry regular date of hearing stated to on 24 th May, 2021, the same would invariably require the necessary clarification from Hon’ble President ITAT regarding the process as to in what manner the same ought to be heard by a regular division bench or Special Bench, as the case may be. This Bench therefore feels it appropriate to direct the registry at Hyderabad to put up the instant case files before the Hon’ble President of the Tribunal to take necessary call on the issue. It is further made clear that although the assessee has not pressed for the instant earlier hearing applications fixed on 19/03/2021, keeping in mind its regular date as 24/05/2021, it shall be very much at liberty to file for the necessary relief afresh with better particulars; if so advised, as per law. The registry is directed to ensure necessary compliance as per law. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 7 2.4. Pursuant to this, the President, ITAT, considering the decision of Hon’ble Bombay High Court; the recommendations of the Division Bench of Hyderabad ITAT originally to hear this appeal outside Andhra Pradesh and also considering the fact that the order of Hon’ble Bombay High Court had not been stayed by Hon’ble Supreme Court, proceeded to constitute a Division Bench for disposal of the aforesaid appeal. 2.5. When this matter was called for hearing, at the outset, ld. Sr. Standing Counsel Mr. K.V. Arvind and ld. Sr. Counsel for the assessee Shri J.D.Mistry was appraised of the fact that there is SLP filed in the Supreme Court against the judgment of Hon’ble Bombay High Court. Both the Counsels categorically stated that there is no stay of operation of judgment of Hon’ble Bombay High Court and Tribunal can hear this matter. In terms of this, this matter was heard by our Bench in Mumbai. 3. The ground Nos.1, 5 & 6 raised by the assessee are general in nature and does not require any specific adjudication. 4. The ground No.2 raised by the assessee was stated to be not pressed at the time of hearing by the ld. AR. Accordingly, the same is dismissed as not pressed. 5. The ground No.3 raised by the assessee is challenging the addition made on account of share premium in the sum of Rs.277,56,88,650/- as income from other sources. The ground No. 4 raised by the assessee is challenging the addition made on account of share premium in the sum of Rs 15,00,00,000/- as unexplained cash credit u/s 68 of the Act. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 8 6. The brief facts of this issue are that the assessee company is engaged in the business of publishing Telangana Newspaper “Sakshi”. The assessee company was incorporated in the year 2006 as private limited company. It commenced publication of its newspaper activity from 24/03/2008. The return of income for the A.Y.2008-09 was filed by the assessee company on 29/09/2008 showing loss of Rs.19,91,51,382/-, which was duly processed u/s.143(1) of the Act. Thereafter, the case was selected for scrutiny by issuance of notice u/s.143(2) of the Act within the prescribed time. During the year under consideration, the assessee received share capital together with premium from the following persons:- SL.NO NAME OF THE COMPANY A.Y. NO.OF SHARES PREMIU M Date of Allotment SHARE CAPITAL 1 MR. J. JAGAN MOHAN REDDY 2007-08 3000 NIL 14.11.2006 30000 TOTAL 3000 30000 2 M/S CARAMEL ASIA HOLDINGS PVT.LTD 2007-08 50035800 NIL 31.03.2007 500358000 2008-09 23525000 NIL 02.08.2007 235250000 TOTAL 73560300 735608000 3 MR.HARISH.C.KAMA RTHY 2007-08 3500 NIL 14.11.2006 35000 2008-09 3500 NIL 17.07.2007 35000 TOTAL 70000 70000 TOTAL OF PROMOTERS & ASSOCIATES 73633800 735708000 HYDERABAD 1. MR. A.K.DANDAMUDI 2008-09 277776 350 15.10.2007 10,00,00,000 2. MATRIX GROUP ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 9 ALPHAVILLAS PVT.LTD 2008-09 4,16,666 350 15.10.2007 150,000,000 TOTAL 4,16,666 150,000,000 ALPHA AVENUES PVT.LTD 2008-09 2,50,000 350 15.10.2007 90,000,000 2008-09 166666 350 14.02.2008 60,000,000 TOTAL 4,16,666 150,000,000 GILCHRIST INVESTMENTS PVT.LTO 2008-09 5,55,554 350 15.10.2007 199999440 2008-09 4,16,666 350 14.02.2008 149999760 2008-09 1,38,889 350 13.03.2008 50000040 TOTAL 11,11,109 39,99,99,240 GROUP TOTAL 19,44,441 69,99,99,240 3. INVESTMENTS SOURCED FROM SALE OF SHARES IN TANLA SOLUTIONS LTD. SANDESH LABS PVT.LTD 2008-09 6,66,664 350 15.10.2007 2,40,000,000 SPUME SOLUTIONS PVT.LTD 2008-09 66,666 350 13.03.2008 2,40,00,000 TOTAL 733330 26,40,00,000 MR.G.SRINIVASA RAJU 2008-09 1,27,777 350 13.03.2008 46,000,000 TOTAL 1,27,777 46,000,000 GROUP TOTAL 8,61,107 31,00,00,000 4. PVP GROUP (MR. POTLURI PRASAD) PVP BUSINESS VENTURES PVT.LTD 2008-09 12,50,000 350 14.02.2008 45,00,00,000 2008-09 1,38,888 350 13.03.2008 4,99,99,680 GROUP TOTAL 1,38,888 49,99,99,680 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 10 5. HETERO GROUP (CHAIRMAN MR .PARTHASARTHY REDDY) HETERO DRUGS LTD. 2008-09 13888 350 14.02.2008 50,00,000 2008-09 27778 350 13.03.2008 1,00,00,000 TOTAL 41,666 15,000,000 HETERO LABS LTD 2008-09 27777 350 14.02.2008 1,00,00,000 2008-09 13889 350 13.03.2008 50,00,000 TOTAL 41,666 15,000,000 HETERO HEALTHCARE LTD. 2008-09 13,888 350 14.02.2008 5,000,000 13889 350 13.03.2008 5,000,000 TOTAL 27,777 10,000,000 MR.M.SRINIVAS REDDY, . SON-IN- LAW OF MR. PARTHASARATHY REDDY 2008-09 13,888 350 13.03.2008 5,000,000 TOTAL 13888 5,000,000 GROUP TOTAL 138886 4,50,00,000 6 AUROBINDO PHARMA GROUP AXIS CLINICALS LTD.(EARLIER KNOWN AS TRIDENT LIFE SCIENCES PVT.LTD. M.D. MR. SARAT CHANDRA REDDY, SON-IN-LAW OF MR. K.NITYANAND REDDY, M.D. OF AUROBINDO PHARMA LTD.) 2008-09 1,94,444 350 14.02.2008 7,00,00,000 MR. K.PRASADA REDDY, (BROTHER OF MR. K.NITYANANDA REDDY, M.D., AUROBINDO PHARMA LTD.) 2008-09 27,777 350 14.02.2008 1,00,00,000 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 11 MRS.K.RAJESWARI (W/O.MR. K.NITYANANDA REDDY, M.D., AUROBINDO PHARMA LTD.) 2008-09 55,555 350 14.02.2008 2,00,00,000 GROUP TOTAL 2,77,776 10,00,00,000 7 INVESTMENTS SORUCED FROM M/S. RAMKY GROUP TWC INFRASTRUCTURE PVT.LTD 2008-09 55,555 350 14.02.2008 2,00,00,000 ERES PROJECTS PVT.LTD 2008-09 222,222 350 13.03.2008 8,00,00,000 GROUP TOTAL 2,77,777 10,00,00,000 8. PENNAR CEMENTS GROUP PIONEER INFRASTRUCTURE HOLDING LTD. 2008-09 5,55,555 350 14.02.2008 20,00,00,000 GROUP TOTAL 5,55,555 20,00,00,000 9 BANGALORE BASED COMPANIES SHRINE FINANCE & INVESTMENTS PVT LTD 2008-09 541666 350 13.03.2008 19,50,00,000 SATABDI INVESTMENTS 2008-09 986111 350 13.03.2008 35,50,00,000 GROUP TOTAL 1527777 55,00,00,000 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 12 10 THE INDIA CEMENTS LTD. #827, ANNAI SALAI, CHENNAI 2008-09 5,55,555 350 14.02.2008 200,000,000 2008-09 416667 350 13.03.2008 150,000,000 TOTAL 972222 350,000,000 KOLKATA / MUMBAI / RAJKOT COMPANIES 11 ARTILLEGENCE BIO INNOVATINS LTD. AMRITHDHAM SUIT # 5 & 6, NITYANAND NAGAR, BAKULTALLA, HOWRAH -711109 2008-09 13,888 350 14.02,2008 5,000,000 12 DELTON EXIM PVT.LTD. #3, AUPORE ROAD, KOLKOTA-700027. 2008-09 6,944 350 14.02.2008 2,500,000 13 HINGORA FINVEST PVT.LTD., SIVAJI RAJE SCHEME, 8- 10/14, MHADA, 101, EKTA NAGAR, MALAD -WEST, MUMBAI - 400062. 2008-09 6,944 350 14.02.2008 2,500,000 14 KIRTI ELECTRO SYSTEMS PVT.LTD., NITYANAND NAGAR, BAKULTALLA, HOWRAH 2008-09 13,888 350 14.02.2008 5,000,000 15 MOON ENTERPRISES LTD. NO.901/902, Everest Building, Opp:Sashtri Maidan, Umbada Chowk,Rajkot- 360001 Shifted to Mumbai. 2008-09 69,444 350 14.02.2008 25,000,000 16 STOCKNET INTERNATIONAL LTD, AMRITHDHAM 2008-09 27,777 350 14.02.2008 10,000,000 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 13 SUIT# 5 & 6, NITYANAND NAGAR, BAKULTALLA, HOWRAH -711109 GRAND TOTAL 81981001 3,740,706,920 6.1. The ld. AO noted that there are two categories of investors in the assessee company (i) promoters category holding 7,35,67,800 shares which were allotted at face value at Rs.10/- totalling to Rs.73,56,78,000/- and (ii) outsiders category holding 83,47,201/- shares of face value of Rs.10/- each at premium of Rs.350 per share. The entire list of share capital received as above was subject matter of verification by the ld. AO. The ld. AO accepted the receipt of share capital received from promoters category at face value of Rs 10 per share as genuine and satisfying all the three necessary ingredients of section 68 of the Act. The ld. AO noted that assessee’s business of publication of news paper commenced only from 24/03/2008 and that the entire shares were allotted to outsiders prior to 24/03/2008 at a premium of Rs.350/- per share. This apparently enabled the ld. AO to verify the receipt of share capital and share premium from outsiders’ category. The ld. AO observed that with regard to the share capital and share premium received from outsiders’ category, certain complaints were received and also news paper articles making various allegations against the promoters of the assessee company. These allegations are listed as under:- • Between April 1, 2007 and March 31, 2008, Shri Y.S. Jagan Mohan Reddy sold 21,42,860 shares of Sandur company at Rs. 140 each to Shri.Nimmagadda Prasad, founder-promoter of pharmaceutical company Matrix Laboratories and earned a profit of nearly Rs.30 crore. Shri Prasad also bought 19,44,441 shares of Jagati Publications in the name of Gilchrist Investments Pvt. Ltd, Alpha Villas Pvt. Ltd., and Alpha Avenues Pvt. Ltd., at Rs.350 a share. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 14 • Around the same time, VANPIC Ports Pvt. Ltd, a company in which Shri Nimmagadda Prasad and the Ras al-Khaimah are partners, was allotted the rights to develop Chirala, Vodarevu and Nizampatnam Port projects in Andhra Pradesh on a build-operate-transfer basis. • It is more than coincidence that those who purchased stakes in Shri Y.S. Jagan Mohan Reddy’s (promoter) businesses were allotted land, projects and contracts, including special Economic Zones (SEZ) by the Andhra Pradesh government led by his father. • Shri Ayodhya Rami Reddy- the promoter of Ramky Group held shares in Jagathi Publications Pvt. Ltd., (JPPL) through Eres Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., who bought 55,555 JPPL shares, was allotted land for an SEZ at Visakhapatnam along with various irrigation projects. • Shri B. Paratha Saradhi Reddy, Promoter of Hetero Drugs Group-held 1,11,109 JPPL shares, through Hetero Health Care Ltd., Hetero Care Ltd., Hetero Drugs Ltd., and Hetero Labs was allotted land for two SEZs at Nakkapalli and Jadcherla. • Building rules were relaxed in respect of a hotel to be constructed at Road No.2, Banjara Hills, Hyderabad, Shri P. Pratap Reddy, Promoter of Pennar Cements, who holds 5,55,555 of JPPL shares through one of the concerns, in which he has substantial interest i.e. Pioneer Infrastructure Holding Ltd., • Land was allotted in Nadargul, Ranga Reddy District to concerns relating to Shri Prasad V. Potluri, who has substantial interest in M/s. PVP Business Ventures Ltd., which invested in 13,88,888 shares of JPPL. • Number of companies with no credentials situated in Kolkata, Gujarat, Chennai, Bangalore and Maharashtra invested in JPPL shares. 6.2. The ld. AO carried out enquiries with the aforesaid investors falling in the outsiders’ category by issuing notice u/s.133(6) of the Act, issuing commissions / summons u/s. 131 of the Act and notices u/s 133(6) of the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 15 Act. The ld. AO observed that shareholders falling in promoters category were allotted shares at par value of Rs.10/- per share and whereas shareholders falling in outsiders category, who had practically contributed major portion of the amount to the assessee company, had been allotted shares at a premium of Rs.350/- per share. In order to examine the genuineness of the same, the ld. AO proceeded to examine the valuation report valuing the shares of the assessee company issued by M/s.Jagadisan & Co., Chartered Accountants dated 12/07/2007 and M/s. Deloitte Touche Tohmatsu India Pvt. Ltd., (hereinafter referred to as Deloitte) dated 16/11/2007, which is the basis for making investments by the shareholders in outsiders’ category at a premium. 6.3. The ld. AO observed on perusal of the valuation reports the following aspects:- a) The valuation report prepared M/s. Jagadisan & Co. dated 12/07/2007 and by Deloitte dated 16/11/2007 did not carry out any market survey or any feasibility study. b) These valuation reports have been prepared without any due diligence and are prepared on the basis of information provided by the management of the assessee company. c) These reports have been prepared without having any scientific basis for provisions made with regard to revenues of the assessee company. d) These reports have not taken into account actual performance and balance sheet of the assessee company till the date for which valuation has been done. The assessee company had suffered huge losses in subsequent years which has resulted in ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 16 eroding of the share capital which proves that the projections made in the valuation report to be unrealistic. e) The valuation reports were completely prepared based on the information furnished by the management, its key management personnel, estimated project cost reports and projections for the future years as estimated by the management and not based on any factual data. f) The ld. AO also observed that newspaper readership has substantially reduced with the commencement of many news channels in the television media and further due to increase in the usage of internet, the entire newspaper industry has been adversely impacted both in its circulation as well as its advertisement revenues. 6.4. In view of the same, the ld. AO observed that the assessee company could not have commanded huge premium of Rs.350/- per share and hence, the same becomes highly questionable. He also observed that despite substantial funding is made by the second category of shareholders (i.e. other than promoters), the major voting power still vests only with the promoter’s family and accordingly, he concluded that the premium received by the assessee company is not justified. He also observed that the investors had not been given any return on their investments by way of dividend by the assessee company. The ld. AO specifically observed that with regard to share capital and share premium received from second category investors i.e. other than promoters group, that assessee company is only a private limited company and not listed company and that the gain in share market on sale of shares cannot be a reason for getting huge premium. The ld. AO observed that the major group of companies i.e. Aurobindo Group, Matrix Group etc had invested ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 17 mainly in their subsidiaries and had invested in outside business for the first time at a high premium. Accordingly, he concluded that it gives a possibility that investors had derived other benefits from their association with key management personnel of the assessee company, either directly or indirectly. 6.5. The ld. AO with regard to the certain shareholders in order to justify his conclusion that the assessee company did not command high premium of Rs 350 per share made specific observations as under:- (i) In respect of shareholders from Bangalore i.e. (Shrine Finance and Investment Pvt. Ltd., and Shatabdi Investments) - these companies have sold their shareholding to 10 companies from Kolkata and one company from Mumbai. (ii) Shareholders from Kolkata (Artillegence Bio Innovations Ltd., Kirti Electro Systems Pvt. Ltd., and Stocknet International Ltd.,) are having Registered office at the same premises. (iii) The ld. AO observed that Artillegence Bio Innovations Ltd., and Delton Exim Pvt. Ltd., have common director even though they have registered office at different premises. (iv) The ld. AO further observed that M/s. Hingora Finvest Pvt. Ltd., and Stocknet International Ltd., was having a common director. These shareholders were having account in the same bank. (v) In respect of other shareholders based at Kolkata / Mumbai / Hyderabad, the ld. AO observed that the investor companies to whom notices were issued u/s.133(6) of the Act were returned unserved with comments “not known” / returned unclaimed. The ld. DDIT (Investigation) Unit IV(2) Kolkata vide its report dated 23/10/2009 had stated that Kolkata based companies do not ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 18 operate from given addresses and are apparently bogus entities. Certain concerns had only address box facility from the owner of the premises, with no furniture, sign boards and one person, appeared to be peon. The telephone numbers had recorded messages that they were out of services or there were no existence of telephone numbers. There was no precise premises matching address of Hingora Finvest Pvt. Ltd., and the traced address belong to a person who was a mason and did not know any such company. In the case of Moon Enterprises, it had its Registered office at Rajkot and address has been changed to Mumbai. The concerned person did not remember to have made any investment in assessee company. The income earned by all these companies were very negligible. The perusal of the bank statements of these companies would show that there are credit deposits without any description and therefore, unverifiable. (vi) With respect to Hyderabad based investors, majority funds were received only from Ramky group of companies for investing in assessee’s company. Certain entities did not respond to summons issued u/s.131 of the Act when they were asked to appear before the ld. AO. The assessee company was also asked to produce shareholders which it had failed to do so. 6.6. By making the aforesaid observations, the ld. AO sought to treat the amount received towards share capital and share premium from the following companies as unexplained cash credit u/s.68 of the Act:- Sr. No. Name Amount(Rs.) 1. Artillegence Bio Innovations Ltd., 50,00,000/- ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 19 2. Kirti Electro Systems Pvt. Ltd., 50,00,000/- 3. Delton Exim Pvt.Ltd., 1,00,00,000/- 4. Stocknet International Ltd., 25,00,000 5. Hingora Finvest Pvt. Ltd., 25,00,000/- 6. Moon Enterprises Pvt. Ltd., 2,50,00,000/- 7. ERES Projects Pvt. Ltd., 8,00,00,000/- 8. TWC Infrastructures Pvt. Ltd., 2,00,00,000/- Total 15,00,00,000/- 6.7. The ld. AO also observed that in respect of shareholders from Kolkata / Mumbai (i.e. Artillegence Bio Innovations Ltd, Kirti Electro Systems Pvt. Ltd., Delton Exim Pvt. Ltd., Stocknet International Ltd., Hingora Finvest Pvt. Ltd., and Moon Enterprises Pvt. Ltd.), the information sought u/s.133(6) of the Act were not responded to by the above investors. The ld. AO confronted the assessee with the same. The assessee company on 15/12/2010 furnished the details of shareholding companies together with their PAN copy, Board Resolution, Certificate of Incorporation, Memorandum of Association and Articles of Association. The ld. AO also observed that M/s. Delton Exim Pvt. Ltd., Artillegence Bio Innovations Ltd., Kirti Electro Systems Pvt. Ltd., and Stocknet International Ltd., had even furnished confirmation letters before the assessee company duly confirming the fact of making investment in assessee company with premium. The ld. AO disregarded these confirmation letters in view of various allegations and observations made ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 20 in respect of veracity of these shareholder companies from Kolkata as detailed supra. 6.8. With regard to Mumbai Investors (i.e. Hingora Finvest Pvt. Ltd., and Moon Enterprises Pvt. Ltd.,) based on the enquiries conducted by ADIT, Unit IX(1), Mumbai and his report dated 28/12/2010, the ld. AO concluded that these shareholders are not genuine. 6.9. The ld AO made a general observation that assessee has failed to produce all the shareholders before him and hence, the assessee has not proved the genuineness of the transactions and creditworthiness of these investors. 6.10. The ld. AO based on the primary details furnished by the assessee proceeded to examine in detail in respect of each shareholder companies as under:- a) Artillegence Bio Innovations Ltd – Investment Amount: Rs. 50,00,000/- The ld. AO observed that based on the enquiry conducted by Kolkata Investigation Wing, this company does not exist and is a mere briefcase company. He also observed that assessee has furnished copies of Board Resolutions, Bank Account extracts, confirmation letter together with Income Tax assessment particulars of the said company. The ld. AO observed that immediately preceding the date of making investment by this shareholder in the assessee company, there were certain money transfers that had happened through RTGS credits. The said money received by the shareholder company did not stay with it and were immediately transferred either to assessee company or to other ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 21 shareholders company which in turn had made similar kind of investment in assessee company towards share capital and share premium. He observed that the nature of money received by the said shareholder company through RTGS credit could not be explained by the assessee herein. In other words, the ld. AO observed that source of source of the investor company was not proved by the assessee in the instant case. b) Kirti Electro Systems Pvt. Ltd – Investment made Rs.50,00,000/- The ld. AO made similar observations as was made in the case of Artillegence Bio Innovations Ltd., He further observed that on perusal of the bank statement of the investor company a sum of Rs.35,00,000/- was received from Online Information Technology Ltd., and immediately a sum of Rs.25,00,000/- was transferred to the assessee company. He ultimately concluded that genuineness of the transactions and creditworthiness of the shareholding company could not be established. c) Stocknet International Ltd., - Investment made Rs.1,00,00,000/-. Same observations were made in respect of this shareholder company as was made in the case of Artillegence Bio Innovations Ltd. d) Delta Exim Pvt. Ltd., Investment made Rs.25,00,000/- Same observations were made in respect of this shareholder company as was made in the case of Artillegence Bio Innovations Ltd. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 22 e) Hingora Finvest Pvt. Ltd., Mumbai – Investment made Rs.25,00,000/- The ld. AO observed that enquiries were sought to be carried out to the Mumbai Investigation Wing to ascertain the genuineness of these shareholder companies and details of investments received therefrom. He observed that the enquiries reveal that no such company exists in the address given by the assessee. He observed that the assessee company has given the copies of Board Resolutions, Bank account extract, confirmation letter from other investors together with their income tax assessment particulars. On perusal of the bank statement, he observed that there were huge transfer of funds that had flown into the investor company and immediately the said funds were either transferred to the assessee company or to other Kolkata based shareholder companies as listed supra. Since the nature of money received by the said investor company was not proved by the assessee, the ld. AO concluded that source of source was not established / proved by the assessee and hence, doubted genuineness of the transaction and the creditworthiness of the investor. f) Moon Enterprises Pvt. Ltd., Rajkot /Mumbai- Investment made Rs.2,50,00,000/- Enquiries were carried out from ACIT, Circle – 1, Rajkot initially about this investor company. Later since, the registered office of the said company was shifted from Rajkot to Mumbai, the ld. AO caused an enquiry to be conducted by Mumbai Investigation Wing. The ld. AO observed that the enquiries revealed that the Directors of the said Investor company were not aware of having any business relationship with the assessee company. The ld. AO on perusal of the bank statements observed that the said company was having its bank account with Bank of India which ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 23 showed opening bank balance of Rs.3,60,50,718/- which money was utilised for making investment in assessee company. The ld. AO however, observed that the opening bank balance as reflected thereon, remain unverifiable and in effect concluded that assessee has not proved the source of source of the investor company. g) Eres Project Pvt. Ltd., Hyderabad – Investment made : Rs. 8,00,00,000/- The assessee furnished latest address of the said investor company. Notice u/s.133(6) of the Act was issued by the ld. AO. In response to the same, the ld. AO observed that the said shareholder company furnished all the requisite details through post. He further observed that as per the bank account of the investor company, the source was explained as amount routed through Axis Bank Account No.008010200058362. The ld. AO also observed that the said bank statement of the investor company revealed that the investment was made on assessee company on 18/02/2008 vide Cheque No.941418 for Rs.8,00,00,000/-. The said amount was sourced from transfer of funds from Ramky Estates and Farms Pvt. Ltd., on 15/02/2008. He observed that prior to transfer of funds from Ramky group to the said investor company i.e Eres Projects Pvt. Ltd., the investor company did not have sufficient bank balance. Accordingly, the ld. AO concluded that the funds received by the investor company from Ramky Group is only an accommodation entry which was inturn utilised for making investment in assessee company. Accordingly, he concluded that the credits received in the books of investor company were not conclusively proved and held that the assessee has not proved the genuineness of the transactions and credit worthiness of the investor company. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 24 h) TWC Infrastructure Pvt. Ltd., Hyderabad – Investment made : Rs.2,00,00,000/- The assessee furnished the latest address of the investor company before the ld. AO. Notices u/s.133(6) of the Act was issued to the said investor company which was duly responded directly by the said investor company before the ld. AO by furnishing the requisite details. From the perusal of the bank statements and details furnished by the investor company, the ld. AO observed that the said company has made investment in assessee company on 31/12/2007 vide Cheque No.111429 for Rs.2,00,00,000/-. The source of such fund was out of transfer of funds received by the investor company from Ramky group of companies. Thereafter, he made similar observations as was made by him in the case of Eres Projects Pvt.Ltd., and concluded that assessee has not proved the genuineness of the transaction and creditworthiness of the investor company. 6.11. With the above observations, the ld. AO proceeded to treat the receipt of share capital and share premium of Rs.15,00,00,000/- in total from the aforesaid eight entities as unexplained cash credit u/s.68 of the Act. 6.12. In respect of share capital and share premium received from Matrix Group of companies amounting to Rs.70 Crores for allotment of 19,44,441 shares at a premium of Rs.350/- per share, the ld. AO observed that as per the statement recorded u/s.131 of the Act from Shri N Prakash, Director in the Matrix Group of companies, the group companies of the shareholders in conjunction with subsidiary of Government of Ras-Al- Khaimah had been awarded with Vodarevu and Nizamapatnam ports and industrial corridor project by the Government of Andhra Pradesh under ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 25 the Government to Government scheme. It was specifically replied by the Director that two of its group companies were awarded the project but not the investor companies in the assessee company. 6.13. In respect of share capital and share premium received from Aurobindo group of companies totalling to Rs.10,00,00,000/- for allotment of 2,27,776 shares at a premium of Rs.350/- per share, the ld. AO observed that as per the statement recorded u/s.131 of the Act from its Director Shri K. Prasad Reddy, it was noticed that family related group concern i.e. Aurobindo Pharma Ltd., was allotted SEZ land at Mahboob Nagar by the Government of Andhra Pradesh. 6.14. In respect of share capital and share premium received from Hetero Group of companies, totalling to Rs.4,50,00,000/- for allotment of 1,24,997 shares at a premium of Rs.350/- per share, the ld. AO observed that as per the statement recorded u/s.131 of the Act from its Director Shri G Srinivasa Reddy, it was noticed that their group concerns had been allotted 75 acres of SEZ land on lease basis for a period of 33 years by Government of Andhra Pradesh. 6.15. In respect of share capital and share premium received from two companies i.e. Sandesh Labs Pvt. Ltd., (Rs.24,00,00,000/-), M/s. Spume Solutions Pvt. Ltd., (Rs.2,40,00,000/-) and from an individual Shri G. Srinivasa Raju (Rs.4,60,00,000/-), the ld. AO observed that the above two companies and the individual had sold their shares held in M/s. Tanla Solutions Ltd., which were acquired by them in secondary market and total sale proceeds thereon were utilised for making investment in assessee company at a premium of Rs.350/- per share. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 26 6.16. In respect of share capital and share premium received from M/s. Pioneer Infrastructure Holding Ltd., (belonging to M/s. Pennar Cements group of Companies) for Rs.20,00,00,000/-; PVP Business Ventures Pvt. Ltd., for Rs.50,00,00,000/- and M/s. India Cements Ltd., for Rs.35,00,00,000/-, the ld. AO in his assessment order did not record any adverse remarks except merely stating that those shareholders also had invested in the assessee company at a premium of Rs.350/- per share. 6.17. The ld. AO observed that the assessee company or the other members in the promoters group does not have any experience in publishing newspapers which would justify payment by other investors at such a huge premium of Rs.350/- per share. The ld. AO disputed the basis of valuation reports submitted by M/s. Jagadisan and Co., Chartered Accountants and by Deloitte and rejected the projections given in the said valuation reports and accordingly, concluded that assessee company did not justify the premium of Rs.350/- per share. The ld AO specifically in para 20 of his order had categorically observed that the allotment of shares made by the assessee company to all the shareholders (which admittedly includes the shareholders in the outsiders category also as stated hereinabove) at par value of Rs 10 per share is reasonable and acceptable. The ld. AO made addition with respect to the investors alleged to have received benefits from the Government of Andhra Pradesh in the form of land, projects etc., had resorted to invest in shares of assessee company at a premium of Rs.350/- per share totalling to Rs.277,56,88,650/- and hence the said premium portion alone would become taxable as business income u/s.28(iv) of the Act in the hands of the assessee company on the ground that assessee company had derived benefits from those investors. The ld. AO also observed that the said amount can alternatively be taxed under ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 27 the head ‘income from other sources.’. While doing so, the ld. AO did not mention the Section under which he wishes to tax the said amount of Rs.277,56,88,650/- under the head ‘income from other sources’. 6.18. In effect, (i) The ld. AO in respect of share capital and share premium received from outside shareholders (other than promoters) observed that share premium component of Rs.277,56,88,650/- represents benefit derived by the assessee in terms of Section 28(iv) of the Act which is taxable as business income of the assessee or alternatively the same is taxable under the head ‘income from other sources’. However, the share capital portion at par value of Rs 10 per share from the very same shareholders were accepted to be genuine by the ld AO. Similarly the share capital portion at par value of Rs 10 per share received from the promoters category were also accepted to be genuine by the ld AO. (ii) The ld. AO observed that in respect of share capital and share premium received in the sum of Rs.15,00,00,000/- from shareholders at Kolkata, Bangalore, Mumbai and Hyderabad comprising of eight parties, the genuineness of the investments and creditworthiness of the investors were not established by the assessee and hence taxable as unexplained cash credit u/s.68 of the Act. 7. With regard to the addition made u/s.28(iv) of the Act, the assessee submitted before the ld. CIT(A), that there was no nexus between the assessee company and the benefit derived by any of the group concerns of the investor companies. It was specifically pointed out ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 28 that if benefits were derived by those group concerns of investor companies, such benefit cannot be deemed to be the benefit derived by the assessee company herein. It was specifically brought to the attention before the ld. CIT(A) that as per the statements of different persons recorded by the ld. AO which are detailed in the assessment order, some third party concerns derived benefit from the State Government or the Central Government and that the subscribers to the share capital or the assessee company did not derive any benefit thereon. Hence, no addition u/s. 28(iv) of the Act could at all be made in the hands of the assessee company. It was specifically argued that the factor of share premium is generally decided by market forces and that in the case of assessee, the share premium was determined based on the valuation of projections proposed at that stage which stand subsequently vindicated by actual performance of publications / circulars recognised and certified by the Audit Bureau of Circulations. Reference was also made to the copies of such certificates obtained from Audit Bureau of Circulations by the assessee. In any case, it was submitted that the receipt of share capital and share premium cannot be taxed as a revenue receipt. 