VENUS DRUGS AND COSMETICS LTD,MUMBAI V. ITO, WORD-8(3)(1), MUMBAI

ITA 5933/MUM/2025

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Venus Drugs and Cosmetics Ltd. appealed against the order of the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi, which confirmed various disallowances and additions made by the Assessing Officer for the assessment year 2011-12. The main issues included disallowances of foreign traveling expenses, product development expenses, trademark expenses, domain expenses, and additions on account of alleged bogus purchases and unexplained cash credits under sections 68 and 56(1) of the Income Tax Act. The Tribunal dismissed the appeal, agreeing with the lower authorities that the assessee failed to provide sufficient evidence to substantiate the business nature of the expenses and the genuineness of the share capital and premium received.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788744 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 26-09-2025
• Other Referred Cases: McDowell & Co. vs. Union of India, Azaadi Bachao Andolan & others vs. Union of India, Bhopal Fire & General Insurance Limited vs. Commissioner of Income Tax, Lovely Exports Pvt. Ltd. vs. Union of India
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Keywords: Corroborative evidences; Unexplained cash credit; Unexplained expenditure; Bogus purchase; Accommodation entries; Bogus
• Section: 56; 68; 133(6); 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) ITA No. 5933/MUM/2025 Assessment Year: 2011-12 Venus Drugs and Cosmetics Ltd., 320-B, 3rd floor, Aurus Chambers, S Amrutwar Marg, Worli, Mumbai-400013. Vs. ITO, Ward 8(3)(1), Aayakar Bhavan, Mumbai-400020. PAN NO. AAACV 3569 L Appellant Respondent Assessee by : None Revenue by : Ms. Kavitha Kaushik, Sr. DR Date of Hearing : 17/11/2025 Date of pronouncement : 26/11/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 31.07.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12, raising following grounds: 1. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Foreign Travelling Expenses of Rs.48,976 though the expenditure was incurred for the purpose of business. Printed from counselvise.com 2. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Product Development Expenses of Rs.1,50,000 though the said expenditure was in the n the nature of day to day expenses incurred for the purpose of business. 3. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Trade Mark Expenses of Rs nature. 4. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Domain Expenses of Rs.23,543 though the said expenditure was revenue nature 5. On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the act though the purchases were genuine. 6. a) On the facts and the circu the learned CIT(A) erred in confirming the addition on account of increase in Share Capital of Rs.50,55,980 under S.68) of the act though the appellant has proved sufficient documents explaining the credit worthiness and id b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. On facts and circumstances of the case and law provisions of S.68) are not applicable and hence no additions could have been made. 7. a) On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming Share Premium of Rs.67,25,020 under S.56(1) of the act though the appellant has provided sufficient documents for charging the premium. b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated req direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Product Development Expenses of Rs.1,50,000 though the said expenditure was in the nature of revenue. The expenditure was in the nature of day to day expenses incurred for the purpose of On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Trade Mark Expenses of Rs.37,603 though the said expenditure was revenue On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Domain Expenses of Rs.23,543 though the said expenditure was revenue the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the act though the purchases were genuine. a) On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of increase in Share Capital of Rs.50,55,980 under S.68) of the act though the appellant has proved sufficient documents explaining the credit worthiness and identity of the applicants. b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. facts and circumstances of the case and law provisions of S.68) are not applicable and hence no additions could have been On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on Share Premium of Rs.67,25,020 under S.56(1) of the act though the appellant has provided sufficient documents for charging the b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated req direction of the CIT(A). The CIT(A) failed to have consider the full submission and