Income Tax Appellate Tribunal - Mumbai
Dcit 12(1)(1), Mumbai vs Adhunik Trnasport Organisation Ltd, ... on 28 August, 2019
1 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 आयकर अपीलीय अिधकरण "ए" ायपीठ मुंबई म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI माननीय ी महावीर िसं ह, ाियक सद एवं माननीय ी मनोज कुमार अ वाल ,ले खा सद के सम ।
BEFORE HON'BLE SHRI MAHAVIR SINGH, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No.3725/Mum/2017 (िनधा रण वष / Assessment Year:2012-13) DCIT-12(1)(1) M/s. Adhunik Transport Organisation Ltd.
बनाम/ 115, Udyog Bhavan nd Room No.223, 2 Floor, Aaykar Bhavan, M.K. Road Vs. Sonawat Road, Goregaon (E) Mumbai-400 020. Mumbai-400 063.
"थायीले खासं ./जीआइआरसं ./PAN/GIR No. AAAC A-4457-G (अ पीलाथ%/Appellant) : (&'थ% / Respondent) Revenue by : Ms. R. Kavitha-Ld. DR Assessee by : Shri D.V. Lakhani-Ld. AR सुनवाई की तारीख/ : 01/08/2019 Date of Hearing घोषणा की तारीख / : 22/08/2019 Date of Pronouncement आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member): -
1. As per the provisions of Section 68 of the Income Tax Act, 1961 where any sum is found credited in the assessee's books and assessee offers no explanation about the nature and source thereof or the explanation furnished is found to be unsatisfactory, the sum so credited may be charged to Income-Tax as the income of the assessee of that previous year. A proviso has been inserted to the said section by Finance Act, 2012 w.e.f. 01/04/2013 to provide that where the assessee 2 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 is a company and the sum so credited consists of share application money, share capital, share premium etc., the explanation furnished by the assessee shall be deemed to be not satisfactory unless the person in whose name such credit is recorded also offers an explanation about and nature and source of sum so credited and such explanation is found to be satisfactory. However, this proviso is applicable only from AY 2013- 14 and the same is not retrospective in nature as held by Hon'ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure Private Limited [80 Taxmann.com 272].
2. It is settled position of law that to avoid the rigors of Section 68, the assessee must prove the identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions. Once these three ingredients are fulfilled by the assessee, the primary onus casted upon him, in this regard, could be said to have been discharged and accordingly, the onus would shift upon revenue to dislodge the assessee's claim by bringing on record material evidences and unless this onus is discharged by the revenue, no addition could be sustained u/s 68. The Hon'ble Supreme Court in the case of Lovely Exports P. Ltd. [319 ITR 5], dismissing revenue's appeal, observed as under: -
2. Can the amount of share money be regarded as undisclosed income under section 68 of IT Act, 1961? We find no merit in this Special Leave Petition for the simple reason that if the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment.
3. Subject to the above, Special Leave Petition is dismissed.3 ITA No.3725/Mum/2017
M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 The ratio of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure Private Limited [80 Taxmann.com 272] & subsequently in CIT Vs. Orchid Industries Private Limited [88 Taxmann.com 502]. The Hon'ble Delhi High Court followed the said decision in Pr.CIT V/s Adamine Construction Pvt. Ltd. [107 Taxmann.com 84] against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court reported at 107 Taxmann.com 85. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT V/s Himachal Fibers Ltd. [98 Taxmann.com 72] against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court reported at 98 Taxmann.com 173. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT V/s Chain House International Pvt. Ltd. [98 Taxmann.com 47] against which revenue's Special Leave Petition has recently been dismissed by Hon'ble Supreme Court on 18/02/2019 reported at 103 Taxmann.com 435.
3. Further, as a principle of natural justice, it is obligatory on the part of revenue authorities to confront the adverse material used against the assessee and provide an opportunity to rebut the same. The failure to do so would render the assessment proceedings nullity in the eyes of law. The additions made merely on the basis of third-party statements and the denial to provide an opportunity to cross-examine the concerned parties would lead to violation of principle of natural justice rendering the assessment proceedings nullity as held by Hon'ble Apex Court in 4 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 Andaman Timber Industries [Civil Appeal No.4228 of 2006 02/09/2015].