8. The ld. CIT(A) categorically held that provisions of Section 28(iv) of the Act cannot be made applicable in the instant case by observing as under:- ‘The provisions of said clause (iv) of Section 28 read as under: “28(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession.” From the above, it may be seen that, such benefit which is to be taxed treating as income in the hands of an assessee, should arise from business or profession of that assessee. However, in the instant case, as submitted during the appeal and also noted by the AO, the appellant company commenced business operation on 24.03.2008. The receipt of said amounts ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 29 towards share premium, from those other investors, were during the period prior to commencement of business in the case of the appellant company, as noticed from the chart furnished by the AO relating to the details of investment in share capital made in the case of the appellant in para 5 of the assessment order. Under these circumstances and having regard to the above provision of Section 28(iv) of the Act, the said amounts received in form of share premium, amounting to Rs.277,56,88,650/-, in my considered view, cannot be taxed treating as business income under that section.” 8.1. The revenue is not in appeal before us against this finding of the ld. CIT(A) by deleting the addition made u/s 28(iv) of the Act. 8.2. The ld. CIT(A) thereafter proceeded to tax the said receipt of share premium in the sum of Rs.277,56,88,650/- as ‘income from other sources’ and for which purpose he proceeded to adjudicate the valuation reports submitted by M/s. Jagadisan and Co., Chartered Accountants and M/s. Deloitte. At the outset, he agreed that these two valuation reports were duly submitted before the ld. AO which justified premium of Rs.350/- per share charged by the assessee. 8.3. The ld. CIT(A) observed that with respect to share premium, the valuation report prepared by M/s. Jagadisan and Co. dated 12/07/2007 did not provide any clarity with respect to (i) when the reference was made by the assessee company seeking valuation from the Chartered Accountants Firm ; (ii) the valuation amounting to Rs.3,450 Crores did not specify the date for which the valuation of the company was determined. 8.4. With respect to Valuation report of M/s. Deloitte, the ld. CIT(A) reiterated the same as was mentioned for M/s. Jagadisan & Co. The ld. CIT(A) also observed that the said valuer i.e. M/s. Deloitte had relied on information furnished by the management and had not carried out any independent verification. Since there was a qualification mentioned in the valuation report issued by M/s. Deloitte that the valuation cannot be ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 30 relied upon by the external parties, the ld. CIT(A) concluded that the valuation made by them is inflated. 8.5. The ld. CIT(A) observed that as per Board Resolution dated 10/11/2007 of M/s. Alpha Avenues Pvt. Ltd., they have relied on the valuation report of M/s. Deloitte for making investments in assessee company. The said valuation report of M/s. Deloitte is dated 16/11/2007 whereas investment is made in the assessee company on 04/10/2007 and 06/10/2007. Similar facts exist in the case of M/s. Alpha Villas Pvt. Ltd. 8.6. The ld. CIT(A) held that the share premium of Rs.350/- per share received from other investors was in the nature of revenue receipt in the hands of the assessee company and the same is taxable under the head ‘income from other sources’ since the said payment was due to benefit derived by these parties in future through association with the key management personnel of the assessee company. By making these observations, he upheld the addition made by the ld AO in the sum of Rs 277,56,88,650/- towards share premium component received by the assessee company from outsiders category. The ld. CIT(A) also effectively upheld the receipt of share capital portion at par value of Rs 10 per share from all the shareholders to be reasonable and acceptable and did not proceed to make any enhancement of income in the hands of the assessee company. 8.7. The ld. CIT(A) with regard to receipt of share capital and share premium received from eight parties listed supra, observed that those parties had not responded to summons issued u/s.131 or notice u/s 133(6) of the Act and that the Investigation Wing had reported that these parties did not exist at the addresses provided; income offered by these ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 31 parties in their respective income tax returns were very negligible; and that the assessee company had failed to prove the existence of these investors / identity of these shareholders since it could not produce the investor parties. The ld. CIT(A) also observed that the ld. AO had rightly observed that assessee has not been able to establish the creditworthiness of the investors and genuineness of the investments made in assessee company. With these observations, the ld. CIT(A) confirmed the addition made in the sum of Rs.15,00,00,000/- as unexplained cash credit u/s.68 of the Act in respect of share capital and share premium received from eight companies listed supra. 9. At the outset the ld. AR vehemently submitted that the entire investments made by the investors in assessee company towards share capital and share premium were made based on the valuation reports of two Chartered Accountants namely M/s. Jagadisan & Co., & M/s. Deloitte, who had apparently valued the assessee company at more than 3000 Crores. He argued that these valuation reports were prepared based on estimates on future projections with regard to the performance of the assessee company. Subsequently, the actual performance of the company had ratified the estimates made in the valuation report. Hence, the entire allegations of the ld. AO that the assessee company could not have commanded huge premium is totally unwarranted. He vehemently submitted that the lower authorities in more than one place in its respective orders had categorically stated that the nature of receipt by the assessee company is only towards share capital and share premium. Once a receipt is made towards capital contribution, such receipt would only be a capital receipt and same shall not constitute income in the hands of the recipient. He placed heavy reliance in this regard on the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 32 decision of the Hon’ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., reported in 368 ITR 1; decision of the Hon’ble Bombay High Court in the case of Shell India Markets Pvt. Ltd., vs. ACIT reported in 369 ITR 516 (Bom). 9.1. He argued that the share premium was sought to be added by the Revenue in the instant case under the head ‘income from other sources’ i.e. u/s.56 of the Act. He specifically argued that once a receipt is a capital receipt and not at all chargeable to tax as income, then the same cannot be brought within the meaning of Section 56 of the Act. In this regard, he placed reliance on the Co-ordinate Bench of Mumbai Tribunal in the case of ITO vs. Chiripal Polyfilms Ltd., in ITA No.2671/Mum/2016 for A.Y.2011-12 dated 19/02/2019. 9.2. He argued that all the shareholders falling in the outsider’s category (i.e. other than promoters) had duly confirmed before the ld. AO the fact of making investments in assessee company at a premium of Rs.350/- per share. All these shareholders had also duly responded to the notices u/s.133(6) of the Act by filing the requisite details directly before the ld. AO or the same were filed by the assessee, as the case may be. No adverse inferences were drawn on those documentary evidences submitted before the ld. AO. The ld. AR drew our attention to the valuation report issued by M/s. Jagadisan and Co. Chartered Accountants, wherein the valuer had categorically stated that the source of information for preparing the valuation report together with information and explanations provided to them are as under:- (a) Key Management Personnel of assessee company (b) Business plan of assessee company ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 33 (c) Market assessment of news paper industry prepared by assessee company. (d) Project cost reports, Revenue and cost projections for five years beginning April 2008, cash flows, projected profit and loss account and projected balance sheet for the first five years of operation of assessee company. (e) Profile of key management personnel of assessee company. 9.3. The ld. AR also drew the attention from the paper book containing the valuation report issued by Jagadisan and Co., dated 12.7.2007, wherein they had adopted Discounted Cash Flow (DCF) method to be the proper method for the purpose of valuing the shares of the assessee company by stating that the assessee company is at nascent stage and hence, it would be appropriate to value the company based on discounted cash flow method of valuation. In the said valuation report, since assessee is in nascent stage, the potential risk in news paper business would be moderate and accordingly, they had used a discount rate of 14% to discount the future cash flows while doing the valuation. They had also specifically taken into account the advertising revenues by selling advertising space in the news paper by the advertising agencies based on the certified figures published by Audit Bureau of Circulations, Mumbai. The ld AR submitted that the valuer M/s Jagadisan & Co. had also taken into consideration the peculiar features of proposed newspaper of the assessee as under:- • JPPL is planning to offer 18 colour newspaper pages in the main edition, which will provide better views and larger news contents when compared to competitor's offer in 4 to 12 page formats. • Sakshi will be printed using Latest Manu graph machineries which employs Computer to Plate(CTP) technology thus reducing print jobs by one hour and improving delivery lead time to readers. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 34 • Sakshi will have Tabloid editions catering to local and district news which will get increased advertisement space and consequent revenue from such districts. • The multi coloured news edition coupled with colour advertisements at very competitive advertisement rates of Rs. 700 per sq.Cms (Main Edn.) is believed to bring substantial revenue by cutting across competitor's territory. • The projected sale of 12 lakh newspapers per day in the first year of operations is slated to progressively increase by 3 lakhs per day by its fourth year will bring in required cash flow and profitability to sustain itself in the future. • As part of its entry strategy "Sakshi" will be priced @ Rs. 2/per copy and this will ensure Rupees 85 crores as subscription sales in the first year and increase up to Rupees 107 crores by the fourth year of its operations. 9.4. The ld AR submitted that accordingly the valuer M/s. Jagadisan & Co. had valued the assessee company at Rs. 3459 Crores using Discounted Cash Flow method vide their valuation report dated 12/07/2007. He also referred to the valuation report issued by M/s. Deloitte vide report dated 16/11/2007 wherein the assessee company was valued as on 31/12/2007 in the range of Rs.2950 to 3050 crores using discounted cash flow method. By this process, the ld AR justified the premium charged by the assessee at Rs 350 per share which is supported by two independent valuation reports. 10. The Ld. DR at the outset argued that department had filed certain additional evidences in terms of Rule 29 of the Income Tax Appellate Tribunal Rules. In this regard, he drew the attention of this Bench to the 14 paper books filed by the department and referred to various documents thereon. He requested for admission of those additional evidences as according to him, those documents would be relevant for disposal of the impugned appeal. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 35 11. Per contra, the ld. AR vehemently objected to the admission of additional evidences filed by the department in the assessee’s appeal. The legality of admission of these additional evidences is dealt with hereinbelow in detail. Admissibility of Additional Evidences filed by the Revenue: 12. The Revenue vide letter dated 16.04.2013 vide F.No.DC- 2(3)/AABCJ7667G/13-14 filed five paper books containing pages 1 to 229 and also requested that the documents contain the statements and the informations in these paper books in 5 volumes and these documents constitute additional evidences. It was requested that as per rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 (hereinafter the ‘Rules’) the same may be admitted. Similar application was filed vide letter dated 19.06.2013 vide F.No.DC-2(3)/AABCJ7667G/13-14 and filed paper book No.6. Similar application and paper books No.7 & 8 were filed vide applications dated 04.07.2013 vide F.No.DC-2(3)/AABCJ7667G/12-13. 12.1. Now during the course of hearing on 09.08.2021 the Revenue filed a consolidated application under Rule 29 of the Rules for admission of additional evidence/documents filed by the Revenue. The relevant text of the application reads as under: “1. The applicant is respondent in the above matter and Assessing Officer of the appellant assessee hereinabove. Hence this application by the applicant. 2. It is submitted that assessment of Assessment Year 2008-09 was completed vide order dated 31/12/2010. The assessee being aggrieved against the order of assessment preferred appeal before the Commissioner of Income Tax Appeals. The Appellate Commissioner decided the appeal vide order dated 30/12/2011. 3. It is submitted that the subject matter of the assessment order as well as the order of the Appellate Commissione rwas subjected to investigation by the CBI authorities. The CBI authorities have filed the chargesheets. The CBI authorities have retrieved various documents in relation to the alleged transactions and the same are in relation to the dispute in question, It Is submitted that the documents were relatable lo the dispute in the appeal have been placed before this Hon’ble ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 36 Tribunal by the then Assessing Officer through different paper books with a request to consider the same as additional evidence. However an application in a specified format prescribed under Rule 29 of the Income Tax Appellate Tribunal Rules has not been filed. Hence this application seeking permission of this Hon’ble Tribunal to take the said additional evidence/documents by allowing this application. 4. It is submitted that these documents were not within the knowledge of the Revenue when the assessment order was framed and also at the time when the Appellate Commissioner passed the order. The documents being subsequent development having bearing on the dispute involved in the above appeal are necessary to arrive at just and correct conclusion in regard to the issues. It is further submitted that though certain documents of the State Government were dated earlier in the time of assessment and the appellate Commissioner, the same could not be accessed with due diligence exercised by the Assessing Officer. It is further submitted that as the additional documents sought to be relied on are directly relatable to the dispute before this Hon’ble Tribunal, the said documents would be necessary for decision by this Hon'ble Tribunal. 5. The entire list of documents, the brief description of the documents and the relevance of the same to the issue in appeal is stated in the tabulated form as per Annexure enclosed. The Annexure to this application may kindly be treated as part and parcel of this application. 6. It is submitted that as the entire documents are forming part of the chargesheet filed by the CBI authorities, the same is also within the knowledge of the appellant. The entire set of documents referred to in the Annexure has already been served on the appellant at the time of filing of the same before this Hon’ble Tribunal. 7. It is submitted that insofar as the statements recorded by the Assessing Officer in the course of the penalty proceedings under section 271(1)(c) of the Act and the Statements recorded in the course of assessment proceedings for the subsequent assessment years, having bearing on the issue as the some of the investments were continuous, the said statements are having important bearing upon the case, required to be taken into consideration to arrive at a just and correct conclusion on the controversy for adjudication of the dispute by this Hon’ble Tribunal. 8. It is submitted that it is settled position of law that any evidence or document which was in existence at the time of passing the order, however even exercise of due diligence the same was not available, the said documents/evidence produced at the time of appeal is Just and necessary for adjudication of disputes, It is further held by the Apex Court that any evidence gathered in relation to the dispute in appeal in the course of penalty proceedings, would be relevant for adjudication of the dispute in the appeal on the assessment order. By applying the above principle of law laid down by the Hon’ble Supreme Court, the list of additional documents as per the Annexure which have come into existence or knowledge of the respondents after conclusion of the proceedings, would be just and necessary for correct conclusion in regard to the issue. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 37 9. It is further submitted that the additional evidence/documents produced would only support the conclusions arrived at by the authorities below, impugned before this Hon’ble Tribunal. Hence the said documents would not alter/change the nature of the stand or case of the revenue. Hence on this ground also the additional evidence is just and necessary for adjudication of the dispute before this Hon'ble Tribunal. 10. Wherefore, it is respectfully prayed that this Hon’ble Tribunal may be pleased to allow this application and take the additional evidence/documents as per the Annexure to the application on record in the interest of justice and equity.” 12.2. The Revenue filed complete details i.e. the description of the documents and relevance of the documents in brief vide a chart dated 09.08.2021. The details i.e. description of the documents and relevance of the documents as given in chart are reproduced as it is: SL No. DESCRIPTION OF THE DOCUMENT RELEVANCE OF THE DOCUMENT IN BRIEF PAGE NO. (as numbered in relevant volumes) VOLUME 1 Valuation report of Jagadisan& co dated 1.11.2006 in the case of Carmel Asia Holdings Pvt. Ltd. seized from office of Jagadisan and co by CBI authorities on 11.02.2012. In the valuation report dated 01/11/2006, M/s. Jagati Publications Pvt. Ltd. was valued between Rs.178 Cr to Rs 196 Cr in contradiction with later reports of contemporaneous period of very high value though there is no change in Circumstances. 1-23 I 2 Projected P & L statement of M/s. Jagati Publication Pvt. Ltd. for theperiod 2000 - 09 2012 - 2013 as perthe valuation report of DeloiteTouche Tohmatsu India Pvt. Ltd figures shown by Deloitte and Jagadisan (in Sl No 1 above) vary widely though both are projections and the management of the assessee has taken different figures which vary widely in different 24-25 I ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 38 reports 3 Sworn Statement of Sri. P.N.Sudarshan dated28.12.2010 before ACIT-2(1) Sr.Director In Deloitte Already part of evidence on record 26-28 I 4 Statement of Sri.Poondi Narayanan Sudarshanrecorded by -CBI authorities on 27/10/2011 Sr.Director In Deloitte Admission by Shri P.N Sudershan that he completed the report only in mid April 2008 but back dated to 16/11/2007 as per request of Shri Vijay Sai Reddy 29-32 I 5 Section 164 CRPC statement of Sri. Poondi Narayanan Sudarshan by the core of the II MetropolitanMagistrate for Railways and Secundrabad on 8/11/2011. Sr.Director In Deloitte The facts in Sl No 4 confirmed by Shri P.N Sudershan before Metropolitan Magistrate u/s 164 CrPC 33-35 I 6 Valuation Report of Jagadisan and co dated12.7.2007 along with working papers in connection with the valuation In contravention of report dated01/11/2006 (at Sl Na 1 above), sameJagadisan& Co. takes different figures and values Jagati Publications Pvt. Ltd. at Rs.3459 Cr though there is no change in circumstances. 36-63 I 7 Statement of Shri JagdisanPrabhakaran recorded by CBI authorities on 31/10/2011 Demonstrates the contradictory valuation of Jagati Publications Pvt. Ltd. on the same set of facts and circumstances and report at the instance of Shri Vijay Sai Reddy both the reports were back dated 64-69 I ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 39 8 Copy of letter dated 14/11/2006 of APIIC Ltd. conveying acceptance of approval of establishment of SEZ at Rajapur, JadcherlaMandal, Mahabubnagar (Dist) Shows contemporaneous event of SEZ establishment in which M/s Aurobindo group got allotment 01 II 9 APIIC Industrial Areas Allotment Regulations, 1998 Allotment regulations of APIIC where open advertisement to given in news papers 02 & 03 II 10 Recommendations of Price Fixation Committee of APIIC dated 17/08/2006 Land cost fixed at Rs.15 lakhs per acre with validity till 31/12/2006 04-12 II 11 Letter from AurobindoPharma Ltd. to MD, APIIC dated 17/11/2006 requesting allotment of 75 acres land at Jadcherla SEZ Application by Aurobindo group in contemporaneous period 13 II 12 Approval letter dated 17/11/2006 from MD, APIIC allotting 75 acres to AurobindoPharma Ltd. at Jadcherla SEZ Application by Hetero group in the contemporaneous period requesting allotment at Rs.7 lakhs/acre though the price fixation committee values at Rs.15 lakh/acre 14&15 II 13 Copy of letter dated 17/11/2006 from Hetero Group to MD, APIIC requesting allotment of 75 acres land at Jadcherla SEZ Application by Hetero group in the contemporaneous period requesting allotment at Rs 7 lakhs/acre though the price fixation committee values at Rs 15 lakhs/acre 16-18 II 14 Copy of order sheet notings of APIIC dated 14/11/2006 indicating approval of SEZ at Jadcherla The price fixation committee and APIIC authorities recommend land value at Rs 15 19-20 II ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 40 lakh/acre 15 Statement of Shri T.L. Ramachandran CGM(Projects), APIIC dated 12/09/2011 recorded before CBI authorities Stated the procedure of allotment, the recommendations of price fixation committee and the rate of allotment was at Rs 7 lakhks/acre as per directions of the Chief Minister as against fixation of price at Rs 15 lakhs/acre by APIIC. 21-26 II 16 Allotment letter dated 17/11/2006 from AurobindoPharma Ltd. allotting 75 acres at JadcherlaRs 7 lakh /acre. Allotment letter at Rs 7 lakhs/acre against the price of Rs 15 lakhs/ acre. 27-28 II 17 Allotment letter dated 17/11/2006 from APIIC to Hetero Drugs Ltd allotting 75 acres at JadcherlaRs 7 lakh/acre. Allotment letter at Rs 7 lakhs /acre against the price of Rs 15 lakhs/acre. 28-29 II 18 Request from M/s Lee Pharma Ltd to APIIC for allotment of 10 acres at Jadcherla SEZ dated 113/11/2006 and statement of AllaVenkataReddy before CBI Authorities dated 09/03/2012. Request of another applicant during the same period though appears to be accepted, however no approval letter was issued to the said party and he was informed that his application was deferred. This applicant is not an investor in Jagati Publications Pvt Ltd 30-35 II 19 Order sheet noting dated 30/04/2007 regarding allotment of land M/s AurobindoPharma Ltd and M/s Hetero Drugs Ltd at Jadcherla SEZ fixing the rate at Rs 7 laksh/acre wherein it is Stated the extent and rate were decided in the presence of Shows that the land was allotted at Rs 7 lakhs/acre against 15 lakhs fixed by the committee at the intervention of Chief Minister who is father of 36-37 II ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 41 CM. the Promoter of the assessee. 20 Notification dated 13/06/2007 by GOI establishing SEZ at Jadcherla. Establishes that the Jand at SEZ wa, allotted to M/s AurobindoPharma Ltd and M/s Hetero Drugs Ltd even pin, to the notification of the SEZ by the GOI 38-40 II 21 Order sheet notings dated 26/06/2007 and 19/07/2007 of APIIC allotting land to M/s AurobindoPharma Ltd and M/s Hetero Drugs Ltd. shows that though the price was recommended by APPIC authorities at 15 lakhs/acre and extent was recommended at 50 acres as against the request by the applicants for Rs 7 lakhs/acre and 75 acres extent, the request of the applicants was accepted at the instance of Chief Minister. 41-42 II 22 Letter dated 26/06/2007 of APIIC to AurobindoPharma Ltd allotting 75 acres at Rs 7 lakhs/acre. Letter of allotment at lower rate and larger extent. 43-45 II 23 Letter dated 26/06/2007 of APIIC to Hetero Drugs Ltd allotting 75 acres at Rs 7 lakhs/acre. Letter of allotment at lower rate and larger extent. 46-48 II 24 Letter dated 01/08/2007 by Hetero Drugs Ltd to APIIC requesting condonation of delay in payment of land cost and order sheet notings of APIIC. Noting on the letter by APIIC authorities and order sheet indicate role of CM. Though the initial allotment to Hetero Drugs Ltd indicates 50 acres, the same was revised to 75 acres while condoning the delay in payment of land cost of 50 acres. 49-53 II ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 42 25 Revised allotment letter to Hetero Drugs Ltd. dated 26/10/2007by APIIC In pursuance of Sl No 24 above. 54-56 II 26 Audit note dated 23/10/2008 indicating loss of Rs 1.28 Cr to APIIC on account of arbitrary allotment of land at Jadcherla SEZ by taking Rs 15 lakh/acre as cost. Note of AG(Audit) indicating loss to APIIC due to allotment at lower rate. 57-60 II 27 Letter from AurobindoPharma Ltd dated 02/11/2006 to APIIC seeking change of allotment to Trident Life Sciences to the extent of 30.33 acres. M/s Trident Life Sciences Ltd was not 100% subsidiary of AurobindoPharma Ltd. 61 II 28 Certificates dated 25/11/2006 & 24/11/2006 from AurobindoPharma Ltd certifying that Trident Life Sciences Ltd is 100% subsidiary of Aurobindo. 62 & 63 II 29 Inter office Memo and correspondence of APIIC dated 14/11/2006 transferring allotment to Trident Life Sciences Ltd and reducing the fee for transfer from 10% to 2%. The transfer fee was reduced from 10% as prescribed in guidelines to 2% treating on par with legal heirs. 64-71 II 30 Letter from Cholamandalam, DBS Finance Ltd to Shri Nityananda Reddy sanctioning loan dated 03/01/2008. Shows that funds were borrowed to invest in the assessee by promoters of Aurobindo group. 72-76 II 31 Cheques and pay in-slips showing investment by Smt K. Rajeswari and Trident Life Sciences in the assessee. 77-88 II 32 Application for loan by Shri P.V. Ramprasad Reddy from IL&FS dated 27/11/2007 and sanction by IL&FS for renewal of loan dated 10/12/2007 and sanction of loan dated 11/12/2007. 89-104 II ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 43 33 Minutes of meeting held in the chamber of CM on 11/09/2004 regarding reduction of “No development zone” from 1 Km to 500 meters. The documents show that in the case of land of 2143 acres allotted to Pharma City developed by Ramky group at Parwada, Visakhapatnam, the green belt zone which was supposed to be 1 km within the boundaries of Pharma City land was reduced to 250 meters and the balance was transferred to outside lands adjacent to the boundary of Pharma City (with a reduced limit of 250 meters). Even the 250 meters inside the boundary of Pharma City was apparently reduced to meters. In fact, the whole issue was subject to revision much later 1n 2011. 105 & 106 II 34 Minutes of meeting dated 20/06/2005 in the chamber of CM reducing the buffer zone from 1 Km to 500 meters out of which 250 meters would be in Pharma City (for plantation purpose). 130-134 II 35 Order sheet noting of MA&UD Department in pursuance of Sl No 33 & 34 above . 135-141 II 36 Representations of local villages on the subject at SlNos 33 to 35 above 142-154 II 37 Letter dated 03/03/2011 from Director, Town and Country Planning, AP to Principal Secretary, MA&UD Dept and Gazette Notification dated 30/06/2006 on the same subject 155-172 II 38 GO Rt No: 437 dated 07/04/2011 issued by MA&UD on constitution of green belt zone around PharmaCity. 173 II 39 Letter dated 10/03/2008 from India Cements Ltd to SE, Irrigation for permission to draw 10 lakh litres of water from Kagna river. Correspondence showing benefits bestowed to India Cements Ltd who is investor in the assessee as well as its sister concern Bharathi Cements Ltd. 1 III 40 GOMS 94 dated 12/08/2009 issued by Govt of AP granting permission to India Cements Ltd to draw 13 Mcft water per annum fromKagna River for their plant near Tandur. 2 III 41 Letter from India Cements Ltd to EE, Irrigation seeking permission for 3&4 III ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 44 drawing 7 lakh gallons of water more than the sanctioned 3 lakh gallons per day from Krishna River for their plant in Nalgonda District. 42 GOMS no: 146 dated 22/07/2008 by Govt of AP sanctioning additional drawal of 7 lakh gallons per day to India Cements Ltd from Krishna River. 5-7 III 43 Letter dated 24/03/2008 from LepakshiKnowleage Hub Pvt Ltd for allotment of land by APIIC in Ananthapur District. Shows that thousands of acres of land was acquired from public at low cost, allotted to Indu group who have practically invested no amount and did no developmental activity. Besides, the lands valued for the purpose of pledging to Financial Institutions at high value and the Government permitted pledge of the lands by the Indu group with Financial Institutions to obtain huge loans. The allotment was not through any tender process. The entire process started in the contemporaneous period of investment in the assessee. 8-13 III 44 MOU between Lepakshi Knowledge Hub Pvt Ltd and Govt of AP dated 22/12/2008 for development ofKnowledge Hub in Ananthapur District. 14-23 III 45 Letter dated 29/10/2008 from APIIC accepting to offer allotment of 8000 to 10000 acres in AnanthpurDistrict 24-25 III 46 Letter dated 26/11/2008 from APIIC allotting 3190 acres land to Lepakshi Knowledge Hub Pvt Ltd in Ananthpur District 26 III 47 GO Rt No 112 dated 21/02/2009 by Industries and Commerce Dept, AP granting incentives and concessions to Lepakhsi Knowledge Hub Pvt Ltd 27 to 29 III 48 Letter dated 30/08/2009 from Lepakshi Knowledge Hub Pvt Ltd requesting NOC for deposit of title deed with Financial Institutions for loan facility to its group companies 30 III 49 Letter dated 05/09/2009 granting NOC M/s Lepakshi Knowledge Hub Pvt Ltd for deposit of titles deeds of 31 III ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 45 land with Financial Institutions for borrowings by its group companies 50 Letter of Bank of India dated 18/11/2010 granting loan to M/s Indu Projects Ltd (group company of Lepakshi) on pledge of land acquired from APIC inAnanthpur District 32-58 III 51 Term loan agreement and MOU with PNB dated 30/08/2010 granting loan to M/s Indu Projects Ltd on pledge of lands acquired by Lepakshi 59-68 III 52 Hypothecation agreement with IL&FS by Indu Projects Ltd sanctioning loan against pledge of land granted by APIIC to Lepakshi 69-110 III 53 Sale cum power of attorney dated 16/11/2006 between APIIC and Indu Tech Zone Pvt Ltd for setting up SEZ in 250 acres at Mamidipally 111-134 III 54 Letter of APIIC dated 16/02/2009 to Director, IDFC conveying NOC for pledging of land by Indu Tech Zone Pvt Ltd 135 III 55 Statement of Shri TataswamyRamaswamyKannan before CBI authorities on 07/12/2011 & 15/03/2012 Statement by Promoter of Jaya Lakshmi Textiles Pvt Ltd stating that due to threat of Vijay Sai, key associate of promoters of assessee, he had to invest Rs 5 Cr as equity in the assessee to buy peace for trouble free cement business in AP 136-139 III 56 Statement of Shri TataswamyRamaswamyKannanbefor e Metropolitan Magistrate dated 13/01/2012 140-141 III 57 Statement of Shri MadhavRamachandra before CBIauthorities on 01/02/2012 & Businessman of Dubai attends 142-145 III ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 46 09/03/2012 58 Statement of Shri MadhavRamachandra dated09/02/2012 before Metropolitan Magistrate Meeting of the CM at Dubai, expresses intention of investment in India. However, the said interest is being followed by the promoters of assessee through its key personnel and investment is insisted. He invests and States that he was cheated. He states that itis nota voluntary investment 146 & 147 III 59 Statement of DandamudiAvanindra Kumar beforeCBI authorities on 14/02/2012 and 27/03/2012 Shri Dandamudi states that he was advised by One Sridhar of JPPL to invest on the basis of valuation report of Deloitte and he invested. Subsequently he expressed that he was cheated by misrepresentation 148-152 III 60 Charge sheet filed by CBI in AurobindoPharma Ltd and Hetero Drugs Ltd dated 31/03/2012 The charge sheets demonstrate the modus operandi of collection of money by the assessee under the guise of Share Capital/Share Premium. The charge sheets also point out violations of rules and regulations of APIIC which prescribe allotment through publicannouncement at least in 2newspapers. 