documents filed. Venus Drugs and Cosmetics Ltd 2 ITA No. 5933/MUM/2025 On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of Product Development Expenses of Rs.1,50,000 though the said ature of revenue. The expenditure was in the nature of day to day expenses incurred for the purpose of On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Trade Mark .37,603 though the said expenditure was revenue On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance Domain Expenses of Rs.23,543 though the said expenditure was revenue the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of alleged bogus purchases of Rs.75,600 made by AO u/s 69C of the mstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of increase in Share Capital of Rs.50,55,980 under S.68) of the act though the appellant has proved sufficient documents explaining b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full facts and circumstances of the case and law provisions of S.68) are not applicable and hence no additions could have been On the facts and the circumstances of the case and in law, on account of Share Premium of Rs.67,25,020 under S.56(1) of the act though the appellant has provided sufficient documents for charging the b) The AO has erred in not considering the details submitted and has not given Remand report in spite of repeated request and direction of the CIT(A). The CIT(A) failed to have consider the full Printed from counselvise.com c) On facts and circumstances of the case and law provisions of S.56(1) are not applicable and hence no additions could have been made. 8. a) On the facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd (Times of India) u/s 68 of the act. b) The learned CIT(A) was provided wi CIT(A) erred in not considering the details submitted. The CIT(A) failed to have consider the full submission and documents filed. On facts and circumstances of the case and law provisions of are not applicable to the facts of could have been 2. At the outset, it is pertinent to record that despite due service of notice, neither did any authorised representative appear on behalf of the assessee nor was any application seeking adjournment filed. In these circumstances, and noting that the matter pertains to A.Y. 2012-13 and has already remained pending for considerable time, we are constrained to hold that the assessee is not interested in pursuing the appeal. We therefore proceed to adjudi appeal ex-parte qua the assessee, after hearing the submissions of the learned Departmental Representative (DR) and examining the record. 3. The facts in brief of return of income for the year under consid declaring total income of Rs.8,56,032/ by the assessee was selected for scrutiny. The assessee was mainly engaged in the manufacturing of cosmetics products. In the course Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 On facts and circumstances of the case and law provisions of S.56(1) are not applicable and hence no additions could have been he facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd (Times of India) u/s 68 of the act. b) The learned CIT(A) was provided with full details, however CIT(A) erred in not considering the details submitted. The CIT(A) failed to have consider the full submission and documents filed. On facts and circumstances of the case and law provisions of are not applicable to the facts of the case and hence no additions been made. At the outset, it is pertinent to record that despite due service of notice, neither did any authorised representative appear on behalf of the assessee nor was any application seeking adjournment In these circumstances, and noting that the matter pertains to 13 and has already remained pending for considerable time, we are constrained to hold that the assessee is not interested in pursuing the appeal. We therefore proceed to adjudi the assessee, after hearing the submissions of the learned Departmental Representative (DR) and examining the The facts in brief of the case are that the assessee filed its return of income for the year under consideration on 30.09.2012 declaring total income of Rs.8,56,032/-. The return of income filed by the assessee was selected for scrutiny. The assessee was mainly engaged in the manufacturing of cosmetics products. In the course Venus Drugs and Cosmetics Ltd 3 ITA No. 5933/MUM/2025 On facts and circumstances of the case and law provisions of S.56(1) are not applicable and hence no additions could have been he facts and the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition on account of Share Warrant of Rs.90,00,000 issued to Bennet Coleman Co Ltd th full details, however CIT(A) erred in not considering the details submitted. The CIT(A) failed to have consider the full submission and documents filed. On facts and