4. Keeping in view the above legal position in mind, we find that revenue is under appeal before us for AY 2012-13 against the order of Ld. Commissioner of Income-Tax (Appeals)-20, Mumbai [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-20/DCIT-12(1)(1)/IT-95/2015- 16 dated 03/02/2017 qua deletion of addition u/s 68. The grounds raised by the revenue read as under: -
1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition u/s. 68 of share premium and share capital without appreciating the fact that the parties had no creditworthiness to justify such high amount of share premium.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in not appreciating the fact that the shares which were subscribed by bogus concerns for high premium were resold by them to promoters of assessee company at face value without charging any premium thus questioning the amount of high premium paid.
5.1 Facts on record would reveal that the assessee being resident corporate assessee was saddled with impugned addition of Rs.250 Lacs in the year under consideration in an assessment framed u/s 143(3) on 30/03/2015. During assessment proceedings, upon perusal of assessee's financial statements, it transpired that the assessee had issued 1 Lacs equity shares of face value of Rs.10/-
each at a premium of Rs.240/- per share to various concerns and accordingly received Share premium of Rs.240 Lacs. The details of these parties, for ease of reference, could be extracted in the following manner: -
5 ITA No.3725/Mum/2017M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13
No. Name No. of Amount of Amount of
Shares Share Share
Issued Capital Premium
1. Casper Enterprises Pvt. Ltd 10,000 Rs.1.00 Lacs Rs. 24.00 Lacs
2. Kush Hindustan Entertainment Ltd 16,000 Rs.1.60 Lacs Rs. 38.40 Lacs
3. Olive Overseas Pvt. Ltd 22,000 Rs.2.20 Lacs Rs. 52.80 Lacs
4. Nakshatra Business Pvt. Ltd. 16,000 Rs.1.60 Lacs Rs. 38.40 Lacs
5. Rigveda Properties Ltd 10,000 Rs.1.00 Lacs Rs. 24.00 Lacs
6. Aquastel Water Purification System P. 6,000 Rs.0.60 Lacs Rs. 14.40 Lacs
Ltd
7. Utkantha Trading and Properties Ltd. 6,000 Rs.0.60 Lacs Rs. 14.40 Lacs
8. A&A Shelters Pvt. Ltd. 14,000 Rs.1.40 Lacs Rs. 33.60 Lacs
Total 1,00,000 Rs.10 Lacs Rs.240 Lacs
Accordingly, the assessee was directed to file the requisite details thereof and documentary evidences to substantiate the fulfillment or primary ingredients of Section 68. In response, the assessee, vide submissions dated 23/01/2015, inter-alia, submitted that following documents in support of the transactions: -
-Address, PAN of the Shareholders, Number of Shares issued
-Copies of Share Application Form
-Details of Payment made by the share applicants
-Confirmation of Share Applicants along with their respective bank statement, financial statements, board resolutions, Income tax returns etc. 5.2 However, upon verification of details, it transpired that the entities listed at serial nos. 1 to 4 were managed and operated by one Mr. Praveen K. Jain who, under search proceedings u/s 132 carried out by the department, admitted to be indulging in providing accommodation entries. The entities listed at serial nos. 5 to 7 were stated to be entities controlled by one Mr. Abhishek Morarka who admitted before Sales Tax Authorities that no genuine activities were being carried out by these entitles. No reply was received from entity listed at serial No. 8. Upon confrontation of said facts, the assessee demanded copy of statements / documents relied upon by Ld. AO in 6 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 case of Shri Pravin Kumar Jain. The assessee denied having any dealing with Shri Pravin Kumar Jain. Similarly, the assessee demanded copy of statement of Shri Abhishek Morarka given before the Sales Tax Authorities. The attention was also drawn to the fact that in response to summons issued by Ld. AO, Shri Abhishek Morarka visited the office of Ld. AO on 17/03/2015 and on 20/03/2015. The assessee reiterated that the documentary evidences already submitted by the assessee would establish that all the entities were genuine and independent entities who applied to assessee's share capital. In the said background, it was submitted that invocation of provisions of Section 68 was not justified since the assessee established the primary ingredients of the transactions. Reliance was placed, inter-alia, on the decision of Hon'ble Supreme Court rendered in Lovely Exports P. Ltd. [319 ITR 5]. 5.3 The assessee, vide further submissions dated 25/03/2015, drew attention to the retraction dated 15/05/2014 in the shape of an affidavit filed by Shri Pravin Kumar Jain before investigation wing wherein it was stated that statement during search operations was recorded under coercion, force and mental duress. He confirmed that the activities of all the entities were genuine and all the entities were carrying on legal business. To substantiate the genuineness of the transactions, the assessee filed copies of the affidavits executed by the directors of entities listed at serial nos. 1 to 4 confirming the transactions of share capital with assessee company. 5.4 At the same time, the assessee also submitted Copy of Income Tax Return, financial statement of entity listed at Serial No.8 in 7 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 support of genuineness of the transaction with respect to the said party. The assessee also filed valuation report to justify the premium received on the share transactions.
