AI Insights
Luminant Investments Ltd. appealed against the order of the Commissioner of Income-tax (Appeals) - 49, Mumbai, which upheld the addition made by the Deputy Commissioner of Income-tax under Section 68 of the Income Tax Act. The addition pertained to Rs 27,78,50,000 received on allotment of equity share capital, which was treated as unexplained cash credit. The Tribunal noted that the appellant failed to provide satisfactory explanations or evidence to substantiate the genuineness of the transactions, despite being given multiple opportunities to do so. The Tribunal also addressed the procedural fairness in the context of the appellant's request for cross-examination of certain directors, which was found to be adequately met by the lower authorities.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 713240 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-07-2025
Appeal Filed By
Assessee
Order Result
Dismissed
Assessment Year
2006-2007
Judgement Text
" IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 4356/MUM/2024 Assessment Year: 2006-07 Luminant Investments Ltd., (Formerly known as Luminant Investment Pvt. Ltd.) 121, Radha Bhuvan, 1st floor, Nagindas Master Road, Fort, Mumbai-400023. Vs. Dy. CIT Central Circle 40, Aayakar Bhavan, M.K. Road, Mumbai-400020. PAN NO. AAACL 0834 A Appellant Respondent Assessee by : None Revenue by : Mr. Rajesh Kumar Yadav, CIT-DR Date of Hearing : 31/07/2025 Date of pronouncement : 31/07/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 27.06.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 49, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2006-07, raising following grounds: 1. The Commissioner of Income-tax (Appeals) - 49, Mumbai (hereinafter referred to as the CIT(A)) erred in upholding the action Printed from counselvise.com of the Deputy Commissioner of Income Mumbai (hereinafter referred to as the Assessing Officer) in making an addition under section 68 of a amount received on allotment of equity share capital. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making as the provisions of section 68, in terms, are not applicable The appellants further, contend that on the facts and in the circumstances of the case and in law, the Assessing Officer erred in thrusting upon the appellants to companies for cross examination; the appellants submit that it is the obligation of the Assessing Officer to produce the said directors for cross examination as they are the witness of the Department. The appellants further, contend that on the facts and in the circumstances of the case and in law,CIT(A) erred in holding that adequate opportunity for cross examination of directors of shareholder-companies has been allowed to appellants. The appellants circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer of relying on the statement on oath of the directors of shareholder officers of the Department instead of himself examining the said directors. The appellants further, contend that on the facts and in the circumstances of the case and in law, the impugned addition ought not to have been made inasmuch as there is no evidence brought record by the Assessing Officer that monies have emanated from the coffers of the appellants. 2. The CIT(A) erred in confirming the action of Assessing Officer in treating business loss as speculation loss by invoking the provisions of Explanation to se The appellants contend that on the facts and circumstances of the case and in law, the provisions of Explanation to section 73 could not have been invoked by the Assessing Officer inasmuch as the same is beyond the scope of directions order (1st round)and hence, CIT(A) has fallen in error in upholding the action of the Assessing Officer in treating the business loss as speculation loss by invoking the provisions of Explanation to Luminant Investments Ltd. ITA No. 4356/MUM/2024 of the Deputy Commissioner of Income-tax, Central Circle 40, Mumbai (hereinafter referred to as the Assessing Officer) in making an addition under section 68 of a sum of Rs 27,78,50,000, being amount received on allotment of equity share capital. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action of the Assessing Officer in making the impugned addition inasmuch as the provisions of section 68, in terms, are not applicable The appellants further, contend that on the facts and in the circumstances of the case and in law, the Assessing Officer erred in thrusting upon the appellants to produce the directors of the various companies for cross examination; the appellants submit that it is the obligation of the Assessing Officer to produce the said directors for cross examination as they are the witness of the Department. The appellants further, contend that on the facts and in the circumstances of the case and in law,CIT(A) erred in holding that adequate opportunity for cross examination of directors of companies has been allowed to appellants. The appellants further, contend that on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer of relying on the statement on oath of the directors of shareholder-companies obtained by other f the Department instead of himself examining the said The appellants further, contend that on the facts and in the circumstances of the case and in law, the impugned addition ought not to have been made inasmuch as there is no evidence brought record by the Assessing Officer that monies have emanated from the coffers of the appellants. 2. The CIT(A) erred in confirming the action of Assessing Officer in treating business loss as speculation loss by invoking the provisions of Explanation to section 73 of the Act. The appellants contend that on the facts and circumstances of the case and in law, the provisions of Explanation to section 73 could not have been invoked by the Assessing Officer inasmuch as the same is beyond the scope of directions of the Tribunal given in their order (1st round)and hence, CIT(A) has fallen in error in upholding the action of the Assessing Officer in treating the business loss as speculation loss by invoking the provisions of to section 73. Luminant Investments Ltd. 2 ITA No. 4356/MUM/2024 tax, Central Circle 40, Mumbai (hereinafter referred to as the Assessing Officer) in making sum of Rs 27,78,50,000, being The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the action the impugned addition inasmuch as the provisions of section 68, in terms, are not applicable The appellants further, contend that on the facts and in the circumstances of the case and in law, the Assessing Officer erred in produce the directors of the various companies for cross examination; the appellants submit that it is the obligation of the Assessing Officer to produce the said directors for cross examination as they are the witness of the Department. The appellants further, contend that on the facts and in the circumstances of the case and in law,CIT(A) erred in holding that adequate opportunity for cross examination of directors of companies has been allowed to appellants. further, contend that on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer of relying on the statement on companies obtained by other f the Department instead of himself examining the said The appellants further, contend that on the facts and in the circumstances of the case and in law, the impugned addition ought not to have been made inasmuch as there is no evidence brought on record by the Assessing Officer that monies have emanated from 2. The CIT(A) erred in confirming the action of Assessing Officer in treating business loss as speculation loss by invoking the provisions The appellants contend that on the facts and circumstances of the case and in law, the provisions of Explanation to section 73 could not have been invoked by the Assessing Officer inasmuch as the of the Tribunal given in their order (1st round)and hence, CIT(A) has fallen in error in upholding the action of the Assessing Officer in treating the business loss as speculation loss by invoking the provisions of Printed from counselvise.com 2. Briefly stated, facts of the case are that the assessee filed return of income for the year under consideration on 25.11.2006 declaring total income at Nil. The return of income filed by the assessee was processed u/s 143(1) of the Income short ‘the Act’) and was thereafter selected for scrutiny. Statutory notices were issued in the course of such proceedings. Assessing Officer (AO), in the course of scrutiny, noted that the appellant-company had received an aggregate amount of crores, including share premium of subscription from a number of private companies, primarily based in Kolkata. These funds were ostensibly raised for the purpose of discharging the appellant's liabilities towards M/s M Mercantile Co-operative Bank Ltd. was revealed that a special team constituted by the Central Board of Direct Taxes (CBDT) had been tasked with verifying the source of the said funds. The Investigation Wing of the In Department, Kolkata, undertook detailed inquiry and recorded statements of the directors of the alleged share subscriber companies. A list of such companies is reproduced as under: Details of increase in share capital Sr. Name and Address 1. JAISHREE COMMOTRADE PVT.LTD. 2. KANODIA VYAPAR PVT. LTD. Luminant Investments Ltd. ITA No. 4356/MUM/2024 ted, facts of the case are that the assessee filed return of income for the year under consideration on 25.11.2006 declaring total income at Nil. The return of income filed by the as processed u/s 143(1) of the Income-tax Act, 1961 (in and was thereafter selected for scrutiny. Statutory notices were issued in the course of such proceedings. Assessing Officer (AO), in the course of scrutiny, noted that the company had received an aggregate amount of crores, including share premium of ₹22.22 crores, by way of share subscription from a number of private companies, primarily based in Kolkata. These funds were ostensibly raised for the purpose of discharging the appellant's liabilities towards M/s M operative Bank Ltd. Upon further investigation, it was revealed that a special team constituted by the Central Board of Direct Taxes (CBDT) had been tasked with verifying the source of the said funds. The Investigation Wing of the In Department, Kolkata, undertook detailed inquiry and recorded statements of the directors of the alleged share subscriber A list of such companies is reproduced as under: Details of increase in share capital Name and Address Qty JAISHREE COMMOTRADE PVT.LTD. 254000 KANODIA VYAPAR PVT. LTD. 310000 Luminant Investments Ltd. 3 ITA No. 4356/MUM/2024 ted, facts of the case are that the assessee filed return of income for the year under consideration on 25.11.2006 declaring total income at Nil. The return of income filed by the tax Act, 1961 (in and was thereafter selected for scrutiny. Statutory notices were issued in the course of such proceedings. The Assessing Officer (AO), in the course of scrutiny, noted that the company had received an aggregate amount of ₹27.78 22.22 crores, by way of share subscription from a number of private companies, primarily based in Kolkata. These funds were ostensibly raised for the purpose of discharging the appellant's liabilities towards M/s Mahavpura Upon further investigation, it was revealed that a special team constituted by the Central Board of Direct Taxes (CBDT) had been tasked with verifying the source of the said funds. The Investigation Wing of the Income-tax Department, Kolkata, undertook detailed inquiry and recorded statements of the directors of the alleged share subscriber A list of such companies is reproduced as under: Total 12700000 15500000 Printed from counselvise.com 3. BANSHIDHAR VYAPAR PVT.LTD. 4. PLATINUM COMMERCE PVT LTD. 5. YULAN MARKETING PVT. LTD. 6. NILHAT PROMOTERS & FISCAL PVT. LTD. 7. COSMIC TRADE & INV PVT. LTD. 8. VENTEX TRADE PVT. LTD. 9. ANKITA FINVEST PVT. LTD. 10. PENTEX EXPO PVT. LTD. 11. TUTICORIN TREXIM PVT. LTD. 12. SNEHDEEP IMPEX PVT. LTD. 13. CLIX SECURITIES PVT. LTD. 14. RAJESH VAN1JYA PVT. LTD. 15. DABRIWAL INVEST & FIN. PVT.LTD. 16. CUBE TRAFIN PVT.LTD 17. APSARA TREX PVT.LTD 18. APSARA FINTRADE PVT.LTD 19. BAKLIWAL FINVEST PVT.LTD 20. PURNIMA VYAPAR PVT LTD 21. CLARA VYAPAR PVT LTD Luminant Investments Ltd. ITA No. 4356/MUM/2024 BANSHIDHAR VYAPAR PVT.LTD. 188000 PLATINUM COMMERCE PVT LTD. 346000 YULAN MARKETING PVT. LTD. 400000 PROMOTERS & FISCAL PVT. LTD. 310000 COSMIC TRADE & INV PVT. LTD. 470000 VENTEX TRADE PVT. LTD. 298000 ANKITA FINVEST PVT. LTD. 190000 PENTEX EXPO PVT. LTD. 100000 TUTICORIN TREXIM PVT. LTD. 170000 SNEHDEEP IMPEX PVT. LTD. 50000 CLIX SECURITIES PVT. LTD. 211000 RAJESH VAN1JYA PVT. LTD. 100000 DABRIWAL INVEST & FIN. PVT.LTD. 200000 CUBE TRAFIN PVT.LTD 100000 APSARA TREX PVT.LTD 200000 APSARA FINTRADE PVT.LTD 100000 BAKLIWAL FINVEST PVT.LTD 200000 PURNIMA VYAPAR PVT LTD 20000 CLARA VYAPAR PVT LTD 20000 Luminant Investments Ltd. 4 ITA No. 4356/MUM/2024 9400000 17300000 20000000 15500000 23500000 14900000 9500000 5000000 8500000 2500000 10550000 5000000 10000000 5000000 10000000 5000000 10000000 1000000 1000000 Printed from counselvise.com 22. ECO RUBBER PRODUCTS PVT.LTD 23. GOODFAITH VYAPAR PVT.LTD. 24. VERONICA VINIMAY PVT.LTD. 25. IRIS COMMERCIAL PVT.LTD. 26. WIMPER TRADING & DIST.PVT.LTD 27. SPENCERS COMMODITIES PVT.LTD 28. LEHAR VYAPAAR PVT. LTD. 29. PADMASHREE SUPPLIERS PVT. LTD. 30. KIRAN TOOLS & MACHINERY P. LTD. 31. MYSOL ENGENEERING PVT. LTD. 32. SAS CONCRETE & INFRASTRUCTURE 33. ALEX POLYMERS PVT. LTD. 34. SWATI STOCK & SECURITIES P. LTD. 35. DICO TRANSPORT CORPORATION 36. Quantum Impex Pvt. Ltd. 37. DHERAR TEXTILES PVT. LTD. 38. PLUS JET FIN VEST PVT. LTD. 39. RUP TRADECOMM PVT. LTD. 40. STAR TRAFIN PVT. LTD. 41. NKP HOLDINGS PVT. LTD. Luminant Investments Ltd. ITA No. 4356/MUM/2024 ECO RUBBER PRODUCTS PVT.LTD 20000 GOODFAITH VYAPAR PVT.LTD. 40000 VERONICA VINIMAY PVT.LTD. 20000 IRIS COMMERCIAL PVT.LTD. 70000 WIMPER TRADING & DIST.PVT.LTD 100000 SPENCERS COMMODITIES PVT.LTD 100000 LEHAR VYAPAAR PVT. LTD. 40000 PADMASHREE SUPPLIERS PVT. LTD. 40000 KIRAN TOOLS & MACHINERY P. LTD. 30000 MYSOL ENGENEERING PVT. LTD. 10000 SAS CONCRETE & INFRASTRUCTURE 60000 ALEX POLYMERS PVT. LTD. 40000 SWATI STOCK & SECURITIES P. LTD. 60000 DICO TRANSPORT CORPORATION 100000 Quantum Impex Pvt. Ltd. 100000 DHERAR TEXTILES PVT. LTD. 100000 PLUS JET FIN VEST PVT. LTD. 100000 RUP TRADECOMM PVT. LTD. 80000 STAR TRAFIN PVT. LTD. 80000 HOLDINGS PVT. LTD. 40000 5,557,000 Luminant Investments Ltd. 5 ITA No. 4356/MUM/2024 1000000 2000000 1000000 3500000 5000000 5000000 2000000 2000000 1500000 5000000 3000000 2000000 3000000 5000000 5000000 5000000 5000000 4000000 4000000 2000000 5,557,000 277,850,000 Printed from counselvise.com 2.1 In their sworn statements under Section 131 of the Act, these individuals admitted that the share subscription cheques issued to the appellant were against receipt of equivalent amounts in from the appellant itself. These transactions were characterised as accommodation entries. Wing reproduced by the AO “4.3 The Addl. DIT (Inv.) Unit of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, resident of Howrah w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his individual Bank A/c as well his propriety concerns Bank A/c's to deposit cash in lieu of signed blank account payee cheques to Shri Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover Road, Kolkata commission of Rs. 100 for per Rs. 1,00,000/ similar transactions were made with one Shri Murari Agarwal. The blank cheques so issued were used by Shri Pawan Kumar Agarwal and Shri N.K. Nahata as and when required. He also stated that all the cash deposited in his A/c's were made by Delhi based parties which were not known to him. Later on statement of Shri Pawan Kumar Agarwal who was former Director of M/s Mrugiya Electornic Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit 131 of the I.T. Act. In his statement he has denied the ownershi the cash. But at the same time he has admitted that the cheques received from Shri Kishan Kumar Verma and Shri Murari Agarwal were utilized to invest in the share application money of M/s Chat Computers Pvt. Ltd.(formerly known as M/s Chitrakut Comput Ltd.). The modus operandi in this case is similar as in the case of M/s Chat Computers Pvt. LTd. It is very much clear from the above that the assessee has mobilized the unaccounted cash by creating various layers of transactions of which the assess beneficiary. 4.4 Similar transactions have been done by the group concerns of the assessee which are given in Annexure 1 which is the report of Investigation wing of the department. Where in it is clearly established that cash was passing through various levels it has eached to the assessee company, Few such instances are covered in the report annexed herewith. Luminant Investments Ltd. ITA No. 4356/MUM/2024 In their sworn statements under Section 131 of the Act, these individuals admitted that the share subscription cheques issued to the appellant were against receipt of equivalent amounts in from the appellant itself. These transactions were characterised as accommodation entries. The relevant finding of the Investigation by the AO is extracted as under: 4.3 The Addl. DIT (Inv.) Unit-1, Kolkata has also recorded statement of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, resident of Howrah-2 who has admitted in his statement recorded w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his individual Bank A/c as well his propriety concerns Bank A/c's to cash in lieu of signed blank account payee cheques to Shri Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover Road, Kolkata-19 and Shri D.K. Nahata resident of Kolkata for a commission of Rs. 100 for per Rs. 1,00,000/-. He also stated that r transactions were made with one Shri Murari Agarwal. The blank cheques so issued were used by Shri Pawan Kumar Agarwal and Shri N.K. Nahata as and when required. He also stated that all the cash deposited in his A/c's were made by Delhi based parties ch were not known to him. Later on statement of Shri Pawan Kumar Agarwal who was former Director of M/s Mrugiya Electornic Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit- 131 of the I.T. Act. In his statement he has denied the ownershi the cash. But at the same time he has admitted that the cheques received from Shri Kishan Kumar Verma and Shri Murari Agarwal were utilized to invest in the share application money of M/s Chat Computers Pvt. Ltd.(formerly known as M/s Chitrakut Comput Ltd.). The modus operandi in this case is similar as in the case of M/s Chat Computers Pvt. LTd. It is very much clear from the above that the assessee has mobilized the unaccounted cash by creating various layers of transactions of which the assessee is an ultimate 4.4 Similar transactions have been done by the group concerns of the assessee which are given in Annexure 1 which is the report of Investigation wing of the department. Where in it is clearly established that cash was deposited in one account and after passing through various levels it has eached to the assessee company, Few such instances are covered in the report annexed Luminant Investments Ltd. 6 ITA No. 4356/MUM/2024 In their sworn statements under Section 131 of the Act, these individuals admitted that the share subscription cheques issued to the appellant were against receipt of equivalent amounts in cash from the appellant itself. These transactions were characterised as The relevant finding of the Investigation 1, Kolkata has also recorded statement of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, 2 who has admitted in his statement recorded w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his individual Bank A/c as well his propriety concerns Bank A/c's to cash in lieu of signed blank account payee cheques to Shri Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover 19 and Shri D.K. Nahata resident of Kolkata for a . He also stated that r transactions were made with one Shri Murari Agarwal. The blank cheques so issued were used by Shri Pawan Kumar Agarwal and Shri N.K. Nahata as and when required. He also stated that all the cash deposited in his A/c's were made by Delhi based parties ch were not known to him. Later on statement of Shri Pawan Kumar Agarwal who was former Director of M/s Mrugiya Electornic Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit-I, Kolkata u/s 131 of the I.T. Act. In his statement he has denied the ownership of the cash. But at the same time he has admitted that the cheques received from Shri Kishan Kumar Verma and Shri Murari Agarwal were utilized to invest in the share application money of M/s Chat Computers Pvt. Ltd.(formerly known as M/s Chitrakut Computers P. Ltd.). The modus operandi in this case is similar as in the case of M/s Chat Computers Pvt. LTd. It is very much clear from the above that the assessee has mobilized the unaccounted cash by creating ee is an ultimate 4.4 Similar transactions have been done by the group concerns of the assessee which are given in Annexure 1 which is the report of Investigation wing of the department. Where in it is clearly deposited in one account and after passing through various levels it has eached to the assessee company, Few such instances are covered in the report annexed Printed from counselvise.com 4.5 As per the statements of the Directors of various Kolkata based companies it is clea mentioned companies which in turn issued back to assessee cheques/Demand Draft of equivalent amount. This fact was stated on oath by the Directors of the said companies. However, Director of the assessee Mr. these companies in his statement before ADIT(Inv.) Unit Mumbai. In his statement he stated his intention to cross examine the aforesaid Directors to prove his stand. DDIT(Inv.) Unit has given several opportunities to the assessee to cross examine the aforesaid Directors at its Kolkata office. Inspite of repeated opportunities given to the assessee, the said cross examination could not take place as the assessee sought adjournments eve Thereafter, the assesee stated that \"he would exercise his right of cross examina 2.2 The Assessing Officer provided due opportunity to the managing director of the assessee company to cross directors of the share sought adjournment every time. Further, the Assessing Officer asked the assessee to produce directors of the share subscription companies but the assessee failed in discharging his burden. The relevant observation of the Assessing Officer is reproduced as under: “4.8 In response to this letter the assessee failed to produce any Director personally, instead he filed a letter dtd. 8.10.2008 stating that copies of share application, acknowledgement slip, cert incorporation etc. have been filed vide their letter dated 8.9.2008. Therefore, genuineness of the confirmation could not be established. The burden of proving genuineness of transaction pertains to so called corporate bodies, is on the assessee failed to carry the burden. The assessee cannot get away from this responsibility by putting it on the shoulders of the Assessing Officer. It is the assessee's responsibility to produce Directors of so called Kolkata based companies f has failed to file original confirmation for all so called share applicant companies from the Directors. Luminant Investments Ltd. ITA No. 4356/MUM/2024 As per the statements of the Directors of various Kolkata based companies it is clear that the assessee had given cash to the above mentioned companies which in turn issued back to assessee cheques/Demand Draft of equivalent amount. This fact was stated on oath by the Directors of the said companies. However, Director of the assessee Mr. Vishal Pancholi denied to have paid any cash to the these companies in his statement before ADIT(Inv.) Unit Mumbai. In his statement he stated his intention to cross examine the aforesaid Directors to prove his stand. DDIT(Inv.) Unit has given several opportunities to the assessee to cross examine the aforesaid Directors at its Kolkata office. Inspite of repeated opportunities given to the assessee, the said cross examination could not take place as the assessee sought adjournments eve Thereafter, the assesee stated that \"he would exercise his right of cross examination at the time of assessment\".” The Assessing Officer provided due opportunity to the managing director of the assessee company to cross share subscriber companies but the assessee sought adjournment every time. Further, the Assessing Officer asked the assessee to produce directors of the share subscription companies but the assessee failed in discharging his burden. The servation of the Assessing Officer is reproduced as 4.8 In response to this letter the assessee failed to produce any Director personally, instead he filed a letter dtd. 8.10.2008 stating that copies of share application, acknowledgement slip, cert incorporation etc. have been filed vide their letter dated 8.9.2008. Therefore, genuineness of the confirmation could not be established. The burden of proving genuineness of transaction pertains to so called corporate bodies, is on the assessee and the assessee has failed to carry the burden. The assessee cannot get away from this responsibility by putting it on the shoulders of the Assessing Officer. It is the assessee's responsibility to produce Directors of so called Kolkata based companies for cross verification. Secondly, assessee has failed to file original confirmation for all so called share applicant companies from the Directors. Luminant Investments Ltd. 7 ITA No. 4356/MUM/2024 As per the statements of the Directors of various Kolkata based r that the assessee had given cash to the above mentioned companies which in turn issued back to assessee cheques/Demand Draft of equivalent amount. This fact was stated on oath by the Directors of the said companies. However, Director of Vishal Pancholi denied to have paid any cash to the these companies in his statement before ADIT(Inv.) Unit-IX(2), Mumbai. In his statement he stated his intention to cross examine the aforesaid Directors to prove his stand. DDIT(Inv.) Unit-I (2), Kolkata has given several opportunities to the assessee to cross examine the aforesaid Directors at its Kolkata office. Inspite of repeated opportunities given to the assessee, the said cross examination could not take place as the assessee sought adjournments every time. Thereafter, the assesee stated that \"he would exercise his right of The Assessing Officer provided due opportunity to the managing director of the assessee company to cross-examine subscriber companies but the assessee sought adjournment every time. Further, the Assessing Officer asked the assessee to produce directors of the share subscription companies but the assessee failed in discharging his burden. The servation of the Assessing Officer is reproduced as 4.8 In response to this letter the assessee failed to produce any Director personally, instead he filed a letter dtd. 8.10.2008 stating that copies of share application, acknowledgement slip, certificate of incorporation etc. have been filed vide their letter dated 8.9.2008. Therefore, genuineness of the confirmation could not be established. The burden of proving genuineness of transaction pertains to so- and the assessee has failed to carry the burden. The assessee cannot get away from this responsibility by putting it on the shoulders of the Assessing Officer. It is the assessee's responsibility to produce Directors of so called or cross verification. Secondly, assessee has failed to file original confirmation for all so called share applicant Printed from counselvise.com 4.9 In the view of the above facts and relying upon the investigation reports of Addi.DIT(Inv.I) Unit of investment in the assessee's company is the cash received by the Directors of the Kolkata based companies from the assessee himself. The Directors of investing companies, in there sworn statement recorded u/s. 131 has s from the assessee and against the same cheques/demand draft have been issued. 4.10 Thus the amount received on account of share allotment of shares is Rs 27,78,50,000 and the same is treated as cash credit u/s. 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to assessee's total 2.3 The AO, relying upon the findings of the Investigation Wing, concluded that the appellant had routed unaccounted cash through several layers of companies, ultimatel of share application money. The statements of key individuals intermediaries and company representatives these were sham transactions. The appellant, though provided opportunities, repeatedly failed to cross produce the directors of the subscriber companies. Based on the material gathered and after considering the conduct of the assessee, the AO made an addition of Act, treating the said amount as Assessing Officer also disallowed the share trading loss of Rs.1,34,056/-. The detail of the total income computed by the reproduced as under: BUSINESS INCOME Net loss as per Profit and Loss Account Add : Inadmissible expenses and Income not included Increase in Authorised capital Luminant Investments Ltd. ITA No. 4356/MUM/2024 4.9 In the view of the above facts and relying upon the investigation reports of Addi.DIT(Inv.I) Unit-I, Kolkata which reveals that the source of investment in the assessee's company is the cash received by the Directors of the Kolkata based companies from the assessee himself. The Directors of investing companies, in there sworn statement recorded u/s. 131 has stated that they got cash of equivalent amount from the assessee and against the same cheques/demand draft have 4.10 Thus the amount received on account of share allotment of shares is Rs 27,78,50,000 and the same is treated as cash credit 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to total income.” The AO, relying upon the findings of the Investigation Wing, concluded that the appellant had routed unaccounted cash through several layers of companies, ultimately bringing it back in the guise of share application money. The statements of key individuals intermediaries and company representatives—established that these were sham transactions. The appellant, though provided opportunities, repeatedly failed to cross-examine the witnesses or produce the directors of the subscriber companies. Based on the material gathered and after considering the conduct of the assessee, the AO made an addition of ₹27.78 crores under Section 68 of the Act, treating the said amount as unexplained cash credit. Assessing Officer also disallowed the share trading loss of . The detail of the total income computed by the reproduced as under: Net loss as per Profit and Loss Account Rs. (-) 8,34,210 Add : Inadmissible expenses and Income not included Rs. 4,73,950 Luminant Investments Ltd. 8 ITA No. 4356/MUM/2024 4.9 In the view of the above facts and relying upon the investigation ata which reveals that the source of investment in the assessee's company is the cash received by the Directors of the Kolkata based companies from the assessee himself. The Directors of investing companies, in there sworn statement tated that they got cash of equivalent amount from the assessee and against the same cheques/demand draft have 4.10 Thus the amount received on account of share allotment of shares is Rs 27,78,50,000 and the same is treated as cash credit 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to The AO, relying upon the findings of the Investigation Wing, concluded that the appellant had routed unaccounted cash through y bringing it back in the guise of share application money. The statements of key individuals— established that these were sham transactions. The appellant, though provided examine the witnesses or produce the directors of the subscriber companies. Based on the material gathered and after considering the conduct of the assessee, 27.78 crores under Section 68 of the unexplained cash credit. The Assessing Officer also disallowed the share trading loss of . The detail of the total income computed by the AO is Printed from counselvise.com General Expenses - stamp fees The business loss Rs. 2,19,910/- speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other sources Add : Income as discussed above para 4.9 Total Income 2.4 The appeal preferred before the order dated 20.05.2009. Upon further appeal, the Income Tax Appellate Tribunal (ITAT), vide order in ITA No. 3925/Mum/2009, set aside the matter, directing the CIT(A) to (i) furnish copies of al documents and statements relied upon by the AO, and (ii) provide the appellant an effective opportunity to discharge the burden cast under Section 68 of the Act. ITA No. 3925/Mum/2009 has been reproduced by the Ld. the impugned order. For ready reference, same is reproduced as under: “3.1 The principal issue arising in the instant case, agitated by the assessee per its ground no.1 is the maintainability in law of the assessment of share application money lacs as unexplained income u/s.68 of the Act. In other words, whether the assessee has been able to prove the said credit in terms of the said provision of the Act? 3.2 It would be relevant to reproduce the background facts of the case, which are not disputed. The assessee filed its return of income on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed by filing of the financial statements on 05.10.2007. The return, subsequent to its processing u/s. 143(1), was subject verification procedure by the issue of notice u/s. 143(2). It was observed by the Assessing Officer (A.O.) in the assessment proceedings that the assessee had factual repayment of loan to the tune of Rs. 25.6 crores to the bank. The same was done by share allotment money in the sum of Rs. 2778.5 crores. The same was found to have been received by way of share application Luminant Investments Ltd. ITA No. 4356/MUM/2024 Rs. 1,40,350 Rs (-) 2,19,910 - is treated as speculation loss and allowed to be c speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other Add : Income as discussed above para 4.9 Rs.27.78.50.000 Rs.27,78,50,000 The appeal preferred before the Ld. CIT(A) was dismissed vide order dated 20.05.2009. Upon further appeal, the Income Tax Appellate Tribunal (ITAT), vide order in ITA No. 3925/Mum/2009, set aside the matter, directing the CIT(A) to (i) furnish copies of al documents and statements relied upon by the AO, and (ii) provide the appellant an effective opportunity to discharge the burden cast under Section 68 of the Act. The relevant finding of the Tribunal in ITA No. 3925/Mum/2009 has been reproduced by the Ld. the impugned order. For ready reference, same is reproduced as 3.1 The principal issue arising in the instant case, agitated by the assessee per its ground no.1 is the maintainability in law of the assessment of share application money in the sum of Rs. 2778.50 lacs as unexplained income u/s.68 of the Act. In other words, whether the assessee has been able to prove the said credit in terms of the said provision of the Act? 3.2 It would be relevant to reproduce the background facts of the case, which are not disputed. The assessee filed its return of income on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed by filing of the financial statements on 05.10.2007. The return, subsequent to its processing u/s. 143(1), was subject verification procedure by the issue of notice u/s. 143(2). It was observed by the Assessing Officer (A.O.) in the assessment proceedings that the assessee had factual repayment of loan to the tune of Rs. 25.6 crores to the bank. The same was done by share allotment money in the sum of Rs. 2778.5 crores. The same was found to have been received by way of share application Luminant Investments Ltd. 9 ITA No. 4356/MUM/2024 is treated as speculation loss and allowed to be carried forward as speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other was dismissed vide order dated 20.05.2009. Upon further appeal, the Income Tax Appellate Tribunal (ITAT), vide order in ITA No. 3925/Mum/2009, set aside the matter, directing the CIT(A) to (i) furnish copies of all documents and statements relied upon by the AO, and (ii) provide the appellant an effective opportunity to discharge the burden cast relevant finding of the Tribunal in ITA No. 3925/Mum/2009 has been reproduced by the Ld. CIT(A) in the impugned order. For ready reference, same is reproduced as 3.1 The principal issue arising in the instant case, agitated by the assessee per its ground no.1 is the maintainability in law of the in the sum of Rs. 2778.50 lacs as unexplained income u/s.68 of the Act. In other words, whether the assessee has been able to prove the said credit in 3.2 It would be relevant to reproduce the background facts of the case, which are not disputed. The assessee filed its return of income on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed by filing of the financial statements on 05.10.2007. The return, subsequent to its processing u/s. 143(1), was subject to the verification procedure by the issue of notice u/s. 143(2). It was observed by the Assessing Officer (A.O.) in the assessment proceedings that the assessee had factual repayment of loan to the tune of Rs. 25.6 crores to the bank. The same was done by raising share allotment money in the sum of Rs. 2778.5 crores. The same was found to have been received by way of share application Printed from counselvise.com money toward 555.7 lacs shares of the face value of Rs. 10/ a premium of Rs.40/ being 41 in number, and the corresponding amounts received by way of application money, are listed at pgs.2 to 4 of the assessment order. The same, with an exception of an odd or two, are from private limited companies. The said transaction had in fac subject matter of detailed investigation by the investigation wing of the department, a special team having been constituted for the purpose by the CBDT. The reports in the matter were received by the A.O. from AddI. DIT (Investigation Unit 1), Ko 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during the course of the assessment proceedings. In fine, the Revenue had followed the money trail up to fourth layer, i.e., whereat the cash was found deposited in the bank accounts of pers credibility. The amount was accordingly assessed as income u/s. 68, and confirmed on the same basis; the assessee only producing documents in relation to the amounts being received through the banking channel and toward share allotment. 3.3 The furnishing of a satisfactory explanation as to the nature and source of a credit appearing in the books of the assessee, which is to be on the parameters of identity and capacity (of the creditor) and the genuineness (of the credit transaction), is essentially a matter of fact. We may, however, before delineating and examining the facts of the case, advert to the legal position obtaining in the matter as clarified by the hon'ble courts. Section 68 of the Act is a rule of evidence casting an obligation on t to satisfactorily explain a credit in its books of account. The admitted fact of the receipt of the sum is an evidence against the assessee, and in the absence of it being satisfactorily explained as to its nature and source, the same is liable of the assessee for the relevant year, i.e., the year in which the said sum is found so credited. This capsules the trite law, equally applicable to the share application money or share capital, expounded and elucidated by the apex of decisions, which are considered as locus classicus on the subject, viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha Banerjee & Ors. vs. CIT [1963] 49 CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. [2007] 291 ITR 278 (SC), most of which have been relied upon by the Revenue. The Revenue is under no obligation to show from what source the-income was derived be treated as its concealed income. As stated in Govindarajalu Mudaliar (supra) (at pg.810) the same is as under: Luminant Investments Ltd. ITA No. 4356/MUM/2024 money toward 555.7 lacs shares of the face value of Rs. 10/ a premium of Rs.40/- each. The names of the share applica being 41 in number, and the corresponding amounts received by way of application money, are listed at pgs.2 to 4 of the assessment order. The same, with an exception of an odd or two, are from private limited companies. The said transaction had in fac subject matter of detailed investigation by the investigation wing of the department, a special team having been constituted for the purpose by the CBDT. The reports in the matter were received by the A.O. from AddI. DIT (Investigation Unit 1), Ko 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during the course of the assessment proceedings. In fine, the Revenue had followed the money trail up to fourth layer, i.e., whereat the cash was found deposited in the bank accounts of pers credibility. The amount was accordingly assessed as income u/s. 68, and confirmed on the same basis; the assessee only producing documents in relation to the amounts being received through the banking channel and toward share allotment. furnishing of a satisfactory explanation as to the nature and source of a credit appearing in the books of the assessee, which is to be on the parameters of identity and capacity (of the creditor) and the genuineness (of the credit transaction), is ially a matter of fact. We may, however, before delineating and examining the facts of the case, advert to the legal position obtaining in the matter as clarified by the hon'ble courts. Section 68 of the Act is a rule of evidence casting an obligation on t to satisfactorily explain a credit in its books of account. The admitted fact of the receipt of the sum is an evidence against the assessee, and in the absence of it being satisfactorily explained as to its nature and source, the same is liable to deemed as the income of the assessee for the relevant year, i.e., the year in which the said sum is found so credited. This capsules the trite law, equally applicable to the share application money or share capital, expounded and elucidated by the apex court in and over a number of decisions, which are considered as locus classicus on the subject, viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha Banerjee & Ors. vs. CIT [1963] 49 ITR 112 (SC), Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. [2007] 291 ITR 278 (SC), most of which have been relied upon by the Revenue. The Revenue is under no obligation to show from what income was derived by the assessee and why it should be treated as its concealed income. As stated in Govindarajalu Mudaliar (supra) (at pg.810) the same is as under: Luminant Investments Ltd. 10 ITA No. 4356/MUM/2024 money toward 555.7 lacs shares of the face value of Rs. 10/- each each. The names of the share applicants, being 41 in number, and the corresponding amounts received by way of application money, are listed at pgs.2 to 4 of the assessment order. The same, with an exception of an odd or two, are from private limited companies. The said transaction had in fact been a subject matter of detailed investigation by the investigation wing of the department, a special team having been constituted for the purpose by the CBDT. The reports in the matter were received by the A.O. from AddI. DIT (Investigation Unit 1), Kolkata on 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during the course of the assessment proceedings. In fine, the Revenue had followed the money trail up to fourth layer, i.e., whereat the cash was found deposited in the bank accounts of persons with no credibility. The amount was accordingly assessed as income u/s. 68, and confirmed on the same basis; the assessee only producing documents in relation to the amounts being received through the furnishing of a satisfactory explanation as to the nature and source of a credit appearing in the books of the assessee, which is to be on the parameters of identity and capacity (of the creditor) and the genuineness (of the credit transaction), is ially a matter of fact. We may, however, before delineating and examining the facts of the case, advert to the legal position obtaining in the matter as clarified by the hon'ble courts. Section 68 of the Act is a rule of evidence casting an obligation on the assessee to satisfactorily explain a credit in its books of account. The admitted fact of the receipt of the sum is an evidence against the assessee, and in the absence of it being satisfactorily explained as to deemed as the income of the assessee for the relevant year, i.e., the year in which the said sum is found so credited. This capsules the trite law, equally applicable to the share application money or share capital, court in and over a number of decisions, which are considered as locus classicus on the subject, viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha ITR 112 (SC), Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. [2007] 291 ITR 278 (SC), most of which have been relied upon by the Revenue. The Revenue is under no obligation to show from what by the assessee and why it should be treated as its concealed income. As stated in Govindarajalu Printed from counselvise.com \"Now the contention of the appellant is that assuming that he had failed to establish the case put forward b a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. In t shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a gift of Rs. 80,000 and the other business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly upon to the Income income. There is ampl assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt are of an asses Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs\". Reference in this case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) and CIT vs. Biju Patnaik [1986] 160 ITR 674. 3.4 Over the recent years there has been some doubt with regard to the nature of the duty cast evidence or incomplete information, i.e., qua the parameters of identity, capacity and genuineness being brought forth by the assessed, where the credit is in respect of share capital/share application money followi the decision reported at CIT vs. Divine Leasing & Finance Ltd. [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine Leasing and and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court after examining the legal position, which it clarified to remain unchanged, i.e., with regard to the legal principles and positions involved, to be essentially a matter of fact, so that no question of law, much less substantial question of law arose for consideration. With regard to the issue of discharge or otherwise of the onus cast Luminant Investments Ltd. ITA No. 4356/MUM/2024 \"Now the contention of the appellant is that assuming that he had failed to establish the case put forward by him, it does not follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the income was derived and why it should be treated as concealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and circumstances of each case. In the present case the receipts are shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a gift of Rs. 80,000 and the other being receipt of Rs. 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly upon to the Income-tax Officer to hold that the income must be concealed income. There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the tax Officer is entitled to draw the inference that the receipt are of an assessable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs\". Reference in this regard may also be made to the decision in the case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) and CIT vs. Biju Patnaik [1986] 160 ITR 674. 