circumstances of the case and law provisions of S.68 the case and hence no additions At the outset, it is pertinent to record that despite due service of notice, neither did any authorised representative appear on behalf of the assessee nor was any application seeking adjournment In these circumstances, and noting that the matter pertains to 13 and has already remained pending for considerable time, we are constrained to hold that the assessee is not interested in pursuing the appeal. We therefore proceed to adjudicate the the assessee, after hearing the submissions of the learned Departmental Representative (DR) and examining the the assessee filed its eration on 30.09.2012 . The return of income filed by the assessee was selected for scrutiny. The assessee was mainly engaged in the manufacturing of cosmetics products. In the course Printed from counselvise.com of scrutiny, the Assessing Office details of various expenses inter travelling expenses of Rs.48,976/ trade mark expenses, domain registration expenses purchase made from M/s Payal Enterpris related party details of share application money etc. After considering the submission of the assessee, the Assessing Officer made following additions: Add Disallowance out of expenses as discussed in para (4) above Foreign Travel As discussed in para (5) above Out of Various Expenses As discussed in para (6) above Unexplained Expenditure As discussed in para (7) above Unexplained Cash Credits As discussed in para Unexplained Cash Credits As discussed in para (10) above Income from Other sources As discussed in para (8) Taxable Total income Rounded off to 4. In relation to ground No. 1 of the noted that the Director travelled to Dubai and Bangkok. The assessee failed to produce any material demonstrating that such travel was undertaken for business purposes. Apart from certain invoices, no evidence or business reports— Officer or before the CIT(A). In absence of any nexus with business, the learned CIT(A) confirmed the disallowance. Before us also, Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 of scrutiny, the Assessing Officer asked the assessee to furnish details of various expenses inter-alia penalty of Rs.5,000/ travelling expenses of Rs.48,976/-, product development expenses, trade mark expenses, domain registration expenses purchase made from M/s Payal Enterprises expenses purchases made from the related party details of share application money etc. After considering the submission of the assessee, the Assessing Officer additions: Disallowance out of expenses as discussed in para (4) above 5000 As discussed in para (5) above 48976 Out of Various Expenses As discussed in para (6) above 211147.60 Unexplained Expenditure As discussed in para (7) above Unexplained Cash Credits As discussed in para (9) above Unexplained Cash Credits As discussed in para (10) above Income from Other sources As discussed in para (8) Taxable Total income In relation to ground No. 1 of the appeal, the learned CIT(A) noted that the Director travelled to Dubai and Bangkok. The assessee failed to produce any material demonstrating that such travel was undertaken for business purposes. Apart from certain invoices, no evidence—such as meeting schedules, c —was furnished either before the Assessing Officer or before the CIT(A). In absence of any nexus with business, the learned CIT(A) confirmed the disallowance. Before us also, Venus Drugs and Cosmetics Ltd 4 ITA No. 5933/MUM/2025 r asked the assessee to furnish alia penalty of Rs.5,000/-, foreign , product development expenses, trade mark expenses, domain registration expenses purchase made es expenses purchases made from the related party details of share application money etc. After considering the submission of the assessee, the Assessing Officer (-)1163343.40 75600 5055980 9000000 6725020 22003256.60 22003257 he learned CIT(A) noted that the Director travelled to Dubai and Bangkok. The assessee failed to produce any material demonstrating that such travel was undertaken for business purposes. Apart from certain such as meeting schedules, correspondence, was furnished either before the Assessing Officer or before the CIT(A). In absence of any nexus with business, the learned CIT(A) confirmed the disallowance. Before us also, no Printed from counselvise.com material whatsoever findings of the learned CIT(A). We find no infirmity in his conclusion that the assessee failed to discharge its burden under section 37(1). The ground No. 1 of the appeal of the assessee is accordingly dismissed. 5. The ground No. 2 of disallowance of product development expenses of Rs.1,50,000/ The ground no. 3 relate to disallowance of trade mark expenses of Rs.37,603/- /-. The ground No. 4 relates to domain development expenses of Rs. Rs.23,543/ the assessee incurred trademark charges, and domain registration. The assessee contended that the expenses improved product quality, yet no supporting evidence nature of services, or proof of business necessity Said arguments of the assessee were not accepted by the lower authorities. The learned CIT(A) sustained disallowance on this issue. Before us, as well, the assessee evidence to establish the business necessity or revenue nature of these expenditures. Accordingly, we uphold the findings of the learned CIT(A) on this issue. accordingly dismissed. 6. The next ground in relation to addition on account of bogus purchases of Rs.75,600/ Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 material whatsoever has been placed to contradict the factual findings of the learned CIT(A). We find no infirmity in his conclusion that the assessee failed to discharge its burden under section 37(1). The ground No. 1 of the appeal of the assessee is accordingly The ground No. 2 of the appeal of the assessee relate to disallowance of product development expenses of Rs.1,50,000/ The ground no. 3 relate to disallowance of trade mark expenses of . The ground No. 4 relates to domain development expenses of Rs. Rs.23,543/-. The Assessing Officer observed that the assessee incurred ₹2,11,147/- towards product development, trademark charges, and domain registration. The assessee contended that the expenses improved product quality, yet no supporting evidence—such as reports, invoices explaining the nature of services, or proof of business necessity— Said arguments of the assessee were not accepted by the lower The learned CIT(A) sustained disallowance on this Before us, as well, the assessee has not produced any fresh evidence to establish the business necessity or revenue nature of these expenditures. Accordingly, we uphold the findings of the learned CIT(A) on this issue. The ground No. 2 to 4 of appeal are accordingly dismissed. ground in relation to addition on account of bogus purchases of Rs.75,600/-. The facts in brief qua the issue in Venus Drugs and Cosmetics Ltd 5 ITA No. 5933/MUM/2025 adict the factual findings of the learned CIT(A). We find no infirmity in his conclusion that the assessee failed to discharge its burden under section 37(1). The ground No. 1 of the appeal of the assessee is accordingly the appeal of the assessee relate to disallowance of product development expenses of Rs.1,50,000/-. The ground no. 3 relate to disallowance of trade mark expenses of . The ground No. 4 relates to domain development The Assessing Officer observed that towards product development, trademark charges, and domain registration. The assessee contended that the expenses improved product quality, yet no invoices explaining the —was furnished. Said arguments of the assessee were not accepted by the lower The learned CIT(A) sustained disallowance on this has not produced any fresh evidence to establish the business necessity or revenue nature of these expenditures. Accordingly, we uphold the findings of the The ground No. 2 to 4 of appeal are ground in relation to addition on account of bogus . The facts in brief qua the issue in Printed from counselvise.com dispute are that the Assessing Officer received information from the Investigation Wing indicating that M/s Payal Enterprises was involved in providing accommodation entries. A notice issued under section 133(6) to the said concern remained unserved. The assessee was informed of this fact but failed to furnish an alternative address or any corroborative evidence to establish receipt of goods. Th learned CIT(A), noting absence of delivery proofs, transport documents, confirmations or discrepancies in stock records, rightly held that mere production of purchase bills is insufficient to establish genuineness. We concur that the assessee has failed substantiate the purchases, and therefore, ₹75,600/- stands confirmed 7. The ground 6 relate to share capital at Rs.50,55,980/ ground No. 7 relate to share premium of Rs.67,25,020/ ground No. 8 relate to share warrant of Rs.90,00,000/ Assessing Officer made the Act share premium has been additionally considered u/s 56(1) of the Act. The learned CIT(A), after analysing the assessment order and the evidence on record in meticulous detail from para 6.5 onwards, held that:  Only identity of some subscribers may have been  However, creditworthiness and genuineness were wholly unproved; Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 he Assessing Officer received information from the Investigation Wing indicating that M/s Payal Enterprises was providing accommodation entries. A notice issued under section 133(6) to the said concern remained unserved. The assessee was informed of this fact but failed to furnish an alternative address