5.5. in the above circumstances, the assessee pleaded for acceptance of the stated transactions.
5.6 However, the Ld. AO, at para 5.2, observed that mere filing of declarations by directors of entities listed at serial nos. 1 to 4 that the shares have been subscribed would not serve any purpose since Shri Pravin Kumar Jain has not proved the source of funding and also not made any attempt to counter evidences unearthed during the search proceedings and therefore, these affidavits would have no value in the eyes of law. The Ld. AO also disregarded the valuation arrived at by the assessee using Discounted Cash Flow method. At para 5.4, Ld. AO observed that all the shares subscribed during the year were transferred in Financial Year 2013-14 to Mr. Rajender K. Agarwal, promoter shareholder and Managing Director of the assessee company at face value. No satisfactory reply could be received from Mr. Rajender K. Agarwal in response to notice u/s 131. Summons issued u/s 131 to directors of concerns managed and controlled by Shri Pravin Kumar Jain through ward inspector revealed that none of the party was available at the given addresses. 5.7 The search action u/s 132 on 01/10/2013 on Shri Pravin Kumar Jain, in the opinion of Ld. AO, established beyond doubt that the said group was engaged in the business of providing accommodation entries of various types through numerous self-controlled business entities. The findings of the search have been extracted on para 8 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 5.7.1 of the quantum assessment order. Further, the retraction statements filed in the shape of affidavits were termed as a planned move to thwart the process of investigation in the cases of beneficiaries of accommodation entries. In the above background, Ld. AO, at para 5.7.3 came to a conclusion that Shri Pravin Kumar Jain was providing accommodation entries through numerous entities running in the names of various name sake directors / proprietors. All these entities were not carrying out any genuine business but solely used as conduits for providing accommodation entries. The real objective of these share subscription was to introduce unaccounted money of the assessee company in the garb of share capital. Another fact noted was that during the year 50,000 shares were issued to Mr. Ritesh Agarwal and Mr. Rajender K Agarwal at face value of Rs.10/- each as against the fact that such shares were issued to the applicant at a premium of Rs.240/- per share. Further, the shares, in later year, was transferred by the share applicants to the promoter shareholders at face value. 5.8 Finally, citing various judicial pronouncements, the said amount of Rs.250 Lacs representing Share Capital & Share Premium was added in the income of the assessee as unexplained cash credit u/s 68 by Ld. AO by observing as under: -
5.13 Creditworthiness is not proved by showing issue and receipt of a cheque or by furnishing a copy of statement of bank account, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment or had, acted as angel investors after due diligence or for personal reasons. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish creditworthiness of the shareholders.9 ITA No.3725/Mum/2017
M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 5.14 On the question of creditworthiness and genuineness, there is no doubt that the money was received through banking channels, but did not reflect actual genuine business activity. The share subscribers do not have their own profit-making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction. 5.15 Correct position of law is that the revenue authorities or the judiciary should be convinced about the identity, creditworthiness and genuineness of the transactions. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up.
5.16 Respectfully relying on the facts of the case and aforesaid judgments, the apparent was not real in the present case. The various judgments relied upon by me lend full support to the findings. Therefore, the addition is made at Rs.2,50,00,000/- being share capital raised by the assessee, u/s 68 of the I.T.Act, 1961.