1-68 IV 61 Charge sheet filed by CBI inRamky group of cases dated 23/04/2012 69-134 IV 62 Charge sheet filed by CBI in cases of A.K. Dandamudi, Jayalakshmi Textiles Pvt Ltd and MadhavRamachandra dated 23/04/2012 135-181 IV 63 Charge sheet filed by CBI in case of Nimmagadda Prasad group and Vanpic Projects Ltd. dated13/08/2012 182-358 IV ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 47 64 Statement of Shri K. Nityananda Reddy (of Aurobindo group) recorded in penalty proceedings on 08/01/2013 Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations at the intervention of CM. It is stated that APIIC people telephoned him to meet CM. The process of allotment of land and investment were contemporaneous 1-10 V 65 Statement of Shri P. Sarat Chandra Reddy {of Aurobindo group) recorded on 08/01/2013 during penalty proceedings Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations. The Process of allotment of land and investment were contemporaneous 11-15 V 66 Statement of Shri K. Prasad Reddy (of Aurobindo group) recorded on 08/01/2013 during penalty proceedings Contradicts Shri K. Nityananda Reddy’s version and states that he saw valuation of report of Deloitte. Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations. The process of allotment of land and investment were contemporaneous 16-19 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 48 67 Statement of Shri M.Srinivasa Reddy (of Hetero Group) on 08/01/2013 during penalty proceedings First he denies that there was valuation report and next he says that there was internal valuation report of the assessee, which does not exist. The process of allotment of land and investment were contemporaneous 20-28 V 68 Statement of Shri B.Parthasarathy Reddy (of Hetero group) recorded on 18/01/2013 during penalty proceedings Demonstrates that there was no business prudence in the investment In assessee 29-31 V 69 Statement of Shri B.P. Acharya (ex MD APIIC) dated21/01/2013 recording during penalty proceedings Demonstrates that allotment of land to the investors in the assessee was in violation rules, regulations of APIIC and recommendations of various committees of APIIC. 32-45 V 70 Statement of Shri P. Pratap Reddy (of Penna group) recorded on 10/01/2013 during penalty proceedings Demonstrates that there ‘5 #no business prudence by (Penna group -Pioneer Infra) in the investment in assessee 46-52 V 71 Statement of Shri N. Prakash (of Matrix-Vanpic group) recorded on 24/01/2013 recorded during penalty proceedings and scrutiny proceedings for A.Y 2010-11 Demonstrates that whatever money was received on sale of shares of sister concern of assessee (Bharathi Cements Ltd} were invested back by Matrix | group into shares of Jagatj Publications Pvt Ltd _ effectively ploughing back the money to assessee with no gain to the alleged investor, No business prudence is 53-65 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 49 demonstrated in the investments in assessee. 72 Statement of Shri PotluriVeeraVenkataSatyaMurali Krishna Vara Prasad (PVP group) 1ecorded on23/01/2013 during penalty proceedings Fails to establish creditworthiness of his investments in assessee 66-73 V 73 Bank Statement of PVP Business Towers Pvt Ltd 74 & 75 V 74 Statement of Shri G. SrinivasaRaju recorded on 28/01/2013 in penalty proceedings Could not produce any basis and creditworthiness is absent 76-78 V 75 Statement of Shri J.V. Ramana Reddy recorded on 28/01/2013 in penalty proceedings No creditworthiness. States that investment is at the instance of Shri Vijay Sai Reddy 79-82 V 76 Statement of Shri T. Srinivasa Rao recorded on 28/01/2013 in penalty proceedings No creditworthiness. States that investment is at the instance of Shri Vijay Sai Reddy 83-85 V 77 Statement of Shri A. AyodhyaRami Reddy (Chairman, Ramky group) recorded on 08/01/2013 in penalty proceedings Establishment of RamkyPharmacity during contemporaneous period 86-90 V 78 Statement of Shri M. Sambasiva Rao (TWC Infrastructure) recorded on 08/01/2013 in penalty proceedings TWC infrastructure was a loss making company, no activity and no creditworthiness 91-96 V 79 Statement of Shri E. Rajesekhar Reddy recorded on 08/01/2013 in penalty proceedings Eres Projects Ltd has no activity and no creditworthiness 97-101 V 80 Statement of Shri M. Vasudeva Reddy recorded on 22/01/2013 in Shows that TWC and Eres are onlyconduits 102-106 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 50 penalty proceedings and do not have creditworthiness. 81 Statement of Shri M. Rama Krishna Reddy recorded on 29.01.2013 in penalty proceedings Shows that Eres and TWC are only mail box companies. 107-109 V 82 Statement of Shri A. Ramakrishna Reddy recorded on 24.01.2013 in penalty proceedings States that he suggested investment to Eres and TWC without even seeing any valuation report or meeting of people of JPPL 110-113 V 83 Statement of Shri P. Ganesh recorded on 04.02.2013 in penalty proceedings Shows that Eres and TWC are mail box companies without any activity 114-118 V 84 Copy of CAG audit report on allotment of land for period 2006 to 2011 Para 4.8 states that APIIC irregularly executed a sale deed for 8844.01 acres land to Lepakshi Knowledge Hub Pvt. Ltd. even before creation of any infrastructure by the said company. Para 4.9 states that 500 acres was irregularly allotted to Indu Tech zone more than 2 years before the receipt of alienation order from government. Para 4.10 describes that terms of agreement with VANPIC were heavily loaded in favour of the company without any elbow room to the government to amend the provisions of agreement. Para 4.14 describes that 119-155 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 51 out of land allotted to Aurobindo group at Jedcherla, 20.48 acres were already under illegal encroachment by the group company from 2002. Collector fixed Rs.25 lakh/acre in such cases but alienation was at Rs.5 lakh/acre. Para 5.1 describes that Lepakshi (Indugroup) was allotted 884.01 acre of land with a promise of generation of 1,50,000 employment but the actual figure was nil. In case of Indu Tech zone pvt. Ltd., 250 acre was allotted with projected employment of 45,000 and the actual figure was nil. Appendix B describes undue benefits to Lepakshi Knowledge Hub Pvt. Ltd. (Rs.37.91 crore), VANPIC Projects Ltd. (Rs.71.42 cr) 85 Copy of statement of Shri Navneet Kumar Singhania recorded on 28.02.2013 (who operates ChendilerTracon Pvt. Ltd. and SugamCommodeal Pvt. Ltd.) dated 28.02.2013 recorded during penalty proceedings. Described in detail the modus operandi of accommodation entries done by him and admits that the investments in the assessee are not genuine. This enquiry was for subsequent year and the assessee was given full opportunity to produce directors/key persons of the investors and he did not produce them nor did he appear at Kolkata for cross examination when AO 156 & 157 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 52 issued summons and examined the witness. The witness clearly states that the entire activity was bogus and neither Shri Vijay Sai Reddy or one Mr. SatyaReddy arranged investor meet in Kolkata as claimed by Shri Vijay Sai Reddy 86 Chart indicating routing of money to paper companies at Kolkata for investment in M/s. Jagati Publications Pvt. Ltd. Demonstrates in detail the layering transactions in the form of accommodation entries through various companies for investment in assessee for subsequent assessment year. No creditworthiness of genuineness of any of the companies. The assessee was requested to produce the directors and key persons at Kolkata but he did not. The assessee also did not appear for cross examination even when it was communicated to him that the directors/key persons were summoned at Kolkata. Some of the investments are continuing investments from A.Y. 2008-09. 158-162 V 87 Statement of Shri Sanjay Mitra recorded on 18/03/2013 in case of Bharathi Cements Ltd Transactions establishing modus operandi of receiving back cash from sale of alleged investments at premium by Dalmia group in Bharathi Cements Ltd which is 163-165 V 88 Statement of Shri Sanjay Mitra dated 27-01-2012 during search in case of Dalmia group 166-178 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 53 89 Statement of ShriJoydeepBasu dated 18-03-2013 in case of Bharathi Cements Ltd sister concern of assessee managed by the same promoters. These transactions were also in the contemporaneous period indicating preponderance of probability 179 & 180 V 90 Statement of ShriJoydeepBasu dated 27-01-2012 during search in case of Dalmia group 181-191 V 91 Statement of Shri Neel Kamal Berry dated 18-032013 in case of Bharathi Cements Ltd 192-194 V 92 Statement of Shri Neel Kamal Berry dated 27-012012 during search in case of Dalmia group 195-210 V 93 Printout of data stored in pen drive showing computation of capital gains tax payable by Dalmia group in case of sale of shares of Bharathi Cements 211 V 93 Printout of data stored in pen drive showing details of payments to Shri Y S Jagan Mohan Reddy 212-215 V 94 Printout of email correspondence between Shri Vijay Sai Reddy and Shni Sanjay Mitra 216-218 V 95 Print out of SMS regarding payments made to Shri Vijay Sai Reddy 219 V 96 Share control register of Carmel Asia Holdings Pvt. Ltd. Shows that the very same investors ofthe assessee invested in Carmel at a premium of Rs 265 and Carmel is major shareholder in the assessee. The funds of the promoters in the assessee are also provided by the same investors through 220-221 V ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 54 Carmel Asia also at a premium showing that the effective investment by the promoters is negligible. Yet they control more than 90% shares whereas the alleged investors control minor share with huge investment. 97 GOMS No: 76 dated 26/02/2009 by Govt of AP granting mining license at Tandur to Penna group Benefits bestowed on Penna group who are investors in assessee including the transfer of mining lease and also grant of fresh mining leases 222 & 223 V 98 GOMS No: 25 dated 29/01/2009 permitting change of name from WalchandTandur Cement Company Ltd to PennaTandur Cement Company Ltd 224 & 225 V 99 GOMS No: 91 dated 29/03/2008 by Govt of AP granting prospecting license for limestone over 307.740 acres to Penna Cement Industries Ltd 226 & 227 V 100 GOMS No: 82 dated 19/03/2018 by Govt of APgranting mining lease over 46 acres in Ananthpur District to PennaTandur Cement Company Ltd 228 & 229 V 101 Correspondence between PrSecy, Infrastructure, Govt of AP and Vanpic Ports Pvt Ltd on the issue of violation of concessionaire agreement by Vanpic through transfer of stake to third party in 2011 and 2012 In 2008, there was difference in the draft MOU submitted for approval of Cabinet of Govt of AP and the actual 1-14 VI ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 55 102 Letter of PrSecy Infrastructure, Govt of AP dated 19/11/2011 seeking opinion of Advocate General on the above issue concessionaire agreement. 15-23 VI 103 Letter from CM's office dated 11-12- 2007 that Secretary, Infrastructure will handle the subject of ports and airports instead of INCAP This decision is directly related to the issue of change of actual agreement from what was submitted for approval of Cabinet in case of Vanpic Ports Ltd who is concern of group Shri Nimmagadda Prasad and the group is one of the major investors in assesse 24 VI 104 Handing of bid documents by MD, INCAP to Secretary, Infrastructure dated 20/02/2008 regarding regional Airport bids No bids were called for Ongole and Nellore Airports on the plea that the project on G to G Basis whereas bids were called for other ports. In reality, it was the Nimmagadda group which was holding substantial share in the entire project which got further increased later on, RAK Investment Authority did not undertake any development activity and it was only a dormant partner. 25-28 VI 105 RFP prepared by INCAP, Govt. of AP for regional airports 29-44 VI 106 Order sheet notings of I &I Dept with reference to bids on development of regional airports 45-57 VI 107 MOU between RAK Investment Authority and Govt of AP for development of Vanpic Project dated 11/03/2008 58-67 VI 108 Letter dated 29/03/2008 from RAK Investment Authority to Govt of AP authorizing M/s MatmnxEnport Holdings Pvt Ltd (Nimmagadda group) to act as their representative 68 VI ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 56 109 GOMs No: 30 of Govt of AP approving concession agreement with Vanpic Demonstrates extraordinary benefits received by Nimmagadda group vis- a-vis similar other ports 69 & 70 VI 110 Comparison of concession agreements with Vanpic, Krishnapatnam and Gangavaram ports by Feedback Infra showing extraordinary benefits conferred on Vanpic group 71-84 VI 111 Statement of P Jagannatham recorded u/s 164 CrPC on 12/03/2012 States that Beta Avenues Pvt Ltd invested in Carmel Asia (Rs 20 Cr) and Jagati (Rs 70 Cr) but the investment was ultra vires because it did not permit investment in other companies. Later on at the instance of Nimmagadda Prasad, the MOA was altered. The investment made by VanpicProjects Pvt Ltd in other companies was in excess of authorized capital and reserves. This shows that the group has no adequate resources of their own to invest in assessee and were acting as conduits 85-87 VI 112 Statement of ChunduriMaruthiNagendram recorded u/s 164 of CrP dated 14.03.2012 States that Walden Properties Pvt Ltd promoted by Shri Shyamprasad Reddy (Indu/Lepakshi group) invested Rs 20 Cr in Beta Avenues Pvt Ltd (Vanpicgroup) and this was in turn invested in Carmel Asia Holdings Pvt [Ltd (which in turn invested in the assessee). Similarly 88-95 VI ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 57 Rs5O Cr from Cornerstone Properties Pvt Ltd was invested by Alpha Avenues and Alpha Villas in the assessee (Enquiries revealed that this Rs 50 Cr also was provided by Walden Properties Pvt Ltd of the Indu group). This shows that the Indu group provided about Rs 70 Crs for the benefits bestowed on them. 113 Statement of ChunduriVenkataRamana Murthy recorded u/s 164 of CrPC dated 13/03/2012 Explains matters related to Nimmagadda group 96-103 VI 114 Statement of PraturiVenkateswara Annam Raja recorded u/s 164 of CrPC dated 13/03/2012 States that out of Rs 560 Crores received by Nimmagadda group on sale of shares of Bharathi Cements Ltd, Rs 350 Crores were invested in assessee in 2010 (the assessee was a loss making company) 104-115 VI 115 Letter of RAK Investment Authority dated 25/06/2008 requesting Govt of AP to allot airport at Ongole Sequence of events showing that benefits were to be bestowed to the Nimmagadda group despite opposition from Chief Secretary 116 & 117 VI 116 Letter of Special SecyI&IDept to various epartments to attend meeting by CM to discuss modifications in proposed Ongole and Nellore Airport projects 118 & 119 VI 117 Minutes of meeting held by CM on 13/12/2008 120-128 VI 118 Comparative analysis of Project DevelopmentAgreement of Ongole Airport with that of Rajiv Gandhi 129-135 VI ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 58 International Airport and approved PDS for PPP Projects 119 Order sheet noting wherein CM rejected the view of Chief Secretary objecting to extending of state support to Ongole Airport 136-142 VI 120 Statement of Shri V. Vijay Sai Reddy recorded on 07/01/2013 in penalty roceedings and proceedings for A.Y 2010-11 The assertions made by Shri V. Vijay Sai Reddy that it was open private placement was unsubstantiated because enquiries with the prospective investors named by him in his statement and the assertion that he/Satya Reddy went to Kolkata and arranged investor meet were found to be unsubstantiated by him and also in independent enquires conducted by Department. 143-171 VI 121 Statement of Shri I.Shyam Prasad Reddy recorded on 06/02/2013 during penalty proceedings He states that Shri Vijay Sai Reddy never approached him for investment in the assessee. When specifically confronted that representative M/sCornerstone Properties Pvt Ltd stated that they invested funds by M/s Walden Properties PvtLtd (Indu group company), he stated that he does not remember. When findings in C&AG report were pointed to him, he denied any wrong doings. 1-10 VII 122 Letter from GVK Industries Ltd dated 22/01/2013 that they did not In his statement dated 7/01/2013, Shri Vijay Sai 11 VII ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 59 receive any officer for making investment in Jagati Publications Pvt Ltd Reddy stated that they contacted major entrepreneurs of AP for investment in the assessee and told the names of these concerns. However, all of them denied to have received any such offer. 123 Letter from Dr Reddy’s Laboratories Ltd dated 25/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd 12 VII 124 Letter from Soma Enterprises Ltd dated 23/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd. 13 VII 125 Letter from Gayatri Projects Ltd dated 22/01/2013 that they did not receive any officer for making investment in Jagati Publications Pvt Ltd. 14 VII 126 Extract of minutes of meeting of India Cements Ltd in April 2010 resolving to give inter corporate deposits/loan/investments in Bharathi Cements Ltd India Cements Ltd sold shares of Bharathi Cements Ltd for Rs 121 Cr and resolves to place Rs 125 Cr as ICD/loan/investment in Bharathi Shows that whatever returns are received are Cements Ltd. This ploughed back to the assessee group. 15 & 16 VII 127 Report of Income Tax Inspector after physical visit to the alleged premises of CliftonsPearsons Export& Agencies Ltd, Ganga Builders Lid, Shivlaxmi. Exports Ltd and Super Finance Ltd dated 27/02/2013 In the proceedings for subsequent year, enquiries were made and it was found that no such companies who invested in the assessee were existent at the given address. 17 VII 128 Statement of ShriRavindra Singh resident of Room No: 102, 6 th Floor, Stephen House, BBD Baug, Kolkata dated 27/02/2013 18 & 19 VII ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 60 129 Search list of CBI dated 18/08/2011 Demonstrates that during search of CBI in 18/08/2011, the premises stated to be housing M/s Artificial Big Innovations Ltd, Kirti Electro Systems Ltd, Charishma Engineering, Globex Corporation Lt, Shakti Ispat Industries Pvt Ltd and Bay Inland Pvt Ltd were locked and no one was available. Thepremises were sealed by CBI 20 & 21 VII 130 Charge sheet filed by CBI in the case of Dalmia Cements Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-64 VIII 131 Charge sheet filed by CBI in the case of India Cements Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-67 IX 132 Charge sheet filed by CBI in the case of P. Pratap Reddy &Penna group of companies Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-84 X 133 Charge sheet filed by CBI in case of Bharathi Cement Corporation Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-188 XI 134 Charge sheet filed by CBI in case of I. Shyam Prasad Reddy &Lepakshi Demonstrates the modus operandi of 1-200 XII ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 61 Knowledge City collection of money under the guise of investment by the assessee group 135 Charge sheet filed by CBI in the case of I. ShyamPrasad Reddy &Indu Tech Zone Demonstrates the modus operandi ofcollection of money under the guise of investment by the assessee group 1-145 XIII 136 Charge sheet filed by CBI in the case of Indu Projects Ltd. Demonstrates the modus operandi of collection of money under the guise ofinvestment by the assessee group. 1-117 XIV 12.3. From the above documents it is observed that there are IX categories of documents which are as follows: (i) From Sl. No.1 to 7 i.e. the valuation report of Jagdisan & Co. dated 01.11.2006 and other documents associated with the same. (ii) Various documents containing land allotments, approvals, plan approvals, noting sheets of various department etc. which are at Sl. No.8 to 54, 97 to 110 & 115 to 119. (iii) Statements of various persons recorded during penalty proceedings at Sl. No.64 to 83, 85 & 120 to 121. (iv) Copy of CAG report on allotment of land for the period 2006 to 2011 at Sl. No.84. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 62 (v) Investments made by Kolkata companies and related statements recorded during search at Sl. No.86 to 96. (vi) Various statements recorded under section 164 of Cr P C at Sl. No.55 to 63 and 111 to 114. (vii) Letters from various investors at Sl. No.122 to 126 (viii) Verification report of Income Tax Inspector of the premises of the investors at Sl. No.127 to 128. (ix) Search list of CBI and various charge sheets filed by CBI at Sl. no. 129 to 136. 12.4. From the above, Ld. Special Counsel for the Revenue Mr. K.V. Aravind stated that the Revenue has filed all the evidences/documents which have come to knowledge of the ld. AO and CIT(A) subsequent to the completion of assessment and appellate proceedings. The Ld. Special Counsel for the Revenue referred to rule 29 of the Rules and argued that the respondent can also file additional evidence before ITAT. He referred to the following decisions in support of his proposition: 1. Decision of Hon’ble Delhi High Court in the case of CIT vs. Text Hundred India Pvt. Ltd. reported in (2013) 351 ITR 57 (Del.) and particularly referred to paras 5, 8, 13, 14 & 15 of the judgment. 2. Decision of Hon’ble Supreme Court in the case of Basir Ahmed Sisodia vs. ITO reported in (2020) 424 ITR 1 (SC) by referring to paras 10 & 14 thereon. 3. Decision of Hon’ble Supreme Court in the case of K. Venkataramaih vs. A. Seetharama Reddy & others reported in (1964) 2 SCR 35 (SC) referred to paras 10 to 20. 4. Decision of Hon’bleDelhi High Court in the case of HL Malhotra & Co. (P) Ltd. reported in (2021) 431 ITR 148 (Del.) by referring to paras 8, 10, 20 and 22 to 25. 5. Decision of Hon’bleBombay High Court in the case of Braganza Construction Pvt. Ltd. vs. ACIT reported in (2020) 425 ITR 115 (Bom.) by referring to paras 8 to 11. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 63 6. Decision of Hon’ble Punjab & Haryana High Court in the case of Smt. ShakuntlaThrukral vs. CIT reported in (2014) 366 ITR 644 (P&H) by referring to paras 4 & 5. 7. Decision of Hon’ble Madras High Court in the case of CIT vs. Ku. Pa. Krishnan reported in (2012) 345 ITR 38 (MAD) by referring to paras 6, 10, 12, 14, 16 & 17. 8. Decision of Hon’ble Supreme Court in the case of UOI vs. K.V. Lakshman& others reported in (2016) 13 SCC 124 by referring to para 13, 15 and 32 to 41. 12.5. The Ld. Special Counsel for the Revenue vehemently pleaded that all these additional evidences are very much in the nature of “public document”. He also submitted that assessment was completed by the Ld. AO on 31.12.2010, order of Ld. CIT(A) was passed on 30.12.2011 and the CBI charge sheet was filed on 31.03.2012. Hence, he pleaded that the CBI charge sheets which are enclosed in the form of additional evidences had come to the knowledge of the Department subsequent to the completion of ld. CIT(A)’s order and hence the same are hereby filed as additional evidences. He also drew our attention to sworn statement of Shri P.N. Sudarshan from M/s Deloitte before CBI. He also referred to the section 161 statement before Police Authorities and section 164 statement before Magistrate of Shri P.N. Sudarshan which are also enclosed by way of additional evidences. Similarly, he referred to the statement dated 31.10.2011 recorded from Shri J. Prabhakar of Jagadisan &Co., Chartered Accountants before DSP, CBI. The Ld. Special Counsel for the Revenue was trying to drive home the point that the valuation reports issued by two independent professionals were back dated and the said valuation reports have been heavily relied upon by the investors for making investment in assessee company at a huge premium. He also referred to paper book 4 filed by the Revenue in the form of additional evidence containing CBI charge sheet of Aurobindo Pharma Group and Hetero Group. He also referred to certain observations made in the charge sheet in connection with Ramky Group & Matrix Group regarding ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 64 environmental clearance regulations, among others, which question the genuineness of the investor companies making investment in assessee company. 12.6. The Ld. Special Counsel for the Revenue placed reliance on paper book filed containing additional evidences which contain statements recorded by the ld. AO from various persons during penalty proceedings and in the assessment proceedings of subsequent years. These statements recorded during penalty proceedings, in the opinion of the Ld. Special Counsel for the Revenue, are relevant for adjudication of the quantum appeals pending before us. 13. The ld. AR vehemently objected to filing of additional evidences in terms of rule 29 of the ITAT Rules by the respondent-Revenue. He argued that the Revenue cannot file any additional evidences under Rule 29 of the ITAT Rules in an assessee’s appeal. He pleaded that charge sheets filed under various sections of CrPC are merely allegations levelled by the State and they cannot be construed as an evidence. He also placed reliance on certain case laws on the aspect as to how a charge sheet should be looked into. He placed reliance on the decision of Chennai Tribunal in the case of ACIT vs. Shri Ramcharan Tej Konidala in ITA No.2074/Chny/2018 for A.Y. 2009-10 dated 28.04.2021. The ld. AR also placed reliance on the decision of Hon’ble Madras High Court in the case of R.S.S. Shanmugam Pillai and Sons vs. CIT reported in (1974) 95 ITR 109 (Mad). The ld. AR also placed reliance on the decision of Bangalore Tribunal in the case of Shri Ratan Babulal Lath vs. DCIT in ITA No.355/Bang/2017 for A.Y. 2009-10 dated 15.06.2018. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 65 13.1. The ld. AR vehemently argued that the Revenue was trying to prove that there were some QUID PRO QUO arrangement between assessee and all the investor companies and for this purpose only the Revenue had filed lot of additional evidences before this Tribunal. But there is a memo filed by CBI in Hyderabad CBI Court stating that no QUID PRO QUO stood established pursuant to CBI investigation wherein the list of investor companies were also listed. He placed on record a copy of the said memo filed by CBI before Hyderabad CBI Court. 13.2. The ld. AR argued that even assuming without conceding that the valuation reports issued by the M/s. Jagdisan & Co. and M/s. Deloitte were back dated, still the date for which valuation is done would be relevant and not the date of valuation report. Both the parties had indeed deposed in their statements before CBI that the back date of valuation reports will not have any bearing as the date for which valuation is done is relevant. Hence, he argued that the additional evidences containing valuation reports which had been relied upon by the ld. Special Counsel for the Revenue is of no use for the adjudication of this appeal. 13.3. He vehemently argued that the orders of the lower authorities in more than one occasion had accepted the fact that what was received by the assessee company was only share capital and share premium. Hence, the character and nature of receipt being share capital and share premium does not change. Even the additional evidences sought to be relied upon by the ld. Special Counsel for the Revenue did not state that what was received by the assessee company was not share capital and share premium. In fact the ld. AO observed that the shareholders had over paid for the share price by virtue of QUID PRO QUO. Even assuming it to be correct, it still remains only as a share consideration and not otherwise. The law is very well settled that up to A.Y. 2012-13, the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 66 receipt of share premium would only have to be construed as a capital receipt and no examination could be made on the same. Reliance in this regard was placed on the decision of Hon’ble Bombay High Court in the case of Vodafone India Services Ltd. reported in 368 ITR 1 (Bom.), which was accepted by the CBDT by not preferring further appeal to Hon’ble Supreme Court. 13.4. The ld. AR also submitted with regard to the statements recorded by the ld. AO in penalty proceedings which were sought to be relied upon by the ld. Special Counsel for the Revenue by way of additional evidences herein, the Ld. Special Counsel for the Revenue had not stated what he wants to rely from those statements. Moreover, the ld. AR also pointed out the fact that no penalty order per se has been passed by the ld. AO even after recording those statements and that the time limit for passing the said penalty orders had already expired. Hence, all the statements recorded during penalty proceedings are of absolutely no relevance for adjudication of the appeals before us. The ld. AR also distinguished the decision relied upon by the Ld. Special Counsel for the Revenue in the case of Basir Ahmed Sisodia vs. ITO reported in (2020) 424 ITR 1 (SC) by stating that the same is factually distinguishable in as much as in that case the assessee did not furnish any details in the original quantum assessment proceedings and since those details were furnished during penalty proceedings, the Hon’ble Supreme Court held that the evidences gathered in subsequent penalty proceedings need to be considered in quantum assessment proceedings. He pleaded that the decision of Hon’ble Supreme Court relied upon by ld. Special Counsel for the Revenue is factually distinguishable. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 67 13.5. The ld. AR also referred to the statement recorded from Shri Neel Kamal Berry on 27.01.2012 which is enclosed in Sl. No.92 of the table submitted by the ld. Special Counsel for the Revenue. In the said statement, no question was relevant to the assessee company herein. Similarly, he referred to statement recorded of Mr. Joydip Basu dated 27.01.2012 which is listed at Sl. No.90 of the table submitted by the ld. Special Counsel for the Revenue. The ld. AR also referred to the statement recorded from Shri K. Nityanand Reddy of Aurobindo Pharma Group dated 08.01.2013 wherein in response to question No.6 on the share premium component, the said party had promptly replied and thereafter it proceeded to explain the modus operandi adopted by Aurobindo Pharma Group for making investment. 13.6. With regard to CBI charge sheet dated 09.09.2014 filed in the case of Indu Projects Ltd. contained in paper book 14 in the form of additional evidence filed by ld. Special Counsel for the Revenue, the ld. AR submitted that Mr. Jagan Mohan Reddy was not even a shareholder in assessee company and was only a director of the assessee company. He became Member of Parliament in the year 2009 and Member of Legislative Assembly (MLA) in the year 2014. Hence at the relevant time of transactions, he was not holding any public office. The ld. AR also pointed out in paper books 8, 11, 12, 13 & 14 filed in the form of additional evidences by ld. Special Counsel for the Revenue, the assessee company was not even mentioned as an accused in the CBI charge sheet. In paper book 4 containing CBI charge sheet, the assessee company was mentioned as accused No.12 and sections applied to assessee company were section 120, 420, 409 and 477A of IPC. The ld. AR argued that none of these provisions have any relation to any income. The main allegation of CBI in their charge sheet is cheating. If amount invested by ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 68 the investor companies is for share capital and share premium, then it cannot be cheating. 13.7. With the above observations, the ld. AR vehemently argued that the additional evidences filed by the revenue and relied upon by the ld. Special Counsel for the Revenue have got nothing to do with the income of assessee company and they are only on the aspect of conspiracy of cheating. 