or any corroborative evidence to establish receipt of goods. Th learned CIT(A), noting absence of delivery proofs, transport documents, confirmations or discrepancies in stock records, rightly held that mere production of purchase bills is insufficient to establish genuineness. We concur that the assessee has failed substantiate the purchases, and therefore, the addition of stands confirmed. The ground 6 relate to share capital at Rs.50,55,980/ ground No. 7 relate to share premium of Rs.67,25,020/ ground No. 8 relate to share warrant of Rs.90,00,000/ made addition of all these three credits u/s 68 of share premium has been additionally considered u/s 56(1) The learned CIT(A), after analysing the assessment order and the evidence on record in meticulous detail from para 6.5 Only identity of some subscribers may have been However, creditworthiness and genuineness were wholly Venus Drugs and Cosmetics Ltd 6 ITA No. 5933/MUM/2025 he Assessing Officer received information from the Investigation Wing indicating that M/s Payal Enterprises was providing accommodation entries. A notice issued under section 133(6) to the said concern remained unserved. The assessee was informed of this fact but failed to furnish an alternative address or any corroborative evidence to establish receipt of goods. The learned CIT(A), noting absence of delivery proofs, transport documents, confirmations or discrepancies in stock records, rightly held that mere production of purchase bills is insufficient to establish genuineness. We concur that the assessee has failed to the addition of The ground 6 relate to share capital at Rs.50,55,980/-. The ground No. 7 relate to share premium of Rs.67,25,020/- and ground No. 8 relate to share warrant of Rs.90,00,000/-. The addition of all these three credits u/s 68 of share premium has been additionally considered u/s 56(1) The learned CIT(A), after analysing the assessment order and the evidence on record in meticulous detail from para 6.5 Only identity of some subscribers may have been established; However, creditworthiness and genuineness were wholly Printed from counselvise.com  Substantial judicial precedents relied upon by the assessee were distinguishable on facts;  The AO had justifiably applied the test of human probabilities, especially in view of th declining EPS;  The high share premium was wholly unjustified in a company with insignificant business performance. 7.1 The learned CIT(A) further relied on binding Supreme Court principles, including to pierce the corporate veil and examine the substance of transactions. He accordingly upheld the respective additions. The finding of the Ld. CIT(A) is reproduced as under: “6.5 Ground No. 7 to 10 and Additional Grounds (i).: pertains to the addition w.r.t. share capital raised during the year at significant premium despite the appellant company had submitted confirmations from major shareholders amounting to 86.96% along with the details of their address, PAN No., accounts, photocopies of all shareholders. Vide para 8 of the assessment order the AO has noted that the appellant company raised share capital amounting to Rs. 50,55,980/ of Rs. 67,25,020/ issued 5 share warrants of Rs. 18,00,000/ 90,00,000/-. Vide para 8.2 and 8.3 of the assessment order, the AO has discussed in detail including the names of 31 subscribers who have subscribed to the shares of the 50,55,980/- at cumulative premium of Rs. 67,25,020/ 8.4 to 8.33 and further para 9 to 11 elaborate details have been discussed by the AO completely establishing absence of the 3 conditions as envisaged in sec 68 of including regarding share warrants so issued. The AO has gone at length to establish that the appellant failed to establish all the three elements i.e. genuineness, creditworthiness and the identity of the share subscribers. I ha appellant before the AO as well as the documents submitted during the appellate proceedings and I observed that at best only identity Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 Substantial judicial precedents relied upon by the assessee were distinguishable on facts; The AO had justifiably applied the test of human probabilities, especially in view of the assessee’s weak financial position and The high share premium was wholly unjustified in a company with insignificant business performance. The learned CIT(A) further relied on binding Supreme Court principles, including McDowell & Co., that empower tax authorities to pierce the corporate veil and examine the substance of e accordingly upheld the respective additions. The finding of the Ld. CIT(A) is reproduced as under: 6.5 Ground No. 7 to 10 and Additional Grounds (i).: pertains to the addition w.r.t. share capital raised during the year at significant premium despite the appellant company had submitted confirmations from major shareholders amounting to 86.96% along with the details of their address, PAN No., accounts, photocopies of all shareholders. Vide para 8 of the assessment order the AO has noted that the appellant company raised share capital amounting to Rs. 50,55,980/- at the premium of Rs. 67,25,020/- during the year. Further, the appellant company issued 5 share warrants of Rs. 18,00,000/- each amounting to Rs. . Vide para 8.2 and 8.3 of the assessment order, the AO has discussed in detail including the names of 31 subscribers who have subscribed to the shares of the company to the extent of Rs. at cumulative premium of Rs. 67,25,020/ 8.4 to 8.33 and further para 9 to 11 elaborate details have been discussed by the AO completely establishing absence of the 3 conditions as envisaged in sec 68 of the Income Tax Act, 1961, including regarding share warrants so issued. The AO has gone at length to establish that the appellant failed to establish all the three elements i.e. genuineness, creditworthiness and the identity of the share subscribers. I have perused the documents filed by the appellant before the AO as well as the documents submitted during the appellate proceedings and I observed that at best only identity Venus Drugs and Cosmetics Ltd 7 ITA No. 5933/MUM/2025 Substantial judicial precedents relied upon by the assessee The AO had justifiably applied the test of human probabilities, e assessee’s weak financial position and The high share premium was wholly unjustified in a company The learned CIT(A) further relied on binding Supreme Court that empower tax authorities to pierce the corporate veil and examine the substance of e accordingly upheld the respective additions. The 6.5 Ground No. 7 to 10 and Additional Grounds (i).: This ground pertains to the addition w.r.t. share capital raised during the year at significant premium despite the appellant company had submitted confirmations from major shareholders amounting to 86.96% along with the details of their address, PAN No., ledger accounts, photocopies of all shareholders. Vide para 8 of the assessment order the AO has noted that the appellant company at the premium the appellant company each amounting to Rs. . Vide para 8.2 and 8.3 of the assessment order, the AO has discussed in detail including the names of 31 subscribers who company to the extent of Rs. at cumulative premium of Rs. 67,25,020/-. Vide para 8.4 to 8.33 and further para 9 to 11 elaborate details have been discussed by the AO completely establishing absence of the 3 the Income Tax Act, 1961, including regarding share warrants so issued. The AO has gone at length to establish that the appellant failed to establish all the three elements i.e. genuineness, creditworthiness and the identity of the ve perused the documents filed by the appellant before the AO as well as the documents submitted during the appellate proceedings and I observed that at best only identity Printed from counselvise.com appears to have established by the appellant. The appellant has squarely failed to e principles i.e. genuineness and creditworthiness of the share subscribers. Mere production of share application forms or certain documents/evidences pertaining to these transactions does not merely assist th (ii). It is further observed that both the appellant and the AO have cited judgments delivered by superior appellate forums. The AO primarily relies on the cases like McDowells [1985] 154 ITR 148 (SC), Azaadi Bachao Andolan & others v/s Union 563, Bhopal Fire & General Insurance Limited v/s Commissioner of Income Tax [1964] 53 ITR 108 and several others. Similarly, the appellant has primarily relied upon the case of Lovely Exports Pvt. Ltd. 216 CTR 195 and certain decisions of various benches of ITAT. While the judgments cited by the Appellant do bear some thematic relevance to the issues involved particularly on the aspect of procedural fairness case stands materially d comprehensive factual matrix brought out by the Assessing Officer. The assessment order, spanning various paragraphs, incorporates detailed analysis of financial records, reasoning, circumstances and findings which go bey Furthermore, the Assessing Officer has relied upon binding decisions of the Hon'ble Supreme Court which have upheld the authority of the tax department to pierce the veil of form and exam surrounding circumstances and preponderance of human probability. Therefore, the legal propositions advanced by the Appellant, though not without academic merit, do not sufficiently dislodge the cogent findings r based on a broader evidentiary foundation. Various superior appellate forums have held in various cases that establishing subscriptions through banking channels or submitting names, PAN numbers or ITRs of the subscribers/inv establish the other 2 limbs of the mandated requirements. Regarding the arguments with respect to the diluted EPS and applicability of section 56 it may be seen that it defies reason as to why the subscriber would invest at such consistently loss making company or in a company showing meager profits. The AO's remarks with respect to consistently decreasing EPS since last 4 years (from AY 2008 tabulated in para 8.12 (a) is consistent wit supports his findings. (iii). Having considered the same at length, I find that the arguments taken by the appellant are not able to assail the findings recorded Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 appears to have established by the appellant. The appellant has squarely failed to establish the other 2 limbs of the relevant legal principles i.e. genuineness and creditworthiness of the share subscribers. Mere production of share application forms or certain documents/evidences pertaining to these transactions does not merely assist the appellant. (ii). It is further observed that both the appellant and the AO have cited judgments delivered by superior appellate forums. The AO primarily relies on the cases like McDowells [1985] 154 ITR 148 (SC), Azaadi Bachao Andolan & others v/s Union of India 256 ITR 563, Bhopal Fire & General Insurance Limited v/s Commissioner of Income Tax [1964] 53 ITR 108 and several others. Similarly, the appellant has primarily relied upon the case of Lovely Exports Pvt. Ltd. 216 CTR 195 and certain decisions of various High Courts and various benches of ITAT. While the judgments cited by the Appellant do bear some thematic relevance to the issues involved particularly on the aspect of procedural fairness-their applicability to the present case stands materially diluted in view of the specific and comprehensive factual matrix brought out by the Assessing Officer. The assessment order, spanning various paragraphs, incorporates detailed analysis of financial records, reasoning, circumstances and findings which go beyond mere reliance placed by the appellant. Furthermore, the Assessing Officer has relied upon binding decisions of the Hon'ble Supreme Court-including McDowell & Co., which have upheld the authority of the tax department to pierce the veil of form and examine the substance of a transaction based on surrounding circumstances and preponderance of human probability. Therefore, the legal propositions advanced by the Appellant, though not without academic merit, do not sufficiently dislodge the cogent findings recorded in the assessment order based on a broader evidentiary foundation. Various superior appellate forums have held in various cases that establishing subscriptions through banking channels or submitting names, PAN numbers or ITRs of the subscribers/investors is not sufficient to establish the other 2 limbs of the mandated requirements. Regarding the arguments with respect to the diluted EPS and applicability of section 56 it may be seen that it defies reason as to why the subscriber would invest at such a large premium in a consistently loss making company or in a company showing meager profits. The AO's remarks with respect to consistently decreasing EPS since last 4 years (from AY 2008-09 till AY 2011 tabulated in para 8.12 (a) is consistent with the records and supports his findings. (iii). Having considered the same at length, I find that the arguments taken by the appellant are not able to assail the findings recorded Venus Drugs and Cosmetics Ltd 8 ITA No. 5933/MUM/2025 appears to have established by the appellant. The appellant has stablish the other 2 limbs of the relevant legal principles i.e. genuineness and creditworthiness of the share subscribers. Mere production of share application forms or certain documents/evidences pertaining to these transactions does not (ii). It is further observed that both the appellant and the AO have cited judgments delivered by superior appellate forums. The AO primarily relies on the cases like McDowells [1985] 154 ITR 148 of India 256 ITR 563, Bhopal Fire & General Insurance Limited v/s Commissioner of Income Tax [1964] 53 ITR 108 and several others. Similarly, the appellant has primarily relied upon the case of Lovely Exports Pvt. various High Courts and various benches of ITAT. While the judgments cited by the Appellant do bear some thematic relevance to the issues involved particularly their applicability to the present iluted in view of the specific and comprehensive factual matrix brought out by the Assessing Officer. The assessment order, spanning various paragraphs, incorporates detailed analysis of financial records, reasoning, circumstances and ond mere reliance placed by the appellant. Furthermore, the Assessing Officer has relied upon binding including McDowell & Co.,- which have upheld the authority of the tax department to pierce the ine the substance of a transaction based on surrounding circumstances and preponderance of human probability. Therefore, the legal propositions advanced by the Appellant, though not without academic merit, do not sufficiently ecorded in the assessment order based on a broader evidentiary foundation. Various superior appellate forums have held in various cases that establishing subscriptions through banking channels or submitting names, PAN estors is not sufficient to establish the other 2 limbs of the mandated requirements. Regarding the arguments with respect to the diluted EPS and applicability of section 56 it may be seen that it defies reason as to a large premium in a consistently loss making company or in a company showing meager profits. The AO's remarks with respect to consistently decreasing 09 till AY 2011-12) as h the records and (iii). Having considered the same at length, I find that the arguments taken by the appellant are not able to assail the findings recorded Printed from counselvise.com by the AO in detail and the judicial pronouncements relied upon by the AO exhibit more applicability than that relied upon by the appellant. Accordingly, I am constrained to dismiss the relevant grounds of appeal and to confirm the additions on account of unexplained cash credit being share capital to the extent of Rs. 50,55,980/- share premium to the extent of Rs. 67,25,020/ share warrants to the extent of Rs. 90,00,000/ hereby confirmed. 7.2 After going through the findings of the learned CIT(A), we find that the order is cogent, reasoned, and supported by both facts law. No rebuttal material has been placed before us to dispute these findings. 8. Having regard to the totality of the facts of the case, and in absence of any contrary evidence filed by the assessee before us, we find no infirmity in the detailed and learned CIT(A). The assessee has not discharged its burden under section 68 nor established the business purpose of various expenditures. 9.The respective grounds of appeal are accordingly dismissed. 10. In the result, the appe Order pronounced in the open Court on Sd/- (SANDEEP GOSAIN JUDICIAL MEMBER Mumbai; Dated: 26/11/2025 Rahul Sharma, Sr. P.S. Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 by the AO in detail and the judicial pronouncements relied upon by hibit more applicability than that relied upon by the appellant. Accordingly, I am constrained to dismiss the relevant grounds of appeal and to confirm the additions on account of unexplained cash credit being share capital to the extent of Rs. share premium to the extent of Rs. 67,25,020/ share warrants to the extent of Rs. 90,00,000/ confirmed.” After going through the findings of the learned CIT(A), we find cogent, reasoned, and supported by both facts No rebuttal material has been placed before us to dispute these Having regard to the totality of the facts of the case, and in absence of any contrary evidence filed by the assessee before us, we find no infirmity in the detailed and well-reasoned order of the learned CIT(A). The assessee has not discharged its burden under section 68 nor established the business purpose of various The respective grounds of appeal are accordingly dismissed. In the result, the appeal of the assessee is dismissed. ounced in the open Court on 26/11/2025. - Sd/ (SANDEEP GOSAIN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Venus Drugs and Cosmetics Ltd 9 ITA No. 5933/MUM/2025 by the AO in detail and the judicial pronouncements relied upon by hibit more applicability than that relied upon by the appellant. Accordingly, I am constrained to dismiss the relevant grounds of appeal and to confirm the additions on account of unexplained cash credit being share capital to the extent of Rs. share premium to the extent of Rs. 67,25,020/-, and share warrants to the extent of Rs. 90,00,000/- are After going through the findings of the learned CIT(A), we find cogent, reasoned, and supported by both facts and No rebuttal material has been placed before us to dispute these Having regard to the totality of the facts of the case, and in absence of any contrary evidence filed by the assessee before us, we reasoned order of the learned CIT(A). The assessee has not discharged its burden under section 68 nor established the business purpose of various The respective grounds of appeal are accordingly dismissed. al of the assessee is dismissed. /11/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Venus Drugs and Cosmetics Ltd ITA No. 5933/MUM/2025 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Venus Drugs and Cosmetics Ltd 10 ITA No. 5933/MUM/2025 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "