Income Tax Appellate Tribunal - Jabalpur
Deputy Commissioner Of Income Tax ... vs M/S Mohit Minerals Pvt.Ltd., New Delhi on 1 February, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
JABALPUR BENCH, JABALPUR
Before Dr. B. R. R. Kumar, Accountant Member
Sh. Yogesh Kumar US, Judicial Member
ITA No. 25/JAB/2020 : Asstt. Year: 2016-17
Mohit Minerals Pvt. Ltd., Vs DCIT,
19-20, First Floor, TDI Mall, Fun Central,
Cinema, Moti Nagar, Jabalpur
New Delhi 110015
(APPELLANT) (RESPONDENT)
PAN No. AAECM 0448 B
ITA No. 42/JAB/2020 : Asstt. Year: 2016-17
DCIT, Vs Mohit Minerals Pvt. Ltd.,
Central, 19-20, First Floor, TDI Mall, Fun
Jabalpur Cinema, Moti Nagar,
New Delhi 110015
(APPELLANT) (RESPONDENT)
PAN No. AAECM 0448 B
CO No. 1/JAB/2021 : Asstt. Year: 2016-17
Mohit Minerals Pvt. Ltd., Vs DCIT,
19-20, First Floor, TDI Mall, Fun Central,
Cinema, Moti Nagar, Jabalpur
New Delhi 110015
(APPELLANT) (RESPONDENT)
PAN No. AAECM 0448 B
Assessee by : Sh. Gautam Jain, Adv.
Sh. Lalit Mohan, CA
Sh. Monika Agarwal, Adv.
Revenue by : Sh. Garima Chaudhary, CIT-DR
Date of Hearing: 24.11.2023 Date of Pronouncement: 01.02.2024
2
ITA No. 25 & 42/JAB/2020
CO No. 1/JAB/2021
Mohit Minerals Pvt. Ltd.
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the orders of ld. C IT(A)-3, Bhopal dated 15.09.202 0.
2. In ITA No. 25/JAB/2020, following grounds have been raised by the assessee:
"1 . O n t he facts a nd in t he circ umsta nc es of t he c as e, the ld CIT (A) s hould ha ve held tha t Ld. A O ha s err ed on facts and i n la w i n passi ng t he o rder u/s 143(3) of Inc ome Ta x Ac t, 1961 on 28.12.2018 determini ng the total inc ome at Rs.71,30,75,300/-inst ead of ac cepti ng the returned i nc ome of Rs. 13,95,80,360/-.
2. O n t he facts a nd in t he circ umsta nc es of t he c as e, the ld CIT (A) s houl d ha ve held t hat the Ld. AO has err ed on facts a nd i n law i n pa ssing the a for esa id order wi th wholly pre- conceiv ed mi nd and i n gros s viola tion o f principl es of natural jus tice wi thout givi ng any oppor tunit y of being heard to the appella nt and wit hout taki ng int o consider ation the detailed a nd exhaus tiv e s ubmissions on facts a nd on la w made during t he course of as sessment proceedi ng.
3. O n t he facts and in t he circumsta nces of the cas e the ld CIT(A) was no t justifi ed in confi rmi ng addition of Rs.14,95,84,481/-
o n a cc ount of unexplai ned cash credit u/s 68 of the IT Act bei ng share capital and shar e pr emium on iss ue of fres h sha r es sol ely on the gr ound that direc tor s wer e not pro duced even t hough more t ha n adequa te dischar ge of onus as required u/s 68 to prov e the i dentit y and c redit worthines s of s harehol ders a nd genuine ness of tra nsac tio n wa s made by t he a ppellant incl udi ng explana tion of s ourc e t o s ource was a lso.
4. Consideri ng the fac t that the reas ons given by t he lower a uthorities for maki ng/ sustaining the a ddition of shar e ca pital are no t ba sed on a ny systematic a nd reali sti c enquiry conduc ted by them a nd a re fac tua lly inco rrec t and the factual position of case law r elied by the lower authorities ar e different from t he case of the appellant henc e the ld. CIT (A) shoul d ha ve del e ted t he a ddition of sha re ca pi tal for t his reas on als o.3
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
5. Consideri ng the fact that the app ellant, not only during t he ass essment procee di ng but also i n r ema nd and appellate pr oc eedi ng, has filed c onfirmati on lett ers , bank a ccounts , bala nc e s heet, profit & loss a /c , ITR c opi es e tc . of s ha re holders a nd all t he s ha re a ppli cation mone y has been rec eived by the a ppel la nt c ompa ny through ba nki ng c ha nnel a nd fr om t he bank a cc ount of respectiv e s har e appli cant acc ordingly the appella nt has discharged it onus. Besides this in a nother assessment proc eedi ng of appella nt o n simila r fa cts a nd gr ounds have produced all the direc tors of c ompanies who se share capital amo unt ha s been added a ga i nst s ummon iss ued unde r sec tion 131 and they have c onfirmed ther e subsc ripti o n to share capital in appella nt co mpa ny henc e the l ower a uthorities has erred in ma ki ng/s ustai ni ng the addition of share capita l without disc ha rgi ng onus shi fted on them.
6. Consideri ng the fa ct that shar es were is sued on a pr emi um as was calcula ted on the basis of method as s pecified in rul e 11UA. [(1 )] of the Act hence t he CIT(A) s hould have del eted a dditi on ofRs.14,95,84,481/- on a cc ount of unexplained cas h credit u/s 68 of the IT Act bei ng s hare c apital a nd s hare premi um on issue of fres h shar es."
3. In ITA No. 42/JAB/2020, following grounds have been raised by the Revenue:
"1 . On t he facts a nd i n the Circ ums ta nc es of the c as e, the L d. CIT(A) erred in del eti ng t he addition of Rs . 40,87,17,666/- made by the AO on acc ount of unexplained cas h c redi ts u/s 68 o f the Inc ome Tax Act , 1961.
2. On the facts and in the circ umstanc es of the c as e, the L d. CIT(A) erred i n deleti ng t he addition of Rs . 53,34,490/- mad e by the AO o n ac count of disal lo wance of reve rsal of pr ovis i ons o f taxes.
3. O n t he f acts and i n the cir cums ta nces of the cas e, the L d CIT(A) erred i n deleti ng t he addition of Rs . 98,58,302/- mad e by t he AO on ac count of unexplai ned expenditure."
4. In CO No. 1/JAB/2021, following grounds have been raised by the as sessee:
"1 . On the facts and i n the circumstances of the ca se , the Id CIT (A) s hould ha ve held tha t Ld. A O ha s err ed on facts and i n la w i n passi ng t he o rder u/s 143(3) of Inc ome Ta x Ac t, 1961 on 28.12.2018 determini ng the total inc ome at 4 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
Rs.71,30,75,300/- instead of ac cepting t he r etur ned income of Rs12,62,65,289/-(All tho ugh co nsidered as Rs.13,95, 80,360/- by AO)
2. On the fac ts a nd i n t he circumstances of t he cas e, the Id CIT (A) s houl d ha ve held t hat the Ld. AO has err ed on facts a nd i n law i n pa ssing the a for esa id order wi th wholly pre- conceiv ed mi nd and i n gros s viola tion o f principl es of natural jus tice wi thout givi ng any oppor tunit y of being heard to the appella nt and wit hout taki ng int o consider ation the detailed a nd exhaus tiv e s ubmissions on facts a nd on la w made during t he course of as sessment proceedi ng.
3. On t he fac ts and i n the circums ta nces of the cas e the ld CIT(A) wa s not justi fied i n co nfirmi ng addition of Rs . 14,95,84,481/- on acco unt of unexpl ained cas h c redit u/s 68 of t he IT Act bei ng shar e capit al a nd share premium on iss ue of fres h shar es s olely on the gr ound t hat direc tors w er e not pr oduced e ven though more than adequate dischar ge of o nus as required u/s 6 8 to pr ove the identity a nd cr editwor thi ness o f s hare holders a nd genui ne ness of transac tion was made by t he appellant i ncludi ng expla nation of s ourc e to s ourc e was also.
4. C onside ri ng the fact t ha t t he reasons gi v en by t he l ower a uthorities for maki ng/ sustaining the a ddition of shar e ca pital are no t ba sed on a ny systematic a nd reali sti c enquiry conduc ted by them a nd a re fac tua lly inco rrec t and the factual position of case law r elied by the lower authorities ar e different fr om the case of the ap pellant henc e the Id CIT (A) shoul d ha ve del e ted t he a ddition of sha re ca pi tal for t his reas on als o.
5. C onsideri ng the fact t hat t he appella nt, not onl y d uri ng the assessment pr oc eedi ng but also in remand a nd a pp ellat e pr oc eedi ng, has filed c onfirmati on lett ers , bank a ccounts , bala nc e s heet, profit & loss a /c , ITR c opi es e tc . of s ha re holders a nd all t he s ha re a ppli cation money has bee n rec eived by the a ppel la nt c ompa ny through ba nki ng c ha nnel a nd fr om t he bank a cc ount of respectiv e s har e appli cant acc ordingly the appella nt has discharged it onus. Besides this in a nother assessment proc eedi ng of appella nt o n simila r fa cts a nd gr ounds have produced all the direc tors of c ompanies who se share capital amo unt ha s been added a ga i nst s ummon iss ued unde r sec tion 131 and they have c onfirmed ther e subsc ripti o n to share capital in appella nt co mpa ny henc e the l ower a uthorities has er red i n maki ng /sustai ni ng t he a ddition of share capita l without disc ha rgi ng onus shi fted on them.
6. Conside ri ng the fact that shar es we re iss ued o n a premi um as was c alc ula ted o n the basis of method as spec ifi ed i n rul e 5 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
11UA. [(1 )] of t he Act henc e t he CIT(A) s hould ha v e del eted additi on of 14,95,84,481/- on acco unt Rs. of unexplaine d cas h credit u/s 68 of the IT Act being sha re ca pital and s hare pr emi um on i ss ue of fresh s hares .
7. On the fac ts and in the circums ta nces o f the c as e t he Id CIT(A) was fully justi fi ed in deleti ng the addition of R s 40,82,17,666/- under s ecti on 68 of the inc ome ta x act 1961 bei ng t owards unsecured loa n received by the as se ssee via ba nki ng channels and c reditworthiness a nd genui neness full y pr ov ed follo wed by fact that full am ount o f unsec ured loa n was fully repaid i n due course.
8. On the fac ts and in the circums ta nces o f the c as e t he Id CIT(A) was fully justi fi ed in deleti ng the addition of R s 53,34,490/-made by Ld AO on acc ount of disallowa nc e of rev ers al of prov ision of exc ess inc ome tax by wrongly consideri ng sa me to be deducti on.
9. On the fac ts and in the circums ta nces o f the c as e t he Id CIT(A) was fully justi fi ed in deleti ng the addition of R s 98,58,302/-made by L d AO on account of a dhoc disallowanc e of e xpens es wi thout pointi ng o ut a ny defect i n the books of accounts or v ouchers prod uced. "
5. The assessee filed retur n o f income for A.Y. 2016-17 declaring total inco me at Rs.13,95,80,360/-. The same was taken up for assessment u/s 143(3) of the Income Tax Act, 1961 and an order was passed on 28.12.2018 a ssessing the total income at Rs.71,30,75,300/- by making the following additio ns to the retur ned income:
1. On account of share capital and share premium on issue of fresh shares u/s 68 of the Act - Rs.14 ,95,84 ,48 1/- On account o f addition of unexplaine d cash cred it u/ s 68 of the Act - Rs.40,87,17,666/-
2. On acco unt of disallowance o f reversal of provision of taxes - Rs.53,34,490/-
3. On acco unt of unexplained expenditure - Rs.98,58,302/-6
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
6. Aggrieved, the assessee filed appeal before the ld. CIT(A).
7. The ld. CIT(A) deleted the addition made on account of unexplained cash credit u/s 68 of the Act of Rs.40 ,87,17,666/-, disallowance of reversal of provision of taxes of Rs.53,34,490/- and unexplained expenditure of Rs.98 ,58,302/- and confirmed additio n on account of share capital and share premium on issue of fre sh shares u/s 68 of the Act - Rs.14,95,84,481/-.
8. Aggrieved, both the revenue and the assessee filed appeal before the Tribunal.
ITA No. 42/JAB/2020(Revenue Appeal)Unexplained Ca sh Credit:
9. During the year, the assessee has taken unsecured loans from the fo llowing parties:
S. No . Na me of t he le nder Amo unt 1. Cent urion Infrastr uc ture Pvt . Ltd. 92,50,000 2. Goga Builders Pvt. Lt d. 85,00,000 3. MVS Leas i ng Pvt. Ltd. 11,00,00,000 4. Sag un C ommercials Pvt. Ltd. 1,50,00,000 5. Saibaba Fi nvest Pvt. Ltd. 4,00,00,000 6. Shyam Sundar B ajaj HUF 1,00,00,000 7. Si gnature Por tfolio Pvt. Lt d. 1,51,00,000 8. Ten Equi ty Ltd. 1,49,50,000 9. Vi sta Sal es Pvt. Ltd. 17,00,00,000 10. White Brothers Infrastruc tur e Pvt. Ltd. 1,16,00,000 7 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd. 10. Each le nder is examined as under: Cent urion Infrastructure Pvt. Ltd.
11. The assessee company has claimed to have received a loan of Rs. 98,02,370/- from the company on various dates which includes the amount o f interest credited also. It has a lso show n a sum o f Rs. 13,19,908/- as opening balance of loan in its books of accounts from the company. In the confirmation letter of the co mpany, again the address has been shown as 188, GF, Pocket 09, Sector 28, Rohini, New De lhi. The as sessee company has failed to produce any of the directors of the company despite the fact that sufficient opportunity was granted and the company belongs to New Delhi before the AO and hence, the AO held that ther e could not be any reason for not producing them for verification.
12. The Asse ssing Officer examine d the de tails of income offered by the co mpany in different AYs is a s under:
A.Y.2014-15 A.Y.2015-16 A.Y.2016-17 A.Y.2017-18 A.Y.2018-19 1,19,780 2,39,290 8,90,940 Not fi led N ot fi le
13. The company has not filed its return for the A.Ys. 2017-18 and 2018-19 till date. The AO held that this fac t deserves to be taken into consideration w hile deciding the genuineness of claim of the assessee in respect of loan fro m it. The AO held that the assessee filed confir mation letter o nly from this company and copy of the bank statement but has failed to file copy of its ba lance sheet for the period under consideration. Though, the loan has been claimed to be receive d in the year under consideration, the source s of the same have not been explained due to no-filing of the copy of balance sheet and 8 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
failure to produce any of the directors of the company and treated the same amount u/s 68 of the Income Tax Act, 1961.
14. The ld. CIT(A) held that the said lender is a reg ular tax assessee who has given loan to the asse ssee through ac count payee cheque. The assessee has filed copy of confirmation obtained from the le nder along w ith copy of his ITR and bank statement of all the years under considera tion. There was an opening balance of loan of Rs. 13,19,906/- as on 01.04.2015 and as sessee has received fresh loan of Rs. 92,50,000/- during the year under consideration. It was a lso held that the assessee has repaid loan of Rs. 27,19,906/- during the year under consideration and entire loan was repaid on 29.02.2020. The assessee has also paid interest of Rs. 6,13,745/- and IDS of Rs. 61 ,3757- has also been deducted. The brief details of repayment of loan are as under:-
AY Open ing Date of Amt Amt Paid Date of Mo de Paying Closing bal receiv ing receiv ed payment Bank bal 2016-17 13, 19,9 06 11. 4.20 15 7,00,000
16. 4.2015 7,00,000 27, 19,9 06 29.4.2015 RTGS Stan dard Cha rte red Bank
22. 5.2015 10,00,000
23. 5.2015 48,00,000
27. 5.2015 18,00,000
18. 8.2015 2,50,000
31. 3.2015 5,52,370 84,02,370 2017-18 84, 02,3 70 84,02,370 2018-19 84, 02,3 70 84, 02,3 70 01.4.2018 Trf. to White B rothe r
15. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender. The lender company got 9 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
amalgamated with Infrastructure Pvt. Ltd. and entire loan was repaid on 29 .02.2020.
Goga Builders Pvt. Ltd.
16. The assessee company has claimed to have received a loan of Rs. 90,76,128/- from the company on various dates which includes the amount o f interest credited also. It has a lso show n a sum o f Rs. 21,32,156/- as opening balance of loan in its books of accounts from the company. In the confirmation letter of the co mpany, again the address has been shown as 188, GF, Pocket 09, Sector 28, Rohini, New De lhi. The as sessee company has failed to produce any of the directors of the company despite the fact that sufficient opportunity was granted and the company belongs to New Delhi and there could not be any reason for not producing them for verification. The details of income offered by the company in different AYs is as under:
A.Y.2014-15 AY.2015-16 A.Y.2016-17 A.Y.2017-18 A.Y.2018-19 23,810 2,08,700 14,04,260 Not fi led Not fi le
17. The company has not filed its return for the A.Ys. 2017-18 and 2018-19 till date. T he assessee filed confirmation le tter only from this company but has failed to file copies of its balance sheet fo r the period under consideration and the bank statements co ntaining the lo an transactions. Though, the loan has been c laimed to be received in the year under consideration, the sources of the same have no t b een explained due to no-filing of the copies of balance sheet and bank statement and failure to produce any of the directors of the-
10ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
company and hence, the AO treated the amount u/s 68 of the Income Tax Act, 1961.
18. The ld. CIT(A) held that the said lender is a reg ular tax assessee who has given loan to the asse ssee through ac count payee cheque. The assessee has filed copy of confirmation obtained from the le nder along w ith copy of his ITR and bank statement of all the years under considera tion. There was an opening balance of loan of Rs. 21,32,156/- as on 01,04.2015 and as sessee has received fresh loan of Rs. 85,00,000/- during the year under consideration. The ld. CIT(A) he ld = the assessee has repaid loan of Rs. 21,32,156/- during the year under consideration and entire loan was repaid on 29,02.2020. The assessee has also paid inter est of Rs. 6,40,142/- and TDS of Rs , 64,014/- has also been deducted. The brief details of repayment of loan are as under;-
AY Opening Date of Amt Amt Paid Date of Mode Paying Cl osing
bal receiv ing receive d payment Bank bal
2016-17 21,32,156 21,32,156 29 04 ^015 RT6S Standard
Cha rte red
Bank
21.5.2015 20, 00,0 00
02.6.2015 11, 00,0 00
06.6.2015 12, 00,0 00
08 06 2015 20, 00,0 00
24.6.2015 22, 00,0 00
31.3.2015 5,76,128 90,76 ,128
2017-18 90,76,128
90,76 ,128
2018-19 90,76,128 90,76,128 01.4.2018 Trf . to
White
B ro the r
19. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction, identity of the lender and creditworthiness of the lender. The lender company got 11 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
amalgamated with M/s White Brothers Infrastruc ture Pvt. Ltd. and entire loan w as repaid on 29.02.2020.
MVS L easing Pvt. Ltd .
20. The assessee company has re ceived a loa n of Rs. 11,00,00,000/- from this company. Out of this a sum of Rs. 5,00,00 ,000/- has been shown as received on 03.10.2015 and Rs. 6,00,00,000/- has been shown to have been received on 30.01.2016. In addition, interest of Rs. 28,09,480 /- has been show n to be cre dited to its account. In the written submission filed on 22.12 .2 018, copie s of confirmation letter, bank book, and acknow ledgement of return and balance sheet for the A.Y. 2016-17 were submitted. The details of income offered by the company in different AYs is as under:
A. Y. 20 14 - 15 A. Y. 20 1 5 -16 A. Y . 20 16 -1 7 A. Y . 20 17 -1 8 A. Y . 20 18 -1 9 43, 21 ,7 4 0 57 ,4 9 ,76 0 2 2 , 27 ,13 0 1 ,2 9, 25 ,68 0 1 ,1 2, 11 ,68 0
21. None o f the directors of the company were produced for verification despite providing adequate oppor tunity for hearing and hence the genuineness of claim of lo an from the comp any cannot be accepted and hence, the AO treated the same amount u/s 68 o f the Income Tax Act, 1961.
22. The ld . C IT(A) held that the lender is a regular tax assessee w ho has given loan to the assessee has filed copy of confirmatio n obtained from the lender along with copy of his ITR and bank statement for the years under consideration. The assessee during AY 2016-17 has taken fresh loan of Rs.
11,00,00,000/-. The assessee has paid interest of Rs. 31,21,644/- and TDS of Rs. 3,12,164/- was deducted . The 12 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
assessee has fully repaid loan on 31.03.2020, the brief details of repayme nt of loan are as under:
AY Openin g bal Date of Amt received Amt Paid Date of Cheuque Paying Bank Closing bal receiving payment 2016-17 3.10.2015 5,00,00,00 0 30.1.2016 6,00,00,00 0 31.3.2016 28,09,480 11,28 ,09,480 2017-18 11,28,09,4 80 01.6.2016 2,00,00,00 0 1,00,000 20.9.2016 829146 Punjab National Sank 02.6.2016 70,00,000 2,00,00,00 0 21.9.2016 829147 Punjab National Bank 03.6.2016 1,30,00,00 0 24.1.2017 1,02,00,00 0 24.8.2017 75,00,000
31.3.2017 1,07,07,12 6 15,12 ,16,606 2018-19 15,12,16,6 06 31.3.2018 1,14,86,59 0 15,00,000 24.10 .2017 RTGS Axis Bank 50,00,000 06.12 .2017 896771 Punjab National Bank 50,00,000 19.12 .2017 324313 Punjab National Bank 2,00,00,00 0 23.1.2018 RTGS Axis Bank 98,00,000 23.2.2018 RTGS Axis Bank 1,02,00,00 0 23.2.2018 RTGS Axis Bank 11,12 ,03,196 2019-20 11,12,03,1 96 19.4.2018 1,00,00,00 0 1,00,00,00 0 18.4.2018 RTGS Axis Sank 19.11 .2018 1,00,00,00 0 1,12,03,19 6 29.6.2018 RTGS Axis Bank 20.11 .2018 1,00,00,00 0 1,00,09,00 0 16.07 .2018 RTGS Axis Sank 31.12 .2018 46,86,989 1,00,00,00 0 31.07 .2018 RTSS Axis Bank 29.03 .2019 11,58,411 1,00,00,00 0 08.08 .2018 RTGS Axis lank 1,00,00,00 0 21.08 .2018 RTSS Axis Bank 1,00,00,00 0 30.08 .2018 RTGS Axis Bank 67,00,000 27.09 .2018 RTGS Punjab National Bank 33,00,000 28.09 .2018 RTGS Punjab National Sank 2,0O,00 ,000 29.03 .2019 RTGS Axis Bank 8,45,400 30.03 .2019 RTGS Axis Bank 4,50,00,000 2020-21 4,50,00,00 0 08.04 .2019 2,00,00,00 0 25,00,000 28.05 .2019 RTGS Axis Bank 09.04 .2013 35,00,000 1,00,00,00 0 24.09 .2019 RTGS Axis Bank 09.04 .2019 65,00,000 1,00,00.00 0 25.09 .2019 RTGS Axis Bank 11.04 .2019 2,00,00,00 0 1,00,00.00 0 26.09 .2019 RTGS Axis Bank 18.04 .2019 1,00,00,00 0 2,00,00,00 0 27.09 .2019 RTGS Axis Bank 20.04 .2019 50,00,000 SO,00 ,000 18.12 .2019 RTGS Axis Sank 22.04 .2019 50,00,000 25,00,000 29.12 .2019 RTGS Axis Bank 23.04 .2019 70,00,000 50,00,000 21.12 .2019 RTGS Axis Bank 24.04 .2019 2,05,00,00 0 50,00,000 23.12 .2019 RTGS Axis Bank 25.04 .2019 75,00,000 1,50,00,00 0 26.12 .2019 RTGS Axis Bank 27.05 .2019 25,00,000 1,00,00,00 0 27.12 .2019 RTGS Axis Bank 31.03 .2020 81,61,916 3,00,00,00 0 31.12 .2019 RTGS Axis Bank 40,00,000 03.03 .2020 RTGS Punjab National Sank 20,00,000 16.03 .2020 RTGS Punjab National Sank 2,96,61,91 6 31.03 .2020 RTGS Punjab National Sank 13 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
23. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender and the loan was repaid in succeeding years.
