RIDDHI PETROCHEM P.LTD, MUMBAI V. DCIT CEN CIR 13(3)(1), MUMBAI

ITA 82/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8372 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Unexplained cash credit; Valuation report; Set aside
• Section: 133(6); 195; 64; 48; 13; 22; 131; 10; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.82/MUM/2017 ( ASSESSMENT YEAR: 2012-13 ) RIDDHI PETROCHEM PVT.LTD. 30, NEW SATGURU NANIK INDUSTRIAL ESTATE WESTERN EXPRESS HIGHWAY, GOREGAON(E) MUMBAI-400 063 VS. DCIT,CIRCLE-13(3)(1) MUMBAI PAN/GIR NO. AADCR0143B APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SUNIL H.TALATI, AR REVENUE BY SHRI H.N.SINGH (CIT-DR) DATE OF HEARING 11/12/2019 DATE OF PRONOUNCEME NT 20/05 /2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)21, MUMBAI, DATED 28/10/2016 AND IT PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING ADDIT IONS MADE BY A.O. OF RS. 15,01,00,000/- U/S. 68 OF THE INCOME TAX ACT TR EATING THE GENUINE SHARE APPLICATION MONEY RECEIVED TOWARDS THE SHARE CAPITAL OF THE COMPANY. IT IS SUBMITTED THAT ON THE FACTS AND CIRC UMSTANCES OF THE CASE THE AMOUNT RECEIVED AS SHARE CAPITAL IS NOT AT ALL UNEXPLAINED AND PROVISIONS OF SECTION 68 ARE JUST NOT APPLICABLE. I T IS SUBMITTED THAT ADDITION MADE BY A.O. WITH PREJUDICE AND BIAS MIND WITHOUT ANY FINDING AND JUSTIFICATION AND THE SAME HAS BEEN INCORRECTLY CONFIRMED BY CIT(A) ON FACTS AS WELL AS LAW AND THUS THE SAME DESERVES TO BE DELETED. ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 2 2. WITHOUT PREJUDICE TO THE ABOVE IT IS SUBMIT TED THAT THE LD. CIT(A) HAS FAILED IN APPRECIATING THE FACTS AND EVIDENCES FILED BEFORE HIM AND INCORRECTLY MENTIONING THAT THE CREDITWORTHINESS OF INVESTORS AND GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN ESTAB LISHED BY THE APPELLANT. IT IS SUBMITTED ALL THE INGREDIENTS BEIN G GENUINENESS OF PAYMENT ALONG WITH IDENTITY SUCH AS RESOLUTION PASS ED BY THE ASSESSEE COMPANY, FORM 2 FILED WITH REGISTRAR OF COMPANIES, COMPLETE ADDRESS WITH NAMES OF SHARE APPLICANTS .THEIR PAN , LEDGER ACCOUNTS AND CONFIRMATIONS AS WELL AS FOR PROVING THE CAPACITY O F THE SAID INVESTORS THEIR AUDITED FINANCIAL STATEMENTS AND IT. RETURNS ETC. WERE FILED BEFORE THE LOWER AUTHORITIES AND ARE ON RECORDS. THUS THER E IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCHARGING ONUS UNDER THE PROVISIONS OF THE ACT . IT IS SUBMITTED THAT THE ADDITION MADE OF RS. 15,01 ,00,000/- U/S. 68 OF THE ACT BEING TOTALLY INCORRECT, ILLEGAL AND UNJUSTIFIA BLE AND DESERVES TO BE DELETED. 3. THE ORDER PASSED BY THE LEARNED CIT(APPEALS) IS BAD IN LAW AND CONTRARY TO THE PROVISIONS OF LAW AND FACTS. IT IS SUBMITTED THAT THE SAME BE HELD SO NOW. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING/JOB WOK OF FLEXIBLE PLASTIC FILM & POLYTHENE FILM AND TRADING OF CLOTHS, FILED ITS RETURN OF INCOME FOR AY 2012-13 ON 25/01/2013, DECLARING TOTA L INCOME AT RS. NIL . THE CASE WAS SELECTED FOR SCRUTINY AND DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO NOTICED THAT DUR ING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS RECEI VED SHARE CAPITAL FROM 14 PARTIES AMOUNTING TO RS.19.01 CRO RES. HE, FURTHER NOTED THAT THE ASSESSEE HAS ISSUED SHARES TO 14 P ARTIES HAVING FACE VALUE OF RS. 10/- WITH A PREMIUM OF RS. 40 PER SHARE. THEREFORE, IN ORDER TO VERIFY GENUINENESS OF TRANSACTIONS, IDE NTITY OF SHAREHOLDERS AND CREDITWORTHINESS OF THE PARTIES, C ALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCES, INCLUDING JUS TIFICATION FOR ISSUE OF SHARES AT HIGH PREMIUM. THE ASSESEE HAS FILED DE TAILS OF SHARE APPLICATION MONEY RECEIVED FROM 14 PARTIES ALONG WITH THEIR NAME AND ADDRESS. IN ORDER TO VERIFY CORRECTNESS OF CLAI M OF THE ASSESSEE, THE LD. AO HAS ISSUED NOTICES U/S 133(6) TO 14 PA RTIES. IN RESPONSE TO 133(6) NOTICES, EXCEPT LALIT POLYSTER PVT.LTD., ALL PARTIES HAVE ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 3 REPLIED AND FURNISHED NECESSARY DETAILS SOUGHT BY T HE LD. AO. THEREAFTER, THE LD. AO HAS ISSUED SUMMONS U/S 131 T O ALL 14 PARTIES, BUT NONE ATTENDED IN RESPONSE TO 131 NOTIC E ISSUED BY THE LD. AO. THEREAFTER, THE LD. AO HAS ISSUED SHOW CAUS E NOTICE, DATED 10/03/2015 AND CALLED UPON THE ASSESSE TO EXPLAIN A S WHY ADDITIONS SHOULD NOT BE MADE TOWARDS SHARE CAPITAL RECEIVED F ROM 14 PARTIES U/S 68 OF THE I.T.ACT, 1961. IN RESPONSE, THE ASSES SEE VIDE LETTER DATED 16/03/2015 HAS FILED NECESSARY EVIDENCES, INC LUDING JUSTIFICATION FOR ISSUE OF SHARES AT PREMIUM OF RS. 40 PER SHARE. THE ASSESSEE HAS ALSO FILED COMPLETE DETAILS OF SHAREHO LDERS, INCLUDING THEIR IDENTITY, GENUINENESS OF TRANSACTIONS AND CRE DITWORTHINESS OF THE PARTIES AND ARGUED THAT SHARE CAPITAL RECEIVED FROM 14 PARTIES IS GENUINE IN NATURE, WHICH IS SUPPORTED BY NECESSARY EVIDENCES. THE ASSESSE, FURTHER, CLAIMED THAT THE SHARE CAPITAL HA S BEEN RECEIVED FROM PARTIES, WHICH ARE CLOSELY RELATED OR ASSOCIAT ED WITH THE ASSESSEE. FURTHER, ALL SUBSCRIBERS TO THE SHARE CA PITAL ARE HAVING SUFFICIENT SOURCE OF INCOME TO EXPLAIN INVESTMENT M ADE IN SHARES OF ASSESSEE COMPANY. 4. THE LD. AO AFTER CONSIDERING THE RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO, TAKEN NOTE OF VARIOUS FACTS INCL UDING CERTAIN JUDICIAL PRECEDENTS, CAME TO THE CONCLUSION THAT TH E ASSESSEE HAS FAILED TO PROVE IDENTITY OF CREDITORS, CAPACITY OF CREDITOR TO LEND MONEY AND GENUINENESS OF TRANSACTIONS, IN ORDER TO PROVE SHARE CAPITAL RECEIVED FROM 14 PARTIES. THE LD. AO FURTHER OBSERV ED THAT ALTHOUGH, THE ASSESSEE HAS ISSUED SHARES AT HUGE PREMIUM, BUT FAILED TO JUSTIFY SHARES ISSUED AT SUCH A HIGH PREMIUM WITH N ECESSARY EVIDENCES. HE, FURTHER, NOTED THAT ALL THE INVESTOR S ARE MYSTERIOUS ENTITIES, WHO NEVER REPLIED OR APPEARED BEFORE THE LD. AO TO JUSTIFY ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 4 THEIR CLAIM OF HAVING MADE INVESTMENTS IN SHARES OF ASSESSEE COMPANY. THEREFORE, HE OPINED THAT THE ASSESSEE HAS FAILED TO PROVE THREE INGREDIENTS PROVIDED U/S 68 OF THE I.T. ACT, 1961 TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDI TWORTHINESS OF THE PARTIES AND ACCORDINGLY, BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT, IN THE CASE OF MAJOR METALS VS UNION OF INDIA (2013) 359 ITR 450 (BOMBAY) HAS MADE ADDITIONS OF RS. 15.01 CR ORES U/S 68 OF THE I.T.ACT, 1961. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE LD. AO AND ARGUED THAT SHARE CAPITAL RECEIVED FROM 14 PARTIES ARE G ENUINE IN NATURE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCES. THE ASS ESSEE, FURTHER, SUBMITTED THAT ALL THE PARTIES ARE EITHER, RELATIVE S OF DIRECTORS OF ASSESEE COMPANY OR CLOSELY ASSOCIATED WITH ASSESEE COMPANY. THEREFORE, THERE IS NO REASON FOR THE LD. AO TO DOU BT THE IDENTITY OF SHAREHOLDERS. INSOFAR AS, GENUINENESS OF TRANSACTI ONS, THE SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH PROPER BANKING CHANNELS, FOR WHICH BANK STATEMENTS OF SHAREHOLDERS HAVE BEEN FURNISHED. THE ASSESSEE HAS ALSO FILED INCOME TAX R ETURNS OF SHAREHOLDER FOR RELEVANT ASSESSMENT YEARS TO PROVE CAPACITY OF THE CREDITORS WITH KNOWN SOURCE OF INCOME. THE ASSESSEE HAS ALSO EXPLAINED THE REASONS FOR ISSUE OF FRESH SHARE CAPI TAL ALONG WITH NECESSARY EVIDENCES. FURTHER, JUSTIFICATION FOR ISS UE OF SHARES AT PREMIUM OF RS. 40 PER SHARE HAS BEEN FILED BEFORE T HE LD.AO. THE LD. AO HAS DISREGARDED ALL EVIDENCES FILED BY THE ASSES SEE ONLY FOR THE REASON THAT THE PARTIES DID NOT APPEAR BEFORE THE LD. AO, WHEN SUMMONS WERE ISSUED U/S 131 OF THE I.T.ACT, 1961. ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 5 6. THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISS IONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF VARIOUS FACTS, INCL UDING BY FOLLOWING CERTAIN JUDICIAL PRECEDENTS, CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY, GENUINENESS OF T RANSACTIONS AND CREDITWORTHINESS OF THE PARTIES, WHICH IS EVIDENT F ROM THE FACT THAT THE IDENTICAL STEREOTYPE CONFIRMATION LETTERS FILED OST ENSIBLE FROM SOME OF THE INVESTORS DO NOT SUBSTITUTE THE FAILURE OF THE ASSESSEE TO SHOW THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSAC TIONS. THE SIGNATORIES TO THE CONFIRMATION DID NOT ATTEND BEFO RE THE LD. AO, WHEN SUMMONS WERE SERVED U/S 131 OF THE I.T.ACT, 19 61. THE DIRECTOR OF THE ASSESSEE COMPANY DID NOT RESPOND TO SUMMONS, NOR PRODUCED THE INVESTORS FOR VERIFICATION. FROM THE A BOVE, IT IS ABUNDANTLY CLEAR THAT THE BURDEN CAST UPON ON THE A SSESEE U/S 68 OF THE ACT, HAS NOT BEEN DISCHARGED TO THE SATISFACTIO N OF THE LD. AO. THEREFORE, HE OPINED THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD. AO TO DISALLOW SHARE APPLICATION MONEY R ECEIVED FROM CERTAIN PARTIES AND ACCORDINGLY, CONFIRMED ADDITION S MADE BY THE LD. AO TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE I .T.ACT, 1961. AGGRIEVED BY THE LD.CIT(A) ORDER, THE ASSESEE IS IN APPEAL BEFORE US. 7. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) HAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE LD. A O TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE I.T.ACT, 1961, WITH OUT APPRECIATING THE FACT THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY FILING ENORMOUS DOCUMENTS TO PROVE IDENTITY OF THE SUBSCRI BERS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE LD. AR, FURTHER SUBMITTED THAT THE LD.CIT(A) HAS F AILED IN ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 6 APPRECIATING THE FACTS AND EVIDENCES FILED BEFORE H IM AND INCORRECTLY MENTIONING THAT THE CREDITWORTHINESS OF THE INVESTO RS AND GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN ESTAB LISHED BY THE ASSESSEE. THE LD. AR, FURTHER, SUBMITTED THAT THE A SSESSEE HAS FILED ALL POSSIBLE DETAILS TO PROVE THE IDENTITY OF THE S UBSCRIBERS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE ASSESSEE HAS ALSO, FILED COPY OF BOARD RESOLUTION P ASSED FOR ISSUE OF SHARE CAPITAL ALONG WITH FORM-2 FILED WITH REGISTRA R OF COMPANIES, WHICH CONTAINS FULL NAME AND ADDRESS OF SHARE APPLI CANTS, THEIR PAN NUMBER, LEDGER ACCOUNTS AND CONFORMATION FROM THE P ARTIES. THE ASSESSEE HAS ALSO, FILED AUDITED FINANCIAL STATEMEN TS AND IT RETURNS OF SHAREHOLDERS TO PROVE GENUINENESS OF TRANSACTION S. FURTHER, ALL THE CREDITORS ARE HAVING SUFFICIENT SOURCE OF INCOM E TO ESTABLISH CREDITWORTHINESS TO PROVE SOURCE OF INCOME FOR INVE STMENTS MADE IN SHARE CAPITAL OF ASSESSEE COMPANY. THE ASSESSEE HAS ALSO, FILED A VALUATION REPORT OBTAINED FROM AN INDEPENDENT AUDIT OR, AS PER WHICH THE INTRINSIC VALUE OF PER SHARE IS MUCH MORE THAN THE AMOUNT OF SHARE PRICE AT WHICH SHARES ARE ISSUED TO ALL THE P ARTIES. THE LD. AO, AS WELL AS THE LD.CIT(A), WITHOUT APPRECIATING ALL THESE FACTS HAS SIMPLY MADE ADDITIONS TOWARDS SHARE CAPITAL RECEIVE D FROM 14 PARTIES., ONLY ON THE GROUND THAT PARTIES HAVE NOT APPEARED BEFORE THE LD. AO, WHEN SUMMONS WERE ISSUED U/S 131 OF THE I.T.ACT, 1961. IN THIS REGARD, HE RELIED UPON BY THE FOLLOWI NG JUDICIAL PRECEDENTS. * PCIT VS GOODVIEW TRADING (P.) LTD. (2017) 77 T AXMANN.COM 204 (DELHI H.C.) * CIT VS. JAY DEE SECURITIES & FINANCE LTD. (20 13) 32 TAXMANN.COM 91 (ALLAHABAD H.C.) * CIT VS. K.C. PIPES (P.) LTD. (2017) 79 TAXMA NN.COM 373 (PUNJAB & HARYANA H.C.) * ACIT VS. NAMISION POWERTECH (P.) LTD. [2017] 87 TAXMANN.COM 22 ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 7 (AHMEDABAD -TRIB.) * ACIT VS. ADAMINE CONSTRUCTION (P.) LTD. [2017] 87 TAXMANN.COM 216 (DELHI-TRIB. 8. THE LD. DR, ON THE OTHER HAND SUPPORTING ORDER O F THE LD.CIT(A) SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE INGREDIENTS PROVIDED U/S 68 OF THE I.T.ACT, 1961, W HICH IS EVIDENT FROM THE FACT THAT WHEN, SUMMONS U/S 131 OF THE I.T .ACT, 1961 WERE ISSUED TO THE PARTIES, NONE OF THE PARTIES WERE PRE SENT BEFORE THE LD. AO TO JUSTIFY THE CLAIM OF THE INVESTMENTS MADE IN SHARES OF ASSESEE COMPANY. THE LD. DR, FURTHER SUBMITTED THAT MERE FU RNISHING OF CERTAIN EVIDENCES TO PROVE IDENTITY IS NOT SUFFICIE NT ENOUGH TO COME OUT OF THE PROVISION OF SECTION 68 OF THE I.T.ACT, 1961, BUT WHAT IS RELEVANT IS TO PROVE THE IDENTITY OF THE INVESTORS TO THE SATISFACTION OF THE LD. AO AND ALSO, DISCHARGE THE BURDEN OF PROVIN G THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. IN THIS CASE, THE FACTS BROUGHT OUT BY THE LD. AO CLEA RLY ESTABLISHES THE FACT THAT NONE OF THE INVESTORS ARE HAVING SUFFICIE NT SOURCE OF INCOME TO JUSTIFY INVESTMENTS MADE IN SHARE CAPITAL OF THE ASSESSEE COMPANY. THEREFORE, THE LD.CIT(A) AFTER CONSIDERING THE RELEVANT FACTS HAS RIGHTLY AFFIRMED THE FINDINGS OF THE LD. AO AND THERE IS NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD.CIT (A). 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE COMPANY HAS ISSUED FRESH SHARES CAPITAL AT A PREMIUM OF RS. 40 PER SHARE TO 14 SHAREHOLDERS AND RECEIVED SH ARE CAPITAL OF RS.19.01 CRORES. THE ASSESSEE HAS EXPLAINED THE REA SONS FOR ISSUE OF SHARES AT PREMIUM AND ALSO, NECESSITY FOR ISSUE OF FRESH SHARES FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSESSE IT WAS ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 8 PLANNED TO GO TO PUBLIC BY IPO TO RAISE CAPITAL FRO M PUBLIC AT LARGE BY WAY OF CONVERTING IT INTO APUBLIC LIMITED COMPANY F OR EXPANSION OF ITS BUSINESS. FURTHER, IN ORDER TO STRENGTHEN ITS S HARE CAPITAL, IT HAS ISSUED SHARES AT A PREMIUM TO CLOSELY RELATED FAMIL Y MEMBERS OF DIRECTORS AND ASSOCIATED CONCERNS BEFORE GOING TO P UBLIC. ACCORDING TO THE ASSESSEE, IT HAS DISCHARGED ONUS CAST UPON U /S 68 OF THE I.T.ACT, 1961, BY FILING ENORMOUS DETAILS, INCLUDIN G DETAILS TO PROVE IDENTITY OF SUBSCRIBERS TO SHARE CAPITAL, DOCUMENTS TO PROVE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE LD. AO HAS MADE ADDITIONS TOWARDS SHARE CAPITAL REC EIVED FROM THE 14 PARTIES AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T.ACT, 1961, ON THE GROUND THAT THE ASSESEE HAS FAILED TO ESTABLISH IDENTITY OF SUBSCRIBERS, GENUINENESS OF TRANSACTIONS AND CREDIT WORTHINESS OF THE PARTIES. THE LD. AO HAS BROUGHT OUT VARIOUS REASONS TO COME TO THE CONCLUSION THAT THREE INGREDIENTS PROVIDED U/S 68 O F THE I.T.ACT, 1961 HAS NOT BEEN SATISFIED. ACCORDING TO THE LD. AO, AL THOUGH ASSESEE HAS FILED CERTAIN DETAILS TO PROVE SHARE CAPITAL RE CEIVED FROM THE 14 PARTIES, BUT NONE OF THE PARTIES HAVE APPEARED BEFO RE THE LD. AO, WHEN 131 SUMMONSES WERE ISSUED TO THE PARTIES. THE LD. AO, FURTHER, NOTED THAT MOST OF THE PARTIES ARE NOT HAV ING SUFFICIENT SOURCE OF INCOME TO ESTABLISH CAPACITY TO PROVE INV ESTMENTS MADE IN SHARE CAPITAL. THE LD. AO HAS ALSO QUESTIONED ISSUE OF SHARES AT PREMIUM OF RS. 40 PER SHARE. ACCORDING TO THE LD. AO, THE ASSESEE HAS NOT FILED ANY DETAILS TO JUSTIFY ISSUE OF SHARE S AT A HUGE PREMIUM OF RS. 40 PER SHARE. 10. THE PROVISIONS OF SECTION 68 OF THE I.T.ACT, 19 61 DEALS WITH A CASE, WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN ANY FINANCIAL YEAR, FOR WHICH THE ASSES EE OFFERS NO ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 9 EXPLANATION OR EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE LD. AO IS NOT SATISFACTORY, THEN SUM FOUND CRED ITED MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. A PLAIN READING OF SECTION 68 OF THE I.T.ACT, 1961, MAKES I T VERY CLEAR THAT TO FIX ANY CREDIT WITHIN THE AMBIT OF SECTION 68 OF TH E I.T.ACT, 1961, THE LD. AO HAS TO EXAMINE THREE INGREDIENTS PROVIDED TH EREIN I.E, IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. IN THIS LEGAL BACK GROUND, IF YOU SEE THE FACTS OF PRESENT CASE, ONE HAS TO UNDERSTAND, WHETHER THE ASSESSEE H AS DISCHARGED ITS ONUS OF PROVING SHARE CAPITAL RECEIVED FROM 14 PARTIES. ADMITTEDLY, ALL PARTIES ARE EITHER CLOSELY RELATED TO DIRECTORS OF ASSESSEE COMPANY OR ASSOCIATED COMPANIES OF ASSESSE E. THIS FACT HAS NOT BEEN DISPUTED BY THE LD. AO. THE LD. AO HAS ALSO NOT DISPUTED THE FACT THAT ALL PARTIES HAVE RESPONDED T O 133(6) NOTICES ISSUED BY THE LD. AO AND FILED NECESSARY DETAILS CA LLED FOR TO PROVE SHARE CAPITAL. IN FACT, THE ASSESSEE HAS FILED DETA ILS OF IDENTITY OF EACH AND EVERY SUBSCRIBER TO THE SHARE CAPITAL. TH E ASSESEE HAS ALSO FILED AUDITED FINANCIAL STATEMENTS OF SHAREHOL DERS ALONG WITH COPY OF INCOME TAX RETURNS FILED FOR THE RELEVANT A SSESSMENT YEAR. THE ASSESSEE HAS ALSO FILED LEDGER ACCOUNTS OF SHAR EHOLDERS ALONG WITH CONFIRMATION LETTERS AND THEIR PAN NUMBER ETC. , OF EACH INVESTOR. THE ASSESSEE HAS ALSO FILED COPIES OF BANK STATEMEN TS OF SHAREHOLDERS. ALL THESE ARE PART OF ASSESSMENT RECO RDS. NEITHER THE LD. AO, NOR LD.CIT(A) HAD DISPUTED THE FACT THAT TH E ASSESSE HAS FILED ALL THESE EVIDENCES, IN RESPECT OF 14 PARTIES . 11. IN THIS FACTUAL BACK GROUND, IF YOU EXAMINE THE CASE OF THE ASSESSEE, IN LIGHT OF PROVISIONS OF SECTION 68 OF T HE I.T.ACT, 1961, IT IS ABUNDANTLY CLEAR THAT THE ASSESEE HAS DISCHARGED IT S ONUS CAST UPON ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 10 U/S 68 OF THE I.T.ACT, 1961 TO PROVE IDENTITY OF TH E SUBSCRIBERS, THEIR CAPACITY AND GENUINENESS OF TRANSACTIONS. FURTHER, IF YOU GO THROUGH DOCUMENTS AND EVIDENCES FILED BY THE ASSESSEE, WE F IND THAT IN RESPECT OF EACH AND EVERY SUBSCRIBER TO THE SHARE C APITAL, THE ASSESSEE HAS FILED THE FOLLOWING DOCUMENTS AND SAID DOCUMENTS HAS CLERELY PROVES THE FACT THAT THE CREDITS IN THE FOR M OF SHARE CAPITAL FROM ALL PARTIES HAS BEEN STAND EXPLAINED. THE RELE VANT DETAILS AND EXPLANATION FILED BY THE ASSESSEE IN RESPECT OF EAC H SHARE HOLDER IS AS FOLLOWS. (I) VALUKKO INDUSTRIES PVT. LTD. COPY OF AUDITED ACCOUNTS OF VALUKKO INDUSTRIES PVT. LTD. SHOWS IT HAS SHAREHOLDER FUND OF RS. 4.31 CR. AND LONG TERM BORROWING OF RS. 15.78 CR. IT HAD CURRENT LIABILITIES OF RS. 62 CR. AND CURRENT ASSETS OF RS. 53 CR. (PAGE NO. 24). THE REVENUE FROM OPERATIO NS WAS RS. 92 CR. IN THIS YEAR AND RS. 50 CR. IN PREVIOUS YEAR (P AGE NO. 25). THE COPY OF LEDGER ACCOUNT FROM ITS BOOK SHOWS THAT IT HAD PAID RS. 3,89,30,000/- AS SHARE APPLICATION MONEY TO THE ASS ESSEE RIDHI PETROCHEM PVT. LTD. BY JOURNAL ENTRIES (PAGE NO. 30 ), WHICH IS ALSO CONFIRMED FROM THE PARTY'S LEDGER ACCOUNT (PAGE NO. 31). THE BOARD RESOLUTION IS ON PAGE NO. 32 AND REPLY TO THE SUMMO NS OF AO IS ON PAGE NO. 33 AND 34. THUS THE STRENGTH AND THE SOURC E IS CLEARLY PROVED INASMUCH AS THE SAID COMPANY HAD RUNNING ACC OUNT WITH THE ASSESSEE RUNNING INTO MORE THAN RS. 7.5 CR. FROM WH ICH IT MADE INVESTMENT OF RS. 33 CRORES PER JOURNAL ENTRIES PASSED IN THE BOOKS OF BOTH THE INVESTORS AND THE RECIPIENT I.E. APPELL ANT COMPANY. ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 11 (II) VISHAL HASMUKH SHETH VISHAL SHETH IS THE SON OF HASMUKH SHETH WHO IS CHA IRMAN AND MANAGING DIRECTOR OF THE APPELLANT COMPANY. THE COP Y OF THE BALANCE SHEET OF VISHAL HASMUKH SHETH SHOWS THE INV ESTMENT WITH THE ASSESSEE COMPANY AND HIS PERSONAL BALANCE SHEET IS OF RS. 12.77 CR. (PAGE NO.38). HE ALSO HAD PAID THE SHARE APPLICATION MONEY FROM HIS CURRENT ACCOUNT RUNNING OF RS. 7 CR. AND HAS INVESTED INTO RS. 8 LAKHS (PAGE NO. 40 AND 42). (III) KASHMIRABEN ASHWIN SHETH SO FAR AS KASHMIRABEN ASHWIN SHETH IS CONCERNED, SHE IS AGAIN DAUGHTER-IN-LAW OF MANAGING DIRECTOR OF THE COMPANY . HER BALANCE SHEET SHOWS THE TOTAL OF RS. 6.72 CR. INTER ALIA RE FLECTING THE INVESTMENT IN ASSESSEE COMPANY (PAGE NO. 44). SHE A LSO HAD A RUNNING ACCOUNT OF RS. 98 LAKHS (PAGE NO. 46) FROM WHICH SHE HAD INVESTED RS. 8,65,000/- (PAGE NO. 48 AND 49). (IV) JYOTIKABEN HASMUKH SHETH JYOTIKABEN HASMUKH SHETH IS A WIFE OF MANAGING DIRE CTOR OF APPELLANT COMPANY. THE COPY OF HER RETURN SHOWS THA T SHE HAS BALANCE SHEET OF RS. 8.50 CR. AND HAVING INVESTMENT IN SHARES OF RS. 6.30 CR. (PAGE NO. 51). SHE ALSO HAD RUNNING ACCOUN T WITH THE COMPANY AND FROM THAT AMOUNT OF RS. 1.60 CR. SHE IN VESTED RS. 1.38 CR. (PAGE NO. 52 AND 54). (V) LALIT POLYESTER PVT. LTD. LALIT POLYESTER PVT. LTD. IS AN INDEPENDENT COMPANY REGULARLY FILING ITS RETURN OF INCOME. THE INCOME FOR A.Y. 2010-11 WAS O F RS. 1.29 CR. (PAGE NO. 56) BALANCE SHEET SHOWS THAT IT HAD SHARE HOLDER FUND OF ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 12 RS. 12.50 CR. AND CURRENT LIABILITY OF RS. 147 CR. THE TURNOVER OF THE SAID COMPANY WAS OF RS. 154 CR. (PAGE NO. 58), AND ITS ASSET BLOCKS SHOWS INVESTMENT OF RS. 45 CR. AND ALSO IN ITS BALA NCE SHEET INVESTMENT WITH THE ASSESSEE COMPANY IS DISTINCTLY SHOWN (PAGE NO. 61). THE SAID COMPANY HAD ITS CURRENT ACCOUNT WITH THE COMPANY FROM WHICH SHARES OF RS. 1,30,00,000/-WERE SUBSCRIB ED (PAGE NO. 64 AND 65) AND THE LEDGER ACCOUNT IS ON PAGE NO. 66. T HE RESOLUTION OF THE COMPANY IS ON PAGE NO. 67 AND REPLY TO SUMMONS IS ON PAGE NO. 68. IT IS EXTREMELY IMPORTANT THAT FOR THE SAID FRO M COMPANY LALIT POLYESTER PVT. LTD. HON'BLE CIT(A) DELETED THE ADDIT ION MADE BY AO OF RS. 6,02,36,836/- HOLDING THAT UNJUSTIFIED ADDIT ION OF THIS AMOUNT IN NATURE OF UNEXPLAINED CREDITOR BY THE AO IS INCORRE CT. THUS CIT ACCEPTS THE CREDIBILITY OF LALIT POLYESTER PVT. LTD . OF RS. 6.02 CR. BUT DID NOT ACCEPT THE SHARE APPLICATION MONEY GIVEN BY JOURNAL ENTRY OF RS. 1.30 CR. (VI) CAT COSMATIC AND HEALTHCARE PVT. LTD. THIS COMPANY IS ALSO IN THE BUSINESS OF MANUFACTURI NG POLYESTER FILM ETC. AND THE TOTAL BALANCE SHEET VALUE IS OF RS. 65 CR. (PAGE NO. 70). THE TURNOVER WAS OF RS. 92 CR. AND THE INVESTMENT H AS BEEN SHOWN CLEARLY ON PAGE NO. 73. IT HAD THE RUNNING ACCOUNT WITH THE COMPANY FROM WHICH THE INVESTMENT WAS MADE (PAGE NO. 76). C OPY OF BOARD RESOLUTION IS ON PAGE NO. 77 AND REPLY TO SUMMONS I S ON PAGE NO. 78. THE LEDGER ACCOUNT IS ON PAGE NO. 76 AND COPY O F RETURN IS ON PAGE NO. 80. (VII) VALUKKO INFRASTRUCTURE PVT. LTD. THIS IS ALSO A COMPANY WHEREIN DIRECTORS ARE COMMON AND HAVING SUBSTANTIAL INTEREST. THE BALANCE SHEET OF THE COMP ANY SHOWS ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 13 ASSETS AND LIABILITIES OF RS. 16 CR. AND INCOME OF RS. 1 CR. (PAGE NO. 82). IT HAS CLEARLY SHOWN THE INVESTMENT IN AUDITED ACCOUNTS (PAGE NO. 84). THE SAID COMPANY HAD ITS RUNNING ACCOUNT W ITH THE APPELLANT COMPANY FROM WHICH SHARE APPLICATION OF R S. 4.22 CR. WERE TRANSFERRED (PAGE NO. 88). COPY OF RESOLUTION ON PAGE NO. 89 AND REPLY TO SUMMONS IS ON PAGE NO. 90. (VIII) DHUMIL VINOD SHETH DHUMIL VINOD SHETH IS A NEPHEW OF THE APPELLANT AND FROM HIS PURCHASE OF SHARE IS RAISE TO RS. 50,000/. HIS BALA NCE SHEET SHOWS TOTAL OF RS. 21 CR. (PAGENO. 93) AND COPY OF LEDGER ACCOUNT IS ON PAGE NO. 96 AND REPLY TO SUMMONS IS ON PAGE NO. 97. (IX) VISION AGENCIES PVT. LTD. THIS COMPANY IS ALSO CLOSELY RELATED WITH THE APPEL LANT COMPANY. IT S AUDITED ACCOUNTS ARE FROM PAGE NO. 98 TO 117. BALAN CE SHEET TOTAL IS OF RS. 44 CR. AND TURNOVER IS OF 99 CR. (PAGE NO. 1 08). LEDGER ACCOUNT IS ON PAGE 114 TO 117 FROM WHICH SHARE APPL ICATION MONEY WERE TRANSFERRED. THE CONFIRMATION IS ON PAGE NO. 1 19 TO 122 AND REPLY TO SUMMONS IS ON PAGE NO. 123. (X) SUJATABEN R. SHETH LASTLY SUJATABEN R. SHETH IS ALSO RELATIVE OF THE A PPELLANT. HER INCOME TAX DETAIL IS ON PAGE NO. 126. TOTAL AMOUNT OF BALANCE SHEET IS SHOWN AS RS. 4.46 CR. (PAGE NO. 127) AND COPY OF LEDGER ACCOUNT IS ON PAGE NO. 128 AND 129 AND REPLY TO SUMMONS IS ON PAGE NO. 130. ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 14 12. FROM THE ABOVE, IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE HAS EXPLAINED WITH NECESSARY EVIDENCES, THE AMOUNT OF S HARE CAPITAL RECEIVED FROM 14 PARTIES, IN ORDER TO PROVE THE IDE NTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES . WE, FURTHER NOTED THAT THE ASSESSEE HAS ALSO, FILED NECESSARY DETAILS BEFORE THE LD. AO TO PROVE THE PURPOSE OF ISSUE OF FRESH SHARES FOR T HE YEAR UNDER CONSIDERATION. WE, FURTHER NOTED THAT THE ASSESSEE HAS ALSO FILED NECESSARY EVIDENCES TO PROVE PRICE CHARGED FOR ISSU E OF SHARES TO THE SUBSCRIBERS, AND AS PER THE DETAILS FILED BY TH E ASSESEE, THE INTRINSIC VALUE OF SHARES AS ON THE DATE OF ISSUE O F SHARES IS AT RS.7,692/- PER SHARE, WHEREAS, THE SHARES HAS BEEN ISSUED AT A PREMIUM OF RS.40 PER SHARE, WHICH IS MUCH BELOW THE BOOK VALUE OF SHARES OF THE COMPANY. WE, FURTHER NOTED THAT THE A SSESEE HAS ALSO FILED COPY OF BOARD RESOLUTION PASSED BY THE BOARD OF DIRECTORS FOR ISSUE OF SHARE CAPITAL ALONG WITH FORM-2 FILED WITH REGISTRAR OF COMPANIES, WHICH CONTAINS THE NAME AND ADDRESS OF S UBSCRIBERS, THEIR PAN NUMBER. THE AUDITED FINANCIAL STATEMENTS OF SHAREHOLDERS CATEGORICALLY PROVE THAT EACH ONE OF THE SHAREHOLDE RS ARE HAVING SUFFICIENT SOURCE OF INCOME TO PROVE CAPACITY OF TH E CREDITORS. IT IS NOT A CASE OF THE LD. AO THAT THE SHARE CAPITAL HAS BEE N RECEIVED FROM CERTAIN MYSTERIOUS INDIVIDUALS OR CONCERNS. IN FACT , THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE SHARE CAPI TAL HAS BEEN RECEIVED FROM RELATIVES OF DIRECTORS OF ASSESEE COM PANY AND ASSOCIATED CONCERNS OF THE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT AMOUNT HAS BEEN ROUTED THROUGH PROPER BANKING CHANN ELS. IN FACT, THE ASSESSEE HAS FILED NECESSARY BANK STATEMENTS OF SUBSCRIBERS TO THE SHARE CAPITAL TO PROVE THAT MONEY HAS BEEN PAID THROUGH PROPER BANKING CHANNELS. UNDER THESE FACTS AND CIRCUMSTANC ES, IT IS DIFFICULT TO ACCEPT THE FINDINGS OF THE LD. AO THAT THE ASSES EE HAS FAILED TO ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 15 PROVE SHARE CAPITAL RECEIVED FROM 14 PARTIES BY F ILING NECESSARY EVIDENCES TO PROVE IDENTITY, GENUINENESS OF TRANSAC TIONS AND CREDITWORTHINESS OF THE PARTIES. 13. COMING BACK TO CASE LAWS RELIED UPON BY THE ASS ESSEE. THE LD. AR ASSESSEE HAS RELIED UPON VARIOUS CASE LAWS I N SUPPORT OF ITS ARGUMENTS. WE FIND THAT HONBLE DELHI HIGH COURT, I N THE CASE OF CIT VS GOODVIEW TRADING PVT.LTD.(SUPRA) HAD CONSIDERED AN IDENTICAL ISSUE AND HELD THAT ONCE, IT IS NOTICED THAT THE SU BSCRIBER TO SHARE CAPITAL POSSESSED SUBSTANTIAL MEANS TO INVESTMENT I N ASSESSEE COMPANY, NO ADDITION COULD BE MADE U/S 68 OF THE I. T.ACT, 1961. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS JAYDEE SECURITIES FINANCE LTD.(2013) 350 ITR 220 HELD THA T WHERE, THE ASSESSEE HAS PRODUCED RETURN OF INCOME, PAN AND CO NFIRMATION OF SHAREHOLDERS, SHARE APPLICATION MONEY WOULD BE TREA TED AS GENUINE. IN THE CASE OF CIT VS K.C.PIPES (P).LTD. 3 86 ITR 532, THE HONBLE PUNJAB & HARYANA HIGH COURT HELD THAT IF, S HAREHOLDERS HAD ACQUIRED MONEY ILLEGALLY, AND ASSESSEE COULD NOT BE HELD LIABLE. THE ITAT AHMEDABAD, IN THE CASE OF NAMISION POWERTECH ( P.) LTD. VS ACIT(SUPRA) HAD CONSIDERED AN IDENTICAL ISSUE AND H ELD THAT WHERE, LD. AO MADE ADDITIONS TO ASSESSEE COMPANY U/S 68 O F THE I.T.ACT, 1961, IN RESPECT OF SHARE APPLICATION MONEY RECEIVE D FROM DAUGHTER OF ONE OF DIRECTORS OF ASSESSEE COMPANY, SINCE BANK ACCOUNT OF SHARE APPLICANT SHOWED SUFFICIENT AMOUNT TO MAKE IN VESTMENTS AND MOREOVER AMOUNT HAD BEEN RECEIVED FROM HER BANK ACC OUNT, IMPUGNED ADDITIONS WAS TO BE SET ASIDE. THE HONBLE SUPREME COURT, IN THE CASE OF CIT VS LOVELY EXPORTS PVT.LTD . (216) CTR 195 HAD HELD THAT IF, THE SHARE APPLICATION MONEY RECEI VED BY THE ASSESEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WH OSE NAMES ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 16 ARE GIVEN TO THE LD. AO, THEN THE DEPARTMENT IS FRE E TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT SUMS RECIVED BY THE ASSESSEE CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THE HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS GOA SPONGE AND POWER LTD, HA S CONSIDERED AN IDENTICAL ISSUE AND BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS LOVELY EXPORTS PVT.LTD . (SUPRA) HAD HELD THAT ONCE, THE AUTHORITIES HAVE GOT ALL THE DETAIL S, INCLUDING THE NAME AND ADDRESS OF THE SHAREHOLDERS, THEIR PAN NUMBER, SO ALSO THE NAME OF THE BANK FROM WHICH THE ALLEGED INVESTORS R ECEIVED MONEY, AS SHARE APPLICATION MONEY, THEN IT CANNOT BE TERME D AS BOGUS. HONBLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS GA GANDEEP INFRASTRUCTURE LTD. 394 ITR 680 HELD THAT PROVISO I NSERTED TO SECTION 68 OF THE I.T.ACT, 1961 W.E.F. 01/04/2013 IS CONSID ERED TO BE PERSPECTIVE IN NATURE AND APPLICABLE FROM ASST. YEA R 2013-14 ONWARDS AND CONSEQUENTLY, NO ADDITIONS COULD BE MAD E TOWARDS SHARE PREMIUM U/S 68 OF THE I.T.ACT, 1961, FOR NOT PROVING THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES PRIOR TO ASST. YEAR 2013-14. THE SUM AND SU BSTANCE OF RATIOS LAID DOWN BY VARIOUS HIGH COURTS AND THE HONBLE SU PREME COURT IS THAT ONCE, THE INITIAL BURDEN WAS DISCHARGED BY THE ASSESSEE BY THE FILING NECESSARY EVIDENCES TO PROVE THE IDENTITY OF THE CREDITORS, THEN THE DEPARTMENT IS FREE TO GO BEHIND THE CREDITORS A ND REOPEN THEIR ASSESSMENT TO DEAL WITH THE ISSUE IN ACCORDANCE WIT H LAW, BUT SUM SO FOUND CREDITED CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE I.T.ACT, 1961. 14. COMING BACK TO THE CASE LAWS RELIED UPON BY THE LD. AO. THE LD.AO HAS RELIED UPON DECISION OF HONBLE BOMBAY HI GH COURT, IN ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 17 THE CASE OF MAJOR METALS VS UNION OF INDIA (SUPRA). WE FIND THAT THE HONBLE HIGH COURT HAS GIVEN ITS FINDINGS ON THE BA SIS OF FINDINGS RECORDED BY THE SETTLEMENT COMMISSION IN ITS ORDER THAT IN ORDER TO SCRUTINIZE, THE GENUINENESS OF TRANSACTIONS, IT HAD DIRECTED THE PETITIONER TO PRODUCE RELEVANT RECORDS SUCH AS MINU TES BOOKS, ATTENDANCE REGISTERS OF AGMS, DISPATCH REGISTERS, S HARE CERTIFICATES AND AUTHORIZATION OF PROXY FORMS AMONGST OTHER DOCU MENTARY MATERIAL. THE ORDER OF THE SETTLEMENT COMMISSION IN DICATES AT LEAST FOURTEEN REASONS ON THE BASIS OF WHICH, THE COMMISS ION FORMED ITS VIEW IN REGARD TO THE GENUINENESS OF THE TRANSACTIO NS. THE ASSESSEE HAS ALSO FAILED TO JUSTIFY ISSUE OF SHARES AT A HUG E PREMIUM OF RS. 990 PER SHARE ON A FACE VALUE OF RS. 10/-, IN LIGHT OF ITS FINANCIAL STATEMENTS. UNDER THOSE FACTS, THE HONBLE HIGH COU RT CAME TO THE CONCLUSION THAT ALLEGED SHARE CAPITAL/SHARE APPLICA TION MONEY RECEIVED FROM CERTAIN PARTIES IS NON GENUINE TRANSA CTIONS. INSOFAR AS, THE CASE LAWS RELIED UPON BY THE LD. DR, IN THE CAS E OF PCIT VS NRA IRON & STEEL PVT.LTD, WE FIND THAT THE HONBLE SUPR EME COURT HAS RECORDED CATEGORICALLY FINDINGS, IN LIGHT OF FACTS BROUGHT OUT BY THE LD. AO THAT NONE OF THE SHAREHOLDERS HAVE SUFFICIENT SO URCE OF INCOME TO ESTABLISH CAPACITY, AS REQUIRED TO BE PROVED U/S 68 OF THE I.T.ACT, 1961. FURTHER, IN MOST OF THE CASES, THE ASSESEE HA S NOT FILED BANK STATEMENT OF THE SUBSCRIBERS. FURTHER, SEVERAL INVE STORS COMPANIES WERE FOUND TO BE NON- EXISTENCE, WHEN THE FIELD ENQ UIRIES CONDUCTED BY THE LD. AO. UNDER THOSE FACTS, THE HONBLE SUPRE ME COURT CAME TO THE CONCLUSION THAT MERE FURNISHING CERTAIN EVID ENCES, IN RESPONSE TO 133(6) NOTICES IS NOT SUFFICIENT ENOUGH AND WHAT IS TO BE SEEN IS WHETHER, THE ASSESEE HAS DISCHARGED ITS ONUS CAST U PON U/S 68 OF THE I.T.ACT, 1961OR NOT. IN THIS CASE, ON PERUSAL O F FACTS , IT IS ABUNDANTLY CLEAR THAT THE SUBSCRIBER TO THE SHARE C APITAL ARE CLOSELY ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 18 RELATED TO THE ASSESEE COMPANY AND THE ASSESSEE HAS FILED ALL POSSIBLE EVIDENCES TO PROVE IDENTITY, GENUINENESS O F TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CASE LAWS RELIED UPON BY T HE LD. DR IS NOT APPLICABLE TO THE FACTS OF PRESENT CASE. 15. IN THIS VIEW OF THE MATTER AND CONSIDERING FACT S AND CIRCUMSTANCES OF THIS CASE AND ALSO, BY FOLLOWING T HE RATIOS OF CASE LAWS DISCUSSED HEREINABOVE, WE ARE OF THE CONSIDERE D VIEW THAT THE ASSESEE HAS DISCHARGED ITS ONUS BY FILING ENORMOUS DOCUMENTS, IN ORDER TO PROVE THE IDENTITY, GENUINENESS OF TRANSAC TIONS AND CREDITWORTHINESS OF THE PARTIES. THEREFORE, THE LD. AO, AS WELL AS THE LD.CIT(A) WERE ERRED IN CONFIRMED ADDITIONS MADE TO WARDS SHARE CAPITAL U/S 68 OF THE I.T.ACT, 1961. HENCE, WE DIRE CT THE LD. AO TO DELETE ADDITIONS MADE TOWARDS SHARE CAPITAL U/S 68 OF THE I.T.ACT, 1961. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20/05/2 020 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 20/05/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. ITA NO.82/MUM/2017 RIDDHI PETROCHEM PVT.LTD. 19 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//