13.8. The ld. AR further argued that with respect to the statements recorded by CBI and the charge-sheets filed by CBI, it has been consistently held by various courts that enquiry conducted by CBI and charge-sheet filed before Hon’ble CBI Court cannot be considered to be the conclusive evidence without any independent inquiry conducted by the ld. AO especially since they are only in the form of allegations and no verdict has been given by the Hon’ble CBI Court. In fact the Hon’ble CBI Court is even yet to take any cognizance of the charge-sheets filed and has not given any verdict on the same and therefore, these documents in the paper book of the department are only in the form of allegations and does not possess any evidentiary value, based on which no addition could be fastened in the hands of the assessee company. The ld. AR also referred to Section 28 of the Indian Evidence Act 1872 to drive home the point that the statement recorded by the Police authorities are not admissible as evidence. 13.9. With regard to yet another objection made by ld. Special Counsel for the Revenue that this Tribunal should pass a separate order on admission of additional evidences before proceeding to dispose of the main appeal, the ld. AR argued that the case law relied upon by the ld. Special Counsel for the Revenue in 179 CTR 265 (SC) is factually ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 69 distinguishable in as much as in that case, the Tribunal disposed of the main appeal without considering the additional evidences filed in terms of Rule 29 of the ITAT Rules. Hence, the Hon’ble Supreme Court directed the Tribunal to dispose of the additional evidences first and then proceed to main appeal. In the instant case before us, the main appeal is still pending and the additional evidences, if admitted, could be dealt while disposing of the main appeal itself and there is no need for passing a separate order thereon. The ld. AR vehemently argued that other than the charge sheet filed before CBI, the Revenue had not brought any supporting material to drive home the point that it has got some bearing on determination of income on the assessee company. The charge sheets filed by CBI are only allegations levelled and nothing is proved as on date. Hence, it lacks complete evidentiary value. With regard to various correspondences exchanged by various companies with government which are enclosed in paper book 3 in the form of additional evidences filed by the Revenue, they are only routine matters and routine correspondences exchange by certain corporates with government. Those correspondences have got absolutely no relevance for determination of income in the hands of the assessee company. Hence, those additional evidences are not required to be admitted. With all these observations, the ld. AR submitted that the additional evidences filed by the Revenue do not deserve to be admitted as they are absolutely irrelevant for adjudication of the appeal before us. 14. We have considered the additional evidences filed by the Revenue and noted that the main emphasis of the Revenue on these additional evidences was to prove that there was QUID PRO QUO arrangement between the assessee and all the investor companies. Even the CBI charge sheets filed in the paper books are merely allegations of CBI as ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 70 regards to criminal conspiracy. We find from the charge sheets that these are filed with the CBI Special Court and adjudication on this is awaited but these CBI charge sheets are allegations of criminal conspiracy and not relating to assessment of income of assessee company. The charge sheets filed by the CBI are only allegations leveled and nothing is proved as on the date because the same is pending adjudication. 14.1. In view of the above, now we have to discuss the provisions of Rule 29 of the Rules, which gives power to Tribunal that, if the Tribunal requires any document to be produced but this power is with reference to certain situations enacted in this regard to. Firstly, it is to enable the Tribunal to pass orders, secondly, it is for any other substantial cause and, thirdly, in the event of a situation that the Income Tax Authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them. It is only in a situation of demand attributable to these requirements, the Tribunal gets the statutory power to allow such documents to be produced or witness to be examined or affidavit to be filed or allowance of such evidence to be adduced. This has been answered by Hon’ble Delhi High Court in the case of CIT vs. Text Hundred India (P.) Ltd.(2013) 351 ITR 57 (Del.), wherein it is held as under: “13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view that such additional evidence would be necessary to do substantial justice in the matter. It is well settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 71 evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect. 14. The next question which arises for consideration is as to whether the exercise of discretion in the instant case permitting the additional evidence by the Tribunal, is apposite? It is undisputed that Rule 29 of the Rules is akin to Order 41 Rule 27(1) of the Code of Civil Procedure. The true test in this behalf, as laid down by the Courts, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced. The legitimate occasion, therefore, for exercise of discretion under this rule is not before the Appellate Court hears and examines the case before it, but arises when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent to the Appellate Court coming in its way to pronounce judgment, the expression „to enable it to pronounce judgment‟ can be invoked. Reference is not to pronounce any judgment or judgment in a particular way, but is to pronounce its judgment satisfactory to the mind of Court delivering it. The provision does not apply where with existing evidence on record the Appellate Court can pronounce a satisfactory judgment. It is also apparent that the requirement of the Court to enable it to pronounce judgment cannot refer to pronouncement of judgment in one way or the other but is only to the extent whether satisfactory pronouncement of judgment on the basis of material on record is possible. In Arjan Singh v. Kartar Singh, AIR 1951 SC 193, while interpreting the provisions of Order 41 Rule 27, the court remarked as follows:- "The legitimate occasion for the application of Order 41, rule 27 is when on examining the evidence as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made, outside the court of fresh evidence and the application is made to impart it. The true test, therefore, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced." (Emphasis supplied)” 14.2. The above case law was referred by ld. Special Counsel for the Revenue Shri K.V. Aravind but he could not make out what is the inability of the Tribunal to decide the issue before us which is on the issue of share premium under section 56 of the Act and second issue of addition of share premium under section 68 of the Act. Once this is not explained that how these additional evidences are beneficial for the pronouncement of judgment of this Tribunal on the material available before it, the case law of Hon’ble Delhi High Court in the case of Text Hundred India (P.) ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 72 Ltd. (supra) is not applicable to the facts before us, rather it negates the argument of Revenue. 14.3. We also noted that the ld. Special Counsel for the Revenue relied on the decision of Hon’ble Supreme Court in the case of Jyotsna Suri vs. ITAT (2003) 179 CTR 265 (SC) wherein the Hon’ble Supreme Court held as under: “2. The Tribunal has disposed of the appeal by its order of 3rd Jan., 1997, without considering the pending application under Rule 29 of the ITAT Rules, 1963, for adducing additional evidence. Obviously, that application was required to be disposed of first before the Tribunal heard the appeal on merits. The appellant also undertakes to withdraw the pending application before the Tribunal for making a reference under Section 256(1) of the IT Act for the above purpose. In view thereof, we direct that the Tribunal should first dispose of the application under Rule 29 on merits and thereafter proceed to dispose of the appeal on merits. The order dt. 3rd Jan., 1997, is, therefore, set aside and the matter is remitted to the Tribunal for disposal on merit in accordance with law. The order of the High Court is set aside as above and the appeal is disposed of accordingly. 14.4. We noted that the issue before Hon’ble Supreme Court was that the appeal was decided by the Tribunal without adjudication, whether admitted or not admitted, of the additional evidences filed in terms of Rule 29 of the Rules. But in the present case, first we are adjudicating the admissibility of the additional evidences and then we will proceed for adjudication of appeal before us. 14.5. We noted that the Department has filed paper books Nos.1 to 14 in the form of additional evidences, mainly the documents being relied upon by the Department is in the form of charge sheets, statements filed by the CBI, correspondence is of the investors with the Govt. of Andhra Pradesh, details of other investors etc. We noted from the orders of the lower authorities i.e. the ld. AO as well as the CIT(A) that the Department has completed its enquiry and investigation for the concerned assessment year during the course of said proceedings and there was sufficient time ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 73 for framing of assessment as provided under the Act. Even the Revenue now before us could not make out how these additional evidences will help or enable us to pass orders or are for the purpose of any other substantial cause or the Department was having no opportunity or time available for framing assessment. 14.6. In view of the above, the admissibility of additional evidence under rule 29 of the Rules totally depends upon whether or not the Tribunal requires the evidence to enable it to pass orders or for any other substantial cause, or if the ld. AO has decided the case without giving sufficing opportunity to the assessee to adduce evidence on the points specified by him or not specified by him. We are conscious enough that rule 29 does not enable the assessee or the Department to tender fresh evidence to support a new point or to make out a new case. Hon’ble Bombay High Court in the case of Velji Deoraj & Co. vs. CIT (1968) 68 ITR 708, 713-14 held that the admission of additional evidences at the appellate stage is not referable to any right of the party to produce the evidence but is dependent solely on the requirement of the court and it is for the court to decide whether for pronouncing its judgment or for any other substantial cause it is necessary to have the additional evidence before it. 14.7. The assessee relied on many case laws but we have considered these but will reproduce the relevant finding from the decision of Hon’ble Bombay High Court in the case of CIT vs. Smt. Kamal C. Mehboobbani (1995) 214 ITR 15 (Bom.) wherein Hon’ble Bombay High Court has considered this issue. The relevant reads as under: “3. ...... The Tribunal did not accept the additional evidence sought to be produced by the revenue at the time of hearing of the appeal before it on the ground that it required investigation of facts and giving of further opportunity to the assessee. The Tribunal, therefore, refused to admit the additional evidence produced by the revenue at that stage and considered the appeal of the revenue ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 74 on merits and upheld the order of the AAC and rejected the appeal of the revenue.” 4......This rule is couched in negative language so far as the right of the parties to produce additional evidence before the Tribunal is concerned. It clearly says that the parties to the appeal shall not be entitled to produce additional evidence, either oral or documentary. In that view of the matter, the question of a party claiming a right to adduce additional evidence cannot arise. The Tribunal has, however, been given a power to require any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass order or for any other sufficient cause. For this purpose also, the Tribunal has to record the reasons. It is evident that in the present case the Tribunal did not think it necessary to require the production of any other document at the stage of final hearing as in its opinion the orders could be passed in the case before it on the basis of the material on record. In such a situation, no fault can be found with the order of the Tribunal refusing to admit the additional evidence sought to be produced by the revenue before it at the time of hearing of the appeal. 6. The learned counsel for the revenue submits that if a party wants to produce additional evidence, the Tribunal should not refuse to admit the same. According to the learned counsel, discretion is vested with the Tribunal in the matter which should be exercised judiciously. 7. We have considered the above submission. We, however, find it difficult to accept the same because, as observed earlier, we are of the opinion that rule 29 does not confer any right on the parties as such to produce any additional evidence, either oral or documentary, before the Tribunal. On the other hand, such a right has specifically been taken away by prohibiting the production of the additional evidence by the parties. The power has been vested only in the Tribunal to require production of any document or evidence if it is of the opinion that it is necessary to do so to enable it to pass order or for any other substantial cause. For doing this also, the Tribunal has to record reasons. In the present case, the Tribunal has not issued any such direction. On the other hand, it has stated that it is not satisfied that any such direction should be issued. In that view of the matter, we do not find any infirmity in the order of the Tribunal requiring to entertain the additional evidence sought to be produced by the revenue at the time of hearing of the appeal.” 14.8. In entirety of facts and the above proposition of law, we are of the considered view that the additional evidence filed in the form of Revenue’s paper book 1 to 14 which mainly contains the CBI charge sheets, statements recorded before CBI under section 161 of CrPC and 164 CrPC before Magistrate, correspondences between the companies and the Govt. of Andhra Pradesh, documents procured from various State Govt. Authorities i.e. Govt. of Andhra Pradesh, statements recorded by the AO during the penalty proceedings, various documents containing ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 75 allotment of land etc., in our view, are not relevant for deciding the issues before us i.e. addition of share premium under section 56 of the Act and share capital and share premium under section 68 of the Act because the entire details relating to facts and tax laws are available in the orders of the lower authorities i.e. assessment order and the order of CIT(A) and assessment records. Hence, we do not admit these additional evidences and reject the application filed by Revenue under rule 29 of the Rules. 14.9. The application filed by Revenue under rule 29 of the Rules is rejected. 15. On merits, the ld. AR also stated that the ld. AO had started the proceedings by merely relying on certain newspaper articles wherein the allegation regarding quid-pro-quo involvement in the entities which had invested in the assessee company was made. He argued that the department cannot take cognizance of these news paper articles since they are merely based on hearsay and in the nature of surmises and conjectures and cannot be construed to be key evidence in any manner to fasten any addition in the hands of the assessee company. In fact the ld. AO had even recorded statements from the Director of Matrix group, Aurobindo Pharma group and Hetero Group during the course of assessment proceedings u/s.131 of the Act. He argued that there has been no acceptance from any of the single party that there was any quid- pro-quo arrangements as has been alleged by the ld. AO based on news paper article. He argued that the ld. AO had completely failed to bring forth any tangible or material evidence to support his contention that investments made in the assessee company are not in the nature of capital receipts but received as a consideration for benefit being granted to such parties by Government of Andhra Pradesh. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 76 15.1. The ld. AR with regard to the valuation report filed by the assessee company for valuation of share premium which are prepared by M/s. Jagadisan & Co., dated 12.7.2007 and M/s. Deloitte dated 16.11.2007 , stating that the valuers had valued the assessee company’s proposed publication of ‘Sakshi’ newspaper after duly taking into account the huge untapped market in the news paper readership in Andhra Pradesh which is certified by Audit Bureau of Circulations, Mumbai. Moreover, the said valuation report of M/s. Deloitte also mentioned the Dip-stick study wherein it was understood that O & M had carried on dip-stick study on the Telugu news paper market from where it was found that the current newspapers are seem to be partisan and / or indicate poor credibility hence, the newspaper which provides news without any bias will become popular among the readers. He also drew our attention that the assessee company had proposed to use technology like “Computer to plate” (CTP) for which it had imported machines from Canada which would provide quality presentation in terms of news, photographs and consequently better readability. Thereafter, he specifically drew the attention of the Bench to the projections of sales used in the financials of the assessee company for future years for the purpose of valuation under DCF method. It was specifically argued that on the date of its launch, the newspaper ‘Sakshi’ had a record sale order of 1286670 numbers. Further readership figures projection has been achieved by the assessee company as per the below mentioned chart:- Period Sakshi Eenadu (Rival Newspaper) Jan-Jun 2009 1256809 1316883 Jul-Dec 2009 1218485 1293275 Jan-Jun 2010 1414175 1507359 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 77 15.2. The aforesaid sale order figures prove that assessee company is not a mere shell company but is a well organized and professional company which is driven by managerial personnel with proper business acumen in the relevant field. Hence, the projections made in the financials which has been used for the purpose of valuation by the valuer viz.,M/s. Jagadisan and Co and M/s. Deloitte cannot be termed as unrealistic as they are strengthened and proved by actual performance. The ld. AR drew our attention to the statement of facts filed before the ld. CIT(A) wherein the assessee had submitted that the advertising revenue was not achieved by the assessee company as projected in view of the fact that the vernacular advertisement market which dropped steeply due to economic recession in the year 2008 & 2009 coupled with political instability, Telangana issue, lack of political readership in terms of the rate and volume. He also pointed out that one of the strong reasons is that the monopoly status of Eenadu newspaper was not challenged till the assessee entered the market and after the entry of the assessee, ‘Eenadu’ newspaper reduced their advertising tariff, which forced the assessee also to reduce the tariff, being a newcomer. This fact is also evident from the dropping profit margins of Eenadu i.e. Rs.107.29 Crores from publication division as on 31/03/2008 to Rs.21.76 Crores at the end of 31/03/2009. This has contributed to the slump in revenue of assessee also and consequent loss which majorly includes depreciation loss. Hence, he argued that the projections and cost estimates used by the management and submitted to the valuer for preparation of valuation reports were very scientific and strategized and is close to actual achievements. The ld. AR further submitted that as per the Indian Readership Survey (IRS), which is the survey conducted by Media Research Users Council (MRUC), an autonomous body of advertising agencies and publications, around the year provides results of ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 78 publications every quarter. The IRS number of Sakshi for the average issue readership is 48.16 per quarter while that of the total issue readership is 133.78 lakhs per quarter which can be tabulated as under: 15.3. Based on the aforesaid figures, the ld. AR stated that the publication of newspaper by the assessee company has indeed reached the targeted figures within 1 ½ years whereas the rival newspaper ‘Eenadu’ has achieved its success in 30 years of its operation. He also referred to the statement of facts filed before the ld. CIT(A) that the newspaper launched by the assessee company was in ‘Limca Book of Records’ stating that “Sakshi”, a Telugu Broadsheet morning daily with all colour pages was launched simultaneously from 23 different cities including 19 cities in Andhra Pradesh and four metros on a single day in March 2008 becoming the first news paper to be launched simultaneously from most cities. 15.4. The ld AR argued that the revenue had not brought on record any corroborative material by conducting any independent inquiry that the transactions between the assessee and the investor companies are in the nature of quid –pro- quo arrangement. It was vehemently submitted that the department failed to conduct any enquiry and bring on record any direct material that can serve as an evidence linking the transactions between the investor companies and the assessee company to show that the capital investment in the assessee company was due to the grant of any land or project by the Government of Andhra Pradesh, even after a Readership Sakshi Eenadu Andhra Jyoti Vaartha Average 48.16 60.91 22.51 6.37 Total 133.78 147.94 56.35 25.55 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 79 lapse of more than 10 years from the end of the assessment year under consideration. The burden of proof to show that the assessee company as alleged had such an arrangement for fastening such huge additions is on the revenue and that burden cannot be said to be discharged by merely referring to the chargesheets filed by CBI which are yet to reach finality /conclusion before the Hon’ble Special Court of CBI. 15.5. The ld AR stated that no additions can be made on the basis of charge sheets filed by CBI. In support of this proposition, he placed reliance on the co-ordinate bench decision of Chennai Tribunal in the case of ACIT vs Shri Ramcharan Tej Konidala in ITA No. 2074/Chny/2018 dated 28/04/2021. He also pointed out that Chennai Tribunal also placed reliance on the decision of Hon’ble Madras High Court in the case of CIT vs N Swamy reported in 241 ITR 363 (Mad) wherein it was held that the burden of showing that the assessee had undisclosed income is on the revenue and the burden cannot be said to be discharged by merely referring to the third party statements. 15.6. The ld AR also placed reliance on the decision of Bangalore Tribunal in the casee of Shri Ratan Babulal Lath vs DCIT in ITA No. 355/Bang/2017 dated 15/06/2018 wherein that assessee’s case was reopened since he was interrogated by CBI in connection with providing of accommodation entries to companies of Shri Y S Jagan Mohan Reddy and that he had provided a sum of Rs 60 crores to two companies viz. M/s Sugam Commodeal Pvt Ltd and M/s Chandelier Tracon Pvt Ltd , which had ultimately invested in M/s Jagati Publication Pvt Ltd in the Asst Year 2009-10. On the basis of the said information, the AO had reopened the assessment u/s 147 of the Act. It was held that once the sensitive information was received by the AO, the onus was on him to ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 80 examine the affairs of the three companies and investigate whether any cash was introduced, which he failed to do so. The AO simply placed reliance on the statement recorded by the CBI and made additions in the hands of that assessee. This is despite the fact that the statement recorded by the CBI cannot be held to be a good piece of evidence in the court of law unless and until some corroborative independent evidence is collected by making necessary enquiry. 15.7. With regard to statement of Shri P.N.Sudarshan, Director of M/s. Deloitte recorded by CBI authorities which have been heavily relied upon by the ld. Special Counsel for the Revenue, he argued that the aforesaid statement recorded by CBI cannot be considered to be a relevant evidence. He also argued that the statement provided by Shri P.N. Sudarshan before the CBI authorities is self-contradictory since he himself has admitted that the date of valuation report is academic as the date of valuation of the company as on 31/12/2007 remained unchanged. Further Shri P.N. Sudarshan has submitted that the valuation was based on future projections and as such change of date of valuation report would not impact the valuation per se. 15.8. The ld. AR also met the arguments of the ld. DR that M/s. Jagadisan & Co., had originally issued valuation report dated 01/11/2006 which is enclosed in the paper book of the department. The ld. AR drew our attention that the said valuation report assignment was carried out for valuing M/s. Caramel Asia Pvt. Ltd., which is a holding company of the assessee company. At that point in time, the assessee company being a subsidiary, was also subject matter of valuation and that the said valuation of assessee was done based on business plan and business model submitted by the management. The ld. Special Counsel for the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 81 Revenue argued that the projections of the assessee company had remain unchanged between the first valuation report and the second valuation report and hence, there was no justification for the valuer M/s. Jagadisan & Co., to give higher value at Rs.3459 Crores in his second report dated 12/07/2007. The ld. AR specifically submitted that there is a complete change in business plan from AY 2007-08 right from the numbers with regard to newspaper circulation figures between the first valuation and the second valuation report. He specifically drew our attention that in the first valuation report dated 01/11/2006, the management of the assessee company had projected sale of only six lakh copies per day in year 5, which figure had increased to Rs.15 lakhs in the second valuation report dated 12/07/2007. This specifically shows that the entire business plan and business model has undergone a drastic change based on subsequent development. Hence, the valuation figure of the assessee company is bound to be different and have to project significant improvement. He also drew our attention to page 598 of the case law paper book-3 filed by the assessee more specifically at page 601 wherein the ld. AO had recorded a statement u/s.131 of the Act on 13/12/2010 from Shri Nimmagadda Prakash who is a Director in M/s. Alpha Avenues Pvt. Ltd., Alpha Villas Pvt. Ltd., Gilchrist Investments Pvt. Ltd. ,among others. A specific question was posed by the ld. AO to Shri Nimmagadda Prakash with regard to the premium of Rs.350 per share charged by the assessee company. The relevant question No.8 posed by the ld. AO and reply given by Shri Nimmagadda Prakash in statement recorded u/s.131 of the Act is reproduced hereunder:- “8. Please give detailed evaluation and reasons for purchase of shares at a high premium rate of Rs.350 per share when a company started its commercial operations on 24.3.2008. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 82 A. As we have proposed to invest in five growth sectors as mentioned above of which Media is one of them, we have evaluated the proposal from Jagathi. We have compared our investment with the proposed investment by M/s. Blackstone USA into Eenadu. After considering discount of 20% on Eenadu valuation, we justified our investment in M/s. Jagathi Publications Limited. The valuation was later verified with the Valuation Report given by M/s. Deloitte Bangalore.” 15.9. As far as the allegation of back dating of the valuation report of the valuer is concerned, the ld AR submitted that the department has not brought on record any material or documentary evidence other than the aforesaid statement. It is trite law that suspicion however strong cannot partake the nature of evidence. It was submitted that even otherwise the courts have time and again held that merely on the basis of statement without anything more, additions cannot be made and huge tax liabilities cannot be fastened on an assessee. It had to be appreciated while evaluating evidence contemporaneous genuine documentary evidence has to be given precedence over unsupported and uncorroborated statement. Reliance in this regard was placed on the decision of Hon’ble Bombay High Court in the case of CIT vs Omprakash K Jain & Ors reported in 24 DTR 157 (Bom) wherein it was held :- 6. ........... The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind. The AO will have to comply with the settled principle of law. Documentary evidence if genuine must prevail over the oral statement. 15.10. The ld AR also placed reliance on the decision of Hon’ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs CIT reported in 328 ITR 411 (Guj) wherein it was held that merely on the basis of admission the assessee could not have been subjected to additions unless and until some corroborative evidence was found in support of such admission. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 83 15.11. The ld AR submitted that the documentary evidences submitted by the assessee in the instant case were not at all doubted by the lower authorities. The said documentary evidences substantiates the contention of the assessee that the issue of shares during the year under consideration was genuine. 15.12. Finally, he argued that in any case, the ld. AO and the ld. CIT(A) had categorically accepted that the nature of receipt was only share premium from these investor companies. Their only allegation is that these investor companies had paid share capital and share premium to the assessee company and that the share capital component at par value is acceptable and reasonable, but the premium component at Rs.350/- per share was not justifiable since assessee is a nascent company. The ld. AR vehemently argued that the character of receipt being share capital and share premium does not change at all in the instant case. Even additional evidences filed by the Revenue, even if admitted, does not state that the monies received was not share capital or share premium. The ld. AO only says that shareholders overpaid for the share price by alleging quid-pro-quo arrangement. Still the character of receipt being share consideration does not change. The law is very settled that the receipt of share capital and share premium is only the capital receipt and cannot be taxed as income in the hands of the assessee company for the year under consideration. Reliance in this regard was placed on the following decisions:- a. Decision of Hon’ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., vs. Union of India reported 368 ITR 1 (Bom). This decision was accepted by the CBDT and instruction No.2/2015 dated 29/01/2015 was issued by CBDT to all its Field Officers to accept the said decision. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 84 b. Decision of Hon’ble Bombay High Court in the case of Shell India Markets Pvt. Ltd., vs. ACIT reported in 369 ITR 516. c. Decision of Hon’ble Bombay High Court in the case of CIT vs. Green Infra Ltd., reported in 392 ITR 7. d. Decision of Co-ordinate Bench of Mumbai Tribunal in the case of DCIT vs. Brand Marketing India Pvt. Ltd., reported in 113 Taxmann.com 15. e. Decision of Mumbai Tribunal in the case of ITO vs. Chiripal Poly Films Limited in ITA No. 2671/Mum/2016 for A.Y.2011-12 dated 19/02/2019. f. Decision of Hon’ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd., reported in 394 ITR 680 (Bom). g. Decision of Hon’ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd., reported in 159 ITR 78. 15.13. With regard to statements recorded in the penalty proceedings by the ld. AO from various parties which are enclosed in the additional evidences filed by the Revenue, the ld. AR argued that even if those additional evidences are admitted, still, the ld. Special Counsel for the Revenue had not stated what he wants to rely from those statements and how the same are against the assessee. With regard to specific case law relied upon by the ld. Counsel for the Revenue on the decision of Hon’ble Apex Court in the case of Basir Ahmed Sisodia vs. ITO reported in 424 ITR 1, the ld. Special Counsel had argued that any evidence gathered from assessee during penalty proceedings would be relevant for adjudication in quantum proceedings. The ld. AR stated that this decision is factually distinguishable with that of the assessee by stating that the ld. AO took divergent stand in quantum and penalty proceedings. Hence, the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 85 Hon’ble Supreme Court held that evidences gathered in subsequent penalty proceedings need to be considered in quantum proceedings as assessee did not furnish any details in quantum proceedings originally. Any decision rendered thereon by the Apex Court should be seen from the facts peculiar to that case and cannot be applied universally without going into the specific facts related to assessee. 