Sagun Co mmercials Pvt . Ltd .
24. The assessee company has re ceived a loa n of Rs. 1,50,00 ,000/- from this company. In addition, interest o f Rs. 6,45,226/- has been credited to its account. I n the written submission filed on 22.12.2018, copies o f confirmation letter, bank book, acknowledgement of return and balance sheet for the A.Y. 2016-17 were submitted. The details of income offered by the company in d ifferent AYs is as under:
A. Y. 20 1 4 -15 AY .20 1 5 -1 6 A. Y. 20 16 - 1 7 A. Y. 201 7 - 1 8 A. Y .2 0 18 - 19 1,7 2 , 0 50 1 ,2 2, 720 98 ,5 7 0 94, 51 ,8 6 0 1 ,1 8, 33 ,86 0
25. None o f the directors of the company were produced for verification despite providing adequate oppor tunity for hearing and hence the genuineness of claim of lo an from the comp any cannot be a ccepted. The AO held that on examination of Balance Sheet of the company for the A.Y. 2 016-17, it is noticed that it has shareholder funds of Rs. 68 ,0 9,49,322/- on account o f share capital and Securities Premium Reserve. The company has accumulated deficit of Rs. 8,87,03 2/- generated over the years,- which shows that there is no meaningful business activity in it. It has shown revenues of Rs.1 ,92,69,848/- on account of sale o f shares and interest on- loan and net profit of Rs. 19,248/- only. On minute examination of the Balance Sheet, it is noticed that non-current investme nts of Rs. 30,25,84 ,945/- and short-term loans and advances of Rs.
14ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
35,14,34,355/- have been shown. Interest of Rs. 1 ,68,69,848/- declared in the Profit and Loss Account is not in proportion to the amount of short-term loans and advances. T he AO held that the company has also claimed loss from trading in deriva tives of Rs. 98,01,000/- which appears to be a regular feature of all the companies from which share capital/ unsecure d loans have been show n. T hus holding, the Assessing Officer treated the amount received as lo an u/s 68 of the Income Tax Act, 1961.
26. The ld . C IT(A) held that the lender is a regular tax assessee and has filed copy of confirmation obtained from the lender along with copy of his ITR and bank statement for the years under co nsideration. The assessee during AY 2016-17 has taken fresh loan of Rs. 1,50,00,000/-. The asses see has paid interest of Rs. 7,16,918/- and IDS of Rs. 71,692/- was deducted. The assessee has fully repaid loan on 31.03.2018. The brie f de tails of repayment of loan are as under:
AY Openin g bal Date of Amt. Am t Pa id Date of Mode Paying Cl osin g bal receiv in g received payment Bank 2016-17 17-09-2015 50,00,000 18-09-2015 50,00,000 22-09-2015 25,00,000 23-09-2015 2501000 31-03-2016 645 226 1,56,45,226 2017-18 1,56,45,226 03-06-2016 25,00,000 04-06-2016 25,00,030 07-06-2016 51,00,000 08-06-2016 49,00,000 09-06-2016 25,00,000 10-06-2016 25,00,000 13-07-2016 61,40,000 16-07-2016 25,00,000 18-07-2016 48,60,000 16-02-2017 30,00,000 17-02-2017 20,00,000 18-02-2017 25,00,000 15 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
21-02-2017 20,00,000
23-02-2017 19,00,000
24-02-2017 9,00,000
27-02-2017 2,00,000
31-03-2017 34,70,818 6,51,16,044
2018-19 6,51,16,044 31-03-2018 37,28,626 50,00 ,000 1.11.2017 RTG S Axis
Bank
50,00 ,000 6.11. 2017 RTG S Axis
Bank
1,00,00,00 9.11.2017 RTGS Punjab
0 National
Bank
65,00 ,000 14.11 .2017 RTGS Punj ab
National
Bank
50,00 ,000 16.11 .2017 RTGS Punj ab
National
Bank
50,00 ,000 18.11 .2017 RTG S Axis
Bank
45,00 ,000 22.11 .2017 RTGS Punj ab
National
Bank
56,55 ,212 16.01 .2018 RTG S Axis
Bank
56,50 ,774 18.01 .2018 RTG S Axis
Bank
58,11 ,890 26.02 .2018 RTG S Axis
Bank
55,83 ,972 27.02 .2018 RTG S Axis
Bank
27. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender and the loan was repaid in succeeding years.
Saibaba Finvest Pvt. Ltd.
28. The a ssessee company has received a loan of Rs.4 ,00,00,000/- from this company on 03.10 .2015. A sum of Rs.3 ,21,37,068/- was also outstanding at the star t of the year. In addition, interest of Rs. 22,83,541/- has been credited to its account. In the written submission filed on 22.12.2018, copies of confir mation letter, bank statement, and acknowledgement of return and balance sheet for the A.Y . 2016-17 were 16 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
submitted before the AO . The details of income offered by the company in different AYs is as under:
A. Y .2 0 14 - 15 AY .20 1 5 -1 6 A. Y. 201 6 - 1 7 A. Y .2 0 17 - 18 A. Y .2 0 18 - 19 6 1 , 54 0 7 1 , 08 0 15, 15 ,8 1 0 1 ,1 5, 62 ,28 0 1 ,2 5, 33 ,91 0
29. None o f the directors of the company were produced for verification despite providing adequate oppor tunity for hearing and hence the genuineness of claim of lo an from the comp any cannot be accepted. On examination of Bala nce Sheet of the company for the A.Y . 2016-17, the Assessing Officer held that the lender has shareholder funds of Rs. 38,61,12,887/- on account o f share capital and Securities Premium Reserve. The company has accumulated surplus of Rs. 44,6 3,998/- only which is insignificant in compar ison to the funds employed by it on account of share capital and thus shows that there is no meaningful business activity in it. Again the company has claimed loss fro m tr ading in de rivatives of Rs. 77,27,038/- which appears to be a regular feature of all the co mpanies from which share c apital/ unsecured loans have been shown. All the se companies have filed their re spective return till the assessment year 2016-17 by declaring either loss or very nominal income which in itself disproves the contention of the assessee regarding creditworthiness of them. Thus holding, the Assessing Officer treated the amount received as loan u/s 68 of the Inco me T ax Act, 1961.
30. The ld. CIT(A) held that the said lender is a reg ular tax assessee and a lso has filed copy of co nfirma tion obtained from the lender alo ng with copy of his ITR and bank statement of all the years under consideration. There was an opening balance of 17 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
loan of Rs. 3,21,37,068/- as on 01.04.2015 and assessee has received fresh loan of Rs. 4,00,00,000/- during the year under consideration. The ld. C IT(A) held that the assessee has also repaid loan of Rs, 3,00,00,0 00/- during the year under consideration and entire loan was repaid on 31.03.2018. The assessee has also paid interest o f Rs. 25,37,268/- and TDS of Rs. 2,53,727/- has also been deducted . The brief details of repayment of loan are as under:
AY Opening Date of Amt. Amt. Paid Date of Paying Closing bal bat receiv ing receive d payment Bank 2016-17 3,21,37,068 3.10.2015 4,0 0,00 ,000 3,00,00,000 17.06 .2015 RTGS Standard Ch arte red Bank
31.3.2016 22, 83,5 41 4,44,20,609 2017-18 4,44,20,609 29.6.2016 1,0 0,00 ,000 2,00,00,000 01.06 .2016 80348 6 Punj ab National Bank 31.3.2017 15, 23,1 38 2,00,00,000 02.06 .2016 80348 7 Punj ab 1,59,43,747 National Bank 2018-19 1,59,43,747 31.3.2018 12, 91,4 44 1,72,35,191 31.03 .2018 Axis B ank 2019-20 01.4.2018 1,72,35,191 31.12.2018 10, 47,9 94 28.3.2019 3,28,932 1.50,00,000 27.03 .2019 6,12,117 28.03 .2019 .
31. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction, identity of the lender and creditworthiness of the lender.
Shya m Sundar Bajaj HUF
32. The asse ssee company has received a sum of Rs. 1,00,00 ,000/- from the person on account of unsecured loans. Confir mation letter has been filed in respect of the loan claimed from the person but copies of bank statements were not filed. The AO stated that the per son was no t produced for verification.
18ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
33. During the course of assessme nt proceedings, vide reply to the show cause notice, the assessee company has claimed that it has complied with the test of identity o f the cred itors, creditworthiness of the creditors and genuineness of the transactions by furnishing various details such as confirmation letter s, cop ies of return of income, bank sta tements and balance sheets of such persons. The AO held that the assessee company has convenie ntly avo ided the issue of non-production of directors of these companies which becomes v ery important after statement of Sh. Prabhash Sharma, Director of Vis ta Sales Pvt. Ltd. from which on amo unt of Rs. 17,00,00 ,000/- has been claimed during the year. The AO held that Sh. Prabhash Sharma couldn' t even tell the address of the company even though he is one of the directors of the company. Many of the companies from whom such transactions have been claimed a re regis tered at New De lhi and directors of these companies were not produced despite the fact that sufficient opportunity of hearing was granted between 07.12.2018 to 19.12.2018 and AR of the assessee w as repeatedly asked to produce these persons for verification. T hus hold ing, the Assessing Officer trea ted the amount received as lo an u/s 68 of the Income Tax Act, 1961.
34. The ld. CIT(A) held that the said lender is a reg ular tax assessee and a lso has filed copy of co nfirma tion obtained from the le nder along with copy of bank statement of all the years under consideration. There w as an opening balance of loan of Rs. 36,15,401/- as on 01.04.2015 and assessee has received fresh loan of Rs. 1 ,00,00,000/- during the year under consideration. The ld. C IT(A) held that the assessee has also repaid entire loan of Rs. 1,38 ,06,353/- on 31.03.2016. The 19 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
assessee has also paid interest of Rs. 2,12,169/- and TDS of Rs. 21 ,217/- has also been deducted. The brief details of repayment of loan are as under:
AY Opening Date o f Amt rece ive d Amt Paid Date of Mode Paying Cl osin g bal receiv ing payment Bank bal 2016-17 36,15,401 24-1 1-2015 1,90,952 38, 06,3 53 24.11.2015 33134 277 Union Bank O f Indi a 10-12-2015 1,00,00,000 1,00,00,000 31.03.2016 33163 464 Union Bank Of Indi a
35. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s o the transaction & ide ntity of the lender and creditworthiness of the lender.
Signature Portfolio Pvt. Lt d.
36. The a ssessee company has received a loan of Rs.1 ,61,64,527/- from the co mpany on various dates w hich includes the amo unt of interest cr edited also. It has also shown a s um o f Rs.69,20,436/- as opening balance of loan in its books of accounts from the company. In the co nfirmation letter of the company, again the address has b een shown as 188, G F, Pocket 09, Se ctor 28 , Ro hini, New Delhi. The AO held that the assessee company has failed to produce any of the directors of the company despite the fact that sufficient opportunity was granted and the company belongs to New Delhi and there could not be any reason for not producing them for verification. The details of income offered by the company in different AYs is as under:
A. Y . 20 14 -1 5 A. Y. 20 15 -1 6 A. Y. 20 16 - 17 A. Y. 20 17 - 18 A. Y. 201 8 - 1 9 1 ,7 3, 980 3 ,0 2, 580 16, 12 ,2 0 0 N ot f ile d N ot f ile d 20 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
37. The AO held that the company has not filed its return for the A.Y . 2017-18 and A.Y . 2018-19 till date and this fact deserves to be taken into consideration while deciding the genuinenes s of claim of the assessee in respect of loan from it. The assessee filed confirmatio n letter o nly fro m this company and has not filed copies of its balance sheet for the period under consideration or bank statements containing the entr ies of loan transactions. Though, the loan has been claimed to be received in the year under consideratio n, the sources of the same have not been explained due to no-filing of the copies of balance sheet and bank stateme nts and failure to produce any of the dire ctors of the company. Thus ho lding, the Asses sing Officer treated the amount received as loan u/s 68 of the Income Tax Act, 1961.
38. The ld . C IT(A) held that the lender is a regular tax assessee w ho has given loan to the assessee has filed copy of confirmatio n obtained from the lender along with copy of his ITR and bank state ment of all the years under consideration. There was an opening balance of loan of Rs. 69,20,436/- as on 01.04.2015 and assessee has received fres h loan of Rs.1 ,51,00,000/- dur ing the year under consideration. The ld. CIT(A) held that the assessee has repaid loa n of Rs.69,20,436/- during the year under consideration and entire loan was repaid on 29.02.2020. The asses see has a lso paid interest of Rs. 11,82,808/- and T DS of Rs. 1,18,281/- has also been deducted. The brief details of repayment of loan are as under:
21ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
AY Opening Date of Amt. Amt. Paid Date of Mode Payin g Closing bal
bal receiv in g receiv ed payment Bank
2016-17 69,20,426 69,20 ,426 29.4.2015 RTGS
22.5.2015 35,00 ,000
22.5.2015 40,00 ,000
22.5.2015 19,00 ,000
04.6.2015 14,50 ,000
05.6.2015 24,00 ,000
24.6.2015 10,00 ,000
29.7.2015 8,50,000
31.3.2015 10,64 ,527 1,61,64,527
2017-18 1.61,64,527
1,61,64,527
2018-19 1,61,64,527 1,61, 64,5 27 01.4.2018 T rf. to
Whit e
B rothe r
39. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender. The lender company got amalgamated with M/s White Brothers Infrastruc ture Pvt. Ltd.
and entire loan w as repaid on 29.02.2020.
Ten Equity Ltd .
40. The AO he ld that in the Written Submiss ion filed on 22.12.2018, details of the co mpany such as address, PAN, share s allotted, bank accounts, assessing officer, name and address of directors, net worth of the company etc. have been submitted. Fro m the details filed, it is noticed that the company has been incorporated on 21.07.1994 . The company is promoted by the Director s of the assessee i.e., Mohit Minerals Pvt. Ltd. and the three Directors of the Company are Sh. Amit Bajaj, Smt. Shalini Bajaj and Sh. Shyam Sundar Bajaj. The AO held that despite this fact, none of the Director s of the company were produced for verification and no explanation in this regard was offered. It is highly improbable that a person 22 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
cannot even produce his family members w ho ar e residing at New Delhi for verification of contribution towards share capital. The details of income offered by the company in different AYs is as under:
A. Y. 20 14 - 15 A. Y. 2 0 15 -16 A. Y . 20 16 -1 7 A. Y. 2 0 17 -18 A. Y. 20 1 8 -19 5,0 3, 06 0 4,5 9, 76 0 0 0 94 00
41. The AO held that o n examination of Balance Sheet of the company for the A.Y. 2016-17, it is noticed that it has share holder funds of Rs. 12,91,49,326/- on acco unt of share capita l and Securities Premium Reserve. T he company has acc umulated deficit of Rs. 23,1 8,674/- generated over the years, w hich shows that there is no meaningful business activity in it. It has shown revenues of Rs . 60,746/- only on account of receip t of interest and net loss of Rs. 98,855/-. The AO he ld that the company is having no fixed assets in the balance shee t, which is also an important ind ica tor. Details of share holders of the co mpany have not been submitted. All the se facts clearly indicate that this company is a bogus/dummy entity created to route unaccounted funds of the assessee company in its books of accounts through a medium.
Thus hold ing , the Assessing Officer treated the amount received as loan u/s 68 of the Income Tax Act, 1961.
42. The ld. CIT(A) held that the said lender is a reg ular tax assessee and has filed copy of confirmation obtained from the lender along with copy of his ITR and bank state ment of all the years under consideration. T he asse ssee has received fresh loan o f Rs, 1 ,49,50,000/- during the year under consideration. The ld. CIT(A) held that the assessee has repaid loan on 23 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
31.03.2016 i.e. in the same year itself. The brief details of repayment of loan are as under:
AY Opening Date of Amt. Amt. Paid Date of Mode Paying Closing Sal receiv in g receive d payment Bank bal 2016-17 06-04-2015 49, 50,0 00 1,1 4,50 ,000 09.6.2015 RTS S HDFC 05-05-2015 65, 00,0 00 10, 00,0 00 16.9.2015 RTGS Standard Ch arte red Bank 11-09-2015 35, 00,0 00 25, 00,0 00 31.3.2016 33163465 Union Bank of In dia
43. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that assessee ha s explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender.
Vista Sales Pvt. Ltd. - From the AO
44. The assessee company received a loan of Rs. 17,00,00,000/- from the company out of which Rs. 7,00,000 has been s hown on 16.09.2015, Rs. 5,00,00,000/- on 27.10.2015 and remaining Rs. 5 ,0 0,00,000/- on 30.10.2015. In additio n, interest of Rs.64,88,87 7/- has been credited to its account. The company has filed its return for the A.Y. 2016-17 by showing address as Kargi Road, Bilaspur. The AO held that complete address of the company is not available even in the return of income. The details of income offered by the company in different AYs is as under:
A. Y . 20 14 -1 5 A. Y. 20 15 - 16 A. Y. 2 0 16 -17 A. Y. 20 1 7 -18 A. Y . 20 18 -1 9 1 4 , 45 0 30, 45 ,7 4 0 62, 34 ,9 4 0 1,8 2 , 2 3 ,690 1 ,1 4, 60 ,86 0
45. The AO held that in his statement, Sh. Prabhash Sharma, Director of M/s Vista Sales Pvt. Ltd. co uldn't even give the basic deta ils of the co mpany such as address of the premises, 24 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
bank accounts etc. He co uld not even tell as to which loc ality or building the company was situated at. His statement was recorded on 17.12.2018 which was temporarily concluded with the d irection issued to him to appear on 18.12.2018 at 10.30 AM sharp which was not complie d with by him. It was told by him that office o f the company was lo cated somewhere in Navi Mumbai but the person couldn' t mention the name of building or the locality. He was not able to even tell as to which floor of the building the company has its office . The AO held that all the se facts are very important particular ly in view of the fact that assessee has not only received share cap ital along with huge premium and unsecured lo ans in the curre nt year but also in many previous years from many entities. The AO he ld tha t it is also important to mention that most of such entities have some connec tion with Ko lkata, which is a p lac e known for providing accommodation entries. Investigations conducted in many cases of companies operating from Kolkata have established that the e ntry operators have routed unaccounted money of various beneficiaries through d ummy/bogus companies run by them to g ive it a shape of s hare capital/ unsecured loan.
46. The AO held that it is beyond imaginatio n that a person who is a Dire ctor of a company having given loan of Rs. 17,00,00,000/- to another company cannot tell the address of his co mpany even after asking for a very long time thro ugh repeated questio ns. Usually such kind a practice is noticed in dummy/bogus companies managed through some ind ividual for providing accommodatio n entries to various persons. This is the case of t he company, w hich has been establishe d in view of statement of Sh. Prabhash Sharma.
25ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
47. The company has shown shareholder funds of Rs.79,68,11 ,308/- on account of share cap ital, and Sec urities Premium Reserve. The company has shown revenues of Rs.1 ,27,58,956/- on acco unt of interest receiv ed which is highly disproportionate to short term loans and advances of Rs.45,89,26 ,575/- show n in the Balance Sheet. The AO held that in view of these facts, claim of genuineness of unsecured loan received from M/s Vista Sales Pvt. Ltd. canno t be accepted. In vie w of the statement of Sh. Prabhash Sharma reproduced above, the AO held that the claim of loan from M/s Vis ta Sales Pvt. Ltd . cannot be accepted. Thus hold ing , the Assessing Officer treated the amount received as loan u/s 68 of the Inco me T ax Act, 1961.
48. The ld. CIT(A) held that the said lender is a reg ular tax assessee and has filed copy of confirmation obtained from the lender along with copy of his ITR and bank state ment of all the years under consideration. T he asse ssee has received fresh loan of Rs. 17,00,00,000/- dur ing the year under consideration. The ld. CIT(A) held that the asse ssee has repaid entire loan on 31.03.2018. The assessee has also paid intere st of Rs,72,09,863/- and TD S of Rs. 7,20,986/- has also been deducted. The brief details of repayment o f loan are as under:
AY Openin g bat Date of Amt. Amt. Paid Date of Mode Paying Closing bal receiv ing received payment Bank 2016-17 16.09.2015 7,00,00,000 27.10.2015 5,00,00,000 30.10.2015 5,00,00,000 31.03.2016 64,88,877 17, 64,8 8,877 2017-18 17,64,88,877 23.09.2016 5,00,00.000 2,00, 00,0 00 27.7.2016 80354 5 Punjab Nati onal Bank 31.03.2017 57,58,643 50,00 ,000 29.7.2016 386892 Axis Bank 55,00 ,000 29.7.2016 386894 Axis Bank 26 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
45,00 ,000 01.8.2016 386897 Axis
Bank
50,00 ,000 02.8.2016 386899 Axis
Bank
1,00,00,000 03.8.2016 416471 Axis
Bank
4,35,00,000 06.8.2016 829094 Punjab
Nati onal
Bank
50,00 ,000 31.8.2016 416591 Axis
Bank
50,00 ,000 01.9.2016 416522 Axis
Bank
1,60,00,000 12.9.2016 416543 Axis
Bank
60,00 ,000 14.9.2016 416545 Axis
Bank
5,00,00,000 23.9.2016 829155 Punjab
Nati onal
Bank
5,00,00,000 23.9.2016 829154 Punjab 67, 47,5 20
Nati onal
Bank
2018-19 67,47,520 31.3.2018 5,46,549 72,94 ,069 31.3.2018 552469 Axis
Bank
49. Thus, after considering entire documents and evidences on record, the ld. CIT(A) held that that assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender.
White Brothers Infrastructur e Pvt. Ltd.
50. The assessee company has re ceived a loa n of Rs. 1,43,34 ,815/- from the company on var ious dates w hich includes the amount of interest credited also. In the confirmatio n letter of the company, the addres s has been show n as 188, GF, Pocket 09, Sector 28, Rohini, New Delhi. The assessee company has failed to produce any of the directors of the company despite the fact that sufficient opportunity was granted and the company belongs to New Delhi and there could not be any reason for not producing them for verification. The details of income offered by the company in different AYs is as under:
27ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
A. Y. 20 14 - 15 A. Y. 201 5 - 1 6 A. Y .2 0 16 - 17 A. Y. 20 17 - 18 A. Y. 20 18 - 19 5,6 8, 52 0 5,8 2, 87 0 8 ,2 0, 520 0 22, 45 ,9 5 0 51. The company has shown shareholder funds of
Rs.1 ,93,68,271/- on account of share capital and Securities Premium Reserve. A sum of Rs. 3,86,64 ,433/- has been shown as loan 3 advances to various persons out of w hich balance outstanding in the books of the assessee company is Rs.1 ,24,08,568/-. The AO he ld that the assessee is not having any fixed assets and share holder funds have been show n to be invested in loans given to the assessee company and others. In view of the failure on the part o f the assessee to produce the Directors of the company, it has failed to explain the sources of funds invested in loans claimed to be received by the assessee company. The share holder funds have been received in the previous years and the assessee company has claimed that the genuinenes s of the loan is estab lished by the fact that the loan is properly reflected in the Balance Sheet. Though, the loan has been c laimed to be received in the year under consideration, the sources o f the same are shareholders funds received in previous years and the same were not proved by the assessee company as it failed to produce any of the D irectors of the company. Thus ho lding, the Assessing Officer treated the amount received as lo an u/s 68 of the Income Tax Act, 1961.
