THE ACIT, CIR-2(1), RAJKOT V. .M/S. RADHIKA JEWEL TECH LIMITED, RAJKOT

ITA 167/RJT/2023

AI Insights

The case involves Radhika Jewel Tech Ltd., which faced scrutiny from the Income Tax Department regarding the genuineness of investments received through an Initial Public Offering (IPO) and unexplained cash deposits during the demonetization period. The Assessing Officer (AO) made additions under Section 68 and Section 69A of the Income Tax Act, 1961, which were later contested by the assessee and partially upheld by the CIT(A). The Tribunal examined the submissions, evidence, and legal provisions, ultimately deciding in favor of the assessee on the grounds that the additions were not justified based on the available evidence and legal precedents.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 34287 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Purvi Finvest Limited vs DCIT, Lovely Exports vs. CIT, Orissa Corporation (P) Ltd. vs. CIT, Dy. CIT vs. Rohini Builders, S. Kamaljeet Singh vs. CIT, Crystal Networks (P.) Ltd. vs. CIT, Hindustan Inks & Resigns Ltd vs. DCIT, Belgium Glass & Ceramics P Ltd vs. CIT, Shree Rama Multi Tech Ltd vs. CIT, Gagandeep Infrastructure (P.) Ltd vs. CIT, M/s Goyal Synthetics P Ltd vs. CIT, CIT vs. Shree Rama Multi Tech Ltd, CIT vs. Nilchem Capital Ltd, CIT vs. V Satyendra Traders P Ltd, CIT vs. Maruti Aluminium P Ltd, CIT vs. Gay Lord Industries Ltd, CIT vs. Himatsu Blmet Ltd, CIT vs. Bhavana Property Developers P Ltd, CIT vs. M/s Goyal Synthetics P Ltd, CIT vs. Shree Rama Multi Tech Ltd, CIT vs. Nilchem Capital Ltd, CIT vs. V Satyendra Traders P Ltd, CIT vs. Maruti Aluminium P Ltd, CIT vs. Gay Lord Industries Ltd
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA
• Assessee Lawyers: S.N. SOPARKAR; LD.
• Keywords: Set aside; Additional evidence; Revised return; Revenue expenditure; Unexplained cash credit; Depreciation; Unexplained investment; Onus to prove; Capital expenditure; Source of fund; Assessment record; Share purchase agreement; Bogus
• Section: 143(3); 142(1); 143(2); 250; 201; 143(1); 68; 22; 69; 133(6); 13; 69A; 145; 133A; 20

Judgement Text

"ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 1 आयकरअपीलीयअिधकरण,राजकोटÆयायपीठ,राजकोट। IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं/.ITA No.167&91/RJT/2023 िनधाªरणवषª /Assessment Year : 2017-2018 Assistant Commissioner of Income-tax, Circle-2(1), Rajkot, Room No.311, AayakarBhavan, Race Course Ring Road, Rajkot- 360 001 M/s Radhika Jeweltech Ltd. Rajshrungi Complex, Palace Road, Opp. Ashapur Temple, Rajkot-360 001 बनाम Vs. Radhika Jeweltech Ltd. Office No.3-4-5 Rajshrungi Complex, Palace Road, Opp. Ashapura Temple, Rajkot-360 001 Assistant Commissioner of Income-tax, Circle-2(1), Rajkot, Room No.311, Aayakar Bhavan, Race Course Ring Road, Rajkot- 360 001 Öथायीलेखासं /.जीआइआरसं /.PAN/GIR No.: AAHCR 8676 H (अपीलाथê/Assessee) .. (ÿÂयथê/Respondent) िनधाªåरतीकìओरसे/Assessee by : Shri S.N.Soparkar, Ld.Sr-AR राजÖवकìओरसे/Revenue by : Shri Sanjay Punglia, CIT-DR सुनवाईकìतारीख /Date of Hearing :10/10/2024 घोषणाकìतारीख /Date of Pronouncement : 27/12/2024 ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 2 आदेश/Order Per Dr. Arjun Lal Saini, A.M Captioned cross appeals filed by the Revenue and assessee, pertaining to assessment years (AY) 2017-18, are directed against thecommon order passed by the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad[in short ‘Ld. CIT(A)’] under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.03.2023, which in turn arise out of a common assessment order passed by the Assistant Commissioner of Income-tax, Circle- 2(1), Rajkot /Assessing Officer (in short ‘AO’) u/s 143(3) of the Act dated 30.12.2019. 2. Since in these two cross appeals, identical and common issues are involved, therefore, these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 3. The grounds of appeal raised by the Revenue are as follows: “1. The Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.49,50,00,000/- made u/s 68 of the I.T. Act, 1961 despite the fact that assessee has not discharged its onus of proving genuineness, creditworthiness and identity of investors who had invested in the IPO of assessee. The Ld.CIT(A) not properly appreciated the findings given by the assessing officer in assessment order, proving the investors being shell companies. 2. The Ld.CIT(A) has erred in law and/or on facts in deleting the addition of Rs.5,55,66,953/- u/s 69A of the I.T. Act, 1961 on account of unexplained cash deposit during demonetization period, despite director himself accepting that the assessee- company has done back dating of sales to justify the huge cash on hand on 08.11.2016 during proceedings. The Ld.CIT(A) not properly appreciated the findings given by assessing officer in assessment order, proving that back dating was done to justify the huge cash in hand on 08.11.2016. 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) should have upheld the order of the assessing officer to the above extent.” ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 3 4. The grounds of appeal raised by the assessee are as follows: “1. The Ld.CIT(A) erred in passing the order under section 250 dated 29.03.2023. The order is prayed for restoration and quash the order u/s 143(3). 2. The Ld.CIT(A) has erred in not accepting the plea of the assessee as to the allowance of IPO for Rs.40,31,283/- and amortisation of Registration Fees to the extent of Rs.5,43,874/-. The same is prayed for allowance. 3. The Ld.CIT(A) has erred in passing an order u/s 250 dated 29.03.2023 ignoring the plea of the assessee that a survey was undertaken by Investigation Wing at the business premises of assessee during the year and no effective discrepancy was found in inventory. The same is prayed for consideration. 4. The assesseecraves leave to add, alter edit, delete, modify or change all or any of the grounds at or before the time of final hearing of appeal.” 5. First, we shall take, ground No.1 raised by the revenue, which relates to deleting the addition of Rs.49,50,00,000/-, made u/s 68 of the Income Tax Act, 1961. 6.The relevant material facts, as culled out from the material on record, are as follows. The assessee, (M/s. Radhika Jeweltech Limited) before us, is a public limited company and had filed its return of income, on 31.08.2017, declaring therein total income at Rs.10,38,25,680/-. The return of income of the assessee- company had been processed u/s 143(1) of the Income Tax Act, 1961. Later on, the assessee`s case was selected for complete scrutiny under CASS for verification of the followings: (1) High revenue from operation and no scrutiny in preceding 5 assessment years, (2) Introduction of large capital during the year of incorporation, and (3) Mismatch in expenditure of personal nature reported in Audit report and ITR. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 4 Therefore,notice u/s 143(2) of the Act, was issued by the assessing officer, on10.08.2018, and duly served upon the assessee though ITBA portal on his e- mail ID.Further, various notices u/s 142(1) of the Act, were issued to the assessee, through ITBA system, requesting for details relevant to the e- assessment proceedings in its case. 7.During the assessment proceedings, the assessing officer observed that assessee- company, is a public Limited company. The assessee -company, got incorporated into Public Limited company on 22.07.2016, with the authorised share capital of Rs.25,00,00,000/-, divided into 2,50,00,000/- equity shares of Rs.10 each. At the time of incorporation, 1,70,00,000 shares were held by the shareholders of the company amounting to Rs.17,00,00,000/-. It issued IPO, which opened on 14.09.2016 and remained open till 20.09.2016, for subscription. The prospectus dated 08.09.2016, mentions that IPO is of 66,00,000 equity shares of the face value of Rs.10 each at a price of Rs.75/- per equity share, including a share premium of Rs.65/-each, aggregating to Rs.49,50,00,000/-. The company had received 399 applications for 69,34,400 shares. The shares were allotted to all 399 applicants by BSE. 8. In order to examine, genuineness, creditworthiness and identity of the share applicants, the assessing officer, issued notice under section 142 (1) of the Act, on 19.08.2019, asking, assessee -company to furnish the details with respect to the source of share capital and premium received through an IPO and to provide the identity and creditworthiness of the shareholders and genuineness of the transactions. 9. In response to the above notices, the assessee-company, through e-filling portal, uploaded details, documents, and written submissions, online. The assessee-company, also submitted further details and documents before the assessing officer, in response to show-cause notices, which are reproduced by ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 5 Assessing Officer on pages 4 to7 of the assessment order. The assessee company submitted before the assessing officer that it has raised genuine and bona fide public funds through share issues and also communicated its ability to provide the requisite details, as it is not bound to keep the details of the shareholders. The assessee, submitted before the assessing officer that company had made public issue on the BSE platform, for SME. The public was invited to subscribe the shares. The issue was sanctioned by statutory authorities like SEBI, and BSE, after due compliance like prospectus financials etc. The issue was opened on 14.09.2016 and closed on 20.09.2016. The issue was 1.05 times, subscribed. The company had received 399 applications for 69,34,400 shares. The shares were allotted to 399 applicants by the BSE. The shares are allotted in demat form and the details of the applicants and KYC was already done by the depositories. Demat accounts are opened by subscribers after all submissions of all KYC documents.The applications are either uploaded on the website of the BSE or on the website of the bank or submitted physically to the bank. The payment for subscription was made through banking channel. The details of applications for subscription was made through banking channel. The details of applications received by company which contains the details of the bank of the applicant and PAN details. The assessee submitted that in public issue, there is no requirement to ask for the balance sheet and the copy of bank statement from which the application is made. The company does not have such information and cannot ask the same from the applicants. However, if so desired, the same may be obtained by assessing officer by issue of notices under section 133(6) of the Act. The assessee submitted before the assessing officer that company has received all the funds through normal banking channel. 10. Then after, assessing officer discussed the survey report. A survey action under section 133A of the Act, was carried out, by investigation wing, at the ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 6 premises of the assessee, on 1st and 2nd December 2016. The detailed report of the survey report, forwarded to the assessing officer, mentioned about the non- existence of the following subscriber companies, based on spot verification conducted by investigation wing, namely, Premium Polycot Private Limited, Yuva Trading company Private Limited, Spiritual marketing company private Limited, Interface financial services Private Limited and interactive financial services Limited. The report also mentioned about the subscribers who were non- filers. In order to make the independent verification of the identity of the shareholder companies, assessing officer issued summons to all the companies. The summons were sent through post and assessing officer found that a few summons remains undelivered. Some of the share-subscribers, attended the office of the assessing officer and assessing officer took a statement of the share- subscribers that why they have invested the money in the assessee- company. Then assessing officer conducted independent verification of identity and creditworthiness of the shareholders and also verified the spot verification report of the Inspector, which are given in the assessment order page number 12 to 51. 11. During the assessment proceedings, the assessee submitted a detailed reply along with documents and evidences, the said reply of the assessee, is reproduced by the assessing officer, on page number 51 to 57 of the assessment order. The assessee- company submitted that share subscribers had made the compliance of the notices issued by the assessing officer. Besides, the assessee submitted the copy of income tax return, bank statement, balance sheet, profit and loss account, name and address of share -subscribers and their PAN number etc. 12. However, assessing officer rejected the contention of the assessee and stated that assessee company has failed to prove creditworthiness, genuineness, ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 7 identity of the share subscribers, therefore, assessing officer made addition to the tune of Rs. 49,50,00,000/-. 13.Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before Ld. CIT(A), who has deleted the addition made by the assessing officer. The Ld CIT(A) observed that assessing officer was wrong in making additions u/s,68 of the Act,to the tune of Rs.49,50,00,000/-, being on account of entire share capital subscription, through public issue (IPO), holding that it was bogus subscription and also related to applicability of provisions of Section 115BBE of the Act. The ld CIT(A) noted thatassessee- company made public issue on BSE- SME Platform andthe undisputed facts of the case are that IPO was sanctioned by Bombay stock exchange( in brief ‘BSE’) and Securities Exchange Board of India (SEBI), after due compliances made by assessee. The said issue was opened on 16/09/2016, and closed on 20/09/2016 and issue was subscribed by 1.05 times. The entire public issue was monitored under the ASBA scheme. The Shares were issued in DEMAT form and payment was received through Banking channels. The ld CIT(A) noted that assessing officer has treated entire such share capital received by assessee, as bogus mainly on following grounds: (i) Assessee has not submitted the share application documents in response to notice issued to him u/s 142(1) of the Act. The Assessee has submitted only sample blank IPO form and not filled form as claimed by it. (ii) Survey by investigation wing u/s 133A was made. Non-existence of following companies were found, Viz:(a) Premium Polycot Pvt Ltd.,(b) Yuva Trading company Pvt Ltd, (c) Spiritual marketing company, (d) Interface Financial services Pvt Ltd,(e) Interactive Financial Services Ltd. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 8 (iii) Independent verification was conducted by the assessing officer (A.O.), where summon was issued to few individual shareholders namely:(a) Darshana Nitin Shaha,(b) Vimal Rarnniklal Ambani,(c) Sonal Rajesh Khandwala,(d) ParimalbhaiJaswantbhai Modi,(e) Bhagavi Vijay Talati and (f) Atul Chambildas Doshi. In response to above, Mr. Parimal Jaswantbhai Modi attended the office, on behalf of the assessee. However, the assessing officer, held that assessee was not able to clarify creditworthiness and genuineness of his investments. (iv) The assessing officer has observed internal relations of the various applicants and observed that some companies were Paper Company. (vi) The assessing officer has observed that 135 shareholders were non-fliers and several opportunities were given to produce the shareholders but none of them have appeared. 14. The ld CIT(A) noted that above allegations were false and these allegations are not applicable to the assessee under consideration. The ld CIT(A),on perusal of relevant facts on records, observed that assessee- company is listed at BSE Exchange, hence share application, money/share capital received, were through IPO process and not through private placement. When share capital is received through IPO process, from public at large, the assessee- company cannot control and do not know the share applicants/ share subscribers. The assessee- company, need not to know about the creditworthiness of share-subscribers, and do not supposed to ask their bank details and their earning capacity, as the same is not required when share capital is received through IPO process. The ld CIT(A) then referred detailed procedure laid down by the SEBI, in simple terms, as under: (i) The draft prospectus is required to be filed with the designated stock exchange(either BSE or NSE) ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 9 (ii) The stock exchange will send the officer for physical inspection of the Company and verification about the existence of the Company and to understand the business of the Company. (iii) On receipt of the inspection report and verification of the Draft Prospectus, the BSE will call for personal interview with the promoter of the Company. (iv) After the personal interview, the BSE will issue approval for the use of the name of the stock exchange in the prospectus for the issue of equity shares on the SME Platform. (v) The company has to file the prospectus with the ROC (Registrar of Companies) along with material documents, SEBI and Stock exchange indicating the date of opening of the issue and closing of the issue. (vi)All the applicants have to compulsorily apply through ASBA (Application Supported by Blocked Amount) Process. 