3.4 Over the recent years there has been some doubt with regard to the nature of the duty cast on the Revenue in the face of inadequate evidence or incomplete information, i.e., qua the parameters of identity, capacity and genuineness being brought forth by the assessed, where the credit is in respect of share capital/share application money following the decision by the Delhi high court in the decision reported at CIT vs. Divine Leasing & Finance Ltd. [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine Leasing and Finance Limited (2) General Exports and Credits Ltd. and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court after examining the legal position, which it clarified to remain unchanged, i.e., with regard to the legal principles and positions lved, to be essentially a matter of fact, so that no question of law, much less substantial question of law arose for consideration. With regard to the issue of discharge or otherwise of the onus cast Luminant Investments Ltd. 11 ITA No. 4356/MUM/2024 \"Now the contention of the appellant is that assuming that he had y him, it does not follow as a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the be treated as concealed income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and he present case the receipts are shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a being receipt of Rs. 42,000 from business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly upon tax Officer to hold that the income must be concealed e authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the tax Officer is entitled to draw the inference that the receipt sable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and regard may also be made to the decision in the case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 3.4 Over the recent years there has been some doubt with regard to on the Revenue in the face of inadequate evidence or incomplete information, i.e., qua the parameters of identity, capacity and genuineness being brought forth by the assessed, where the credit is in respect of share capital/share ng the decision by the Delhi high court in the decision reported at CIT vs. Divine Leasing & Finance Ltd. [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine Finance Limited (2) General Exports and Credits Ltd. and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court after examining the legal position, which it clarified to remain unchanged, i.e., with regard to the legal principles and positions lved, to be essentially a matter of fact, so that no question of law, much less substantial question of law arose for consideration. With regard to the issue of discharge or otherwise of the onus cast Printed from counselvise.com on the assessee it will be relevant to reproduce the re observation of the court, which is as under: “There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly the preponderance of evidence indicates absence of culpability and complexity (complicity) of the assessed it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its Subscribers. The company must, Assessing however, maintain and make available to the Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income The burden of proof can seldom be discharged to the hilt by the assessee if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carryout thorough investigations. But if the Assessing Officer fa any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company.\" We may here emphasis that the share application money is generally received through the making it difficult for discharging the burden of proof on the assessee- recipient company in terms of section 68 to the hilt, as observed by the hon'ble court. The assessee in the instant case is, however a private li substantially interested and which can have a maximum of 50% shareholders. Persons including companies, investing therein would unarguably by known persons (or company's control by such persons) as nobody would oth largely illiquid with an unknown entity and, further, made on assessment of the business potential and prospects. The onus, therefore, on the assessee reference to its facts and circumstan more. Further, that the shares have been issued in the instant case at a premium of 400% of the face value further corroborates the inference of a complete and intimate knowledge of the affairs of the assessee-company. Further on, the matter has been examined in depth by the hon'ble court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR Luminant Investments Ltd. ITA No. 4356/MUM/2024 on the assessee it will be relevant to reproduce the re observation of the court, which is as under: “There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity (complicity) of the assessed it should not be harassed by the Revenue's insistence that it should prove the negative. In the public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its Subscribers. The company must, Assessing however, maintain and make available to the Officer for his perusal, ll the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income The burden of proof can seldom be discharged to the hilt by the assessee if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carryout thorough investigations. But if the Assessing Officer fa any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the company.\" We may here emphasis that the share application money is generally received through the public offer route by public company, making it difficult for discharging the burden of proof on the recipient company in terms of section 68 to the hilt, as observed by the hon'ble court. The assessee in the instant case is, however a private limited company, in which the public is not substantially interested and which can have a maximum of 50% shareholders. Persons including companies, investing therein would unarguably by known persons (or company's control by such persons) as nobody would otherwise risk its capital largely illiquid with an unknown entity and, further, made on assessment of the business potential and prospects. The onus, therefore, on the assessee-debtor, which would only be with reference to its facts and circumstances of the case, is without much more. Further, that the shares have been issued in the instant case at a premium of 400% of the face value further corroborates the inference of a complete and intimate knowledge of the affairs of the company. ther on, the matter has been examined in depth by the hon'ble court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR Luminant Investments Ltd. 12 ITA No. 4356/MUM/2024 on the assessee it will be relevant to reproduce the relevant “There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity (complicity) of the assessed it should not be harassed by the Revenue's insistence that it should prove the negative. In the public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its Subscribers. The company must, Assessing however, maintain and make available to the Officer for his perusal, ll the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income-tax Act. The burden of proof can seldom be discharged to the hilt by the assessee if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carryout thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed We may here emphasis that the share application money is public offer route by public company, making it difficult for discharging the burden of proof on the recipient company in terms of section 68 to the hilt, as observed by the hon'ble court. The assessee in the instant case is, mited company, in which the public is not substantially interested and which can have a maximum of 50% shareholders. Persons including companies, investing therein would unarguably by known persons (or company's control by such erwise risk its capital - which is largely illiquid with an unknown entity and, further, made on assessment of the business potential and prospects. The onus, debtor, which would only be with ces of the case, is without much more. Further, that the shares have been issued in the instant case at a premium of 400% of the face value further corroborates the inference of a complete and intimate knowledge of the affairs of the ther on, the matter has been examined in depth by the hon'ble court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR Printed from counselvise.com 169 (Del), reviving the case law in the matter, and placing the earlier decisions in proper prospective, the same is in respec private limited company and brings out the full scope of the nature and duty cast both on the assessee and the Revenue in the matter. This in fact is followed by a series of a decision by the said court, as in CIT vs. Titan Securities Ltd. [2013] 35 vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may reproduce for the sake of clarity the observations by the hon'ble court in the later case: \"Section 68 of the Income application monies received by an assessee and, therefore, the burden is on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. It involves there ingredients, namely, the proof regarding identity of the share applicants, their creditworthiness to purchase the shares and the genuineness of the transaction as a whole. Held, that there was enough material in the possession of the Assessing Officer which warranted explanation from the assessee regarding the nature and source The assessee had done little to discharge its burden under the section. The Tribunal had failed to keep in view the broader picture and had taken a rather simplistic view of the matter, ignoring the factual aspects and surr It should have dealt with the case in a holistic manner dealing with the entire evidence relied upon and having regard to the report of the investigation wing, the manner in which entries were made in the bank accounts of the three companies, the statement of PKJ and denial thereof by AKK, as also the other surrounding circumstances of the case.\" 3.5 Coming to the facts of the instant case, we find the first observation over the assessee as even, as much as not fur confirmation letters from the creditors. The Revenue has sufficient material that it impugning the transaction as being in fact a result of a deliberated and or casted scheme of routing of cash, tracking the money trail, since unearth by the efforts the department (also refer paras 3.2 & 3.4). The money has been followed upto the point where the cash has been deposited and which extends to the forth tier, as detail transaction Revenue per the reports of its i part of the assessment order as Annexure 1 thereto. This is coupled with the statement of the persons providing access to their bank account or the deposit of their cash, as well as by the directors of the investors compa inasmuch as they are only providing accommodation entries for a Luminant Investments Ltd. ITA No. 4356/MUM/2024 169 (Del), reviving the case law in the matter, and placing the earlier decisions in proper prospective, the same is in respec private limited company and brings out the full scope of the nature and duty cast both on the assessee and the Revenue in the matter. This in fact is followed by a series of a decision by the said court, as in CIT vs. Titan Securities Ltd. [2013] 357 ITR 184 (Del) and CIT vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may reproduce for the sake of clarity the observations by the hon'ble court in the later case: \"Section 68 of the Income-tax Act, 1961, applies equally to share monies received by an assessee and, therefore, the burden is on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. It involves there ingredients, namely, the proof regarding identity of the share their creditworthiness to purchase the shares and the genuineness of the transaction as a whole. Held, that there was enough material in the possession of the Assessing Officer which warranted explanation from the assessee regarding the nature and source of the share application monies. The assessee had done little to discharge its burden under the section. The Tribunal had failed to keep in view the broader picture and had taken a rather simplistic view of the matter, ignoring the factual aspects and surrounding circumstances present in the case. It should have dealt with the case in a holistic manner dealing with the entire evidence relied upon and having regard to the report of the investigation wing, the manner in which entries were made in ounts of the three companies, the statement of PKJ and denial thereof by AKK, as also the other surrounding circumstances 3.5 Coming to the facts of the instant case, we find the first observation over the assessee as even, as much as not fur confirmation letters from the creditors. The Revenue has sufficient material that it impugning the transaction as being in fact a result of a deliberated and or casted scheme of routing of cash, tracking the money trail, since unearth by the efforts of the Investigation wing of the department (also refer paras 3.2 & 3.4). The money has been followed upto the point where the cash has been deposited and which extends to the forth tier, as detail transaction Revenue per the reports of its investigation wing, and which forms part of the assessment order as Annexure 1 thereto. This is coupled with the statement of the persons providing access to their bank account or the deposit of their cash, as well as by the directors of the investors companies, admitting to the transaction beign bogus inasmuch as they are only providing accommodation entries for a Luminant Investments Ltd. 13 ITA No. 4356/MUM/2024 169 (Del), reviving the case law in the matter, and placing the earlier decisions in proper prospective, the same is in respect of a private limited company and brings out the full scope of the nature and duty cast both on the assessee and the Revenue in the matter. This in fact is followed by a series of a decision by the said court, 7 ITR 184 (Del) and CIT vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may reproduce for the sake of clarity the observations by the hon'ble tax Act, 1961, applies equally to share monies received by an assessee and, therefore, the burden is on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. It involves there ingredients, namely, the proof regarding identity of the share their creditworthiness to purchase the shares and the Held, that there was enough material in the possession of the Assessing Officer which warranted explanation from the assessee of the share application monies. The assessee had done little to discharge its burden under the section. The Tribunal had failed to keep in view the broader picture and had taken a rather simplistic view of the matter, ignoring the ounding circumstances present in the case. It should have dealt with the case in a holistic manner dealing with the entire evidence relied upon and having regard to the report of the investigation wing, the manner in which entries were made in ounts of the three companies, the statement of PKJ and denial thereof by AKK, as also the other surrounding circumstances 3.5 Coming to the facts of the instant case, we find the first observation over the assessee as even, as much as not furnished confirmation letters from the creditors. The Revenue has sufficient material that it impugning the transaction as being in fact a result of a deliberated and or casted scheme of routing of cash, tracking the of the Investigation wing of the department (also refer paras 3.2 & 3.4). The money has been followed upto the point where the cash has been deposited and which extends to the forth tier, as detail transaction- wise by the nvestigation wing, and which forms part of the assessment order as Annexure 1 thereto. This is coupled with the statement of the persons providing access to their bank account or the deposit of their cash, as well as by the directors of nies, admitting to the transaction beign bogus inasmuch as they are only providing accommodation entries for a Printed from counselvise.com commission, the rate of which has also been stated. Further, there has been no rebut of those statements. The Revenue is, therefore, fully entitle to rely on them and in fact, entitled serious doubt with regard to the genuineness of the said credits which in fact reveal the pernicious scheme, as held by the hon'ble court in the case of Divine Leasing & Finance Ltd. (supra) of conversion of unaccoun money, by masquerading his share capital of a company. The assessee has done little except raising a legal plea of non production of the said directors or deponents for cross examination. The same has been disregarded by the Revenue on the ground that sufficient opportunity is toward the same were granted during the course of the proceedings before the investigation wing and which deliberately evaded by the assessee on pretext or the other. This conduct needs to be seriously depreciated inasmuch as the investigation wing being fully in position of the fact and rather in a much better position to investigate the facts, both in terms of the information in their position as well as in terms of time, as information tends to be dissipated with the lapse of t how, we wonder could the assessee this legal plea inasmuch as the confirmations as afore by it. True, the A.O. has not created any further investigation in the matter relying solely on the finding However, firstly, as afore secondly, the question of the same would only where the assessee furnishes any material controverting the said incriminating information in the position of th documentary evidences, viz. the share application money, balance sheet of the creditor companies is of little evidential value in the facts of unearth and late bear by the Revenue. Rather, it needs to be appreciated that if be itself sufficient to prove cash credits, section 68 would itself to be misconceived and redundant inasmuch as it is only based on the credit appearing in the books of account. As clarified earlier, it is a rule of evidence casting the burden of proof to exhibit that the said credit in act represents a genuine credit transaction. 3.6 At the same time, however, we also find that, rather strangely, the matter in the position of the A.O. has not been provided to t assessee. The assessee has raised a specific plea in this regard before the Id. CIT(A) (vide its ground no.2). This is material and definitely amounts to a denial of opportunity to the assessee to present its case. Though, in our view, the assessee ough asked for the same, the primary onus being on it, and with it having not even furnished the confirmations. However, the Revenue relying on the findings of its investigation wing which though no doubt are relevant and it is fully entitled to do so Luminant Investments Ltd. ITA No. 4356/MUM/2024 commission, the rate of which has also been stated. Further, there has been no rebut of those statements. The Revenue is, therefore, e to rely on them and in fact, entitled serious doubt with regard to the genuineness of the said credits which in fact reveal the pernicious scheme, as held by the hon'ble court in the case of Divine Leasing & Finance Ltd. (supra) of conversion of unaccoun money, by masquerading his share capital of a company. The assessee has done little except raising a legal plea of non production of the said directors or deponents for cross examination. The same has been disregarded by the Revenue on the ground that sufficient opportunity is toward the same were granted during the course of the proceedings before the investigation wing and which deliberately evaded by the assessee on pretext or the other. This conduct needs to be seriously depreciated inasmuch as the investigation wing being fully in position of the fact and rather in a much better position to investigate the facts, both in terms of the information in their position as well as in terms of time, as information tends to be dissipated with the lapse of t how, we wonder could the assessee this legal plea inasmuch as the confirmations as afore-noted from the creditors have not been filled by it. True, the A.O. has not created any further investigation in the matter relying solely on the findings by the investigation wing. However, firstly, as afore-stated he is fully entitled to do so, and secondly, the question of the same would only where the assessee furnishes any material controverting the said incriminating information in the position of the Revenue. The furnishing of the documentary evidences, viz. the share application money, balance sheet of the creditor companies is of little evidential value in the facts of unearth and late bear by the Revenue. Rather, it needs to be appreciated that if the evidence by way of book entries were to be itself sufficient to prove cash credits, section 68 would itself to be misconceived and redundant inasmuch as it is only based on the credit appearing in the books of account. As clarified earlier, it is a le of evidence casting the burden of proof to exhibit that the said credit in act represents a genuine credit transaction. 3.6 At the same time, however, we also find that, rather strangely, the matter in the position of the A.O. has not been provided to t assessee. The assessee has raised a specific plea in this regard before the Id. CIT(A) (vide its ground no.2). This is material and definitely amounts to a denial of opportunity to the assessee to present its case. Though, in our view, the assessee ough asked for the same, the primary onus being on it, and with it having not even furnished the confirmations. However, the Revenue relying on the findings of its investigation wing which though no doubt are relevant and it is fully entitled to do so. It was incumbent in the Luminant Investments Ltd. 14 ITA No. 4356/MUM/2024 commission, the rate of which has also been stated. Further, there has been no rebut of those statements. The Revenue is, therefore, e to rely on them and in fact, entitled serious doubt with regard to the genuineness of the said credits which in fact reveal the pernicious scheme, as held by the hon'ble court in the case of Divine Leasing & Finance Ltd. (supra) of conversion of unaccounted money, by masquerading his share capital of a company. The assessee has done little except raising a legal plea of non- production of the said directors or deponents for cross examination. The same has been disregarded by the Revenue on the ground that sufficient opportunity is toward the same were granted during the course of the proceedings before the investigation wing and which deliberately evaded by the assessee on pretext or the other. This conduct needs to be seriously depreciated inasmuch as the investigation wing being fully in position of the fact and rather in a much better position to investigate the facts, both in terms of the information in their position as well as in terms of time, as information tends to be dissipated with the lapse of time. Further, how, we wonder could the assessee this legal plea inasmuch as the noted from the creditors have not been filled by it. True, the A.O. has not created any further investigation in the s by the investigation wing. stated he is fully entitled to do so, and secondly, the question of the same would only where the assessee furnishes any material controverting the said incriminating e Revenue. The furnishing of the documentary evidences, viz. the share application money, balance- sheet of the creditor companies is of little evidential value in the facts of unearth and late bear by the Revenue. Rather, it needs to the evidence by way of book entries were to be itself sufficient to prove cash credits, section 68 would itself to be misconceived and redundant inasmuch as it is only based on the credit appearing in the books of account. As clarified earlier, it is a le of evidence casting the burden of proof to exhibit that the said 3.6 At the same time, however, we also find that, rather strangely, the matter in the position of the A.O. has not been provided to the assessee. The assessee has raised a specific plea in this regard before the Id. CIT(A) (vide its ground no.2). This is material and definitely amounts to a denial of opportunity to the assessee to present its case. Though, in our view, the assessee ought to have asked for the same, the primary onus being on it, and with it having not even furnished the confirmations. However, the Revenue relying on the findings of its investigation wing which though no doubt are . It was incumbent in the Printed from counselvise.com fairness of procedure and principle of justice to confront those materials to the assessee. The Id. CIT(A) has not dealt with this aspect of the matter. We decide 2.5 In compliance, the appellant between January 2019 and May 2024, furnishing the relevant documents and affording sufficient opportunity for representation. Despite this, the appellant neither submitted any fresh explanation nor availed the opportunity to rebut the furnished. Instead, it merely reiterated the photocopies of submissions earlier placed before the Tribunal, without addressing the factual matrix or the findings of the Investigation Wing. relevant detail is reproduced “5. In view of the above directions of Hon’ble ITAT, the present appellate proceedings were initiated. Thereafter, the appellant was given multiple opportunities of hearing by issuing notices, as detailed below: S. No. Date of Notice 1. 07/01/2019 2. 04/03/2024 3. 08/03/2024 4. 15/03/2024 5. 22/03/2024 6. 24/04/2024 2.6 In view of non-compliance on the part of the assessee, the Ld. CIT(A) provided one more final opportunity on 08.05.2024 but the assessee sought adjournment Thereafter, the assessee filed only photocopies of the submissions which were filed before the Tribunal in ITA No. 3925/Mum/2009. Luminant Investments Ltd. ITA No. 4356/MUM/2024 fairness of procedure and principle of justice to confront those materials to the assessee. The Id. CIT(A) has not dealt with this aspect of the matter. We decide accordingly.\" In compliance, the ld. CIT(A) issued multiple not appellant between January 2019 and May 2024, furnishing the relevant documents and affording sufficient opportunity for representation. Despite this, the appellant neither submitted any fresh explanation nor availed the opportunity to rebut the furnished. Instead, it merely reiterated the photocopies of submissions earlier placed before the Tribunal, without addressing the factual matrix or the findings of the Investigation Wing. relevant detail is reproduced as under: of the above directions of Hon’ble ITAT, the present appellate proceedings were initiated. Thereafter, the appellant was given multiple opportunities of hearing by issuing notices, as detailed below:- Date of Notice Date of Hearing 07/01/2019 17/01/2019 04/03/2024 07/03/2024 08/03/2024 14/03/2024 15/03/2024 21/03/2024 22/03/2024 28/03/2024 24/04/2024 01/05/2024 compliance on the part of the assessee, the Ld. CIT(A) provided one more final opportunity on 08.05.2024 but the assessee sought adjournment for compiling of the Paper Book , the assessee filed only photocopies of the submissions which were filed before the Tribunal in ITA No. 3925/Mum/2009. Luminant Investments Ltd. 15 ITA No. 4356/MUM/2024 fairness of procedure and principle of justice to confront those materials to the assessee. The Id. CIT(A) has not dealt with this CIT(A) issued multiple notices to the appellant between January 2019 and May 2024, furnishing the relevant documents and affording sufficient opportunity for representation. Despite this, the appellant neither submitted any fresh explanation nor availed the opportunity to rebut the evidence furnished. Instead, it merely reiterated the photocopies of submissions earlier placed before the Tribunal, without addressing the factual matrix or the findings of the Investigation Wing. The of the above directions of Hon’ble ITAT, the present appellate proceedings were initiated. Thereafter, the appellant was given multiple opportunities of hearing by issuing notices, as Date of Hearing compliance on the part of the assessee, the Ld. CIT(A) provided one more final opportunity on 08.05.2024 but the compiling of the Paper Book. , the assessee filed only photocopies of the submissions which were filed before the Tribunal in ITA No. 3925/Mum/2009. Printed from counselvise.com 2.7 The Ld. CIT(A) provided material which the AO and which was CIT(A), in his impugned order dated 20.06.2024, noted the continued non-cooperation of the assessee and confirmed the addition made under Section 68 of the Act, observing that the appellant had failed to discharge the statutory onus of establishing the identity, creditworthiness, and genuineness of the alleged share applicants. He dismissed the grounds of appeal of the assessee observing as under: “9. It was noticed that in the appeal filed in Form No. 35 before CIT(Appeals) against the assessment order u/s.143(3) dated 07/11/2008, vide Ground No.2, the appellant had, inter alia, contended that the Assessing Officer had violated the principles of natural justice in not furnishing, before passing the impugned assessment order, the various statements on oath of directors of various companies to whom shares had been allotted. Accordingly, in compliance with the directions of Hon'ble ITAT, copies of such statements were provided to the AR of the appellant during the course of hearing on 21.03.2024 so as to enable the appellant to present its case. However, despite three notices of hearing issued thereafter, the appellant did not file any written submissions a why the action of the AO in treating the amount of Rs.27,85,50,000/ amount received on allotment of its shares (including share premium), as unexplained cash credit and consequently adding the same to its total income u/s.68 of the Act, upheld by the learned CIT(Appeals) vide order dated 20/05/2009, is not justified. In response to the notice of hearing issued on 02/05/2024 granting final opportunity, the appellant sought adjournment on the ground that they were in the process of compiling the paper book. The adjournment was granted and the hearing was re 20/06/2024. However, even then, the appellant has filed only the photo copy of the submissions filed before Hon'ble ITAT. It is seen that these submissions had been filed by the appellant before the ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are a summary of the evidences in respect of the receipt of share application monies as submitted by the appellant with the Assessing Office Luminant Investments Ltd. ITA No. 4356/MUM/2024 Ld. CIT(A) provided material which was in which was relied upon while making addition CIT(A), in his impugned order dated 20.06.2024, noted the cooperation of the assessee and confirmed the addition made under Section 68 of the Act, observing that the appellant had failed to discharge the statutory onus of establishing the identity, creditworthiness, and genuineness of the alleged share dismissed the grounds of appeal of the assessee It was noticed that in the appeal filed in Form No. 35 before CIT(Appeals) against the assessment order u/s.143(3) dated 07/11/2008, vide Ground No.2, the appellant had, inter alia, contended that the Assessing Officer had violated the principles of l justice in not furnishing, before passing the impugned assessment order, the various statements on oath of directors of various companies to whom shares had been allotted. Accordingly, in compliance with the directions of Hon'ble ITAT, copies of such tements were provided to the AR of the appellant during the course of hearing on 21.03.2024 so as to enable the appellant to present its case. However, despite three notices of hearing issued thereafter, the appellant did not file any written submissions a why the action of the AO in treating the amount of Rs.27,85,50,000/-, found credited in its books of accounts as amount received on allotment of its shares (including share premium), as unexplained cash credit and consequently adding the otal income u/s.68 of the Act, upheld by the learned CIT(Appeals) vide order dated 20/05/2009, is not justified. In response to the notice of hearing issued on 02/05/2024 granting final opportunity, the appellant sought adjournment on the ground were in the process of compiling the paper book. The adjournment was granted and the hearing was re 20/06/2024. However, even then, the appellant has filed only the photo copy of the submissions filed before Hon'ble ITAT. It is seen ubmissions had been filed by the appellant before the ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are a summary of the evidences in respect of the receipt of share application monies as submitted by the appellant with the Assessing Officer and the CIT(A). Thus, the appellant has failed to Luminant Investments Ltd. 16 ITA No. 4356/MUM/2024 was in possession of relied upon while making addition. The CIT(A), in his impugned order dated 20.06.2024, noted the cooperation of the assessee and confirmed the addition made under Section 68 of the Act, observing that the appellant had failed to discharge the statutory onus of establishing the identity, creditworthiness, and genuineness of the alleged share dismissed the grounds of appeal of the assessee, It was noticed that in the appeal filed in Form No. 35 before CIT(Appeals) against the assessment order u/s.143(3) dated 07/11/2008, vide Ground No.2, the appellant had, inter alia, contended that the Assessing Officer had violated the principles of l justice in not furnishing, before passing the impugned assessment order, the various statements on oath of directors of various companies to whom shares had been allotted. Accordingly, in compliance with the directions of Hon'ble ITAT, copies of such tements were provided to the AR of the appellant during the course of hearing on 21.03.2024 so as to enable the appellant to present its case. However, despite three notices of hearing issued thereafter, the appellant did not file any written submissions as to why the action of the AO in treating the amount of , found credited in its books of accounts as amount received on allotment of its shares (including share premium), as unexplained cash credit and consequently adding the otal income u/s.68 of the Act, upheld by the learned CIT(Appeals) vide order dated 20/05/2009, is not justified. In response to the notice of hearing issued on 02/05/2024 granting final opportunity, the appellant sought adjournment on the ground were in the process of compiling the paper book. The adjournment was granted and the hearing was re- fixed for 20/06/2024. However, even then, the appellant has filed only the photo copy of the submissions filed before Hon'ble ITAT. It is seen ubmissions had been filed by the appellant before the ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are a summary of the evidences in respect of the receipt of share application monies as submitted by the appellant with the r and the CIT(A). Thus, the appellant has failed to Printed from counselvise.com bring any new facts/material on record to support its case, despite being given fresh and adequate opportunity during the course of the present proceedings as per the directions of the Hon'ble ITAT. 10. It would be seen from the above discussion that as directed by Hon'ble ITAT, relevant material was provided to the appellant and sufficient opportunities were also provided to the appellant. However, the appellant has chosen not to avail of these fresh opportunities granted to it as per the directions of Hon'ble ITAT to present its case. Under the circumstances, I see no reason to take a different view from the one taken by my predecessor on the issue in his order dated 20/05/2009. The issue is, accordingly, against the appellant. 3. Despite notifying by way of registered post neither anyone appeared before us nor any application for adjournment on behalf of the assessee assessee was not interested in proceeded to hear appeal ex the argument of the Ld. DR and perusal of the material on record. 4. We find that the Assessing Officer has made addition on the basis of the thorough inv Wing under a special team constituted of the CBDT wherein the director of the share subscriber companies deposed that they had returned cash against the cheque issued to the assessee company. The assessee was dul those persons but assessee did not avail the opportunity despite providing multiple opportunity. However, assessee also did not discharge his burden u/s 68 of the Act of establishing the identity, genuineness of the transaction and creditworthiness of the subscriber parties. Luminant Investments Ltd. ITA No. 4356/MUM/2024 bring any new facts/material on record to support its case, despite being given fresh and adequate opportunity during the course of the present proceedings as per the directions of the Hon'ble ITAT. t would be seen from the above discussion that as directed by Hon'ble ITAT, relevant material was provided to the appellant and sufficient opportunities were also provided to the appellant. However, the appellant has chosen not to avail of these fresh rtunities granted to it as per the directions of Hon'ble ITAT to present its case. Under the circumstances, I see no reason to take a different view from the one taken by my predecessor on the issue in his order dated 20/05/2009. The issue is, accordingly, appellant.” Despite notifying by way of registered post neither anyone before us nor any application for adjournment on behalf of the assessee, therefore, we were of the opinion that not interested in prosecuting the appeal r appeal ex-parte qua the assessee the argument of the Ld. DR and perusal of the material on record. We find that the Assessing Officer has made addition on the basis of the thorough investigation carried out by the Investigation Wing under a special team constituted of the CBDT wherein the director of the share subscriber companies deposed that they had returned cash against the cheque issued to the assessee company. The assessee was duly provided the opportunity to cross persons but assessee did not avail the opportunity despite providing multiple opportunity. However, assessee also did not discharge his burden u/s 68 of the Act of establishing the identity, the transaction and creditworthiness of the The Ld. CIT(A) has recorded that all the Luminant Investments Ltd. 17 ITA No. 4356/MUM/2024 bring any new facts/material on record to support its case, despite being given fresh and adequate opportunity during the course of the present proceedings as per the directions of the Hon'ble ITAT. t would be seen from the above discussion that as directed by Hon'ble ITAT, relevant material was provided to the appellant and sufficient opportunities were also provided to the appellant. However, the appellant has chosen not to avail of these fresh rtunities granted to it as per the directions of Hon'ble ITAT to present its case. Under the circumstances, I see no reason to take a different view from the one taken by my predecessor on the issue in his order dated 20/05/2009. The issue is, accordingly, decided Despite notifying by way of registered post neither anyone before us nor any application for adjournment was filed of the opinion that prosecuting the appeal, Hence, we parte qua the assessee, after hearing the argument of the Ld. DR and perusal of the material on record. We find that the Assessing Officer has made addition on the estigation carried out by the Investigation Wing under a special team constituted of the CBDT wherein the director of the share subscriber companies deposed that they had returned cash against the cheque issued to the assessee company. y provided the opportunity to cross-examine persons but assessee did not avail the opportunity despite providing multiple opportunity. However, assessee also did not discharge his burden u/s 68 of the Act of establishing the identity, the transaction and creditworthiness of the The Ld. CIT(A) has recorded that all the Printed from counselvise.com statements and other documents relied upon by the Assessing Officer were duly provided to the assessee and despite no fresh explanation was filed befo filed earlier before the Tribunal and were rejected by the Tribunal(supra) in the order. Before us, also assessee has not explained genuineness of the share subscription money including share premium received. 4.1 Upon careful consideration, we find no infirmity in the orders passed by the lower authorities. The investigation undertaken by the Department was comprehensive and based on concrete statements and documentation. The appellant failed at every stage to discharge the initial burden placed upon it under Section 68 of the Act. The settled position in law, as enunciated by Supreme Court in CIT v. P. Mohanakala Kale Khan Mohammad Hanif v. CIT the burden lies squarely upon the assessee to offer a satisfactory explanation regarding the nature and source of any credit in its books, failing which such amount may be deemed as the assessee’s income. The Tribunal, in its earlier order, rightly held that S 68 is a rule of evidence and mandates the assessee to prove all three components—identity, creditworthiness, and genuineness. It also rightly distinguished the decision of the Delhi High Court in CIT v. Lovely Exports Pvt. Ltd. inapplicable to the facts of the present case, particularly in light of Luminant Investments Ltd. ITA No. 4356/MUM/2024 statements and other documents relied upon by the Assessing Officer were duly provided to the assessee and despite no fresh explanation was filed before him except the submission which were filed earlier before the Tribunal and were rejected by the Tribunal(supra) in the order. Before us, also assessee has not explained genuineness of the share subscription money including share premium received. Upon careful consideration, we find no infirmity in the orders passed by the lower authorities. The investigation undertaken by the Department was comprehensive and based on concrete statements and documentation. The appellant failed at every stage harge the initial burden placed upon it under Section 68 of the Act. The settled position in law, as enunciated by CIT v. P. Mohanakala [(2007) 291 ITR 278 (SC)], Kale Khan Mohammad Hanif v. CIT [(1963) 50 ITR 1 (SC)], is that burden lies squarely upon the assessee to offer a satisfactory explanation regarding the nature and source of any credit in its books, failing which such amount may be deemed as the assessee’s The Tribunal, in its earlier order, rightly held that S 68 is a rule of evidence and mandates the assessee to prove all identity, creditworthiness, and genuineness. It also rightly distinguished the decision of the Delhi High Court in CIT v. Lovely Exports Pvt. Ltd. [(2008) 299 ITR 268 ( inapplicable to the facts of the present case, particularly in light of Luminant Investments Ltd. 18 ITA No. 4356/MUM/2024 statements and other documents relied upon by the Assessing Officer were duly provided to the assessee and despite no fresh re him except the submission which were filed earlier before the Tribunal and were rejected by the Tribunal(supra) in the order. Before us, also assessee has not explained genuineness of the share subscription money including Upon careful consideration, we find no infirmity in the orders passed by the lower authorities. The investigation undertaken by the Department was comprehensive and based on concrete statements and documentation. The appellant failed at every stage harge the initial burden placed upon it under Section 68 of the Act. The settled position in law, as enunciated by Hon’ble [(2007) 291 ITR 278 (SC)], [(1963) 50 ITR 1 (SC)], is that burden lies squarely upon the assessee to offer a satisfactory explanation regarding the nature and source of any credit in its books, failing which such amount may be deemed as the assessee’s The Tribunal, in its earlier order, rightly held that Section 68 is a rule of evidence and mandates the assessee to prove all identity, creditworthiness, and genuineness. It also rightly distinguished the decision of the Delhi High Court in [(2008) 299 ITR 268 (Del)] as inapplicable to the facts of the present case, particularly in light of Printed from counselvise.com the appellant being a closely held company and the overwhelming evidence against it. The non failure to produce directors, the evasive investigation, and the absence of any credible rebuttal cumulatively demonstrate that the assessee has not acted in good faith and has failed to meet the evidentiary threshold prescribed under the law. the circumstances, we see no error i learned CIT(A) in confirming the addition made under Section 68 of the Act. The findings are consistent with the material available on record and are in conformity with the principles laid down by Hon’ble Supreme Court accordingly dismissed. 5. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 31/07/2025 Rahul Sharma, Sr. P.S. Luminant Investments Ltd. ITA No. 4356/MUM/2024 the appellant being a closely held company and the overwhelming The non-furnishing of confirmation letters, the failure to produce directors, the evasive conduct during investigation, and the absence of any credible rebuttal cumulatively demonstrate that the assessee has not acted in good faith and has failed to meet the evidentiary threshold prescribed under the law. the circumstances, we see no error in the order passed by the learned CIT(A) in confirming the addition made under Section 68 of the Act. The findings are consistent with the material available on record and are in conformity with the principles laid down by Hon’ble Supreme Court. The grounds of appeal of the assessee are accordingly dismissed. In the result, the appeal of the assessee is dismissed. nounced in the open Court on 31/07/2025. Sd/ SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Luminant Investments Ltd. 19 ITA No. 4356/MUM/2024 the appellant being a closely held company and the overwhelming furnishing of confirmation letters, the conduct during investigation, and the absence of any credible rebuttal cumulatively demonstrate that the assessee has not acted in good faith and has failed to meet the evidentiary threshold prescribed under the law. In n the order passed by the learned CIT(A) in confirming the addition made under Section 68 of the Act. The findings are consistent with the material available on record and are in conformity with the principles laid down by s of appeal of the assessee are In the result, the appeal of the assessee is dismissed. /07/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Luminant Investments Ltd. ITA No. 4356/MUM/2024 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Luminant Investments Ltd. 20 ITA No. 4356/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "
Other Referred Cases
Govindarajulu Mudaliar vs. CIT, Kale Khan Mohammad Hanif vs. CIT, Sreelekha Banerjee & Ors. vs. CIT, CIT vs. P Mohanakala & Ors., CIT vs. Divine Leasing & Finance Ltd., CIT vs. Titan Securities Ltd., CIT vs. Youth Construction P. Ltd.
Laws Referred To
Income Tax Act, 1961
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