DCIT CENTRAL CIRCLE-8(4), MUMBAI V. M/S.BELL FABRICS PRIVATE LIMITED, MUMBAI

ITA 906/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3528 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Fair market value; Accommodation entries; Onus to prove; Reassessment proceedings
• Section: 56(2); 133A; 133(6); 195; 143(2); 13; 147; 131; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.906/M/2018 ASSESSMENT YEAR: 2009-10 DCIT, CENTRAL CIRCLE-8(4), 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. BELL FABRICS PVT. LTD., 5 TH FLOOR, SUNTECK CENTRE, 37-40 SUBHASH ROAD, VILE PARLE (EAST), MUMBAI 400 057 PAN: AADCB7224P (APPELLANT) (RE SPONDENT) CO NO.75/M/2019 (ARISING OUT OF ITA NO.906/M/2018) ASSESSMENT YEAR: 2009-10 M/S. BELL FABRICS PVT. LTD., 5 TH FLOOR, SUNTECK CENTRE, 37-40 SUBHASH ROAD, VILE PARLE (EAST), MUMBAI 400 057 PAN: AADCB7224P VS. DCIT, CENTRAL CIRCLE- 8(4), 6 TH FLOOR, ROOM NO.658, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : MS. KAVITA P. KAUSHIK, D.R. DATE OF HEARING : 09.04.2021 DATE OF PRONOUNCEMENT : 25.05.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL BY THE REVENUE AND CROSS OBJECTI ON BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORDER DATED ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 2 22.12.2017 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) (HEREINAFTER REFERRED TO AS THE CIT(A) RELEVANT TO ASSESSMENT YEAR 2009.10. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS. 8,33,00,000/- BY LD. CIT(A) AS M ADE BY THE AO ON THE BASIS OF STATEMENT OF SHRI KAMAL KHETAN AND SHRI VIKASH SANKHLECH BY CONSIDERING THE SAME AS CREDIBLE AND A DMISSIBLE EVIDENCE. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY AND FOUR OTHER COMPANIES NAMELY M/S PALI FABRICS PVT LTD., M /S ACRO EXPORTS TRADE PVT LTD., M/S AMAZON METAL PVT LTD. & M/S GANDHAR YARN PVT LTD. WERE CONTROLLED BY M/S. AKSH UNYA ENERGY PVT LTD. WHICH WAS A HOLDING COMPANY. THESE COMPANIES WERE ACQUIRED BY SHRI KAMAL KHETAN IN FINANCIAL YE AR 2011-12 THROUGH A HOLDING COMPANY NAMELY M/S AKSHUNYA ENERG Y PVT. LTD. THE ASSESSEE FILED RETURN OF INCOME ON 30.07.2 009 DECLARING A LOSS OF RS. 24,849/-. THE CASE OF THE ASSESSEE WA S CENTRALIZED WITH DCIT, CENTRAL CIRCLE-8(4), MUMBAI AFTER A SURV EY WAS CONDUCTED UNDER SECTION 133A OF THE ACT ON SUNTECK GROUP AS THE ASSESSEE WAS A SUNTECK GROUP COMPANY. IN THE SA ID SURVEY, IT CAME TO LIGHT THAT ASSESSEE COMPANY HAS RECEIVED HUGE PREMIUM OF RS. 8,33,00,000/- DURING FINANCIAL YEAR 2008-09. THE AO ON THE BASIS OF PERUSAL OF BALANCE SHEET AS ON 31.03.2009 NOTICED THAT DURING THE YEAR UNDER CONSI DERATION THE ASSESSEE HAS SHOWN ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL OF RS. 18 LAKHS. DURING THE YEAR THE ASSES SEE HAS ISSUED 1,80,000 EQUITY SHARES OF FACE VALUE RS. 10/ - EACH AT A ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 3 PREMIUM OF RS. 462/- PER SHARE. THE AO OBSERVED THA T THE SAID COMPANY DOES NOT HAVE ANY RESERVE OR SURPLUSES EXCE PT THE SHARE APPLICATION MONEY & SHARE PREMIUM RECEIPTS NO R ANY DEBTORS/CREDITORS IN THE COMPANY AS NO BUSINESS ACT IVITIES WERE CARRIED ON DURING THE YEAR UNDER CONSIDERATION. SIM ILARLY, THE ASSESSEE WAS NOT HAVING ANY FIXED ASSETS. THE ASSES SEE HAS ONLY SHOWN AN INVESTMENT OF RS. 8,49,30,000/- IN THE YEA R UNDER CONSIDERATION WHICH WAS MADE OUT OF SHARE PREMIUM R ECEIVED BY THE ASSESSEE. BASED UPON THIS INFORMATION, THE CASE OF THE ASSESSEE WAS REOPENED UNDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 28.03.2016. THE ASSESSEE COMPLIED WITH THE NOTICE VIDE LETTER DATED 28.07.20 16 REQUESTING THE AO TO TREAT THE RETURN FILED UNDER SECTION 139 (1) OF THE ACT IN COMPLIANCE TO NOTICE ISSUED UNDER SECTION 148 OF THE ACT. THEREAFTER, THE NOTICE UNDER SECTION 143(2) AND 142 (1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE OBJECTIONS FILED BY THE ASSESSEE TO REOPENING PROCEEDINGS WERE DULLY DISPOS ED OFF BY THE AO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO ASKED THE ASSESSEE TO FURNISH THE NAMES, ADDRESSES AND PA N NUMBERS OF THOSE PERSONS FROM WHOM THE SHARE PREMIUM AND SH ARE APPLICATION MONEY WERE RECEIVED. BESIDES, THE ASSES SEE WAS ASKED TO FURNISH THE SHARE ALLOTMENT CERTIFICATES, CONFIRMATIONS FROM THE INVESTORS AND DETAILS OF BANKING TRANSACT IONS ETC. ACCORDING TO THE AO, THE FINANCIAL POSITION OF THE ASSESSEE IS SUCH WHICH DOES NOT JUSTIFY THE ISSUANCE OF SHARE A T SUCH HIGH PREMIUM. THE AO ALSO ISSUED NOTICES UNDER SECTION 1 33(6) OF THE ACT TO BANK OF RAJASTHAN ( NOW ICICI BANK LTD.) FOR DETAILS OF TRANSACTIONS MADE DURING THE FINANCIAL YEAR 2008-09 . SIMILAR ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 4 NOTICES WERE SENT TO THE INVESTORS WHO HAVE INVESTE D IN THE ASSESSEE COMPANY. HOWEVER, MOST OF THE NOTICES WERE RETURNED WITH THE REMARKS NON KNOWN. THE AO ALSO DEPUTED T HE INSPECTOR TO VERIFY THE ADDRESS OF THE BANK AS WAS GIVEN BY THE ASSESSEE BUT FOUND THAT NO BANK IS BEING OPERATED F ROM THE SAID PREMISES. THE AO FOUND FROM THE INTERNET THAT BANK OF RAJASTHAN HAS BEEN DISSOLVED AND NOT TAKEN OVER BY ICICI BANK LTD. ACCORDINGLY, A LETTER WAS ISSUED TO PR. OFFICE R OF ICICI BANK LTD. CALLING FOR INFORMATION UNDER SECTION 133(6) OF THE ACT TO PROVIDE INFORMATION