15. The ld CIT(A) also mentioned in his decision, the ASBA process (Application Supported by Blocked Amount) as under: (a) A Resident Retail Individual Investor shall submit his Application through an Application Form, either in physical or electronic mode, to the SCSB (Self- certified Syndicate bank) with whom the bank account of the ASBA Applicant or bank account utilized by the ASBA Applicant (\"ASBA Account\") is maintained. The SCSB shall block an amount equal to the Application Amount in the bank account specified in the ASBA Application Form, physical or electronic, on the basis of an authorization to this effect given by the account holder at the time of submitting the Application. (b) The Application Amount shall remain blocked in the aforesaid ASBA Account until finalization of the basis of Allotment in the issue and consequent ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 10 transfer of the Application Amount, against the allocated shares to the ASBA Public Issue Account, or until withdrawal/failure of the Issue or until withdrawal/rejection of the ASBA Application, as the case may be. (c) The ASBA data shall thereafter be uploaded by the SCSB in the electronic IPO system of the Stock Exchange. Once the Basis of Allotment is finalized, the Registrar to the issue shall send an appropriate request to the Controlling Branch of the SCSB for unblocking the relevant bank accounts and for transferring the amount allocable to the successful ASBA Applicants to the ASBA Public Issue Account. In case of withdrawal/failure of the Issue, the blocked amount shall be unblocked on receipt of such information from the Lead Manager. (d) ASBA Applicants are required to submit their applications, either in physical or electronic mode. In case of application in physical mode, the ASBA Applicant shall submit the ASBA Application Form at the Designated Branch of the SCSB or Registered Brokers or Registered RTA's or DPsregistered with SEBI. In case of application in electronic form, the ASBA Applicant shall submit the Application Form either through the internet banking facility available with the SCSB, or such other electronically enabled mechanism for applying and blocking funds in the ASBA account held with SCSB, and accordingly registering such Applications. (e) On closure of the issue, the registrar of the issue (registrar) will verify the application details and reject the application on the grounds mentioned in the prospectus. (f) The list of accepted application is prepared by the Registrar and final basis of allotment is prepared by the Registrar. (g) All the SCSB will submit the final certificate certifying the amount blocked by them, ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 11 (h) The basis of allotment is approved by the stock exchange and the shares are allotted to the successful applicants. The minutes of the meeting is recorded and signed by the merchant banker, the Company and the registrar of the issue. (i) After the allotment, the registrar initiates unblocking of funds and instruct the banks to transfer the funds in the public issue account of the Company. (j) On getting listing and trading permission from the stock exchange, the Company can utilize the funds. (k) The entire procedure from the date of closing of the issue to the listing and trading permission of the shares is required to be completed within six working days from the closure of the issue. 16. From the above facts, ld. CIT(A) noted thatit is evident that the assessee company had no control over the process of application for share and allotment of shares. The assessee- company, during the course of assessment made compliance, in its reply dated 19/12/2019, filed the copy of members register, containing in all Columns from A toCI which had Name, detailed address, bank account number, PAN, Quantity of shares, amount etc. The Demat account of any applicant cannot be opened unless he completes the formality of submitting all the KYC Norms. All the applicants hold Demat accounts and details thereof are in assessment records. Thus, the identity of the applicant is proved by the assessee- company and cannot be doubted. The present case of assessee is not that of allotment of share by private limited company to its share applicant but entire process is through IPO wherein company is not aware about who are share applicant, till entire process of share allotment is not completed. The ld. CIT(A) also noticed that in response to notice issued by the assessing officer, under section 133(6) of the Act, the respective share subscriber has submitted his balance sheet, profit and loss ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 12 account, bank statement, name and address, PAN number and other details required by the assessing officer. Therefore, in their individual capacity, each shareholder, satisfied the three conditions of section 68, namely, identity, genuineness, and creditworthiness, therefore, ld. CIT(A) deleted the addition made by the assessing officer. 17. Aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before us. 18. Learned Commissioner of Income Tax, Departmental Representative (Ld. CIT-DR) for the Revenue, stated that assessee has not discharged its onus of proving genuineness, creditworthiness and identity of investors who had invested in the IPO of assessee. The Ld.CIT(A) not properly appreciated the findings given by the assessing officer in assessment order, proving the investors being shell companies. The assessee- company partly failed to prove the identity of the share subscribers/ Investors. The Ld. CIT-DR submitted written submission, before the Bench, the sum and substance of the written submission are that ssummons were returned unserved in case of some share subscribers, some of the share subscribers were not having creditworthiness and capacity to invest the amount in the share of the Assessee Company. The assessee-company has failed to prove the genuineness of transaction. There was direct or indirect relationship of the assessee- company with three Ahmedabad based Companies. The ld DR are also stated in the written submission that considering circumstantial evidences it is proved beyond doubt that subscribers to the IPO were neither creditworthy nor genuine. 19. The ld DR also stated that some of the share subscribers were not filling return of income hence their creditworthiness is questionable and the same was not proved by the assessee. The ld DR has placed reliance upon the decision of Hon`ble ITAT Raipur in the case of Purvi Finvest Limited vs DCIT [2023] 157 ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 13 taxmann.com 638 (Raipur- Tribunal), wherein under similar circumstances, the ITAT has confirmed the addition u/s 68 of the Act. The Ld. DR further submitted that the assessee had miserably failed to explain the nature and source of the sums in question, so the assessing officer has rightly added the sums u/s. 68 of the Act. The Ld.CIT-DR submitted before us that during assessment proceedings, assessee did not submit the documents, which are mentioned in table B of the written submission of ld DR, therefore, Ld.CIT-DR submitted that some of the documents and evidences relating to above companies/individual were not available before the Assessing Officer, only covering letters are available in the folder of the Assessing Officer. Therefore, Ld.CIT-DR submitted that during assessment proceedings, assessee has submitted only the covering letters and the documents mentioned in the covering letter relating to share subscribers /individuals were not available. Therefore, Ld.CIT-DR contended that matter may be remitted back to the file of the Assessing Officer for verification. 20. On the other hand, Shri S. N. Soparkar, Learned Senior Advocate, begins by pointing out that first of all, the Revenue did not raise any ground or additional ground, in respect of additional evidences. Thus, without raising grounds of appeal, in respect of additional evidences, if any, the Revenue cannot plead the case in respect of additional evidences.In respect of additional evidence, Ld. Sr- Counsel for the assessee stated that as per Rule11 of the Appellate Tribunal Rules, 1963, the Department cannot argue the case without raising the grounds of appeal, in appeal memo. Without prejudice to the above, Learned Senior Advocate, also argued that in fact, all the evidences and documents in respect of share-subscribers, were submitted before the assessing officer and acknowledgement for submission of these documents, before the assessing officer is available with the assessee, hence, it is a false allegation on the assessee that some of the documents were ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 14 not submitted before the assessing officer. In fact, entire documents and evidences, which were filed before the Tribunal, by way of various paper books, were available with the assessing officer, during the assessment proceedings. 21.On merit, The Ld. Counsel for the assessee, pleaded that assessee- company is a public limited company, therefore, it had no control over the process of application for share and allotment of shares. The present case of assessee- company is not that of allotment of share by private limited company, to its share applicants, however, in assessee`s case under consideration, entire process is through IPO, wherein company is not aware about who are share applicant, till entire process of share allotment is not completed.However, during assessment proceedings, assessee-company tried to submit the relevant documents in respect of each share-subscriber, such as: (a) Income Tax Return of the share holders/ share -subscriber (b) Balance Sheet and profit and loss account and Audited Accounts of the share holders (C) Copy of the bank account of the each share holders/ share -subscriber. (d) Transaction with the assessee was duly highlighted in the bank statement (e) Evidences of source of source of the share- holders/ share subscriber. (f) Name and address and PAN Number of each share subscriber. During the assessment proceedings, in fact, the assessing officer conducted enquiry by issuing notices under section 133(6) of the Act, and in response to these notices, the share- subscribers filed documents and evidences, such as, bank statement, balance-sheet, profit and loss account,name, address and PAN number. Not only that some of these share- subscribers/share-applicants have attended the office of the assessing officer personally and submitted entire ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 15 documents and evidences, before the assessing officer. Since the assessee- company, discharged its onus, to prove, identity, genuineness, and creditworthiness, therefore, ld CIT(A) has rightly deleted the addition. 22.The Ld. Sr-Counsel for the assessee also submitted that during the assessment proceedings, the assessee has submitted information to the Assessing officer, about change of address, of some parties/ share-subscriber, and on the changed address, such share subscribers/ share applicants were available, when the assessing officer issued again notice to them. Thus, all the documents and evidences, such as, bank statement, balance-sheet, profit and loss account and PAN of the share subscribers were submitted during assessment proceedings. 23. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We have examined the paper book submitted by the assessee, and the written submissions filed by the ld DR for the revenue, stating that assessee submitted some additional evidences before the Bench, first time, which were not submitted before the assessing officer, therefore, entire matter may be remitted back to the file of the assessing officer for fresh examination. We noticed that there is no additional evidences submitted by the assessee, first time before the Bench. We have examined the documents and evidences submitted by the assessee, before the assessing officer, along with covering letter, and found that evidences and documents were before the file of the assessing officer. We note that as per rule 11 of the Appellate Tribunal Rules, 1963, the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground, not set forth in the memorandum of appeal. The revenue, also failed to raise any ground, in the appeal memo, about additional evidences. However, as we have already noted ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 16 that no additional evidences and documents were submitted by the assessee, before this Bench, first time, and all the documents and evidences filed before the assessing officer, were filed before the Bench, therefore, plea raised by the ld. DR for the Revenue, is rejected. 24. We also find merit in the submissions of ld. Counsel for the assessee, to the effectthat assessee- company is a public limited company, therefore, it had no control over the process of application for share and allotment of shares. The present case of assessee-company is not that of allotment of share by private limited companyto its share applicants, however, in the assessee`s case under consideration, entire process is through IPO, wherein company is not aware about who are share applicant, till entire process of share allotment is not completed. Moreover, the allotment of shares to the various share applicants, are subject to the rules and regulations framed by the SEBI and BSE, hence, there is strict control by the external authorities, likeSEBI and BSE, therefore, assessee- company, need to collect, Bank statements, Income tax returns etc, from each share -subscriber. Moreover, in IPO-process, no any share -applicant/ share- subscriber, supposed to furnish Bank statements, Income tax returns etc, and assessee-company, legally, cannot ask from the share subscribers/ share applicants to furnish their secret information. Therefore, during the assessment proceedings, if the assessing officer wants any information, about the share applicants, he may do so, by issuing notice under section 133(6) of the Act, individually, to each share subscriber/ share applicant, as the assessee- company already submitted the name and address of the share subscriber/ share applicant, before the assessing officer. 25. In case of public issue, that is, when shares are issued to the public at large, for example in public issue, like, Tata consultancy services, Wipro, ICICI Bank, Infosys etc, issued in past, shares to the public at large, and share applicants are in crores, who were applied to these companies for shares, therefore, it is ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 17 impossible for these companies, to submit, their individual balance sheet, bank statements etc, before the assessing officer, as these shareholders of these companies do not supposed to submit personal information to the company. However, this situation is different in case of a Private Limited company. In case of a private Limited company, this situation is different, because the shares are allotted to friends and family members and relatives by the Private Limited company, and number of shareholders are also restricted, therefore, the private Limited company, may submit, before the assessing officer, the personal information of the share subscriber/ share applicants, like their balance sheet, bank statement, income tax returns etc, to prove the source of the fund. In case of a public limited company, the assessee under consideration, the assessing officer, may collect the information from the share subscriber/ share applicant, by issuing notice to them under section 133(6) of the Act, which the assessing officer has done, in the assessee`s case under consideration and in response to the notices issued under section 133(6) of the Act, the share subscriber/ share applicant, in fact, submitted the information, in his/ her individual capacity, before the assessing officer. The assessee- company, under consideration, has also tried to submit the information about the share subscriber/ share applicant, to the extent available with it, before the assessing officer. This way, the assessing officer, in the assessee`s case under consideration, had full information of all share subscriber/ share applicant, like (a) Income Tax Return of the share holders,(b)Copy of the bank account of the share holders, (c) Transaction with the assessee was duly highlighted in the bank statement, (d) Explanation along with evidence of source of source of the funds of the applicant,(e)Audited accounts of the shareholders (e) Relevant address proofs, PAN Number etc. 26. We note that the main plank on which the assessing officer made the addition was because the share subscribers did not turn up before him. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 18 From the notices issued under sections 133(6) and 131 of the Act, it is noted that each of the share subscribing company was required to furnish the following details for examination, Viz:(a) Income Tax Return of the share holders,(b)Copy of the bank account of the share holders, (c) Bank statements,(d) Explanation along with evidence of source of source of the funds of the applicant,(e)Audited accounts of the shareholders (e) Relevant address proofs, PAN Number etc.It is noted that the all the above requisitioned documents were furnished before the assessing officer which substantiated the transaction between the assessee- company and the share applicants. It is therefore not a case where the documents sought from the share- applicants/ share subscriber, to examine the transaction were not available before the assessing officer. As regards the issue of non-appearance of the share applicants, we note that in such a case the Hon'ble Apex Court in the case of Orissa Corporation (P) Ltd. (supra) 159 ITR 78 and the Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360 /[2003] 127 Taxman 523, has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of cash deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). In arriving at this conclusion, the Hon'ble Court has further stressed the presence of word \"may\" in section 68. Relevant observations at pages 369 and 370 of this report are reproduced hereunder:- \"Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 19 burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non- compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 27. The Ld. Counsel submitted before the Bench that the details of PAN, Income Tax Return-Acknowledgment, etc. duly proved the identity of the share-subscribers. The Ld. Counsel thereafter invited our attention to the respective balance sheets of the share applicants to show that each of them had sufficient funds available at their disposal to make investment in the assessee- company. Referring to the respective bank statements, it was further pointed out that the transactions were conducted through proper banking channel and that there were no cash deposits in any of the bank account of the share- applicants. The ld Counsel also invited our attention to the explanation furnished by each of the share applicants regarding their source of funds. It was thus submitted that the fund flow position of the share- applicant and not the profitability was the decisive criteria to examine the creditworthiness of the share- applicants. 28.Let us look at section 68 of the Act and the judicial precedents on the issue at hand. Section 68 under which, the addition has been made by the assessing officer, reads as under: \"68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.\" ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 20 The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words ‘shall’ be charged to income-tax as the income of the assessee of that previous year\". The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word \"may\" and not \"shall\". Thus, the un- satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as also held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. 29.We note that the IPO form of assessee- company, as approved by SEBI and BSE were examined by the ld. CIT (A).It can be seen from above referred IPO form that shareholder is required to provide mainly details like name of applicant, address of applicant, PAN, details of DEMAT, whether share applicant is individual/HUF/Body corporate etc. The entire form nowhere requires applicant to provide details of sources of such share application money, details of return of income filed by it, their individual net worth, hence appellant- company can never have such details. While passing the assessment order, assessing officer has proceeded to make addition u/s 68 of the Act, as if he is assessing share capital of private limited company, whereas he ought to have appreciated that IPO was on BSE- SME platform and appellant has no control over such IPO or even cannot give any conformation to any share- applicant to give confirmed allotment, as entire process is through electronic mode and on luck draw basis, if there is oversubscription. The observation of assessing officer that appellant has not submitted share application forms arenever received by ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 21 company post allotment as same are with Banks who had accepted ASBA application for share applicant or when online form is filed, such details are also in Bank Server. The ld CIT(A) also relied on the judgement of the Hon`ble Supreme Court in the case of CIT vs. Lovely Exports 216 CTR 195, wherein it was held as under : “ if the share application money is received by the assessee company from alleged bogus shareholders,whose names are given to the assessing officer, then the department is free to process to reopen their individual assessmentsin accordance with law but this amount of share money cannot be regarded as undisclosed income under section 68 of the assessee company.” In the above decision , the Hon`ble Supreme Court has clarified that in case of public issue, share application income cannot be treated as unexplained income of the assessee and if any doubt is raised against the same, proper enquiry is required to be conducted in case of investors. 30. The ld CIT(A) also observed that in the assessee`s case under consideration, addition u/s 68 of the Act has not been made for private placement of shares but for funds received in IPO-process and on such share application money, appellant- company has no control, hence parameters referred by assessing officer does not make share application/ share capital received by appellant to be non -genuine.The following important factors need to be considered in this particular case, as shares are allotted through IPO process. (i)The entire process of IPO was monitored by SEBI/BSE and assessing officer has not referred to any grievances, as were raised by any authority which can prove that appellant company had issued bogus share capital. (ii)None of the shareholders have confirmed that they have received cash against share application made by them. The assessing officer has not brought any evidences to prove that appellant company has routed its own funds in IPO application. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 22 (iii)The assessing officer has not brought any evidences that entire IPO was managed by appellant company or directors and same was sham IPO. (iv)Merely because share applicants were not found at their address, share capital received by appellant cannot be held to be bogus in this case as appellant company has no control on allotment of shares to them or even before final allotment, appellant cannot become aware of such fact. (v) During the course of survey proceedings carried out at appellant`s premises, no documents were found which can prove that share capital received by appellant represent unaccounted money of appellant. (vi)The assessing officer observed that some of the shareholders who were allotted shares have sold the shares at discount i.e. as against allotment of Rs. 75 per shares, such shares were sold at 50 per share. The subsequent listing price or further action of shareholder, holding shares or selling such shares dose not decide whether share capital issued by appellant is bogus or not. It is relevant to refer to market price of present company i.e. on 18/03/2023, and in fact, the ld CIT(A) in his order, had demonstrated that market price of shares of the assessee-company is fair and reasonable. 31. The Reliance can be placed on the following judgements which support the assessee`s case: (i) In the case of CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502/397 ITR 136, the Hon’ble Bombay High Court on the issue of non- appearance of share applicants had held as under: \"[5] The Assessing Officer added Rs.95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 23 [6] The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case\" (ii) In the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under: \"4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AA C, setting aside the assessment order.” (iii). Hon`ble Calcutta High Court in the case of S. K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata (347 ITR 347) also held as follows: “15. It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assessee and if no explanation is given or the explanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee. 16. In the case before us, the appellant by producing the loan-confirmation-certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements.” ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 24 (iv) The Hon'ble High Court at Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax (353 ITR 171), on the issue of unexplained cash credits, held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons issued to any witness is immaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable and unfavourable should have been considered. By not doing so the Tribunal committed grave error in law in upsetting the judgment in the order of the Commissioner of Income-tax (Appeals). 9. In this connection he has drawn our attention to a decision of the Supreme Court in the case of Udhavdas Kewalram v. CIT [19671 66 ITR 462. In this judgment it is noticed that the Supreme Court as proposition of law held that the Tribunal must In deciding an appeal, consider with due care, all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. 10. We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income- tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: \"The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. \" ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 25 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to upset the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Commissioner of Income-tax (Appeals). The appeal is allowed. 32. On the identical facts, in Tax appeal no.442 of 2011 of Hon'ble’ Gujarat High Court in the case of CIT v/s Belgium Glass & Ceramics P Ltd (date of pronouncement 13.06.2012), held as follows: \"4. On consideration of facts and the order of the Tribunal, it is seen that while reversing the order of the Commissioner (Appeals) the Tribunal took view that once the applicants admit to have made the payment of share application money, no further inquiry was necessary into the creditworthiness and genuineness of the transactions in the case of assessee - company. It took such view on the basis of various judicial pronouncements of the High Courts in which, the issue of share application money was considered and mainly relied on the decision of the Apex Court in CIT v/s Lovely Exports P Ltd (2010 ) 14 SSC 761) 4.1 In the facts of the case, it is not disputed that the assessee had furnished the assessing officer the names of 15 persons from whom the share application money was receive. The assessee had also produced in respect of each of them the copies of revenue records in form no. 7/12 extracts showing that they were holders of agricultural land. In Lovely Exports (supra), the Supreme Court considered the issue of share application money regarded as undisclosed income u/s 68 of the Act and observed that if share application money was received by assessee - company, from the alleged bogus share holders, whose names were given to assessing officer then the Department was free to proceed to reopen the individual assessments in accordance with Law.\" ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 26 33.On identical facts, as those of assessee, under consideration, the Hon'ble jurisdictional High Court in the case of Associated Transrail Structure Ltd. vs. ACIT 397 ITR 573 (Guj), held as follows: “9. Thus, from the facts emerging on record, it is apparent that during the period immediately after its incorporation the assessee-company hand practically done no business so as to generate income of Rs.50 lakhs. The Assessing Officer on inquiry has found many of the alleged shareholders to be benamidars or having not invested the money, but at the same time, he has traced out the source of money to some specific persons, who were the real investors. The Supreme Court has in the case of CIT v. Lovely Exports (P).Ltd., (supra),held that if the share application money is received by the assessee-company from the alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen the individual assessment in accordance with law. Such amounts cannot be regarded as undisclosed income under section 68 of the Act. Applying the said principles to the facts of the present case, the Assessing Officer having traced out the source of funds to specific persons who had invested the same in share of the assessee-company, it was open for the Assessing Officer to proceed against the said persons. The funds not having emanated from the assessee-company, there was no warrant for making addition of the said amount as undisclosed income under section 68 of the Act in its hands. In the circumstances, the Tribunal was justified in deleting the addition of Rs.50,00,000 made under section 68 of the Act. The question stands answered accordingly, that is, in favour of the assessee and against the Revenue.” 34. On identical facts, as those of assessee, under consideration, the Hon'ble jurisdictional High Court of Gujarat in many cases held that once the basic document such as, confirmation, copy of bank account, copy of share application and copy of income tax returns of the creditors, or share applicants have been furnished by the assessee, the onus of proving the above three elements required for section 68 is discharged. It is also held that it is not for the assessee to prove or to explain the \"source\" of the share applicant or loan creditor. It is also held that if there is any doubt regarding source of the said creditors / share applicants, the matter can be examined by the concerned assessing officer in their own assessment. For this, reliance can be placed on the judgment of the Hon`ble Gujarat High Court in the case of Hindustan Inks & Resigns Ltd v/s DCIT, 60 DTR 0018 (Guj).The same legal ratio is also followed in following binding decisions of Hon'ble’ jurisdictional High Court of Gujarat: (i) CIT v/s Himatsu Blmet Ltd (High Court of Gujarat no. 546 of 2009 Order dt 04.05.2010 in Tax Appeal ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 27 (ii)CIT v/s Bhavana Property Developers P ltd (High Court of Gujarat) in ITA No. 1039/2009 (iii) CIT v/s M/s Goyal Synthetics P Ltd (High Court of Gujarat) (in ITA No. 498 of 2010) are all of exact issue of share application money received. (iv) CIT v/s Shree Rama Multi Tech Ltd reported in (2013) 34 Taxmann. Com 177 (Gujarat) (v) The CIT v/s Guptex P Ltd inTA No. 109/2010 dt14.09.2011 (vi) CIT v/s Nilchem Capital Ltd in T A No. 2087/ 2009 with 2088/2009 dt 14. 11. 2011 (vii)CIT v/s V Satyendra Traders P Ltd in T ANo 692/ 2010 dt 04. 10. 2011 (viii) CIT v/s Maruti Aluinium P Ltd in TA No. 330/2011 dt27. 06. 2012 (ix) CIT v/s Gay Lord Industries Ltd in TA No. 1426/2011 dt 27.06.2012 35.To conclude, section 68 of the Act provides that if any, sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case of the assessee, both the nature & source of the share application received was fully explained by the assessee. The assessee had explained the ‘source of the source’ and discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income Tax acknowledgments were placed on assessing officer`s record. Considering the above facts, the addition made by the assessing officer is based on conjectures and surmises, hence cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under Section 68 of the Act. That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 36. In the result, ground No.1 raised by the revenue, is dismissed. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 28 37. Ground No.2 raised by the revenue, relates to deleting the addition of Rs.5,55,66,953/-, u/s 69A of the I.T. Act, 1961, on account of unexplained cash deposit during demonetization period. 38.Succinct facts are that assessing officer noticed thatduring the course of survey carried out in the case of assessee- company on 1st December 2016, it was found that the assessee-company, has done back dating of purchases and sales bills. The assessing officer was of the view that the assessee- company has manipulated its stock register, by back dating of purchases, thereby creating stock in the books, shown the same stock as sales during pre-demonetization period to explain the sources of cash deposited during demonetization period.The assessing officer observed that assessee- company has filed its October VAT monthly return on 22/11/2016 showing purchases at Rs.22,76,06,628/-. Thereafter, the assessee- company revised this return on 22/12/2016 i.e. after the survey action on 01.12.2016 and increased purchases by Rs.5,30,48,246/- and accordingly shown purchases at Rs.28,06,54,874/-. The assessing officerhas reproduced such VAT return in assessment order. The assessing officer has correlated such revised VAT return with acceptance of director that backdating in purchase was made. The assessing officer has also observed that before October 2016, assessee was keeping small cash balance and cash was immediately deposited in bank whereas in October 2016, assessee had huge cash balance which was deposited post announcement of demonetization. The assessing officer has observed that assessee had made cash sales of Rs.48,20,972/- on 08.11.2016 which remained un-deposited on 08.11.2016, as the assessee- company has deposited cash on 07.11.2016, before demonetization and considering reasonable cash balance of Rs.5,27,075/-, the assessing officer considered available cash balance with assessee at Rs.53,48,047/- (Rs.5,27,075/- plus Rs.48,20,972/-) and as ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 29 assessee has deposited cash of Rs.6,09,15,000/- post demonetization, difference of Rs.5,55,66,953/- (Rs.6,09,15,000/- minus Rs.53,48,047/-) was treated as unexplained money u/s 69A of the Act. 39. On appeal, the ld. CIT(A) deleted the addition. The ld. CIT(A) noted that assessing officer has not disputed the Sales of the assessee and also has not found any defect in the profit and loss account of the assessee. The previous year`s, Sales and current year Sales, are same, and there is no fluctuation in purchase and sales as compared to previous year. The revised return of VAT was filed by the assessee, because of gold loan. Moreover, assessee has offered tax on the entire sale. Considering these facts, ld. CIT(A) deleted the addition. Aggrieved by the order of the ld. CIT( A), the revenue is in appeal before us. 40. Learned CIT-DR for the Revenue argued that assessee has deposited the money during demonetization period and no valid explanation has been offered and there is no change in quantity of the stock,therefore, how additional sales is possible, particularlywhen there is no change in stock, therefore, it should be presumed that assessee has deposited unaccounted money during demonetization period and the same should be added to the total income of the assessee. The learned DR also pointed out that Ld.CIT(A) has also ignored the high cash balance shown by the assessee, with effect from 1st October 2016 i.e. after the manipulation done in purchase register. The Id.CIT(A) has also wrongly accepted new evidence wherein the assessee has tried to explain the back dating of purchases by way of gold loan taken. Therefore, ld. DR argued that addition made by the assessing officer should be sustained. 41.On the other hand, Ld. Sr-Counsel for the assessee submitted that assessee has recorded sales and sales have been shown in the profit and ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 30 loss account and offered to tax. Therefore, to tax the same Sales again is tantamount to double taxation. The sales made by the assessee during demonetization period has been offered for tax by way of showing in the profit and loss account. Therefore, income of assessee has suffered the tax, hence, no further addition should be made in the hands of assessee. There is noback dating of purchases and sales. The cash balance has arisen on account of cash sales and such sales was duly offered for taxation, in its profit and loss account.The assessing officer has not rejected books of account u/s 145 of the Act, even though he was of the view that there was backdating entries relating to purchases, which is also reflected in revised VAT returns filed by assessee. Therefore, learned Counsel argued that order passed by the ld. CIT(A) is a speaking order, therefore, findings of the learned CIT(A) should be upheld. 42. We have heard the Learned Counsel appearing on behalf of the respective parties at length. We find that assessing officer has made entire addition u/s.69A of the Act, on the ground that assessee has back dated the entries and part of available cash balance is unexplained money u/s 69A of the Act. The assessee in its submission has contended, before learned CIT (A) that the said cash balance has arisen on account of cash sales and such sales was duly offered for taxation in its profit and loss account. It is found that the assessing officer has not rejected books of account u/s 145 of the Act even though he was of the view that there were backdating entries relating to purchases, which is also reflected in revised VAT returns filed by assessee. The assessing officer has accepted Gross Profit, Net profit shown in books of account and purchase payment has not been doubted. The assessing officer has nowhere doubted on the genuineness on the Purchase and sales of the assessee. Once the Assessing officer has accepted book results shown by assessee, purchase, sales and stock ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 31 to be correct then part of cash balance generated out of such cash balance cannot be held to be unexplained. 43.The ld CIT(A) also referred to Question No. 25 of statement of director recorded, on 01.12.2016, by the survey team wherein he has categorically denied the allegations for cash deposit and further explained as to why this year higher cash been deposited in bank account for the same period as compared with earlier year. Relevant part of the statement is reproduced as under: \"Q.25. In the premises of your company office sales register of the company is found, wherein data of sales for the period of April 2015 to November 2015 and April - 2016 to November - 2016 data is given. While comparing sales for the period September, October 2015 with September, October 2016 the sales are more. The sales have increased 2-to-3.33-time folds. Give the reason for the same and it appears that on account of demonetization of notes of Rs.500 & Rs. 1000 in order to deposit the same being on account of excess sale created. Explain these allegations. A. 25. No. This allegations are wrong. This year Dipavali was in October. Whereas in last year Dipavali was in November. Over and above this, for current year on account of Griah marriages were more. This year in October there were more marriages. In routine manner our sales in marriage season are more, That is, the reason our sales are more in October-2016. Our average sales for 01. 11. 201 6 to 08.1 1.201 6 are less. It is clarified by assessee that in A.Y.2016-17, Diwali was in the month of November, whereas in current year, Diwali was in the month of October which has made to higher cash sales in the month of October 2016 in comparison with sales in October 2015, ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 32 44. The ld CIT(A) also observed that so far as observation of the assessing officer that assessee has revised VAT return, the assessee has explained that such revision was required on account of the fact that the assessee- company had obtained Gold Loan and such loan was not shown as purchases in VAT return. However, on coming to the notice of this fact, which it was required to do, a revised return was filed. This factual statement can be verified from the original and revised return.It is found that assessing officer has made assumption that difference in VAT is on account of backdating of purchase but assessee has explained the reason for difference in purchase in original and revised return and such explanation is not found to be incorrect. 45.So far as backdating of purchases, as alleged by the assessing officer, it was noted that assessing officer, vide letter dated 11th December 2019 has given simplified details of back dating, shown in the table, in show-cause notice, which was reproduced by the CIT(A) on page number 58, of his order. It can be seen from referred tabular chart that out of alleged backdated purchase of Rs 3,90,05,020/-, purchases from Jyotirmaya Jewels Private Limited was Rs.3,06,42,390/-, were shown, which is more than 85% of the total alleged back dated purchases. The assessee has explained that purchase from aboveparty is of fine gold only. During the course of assessment proceedings, as well as appellate proceedings, assessee has submitted copy of purchase bill from which,it is evident that goods were purchased on 10/11/2016 i.e after demonetization and even purchase payment was made on very same date which is also reflected in bank statements submitted by assessee. The assessee has not made any cash sales out of such stock but in fact that the assessee sold fine gold on 11.11.2016 of 6000.00 GMS to Akshay Jewellers Pvt Ltd and Milan Jewellers. On 12.11.2016 it sold 1000.00 GMS to VM Jewellers and on 21.11.2016 it sold 1000 GMS to Divine Jewels, the payment for which is received by assessee by way of RTGS. If the allegation for back dated ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 33 purchases is to accepted, no sales of the aforesaid quantity would have been possible. Thus, most of the alleged back dated purchase of Rs. 3,06,42,390/-, on 10/11/2016, is through RTGS and subsequent sale is also through RTGS, which has not connection with cash sales made in the month of October 2016. It is also observed that alleged backdating purchase prior to date of announcement of demonetization is significant lower amount i.e. Rs. 8,965/-, Rs.30,977/-, Rs. 28,530/-, Rs. 26,815/-, Rs. 84,588/- and Rs. 18,510/- and such lower amount of purchases cannot generate cash of more than 6 crore as alleged by the assessing officer. It is observed that assessee has available stock before the date of sale and such stock has never been disputed by assessing officer hence consequent sales cannot be doubted. It is observed that remaining alleged back dated purchases are subsequent to date of demonetization and assessing officer has not doubted genuineness of such purchases and its subsequent sale. The entire basis of addition made by assessing officer for treating part of cash balance as unexplained money is without any basis and without rejecting books of account or without doubting any purchase, sales or closing stock. He has not proved that part of purchase or sales to be bogus hence, there is no reason for not accepting explanation of assessee regarding deposit of cash out of available balance with it. 46. The assessee also produced before the lower authorities, the working of Sales and cash Deposit effected in 2016 vis-a-vis corresponding period of 2015. The said comparative figures are mentioned by the ld CIT(A) on page number 60 of his order. From the perusal of the same it is observed that overall cash sales for October to December in A.Y. 2016-17 was Rs.38.46 crore whereas in A.Y.2017-18, such cash sales was Rs.24.73 crore. It is observed that in A.Y. 2016-17, Diwali was in the month of November 2015 wherein cash sales was Rs. 19.46 crore whereas in A.Y. 2017-18, Diwali was in the month of October 2016 wherein cash sales was Rs.20.69 crore, which is much in line with last ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 34 year sales. There is no extra ordinary sales in the month of October 2016 as compared to previous year. It is observed that VAT department has also accepted sales shown by assessee. Considering the facts discussed herein above, cash deposited by assessee subsequent to date of announcement of demonetization is out of sales already recorded in books of account, hence such cash deposited cannot be considered as unexplained money in the hands of assessee. The assessee has also contended before Ld.CIT(A) that all such cash deposits are arising out of its cash sales which is duly offered for taxation in its profit and loss account and if such cash deposits are again brought to tax under different section, the same would mean double addition/taxation of the same amount. The assessee has contended that the double taxation is against the accepted principles/canons of taxation. In view of the above factual position, since it has been observed that the assessing officer has not disputed the Sales of the assessee and also has not found any defect in the profit and loss account of the assessee inter-alia the profits offered to tax by the assessee, therefore, ld CIT(A) deleted the addition of Rs. 5,55,66,953/-. We also find that while deleting the said addition,theld. CIT(A) relied on the following judgements. (i). Ahmedabad ITAT in the case of Vishal Export in. ITA No.1684/Ahd/2004, dated 07.08.2009. (ii) Hon`ble Jurisdictional Gujarat High Court in Tax Appeal No.2471 of 2009, dated 03.07.2012. (iii) Ahmedabad ITAT in the case of Shree Sanand Textile Industries Ltd, in ITA No.995/Ahd/2014, dated 06.01.2020. (iv) Hon`ble Delhi High Court in the case of J.M. Wire Industry, Income tax reference number 96 of 1989 dated 15 July 2020. (v)Hon`ble Delhi High Court in the case of Kailash Jewellery House, ITA No.613/2010, dated 09.04.2010. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 35 (vi) New Pooja Jewellers Vs. Income Tax Officer Calcutta, ITA No.1329/Kol/2018. (vii) ACIT Vs. Dewas Soya Limited, ITA No.336/Ind/2012. (viii)ACIT Vs. Heera Panna Jewellers, (2021)128 taxmann.com 291 (Visakhapapnam-trb) 47. In the above judgements, by and large, it has been held that that assessee has available stock before the date of sale and such stock has never been disputed by assessing officer hence consequent sales cannot be doubted. The remaining alleged back dated purchases are subsequent to date of demonetization and assessing officer has not doubted genuineness of such purchases and its subsequent sale. The addition was made without rejecting books of account or without doubting any purchase, sales or closing stock, and assessing officer has not proved that part of purchase or sales to be bogus. Therefore, we find that in assessee`s case under consideration, the ld. CIT(A) deleted the addition based on the above facts, therefore, we do not find any infirmity in the order of the ld. CIT(A).The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A). 48. In the result, ground No.2 raised by the revenue, is dismissed. 49. Now coming to assessee’s appeal in ITA No.91/RJT/2023, wherein the assessee has raised two grievances, namely, expenses relating to IPO process to the tune of Rs.40,31,283/-have not been allowed to the assessee, as revenue expenditure and amortisation of registration fees to the tune of Rs.5,43,874/- has not been granted to the assessee, as a revenue expenditure. 50. Brief facts of the issue in dispute are stated as under.The assessee- company has raised Rs.49.50 crores as share capital through IPO during the year. It has been observed that the assessee-company has debited expenses of Rs.40,31,283/-, as IPO Expenditure and Registration Fees of Rs.5,43,874/-, paid ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 36 to ROC during the year. The assessing officer was of the view that the nature of IPO expenditure and ROC fees is capital in nature, accordingly, vide notice u/s. 142(1) of the Act, the assessee- company was requested to explain, as to how IPO expenditure and Registration fees is an allowable revenue expense. 51. In response to this notice, the assessee-company stated that the funds received from IPO were invested in short- term mutual funds andearned short term capital gain and accordingly IPO expenses is set- off from this profit. The assesses- company relied on few judgements. In this regard, it wasstated by the assessing officer that the expenses incurred for IPO are capital in nature and even if the funds received from IPO were invested to earn income, it doesn't change the nature of expense. The IPO expenditure is incurred for raising share- capital and therefore is clearly capital in nature. Further, the claim of assessee- company, as an alternative to allow expenses u/s. 35D of theAct is also not acceptable, as IPO expenditure and Registration expenses paid to ROC is attributable to rise in share capital and therefore the nature of the expense is capital and should be capitalized. The plea of the assessee-company was not accepted by the assessing officer, as the Apex court, in various judgements held that ROC fees paid for increase in Authorised Capital is a Capital Expenditure. Accordingly, Rs.45,75,153/-(Rs.40,31,283 +Rs.5,43,874) expenses in the nature of IPO expenditure and Registration Expense claimed as revenue were disallowed, by the assessing officer. 52. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before Ld.CIT(A), who has confirmed the action of the Assessing Officer. 53. Further, aggrieved by the order of Ld. CIT(A),assessee is in appeal before us. ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 37 54.The Ld. Sr-Counsel for the assessee, submitted that registration expenses and the IPO expenses should be allowed as amortization, under section 35D of the Act, as these expenses were incurred by the assessee, during formation of a public Limited company, therefore, entire expenses cannot be disallowed, some of the expenses, would definitely allowable, as amortisation under section 35D of the Act. 55. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 56.We have carefully considered the facts of the case, the submission of the Ld. Counsel for the assessee and ld. DR for the Revenue and evidences on record.The Ld. Counsel for the assessee, submitted that assessee is eligible to claim amortisation of expenses, as per the scheme of section 35D of the Act. However, ld. DR for the Revenue submitted that these are capital expenditure and hence should not be allowed for amortisation under section 35D of the Act.We note that section 35D of the Act, permits amortization of certain preliminary expenses which include expenses of a capital nature and also expenses incurred before the commencement of business.That is, section 35D of the Income Tax Act, 1961, provides for the amortization of certain preliminary expenses incurred by company. These expenses are incurred before the commencement of the business and include, such as, legal fees, registration fees for registering the company under the provisions of the companies Act, and incorporation fees, public subscription expenses etc. Therefore, we direct the assessing officer, to examine, the nature of expenditure incurred by the assessee, whether these are allowable expenditure under section 35D of the Act or not, and allow the amortisation of expenditure, as per the provisions of section 35D of the Income Tax Act 1961, in accordance with law. We also direct the assessee to submit the details of these expenditure and its nature, along with ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 38 documentary evidences, as and when, call for, by the assessing officer. For statistical purposes, grounds raised by the assessee are allowed. 57.In the result, appeal of the assessee is allowed for statistical purposes, in above terms. 58.In thecombined result, appeal filed by the Revenue is dismissed, whereas the appeal filed by the assessee is allowed for statistical purposes. A copy of the instant common order be placed in the respective case file(s). Order is pronounced in the open court on 27/12/2024. Sd/- Sd/- (DINESH MOHAN SINHA) (DR. ARJUN LAL SAINI)ÆयाियकसदÖय/JUDICIAL MEMBERलेखासदÖय/ACCOUNTANT MEMBER राजकोट/Rajkot िदनांक/ Date:27 /12/2024 DKP Outsourcing Sr. P. S आदेशकìÿितिलिपअúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Assessee  ÿÂयथê/ The Respondent  आयकरआयुĉ/ CIT  आयकरआयुĉ(अपील)/ The CIT(A)  िवभागीयÿितिनिध, आयकरअपीलीयआिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File ITA Nos.167 & 91/Rjt/23 (AY 17-18) Radhika Jewel Tech Ltd. 39 By order/आदेशसे , सहायकपंजीकार आयकरअपीलीयअिधकरण ,राजकोट Date Initial 1. Draft dictated on 24/10/24 Sr.PS 2. Draft placed before author 25/10/24 (dictation pad has been enclosed along with original file) Sr.PS 3. Draft proposed & placed before the second member /11/24 AM 4. Draft discussed/approved by Second Member. /11/24 AM 5. Approved Draft comes to the Sr.PS/PS /11/24 Sr.PS /PS 6. Kept for pronouncement on /11/24 Sr.PS 7. File sent to the Bench Clerk /11/24 Sr.PS 8. Date on which file goes to the H.C. 9. Date on which file goes to the SPS 10. Date of dispatch of Order. "