M/S UNIHEALTH CONSULTANCY LIMITED,MUMBAI V. DCIT, 8 (3) (1), MUMBAI

ITA 4387/MUM/2024

AI Insights

The case involves M/s Unihealth Consultancy Ltd., which appealed against the orders of the Deputy Commissioner of Income Tax and the Commissioner of Income Tax (Appeals) regarding the additions made under Sections 68 and 56(2)(viib) of the Income Tax Act, 1961. The additions were related to the share capital and share premium received by the company, which were treated as unexplained cash credits and excess share premium, respectively. The Tribunal examined the valuation methods used for the shares and the documentary evidence provided to substantiate the creditworthiness of the shareholders. The Tribunal found that the assessee did not adequately substantiate the claims and upheld the additions made by the lower authorities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471354 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2017-2018
• Other Referred Cases: Vodafone M-Pesa Ltd vs. Pr. CIT, TUV Rheinland NIFE v. ITO, Agro Portfolio (P.) Ltd. v. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESHWARI MENON
• Assessee Lawyers: RAJESH KALYANI AJAY DHOOT
• Keywords: Opportunity of being heard; Corroborative evidences; Unexplained cash credit; Fair market value; Onus to prove; Principle of natural justice; Valuation report; Source of fund; Bogus
• Section: 143(3); 68; 56(2); 133(6); 73; 191

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 4387/MUM/2024 Assessment Year: 2017-18 M/s Unihealth Consultancy Ltd., H-13 & H-14 Everest, 9th floor, Tardeo Road, Mumbai-400034. Vs. The Dy. CIT-8(3)(1), Room No. 615, 6th floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai-400020. PAN NO. AABCU 1551 C Appellant Respondent Assessee by : Mr. Rajesh Kalyani/ Ajay Dhoot Revenue by : Ms. Rajeshwari Menon, Sr. DR Date of Hearing : 27/11/2024 Date of pronouncement : 29/01/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 09.07.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1. Section 68 of the Income Tax Act, 1961 a) On the fact and in the circumstances of the case and in law, the learned Assessing Officer (\"AO\") erred in passing the order u/s. 143(3) of the Income Tax Act, 1961 (\"ITA\"), and the confirmation of the addition of 4,20,00,000/ by the learned Commissioner of Income Tax (Appeals) (\"CIT(A)\") is erroneous and is liable to be quashed. b) On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that the appellant had provided complete details regarding the identity, creditworthiness, and genuineness of the shareholde whom the amounts were received. Copies of the relevant documents, including the profile, identity proof, Income Tax return and bank statements etc. were duly submitted and should have been taken into consideration. c) On the fact and in the circumst the learned AO and learned CIT(A) did not properly consider the documentary evidence and explanations provided by the appellant concerning the cash credits. The failure to acknowledge the details and documents provided, which credits were genuine and properly explained, is a clear case of error in judgment. d) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's addition without giving due regard to th evidence provided during the appellate proceedings. The learned CIT(A) should have considered the documents and explanations provided at the time of the appeal. e) On the fact and in the circumstances of the case and in la the learned AO and learned CIT(A) have ignored the settled legal position regarding the burden of proof under Section 68 of the Act, which is only to establish the identity and creditworthiness of the shareholders and the genuineness of the transactions of which were duly demonstrated by the appellant during the course of proceedings WITHOUT PREJUDICE 2. Section 56(2)(viib) of the Income Tax Act, 1961 a) On the fact and in the circumstances of the case and in law, the learned A grossly erred in confirming the alternative addition of Rs 4,09,70,600/ the valuation methodology adopted by the appellant for the M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 a) On the fact and in the circumstances of the case and in law, learned Assessing Officer (\"AO\") erred in passing the order u/s. 143(3) of the Income Tax Act, 1961 (\"ITA\"), and the confirmation of the addition of 4,20,00,000/- u/s. 68 of the ITA by the learned Commissioner of Income Tax (Appeals) (\"CIT(A)\") is us and is liable to be quashed. On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that the appellant had provided complete details regarding the identity, creditworthiness, and genuineness of the shareholde whom the amounts were received. Copies of the relevant documents, including the profile, identity proof, Income Tax return and bank statements etc. were duly submitted and should have been taken into consideration. c) On the fact and in the circumstances of the case and in law, the learned AO and learned CIT(A) did not properly consider the documentary evidence and explanations provided by the appellant concerning the cash credits. The failure to acknowledge the details and documents provided, which clearly show that the credits were genuine and properly explained, is a clear case of error in judgment. d) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's addition without giving due regard to the appellant's submissions and the evidence provided during the appellate proceedings. The learned CIT(A) should have considered the documents and explanations provided at the time of the appeal. e) On the fact and in the circumstances of the case and in la the learned AO and learned CIT(A) have ignored the settled legal position regarding the burden of proof under Section 68 of the Act, which is only to establish the identity and creditworthiness of the shareholders and the genuineness of the transactions of which were duly demonstrated by the appellant during the course of proceedings WITHOUT PREJUDICE 2. Section 56(2)(viib) of the Income Tax Act, 1961 a) On the fact and in the circumstances of the case and in law, the learned A grossly erred in confirming the alternative addition of Rs 4,09,70,600/- u/s. 56(2)(viib) of the ITA thereby rejecting the valuation methodology adopted by the appellant for the M/s Unihealth Consultancy Ltd. 2 ITA No. 4387/MUM/2024 a) On the fact and in the circumstances of the case and in law, learned Assessing Officer (\"AO\") erred in passing the order u/s. 143(3) of the Income Tax Act, 1961 (\"ITA\"), and the u/s. 68 of the ITA by the learned Commissioner of Income Tax (Appeals) (\"CIT(A)\") is On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that the appellant had provided complete details regarding the identity, creditworthiness, and genuineness of the shareholder from whom the amounts were received. Copies of the relevant documents, including the profile, identity proof, Income Tax return and bank statements etc. were duly submitted and should ances of the case and in law, the learned AO and learned CIT(A) did not properly consider the documentary evidence and explanations provided by the appellant concerning the cash credits. The failure to acknowledge clearly show that the credits were genuine and properly explained, is a clear case of d) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's addition without e appellant's submissions and the evidence provided during the appellate proceedings. The learned CIT(A) should have considered the documents and explanations e) On the fact and in the circumstances of the case and in law, the learned AO and learned CIT(A) have ignored the settled legal position regarding the burden of proof under Section 68 of the Act, which is only to establish the identity and creditworthiness of the shareholders and the genuineness of the transactions, all of which were duly demonstrated by the appellant during the a) On the fact and in the circumstances of the case and in law, the learned A grossly erred in confirming the alternative addition u/s. 56(2)(viib) of the ITA thereby rejecting the valuation methodology adopted by the appellant for the issuance of share and the confirmation of the same by CIT(A) is erroneous and is liable to be quashed. b) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's rejection of the valuation method. In doin hindsight to compare projections made at the time of share issuance with later events and results. This violates the principle that valuation should be based on information available at the time of issuance, not on subse c) On the fact and in the circumstances of the case and in law, the learned AO and learned CIT(A) erroneously disregarded the appellant's valuation based on assumptions and presumptions which was in accordance with rule 11UA(2)(b) of the Inco Rules, 1962. d) On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that appellant had provided all necessary documents, including the valuation report, details of transactions, and supporting evidence, t shares. The learned AO and learned CIT(A) failed to adequately consider these documents and the appellant's legitimate claims. e) On the fact and in the circumstances of the case and in law, the learned CIT(A) has completely ignored th Hon'ble Bombay High Court (Jurisdictional High Court) in the case of M/s. Vodafone M taxmann.com 73 (Bombay). f) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s has affirmed LTD v. ITO [2018] 171 ITD 74 (Delhi explicitly overturned by the Hon. Delhi High Court in favour of the appellant. The appellant had duly highlighted the updated legal position in the submissions, to acknowledge. g) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s has failed to apply the correct legal principles as established by the Hon. jurisdictional High Court and the Hon. Delhi High Court thereby resulted in an unjust addition to the appellant's income, ignoring the binding precedents that are in favour of the appellant. 3. Principal of Natural Justice M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 issuance of share and the confirmation of the same by CIT(A) is erroneous and is liable to be quashed. b) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's rejection of the valuation method. In doing so, the learned AO erred by using hindsight to compare projections made at the time of share issuance with later events and results. This violates the principle that valuation should be based on information available at the time of issuance, not on subsequent events. c) On the fact and in the circumstances of the case and in law, the learned AO and learned CIT(A) erroneously disregarded the appellant's valuation based on assumptions and presumptions which was in accordance with rule 11UA(2)(b) of the Inco d) On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that appellant had provided all necessary documents, including the valuation report, details of transactions, and supporting evidence, to justify the FMV of shares. The learned AO and learned CIT(A) failed to adequately consider these documents and the appellant's legitimate claims. e) On the fact and in the circumstances of the case and in law, the learned CIT(A) has completely ignored the decision of the Hon'ble Bombay High Court (Jurisdictional High Court) in the case of M/s. Vodafone M-Pesa Ltd vs. Pr. CIT [2018] 92 taxmann.com 73 (Bombay). f) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s has affirmed the decision of Agro Portfolio (P.) LTD v. ITO [2018] 171 ITD 74 (Delhi -Trib.) which has been explicitly overturned by the Hon. Delhi High Court in favour of the appellant. The appellant had duly highlighted the updated legal position in the submissions, which the learned CIT(A) has failed to acknowledge. g) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s has failed to apply the correct legal principles as established by the Hon. jurisdictional High Court and the Hon. hi High Court thereby resulted in an unjust addition to the appellant's income, ignoring the binding precedents that are in favour of the appellant. 3. Principal of Natural Justice M/s Unihealth Consultancy Ltd. 3 ITA No. 4387/MUM/2024 issuance of share and the confirmation of the same by CIT(A) is b) On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the AO's rejection of the g so, the learned AO erred by using hindsight to compare projections made at the time of share issuance with later events and results. This violates the principle that valuation should be based on information available at the c) On the fact and in the circumstances of the case and in law, the learned AO and learned CIT(A) erroneously disregarded the appellant's valuation based on assumptions and presumptions which was in accordance with rule 11UA(2)(b) of the Income Tax d) On the fact and in the circumstances of the case and in law, the learned AO failed to appreciate that appellant had provided all necessary documents, including the valuation report, details o justify the FMV of shares. The learned AO and learned CIT(A) failed to adequately consider these documents and the appellant's legitimate claims. e) On the fact and in the circumstances of the case and in law, e decision of the Hon'ble Bombay High Court (Jurisdictional High Court) in the Pesa Ltd vs. Pr. CIT [2018] 92 f) On the fact and in the circumstances of the case and in law, the decision of Agro Portfolio (P.) Trib.) which has been explicitly overturned by the Hon. Delhi High Court in favour of the appellant. The appellant had duly highlighted the updated legal which the learned CIT(A) has failed g) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s has failed to apply the correct legal principles as established by the Hon. jurisdictional High Court and the Hon. hi High Court thereby resulted in an unjust addition to the appellant's income, ignoring the binding precedents that are in a) On the fact and in the circumstances of the case and in law, the learned CIT(A) has completely disregarded and ignored the submissions and evidence provided by the appellant during the appellate proceedings. b) On the fact and in the circumstances of the case and in law, the learned CIT(A) failed to consider the detailed submi and documentation provided by the appellant in support of its case. The appellant had submitted comprehensive evidence and legal arguments addressing all issues raised in the assessment order, which were crucial to the determination of the case. c) On the fact and in the circumstances of the case and in law, the learned CIT(A) did not adequately address or even acknowledge the peculiar points raised in the appellant's submissions. d) On the fact and in the circumstances of the case and in law, the learned CIT(A)'s decision is contrary to the principles of equity and due process, as it disregards the appellant's legitimate claims and evidentiary support. The failure to consider these submissions has resulted in an incorrect and unjust addition to the appellant's income. e) On the fact and in the circumstances of the case and in law, the order of the learned CIT(A) has been rendered in violation of the basic procedural requirements of adjudication, which requires a fair and thorough examination of all ma presented by the appellant. f) On the fact and in the circumstances of the case and in law, the learned AO erred in making an alternative addition u/s. 56(2)(viib) of the ITA which is inconsistent with established legal principles. The section, rather than multiple or alternative sections, is well established. Therefore, the alternative addition made u/s. 56(2)(viib) of the ITA is against the law. 2. Briefly stated, facts of the case are th was engaged in the healthcare consultancy services medical equipment and hospital management services etc. For the year under consideration, the assessee filed return of income electronically on 30.11.2017 declaring tot M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 a) On the fact and in the circumstances of the case and in law, CIT(A) has completely disregarded and ignored the submissions and evidence provided by the appellant during the appellate proceedings. b) On the fact and in the circumstances of the case and in law, the learned CIT(A) failed to consider the detailed submi and documentation provided by the appellant in support of its case. The appellant had submitted comprehensive evidence and legal arguments addressing all issues raised in the assessment order, which were crucial to the determination of the case. On the fact and in the circumstances of the case and in law, the learned CIT(A) did not adequately address or even acknowledge the peculiar points raised in the appellant's d) On the fact and in the circumstances of the case and in law, arned CIT(A)'s decision is contrary to the principles of equity and due process, as it disregards the appellant's legitimate claims and evidentiary support. The failure to consider these submissions has resulted in an incorrect and unjust addition to ppellant's income. e) On the fact and in the circumstances of the case and in law, the order of the learned CIT(A) has been rendered in violation of the basic procedural requirements of adjudication, which requires a fair and thorough examination of all material and arguments presented by the appellant. f) On the fact and in the circumstances of the case and in law, the learned AO erred in making an alternative addition u/s. 56(2)(viib) of the ITA which is inconsistent with established legal principles. The principle of making additions under a specific section, rather than multiple or alternative sections, is well established. Therefore, the alternative addition made u/s. 56(2)(viib) of the ITA is against the law. Briefly stated, facts of the case are that, the assessee company was engaged in the healthcare consultancy services medical equipment and hospital management services etc. For the year under consideration, the assessee filed return of income electronically on 30.11.2017 declaring total income at M/s Unihealth Consultancy Ltd. 4 ITA No. 4387/MUM/2024 a) On the fact and in the