6.1 Aggrieved, the assessee contested the quantum additions with success before Ld. first appellate authority by way of elaborate written submissions, which has already been extracted in the impugned order and therefore, not repeated here for the sake of brevity. In the submissions, the assessee drew attention to the elaborate documentary evidences submitted by it to prove the identity, creditworthiness of the investors and genuineness of the transactions. In the said circumstances, the assessee pleaded that it had discharged the onus by furnishing the identity of the investor, their address, PAN, financial statements, confirmations, details of bank account, bank statements, registration number of the company with the Registrar of Companies, documents filed by the investors with the Registrar of Companies to comply with statutory obligations, intimation to the Registrar of Companies about the issue of shares 10 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 giving the full details of the investors, the payment of stamp duty on issue of shares, details of the distinctive numbers and share certificate numbers of the shares which were issued along with Income Tax Returns of all the entities. The assessee denied having made any dealing with Shri Pravin Kumar Jain. The attention was again drawn to the fact that Ld. AO could not rely upon any material without confronting the same to the assessee and without providing an opportunity to the assessee to meet the evidence which is alleged to be against the assessee. Reliance was again placed, inter-alia, on the decision of Hon'ble Supreme Court in the case of Lovely Exports P. Ltd. [supra]. The attention was also drawn to the retraction statement filed by Shri Pravin Kumar Jain subsequent to search proceedings wherein the it was stated that statement was recorded under coercion, force and mental duress and he denied having given any accommodation entries and further stated that all the entities were carrying out genuine business activities and complying with applicable laws. The allegation of Ld. AO that the shares were subsequently bought back by the promoters was sought to be rebutted in the strength that those transactions happened in AY 2014-15 and the investors had the option to liquidate the investment depending upon the market situation and various other relevant factors. Therefore, the subsequent events would not change the character of transactions that took placed in AY 2012-13. Since the assessee fulfilled the primary ingredients as envisaged by Section 68, the said provisions could not be invoked to make additions in the hands of the assessee. It was also pleaded that the Ld. AO did not contradicted the evidences produced before him and 11 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 merely relied upon the statement of certain person ignoring the fact that these statements were retracted later on.
6.2 The Ld. first appellate authority, after due consideration of documentary evidences submitted by the assessee in support of the transactions, observed that the peculiar facts may have caused suspicion in the mind of Ld. AO, but there was no evidence or any other material on record to hold that the assessee had routed its own money in the garb of share capital. It was also noted that the assessee filed sufficient documentary evidences as tabulated by us in para 5.1 above and therefore, it successfully fulfilled the primary ingredients viz. identity of the investors, creditworthiness of the investors and genuineness of the transactions. More so, there was no cash transaction which would compel oneself to assume that the transactions were not genuine. The ratio of the following judicial decisions was noted in the context of factual matrix: -
(i) Hon'ble Delhi High Court in Oasis Hospitality Pvt. Ltd. 333 ITR 119
(ii) Hon'ble Bombay High Court in CIT V/s Creative World Telefilms Ltd. 333 ITR 100
(iii) Hon'ble Supreme Court in CIT V/s P. Mohankala 291 ITR 278
(iv) Hon'ble Delhi High Court in Stellar Investment Ltd. 192 ITR 287
(v) Hon'ble Delhi High Court in CIT V/s Gangeshwari Metal Pvt. Ltd. 361 ITR 10 6.3 Finally, the matter was concluded in assessee's favor by observing as under: -
5.12 In view of the legal position emanating from legal precedents and the observations of Hon'ble Delhi High Court, in the case of Gangeshwari Metal P. Ltd. as discussed above it is noted that when requisite documents such as PAN, Bank Accounts, Balance Sheet etc. were available with the A.O., to establish that no cash transactions were involved in the bank accounts of the investing company then without further probe to prove contrary the addition u/s 68 in the hands of the assessee cannot be made. In view of the above discussion on the 12 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 facts of the case and having regard to the decisions of the courts and judicial precedents as noted above, the addition made by the A.O. of the share capital and premium of Rs.2,50,00,000/- under Section 68 of the Income Tax Act 1961 cannot be sustained in appeal and is directed to be deleted. Accordingly, this ground of appeal is allowed.
Aggrieved as aforesaid, the revenue is in further appeal before us.
7. The Ld. Departmental Representative for Assessee [DR] relying upon the findings of Ld. AO placed reliance on the decision of Hon'ble Apex Court in Pr.CIT V/s NRA Iron & Steel Pvt. Ltd. [103 Taxmann.com 48], decision of Hon'ble Delhi High Court in CIT V/s N.R. Portfolio Pvt. Ltd. [222 Taxman 157] & CIT V/s MAF Academy Pvt. Ltd. [42 Taxmann.com 377] and the decision of Ahmedabad Tribunal in Pavankumar M.Sanghvi V/s ITO [81 Taxmann.com 308]. On the other hand, Ld. Authorised Representative for Assessee [AR], distinguishing the facts of case laws cited by the revenue, relied upon the findings and conclusion of Ld. first appellate authority. Reliance has similarly been placed on numerous judicial pronouncements favoring the assessee.