15.14. The ld AR submitted that the ld CIT(A) had confirmed the addition made under the head ‘income from other sources’ , though no section thereon was mentioned. Even assuming that the revenue intended to apply the provisions of section 56(2)(viib) of the Act where the issue of share premium was made taxable as income by a legal fiction with effect from 01/04/2013 relevant to Asst Year 2013-14 and onwards, the ld AR submitted that the said provision cannot be made applicable for the year under consideration. Hence no addition could have been made u/s 56(2)(viib) of the Act by the lower authorities in the instant case. Further it was submitted that the amount of share premium decided by a private limited company is based on commercial negotiations and the business expectations of the investors. Infact at the time when the share premium was received, there was no bar in law for the assessee to charge a high share premium. The department cannot therefore question the transaction merely because it thinks the investor could have managed by paying a lesser amount as share premium. It is the prerogative of the Board of Directors to decide the premium and it is the wisdom of the shareholder whether they want to subscribe to shares at such a premium or not. Heavy reliance was placed on the decision of Hon’ble Supreme Court in the case of PCIT vs Chain House International (P) Ltd reported in 103 taxmann.com 435 (SC) wherein the Special Leave Petition (SLP) filed by the department against the decision of Hon’ble Madhya Pradesh High ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 86 Court reported in 408 ITR 561 (MP) was dismissed by the Hon’ble Supreme Court. The relevant observations of the Hon’ble Madhya Pradesh High Court are as under:- 51. The learned ITAT after due examination of the order of CIT (Appeals) and the documents on record insofar as identity creditworthiness, genuineness of transaction of M/s. Aadhaar ventures (I) Ltd, M/s. Dhanush Technologies Ltd, M/s. Emporis Projects Ltd and M/s. L.N. Industries Ltd (formarly known as L.N. Polyster Ltd) came to the conclusion that the assessee company having receipt share application money through bank channel and furnished complete details of bank statements, copy of accounts and complied with notices issued and the directors of the subscriber company also appeared with books of accounts before the appellate authority and confirmed the investment made by them with the assessee company, therefore, the identity and creditworthiness of investor and genuineness of transaction of the share applicant has been proved in the light of the ratio laid down by the M.P. High Court, Delhi High Court and the Hon'ble Supreme Court and were of the opinion that the onus cast upon the assessee as provided under Section 68 of the Act has been duly discharged by the assessee the identity of the share subscriber, creditworthiness and genuineness of the transaction is not to be doubted. The learned ITAT considered the case of the each company in great detail in paras 85 to 110 of the impugned order and recorded its finding. The aforesaid finding of fact recorded by the ITAT are based on the material available on record which is a finding based on appreciation of evidence on record. 52. Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. 53. Once the genuineness, creditworthiness and identity are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 87 15.15. The ld AR submitted that the share premium cannot be taxed in the hands of the assessee company u/s 56(1) of the Act as the said section starts with the expression “income of every kind” . Hence what is relevant is there should be some character of income. It is settled proposition of law that capital receipts, unless specifically taxed under any provisions of the Act, are excluded from income. He argued that issue of shares is of capital nature and forms part of the share capital of the company and therefore cannot be taxed as revenue receipt. He stated that the department had failed to establish that the share premium received is income of the assessee company and in the absence of the same, the said amount cannot be taxed in the hands of the assessee company u/s 56 of the Act. Reliance in this regard was placed on the decision of Co-ordinate Bench of this Tribunal in the case of Green Infra Limited vs ITO reported in 145 ITD 240 (Mum) wherein this tribunal had considered the issue of shares at a high premium with respect to that assessee in its first year of operation. In the said case, it was held by this tribunal that it is the wisdom of the shareholders whether they want to subscribe to such a heavy premium. It has been further held that share premium realised from the issue of shares is of capital nature and forms part of the share capital of the company and therefore cannot be taxed as a revenue receipt u/s 56 of the Act. The said decision of Mumbai Tribunal had been affirmed by the Hon’ble Bombay High Court in the case of Green Infra Limited reported in 392 ITR 7 (Bom). 15.16. With regard to the addition made in the sum of Rs 15 crores u/s 68 of the Act, the ld AR submitted that the assessee company had submitted various documentary evidences with respect to the investors to prove their identity, creditworthiness and genuineness of transactions. It was pointed out that the identity of the credit entries could be established ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 88 by the assessee by providing name and PAN of the parties through whom it had received the sum of money. The genuineness of the transaction could be demonstrated by showing that the assessee had infact received money from the said shareholder and it came from the bank accounts of that shareholder. The bank statements of the investors proves the creditworthiness or financial strength of the parties as they possessed sufficient bank balances to make investment in the assessee company. Hence the initial burden has been discharged by the assessee by submitting basic evidences proving identity, creditworthiness and genuineness of transactions and once the same is discharged, then the burden shifts to the department to prove that the said credit entry is fictitious and not genuine. This has apparently not done by the department in the instant case. The ld AR also placed reliance on the following decisions in support of its proposition, among other decisions:- a) Decision of Hon’ble Delhi High Court in the case of CIT vs Oasis Hospitalities P Ltd reported in 333 ITR 119 (Del) b) Decision of Hon’ble Delhi High Court in the case of CIT vs Kamadhenu Steel & Alloys Ltd & Ors reported in 361 ITR 220 (Del). SLP of revenue against this decision was dismissed by the Hon’ble Supreme Court in SLP No. CC 15640/2012 dated 17/09/2012. c) Decision of Hon’ble Gauhati High Court in the case of Nemi Chand Kothari vs CIT & Another reported in 264 ITR 254 (Gau) 15.17. The ld. AR argued that out of the 28 parties from whom share application money was received, it is submitted that the ld. AO has made additions u/s. 68 of the Act in the case of the following investor companies:- Sr. No. Name of Party Amount of Addition (Rs.) ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 89 1. Artillence Bio-Innovations Limited 50,00,000/- 2. Kirti Electro Systems Pvt. Ltd. 50,00,000/- 3. Delton Exim Pvt. Ltd. 1,00,00,000/- 4. Stocknet International Ltd. 25,00,000/- 5. Hingora Finvest Pvt. Ltd. 25,00,000/- 6. Moon Enterprises Pvt. Ltd. 2,50,00,000/- 7. Eres Projects Pvt. Ltd. 8,00,00,000/- 8. TWC Infrastructure Pvt. Ltd. 2,00,00,000/- Total (Rs.) 15,00,00,000/- 15.18. The ld. AR submitted that from the above tables as well as on a perusal of the assessment order at para 23.1., the ld. AO has discussed the evidences filed by the assessee company from where it can be seen that the following documents were filed by the assessee with respect to the investor companies for which the ld. AO has made additions u/s. 68 of the Act:- 1. Copy of PAN Card 2. Copy of Board Resolution 3. Copy of Memorandum of Association & Articles of Association with Incorporation Certificate 4. Copy of Share Application Form For parties at Serial No. 1 to 6, the assessee has also filed (i) copies of bank statement, (ii) copies of Annual Reports as well as (iii) Annual General Meeting Notices. It is to be added that the ld. AO has also stated that (i) M/s. Delton Exim Pvt, Ltd. has responded to him on 24.12.2010. Further, the investor companies i.e. (ii) M/s. Artillence Bio-Innovations Limited, (iii) Kirti Electro Systems Pvt. Ltd. and (iv) Stocknet International ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 90 Ltd. had responded and submitted confirmation letters on 27.12.2010 before the ld. AO. Also, ld. AO has confirmed that the assessee company has filed confirmation letters in respect of these four companies. Information from (v) M/s. ERES Project Pvt. Ltd. and (vi) TWC Infrastructure Pvt. Ltd. was received by the ld. AO on 16.12.2010 which contained details of directors, bank statements etc. The ld AR submitted that the ld. AO has also confirmed that he was in possession of the Income Tax Returns filed by these eight investor companies, wherein he has discussed that the income of these parties were meagre. Further, the assessee company had furnished the correct address of M/s. TWC Infrastructure Pvt. Ltd. and M/s. ERES Projects Pvt. Ltd. before the ld. AO vide letter dated 09.12.2010. 15.19. The ld. AR further submitted that the assessee has proved the identity of shareholders by furnishing the copy of PAN card of all the investor companies and copy of acknowledgement of income tax returns filed by all the investor companies. The ld. AR submitted that to prove the genuineness of the transactions, the assessee has furnished confirmations from four investor companies; copy of bank statements of all the investor companies showing amounts received by them via bank transfers and not through cash deposits and payments made to the assessee company towards share subscription; copy of Board resolutions passed in their respective hands for making investment in assessee company at a premium; the six companies mentioned in Sr. No.1-6 duly complied with the notices issued by the ld. AO wherein they had also accepted the investments made by them in the assessee company and copy of share certificates and share application forms were also submitted before the ld. AO. The ld. AR submitted that in order to prove the creditworthiness of the shareholders, the copy of audited financial statements of six investor ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 91 companies were furnished and from the same, it could be noticed that all the six companies had sufficient networth to make investment in the assessee company as tabulated hereunder:- Sr. No. Name of Investor Investment Amt (Rs.) Net Worth as on 31.03.2008 (Rs.) 1. Artillence Bio- Innovations Limited 50,00,000/- 26,61, 58,360/- 2. Kirti Electro Systems Pvt.Ltd, 50,00,000/- 40,24,88,989/- 3. Delton Exim Pvt. Ltd. 1,00,00,000/- 34,94,96,200/- 4. Stocknet International Ltd., 25,00,000/- 9,54,69,026/- 5. Hingora Finvest Pvt. Ltd. 25,00,000/- 30,02,28,200/- 6. Moon Enterprises Pvt. Ltd., 2,50,00,000/- 7,23,94,648/- 15.20. From the above submission of documents, the ld. AR pleaded that assessee had duly discharged its primary onus of proving the three necessary ingredients of Section 68 of the Act. The ld. AR also submitted that none of the documents submitted by the assessee were even sought to be doubted by the lower authorities. It was also pointed out that the investors who have acquired shares in the assessee company are not in any manner related to the Directors and their families and that all the share subscribers are regular tax payers and the transactions had taken place through regular banking channels. 15.21. With regard to the allegation of the ld. AO and the ld. CIT(A) that the credit-worthiness of the investors was not established by the assessee company, it was stated that it needs to be appreciated that the assessee company is required to establish the creditworthiness of the investor ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 92 companies only to the extent of the investment made by them in the assessee company. Therefore, once these parties have produced the bank statements from where it could be seen that they had sufficient bank balances in their kitty to make investment and confirmed the transaction and the share capital is received through banking channel the creditworthiness of the investor companies to the extent of the investment made in the assessee company stands proved. 15.22. The ld. AR also submitted that assessee, by discharging the initial burden of proof by proving the three necessary ingredients of Section 68 of the Act, is not obliged to prove the source of source of the investor companies atleast for the year under consideration. Once the primary onus is discharged by the assessee, then the onus of proof shifts to the Revenue and just because the share applicants could not be found at the address given, it would not give the Revenue an automatic right to make an addition u/s.68 of the Act. The ld. AR also stated that one must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Reliance in support of the aforesaid propositions were placed on the decision of the Hon’ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., and others reported in 330 ITR 298 (Del). 15.23. The ld. AR also submitted that assessee had given the present address together with all the relevant details of each of the investor companies. Even if it be assumed that the subscribers to the increased share capital were not genuine, nevertheless, under no circumstances, can the amount of share capital and share premium be regarded as undisclosed income of the assessee. Reliance in this regard was placed on the judgement of Hon’ble Delhi High Court in the case of CIT vs. Stellar ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 93 Investment Ltd., reported in 192 ITR 287 which was later affirmed by the Hon’ble Supreme Court in 251 ITR 263. 16. The ld. Special Counsel for the Revenue vehemently argued that the prime basis for all the investor companies to make investment in the assessee company towards share capital and the share premium was the share valuation reports issued by M/s. Jagadisan & Co., Chartered Accountants and M/s. Deloitte. He drew the attention of the Bench that M/s. Jagadisan & Co., had indeed given two valuation reports. The first valuation report dated 01/11/2006 and the second valuation report dated 12/07/2007. The ld. Special Counsel for the Revenue stated that the valuation of the assessee company in the second valuation report had been increased substantially despite the fact that the projections had remained unchanged. This point was countered by the ld. AR that the business plan had completely undergone drastic change between the period of first valuation and the period of second valuation carried out by M/s. Jagadisan & Co., In fact the prime basis of Revenue recognition itself underwent drastic change in terms of number of circulations that had been projected in the revised business plan. In fact in year 5, in the first valuation report dated 01/11/2006, the company had projected to sell only 6,00,000 copies per day. Whereas in the second valuation report dated 12/07/2007, the number of copies projected to be sold in year 5 was 15,00,000 copies per day. This drastic change in the projections coupled with the changed business plan of the assessee company based on the development that had cropped up between 2006 and 2007 had enabled M/s. Jagadisan & Co., to determine the value of the assessee company at Rs.3,450 crores. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 94 16.1. The ld. Special Counsel for the Revenue vehemently argued that the ld. CIT(A) had sustained the addition under the head ‘income from other sources’ in respect of share premium received from outsiders’ category in the sum of Rs.277,56,88,650/-. He argued that though the ld. CIT(A) had not mentioned the section under which such addition had been sustained, from the reading of the order of the ld. CIT(A) and the order of ld. AO, it could be reasonably inferred that the lower authorities were only trying to apply the provisions of Section 68 of the Act. The ld. Special Counsel for the Revenue also pointed out that Section 68 also falls under the head ‘income from other sources’. He argued that the head of income i.e. ‘income from other sources’ falls under Chapter IV F and Section 68 also would fall under the same. Hence, he pleaded that the entire addition made on account of share premium should be viewed from the context of provisions of Section 68 of the Act and not otherwise. To counter this argument, the ld. AR objected that Section 68 does not fall under Chapter-IV F of the Act. He drew the attention of the Bench that Section 68 falls under Chapter –VI of the Income Tax Act under the heading ‘AGGREGATION OF INCOME’. Hence, he argued that Section 68 would not fall under the head ‘income from other sources’ and it forms part of income of the assessee only by way of a deeming legal fiction. 16.2. The ld. Special Counsel for the Revenue reiterated the findings recorded by the ld. AO as well as by the ld. CIT(A) on the merits of the additions of Rs.277.57 Crore and Rs.15 Crores made on account of share capital and share premium. In support of the action of the lower authorities, the ld. Special Counsel for the Revenue placed reliance on the following decisions:- ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 95 a. Decision of Hon’ble Supreme Court in the case of Sumati Dayal vs. CIT reported in 214 ITR 801. b. Decision of Hon’ble Supreme Court in the case of Kale Khan Mohammad Hanif vs. CIT reported in 50 ITR 1. c. Decision of Hon’ble Supreme Court in the case of J J Development P. Ltd., vs. CIT reported in 259 Taxman 414. d. Decision of Hon’ble Supreme Court in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd., reported in 412 ITR 161. e. Decision of Hon’ble Supreme Court in the case of CIT vs. P. Mohanakala reported in 291 ITR 278. f. Decision of Hon’ble Supreme Court in the case of Sunil Siddharthbhai vs. CIT reported in 156 ITR 509. g. Decision of Hon’ble Supreme Court in the case of S.A. Builders Ltd., vs. CIT reported in 288 ITR 1. h. Decision of Hon’ble Delhi High Court in the case of CIT vs. N. R. Portfolio Pvt. Ltd., reported in 264 CTR 258. i. Decision of Hon’ble Delhi High Court in the case of CIT vs. Navodaya Castles Pvt. Ltd., reported in 367 ITR 306. j. Decision of Hon’ble Himachal Pradesh High Court in the case of J.M.J. Essential Oil Company vs. CIT reported in 415 ITR 17. 16.3. The ld. Special Counsel for the Revenue submitted groupwise/partywise written submission on 24/08/2021 in respect of the following investors:- a. Matrix / Vanpic Group: Alpha Villas Pvt. Ltd., Alpha Avenues Pvt. Ltd., and Gilchrist Investments Pvt. Ltd., ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 96 b. Ramky Group: TWC Infrastructure Pvt. Ltd., and ERES Projects Pvt. Ltd., c. Hetero group: Hetero Drugs Ltd, Hetero Labs Ltd, Hetero Healthcare Ltd., and Shri M. Srinivasa Reddy d. Aurobindo Group: Axis Clinicals ltd., (Trident Life Sciences Pvt. Ltd.), Shri K. Prasad Reddy and Smt. K. Rajeshwari. e. Penna Cements Group: Pioneer Infrastructure Holdings Ltd., f. India Cements Group: India Cements Ltd., g. P.V.P. Group: P.V.P. Business Ventures Pvt. Ltd., h. Sandesh Labs Group: Sandesh Labs Pvt. Ltd., Spume Solutions Pvt. Ltd., and Shri G.Srinivasaraju i. Shri A.K.Dandamudi j. Shrine Finance and Investments Pvt. Ltd., and Satabdi Investments Pvt. Ltd., k. Artillegence Bio Innovations Pvt. Ltd., Kirti Electrosystems Pvt. Ltd., Delton Exim Pvt. Ltd., Stocknet Internaitonal Ltd., Hingora Finvest Pvt. Ltd., and Moon Enterprises Pvt. Ltd., 16.4. The ld. Special Counsel for the Revenue in respect of the aforesaid parties reiterated what is mentioned in the Assessment order and additionally also placed reliance on the charge-sheets filed by the CBI before the Hon’ble Special Court of CBI in respect of certain parties. The ld. AR vehemently argued that he had already made his submissions for non-admission of additional evidences filed by the department in the instant case. Hence, any reference made by the ld. Special Counsel for the Revenue to those additional evidences should not be given any weightage as they do not fall under ambit of evidences per se as they are mere charge sheets filed by CBI which are yet to be taken cognizance by the Hon’ble CBI Court. With regard to the observations of the ld. Special ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 97 Counsel for the Revenue on merits with regard to various documentary evidences submitted by the assessee, the ld. AR stated that all those points were already met by him in his arguments. With regard to the reliance placed on various decisions by the ld. Special Counsel for the Revenue, the ld. AR pointed out that there is absolutely no quarrel on the ratio laid down in various decisions of Hon’ble Supreme Court and Hon’ble Delhi High Court referred to by the ld. Special Counsel for the Revenue supra. He pleaded that what is to be seen is that those decisions were rendered in the context of facts prevailing in those cases. He pleaded that we can only adopt the principles laid down thereon, but the same are not directly applicable to the facts prevailing in the instant case. In effect, he pleaded that the decisions relied upon by the ld. Special Counsel for the Revenue are factually distinguishable. 16.5. The ld. Special Counsel for the Revenue also placed reliance on the charge sheet filed by the CBI which are enclosed in the form of additional evidences to drive home the point that CBI had recorded a statement from the partner of Jagadisan & Co., Chartered Accountants, which was the sole basis for the investors to rely and make investment in the assessee company at a premium. Similarly, he also placed reliance on the statement given by the partner of M/s Deloitte before the CBI which are enclosed in the additional evidences wherein he had stated that the valuation report has been predated. The ld. Special Counsel for the Revenue also submitted by placing reliance on the charge sheet filed before the ld. CBI that the projections made by the assessee were totally unreal. He also pointed out that an independent valuation report was also given by SBI Capital Markets Ltd., at the behest of CBI. Accordingly, he pleaded that assessee company could not justify the receipt of premium @Rs.350 per share. Per contra, the ld. AR vehemently argued that all the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 98 arguments advanced by the ld. Special Counsel for the revenue including the case laws relied upon by him, were in the context of addition made for Rs.277.57 Crores u/s.68 of the Act. Whereas what is to be noted is both the ld. AO as well as the ld. CIT(A) had only made addition on account of share premium addition made for Rs.277.57 Crores only under the head ‘income from other sources’ and that Section 68 of the Act does not fall under the head ‘income from other sources’ as they fall in different chapters of the Act altogether. Not even a single word has been mentioned on account of section 68 of the Act by the lower authorities while making the addition on account of share premium in the sum of Rs. 277.57 Crores. The ld. AR also pointed out that the ld. AO had time and again mentioned that the nature and character of receipt in the hands of the assessee was share capital and share premium and that the share capital portion received at par value of Rs.10/- per share is accepted and found to be reasonable and that the share premium portion received from very same investors alone has been concluded to be beyond human probabilities. He also argued that the ld. Special Counsel for the Revenue had vehemently argued that this premium component had arose to the assessee only pursuant to quid pro quo arrangement in view of the investors and their allied companies getting some benefit from the Government of Andhra Pradesh. This receipt of money based on quid pro quo arrangement in the form of share premium was treated as a benefit derived by the assessee company and hence, sought to be taxed under the provisions of Section 68 of the Act according to ld. Special Counsel for the Revenue. The ld. AR argued that one cannot have quid pro quo in Section 68 of the Act at all. The main case of the Revenue is quid pro quo and once there is quid pro quo, the entire provisions of Section 68 of the Act wholly goes. This act of quid pro quo arrangement, if any, emanates apparently only from the charge sheet filed by CBI which are merely ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 99 allegations and does not have any evidentiary value. The ld. AR forcefully submitted that the ld. Special Counsel for the Revenue nowhere pleaded that what was received by the assessee company was not share premium. In other words, the case of the Revenue is assessee company has received unjustified share premium. Now, the moot question that arises is whether receipt of share premium per se could be brought to tax in the year under consideration. The ld. AR argued that in view of the decision of the Hon’ble Bombay High Court in the case of Vodafone India Services Ltd., reported in 368 ITR 1(which has been accepted by the CBDT by not filing further appeal to Hon’ble Supreme Court), the answer is an emphatic ‘NO’. In other words, the receipt of share premium could be subject matter of examination only from A.Y.2013-14 onwards due to the amendment brought in the statute. Hence, in any case, the share premium will only continue to be capital receipt in the hands of the assessee company for the year under consideration and hence, there cannot be any addition that could be made in the hands of the assessee company. The ld. AR also pointed out that the main case of the ld. Special Counsel for the Revenue is only Section 68 though, that is not case of lower authorities. Hence, this is a classic case of ld. Special Counsel for the Revenue trying to improve the case of lower authorities before this Tribunal which is impermissible in law. According to lower authorities, the assessee has proved identity of the investors, credit worthiness of the investors and genuineness of transactions in respect of share capital portion received from the investors. Then how the same could be stated to be not proved when it comes to share premium portion? Reliance in this regard was placed by the ld AR on the decision of Kolkata Tribunal in the case of ITO vs. Trend Infra Developers Pvt. Ltd., in ITA No.2270/Kol/2016 for A.Y.2012-13 dated 26/10/2018, wherein under similar facts and circumstances, the share capital was accepted by the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 100 Revenue as genuine and share premium was sought to be taxed u/s.68 of the Act which was deleted by the Kolkata Tribunal. 16.6. With regard to addition made u/s.68 of the Act in the sum of Rs.15 Crores, the ld. AO as well as the ld. Special Counsel for the Revenue by placing reliance on various documents produced by the assessee and various information gathered by them, vehemently argued that monies were invested by ERES Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., totalling to Rs.10 Crores in assessee company and that those two parties were provided funds by Ramky group. This is a classic case of department itself proving the source of source of the investor company. He argued that the provisions of Section 68 of the Act pre-supposes introduction of assessee’s own money. When the orders of the lower authorities itself state that monies have been provided by Ramky group to the aforesaid two parties, who inturn had invested money in the assessee company, then obviously, it cannot be assessee’s own money. Then the whole gamut of Section 68 of the Act vanishes. 16.7. With regard to the remaining Rs.5 Crores received from various parties, which are subject matter of addition u/s.68 of Act, the main grievance of the Revenue seems to be that all these parties got funded by some other parties, who had quid pro quo arrangement with the assessee company. In this regard, the ld. AR placed on record, the copy of Memo of CBI Court order filed by CBI to the Hon’ble CBI Court wherein the CBI had admitted that there is absolutely no quid pro quo arrangement with the directors of the assessee company. He argued that this document completely demolishes the entire case of the ld. Special Counsel for the Revenue as the addition is sought to be made u/s 68 of the Act doubting the genuineness of transactions and the share capital and share premium ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 101 received by the assessee company was only in the nature of quid pro quo arrangement. 17. We have heard the rival submissions and perused the materials available on record including the various judicial pronouncements that were referred to by both the parties before us at the time of hearing. It is not in dispute that the assessee company had received share capital and share premium from various investor companies. It is not in dispute that the character and nature of receipt has been accepted by the lower authorities in several pages of its order that what was received was only share capital and share premium. We find that the lower authorities had accepted the receipt of share capital portion for which shares have been allotted at face value for promoters category and for allotment of shares at par for outsiders category, to be reasonable and had not made any addition thereon. In this regard, we find that the ld. AO in more than one occasion in his assessment order had categorically stated that share capital portion received from the investor companies in the outsiders category at par value is accepted and found to be reasonable depending upon the performance of the assessee company. The ld. AO had only doubted the receipt of share premium from the various investor companies, which in his opinion, is not justifiable. In this regard, we find that the ld. Special Counsel for the Revenue had placed heavy reliance on the additional evidences in the form of CBI chargesheets, statements recorded during penalty proceedings, various correspondences between investor and their group companies with the Government of Andhra Pradesh for their routine business matters, share valuation report etc. We have already held hereinabove that these charge sheets are not admissible as they are not relevant for adjudication of the issues before us and also in view of the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 102 fact that most of them do not fall under the category of being construed as an ‘evidence’. With regard to various paper books relied upon by the learned special counsel for the revenue in the form of additional evidences, though these additional evidences were not admitted by this tribunal for reasons stated elaborately hereinabove, the bench still gave the liberty to the learned special counsel for the revenue to refer to those evidences for addressing the issue in dispute. 17.1. We hold that the chargesheets filed before the Hon’ble CBI Court are nothing but mere allegations levelled on various parties involved thereon and absolutely loses the character of having any evidentiary value thereon to be used for the purpose of income tax proceedings, especially in view of the fact that those papers are even yet to be taken cognizance by the Hon’ble CBI Court and as on date, no decision has been rendered by the Hon’ble CBI Court. Hence we hold that statement recorded by the CBI cannot be held to be a good piece of evidence in the court of law unless and until some corroborative independent material is collected by making necessary enquiry by the ld. AO , which is conspicuously absent in the instant case before us. No corroborative material by conducting any independent inquiry has been brought on record by the revenue to prove that the transactions between the assessee company and the investor companies are in the nature of quid pro quo arrangement. This gets further ratified by the Memo filed by the CBI before the Hon’ble CBI Court that the transactions of most of the investor companies with the assessee does not involve any quid pro quo arrangement at all. We find that this memo was filed only in respect of few investor companies which dealt with the assessee company by the CBI before the Hon’ble CBI Court. In the said memo, we find that CBI had not mentioned anything wrong or passing of illicit consideration or ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 103 quid – pro – quo arrangement in respect of remaining investor companies. We find that the case of the revenue is that the share premium portion represent monies received through quid-pro-quo arrangement. We hold that when the share capital portion received from the very same investor companies have been accepted to be reasonable by the ld. AO as not forming part of quid-pro-quo transaction, how can the premium component alone received from the very same investor companies be categorised as quid-pro-quo transaction. 