M/S. MYSORE FINLEASE PVT. LTD.,NEW DELHI V. ACIT, NEW DELHI

CO 141/DEL/2017

AI Insights

The case involves cross appeals by the Revenue and the assessee, Mysore Finlease Pvt Ltd, against the order of the CIT(A) pertaining to the assessment year 2012-13. The primary issues revolved around the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, concerning unexplained share capital and loans and advances. The Tribunal examined the evidences, including the financial capacity of the subscriber companies, the genuineness of the transactions, and the procedural compliance with the Companies Act and RBI norms for NBFCs. The Tribunal's decision was influenced by the detailed investigations and field enquiries conducted by the Assessing Officer, which revealed discrepancies and lack of substantive evidence to support the assessee's claims.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 37349 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 4 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 18-10-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2017
• Other Referred Cases: M/s. Mantram Commodities Pvt. Ltd. Vs ITO, CIT vs. Dwarkadhish Investment Pvt. Ltd., CIT vs. Lovely Exports Ltd., Pr.CIT-8 vs Softline Creations Pvt. Ltd., Commissioner of Income Tax & Ors vs. Five Vision Promoters PVT. Ltd. & Ors., CIT vs Goel Sons Golden Estate (P) Ltd., CIT vs. Nishan Indo Commerce Ltd., ITO vs Rakam Money Matters (P) Ltd., PR. CIT vs Rakam Money Matters (P) Ltd., CIT vs. Vrindavan Farms (P) Ltd., Commissioner of Income Tax vs. Gangeshwari Metal Pvt. Ltd., CIT vs Fair Finvest Ltd., CIT vs Oasis Hospitalities (P) Ltd., CIT vs Value capital services (P) Ltd., CIT vs Winstral Petrochemicals (P) Ltd., CIT vs. Divine Leasing and Finance Ltd., Baba Bhoothnath Trade and Commerce Ltd. vs. ITO, ITO vs Sai Everest Building & Developers, PCIT (Central)-1 v. NRA Iron & Steel (P.) Ltd., CIT v. Nipun Builders & Developers (P.) Ltd., CIT vs. Navodaya Castles Pvt ltd, CIT vs. M/s Navodaya Castles Pvt ltd, CIT vs. Divine Leasing and Finance Ltd., CIT vs. Lovely Exports Ltd., CIT vs. Value capital services (P) Ltd., CIT vs. Winstral Petrochemicals (P) Ltd., CIT vs. Oasis Hospitalities (P) Ltd., CIT vs. Gangeshwari Metal Pvt. Ltd., CIT vs. Vrindavan Farms (P) Ltd., CIT vs. Nishan Indo Commerce Ltd., CIT vs. Goel Sons Golden Estate (P) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHRA JYOTI CHAKRABORTY
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Business income; Question of law; Unexplained cash credit; Gift; Principle of natural justice; Accommodation entries; Source of fund; Bogus Share capital; Share purchase agreement; Bogus
• Section: 143(3); 119; 250; 48; 68; 208; 131; 205; 133(6); 13; 234B; 264; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘E’ BENCH, NEW DELHI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 2425/DEL/2017[A.Y. 2012-13] & CO No. 141/DEL/2017 [A.Y. 2012-13] [A/o ITA No. 2425/DEL/2017] The A.C.I.T Vs. Mysore Finlease Pvt Ltd Central Circle – 13 C – 186, 2nd Floor, Nirmal Vihar New Delhi Vikas Marg, New Delhi PAN – AAACM 6761 B ITA No. 2366/DEL/2017 [A.Y. 2012-13] Mysore Finlease Pvt Ltd Vs. The A.C.I.T C – 186, 2nd Floor, Nirmal Vihar Central Circle – 13 Vikas Marg, New Delhi New Delhi PAN – AAACM 6761 B (Applicant) (Respondent) Assessee By : Dr. Rakesh Gupta, Adv Shri Somil Agarwal, Adv Department By : Shri Subhra Jyoti Chakraborty Date of Hearing : 08.07.2024 Date of Pronouncement : .10.2024 2 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- The above captioned cross appeals by the Revenue and assessee are directed towards the order of the CIT(A) - 29, New Delhi dated 31.01.2017 pertaining to A.Y. 2012-13. The assessee has also filed a Cross Objection arising out of ITA No. 2425/DEL/2017. 2. Both these appeals and cross objection pertaining to same assessee were heard together and are disposed of by this common order for the sake of convenience and brevity. 2. The ld. counsel for the assessee sought permission to withdraw the appeal filed by the assessee in ITA No. 2366/DEL/2017 vide application dated 18.04.2024. The appeal is allowed to be withdrawn and therefore, the same is dismissed as withdrawn. 3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. 3 4. The Revenue in ITA No. 2425/DEL/2017 for A.Y. 2012-13has raised the following grounds of appeal: 1. On the facts and in the circumstances of the case, the Ld. CIT{A) has erred in law and on facts in deleting the addition of Rs. 31,90,49,800/- made by assessing officer on account of unexplained share capital when the creditworthiness of the companies were not proved beyond doubt based on AO's investigation. 2. On the facts and in the circumstances of the case, the Ld. CIT{A) has erred in law and on facts in deleting the addition of Rs. 8,71,59,600/- on account of unexplained loans and advances when the identity, genuineness & creditworthiness of the creditors were not proved by the assessee. 3. That the grounds of appeal are without prejudice to each other. 4. That the order of the ClT{A) is erroneous and is not tenable on facts and in law. 5. That the appellant craves leave to add, amend, alter or forgo any ground{s) of appeal either before or at the time of hearing of the appeal. 4 5. The assessee in its CO No. 141/DEL/2017 for A.Y. 2012-13 arising out of Revenue appeal in ITA No. 2425/DEL/2017 has raised the following grounds of appeal in its cross objections: “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition of Rs. 36,87,95,074/- fully as made by Ld. AO on account of share capital and has further erred in sustaining the same to the extent of Rs. 4,98,20,0001- in this regard and that too by recording incorrect facts and finding and without observing the principles of natural justice. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in sustaining the addition made by Ld. AO to the extent of Rs. 4,98,20,0001- on account of share capital is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 1,05,15,0001- on account of loss on shares. 4. That in any case and in any View of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 1,05,15,0001- on account of loss on shares is bad in law and against the facts and circumstances of the case. 5 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs. 12,35,0001- on account of sales promotion expenses. 6. That III any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of Rs. 12,35,0001- on account of sales promotion expenses is bad in law and against the facts and circumstances of the case. 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition of Rs. 9,64,57,460/- fully as made by Ld. AO on account of loans and advances and has further erred in sustaining the same to the extent of Rs. 86,95,0001- in this regard and that too by recording incorrect facts and findings and without observing the principles of natural justice. 8. That in any case. and in any view of the matter, action of Ld. CIT(A) in sustaining the addition made by Ld. AO to the extent of Rs. 86,95,0001- on account of loans and advances is bad in law and against the facts and circumstances of the case. 9. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest uls 234B and 234D of the Income Tax Act, 1961. 6 10.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. “ 6. Brief facts relating to Ground No. 1 of Revenue’s appeal and ground number 1 and 2 of assessee’s cross appeal is that during the course of assessment proceedings, the Assessing Officer noticed that the assessee allotted its shares, as on 31.03.2012, to a total of 30 subscribers, 28 subscribers being companies, amounting to Rs 47,68,95,074/- at face value of Rs. 10/- having premium of Rs. 190 on each share totaling to Rs. 200/- per shares. Out of this share allocation, subscription amounting to Rs. 36,87,95,074/- [(Rs 36,88,69,800/- as corrected by CIT(A)] pertained to the instant AY 2012-13. 7. When the assessee was asked to furnish documents to prove the identity, creditworthiness and genuineness of the said share subscriptions, the assessee provided confirmation, copy of return filed by investors, their bank account, PAN, share application, allotment of shares, submissions before the ROC, copy of ITR, bank statement, balance sheet, profit and loss account etc. of such investors of share in the company. From the documents submitted by the assessee and replies received from the subscribers, the AO got suspicious with 7 respect to the authenticity of the documents. The AO also independently issued notice u/s 133(6)/131 to the subscribers for verification. 8. The Assessing Officer, thereafter, deputed an Inspector of the department to conduct field enquiries. The Inspector reported that no such companies existed on the addresses provided by the subscriber companies. The two directors of the assessee company Smt Charu Agarwal and Shi Amit Sharma did not appear on summons issued. Accordingly, a show cause notice, describing the investigation conducted so far, was issued seeking explanation as to why shares subscribed for the period under consideration should not be treated as unexplained and added u/s 68 of the Act. 9. The assessee furnished a detailed reply giving documents to substantiate its claim that all the share subscription money was genuine and verifiable and routed through banking channel. Copies of Share certificates issued and return with ROC was submitted in addition to the confirmation, PAN, Balance Sheet, bank account etc. 8 10. Not satisfied with the reply of the assessee, the Assessing Officer formed a belief that share capital received are not duly explained as their credit worthiness and genuineness of the transactions were not established and the pattern of deposits are on the same design as of bogus entry providers and looking to the very high premium which was also not explained to the satisfaction of the Assessing Officer, came to the conclusion that the assessee has not duly discharged the onus cast upon it and made addition of Rs. 36,87,95,074/-, received during the year as share capital with premium, u/s 68 of the IT Act. 11. Aggrieved, the assessee went in appeal before the ld. CIT(A). 12. During the course of appellate proceedings, the assessee furnished updated addresses and names of the subscribers company and in response the ld. CIT(A), initiated a further enquiry by the AO. It was reported by the AO that out of 20 subscribers, only 13 companies were found on the given address while 7 subscribers company were not found. The CIT(A), on the basis of documents furnished by the subscribers, concluded that the identity, credit worthiness and genuineness of the share capital to the extent of Rs. 31,90,49,800/- pertaining to 13 subscribers was established. Accordingly, the ld. CIT(A) gave part relief of Rs. 31,90,49,800/- to the assessee. The CIT(A), 9 however, confirmed the addition to the extent of Rs 4,98,20,000/- pertaining to 7 subscribers who were not found. 13. Both the Revenue and the assessee are now aggrieved and are before us on this issue. 14. The ld AR of the assessee filed a detailed written submission where he averred that the assessee company has filed voluminous evidences in the form of confirmations, ITR, financial statements, MOA- AOA, forms filed with RoC, Company master data of all the 30 investors. Copies of share certificate were also filed. It is the say of the ld AR that the ITR and RoC documents and the confirmation of the subscribers in response to the notices u/s 133(6), establishes the identity of the subscribers. The bank statement showing the transaction through banking channel and the share certificates establishes the genuineness of the transaction. The audited account of the subscriber companies establishes the creditworthiness of the subscribers. The ld AR vehemently contended that the assessee has discharged its onus. In view of the above evidences and pleadings, the ld AR submitted that the assessee has established the identity of the parties and the genuineness of the transaction and their creditworthiness. Further, notices u/s 133(6) were duly complied with, physical enquiries were 10 made and the said 13 entities duly found existing. Therefore, it is was prayed that addition made by Ld. AO is without any basis, evidence or material and has rightly been deleted by Ld. CIT(A) and the same may please be held so to the extent of 13 subscribers amounting to Rs. 31,90,49,800/-. With respect to 7 subscriber companies not found at their addresses, the ld AR averred the documents submitted establishes their identity, genuineness and creditworthiness prayed for reversal of the decision of CIT(A), to the extent of Rs 4,98,20,000/- pertaining to 7 subscribers. The ld AR has placed reliance on the following judicial pronouncements to buttress his arguments: i) M/s. Mantram Commodities Pvt. Ltd. Vs ITO, ITA.No.105/Del./2021 dated 25.04.2022, ITAT Delhi Bench. ii) CIT vs. Dwarkadhish Investment Pvt. Ltd., (2011) 330 ITR 298, High Court of Delhi. iii) CIT vs. Lovely Exports Ltd., 216 CTR 195, (SC). iv) Pr.CIT-8 vs Softline Creations Pvt. Ltd., ITA 504/2016 dated 31.08.2016, the High Court of Delhi. v) Commissioner of Income Tax & Ors, vs. Five Vision Promoters PVT. Ltd. & Ors., (2016) 380 ITR 0289, High Court of Delhi. vi) CIT vs Goel Sons Golden Estate (P) Ltd., ITA No. 212/2012, Date of order 11.04.2012, High Court of Delhi. 11 vii) CIT vs. Nishan Indo Commerce Ltd., (2014)101 DTR 413, Calcutta High Court. viii) ITO vs Rakam Money Matters (P) Ltd., (2014) 41 CCH 0155 (Delhi Tribunal) ix) PR. CIT vs Rakam Money Matters (P) Ltd., ITA No. 778/2015 (High Court of Delhi), Date of order 13.10.2015 x) CIT vs. Vrindavan Farms (P) Ltd., ITA No.71/2015 (High Court of Delhi) xi) Commissioner of Income Tax vs. Gangeshwari Metal Pvt. Ltd. (2014) 361 ITR 10 xii) CIT vs Fair Finvest Ltd., (2013) 357 ITR 146, (High court of Delhi) xiii) CIT vs Oasis Hospitalities (P) Ltd., (2011) 333 ITR 119, (High Court of Delhi) xiv) CIT vs Value capital services (P) Ltd., (2008) 307 ITR 334 (High Court of Delhi) xv) CIT vs Winstral Petrochemicals (P) Ltd., (2011) 330 ITR 0603 (High Court of Delhi) xvi) CIT vs Expo Globe India Ltd., (2014) 361 ITR 0147 (High Court of Delhi) xvii) CIT vs. Divine Leasing and Finance Ltd., 299 ITR 268, (High Court of Delhi). xviii) Baba Bhoothnath Trade and Commerce Ltd. vs. ITO, ITA No. 1494/Kol/2017 dated 05.04.2019, ITAT Kolkata. 12 15. Per contra, the ld DR stated that there were 30 shares subscribers out of which 20 share subscribers invested in the shares of the assessee company during the instant year. The ld DR further submitted that the AO made enquiry with respect to the existence of the subscribers company twice - one during the assessment proceedings and the other during appellate proceedings. No existence of subscriber companies, at their given addresses, was found in the initial enquiry. During the appellate proceedings, the assessee provided updated addresses of the concerned subscribers/investors and an inquiry was done by Inspector of the AO on 29.09.2016, 30.09.2016 and 03.10.2016. It was found out by the Inspector that two of the facilities were closed and a lock had been placed on the door. Many of the other premises had employees but upon questioning they had no clue of the work done by the company. Many companies did not even have a board mentioning the name of the company and it looked like a make do arrangement. The ld DR vehemently argued that based on the findings by the inspector of the AO, it is beyond doubt that the assessee is trying to mislead the authorities by camouflaging all these arrangements. The ld DR furnished a Chart-1 and pointed out that the subscribers at sr. no. 1 to 6 of Chart -1 have given the same address and have same directors Shri Nem Chand Gupta and Brij Kishore.The ld DR, with respect to their 13 existence, narrated the findings of the Inspector of the AO as given in the Chart-1. 16. The ld DR forcefully submitted that similar findings, with respect to existence of subscribers from sr. no 7 to 12 of Chart- 1, was reported by the Inspector on enquiry from their address/premises. The ld DR again wondered that despite having no clue of the business of the subscriber companies, the staff members of the subscribers company were able to submit all documents in respect of share capital money/premium given to M/s Mysore Finlease Pvt. Ltd. It was submitted by the ld DR that the facts gathered only leads to the conclusion that all the share transaction are pre-arranged and meticulously planned. Chart-1 Sl. No. NAME ADDRESS REMARKS and Findings of enquiries: 1. M/s Hare Krishna Garments Pvt. Ltd. . . Kh. No. 871, H. No. 1, Shop Gali no. 1, Block-B1, Porvatiya Anchal, Sant Nagar, Burari, Delhi- 110084 The premise is located in a residential cum commercial area. 6 offices were working in a single room with a staff of total 5 people. Nothing related to garments, clothings or gas products was visible to the naked eye in the office. There was only a single computer in the premise and 2 portfolio management companies and one construction company were operating from that office. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. The concerned has submitted the following documents of the following companies”… 1. Copy of Memorandum & Articles of Association. 2. Copy of PAN. 3. Copy of Bank Statement 20.04.2012 to 10.04.2013 14 4. Copy of ITR for A Y. 2013-14 5 Copy of notice of Annual General Meeting. 6. Copy of Directors report 7 Copy of Auditors report 8. Copy of Balance sheet 9. Name of the director. Nem Chand Gupta and Brij Kishore 10. Date of incorporation 20.08.2003 2. M/s Tyagi Portfolio Management Pvt. Ltd. -do- -same as above- 1 Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Rajendra Dixit (Current Director). 3. Copy of Bank Statement 22.03.2013 to 30.03.2013. 4. Copy of ITR for A.Y. 2013-14. 5. Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7. Copy of Auditors report 8. Copy of Balance sheet 9. Name of the director: Nem Chand Gupta and Brij Kishore. 10. Date of incorporation 06.09.1995. 3. M/s Startle Construction Pvt. Ltd -do- -same as above- 1 Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Rajendra Dixit 3. Copy of Bank Statement 12.02.2013 to 15.05.2013. 4. Copy of ITR for A.Y. 2013 14. 5.Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7. Copy of Auditors report. 8. Copy of Balance sheet 9. Name of the director: Nem Chand Gupta and Rajendra Dixit.. 10. Date of incorporation 13.05.2011. 4. M/s Radhika Clothings Pvt. Ltd -do- -same as above- 1. Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Rajendra Dixit. 3. Copy of Bank Statement 04.04.2012 to 17.04.2013. 4. Copy of ITR for A.Y. 2013-14. 5. Copy of Balance sheet 6. Name of the director. Nem Chand Gupta and Rajendra Dixit.. 7. Date of incorporation 17.01.2011 5. M/s Sridhar Portfolio Management Ltd. -do- -same as above- 1. Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Rajendra Dixit. 3. Copy of Bank Statement 19.02.2013 to 30.03.2013 4. Copy of ITR for A.Y. 2013-14. 5. Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7. Copy of Auditors report. 15 8 Copy of Balance sheet 9. Name of the director: Brij Kishore and Rajendra Dixit... 10. Date of incorporation 29.02.2008. 6. M/s Sperryn Gas Products Ltd -do- -same as above- 1. Copy of Memorandum & Articles of Association. 2 Copy of PAN of Company and Rajendra Dixit. 3 Copy of Bank Statement 24.08.2012 to 14.12.2012. 4 Copy of ITR for A.Y. 2013-14. 5. Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7 Copy of Auditors report. 8. Copy of Balance sheet 9 Name of the director: Brij Kishore and Rajendra Dixit. 10. Date of incorporation 07.08.2008. 7. M/s Wake up Portfolio Management Pvt. Ltd. 228A, Pocket A, Mayur Vihar, Phase-2, Delhi- 110091 The above premise is situated in a residential area, and the office is in the residence. The staff had two members. No computer or laptop was found at the premise which raises doubts over how they were carrying out the portfolio management. There was no board mentioning the name of the company. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. During the course of inquiry proceeding the inspector of this circle was asked to file details in respect of share capital money/premium received/given by you to M/s Mysore Finlease Pvt. Ltd. In this regard, the following documents were provided by the above mentioned stoff 1. Copy of Memorandum & Articles of Association. . 2.Copy of PAN of Company and Krishan Kumar Agarwal (current director). 3. Copy of ITR for A.Y. 2013-14. 4. Copy of Auditors report 5. Copy of Balance sheet 6. Name of the director: Brij Kishore and Rajendra Dixit.. 7. Date of incorporation 18.01.2011. 8. M/s Green Vision Automotives Pvt. Ltd.(now known as M/s 3D portfolio Pvt. Ltd.) E-36/304, Jawahar Park, Vikas Marg, Laxmi Nagar, East Delhi-110092 It was situated in a commercial area. There was a staff of two people. There was no board mentioning the name of the company. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. During the course of inquiry proceeding the inspector of this circle was asked to file details in respect of share capital money/premium received/given by you to M/s Mysore Finlease Pvt. Ltd. In this regard, he following documents were 16 provided by the above mentioned staff: 1. Copy of Bank Statement 14.03.2011 to 03.05.2011. 2. Copy of ITR for A.Y. 2013-14. 3 Copy of notice of Annual General Meeting. 4. Copy of Directors report. 5. Copy of Auditors report. 6. Copy of Balance sheet 9. M/s I-tech Insurance Brokerage Pvt. Ltd. Mr. Prem Kumar Chhabra, Shop no. 306 T/F Plot No. 17, Sachdeva Tower Comm. Karkardooma, East Delhi 110092 The premise was located in a commercial complex, and had a staff of 3 people also shared the office with another listed company. There were boards of both the companies. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. During the course of inquiry proceeding the inspector of this circle was asked to file details in respect of share capital money /premium received/given by you to M/s Mysore Finlease Pvt. Ltd. In this regard, he following documents were provided by the above mentioned staff: 1. Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Kanti Prasad Sharma. (current director) 3. Copy of Bank Statement 24.08.2012 to 06.03.2013. 4. Copy of ITR for A.Y. 2013-14. 5 Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7. Copy of Auditors report. 8. Copy of Balance sheet 9. Name of the director: Brij Kishore. 10. Date of incorporation 01.08.2003.Centre, 10. M/s Jaquar Equity Ltd. Mr. Prem Kumar Chhabra, Shop no. 306 T/F Plot No. 17, Sachdeva Tower Comm. Centre, Karkardooma, East Delhi- 110092 The premise was situated in a commercial complex, which had a staff of 3 people and shared the office with another listed company. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. During the course of inquiry proceeding the inspector of this circle was asked to file details in respect of share capital money/premium received/given by you to M/s Mysore Finlease Pvt. Ltd. In this regard, he following documents were provided by the above mentioned staff: 1. Copy of Memorandum & Articles of Association. 2. Copy of Bank Statement 04.04.2012 to 16.04.2013. 3. Copy of ITR for A.Y. 2013-14. 4. Copy of notice of Annual General Meeting. 5. Copy of Directors report. 6. Copy of Auditors report. 7. Copy of Bolance sheet 17 8. Name of the director: Brij Kishore and Nem Chand Gupta. 9. Date of incorporation 19.11.2009. 11. M/s Zoom Developers SEZ Indore Pvt. Ltd. 62, W.E.A, 2nd Floor, Ajmal Khan Road, Karol Bagh, New Delhi- 110005 The premise was located in a commercial area, and they shared the office with 2 other companies. There was no board for the aforementioned company however the other companies had their names mentioned outside on a board. Upon questioning, the staff admitted that they had no clue of the work of the company as they have joined the company recently. During the course of inquiry proceeding the inspector of this circle was asked to file details in respect of share capital money/premium received/given by you to M/s Mysore Finlease Pvt. Ltd. In this regard, he following documents were provided by the above mentioned staff: 1. Copy of Memorandum & Articles of Association. 2. Copy of PAN of Company and Samir Nawalgaria (current director). 3. Copy of Bank Statement (Current Account) 01.03.2014 to 01.04.2015. 4. Copy of ITR for A.Y. 2013-14. 5. Copy of notice of Annual General Meeting. 6. Copy of Directors report. 7. Copy of Auditors report. 8. Copy of Balance sheet 9. Name of the director: Brij Kishore and Rajendra Dixit... 10. Date of incorporation 27.10.2007 12 M/s Nandita Sundaram A-485, Gali no. 5, Mandawali, Fazalpur, Delhi- 110092 Address was found to be locked. 17. The ld DR argued that the voluminous documents submitted by the assessee only gives evidence of conduit or chain between the subscribers and the assessee and does not establish creditworthiness of the subscribers. It is the say of the ld DR that the CIT(A) deleted the additions made in the case of 13 subscribers considering them as genuine only on the ground that these subscribers were physically 18 found at the revised address. The ld DR submitted that the CIT(A) did not delve into deeper scrutiny of the documents and failed to examine the financial capacity of the 13subscribers derived from their Audited financial statements itself. The ld DR furnished a detailed analysis as per Chart-2 of the financial capacity of 10 of these subscribers company: Chart-2 Sr Subscriber Name Financial Description 1 Jaguar Equity Ltd.- Shares amt. subscribed: Rs 1,46,35,400/- Share capital- Rs. 97,65,000/- Reserves comprising of securities premium only - Rs. 8,33,85,000 Schedule 2.2: Reserves and Surplus-Rs. 8,34,85,058/- Last year Rs. 8,34,57,595/- Share Capital and reserves comprises of paid up capital and securities premium. Revenue from operations-Nil other income -171,849 net profit-38,975/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 1,11,765/- Negligible Share capital and share premium 93250058 alongwith Trade Payables 38,900,000 totaling 13,215,0058 matches Long Term Loans and Advances 94,218,927 and Non Current Investments 37,753,620 totaling 13,19,72,547. 2 Wakeup Portfolio Management Pvt. Ltd.- Shares amt. Share capital- Rs. 2496900/- Reserves comprising of securities premium only - 7,55,02,350/- Schedule 2: Reserves and Surplus-Rs. 19 subscribed: Rs 1,30,00,000/- 7,57,50,970.85/- Last year Rs. 7,55,16,389/- Share Capital and reserves comprises of paid up capital and securities premium Income as per Return of Income- 11022/- Fixed asset- Rs. 10,89,988/- Share equity and premium of Rs. 7,82,47,870/- matches Non current investment Rs. 1,45,00,000/- & short term loans & advances Rs. 6,32,74,614/- totaling Rs. 7,77,74,614/- 3 Zoom Developers SEZ(Indore) Pvt. Ltd Shares amt. subscribed: Rs 36,57,000/- Share capital- Rs. 95,40,000/- Reserves comprising of securities premium only 10,85,60,000/- Schedule 2.2: Reserves and Surplus-Rs. 10,86,24,033/- Last year Rs. 10,83,56,230/- Negligible profits. Net profit- 368522/- Share Capital are reserves comprises of paid up capital and securities premium. Fixed asset- Rs. 43,875/- Negligible Share equity and premium of Rs. 11,81,65,033/- matches Non current investment Rs. 9,86,68,278/-& long term loans & advances Rs. 1,94,90,692/- totaling Rs. 11,81,58,970/- 4 Tyagi Portfolio Management Pvt. Ltd.- Shares amt. subscribed: Rs 4,83,07,000/- Share capital- Rs. 46,31,020/- Reserves comprising of securities premium only -9,53,76,480/- Schedule 2.2. Reserves and Surplus-Rs. 9,53,08,123/- Last year Rs. 9,52,99,474/- Net profit- 8,441/-Negligible Profits Share Capital are reserves comprises of paid up capital and securities premium. Fixed asset- Rs. 19,510/- Negligible Share equity and premium of Rs. 9,99,39,143/- matches Non current investment Rs. 9,46,52,000/- & long term loans & advances Rs. 52,50,300/- totaling Rs. 20 9,99,02,300/- 5 Shridhar Portfolio Management Pvt. Ltd.- Shares amt. subscribed: Rs 1,29,40,000/- Share capital- Rs. 4,67,01,600/- Reserves comprising of securities premium only -9,04,03,200/- Schedule 2.2: Reserves and Surplus-Rs. 9,03,83,967/- Last year Rs. 9,03,63,016/- Negligible profits. Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations-Nil Net profit -25,319/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 76482/- Negligible Share equity and premium of Rs. 13,70,85,567/- matches Non current investment Rs. 11,31,22,999/- trade receivables Rs. 1,50,07,500/- & long term loans & advances Rs. 80,40,500/- totaling Rs. 13,61,70,999/- 6 Sperryn Gas Products Ltd.- Shares amt. subscribed: Rs 6,75,21,000/- Share capital- Rs. 89,26,400/- Reserves comprising of securities premium only - Rs. 9,69,03,600/- Schedule 2.2: Reserves and Surplus-Rs. 9,70,93,023.94/- Last year Rs. 9,70,15,950/- Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations-Nil Net profit-1,04,433/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 19,872/- Negligible Share equity and premium of Rs. 10,60,19,436/- matches Non current investment Rs. 9,55,82,500/-8 long term loans & advances Rs. 98,90,668/- totaling Rs. 10,54,73,168/- 21 7 Purav Portfolio Management Pvt. Ltd Shares amt. subscribed: Rs 50,00,000/- Share capital- Rs. 24,86,190/- Reserves comprising of securities premium only - Rs. 6,56,20,225/- Schedule 2: Reserves and Surplus-Rs. 6,56,19,500.33/- Last year Rs. 6,56,37,529/- Return income-15,492/- Net profit- Share Capital and reserves comprises of paid up capital and securities premium. Equities, securities premium and pending allotment 90,906,415/- matches current investments loans and advances being 87,086,860/- Fixed asset- Rs. 8,34,874/- 8 3D Portfolio Pvt. Ltd (Earlier Green Vision Automotives Pvt Ltd) Shares amt. subscribed: Rs 28,00,000/- Share capital- Rs. 48,78,000/- Reserves comprising of securities premium only - Rs. 11,46,72,000/- Schedule 2: Reserves and Surplus-Rs. 11,47,31,779/- Last year Rs. 11,47,27,947/- Net profit-5542/-Negligible Profits. Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations-Nil Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 35,992/- Negligible Share equity and premium of Rs. 11,96,09,779/- matches Non current investment Rs. 11,77,60,000/- & long term loans & advances Rs. 15,07,989/- totaling Rs. 11,92,67,989/- 9 I Tech Insurance Brokers Pvt. Ltd.- Shares amt. subscribed: Rs 5,20,39,000/- Share capital- Rs. 38,84,000/- Reserves comprising of securities premium only - Rs. 14,75,76,000/- Schedule 2.2: Reserves and Surplus-Rs. 14,75,25,067/- Last year Rs. 14,75,04,432/- 22 Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations-Nil Net profit- 25,495/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 64,423/- Negligible Share equity and premium of Rs. 15,14,09,067/- matches Non current investment Rs. 13,99,98,600/- & long term loans & advances Rs. 9661540/- totaling Rs. 14,96,60,140/- 10 Hare Krishna Garments Pvt. Ltd.- Shares amt. subscribed: Rs 4,13,47,400/- Share capital- Rs. 42,58,400/- Reserves comprising of securities premium only - Rs. 12,05,93,600/- Schedule 2.2: Reserves and Surplus-Rs, 12,06,23,104/- Last year Rs. 12,06,39,098/- Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations- Nil Net profit- (-) 12,319/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 68,734/- Negligible Share equity and premium of Rs. 12,48,81,504/- matches Non current investment Rs. 11,12,25,927/- & long term loans & advances Rs. 1,34,50,000/- totaling Rs. 12,46,75,927/- 18. The ld DR also submitted the financial capacity of the5out of 7 subscribers whose addition was confirmed by the CIT(A) on the ground that they were not found on the given address as follows (Chart-3): 23 Chart-3 Sr Subscriber Name Financial Description 1 USK Exim Pvt. Ltd.- Shares amt. subscribed: Rs 35,00,000/- Share capital- Rs. 45,56,400/- Reserves comprising of securities premium only - Rs. 4,66,48,600/- Schedule 2.2: Reserves and Surplus -Rs. 4,60,49,055/- after adjustment minor loss of 6 lakh in the year Share Capital and reserves comprises of paid up capital and securities premium. Revenue from operations- Rs. 20,148/- Net profit- (-) 5,42,329/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs.9833/- Negligible Share equity and premium of Rs. 4,42,05,455/- matches Non current investment Rs. 4,07,50,000/- & short term loans & advances Rs. 10,00,000/- totaling Rs. 4,17,50,000/- 2 SRB Promoters Pvt. Ltd.- Shares amt. subscribed: Rs 50,00,000/- Share capital- Rs. 8155900/- Reserves comprising of securities premium only - 2,31,53,800/- Schedule 2: Reserves and Surplus-Rs. 3,42,31,806.20/- Last year Rs. 2,55,93,763.07/- No return filed Negligible profits Share Capital and reserves comprises of paid up capital and securities premium and current year profits 86 lakhs Share capital 8,155,900 and reserves and surplus 34,231,806 of which securities premium is 23,153,800 share capital and reserves 42,387,706, short term borrowings at 343,137,005 and long term borrowings 125,874,022 and other liabilities 8,097,592 totaling 51,94,96,325 MATCHES Investments 125,095,867 and short term loans and 24 advances extended at 486,416,354 and long term loan term advances 1,086,860 totaling 6 1,25,99,081. Fixed asset-Rs. 94,32,936.50/- 3 Expect Portfolio Management Pvt. Ltd.- (Earlier M/s Sequin Marketing Pvt Ltd) Shares amt. subscribed: Rs 1,28,00,000/- Share capital- Rs. 49,00,980/- Reserves comprising of securities premium only -23,52,48,020/- Schedule 2.2: Reserves and Surplus-Rs. 24,05,82,567/- Last year Rs. 24,01,75,617/- Net profit 4,06,350/-Negligible Profits. Share Capital are reserves comprises of paid up capital and securities premium. Fixed asset- Rs. 60433/- Negligible Share equity and premium of Rs. 24,05,82,567/- matches Non current investment Rs. 21,94,50,000/-& long term loans & advances Rs. 2,99,12,421/- totaling Rs. 24,93,62,421/- 4 ANP Credit Rating Pvt. Ltd.- Amt- Rs 2,02,70,000/- Share capital- Rs. 45,97,190/- Reserves comprising of securities premium only - Rs. 19,78,76,360/- Schedule 2: Reserves and Surplus-Rs. 19,85,64,291/- Last year Rs. 19,78,91,875/- Share Capital are reserves comprises of paid up capital and securities premium. Revenue from operations- Nil Net profit- 6,72,415/- Negligible Revenue, No profit making apparatus, no economic rationale for operations Fixed asset- Rs. 58,985/-Negligible Share equity and premium of Rs. 20,31,61,481/- matches Non current investment Rs. 16,41,50,000/- & long term loans & advances Rs. 3,81,71,647/- totaling Rs. 20,23,21,647/- 5 Ortem Equity Pvt. Ltd.-( Earlier M/s Laxman Sawarkar Marketing Pvt Ltd) Share capital- Rs. 49,13,800/- Reserves comprising of securities premium only - Rs, 23,58,76,200/- Schedule 2: Reserves and Surplus-Rs. 25 Shares amt. subscribed: Rs 2,60,00,000/- 23,59,59,288/- Last year Rs. 23,59,10,861.12/- Net profit-48,426/- negligible profits Share Capital and reserves comprises of paid up capital and securities premium. Fixed asset-Rs. 53,211/- Negligible Share equity and premium of Rs. 24,08,73,088/- matches Non current investment Rs. 23,53,50,000/- & long term loans & advances Rs. 53,50,000/- totaling Rs. 24,07,00,000/- 19.The ld DR further argued that the above analysis of the financial statements of the subscribers company illustrates that all the subscriber have negligible profits and Revenue and there is absence of any profit making apparatus or any economic rationale for operations. It was submitted that the voluminous documents only serve as evidence of conduit or chain but not capacity or creditworthiness to subscribe to assessee’s shares. 20. The ld DR, with respect to the premium of Rs 190/- per share charged by assessee stated that the assessee has not given any evidence of any of its profit making apparatus or financials or any economic rationale which would justify premium of Rs 190/-. The ld DR referred to the financial statement of the assessee to show that it does not provide any rationale for such a high premium. 26 21. The ld DR also stated that the description and conduct of the subscribers bank accounts shows matching debit and credits, negligible closing balances, credits immediately preceding debits. The ld DR also pointed out that the shares subscribers of Mysore Finlease Pvt Ltd are companies whose equity in turn is subscribed to by other companies. It is the say of the ld DR that the above analysis as given in Chart 2 and 3 establishes the A-B-C evidence of CONDUIT not capacity to subscribe to the shares of the assessee. 22. The ld DR further stated that the Assessee company claims to be an NBFC but its violates the RBI norms as prescribed for the NBFC. The assessee company did not provide any evidence of NBFC registration. It was argued that the assessee’s utilization of share premium is not as per companies Act 2013 or Companies Act 1956. In the instant case, the securities premium is applied for the acquisition of shares in other companies which is impermissible as per section 52 of the Companies Act. It was vehemently argued by the ld DR that the assessee company only activity is issuance of shares and give onwards advances. 27 23. The Ld DR relied on various decision for the different applicable propositions: CIT Vs. Oasis Hospitalities Pvt Ltd(2011)333 ITR 119(Del) Hon'ble Delhi High Court for the proposition that receipt of money is prima facie evidence against the assessee and only when the assessee has discharged the initial burden of proving the nature and source of credits, the onus is shifted to the Department; Rajmandir Estates Pvt Ltd(2016) 386 ITR 162(Cal) Hon'ble Calcutta High Court for the proposition that the Assessing Officer is not required to identity the sourceand even underunamended provisions section 68, source of source could be enquired into. Relied on Pragati Financial Management Pvt Ltd ITA 178 of 2016, GA 7 of 2016 by Hon'ble Calcutta High Court for the proposition that even under unamended provisions section 68 identity genuineness creditworthiness has to be established. The SLP filed by the assessee in both Rajmandir Estates Pvt Ltd and Pragati Financial Management Pvt Ltd was dismissed by the Hon’ble Supreme Court in the case of Daniel Merchant Pvt Ltd. Assessing Officer are not required to identify the source and the Identity stands discharged only when it is proved that the said person had capacity as held in ACIT Vs. Shri Jatinder Manchanda ITA 4060/Del/2011 ITAT Delhi. The reliance on CIT Vs. M/s Navodaya Castles Pvt ltd[2014] 367 ITR 306 (Del)by Hon'ble Delhi High Court for the meaning of identity 28 is not simply the existence of the person individual. If deposits proceeding issuance of cheques in a number of creditors – points to an arrangement as held in DCIT Vs. Vishwanath Prasad Gupta 129 ITD 95; Even in the case of companies subscribing – onus on assessee to establish creditworthiness as held in M/s Pankaj Hospital Ltd WT No. 83 of 2014 Hon'ble Allahabad High Court. In M/s Prem Caastings [P] Ltd ITA No. 34 of 2016, Allahabad High Court it was held that it was the assessee who had to identify the real person.Capacity and conduct of bank accounts is material as held in Sarita AgarwalITA No. 133/2003 Hon'ble Delhi High Court. 23.1. Apart from above, ld DR made reference to following judgements: 1. [2022] 142 taxmann.com 383, ITAT Mumbai Bench G, ITO Vs Sai Everest Building & Developers 2. [2019] 103 taxmann.com 48, SC, PCIT (Central)-1 v. NRA Iron & Steel (P.) Ltd. 3. [2013] 350 ITR 407, Delhi HC, CIT v. Nipun Builders & Developers (P.) Ltd. 29 24. We have heard the rival submissions and have perused the relevant material on record. We find that the Assessee company has received Rs.47,70,40,800/-on account of share application money from 30 subscribers (28 being corporate entities) as on 31.03.2012 out of which Rs.36,88,69,800/- was received during the instant year from 20 subscribers. We are therefore concerned with the validity of addition sustained/deleted u/s 68 of the I T Act of 20 subscribers. The CIT(A) has deleted the additions made on account of the following 13 subscribers on the ground of the physical presence of the investor: Chart-4 Sr no Name of Investor Company Total amount received during year under consideration 1 Flavour Technology P. Ltd 20,00,000 2 Green Vision Automatives P. Ltd. 28,00,000 3 Hare Krishna Garments P. Ltd. 4,13,47,400 4 Impose Infratech P. Ltd. 5,20,39,000 5 Jaguar Equity ltd. 1,46,35,400 6 Purav Portfolio Management p Ltd. 50,00,000 7 Radhika Clothings P. Ltd. 1,15,70,000 8 Shridhar portfolio management Ltd. 69,40,000 9 Sperryn Gas Products Ltd 6,75,21,000 10 Startle Construction Pvt. Ltd 6,02,33,000 11 Tyagi Portfolio Management Ltd 4,83,07,000 12 Wakeup Portfolio Management Pvt Ltd 30,00,000 13 Zoom Developers SEZ Indore Pvt Ltd 31,90,49,000 Total 31,90,49,800 30 In the following 7 subscribers cases, the CIT(A) upheld the additions on the ground that physical presence of the investors were not verified: Chart-5 Sl. No Name of Investor Company Total amount received 1. ANP Credit Rating P. Ltd 2,02,70,000 2. Forefront Buildcon P. Ltd 56,50,00 3. Laxman Sawarkar Marketing P Ltd 30,00,000 4. Nandita Sundaram 6,00,000 5. SRB Promoters P Ltd 50,00,000 6. Sequin Gopal Landcraft P Ltd 1,28,00,000 7. USK Exim P Ltd 25,00,000 Total 4,98,20,000 25. We note that the AO had initially doubted the genuineness of share capital with premium as he observed that the assessee company share worth Rs 10 was allotted at Rs 200/- i.e. at a premium of Rs 190/-. The AO sought proof of the identity, creditworthiness and genuineness of all the said 30 share subscriber/investor companies. The assessee provided confirmation, copy of return filed by investors, their bank account, PAN, share application, allotment of shares, submissions before the ROC, copy of ITR, bank statement, balance sheet, profit and loss account etc. of such investors of share in the company. The AO also independently issued notice u/s 133(6) to all the 30 subscribers and notice u/s 131 to their principal officers for verification. The AO thereafter, on the basis of various documents received in the course of assessment proceedings, initiated field enquiry. The AO found that 8 31 out of the 30 companies had given same address as B-4827, Gali no. 112/2, Sant Nagar Burari, Delhi-84 while 5 other subscribers had one address as A-485, Gali no 5, Mandawali, Fazalpur, Delhi-9. The AO got the inquiry conducted from the neighbor-hood which revealed that there were no such companies existing on these two addresses. Inspector of the AO visited two of the other addresses at Rohini and Nazafgarh, Delhi as given by the assessee but no companies were found at these addresses also. As per the Inspector’s report dt. 13.03.2015 all the addresses were residential addresses and none of the subscriber companies as reported by the assessee were running from those addresses. The AO, on the basis of her investigations, meticulously prepared an Annexure detailing the share subscribed, Income tax details, the profits and turnover of each of the 30 subscriber companies and attached it with her assessment order. 26. Thereafter, the Directors of the assessee company were summoned u/s 133(6). In response, Smt. Charu Agarwal & Sh Amit Sharma, Directors of the assessee company, did not appear before AO. The reasons stated for non-appearance was that Smt. Charu Agarwal could not appear as she went to her parents' house with her kids and could not come before kids' summer vacation is over, whereas Sh. Amit 32 Sharma refused to appear on the ground that he joined as director in the year 2012 and is not aware of the factual circumstances prevailing at the time when shares were allotted. 27. We find that before the CIT(A), the assessee supplied updated addresses and names of the subscribers and the CIT(A) initiated a fresh probe through the AO. The fresh report of the inspector shows that 13 out of 20 subscribers were found on the new addresses supplied. However, these premises were again found to be situated in a residential area, and the office were located in the residence. We also note that these 13 subscribers had 2 to 3 staff members who all gave similar reply that they had no clue of the work of the company as they have joined the company recently. We note that the enquiry revealed that no computer or laptop was found at the premise which raised doubts as to how they were carrying out the portfolio management and other businesses. Absence of any Board mentioning the name of the company also raised doubt with respect to the identity of the subscriber companies. We also find that the staff member of all the different subscribers company had joined new and that despite having no clue of the business of the subscriber companies, the staff members of the subscribers company were able to submit all documents such as 33 confirmation, copy of return filed by investors, their bank account, PAN, share application, allotment of shares, submissions before the ROC, copy of ITR, bank statement, balance sheet, profit and loss account etc as evidence for the investment of share capital money/premium in M/s Mysore Finlease Pvt. Ltd. We are of considered opinion that these findings only point to the fact of arrangements made and exact similar reply of all the subscribers company staff members, demonstrates that they were all well tutored. The availability of the relevant documents with the staff members, arranged meticulously, also shows that the apparent is not real. We also note from the assessment order at para 4 that the information as filed by the assessee and as received from the subscribers companies, in response to summons issued u/s 133(6) via speed post, reflect same pattern & format i.e., the annexure were fixed in same order and similar documents furnished by all the subscriber companies also point to an arrangement to mislead. 28. We find from the details of party-wise share capital received and particulars of the turnover, net profit and returned income of the subscribers, as tabulated in the Chart 2 and 3 above, they depict a similar pattern of Balance Sheet and Profit and Loss account for all the 30 subscriber companies. We also note from Chart-2 and 3 above that 34 all the entities barring one have no turnover, some of them have only income from other sources and most of the subscriber companies are filing ITR with very meagre profits. From the Financial accounts of all the 30 subscriber companies, we note that there is negligible Revenue and there is absence of any profit making apparatus or any economic rationale for operations. Out of the 20 subscriber companies we are dealing with in the instant year, 11 of the subscriber have negligible profits or Nil revenue from operations while 9 subscribers have profit ranging from only Rs 1 lakh to 6 lakh whereas they have invested in crores in assessee company. In all cases of subscriber companies, their share equity and premium is balanced by non-current investments and loans and advances which defies preponderance of human probability. While Bank accounts of all of these subscribers entities being with either Axis Bank, Nainital Bank & Dhan Laxmi Bank may not be suspicious, the manner of their operations creates specter that they are in existence only for circuitous transactions, for rotating funds from one entity to another. A perusal of the bank statements of the subscribers company shows similar pattern of precedence of credit entries from unknown unexplained sources before debit entries either on the same or the next 2-3 following days, leaving nominal balance in the account. 35 29. We also note that the assessee failed to produce the office bearers of subscriber companies before the authorities and summons issued u/s 131 to them to appear in person went unanswered. Initial reasons for failure to attend personally, given by the directors of the assessee company, were very spacious and flimsy. Subsequent notice for appearance of Charu Agarwal, Director who is also one of the investors, again met with non-compliance on the ground that she is no longer the director of the company. We also find that though the subscriber companies could provide all the documents in perfect chronological order, they exhibited complete non-cooperation by not responding to notices u/s 133(6)/131 to present themselves before the AO to establish the identity, genuineness and creditworthiness of the subscriber company. 30. From the facts as narrated above, we are of the considered view that the assessee has failed to discharge the initial onus of establishing the identity, genuineness of transaction and creditworthiness. It is settled law, in the context of addition u/s 68, merely filing the primary documents such as ITRs, PAN is not sufficient to discharge the onus as held by the Hon’ble Supreme Court in NRA Iron & Steel (P.) Ltd [2019] 103 taxmann.com 48 (SC)which upheld the addition u/s 68 on 36 the facts that merely because assessee company had filed all primary evidence, it could not be said that onus on assessee to establish creditworthiness of investor companies stood discharged. It is important to reproduce the decision of the Hon’ble Supreme Court in NRA Iron and Steel (supra) as it settles several issues with respect to section 68 of the I T Act and answers legal questions raised by the ld AR: “8.2 As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit- worthiness of the investors under Section 68 of the Act. The assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance (P.) Ltd. [1995] 82 Taxman 31/[1994] 208 ITR 465 (Cal.): ♦ Proof of Identity of the creditors; ♦ Capacity of creditors to advance money; and ♦ Genuineness of transaction This Court in the land mark case of Kale Khan Mohammed Hanif v. CIT [1963] 50 ITR 1 (SC) and Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) laid down that the onus of proving the source of a sum of money found to have been received by an assessee, is on the assessee. Once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the income of the 37 assessee, and there would be no further burden on the revenue to show that the income is from any particular source. 8.3 With respect to the issue of genuineness of transaction, it is for the assessee to prove by cogent and credible evidence, that the investments made in share capital are genuine borrowings, since the facts are exclusively within the assessee's knowledge. The Delhi High Court in CIT v. Oasis Hospitalities (P.) Ltd. [2011] 9 taxmann.com 179/198 Taxman 247/333 ITR 119, held that : \"The initial onus is upon the assessee to establish three things necessary to obviate the mischief of Section 68. Those are: (i) identity of the investors; (ii) their creditworthiness/investments; and (iii) genuineness of the transaction. Only when these three ingredients are established prima facie, the department is required to undertake further exercise.\" It has been held that merely proving the identity of the investors does not discharge the onus of the assessee, if the capacity or credit- worthiness has not been established. In Shankar Ghosh v. ITO [1985] 13 ITD 440 (Cal.), the assessee failed to prove the financial capacity of the person from whom he had allegedly taken the loan. The loan amount was rightly held to be the assessee's own undisclosed income. 8.4 Reliance was also placed on the decision of CIT v. Kamdhenu Steel & Alloys Limited [2012] 19 taxmann.com 26/206 Taxaman 254 [2014] 361 ITR 220 (Delhi) wherein the Court held that : \"38. Even in that instant case, it is projected by the Revenue that the Directorate of Income Tax (Investigation) had purportedly found such a racket of floating bogus companies with sole purpose of lending entries. But, it is unfortunate that all this exercise is going in vain as few more steps which should have been taken by the Revenue in order to find out causal connection between the cash deposited in the bank 38 accounts of the applicant banks and the assessee were not taken. It is necessary to link the assessee with the source when that link is missing, it is difficult to fasten the assessee with such a liability.\" 9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness. 10. On the issue of unexplained credit entries /share capital, we have examined the following judgments : i. In Sumati Dayal v. CIT [1995] 80 Taxman 89/214 ITR 801 this Court held that : \"if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory, there is prima facie evidence against the assessee, vis., the receipt of money, and if he fails to rebut the same, the said evidence being unrebutted can be used against him by holding that it is a receipt of an income nature. While considering the explanation of the assessee, the department cannot, however, act unreasonably\" ii. In CIT v. P. Mohankala [2007] 161 Taxman 169/291 ITR 278 this Court held that: 'A bare reading of section 68 of the Income- tax Act, 1961, suggests that (i) there has to be credit of amounts in the books maintained by the assessee ; (ii) such credit has to be a sum of money during the previous year ; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to Income-tax as the income of the assessee of that previous year. The expression \"the assessee offers no explanation\" means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books 39 maintained by the assessee. The burden is on the assessee to take the plea that, even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature.' (emphasis supplied) iii. The Delhi High Court in a recent judgment delivered in PR.CIT v. NDR Promoters (P.) Ltd. [2019] 102 taxmann.com 182/410 ITR 379 upheld the additions made by the Assessing Officer on account of introducing bogus share capital into the assessee company on the facts of the case. iv. The Courts have held that in the case of cash credit entries, it is necessary for the assessee to prove not only the identity of the creditors, but also the capacity of the creditors to advance money, and establish the genuineness of the transactions. The initial onus of proof lies on the assessee. This Court in Roshan Di Hatti v. CIT [1992] 2 SCC 378, held that if the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee. v. The Guwahati High Court in Nemi Chand Kothari v. CIT [2004] 136 Taxman 213/[2003] 264 ITR 254 held that merely because a transaction takes place by cheque is not sufficient to discharge the burden. The assessee has to prove the identity of the creditors and genuineness of the transaction. : \"It cannot be said that a transaction, which takes place by way of cheque, is invariably sacrosanct. Once the assessee has proved the identity of his creditors, the genuineness of the transactions which he had with his creditors, and the creditworthiness of his creditors vis-a-vis the transactions which he had with the creditors, his burden stands discharged and the burden then shifts to the revenue to show that though covered by cheques, the amounts in question, actually belonged to, or was owned by the assessee himself \" (emphasis supplied) vi. In a recent judgment the Delhi High Court CIT v. N.R. Portfolio (P.) Ltd. [2014] 42 taxmann.com 339/222 Taxman 157 (Mag.) (Delhi) held that the credit-worthiness or genuineness of a transaction regarding share application money depends on whether the two parties are related or known to each other, or mode by which parties approached each other, whether the transaction is entered into through written documentation to protect investment, whether the investor was an angel investor, the quantum of money invested, credit-worthiness of the recipient, object and purpose for which payment/investment was made, etc. The incorporation of a company, 40 and payment by banking channel, etc. cannot in all cases tantamount to satisfactory discharge of onus. vii. Other cases where the issue of share application money received by an assessee was examined in the context of Section 68 are Lovely Exposes (P.) Ltd. Divine Leasing & Financing Ltd. (supra), and CIT v. Value Capital Service (P.) Ltd. [2008] 307 ITR 334 (Delhi) 11. The principles which emerge where sums of money are credited as Share Capital/Premium are : i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name- lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that : i. There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the investor companies were non-existent, and had no office at the address mentioned by the assessee. : For example: a. The companies Hema Trading Co. Pvt. Ltd. and Eternity Multi Trade Pvt. Ltd. at Mumbai, were found to be non-existent at the address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty Traders Ltd., were found to be non-existent at the address provided. 41 The genuineness of the transaction was found to be completely doubtful. ii. The enquiries revealed that the investor companies had filed returns for a negligible taxable income, which would show that the investors did not have the financial capacity to invest funds ranging between Rs. 90,00,000 to Rs. 95,00,000 in the Assessment Year 2009-10, for purchase of shares at such a high premium. For example: Neha Cassetes Pvt. Ltd. - Kolkatta had disclosed a taxable income of Rs. 9,744/- for A.Y. 2009-10, but had purchased Shares worth Rs, 90,00,000 in the Assessee Company. Similarly Warner Multimedia Ltd. – Kolkatta filed a NIL return, but had purchased Shares worth Rs. 95,00,000 in the Assessee Company – Respondent. Another example is of Ganga Builders Ltd. – Kolkatta which had filed a return for Rs. 5,850 but invested in shares to the tune of Rs. 90,00,000 in the Assessee Company – Respondent, etc. iii. There was no explanation whatsoever offered as to why the investor companies had applied for shares of the Assessee Company at a high premium of Rs. 190 per share, even though the face value of the share was Rs. 10/- per share. iv. Furthermore, none of the so-called investor companies established the source of funds from which the high share premium was invested. v. The mere mention of the income tax file number of an investor was not sufficient to discharge the onus under Section 68 of the Act. 13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company – Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a 42 meagre or nil income had to explain how they had invested such huge sums of money in the Assesse Company -Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee. 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. 15. On the facts of the present case, clearly the Assessee Company - Respondent failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the Assessee's income”. 43 31. In similar facts, the Hon’ble Supreme Court in NDR Promoters Pvt Ltd V PCIT [2019] 109 taxmann.com 53 (SC)had upheld the addition u/s 68 where assessee had failed to produce directors of shareholder companies, though directors had filed confirmations and therefore, were in touch with assessee. This decision also needs to be reproduced: “11. Issue of bogus share capital in the form of accommodation entries has been subject matter of several decisions of this Court and we would like to refer to decision in CIT v. Navodaya Castles (P.) Ltd. [2014] 50 taxmann.com 110/226 Taxman 190 (Mag.)/367 ITR 306, wherein the earlier judgments were classified into two separate categories observing as under:— '11. We have heard the Senior Standing counsel for the Revenue, who has relied upon decisions of the Delhi High Court in Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd. [2012] 342 ITR 169 (Delhi), Commissioner of Income Tax v. N.R. Portfolio Pvt. Ltd., 206 (2014) DLT 97 (DB) (Del) and Commissioner of Income Tax-II v. MAF Academy P. Ltd., 206 (2014) DLT 277 (DB) (Del). The aforesaid decisions mentioned above refer to the earlier decisions of Delhi High Court in Commissioner of Income Tax v. Sophia Finance Ltd., [1994] 205 ITR 98 (FB)(Delhi), CIT v. Divine Leasing and Finance Limited [2008] 299 ITR 268 (Delhi) and observations of the Supreme Court in CIT v. Lovely Exports P. Ltd. [2008] 319 ITR (St.) 5 (SC). 44 12. The main submission of the learned counsel for the assessee is that once the assessee had been able to show that the shareholder companies were duly incorporated by the Registrar of Companies, their identity stood established, genuineness of the transactions stood established as payments were made through accounts payee cheques/bank account; and mere deposit of cash in the bank accounts prior to issue of cheque/pay orders etc. would only raise suspicion and, it was for the Assessing Officer to conduct further investigation, but it did not follow that the money belonged to the assessee and was their unaccounted money, which had been channelized. 13. As we perceive, there are two sets of judgments and cases, but these judgments and cases proceed on their own facts. In one set of cases, the assessee produced necessary documents/evidence to show and establish identity of the shareholders, bank account from which payment was made, the fact that payments were received thorough banking channels, filed necessary affidavits of the shareholders or confirmations of the directors of the shareholder companies, but thereafter no further inquiries were conducted. The second set of cases are those where there was evidence and material to show that the shareholder company was only a paper company having no source of income, but had made substantial and huge investments in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the 45 creditors/shareholder, creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements have to be tested not superficially but in depth having regard to the human probabilities and normal course of human conduct. 14. Certificate of incorporation, PAN number etc. are relevant for purchase of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor. It is in this context, the Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) had observed:— \"Now we shall proceed to examine the validity of those grounds that appealed to the learned judges. It is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.\" 46 15. Summarizing the legal position in Nova Promoters and Finlease (P) Ltd. (supra), and highlighting the legal effect of section 68 of the Act, the Division Bench has held as under:— \"32. The tribunal also erred in law in holding Assessing Officer ought to have proved that the monies emanated from the coffers of the assessee-company and came back as share capital. Section 68 permits the Assessing Officer to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered is not satisfactory. It places no duty upon him to point to the source from which the money was received by the assessee. In A. Govindarajulu Mudaliar v CIT, (1958) 34 ITR 807, this argument advanced by the assessee was rejected by the Supreme Court. Venkatarama Iyer, J., speaking for the court observed as under (@ page 810): — \"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 47 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 Income-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. Section 68 recognizes the aforesaid legal position. The view taken by the Tribunal on the duty cast on the Assessing Officer by section 68 is contrary to the law laid down by the Supreme Court in the judgment cited above. Even if one were to hold, albeit erroneously and without being aware of the legal position adumbrated above, that the Assessing Officer is bound to show that the source of the unaccounted monies was the coffers of the assessee, we are inclined to think that in the facts of the present case such proof has been brought out by the Assessing Officer. The statements of Mukesh Gupta and Rajan Jassal, the entry providers, explaining their modus operandi to help assessee's having unaccounted monies convert the same into accounted monies affords sufficient material on the basis of which the Assessing 48 Officer can be said to have discharged the duty. The statements refer to the practice of taking cash and issuing cheques in the guise of subscription to share capital, for a consideration in the form of commission. As already pointed out, names of several companies which figured in the statements given by the above persons to the investigation wing also figured as share-applicants subscribing to the shares of the assessee-company. These constitute materials upon which one could reasonably come to the conclusion that the monies emanated from the coffers of the assessee-company. The Tribunal, apart from adopting an erroneous legal approach, also failed to keep in view the material that was relied upon by the Assessing Officer. The CIT (Appeals) also fell into the same error. If such material had been kept in view, the Tribunal could not have failed to draw the appropriate inference.\"' 12. The present case would clearly fall in the category where the Assessing Officer had not kept quiet and had made inquiries and queried the respondent-assessee to examine the issue of genuineness of the transactions. The Tribunal unfortunately did not examine the said aspect and has ignored the following factual position:— (a) The shareholder companies, 5 in number, were all located at a common address i.e. 13/34, WEA, Fourth Floor, Main Arya Samaj Road, Karol Bagh, New Delhi. (b) The total investment made by these companies was Rs.1,51,00,000/-, which was a substantial amount. (c) Evidence and material on bogus transactions found during the course of search of Tarun Goyal. Evidence and material that the companies were providing accommodation entries to beneficiaries was not considered. (d) The findings recorded as mentioned in the assessment order, which read as 49 under:- \"1. From the finding of search, it is evident and undeniable that all the companies including the alleged shareholders companies belong to Sh. Tarun Goyal. This is enforced even more from the following:— i. All the companies are operated from the-office premises of Sh. Tarun Goyal. ii. All the directors are either his employees or close relatives. Sh. Tarun Goyal could never produce the directors nor furnish their residential address. iii. The statement of employees of Sh. Tarun Goyal is on record, whereby they have clearly stated that they signed on the papers produced before them by Sh Tarun GoyaL They do not know about the basic details of the companies like shareholding patterns, nature of business of these companies etc. iv. The statement of auditors of Sh. Tarun Goyal is on record. They have stated to have never meet (sic) the directors of the companies and audited the accounts only on the directions of Sh Tarun Goyal. As per the statement of auditors, the employees of Sh Tarun Goyal were directors of the companies run by them, also they could not ascertain the so called share capital subscribed by Sh Tarun Goyal as documentary proof of the same was lacking. v. During the course of search, all the passbooks, cheque books, PAN Cards etc. were always in possession of Sh Tarun Goyal. On his directions all the employees signed all the documents. vi. All the bank account opening forms appear to be in the handwriting of Sh Tarun Goyal. vii. All the books of accounts of all the companies have been retrieved from the computers/laptop of Sh Tarun Goyal. viii. Sh Tarun Goyal has given letters for the release of bank accounts of companies put under restraints after search. No such application was received from so called directors of the companies. ix. Sh Tarun Goyal appears in all the scrutiny assessments as well as appeals of his companies himself before various income' tax authorities. From verification carried out in respective wards/ circles where the above mentioned companies are assessed, it is' evident that Sh Tarun Goyal is appearing in all the income tax proceedings on behalf of all the companies. He is not charging any fees for appearing in these cases. 50 x. During the post search investigation it was revealed that besides, aiding and abetting the evasion of taxes, Sh Tarun Goyal has been indulging in violation other provisions of the law of the land. This matter has also been taken up by REIC for multi-agency probe.\" (e) The respondent-assessee did not have any business income in the year ending 31st March, 2007 and had income from other sources of Rs.16.38 lakhs in the year ending 31st March, 2008. The respondent-assessee had not incurred any expenditure in the year ending 31st March, 2007 and had incurred expenditure of Rs.12.17 lakhs in the year ending 31st March, 2008. (f) Shares of face value of Rs.10/- each were issued at a premium of Rs.40/- (total Rs.50/-). (g) The respondent-assessee had failed to produce Directors of the companies, though they had filed confirmations, and therefore, were in touch with the respondent- assessee. The respondent-assessee had also failed to produce the details and particulars with regard to issue of shares, notices etc. to the shareholders of AGM/EGM etc. 13. In view of the aforesaid factual position, we have no hesitation in holding that the transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by the Tribunal is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. 14. Accordingly, the appeal is allowed. The substantial question of law framed above is accordingly answered in favour of the appellant-revenue and against the respondent- assessee. There would be no order as to costs. 32. The facts and circumstances of the instant case more or less are at pari-materia with facts as discussed in the cases of NRA Iron & Steel (P.) Ltd and NDR Promoters Pvt Ltd V PCIT (supra). In the instant case also, 51 1) There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The enquiry by the Inspector revealed that 7 of the subscriber companies were non-existent and had no office at the address mentioned by the assessee. The subscriber companies at Chart-5 were found to be non-existent at the address were given. 2) None of the directors of the assessee companyor the subscriber companies appeared before the AO in response to notice u/s 133(6)/131 though the act of voluminous documents being filed by the subscriber companies establishes the fact that they were in touch with the assessee. 3) The genuineness of the transaction was found to be completely doubtful. The enquiries revealed that the subscriber companies had filed returns for a negligible taxable income, which would show that the subscriber companies did not have the financial capacity to invest funds ranging between Rs. 30,00,000/- to Rs. 6,75,21,000/-per subscriber in the assessment Year 2012-13, for purchase of shares at such a high premium. For example: 52 i) M/s Hare Krishna Garments P Ltd had a loss of Rs 12,319/- but made an investment of Rs 4,13,47,400/-. ii) M/s Green Vision Automatives P Ltd had net profit of Rs 5,542/- but made an investment of Rs 28,00,000/- iii) M/s I-Tech Insurance brokerage Pvt Ltdhad net profit of Rs 25,495/- but made an investment of Rs 5,20,39,000/- iv) M/s Radhika Clothings Pvt Ltd had net profit of Rs 1,30,245/- but made an investment of Rs 1,15,70,000/- v) M/s Shridhar Portfolio Management Ltd had net profit of Rs 25,319/- but made an investment of Rs 1,29,40,000/- 4) There was no explanation whatsoever offered either by the assessee as to how it commanded such premium or the subscriber companies as to why the subscriber companies had applied for shares of the assessee company at a high premium of Rs. 190 per share, even though the face value of the share was Rs. 10/- per share. 5) Furthermore, none of the so-called subscriber companies established the source of funds from which the high share premium was invested. 53 6) The mere mention of the PAN and RoC etc details of an investor was not sufficient to discharge the onus under Section 68 of the Act. 7) The genuineness of the transaction was found to be completely doubtful. 33. The Hon'ble High Court of Delhi in the case of CIT vs. Nova Promoters and Finance Lease Pvt Limited 342 ITR 169 (Del) on similar facts had held that- “the finding that the share application monies have come through account payee cheques is, at best, neutral. The question required a thorough examination and not a superficial examination. ……. The fact that the companies which subscribed to the shares were borne on the file of the ROC is again a neutral fact. Every company incorporated under the Companies Act, 1956 has to comply with statutory formalities. That these companies were complying with such formalities does not add any credibility or evidentiary value. In any case, it does not ipso facto prove that the transactions are genuine……. Compliance with statutory norms and requirements is only one aspect, but in the present case a deeper scrutiny was required and the camouflage adopted was the primary aspect that required adjudication. This aspect has been ignored. Bonafide and genuineness of the transactions was the issue.” 54 33.1 Similarly, the Hon'ble Delhi High Court in the case of CIT Vs. Oasis Hospitalities Pvt Ltd 333 ITR 119 (Del) held that : “whenever the issue is subscribed without quoting it on stock exchange by limited or private limited company, the presumption is very strong against the assessee that subscription is available only to the closely connected persons of the assessee. Once the inference is against the assessee that the issue is subscribed by its closely connected persons, the onus is upon the assessee to prove the identify (sic. identification) of the subscribers and their creditworthiness.” The Hon’ble Delhi High Court had further held that \"In cases where the explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money.\" The Hon’ble Delhi High Court further held that the\" Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder.\" It also laid emphasis on the factum of creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. In the instant case, the analysis of the bank statement of the subscriber companies demonstrates that they all form part of a chain and are used as a conduit. Their bank statements show similar pattern of precedence 55 of credit entries from unknown unexplained sources before debit entries either on the same or the next 2-3 following days, leaving nominal balance in the account. 34. We also note the there is a legal mandate to the taxation authorities not to put blinkers and make bald and superficial study of documents produced before it. They are required to investigate and examine the documents produced before fairly. The Hon'ble Delhi High Court in the case of Divine Leasing & Finance Limited 299 ITR 282 (Del)had held that “The Assessing Officer is duty bound to investigate the credit worthiness of the creditor/subscriber, the genuineness of the transaction and veracity of the repudiation”. In the instant case, the AO has conducted requisite enquiries and has given due opportunities to the assessee at every stage of investigation before arriving at his conclusion. The CIT(A), however, made superficial evaluation of the documents furnished to arrive at his decision. 35. In Navodhya Castles Pvt Ltd[2014] 367 ITR 306 ( Delhi),the Hon’ble Delhi High Court explained the legal position with respect to section 68. It refers to the decision of Supreme Court in the case of V. Govindarajuly Mudaliar V CIT (1958) 34 ITR 807(SC) for the legal 56 proposition that the AO is not required u/s 68 to prove that the monies emanated from the coffers of the assessee company and came back as share capital. The Supreme Court categorically laid down that “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 Income-tax Officer is entitled to draw the inference that the receipt are of an assessable nature”. It was held by the Hon’ble Delhi High Court that certificate of incorporation, PAN, etc are not sufficient for purpose of identification of shareholder when there is material to show that shareholder was a paper company and not a genuine investor. SLP against the said decision was dismissed by Hon'ble SC in this case in 2015.In the instant case, the assessee has not been able to establish the identity, genuineness of transaction and creditworthiness of the subscriber companies and hence we find that the action of the AO is legally justified. 35.1 We may also take note of the decision of Calcutta High Court in the case of Rajmandir Estate Pvt Ltd(2016) 386 ITR 162 ( Kol) and Pragati Financial Management Pvt Ltd (supra)which in similar facts held that \"Identity of the alleged share-holders is known but the 57 transaction was not a genuine transaction. The transaction was nominal rather than real. The creditworthiness of the alleged share holders is also not established because they did not have any money of their own. Each one of them received from somebody and that somebody received from a third person.(emphasis supplied) Therefore, prima facie, the share-holders are mere name lenders’ and distinguished the judgement of CIT v Lovely Export Pvt Ltd (2008) 299 ITR 268(Del) \"where the preponderance of evidence indicates absence of culpability, the tax payers should not be harassed\". In the present case, however, there exists, in the words of Calcutta High Court, reasonable suspicion if not prima facie evidence of culpability.\" The Calcutta High Court also held that source of source can be examined in reference to section 68 drawing support from the full bench Delhi High Court in the case of Sophia Finance Ltd(1994) 205 ITR 98 (Del) which held that “the ITO may even be justified in trying to ascertain the source of the depositor”. This issue of ‘source of source’ is now settled by Hon’ble Supreme Court in NRA Iron & Steel (P.) Ltd (supra) when it held that the investor company has to prove the source of their investment in the assessee company. 58 35.2 We are further fortified in our view by the Hon'ble High Court of Delhi in the case of Divine Leasing and Finance Limited (supra) wherein the Hon'ble Delhi High Court has clearly differentiated the cases of share capital of private limited company from public limited company by saying \"in the case of private placement, the legal regime will not be the same\". 36. In PeeAar Securities Ltd reported in [2018] 96 taxmann.com 602 (Delhi-Trib.)[23-08-2018], the ITAT held that “A private limited company cannot say that it has no clue about subscribers to its share capital; genuineness of transaction has to be determined by ground realities and not by documents like PAN cards, board resolutions, share certificates etc. as even shell companies have these documents” 37. The decision of the ITAT ITO Vs Sai Everest Building & Developers [2022] 142 taxmann.com 383, ITAT Mumbai Bench G, in similar circumstances came to the same conclusion. In this case, assessee firm claimed to have received unsecured loans from two entities. On perusal of documents of lender parties, it was observed that all the entities were involved in similar activities of share trading and investments with negligible or zero/negative profit. Out of three 59 essential ingredients, credibility and creditworthiness of lender companies could not be established. It was held that addition made by AO u/s 68 was justified. In CIT v. Nipun Builders & Developers (P.) Ltd[2013] 350 ITR 407 (Delhi) addition u/s 68 was held to be justified as summons issued to subscribers returned unserved and assessee failed to produce principal officers of subscriber companies. 38. The cases relied upon by the AR are either all distinguishable in facts or have been discussed in details in the case of Hon’ble Supreme Court in NRA Iron & Steel (P.) Ltd and NDR Promoters Pvt Ltd V PCIT (supra).In the case of Orissa Corporation Pvt Ltd, the Hon'ble Supreme Court had held that the assessee discharged the burden that lay on him which is not discharged in the instant case. In the case of Lovely Exports Pvt Ltd (2008) 319 ITR (St) 5 (SC) the Hon'ble Supreme Court held that in the case of a public Ltd company, even if the subscribers to the share capital are not genuine, then too, it would not be regarded as undisclosed income of the assessee company. 38.1 The instant case is that of Pvt Ltd company where the regime of law is different. In the case of Vrindavan Farms Pvt Ltd, the Hon'ble Delhi High Court held that the AO had not undertaken any investigation of prove the veracity of the documents like PAN etc submitted by the 60 assessee whereas in the instant case the AO has carried out due enquiries. In the case of Divine Leasing & Finance Ltd (2008) 299 ITR 268 (Del), the Hon'ble Delhi High Court held that no adverse inference should be drawn if shareholders failed to respond to the notice of the Assessing Officer. In the instant case the facts are different as stated above. In the case of Dwarkadish Investment Pvt Ltd(supra) the Hon'ble Delhi High Court, held that just because the creditors/share applicants could not be found at the address given, section 68 can’t be invoked and also held that the assessee need not to prove the “source of source”. The issues raised are answered by Hon’ble Supreme Court in NRA Iron & Steel (P.) Ltd and NDR Promoters Pvt Ltd V PCIT as discussed above. In the case of CIT Vs. Winstral Petrochemicals Pvt Ltd, the Hon'ble Delhi High Court had held that the case was not of non-existent subscriber. 38.2 In the case of CIT Vs. Value Capital Services Pvt Ltd, the Hon'ble Delhi High Court held that the Revenue had to show that the investment made by the applicant actually emanated from the coffers of the assessee-company so as to enable it to be treated as the undisclosed income of the assessee-company. The Hon’ble Delhi High Court in a later case in 2014 in Navodhaya Castles Pvt Ltd(supra) 61 explained the legal proposition, in context of section 68, that such an argument was rejected by Supreme Court in the case of V. Govindarajuly Mudaliar V CIT (1958) 34 ITR 807(SC). 39. From the compendium of facts and law as discussed above, more so in para 32 above, we find that the Assessing Officer made an independent and detailed enquiry, including field enquiry of the so- called subscriber companies to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness. It is a trite law that identity of the creditor stands discharged only when it is proved that the said person had capacity and since the financial capacity of the subscriber companies in the instant case has not been established, the onus is not discharged. We are therefore of the considered opinion that the assessee failed to discharge the onus of establishing the identity, genuineness of the transaction and creditworthiness or financial strength of the shareholder. 39.1 The Hon’ble Supreme Court in NRA Iron & Steel (P.) Ltd has clearly laid down the principles in cases of such nature as follows: 62 “14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee”. 39.2 We find that the CIT(A)has not followed the legal requirement of careful scrutiny in a case of private placement of shares and has ignored or brushed aside the detailed findings of the AO from the field enquiry and investigations carried out by his office. The CIT(A) has erroneously held that merely because the assessee company had filed all the primary evidence, the onus on the assessee stood discharged. The CIT(A) failed to appreciate that the subscriber companies which had filed income tax returns with a meagre or nil income, had to explain how they had invested such huge sums of money in the assessee Company. The onus to establish the credit worthiness of the subscriber companies was clearly not discharged. The entire transaction seemed bogus, and lacked credibility. 63 39.3 In view of the aforesaid factual and legal position, we have no hesitation in holding that the transactions in question were clearly sham and make-believe with excellent paper work to camouflage their bogus nature. Accordingly, the order passed by the CIT(A),deleting the addition in respect to 13 subscriber company in Chart-4, is held as clearly superficial. The CIT(A) has adopted a perfunctory approach and has ignored the evidence and material referred to in the assessment order. Merely because the 13 subscriber companies were found existing in their premises, does not absolve them from establishing their financial capacity to subscribe to the shares of the assessee company. The reasoning given is contrary to human probabilities, for in the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. Likewise, the CIT(A) should have delved deeper into the documents produced in respect of 7 subscriber companies of Chart-5 instead of confirming the addition only on the ground of their non- presence on the addresses given. 39.4 In view of the discussion above, we have arrived at our considered opinion that the CIT(A) fell in complete error when he accepted that the assessee has discharged its onus u/s 68 in the cases 64 of 13 subscriber companies at Chart-4,only on the ground that they were found existing on the updated address given. We hold that the CIT(A) blindly accepted the sanctity of documents like confirmation and transactions through banking channel. The CIT(A) fell in error in not giving due consideration to the legal principles which mandate that mere documents like PAN, RoC certification and transaction through banks neither establishes the identity of the investor nor the genuineness of the transaction and the creditworthiness of the subscriber companies. 39.5 There are overwhelming evidences, which have been discussed by the AO and meticulously referred to by the ld DR as above through Chart-1 to Chart-3, to corroborate the fact that the transactions are pre-arranged transactions with the sole motive to evade tax. We therefore hold that where the AO has discharged his onus of investigation and providing natural justice to the assessee adequately, the assessee at the same time has failed to discharge the onus cast upon it. We therefore, find no infirmity in the findings of the AO that the amount received by the assessee company as share application money are arranged transactions, remains unexplained and liable to be added as income u/s 68. Accordingly, the decision of CIT(A) 65 of deleting the addition of Rs 31,90,49,800/- u/s 68 is reversed. Simultaneously, the CIT(A) decision of upholding the AO’s treatment of the share capital and share premium of Rs. 4,98,20,000/- received by the assessee as non-genuine u/s 68 of the Act is sustained, though on different grounds i.e., grounds of failure to prove the identity, genuineness and creditworthiness apart from the reason of non- existence of subscriber companies on their given address. Consequently, the ground no 1 and 2 of the assessee’s cross appeal stands dismissed and ground number 1 of the Revenue is allowed. 40. The ground no 2 of the Revenue and Ground Nos. 7 and 8 of the assessee pertaining to addition/deletion made of Rs. 9,58,54,600/- on account of unexplained loans and advances. The facts of the issue are that during the course of assessment proceedings, the Assessing Officer noticed that the assessee failed to establish the identity, creditworthiness and genuineness of the loans and advances taken by it. 41. The assessee submitted before the Assessing Officer that the entire act of assessment under section 143(3) of the Act appears to be sham. During the dates of hearing in entire proceedings, nothing related to advance received from customers, salary payable, 66 professional fee payable, audit fee payable, Roc fee payable etc., has ever been enquired. The specific detail of advance received from customers for Rs. 9,58,54,600/- has been submitted by the ld. counsel for the assessee which was never been questioned or disputed thereafter. Further nothing related thereto has ever been asked in the final show cause notice served on 23-03-2015, which can in any way be characterized as query floated for the additions to be made. 42. The ld. counsel for the assessee further submitted that neither the documents nor the contents thereof have ever been questioned, denied and/or rejected by the Assessing Officer during the entire assessment proceedings. No discussion, whatsoever, howsoever, has been done in the entire substance of order impugned, which can be termed as enquiry in respect of advance from customers and/or expenses payable. The overall discussion in the order impugned grossly been related to share capital and nothing therefrom can be characterized as related to aforesaid addition of current liability comprising advance from customers and/or expenses payable. 43. Accordingly, the ld. counsel for the assessee concluded that this 67 entire act of addition is illegal and based on mere imagination of the Assessing Officer. She has made additions by mentioning wrong facts and without making any effective investigations thereon. The ld. counsel for the assessee relied upon the decision of the Hon'ble High Court of Delhi in the case of Gangeshwari Metal [P] Ltd 214 Taxman 423. 44. Not convinced with the reply of the assessee, the Assessing Officer made an addition of Rs. 9,64,57,460/-. 45. Aggrieved, the assessee went in appeal before the ld. CIT(A) who, out of total addition of Rs. 9,64,57,460/-, sustained the addition to the extent of Rs. 86,95,000/- and balance amount of Rs. 8,71,59,600/- was deleted by holding as under: “9.1 The addition has been made by the AD considering the same as loans or advances received for which identity, creditworthiness and genuineness .has not been proved by the appellant. However, it is observed from the assessment order that no specific instance have been pointed out by the AO to treat the whole such amount in the current liability as unexplained within the meaning of provisions of section 68 of the Act. It has just been added without any discussion but mentioning that \"in the light of the discussion made in preceding paragraphs, the same amount is disallowed \". 68 9.2 Before me in the appellate proceedings, the appellant provided the details of such outstanding current liability, as submitted before the AD earlier. Out of the amounts received from 6 parties, the appellant mentioned that the advance has been received from M/s Daze Construction P. Ltd. amounting to Rs.7,98,34,600/- and M/s Lotus Enterprises amounting to Rs.75,50,OOO/-, against the sale of shares, which has been actually affected during the next financial year. A copy of ledger account has been provided for the year under consideration to show that the amount has been received through banking transactions from Daze construction, which is duly reflected in the bank statement. A confirmation of Daze Construction P. Ltd and its copy of return of income and final accounts have also been submitted to substantiate that these are the amounts received, for the purpose of the business. Further, in the succeeding year the appellant has transacted in shares on behalf of Daze Construction Ltd. and a closing balance of Rs.6,47,04,600/- has been further carried over. Therefore, it is clear that the appellant could sufficiently explain and establish the identity, creditworthiness and genuineness of transaction and also demonstrated that these advances are related to the business of appellant whereas AO has not brought out anything specific on record to prove that these are unexplained cash credit. Therefore, looking to the facts and circumstances of this case, the amount Rs.7,93,34,600/- added, shown to have received from Daze Construction P. Ltd. is not tenable as unexplained cash credit within the meaning of provisions of section 68 of the Act and hence liable to be deleted.” 69 46. We have heard the rival submissions and have perused the relevant material on record. The Assessing Officer framed the assessment order observing that no specific instance has been pointed out to treat the whole such amount in the current liability as unexplained within the meaning of provisions of section 68 of the Act. We find that the ld. CIT(A) considered each and every items of advance separately and rightly came to the conclusion in sustaining addition to the extent of Rs. 86,95,000/- and deleted the balance amount of Rs. 8,71,59,600/-. Accordingly, we find no reason to interfere with the findings of the ld. CIT(A). Ground No. 2 raised by the Revenue is dismissed and Ground No. 7 and 8 raised in the cross objection are also dismissed. 47. Ground Nos. 3 and 4 in the cross objection of the assessee relate to the disallowance of Rs. 1,05,15,000/- made on account of loss on shares. 48. Briefly stated, the facts of the case are that the assessee purchased 1,50,000 shares of M/s Jyoti Steel Ltd. from M/s AKJ Fabrics Pvt Ltd @ 100/- per share amounting to Rs. 1,50,15,000/-. Subsequently, the shares got transferred in its name and certificate in 70 this regard was provided. The shares were sold to ASW Engineering Consultants Pvt Ltd @ Rs. 30/- per share amounting to Rs. 45,00,000/- showing a loss of Rs. 1,05,15,000/-. 49. Holding the business of the assessee to be sham and the transactions not genuine, the Assessing Officer made addition of Rs. 1,05,15,000/- and added the same to the income of the assessee. 50. Aggrieved, the assessee went in appeal before the ld. CIT(A) who confirmed the disallowance. 51. Aggrieved further, the assessee in appeal before us. 52. We have heard the rival submissions and have carefully perused the relevant material on record. The ld. CIT(A) has elaborately discussed this issue at para 11 to 11.2 of the appellate order and confirmed the addition as under: “I have carefully gone through the above submissions of the appellant and have considered the facts and evidences on record. 11.1 The appellant purchased 1,50,000 shares of M/s Jyoti Steels Ltd. on 12.03.2012 from M/s AKJ Fabrics P. Ltd. @Rs.I00.10 per share amounting to Rs.l,50,15,OOO/-. The same shares were got transferred in its name as per the share 71 transferred certificate and transfer form provided. These shares of M/s Jyoti Steels Ltd. were sold to ASW Engineering consultants P. Ltd. on 29.03.2012 @30 rupees per share amounting to Rs.45,OO,000/-. Thus, loss on share has been shown to have incurred amounting to Rs.l,05,15,OOO/-. The delivery note, further share transfer, resolution of the board of directors and other details provided to show that these transactions have actually been incurred where appellant has incurred heavy losses. On the face of it the transaction appears to be properly fortified with the paper work, however it is observed that the company M/s Jyoti Steels l.td., whose shares have been sold by the appellant within a span of 15 days, incurring a loss of Rs. 70.10 per share is a privately held company and the transaction are not through any reported stock exchange because it is not a listed company. The appellant could not substantiate the valuation of shares either at the time of purchase or at the time of sale. It is also not provided any cogent reasoning for the sale at such a huge loss within a span of 15 days and what is the basis of such a drastic diminution in value of share and how the values have been arrived or what condition prevailed for such drastic decrease. The appellant has stated to be a financing and investment company, dealing in shares on behalf of others also and therefore it cannot be said that it has no expertise or acumen to judge about the movement of downward price in shares. No prudent businessman shall enter into such transaction to incur such losses and especially in the case of appellant being finance and investment company, this cannot be expected. The downward movement in value in shares are not market driven and the need to sell these shares is also not 72 put forward by the appellant resulting in such losses. Therefore, though on the face of it this transaction appears to be carried out in the regular course of business but it is necessary to go behind the veiled for such transaction and there it clearly emerges that these transactions are sham and entered into to reduce the profit of the appellant to that extent and thereby less payment of taxes, defrauding revenue. 11.2 Looking to the facts and circumstances of the case where the share transactions have been entered of a privately held company whose credence and valuation of share is not justified and also not market driven as it is an off market transaction, the reasoning for entering into such transaction resulting into loss or the promptness of selling the shares at almost last day of financial year for obtaining such loss clearly indicates that it is a sham transaction for which the colour of genuineness has been given and therefore the losses so claimed to have been incurred cannot be treated as loss of the appellant and hence same is not allowed. Accordingly, the addition to extent is confirmed and this ground of appeal is dismissed. “ 53. We concur with the findings of the ld. CIT(A) that the share transactions of a privately held company without credible valuation, in an off market transaction, resulting into loss or the promptness of selling the shares at almost last day of financial year for obtaining such loss, clearly indicates that it is a sham transaction for which colour of 73 genuineness has been given. We are in agreement with the well reasoned findings given by the ld. CIT(A) and accordingly, this ground number 3 and 4 of the assessee are dismissed. 54. Ground Nos. 5 and 6 in the cross objection of the assessee relate to the disallowance of Rs. 12,35,000/- made on account of sales promotion expenses. 55. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has claimed sales promotion expenses of Rs. 24,70,000/-. The assessee submitted that the expenses were incurred to attract clients/investors. Not satisfied, the Assessing Officer observed that the so called investors exist only on paper and disallowed a sum of Rs. 12,35,000/- which was 50% of the sum disallowed. 56. Aggrieved, the assessee went in appeal before the ld. CIT(A). 57. The ld. CIT(A), after considering the facts and submissions, held as under: “13. I have gone through the above submission of the appellant and have considered the facts and evidences on record. I have also gone through the bills for purchase of such sale promotion 74 items as submitted by the appellant during assessment proceedings and during appellate proceedings. 13.1 It has been observed that the appellant has purchased various gifts items from September, 2011 onwards and most of the purchases have been made from one JMD Sales Corporation. While going through the bill no, it is observed that bill dated 07.10.2011 by said JMD Sales Corporation amounting to Rs.l,16,366/-for purchase of 200 bone china sets and 125 executive diaries have the bill no.239. further, one more bill no.239 has been given dated 22.10.2011 for the purchase of 200 diary sets and 250 executive diary amounting to Rs.l,95,563/-. It is not possible to have the same bill numbers for two different items which clearly indicates that veracity of these bills are not upto the mark and the bill are fabricated. It is also observed from the various bills submitted that total gifts runs into more than two thousand pieces, mainly consists of diary set planner, address book, calendars, crockery sets, parker pen set, executive watch, cuffling set with emerald stones, table calendars, wrist watch etc. It is not substantiated by the appellant that to whom such gifts have been given, especially when it is dealing with limited number of buyers. Further. on what occasions so many gifts have been given. Whether any logo was affixed on such gifts or not. In what manner this has helped in increasing the business of the appellant with respect to its clients. 13.2 Therefore, looking to the facts and circumstances of the case it cannot besaid that all expenditure have been incurred wholly and exclusively towards the purchase of such gift items in 75 large number having no plausible justification and therefore it is held that 50% disallowance made by the AO for non business purposes use, in the absence of any justification is retained and confirmed. Accordingly the addition amounting to Rs. 12,35,000/- is confirmed and this ground of appeal is dismissed.” 58. Now the assessee is in appeal before us against the 50% disallowance confirmed by the ld. CIT(A). 59. After considering the submissions of the assessee, we find that the ld. CIT(A) has rightly observed that it is not possible to have same bill numbers for two different items which clearly indicate that veracity of the bills are not established which leads to the conclusion that the bills are fabricated. We also concur with findings of the ld. CIT(A) that the assessee has not substantiated as to whom such gifts have been given, especially when it is dealing with limited number of buyers or on what occasions so many gifts have been given, whether any logo was affixed on such gifts or not and in what manner this has helped in increasing the business of the assessee with respect to its clients. In view of the above findings of the ld. CIT(A), we are inclined 76 to agree with the well reasoned findings of the ld. CIT(A) and decline to interfere with the same. Grounds number 5 and 6 stands dismissed. 60. In the result: ITA No. 2425/DEL/2017 - Appeal of Revenue is partly allowed. CO No. 141/DEL/2017 - Cross Objection of Assessee is Dismissed. ITA No. 2366/DEL/2017 - Appeal of assessee is dismissed as withdrawn. The order is pronounced in the open court on 24.10.2024. Sd/- Sd/- [SAKTIJIT DEY] [NAVEEN CHANDRA] VICE PRESIDENT ACCOUNTANT MEMBER Dated: 24th OCTOBER, 2024. VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi 77 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order "