8.1 We have carefully considered the rival submissions, relevant material on record and deliberated on judicial pronouncements as cited before us. From perusal of factual matrix, the undisputed position that emerges is the fact the assessee has issued share capital to as many as 8 corporate entities during the year at certain premium. In support of the transactions, the assessee placed on record plethora of documents as tabulated by us in para 5.1. On the strength of this same, it was pleaded that the assessee proved the identity of the investor, creditworthiness of the transactions and 13 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 genuineness of the transactions. We also find that out of 8 entities, 4 entities are stated to be belonging to Shri Pravin Kumar Jain whereas 3 entities are stated to be belonging to Shri Abhishek Morarka group. One entity is stated to be an independent entity. From the perusal of quantum assessment order, we find that Ld. AO has heavily relied upon the statements given by Shri Pravin Kumar Jain during search proceedings. Reliance was also placed on the statement given by Shri Abhishek Morarka before Sales Tax Authorities. However, nothing on record would establish that the said statements were ever confronted to the assessee despite being specifically being asked by the assessee in his submissions. No opportunity to rebut the same was ever provided to the assessee. This become all the more important when the statements were retracted later on.
8.2 Upon perusal of quantum assessment order, it transpires that the assessee placed on record plethora of documents in the shape of Name, Addresses, PAN of the investors, their financial statements reflecting aforesaid investment made in the assessee company, copy of their respective Income Tax Returns, Relevant Board Resolutions authorizing such investments, copy of share application forms, details of payment, respective Bank Statements from where the investment were made in the investee company and confirmation of the investors which is evident from the following submissions / explanations furnished by the assessee before lower authorities: -
As regards Rigveda Properties Ltd. is concerned please refer to pages 55 to 110 of the paper book. We arc enclosing herewith the following information.14 ITA No.3725/Mum/2017
M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13
(a) The total number of share issued is 10,000 and our client received Rs.
25,00,000/- Out of this Rs. 1,00,000/- towards share capital and Rs. 24,00,000/- towards share premium.
b) Share application form -page No. 55 to 56c)Details of the payments made by the party giving cheque No., date, name of the bank& the branch --page No. 57
d)Party confirmation giving cheque No., date, name of the bank, branch, Funding confirmation, PAN no. -page No. 58
e)The copies of the bank statement where such investments are reflected - page No. 59 (f) Copy of PAN card-page No. 60
(g) Audited financial statements for year ending 31.3.2012-page No, 61 to 78.
(h) Board resolution passed at the meeting of the Board of Directors held on 05/03/2012 for making investments in the shares of the client -page No. 79
(i) Copy of income tax return filed for A.Y. 2011-12 & for A. K 2012-13-page No. 80 to 81
(j) Please note that the net worth of the investor company as on 31.3.2011 is Rs. 45,57,62,438/- and as 31.3.2012 is Rs. 45,94,91,972/-. Both these figures are reflected in the balance sheet of the company which are on pages no. 63 of the paper book.
(k) In the balance sheet of the company as on 31.3.2012. The total investments are reflected at Rs. 37,66,93,889/-. Please refer to page no. 63. The break up of the same is on page No. 66.
6. As Aquastel Water Purification Systems Pvt. Ltd. is concerned please refer to pages 111 to 154 of the paper book We are enclosing herewith the following information.
(a) The total number of share issued is 6,000 and our client received Rs. 15,00,000/- . Out of this Rs. 60,000/- towards share capital and Rs. 14,40,000/- towards share premium.
(b) Share application form -page No.lll to 112.
(c) Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No. 113.
(d) Party confirmation giving cheque No., date, name of the bank, branch, Funding confirmation, PAN no. -page No. 114.
(e) The copies of the bank statement -where such investments are reflected - page No.115.
(f) Copy of PAN card - page No. 116.
(g) Audited financial statements for year ending 31.3.2012 -page No.117 to 127.
(h) Board resolution passed at the meeting of the Board of Directors held on 09/03/2012 for making investments in the shares of the client -page No. 128.
(i) Copy of income tax return filed for A.Y. 2011-12 & for A.Y. 2012-13 -page No.129 to 130.
(j) The company had borrowed the funds in earlier assessment years and the amount of borrowing as on 31.3.2011 was Rs. 7,81,24,101/- and as on 31.3.2012 it was Rs. 9,00,00,901/-. The company also had the share capital of Rs. 33, 75.987/- as on 31.3.2011 and the share capital as on 31.3.2012 of Rs. 35,94,111/-. The company had also received share application of Rs. 5,00,000/- All these details are reflected in the balance sheet as on 31.3.2012 which is on page no.119.
15 ITA No.3725/Mum/2017M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13
7. As regards Utkantha Trading & Properties Limited is concerned please refer to pages 155 to 174 of the paper book. We are enclosing herewith the following information.
(a) The total number of share issued is 6,000 and our client received Rs. 15,00,000/- . Out of this Rs. 60,000/-towards share capital and Rs. 14,40,000/-towards share premium.
b)Share application form -page No. 155 to 156.
c)Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No. 157.
d)Party confirmation giving cheque No., date, name of the bank, branch, Funding information, PAN no. -page No. 158.
e)The copies of the bank statement where such investments are reflected - page No. 159. (I) Copy of PAN card-page No. 160.
(m) Audited financial statements for year ending 31.3.2 012-page No.161 to 172.
(n) Board resolution passed at the meeting of the Board of Directors held on . 15/03/2012 for making investments in the shares of the client -page No. 173. (o) Copy of income tax return filed for A. Y. 2011-12-page No. 174.
(p) The net worth of the company as on 31.3.2011 was Rs. 2,46,11,393/- and as on 31.3.2012 was Rs. 2,50,31.09S/-. Please refer to the balance sheet as on 31.3.2012 which is on page No.164.
(q) The investments reflected in the balance sheet of the company as on 31.3.2012 is Rs. 52,81,53,550/-. Please refer to page No.164 and ine breakup of the same is on page No. 167.
(r) The company has received advances amounting to Rs, 68,50,00,000/- and the same is reflected in the balance sheet as on page no. 166.
8. As regards Kush Hindustan Entertainment Ltd. is concerned please refer to pages 175 to 230_ of the paper book. We are enclosing herewith the following information.
(a) The total number of share issued is 16,000 and our client received Rs. 40,00,000/-. Out of this Rs. 1,60,000/- towards share capital and Rs. 38,40,000/- towards share premium.
(b) Share application form -page No. 175.
(c) Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No. 176.
(d) Party confirmation giving cheque Aa, date, name ^:the bank, branch, Funding confirmation, PAN no. -page No. 177.
(e) The copies of the bank statement where such investments are reflected ~ page No. 178.
(f) Copy of PAN card -page No. 179.
(g) The copy of the Form No. 23AC for the year ending 31.03.2012 being the form filed by the company disclosing the financial statements to the registrar of Company in Form XBRL is enclosed. Please refer to page . No. 180 to 207.
(h) Board resolution passed at the meeting of the Board of Directors held on 03.01.2012 for making investments in the shares of the client -page No. 208,
(i) Copy of income tax return filed for A.Y. 2011-12-page No.209 to 210.
(j) Please note that the net -worth of the investor company as on 31.3.2011 is Rs. 3,94,43,600/- and as 31.3.2012 is Rs. 4,08,01,953/-. Both these figures are reflected in the balance sheet of the company which are on pages no. 220 of the paper book.
16 ITA No.3725/Mum/2017M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13
(k) In the balance sheet of the company as on 31.3.2012 the sum of Rs. 94,08,068/- is reflected. Please refer to page No. 220.
9. As regards A & A Shelters Private Ltd. is concerned please refer to pages no.231 to 277 of the paper book. We are enclosing herewith the following information.
(a) The total number of share issued is 14.000 and our client received Rs.35,00,000- Out of this Rs.1,40,000/- towards share capital and Rs.33.60.000/- towards share premium.
b) Share application form-page No.231 to 234.
c) Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No.235 to 236.
d) Party confirmation giving cheque No., date, name of the bank, branch, Funding confirmation, PAN no, -page No. 237 to 238.
e) Copy of PAN card-page No. 239.
(f) Board resolution passed at the meeting of the Board of Directors held on 23.03.2012 for making investments in the shares of the client - page No. 240.
10. As regards Casper Enterprises Pvt. Ltd. is concerned please refer to pages no. 278 to 356 of the paper book.We are enclosing herewith the following information.
(a) The total number of share issued is 10,000 and our client received Rs. 25,00,000/-. Out of this Rs. 1,00,000/- towards share capital and Rs. 24,40,000/- towards share premium.
(b) Share application form -page No. 278.
(c) Details of the payments mode by the party giving cheque No., date, name of the bank & the branch -page No. 279.
(d) Party confirmation giving cheque No., date, name of the bank, branch, Funding confirmation, PAN no. -page No. 280.
(e) The copies of the bank statement where such investments are reflected- page No. 281 to 282.
(f) Copy of PAN card-page No. 283.
(g) The copy of the Form No. 23AC for the year ending 31.03.2012 being the form filed by the company disclosing the financial statements to the Registrar of Company in Form XBRL is enclosed - page No. 284 to 331.
(h) Board resolution passed at the meeting of the Board of Directors held on 02.01.2012 for making investments in the shares of the client-page No. 332.
i) Copy of income tax return filed for A. Y. 2011-12 -page No. 333 to334.
j) The copy of the Form No.23AC being the form filed by the company disclosing the financial statements to the Registrar of Company in Form XBRL is enclosed. In the balance sheet the company has borrowed funds of Rs.70,77,19,419/-as on 31.3.2011 and Rs. 56,61,48,543/- as on 31.3.2012. Please refer to page No. 346. The company has made investments in shares of other companies amounting to Rs. 35,57,77,437/-. Please refer to page No. 346.
11. As regards Olive Overseas Pvt. Ltd. is concerned please refer to pages 357 to 425 of the paper book We are enclosing herewith the following Information.
(a) The total number of share issued is 22,000 and our client received Rs. 55,00,000/-. Out of this Rs. 2,20,0007- towards share capital and Rs. 52,80,000/- towards share premium.
17 ITA No.3725/Mum/2017M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13
(b) Share application form -page No. 357 to 358.
(c) Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No. 359 to 360.
(d) Party confirmation giving cheque No,, date, name of the bank, branch, Funding confirmation, PAN no. -page No. 361 to 362_.
(e) The copies of the bank statement where such investments are reflected - page No. 363 to 364.
f) Copy of PAN card-page No. 365_.
g)copy of the Form No. 2 3AC being the form filed for the year ending 31.03.2012 by company disclosing the financial statements to the Registrar of Company in Form is enclosed. - page No. 366 to 398.
h)resolution passed at the meeting of the Board of Directors held on 02.01.2012 making investments in the shares of the client -page No. 399.
i)Copy of income tax return filed for A.Y. 2011-12 -page No. 400 to 401. J)Please note that the net worth of the investor company as on 31.3.2011 is Rs.2,79,44,320/- and as 31.3.2012 is Rs. 3,03,49,520/-. Both these figures are reflected in the balance sheet of the company which are on pages 414 of the paper book The company also received share application of Rs, 6,50,00,000/- as on 31,3.2012. Please refer to page No. 414.
(k) The company has made investments in shares amounting to Rs. 4,74,80,084/-. Please refer to page No. 414.
12. As regards Nakshatra Business Pvt. Ltd. is concerned please refer to pages 426 to 489 of the paper book. We are enclosing herewith the folio-wing information.
(a) The total number of share issued is 16,000 and our client received Rs. 40,00,000/-, Out of this Rs. i,60,000/- towards share capital and Rs. 38,40,000/- towards share premium.
(b) Share application form -page No. 426 to 427.
(c) Details of the payments made by the party giving cheque No., date, name of the bank & the branch -page No. 428.
(d) Party confirmation giving cheque No., date, name of. the bank, branch, Funding confirmation, PAN no. -page No. 429.
(e) The copies of the bank statement where such investments are reflected - page No. 430 to 431.
(f) Copy of PAN card-page No. 432.
(g) The copy of the Form No. 23AC being the form filed for the year ending 31.03.2012 by the company disclosing the financial statements to the Registrar of Company in Form XBRL is enclosed, --page No. 433 to 463.
(h) Board resolution passed at the meeting of the Board of Directors held on 02.01.2012 for making investments in the shares of the client -page No. 464.
(i) Copy of income tax return filed for A.Y. 2011-12-page No. 465 to 466.
d) The company has borrowed the funds amounting to Rs. 22,11,22,751/- as on 31.3,2011 and FDs. 15,50,34,000/- as on 31.3.2012 page no. 478.
(k) The company has made investment in shares amounting to Rs. 3,91,68,8951- as on 31.3.2012. Please refer to page No. 478.
18 ITA No.3725/Mum/2017M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 Upon perusal of the same, we find that the assessee had, inter-alia, not only furnished copies of bank statements but also placed on record financial statements reflecting the source stated investments in the assessee company. This is coupled with the admitted fact that Shri Abhishek Morarka, director of as many as 3 entities visited the office of Ld. AO twice but still nothing adverse could be brought on record by Ld. AO to contradict the claim the assessee. In fact, none of the evidences submitted by the assessee were ever rebutted by Ld. AO but heavy reliance was placed on third party statements which were never confronted to the assessee and no opportunity of cross- examination was ever provided to the assessee. Nothing has been brought on record to establish the fact that any cash got exchanged between the assessee and investors which would corroborate the fact that assessee's unaccounted money got routed back in the garb of share capital. The Ld. AO, while confirming the addition, has already admitted that the bank statements of the investors were duly furnished and there is no allegation of any immediate cash deposits in those accounts.
8.3 Proceeding further, we are of the considered opinion that no adverse inference could be drawn on bare facts that shares were subsequently repurchased by the promoters or similar shares were issued to the promoters at face value during the year unless the said facts were corroborated by any adverse evidences, which we are unable to find. Similarly, so far as the valuation of shares is concerned, we find that the assessee had justified the valuation by adopting discounted Cash Flow Method and the onus was on revenue 19 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 to rebut the method of valuation. We are unable to find any such exercise by revenue.
8.4 Lastly, it is trite law that no addition could be made merely on the basis of suspicion, conjectures or surmises. The extent and degree of investigation carried out by Ld. AO do not inspire us to concur with the submissions made by Ld. DR before us. 8.5 Therefore, on the facts and circumstances, the case laws being cited by us in the opening paragraphs and relied upon by Ld. first appellate authority were applicable to the facts of the case and we are of the considered opinion that the revenue was not able to discharge the burden of disproving the genuineness of the stated transactions. 8.6 The Ld. DR has relied upon the judgement of Hon'ble Apex Court rendered in PCIT Vs. NRA Iron & Steel Pvt. Ltd. [412 ITR 161] which we have carefully studied. Upon perusal, we note certain distinguishing features vis-à-vis factual matrix of the present case. Upon perusal of para 3.7 & 3.8 of the said judgement, it is noted that Ld. AO had issued summons to as many as 19 investor entities but nobody appeared on behalf of the investor companies. The submissions were received through DAK only which created a doubt about the identity of the investor company. Further, Ld. AO independently got field inquiries conducted at the location of investor companies, the result of which has been tabulated in the said para. Notice was served on few entities but the same were not replied to. In few cases, the notices were returned back. Submissions were received in few cases though DAK wherein the company only provided the mode of investment but no reasons were supplied for paying a huge premium of Rs.190/- per share. Another striking feature was that 20 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 most of the investors had reflected meagre income during assessment year under dispute. The two companies in Mumbai as well as Guwahati were found to be non-existent. With respect to Kolkata Companies, the response came through DAK only and nobody appeared. Further, the bank statements were not produced in most of the cases to establish the source of funds for making huge investments. However, the factual matrix, before us, in the present case is quite different. As noted in earlier paragraphs, the assessee has duly discharged the initial onus of proving the identity of the investors, creditworthiness of the transactions and genuineness of the transactions. Therefore, the ratio of aforesaid decision, in our respectful submission, do not apply to the facts of the case.
8.7 The decision of Hon'ble Delhi High Court in CIT V/s N.R. Portfolio Pvt. Ltd. [supra] has been rendered in peculiar circumstances wherein the assessee company adopted non- cooperative attitude before Ld. AO with a view to thwart the investigation, which is not the case here. The perusal of facts in the case of CIT V/s MAF Academy Pvt. Ltd. [supra] would reveal that there was immediate cash deposit before making investment in the assessee company, which is not the allegations here. Similarly, the decision of Ahmedabad Tribunal in Pavankumar M.Sanghvi V/s ITO [81 Taxmann.com 308] deals with the transactions of loans and the perusal of bank statement of lender entities revealed high transactions during the day and a consistently minimal balance at end of working day. The judgment was rendered after extensive analysis of the bank transactions. No such facts have been shown to have existed before us 21 ITA No.3725/Mum/2017 M/s. Adhunik Transport Organisation Ltd.
Assessment Year :2012-13 and no such allegations of immediate cash deposit have been leveled by Ld. AO against the assessee. Therefore, the said decisions, in our respectful submission, would not apply to the facts of the case. 8.8 Keeping in view the entirety of facts and circumstances, we are of the considered opinion that the impugned order, on the stated issue of addition u/s 68, would require no interference on our part. Therefore, finding no infirmity in the same, we dismiss the appeal.
9. In result the appeal stands dismissed.
Order pronounced in the open court on 22nd August, 2019.
Sd/- Sd/-
(Mahavir Singh) (Manoj Kumar Aggarwal)
ाियक सद / Judicial Member लेखा सद / Accountant Member
मुंबई Mumbai; िदनां क Dated : 22/08/2019
Sr.PS, Jaisy Varghese
आदे शकी ितिलिपअ"ेिषत/Copy of the Order forwarded to :
1. अपीलाथ%/ The Appellant
2. &'थ%/ The Respondent
3. आयकरआयु.(अपील) / The CIT(A)
4. आयकरआयु./ CIT- concerned
5. िवभागीय&ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai
6. गाड3 फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.