circumstances of the case and in law, CIT(A) has completely disregarded and ignored the submissions and evidence provided by the appellant during the b) On the fact and in the circumstances of the case and in law, the learned CIT(A) failed to consider the detailed submissions and documentation provided by the appellant in support of its case. The appellant had submitted comprehensive evidence and legal arguments addressing all issues raised in the assessment order, which were crucial to the determination of the case. On the fact and in the circumstances of the case and in law, the learned CIT(A) did not adequately address or even acknowledge the peculiar points raised in the appellant's d) On the fact and in the circumstances of the case and in law, arned CIT(A)'s decision is contrary to the principles of equity and due process, as it disregards the appellant's legitimate claims and evidentiary support. The failure to consider these submissions has resulted in an incorrect and unjust addition to e) On the fact and in the circumstances of the case and in law, the order of the learned CIT(A) has been rendered in violation of the basic procedural requirements of adjudication, which requires terial and arguments f) On the fact and in the circumstances of the case and in law, the learned AO erred in making an alternative addition u/s. 56(2)(viib) of the ITA which is inconsistent with established legal principle of making additions under a specific section, rather than multiple or alternative sections, is well established. Therefore, the alternative addition made u/s. at, the assessee company was engaged in the healthcare consultancy services, trading in medical equipment and hospital management services etc. For the year under consideration, the assessee filed return of income al income at Rs.62,82,408/-. The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the Income-tax act, 1961 (in short ‘the Act’) were issued and complied with. During scrutiny proceedings, the Assessing share capital aggregating to Rs.4,20,00,000/ capital as well as preference share capital premium. The equity and preference share capital had been issued in two tranches in November, 2016 (equity cap August, 2016 (preference share capital). The Assessing Officer noticed valuation report the equity shares and Rs.799.90 and Rs.202.19 per share valuers applying discount vast difference in the valuation of the equity and preference share as within a short span, the Assessing Officer rejected the DCF method employed by the as the basis of net asset value Accordingly, held the received as taxable u/s 56(2)(viib) of the Act amounting to Rs.4,09,70,600/-. Alternati examined the genuineness of the entire share capital invoking section 68 of the Act. The Assessing Officer after documents filed by the assessee for discharging onus u/s 68 of the Act, held the entire shar of Rs.4,20,00,000/- M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the tax act, 1961 (in short ‘the Act’) were issued and complied with. During scrutiny proceedings, the Assessing share capital aggregating to Rs.4,20,00,000/- comprising of equity capital as well as preference share capital, both issued at a premium. The equity and preference share capital had been issued ranches in November, 2016 (equity capital share) and August, 2016 (preference share capital). The Assessing Officer noticed valuation reports submitted by the assessee for the value of the equity shares and preference shares determining share price at Rs.799.90 and Rs.202.19 per share respectively from two different applying discounting cash flow (DCF) method. In view of the vast difference in the valuation of the equity and preference share as within a short span, the Assessing Officer rejected the DCF method employed by the assessee and himself valued the share on the basis of net asset value (NAV) method at Rs.13.44 per share. held the balance excess amount of the share premium as taxable u/s 56(2)(viib) of the Act amounting to . Alternatively, the Ld. Assessing Officer also examined the genuineness of the entire share capital invoking section 68 of the Act. The Assessing Officer after documents filed by the assessee for discharging onus u/s 68 of the share capital including share premium as unexplained cash credit u/s 68 of the Act. M/s Unihealth Consultancy Ltd. 5 ITA No. 4387/MUM/2024 . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the tax act, 1961 (in short ‘the Act’) were issued and complied Officer noticed comprising of equity both issued at a premium. The equity and preference share capital had been issued ital share) and August, 2016 (preference share capital). The Assessing Officer submitted by the assessee for the value of preference shares determining share price at respectively from two different method. In view of the vast difference in the valuation of the equity and preference share as within a short span, the Assessing Officer rejected the DCF sessee and himself valued the share on method at Rs.13.44 per share. balance excess amount of the share premium as taxable u/s 56(2)(viib) of the Act amounting to vely, the Ld. Assessing Officer also examined the genuineness of the entire share capital invoking section 68 of the Act. The Assessing Officer after analysing the documents filed by the assessee for discharging onus u/s 68 of the e capital including share premium amount credit u/s 68 of the Act. In the computation to the assessment order, the Assessing Officer made addition for unexplained cash credit u/s 68 of the Act amounting to Rs.4,20,00 addition for share premium u/s 56(2)(viib) of the Act subsumed in addition for share capital u/s 68 of the Act 3. On further appeal, the Ld. CIT(A) rejected the grounds of the assessee challenging the addition made u/s well as addition made by the AO invoking section 68 of the Act. The relevant finding of the Ld. CIT(A) in relation to the addition of Rs.4,09,70,600/- u/s 56(2)(viib) of the Act is reproduced as under: “3. Discussions, Reason & De 3.1. The assessee's Return was assessed u/s. 143(3) on 29.12.2019. In the assessment order, the AO found that the assessee had raised preference shares, worth Rs. 65,00,000/ , by issue of 32,500 preference shares @ Rs. 200/ This issue was made in August, 2016. However, in the same Financial Year, in November, 2016 again, capital was raised , by issue of 44,375 nos. of shares, raising 3,55,00,000/ per share. During the assess basis of the value of each share, issued as preference share and as regular share. The assessee during assessment stage submitted that the preference shares were issued, as per the valuation of a Chartered Accountant firm named & Associates, 30.11.2015, applying the Discounted Cash Flow Method (DCF), the value of each share was determined for Rs. 202.19 paise, per share. the preference s shares, the shares of the Company were valued to know the Fair Market Value, per share, through another Chartered Accountant Firm, M/s. NP Lahoti & Co., who again, adopting the DCF Method, determined the Fai shares at Rs. 799.90, each. 191 M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 In the computation to the assessment order, the Assessing Officer made addition for unexplained cash credit u/s 68 of the Act amounting to Rs.4,20,00,000/- probably for the reason that addition for share premium u/s 56(2)(viib) of the Act subsumed in addition for share capital u/s 68 of the Act. On further appeal, the Ld. CIT(A) rejected the grounds of the assessee challenging the addition made u/s 56(2)(viib) of the Act as well as addition made by the AO invoking section 68 of the Act. The relevant finding of the Ld. CIT(A) in relation to the addition of u/s 56(2)(viib) of the Act is reproduced as under: Discussions, Reason & Decision: 3.1. The assessee's Return was assessed u/s. 143(3) on 29.12.2019. In the assessment order, the AO found that the assessee had raised preference shares, worth Rs. 65,00,000/ , by issue of 32,500 preference shares @ Rs. 200/- per share. was made in August, 2016. However, in the same Financial Year, in November, 2016 again, capital was raised , by issue of 44,375 nos. of shares, raising capital of Rs. 3,55,00,000/-. The value of shares issued, were @ Rs. 800/ During the assessment stage, the AO asked for basis of the value of each share, issued as preference share and as regular share. The assessee during assessment stage submitted that the preference shares were issued, as per the valuation of a Chartered Accountant firm named, M/s. HP Jain & Associates, where, as per valuation report dated 30.11.2015, applying the Discounted Cash Flow Method (DCF), the value of each share was determined for Rs. 202.19 paise, per share. Such valuation was adopted while issue of the preference shares. Again, before the issue of regular equity shares, the shares of the Company were valued to know the Fair Market Value, per share, through another Chartered Accountant Firm, M/s. NP Lahoti & Co., who again, adopting the DCF Method, determined the Fair Market Value of the shares at Rs. 799.90, each. 191 M/s Unihealth Consultancy Ltd. 6 ITA No. 4387/MUM/2024 In the computation to the assessment order, the Assessing Officer made addition for unexplained cash credit u/s 68 of the Act probably for the reason that addition for share premium u/s 56(2)(viib) of the Act subsumed in On further appeal, the Ld. CIT(A) rejected the grounds of the 56(2)(viib) of the Act as well as addition made by the AO invoking section 68 of the Act. The relevant finding of the Ld. CIT(A) in relation to the addition of u/s 56(2)(viib) of the Act is reproduced as under: 3.1. The assessee's Return was assessed u/s. 143(3) on 29.12.2019. In the assessment order, the AO found that the assessee had raised preference shares, worth Rs. 65,00,000/- per share. was made in August, 2016. However, in the same Financial Year, in November, 2016 again, capital was raised , capital of Rs. . The value of shares issued, were @ Rs. 800/- ment stage, the AO asked for basis of the value of each share, issued as preference share and as regular share. The assessee during assessment stage submitted that the preference shares were issued, as per the , M/s. HP Jain valuation report dated 30.11.2015, applying the Discounted Cash Flow Method (DCF), the value of each share was determined for Rs. 202.19 Such valuation was adopted while issue of hares. Again, before the issue of regular equity shares, the shares of the Company were valued to know the Fair Market Value, per share, through another Chartered Accountant Firm, M/s. NP Lahoti & Co., who again, adopting r Market Value of the 3.2. In the assessment order, the AO analyzed the valuations made by two different valuers, on different dates, where the valuations differed by a great length. of the view that occasions were flawed, especially, with regard to the projected cash flow, that was adopted for the valuations. He found that the variations of the actual cash flow and the projections made were far apart. Therefor valuation reports, based on which new shares were issued by the assessee, were flawed. the value of the shares by adopting Net Asset Value Method (NAV) by analyzing the assets and liabilitie as on 31/03/2016. By such Method, he came to the conclusion that the valuation of the shares should not exceed Rs. 13.44, per share. And therefore, he concluded that, out of the total raised capital of Rs. 4,20,00,000/ overvaluation by Rs. 4,09,70,600/ such excess valuation, by adopting Sec. 3.3. Aggrieved with the order, the assessee instituted the present appeal. The assessee during the appeal proceedings, submitted that the Valuation Method, adopted by them as, Rule 11UA of the Income Tax Rules clearly states that there is an option available with the assessee to adopt, either the DC Method or the NAV Method, for valuation of Market V their own choice. Moreover, it said that there had been a considerable time gap between the two valuation reports. The 1st of which was, on the date of November, 2015 and the 2nd one was of September, 2016. During the said period, the projections were in favour of the assessee. Thus, there was a considerable increase in the valuation of the shares. The basis of such increase in valuation was also due to the new business plan of the assessee Company, to have branches in various countries o 3.4. The logic submitted by the assessee was also submitted before the AO. that the actuals of FY 2016 any bearing with the projections made. Therefore, the AO claimed that the valuation reports were not reliable at all and the variants had been adopted by the assessee only to match with the investments taken through private placements by a backward calculation, so that the end results are sought to be achieved. It is als independently verified the claims made by the Management, regarding the future cash flow prospects. M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 3.2. In the assessment order, the AO analyzed the valuations made by two different valuers, on different dates, where the valuations differed by a great length. Thereafter, the AO was of the view that the Method adopted by the valuers on both occasions were flawed, especially, with regard to the projected cash flow, that was adopted for the valuations. He found that the variations of the actual cash flow and the projections made were far apart. Therefore, the concluded that both the valuation reports, based on which new shares were issued by the assessee, were flawed. Thereafter, he himself, calculated the value of the shares by adopting Net Asset Value Method (NAV) by analyzing the assets and liabilities of the Company, as on 31/03/2016. By such Method, he came to the conclusion that the valuation of the shares should not exceed Rs. 13.44, per share. And therefore, he concluded that, out of the total raised capital of Rs. 4,20,00,000/-, there was an valuation by Rs. 4,09,70,600/- and made an addition of such excess valuation, by adopting Sec. 56(2)(viib) of the Act. 3.3. Aggrieved with the order, the assessee instituted the present appeal. The assessee during the appeal proceedings, submitted that the AO did not have the right to discard the Valuation Method, adopted by them as, Rule 11UA of the Income Tax Rules clearly states that there is an option available with the assessee to adopt, either the DC Method or the NAV Method, for valuation of Market Value of shares, at their own choice. Moreover, it said that there had been a considerable time gap between the two valuation reports. The 1st of which was, on the date of November, 2015 and the 2nd one was of September, 2016. During the said period, the ojections were in favour of the assessee. Thus, there was a considerable increase in the valuation of the shares. The basis of such increase in valuation was also due to the new business plan of the assessee Company, to have branches in various countries of Africa. 3.4. The logic submitted by the assessee was also submitted before the AO. However, the AO refuted such claim and stated that the actuals of FY 2016-17 to FY 2019-20 does not have any bearing with the projections made. Therefore, the AO hat the valuation reports were not reliable at all and the variants had been adopted by the assessee only to match with the investments taken through private placements by a backward calculation, so that the end results are sought to be achieved. It is also not clear whether the valuers have independently verified the claims made by the Management, regarding the future cash flow prospects. M/s Unihealth Consultancy Ltd. 7 ITA No. 4387/MUM/2024 3.2. In the assessment order, the AO analyzed the valuations made by two different valuers, on different dates, where the Thereafter, the AO was the Method adopted by the valuers on both occasions were flawed, especially, with regard to the projected cash flow, that was adopted for the valuations. He found that the variations of the actual cash flow and the projections made e, the concluded that both the valuation reports, based on which new shares were issued by Thereafter, he himself, calculated the value of the shares by adopting Net Asset Value Method s of the Company, as on 31/03/2016. By such Method, he came to the conclusion that the valuation of the shares should not exceed Rs. 13.44, per share. And therefore, he concluded that, out of , there was an and made an addition of 56(2)(viib) of the Act. 3.3. Aggrieved with the order, the assessee instituted the present appeal. The assessee during the appeal proceedings, to discard the Valuation Method, adopted by them as, Rule 11UA of the Income Tax Rules clearly states that there is an option available with the assessee to adopt, either the DC Method or alue of shares, at their own choice. Moreover, it said that there had been a considerable time gap between the two valuation reports. The 1st of which was, on the date of November, 2015 and the 2nd one was of September, 2016. During the said period, the ojections were in favour of the assessee. Thus, there was a considerable increase in the valuation of the shares. The basis of such increase in valuation was also due to the new business plan of the assessee Company, to have branches in 3.4. The logic submitted by the assessee was also submitted However, the AO refuted such claim and stated 20 does not have any bearing with the projections made. Therefore, the AO hat the valuation reports were not reliable at all and the variants had been adopted by the assessee only to match with the investments taken through private placements by a backward calculation, so that the end results are sought to be o not clear whether the valuers have independently verified the claims made by the Management, 3.5. In the Vodafone M. Pesa Ltd. decision dated 73, the Ld. Bombay High Court held that, as per the Rule 11UA, the assessee has the option to choose either of the two methods of valuation of DCF Method or NAV Method, for valuation of Market Value of the shares and the Department should not interfere in the assessee. In this case, the assessee chose the Valuation under the DCF Method and prima facie, the Department cannot not change the valuation from DCF to NAV Method, only for the fact that apparently the valuation of the s Method is resulting at a higher value. 3.6. However, in the case of TUV Rheinland NIFE v. ITO [IT Appeal No. 3160 (Bang.) of 2018 dated 27 dealing with this issue, the Hon'ble Bangalore Income Appellate Tribunal (ITAT) u had rejected the DCF method of valuation adopted by the taxpayer-company and made addition under section 56(2) (viib) of the IT Act, based on the NAV method. In the facts of this case, the taxpayer parent Company at a premium and it had relied on the DC method to determine FMV for justifying the premium. The Id. AO, upon examining the valuation report concluded that the valuation report had solely relied on the values provided by the Management of the taxpayer adopted to arrive at the FMV to justify the high premium. The Id. AO recomputed the FMV of the shares of the taxpayer company using the NAV method and made relevant additions, which were upheld by the Id. (Appeals) (CIT(A)). The Hon'ble ITAT paid heed to the argument of the taxpayer select either one of the two methods prescribed for the purposes of section 56(2) (viib), one of them being the DCF method. In addressing this argument as well as the contention that the right of a Id. AO was limited to verifying the arithmetical accuracy of the method selected by the taxpayer company, the Hon'ble ITAT clarified that the Id. AO had not questioned the rig method of valuation, but after examining the projections,, he had questioned the numbers The Hon'ble ITAT noted that the estimates and projections used by the taxpayer reality' and the taxpayer had failed to produce and substantiate the basis for such estimates and projections. Thus, in absence of any valid and meaningful justification for the projections consider M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 3.5. In the Vodafone M. Pesa Ltd. - Vs. - PCIT case, in a decision dated 01.03.2020, as reported in 92 taxmann.com the Ld. Bombay High Court held that, as per the Rule 11UA, the assessee has the option to choose either of the two methods of valuation of DCF Method or NAV Method, for valuation of Market Value of the shares and the Department should not interfere in the Method of Valuation, taken by the assessee. In this case, the assessee chose the Valuation under the DCF Method and prima facie, the Department cannot not change the valuation from DCF to NAV Method, only for the fact that apparently the valuation of the shares, as per DCF Method is resulting at a higher value. 3.6. However, in the case of TUV Rheinland NIFE v. ITO [IT 3160 (Bang.) of 2018 dated 27-2-2019] while dealing with this issue, the Hon'ble Bangalore Income Appellate Tribunal (ITAT) upheld the order of the Id. AO, who had rejected the DCF method of valuation adopted by the company and made addition under section 56(2) (viib) of the IT Act, based on the NAV method. In the facts of this case, the taxpayer-company had issued shares to its parent Company at a premium and it had relied on the DC method to determine FMV for justifying the premium. The Id. AO, upon examining the valuation report concluded that the valuation report had solely relied on the values provided by ment of the taxpayer-company, which were adopted to arrive at the FMV to justify the high premium. The Id. AO recomputed the FMV of the shares of the taxpayer using the NAV method and made relevant additions, which were upheld by the Id. Commissioner of Income (Appeals) (CIT(A)). The Hon'ble ITAT paid heed to the argument of the taxpayer-company that it has the statutory right to select either one of the two methods prescribed for the purposes of section 56(2) (viib), one of them being the DCF ethod. In addressing this argument as well as the contention that the right of a Id. AO was limited to verifying the arithmetical accuracy of the method selected by the taxpayer company, the Hon'ble ITAT clarified that the Id. AO had not questioned the right of the taxpayer-company to choose the method of valuation, but after examining the projections,, he had questioned the numbers - its basis, veracity, accuracy. The Hon'ble ITAT noted that the estimates and projections used by the taxpayer-company were 'a long distance from reality' and the taxpayer- company, despite repeated requests, had failed to produce and substantiate the basis for such estimates and projections. Thus, in absence of any valid and meaningful justification for the projections consider M/s Unihealth Consultancy Ltd. 8 ITA No. 4387/MUM/2024 PCIT case, in a 01.03.2020, as reported in 92 taxmann.com the Ld. Bombay High Court held that, as per the Rule 11UA, the assessee has the option to choose either of the two methods of valuation of DCF Method or NAV Method, for valuation of Market Value of the shares and the Department Method of Valuation, taken by the assessee. In this case, the assessee chose the Valuation under the DCF Method and prima facie, the Department cannot not change the valuation from DCF to NAV Method, only for the hares, as per DCF 3.6. However, in the case of TUV Rheinland NIFE v. ITO [IT 2019] while dealing with this issue, the Hon'ble Bangalore Income-tax pheld the order of the Id. AO, who had rejected the DCF method of valuation adopted by the company and made addition under section 56(2) (viib) of the IT Act, based on the NAV method. In the facts of es to its parent Company at a premium and it had relied on the DC method to determine FMV for justifying the premium. The Id. AO, upon examining the valuation report concluded that the valuation report had solely relied on the values provided by company, which were adopted to arrive at the FMV to justify the high premium. The Id. AO recomputed the FMV of the shares of the taxpayer- using the NAV method and made relevant additions, er of Income-tax (Appeals) (CIT(A)). The Hon'ble ITAT paid heed to the argument company that it has the statutory right to select either one of the two methods prescribed for the purposes of section 56(2) (viib), one of them being the DCF ethod. In addressing this argument as well as the contention that the right of a Id. AO was limited to verifying the arithmetical accuracy of the method selected by the taxpayer- company, the Hon'ble ITAT clarified that the Id. AO had not company to choose the method of valuation, but after examining the projections,, he its basis, veracity, accuracy. The Hon'ble ITAT noted that the estimates and projections a long distance from company, despite repeated requests, had failed to produce and substantiate the basis for such estimates and projections. Thus, in absence of any valid and meaningful justification for the projections considered and adopted in determining FMV under the DCF method, the Hon'ble ITAT agreed with the decision of the Id. AO to deploy NAV method. In doing so, the Hon'ble ITAT thus upheld the authority of the Id. AO to override the choice of valuation method adopted u 3.7. Again, Hon'ble Delhi ITAT in case of Agro Portfolio (P.) Ltd. v. ITO [2018] 94 taxmann.com 112/171 ITD 74, held that in the facts of this case in the event the Id. AO had any inhibition or doubt about the valuation adopted make a reference to the Valuation Officer of the Department to verify the veracity of such valuation. However, in a situation where the taxpayer projections adopted to determine the FMV as per DCF m it may not be possible even for the Departmental valuation officer to verify the correctness of such valuation adopted. Accordingly, the Hon'ble ITAT added that in such cases, the Id. AO may be forced to reject the DCF method, since the same cannot be verified and instead, could adopt the NAV method to determine the liability of the taxpayer under section 56(2)(viib) of the IT Act. 3.8. Respectfully following the above quoted decisions, I find the action of the AO to be completely justified by adopti valuation of the shares through NAV Method and making the addition of Rs. 4,09,70,600/ addition made by the AO is upheld and the Ground of Appeal of the assessee is rejected. 