17.2. We find that the statements recorded during penalty proceedings from second category of shareholders were heavily relied upon by the ld. Special Counsel for the Revenue by referring to the paper books in the form of additional evidences . But we find that no penalty was ultimately levied by the ld AO by passing of any penalty order. We find that the time limit for passing the same had already expired and hence it could be reasonably concluded that department did not intend to even levy penalty on the assessee company despite the availability of certain statements recorded from various persons. Hence the entire statements , even if it is adverse, is of no relevance for the impugned appeals. 17.3. It is not in dispute that the investor companies had decided to make investments in the assessee company at a premium of Rs 350 per share by placing reliance on the valuation reports issued by M/s Jagadisan & Co., Chartered Accountants dated 12/07/2007 and by M/s Deloitte dated 16/11/2007. Admittedly, these two valuers had valued the assessee company at more than Rs 3000 crores, by taking into account the proposed publication of ‘Sakshi’ newspaper and the untapped market in the news paper readership in Andhra Pradesh which is later certified by the Audit Bureau of Circulations, Mumbai, which justifies the allotment of ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 104 shares to the investor companies at a premium of Rs 350 per share. We find from the perusal of the valuation reports, they had clearly defined the various parameters used by them for valuing the assessee company together with the method used for valuation after due consideration of the financial projections given by the management of the assessee company and after duly considering the market forces and the datas available in respect of competitors and others in the market. The entire parameters used in the said valuation reports have already been detailed in the facts hereinabove and hence the same are not reiterated herein for the sake of brevity. The technical specifications proposed to be utilised by the assessee company in its proposed news paper industry which had been taken due cognizance by the valuers , which are already reproduced in the arguments of ld AR hereinabove, are not disputed by the revenue before us and hence the same are not reiterated herein. 17.3.1. We find that M/s Jagadisan & Co had initially valued the assessee company on 01/11/2006 at a much lesser figure while determining the value of holding company (i.e M/s Caramel Asia) of assessee. While valuing the holding company, the valuer thought it fit to value subsidiary co. i.e assessee herein also at that point in time, based on the figures available at that relevant point in time. Thereafter, he had valued the assessee company at Rs 3450 crores in the second valuation report dated 12/07/2007. The basis adopted in the second valuation report is doubted by the revenue. In this regard, it was submitted that the valuation report assumptions had undergone huge change in the 2 nd valuation report. Assessee was also valued at lesser price based on facts prevailing at that point of time. The 2 nd valuation report was done exclusively for assessee based on facts prevailing at that point of time. When 2 nd valuation was done, the CA had taken cognizance of subsequent prospects and business ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 105 plan of the assessee. Modified business plan was presented to CA by the assessee, which had enabled the valuation report to undergo huge change. The changes or modified business plan is reflected in the statement of facts by the assessee before the lower authorities. 17.3.2. We find that the ld. Special Counsel for the Revenue placed heavy reliance on the statement of Shri P.N.Sudarshan, Director of M/s. Deloitte recorded by CBI authorities. We find that this statement was included in the paper book filed by the department in the form of additional evidences, which is not admitted by this tribunal for reasons stated supra. However, the ld. Special Counsel for the Revenue was still given liberty to verify those documents while addressing the issue in dispute before us. From the perusal of the said statement, we find that the statement provided by Shri P.N. Sudarshan before the CBI authorities is self- contradictory since he himself has admitted that the date of valuation report is academic as the date for which valuation of the company remained unchanged. Further Shri P.N. Sudarshan has submitted that the valuation was based on future projections and as such change of date of valuation report would not impact the valuation per se. This is a very crucial factor in as much as even if some adverse inference is to be drawn on the aspect of valuation report being pre-dated , still it would not impact the valuation, as the date for which valuation is done would be relevant and not the date of valuation report. 17.3.3. One more crucial fact which requires consideration is that there was a complete change in business plan from A.Y. 2007-08 right from the numbers with regard to newspaper circulation figures between the first valuation and the second valuation report given by M/s Jagadisan & Co., Chartered Accountants. In this regard, we find that in the first valuation ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 106 report dated 01/11/2006, the management of the assessee company ahd projected sale of only 600000 copies per day in Year 5, which figure had increased to 1500000 copies per day in the second valuation report dated 12/07/2007. This specifically proves that the entire business plan and business model had undergone drastic change based on subsequent developments and untapped market in the news paper industry. In view of this, the valuation figure in the second valuation report is bound to have significant difference when compared to the first valuation report (where the main focus of the valuer was only to value the holding company M/s Caramel Asia and not the assessee company, being subsidiary). 17.3.4. The main grievance of the revenue is that the financial projections have been made in an unviable manner with more optimistic approach. What is to be seen is that the projections estimated in the valuation report had eventually turned out to be true or not in the subsequent actual performance of the assessee company. In this regard, it was pointed out that on the date of its launch, the newspaper ‘Sakshi’ had a record sale order of 1286670 numbers. Further readership figures projection has been achieved by the assessee company as per the below mentioned chart vis a vis its rival :- Period Sakshi Eenadu (Rival Newspaper) Jan-Jun 2009 1256809 1316883 Jul-Dec 2009 1218485 1293275 Jan-Jun 2010 1414175 1507359 17.3.5. Hence it could be safely concluded that the projections made in the financials which has been used for the purpose of valuation by the valuer viz.,M/s. Jagadisan and Co and M/s. Deloitte cannot be termed as ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 107 unrealistic as they are strengthened and proved by actual performance. The reason for drop in advertisement revenue between the projections and the actual performance is also well explained by the assessee as detailed in the arguments of the ld. AR hereinabove. In this regard, it was pointed out that one of the strong reasons is that the monopoly status of Eenadu newspaper was not challenged till the assessee entered the market and after the entry of the assessee, ‘Eenadu’ newspaper reduced their advertising tariff, which forced the assessee also to reduce the tariff, being a newcomer. This fact is also evident from the dropping profit margins of Eenadu i.e. Rs.107.29 Crores from publication division as on 31/03/2008 to Rs.21.76 Crores at the end of 31/03/2009. This has contributed to the slump in revenue of assessee also and consequent loss which majorly includes depreciation loss. It is well accepted principle that the projections and actual performance would always differ and as long as the difference is not alarming or huge, the figures reflected in the projections attain greater credibility. Hence in the DCF method used by the valuer wherein the projections and cost estimates used by the management and submitted to the valuers for preparation of valuation reports were prepared in a very scientific manner. The ld. AR had also pointed out that as per the Indian Readership Survey (IRS), which is the survey conducted by Media Research Users Council (MRUC), an autonomous body of advertising agencies and publications, around the year provides results of publications every quarter. The IRS number of Sakshi for the average issue readership is 48.16 per quarter while that of the total issue readership is 133.78 lakhs per quarter which can be tabulated as under: Readership Sakshi Eenadu Andhra Jyoti Vaartha ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 108 17.3.6. Based on the aforesaid figures, the ld. AR stated that the publication of newspaper by the assessee company has indeed reached the targeted figures within 1 ½ years whereas the rival newspaper ‘Eenadu’ has achieved its success in 30 years of its operation. We hold that the subsequent actual performance fully ratifies the fact that the assessee company is managed by proper key managerial personnel having both technical and business acumen in the relevant field. Hence the allegations levelled by the ld AO and ld CIT(A) in their respective orders in this regard is dismissed as baseless. 17.3.7. One more excruciating fact which requires consideration is that the ld. AO had recorded a statement on 13/12/2010 u/s 131 of the Act from Shri Nimmagadda Prakash, Director of M/s Alpha Avenues Pvt Ltd., M/s Alpha Villas Pvt Ltd , M/s Gilchrist Investments Pvt ltd , among others. In response to the specific question posed by the ld. AO to him with regard to the premium of Rs 350 per share charged by the assessee company vide Question No. 8, he had replied as under:- “8. Please give detailed evaluation and reasons for purchase of shares at a high premium rate of Rs.350 per share when a company started its commercial operations on 24.3.2008. A. As we have proposed to invest in five growth sectors as mentioned above of which Media is one of them, we have evaluated the proposal from Jagathi. We have compared our investment with the proposed investment by M/s. Blackstone USA into Eenadu. After considering discount of 20% on Eenadu valuation, we justified our investment in M/s. Jagathi Publications Limited. The valuation was later verified with the Valuation Report given by M/s. Deloitte Bangalore.” Average 48.16 60.91 22.51 6.37 Total 133.78 147.94 56.35 25.55 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 109 17.4. We find substantial force in the argument advanced by the ld AR that the revenue had not brought on record any corroborative material by conducting any independent inquiry that the transactions between the assessee and the investor companies are in the nature of quid –pro- quo arrangement. No direct material whatsoever has been brought on record by the revenue by conducing independent inquiry , which could serve as an evidence linking the transactions between the investor companies and the assessee company to show that the capital investment in the assessee company was due to the grant of any land or project by the Government of Andhra Pradesh, even after a lapse of more than 10 years from the end of the assessment year under consideration. The various documentary evidences submitted by the assessee in the instant case were not at all doubted by the lower authorities. The said documentary evidences substantiates the contention of the assessee that the issue of shares during the year under consideration was genuine. The burden of proof to show that the assessee company as alleged had such an arrangement for fastening such huge additions is on the revenue and that burden cannot be said to be discharged by merely referring to the chargesheets filed by CBI which are yet to reach finality /conclusion before the Hon’ble Special Court of CBI. In any case, these charge sheets are not admitted as additional evidences by this tribunal for elaborate reasons stated supra. 17.5. We find that the lower authorities had made an addition under the head ‘income from other sources’ without mentioning the relevant section under which the addition is sought to be made. If the same is to be considered as an addition made u/s 56(1) of the Act, then the receipt should be income. We find that the lower authorities had categorically accepted to the fact that the nature of receipt was only share capital and ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 110 share premium from the investor companies. Their only allegation is that these investor companies had paid share capital and share premium to the assessee company and that the share capital component at par value is acceptable and reasonable, but the premium component at Rs.350/- per share was not justifiable since assessee is a nascent company. We find that the ld. AO had observed that the shareholders overpaid for the share price by alleging quid-pro-quo arrangement. In our considered opinion, this allegation / objection of the revenue does not change the character of receipt being share capital and share premium. It is nobody’s case that what was received from the investor companies was not share capital or share premium. It is trite law that the receipt of share capital and share premium is only the capital receipt and cannot be taxed as income in the hands of the assessee company for the year under consideration, unless specifically taxed under any provisions of the Act. Those capital receipts are always excluded from the definition of income u/s 2(24) of the Act. Hence any receipt should first fall within the definition of income u/s 2(24) of the Act and then once it becomes ‘income chargeable to tax’ , then it may fall under the residuary head u/s 56 of the Act , if not specifically taxed under the provisions enumerated in Chapter IV A to IV E of the Act. This is the primary requirement of section 56(1) of the Act which reads as under:- Section 56(1) - Income of every kind which is not to be excluded from the total income under this Act shall be chargeable to income –tax under the head “Income from other sources” , if it is not chargeable to income- tax under any of the heads specified in section 14, items A to E. 17.5.1. From the above, it could be seen that provisions of section 56(1) of the Act are general provisions and gets triggered for a receipt having the character of ‘income u/s 2(24) of the Act’ and not getting taxed under ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 111 Chapter IV A to IV E of the Act. We find that the provisions of section 56(2) of the Act reads as under:- Section 56(2) – In particular, and without prejudice to the generality of the provisions of sub-section (1) , the following incomes, shall be chargeable to income-tax under the head “Income from other sources’, namely :- (i) .......... , (ia) ..... , (ib) ........., (ic) ........ and (id)........ (ii) .......... (iii) .......... (iv) .......... (v) ............. (vi) .............. (vii) ........... (viia) ....... Inserted by Finance Act, 2010 w.e.f. 1-6-2010 (viib) ........ Inserted by Finance Act, 2012 w.e.f. 1-4-2013 (viii) ......Inserted by Finance (No.2) Act, 2009 w.e.f. 1-4-2010 (ix) ...... Inserted by Finance (No.2) Act, 2014 w.e.f. 1-4-2015 (x) ......... Inserted by Finance Act, 2016 w.e.f. 1-4-2017 17.5.2. We find that the ld. Special Counsel for the Revenue vehemently argued that the addition was sought to be made u/s 68 of the Act by the lower authorities under the head ‘income from other sources’. In this regard, the ld. Special Counsel for the Revenue placed reliance on the proviso to section 68 of the Act to drive home the point that share premium could be brought to tax as income of the assessee company. We find that the proviso to section 68 of the Act has been inserted by the Finance Act, 2012 w.e.f. 1.4.2013 i.e. from Asst Year 2013-14 onwards. The only closest sub-section in section 56 of the Act which may be made applicable to the issue in dispute before us is section 56(2)(viib) of the Act and that is made applicable only from Asst Year 2013-14 onwards. Similarly the closest section is proviso to section 68 of the Act. The said amendments has been made effective only from Asst Year 2013-14 onwards and prospective in operation only as held by the Hon’ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure (P) Ltd reported in 394 ITR 680 (Bom). ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 112 17.5.3. Though the ld. Special Counsel for the Revenue argued the case on the basis of applicability of provisions of section 68 of the Act, but that was not the section in which, the addition was sought to be made by the lower authorities. Hence it results in a situation wherein, the ld. Special Counsel for the Revenue is only trying to improve the case of the lower authorities before us, which is impermissible in law , as this tribunal does not have power of enhancement. We find that the provisions of section 68 of the Act , either way, falls in Chapter VI of the Act under the heading “Aggregation of Income”. It becomes income of the assessee only by way of deeming legal fiction. We find that the residuary head “Income from Other Sources” falls in Chapter IV F of the Act. Hence what is added u/s 68 of the Act cannot be treated as income from other sources. The provisions of ‘Income from Other Sources’ starts from section 56 and ends with Section 59 of the Act. Section 68 of the Act falls in totally different chapter altogether. We hold that “Income from other sources” is mutually exclusive to section 68 of the Act. We find that the ld. CIT(A) having co-terminus powers could have enhanced the assessment by invoking the provisions of section 68 of the Act in the instant case, which was not done by him. This goes to conclusively prove that both the lower authorities were thoroughly convinced of the fact that the assessee company had duly proved the three necessary ingredients of section 68 of the Act viz. (i) identity of the investors ; (ii) creditworthiness of the investors and (iii) genuineness of transactions. Either way, on merits, it could be seen from the aforesaid submissions of the ld. AR that assessee had indeed duly proved the three necessary ingredients of section 68 of the Act in the instant case, in view of the fact that those factual submissions remain uncontroverted by the revenue before us. Hence we hold that the provisions of section 68 of the Act are not applicable in ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 113 respect of addition of Rs 277.57 crores in the facts and circumstances of the instant case. Hence all the case laws that were relied upon by the ld. Special Counsel for the Revenue in the context of provisions of section 68 of the Act, need not be gone into at all, as they are not germane to the issue before us. 17.5.4. We are now left only with one section i.e section 56(1) of the Act. Let us see whether the addition made by the lower authorities fit into the said section. We find that the said section starts with the expression “income of every kind”. As observed earlier, first the receipt of share capital and share premium should be income u/s 2(24) of the Act. It is trite law that the receipt of share capital and share premium are only capital receipts, not chargeable to tax at all under any of the provisions of the Act, atleast for the year under consideration. Hence a receipt , once it is not chargeable to tax at all under any of the provisions of the Act, it cannot be brought to tax under the head ‘Income from other sources’. Similar addition of share capital and share premium sought to be made by the revenue u/s 56(1) of the Act (i.e income from other sources) was subject matter of adjudication by Mumbai Tribunal in the case of Green Infra Ltd vs ITO reported in 145 ITD 240 (Mum ITAT) dated 23/08/2013 wherein it was observed as under:- 10.3 A simple reading of this section show that income of every kind which is not to be excluded from the total income shall be chargeable to income tax. The emphasis is on that ' income of every kind', therefore, to tax any amount under this section, it must have some character of "income". It is a settled proposition of law that capital receipts , unless specifically taxed under any provisions of the Act , are excluded from income. The Hon'ble Supreme Court has laid down the ratio that share premium realized from the issue of shares is of capital in nature and forms part of the share capital of the company and therefore cannot be taxed as a Revenue receipt. It is also a settled proposition of law that any expenditure incurred for the expansion of the capital base of a company is to be treated as a capital expenditure as has been held by the Hon'ble Supreme Court in the case of Punjab State Industrial Development Corpn. Ltd. v. CIT [1997] 225 ITR 792/93 Taxman 5 and in the case of Brooke Bond India Ltd. v. CIT [1983] 140 ITR 272/[1982] 10 Taxman 18 (Cal.). Thus the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 114 expenditure and the receipts directly relating to the share capital of a company are of capital in nature and therefore cannot be taxed u/s. 56(1) of the Act. The assessee succeeds and Revenue fails on this account. 11.1 Considering the submissions of the Ld. DR in the light of the above ratio, let us test the transaction in the light of the provisions of Sec. 68 of the Act. As per Section 68 - the initial onus is upon the assessee to establish identity, genuineness of the transaction and the capacity of the lender or the depositor. The subscribers to the share capital are all companies. The confirmations of the transactions have been received by the AO by issuing notice u/s. 133(6) of the Act, therefore, identity has been established beyond all reasonable doubts nor the Revenue authorities have questioned the identity of the share holders. The genuineness of the transaction can also be safely concluded since the entire transaction has been done through the banking channels duly recorded in the books of accounts of the assessee duly reflected in the financial statement of the assessee. The bank statement is exhibited at pages 101 and 102 of the Paper book in which the transaction relating to the allotment of shares are duly reflected . In the instant case, the capacity of the share holders cannot be doubted as has been pointed out elsewhere in our order that 98% of the share is held by IDFC Private Equity Fund-II which is a front manager of IDFC Ltd., and the contributors in IDFC Private Equity Fund-II are LIC, Union of India, Oriental Bank of Commerce, Indian Overseas Bank and Canara Bank which are public sector undertakings. 11.2 Now the only point of dispute is the nature of transaction which according to the Revenue authorities is beyond any logical sense and which is the charging of share premium at the rate of Rs. 490/- per share. According to the Revenue authorities this is a sham transaction . So far till now, we have seen and examined the sources of funds. Let us see the application of funds and who are the ultimate beneficiaries of this share premium which may clear the clouds over the transaction alleged to be a sham. We find that the assessee company has invested funds in its three subsidiary companies namely (i) Green Infra Corporate Wind Ltd. (ii) Green Infra Wind Assets Ltd and (iii) Green Infra Wind Farms Ltd., wherein the assessee is holding 99.88% of share capital which means that the funds have not been diverted to an outsider. This clears the doubt about the application of funds and the credibility of the company in whom the funds have been invested. Since the assessee itself is holding 99.88% of shares and in turn the assessee company's 98% of shares are held by IDFC PE Fund-II, this entire share holding structure cannot be said to generate any transaction which could be said to be sham. 12. We have considered the grievance of the Revenue from all possible angles and by applying the provisions of Sec. 56 of the Act and at our stage we have gone to the extent of testing the transaction within the parameters of Section 68 of the Act. We could not find a single evidence which could lead to the entire transaction as sham. Our view is also fortified by the share holding pattern as explained to us and as substantiated by the material evidence on record. We find that the share holders in all the related transaction under issue are directly or indirectly related to the Government of India. Therefore, considering the entire ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 115 issue in the light of the material evidence brought on record, in our considerate view, the Revenue authorities have erred in treating the share premium as income of the assessee u/s. 56(1) of the Act. In our considerate view, for the reasons discussed hereinabove, we do not find it necessary to apply the provisions of Sec. 68 of the Act. We, therefore, direct the AO to delete the addition of Rs. 47,97,10,000/-. Ground No. 2 & 3 are accordingly allowed. 17.5.5. We find that this decision of Mumbai Tribunal was approved by Hon’ble Bombay High Court in the case of CIT vs Green Infra Ltd reported in 392 ITR 7 (Bom), wherein it was observed as under:- Regarding question no. (ii) 3. (a) Before the Tribunal, the Revenue raised a new plea viz. that the so called share premium has also to be judged on the touchstone of Section 68 of the Act which provides for cash credit being charged to tax. The impugned order of the Tribunal allowed the issue to be raised before it for the first time, overruling the objection of the respondent-assessee. (b) The impugned order examined the applicability of Section 68 of the Act on the parameters of the identity of the subscriber to the share capital, genuineness of the transaction and the capacity of the subscriber to the share capital. It found that the identity of the subscribers was confirmed by virtue of the Assessing Officer issuing a notices under Section 133(6) of the Act to them. Further, it holds that the Revenue itself makes no grievance of the identity of the subscribers. So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the Books of Accounts and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98% of the shares is held by IDFC Private Equity Fund-II which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings. (c) Mr. Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of Rs.490/- per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of Section 68 of the Act and found on facts that it is not so hit. Therefore, Section 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the Tribunal is perverse in any manner. (d) Thus, question no. (ii) as formulated does not give rise to any substantial question of law and thus not entertained. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 116 17.5.6. In addition to the above, we also find that the receipt of share capital and share premium had been construed to be capital receipts not chargeable to tax by the decision of the Hon’ble Bombay High Court in the case of Vodafone India Services Pvt. Ltd., vs. Union of India reported 368 ITR 1 (Bom). We find that this decision was accepted by the CBDT and instruction No.2/2015 dated 29/01/2015 was issued by CBDT to all its Field Officers to accept the said decision. For the sake of convenience, the said Instruction issued by CBDT is reproduced hereunder:- INSTRUCTION NO. 2/2015 [F.NO.500/15/2014-APA-I] SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE - ACCEPTANCE OF ORDER OF HIGH COURT OF BOMBAY IN CASE OF VODAFONE INDIA SERVICES PVT. LTD. [2014] 50 TAXMANN.COM 300 (BOMBAY) INSTRUCTION NO. 2/2015 [F.NO.500/15/2014-APA-I], DATED 29-1-2015 In reference to the above cited subject, I am directed to draw your attention to the decision of the High Court of Bombay in the case of Vodafone India Services Pvt. Ltd. for A.Y. 2009-10 (WP No.871/2014), wherein the Court has held, inter- alia, that the premium on share issue was on account of a capital account transaction and does not give rise to income and, hence, not liable to transfer pricing adjustment. 2. It is hereby informed that the Board has accepted the decision of the High Court of Bombay in the above mentioned Writ Petition. In view of the acceptance of the above judgment, it is directed that the ratio decidendi of the judgment must be adhered to by the field officers in all cases where this issue is involved. This may also be brought to the notice of the ITAT, DRPs and CsIT (Appeals). 3. This issues with the approval of Chairperson, CBDT. ■■ 17.5.7. Same views were also expressed in yet another decision of Hon’ble Bombay High Court in the case of Shell India Markets Pvt. Ltd., vs. ACIT reported in 369 ITR 516 (Bom). 17.5.8. We are in agreement with the argument advanced by the ld AR that the decision to arrive at the share premium amount for a private ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 117 limited company is based on commercial negotiations and the business expectations of the investors. In the instant case, though the assessee is private limited company had obtained 2 valuation reports from independent experts in support of allotment of shares at a premium of Rs 350 per share, despite the fact that there was no bar in law for the assessee to charge high premium. The revenue cannot step into the shoes of the assessee company and question the business decision taken by it by questioning the premium component charged by the assessee company, especially for the year under consideration. We find force in the argument of the ld. AR that it is always the prerogative of the Board of Directors to decide the premium component and it is the wisdom of the shareholders whether they want to subscribe to shares at such a premium or not as long as the same is within the four corners of law. Reliance in this regard was rightly placed by the ld AR on the decision of Hon’ble Madhyapradesh High Court in the case of PCIT vs Chain House International (P) Ltd reported in 408 ITR 561 (MP), the operative portion of which is already reproduced hereinabove. Against this decision, the revenue preferred Special Leave Petition (SLP) before the Hon’ble Supreme Court and the same was dismissed in 113 taxmann.com 32 (SC). 17.5.9. Moreover, we find that the ld. AO had categorically accepted the fact of receipt of share capital portion from the investor companies to be genuine and reasonable based on the performance of the assessee company. This is not sought to be disturbed by the ld. CIT(A) in his order. This goes to prove that the assessee had indeed proved the identity of the investors, genuineness of transactions and creditworthiness of investors, by furnishing relevant supporting documentary evidences. When the share premium component is received from the very same investor companies, how could the same AO take a divergent view by ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 118 doubting the veracity of the receipts ? We find that the Kolkata Tribunal had an occasion to address the similar issue in the following cases:- (i) ITO vs M/s Trend Infra Developers Pvt Ltd in ITA No. 2270/Kol/2016 for A.Y. 2012-13 dated 26/10/2018. (ii) ITO vs Unique Hirise Pvt Ltd in ITA No. 2272/Kol/2016 for A.Y. 2012- 13 dated 20/09/2019. (iii) ITO vs Savera Towers Pvt Ltd in ITA No. 2275/Kol/2016 for A.Y. 2012-13 dated 05/12/2018. (iv) ITO vs Positive Properties Pvt Ltd in ITA No. 2274/Kol/2016 for A.Y. 2012-13 dated 09/01/2019. (v) Ananya Developers Pvt Ltd vs ITO in ITA No. 285/Kol/2017 for A.Y. 2012-13 dated 14/06/2019. 17.5.10. In view of the above observations in the facts and circumstances of the instant case and respectfully following the various judicial precedents relied upon hereinabove, we hold that the addition made in the sum of Rs 277.57 crores under the head ‘income from other sources’ is hereby directed to be deleted. Accordingly, the grounds raised in this regard are allowed. 