FROM 01.04.2008 TO 31.03.2009. THE BANK REPLIED THE SAID NOTICE WHICH IS REPRODUCED IN THE ASSESSMENT ORDER. AS IS CLEAR FROM THE REPLY OF THE ICICI BANK LTD. THAT THE BANK HAS SHOWN ITS INABILITY TO PROVIDE THE BANK ST ATEMENT FOR THE PERIOD AS MENTIONED IN NOTICE UNDER SECTION 133 (6) OF THE ACT. AGAIN THE ASSESSEE WAS GIVEN A SHOW CAUSE NOTI CE TO PRODUCE THE COMPLETE BANK ACCOUNT DETAILS PERTAININ G TO SUCH PERIOD. THEREAFTER, THE KAMAL KHETAN WAS SUMMONED B Y THE AO AND A STATEMENT WAS RECORDED U/S 133A OF THE ACT T HE RELEVANT EXTRACT WHEREOF IS REPRODUCED IN THE ASSESSMENT ORD ER. THE ASSESSEE WAS ALSO NOT PROVIDED CROSS EXAMINATION AS IS NOTED BY THE AO IN PARA NO. 12 OF THE ASSESSMENT ORDER. WE F IND THAT NOWHERE IN THE STATEMENT OF SHRI KAMAL KHETAN, THE NAME OF THE ASSESSEE WAS EVER TAKEN. SIMILARLY, THE STATEMENT WAS ALSO RECORDED OF SHRI VIKASH SANKHLECH WHO CONFIRMED TH E MODUS OPERANDI OF THE GROUP. FINALLY, THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE HAS TAKEN ALL THE ACCOMMODATION E NTRIES AND ISSUED SHARE AT A PREMIUM WITHOUT ANY JUSTIFICATION . THE AO ALSO OBSERVED THAT ASSESSEE HAS NOT DISCHARGED THE ONUS AND ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 5 FINALLY ADDED THE AMOUNT OF SHARE PREMIUM OF RS. 83 300000/- TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF T HE ACT AS UNEXPLAINED CASH CREDIT ON THE GROUND THAT ASSESSEE HAS FAILED TO ESTABLISH THE INGREDIENTS AS ENVISAGED OF THE SA ID SECTION. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) AFT ER CONSIDERING THE CONTENTIONS AS MADE BY THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO DELET E THE ADDITION. THE LD CIT(A) NOTED IN PARA 12.12 IN THE APPELLATE ORDER THAT IN RESPONSE TO QUESTION NO. 11 OF THE STATEMENT DATED 08.11.2016 SHRI KAMAL KHETAN STATED THAT HE WAS UNAWARE AS TO THE BASIS ON WHICH SHRI VIKASH SANKHLECHA STATED THAT THESE 5 COMPANIES WERE CELL COMPANIES. HE HAS ALSO ASKED FOR CROSS EX AMINATION OF SHRI VIKASH SANKHLECHA FOR CHECKING THE VERACITY OF THE OF HIS STATEMENT. THE LD. CIT(A) NOTED THAT THE ASSESSEE W AS NOT PROVIDED CROSS EXAMINATION OF SHRI VIKASH SANKHLECH BY THE REVENUE AND THEREBY VIOLATION OF PRINCIPLES OF NATU RAL JUSTICE HAVE HAPPENED AS A STATEMENT OF SHRI VIKASH SANKHLEC HA WAS RELIED ON WITHOUT GIVING OPPORTUNITY OF CROSS EXAMI NATION. THE LD. CIT(A) OBSERVED THAT IN THE CASE OF ANDAMAN TIM BER INDUSTRIES LTD. VS CCE KOLKATA II IN ITA NO. 4228 OF 2006 VIDE ORDER DATED 02.09.2015 , THE HONBLE APEX COURT H ELD THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSE S BY THE ADJUDICATING AUTHORITY, THOUGH THE STATEMENTS OF TH OSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW, WHICH MAKES THE ORDER NULLITY IN AS M UCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE, BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. LD CIT(A ) AFTER ANALYZING THE STATEMENT OF VARIOUS PARTIES AND OTHE R FACTS OF THE ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 6 CASE, DELETED THE SAID ADDITION U/S 68 OF THE ACT BY OBSERVING AND HOLDING AS UNDER: - 12.16 A PERUSAL OF THE VARIOUS STATEMENTS OF SHRI KAMAL KHETAN, REVEALS THAT HE HAS CATEGORICALLY DENIED ANY KNOWLEDGE ABOUT THE TRANSA CTION OF INVESTMENTS AND SHARE CAPITAL IN THE ABOVE MENTIONED FIVE COMPANIES, WHIC H WERE TAKEN OVER THROUGH THE HOLDING COMPANY NAMELY M/SAKSHUNYA ENERGY PRIVATE L IMITED. SHRI KHETAN IN HIS STATEMENTS HAS ADMITTED THAT M/S ESKAY INFRASTRUCTU RE PVT. LTD. HAD INVESTED A SUM OF RS.L CRORE IN M/SAKSHUNYA ENERGY PRIVATE LIMITED. M OREOVER, IN THE STATEMENT HE ALSO CONFIRMS THAT AS THESE COMPANIES WERE TAKEN OVER IN THE F.Y. 2011-12 RELEVANT TO AN. 201213, HE DOES NOT KNOW, AS TO WHAT HAS HAPPENED I N F.Y. 2008-09 RELEVANT TO 2009- 10, WHEN HE WAS NOT EVEN THE SHAREHOLDER OF THESE C OMPANIES. 12.17 A PERUSAL OF THE VARIOUS STATEMENTS AND MATER IAL ON RECORD, CLEARLY REVEALS THE FACT THAT ALL THESE 5 COMPANIES WERE TAKEN OVER THR OUGH M/SAKSHUNYA ENERGY PRIVATE LIMITED BY SHRI KAMAL KHETAN OF SUNTECK GROUP IN TH E A.Y. 2012-13. ON THE CONTRARY, THE ENTIRE ADDITION U/S 68 OF THE ACT FOR THE SHARE PREMIUM HAS BEEN MADE BY THE A.O. IN A.Y. 2009-10 BASED ON THE ABOVE NARRATED ST ATEMENTS OF SHRI KAMAL KHETAN & SHRI VIKAS SANKHLECHA, WHICH ARE WITH REFERENCE TO SUBSEQUENT EVENTS FALLING IN A.Y. 2012-13. 12.18 IT IS PERTINENT TO NOTE THAT IN RELATION TO T HE CURRENT AN. 2009-10, SHRI KAMAL KHETAN WAS IN NO WAY CONNECTED WITH ANY OF THE 5 CO MPANIES VIZ. M/SPALI FABRICS PVT. LTD., M/S ACRO EXPORTS TRADE PVT. LTD., M/S AMAZON METAL PVT. LTD., M/S BELL FABRICS PVT. LTD.& M/S GANDHAR YARN PVT. LTD. IT IS ALSO A FACT THAT IN THE A.Y. 2009-10, SHRI KAMAL KHETAN WAS NOT CONNECTED / RELATED EVEN WITH THE HOLDING COMPANY NAMELY, M/SAKSHUNYA ENERGY PRIVATE LIMITED. SHRI KAMAL KHET AN WAS NEITHER A SHAREHOLDER NOR A DIRECTOR IN THE 5 COMPANIES OR IT'S HOLDING C OMPANY IN THE AN. 2009-10. IT WAS ONLY IN AN. 2012-13 THAT SHRI KAMAL KHETAN OF SUNTE CK GROUP HAS TAKEN OVER M/S AKSHUNYA ENERGY PRIVATE LIMITED THROUGH M/S ESKAY I NFRASTRUCTURE PRIVATE LIMITED (A CONCERN OF SUNTECK GROUP). 