52. The ld. CIT(A) held that the said lender is a reg ular tax assessee and has filed copy of confirmation obtained from the lender along with copy of his ITR and bank state ment of all the years under consideration. There was an opening balance of loan of Rs.19,2 8,250/- as on 01.04.2015 and assessee has received fresh loan of Rs. 1,16,0 0,000/- during the year under 28 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
consideration. The ld. CIT(A) held that the assessee has repaid loan of Rs.19,28,250/- during the year under co nsideration and entire loan was repaid on 29.02 .2020. The assessee has also paid interest of Rs. 8 ,96,183/- and TDS of Rs. 8 9,618/- has also been deducted. The brief details of repayment of loan are as under:
AY Opening bal Date of Amt. Amt. Paid Date of Mode Payin g Closing bal receiv ing receiv ed payment Bank 2016-17 19,28,250 21-05-2015 25,00 ,000 19,28 ,250 29.4.2015 RTGS Standard Charte red Bank 21-05-2015 30,00 ,000 22-05-2015 21,00 ,000 23-05-2015 3,00,000 02-06-2015 25,00 ,000 11-06-2015 7,00,000 16-07-2015 5,00,000 31-03-2016 8,06,565 1,24,06,565 2017-18 1,24,06,565 - - 1,24,06,565 2018-19 - -
1,24,06,565 1,24,06,565
2019-20 1,24,06,565 01.04.2018 3,36,43,025 4,00,000 19.7.2018 RTGS Axis Bank
31.12.2018 27,95,551 2,00,00,000 28.3.2019 RTGS Axis Bank
31.12.2019 9,11,741 13,56,882 30.3.2019 RTGS Axis Bank 2,8 0,00 ,000
2020-21 2,80,00,000 29.02.2020 20,75,376 3,00,75,376 29.2.2020 Punjab
National
Bank
53. Thus, after considering entire documents and evidences on record, the ld. CIT( A) held that the assessee has explained the genuinenes s of the transaction & identity of the lender and creditworthiness of the lender.
54. Having heard arg uments of both the parties who relied on the orders of Assessing Officer as well as the ld. CIT(A), we find that the ld. CIT(A) has gone by the facts of the case viz.
receipt of the amounts, filing of confirmations, rec eipts of loans during the year and ear lier years, copies of the bank state ment and IT Rs, interest paid, TDS deducted and also the repayment of the principle. Hence, based on the charts give n above with 29 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
regard to each and every loan party pertaining to the amounts received, repaid and interest paid, we decline to interfere with the order of the ld. CIT(A) on the issue of cash c redits u/s 68 of the Inco me Tax Act, 1961.
55. In the result, the appeal of the Revenue on this ground is dismissed.
Reversal of Provisions of Tax:
56. The AO dur ing the course of assessment proceedings observed that the assessee has claimed a deduction of Rs.42,89,007/- on account of prior ite ms. The deductio n was claimed on account of provisions of tax which w as in excess of actual tax paid . Therefore, the AO was of the view that any reversal of provision made for tax is no t an allowable expenditure as the correspo nding tax amount was not offered to tax by including it into previo us year and made addition of Rs. 53,34,490/- to the income o f the assessee.
57. The ld. CIT(A) held that assessee has filed the retur n of Income for A.Y 2015-16 declaring Gross Income of Rs.10,68,10 ,613/- and the to tal Tax Payable as per Retur n of income was Rs.3,63,04 ,926/- against w hich as sessee made a provision of Rs. 4,16,39,524/-.
58. The assessee he re has explained that in order to square up account of excess provision, in A.Y . 2016-17, amounting to Rs.53,34,598/- the same w as credited to profit and loss account. However, w hile filing return of income for A.Y. 2016- 17, this excess amount of Rs.53,34,598/- as credited in Profit & Loss Account was reduced from total profit as shown in audited 30 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
profit and loss acco unt so as to b ring correc t taxable profits . It was submitted that the AO under mistaken belie f has treated this ac counting entry as deduction claimed by the assessee and added back to the income of the asses see. Initia lly, the assessee has credited the P/L account w ith the excess provision amount of Rs.53,34,490/- and later on the s aid amount was debited to the P/L account making the re sultant was NIL. Thus, the AO was no t justified in making addition on acco unt of an accounting entry passed by the assessee for show ing tr ue and correct inco me.
59. Having gone through the details, we find no infr ac tion in the decision of the ld . C IT(A).
60. In the result, the appeal of the Revenue on this ground is dismissed.
Unexplained Ex penditure:
61. The Revenue has challenged deletion by the ld. C IT(A) of Rs.98,58,302/- made by the AO on acco unt o f ad-hoc 10% disallowance of expenses. T he AO vide para 30 of the assessment order has alleged that assessee despite several opportunities of being heard failed to produce bills/vouchers relating to expenses claimed by the assessee and therefore, disallowed 10% of the expenses claimed by the assessee under the head s mentioned on page no 44 & 45 of the assessment order.
62. The ld. CIT(A) held that all the details as required by the AO were furnished in time allotted by the AO, ho wever, the AO has not considered the evidences furnished during assessment 31 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
proceedings and made ad-hoc disallowance of 10% of the expenses. D uring the course of appeal proceedings also, the assessee fur nished all bills and vouchers w.r.t. expenses claimed under head given on page nos. 44 & 45 of the assessment order. The assessee in compliance furnis hed the relevant bills and vouchers. T he ld . CIT(A) himself has examined the expenses on te st check basis and came to a conclusion that the expenses debited to P/L account were supported by bills and vouchers.
63. The AO tailed to point and discrepancies in the books of accounts maintained by the assessee and the ld. CIT(A) has examined all the expenses and hence, we hold that the AO was not justified in making ad-ho c disallowance as per without bringing any specific instance of non business expenditure to fore. Hence, we decline to interfere with the ord er of the ld. CIT(A).
64. In the result, the appeal of the Revenue on this ground is dismissed.
ITA No. 25/JAB/2020 (Assessee Appeal)M/s Ten Equity Ltd.
65. This case of lender/subscr iber has been discussed in detail in this order while dealing with the issue of loans where in this entity has been found to be genuine. The ld. CIT(A) held tha t the loans given by this company are genuine and accep table but treated the share capital receipts as not-genuine. Since, the loans re ceived have already been considere d genuine by the ld. C IT(A), no contrary decision can be taken with regard to 32 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
the share capital subscribed by this company. Hence , the additio n made on this account is liab le to be deleted . In the result, the appeal of the asse ssee on this issue is allowed.
M/s Everglow Equity Leasing (P) Ltd.
66. The assessee company has received Rs. 46 ,59,39,000/- from this company against allo tment of 51,77 ,1 00 share s to it. In the written submission filed on 22.12.2018, details of the company suc h as address, PAN, shares allotted , b ank accounts, assessing officer, name and address of director s, net worth of the company etc. have been submitted. Fr om the details filed, the AO noticed that the company has been incorporated on 04.03.2010. Fro m the copy of accounts of the company, in the books of the assessee, the AO noticed that funds amo unting to Rs. 46 ,59,58,218/- were sho wn to be received in the previous years. A sum of Rs.94,50,000/- has been received from the company in addition to interest of Rs. 61,44,904 /- credited to the account in respect of interest for the year. The assessee company has claimed to have allotted shares for a total consideration of Rs.46 ,59,30,000/- and the balance amount of Rs. 1 ,56,14,122/- has been shown as refunded back to the company.
67. The AO held that the address of the compa ny of Shop No. 3, D-12/157, Sector 8 , Rohini, Delhi co uld not traced by Sh. lndrajeet Kumar, IT I w ho was deputed to conduct enq uir ies regarding the existence of the company at the address stated above. Sh. lndrajeet Kumar , IT I has submitted a report dated 11.12.2018 indicating that no such co mpany was operating at the address given. For the sake of reference, the relevant part of the Assess ment Order is reproduced below:
33ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
"Fr om the repo rt of the Inspec tor , whic h is s el f-expla na tory, it is abs ol utely cl ear that t he c ompa ny doesn't exis t at the a ddress menti oned i n the ret urn. Some o ther important fac ts a lso des erve to be consider ed. Though the ass esse e is regist ered at New Del hi, it has filed its retur n of inc ome for the AY 2016-17 wit h ITO Ward- 11(4), Kol kata . It has a bank acc ount in the Ka rur Vysya Ba nk Ltd., Shakespear e Sarani, Kol kata Bra nch, copy of whi ch has been submitt ed. From the details of t he compa ny, submitt ed on 22.12.2018, it is notic ed t hat one o f the direc tors S h. V aibhav Agrawal is resident of Fla t No. 712, Radhi ka Apa rt ment, Sect or 14, Dwa rka, New Delhi . Needles s t o menti on that des pite providi ng sufficient opportunity of heari ng t o prov e genuine ness of s hare capital and uns ec ured l oa n from va rious entiti es, only 2 pers ons were produc ed for verifica tion during t he c ours e of as ses s ment proc eedi ngs. Even o ut of these 2 pers ons, Sh. Pra bhash Sha rma, Direct or of M/s V ista Sal es Pvt . Ltd. c oul dn't even giv e the basic details of the c ompa ny s uch a s a ddress of t he premise s, bank acco unts etc. He c ould not even t ell as to whic h loc ality or buildi ng the c ompany was si tuated at . Hi s statement wa s rec orded on 17.12.2018 which wa s temporarily concluded wi t h t he dir ec tion issued t o him to appe ar on 18.12.2018 at 10.30 a. m. s ha rp whic h was not c omplied wit h by him. A gain a t the cost of repetition, it is stat ed that t he a ss ess ee has f ailed to produc e va rious shareholde rs/ unsec ured loan creditors for whic h no expla nati on has been o ffered ev er duri ng the c ours e of pro ce edi ngs. N on-compli anc e in produci ng the pers ons for verificati on i n itself s hows the dismal st ate of af fairs, whic h is fur ther stre ngthened by the s tat ement of S h. Pra bhash Sha rma who co uld not even tell the addr ess of his compa ny .
The details of i ncome offered by the company i n different AYs is as under:-34
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
A.Y . 2 0 14 - 15 A. Y. 2 01 5 -1 6 A. Y .2 0 16 - 17 A.Y . 20 17 - 18 A.Y . 20 18 - 19 36, 31 0 3,9 2, 90 0 8 8 , 04 0 36, 23 0 5,9 9, 11 0
On exa mi na tion of Bal ance S heet of the company for the A.Y. 2016- 17, it is noticed that it has s hareho lder funds of Rs . 48,47,69,775/- on acc ount of s hare capital and Sec urities Pr emi um Res erve. The compa ny has acc umulate d surpl us of Rs. 3 ,85,775/- only gener ated over t he years, which s hows t ha t ther e is no meaningf ul busi nes s activity i n it. It has shown r evenues of Rs . 79,63,266/- on a cc ount of receipt o f interest a nd net pr ofit of Rs. 88,038/-. The c ompany has claime d loss on deriva tiv e tra nsac ti ons of Rs . 70,20,365/-. On minut e exami nati on o f the Bala nce Sheet, it is noticed t hat non- current i nv es tme nts of Rs . 47,64,14,000/- hav e been shown. Out of this a mount, a sum of Rs . 46,59,39,000/- has been shown to be invested in the ca pita l of t he ass es see compa ny. Thus , almost the entire f unds of the company ha ve been c laimed to be i nv es ted i n share capital of the ass ess ee c ompany. It is also notic ed t hat in the precedi ng y ear the funds of t he compa ny were inves ted i n s hort te rm l oans and a dvanc es of Rs. 47,48,19,796/-, which have been diverted towa rds s ha re ca pital of t he ass es see co mpa ny. The compa ny is having no fix ed as sets in t he bala nce she et, whic h is also an important indica tor. Details of s hareholders of t he c ompany hav e not been s ubmitt ed. All thes e fa cts clearly i ndi c at e that t his compa ny is a bogus /dummy e ntity creat ed to route unacc ounted funds of t he ass es se e c ompa ny i n its books of ac counts thro ugh a medium."
Rishikesh Barter Pvt. Ltd.
68. For the sake of reference, the relevant part of the Assessment Order is reproduced below:
"The ass es se e c ompa ny has cla imed to hav e rec eived Rs.27,39,51,000/- from this c ompa ny a ga i nst allotment of 30,43,900 35 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
shares to it . In t he Written S ubmis sion filed on 22.12.2018, details of the co mpany s uch as a ddr ess, PAN, shares allott ed, ba nk acco unts, a ss es sing officer, name and addr ess of direc tors, net wort h of t he c ompa ny etc. ha ve bee n s ubmitted. From the details filed, it is notic ed that the c ompa ny has bee n i nco rporat ed on 20.02.2010. Fr om t he copy of a cc ounts of the c ompany, in the books of the ass essee , it is notic ed tha t funds amounti ng to Rs.21,03,96,678/- were s hown to be receiv ed in the prev ious y ears. A s um of Rs. 8,85,64,888/- has bee n s hown to be rec eiv ed from the compa ny i nc l udi ng i nter est credit ed to the ac c ount in respec t of loan. The as ses s ee company has claimed t o hav e allot ted s hares for a total considera ti on of Rs.27,39,51,000/- a nd t he b alanc e a mount of Rs. 2,50,10,5 66/- ha s been sho wn as refunded bac k t o the compa ny .
Again before commenti ng on the issue of cr edit-worthi nes s, it is ve ry impor ta nt to disc uss the physi cal existe nc e o f the compa ny at the prov ided address. From the copy of re turn for the AY 2016-17 of the c ompa ny, it is noticed t hat a ddress has been sho wn as A -08, Jyoti C ol ony , Mai n L oni Roa d, New Delhi . In this regard, Sh. Indr ajeet K umar, ITT was de puted to c onduct enqui ries r egardi ng the exist ence of t he compa ny at t he a ddress s tate d ab ove. Sh. Indr ajeet K umar, ITI has s ubmitted a r eport da te d 11.12.2018, whic h is repr oduc ed her eunder as the- fa cts m enti one d in t he report are very important and crucial :-
"R eport i n the c as e of M/s Rishi kes h Bart er Pv t. L td., A-08, Mai n Loni Road, Jyoti C ol ony, New Del hi "
As direc ted, I hav e visited the a bove m enti oned pre mises to conduct enquiries in the case of M/s Ri shi kesh Barte r Pvt. L td. on 11.12.2018. On re ac hing Jyoti C ol ony, New Del hi a t Main Loni Roa d, I se arc hed for premises havi ng No. A-08 fo r l oca ting t he above 36 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
menti oned company. The sa id c olony is a ver y ol d and dens ely popula ted are a, wherei n ho use numbers were fo und to be not menti oned at ma ny of t he houses. It was furt her notic ed t ha t vari ous houses are not having numbe rs i n a ny s eque nce. Mai n Loni Road is a round 5 0-60 feet wide and has mai nly shops /c ommercial establ is hme nts on it wherea s t he lanes a nd bylanes have residential hous es built on them. Aft er exte nsive enquiries , I was able to loc ate two premise s having num ber A-08 but t he above menti oned compa ny was not found at a ny of t hese two addr ess es des pite maki ng my bes t efforts for l oca ting it. Details o f the two pr emis es having number A-08 is s tate d bel ow :
1. Hous e no. A-08, Mai n Lo ni Roa d, Jyoti Col ony , New Del hi is a shop on which board/hoardi ng of M/s DTH Sales was found. On the said hoardi ng, tel ephone number 011-22831275 and Mob -
9811078215 was menti oned. This s hop was found to be clos ed at the time of my visit. I enquired with a pers on named S h. Ja g Mohan who is- runni ng a s hop of building mat erial in the adjoi ni ng premis es a nd it was told by hi m that M/s DTH Sales was i nv olve d i n Tradi ng of Timber. I t was furthe r s tated by him t hat the shop is closed on Tue sday. On enquiry with S h. Ja g Mo han, it was stated by him that he is not a ware of a ny company in the na me of M/s Ris hi kesh Bar ter Pvt. Ltd. runni ng from the s aid premises of Ho use No. A -08, Mai n Lo ni Ro ad, Jyoti C ol ony, N ew Del hi.
2. A hous e havi ng No. A -08 was further locat ed in Jyoti C olony at a distanc e of a bout 80-100 metres a way fr om premises menti oned at Sl. No. 1 a bove which i s a residenti al hous e owned by S h. Ja ved H ussai n havi ng Mo bil e No. 9891187786. Sh. Ja ved Huss ai n wa s not found a t home a nd his wife st ated that they ar e residing i n t he ho use for t he las t 30 yea rs . It was furthe r stated by her tha t she is not aware of a ny 37 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
company i n the name of M/s Rishikesh Bart er Pvt . Ltd. bei ng run from the said premis es .
In view of t he abov e fac ts , it is clear that t he compa ny na med M/s Rishi kesh Barte r Pvt. L td. was not found to be av ailable at the addr ess A -08, Mai n L oni R oa d, Jyoti Col ony, N ew Del hi . Copies of phot ographs of both the premis es are enc l os ed with the repor t for ki nd reference.
Fr om the report of the Insp ector, w hich is self-expla na tory, it is abs ol utely cl ear that t he c ompa ny doesn't exis t at the a ddress menti oned i n the ret urn. Some o ther important fac ts a lso des erve to be consider ed. Though the ass esse e is regist ered at New Del hi, it has filed its retur n of inc ome for the AY 2016-17 wit h ITO Ward- 4(1), Kolkata. It has a bank ac count i n the Karur Vysya Ba nk Ltd., Shakespear e Sa rani , Kol ka tta B ranc h, which is t he s ame bank a nd branch whe re the acc ount of the ot her s hareholder company i .e., Evergl ow Equity L easi ng Pvt. Ltd. i s mai ntained. A copy of bank stat ement has been s ubmitt ed. N eedl ess t o mention that des pite providi ng s uffic ient opportunity of hea ri ng, no di rec tor of the compa ny was produc ed for ver ification duri ng the c ours e of assessment proc eedi ngs. No n-compliance i n pro duci ng the pers ons for veri fi cation i n it s hows the dismal st ate of a ffair s.
The details of i ncome offered by the company i n different AYs is as under:-
A. Y . 20 14 -1 5 A. Y . 20 15 -1 6 A. Y . 20 16 -1 7 A. Y. 2 0 17 -18 A. Y . 20 18 -1 9 1 8 , 27 0 2 ,0 5, 420 1 ,4 4, 430 63, 29 0 2 8 , 56 ,31 0 On exa mi na tion of Bal ance S heet of the company for the A.Y. 2016-
17, it is noticed that it has s hareho lder funds of Rs . 45,31,57,254/- on acc ount of s hare capital and Sec urities Pr emi um Res erve. The compa ny has acc umula ted s urpl us of Rs. 36,934/- only genera ted over t he years, which s hows t ha t ther e is no meaningf ul busi nes s 38 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
activity in it. It has shown revenues of Rs. 1 ,02,23,285/- on a cc ount of r eceipt of i nter est and net profit of R s. 1,44,430/-. It is fur ther noticed that the c ompa ny has cla imed loss on derivative tr ansa ctions of Rs . 94,19,808/- whi ch is identica l to t he cas e of the previ ous c om pany i .e., Evergl ow Equi ty Leasi ng Pvt. Ltd. On mi nute exami nati on of the B alance Sheet, it is notic ed tha t non-c ur rent investments of R s. 29,39,51,000/- ha ve been s hown. O ut of t his amo unt, a sum of Rs. 27,39,51,000/- has been shown to be i nves ted in t he ca pital of the ass ess ee c ompany. It is als o noticed t hat in the precedi ng y ear the funds of t he compa ny wer e inves ted i n s hort te rm l oans and a dvanc es of Rs. 39,36,23,393/-, which have been diverted towa rds s ha re ca pital of t he ass es see co mpa ny. The compa ny is having no fix ed as sets in t he bala nce she et, whic h is also an important indica tor. Details of s hareholders of t he c ompany hav e not been s ubmitt ed. All thes e fac ts clearly i ndi c ate tha t t his compa ny is a bogus /dummy e ntity creat ed to route unacc ounted funds of t he ass es se e c ompa ny i n its books of ac counts thro ugh a medium."
69. The ld. CIT(A) affir med the actio n of the Assessing Officer holding that the AO on independent enquiry observed tha t the se companies have lo w cap ital, high re serves and s urplus, low or no turnover, corresponding low expenses, low profits or loss etc. The reserves and surplus were matched with equiva lent investment in be neficiary companies o r other shell companies. The pattern of expenditure was a lso found to be similar i.e. expenditure on salary and few overheads. The ld. CIT(A) held that these companies are having income and not doing any business a giving accommodation entries in the garb of share capital. The ld. CIT(A) held that from the perusal of the details/documents, it is clear that the lenders was no t having any business activity, having meager income from w hich 39 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
it is clear that it was paper/she ll companies of meager means and engaged in giving accommodation entries to the beneficiaries in the garb of share capital includ ing high share premium. The ld. CIT(A) held that the above mentio ned companies were not doing any business activ ities and these were engaged in giving accommodation entries. The ld. C IT(A) relied on the judgments of Hon'ble Delhi High Court in the cases of CIT Vs. Nova Promo ters and Finlease (P ) Ltd. (2012) 342 ITR 169 (Del) and CIT Vs. N. R. Portfolio Pvt. Ltd.(2014) 264 CTR 258 (Del), Hon'ble Kolkata High Court in the case of Rajmandir Esta te Pvt. Ltd. (2016). For t he sake of ready reference, the relevant part of the adjudication of the ld. CIT(A) is reproduced as under:
"The genui neness of t he transa ction were also doubted by the AO wherei n the investors did not ha ve a ny bus i ness /project i n ha nd a nd is merely a pers ons of meager mea ns, as it is brought on rec ord that these lenders are persons of mea ger mea ns dec l ari ng nomi nal income a nd hi s Ba lance S heet /s ta teme nt of affairs rev ealed t ha t he hav e otherwise insi gni fic ant as set s othe r tha n inves tment in the appella nt. Secti on 68 of t he Act ca st onus on the a ppellant to sa tisfy the i ngredients of Sectio n 68 to establis h the ide ntity a nd creditwo rthi ness of t he c redit ors and to esta bli sh the genuine ness of the transa ctions. O nce appella nt filed the basic detai ls s uc h a s name and addr ess of credi tor, PA N i ncom e ta x ret ur n, confirma ti on a nd bank s tat ement, the i niti al onus gets discharged but sinc e, t he AO has doubted the c reditworthiness of the i nvest ors and ge nui neness of the tra nsacti on as per the rea sons ci ted and set out abov e, the onus s hifts bac k t o t he appel lant compa ny to o ffer a n explana tio n to the satisf acti on of the AO as cont emplated u/s 68 of the Act whic h could have been dis charged by produci ng t he lenders befor e the AO so tha t tr uth behind the smok escreen c ould have been unrav el ed by 40 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
the AO by i nt err ogati ng t hem. The burden/onus is c ast o n the appella nt a nd the appella nt is req uired to ex plain to the sa tisfac tion of the AO cumulatively about the identify a nd capa city / creditwo rthi ness o f the creditors al ong with the genui nenes s of the tr ansa ction. All the c ons tituents are required to be cumulativ ely satisfi ed. If one or mor e of them is abs ent, then the AO c an ma ke the additio ns u/s 68 of the Act as an i nc ome. The fa c t rem ai ns that the ap pella nt is priva te li mited company, for whic h the onus as required u/s 68 of the Act is ver y heavy to prov e ide ntity a nd capacity of the lenders a nd genui neness of t he tra nsac tio n, in vi ew of the abov e disc ussion, I a m of the c onsidered view t hat merely submissi on of the nam e and address of the i nvestors , inc ome, tax ret urns, Ba lance Sheet /st atement of affai rs of the investors a nd bank s tat ement is no t sufficient as t he AO is t o be s atisfied as to their identity and credi tworthi ness a s well as to the genui nenes s of the trans acti on e ntered i nto. The alleged i nvest ors were not found IO be in existenc e and t hus, t he onus s hi fts bac k to t he a ppellant to prod uce the lenders before the AO a nd if t he appella nt falters , the additi ons can be made u/s 68 of the Act. S ec tion 68 o f t he Ac t has bee n amended by Fi nanc e Ac t 2012 w.e.f. 01-04-2013 where by the onus is cast upo n the appellant t o j ustify the s ourc e of s hare ca pital incl udi ng sha re premi um, to explain the source of the s ourc e of raising t he sha re capital incl uding share premium whic h has been held to be cla rific atory in nature. In the present cas e, the a ppell ant could not prove t he identity a nd credit wort hi ness of the alleged investors and the genui neness of the s hare ca pi tal including s ha re premi um. Bei ng compa ny , it was t herefore, viable a nd proper a nd duty on t he part of t he appella nt to pr ove genui neness of the tr ansa ction but the fac t remai ns t hat the a ppellant c ould not prove the sa me. The i nv est ors were ha ving no mi nal inc ome. This company is ha vi ng v ery i ns ignificant a mo unt of inc ome fo r t he period under considera tio n and henc e their creditworthi nes s is also not establ is hed. The M.P. High C ourt held i n the cas e of CIT vs . Rathi 41 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
Fi nlease L td wherei n cons ideri ng the jud gment of H on'ble Supreme Court i n the cas e o f C IT vs. S teller Invest ment a nd the j udgment of Ho n'bl e S upr eme Court i n the case of Lovely Export Ltd., H on'bl e High Court has held that each and eve ry tra ns ac tion of s hare applicatio n mo ney inv olvi ng application of provis i ons of s ection 68 in mat ter of c ontri buti on of s hare application/s hare ca pital a nd whether this onus o n the ass esse e has been disc ha r ged or no t has to be appreciat ed on totality of evide nces a vail abl e on r eco rd a nd surroundi ng facts and circumsta nces of the case.
The cre ditwort hi ness or genui neness of tra ns acti ons depends on whether the parti es ar e r el ated or known t o eac h ma nner or mode by which parti es approached each ot her, whether tra ns ac tion w as ent ered int o thr ough writt en document ati on to protect i nvestment whether i nves tor profes ses a nd was a n angel i nv es tor, qua ntum of money , cr edi tworthi ness of recipi ent, object and purpo se for whic h pay ment/inv est ment was ma de, e tc . Cer tificat e of incorpor ati on of compa ny , pay ment by banking c hannel , etc, c annot in all cas es ta ntamount to s atisfactory disc harge of onus. The i nvestors ar e not having credi tworthiness to i nv est to the t une of Rs.14,95,84,481/-. The le nder c ompani es ar e hardly ea rni ng a ny i nc ome to inves t s uc h an amo unt as share ca pital i ncludi ng share pr emium to the appella nt. Therefor e, it is held that transac tion is not genui ne. These c ompa ni es have no cr editwort hi ness , financi al worth or regular res ourc es to justify, s hort term borrowi ngs . The appell ant has no t di sc har ge d the ge nui neness of t he trans acti on. The appella nt has not es tablis hed the I ngredients of s ect ion 68 of the I.T. Act. Therefore , t he c redit is not acceptable. C reditworthi nes s is not prov ed by s howi ng issue a nd rec eipt of a che que or by furnishing a c opy of state ment of bank account , when circ umsta nc es requires that t here s houl d be some mor e evidenc e of po sitive na ture to ensur e that the subscribe r ha d made genui ne i nv estm ent. In the followi ng cases ITAT, Indore bench a nd other Judicial Authorit y held as under:-42
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
1. Asses see has to establish id entity of s ubs cribers to s hare capital a nd prove their credit worthiness and genui neness of tr ansa ction; furnishi ng of i nc ome-ta x file numbers may not be sufficiency to discharge the burden - CIT v. Niv eda n Vanijya Niy oja n L td. [2003] 130 Ta xman 153 (Cal ).
2. Share Application Mone y - Additi on is c alled for - As sess ee obtai ned loan and also r eceived s hare a pplication money - AO doubt ed the i dentity, genui neness and creditwort hiness of these cre dits - A O ma de ad dition f or s ame u/s . 68 - CIT(A) held that the i ngredients of s ecti on 68 are not sa tisfied .
Ho wever, i n one of the c ases, CIT(A) held tha t a ddition, shall be ma de s ubstantiv el y in t he ha nds of ass ess * e and prot ec tiv ely i n the hands of al leged inv es t ors i n ter ms o f ITAT Judgem ent i n Asst. CIT v. Narmada Ext rusi o n Ltd. (2012) 19 ITJ 202 (Trib.-I ndore) - HELD - Ass esse e has not establis hed the i ngredients of sec ti on 68 ; cr edits c annot be ac c epted - Also, i n Asst. C IT v. Narmada Extrus ion Ltd. (2012) 19 ITJ 202 (Trib.-Indore), it was found t hat a dditions has alr eady been made i n the ha nds o f i nvestor - In t he pres ent cas e, as sess ee is unabl e to es tablish the ingredi ent s of s ecti on 68 - Addition is c alled for Pr amila Inv estme nt and Fi nance L td. v. ITO (2013) 22 ITJ 149 (Trib. - Indor e).
3. Share Applicati on Money - Assess ee has not dis char ged the genui ne of t he tra nsactio n - Additi ons justifi ed - S hare Application money - The AO noticed that ba nk s tat ement furnished duri ng the ori gi nal as sess ment proc eedi ngs was fabricated and misled the AO. The AO found that the As sess ee had adopted unf air pr actice by a dduci ng fals e evide nc e t o get undue a dv antage of gi ving col our of genuinenes s to bo gus entri es thro ugh f abricated ba nk accounts - The AO held t hat the said compa nies ha d no credit worthi ness , fi na ncial wor th or 43 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
regular res ources to j ustify their s ubscripti on of s ha re c apital money - The as sessee has not discharge d t he genui ne of the tr ansa ction a nd ther efor e, the AO made a dditions - The Delhi High Court held that t he Ass ess ee has not disc ha rged the onus satis fa ctorily and therefore, the addi tio ns ma de by AO was justified - A gai ns t t he decision of Del hi Hi gh Co urt, SLP has bee n dismiss ed by the S upreme Cour t. N. Tari ka Prope rty Invest . (P.) Ltd. v. C IT (2016) 27 ITJ 149 (SC ): (2015) 12 STD 17: (2014) 227 Taxma n 373.
4. Share Appli cation Money - Identity and credit worthi ness not prov ed -- S hare application - Assess ee rec eived share applicatio n m oney from "MPFPL" - Identit y of s aid c ompa ny was not pr ov ed -- H ELD - Additio n u/s. 68 shall be ma de. Saaj Plastic Industries Pvt. Lt d. v . ITO (2012) 20ITJ 103 (Trib.- Indore).
5. Share Applicatio n Money - In case of Pvt. L td. Company, even tr ansa ction through cheque som e more evi denc e requir ed to prov e genui ne i nv estment - Shar e Application Mone y - It was held by t he D el hi High C ourt that in. case of private limited compani es, genera lly pers ons known to direc tors or sharehold ers, dir ectly or i ndire ctly, buy or s ubsc ribe to s hares . Upon r eceipt o f money, t he sha re subscribers do not lose t ouc h and bec ome i ncommunicado . Call m oney, dividends, wa rra nts , etc. have to be se nt a nd the relati ons hi p remains a conti nui ng one. Ther efore, a n as ses ee cannot s i mply furnis h s ome det ails and remai n quiet when summons issued to s ha reholders remai n un-s erved and unc omplies. As a gener al pr oposition, it would be improper to uni versal ly hold t hat the a ss esse e ca nnot plea d tha t the y had rec eiv ed money , but could d o nothi ng more and it was for the AO to enfo rce shar eholders ' at tenda nc e in s pite of the fac t that the shareholders were miss i ng a nd not av ailabl e. C reditworthi ness is not p r oved by s howi ng iss ue and 44 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
rec eipt of a cheque or by furnis hi ng a c opy of stat ement of bank ac count, when circumsta nces requi res that there s houl d be s ome more ev idenc e of positive nature to s how that the subsc ribers had made genui ne i nv estment - SLP a gains t t his decisi on of Del hi High Court ha s been dis mis sed. Na vodaya Cas tl e (P) Ltd v. CIT (2015) 25 I TJ 552 (SC ): (2015) 12 STD 463: (2015) 230 Taxma n 268.
6. Share Appl ication Mone y - There is evidence and ma terial to show tha t s ubsc ri be r was paper co mpa ny a nd not a genui ne inves tor - Sha re applicati on mo ney - It wa s held by t he Del hi High C ourt that Certifica te of i ncorporati on, PA N etc . are rel evant for pur chase of identific ation, but have their limitation when there is evidence and mat erial to s how tha t the subsc riber was pa per c ompa ny and not a genui ne i nves tor - SLP agai ns t this decis ion of Del hi Hi gh C ourt has been dismissed. Na vodaya Castle (P) Ltd. v . C IT (2015) 25 1TJ 552 (SC): (2015) 12 S TD 463: (2015) 230 Taxma n 268.
7. Share Capita l and Loan - Assessee not able to es ta bl ish identity of i nv es tor -- Merely filing PAN , IT r et urns , C ertificate of incorporati on, Balanc e S hee t etc . do not es ta blis h the identity - S har e Capital and Loa n - "HCL " a nd "OTIL " ha d subsc ribed i n shares of asses see compa ny - In s ome c as es , "HCL" and "OTIL " ha d given loa ns to assess ee compa ny - AO required assess ee to prove trans action - Ass ess ee fur nis hed vari ous doc ument s to prove t he trans acti on - O n i nquiry, the compani es were found t o be non-e xistent - Notic ed issued to them wer e re turne d uns erved - HELD -- Ass ess ee is not abl e to es tabl is h identi ty of invest ors - Merely filing PA N, IT returns , Certifica tion of inc orpora tion, Bal a nce Sheet etc. do not es tabl is h t he identity of subscri bers or produc e t hem -- Addition u/s. 68 shall be made. A gra wal C oal C orporati on P. 45 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
Ltd. v. Addl . C IT (2011) 18 ITJ 717 (Trib. - Indore): (2012) 135 ITD 270: (2011)142 TTJ 409: (2012) 13 ITR(T ) 53 1.
8. Share Premi um - Rs.10 share s ubsc ribed at a pr emi um of Rs .90 per share - I n first year it is do ubtful - Es tablished that tr ansa ction is not genui ne - C r edits in form of shar e premi um are not ac ce ptabl e - S har e Premi um - First yea r of bus i ness - Asses see i ss ued s har es havi ng fac e val ue of Rs. 10/- pe r s hare at a premi um of R s.90 per sha re - Assessee c ontended t hat the premi um was received based on the vas t exper ie nce of prom oter of 30 y ears ; a nd also t hat the i nves tors wer e known to hi m - Letter s ent by AO to t hese parti es were returned uns er ved - AO hi ms elf visit ed Kolkata , from where t he money was r eceiv ed, but the pa rti es were not tr ac eable a t the address
- A O also v isited bank a nd v erifie d that the amounts ha d been deposited i mmediat ely bef ore i ssue of cheques for invest ment in shares - S hares were brought back a t a low price in next ye ar - HELD - It is pe rti nent to note tha t i n the firs t year, how could the ass ess ee ma nage s uc h sha re applicati on on a premi um of Rs,9 0 without doi ng any busi ness or without creati ng goodwil l - A G has conducted detai led i nq ui r y, whic h es tabl is h tha t the transac tion is not genui ne - Credits in f orm of share premi um are not acceptable. Vai hhav Cotton Pvt. Ltd v. ITO (2012) 20 ITJ 422 (Trib.-Indore ).
Followi ng the decision of abov e Judicial Authorities , i t is hel d that the l ender c ompa nies are pa per compa ny wi thout any mea ns.
The appella nt com pany was obl ige d t o pr ove:-
(a) The identi ty of the alle ged lenders . (b) The credi t wort hi ness of the l ende rs. (c ) The genui neness of the tr a nsacti ons. 46 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
4.3.6 Thus , it is abundantly clear fro m the fa cts a s di sc uss ed a bove tha t the appellant c ould no t prove the sa me, ther efore, i n t he light of abo ve facts and case laws as di scuss ed a bove , I am of the considered vi ew that the A O wa s justi fied to make additio n u/s 68 of the IT Ac t. Therefore , the AO wa s ful ly justifi ed i n ma king addition on account of unexplai ned cash cr edi t u/s 68 of the Ac t. Thus, additi on made by t he AO a mounti ng to Rs .14,9 5,84,481/- is Confir med, Ther efore, appeal on this ground is dis miss ed."
70. The ld. AR submitted that all the evidences have been given a nd one of the three partie s namely, M/s Ten Equity Ltd. which has subscribed to share capital of Rs.5,15,70,000/- has also issued unse cured loan o f Rs.1,49,50 ,000/- which was a lso repaid during the year. It was submitted that the ld. C IT(A) while adjudicating the issue of unsecured loans has dele ted the additio n made by the AO on account of unsecured loans from the same party. Hence, there is no reason to confirm the share capita l receip t from M/s Ten Equity Ltd . With regard to the other two e ntitie s name ly, M/ s Everglow Equity Leas ing (P) Ltd. and M/s Rishikesh Barter (P) Ltd., he ld . AR reiter ated the arguments taken up before the revenue authorities.
71. Before us, the ld . DR relied on the order of the Assessing Officer as well as the ld. CIT(A).
72. Heard the arguments of both the parties and perused the material available on record.
M/s Everglow Equity Leasing (P) Ltd.
73. The as sessee has submitted various evidences such as copy of ITR, copy of confirmation, copy of affidavit of Director, Memorandum of Association and Articles of Association, copy of 47 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
annual return, copy of order of assessment for A.Y. 2011-12, A.Y . 2014-15 & A.Y. 2017-18, co py of TDS certificate, copy of bank statement of M/ s Wonder Commo trade (P) Ltd. for A/c No. 3102135000006382, the Karur Vysya Bank Ltd. and copy of audited financial statements, Director report along with independent auditors report for A.Y. 2016-17.
M/s Rishikesh Barter (P) Lt d.
74. The as sessee has submitted various evidences such as copy of share certificate, copy of ITR, copy of confirmation (unsigned), copy of affidavit of Director, Me morandum of Association and Articles of Asso ciation, copy of annual return, copy of order of assessment for A.Y. 2011-12, A.Y. 2014-15 & A.Y . 2017-18, copy of ledger account in the books of appellant for F.Y. 2015-16, copy of bank stateme nt, copy of Director report along w ith independent auditors report, audited financial statement for A.Y. 2016-17 and copy of TDS certificate.
75. Further, reliance is placed on the judgments of Hon'ble Supreme Co urt in the Civil Appeal no . 6181 of 2010 dated 30.07.2010 in case of Earthmetal Electrical (P) Ltd. reversing the decision of Mumbai Tribunal reported in 4 SOT 484 and Hon'ble High Court in ITA No. 590/2005 dated 15.10.2008 . In the aforesaid case, the Assessing officer, having found certain share capital money and unsecured loan in the books of account of the assessee co mpany directed the assessee to explain the share capital money as well as unsecured loa n. In response to the Assessing Officer's query, the assessee submitted confirmation and disclosed that share capita l and unsecured loan had been taken fr om the family members of the directors. The Assessing officer, having noted that the alleged 48 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
confirmatio n did not co ntain the necessary details, issued notice u/s 133(6) to all those persons who had allegedly contr ibuted to the share capital of the asse ssee company as well as given unsecured loan. In response to notice, no one gave any reply. The Assessing officer also procured information u/s 131 from the bankers and compared the transaction from information gathered from bank but co uld not correlate them. The AO then issued notice to the assessee , but assessee never appeared before the Assessing Officer. The Assessing Officer, therefore treated the share capital money and unsecured loan as unexplained cash credit failing u/s 68 and accordingly, made additio n to the income of the assessee. The Hon'ble Supreme Cour t allowed the SLP filed by assessee and he ld that, if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to AO, then the department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as und isclosed inco me of the assessee company.
76. The assessee also placed reliance on the decis io ns of Delhi Bench of Tribunal which followed the judgment of Hon'ble Supreme Co urt in the Civil Appeal no . 6181 of 2010 dated 30.07.2010 in case of Earthmetal Electrical (P) Ltd.:
i) 61 ITR (T) 352 (Del) for Assessment year 2011-12 M/s Prabhatam Investment (P) Ltd. vs. AC IT has he ld as under:
"The ass essee on the basis of thes e doc umenta ry evidenc es hav e been abl e to est ablish t hat both t he s har ehol ders are genui ne par ti es a nd t hey are not bogus a nd fictitious . The 49 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
decis i on of the Hon'ble S upreme C ourt i n the c as e of M/s. Eart hmetal El ectrical P. Ltd. (supra ) clearly support the ca se of t he assesse e. It ma y a lso be noted t hat the facts considered i n t his c ase by I TAT, Mumbai Benc h and Hon'ble Bombay High C ourt (c opi es of the j udgement ar e plac ed on rec ord) are not on bet ter footi ng as brought on record in the case of the ass ess ee. The facts of t he c ase of t he as sess ee a nd ma teri al e videnc e brought on r ec ord a re on better footi ng as compared to the fac ts c onsider ed i n the c a se of M/s Earthmetal Electrical P. L td. (s upra ). The assess ee spec ifically pleaded before t he ld. C IT(A ) and fi led the details supported by evidence that net worth o f bot h the investor co mpani es a re very s ubsta ntia l so as to ma ke investment in as sessee company . They were havi ng sufficient funds w ith them to ma ke inves tment i n as sess ee compa ny . The mate rial produced by the ass es s ee have not bee n doubte d and r ebutted by t he a uthoriti es b elow."
[Emphasis s upplied]
ii) C.O.No.163, 164 & 165/Del./2016 M/s. Garuda Imaging & Diagno stics Pvt. Ltd vs. ACIT 9.5. Decision of Hon'ble Supreme Cour t in the case of Earthmetal Electrical Pvt. Ltd., vs. CIT dated 30th July, 2010 in SLP.No.21073 of 1999, in which it was held as under:
"We hav e exa mi ned the p ositi on, we fi nd tha t the sharehold ers are genui ne parties. They are not bogus a nd fictitious t herefore, t he impugned or der is s et aside. "
77. The assessee also placed reliance on the judgment of Hon'ble Jur isd ictional High Cour t in the case of CIT vs. Lanco 50 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
Industries Ltd. reported in 242 ITR 357 wherein it has been held as under:
"4 . Comi ng t o the sec ond ite m of dispute, at the time of s earc h, the directors o f the company admitted t ha t a sum o f Rs. 74.2 la khs w as undisclosed i ncome repre senti ng i nvestments ma de by them i n the names of their fr iends and rela tives. The As sessi ng Officer c alled for details of the inv estments made by frie nds a nd r elativ es i n r espect of the balanc e amount of Rs.95.9 3 lakhs . A st atement gi ving the details along wi th the c onfirmati on letters of t he s hare hol ders was filed. The Ass essi ng Officer did not accept t he confi rmati on letters for the reas on that t hey were in ster eo-t yped for ms and moreover they did not c ontain the necess ary particulars regarding the ext ent of agric ult ural land a nd their income from va rious sources. The Assessi ng Offic er also questi o ned the genui nenes s of t he si gnatur es in certai n l etters .
The Tribunal obs erved tha t in v i ew of the s hort time-lag left t o the Assessi ng O ffic er, the ass essme nt was c ompl eted wi tho ut ma ki ng nec essary enqui ries and without calling upon t he ass es see to furnis h more details. The mere fac t tha t the l etters were in st ereo-ty ped form, was held to be not a fa ct or whic h goes agai ns t the ass esse e. The Tribunal commented that none of the s hareholders who filed confirmati on letters was exa mined a nd, the refore, the ge nui neness of the c onfir mati on lett ers s houl d not have been doubted by him. The Trib unal furt her obs erved t hat the infor ma tion rega rdi ng the contributi ons to shar eholde rs by friends and rel atives of the directors cannot be construed as an 'i nforma ti on' ba sed on an e ntry in t he doc uments or materi al uneart hed a t the ti me of searc h, whic h, but for the search, would not ha ve been di s clos ed by the assessee. As far a s this partic ular observa ti on is c onc erned, we ha ve res erv ati ons in accepti ng s uch vi ew. However, it is not nec essary to expr es s a fi nal opini on on this as pect ha ving rega rd to the other circumsta nc es ta ken into a cc ount by the Tribuna l. As rega rds other 51 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
circumsta nc es, at bes t we ca n s ay that the Tri buna l a dopted an over-liberal a pproac h in favour of the appellant -ass ess ee. The Tri bunal no doubt should ha ve c onsidered t he ques tion of reliabili ty of confirma tio n let ters on t he i nt rinsic worth a nd tenor of s uch letters. If c rucial facts thro wi ng li ght on the source of i nv est ment are not disc ernible from t he letters, the Tribunal c ould hav e v ery well eschewed tho se l ett ers from considera tion. B ut, this is a matter of apprec iation of evidenc e a nd we do not t hi nk that a s ubsta ntial questi on of la w a ri ses on tha t account. More ov er, we fa il to se e how mer ely by reas on of unsa tis fact ory expla nation rela ti ng to the source of i nv es tment by the s harehold ers, t he money invest ed on shares should be tr eat ed as income of t he as sess ee. If the os tensible shareholders failed t o explai n the means o f investme nt, tha t shoul d have been treated as unexplai ned inc ome i n their hands. In order t o add it to the i ncome of the ass ess ee , ther e mus t be a further fi nding that i n fact the shareholders were mere name- lenders and the money alle gedly i nvested by the m r eally bel onged to the di rectors of the asses see-c ompany. In the ab sence of a fi ndi ng tha t the pers ons t o whom t he share certific ates were is sued on rec eipt of consider ati on as per t he Bo ok entries were in fac t dummies or st ooges of the dir ect ors of the a ss ess ee-c ompa ny, the same ca nnot be treat ed as una cc ounte d income of the a ss esse e. Ther e was no s uch fi ndi ng b y the ass essi ng aut hority. I n t his view of the matter, t he ultimat e c oncl usi on of t he Tribunal ca nnot be fa ulted in any case. We, therefore, see no ground to admit thi s appeal as no subst antial ques tion of la w a rises for cons idera tion. The Inc ome -tax Tri bunal appeal is dismissed. "
78. Re liance is placed on the following judgments of Hon'ble Supreme Court and Hon'b le High Cour ts:
52ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
255 Taxman 160 (SC) Apex Court affirmed the de cision of Bombay High Court reported in 400 TTR 439 (Bom) Pr. C IT vs. Paradise Inland Shipping (P) Ltd.
271 Taxman 29 (SC) Apex Court affirmed the decision of Bombay High Court repor ted in 3 97 IT R 136 (Bom) CTT vs. Orchid Industrie s (P) Ltd.
264 Taxman 279 (SC) Apex Court affirmed the de cision of Delhi High Cour t reported in 107 taxmann.com 84 (Del) Pr. CIT vs. M/s Adamine Constr uction (P) Ltd. Apex Court in SLP No . 15640 of 2012 dated 23.12.2011 (Page 652 of JPB-II) affirmed the decision of Delhi High Cour t reported in 361 ITR 220 (Del) CIT v. Kamdhenu Steel and Alloys Ltd.
Funnay Time Finvest Ltd., ITA No . 645/2012 dated 13.1.2015 CIT vs. Well W orth Constructio n Udyog Ltd., ITΑ Νο.
443/2014 dated 25.2.2015 (Del) CTT vs. Rakam Money Matters ( P) Ltd., ITA No . 778/2015 (Del) da ted 13.1 0.2015 Pr. CIT v. Lakshmi Float Glass Ltd., ITA No. 467/2016 (Del) dated 24.8.2016 affirming the decision of Tribuna l in ITA No. 535/D/2 009 dated 31.3.2015 CIT(A) order dated 18.11.2008 and order of assessment dated 17.12.2007 u/s 143(3) of the Act
79. The Hon'ble Delhi High Court in the case of CIT vs. Softline Creations (P) Ltd. 387 ITR 636 (Del) held as under:
"4 . This Court has considered t he co ncur r ent order of the CI T(A) as well as the ITA T. Both these a uthorities primarily went by t he fac t tha t the as sessee had provided sufficient i ndic ati on by wa y of PA N 53 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
numbers , t o hi ghlight the identity of the s hare applicants , as well as prod uced the affidavits of Direct or s. Fur the rmore, the bank details of the share applica nts too had been provid ed. In the circ umstanc es , it was held that the ass essee had establ ished the i dentity of the share ap plicants, the genui nenes s of tra nsa ctions a nd their creditwo rthi ness . The AO chose t o proceed no further but merely added the amounts bec ause of the abs enc e of the Direct ors to physically pres ent thems elves before him.
5. The ITAT has relied upo n a decisio n of t his Court in C IT v s. Fair Fi nves t Ltd. 2013 357 ITR 146 (Del) where i n s omewhat si milar circumsta nc es, it was stated as follows :
"6 . This C ourt has co nsidered the s ubmissions of the pa rti es . In t his case the disc ussion by t he CIT(A ppeals ) would reveal tha t the assessee has filed documents incl udi ng certified copi es issued by the Registrar of C ompa ni es in r elatio n to t he s ha re applicati on, af fida vits of the Directors, Form 2 filed wit h the ROC by s uch applicants c onfirmatio ns by the applica nt fo r c ompa ny's s hares , certific ates by a uditors etc. Unfort unately , t he as se ssing offic er chose to bas e hi ms elf merely on t he general infere nc e t o be drawn from t he readi ng of t he i nv esti gati on repo rt a nd the statement of Mr. Mahesh Garg. To el evat e the i nferenc e whic h c a n be dra wn on the basis of readi ng of such materia l into j udicial conc lusi ons woul d be impr oper, more s o when the a sses see produc ed ma terial. The least tha t the as sessi ng offic er ought to ha ve done was t o enquire into the mat ter by, if nec essar y, i nv o ki ng his powers under S ecti on 131 summoni ng the share appl ica nts or direct ors . No effor t was made in t hat regard. In the absence of any s uch fi ndi ng tha t the mat erial disc los ed was untrus tworthy or lack ed credibility the assessi ng officer me rely concl uded on the basis o f enquir y repor t, whic h c ollec ted ce rtai n facts a nd the statements o f Mr . Mahes h Ga rg tha t the i nc ome s ought to b e added fell withi n t he desc ripti on of Secti on 68.54
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
80. The Hon'ble Delhi High Co urt in the case of Pr. CIT vs. Muni Ram Verma, ITA No. 678/2016 dated 26.9.20 16 (Del) held as under:
"2 . As t o t he first questi on, we notice tha t the AO added a mounts adv ance d by 18 uns ecured credit ors. The to tal amount added was Rs.1,95,02,979/-. The asses see ha d produc ed d etails a nd doc ument ary evidenc e pertaini ng to the creditors whi ch the A O took not e of but was not satisfie d wit h. O n appeal, the AO produc ed certai n additi onal evid enc e compel ling the ld. CIT (A) to s eek a remand repo rt, i n view o f i nvocati on of Rul e 46A of the Income Tax Rul es. Af ter appreciati on of t he r ema nd r eport, t he ld. C IT (A) sustai ned t he addition onl y with respect t o Rs.1 lac said to have bee n advanced by one M/s Muska n Enterprises Priva te Limited. The ITAT did not disturb thos e findings. The r evenue a rgues that the appr oac h of the l d. CIT(A ) and the ITAT was inc orr ect beca us e the assessee did not produc e furt her details apa rt from the bank acco unt particulars a nd t he documents f ur nis hed.
3. This court is un-pers uaded wi th these submiss ions . R eadi ng of the or der of C IT (A) shows that rema nd specific ally wa s s ought; after c onsideri ng the remand rep ort a nd s ubmissi on of both the parties , t he CIT (A) was satisfi ed that the doc ument s pa rtic ularly the ba nk acc ounts sta te ments revealed tha t t he creditors were not fictitious but rather had genui ne acc ounts a nd that they wer e also filing i nc ome ta x returns.
81. The Hon'ble Delhi High Cour t in the case of Pr. C IT vs. M/s N.C . Cables Ltd. 391 IT R 11 (Del) dated 11.1 .2 017 he ld as under:
"8 . As fa r as the addition is c onc erned, the as s es see ha d furnis hed lar ge amounts of materia ls in t he f orm of documents to evidenc e the 55 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
genui nenes s of the identity and the transactions a s well as the creditwo rthi ness of t he parti es. The AO appa rently co nduc ted the perfunc tor y inqui ry by deputi ng an inspec tor to the premi ses . As is contended by the ass ess ee, the a bsence of thes e parties, after seven or ei ght y ears , ipso fact o could not hav e led the AO to conclude that the parties were fictitious or non-e xist ent. The assessee had provided detail s of the P erma nent Acc ount Numbers (PAN) and Inc ome Tax Returns (ITR) for the rel eva nt years . N othi ng prevented the AO from inquiri ng i nt o these det ails in support of its suspicion that the tr ansactions wer e not genui ne. Undo ubtedly, the AO had cert ai n ba nk stat ements w hic h disclos ed fac ially tha t the amo unts were infus ed i n cas h at the releva nt time before the s ha res were subscribed to or the cr edits were gi ven. Thos e suspic ious circumsta nc es a t the same time c oul d no t hav e been t he c oncl us ive factor in t his case.
9. Sinc e the i nvestigati on wi ng had leveled s ever al allegati ons, the AO should, in our opini on, ha ve carried out a more i ntens ive investigati on i nto t he i ncome ta x rec ords to ac tually disc ern the volume of trade or commerc e of the share a pplica nts /c reditors a nd their i nability, if a ny , to i nv es t or advanc e the a mounts in is s ue.
That failure cannot transla te int o the amount by the a ss ess ee to provide ba sic informa tion whi ch i s undoubt edly not done. In the se circumsta nc es, thi s C ourt is of the opini on that there i s no i nfirmi ty in the co ncurr ent findi ngs of the C IT (A) a nd the ITAT on t his is sue. "
82. The Hon'ble Delhi High Court in the case of Pr. CTT vs. Oriental International Co . (P) Ltd. 101 CCH 004 (Del) dated 8.1.2018 he ld as under:
"9 . This C ourt is of the opi ni on that the lone c irc umst anc e of a Direct or disowni ng the doc ument per s e c ould not ha ve cons ti tuted a fres h ma terial to rej ect t he doc umentary evidenc e. In this cas e, the existence of t he c ompany as a n income tax ass ess ee, and that i t ha d 56 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
furnished a udited acc ounts is not i n dis pute. Furt hermor e, its bank details too wer e fur nished to the AO. If the AO were t o c onduct his task diligently , he ought to have at l eas t sought t he m aterial by way of bank stat ement s etc . to di sc ern w hether i n fa ct the amounts were infused i nto t he share holder's acc ount i n ca sh a t any point of time or tha t the amount of Rs.1 .3 c rores in the c as e of Ms. Creative Fi nancial Servic es Pvt . Ltd and Rs.3.7 crores in the c as e o f other share applica nts we re s uch as to be bey ond t heir mea ns. In the abs enc e o f any s uch enquiry, the Co urt is of the opini on that the findi ngs holdi ng that the assess ee had not disc harged the onus placed upon it by la w ca nnot be c onsidered unreasona ble. No questi on of la w arises .
10. The appeal is acc ordi ngly dismissed."
83. The Hon'ble Delhi High Cour t in the case of Pr. C IT vs. M/s Adamine Constructio n (P) Ltd. in ITA No. 130/2018 (Del) Dated 6.2.2018 he ld as under:
"2 . The ass ess ee's origi nal return was pr oc es s ed under Sec tion 143(1) of the Act cla iming that some rec eipts were sus pec t. Re- assessment proceedi ngs were initi at ed on 19.09.2011. The AO observ ed that the as sessee rec eived s hare capital and s har e premi um from vario us Kolkata and Mumbai bas ed c ompa ni es aggr ega ting Rs .4 .65 crores . After eliciting r el evant i nformati on a nd conduc ti ng enquiries in the c ours e of which notices were iss ued under Section 131 of the Act to the conc erned s ha re a pplic ant as well as after taki ng into acc ount r eports r eceiv ed fr om the revenue aut horities , thes e amounts were a dded under Sec ti on 68 of t he Ac t. Furthermore, t he AO brought to tax Rs.50 lakhs rec eived by the assessee as a pplication money fr om o ne R eal Gold Tradi ng Pri vate Ltd. The ld. C IT(A ) to whom t he as sessee app ealed, cons ider ed the same material that was before the AO a nd by a det ail ed order, w as of the opi ni on that si nc e the identity of the i nvestors had been 57 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
establ is hed a nd prima fa cie t heir credibi lity too was reveal ed, bur de n of provi ng that the tr ansa ct ions were not genui ne lay upon the Rev enue. After noticing the judgm ent of the S upre me C ourt in Commis si o ner of Inc ome Tax v. L ovely Exports Pvt. Ltd. (2008) 216 CTR 195 (SC ) and ot her judgm ents of this C ourt, t he CIT(A) direc ted tha t the a mounts br ought to ta x under S ec tion 68 of the Act ought to be delet ed. The ITA T by i ts impugned order c onfirmed the l d. CIT(A)'s c oncl usions.
.............
4. The ma terial on rec ord in the for m of the orders of the lower appellate authorities di sclosed that both the ass es se e and later the share applicants (upon rec eivi ng notic e under S ec tion 131 of the Act) had produc ed documentary proof. Thes e i nc l uded the assessments and i nc ome-tax r etur ns filed by the share applic ant s as well as confirma ti on and acknowl edgment doc uments . If the AO wis hed to pursue t he matt er, there we re sufficient cl ues for him to hav e proc eeded for i ns tance, it could hav e iss ued noti ces a nd obtai ned s tat ements from the ba nkers of the s har e applic ants or ev en the ba lanc e sheets which exist ed i n the i ncome-tax rec ords of their Ass ess i ng Offic ers . He did not cho ose to purs ue bot h but instead r ested hi s concl usio ns e ntirel y on the basi s of r ema rks rec eiv ed from the Commissioner . T hese r ema rks ca n a t b est be considered opi nion but not primary evidenc e to displac e the inferenc es that ha d to be dra wn with respect to the genui nenes s of the transaction a nd t he c reditworthiness of the pa rti es ."
84. The Hon'ble Bombay High Court in the ca se of Pr. CIT vs. Paradise Inland Shipping (P) Ltd. in IT A No. 66/2016 dated 10.4.2017 held as under:
"9 . This C ourt i n the Judgm ents reli ed upon by the learne d Counsel appeari ng for t he Respo ndents, ha ve c ome to t he c onc l usi on that onc e the Assess ee ha s produced docume ntary evidenc e to esta blish 58 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
the existenc e of such C ompa ni es, the burden woul d s hift on the Revenue-App ellants her ein to establ ish thei r cas e i n the pres ent case, the Appellants are s eeki ng to rel y upo n the s tatements rec orde d of two p ers ons who have admit tedly not bee n s ubjected to cr oss examination. In suc h circums ta nces , the questi on of remandi ng t he ma tter for re-exami nation of suc h p ers ons , would not at all be justifi ed. The Assessi ng O fficer, if he so des ired, ought to hav e allowe d the Assess ee t o c ross exa mi ne s uc h pers ons i n ca se the statements w ere t o be relied upon i n s uc h proc eedi ngs . Apa rt from tha t, t he vol umi nous documents produced by the R es pondent s cannot be disc arded me rely on t he ba sis of two i ndivi dual s who have given their s ta teme nts c ontra ry to suc h public doc uments .
10. We fi nd no i nfi rmit y in the fi ndings arriv ed at by the ITAT as well as CIT Appeals on the c onte nti ons raised by t he Appellants- Revenue in the present ca se a nd as s uc h the questi on of inte rfer ence by this Court i n t he pres ent proc eedi ngs under S ec tion 260A of the Income Ta x Act would not at all be Justifi ed Apa rt from tha t, as ri ghtl y poi nted out by the learned Counsel appea ri ng for the Res pondents , the CIT Appeals had also noted that proc eedi ngs under Secti on 147 of the Inc ome Ta x Act cannot lea d t o re-verific atio n of the records . The se fi ndi ngs of t he CI T Appeals hav e not been assailed befor e the Income Ta x Appellate C ourt."
85. The Hob'ble Bombay High Court in the case of CIT vs. Orchid Industrie s (P) Ltd. 397 ITR 136 (Bo m) held as under:
"6 . T he Tri bunal has conside red tha t the Asses s ee has produc ed on rec ord the documents to esta blish the genui ne ness o f the pa rty s uc h as PAN of all the cr editors al ong with the c onfir mati on, thei r bank stat ements s howing pay ment of s ha re a pplicati on money. It was a lso observ ed by the Trib unal t hat the Assessee has a lso produc ed the entire r ecord regardi ng iss ua nce of s hares i.e. allo tment of shares to these parti es, their share ap pl ication forms, allotment letters a nd 59 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
share c ertifi cates , so als o the books of a ccount. The balanc e s heet and profit and l oss acc ount of the se pers ons disc l os es tha t these persons had s ufficie nt funds i n t heir a ccounts f or i nvesti ng i n the shares of t he As sessee. In view of these v ol umi nous doc umentary evidence, only becaus e thos e pers ons had not appea red before the Assessi ng Offic er woul d not negate the c as e of t he Assess ee. The judgment i n cas e of Gagandeep Infrastr ucture (P.) Ltd (supra) would be applicabl e i n the fac ts and circ umstanc es of the pres ent c as e."
86. The Ho n'bl e High Co ur t of B omba y has express ed si milar opi ni on in the follo wi ng c as es also.
i) 394 ITR 680 (Bom.) CIT v. Gagandeep Infras tructure (P) Ltd .
ii) 403 ITR 415 (Bom) PCIT vs. Veedhata Tower (P) Ltd.
iii) ITΑ Νο. 1502/2016 dated 26.5.2019 Pr. CIT vs. Aditya Birla Telecom Ltd .
87. The Hon'ble High Court of Alla hab ad, H on'bl e High Court of Madhya Pra des h and H on'ble High Co urt of Calcutta have expr ess ed similar opi ni on i n t he foll owi ng ca se s.
i) 350 ITR 220 (All) CIT vs. Jay Dee Secur ities and Finance Ltd.
ii) 350 ITR 222 (All) CIT vs. Misra Preservers (P) Ltd.
iii) 356 ITR 65 (MP ) C IT vs. Peoples General Hospital Ltd.
iv) 268 Taxman 394 (SC) Pr. CIT v. Chain House International (P) Ltd. affirmed the judgment in the case o f Pr. CIT v. Chain House International (P) Ltd. reported in 408 ITR 561 (MP) 60 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
(v) ITA No. 263/2011 GA No . 2856/2011 (Cal) dated 21.9.2011 CIT vs. Dataw are (P) Ltd.
(vi) 2016 T IOL 1227 C IT v. J. J. Development (P) Ltd.
88. The coordinate bench of IT AT in ITO vs. XO Infotech Ltd. in IT A No. 3342/D/2013 held as under:
10 . We ha v e c o ns id e red t he ri v a l s u bm is s io ns, i t m a y b e no t ed he r e t ha t be f or e t h e a p p ea l w a s f ina lly h e a r d , t he Ld . D . R. w as d i re c ted t o p r o d uc e t he a ss e s s me nt r ec o rd f o r p er us a l of t h e B en c h. E v e n l as t op p or t un it y w as gi v e n to t he Ld . D.R. to p ro d uc e t he as s es s m ent r ec o rd . H o w e v er , a ss e s s m e nt r ec o rd ha s no t b e en p r o d uc ed fo r t h e ins p ec t io n of t he Be nc h .
T h e a ss es s ee i n t hi s c as e has c at e g or i c all y s ub m it t ed be fo re Ld . C I T (A) t ha t v a r io us r ep lies we re f ile d b efo r e t he A . O. a t as s es s m e nt st a g e a lo ng w i t h t h e d o c u m e nt s , o n w h ic h, n o i nq u i ry ha v e b ee n co n d uc t ed by t he A. O. a n d n o f u rt h er q ue ry ha v e b e e n ra is ed f ro m t he a s s es s e e. T he Ld . C I T ( A), a ft e r v e ri fic a t io n of t h e fa c ts ac c ept ed t he c on t e nt i o n of a ss e s s ee . Si nc e , it is a D e pa r t m e nt a l Ap p ea l, t her e fo r e, i n o rd er to v e ri f y t he fac t w h et h e r a s s es s e e f i l ed d oc um e nt s a nd r ep l ies a t a ss es s m e n t s t a ge, r ec o r d wa s s um mo n e d t h ro ugh Ld . D . R . H o w e ve r, as s es s m ent r ec o rd has not be en p r od uc ed fo r ins p ec t ion of t he Be nc h. W e , t h er ef o r e, d raw ad v ers e in fe r e nc e a g a i ns t t he Re v e nue a nd ho ld t h at a ll t he d oc um e nts w er e fil ed be f or e A.O . ev e n a t as s e ss m e nt s ta ge . I t is n ot i n d is p ut e t ha t a ss es s ee i s a L ist ed Pub lic C o m pa n y a nd i ts s h ar es are list ed at B om ba y St o ck Ex c ha nge Lim it ed . L ea r ne d C o uns e l f o r th e As s es s ee als o s u b m itt ed b ef or e Ld . CI T (A ) a s w e l l a s b ef o r e us t h at o ut o f 1 9 in v est o r c o m p a nies , 17 ar e P ub li c L im it ed C o mp a n ies . T his fa c t is no t d is p ut e d by the Rev en ue t hr o ugh a n y e v id en c e o r m at er ia l o n r ec or d. It is n ot in d is p ut e t ha t a ss e s s e e p r od uc ed s uf f ic ie nt d o c u m e nt ar y e v i d e nc e b e fo r e th e a ut ho r it i es be lo w t o p ro v e id en tit y , c r ed it w o r t h in es s of t h e i nv e st or s a nd g en u ine ne s s o f t h e t ra ns ac t ion i n t h e m at t e r w i t h re ga rd t o pa ym en ts li k e c he q ue no . da t e, c o nf ir ma t io n c o p y o f t he l ed ger ac c o unt w it h e xp lan at ion f o r cr ed it e nt r ies , ba nk s t a t em e n t, P AN , I T R a nd c op y o f t h e b al a nc e s he et of a ll t he in v es t o r c o mp a n ies be fo r e A. O . T he A.O . i ns t ead of ma k i ng an y inq uir y on 61 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
t he d o c um e nt s f il ed bef or e hi m, ig no r e d th e sa m e a nd ma de t h e ad d it i on a ga i ns t t h e as s e ss e e w it ho ut a p p l ic at io n of m ind . W he n t he as s es s e e f i led a l l t h e d oc um e nt s be fo re t he Ld . C I T (A) a nd r eq uest ed fo r a dm is s i on o f t he a d d it i on a l e v id e nc es , same were ag a in re fe r r ed to t he A. O. for e xa m in at ion /v e r if ic a tio n a nd c om m e nt s . T he A . O. how e ve r, did n ot ve r ify a nd e xa m ine t he a dd it io na l e vi d en c es a nd m er el y obj ec t e d to t he a dm is s i o n o f t h e s a me . T he Ld . CI T ( A) o n p e r us a l o f t h e s am e, c or r ec t ly no t ed t h at t h es e d o c um ents a re r e le v a nt an d es s en t ia l f o r d is p o s a l o f t he m at t e r . T he L d. C IT (A ) v id e im p ug ned o rd er a d m itt ed t he ad d it i ona l e v id e nc es under R ul e 46A of the I. T. R ule s . However, the Rev en ue D ep a r tm en t d id no t c ha ll e nge t h os e find in g of f ac t rec o r d ed b y t he Ld . C I T ( A) f o r a dm itt ing a dd it ion a l e vid enc es at ap p e lla t e s t ag e. N o g ro u nd s o f a pp e a l ha v e b e e n ra is ed by t h e R ev e nue . N o m at e r ia l is p r o d uc ed be f or e us t o co nt r a dic t t he f ind i ngs of fa c t r ec o rd e d by t he L d. CI T (A ) . In t he a b s e nc e of a ny c ha l le n ge t o t h e ad mi ss io n of a d d it i ona l e v id e nc e s w h ic h w e r e a lr e ad y pa rt o f t he r ec o rd o f t he A.O , t he c o nt e nt i on o f t he Ld . D . R. is re j ec t ed t ha t a dd it i o na l ev id e nc es s ho u ld n ot b e a dm it t ed b y t he Ld . C I T (A ). I n t his c a s e , it is a n ad m it t e d fac t t hat as sess e e p ro d uc e d t h e do c um en ta r y ev id e n c e s be fo r e t he aut ho rit ies b e lo w t o p r ov e t h e id ent it y o f t h e in v es t o r s , t h ei r c r ed i t w o r t h in es s a nd ge nu i ne n es s of t h e t r an s ac t i on in t h e m a tt e r. T he s ha r es of t h e a s s es s ee a r e lis t e d w ith t he B om ba y St oc k Ex c ha nge a nd p er mis s i o n o f t he S E BI fo r a ll ot m e nt o f th e ad d it ion a l s ha re s h a v e be e n o bta in ed in t his c as e. C op i es of t he ap p ro va l a r e f il e d i n t he pa p e r b o o k. F ur th e r , t h e b a nk s t a t e me nt s o f t h e i nv es t or s s ho ws t he y a re ha v i n g su ff ic ie nt f unds w i t h t hem t o m ak e i nv es t me nt in t h e as s e s s e e c om p a ny a nd a ll t he t r a ns ac t i ons a re rec or d ed i n t h e ir b o o k s o f ac c o u nt a nd t he a u d it ed ac c o u nt s a nd ba la nc e s he et . T he A. O. ins te ad o f m a k i n g in q uir y o n t he d o c u me nt a r y ev id e nc e a t a s s es s m e nt st a g e a s w e ll a s at a pp e l la t e s ta ge b y t he L d . C I T (A), m e re l y r ej ec t ed t he c la i m o f as s es s e e , w i t ho ut a ny j us t re a s o ns . T he A. O. d id n ot m ak e an y i n d e pe nd e nt in q uir y o n t h e d oc um e nt s f ur nis h ed b y t he a ss es s ee an d no f urt he r inq ui r y ha v e be en c o nd uc t e d un d e r s ec t ion 13 3 (6 ) of the I . T. Ac t . N o ca s h w as f o und t o ha v e b e e n d e p os i t e d in t h e b a nk a cc o unt of t he inv est or co m p an ie s. T he Ld . D. R. r ef e r re d t o s om e p a g es o f t h e b a nk s ta t e m e nt s o f t he in v es t o r c om p a ni es f ile d in t h e p ap er b o ok t o s h ow t hat o n t he d at e of i nve s t m e nt in as s es s e e c o mp a n y , id e nt ic al a mo un t t hr o ug h t ra ns fe r e nt r y ha v e b e en t ra ns fe r r ed t o t h ei r a c c o u nts . H ow e v e r , s uc h a r gu m e nt s ha s no r e le va nc e 62 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
t o t he m a tt e r in is s u e b ec a us e it is n ot a c as e of t he D ep ar t m en t t hat t he t ra ns fe r en t ry in t he a c c ou nt o f i nv es t or c om pa ni es ha v e b e e n t ra ns f e rr e d t hr o ugh t he s o ur c e o f t h e as s es s e e c o m pan y. Th e inv es t o rs m i gh t h av e t ak en c ap i t a l f r om t he i r o w n s o u rc e t hr o ugh t r a ns fe r e nt ry , t he r e fo r e, t he r e is n ot hin g w r o ng in t he ex p la na t io n o f a s s es s ee in t h is r ega rd . F urt he r, i f AO s u s pec t ed a nyt h in g w r o n g h av e b ee n c o mm it t e d b y t he in v es t o r c om p a ni es , th e m a tt er s hou ld ha v e b e en inv es t iga ted t ho r o ugh ly by r ef er rin g t o t he ir c onc e r ned A. O . to in v es t ig at e t h e s ou rc e h e ld b y t he m. F ur t h er , n o s uc h a t t em pt h av e a ls o b e en ma d e in this c a s e. It is w e ll s e tt led la w t h a t n o s o u rc e o f t h e s ou rc e s hal l ha v e t o b e p ro v e d b y t he as s es s e e . It is , t he re fo re , c le ar t h a t A. O . d id n ot m ak e a ny inq ui ry o n t he d oc um e nta ry ev id e nc es f ile d by t he as s es s e e . Th e A. O. m e r e ly r ej ec t ed t he e xp l a na t i on o f as s es s e e b ec a us e n o n e o f t he i nv es t o r s h av e t he i r c r e d itw or t hi n es s a n d c o p ies o f t h e ba nk s t a t em e nt a nd a ud it e d a cc o unts a r e n ot f il ed a nd t hat t h e y d id n ot ha v e a ny as s e t s for b us ines s . H ow ev er , t h e fi nd in g of f a c t r ec o rd e d b y t h e L d. C I T (A) c le ar l y p r o ve t ha t t he inv es t o r c o mp a ni es h av e t h eir c r ed it w o rt hin es s t o m ak e i nv es tm e nt in a ss e s s e e c o m pa n y a n d t h e c o p ie s o f th e b a nk s tat e m e nt a nd aud it ed a cc o unts ha v e b e e n f i led o n r ec o rd . T h e re f o r e, f i n d i ng o f f act re c or d e d b y t he Ld . CI T ( A) h av e n ot b ee n r eb utt ed by t he a ut h o rit i es b e l ow . T he det a ils f ur n is h e d by t he a s s es s e e a ls o sh ow s t ha t p r io r t o a s se s s me nt y ea r und e r a pp e a l, 11 in v e s t o r c o mp an ies h av e a ls o ma d e inv es t m e nt in a ss e s s e e c o mp a n y i n e a r lie r y e ars w h ic h w ou ld s tre ng t h en t he c ase o f t h e a ss e s s e e t ha t it ha s r ec e iv e d t h e a m o unt f r om ge nui ne pa rt i es h av ing c r ed it w o rt hine s s . T he re is no mat e r ia l on re c or d to d is p r ov e t he e xp la na t i o n of assessee. T he L d. C IT (A) w as , t her ef or e , j us t i f ied in ho ld i ng t ha t as s es s e e p r ov ed c r ed i t w or t h in es s of the inv es t o rs a nd ge nu in e ne ss of t he tr a ns ac t i o n in t he m a tt er . W e , r el y up o n t he f ol l ow i n g dec is ion s .
11 . Co ns id e r ing t he fa c t s o f t he c a s e i n t h e lig ht of ma t e ri a l o n r ec o rd , it is c lea r t ha t as s es s e e p r od uc ed s u ffic ie nt d oc u me nt a r y e v id e nc e s b ef or e A. O. a t t he a s s es s me n t as w ell as a ppe lla t e p roc e ed i ng s t o p ro v e t h e in gre d ie nt s of Sec t io n 6 8 of t h e I . T . Ac t . T he A. O . ho w e ve r , d id n o t m a k e a ny f ur t he r i nq uir y on t he d o c u m e nt s f iled by t h e ass es se e . T h us, t he A. O. fa il e d t o c o nd uc t s c rut iny o f t h e d oc um en ts a t as s e s sm e nt s t a g e a n d m er el y s us pec t e d t he t ra ns a c t io n b e t w ee n in v e s t o r c om pa nie s and t h e 63 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
a ss e s s e e o n ir r el e v a nt r ea s on s w h ic h w e re d is p ro ve d i n t he f ind ings o f t he Ld . CI T ( A). T he r e f o r e , t h e t o ta li t y o f t he fa c ts a nd c ir c um s t anc es o f t he c as e , c l ea r ly p ro v e t ha t t he as s es s e e d is c ha rge d it s ini t ia l o n us t o p r o v e t he id e nt ity of t he in v e s t o r c o m p ani es , t h ei r c re d it wo r t h in es s a nd ge nu in e ne ss o f t h e t ra ns a c t io n in t h e m att er . N o m at er i al is p r o d uc ed be f or e us t o r eb ut t he f ind ing of f ac t r ec o r d ed b y t h e L d. C IT (A). W e , t he r ef o r e, d id n ot f ind a ny j us t if ic a t io n to int er f e re w it h t h e o rd e r of t h e Ld . CI T (A) in d e le t in g t he a dd it io n. T h er e is n o m e r it in t h e D e p ar t m e nt a l Ap p ea l a n d t h e s a m e is d is m is s ed .
89. In the case of M/s Prabhatam Investment (P) Ltd. vs. AC IT 61 IT R (T) 352 (Del), the coordinate bench of Tribunal held as under:
17 . We have c o ns id e r ed r i va l s ub m i ss io ns . T he ass es s e e c o m p a ny is e nga ged in the bus i nes s of inv es t me nt a nd it h ad r ec e i v ed s har e a pp lic a t i o n m o ney to the tu ne of Rs .5 .75 c ro r es f r om P une et & O il C he m ic a ls Pv t. Ltd a nd M /s T a n is h Ta le T rad ec om P. Ltd . T h e AO as k ed t he a s s es s e e to f ile c o n fi rm at io n and ot h er d oc um e n ts of t he s h ar e a pp lic a nt s in or d e r to pr o v e i de nt i t y, c re d it w o rt h ines s an d gen u in e nes s o f t he t r a n s a c t io n. T he as s es s e e ad m it t e dly p ro d uc ed s ev er a l d o c um en ta r y e v id e nc e b ef o r e t h e A O in ord er t o p r o v e t he a b ov e ing r ed i e nt s of s ec t i on 68 of t he Ac t i. e. t he a s s es s e e f ur n is hed ad d r es s o f t he s ha r e a p p li ca nt s .
C I N N o ., I nc o rp o ra t io n d at e of c o mp an y, P AN , A ut h o r iz e d c ap ita l, p a id u p c ap it a l , na m es of D ir ec t or s , c e rt i fic a t e is s ued by R eg is t r a r o f C o m pan ie s a nd r et u rn fil e d b ef or e RO C , n et w o rt h of both th e c o m pa nies , c o nfi r m at i on of a c c oun ts , c op y of b an k s t at em e nt w it h r ec o nc ilia t i o n s ta t e m ent , c op y of a c kn o w l ed g e m ent o f f il in g o f inc o m e t ax r et ur n f o r A Y und e r a p p e a l 2 0 11 - 1 2 w i t h a u d it ed ac c o u nts , a ff ida vit s o f D ir ec t o rs a nd c op ies of as s e s s me nt or d e rs u/s 143 (3 ) f or b ot h t h e inv es t or s co m pan ie s f or A Ys 20 1 1 -1 2 to 20 13 -1 4 . T he AO did no t v er ify a ny of t h es e do c um en ta r y ev id e nc es in o rd e r t o f ind o ut t he t ru t h in t h e ma tt er . T hus , t he AO fa ile d t o ma ke a ny inq u ir y o n t hes e d oc um e nt a r y e v id enc es w hic h a re p a r t of Re v e nue re c or d as w e l l. T he s ea rc h is a ls o c ond uct ed in t he c as e o f M r . Su res h Kum a r Jai n & KJ S G ro up o f c as es w it h w ho m t he A O a l le g ed t ha t t he i nv es t o r c om p a nie s ha v e r el at i ons . T he r efo r e , t hes e 64 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
do c um en ta r y e v id enc e s c l ea r ly p ro v ed t ha t b o t h t he i n v e s to r co m pan ie s a re e xis t in g a nd ge nu ine c o mp a nies r eg is t e r ed w it h Re g is t r a r of C o mp a ni es a s w e ll as a s s es s e d t o inc o me t ax . N o m at e r ia l is p ro d uc e d on r ec or d t hat d u r in g c o u rs e o f s ea rc h i n th e c a se of t h e as s es s e e o r ot he r pa rt ies a s r e f er r ed t o a b ov e, an y mat e r ia l wa s f o u nd t o pro ve t ha t t he a ss e s s e e r ec eiv e d a ny a c c o mm o d at io n e nt r ies f ro m t hes e inv es t o r s c om p a ni es . T he re fo re , the AO d id no t ob j ec t t o th e m at e r ia l e v id e nc e f ur n is hed a n d d id no t u nd er ta k e a n y v er if ic at io n . T h e A O als o fa il e d t o c o nd uc t any sc r ut i ny of t he d oc u m e nt s a nd m er el y r e li e d upon t he s ta t e m ent o f M r . Su r es h K um a r Ja in a n d ot he rs fo r t he p ur p os e o f ma k i n g t he a dd it i o n. T h e d ec is io n of H on 'b le D elh i H i gh C o ur t in t h e c as e of Pr . C I T v s L a xm a n I nd u s t r ia l R es o urc es L td . (s up ra ) c l ear l y ap ply t o t h e fact s o f t he c as e of t he as s es s e e t ha t t he a s se s s e e r ec eiv ed ge nu ine s har e a pp lic a t i o n m o ne y f ro m b o t h t h e inv es t o r c o m p a nie s . T h e as ses s e e on t h e ba s is o f t hes e d oc um e nta ry e vid enc es ha v e be e n a b le t o es t ab l is h t ha t bo t h t he s ha re ho ld er s a re ge n u ine p a rt ies a nd t he y ar e n ot b o gu s a nd f ic t it io us . T he d ec is ion of t he H o n' b le S u p r em e Co u rt i n t he ca s e o f M /s . Ea rt hm et a l E lec t r ic a l P . Ltd. (s u p r a) c lea r ly s up p o rt t h e c as e o f t he a ss e s s e e . I t m a y a ls o b e n ot e d t ha t t he fac ts c o ns id e r e d in t h is c as e b y IT AT , M um ba i Bench a nd H o n 'b le Bo m bay High C o ur t ( c op i es of t he j ud gm e nt a r e p lac e d on rec o rd ) a r e no t o n b ett er fo ot in g as b r o ug ht on r ec or d in t he c a s e o f t he as s e ss e e. T he fac ts of t he c as e o f t h e as s ess e e a nd m a t er ia l e v id enc e b r o ug ht on re c or d are on b et te r foo t i n g as c om p a r ed t o t h e fa c ts c o ns id e r ed i n t he c as e o f M /s E ar t hm e ta l Ele ct r ic a l P . Lt d . (s up ra ). T h e as s e s s e e s p ec if ic a l ly p lea d e d b e fo r e t he C IT ( A) a nd f il ed t he d e t a i ls s u p po rt ed b y ev id e nc e t ha t n et w o rt h o f b o t h t h e in v es t o r c om p a ni es a r e v er y su bs t a nt ia l s o a s to m a k e in v es tm en t in as s e s s e e c om p a ny . T hey were ha v i ng s u ffic i e nt fu nd s w it h t he m to m ak e in v es t m e nt in as s es s e e c o mp an y. T h e m at er ia l p r o d uc ed b y t he as s e s se e ha v e no t b e en d oub te d a nd r e b utt ed b y t h e a ut h o r it ies b el ow.
17 .1 . T he a ut ho r it i es b e lo w h ea v il y re lie d up o n t he s t a t em ent o f M r . Su r es h K um a r Ja in w h o is s t at e d t o b e as s oc ia t e o f KJS G r o up of c as es w h er ea s t he as s es se e c o mp an y w as dis t i nc t fr om t h e K JS G r o up . T he s ta t e m ent of Mr . S ur es h K um a r Ja in r ec o rd ed u /s 1 32 (4 ) r ef e rr ed t o a cc o m m oda t io n e nt ry p r ov ide d t o t h e KJ S Gr o u p. T h e s t at e m e nt o f M r . Su r es h K um a r Ja in wa s no t re c o rd ed d ur i ng t he c o urs e o f s ea rc h in t h e 65 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
c as e o f t h e a s s es s ee . T he s t a t em e nt of M r. S ur es h Ku ma r Ja in ha v e not be en c o nf ro nt ed t o t he as s es s e e d u r in g t h e as s e s s me nt p ro c e ed in gs . H e wa s not p r o d uc e d a t a s s es s m ent s t ag e t o al lo w c ros s -e xa m inat io n by t h e a ss e s s e e . N o r i gh t to c ros s -e x am i nat i o n ha ve be e n g iv e n t o as s es se e t o c r os s -e xa m ina t i o n ha v e b ee n giv en t o as s es s e e to c r o s s -exa m i n e t h e s ta t e m ent o f M r . Su r es h K um a r Ja in , t he re fo re , h is s tat e me nt ca nn ot b e r ea d a ny ev id enc e a ga ins t t h e as s es s e e. W e re ly up o n t he d ec is i o n o f t he H o n 'b l e Su p re m e Co urt in t he c as e o f Ki s h an c ha nd Ch el l a ra m vs . C IT 1 25 IT R 7 1 3 (S C) i n w hi c h it w a s h e ld t ha t an y m at e r ia l c ol lec t ed at t h e b a ck o f th e as s es s e e a n d n ot c o nf r o nt ed a nd n o o p p o r t u nit y giv e n t o c r os s - e xa m in e, s uc h m at e r ia l c a n n ot b e r el ied up o n a ga ins t t h e as s e ss e e. It m ay a ls o not e d he re t ha t Mr . Su r es h K um a r Ja in ha s l at e r o n re t rac t ed f ro m t he s ta t e m e nt on w hic h no ad v e rs e f in d ing has b e en g iv en . T he s ea rc h wa s a ls o c ond uc t ed in the case of KJ S G ro up of c as es a nd s ta t e m ent o f Sh. K . J . Ahl u wa li a wa s a l s o r ec o rd ed d u r ing s ea rc h w he re in he h as e xp la in ed a nd c o nf ir m e d /a dm it t ed t o hav e inv es t ed in as s e s se e c om p a ny . N o a d d it ion has b ee n m ad e a ga ins t t he a s s es s ee o n th e b a s is of s ta t e m ent o f Sh. K. J . Ah luwa li a . T he s t at em en t o f Sh . D ine s h G up t a , D i re c t o r o f t he a s s es s e e c om p a ny wa s als o r ec o rd e d in w h ic h he ha s c o nfi r m ed t ha t K JS G ro up o f c o mp a ni es ma d e inv es t m e nt i n as s ess e e c om p a ny as r efl ec t ed in t he b oo k s o f a cc o unts b ut no s h ar e c er t if ic at e s ha v e b e en i ss u ed b ec a us e it was m ut ua lly a gr e ed t ha t inv es t m e nt m a d e by t h em s ha ll be re fu nd ed by pa y in g m inim u m 24% p. a . of s uc h in v es t m e nt . T h e a ut h or it i es b e lo w d id no t m a k e t he a b o v e a dd it io n on t he ba s is of s ta t em e nt o f S h. D i n es h G up t a . T he a ut ho r it i es be lo w h ow e v e r, in fe r r ed f r om t h es e s ta t em e nt s t hat a c c omm o d a t io n e nt r ies w ou ld ha v e be en r ec e iv ed b y t he a s s e s s ee c o m p a n y de sp it e S h. D in es h G upt a and Sh . K. J. A hluw a li a c o nf irm e d t he g enu i ne ne ss of t he t ra ns ac t io n in the m at t e r . As not ed a b o v e , t h e s ta t e m e n t of S h. K . J . Ah lu wa l ia ca nn ot b e r ea d in e v id e nc e a ga ins t t h e as s es s e e . T her ef o r e, t he r e w as n o o t he r m at er ia l a v a il ab l e on r ec o r d to p r ov e t h at t he i nv e st or s h av e no c r ed it w o rt hine s s o r t h e y ha v e no t gen u in e ly m ad e in v es t m e nt in as s e s s e e c om p a ny .
18 . T h e AO d oub t ed t h e ge nui nen es s o f t he t r ans a c t io n b ec aus e n ot ic e u/ s 13 3 (6 ) c o uld no t b e s erv e d u po n t he inv es t or s an d t hat t h e as s es s e e was di r ec t e d t o p ro d uc e bo t h t h e p ar t ie s b y 1 9 .0 3.2 0 14 . Th e Ld . C o uns e l fo r 66 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
t he a s s es s ee h o w e v e r, re f e rr ed t o Pa p e r Bo ok p ag e 157 w h ic h is t he r e p ly be f or e t h e A O da t ed 24 .0 3. 2 01 4 i n w hic h t he as s es s e e has p r ov id ed c o rr ec t a nd u pd a t ed a dd r es s of t he e nt ity a s p e r M CA w eb s it e . T h e AO ins t e a d o f is s uin g f r es h n ot ic e u /s 1 33 (6 ) at t he co r r ec t a dd r ess of t h e in v es t o r c om pa nie s me r e ly r e lie d u p o n t h e fac t t h at t h e e ar l ier let t e r und e r t h e ab ov e p r ov is io n h as r et u r ne d uns e rv ed . Sinc e t h e AO d id no t is s ue f r es h no t ic e a t t he c o r re c t ad d r es s pr ov id e d by t h e a s s es se e a nd no c o e rc iv e ac t io n ha s be e n t a k e n f or t h e p r od uc t io n o f inv es t o rs , t he r efo r e , no ad v e rs e i nf e re nc e c o uld b e d r a w n a g ai ns t t he as s es s e e . We re ly up o n t he d e c is io n of t he D e lh i H igh C o ur t i n t he c as e o f CI T v s D i v in e L e as in g & F ina nc e Lt d . 2 99 I T R 26 8 in w hi c h it w a s he ld t ha t " n o a d v ers e inf e re nc e s ho uld b e d ra w n if s ha r eh old er s fai led t o r es p o nd t o t he n ot ic e b y AO ." T h e d ut y o f t h e AO t o inv es t iga t e c r e d i t wo rt hin es s o f s ha r e h o ld e rs . I t wa s f ur t he r h e ld in t he c a s e of C IT v s P eo p les G e n er al H osp it a l Lt d . [2 0 13 ] 35 6 I T R 65 ( M. P . Hi gh C ou rt ) t ha t " dis m is s ing t h e ap p ea ls , t ha t if t he a ss e s s e e ha d r ec ei v ed s ub s c rip t i o ns t o t he p ub l ic or rig ht s is s ue t hr o u gh ba nk i ng c ha n ne l s a nd fu r nis h ed c om p l et e d e t a ils of t h e s ha r e h o l d e rs , no a dd it io n c ou ld b e m a d e und e r s ec t i o n 6 8 o f t he I nc om e- ta x Ac t , 196 1, in t he a bs e nc e o f a n y po s it iv e m a t e ria l or ev id e nc e t o ind ic at e t ha t t he s ha re ho l d ers w er e b e na m id a rs o r f ic t it io us p e rs o ns o r t ha t an y pa rt o f t he s ha re c a p i ta l r ep r e s e nt ed t he c om pa ny' s o w n inc o m e f r om un d is c lo s ed s o u rc e s . I t w a s no b o d y 's c a s e t h at t he n o n -re s id e nt I nd ia n c om pa ny w as a bo gus o r no n e xis t ent c o m pa n y o r t ha t t he am o u nt s ubs c r ib ed b y t he c om p a ny b y w ay o f s ha re s ubs c r ip t io n w a s n fa c t t h e m on e y o f t he a ss e s s e e . T he a s s es s ee ha d es t ab lis he d t he id e nt it y o f t he i nv es t o r w ho ha d p ro v id ed t h e s h ar e s ub s c r ipt io n a nd t hat t he tr a ns ac t i o n w as g enu ine . T h o u gh t h e a s s e s s e e 's c o nt e nt io n wa s th at t he c red it w or t h ines s of t he c r ed it o r w as a ls o e s ta b l is h ed , in t h i s c a s e, t he e s t ab l is hm e nt o f t he id e nt it y of t h e in v es t o r a l on e was to be s ee n. T h us , t h e a dd it i o n w as r i ght l y d e le t e d. C IT v s . L ov e ly E xp ort s P . L td . [2 0 09 ] 3 1 9 IT R ( St ) 5 (SC ) a pp li ed. "
18 .1 H o n' b le D e l hi H i gh Co ur t i n t he c as e of C TT vs . (i) D w a rk ad his h In v e s tm e n t P . L ad . (I T A N o. 91 1 o f 2 0 1 0 ) & (ii) D wa r k a d his h Ca p t ial P. Ltd . (I T A N o. 9 13 o f 20 10 ) [2 01 1 ] 330 I T R 2 9 8 (D elh i H ig h C ou rt ) h e ld " I n a ny ma tt e r, t he o ne o f p roo f is no t a s t at ic o n e . T ho u gh in s e c t io n 6 8 o f t he I nc om e Ta x Ac t, 1 96 1 , t h e i nit ial b u rd e n o f p ro o f lie s o n t he as s es s e s 67 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
y et o nc e h e p r ov es the id e nt it y o f t h e c r ed i to rs ' s ha r e a pp li c ant s b y eit he r f ur n is hin g t h e ir P AN n um b e r o r Inc om e Ta x a ss es s m e nt n u mb er a nd s h ow s t he g e n ui ne nes s of tra ns a c t io n b y s ho w in g m on ey i n hi s b o o ks e it h er b y a cc o unt p a y ee c h eq ue or b y d ra ft o r b y any ot he r m od e , t h en t h e o nus o f pr oo f w o uld s h ift to the R e v e nu e. Jus t b ec a us e t he c re d it o r s s har e a pp lic a nt s c o u ld n ot be f ou nd a t t h e ad d res s g iv e n, it w o ul d s et g iv e t h e R e v e nu e t he ri g ht t o inv o k e s ec t io n 68 . On e m us t n ot l os e s i gh t of t he fac t t ha t it is t h e R ev en ue w hic h has a ll t h e p o w e r an d w he r e w it ha l t o t ra c e an y p e rs on . M o r e ov e r, it is s et t l e d la w t h at t he as s es s e e n e ed n ot t o pr ov e t he " s ou rc e o f s o u rc e " T h e as s es s e e -c o m pa ny s ee -c om pa ny wa s e nga ged in t h e b u s i nes s o f fi na nc in g a nd t rad ing o f s ha r es . F o r t he a ss e s s m e nt y ea r 20 01 -02 o n sc r ut iny o f a c c o unts , t he As s es s in g O ffic e r f o u nd a n add it i on o f Rs .7 1, 75 ,0 0 0 /- in t he s ha r e c ap i ta l o f t he as ses s e e . T h e As s es s i ng O ff ic e r s ou ght a n exp l ana t i o n o f t he as s es s e e ab out t his a dd it io n i n t h e s ha r e c a p it a l. T he a s s es s ee o f fer e d a d eta il e d e xp la n at io n . H ow ev er , a c c o r d ing to t he As s es s ing Off ic er , t he a s s e s s ee f ail ed to e xp la in the a dd it io n of s ha re ap p lic a t io n m o n ey fro m f iv e of it s s ub s c r ib e rs . Ac c o rd in gl y , t h e As s es s in g O f fic e r m ad e a n ad d it ion of Rs . 35 ,5 0 ,00 0 /- w it h t he a id o f s e c t io n 6 8 o f t he Ac t , 19 6 1 o n ac c o un t of un exp la ined cash c r ed it s a p p ea r i ng in the b o o ks of the a ss es s e e . H ow ev er , in a pp e a l , t he C om m is s i on e r o f I nc om e -ta x (A p p e a ls ) d el e t e d t he ad d it ion o n t he gr o und t ha t t h e as s es s e e h ad p r o v ed t h e ex is t e nc e o f t he s ha r eh o ld e rs a nd t he ge n ui n en es s o f th e t ra ns a ct io n. T h e I nc om e -t a x Ap p el lat e Tr ib una l c o n fi rm ed t h e or d e r o f t he C o m m is s io ne r o f I nc o m e -ta x (A p p ea ls ) a s it w a s a ls o of t he o p in i on t hat t he as s es s o r h ad be e n a b le t o pr ov e t he id e nt it y o f t h e s ha r e a pp l ic an t s and t he s h ar e a p plic at io n m o ne y ha d b e en r ec e i v ed by w a y o f ac c o unt pay e e c heq ues . On app ea l t o t h e H igh Co ur t : H eld , d i s mis s in g t h e ap p e a ls , t ha t t h e d e le t i o n o f a dd it i on w as j us t ifi ed . "
18 .2 . H o n' b le D el hi H igh Co u rt in t he c as e of CI T vs. W i ns t r a l P et r oc h em ic a ls P. La d 33 0 I T R 60 3 (D e l) h e ld t ha t "d i s m is s ing t h e a pp ea l, t ha t it ha d no t b e en d is p ut ed t hat t he s ha re a pp lic at io n m on ey wa s r ec e iv e d b y t h e a s s es s ee c o m pa n y by wa y o f ac c o unt p ay e e c heq ues , t hr o ugh no rm a l ba nk ing c h a n n els . A d m itt ed ly , c o p ie s of a pp l ic at io n f o r a l lot m e n t of sh a r es w er e a ls o p r o v id e d t o t he As s ess i ng O ff ic er S inc e t he a pp lic a nt c om p a ni es w er e d uly inc or p o r at ed , w e re u nd P A N c ards a nd h ad 68 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
ba nk a c c ou nts fr om whic h m on ey was tr a ns fe rr ed t o th e as s by w ay o f a cc o unt p ay ee c heq u es , t h ey c o uld no t b e s a id t o b e n o n- e x is t e nc e , e v en if they, a ft e r s ub m it t in g the s h ar e ap p l ic at io ns ha d ch a n ge d t he ir a dd r es s es or h ad s t op p ed f u nc t io ni n g. T h e r e fo r e, the Co m m is s io n e r (A p p ea ls ) a n d t he T r ib un a l w er e ju s t if i e d in h o ld in g t hat t he g en u ine ne s s o f t he t ra ns ac t io ns ha d b ee n d u ly es t ab lis he d b y t he as s es s e e .
18 .3 . I t ma y a ls o be n ot ed he r e t hat t h e AO at t he f ag e n d of as s ess m ent di r ec t e d t h e a s s es s e e to p r od u c e t he i nv es to r c o mp ani es by 19 .0 3 .2 0 14 . H ow ev er , t he A O p as s ed an a s s es s m ent or d e r o n 29 .0 3. 2 01 4 w it h out gi v in g s u ff ic ie nt t ime t o t he as s e s se e or t o is s u e no t ic e o r s um m o n at t he c o rr ec t a dd r es s o f t he in v es to rs . T he re f o re , s uc h c irc u mst anc e s w o u ld c le a r l y prove t h at t he a s s es s e e ge n ui n el y r ec e iv ed s ha r e a pp li ca t i on m on e y a nd in v es t o r s wer e ha v i ng s u f f ic ie nt f und t o m ak e i n v e s tm ent in a ss e s s e e c o mp a ny .
18 .4 . The a ut ho ri t ies b e lo w have als o c o ns id e r ed low inc om e of t he in v es t o r a nd t ha t t hey a r e n ot e x is t i n g p a rt ies . As n ot e d a bo v e, t he K JS G ro up o f c a s es a nd M r. Su r es h Kum ar Ja in w e r e s ubj e c te d t o s earc h, t he r ef o r e, t he i nv e s to r c o mp a n i es w e re ex is t i ng c om pa nie s . T he y ar e a ls o a ss e s s e d t o t a x u /s 1 43 (3 ). C op i es of t h e as s es sm e nt o rd e rs in t he ir c as e s a re f i led o n r ec o rd . T h e y ha ve a ls o ne t w o rt h t o m a k e inv es t m e nt in a ss e s s e e c o mp a ny , t he r e fo r e, lo w i nc om e ea rn ed b y in v es t or s c om p a ny b y it s e lf is no g ro und to t r ea t t h e s ha r e ap p lic a t io n m o ne y r ec e ive d b y t he a ss e s s e e a s no t ge nui n e. T he d ec is i on o f t h e D e lhi H igh C o u rt i n t h e c as e o f CI T v s . V r ind a w a n Fa r m s P v t . Ltd . ( s up r a ) s q ua re l y a p p l y t o t he fa c ts o f t he c a s e. T h e au t h o rit ies b el ow , t h er ef or e, s ho uld n ot hav e d ra w n a dv e rs e inf er enc e a g a ins t t h e a s s es s ee . T he a ut ho r it i es b e low ha ve a ls o di d n ot p r od uc e a ny m a t e r ia l o n r ec o rd t ha t s uc h i nv es t me nt s m ad e in t h e a ss e s s e e c om p a ny w as m ad e f r o m co f fe rs o f t he as s e ss e e. W e r el y up on t he d ec is i o n o f t he D el h i H i gh C o urt in th e c as e o f C IT vs . Va lu e Ca p i t a l Se r v ic es P . Lt d . [2 0 08 ] 3 07 IT R 33 4 (D e l hi H igh Co ur t ) in w hic h it wa s he ld t ha t " d i sm is s i ng t h e a p p e al , t h at t he ad d it i ona l b ur de n w as o n t he D ep a r tm en t t o s h o w t ha t e v en if t h e s h a r e a p p lic a nt s d id not h a v e t he m ea ns t o m a k e t he inv e s t m en t , t he in v es tm ent ma d e by t he m ac t ua lly em a na t e d fr om t he c o f fe rs of t he as s es s e e s o as t o e nab le it t o b e t r eat ed 69 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
a s t h e und is c los e d i nc om e o f t h e a s s es s e e. N o s ub s ta nt i al ques t io n of la w a ros e ."
18 .5 . I t ma y b e n ot ed a ga in t h at t he in ves to r c o m pa nies ha v e c on fir m ed m ak ing in v e s tm ent in a s s es s ee c o mp a n y w h o w e re hav in g s uf f ic ie nt ne t wo r t h t o m ak e inv es tm e n t in a s s es s ee c om p a ny . T he r ef o r e , t he as s ess e e ha s b ee n ab l e to p rov e id ent it y of t he s h ar e ap p lic a nts , th e i r c r ed it w o rt hine s s a nd ge n ui n en es s of t he t ra ns ac t i on i n t he m at t e r . T h e dec is ion s c it ed b y th e Ld . C o uns e l f or t he as s es se e c lea r ly s u pp o rt o u r f ind ings .
18 .6 . Ld . D R h ow ev er , r eli e d u p on s e v e ra l d ec is i on s o f D e lhi H i gh C o urt r e fe r red t o a bo v e . In t h es e c as es , t h e gis t o f t he f in d in g s a r e t ha t t he a ss e s s e e f a i led t o p r ov e id e nt ity a nd c a pac it y o f t h e s ub sc r ib e r co m pan ie s to pay s ha r e ap p lic a t io n m o ney or t ha t am ou nt was r ec e iv ed as a cc o m m oda t io n e nt r ies or t hat w he n as s es s e e m a na ge d to s ec ur ed do c um en ts li k e inc o me ta x r et ur n a n d bank ac c ou nt of t he s ubs c r ib e rs in s uc h c irc um s ta nc es , t he AO w a s j us t i fied in d r aw ing a d ve rs e inf e r e nc e a ga i ns t the a s s es s e e a nd t hat the AO has do ub t on the d oc um e nts pr od uc ed by the a s s es s e e. The fa ct s of t hes e de c is io ns are cl e a r ly dis t in g uis h a b l e fro m t h e f a c ts of t h e c as e b ec a us e in t he p re s ent c as e , t he a ss e s s e e ha s b e en able to p r ov e id e n t it y of t he i nv es t or s , t he ir c r ed it w o rt hine s s a nd g en uine ne s s of t he t r a ns ac t io n in the ma tt e r . T h e r ef o r e, t h e a ut ho r it ies b e lo w s h o u ld not h av e m ad e o r c o nf i r me d t he a dd it io n o f Rs .5 .7 5 c r o r es in t h e ha nd s o f t h e a s s es s ee . In v iew of t he a b ov e d is c us s i o n, w e s et a s id e t he o rd ers of t h e aut ho r it ies b e low a nd de le t e t he ad d it i on o f Rs . 5. 75 c r o re s . T his gro u n d of ap p ea l o f t he a ss e s s e e i s a l low ed .
90. In the case of M/ s. Garuda Imaging & Diagnostics Pvt. Ltd vs. ACIT in C.O.No.163, 164 & 165/Del./2016 the Tribunal held as under:
9.5 . D ec is io n of H o n' b l e S up r em e Co ur t in the case of Ea r t hm et a l El ec t r ic a l Pv t. Ltd . , v s . CI T d a t ed 3 0 t h Ju ly , 2 01 0 in S L P.N o .2 10 7 3 o f 19 99 , i n w h ic h it w a s h e ld as und e r " W e ha v e e xam in ed th e p os it ion , w e f ind t ha t t h e s ha re ho ld er s a re g en u ine p a rt i es . T he y ar e no t b o gus a nd 70 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
f ic t it io us t he r efo r e , th e im p u gn ed or d e r is s e t as id e ." I T A . N o s . 4 49 , 45 0 , 45 1 /D el /20 1 6 & C. O s .1 ... ...
10 . Co ns id e r ing t he fa c t s o f t he c a s e i n t h e lig ht of ma t e ri a l o n r ec o rd , it is c lea r t ha t as s es s e e p r od uc ed s u ffic ie nt d oc u me nt a r y e v id e nc e s b ef or e A. O. t o p r ov e t he i ng r ed i ents o f Sec t i on 6 8 of t he IT. Ac t . T he A.O .
ho w ev e r , d id not m a k e a ny fu rt her e nq u ir y o n t he d o c um e nts f i le d b y t h e a ss e s s e e . T h e A .O. t hus , fa ile d t o c o nd uc t any enq uir y a nd sc r ut iny o f t h e do c um en ts at as s e s s m ent s t age a nd m er e l y s us p ect ed t h e tr a ns ac t i on bet w ee n in v es t or c o m pa nie s a nd as s es s e e b ec a us e t h e i nv e st ors c o m pa ny w e re fr o m K o lk a ta . T he A . O . t h us , d id not p e rf o r m his d ut ies at t he a ss e s s m e nt s ta ge s o a s t o ma k e ad d it ion ag ain s t t he as s es s ee . T h e A. O . di d no t b r ing a ny ev id e nc e o n r ec or d t ha t t h e i nv es t me nt s m ad e b y t he in v es t o r c o m pa nie s w er e ac t ua l l y e m a na t ed f ro m t he c of f e rs of t he a ss e s s e e c om p a ny s o a s t o e na b l e it t o b e t re at ed a s und is c los e d i nc om e o f t he a s s es s e e . T h e A. O. c a n no t as k t h e as s es s e e t o pr o v e s o u rc e o f t he s o u rc e . T h er e f or e, t he fa c t s a nd c ir c um s t a nc es c l ea rly p r ov ed t ha t a ss e s s e e d isc h a r ge d in it ia l o nu s to p ro v e id e nt i ty of the in v es t o r c om p a ni es , t h e ir c re d it w or t h ines s a nd ge nu i ne n es s of t h e tr ansa c t io n in t he m at t er . T he Ld . CI T ( A ) on p r op e r a ppr ec ia t io n of ev id e nc e b e f o r e him , c o rr ec t ly d el e t e d t h e a dd it io n. N o int er fe re nc e is c a l led f o r in t h e ma tt e r. T h e L d . CI T (A) c o r r ec t ly d e le t ed t h e ad d it io n o f Rs .3 .3 5 c ro re s u nd e r s ec t i on 6 8 of t he I. T. Ac t . T he d e c is io n s r elie d up o n b y t he Ld . D .R. w o uld no t s u pp o rt t h e c as e of t h e R e ve n u e in v ie w of t he fa c t t h at no e nq uir y ha v e b e en ta k e n by A.O. in t hi s c as e to d is p ut e the d o c um ent ar y e v id e nc es f ile d by t h e a s s es s ee . T h e dep a rt me nt a l ap p ea l ha s no m er it a nd is ac c or d in gly d is m is s ed .
NON PRODUCTION OF DIR ECTORS OF LEND ER COMPAN IES CANNOT BE MADE A BASIS OF ADDITION IN THE HAN DS OF APPELLAN T.
91. It was next submitted that the observation of the Assessing officer in respect o f each of the lender that " None of 71 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
the directors of the company were produced for verification despite adequate opportunity is llegally untenable.
92. It is submitted that non-production of direc tors of le nder companies could not be a so le ground for making addition. In this regard assessee places reliance on below mentioned judicial pronouncements:
DELHI HIGH COURT
i) CIT vs. Value Capital Services (P.) Ltd. 307 ITR 33 4 (Del)
ii) CIT vs. Victor Electrodes Ltd. (Direc tors) 329 ITR 271 (Del)
9. Th e r e w a s no l e ga l o b li ga t io n o n t h e as s es s e e t o p r od uc e som e d ir ec t o r o r ot her r ep r es e nt a t i v e o f t h e a pp lic a nt -c om pa nies b ef o re t h e A ss es s in g O ff ic e r. T h er e f o r e, fa ilu r e o f t he a s s es s e e t o p r od uc e t h e m c o u ld n ot , b y it s e lf , h av e j us t i fie d t he a d d it io ns m a de b y t h e As s es s i ng Of fic e r, w he n t he a s s es s e e ha d f ur nis h ed d oc um e nts , on the b as is of w hic h, t he As s es s in g O ffic e r, if he so wa nt ed , c o uld ha v e s um m o ne d t he m fo r v eri fic a t i o n. N o a t t e mp t wa s m ad e b y t h e As s es s i ng O f f ic e r t o s um m o n t h e di r ec t o r s o f t h e a p pl ic a nt -c o m p a ni es . T he a dd r es s es o f t hes e com pa nie s m us t b e av a i lab le on t he s har e app l ic at io ns , m e m o ran d u m a nd a r t ic les of a ss o c iat io n a nd t h ei r inc o m e- ta x r et ur ns . If t h e As s es s i ng O ff ic e r h ad a ny do ub t ab out id e nt i t y of t h e s ha r e a p p lic an ts , h e c o ul d hav e s um m on e d t h e di r ec t o r s o f t he ap p lic a nt - c om p a ni es . No s uc h a tt em p t wa s , how ev er , m ad e b y h im . T he r e fo re , t he C om m is s io ne r of I nc om e-t a x (A p p e als ) a nd t he I nc o m e -ta x App e ll a t e T r ib una l, in o ur v ie w , w e re j ust i f ied in h old ing t ha t t h e id e nt i ty o f t h e s ha re a pp l ic an ts a nd t h e ge n u ine nes s o f t he t ra ns a c t io ns ha d b ee n es t a b lis h ed b y t he a ss e s s ee. F o r t he r e aso ns giv en in t h e p re c ed i ng p a ra gr ap hs , n o s ub s t ant ia l q ues t i o n o f la w a ri s es f or o ur c o ns id e ra t io n.72
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
iii) CIT vs. Fair Finvest Ltd. (Directors) 357 ITR 1 46 (Del)
iv) CIT vs. Goel Sons Golden Estate (P) Ltd. in ITA No .
212/2012 (Del) dated 11 .04.2012 THE ACT OF LACK OF ENQUIR Y BY THE ASSESSING OFFICER TO REBUT THE FUNDAMENTAL FA CTS ON RECORD BY THE APPELL ANT COMPANY-
93. The powers under section 131 of the ac t have been vested with the learned officer to enforce the a ttend ance w ho has rejected the docume ntary evidence witho ut any valid basis, the burden lay upon him to issue notices/summons to make further investigation. It is submitted that assessee seeks to emphasize that the instant case at best is a case of "lack of enquiry" and not a case where assessee has failed to discharge its onus u/s 68 of the Act. Reliance is place on the follo wing judgments:
CIT vs. Gangeshwari Metal (P) Ltd. 361 IT R 10 (D el)
8. M r . Sa b ha r w a l, a pp ea r in g o n beh a lf o f t he r eve nu e/a pp e lla nt s ou gh t t o pl a c e r eli a nc e o n a Di v is io n Be nc h d e c is io n o f t h is C o u r t in C I T v . N ov a P ro m ot er s & F in l ea s e (P ) L t d . [20 12 ] 34 2 I T R 16 9 / 20 6 T ax ma n 2 07 /1 8 t ax ma nn.c om 21 7 (D e l hi ). H o w ev e r , on g o in g t hr o ug h t he s a id d ec is io n in N ov a Pr o m ot ers & Fi nl e a s e (P ) L td . ( s up ra ) w e f ind t ha t t h e fac t s ar e c le a r l y d is t in guis h a b l e. I n f ac t , i n N ov a P r o mo t e rs & F inle as e (P ) L t d .
(s up ra ) its e lf t his C ou rt has obs e rv ed , i n t h e c o nt e xt of Lo v e ly Exp o rt s ( P ) Ltd . (s u p ra ), a s un d er : -
"T h e ra t io o f a d e c is i on is to b e un de rs t o od a nd app r ec iat e d in t he ba c k g r o und o f t he fa c ts o f t hat c a s e. S o un d e rs t o od , it w i ll b e s e en t ha t w h er e t h e c o m p l et e pa rt ic ula rs o f t he s h ar e ap p l ic a nt s s uc h as t he ir na m es a nd ad d re s s e s , inc o m e t a x f ile n um b e rs , t h e ir c re d it w o rt hi nes s , 73 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
s ha re a pp lic a t io n f or ms a nd s ha r e h o ld e rs ' r e gi st er , s ha r e t rans fe r r e gis t e r et c . a r e f ur n is h ed t o t he A s s es s ing O f f ic er a nd th e As s es s i n g O ff ic e r ha s no t c ond uc t ed a ny enq u i r y in t o t h e s am e o r has no m at er ial in his p os s es s i on t o s ho w t h at t hos e p ar t ic u la rs a re fa ls e a nd c a nno t b e a ct e d up o n, t h en n o a d d it i o n c a n b e m a d e i n t he ha n ds o f t he c om pa ny und e r s ec . 6 8 a nd t he r e me d y op e n t o t h e re v e n ue is t o go a ft e r t h e s har e a pp lic a nt s in a c c o rd anc e w i t h la w . W e a re afr a id t ha t w e c an no t ap p ly t he ra t i o t o a c a s e , s uc h a s t he p r es e n t o ne, w he r e t he As s es s i ng Of f ic er is in po s s es s io n of ma t e ria l t ha t d is c r ed it s a nd im p eac hes th e p a rt ic u la r s f ur n is hed b y t he a s s es s e e a nd a ls o e s ta b lis h es t he l ink b etw e e n s e lf - c o nfes s ed "a cc o m m od at io n en t r y p r o v ide rs " , w hos e b u s i nes s it is t o he lp a ss e s s e es b r in g int o t he ir b o o ks of a c c ou n t t he ir un ac c o u nt ed m o n ies t hr o ugh t he m e d iu m of s ha r e s ub s c r ip t ion , a nd t he as s es s ee. T he r at io i s in app l ic ab le to a case, a g a in s uc h as t he p r es ent o ne, where t he in v o l v em e nt of t h e as s es s e e i n s uc h m od us op er and i is c l ea r ly ind i ca t ed by va lid m at er ia l m ad e a v a i l ab l e t o t h e As s es s ing Of f ic er as a r es u lt o f in v es t i ga t ion s c a rr i ed o ut b y t he re ve nu e a ut ho r it ies i nt o t h e a ct iv it i es o f s uc h " ent ry p r ov id e rs " . The e xis t e nc e w it h the As s ess in g O ff ic e r of m at er ia l s h ow ing t h at t h e s h a r e s u bs c rip t io ns w er e co l lec t ed as p a rt o f a pr e- m ed it a t ed p la n -a s m o k e s c r e en c o nc e iv ed an d ex ec ut ed w it h the c o n niv a n c e or in v o l v em e nt o f t h e a ss e s s ee exc lu d es t h e ap p lic a b il it y o f t he r a t i o . I n o u r u nd er s t a n d in g, t h e rat io is at t r ac t ed t o a c as e w he r e it i s a s imp le q u es t io n o f w he t h e r t he as s es s e e has d is c ha rg ed t he b urd en pl a c ed up o n hi m u nd e r s ec .6 8 t o pr o ve a nd es t a b l is h t h e id e nt ity a nd c r ed it w o rt hine s s of t he s ha r e a pp l ic an t an d t he gen ui n ene s s of t he t ra ns a c t io n. I n s uc h a c as e , t h e As s e s s ing O ff ic e r ca n n o t s it b ac k w it h f o ld ed ha nd s t i ll t he a ss e s s ee e xha us t s a l l t he ev i d e nc e o r m a t e ri a l in h is po s s es s io n a nd t he n c om e f or w a rd t o m e re ly re je c t t he sa m e, w it h ou t c ar r y i ng o ut a n y v e r if ic a t io n o r e n q u i ry in to t he m at e r ial p l ac ed b ef or e hi m. T h e c a s e b e f or e us d o es no t fa ll u nd e r t h is c at eg or y an d it w o u ld b e a tr av es t y of t r ut h a nd j us t ic e to e xp r es s a v i ew to t he c o nt ra r y . (u nd er li ning a dd ed )
9. As c a n b e s e e n fr om t he ab o v e e xt ra ct , tw o t yp es o f cas es hav e b e en in d ic at ed . O n e in w h ic h t he as s es s i n g of f ic e r c a r rie s o ut t h e ex e rc is e w h ic h is r eq uir e d in la w a nd t h e ot h er in w hic h t h e as s es si ng of f ic er s it s ba c k w it h f ol d ed ha nd s ' t il l t h e a s s es s e e e xha ust s al l t h e ev id e nc e o r 74 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
m at er ia l i n h is p os s e ss io n a n d t h en c o m es fo rw ard t o m er e ly r ej ec t t h e s am e on t he p r es um pt i o ns . T he p r es e nt ca s e fa l ls in t h e lat t e r c a t e go ry . H er e t he a s s es s ing of f ic er, a ft e r no t i ng t he fac t s , m e re l y r ej ect ed t he s am e . T his w o uld be a p pa re nt f r om th e o bs er v a t io ns of t he a ss es s ing o ff ic e r i n t h e a s s es s me nt o rd er t o t h e f oll o w in g eff e ct :-
"I nv es t i ga t io n m a d e by t he I nv es t iga t io n W ing of t h e D ep ar t m en t c lea r ly s ho w e d t h at t his w as no t hin g b ut a s ha m t ra ns act io n of ac c om m oda t i o n e nt r y. T h e a s s es s e e wa s a s k e d t o ex p la in a s t o w hy t h e s ai d am oun t o f Rs .1 ,1 1 ,5 0 , 0 00 /- m ay n ot be a dd e d to it s inc om e. In r es p on s e, the a ss e s s e e ha s s ub m it t ed t ha t t he r e is no s uc h c r ed i t in t he b oo ks of t he a ss e s s e e . R at he r, t he a s s es s e e c om pa n y has r ec e i v e d the s har e a pp lic a t i o n m o ne y f or a l lo t m e nt o f it s s ha r e . It w as s t at ed t ha t t he ac t u a l a mo u nt r ec e iv ed wa s Rs . 5 5, 5 0 ,0 0 0 / - an d n ot Rs . 1 , 11 , 50 ,0 0 0 / - as m en t io ned i n t he n ot ic e . T he a s s es s e e has f u rn is hed d et ai ls of s uc h r ec e ip ts a nd t he c o nt ent io n of t h e as s es s e e in r esp ec t o f t h e am o u nt is f o u nd c o rr ec t . As s uc h t h e u n ex p la ine d a m o unt is t o b e t a k e n at Rs . 55 ,5 0 ,00 0 /-. T h e a s s es s ee has f u rt h e r t ri e d t o exp lai n t he so u rc e o f t hi s a mo u nt o f Rs . 55 , 50 ,0 0 0 /-b y f ur n is hin g c op i es o f s ha r e a pp lic a t io n m o n ey , ba la nc e s h eet , e tc . o f t he p a rt ies me nt i on ed ab ov e a nd a ss e rt ed t h at t he qu es t io n of a d d it io n in t h e inc o m e o f t he as s es s e e d o es no t ar is e. T hi s e xp la na t i o n o f t h e as s es s ee h as b ee n du l y c o ns id e re d a ng le . T hi s e nt r y r em a ins un ex p la ine d i n t he h an ds o f t h e a ss e s s ee b y t h e neg at i on w in g o f t he D ep a r t m en t Arc hiv ed by t he a ss es s e ar e in t h e h a nd s of t h es e a nd a dd ed t o it s inc o m e . Sinc e I am s a t is f i ed t ha t t he a s s es s ee h as f ur nis he d in ac c ur a t e p ar t ic ul a rs of it s inc o m e, p e na lty p r oc e ed ings u/s 2 71 ( 1 )(c ) a re b ei n g in it ia t ed s e p a ra t e ly ."
10 . T he fa c t s of N o v a Pr o m ot e rs a nd F in lea s e (P ) L t d. (s up ra ) f a ll i n t he f or me r c at eg o r y a n d t hat is w hy t h is Co ur t d ec ide d in fa v o ur of t h e r ev e nu e in t hat c a s e. H ow ev er , t he fa c ts o f t he p r es e nt c a se ar e c lea r ly dis t in g uis h a b l e a nd fa l l in t h e s ec o nd c at e g or y a nd a r e m o r e in li ne w it h fac t s of L o v e ly Ex p o rt s (P ) Ltd . (s up ra) . Th er e w as a c le ar lac k of in q uir y o n t h e p a rt o f t he as s es s i ng o ff ic e r o n c e t h e a s s es s ee ha d fu r n is h ed a ll t he m a t e r ia l w h ic h we have a lr e a d y r ef e r re d to a b ov e . In s uc h an e v e nt ua l i ty no add it i o n can be m ad e u nd e r s e ct io n 68 of the Ac t .
75ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
C o ns eq u ent l y , t h e qu es t i o n is a ns w e r e d in t he n e g at ive . T he d ec is i o n o f t he T ri b u na l is c or r e c t in la w. [Em p has is s upp l ie d ]
94. In CIT vs. M/s Kamdhenu Steel and Alloys Ltd. 361 ITR 220 (Del), it was he ld as under:
"1 2 . W h at d o es fo llo w f r o m t he a fo r e s aid ? It is n ot in do u bt t h at t he a ss e s s e e had g iv e n the pa rt ic ula rs of r e g is t r at i on of t he in v es t i ng /a pp lic a nt c omp a n ies ; c o n fir m at i o ns f r o m t he s h ar e app lic a nts ; ba nk ac c o u nt s d et a ils ; s h ow n pa ym e nt s t hr o u g h ac c o u nt pay ee ch e q ues , etc . As s ta t e d by us i n t h e b e g inn ing , wit h t h es e d oc um e nt s , it c a n b e s ai d t ha t t he a s s es s e e has d is c ha r ged it s i nit i al o nus . W it h t he r e gis t ra t io n of the c o mp a n ies , it s id e nt ity s t a nd s es t ab lis h ed , th e a pp lic a nt c om p a n ies we r e ha vi n g ba nk a c c oun ts , i t had m a d e t h e pay m ent t hr o ugh a c c ou nt p a y e e c h e q ues .
13 . N o d o ub t , w h a t t he AO o bs er v e d ma y m ak e him s usp ic i ous a b o ut s uc h c om p a ni es , e it h er t h ei r e x is t e nc e, w hi c h m ay b e o n ly o n pap e rs a nd / o r ge nu in e ne ss o f t he tr a ns a c t io ns , w h e n h e f o un d t ha t i nv es t ing c om pan ie s a re n o t a va ila b le a t g iv e n add r es s es o r t h at t h e is s ua nc e o f t he c h eq ue r ep r es e nt i ng s h a r e a pp l ic a t i on m o ne y o r p r ec e d ed b y t h e dep os i t o f c as h in t he b a n k ac c o unt of t he s e i n ve s t m en t c o m p a nie s .
95. In the case of M/ s. Heat Flex Cables (P) vs. ITO in ITA No. 2376/D/18 dated 01.08 .2018 it was held that:
7 .1 2 . T h e d ec is io ns re li e d up on by t he Le a r ned C ou ns e l f or t he As s e ss e e a b ov e s q ua r el y ap p l y t o t he f ac t s a nd c irc ums ta nc es of t h e c as e . S i nc e t he in v es t o r c om pa nie s ha v e c o nf ir m e d t h e t ra ns ac t io n w it h t h e as s es s e e-
c om p a ny w hic h w e re c o nd uc t e d t h ro ug h b a nk i ng c ha n n e l an d e nt i r e e v id e nc e w e r e b ro ug ht o n re c or d , t he r ea ft e r , if t he A. O . wa s no t s at is fied w i t h t he d oc um e nt s o n re c o rd and e xp la nat io n of t he as s es se e-c o m pa ny a nd t h e I n v es to rs , the A. Ο. s ho uld ha v e m ad e f urt he r e nq u iry o n t he s am e . H o w ev e r , it is a c as e w he r e t he A.O . ha s fa ile d to co nd uc t ne c es s a ry e n q u i ry , v er if ic at i on a nd d ea l w it h t he ma tt er in d ep t h. T h e r ef o r e, t he ex p la nat io n o f t he a s s es s ee -c om p a ny s ho uld n ot hav e b e en dis b e l ie v e d by t he au t h o r it ie s b e l o w. In t his v iew o f t h e ma tt er , I s et 76 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
a si d e t h e o r d er s o f th e a ut ho r it ies b e l o w an d d el e t e t he a d d it io n of Rs . 40 la k hs .
Low income of shareholder is an irrelevant consideratio n
96. Re liance is being placed on the below mentio ned judgme nts:
Pr. CIT vs. Goodview Trading Pvt. Ltd. 77 taxma nn.com 204(Del)
5. T he r ev en u e ur g es t hat t he C I T (A ) and t h e I T AT b ot h g r ie v o us ly e r re d in c a nc e llin g t he ad d it io ns m ad e . I t is s ub m it t e d t hat t he ge nui nen es s o f t he t ra ns a c t i o ns a n d t he c r ed it w o rt hine s s is s us p ec t i n t h e c i rc um s ta nc es o f t h e c a s e. L ea r ne d c o uns e l r e lie d up o n a tab u la r c ha rt p r ep a r ed b y t he AO t o s ubm i t t h at m o s t o f t he s har e app lic a nts had p a id li t t le o r no inc o m e ta x a nd t h a t a na lys is o f t h e b a nk s t at em en ts fu rn is h ed b y s uc h in v es t o r s r ev e a led th a t t h e a m o unt s w er e d ep os it ed i n c as h a nd a ls o r o ut ed t h ro ug h d if fe re nt e nt it ies . It w as s ubm it t ed t ha t w h er ea s t he id e nt it y of t he i nv e s to rs was no d ou b t es tab l is he d, nei t he r the ge nu in e ne ss nor c r e dit w or t hi nes s c o uld be s a id t o ha ve b ee n s a t is f i e d t o pa s s th e t es t of b o na fid e t r ans ac t io ns . It is s ub m it t e d t ha t in t hes e c irc ums t a nc e s , t h e C I T (A )' s d ec is ion a s e nd o rs ed b y t he I T AT is r eq uir ed t o b e s e t a s i d e in t h is a pp e a l .
6. T h is C o ur t ha s c o ns id e r ed t h e m at er i als o n r ec o rd .
7. As a ga ins t t he A O's t ab ula r a pp r ec ia t i o n of t he fa c ts , t h e CIT (A) a ls o f ra m e d a no t he r c h ar t w hic h int e r es t in gly r ev e a ls t he ne t w o r t h of t he c om p a ni es t h at ha d inv es t e d i n t he c o ur s e o f t h e s ha r e o ffe r in gs , of t he a pp lic a nt .
8. I t is qu i t e e v id ent f r o m th e C I T ( A) 's r eas oni n g i n p a ra gr a p h 4 .3 , t ha t t he m a t er ia ls c le ar ly p o int ed to t he share ap p li c a nt s ' pos s es s i ng s ub s ta nt ia l me a ns to i nv e st in t h e as s es s e e' s c om pa n y. T he AO s e iz ed c er ta in ma t e ri a l t o s a y t ha t m in ima l o r ins ub s t a nt ia l am ou nt s w as p aid as 77 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
t ax b y s uc h s ha r e a pp l ic a n ts and d id no t c a r ry out a d ee per a n a lys is o r ra t h er c ho s e t o i gn o re i t . I n t h es e c irc u ms t a nc es , t he infe re nc es d r aw n b y t he CI T (A ) a r e no t o nl y fa c t u a l b ut f ac ia l ly ac c u ra t e .
9. H a v ing re ga rd t o t h es e c i rc um s ta nc es , t h e c ou rt d is c er ns n o q u es t i on o f la w , lea s t a s u b s ta n ti a l q u es t io n , h av in g re ga rd t o t h e f ac t . "
97. In ITA No . 412 2/D/2009 dated 22.10.2014 AY 2001-02 ITO vs. N.C. C ables Ltd. affirmed by Hon'ble Delhi High Court in the case of Pr. CIT v. N.C . Cable s Ltd. reported in 391 ITR 11 it was held as under:
"8 . As fa r a s t h e a dd it i o n is c o nc e r n e d , t he as s e s se e ha d f ur nis he d l ar g e a mo u nt s of m a t er ia ls in t he f o rm of d o c um e nt s to e v id enc e t he ge nu in e ne ss of the id ent it y a nd the t r a ns ac t i ons as w el l as t he c r ed it w o rt hine s s of t he p a rt i es . Th e AO ap pa r en t l y c ond uc t ed t he pe rf u nc t o ry in q ui ry by d e p ut in g an i ns p e c t o r to the p r em is e s . As is c o nt e nd ed b y t he a s s es s e e , th e abs e nc e o f t he s e p art ie s , aft e r s ev en o r e ight y ea rs , ips o f ac t o c o ul d n o t ha v e le d t he AO t o c o nc lud e t ha t t he pa rt ies w e r e fic t it i ous o r no n-e xis t e nt . T h e as s es s e e h ad p r ov id ed d et a il s o f t he P e rm a ne nt Ac c ou nt N u mb ers (P AN ) a nd I nc o m e Ta x R et u r ns (I T R ) f or t he r ele va nt y e a rs . No t h ing p re v e nt ed t he AO f ro m i n q u i r ing i nt o t hes e det a ils i n s u pp o rt o f its sus p ic io n t ha t th e t ra ns a ct io ns w er e n ot ge nu i ne . Un d o ub t ed ly , t h e AO ha d c e rt ai n b a nk s ta t em ents w hic h d is c lo s ed f ac ia lly t ha t t h e a m o un ts w er e inf us e d in c a s h a t t h e r ele va nt t im e b ef o re t h e s ha re s w e re s ub s c r ib e d t o o r the c re di ts w e re g iv e n. T h os e s us p i ci o us c irc ums t a nc e s a t t h e s a m e t i m e c o u ld no t ha ve b e e n t h e c o nc lus i v e fac t o r in t his c as e.
9. Sinc e t he in v es t ig a t io n w ing h ad le ve ll ed s ev er a l al l eg at i ons , t h e AO s ho uld , in o ur o p ini o n, ha v e c ar r ied o ut a m o r e int ens iv e inv est i ga t i on int o t he inc o m e t a x r ec o rds t o a c t ua lly d is c e rn t he v ol um e o f t r ad e o r c om m erc e of t he s h ar e a pp l ic an ts /c re d i t o r s a nd t h eir i na b ili ty , if a ny , t o in v es t o r ad va nc e t h e am o unts in is s u e . T hat fa ilur e c a nn ot t ra ns la t e int o t he a m o un t by the a ss es s ee to p ro v id e b as ic inf o rma t io n w hic h is und o ubt ed ly no t d o n e . I n t hes e c irc um s tanc es , th is Co u r t i s o f t he o p ini on 78 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
t ha t t he r e i s n o i n fi rm ity i n t he c o nc u r re nt f ind ings of t h e C IT (A ) a nd t he IT AT o n t h is is s u e ."
98. In CIT vs. Vrindavan Farms (P) Ltd. in ITA No. 71/2015 dated 12.8.2015 (Del) it was held, "3 . T he I T A T h as in the im p ug ne d o rd e r n ot ic ed t ha t in t h e p r es e nt cas e t he Re v e nue ha s no t d o ub t e d t h e id ent i t y of t h e s ha re a pp lic ants . T he s o le ba s is f or t he R ev en ue t o d ou bt t h ei r c r ed i t w o rt hine s s w as t he lo w inc om e a s r e f lec t e d in t h e ir Inc o m e T ax R et u r ns . T he e nt ire d et a i ls o f t he s har e a pp lic a nt s w e re ma de av a i la b le t o t he A O b y t h e As s e s s ee . T his inc l ud ed t he i r P A N numb er s , c o nf i rm a t io ns , t h e ir ba nk s tat e m e nt s, t h e ir b ala nc e s he et s a nd pr o f it a nd lo s s a c c o u nts a nd t he c e rt if ic a t es of i nc o rp o ra t i on etc . I t was ob s er v ed b y t h e IT AT t ha t th e AO h a d n ot und e rt ak en a ny in v es t i ga t ion o f t he v er ac it y of t he a b o v e do c um e nt s s ub m it t ed to h im. I t ha s been r ig ht y c o m m ent e d by the IT A T t hat w i t ho ut do ub t i ng the do c um en ts , t he AO c om p let e d t h e as s es s m e nt o nly o n t he p r es u mp t i o n t ha t lo w r et ur n o f inc o m e w a s s u f fic ie nt t o d o u bt t h e c r ed it w or t hi nes s o f t he s ha re ho ld e rs . "
99. We find the Hon'ble Kolkata High Cour t in the case of M/s Dataware Pvt. Ltd. (supra) has observed as under:-
"In our opi nion, in s uch c ircums ta nces, the Ass ess i ng officer of the assessee canno t take the burden of ass essi ng the pro fit a nd los s acco unt of the cr editor when admittedly the c r editor hims elf is a n income tax as sessee. After getti ng the PAN number a nd getti ng the informati on that the cr editor is assess ed under the Ac t, the Assessi ng officer should enqui re fr om t he As ses sing Officer of the creditor as t o the ge nui neness of the t ransac tion and whet her s uc h tr ansa ction has been acc epte d by the Ass essi ng offic er of the creditor but instead of adopti ng such cours e, the Ass ess ing of fi cer hims elf could not ent er i nt o the ret urn of t he c r edit or a nd brand the same as unwor thy of c redenc e.79
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
So long it i s not es ta blished tha t t he ret urn s ubmitt ed by the creditor has bee n rejec ted by its Assessi ng Offic er , the Ass essi ng offic er of the asse ssee is bound to accept the sa me as genuine when the identi ty of the cr editor a nd the genui nene ss of transacti on thr ough acc ount paye e cheque has been establ is hed."
100. We find the Hon'ble Delhi High Court in the case o f Kinetic Capital Finance Ltd. (supra) has observed as under:-
"7 . The Tribunal, i n our vi ew, has c orrectl y appreci at ed t he positi on in law whi ch is that when a n une xplai ned cre dit is found i n the books of account of a n as ses se e the i nitial onus is placed on the assessee. The ass essee is requi red to disc ha rge thi s ini tial onus . Once t hat onus is discharge d, it is for t he revenue to prove that the credit found in t he books of acc ounts of the ass es se e is the undisclosed income of t he assess ee. In the circ umsta nc es obtaini ng in the present cas e, i n our vi ew, the ass ess ee has di sc harged that initial onus. The ass ess ee is not requi red therea ft er t o prov e the genui nenes s o f t he t ransacti ons as betwe en its c redit ors and that of the credit ors ' s ource of i ncome, i. e., t he sub- cr editors (S ee Nemi C hand Kothari vs CIT & A nr. (2003) 264 ITR 254 a nd judgme nt of this co urt i n ITA No. 1158/2007 Mod Creati ons Pvt. Ltd. vs Inc ome Tax Offic er dec ided on 29.08.2007).
8. The Tribunal is the fi nal fact fi ndi ng a utho rity. The Tribunal appears t o hav e been satisfied wi th the quality of the evidence placed b efor e i t. We fi nd no perversity in the fi ndings , not withstandi ng t he stra y sente nce in i ts ord er pertai ning to s ervic e of dep ositors. In t hese circumsta nces, we a re not pers uaded to ups et the fi ndings re turned by the Tribunal . In our view no subst antial question of la w arises for our c onsiderati on. The appeal is, acc ordi ngly, dis missed."80
ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
101. We find the Hon'ble Chhattisgarh High Court in the case of Abdul Aziz (supra) has held that where the ld. CIT(A) and the Tribunal has rendered a finding of fact that assessee has proved creditworthiness of creditors, no addition can be made u/s 68 , such findings are not liable to be interfered in appeal. The relevant observation of the Hon'ble High Court reads as under:-
"19. In t he case on hand, the CIT (A) has exa mined all the stat ements a nd depositi ons ma de by the creditors incl udi ng their source of i nc ome and it was found t hat the A .O. witho ut havi ng any mat erial on r eco rd, contrary to the sta tements a nd a ffidavits filed by the c r edi tors tak en a s ta nd that the creditors have fa iled t o prove their cre ditwort hi ness a nd, as s uch, the tra ns ac tion was not genui ne. The A.O. ha s not made a ny ot her independe nt enquiry to disprov e t he creditworthiness of the c redit ors , as establis hed by af fida vits , statements of the credit ors disclosi ng s ourc e of inc ome. Thus, the fi ndi ng of t he C IT (A ) t hat the obs er va tion of the A.O. with rega rd t o dissatisfa cti on was on the bas is of surmis es a nd conject ures, is jus t and proper. T he I.T.A.T. has affirmed the fi ndi ng rec orde d by the C IT (A) and, as s uch, ther e is no oc casion for this Court to i nterfere with the fi ndi ng of facts, whic h is ba sed on proper appraisal of evidenc e a nd on t he ba sis o f sufficient re cords .
20. In view of for egoi ng, we ar e of the c onsidere d opini on tha t the findi ngs recorded by t he C IT (A) a nd a ffirmed by the I.T.A. T. are bas ed on pr oper appreci ati on of fa cts and are not per v ers e, bei ng correla ted with e ach and ev er y tr ansaction. Thus, the iss ue is purely questi on of fac ts . No question of law, more so s ubs ta ntial questi ons of la w, as afores tated, a rise i n the facts of the case ."
21 . T he v a r io us ot h er d ec is i o ns r e lie d o n b y t h e Id . c o u ns e l fo r t he a ss e s s e e i n t h e c a s e l a w c om p il at i on s u p p o rt s t he c as e of t h e as s es s e e . Si nc e t he As s es s ing Of f ic er i n t he i ns t ant c as e has ac c ept ed t h e id ent it y 81 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
o f t he loa n c r ed it o rs a n d g enu ine ne s s o f t h e t r a ns ac t i on i n t he let t e r a dd r es s e d t o t h e a s s es s e e a n d t he c o nc er n ed As s es s ing O ff ic e rs o f t he lo a n cr ed it o rs w h ile gi v i ng t h e re p o rt alo ng w it h t h e i r pr of it a n d lo s s a cc o unt a nd b a l a nc e s hee t ha v e not gi v en a ny adv er s e f i n d i ng ab o ut t he c r ed it w o rt hine s s o f th e l oa n c re d it o rs , th er e f or e, c o ns i d er ing t h e t ot a lit y o f t h e fac t s of t he c a s e , w e a r e of th e c o ns id e r ed opi nio n t ha t t he a ss e s s e e in t he in s t a n t c a s e has d is c har g ed t h e b urd en cas t o n it b y pr ov in g a l l t h e t h r ee ingr e d ie nts of p ro vi s i o ns of s ec t i o n 68 of t he I .T . Ac t . T he re fo r e, t he a dd it io n m ad e b y t he As s e ss in g O f fi ce r a nd s us t a ined by t he I d. C I T (A) is u nc a l led fo r un d e r t he f ac t s a nd c irc u mst anc e s o f t h e ins t a nt c as e . W e , t h er e fo r e, s e t -as id e t he or d e r o f t h e Id . CI T( A) a nd t h e gr ou nds ra is ed b y t he a s s es s ee ar e al l o w ed.
21 . I n t he r es u lt , t h e a p pe a l f il e d by t he as s es s e e is all ow e d."
NO PROOF THAT MONEY R ECEIVED OR IGINATED FROM THE COFFERS OF THE A SSESSEE:
102. It is submitted and emphasized here tha t it is neither the allegation and nor there is any material to show that money received originated from the coffers of the asses see company and on this ground alone addition is not tenable. Re liance is placed on the following jud icial pronounce ments CIT vs. Kamdhenu Steel and Alloys Ltd. 361 IT R 220 (Del) "3 5 . T h e im p o rt a nt q u es t io n w h ic h a ris es a t t h is s t ag e is a s t o w h et he r o n t he ba s is o f t h es e f ac t s , c ou ld i t b e s ai d t ha t it is t he ass e s se e w h ic h has no t b ee n ab le t o ex p la in t he s o urc e a nd r ec e ipt of m o ne y . Ac co r d in g t o t he as s e s s e e, he ha d giv en t he r eq u ir e d i nf o r ma t io n to ex p la in t he so u rc e a nd w a s not o b li gat e d t o p r o ve s o urc e o f t he m o n e y . It is th e s ub m is s i on o f th e a s s es s ee t h at e v e n in c as e t he r e is s om e d o ubt a b o ut t he s o u rc e of m on e y i n giv in g i nt o c o ff e rs of t he s h ar e ap p lic a nt s w hic h t he y i n v es t e d w i t h t he as s e s s e e , it w o u ld no t a ut om at ic a ll y f o ll ow t ha t t he s a id m on e y be lo ngs t o t h e as s es s e e a n d bec o m es una c c o unt ed m one y. Ac c or d i ng t o 82 ITA No. 25 & 42/JAB/2020 CO No. 1/JAB/2021 Mohit Minerals Pvt. Ltd.
us , t h e as s e s s e e a pp e a r s t o b e c or r e ct o n t his as p ec t . W e f ee l t ha t s om e t hi ng m o r e w h ic h wa s n ec es s a ry a nd r eq u i r ed t o b e d on e by t he AO wa s no t d o ne . T he AO fa ile d t o c a rr y his s us p ic iou s t o lo g ic al c o nc lus io n by fu rt he r i nv es t iga ti o n . " [Em p h as is s upp lie d ]
103. In view of this, we hold that no addition is called for on account o f the amount received from M/s Ten Equity Ltd., M/s Everglow Equity Leasing (P) Ltd . and M/s Rishikesh Barter (P) Ltd.
104. In t he result, the appeal o f the assesse is allowed and appeal of the Revenue is dismissed.
105. Owing to the adjudication on merits the cross objection of the a ssessee is dismissed as infructuous.
Order Pronounced in the Open Court o n 01/02/2024.
Sd/- Sd/-
(Yogesh Kumar U.S) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 01/02/2024
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT JABALPUR