18. With regard to the addition made in the sum of Rs 15 crores u/s 68 of the Act is concerned, we find that the ld . AO had sought to add both the share capital and share premium received from the following companies :- Sr. No. Name of Party Amount of Addition (Rs.) 1. Artillence Bio-Innovations Limited 50,00,000/- 2. Kirti Electro Systems Pvt. Ltd. 50,00,000/- 3. Delton Exim Pvt. Ltd. 1,00,00,000/- ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 119 4. Stocknet International Ltd. 25,00,000/- 5. Hingora Finvest Pvt. Ltd. 25,00,000/- 6. Moon Enterprises Pvt. Ltd. 2,50,00,000/- 7. Eres Projects Pvt. Ltd. 8,00,00,000/- 8. TWC Infrastructure Pvt. Ltd. 2,00,00,000/- Total (Rs.) 15,00,00,000/- 18.1. It is not in dispute that assessee has filed the following documents before the lower authorities in respect of the aforesaid parties:- Artilligence Bio-Innovations Limited:- • Copy of share application form • Copy of PAN Card • Copy of Board Resolution • Copy of Bank statement • Copy of notice of Annual General Body Meeting • Copy of Annual report with audited financials • Copy of Memorandum of Association and Articles of Association • Copy of Certificate of Incorporation Delton Exim Pvt. Ltd., • Copy of share application form • Copy of PAN Card • Copy of Board Resolution • Copy of Bank statement • Copy of notice of Annual General Body Meeting ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 120 • Copy of Annual report with audited financials • Copy of Memorandum of Association and Articles of Association • Copy of Certificate of Incorporation Hingora Finvest Pvt. Ltd., • Copy of share application form • Copy of PAN Card • Copy of Board Resolution • Copy of Bank statement • Copy of Annual report with audited financials • Copy of Memorandum of Association and Articles of Association • Copy of Certificate of Incorporation Kirti Electro Systems Pvt. Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolution Copy of Bank statement Copy of notice of Annual General Body Meeting Copy of Annual report with audited financials Copy of Memorandum of Association and Articles of Association Copy of Certificate of Incorporation Moon Enterprises Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolution Copy of Bank statement Copy of Annual report with audited financials ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 121 Copy of Memorandum of Association and Articles of Association Copy of Certificate of Incorporation Stocknet International Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolution Copy of Bank statement Copy of notice of Annual General Body Meeting Copy of Annual report with audited financials Copy of Memorandum of Association and Articles of Association Copy of Certificate of Incorporation ERES Projects Pvt. Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolution Copy of Memorandum of Association and Articles of Association Copy of Certificate of Incorporation TWC Infrastructure Pvt. Ltd., • Copy of share application form • Copy of PAN Card • Copy of Board Resolution • Copy of Memorandum of Association and Articles of Association • Copy of Certificate of Incorporation ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 122 18.2. Apart from above, we find that the ld AO had stated that M/s. Delton Exim Pvt. Ltd., had responded to the ld. AO on 24/12/2010 by deputing its Director in person. Further, the other three companies i.e. Artilligence Bio-Innovations, Kirti Electro Systems Pvt. Ltd., and Stocknet International Ltd., had also responded and filed confirmation letters before the ld. AO on 27/12/2010. This fact has been duly acknowledged by the ld. AO in his assessment order. The assessee company had also furnished the correct address of M/s. ERES Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd. Before the ld. AO vide letter dated 09/12/2010. Thereafter notices were issued to the two parties by the ld. AO calling for certain details and the two parties have duly responded before the ld. AO on 16/12/2010 by filing the details of Directors, their bank statements, their income tax returns etc., 18.3. We find that the Mumbai Investigation Wing carried out enquiries with regard to Hingora Finvest Pvt. Ltd., at the wrong address and concluded that the traced address belong to a person who was a mason and was not aware of existence of such company. We also find that in case of M/s. Moon Enterprises Pvt. Ltd., enquires were sought to be carried out by the Mumbai Investigation Wing and Mumbai Investigation Wing vide their report dated 28/12/2010 had stated that the said company owns 11 flats in Kandivali since 2004 and had been deriving rental income from such flats. This clearly establishes even the source for those companies which in turn had been utilised for making investment in the assessee company apart from proving the identity and genuineness of the transaction. 18.3.1. We find that the ld. AO has simply relied on the report of the Investigation Wing on the basis of which he has raised the following objections / allegations:- ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 123 i. In case of Hingora Finvest Pvt. Ltd.. the address of M/s. Hingora Finvest Pvt. Ltd. is vague and there is no address which exact matches the given address. Further one premises was found which was originally purchased by one Shri Sharif Farooq Mohiuddin and later sold to Shri Alam Shaikh. Both the persons are not aware of the entity M/s. Hingora Finvest Pvt. Ltd. ii. Further in the case of M/s. Moon Enterprises IM. Ltd.. one of the directors Shri Pradeep Ratanlal Parikh has filed a letter stating that he does not remember to have made any investment in the assessee company nor does he remember having any relations with the promoter / director of the assessee company. iii. It was concluded in the report of the Investigation Wing that the investor companies are apparently bogus companies and are mere briefcase companies. iv. There are no signboards or mailbox in the case of premises at 102 Stephen House, 4 BBD Bag. Kolkata-01 and only one person who appeared to be a peon was sitting at premise. 18.3.2. With respect to M/s. Hingora Finvest Pvt, Ltd., it was stated that the finding that Shri Sharif Farooq Mohiuddin and Shri Alam Shaikh are not aware of the entity M/s. Hingora Finvest Pvt. Ltd. is irrelevant since both these parties are nowhere connected either to M/s. Hingora Finvest Pvt. Ltd. or the assessee company. Further, it has been accepted in the report itself that the premises found is not having the same address of M/S. Hingora Finvest Pvt. Ltd. However, the assessee had already provided the present address before the ld. AO. However, no inquiry was ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 124 conducted by the ld. AO at the given address. The assessee had duly discharged its onus by even taking pains by furnishing the present address of the investor company. It is the bounden duty of the ld. AO to make necessary enquiries at the latest address furnished by the assessee. Without discharging the said duty, the ld. AO cannot merely place reliance on the investigation report by ignoring all the relevant statutory documents filed before him proving the three necessary ingredients of Section 68 of the Act. Hence, we are inclined to accept the argument advanced by the ld AR in this regard. 18.3.3. As far as the letter of Shri Pradeep Ratanlal Parikh, wherein he has stated he does not remember having made investment in assessee company is concerned and that he does not remember having any relations with the promoter / director of the assessee company, it was submitted that the evidence with the Investigation Wing is simply in the form of oral evidence and nothing else. As against the same, the assessee company has provided the ld. AO with proper documentary evidences in the form of Copy of Share Application Form, Copy of PAN Card, Copy of Board Resolution, Copy of Bank Statement. Copy of Annual Report with Audited Statement of Accounts , Copy of Memorandum of Association & Articles of Association and Certificate of Incorporation. Therefore, merely on the basis of statement without anything more, additions cannot be made and huge tax liabilities cannot be fastened on the assessee company. We find that the law is now very well settled that it has to be appreciated while evaluating evidence, contemporaneous genuine documentary evidence has to be given precedence over unsupported and uncorroborated statement. Reliance for the aforesaid contention is placed on the judgement of the Hon'ble Bombay High Court in case of C1T vs ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 125 Omprakash K Jain & Ors reported at 24 DTR 157 (Bom) has held as under: "The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind. The AO will have to comply with the willed principle of law. Documentary evidence if genuine must prevail over she oral statement ". 18.3.4. In any case, we further find that the allegations made by the Investigation Wing in it's reports cannot be considered for making additions since these allegations or contentions have not been made by the ld. AO independently. The contentions made by Shri Pradeep Ratanlal Parikh have not been independently verified by the ld. AO. Further the assessee company has not been provided with cross examination of Shri Pradeep Ratanlal Parikh. As against the same, the assessee company has submitted uncontroverted documentary evidences to establish the identity, genuineness and creditworthiness. The ld. AO cannot fasten additions in the hands of the assessee company simply by relying on the report of the Investigation Wing and not verifying the persons independently and failing to provide cross-examination to the assessee company. 18.3.5. With regards to the objection raised that some of the investor companies have common addresses, it was submitted that just because the said investor companies have a common address is not a valid basis to doubt the identity or the genuineness of the investor companies. Reliance for this contention has been rightly placed on the judgement of Hon'ble Delhi High Court in the case of CIT & Others vs. Five Vision Promoters Pvt Ltd. & Others reported at 380 ITR 0289 (Del), wherein the Hon’ble Delhi High Court held as under:- 41. Detailed findings have been given by the ITAT in the present cases after a thorough examination of the records. These have been extracted hereinabove. The ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 126 Court finds no reason to differ from the decision of the ITAT in its rejection of the very same contentions urged before the Court by the Revenue. In particular, the Court concurs with tin ITAT that the mere fact that some of the investors have a common address is not a valid basis to doubt their identity or genuineness. 18.3.6. In our considered opinion, the assessee cannot be held responsible for enquiries conducted by the Mumbai Investigation Wing at the wrong address. However, the assessee had furnished all the relevant details that were called for by the ld. AO with regard to the said investor company. 18.4. All the aforesaid eight entities had filed their income tax returns regularly, which fact had been acknowledged by the ld. AO by himself. The bank statement of all the investors were furnished before the ld. AO wherein it could be seen that the immediate source of credit for those investor companies were not cash deposits and were either mere fund transfers received in their regular course of business or out of their available bank balances. Hence, the creditworthiness of all investor companies is also proved by the assessee. All the transactions had been routed through regular banking channels. The assessee had also furnished the copy of share certificates together with the relevant share application form in respect of all the eight investor companies. Six out of eight investor companies had indeed confirmed the fact of having made investments in the assessee company at a premium of Rs.350/- per share. In respect of Hingora Finvest Ltd., & Moon Enterprises Pvt. Ltd., as stated above, independent enquiries were carried out by Mumbai Investigation Wing. All these facts and supporting documents duly prove the genuineness of transactions also. Apart from that we find that six out of eight investor companies had sufficient net worth amounting to several crores much more than the amount of investment made by them in the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 127 assessee company. The relevant details of net worth of these six companies have already been tabulated in para 15.19 hereinabove. 18.5. In fact, even in respect of these Kolkata parties i.e. Artilligence Bio- Innovations Ltd., Kirti Electro Systems Pvt. Ltd., Delta Exim Pvt. Ltd., and Stocknet International Ltd., enquiries were sought to be carried out by Kolkata Investigation Wing of Income Tax department. The assessee company from its side had furnished all the relevant details with regard to those investor companies that were called for and all these investor companies had furnished direct confirmations before the ld AO in response to the quiries raised by the ld. AO as stated supra. In fact, the ld. AO accepts the fact that monies had been received by the assessee company from these parties. The ld. AO alleges that the credits in their bank accounts are unverifiable and doubts that they are accommodation entries. In our considered opinion, the assessee could only be expected to explain the source of investor companies which had been duly proved. The assessee cannot be expected to prove the source of source of the investor companies, at least for the year under consideration. If at all, the ld. AO is entertaining any doubt on the unverifiable nature of the credits appearing in the bank statements of investor companies, then suitable action need to be taken in their hands by the income tax department in the manner known to law. We hold that assessee company cannot be faulted for the same and no adverse inference could be drawn on the assessee company. In fact, the Kolkata Investigation report dated 23.10.2009 categorically states that all these companies have huge amounts as reserves and surplus which has been raised annually through share premium consequent to increase in their share capital. This clearly explains the source for those Kolkata companies to make investment in assessee company. This is a classic case of Investigation report of ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 128 Kolkata which has been relied upon by the ld AO, but which findings are actually in favour of the assessee company. 18.6. We find with regard to ERES projects Pvt. Ltd and TWC Infrastructure Pvt. Ltd., the ld. AO records in page 48 of his Assessment order that monies were transferred by Ramky Group of companies which were in turn utilised by these two companies to make investments in the assessee company. This clearly goes to prove the fact that the ld. AO himself has stated the source of source of the investor companies. When assessee was asked to produce the directors of various companies before the ld. AO vide letter 1/12/2010, we find that the ld. AO had specifically excluded these two companies i.e. ERES Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., from the list of 20 companies. We find that assessee had furnished all the relevant documents even with regard to these two companies by also mentioning the correct address of the companies. The very fact that the ld. AO had not chosen to exclude the physical presence of Directors of these two companies before him, itself goes to prove that the ld. AO was convinced with the documentary evidences furnished by the assessee. 18.7. Heavy reliance was placed on the decision of Mumbai Tribunal in the case of Bini Builders Pvt. Ltd., vs. DCIT in ITA Nos. 631 & 632/Mum/2019 for A.Yrs. 2011-12 & 2012-13 respectively dated 12/03/2020 wherein the various decisions quoted by the ld. Special Counsel for the Revenue were also considered. For the sake of convenience, the said order is reproduced hereinbelow. As per the provisions of section 68 of the Income-tax Act, 1961, where any sum is found credited in the assessee's books and assessee offers no explanation about the nature and source thereof or the explanation furnished is found to be unsatisfactory, the sum so credited may be charged to Income- Tax as the income of the assessee of that previous year. A proviso has been ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 129 inserted to the said section by Finance Act, 2012 w.e.f. 01/04/2013 to provide that where the assessee is a company and the sum so credited consists of share application money, share capital, share premium etc., the explanation furnished by the assessee shall be deemed to be not satisfactory unless the person in whose name such credit is recorded also offers an explanation about nature and source of sum so credited and such explanation is found to be satisfactory. However, this proviso is applicable only from AY 2013-14 and the same is not retrospective in nature as held by Hon'ble Bombay High Court in the case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245]. The said position has also been reiterated by Hon'ble Bombay High Court in its recent decision tilted as Gaurav Triyugi Singh v. ITO [ITA No. 1750 of 2017, dated 22-01-2020] which also considered its earlier decision of Pr. CIT v. Veedhata Towers (P.) Ltd. [2018] 403 ITR 415. 2. It is settled position of law that to avoid the rigors of section 68, the assessee must prove the identity, creditworthiness of the lenders/investors to advance such monies and genuineness of the transactions. Once these three ingredients are fulfilled by the assessee, the primary onus casted upon him, in this regard, could be said to have been discharged and accordingly, the onus would shift upon revenue to dislodge the assessee's claim by bringing on record material evidences and unless this onus is discharged by the revenue, no addition could be sustained u/s. 68. The Hon'ble Supreme Court in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195, dismissing revenue's appeal, observed as under: — "2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment. 3. Subject to the above, Special Leave Petition is dismissed." The ratio of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of Gagandeep Infrastructure (P.) Ltd. (supra), & subsequently in CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502 (Bom.). The Hon'ble Delhi High Court followed the said decision in Pr. CIT v. Adamine Construction (P.) Ltd. [107 taxmann.com 84 against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Adamine construction (P.) Ltd. [2019] 107 taxmann.com 85/264 Taxman 279. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 172 against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 173/259 Taxman 3. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT v. Chain House International (P.) Ltd. [2018] 98 Taxmann.com ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 130 47 against which revenue's Special Leave Petition has recently been dismissed by Hon'ble Supreme Court on 18/02/2019 reported at Pr. CIT v. Chain House International (P.) Ltd. [2019] 103 taxmann.com 435/262 Taxman 207. 3. Similar is the recent decision of Hon'ble Bombay High Court in Pr. CIT v. Ami Industries (India) (P.) Ltd. [2020] 116 taxmann.com 34/271 Taxman 75 which has been rendered after considering the principles laid down by Hon'ble Supreme Court in its recent decision titled as Pr. CIT v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 61. The Hon'ble Court held as under: — 10. Mr. Suresh Kumar, learned standing counsel, revenue has taken us through the assessment order and submits therefrom that it cannot be said that assessee had discharged the burden to prove credit worthiness of the creditors. His further contention is that the assessee is also required to prove the source of the source. In this connection, he has placed reliance on a decision of the Supreme Court in Pr. CIT v. NRA Iron & Steel Pvt. Ltd. He, therefore, submits that the finding returned by the Tribunal is wholly erroneous and requires to be interfered with by this Court. 11. Per contra, Mr. Padvekar, learned counsel for the respondent submits that from the facts and circumstances of the case, it is quite evident that assessee had discharged its burden to prove identity of the creditors, genuineness of the transactions and credit worthiness of the creditors. He submits that the legal position is very clear in as much as assessee is only required to explain the source and not source of the source. Decision of the Supreme Court in NRA Iron & Steel (P.) Ltd. (supra) is not the case law for the aforesaid proposition. In fact, the said decision nowhere states that assessee is required to prove source of the source. 11.1 Referring to the orders passed by the authorities below, Mr. Padvekar submits that in the present case, the investigation wing of the department had carried out detailed investigation at Kolkata and found the source of the credit to be genuine. This report of the investigation wing was not taken into consideration by the Assessing Officer. Therefore, lower appellate authorities were justified in deleting the additions made by the Assessing Officer. Being a finding of fact, no substantial question of law arises in the appeal. Therefore, the appeal should be dismissed. 12. Submissions made by learned counsel for the parties have been considered. Also perused the materials on record. 13. Section 68 of the Act deals with cash credits. As per section 68, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 131 the income of the assessee of that previous year. Simply put, the section provides that if there is any cash credit disclosed by the assessee in his return of income for the previous year under consideration and the assessee offers no explanation for the same or if the assessee offers explanation which the Assessing Officer finds to be not satisfactory, then the said amount is to be added to the income of the assessee to be charged to income tax for the corresponding assessment year. 14. Section 68 of the Act has received considerable judicial attention through various pronouncements of the Courts. It is now well settled that under section 68 of the Act, the assessee is required to prove identity of the creditor; genuineness of the transaction; and credit worthiness of the creditor. In fact, in NRA Iron & Steel (P.) Ltd. (supra), Supreme Court surveyed the relevant judgments and culled out the following principles: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit- worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the inquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act." 15. It is also a settled proposition that assessee is not required to prove source of source. In fact, this position has been clarified by us in the recent decision in Gaurav Triyugi Singh v. Income-tax Officer-24(3)(1). 16. Having noted the above, we may now advert to the orders passed by the authorities below. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 132 17. In so far order passed by the Assessing Officer is concerned, he came to the conclusion that the three companies who provided share application money to the assessee were mere entities on paper without proper addresses. The three companies had no funds of their own and that the companies had not responded to the letters written to them which could have established their credit worthiness. In that view of the matter, Assessing Officer took the view that funds aggregating Rs. 34 Crores introduced in the return of income in the garb of share application money was money from unexplained source and added the same to the income of the assessee as unexplained cash credit under section 68 of the Act. 18. In the first appellate proceedings, it was held that assessee had produced sufficient evidence in support of proof of identity of the creditors and confirmation of transactions by many documents, such as, share application form etc. First appellate authority also noted that there was no requirement under section 68 of the Act to explain source of source. It was not necessary that share application money should be invested out of taxable income only. It may be brought out of borrowed funds. It was further held that non- responding to notice would not ipso facto mean that the creditors had no credit worthiness. In such circumstances, the first appellate authority held that where all material evidence in support of explanation of credits in terms of identity, genuineness of the transaction and creditworthiness of the creditors were available, without any infirmity in such evidence and the explanation required under section 68 of the Act having been discharged, Assessing Officer was not justified in making the additions. Therefore, the additions were deleted. 19. In appeal, Tribunal noted that before the Assessing Officer, assessee had submitted the following documents of the three creditors: (a) PAN number of the companies; (b) Copies of Income-tax return filed by these three companies for assessment year 2010-11; (c) Confirmation Letter in respect of share application money paid by them; and (d) Copy of Bank Statement through which cheques were issued. 20. Tribunal noted that Assessing Officer had referred the matter to the investigation wing of the department at Kolkata for making inquiries into the three creditors from whom share application money was received. Though report from the investigation wing was received, Tribunal noted that the same was not considered by the Assessing Officer despite mentioning of the same in the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 133 assessment order, besides not providing a copy of the same to the assessee. In the report by the investigation wing, it was mentioned that the companies were in existence and had filed income tax returns for the previous year under consideration but the Assessing Officer recorded that these creditors had very meager income as disclosed in their returns of income and therefore, doubted credit worthiness of the three creditors. Finally, Tribunal held as under: "5.7 As per the provisions of Section 68 of the Act, for any cash credit appearing in the books of assessee, the assessee is required to prove the following (a) Identity of the creditor (b) Genuineness of the transaction (c) Credit-worthiness of the party (i) In this case, the assessee has already proved the identity of the share applicant by furnishing their PAN, copy of IT return filed for asst. year 2010-11. (ii) Regarding the genuineness of the transaction, assessee has already filed the copy of the bank account of these three share applicants from which the share application money was paid and the copy of account of the assessee in which the said amount was deposited, which was received by RTGS. (iii) Regarding credit-worthiness of the party, it has been proved from the bank account of these three companies that they had the funds to make payment for share application money and copy of resolution passed in the meeting of their Board of Directors. (iv) Regarding source of the source, Assessing Officer has already made enquiries through the DDI (Investigation), Kolkata and collected all the materials required which proved the source of the source, though as per settled legal position on this issue, assessee need not to prove the source of the source. (v) Assessing Officer has not brought any cogent material or evidence on record to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represent company's own income from undisclosed sources. Accordingly, no addition can be made u/s. 68 of the Act. In view of above reasoned factual finding of CIT (A) needs no interference from our side. We uphold the same." 21. From the above, it is seen that identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 134 source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source. 22. In NRA Iron & Steel (P.) Ltd. (supra), the Assessing Officer had made independent and detailed inquiry including survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked credit-worthiness. It is in these circumstances, Supreme Court held that the onus to establish identity of the investor companies was not discharged by the assessee. The aforesaid decision is, therefore, clearly distinguishable on facts of the present case. 21. Therefore, on a thorough consideration of the matter, we are of the view that the first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving identity of the creditors, genuineness of the transactions and credit- worthiness of the creditors which finding of fact stood affirmed by the Tribunal. There is, thus, concurrent findings of fact by the two lower appellate authorities. Appellant has not been able to show any perversity in the aforesaid findings of fact by the authorities below. 22. Under these circumstances, we find no error or infirmity in the view taken by the Tribunal. No question of law, much less any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost. 4. Keeping above said legal position in mind, we find that the assessee is under appeal before us for Assessment Years [in short referred to as 'AY'] 2011-12 & 2012-13 contesting the order of learned first appellate authority confirming certain addition u/s. 68. 18.8. We hold that when all the relevant details of the investor companies were indeed furnished by the assessee company, merely because the share subscribers could not be found at the given address when sought to be verified by the revenue at the relevant point in time, it does not mean automatically that adverse inference could be drawn on the assessee and conclude that assessee had indeed routed its undisclosed income in the form of share capital and share premium in the names of the various investor companies. Reliance in this regard has been rightly placed by ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 135 the ld AR on the decision of Hon’ble Delhi High Court in the case of Stellar Investment Ltd reported in 192 ITR 287 (Del) which was later affirmed by the Hon’ble Supreme Court in 251 ITR 263 (SC). We further find that the reliance placed by the ld AR on yet another decision of Hon’ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., and others reported in 330 ITR 298 (Del) also supports the case of the assessee company. 18.9. With regards to the argument of the ld. Special Counsel for the Revenue that the investors were showing meagre income in their Income Tax Returns for the assessment year under consideration, it is submitted that the assessee company has established the identity of the investor companies. It had provided evidences like confirmation letters, copies of bank statement/Income Tax Return Acknowledgements and it's own bank statement to prove the genuineness and credit-worthiness of transactions. The assessee company has given the entire details of the investor companies like their ITR Acknowledgement. PAN details, certificate of incorporation. Memorandum of Association, Articles of Association and their bank statements wherein the payments made to the assessee company are reflected. We also find that all these investor companies have sufficient net worth in their balance sheets as tabulated supra. Therefore, only because the said companies have shown meagre income it cannot be made the basis of addition in the hands of the assessee company. Reliance for this contention is placed on the judgement of Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms (P.) Ltd. ITA No. 71/2015 wherein the Hon'ble High Court has held as under: "3. Ms. Suruchi Aggarval, learned Senior Standing counsel for the Appellant, relied upon the decision of this Court in CIT v. Nova Promoters & Finlease Lid. 342 ITR 169 and urged that the Assessing Officer (AO) was not required to "point to the source from which the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 136 money was received by the Assessee". On the other hand, it was incumbent upon the Assessee to offer a satisfactory explanation regarding nature and source of the funds. The ITAT has in the impugned order noticed that in the present case the Revenue has not doubted the identity of the share applicants. The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their Income Tax Returns. The entire details of the share applicants were made available to the AO by the Assessee. This included their PAN numbers, confirmations, their bank statements, their balance sheets and profit and loss accounts and the certificates of incorporation etc. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the above documents submitted to him. It has been righty commented by the ITAT that without doubting the documents, the AO completed the assessment only on the presumption that low return of income was sufficient to doubt the credit worthiness of the share holders. 4. The Court is of the view that the Assessee by produced sufficient documentation discharged its initial onus of showing the genuineness and creditworthiness of the share applicants. It was incumbent to the AO to have undertaken some inquiry and investigation before coming to a conclusion on the issue of creditworthiness. In para 39 of the decision in Amy/ Promoters (supra), the Conn has taken note of a situation where the complete particulars of the share applicants are furnished to the AO and the AO fails to conduct an inquiry. The Court has observed that in that event no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law.” 18.10. Reliance was also rightly placed by the ld AR on the judgement of Hon'ble Bombay High Court in the case of Mr. Gaurav Triyngi Singh vs. ITO in ITA No. 1750 of 2017 dated 22.01.2020, wherein the Hon'ble Bombay High Court has held as under: "15. In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Waive, learned standing counsel, has pointed out that the creditor had no regular source of income to justify 1 the advancement of the credit to the assessee, we arc of the view that the assessee had discharged the or, us which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he was not required to explain the sources of the money provided by the creditor Smt. Savitn Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 137 16. Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of (he assessee as undisclosed cash credit under section 6% of the Act. " 18.11. With regard to heavy reliance placed on the decisions of Hon’ble Supreme Court by the ld. Special Counsel for the Revenue in the cases of Sumati Dayal vs. CIT reported in 214 ITR 801 and CIT vs. Durga Prasad More 82 ITR 540, we hold that no doubt that the revenue authorities were not required to put blinkers while looking at the documents produced before them and they were entitled to look into the surrounding circumstances to find out the reality of the documents produced before them. However, we find that no such enquiries have been made by the lower authorities except alleging that the share premium received were bogus in nature, which is absolutely without any basis. Nothing was brought on record to substantiate the fact that unaccounted income of the assessee or the unaccounted income of the investor companies were utilised and brought in the garb of share capital and share premium in assessee company. 18.12. From the aforesaid observations, it could be seen that the assessee had duly discharges its onus by proving the identity, creditworthiness of the investors and the genuineness of the transactions being the three necessary ingredients of the Section 68 of the Act. Once, the assessee has discharged its initial burden as required u/s.68 of the Act, the burden shifts to the ld. AO by putting forth any evidence on record to justify an addition u/s.68 of the Act. This had apparently not being done by the ld. AO, failing which no addition could be fastened in the hands of the assessee company u/s.68 of the Act. Reliance in this regard had been rightly placed on the decision of Hon’ble Allahabad High Court in the case of CIT vs. Vacmet Packaging (India) Pvt. Ltd., reported ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 138 in 367 ITR 217 The relevant operation portion of the said order is reproduced hereinbelow:- “8. In the present case the assessee had discharged the onus of establishing the identity, credit worthiness and genuineness of the transactions which had formed the basis of the addition that was made under Section 68. Ultimately, whether the documentary materials which had been produced by the assessee were sufficient to displace the onus is a matter to be decided upon the facts of each case. Both the CIT(A) and the Tribunal having held that the assessee had duly discharged the onus, in our view no substantial question of law would arise.” 18.13. In any case, the nature of receipt being share capital and share premium had not been doubted by the Revenue in the instant case. We find that the assessee duly proved the nature and source of credit being share capital and share premium as contemplated in Section 68 of the Act. The law is very well settled that the receipt of share capital and share premium would only be capital receipt and cannot be brought to tax as income of the assessee as has been held by the Hon’ble Bombay High Court in the case of Vodafone India Services Ltd., reported in 368 ITR 1, which decision has been accepted by the CBDT by not preferring further appeal to Hon’ble Supreme Court. In fact, the CBDT had also issued instruction No.2/2015 dated 29/01/2015 to all its field officers to accept the said decision of the Hon’ble Bombay High Court. In our considered opinion, the said instruction is binding on the lower authorities. 18.14. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the addition made in the sum of Rs.15 Crores u/s.68 of the Act. Accordingly, the grounds raised by the assessee in this regard are allowed. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 139 19. In the result, appeal of the assessee in ITA No. 18/Hyd/2012 for A.Y.2008-09 is partly allowed. ITA No.790/H/2013 (A.Y.2008-09)-Assessee appeal against Section 263 Order 20. Though the assessee has raised several grounds of appeal before us, we find the only effective issue to be decided in this case is as to whether the ld. Administrative CIT-2, Hyderabad (CIT in short) was justified in invoking revision jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case. In other words, the grounds raised by the assessee are challenging the assumption of revision jurisdiction u/s 263 of the Act and also challenging the directions of the ld. CIT given to the ld. AO on merits of the issue. 21. We have heard the rival submissions and perused the materials available on record. We find that the return of income for the A.Y.2008-09 was filed by the assessee company engaged in the business of publishing of news paper ‘Sakshi’ was filed on 29/09/2008 declaring total loss of Rs.19,91,51,382/-. The assessment was completed u/s.143(3) of the Act on 31/12/2010 determining total income Rs.272,65,37,270/-. In the said assessment, the following additions were made by the ld. AO. a. Addition made u/s.28(iv) of the Act in respect of share premium component received from various investor companies belonging to non-promoters category (i.e. outsiders category- Rs.277,56,88,650) b. Addition made u/s.68 of the Act in respect of share capital portion and share premium portion from investor companies belonging to ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 140 Kolkata, Mumbai and Hyderabad, totalling to 8 parties– Rs.15 Crores (outsiders category) 21.1. The assessee had preferred an appeal before the ld. CIT(A)-III, Hyderabad and the said appeal was disposed of by ld. CIT(A) on 30/12/2011 dismissing the appeal of the assessee. 21.2. Later, the assessment which was already confirmed by the ld. CIT(A) for A.Y.2008-09 was sought to be revised by the ld. CIT by invoking revision jurisdiction u/s.263 of the Act. According to ld. CIT, the order of the ld. AO is erroneous in as much as it is prejudicial to the interest of the Revenue on the ground that during the year under consideration, the assessee has received share capital from Caramel Asia Holdings Pvt. Ltd., (holding company of assessee company) of Rs.23,52,50,000/- comprising of 23525000 shares of Rs.10/- each. According to ld. CIT, the ld. AO has not examined the following aspects:- 1. Genuineness of the investment by the Carmel Asia. 2. Capacity of Carmel Asia to invest a sum of Rs. 23.5 cr. in the share capital of the assessee during the previous year. 3. The AO did not examine the issue of common investors or shareholders both in Caramel Asia and tax payer. 4. The AO also did not examine the issue of quid-pro-quo arrangement by the common investor in the Carmel Asia and the assessee. The common investors had received various benefits from the Government of Andhra Pradesh and the possibility of routing investment by them cannot be ruled out and Sri YVST Sai, Addl.CIT, Range-2, Hyderabad has emphasized on this issue. 5. Mere filing of a confirmation letter from Carmel Asia does not absolve the assessee from establishing the capacity and genuineness of the transactions ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 141 21.3 The ld. CIT also observed in his order that the aspect of quid pro quo arrangement was examined by the ld. AO with reference to other investors but not with reference to Carmel Asia. The ld. CIT also observed that assessee’s case has to be viewed in the backdrop of quid pro quo arrangement by the investors or share holders in Caramel Asia and the assessee. 21.4. The assessee made preliminary objections before the ld. CIT by stating that money has been received by the assessee company only from its holding company and there is nothing unusual for holding company to have substantial investment in its subsidiary company. The holding company is having sufficient source in its kitty to make investment in the assessee company. During the course of original assessment proceedings, the confirmation letter was indeed filed by holding company (i.e. Caramel Asia) before the ld. AO assessing the assessee company. Merely because there are common investors in holding company as well as in the assessee company, that cannot be a reason for holding that the assessment order of the ld. AO is erroneous and prejudicial to the interest of the Revenue. It was also pointed out that assessee has indeed proved the source of Caramel Asia to make investment in assessee company. The source of source for the holding company is not required to be proved by the assessee company. It was submitted that if at all the same is to be verified, the ld. AO assessing the holding company should examine it in the assessment of holding company and not in assessee company’s hands. 21.5. However, the aforesaid contentions of the assessee were rejected by the ld. CIT and a revision order was passed u/s.263 of the Act by treating the order of the ld. AO as erroneous and prejudicial to the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 142 interest of the Revenue on the limited aspect of examining the receipt of share capital from Caramel Asia. The final observations of ld. CIT are as under:- 12. I am not able to agree with the views of the ld. AR. I agree with the views of Sri. Y.V.S.T. Sai, Addl. CIT, Range-2. The ld. AR has relied on the decision in CIT vs. G.M Mittal Stainless Steel Pvt. Ltd., (263 ITR 255). This is not a case of simple investment to apply the ratio of the decision on which the ld. AR relied on. The assessee’s case has to be viewed in the backdrop of quid pro quo arrangement by the investors or shareholders in the Caramel Asia and the assessee. The AO in the assessment order dealt with the quid pro quo arrangement which I don’t wish to repeat. The facts of this case are different to apply the ratio in G.M.Mittal Stainless Steel (P). Ltd., (supra). During the course of penalty proceedings u/s.271(1)(c), the AO has recorded the sworn statements from the common investors which primafacie indicate that investments into the share capital of the assessee through the Caramel Asia could be a part of the quid pro quo arrangement. The common investors or shareholders had obtained various benefits from the Government of Andhra Pradesh. At this stage, I do not wish to draw any conclusion about the quid pro quo arrangement between the tax payer and the common investors. At this stage, the information on record reveals that the AO, at the time of passing the original assessment order did not examine the capacity and genuineness of the investment of the Caramel Asia into the share capital of the tax payer and also the quid pro quo arrangement by the common investors. The AO is hereby directed to examine these three issues mainly genuineness, capacity of the Carmel Asia and quid pro quo arrangement of common investors and beside the issue in accordance with the provisions of law. For this limited purpose, I set aside the assessment made by the AO on 31/12/2010. The AO should adhere to the principles of natural justice strictly. The AO should pass a fresh assessment order in accordance with the provisions of law after a thorough enquiry of the investment by the Carmel Asia in the share capital of the assessee. 21.6. On going through the various documents enclosed in paper book No.1 comprising of pages 1-358 and paper book No.2 comprising of pages 359-614 filed by the assessee, which was sought to be referred to, at the time of hearing, we find that the very same issue was indeed examined by the ld. AO in the original assessment proceedings vide notice u/s.142(1) of the Act dated 26/08/2010 vide Question Nos. 3 and 6 which are enclosed in page 11 & 12 of the paper book. We find that assessee company had indeed furnished the reply to the said notice vide letter ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 143 dated 15/09/2010 enclosed in pages 13-15 of the paper book. In the said reply, the assessee company had clearly specified that Caramel Asia Holdings Pvt. Ltd., is a holding company of assessee having stake of 89.80% shares in assessee company as on 31/03/2008. The address together with PAN of the holding company was also furnished by the assessee. The assessee also furnished a copy of Form No.2 filed with Registrar of Companies for allotment of shares to its holding company. Further, we find that the ld. AO vide letter dated 01/12/2010 addressed to the assessee company sought confirmation from various investor companies which admittedly included Caramel Asia Holdings Pvt. Ltd., also. The evidence in this regard is enclosed in page 16 of the paper book filed before us. 21.7. We find that M/s. Caramel Asia Holdings Pvt. Ltd., (i.e. holding company) had indeed furnished confirmation vide letter dated 02/12/2010 enclosed in page 17(i) of the paper book confirming the fact that they had invested in the share capital of assessee company comprising of 23525000 equity shares of Rs.10/- each. In the said confirmation, the holding company had also mentioned the date of making investments, cheque number, amount and their bank details from which cheques were issued to the assessee company. This confirmation letter was directly filed by holding company before the ld. AO of the assessee company. The assessee also furnished the correct address of its holding company before the ld. AO vide its letter dated 09/12/2010 which is enclosed in pages 18- 19 of the paper book filed. 21.8. We find that the show-cause notice issued by the ld. CIT u/s.263 of the Act dated 08/03/2013 is enclosed in pages 20-22 of the paper book. From the perusal of the said show-cause notice, the Tribunal in paras 6-8 ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 144 thereon, the ld. CIT had observed that source of source in respect of capital received from holding company has not been verified by the ld. AO. 21.9. We find from page 65 of the paper book which contains the re- assessment framed in the hands of holding company u/s.143(3) r.w.s. 147 of the Act dated 30/03/2015 for A.Y.2007-08. The said re-assessment apparently had triggered based on the search conducted by CBI in the case of Shri Jaganmohan Reddy and his group companies on 18/08/2011 wherein certain documents were found connected to Caramel Asia (holding company) that it had received share capital and share premium from various companies at a huge premium in A.Y.2007-08. The list of those companies from whom share capital and share premium were received by Caramel Asia were listed out in the reasons recorded by the Assessing Officer assessing the holding company. We also find that in the said reasons, there is also an observation that on the basis of investigations by the CBI that companies have received certain benefits from Government of Andhra Pradesh and that those companies had invested in share capital and share premium of holding company which was sought to be taxed by ld. Assessing Officer assessing the holding company, for which assessment for A.Y.2007-08 of holding company was reopened. In fact in the said reasons, the ld. Assessing Officer assessing the holding company had even mentioned that income of Rs.60,59,51,640/- had escaped assessment in the hands of Caramel Asia Holdings Pvt. Ltd., (holding company) for A.Y.2007-08. Ultimately the said sum was added in the re-assessment framed for A.Y.2007-08 on 30/03/2015. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 145 21.10. Similarly, we find from pages 73-86 of the paper book which contains re-assessment order framed in the hands of the holding company u/s.143(3) r.w.s. 147 of the Act for A.Y.2008-09 dated 30/03/2015 wherein the share capital and share premium received by the holding company during A.Y.2008-09 amounting to Rs.18,78,05,268/- was sought to be added as unsubstantiated credit. 21.11. Hence, it could be seen that entire share capital and share premium received by Caramel Asia Holdings Pvt. Ltd., i.e. the holding company during A.Ys. 2007-08 and 2008-09 had already been the subject matter of addition in the hands of holding company. While this is so, even if assessee company is called upon to prove the source of source of Caramel Asia (i.e. its holding company), still the same gets clearly proved and established by the assessment orders of the Assessing Officer framed in the hands of the holding company for A.Ys. 2007-08 and 2008-09 as referred supra. In other words, the re-assessment orders framed in the hands of the holding company itself clearly establishes the source of source and that money itself is available for making investment in the assessee company herein. Hence, where is the question of examining this issue in the hands of assessee company for the purpose of making any addition in the hands of assessee on the ground that assessee company has not proved the source of the holding company when the same has been proved by the orders of the department itself. 21.12. We also find from page No.107 of the paper book containing letter addressed by the ld. AO to the assessee company vide letter dated 02/01/2015 intimating the reasons for reopening assessment for A.Y. 2007-08 in the hands of the assessee company. In the said reasons, the ld. AO had given the shareholding pattern of assessee ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 146 company as well as its holding company together with the premium component charged in A.Y.2007-08. In the said reasons, the ld. AO finally concluded that income of Rs.50,03,58,000/- chargeable to tax as escaped assessment in the hands of the assessee company for the A.Y. 2007-08. However, while framing the re-assessment order for the A.Y.2007-08 u/s.143(3) r.w.s. 147 of the Act on 30/03/2015 (this order is enclosed in page 114 to 116 of the paper book), the ld. AO did not make any addition and accepted the income returned by the assessee. It is pertinent to note that this re-assessment order for A.Y.2007-08 was framed on 30/03/2015 which is much after the date of filing of charge sheets by the CBI before the Hon’ble CBI Court. The CBI chargesheet filed was filed on 31/03/2012. The revision order for A.Y.2008-09 was passed by the ld. CIT u/s.263 of the Act on 28/03/2013. Despite CBI chargesheets dated 31/03/2012 and revision order of ld. CIT dated 28/03/2013 for A.Y.2008- 09, the ld. AO in the re-assessment framed for A.Y.2007-08 vide his order dated 30/03/2015 had not made any addition and simply accepted the returned income of the assessee. 21.13. We find that the Co-ordinate Bench of Bangalore Tribunal in the case of holding company of assessee i.e. Caramel Asia Holding Ltd., in ITA Nos.700 and 701/Bang/2018 for A.Yrs 2007-08 and 2008-09 dated 02/08/2019 had quashed re-assessment proceedings for A.Y.2007-08 and 2008-09 in the hands of the holding company. We further find that the Bangalore Tribunal had also addressed the merits of the addition. Even on merits, we find that Bangalore Tribunal had deleted the addition made on account of share capital and share premium received by Caramel Asia (holding company of the assessee) by considering of the case laws which are relied upon by the ld. Special Counsel for the Revenue in the instant case before us. Hence, every issue which is the subject matter of revision ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 147 order u/s.263 of the Act in the instant case of the assessee herein, was already considered in the hands of the holding company by initially making the addition and thereafter, the said additions getting deleted by Bangalore Tribunal on merits also. 21.14. We find in pages 4-8 of the impugned order of the ld. CIT, the ld. CIT had only discussed about quid pro quo arrangements that are the subject matter of CBI chargesheets and that Caramel Asia Holdings Ltd., did not have the capacity to raise share capital and share premium from its shareholders which money had eventually passed on to the assessee company. In other words, the ld. CIT had only doubted the transactions on receipt of share capital and share premium received by Caramel Asia Holdings Ltd., from its shareholders. Finally, however, the ld. CIT has passed on this responsibility to the ld. AO to identify whether there is any quid pro quo arrangement involved in the said transaction in his concluding para. This only goes to prove that the revision order has been made only to make fishing and roving enquiries for a concluded matter by passing on the bug / responsibility from the hands of the ld. CIT to ld. AO and giving a fresh innings to the ld. AO. We find that the ld. CIT in pages 4-7 had alleged that there is heavy quid pro quo arrangement involved in all the transactions on receipt of share capital and share premium by Caramel Asia (holding company). If there is quid pro quo involved for the allotment the shares by Caramel Asia Holdings Ltd., at a premium then, the said aspect should be considered for assessment in the hands of Caramel Asia and not in the hands of the assessee company herein. 21.15. We further find that the ld. CIT in para 10 & 11 had held that the ld. AO had not examined the genuineness of the transactions with Caramel Asia. In this regard, we find that the ld. AO had examined the ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 148 receipt of share capital at par by the assessee company from Caramel Asia (holding company) and had accepted the genuineness of the same in the assessment order. In fact, even for investors falling in the outsiders category as has been elaborately dealt by us in ITA No.18/Hyd/2012 for A.Y.2008-09 hereinabove, the allotment of shares at par has been accepted by the ld. AO to be genuine and reasonable based on the performance of the assessee company. While this is so, where is the scope for the ld. CIT to say that the ld. AO had not examined the issue on receipt of share capital at par from its holding company. This is a classic case of the ld. CIT trying to substitute his view in the place of view already taken by the ld. AO in the course of assessment proceedings. There is a categorical finding given by the ld. AO in his assessment order in several places that the receipt of share capital portion from all the investors (which includes the receipt from holding company also) to be reasonable and he had accepted the same. This conclusion of the ld. AO had been accepted and endorsed by the ld. CIT(A) also in his appellate order. In fact the ld. CIT(A) had not resorted to make any enhancement by adding the share capital portion which was allotted at par though the entire issue of addition made on account of share premium from outsiders category and share capital with share premium in respect of eight investor companies in Mumbai, Kolkata and Hyderabad were disputed before him. This certainly would not be the new source of income for the ld. CIT(A) , in which event, his hands would be tied by the provisions of the Act and decided judicial precedents. Despite the issue lying upon before the ld. CIT(A), we find that the ld. CIT(A) had not resorted to make any enhancement thereon. Hence, the very same issue is now the subject matter of revision jurisdiction u/s.263 of the Act by the ld. CIT , was very much available for consideration before the ld. CIT(A) and the same issue has already been considered and decided by the ld. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 149 CIT(A). Hence, the doctrine of merger would come into operation here. The order of Assessing Officer gets merged with order of the ld. CIT(A). Moreover, in view of the explicit provisions of Explanation 1(c) to Section 263(1) of the Act, an issue which has already been considered and decided by the ld. CIT(A) cannot be the subject matter of revision u/s.263 of the Act by the ld. Administrative CIT. On this ground also, the revision order passed by the ld. CIT deserves to be quashed apart from merits. 21.16. In any event, it is not in dispute that assessee company has allotted shares to its holding company only at par i.e. at face value of 10/- each per share. If the allegations of ld. CIT that there is quid pro quo arrangement, is to be accepted, then how can there be any quid pro quo arrangement for the share capital allotment at par. We have already held in ITA No.18/Hyd/2012 that no addition could be made on account of share premium and share capital portion for the year under consideration as there is no explicit provision to tax the same in the Act and they are only capital receipts. Reliance in this regard was made on the decision of Bombay High Court in the case of Vodafone India Services Ltd., reported in 368 ITR 1 which decision has been accepted by the CBDT by not preferring further appeal to the Hon’ble Supreme Court. Hence, that matter has attained finality. 21.17. To sum-up, we find that the issue which is sought to be revised by the ld. CIT by invoking revision jurisdiction u/s.263 of the Act in the instant case, was already the subject matter of addition made in the hands of the Caramel Asia Holdings Ltd., (holding company of the assessee). In any case, in the scrutiny assessment order passed in the hands of the assessee company for A.Y.2008-09 u/s.143(3) of the Act ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 150 dated 31/12/2010, the ld. AO had given a categorical finding on more than one occasion at several places of his order, that the receipt of share capital at par value from the promoters category (which includes the holding company i.e. Caremel Asia) and outsiders category are accepted as genuine and reasonable. This has been admittedly done by the ld. AO after considering all the relevant documents with supporting evidences furnished by the assessee company including the direct confirmations filed by those investor companies before the ld. AO in response to the notices issued u/s.133(6) or summons u/s.131 of the Act. Hence, the ld. AO in the light of these supporting documents had indeed taken a possible view. We find that the ld. CIT by invoking his revisionary powers is only trying to substitute his view in place of the view already taken by the ld. AO. This is not permitted in the light of the decision of the Hon’ble Bombay High Court in the case of Gabriel India Ltd., reported in 203 ITR 108 and also on the decision of Mumbai Tribunal in the case of Cricket Club India Ltd., vs. PCIT for A.Y.2013-14 dated 03/08/2018 reported in (2018) 66 ITR (Trib.) 644 (Mumbai). In the said decision of Mumbai Tribunal, the decision of the Hon’ble Bombay High Court in 203 ITR 108, the decision of the Hon’ble Supreme Court in the case of CIT vs. Max India Ltd., reported in 295 ITR 282 and decision of Hon’ble Supreme Court in the case of Malabar Industrial Company Ltd., vs. CIT reported in 243 ITR 83 were duly considered. 21.18. Further, the main case of the ld. CIT in his revision order is only directing the ld. AO to examine source of source. We hold that the assessee is not bound to establish the source of source of the investor company. Reliance in this regard is placed on the decision of Hon’ble Bombay High Court in the case of CIT vs. Nirav Modi reported in 390 ITR 292 wherein it was specifically held as under:- ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 151 9. It was next submitted that no enquiry was done by the Assessing Officer to find out whether the donor Mr Deepak Modi (father) had received money from M/s. Chang Jiang as claimed. Nor any inquiry was done to find out whether the sister had in fact earned amounts on account of Foreign Exchange Transactions as claimed by her. We find that this enquiry of a source of source is not the requirement of law. Once the Assessing Officer is satisfied with the explanation offered on inquiry, it is not open to the CIT in exercise of his revsional powers direct that further enquiry has to be done. At the very highest, the case of the Revenue is that this is a case of inadequate inquiry and not of "no enquiry." It is well settled that the jurisdiction under Section 263 of the Act can be exercised by the CIT only when it is a case of lack of enquiry and not one of inadequate enquiry. This view has been taken by this Court in the matter of CIT v. Shreepati Holdings & Finance (P.) Ltd. [ITA 1879 of 2013 dated 5th October, 2013], by the Delhi High Court in CIT v. Vikas Polymers [2012] 341 ITR 537/194 Taxman 57 and in D.G. Housing Projects (supra). In fact the Delhi High Court in D.G. Housing Projects (supra) while so holding placed reliance upon the decision of this Court in Gabriel (India) Ltd. (supra). It is very important to note that the CIT in his order under Section 263 of the Act has recorded the fact that there has been no adequate inquiry. Thus, this is not a case of no inquiry, warranting order under Section 263 of the Act. Thus, this objection on the part of the Revenue, is also not sustainable. . 10. The Revenue placed reliance upon the decision of the Delhi High Court in D.G. Housing Projects Ltd., (supra) that as the Assessing Officer had not enquired into the source of the source of the gifts received by the Assessee, the Assessment Order is erroneous. The aforesaid decision holds that the power of Revision under Section 263 of the Act would normally be exercised in case of no enquiry and not in cases of inadequate enquiry. However, even in case of inadequate enquiry by the Assessing Officer, the order of the Assessing Officer could be erroneous in two classes of situation. The first class would be where orders passed by the Assessing Officer are ex facie erroneous i.e. a decision rendered ignoring a binding decision in favour of the Revenue or where enquiry is per se mandated on the basis of the record available before the Assessing Officer and that is not done. In the second class of cases, where the order is not ex facie erroneous, then the CIT must himself conduct an enquiry and determine it to be so. The Court held that it is not permissible to the CIT while exercising power under Section 263 of the Act to remit the issue to the Assessing Officer to re-examine the same and find out whether earlier order of Assessment is erroneous. It is the CIT who must hold that the order is erroneous, duly supported by reasons. In the present facts, the CIT in exercise of its powers under Section 263 of the Act has merely restored the Assessment to the Assessing Officer to decide whether the gifts were genuine and, if not, then the Assessment could be completed on application of Section 68 of the Act. In this case, the order passed by the Assessing Officer is not per se erroneous and further the CIT has not given any reasons to conclude that the order is erroneous. In fact, he directs the Assessing Officer to find out whether the order is erroneous by making further enquiry. This the decision of the Delhi High Court in D.G. Housing Projects Ltd. (supra), clearly negates. In the above view, the decision of Delhi ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 152 High Curt in D.G. Housing Projects Ltd. (supra) would not assist the Revenue in the present facts. 21.19. We further find that the revision proceedings u/s.263 of the Act could not be invoked for making fishing and roving enquiry. Reliance in this regard was placed on the Co-ordinate Bench decision of Mumbai Tribunal in the case of Lotus Energy India Ltd., vs. CIT reported in (2017) 53 ITR (Trib.) 227 (Mum) dated 14/12/2016. 21.20. One more excruciating fact which has to be seen in the instant case when the very same issue that is sought to be revised by invoking revision jurisdiction u/s.263 of the Act by the ld. CIT has already been the subject matter of addition in the hands of Caramel Asia (holding company of the assessee company) then how can it be said that the order of the ld. AO is prejudicial to the interest of the Revenue. 21.21. In view of the aforesaid observations and respectfully following the various judicial precedents relied upon hereinabove, we hold that the order of the ld. AO is neither erroneous nor prejudicial to the interest of the Revenue for A.Y.2008-09, warranting revision u/s.263 of the Act. Hence, we have no hesitation in quashing the revision order passed by the ld. CIT u/s.263 of the Act wherein he had directed the ld. AO to examine the investment made by Caramel Asia (holding company of the assessee company) in equity shares of the assessee company at par. Accordingly, the grounds raised by the assessee in this regard are allowed. 22. In the result, appeal of the assessee is allowed. ITA No.18/H/2012 & 790/H/2013 M/s. Jagati Publications Ltd., 153 23. To Sum-Up: Sr. No. ITA No. AY Appeal By Result 1. 18/Hyd/2012 2008-09 Assessee Allowed 2. 790/Hyd/2013 2008-09 Assessee Allowed Order pronounced on 23/12/2021 by way of proper mentioning in the notice board. Sd/- (M BALAGANESH) Sd/- (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT Mumbai; Dated 23/12/2021 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//