12.19 IN VIEW OF THESE CIRCUMSTANCES, IT IS FACTUAL LY INCORRECT TO ADVERSELY INTERPRET THE STATEMENTS OF SHRI KAMAL KHETAN & SHRI VIKAS SANKLE CHA, WHICH ARE NOT RELEVANT FOR THE CURRENT ASSESSMENT YEAR I.E. AY. 2009-10. IT IS PER TINENT TO NOTE THAT NEITHER SHRI KAMAL KHETAN NOR SHRI VIKAS SANKLECHA, HAD ANY LOCUS-STAN DI IN AN. 2009-10, IN RELATION TO THE IMPUGNED 3 COMPANIES. IN FACT, IN ALL THE STATEMENT S RECORDED OF SHRI KAMAL KHETAN & SHRI VIKAS SANKLECHA ARE REFERRING TO EVENTS, WHICH HAVE HAPPENED AFTER THE CURRENT ASSESSMENT YEAR UNDER CONSIDERATION. 12.20 THE ABOVE OBSERVATIONS ARE FURTHER REINFORCED FROM THE FACT THAT SHRI KAMAL KHETAN HAS NOT MADE ANY DISCLOSURE FOR THE A.Y. 200 9-10, THE CURRENT ASSESSMENT YEAR, UNDER CONSIDERATION. AT THE COST OF REPETITION, IT IS STATED THAT SHRI KAMAL KHETAN HAS MADE A DISCLOSURE OF RS- 47.6 CRORE RELEVANT TO AN. 2010-11, AN. 2012-13 & AN. 2013- 14. 12.21 FURTHER, THE A.O. HAS WITHOUT BRINGING ON REC ORD ANY MATERIAL EVIDENCE HELD THAT THE IMPUGNED 5 COMPANIES INCLUDING THE APPELLANT AR E SHELL COMPANIES. DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELLANT HAS FILED THE DETAILS OF THESE COMPANIES DOWNLOADED FROM THE SITE OF MINISTRY OF C ORPORATE AFFAIRS SHOWING THAT IN THE CASE OF ALL THE IMPUGNED 5 COMPANIES, ACCOUNTS HAVE BEEN FILED TILL 31.032017, FURTHER, THE STATUS OF ALL THE COMPANIES IN THE ROC DATA HAS BEEN SHOWN AS 'ACTIVE'. ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 7 ON THE BASIS OF THE INFORMATION SUPPLIED BY THE APP ELLANT, WHICH IS IN PUBLIC DOMAIN, I HAVE NOTED THAT ALL THE 5 COMPANIES ARE STILL ACTIV E COMPANIES AND ARE FILING THEIR RETURNS WITH ROC ON REGULAR BASIS.DURING THE COURSE OF THE APPELLATE PROCEEDINGS, IT WAS ALSO ARGUED THAT NONE OF THESE COMPANIES ARE SH ELL COMPANIES, AS THEIR NAMES DON'T FIND MENTION IN THE LIST OF SUCH COMPANIES MA INTAINED BY SEBI, IT OR ANY OTHER REGULATORY AUTHORITY. 12.22 THE APPELLANT HAS FURTHER SUBMITTED THAT DURI NG THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD ASKED THE AP PELLANT COMPANY TO FURNISH NAME, ADDRESS, PAN OF THE PERSONS FROM WHOM THE SHARE APP LICATION AND PREMIUM WAS RECEIVED, SHARE ALLOTMENT CERTIFICATES, CONFIRMATION FROM THE PARTIES TO WHOM SHARE WERE ALLOTTED AND BANK STATEMENT ETC. IN ORDER TO VERIFY THE IDENTITY, GEN UINENESS AND CREDITWORTHINESS OF THE INVESTOR. 12.23 1 HAVE NOTED THAT DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS, THE APPELLANT HAS FILED VARIOUS DETAILS SUCH AS SHARE A PPLICATION FORM, COPY OF DECLARATION, BOARD RESOLUTION, BANK STATEMENT OF INVESTOR COMPAN Y, PAN CARD, ACKNOWLEDGEMENT OF RETURN OF INCOME, FINANCIAL STATEMENT OF INVESTO R COMPANY, FORM NO 2 FOR ALLOTMENT, BANK STATEMENT REFLECTING THE AMOUNT REC EIVED THROUGH BANKING CHANNEL, ETC IN ORDER TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR. SUCH DETAILS WERE ALSO FILED BEFORE THE UNDERSIGNED , DURING THE COURSE OF THE APPELLATE PROCEEDINGS. IT IS A FACT THAT THE A.O. HAS NOT RAI SED ANY DOUBT ON ANY OF THE VOLUMINOUS DOCUMENTARY EVIDENCE PLACED ON RECORD, B Y THE APPELLANT. NO FURTHER VERIFICATION OR ENQUIRIES WERE DONE BY THE A.O. ON THE DOCUMENTATION OF SHAREHOLDERS / INVESTORS PROVIDED BY THE APPELLANT. THUS, THE AP PELLANT COMPANY HAS DULY DISCHARGED THE ONUS FOR PROVING THE IDENTITY, GENUI NENESS AND CREDITWORTHINESS OF THE VARIOUS INVESTORS. 12.24 AS REGARDS THE VALUATION OF THE SHARES OF THE APPELLANT COMPANY IS CONCERNED, IT HAS BEEN SUBMITTED THAT VALUATION IS A CONSIDERATIO N FOR THE INVESTOR AND NOT FOR THE REVENUE, ESPECIALLY IN THE LIGHT OF THE FACT THAT T HE PROVISIONS OF SECTION 36(2)(VIIB) WERE INTRODUCED IN THE STATUE W.E.F. 01.042013 AND HAVE NOT BEEN GIVEN RETROSPECTIVE EFFECT. THUS, AS PER THE APPELLANT, THE PROVISIONS OF SECTION 56(2)(VIIB) ARE APPLICABLE FROM THE AN. 2013-14 AND ONWARDS. ACCORDINGLY, IT H AS BEEN SUBMITTED THAT THE A.O. OUGHT TO HAVE CONSIDERED THE LAW AS IT WAS IN FORCE DURING A.Y2009-10. IT HAS ALSO BEEN EMPHASIZED, DURING THE APPELLATE PROCEEDINGS THAT E VEN THE FIRST PROVISO APPENDED TO SECTION 68 OF THE ACT, WHICH REQUIRES THE INVESTOR ALSO, TO SATISFACTORY EXPLAIN THE NATURE AND SOURCE OF THE CREDITS WAS INSERTED W.E.F . 01.042013 I.E. FROM AN. 2013-14 AND HENCE THE SAME IS NOT APPLICABLE FOR THE PRESEN T ASSESSMENT YEAR, VIZ. AN. 2009- 10. 12.25 AS REGARDS THE NOTICES ISSUED UNDER SECTION 1 33(6) OF THE ACT ARE CONCERNED, THE APPELLANT COMPANY HAS STATED THAT DUE TO TIME LAG C ERTAIN PERSON'S MIGHT HAVE LEFT THE PLACE AND FOR THIS NO RESPONSIBILITY CAN BE FASTENE D ON THE APPELLANT. IT HAS BEEN STATED THAT THE APPELLANT HAS FURNISHED THE FOLLOWING DETA ILS TO THE A.O., REGARDING THE RECEIPT OF SHARE PREMIUM:- 1. SHARE APPLICATION FORM 2. COPY OF DECLARATION 3. BOARD RESOLUTION 4. BANK STATEMENT OF INVESTOR COMPANY 5. PAN CARD 6. ACKNOWLEDGEMENT OF RETURN OF INCOME ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 8 7. FINANCIAL STATEMENT OF INVESTOR COMPANY 8. FORM NO 2 FOR ALLOTMENT 9. BANK STATEMENT REFLECTING THE AMOUNT RECEIVED TH ROUGH BANKING CHANNEL 12.26 THE APPELLANT COMPANY HAS CONTENDED THAT BY F URNISHING THE ABOVE MENTIONED DETAILS REGARDING THE INVESTORS, THE APPELLANT HAS DULY DISCHARGED THE INITIAL ONUS CAST ON IT. AFTER THIS STAGE, THE ONUS SHIFTS ON THE A.O . TO SHOW AS TO HOW THE EXPLANATION FURNISHED BY APPELLANT IS NOT SATISFACTORY IN HIS O PINION. IN THIS REGARD, THE APPELLANT HAS ALSO RELIED ON THE JUDGMENT OF JURISDICTIONAL H IGH COURT OF BOMBAY IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD, 394 ITR 680, THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER :- 'PROVISO TO SECTION 68 INTRODUCED BY FINANCE ACT 20 12 WITH EFFECT FROM 1-4-2013, WOULD NOT HAVE RETROSPECTIVE EFFECT. WHERE ASSESSEE -COMPANY HAD ESTABLISHED IDENTITY, GENUINENESS AND CAPACITY OF SHAREHOLDERS WHO HAD SUBSCRIBED TO ITS SHARES, ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING AMOUN T OF SHARE CAPITAL SUBSCRIPTION AS UNEXPLAINED CREDIT. WHERE REVENUE URGED THAT ASSESS EE HAD RECEIVED SHARE APPLICATION MONEY FROM BOGUS SHAREHOLDERS, IT WAS FOR INCOME-TA X OFFICERS TO PROCEED BY REOPENING ASSESSMENT OF SUCH SHAREHOLDERS AND ASSES SING THEM TO TAX IN ACCORDANCE WITH LAW AND IT DID NOT ENTITLE REVENUE TO ADD SAME TO ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. ' 12.27 THE APPELLANT COMPANY HAS ALSO RELIED UPON THE DECI SION OF APEX COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. , 216 CTR 195, WHEREIN IT WAS HELD AS UNDER:- 'THE ASSESSEE HAD RECEIVED CERTAIN AMOUNTS FROM VAR IOUS PERSONS AS SHARE APPLICATION MONEY. NO ADDITION ON ACCOUNT UNEXPLAIN ED CASH CREDITS COULD BE MADE TO ITS INCOME IN THE ABSENCE OF ANY EVIDENCE TO SUG GEST THAT THE SUBSCRIBERS WERE BENAMIDARS OR ANY PART OF THE SHARE CAPITAL REPRESE NTED THE ASSESSEE'S OWN INCOME FROM UNDISCLOSED SOURCES, AS THE ASSESSEE HAD FURNI SHED RELEVANT DETAILS OF THE SUBSCRIBERS AND THE SHARES WERE ALLOTTED AS PER THE RULES OF STOCK EXCHANGE. ' 12.28 APART FROM THE ABOVE TWO DECISIONS, THE APPEL LANT COMPANY HAS ALSO RELIED ON MANY OTHER DECISIONS IN SUPPORT OF ITS CONTENTION T HAT NO SUCH ADDITION COULD HAVE BEEN MADE BY THE ASSESSING OFFICER IN THE LIGHT OF THE FACT THAT STATUE WAS AMENDED WITH THE PROVISO APPENDED TO SECTION 68 W.E.F. A.Y. 2013-14 AND IT WAS NOT A RETROSPECTIVE AMENDMENT. 12.29 ANOTHER OBJECTION OF THE A.O. CONTAINED IN TH E ASSESSMENT ORDER IS THAT THE BANK OF THE APPELLANT COMPANY HAS FAILED TO PROVIDE THE BANK STATEMENT OF THE APPELLANT COMPANY, WHICH WAS REQUISITIONED UNDER SE CTION 133(6) OF THE ACT. AS FAR AS THE ISSUE OF BANK STATEMENT IS CONCERNED, THE APPEL LANT COMPANY HAS SUPPLIED THE SAME TO THE A.O., DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, ITSELF. 12.30 IN FACT, THE A.O. HAS MADE OBSERVATIONS IN TH E ASSESSMENT ORDER BASED ON THE BANK STATEMENTS PROVIDED BY THE APPELLANT COMPANY. HENCE, NO ADVERSE INFERENCE CAN BE DRAWN BY THE A.O. ON THIS ISSUE. THE A.O. HAS ER RED IN RELYING ON THE STATEMENTS OF SHRI KAMAL KHETAN & SHRI VIKAS SANKLECHA FOR MAKING ADDITION ON ACCOUNT OF SHARE PREMIUM U/S 68 OF THE ACT, FOR THE CURRENT YEAR UND ER CONSIDERATION. THE A.O. HAS FAILED TO APPRECIATE THAT THE STATEMENTS OF SHRI KA MAL KHETAN& SHRI VIKAS SANKLECHA RELATE TO EVENTS, WHICH HAVE HAPPENED SUBSEQUENT TO THE CURRENT ASSESSMENT YEAR UNDER CONSIDERATION. THE A.O. HAS ALSO IGNORED THE FACT THAT SHRI KAMAL KHETAN HAS NOT MADE ANY DISCLOSURE OF INCOME FOR THE CURRENT ASSES SMENT YEAR UNDER CONSIDERATION, ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 9 IN ANY OF HIS STATEMENTS RECORDED BY THE DEPARTMENT . IN HIS STATEMENTS RECORDED BY THE DEPARTMENT, SHRI KAMAL KHETAN HAS STATED THAT H E IS UNAWARE ABOUT THE INTRODUCTION OF THE SHARE PREMIUM, AS IT WAS HANDLE D BY THE OLD MANAGEMENT. EVEN THE STATEMENT RECORDED OF SHRI VIKAS SANKLECHA REFE RS TO EVENTS, WHICH HAVE HAPPENED IN THE SUBSEQUENT ASSESSMENT YEARS. THUS, THE RELIANCE OF THE A.O. ON THE STATEMENTS OF SHRI KAMAL KHETAN & SHRI VIKAS SANKLE CHA FOR MAKING THE ADDITION IN THE CURRENT YEAR UNDER CONSIDERATION, IS MISPLACED AND CONTRARY TO MATERIAL FACTS ON RECORD. 12.31 IN FACT, FOR MAKING A CASE OF ADDITION U/S 68 OF THE ACT FOR THE CURRENT YEAR UNDER CONSIDERATION, THE A.O. SHOULD HAVE EXAMINED & REBU TTED THE VOLUMINOUS DETAILS OF SHAREHOLDERS FURNISHED BY THE APPELLANT COMPANY, DU RING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE A.O. HAS NOT PLACED ANY ADVERSE MATERIAL ON RECORD IN RELATION TO THE ACTUAL SHAREHOLDERS, WHO HAVE PAID THE SHARE PREMIUM TO THE APPELLANT COMPANY AND INSTEAD ERRONEOUSLY RELIED ON A SUBSEQU ENT CHANGE IN SHAREHOLDING IN A.Y. 2012-13, OF A HOLDING COMPANY, NAMELY M/S AKSH UNYA ENERGY PRIVATE LIMITED. 12.32 1 HAVE ALSO TAKEN NOTE OF THE FACT THAT ON SI MILAR FACTS AND CIRCUMSTANCES, MY LD. PREDECESSOR CIT(A)-30, MUMBAI HAS IN A CONNECTE D CASE OF M/S PRIME DEVELOPERS FOR AN. 2012-13 IN APPEAL NO. CIT(A) 50/1T186/2015- 16, VIDE ORDER DATED 24.02.2017 DELETED THE ADDITION MADE ON THE BASIS OF STATEMENT OF SHRI PARAS PORWAL & SHRI VIKAS SANKLECHA. IN THE PRESENT APPEAL AT HAND, INSTEAD O F SHRI PARAS PORWAL OF '0M SHANTI GROUP', SHRI KAMAL KHETAN OF 'SUNTECK GROUP' IS INV OLVED. MY LAD. PREDECESSOR CIT(A)- 50, MUMBAI HAS DELETED THE ADDITION IN THE CASE OF M/S PRIME DEVELOPERS FOR A.Y. 2012-13. 12.33 IN VIEW OF THE FACTS AND CIRCUMSTANCES, DISCU SSED IN DETAILS IN THE ABOVE PARAS & IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS A ND FOLLOWING THE ORDER OF MY LD. PREDECESSOR CIT(A)-50, THIS GROUND OF APPEAL OF THE APPELLANT COMPANY IS ALLOWED. IN THE RESULT, THE GROUND OF APPEAL NO. 2 OF THE PRESE NT APPEAL IS ALLOWED. 5. BEFORE US THE LD. A.R. AT THE BEGINNING SUBMITTE D THAT THE CASE IS SQUARELY COVERED BY THE DECISION OF CO-ORDI NATE BENCH OF THE TRIBUNAL IN ITA NO. 905/M/2018 A.Y. 2009-10 & O THERS VIDE ORDER DATED 28.08.2019 IN THE CASE OF GROUP CONCERN S NAMELY M/S. ACRO EXPORTS TRADE PVT. LTD. & M/S. AMAZON MET AL PVT LTD. WHEREIN CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT ASSESSEE HAS DISCHARGED ITS BURDEN TO PROVE THE IDE NTITY, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE INVESTORS BY FILLING VARIOUS DOCUMENTS AND THUS DIR ECTED THE A O TO DELETE THE ADDITION MADE UNDER SECTION 68 OF THE ACT. THE LD. A.R. WHILE REFERRING TO ABOVE DECISION OF THE COOR DINATE BENCH SUBMITTED THAT NO ADDITION CAN BE MADE UNDER SECTIO N 68 OF THE ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 10 ACT, WHERE THE ASSESSEE HAS DISCHARGED THE ONUS OF THE PROVING IDENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDI TWORTHINESS OF THE INVESTORS BY FILING THE NECESSARY EVIDENCES. TH E LD. A.R. SUBMITTED THAT DESPITE THE ASSESSEE HAVING FILED TH E VARIOUS DOCUMENTS NAMELY SHARE APPLICATION FORMS, COPIES OF DECLARATION, BOARD RESOLUTIONS, BANK STATEMENTS, PA N CARDS, ACKNOWLEDGEMENTS OF THE RETURNS OF INCOME, FINANCIA L STATEMENTS OF INVESTORS COMPANY, FORM NO. 2 FOR ALL OTMENT AND PROOFS OF ROUTING THE TRANSACTIONS TO BANKING CHANN EL, NO FURTHER ACTION WAS TAKEN BY THE LD AO. THE LD. A.R. THEREFO RE RELIED HEAVILY ON THE ORDER OF LD. CIT(A) WHO HAS PASSED A VERY REASONED AND SPEAKING ORDER AND RELIED ON THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. 16 CTR 195 AND JURISDICTIONAL HIGH COURT DECISION IN T HE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. 394 ITR 680 (BOM.). THE LD. A.R. FINALLY SUBMITTED THAT SINCE THE ASSES SEE HAS FILED ALL THE DOCUMENTS ON THE BASIS ON WHICH THE AO COUL D HAVE CARRIED OUT FURTHER VERIFICATION AND INVESTIGATION, HOWEVER, AO INSTEAD OF DOING ANY FURTHER VERIFICATION CHOSE TO ADD THE SAID AMOUNT ON ACCOUNT EXCESSIVE SHARE PREMIUM. THE LD. A.R. FINALLY SUBMITTED THAT SINCE THE ISSUE HAS BEEN SET TLED IN THE GROUP CONCERN CASE AS STATED ABOVE, THEREFORE, THE APPEAL OF THE REVENUE MAY KINDLY BE DISMISSED. 6. PER CONTRA, THE LD. D.R. SUBMITTED BEFORE THE BE NCH THAT THE DECISION IN THE CASES OF M/S. ACRO EXPORTS TRAD E PVT. LTD. & M/S. AMAZON METAL PVT LTD. IN ITA NO. 905/M/2018 (S UPRA) IS NOT APPLICABLE TO THE PRESENT CASE AS THE AOS WERE DIFFERENT IN BOTH THESE CASES. THE LD. D.R. FURTHER SUBMITTED TH AT IN ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 11 INFORMATION AS SUPPLIED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE ANALYZED IN GREAT DEPTH AND DETAILS AND ONLY THEN THEREAFTER, AO RELIED ON THE ANALYSIS OF SAID INFORMATION OF THE DIRECTORS OF THE ASSESSEE C OMPANY. THE LD. D.R. ALSO DREW OUR ATTENTION TO PAGE NO. 23 & 2 9 OF THE PAPER BOOK AND SUBMITTED THAT IN MOST OF THE CASES, THE ADDRESSES OF THE COMPANY WERE SAME. THE LD. D.R. SU BMITTED THAT THESE WERE CIRCULAR TRANSACTIONS WHICH WERE RE CEIVED FROM ONE COMPANY AND THEN MONEY WAS TRANSFERRED TO M/S. AMAZON METAL PVT. LTD. THUS THE MONEY RECEIVED IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM WAS IMMEDIATELY TRANSFERR ED TO OTHER COMPANY. THEREFORE, THIS LEAD TO UNDISPUTED CONCLUS ION THAT THIS IS A CASE OF AN ACCOMMODATION ENTRIES. THE LD. D.R. SUBMITTED THAT ALTOGETHER DIFFERENT STORY WAS COINED BY THE A SSESSEE IN THE ASSESSMENT PROCEEDINGS CONTRARY TO THE FACTS ADMITT ED IN THE STATEMENT RECORDED. THE LD. D.R. SUBMITTED THAT NO DETAILS WERE RECEIVED IN RESPONSE TO NOTICES UNDER SECTION 133(6 ) OF THE ACT ISSUED TO THE BANK. THE LD. D.R. WHILE RELYING HEAV ILY ON THE ORDER OF AO SUBMITTED THAT THIS IS A CASE OF TAX EV ASION IN A PLANNED MANNER BY THE ASSESSEE WHO HAS NO CREDENTIA LS. THE LD. D.R. SUBMITTED THAT IN VIEW OF THESE FACTS, THE ORDER OF LD. CIT(A) IS WRONG AND MAY KINDLY BE REVERSED. 7. THE LD. A.R. WHILE REPLYING TO THE ARGUMENTS OF LD. D.R. SUBMITTED THAT SHRI KAMAL KHETAN HAS SPECIFICALLY D ENIED THE KNOWLEDGE OF THESE INVESTMENTS AS THESE RELATED TO THE PERIOD PRIOR TO THE DATE OF TAKING OVER I.E 1.4.2012. THE LD. A.R. ALSO DENIED THE ARGUMENTS OF THE LD. D.R. THAT THESE COM PANIES DID NOT HAVE ANY CREDENTIALS AS THESE ENTITIES HAVE DUL Y RETURNED THE ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 12 INCOME IN FINANCIAL YEAR 2011-12 AND 2012-13 WHICH WAS DULY ASSESSED. THE LD. A.R. SUBMITTED THAT THE ASSESSEE WAS HAVING BANK STATEMENTS OF INVESTORS, PAN NUMBERS ETC. HOWE VER, NO. FURTHER INVESTIGATION WAS DONE DURING THE ASSESSME NT PROCEEDINGS BY THE AO. THE LD. A.R. ALSO SUBMITTED THAT NO CROSS EXAMINATION WAS ALLOWED OF SHRI VIKASH SANKHLE CH WHOSE STATEMENT WAS SOLELY RELIED UPON BY THE AO AND THER EFORE THE SAME IS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTIC E. THE LD. A.R. ALSO REFERRED TO PAGE NO. 18 OF THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. AMAZON ME TAL PVT. LTD. AS REFERRED TO ABOVE WHEREIN THE DECISION OF THE HO NBLE SUPREME COURT IN THE CASE OF DCIT VS. NRA STEEL PVT. LTD. W AS CONSIDERED AND DISTINGUISHED. FINALLY, THE LD. A.R. PRAYED TH AT THE APPEAL FILED BY THE REVENUE MAY KINDLY BE DISMISSED AS THE LD. CIT(A) PASSED A VERY REASONED AND SPEAKING ORDER. MOREOVER , THE PRESENT CASE IS COVERED BY THE DECISION OF THE CO-O RDINATE BENCH OF THE TRIBUNAL IN THE GROUP CONCERNS CASE AND THER EFORE THE APPEAL OF THE REVENUE MAY BE DISMISSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DC IT VS. M/S. PALI FABRICS PVT. LTD. IN ITA NO. 904/M/2018 A.Y. 2 009-10 AND OTHERS (SUPRA) WHEREIN THE SIMILAR MONEY HAS BEEN R AISED BY THE SISTER CONCERNS BY WAY OF SHARE CAPITAL & SHARE PRE MIUM TO THE TUNE OF RS. 8,82,00,000/-. WE HAVE PERUSED THE ORDE R OF CO- ORDINATE BENCH OF THE TRIBUNAL CAREFULLY AND OBSERV ED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT AS WERE IN THE ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 13 ABOVE SAID CASE ADJUDICATED BY THE CO-ORDINATE BENC H OF THE TRIBUNAL. THE OPERATIVE PART OF THE DECISION IS REP RODUCED BELOW: 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE F ACTS BORNE OUT FROM RECORD ARE THAT THE ASSESEE AND OTHER FOUR COMPANIES ARE SUBSI DIARIES OF M/S AKSHUNYA ENERGY PVT.LTD,. IN THE F.Y. 2008-09 RELEVANT A.Y.2 009-10, THE ASSESEE HAD ISSUED 190000 EQUITY SHARES AT A PREMIUM OF RS. 464/- PER SHARE, AMOUNTING TO RS. 9,00,00,000/-. THE HOLDING COMPANY NAMELY M/S AKSHU NYA ENERGY PVT.LTD. WAS LATER ON TAKEN OVER BY M/S ESKAY INFRASTRUCTURE DEV ELOPMENT PVT.LTD., A SUNTECK GROUP COMPANY. ON 15/10/2013 A SURVEY U/S 133A OF THE I.T.ACT, 1961 WAS CONDUCTED IN SUNTECK GROUP OF COMPANIES. DURING TH E COURSE OF SURVEY, STATEMENT U/S 131 OF THE I.T.ACT, 1961 WAS RECORDED FROM SHRI KAMAL KHETAN, THE MAIN PROMOTER OF SUNTECK GROUP OF COMPANY. IN THE STATEM ENT, SHRI KAMAL KHETAN, WHILE REPLYING TO QUESTION NO. 18 HE HAD OFFERED AN AMOUN T OF RS. 46.6 CRORES AS UNACCOUNTED INCOME, IN THE NAME OF FIVE COMPANIES T OWARDS SHARE CAPITAL AND SHARE PREMIUM RECEIVED FOR THE YEAR UNDER CONSIDERA TION. IN THE ABOVE STATEMENT, HE FURTHER STATED THAT HIS GROUP CONCERN M/S ESKAY INFRASTRUCTURE DEVELOPMENT PVT.LTD. HAD ACQUIRED A CONTROLLING INTEREST IN M/S AKSHUNYA ENERGY PVT.LTD. BY INVESTING A SUM OF RS. 1 CRORE, AS ADDITIONAL CAPIT AL IN THE COMPANY, WHICH HAS MADE HIM 99% OWNER OF THE COMPANY. ANOTHER STATEMEN T OF SHRI KAMAL KHETAN WAS RECORDED ON 16/10/2013. IN RESPONSE TO QUESTION NO.10, HE CONFIRMED THAT ONE OF HIS GROUP COMPANY M/S ESKAY INFRASTRUCTURE D EVELOPMENT PVT.LTD. HAD ACQUIRED HOLDING COMPANY OF FIVE COMPANIES NAMELY M /S AKSHUNYA ENERGY PVT.LTD FOR A CONSIDERATION OF RS. 1 CRORE. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, ANOTHER STATEMENT OF SHRI KAMAL KHETAN WAS RECORDED U/S 131 OF THE I.T.ACT, 1961 ON 08/11/2016. IN THE SAID STATEMENT, WHILE REPLYI NG TO QUESTION NO.9, HE HAD DENIED ANY KNOWLEDGE ABOUT ALL THE TRANSACTIONS OF INVESTMENTS AND SHARE CAPITAL IN THE ABOVE MENTIONED FIVE COMPANIES. HE, FURTHER STATED THAT TRANSACTIONS OF INVESTMENTS AND SHARE CAPITAL WERE HANDLED BY THE O LD MANAGEMENT AND HENCE, HE WAS NOT IN A POSITION TO OFFER ANY COMMENTS ON THE ADMISSION MADE BY THE OLD MANAGEMENT, IN RESPECT OF SHARE CAPITAL AND SHARE P REMIUM. IN THE SAID STATEMENT, IN REPLY TO QUESTION NO.11, SHRI KAMAL KHETAN, ONCE AGAIN STATED THAT HE WAS UNAWARE AS TO THE BASIS ON WHICH, SHRI VIKAS SANKHL ECHA HAS STATED THAT THESE FIVE COMPANIES ARE SHELL COMPANY. HE HAD ALSO ASKED FOR CROSS-EXAMINATION OF SHRI VIKAS SANKHLECHA FOR THE FACTS MENTIONED IN HIS STA TEMENT. 14. THE LD. AO HAS MADE ADDITIONS TOWARDS SHARE C APITAL AND SHARE PREMIUM, ON THE GROUND THAT ALTHOUGH, THE ASSESEE HAS FILED VAR IOUS DETAILS TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES BUT, ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAS FAILED TO ESTABLISH TRANSACTIONS BETWEEN THE PARTIES ARE GENUINE IN NAT URE AND ALSO THE SUBSCRIBER TO THE SHARE CAPITAL ARE HAVING CAPACITY TO EXPLAIN HU GE INVESTMENTS IN ASSESSEE COMPANY. ACCORDING TO THE AO, MERE FURNISHING CONFI RMATION LETTERS FROM THE PARTIES ALONG WITH THEIR PAN NUMBER AND ITR ACKNOWL EDGEMENT IS NOT SUFFICIENT ENOUGH TO DISCHARGE ,THE ONUS CAST UPON U/S 68 OF T HE I.T.ACT, 1961 AND WHAT IS RELEVANT IS TO DISCHARGE THE TRUE IDENTITY OF THE I NVESTORS. ALTHOUGH, THE ASSESSEE HAS FILED CERTAIN DOCUMENTS, INCLUDING PAN NUMBER A ND ITR ACKNOWLEDGEMENT AND ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 14 FINANCIAL STATEMENTS ALONG WITH BANK STATEMENT OF S UBSCRIBERS, BUT WHEN, IT COMES TO GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES, EXCEPT FILING FINANCIAL STATEMENTS, NO OTHER EVIDENCES HAS BEEN F ILED TO PROVE THAT SHARE CAPITAL RECEIVED FROM SUBSCRIBERS IS GENUINE IN NATURE, WHI CH IS SUPPORTED BY NECESSARY EVIDENCES. THE AO HAS ALSO TAKEN SUPPORT FROM THE F INDINGS RECORDED, DURING THE COURSE OF SURVEY AND STATEMENT RECORDED FROM CERTAI N PERSONS, INCLUDING SHRI KAMAL KHETAN AND SHRI VIKAS SANKLECHA TO COME TO TH E CONCLUSION THAT THE ASSESSEE HAS ENTERED INTO AN ARRANGED TRANSACTIONS WITH CERT AIN COMPANIES, IN ORDER TO CONVERT ITS OWN UNACCOUNTED INCOME IN THE FORM OF S HARE CAPITAL, WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS ISSUED SHARE CA PITAL WITH A HUGE PREMIUM OF RS. 480 PER SHARE, EVEN THOUGH, THE FINANCIAL OF THOSE COMPANIES IS NOT SUPPORTING SUCH A HUGE VALUATION. FURTHER, THE AO HAS TAKEN SUPPOR T FROM THE ADMISSION OF SHRI KAMAL KHETAN, DURING THE COURSE OF SURVEY WHERE, HE HAD ADMITTED THAT SHARE CAPITAL, INCLUDING PREMIUM RECEIVED FOR THE YEAR UN DER CONSIDERATION IS AN UNEXPLAINED CREDIT AND ACCORDINGLY, THE SAME HAS BE EN OFFERED TO TAX. 15. THE PROVISION OF SECTION 68 OF THE INCOME TAX ACT, 1961 DEALS WITH A CASES, WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF AN A SSESEE, IN ANY PREVIOUS YEAR, FOR WHICH THE ASSESEE OFFERED NO EXPLANATION ABOUT THE NATURE AND SOURCE, THEREOF OR THE EXPLANATIONS OFFERED BY THE ASSESSEE, IN THE OPINION OF THE AO IS NOT SATISFACTORY, THEN SUM SO FOUND CREDITED MAY BE CHA RGED TO INCOME TAX, AS INCOME OF THE ASSESSE OF THAT PREVIOUS YEAR. IN ORDER TO FIX ANY CREDIT WITHIN THE AMBIT OF SECTION 68 OF THE I.T ACT, 1961, THE AO HAS TO EXAM INE THREE INGREDIENTS IE., IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. IN THIS FACTUAL AND LEGAL BACKGROUND, IF YOU EXAMINE, THE P RESENT CASE IN THE LIGHT OF VARIOUS EVIDENCES FILED BY THE ASSESSEE, IN ORDER T O PROVE CREDIT FOUND IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM, ONE HAS TO SEE, WHETHER THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS CAST UPON U/S 68 OF THE I.T.ACT, 1961 OR NOT. IN THIS CASE, THE ASSESEE HAS FILED VARIOUS DETAILS, INCLUDING SH ARE APPLICATION FORM, COPY OF DECLARATION, BOARD RESOLUTION, BANK STATEMENT OF IN VESTOR COMPANY, PAN CARD, ACKNOWLEDGMENT OF RETURN OF INCOME, FINANCIAL STATE MENT OF INVESTOR COMPANY, FORM NO. 2 FOR ALLOTMENT OF EQUITY SHARES AND BANK STATEMENT REFLECTING, THE AMOUNT RECEIVED THROUGH BANKING CHANNELS. ONCE, TH E ASSESSEE HAS DISCHARGED ITS INITIAL ONUS BY FILING VARIOUS DETAILS, THEN THE ON US SHIFT TO THE AO TO CARRY OUT FURTHER VERIFICATION, IN THE LIGHT OF EVIDENCES FIL ED BY THE ASSESSEE TO ASCERTAIN TRUE NATURE OF TRANSACTIONS BETWEEN THE PARTIES BEFORE, HE COME TO THE CONCLUSION THAT THE TRANSACTIONS BETWEEN THE PARTIES ARE GENUINE OR NOT. IN THIS CASE ALTHOUGH, THE AO HAS ISSUED 133(6) NOTICES TO THE PARTIES, NO FUR THER ENQUIRY HAS BEEN CONDUCTED, INCLUDING ISSUE OF SUMMONS U/S 131. NO DOUBT, NONE OF THE INVESTORS COMPANIES HAVE RESPONDED TO 133(6) NOTICES ISSUED BY THE AO, BUT FACT OF THE MATTER IS WHEN, ASSESSEE HAS FILED COMPLETE SET OF DOCUMENTS, INCLU DING NAME AND ADDRESS OF THE PARTIES, IT IS FOR THE AO TO CARRY OUT FURTHER INVE STIGATION BY EXERCISING ALL POSSIBLE OPTIONS AVAILABLE TO HIM, BUT NON ATTENDANCE OF PAR TIES IN RESPONSE TO 133(6) CANNOT BE ATTRIBUTED TO THE ASSESSEE, BECAUSE DUE T O TIME LAG CERTAIN PERSONS MIGHT HAVE LEFT THE PLACE AND FOR THIS NO RESPONSI BILITY CAN BE FASTENED UPON THE ASSESSEE. IN THIS CASE, THE ASSESSEE DONE WHAT BEST IT COULD DO AND FILED, WHATEVER INFORMATION AVAILABLE WITH IT, IN ORDER TO SATISFY THE AO. IN CASE, THE AO IS NOT SATISFIED WITH DOCUMENTS FURNISHED BY THE ASSESSEE, THEN HE IS FREE TO CARRY OUT HIS OWN INVESTIGATIONS BY EXERCISING POWERS CONFERRED U /S 131 OR U/S 133(6) OF THE ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 15 I.T.ACT, 1961. IN THIS CASE, THE AO, EXCEPT ISSUE OF 133(6) NOTICES NOTHING HAS BEEN DONE TO FIND OUT, THE NATURE OF TRANSACTIONS BETWEE N THE PARTIES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT WHEN, ASSESSEE HAS FILE D COMPLETE DETAILS TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES, THEN THERE IS NO REASON FOR THE AO TO CAME TO THE CONCLU SION THAT SHARE CAPITAL AND SHARE PREMIUM IS UNEXPLAINED ONLY FOR THE REASON TH AT DURING THE SURVEY PROCEEDINGS, THE DIRECTOR OF THE COMPANY HAD ADMITT ED THAT THOSE FIVE COMPANIES ARE SHELL COMPANIES IGNORING THE FACT THAT SUCH ADM ISSION HAS BEEN RETRACTED BY FILING AFFIDAVIT ALONG WITH LETTER EXPLAINING REASO NS FRO SUCH ADMISSION DURING SURVEY PROCEEDINGS. FURTHER, ADDITIONS MADE BY THE AO CANN OT BE SUSTAINED EVEN ON THIS COUNT ,BECAUSE THE AO HAS RELIED UPON STATEMENT OF SHRI VIKAS SANKHLECHA, THE ERSTWHILE DIRECTOR OF THOSE FIVE COMPANIES TO MAKE ADDITIONS TOWARDS SHARE CAPITAL, BUT WHEN ,SHRI KAMAL KHETAN, THE PRESENT DIRECTOR O F THE ASSESSEE COMPANY ASKED FOR COPIES OF STATEMENT OF SHRI VIKAS SANKHLECHA AN D ALSO OPPORTUNITY FOR CROSS EXAMINATION OF SHRI VIKAS SANKHLECHA, THE AO HAS DE NIED, THE OPPORTUNITY OF CROSS EXAMINATION AND ALSO NOT FURNISHED COPIES OF STATEM ENT RECORDED FROM SHRI VIKAS SANKHLECHA. IT IS A SETTLED POSITION OF LAW THAT ON CE, ANY THIRD PARTY INFORMATION/STATEMENTS IS RELIED UPON TO MAKE ADDIT IONS, IT IS THE OBLIGATION OF THE AO TO PROVIDE COPIES OF SUCH STATEMENTS/INFORMATION AND ALSO TO PROVIDE AN OPPORTUNITY OF CROSS EXAMINATION OF THE PERSON, WHO GAVE THE STATEMENT, WHEN SUCH OPPORTUNITY HAS BEEN AVAILED BY THE PERSON AGA INST WHOM, SUCH STATEMENTS ARE USED. THIS LEGAL PROPOSITION IS SUPPORTED BY TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM VS CIT 1 980 125 ITR 713 (SC), WHERE IT WAS HELD THAT WHEN, THIRD PARTY INFORMATION IS RELI ED UPON TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE, THE SAME NEEDS TO B E PROVIDED AND ALSO OPPORTUNITY OF CROSS EXAMINATION SHALL BE GIVEN, IF SUCH OPPORTUNITY IS AVAILED BY THE ASSESSEE. THE HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES LTD VS CCE, KOLKATA II IN APPEAL NO 4228 OF 2006 HAS VIDE ORDER DATED 02.09.2015 HAD ALSO UPHELD A SIMILAR LEGAL POSITION AND HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES BY THE ADJU DICATING THE AUTHORITY, THOUGH THE STATEMENTS AND THOSE WITNESSES WERE MADE THE BA SIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW, WHICH MAKES THE ORDER NULLITY IN, A S MUCH AS, IT AMOUNT TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, BECAUSE OF WHICH, THE ASSESSEE WAS ADVERSELY AFFECTED. THEREFORE, ON THIS COUNT ALSO THE ADDITIO NS MADE BY THE AO CANNOT BE SUSTAINED. 16.COMING TO THE OTHER ASPECT OF THE ISSUE, THE AO HAS INVOKED THE PROVISIONS OF SECTION 56(2)(VIIB) OF THE I.T. ACT, 1961. WE FIND THAT THE SAID PROVISION HAS BEEN INSERTED BY FINANCE ACT, 2012 W.E.F 10.04.2013, WHE RE IT PROVIDES THAT WHERE A CLOSELY HELD COMPANY ISSUES ITS SHARES AT A PRICE W HICH IS MORE THAN ITS FAIR MARKET VALUE, THEN AMOUNT RECEIVED IN EXCESS OF FAIR MARKE T VALUE WILL BE CHARGED TO TAX IN THE HANDS OF THE COMPANY AS INCOME FROM OTHER SOURC ES. WE, FURTHER NOTED THAT THE PROVISIONS OF SECTION 56(2)(VIIB) WAS INSERTED BY FINANCE ACT,2012 W.E.F. 1.04.2013 IS APPLICABLE FROM A.Y. 2013-14 ONWARDS. IN FACT, A SIMILAR AMENDMENT HAS BEEN MADE IN SECTION 68 BY INSERTION OF A PROVI SO BY THE FINANCE AT 2012 W.E.F. 01.04.2013 AS PER WHICH THE ASSESSEE COMPANY (NOT B EING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED) AND SUMS SO CR EDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL , SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESS EE COMPANY SHALL BE DEEMED ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 16 TO BE NOT SATISFACTORY, UNLESS THE PERSON BEING, A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALS O OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED AND S UCH EXPLANATION IN THE OPINION OF THE AO AFORESAID HAS BEEN FOUND TO BE SATISFACTO RY. ON PERUSAL OF AMENDMENTS BROUGHT OUT BY FINANCE ACT 2012, W.E.F. 01.04.2013 TO THE PROVISIONS OF SECTION 56(2)(VIIB) AND SECTION 68 OF THE ACT, IT IS VERY C LEAR THAT WHERE THE ASSESSEE HAS ISSUED SHARES AT PREMIUM AND ALSO RECEIVED SHARE CA PITAL AND IF SUCH COMPANY DO NOT OFFER ANY EXPLANATION ABOUT THE NATURE AND SOUR CE, THEN SUM SO RECEIVED MAY BE REGARDED AS INCOME OF THE ASSESSEE FROM UNDISCLO SED SOURCES. IN OTHER WORDS, THE PURPOSE OF INSERTION OF PROVISO IS TO EXAMINE T HE SOURCE OF INVESTMENT BY SUBSCRIBER TO THE SHARE CAPITAL. THIS AMENDMENT HA S BEEN EXAMINED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GA GANDEEP INFRASTRUCTURE (P) LTD. (2017) 394 ITR 680, WHERE THE COURT OBSERVED THAT P ROVISO INSERTED TO SECTION 68 W.E.F. 01.04.2013 IS CONSIDERED TO BE PROSPECTIVE I N NATURE AND IS APPLICABLE FROM A.Y. 2013-14 ONWARDS. FROM THE ABOVE, IT IS VERY CL EAR THAT SIMILAR AMENDMENT HAS BEEN MADE TO PROVISIONS OF SECTION 56(2) BY INSERTI ON OF CLAUSE (VIIB) SO AS TO BRING SHARE PREMIUM WITHIN THE AMBIT OF SECTION 56(2) OF THE I.T ACT, 1961. SINCE, THE PROVISO INSERTED TO SECTION 68 IS CONSIDERED TO BE PROSPECTIVE IN NATURE, OBVIOUSLY SUB CLAUSE (VIIB) INSERTED TO SECTION 56(2) IS ALSO CONSIDERED TO BE PROSPECTIVE AND CANNOT BE APPLIED TO THE ASSESSMENT YEAR IN QUESTIO N. EVEN OTHERWISE, ASSUMING FOR A MOMENT ABOVE PROVISIONS ARE APPLICABLE FOR TH E YEAR UNDER CONSIDERATION, IN ORDER TO APPLY SAID AMENDED PROVISIONS, THE AO HAS TO PROVE THAT THE ASSESSEE HAS NOT PROVED CAPACITY OF THE INVESTORS AND ALSO NOT O FFERED ANY JUSTIFICATION FOR ISSUE OF SHARES AT PREMIUM. IN THIS CASE, FROM THE FACTS ON RECORD, IT IS CLEAR THAT THE ASSESSEE HAS PROVED IDENTITY AND GENUINENESS OF THE TRANSACTIONS BY FILING NECESSARY EVIDENCES. THE ASSESSEE HAS FILED VALUAT ION REPORT FROM REGISTERED VALUER AS PER WHICH THE SHARE PRICE OF THE COMPANY IS OVER AND ABOVE PREMIUM CHARGED BY THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT PROVISIONS OF SECTION 56(2)(VIIB) HAS NO APPLICATION. 9. CONSIDERING THE FACTS OF THE CASE AS WELL AS DEC ISION OF COORDINATING BENCH IN THE CASE OF ASSESSEES GROU P COMPANIES, WE ARE OF THE VIEW THAT THE CASE IS SQUARELY COVERE D WITH THE DECISION OF COORDINATING BENCH. AS THE FACTS ARE MA TERIALLY SAME, WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME DIS MISS THE APPEAL OF REVENUE. CO. NO. 75/MUM/2019 10. THE ASSESSEE HAS FILED CROSS OBJECTION AGAI NST THE ORDER OF THE LD. CIT(A) CHALLENGING THE FINDINGS OF LD. CIT( A), IN RESPECT OF CONFIRMING THE ACTION OF THE AO IN REOPENING ASSESS MENT U/S ITA NO.906/M/2018 & CO NO.75/M/2019 M/S. BELL FABRICS PVT. LTD. 17 147 OF THE I.T.ACT, 1961. SINCE, WE HAVE ALREADY DE CIDED THE ISSUE OF ADDITIONS MADE BY THE AO, IN RESPECT OF SH ARE CAPITAL AND SHARE PREMIUM U/S 68 OF THE I.T.ACT, 1961, IN F AVOUR OF THE ASSESSEE AND AGAINST REVENUE IN APPEAL FILED BY THE REVENUE IN ITA.NO. 906/MUM/2018, THE CROSS OBJECTION FILED BY THE ASSESSEE CHALLENGING VALIDITY OF REOPENING OF ASSES SMENT BECOMES ACADEMIC AND, THEREFORE, THE CROSS EXAMINAT ION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT, APPEAL FILED BY THE REVENU E IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 25.05.2021. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 25.05.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.