3.1 Regarding the addition u/s 68 of the A Rs.4,20,00,000/- in relation to en the Ld. CIT(A) is reproduced as under: “4.1. As an alternative action, the AO found that even otherwise, the creditworthiness of the so the shares of t he proposed that the amount of share capital raised by the assessee, through such individual shareholders were not explained properly and therefore, as an alternative action, he proposed to treat the amount of Unexplained Cash Credit, u/s. 68 of the Act. 4.2. The assessee submitted that all the shareholders were genuine tax payers and during the assessment stage, the assessee discharged its onus by filing complete details of the M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 adopted in determining FMV under the DCF method, the Hon'ble ITAT agreed with the decision of the Id. AO to deploy NAV method. In doing so, the Hon'ble ITAT thus upheld the authority of the Id. AO to override the choice of valuation method adopted under certain circumstances, 3.7. Again, Hon'ble Delhi ITAT in case of Agro Portfolio (P.) Ltd. [2018] 94 taxmann.com 112/171 ITD 74, held that in the facts of this case in the event the Id. AO had any inhibition or doubt about the valuation adopted by the taxpayer, he may make a reference to the Valuation Officer of the Department to verify the veracity of such valuation. However, in a situation where the taxpayer-company fails to substantiate the projections adopted to determine the FMV as per DCF m it may not be possible even for the Departmental valuation officer to verify the correctness of such valuation adopted. Accordingly, the Hon'ble ITAT added that in such cases, the Id. AO may be forced to reject the DCF method, since the same be verified and instead, could adopt the NAV method to determine the liability of the taxpayer under section 56(2)(viib) 3.8. Respectfully following the above quoted decisions, I find the action of the AO to be completely justified by adopti valuation of the shares through NAV Method and making the addition of Rs. 4,09,70,600/-, u/s. 56(2)(viib). Therefore, the addition made by the AO is upheld and the Ground of Appeal of the assessee is rejected.” Regarding the addition u/s 68 of the Act amounting to in relation to entire share capital, t reproduced as under: 4.1. As an alternative action, the AO found that even otherwise, the creditworthiness of the so-called investors in the shares of the Company is not well-established. Therefore, he proposed that the amount of share capital raised by the assessee, through such individual shareholders were not explained properly and therefore, as an alternative action, he proposed to treat the amount of Rs. 4,20,00,000/ Unexplained Cash Credit, u/s. 68 of the Act. 4.2. The assessee submitted that all the shareholders were genuine tax payers and during the assessment stage, the assessee discharged its onus by filing complete details of the M/s Unihealth Consultancy Ltd. 9 ITA No. 4387/MUM/2024 adopted in determining FMV under the DCF method, the Hon'ble ITAT agreed with the decision of the Id. AO to deploy NAV method. In doing so, the Hon'ble ITAT thus upheld the authority of the Id. AO to override the choice of valuation 3.7. Again, Hon'ble Delhi ITAT in case of Agro Portfolio (P.) Ltd. [2018] 94 taxmann.com 112/171 ITD 74, held that in the facts of this case in the event the Id. AO had any inhibition by the taxpayer, he may make a reference to the Valuation Officer of the Department to verify the veracity of such valuation. However, in a situation company fails to substantiate the projections adopted to determine the FMV as per DCF method, it may not be possible even for the Departmental valuation officer to verify the correctness of such valuation adopted. Accordingly, the Hon'ble ITAT added that in such cases, the Id. AO may be forced to reject the DCF method, since the same be verified and instead, could adopt the NAV method to determine the liability of the taxpayer under section 56(2)(viib) 3.8. Respectfully following the above quoted decisions, I find the action of the AO to be completely justified by adopting valuation of the shares through NAV Method and making the , u/s. 56(2)(viib). Therefore, the addition made by the AO is upheld and the Ground of Appeal ct amounting to tire share capital, the finding of 4.1. As an alternative action, the AO found that even called investors in established. Therefore, he proposed that the amount of share capital raised by the assessee, through such individual shareholders were not explained properly and therefore, as an alternative action, he 4,20,00,000/- as 4.2. The assessee submitted that all the shareholders were genuine tax payers and during the assessment stage, the assessee discharged its onus by filing complete details of the investors. Therefore, it should not be penalized by treating such investment as bogus. 4.3. The explanation of the assessee is not completely acceptable. It is true that the assessee had submitted details of the investors. However, it was also found by the AO, by independently making enquiry with such investors, that their creditworthiness was at serious doubt. It is also to be mentioned that, out of 10 investors, at least 3 of them did not respond to the notices of the AO, to explain the source of their investment, m other 7 shareholders, cases, the investors received channelized as investment in shares of the assessee Company, whereas, those third the sum lent to the investors by assessee itself. 4.4. Considering the facts of the case, I do not want to interfere in the findings of the AO and hold that the alternative proposal of the AO, also holds good. However, as propose the AO in the assessment order, I hold the substantive addition of Rs. 4,09,70,600/ proper judicial reference. 4,09,70,600/ case. However, a proper addition, for statistical purpose and the Ground of Appeal of the assessee is dismissed. 4. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 1297. 4.1 The ground Nos Act. In the grounds raised, the assessee is aggrieved with the sustaining of the disallowance of Rs.4,20,00,000/ entire equity and preference share capital received by the assesse during the year under consideration unexplained cash credit by the lower authorities. It is the contention of the Ld. counsel for the assessee that the assessee has filed all the documents regarding the identity, creditworthiness M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 Therefore, it should not be penalized by treating such investment as bogus. 4.3. The explanation of the assessee is not completely acceptable. It is true that the assessee had submitted details of the investors. However, it was also found by the AO, by ependently making enquiry with such investors, that their creditworthiness was at serious doubt. It is also to be mentioned that, out of 10 investors, at least 3 of them did not respond to the notices of the AO, to explain the source of their investment, made in the Company's shares. Regarding, the other 7 shareholders, it was found by the AO that, in certain cases, the investors received funds from entities, which were channelized as investment in shares of the assessee Company, whereas, those third-party entities actually received the sum lent to the investors by assessee itself. 4.4. Considering the facts of the case, I do not want to interfere in the findings of the AO and hold that the alternative proposal of the AO, also holds good. However, as propose the AO in the assessment order, I hold the substantive addition of Rs. 4,09,70,600/- to be more logical and backed by proper judicial reference. Therefore, the addition of Rs. 4,09,70,600/- is held to be the addition, to be made in this case. However, the addition of Rs. 4,20,00,000/- is held to be a proper addition, for statistical purpose and the Ground of Appeal of the assessee is dismissed.” Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 1297. s. 1(a) to 1(e) are in relation to section 68 of the grounds raised, the assessee is aggrieved with the sustaining of the disallowance of Rs.4,20,00,000/ entire equity and preference share capital received by the assesse during the year under consideration, which has been held as unexplained cash credit by the lower authorities. It is the contention of the Ld. counsel for the assessee that the assessee has filed all the documents regarding the identity, creditworthiness M/s Unihealth Consultancy Ltd. 10 ITA No. 4387/MUM/2024 Therefore, it should not be penalized by treating 4.3. The explanation of the assessee is not completely acceptable. It is true that the assessee had submitted details of the investors. However, it was also found by the AO, by ependently making enquiry with such investors, that their creditworthiness was at serious doubt. It is also to be mentioned that, out of 10 investors, at least 3 of them did not respond to the notices of the AO, to explain the source of their ade in the Company's shares. Regarding, the it was found by the AO that, in certain funds from entities, which were channelized as investment in shares of the assessee entities actually received 4.4. Considering the facts of the case, I do not want to interfere in the findings of the AO and hold that the alternative proposal of the AO, also holds good. However, as proposed by the AO in the assessment order, I hold the substantive to be more logical and backed by Therefore, the addition of Rs. is held to be the addition, to be made in this is held to be a proper addition, for statistical purpose and the Ground of Before us, the Ld. counsel for the assessee has filed a Paper . 1(a) to 1(e) are in relation to section 68 of the grounds raised, the assessee is aggrieved with the sustaining of the disallowance of Rs.4,20,00,000/- in respect of entire equity and preference share capital received by the assessee which has been held as unexplained cash credit by the lower authorities. It is the contention of the Ld. counsel for the assessee that the assessee has filed all the documents regarding the identity, creditworthiness and genuineness of the transaction in respect of share capital received. The Ld. counsel submitted that the assessee had profile, identity proof, income statement of all the share applicants has not discharged his onus. already discharged his burden of proof u/s 68 submitting the required documents, the lower authorities are not justified in sustaining the addition of the entire unexplained cash credit. On the other hand, the Ld. Departmental Representative (DR) relied on the order of the lower authorities. 4.2 We have heard rival submissions of the parties and perused the relevant materials on record dispute are that the assessee received share capital and preference shares issued notice u/s 133(6) of the Act to information from them regardi explanation was received information received Assessing Officer. The Assessing Officer has reproduced a chart of the information filed and def relevant chart is reproduced as under: Name Bank account details Ms. Mayuri Akshay Parmar ICICI Bank A/c No. 026101512739 M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 genuineness of the transaction in respect of share capital received. submitted that the assessee had profile, identity proof, income-tax return and all the share applicants but the Ld. Assessing O has not discharged his onus. He submitted that as the assessee has already discharged his burden of proof u/s 68 of the Act by way of the required documents, the lower authorities are not justified in sustaining the addition of the entire share capital as unexplained cash credit. On the other hand, the Ld. Departmental Representative (DR) relied on the order of the lower authorities. We have heard rival submissions of the parties and perused the relevant materials on record. The brief facts qua the issue in dispute are that the assessee received share capital by way of equity and preference shares from few subscribers. The Assessing Officer d notice u/s 133(6) of the Act to the subscribers calling for information from them regarding source of the funds explanation was received from the part of the subscribers. T information received was also not found to be sufficient by the Assessing Officer. The Assessing Officer has reproduced a chart of the information filed and deficiency noticed. For ready reference the relevant chart is reproduced as under: Bank account details Observations ICICI Bank A/c No. 026101512739 The amount of Rs. 55,00,000/ been provided by bank transfers M/s Matushree Marketing (Rs. 23,00,000), M/s Unity Engineering (Rs. is a family promoted company of Mr. M/s Unihealth Consultancy Ltd. 11 ITA No. 4387/MUM/2024 genuineness of the transaction in respect of share capital received. submitted that the assessee had already filed tax return and bank account the Ld. Assessing Officer s the assessee has of the Act by way of the required documents, the lower authorities are not share capital as unexplained cash credit. On the other hand, the Ld. Departmental Representative (DR) relied on the order of the lower authorities. We have heard rival submissions of the parties and perused facts qua the issue in by way of equity from few subscribers. The Assessing Officer the subscribers calling for ng source of the funds, but only from the part of the subscribers. The also not found to be sufficient by the Assessing Officer. The Assessing Officer has reproduced a chart of iciency noticed. For ready reference the The amount of Rs. 55,00,000/- invested has been provided by bank transfers from one M/s Matushree Marketing (Rs. 23,00,000), M/s Unity Engineering (Rs. 3,00,000)(which is a family promoted company of Mr. Ms. Nikita Punamiya Union Bank, A/c No. 381402010003544 jointly held with Mr. V C Gandhi) Mr. Rahul Vimalchand Gandhi Union Bank, A/c no. 381402010905537 Mr. Santosh Mehta Union Bank, A/c No. 318005040034242 in the name of Mehta Emporium Jewellers Ms. Swati Gandhi Union Bank, A/c no. 381402010905538 Ms. Vasanti Vimalchand Gandhi Union Bank, A/c No. 381402010905551 M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 Akshay Parmar) and Mr. Akshay Parmar (Rs. 26,30,000). Besides the transfers from these accounts, the account balance does not appear to be creditworthy of an investment of the considered sum. Union Bank, A/c No. 381402010003544 jointly held with Mr. V C Gandhi) The amount of Rs. 50,00,000/ 02.11.2016 has been entirely provided by one M/s Ratanchand Dalichand (which is a Pune based jeweller firm) on 01.11.2016 i.e. just one day before the investment. Besides this receipt of money, the account does not suggest i creditworthiness of an investment of the considered sum. The capital account has not be support. Union Bank, A/c no. 381402010905537 Out of the amount of Rs. 55,00,000/ 381402010905537 invested on 28.10.2016, an amount of Rs. 5,00,000/ received on the same day from M/s G Data Process. Bank statement for the earlier period has not been provided by the assessee to verify the source of funds for the remaining amount. The capital account has not been submitted in support. Union Bank, A/c No. 318005040034242 in the name of M/s Mehta Emporium Jewellers The amount of Rs. 1,00,00,000/ 28.11.2016 by Mr. Santosh Mehta has been received back from the assessee company by M/s Mehta Emporium Jewelers on 01.12.2016 and has been further transferred to Mr. Santosh Mehta on 02.12.2016. The capital account has not been submitted in support. Union Bank, A/c no. 381402010905538 An amount of Rs. 10,00,000/ from M/s Dariyav Himmatlal Enterprises on 24.08.2016, and one day to the assessee company on 25.08.2016. Besides this amount, the account does not suggest creditworthiness of the size of the considered investment. The capital account has not been submitted in support. Union Bank, A/c No. 381402010905551 On the same day that the amount is invested in the assessee company, i.e. 15.11.2016, of Rs. 10,00,000/ cash deposit of Rs. 2,00,000 and a transfer from another account of an amount of Rs. 10,00,000/-. Further, earlier on 28.10. an investment of Rs. 20,00,000/ the assessee company, which had come from Mr. Vimalchand Gandhi on the same day. Besides the above sources, the account does not show any creditworthiness. The M/s Unihealth Consultancy Ltd. 12 ITA No. 4387/MUM/2024 Akshay Parmar) and Mr. Akshay Parmar (Rs. 26,30,000). Besides the transfers from these accounts, the account ppear to be creditworthy of an investment of the considered sum. The amount of Rs. 50,00,000/- invested on 02.11.2016 has been entirely provided by and Dalichand (which is a Pune based jeweller firm) on 01.11.2016 i.e. just one day before the investment. Besides this receipt of money, the account does not suggest i creditworthiness of an investment of the considered sum. The capital account has not been submitted in Out of the amount of Rs. 55,00,000/- 381402010905537 invested on 28.10.2016, an amount of Rs. 5,00,000/- has been received on the same day from M/s G Data Bank statement for the earlier period has not been provided by the assessee to verify the source of funds for the remaining amount. The capital account has not been submitted in support. The amount of Rs. 1,00,00,000/-invested on 28.11.2016 by Mr. Santosh Mehta has been received back from the assessee company by M/s Mehta Emporium Jewelers on 01.12.2016 and has been further 02.12.2016. The capital account has not been submitted in support. An amount of Rs. 10,00,000/- is received from M/s Dariyav Himmatlal Enterprises on 24.08.2016, and one day later transferred sessee company on 25.08.2016. Besides this amount, the account does not suggest creditworthiness of the size of the considered investment. The capital account has not been submitted in support. On the same day that the amount is invested in the assessee company, i.e. 15.11.2016, of Rs. 10,00,000/- there is a cash deposit of Rs. 2,00,000 and a transfer from another account of an amount of Rs. . Further, earlier on 28.10.2016, an investment of Rs. 20,00,000/- is made in the assessee company, which had come from Mr. Vimalchand Gandhi on the same day. Besides the above sources, the account does not show any creditworthiness. The Rajendra Kothari (NRI) Bank statement not submitted Vimalchand Gandi Punjab National Bank, 0387000100063059 Naitik Chinubhai Shah Nothing su the assessee to explain the nature and source of the investments Manthan Chinubhai Nothing submitted the assessee to explain the nature and source of the investments 4.1 We find that the Assessing Officer has mainly noted that the assessee had only filed bank statement but did not file evidence in support of creditworthiness including the copy of the capital account in case of three parties namely Shri Naitik Chinubhai Shah, Manthan Chinubhai Shah reply of the notice u/s 133(6) of the Act was received and also no efforts deficiencies before the Ld. CIT(A). were received in the hands of subscribers concerns just one or two days before investment. assessee has filed a copy of the documents filed before the lower authorities. We find that the assessee had filed balance sheet and other financial statement in the case of Mrs Mayuri Akhsya Parmar , a copy of which is available on page 997 M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 capital account has not been submitted in support. Bank statement not submitted In the absence of the bank statement, the nature and source of the investments made in the assessee company remains unexplained. The capital account has not been submitted in support. Punjab National Bank, 0387000100063059 The bank statement submitted does not explain the source of the funds invested nor has the assessee explained the same in the reply to the notices issued u/s 133(6) of the Act. Nothing submitted by the assessee to explain the nature and source of the investments No reply received to the notice issued to u/s 133(6) of the Act. Nothing submitted the assessee to explain the nature and source of the investments u/s 133(6) of the Act We find that the Assessing Officer has mainly noted that the assessee had only filed bank statement but did not file evidence in support of creditworthiness including the copy of the capital account in case of three parties namely Shri Vimalchand Naitik Chinubhai Shah, Manthan Chinubhai Shah reply of the notice u/s 133(6) of the Act was received no efforts were made by the assessee to remove those before the Ld. CIT(A). The AO also noted that funds were received in the hands of subscribers from their family one or two days before investment. assessee has filed a copy of the documents filed before the lower We find that the assessee had filed balance sheet and other financial statement in the case of Mrs Mayuri Akhsya Parmar , a copy of which is available on page 997-998 of paper book. M/s Unihealth Consultancy Ltd. 13 ITA No. 4387/MUM/2024 capital account has not been submitted in In the absence of the bank statement, the nature and source of the investments made in the assessee company remains unexplained. The capital account has not been submitted in support. The bank statement submitted does not explain the source of the funds invested nor has the assessee explained the same in the reply to the notices issued u/s 133(6) of the No reply received to the notice issued to u/s We find that the Assessing Officer has mainly noted that the assessee had only filed bank statement but did not file evidence in support of creditworthiness including the copy of the capital Vimalchand Gandhi, Naitik Chinubhai Shah, Manthan Chinubhai Shah. Further, no reply of the notice u/s 133(6) of the Act was received in three cases de by the assessee to remove those o noted that funds from their family one or two days before investment. Before us, the assessee has filed a copy of the documents filed before the lower We find that the assessee had filed balance sheet and other financial statement in the case of Mrs Mayuri Akhsya Parmar 998 of paper book. Similarly, balance sheet alongwith capital account in the case of subscriber Nikita Dinesh Punmiya is available on page 1001N to 1001O of the paper book. Balance sheet along with capital account in the case of smt. Santosh V Mehta is available on page 1008 to 1009 of paper book. Similarly balance sheet and capital account in case of other subscribers are available in paper book filed before us. Evidently, the Assessing officer has properly for verification of question arises whether pointed out by the Assessing subscribers are filing their regular return of income, balance sheets etc, and all such details have been filed before us, be difficult to ascertain their c and circumstances of the case and justice, we are of the opinion that assessee more opportunity to discharge his onus u/s 68 of the Act justifying identity, creditworthiness and genuineness of the transaction. If required so, the Assessing Officer may also carry out inquiry as deemed fit in the facts and circumstances of the case including examining the share subscriber in dispute of addition u/s 68 of the Act to the file of the Assessing Officer for deciding afresh shall be provided adequate opportunity of no. 1 of appeal is accordingly allowed for statistical purposes. Since the issue of addition u/s 68 of the Act M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 Similarly, balance sheet alongwith capital account in the case of er Nikita Dinesh Punmiya is available on page 1001N to 1001O of the paper book. Balance sheet along with capital account in the case of smt. Santosh V Mehta is available on page 1008 to 1009 of paper book. Similarly balance sheet and capital account in e of other subscribers are available in paper book filed before us. Assessing officer has not verified the properly for verification of creditworthiness of the parties. question arises whether is it possible to remove those deficiencies pointed out by the Assessing Officer? In our opinion subscribers are filing their regular return of income, balance sheets , and all such details have been filed before us, be difficult to ascertain their creditworthiness. In view of the facts and circumstances of the case and in the interest of we are of the opinion that assessee should be more opportunity to discharge his onus u/s 68 of the Act justifying ditworthiness and genuineness of the transaction. If the Assessing Officer may also carry out inquiry as fit in the facts and circumstances of the case including examining the share subscribers. Accordingly, we restore the issue addition u/s 68 of the Act to the file of the Assessing for deciding afresh. It is needless to mention that assessee shall be provided adequate opportunity of being heard of appeal is accordingly allowed for statistical purposes. Since the issue of addition u/s 68 of the Act is restored back to the file of M/s Unihealth Consultancy Ltd. 14 ITA No. 4387/MUM/2024 Similarly, balance sheet alongwith capital account in the case of er Nikita Dinesh Punmiya is available on page 1001N to 1001O of the paper book. Balance sheet along with capital account in the case of smt. Santosh V Mehta is available on page 1008 to 1009 of paper book. Similarly balance sheet and capital account in e of other subscribers are available in paper book filed before us. the documents filed parties. Thus the e those deficiencies In our opinion, when the subscribers are filing their regular return of income, balance sheets , and all such details have been filed before us, then it may not In view of the facts in the interest of substantial of should be provided one more opportunity to discharge his onus u/s 68 of the Act justifying ditworthiness and genuineness of the transaction. If the Assessing Officer may also carry out inquiry as fit in the facts and circumstances of the case including . Accordingly, we restore the issue addition u/s 68 of the Act to the file of the Assessing . It is needless to mention that assessee being heard. The ground of appeal is accordingly allowed for statistical purposes. Since back to the file of the Ld. Assessing Officer, we are not adjudicating upon the alternative ground raised by the assessee for addition u/s of the Act at this stage as first the assessee has to cross the barrier of section 68 of the Act and if the assessee succeeds then only for examining liability of The ground No. 2 is accordingly Assessing Officer for deciding along with the grounds related to addition u/s 68 of the Act. back to the file of the Assessing Officer, t rendered infructuous, 5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 29/01/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// M/s Unihealth Consultancy Ltd. ITA No. 4387/MUM/2024 the Ld. Assessing Officer, we are not adjudicating upon the alternative ground raised by the assessee for addition u/s t at this stage as first the assessee has to cross the barrier of section 68 of the Act and if the assessee succeeds then only for examining liability of section 56(2)(viib) of the Act would arise The ground No. 2 is accordingly also restored back to the file of the Assessing Officer for deciding along with the grounds related to addition u/s 68 of the Act. In view of the matter already restored back to the file of the Assessing Officer, the ground No. 3 is also tuous,. In the result, the appeal of the assessee is allowed for nounced in the open Court on 29/01/2025. Sd/ (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai M/s Unihealth Consultancy Ltd. 15 ITA No. 4387/MUM/2024 the Ld. Assessing Officer, we are not adjudicating upon the alternative ground raised by the assessee for addition u/s 56(2)(viib) t at this stage as first the assessee has to cross the barrier of section 68 of the Act and if the assessee succeeds then only need of the Act would arise. also restored back to the file of the Assessing Officer for deciding along with the grounds related to In view of the matter already restored he ground No. 3 is also In the result, the appeal of the assessee is allowed for /01/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "