Income Tax Appellate Tribunal - Nagpur
Assistatn Commissioner Of Income Tax ... vs M/S Ramsons Insdustries Limited , ... on 7 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
"NAGPUR" BENCH, NAGPUR
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER &
SHRI KHETTRA MOHAN ROY, ACCOUNTANT MEMBER
ITA No. 87/NAG/2019 (A.Y.: 2010-11)
(Physical hearing)
Assistant Commissioner of M/s. Ramsons Industries
Income Tax, Central Circle-2(2) Vs Limited, Central Bazar Road,
2nd Floor, Room No. 207, Ramdasspeth,
Aayakar Bhavan, Telangkhedi Nagpur - 440002.
Road, Civil Lines,
Nagpur - 440 001. PAN :AAECR3577N
Appellant /Revenue Respondent /Assessee
Assessee by Shri K. P. Dewani, Advocate
Revenue by Shri Pankaj Kumar, CIT-DR
Date of hearing 16.02.2026
Date of pronouncement 07.04.2026
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER:
1. This appeal by the revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-3, Nagpur [for short "CIT(A)"] for assessment year 2010-11. The revenue has raised following grounds pf appeal;
"(i) On the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 15.00 Crore made by the AD treating the share capital and share premium received by the assessee as unexplained cash credit u/s 68 of the IT. Act, without going into the merits of the case.
(ii) On the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 15.00 Crore made by the AO treating the share capital and share premium received by the assessee as unexplained cash credit u/s 68 of the 1.T. Act, without appreciating the fact that incriminating documents were found from the residence of the director.
(iii) On the facts and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the addition of Rs. 15.00 Crore made by the AO treating the share capital and share premium received by the assessee as unexplained cash credit u/s 68 of the IT. Act without appreciating the fact that the assessee has failed to establish the creditworthiness of the creditors ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur and the genuineness of the transactions to the satisfaction of the AO, thereby ignoring the Apex Court decision in the case Pavankumar M. Sanghvi Vs Income-tax officer (Special leave to appeal No(s) 10250 of 2018 and NRA Iron & Steel Pvt. Ltd (SLP (Civil) No. 29855 of 2018) dated 5"
March, 2019 on same facts.
(iv) On the fact and circumstance of the case & in law, the Ld CIT(A) fails to appreciate that no prudent business-men will buy a share of face value of Rs.10 at Rs.90 premium and thereby selling again in the following year at Rs.10 to the assessee company suffering a loss of Rs 90?
(v) On the fact and circumstance of the case & in law, the Ld CIT(A) fails to appreciate that the seizure of blank share transfer forms given at the initial stage of investment along with the letter requesting for allotment of shares clarify the modus operandi of the assessee that he is the owner of shares and consequent investment in share capital and premium is his own.
(vi) On the fact and circumstance of the case & in law, the Ld CIT(A) erred in deleting the addition of Rs. 15.00 Crore being unexplained credit overlooking the crucial fact that the companies Warner Multimedia Ltd and Shyama Infosys Ltd, Unisys Software & Holdings Industries Ltd, Alka Diamond industries Ltd were used for providing accommodation entries in the form of bogus share capital/unsecured loan to various beneficiaries:
(vii) On the facts and circumstances of the case & in law, the Ld. CIT(A) failed to appreciate that the company from whom the share capital along with share premium was received did not have the creditworthiness to fund the share capital & premium and as such neither the creditworthiness nor the genuineness of the transaction is proved
(viii) On the fact and circumstance of the case & in law, the ld CIT(A) erred in deleting the addition of Rs.15,00,00,000/-being unexplained credit overlooking the deposition made by the operator who had accepted during the investigation made by investigating wing, Kolkata, that these beneficiaries' companies were paper companies and acted as conduit for routing unaccounted fund.
(ix) On the facts and circumstances of the case & in law, the Ld. CIT(A) failed to appreciate that the premium receipts from the companies Warner Multimedia Ltd and Shyama Infosys Ltd, Unisys Software & Holdings Industries Ltd, Alka Diamond industries Ltd had hardly any turnover and net profit
(x) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the investigation wing of the department at Kolkata has carried out detailed investigation in this regard and it was found that in the case of M/s Warner Multimedia Ltd, M/s Shyama Infosys Ltd and M/s Unisys Software & Holdings Industries Ltd that such companies appear in the list of paper/Jamakarchi companies?
(xi) On the facts and circumstances of the case, the Ld. CIT(A) falled to appreciate that to make further verification of identity, genuineness and creditworthiness of these companies, the circle inspector was sent to Kolkata to physically inspect the premises of these companies and the commissions u/s 131(1)(d) was also issued to DDIT(inv) Unit 2(3). Kolkata to make enquires with respect to these companies despite these efforts the companies could not be physically traced out at the given addresses failing 2 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur to establish the identity of these companies and genuineness of the transactions?
(xii) On the facts and circumstances of the case & in law, the Ld. CIT(A) failed to appreciate the ground realities that the documents in the case of shell companies are always in order so that they can act as a conduit in aiding tax evasion.
(xiii) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the onus was on the assessee to produce the parties to prove the bonafide of the share capital/premium received.
(xiv) On the fact and circumstance of the case & in law, the Ld CIT(A) erred in ignoring the fact that Hon'ble SC in the case of Navodaya castle (Pvt) Ltd Vs. CIT(2015)[230 Taxman 268] held that certificate of incorporation, PAN, return of income etc were not sufficient for purpose of identification of subscriber is a paper company and not a genuine investor.
(xv) On the fact and circumstance of the case & in law, the Ld. CIT(A) erred in relying on the judgment of Hon'ble Bombay High Court ITA No. 1613 of 2014(CIT Vs. Gagandeep infrastructures Pvt Ltd) holding it to be concluded, overlooking the fact that the said judgement not admitting the question of law on this issue has been modified by the Hon'ble SC on 02/04/2018 (SLP No.5759/2018) reinstating the said question of law to be considered in the appeal u/s 260A before the Hon'ble High Court.
(xvi) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the seizure of blank share transfer form was the incriminating evidence which lead to the acceptance of accommodation entries by the assessee in the form of share capital/premium.
(xvii) On the facts and circumstances of the case and in law, the Ld CIT(A) failed to appreciate that the evidences/documents/material unearthed at the time of search has to be seen as consolidated whole purporting to the period of assessment enunciated u/s 153A of the Act (xviii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in limiting the scope of section 1534 only to undisclosed income when as per the section, the AG has to assess or re-assess the total income of the six assessment years?
(xix) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the scope of section 153A is limited to assessing only search related income, thereby denying Revenue the opportunity of taxing other escaped income that comes to the notice of the AO?
(xx) On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that assessing officer while computing income u/s 153A is well within his powers to compute taxable income on the basis of material on record even though such material was not found during the course of search operation in view of section 15881 w.e.f 01/06/2003 (xxi) On the facts and circumstances of the case and in law the Ld. CIT(A) erred while deleting the addition holding that a completed assessment can be interfered with by the AO only on the basis of some incriminating documents ignoring the crucial fact that original assessment made u/s 143(1) where AO did not possess the opportunity to examine the issue 3 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur (xxii) On the facts and circumstances of the case and in law the Ld. CIT(A) erred while deleting the addition holding that a completed assessment can be interfered with by the AO only on the basis of some incriminating documents ignoring the crucial fact that original assessment made u/s 143(1) had not reached finality and was liable for reopening u/s 147 till 31/03/2017.
(xxiii) On the facts and circumstances of the case the Ld CIT(A) failed to apply the definition of conclusiveness by Hon ole Bombay High Court in the case of Rajeev Yeshwant Bhale Vs PCIT W.P No.3366 of 2017 with C.A. No.849 of 2017.
(xxiv) On the facts and circumstances of the case, the Ld. CIT(A) erred in relying on retraction of hawala operators Pravin Jain before the search on assessee premise while deletingthe addition of Rs.15,00,00,000/- failing to appreciate the direct and circumstantial evidence is available on record (xxv) On the facts and circumstances of the case the Ld. CIT(A) erred in relying on the affidavit of Hawala operator Pravin Jain for accepting the genuineness of transaction of Alka Diamond Industries Ltd failing to appreciate that Alka Diamond Industries Ltd was not existing at given address.
(xxvi) On the facts and circumstances of the case the id. CITIA) failed to appreciate that strict principles of Indian Evidence Act are not applicable in income tax Act and denial of opportunity of cross examination does not render the decision void ipsa jure as held by Hon'ble Supreme Court in State Bank of Patiala Vs SK. Sharma 7 (xxvii) On the facts and circumstances of the case the Ld. CITIA) erred in deleting the addition on technical grounds while failing to appreciate that CIT(A)'s power is co-terminus with AD and she could have corrected the impugned error of AD clearly propounded in the decision of Hon'ble Supreme Court in Kanpur Coal Syndicate.
(xxviii) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that the word 'evidence' as used in section 143(3) is comprehensive enough to cover circumstantial evidence also, and it is not confined to direct evidence.
(xxix) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate that under the tax jurisprudence, the word 'evidence' had much wider connotations and the use of word 'material' in section 143(3) shows that the assessing officer, not being a court could rely upon material, which might not strictly be evidence admissible under the Indian Evidence Act for the purpose of making an order of assessment.
(xxx) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate the plain reading of section 142 and 143 clearly suggests that the assessing officer may also act on the material gathered by him and the word 'material clearly shows that the assessing officer is not fettered by the technical rules of evidence and the like, and that he may act on material which may not strictly speaking be accepted evidence in court of law. (xxxi) On the facts and circumstances of the case, the Ld. CIT(A) failed to appreciate the decision of the Hon'ble ITAT Bombay Bench "B' (ITA No. 4 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur 614/Bom/87 A.Y. 1983-84) in the case of M/s Mont Blanc Properties and industries Pvt Ltd which was upheld by the Hon'ble Supreme Court where what constitute evidence under tax jurisprudence is clearly explained. (xxxii) On the fact and circumstance of the case & in law, the Ld CIT(A) erred in relying the affidavit filed voluntarily ignoring Sec. 3 of Evidence Act wherein affidavits are not included as evidence.
(xxxiii) On the fact and circumstance of the case & in law, the Ld CIT(A) erred in ignoring the fact that the affidavit will partake the character of evidence only if it is filed either as per Rules 1,2 and 3 of order 19 of CPC or the particular enactment or statute that allows, an affidavit to be treated as an evidence. Its verification has to confirm the conditions laid down under Rule 3 of Order 19 of CPC.
(xxxiv) On the fact and circumstance of the case & in law, the Ld CIT(A) erred in appreciating that there is no specific provision under the income Tax Act which allows for admission of affidavit as an evidence (xxxv) Any other question of law and fact to be raised at the time of appeal. (xxxvi) It is humbly submitted that the order passed by Ld CIT(A) is perverse, and against the settled provisions of law, and the order impugned cannot be sustained under the scrutiny of law and facts. (xxxxvii) It is humbly prayed to set aside the order of the CIT(A) and restore the order of the assessing officer."
2. The brief facts of the case as extracted from the orders of lower authorities are that search and seizure action under section 132 was carried out on Ramsons Group in Nagpur on 17.11.2015. The assessee is a part of Ramsons group; accordingly, office premises of assessee was also covered. During search action, certain incriminating evidences were found and seized. Case of the assessee was centralized. Notice under section 153A dated 01.06.2016 was served upon the assessee for filing return of income for various assessment years including for the impugned assessment year. In response to notice under section 153A, the assessee filed its return of income on 25.02.2017, declaring Nil income. Case was selected for scrutiny. During assessment, the Assessing Officer ('AO') noted that assessee is a closely held company, incorporated on 24.04.2009 and it was first year of its 5 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur operations. The AO on perusal of the financial details furnished by assessee noted that during relevant financial year, the assessee has issued equity shares and also charged share premium. The assessee raised share capital of Rs. 20.00 crores. The AO prepared details of shareholders to whom the shares were allotted. Such details of shareholders like their PAN, number of shares allotted, face value and premium charged by the assessee is summarised in para 3.1 of assessment order. The AO noted that out of 21 shareholders, 10 shareholders are from assessee group, from whom no premium is charged. The assessee charged premium of Rs. 90/- per share for a share of face value of Rs. 10/- each. The AO recorded that from 11 investors/ persons, the assessee has raised Rs. 13.50 crores as premium and Rs. 1.50 crores as share capital aggregating of Rs. 15.00 crores. The AO in para 3.2 of the assessment order recorded that during search action on assessee group, Annexure-B5 was seized which contained transfer deeds for transfer of shares and receipt of sale consideration. There are certain blank entries at the place of sale consideration on transfer form. The AO in para 3.3 of assessment order recorded that he has information that Investigation Wing of Kolkata carried out investigation regarding various penny stock companies. In the said investigation, statement of various persons like Anil Kumar Khemka and Jagdish Prasad Purohit were recorded, wherein they have accepted that M/s. Warner Multimedia Ltd., M/s. Shyama Infosys Ltd. and M/s. Unisys Software and Holdings Industries Ltd. were merely paper companies which were used to provide only accommodation entries like bogus share application money/share premium/LTCG etc. The 6 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur AO on the basis of information of Investigation Wing, Kolkata and alleged incriminating material took his view that share premium received by assessee is abnormal.The assessee received share capital and share premium fromWarner Multimedia Ltd., Shyama Infosys Ltd. and M/s. Unisys Software and Holdings Industries Ltd.The AO also recorded that commission under section 131(1)(d) was also sent to Kolkata to make inquiries about such companies, but such companies could not be traced. In para 3.5 of assessment order, the AO recorded that in subsequent year (AY 2011-12) all investors have sold their shares to the group company i.e. Ramsons Ispat Limited at the price of face value.During the course of assessment, one of the directors of assessee Rajesh Sarda was asked as to why the share capital and share premium introduced by assessee should not be brought to tax. The AO recorded that in response to such show cause notice, the assessee filed confirmation of investors along with other details of investors. The AO in para 3.6 of assessment order recorded that director of assessee failed to produce investors. The AO in para 3.12 of assessment order recorded that statement of Rajesh Sarda, one of the Director of the assessee company was recorded. The AO referred the certain questions and answer recorded under section 131 during assessment. The AO recorded that in answer to various question, the Director of assessee gave general answers. With regard to various unsigned vouchers and forms, he blamed company secretory. The AO asked the assessee to file confirmation of investors. The AO recorded that the assessee filed confirmation of 18 investors but failed to prove the creditworthiness and genuineness of all the 7 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur investors. The assessee has not offered any satisfactory explanation about the nature and source of investment in its companies. The evidence furnished by assessee about investors are not sufficient. The AO by referring decision of Hon'ble Apex Court in the case of Sumati Dayal (208 ITR 465- SC) treated the share capital and share premium as unexplained cash credit in the assessment order dated 28.12.2017 passed under section 143(3) r.w.s. 153A.
3. Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee challenged the addition as well as the validity of addition in the assessment order under section 153A of the Act. The assessee filed detailed written submissions in support of its various grounds of appeal. The written submissions of assessee are recorded at page no. 3 to 16 of the order of ld. CIT(A). The assessee in its written submission submitted that the assessee is closely held company incorporated on 25.04.2009. This assessment year was the first year of its operation. During the assessment, the AO noted that assessee had charged premium only from outsider and no premium is charged from group concerns /promoters. The investor visited the business establishment of the assessee and invested on expecting good returns without any involvement in the business of the assessee. However, the promoters are involved in day-to-day business affairs of assessee company. The condition/restriction prescribed under section 56(2)(viia) is made applicable only from 01.06.2010 and the same is not retrospective. In response to various show cause notice, the assessee furnished complete 8 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur details of the investors. No infirmity was pointed out in such evidence. The AO recorded that during search action blank share transfer form and blank receipt signed by investors were found which were considered as incriminating documents found during the search. Such document was required as per Section 108 of Companies Act, 1956 for registration of transfer of shares to any other person from the existing shareholders. The documents found during the search were duly recorded whenever necessary to record. No unrecorded transaction was found on such unsigned blank transfer form as recorded in assessment order. No unrecorded share transfer form was found. Rajesh Sarda, director of the assessee in response to question no. 42, 43 and 44 of his statement also clarified that this was a curable mistake in filing the details, in forms by company secretary. The AO instead of verifying the facts has simply recorded that answer of director is general and not satisfactory and cannot be relied. The AO failed to prove that the evidences furnished by assessee as non-genuine and incriminating, despite the fact that all information was available with AO during search action and all were duly recorded in the books and record of Registrar of Companies (ROC). Mere incomplete signed documents were found with no proper information does not render the documents as incriminating. The AO has not found any deviation in the amount or number of shares mentioned in the share transfer form nor any transaction outside the books of assessee. The assessee apart from explaining the fact submitted that AO relied on third party information. The AO relied on the statement of some 9 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur unknown person which has no connection with the assessee. To support such contention, the assessee also relied on certain case laws.
4. The ld. CIT(A) on considering the assessment order, submission of assessee and the material available on record summarised the stand of AO and noted that AO has taken a specific objection that assessee issued share premium to its group entity on its face value but to outsider they have charged premium. On such objection, the assessee explained that premium is charged where shares were issued through private placement as they were investor in the business of assessee. However, all work relating to establishment of factory, its production, sales and other management were required to be carried out by promoters only. Thus, no premium was charged from promoters and were charged from investors only. Charging of premium is a commercial decision and not required any justification during the period under consideration. It was a propagative of board of directors to decide the premium. To support such view, the assessee made reliance on various decisions of different High Courts and Supreme Court including in CIT vs. Dalmia Cement (254 ITR 377),(Delhi HC)and CIT Vs Walchand and Co. (P.) Ltd. [1967] 65 ITR 381 (SC), J. K. Woollen Manufacturers vs. CIT [1969] 72 ITR 612 (SC) and CIT Vs PanipatWoolen and General Mills Company Limited [1976} 103 ITR 66 (SC).The ld CIT(A) also held that the signed blank transfer form and receipt shall not be considered as incriminating documents, transaction mentioned in those forms were duly recorded in the books of assessee. The ld. CIT(A) held that submission of assessee is found to be correct and acceptable which is regularly followed 10 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur practice of unlisted companies while determining the prising of shares at the time of issue of shares. There was no law in force which restrict the assessee from issuing share at any amount of premium. Both the parties agreed on pricing and there was no restriction. Therefore, objection of AO is not justified. The assessee has clearly explained nature and source on investment. Once, the assessee fulfilled all three conditions as required under section 68, that indemnity, creditworthy and genuineness of transaction, the onus shifts on the AO to disprove the material placed before him. Without disproving such evidence by the AO, the addition so made is based on surmises and conjecture and is not justified. On the basis of aforesaid findings, the ld CIT(A) delated the entire addition under section
68. Aggrieved, by the order of ld CIT(A), the revenue has filed present appeal before this Tribunal.
5. We have heard the submissions of the learned Commissioner of Income Tax-departmental representative (ld. CIT-DR) for the revenue and the learned authorised representative (ld AR) of the assessee. In addition to oral submissions, the ld AR of the assessee also filed his short-written synopsis, which is taken on record. The ld CIT-DR for the revenue submits that in all grounds of appeal, the revenue has challenged the order of ld CIT(A) in deleting the addition under section 68 of Rs. 15.00 Crore. The ld CIT(A) deleted the addition of section 68 without going into the merits of the case that incriminating evidence was found from the residence of the assessee. The ld CIT(A) failed to appreciate that blank share forms and transfer forms was recovered from the assessee. The ld CIT(A) failed to 11 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur appreciate the facts that companies from whom the assessee received share capital and share premium were merely paper companies and were used only for providing such accommodation entry only. Investigation wing of Calcutta made a full-fledged investigation and foundthat such companies were merely jama kharchi companies. The assessee failed to establish identity, creditworthy and genuineness of transaction. Interested feature is that shares were again sold to the group company in next year and the face value of shares, though, there was no material change in the business activity of the assessee-company. To support his submissions, the ld CIT-DR for the revenue relied on the following decisions, PCIT Vs NRA Iron and Steel Private Limited. (2019) 4 SCALE 25, ITO Vs Mont Blanc Properties Private Limited. in ITA No. 614/Mum/87, CIT Vs Gagandeep Infrastructure Private Limited in Special Leave Petition No. 5759/ 2028 dated 02.04.2018 (Supreme Court), Navodaya Castle (P) LimitedVs CIT (2015) 56 taxmann.com 18 (SC), Pawan Kumar M. Singhvi Vs ITO (2018) 97 taxmann.com 398 (SC).
6. On the other hand, the ld AR of the assessee submits that search action was carried out on the assessee group on 17/11/2015. When search action was initiated, regular assessment for AY 2010-11 was already completed under section 143(1) on 17/04/2011, such fact is accepted by AO in para-1 of his order. Thus, it was an unabated assessment. Addition made by AO is not based on any incriminating material found in the course of search. It is not the case of abated assessment. Therefore, the addition made by AO under section 68 is absolutely unjustified. To support his submissions, he relied on the decision of Hon'ble Supreme Court in PCIT vs. Abhisar Buildwel Private Limited reported in 454 ITR 212 (SC), copy of decision if 12 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur filed. The AO in para 3.2 at page 4 of assessment order noted that incriminating material found during search being share transfer forms, copy of such seized documents are at Page 1 to 21 [Paper Book-Vol.-I]. Share transfer forms are for purchase of shares by Ramsons Ispat Ltd, copy of which is filed at Page No.1 [Vol. - I], which is working of stamp duty on transfer of shares to M/s. Ramsons Ispat Ltd. Share Transfer Forms at pages 3 to 13 indicates transferee M/s. Ramsons Ispat Ltd. Date on Share transfer Form is dated 31/05/2010 and in respect to all other forms, date noted is of later financial years. All such pages 1 to 16 of seized material are not relevant to AY 2010-11 and are not in respect to share capital contribution received by assessee company in Financial Year 2009-10 relevant to AY 2010-11. Such evidences do not and cannot constitute incriminating material for making addition at the hands of assessee. To support his view, the ld AR of the assessee relied on the decision of Delhi Tribunal in DCIT vs. DMG Finance Investment Pvt. Ltd. in ITA No.3432/Del/2023 dated 28/11/2024.
7. The ld AR of the assessee would submit that page No. 17 to 21 of seized material are in respect of sale note for shares by G-Tech Info Training Ltd. It is undisputed fact on record that shares from aforesaid company are purchased by Ramsons Ispat Ltd. In the assessment of Ramsons Ispat Ltd. purchase of shares are accepted as genuine transaction by same AO while passing assessment on same date, copy of assessment order in case of Ramsons Ispat is filed at page No. 26 to 38 of PB. Transaction referred to in seized documents is recorded transaction in books of accounts of 13 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur associate company for AY 2011-12. So, it cannot be considered as incriminating material to make addition in case of assessee under section 68 in AY 2010-11. Share Transfer forms are pertaining to AY 2011-12 and are in respect of recorded transaction and in no manner of consideration can be considered to be in the nature of incriminating material. It is settled position of law that incriminating material relevant to assessment year for which addition is to be made, is condition precedent for making addition in 153A proceedings. In the case of assessee, no incriminating material pertaining to AY 2010-11, is found in the course of search. Addition made is unjustified and unsustainable. To support his submission, the ld AR of the assessee relied on the following case laws;
CIT Vs Sinhgad Technical Education Society (2017) 397 ITR 344(SC) PCIT Vs Hadoti Punj Vikas Ltd. (2023) 157 taxmann.com 193 (SC)
8. The ld AR of the assessee submits that the assessee before AO has filed and again now placed on record confirmation of share capital contribution, PAN and acknowledgement of Income Tax Return of corporate entities with Bank statement and financial statements of investor companies. Financial statements of investor entities clearly indicate that share capital subscriber have substantial net worth. Identity, creditworthiness and genuineness of transaction stands established, considering legal evidence on record. The documentary evidences placed on record has not been found to be incorrect or false in any manner. Transactions are through proper banking channel. Onus to explain credit under section 68 of Act, has been satisfactorily discharged in terms of decision of Hon'ble Apex Court in the case of Orissa 14 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur corporation Private Limited reported viz; 159 ITR 78 (SC) held that once, the assessee discharged its onus, the onus shifts of the AO to carry out further investigation to disprove the evidences filed by the assessee.
9. In alternative submissions, on merit, the ld AR of the assessee submits that the assessment year under consideration is AY 2010-11. In terms of law laid down by the Hon'ble Apex Court in the case of Lovely Exports (P) Ltd. no addition ought to have been made if the identity of the corporate shareholder is established. On the facts and evidence on record the assessee had not only established identity of investor but had also established creditworthiness and genuineness of transaction. Thus, that addition made by AO is arbitrary and unjustified. Reliance is place on the following case laws;
CIT vs. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom.) Paradise Inland in SLP (Civil) Diary No(s). 12644/2018, Pr. CIT vs. Paradise Inland Shipping Pvt. Ltd. (2017) 98 CCH 417 (Bom) (HC), CIT vs. Lovely Exports (P) Ltd. (2008) 6 DTR 308 (SC), 424 ITR 219 (Bom.) in PCIT vs. AMI Industries (India) Ltd., (2017) 397 ITR 148 (Bom) in PCIT vs. Apeak Infotech, (2024) 227 TTJ 513 (Kol.),ITO vs. Rajshree Integrated Cold Chain Pvt. Ltd.
10. The A.O. in assessment order has made reference to statement recorded by Kolkata Investigation Wing of various persons at para 3.3 and 3.4.1. Dates of statement indicate that such statements were prior to date of search. Such statements are not in respect to transaction of assessee company. All are general statements recorded behind the back of assessee and has not produced to the test of cross examination. The AO has simply relied on such statement without allowing opportunity of cross examination of such 15 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur persons. Such general statement has no evidentiary value unless those persons are called for cross examination. To support such view, the ld AR of the assessee relied on the decision of Apex Court in Andaman Timber Industries Vs CCE (2015) 282 CTR 241(SC). Further, only part of statements of certain persons recorded by Investigation Wing of Kolkata are reproduced in assessment order. It is evident from dates of statement recorded that they are not in the course of proceedings in the case of assessee. It does not even refer to investment made in assessee company. General statements recorded behind the back of assessee and not in relation to transaction of assessee company, have no evidentiary value in case of assessee company. Statement of alleged three persons as recorded by AO are related four investor companies only, out of eleven investorcorporate entities. Hence, the addition made by A.O. is arbitrary and unjustified. The ld AR of the assessee also invited our attention on number of grounds raised in memo of appeal, which are argumentative and same are not in accordance with Rules. Various decisions referred in grounds of appeal are distinguishable on facts and contrary to settled position of law on subject matter as per decisions of Hon'ble Apex Court and Jurisdictional High Court. The ld AR of the assessee submits that he fully supports the order of ld CIT(A), with his aforesaid certain additional submissions and prayed for dismissal of appeal.
11. We have considered the rival submissions of both the parties and have gone through the entire material placed before us, including the orders of lower authorities. We have also deliberated on various case laws relied by the 16 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur lower authorities as well as by parties before us. We have also perused the various documents filed by the assessee on record. The basis of addition under section 68 by treating the share premium and share capital as unexplained credit by AO and deleted by ld CIT(A) has been recorded by us in earlier paras of this order, which is not repeated here for the sake of brevity.
12. We have independently examined the transaction of share premium and the share capital. We find that before AO the assessee in responses to various show cause notice, furnished details of the investors, which included PAN, address and the financial statement of all the investors. No infirmity was pointed out by AO in all such evidence. Once, the onus is discharged by the assessee, the onus shifted on the AO to disprove such documentary evidence. No efforts are made by AO to bring adverse evidence on record. No special infirmity was pointed out by AO, which was fatal to the assessee. We find that the AO instead of verifying the facts has simply recorded that answer of director is general and not satisfactory and cannot be relied. The AO not disprove the evidences furnished by assessee as non-genuine and incriminating, despite the fact that all information was available before him. The Hon'ble Apex Court in the case of Orissa corporation Private Limited (supra) held that once, the assessee discharged its onus, the onus shifts of the AO to carry out further investigation to disprove the evidences filed by the assessee. We find that Hon'ble Jurisdictional High Court in PCIT Vs AMI Industries (supra) held that addition under section 68 is not sustainable where the assessee had discharged its onus of proving identity of creditors, 17 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur genuineness of transactions and credit worthy of creditors. Further, jurisdictional High Court in CIT Vs Gegandeep Infrastructure Private Limited (supra) held that proviso to section 68 is introduced by Finance Act 2012, which is effective from AY 2013-14. In CIT Vs Lovely Export (2008) 216 CTR 195 SC, it was held that if the share application money is received from alleged bogus shareholders, whose names are given to the AO, then the department is free to proceed to reopen their individual assessment in accordance with law, but it cannot be regarded as undisclosed income of assessee company. We find that on furnishing complete evidence of identity, creditworthy and genuineness of transaction the AO has neither carried out any investigation nor proved the evidence filed by the assessee as non- genuine. We find that in latest decision, Gujarat High Court in PCIT Vs Priya Blue (2025) 181 taxamman.com 745 (Guj) after considering the decision of Hon'ble Apex Court in NRA Iron and Steel Private Limited (supra) also held that where AO treated undated cheques found during search as unaccounted cash loans advanced by assessee, in absence of any corroborative evidence such as cash trail or supporting documentation, and with some cheques not even in assessee's name, additions made merely on presumption were rightly deleted by CIT(A) and Tribunal. Thus, the order of ld CIT(A) is also deserve to be approved on this reasoning.
13. We find that the AO in his finding noted that during search action blank share transfer form and blank receipt signed by investors were found which were considered as incriminating documents found during the search. On perusal of all such document, we find that all such documents are required 18 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur as per Section 108 of Companies Act, 1956 for registration of transfer of shares to any other person from the existing shareholders. No unrecorded transaction was found on such unsigned blank transfer form as recorded in assessment order. The documents found during the search were duly recorded in the books of assessee, whenever necessary to record. No unrecorded share transfer form was found. We find that Rajesh Sarda, director of the assessee in response to various question and answers thereto clarify his position about mistake in filing the details, in forms by company secretary. Mere incomplete signed documents were found with no proper information does not render the documents as incriminating. The AO has neither specified nor found any deviation in the amount or number of shares mentioned in the share transfer form nor any transaction outside the books of assessee. We also find that AO relied on third party information and the statement of some third person who has no connection with the assessee.
14. On carful perusal of such documents, which is at Page 1 to 21 Volume No. of paper book, which is share transfer forms are for purchase of shares by Ramsons Ispat Ltd. Share Transfer Forms at pages 3 to 13 indicates transferee M/s. Ramsons Ispat Ltd. Date on Share transfer Form is dated 31/05/2010 and in respect to all other forms, date noted is of later financial years. All such pages 1 to 16 of seized material are not relevant to AY 2010- 11 (year under consideration) and are not in respect to share capital share premium contribution received by assessee company in Financial Year 2009- 19 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur 10 relevant to AY 2010-11. Such evidences do not and cannot constitute incriminating material for making addition at the hands of assessee.
15. It is undisputed fact that when search action was initiated on the assessee group, regular assessment for AY 2010-11 in case of assessee was already completed under section 143(1) on 17/04/2011, such fact is accepted by AO in para-1 of his order. Hence, the impugned year is an unabated assessment year. It is also settled position in law that addition in the unabated assessment year can be based only on any incriminating material found in the course of search. We find that in entire assessment record, the AO has no specified specific material found during search action to prima facia show that any evidence was found during search action that investor were not genuine or any unaccounted money was routed or any trail of unaccounted money. Thus, the addition is the assessment completed under section 153 is not based on any incriminating evidence. Thus, the ratio of decision in PCIT vs. Abhisar Buildwel Private Limited (supra) is clearly applicable on the facts of present case. Similar view was taken by Delhi Tribunal in DCIT vs. DMG Finance Investment Pvt. Ltd. (supra). Hence, the assessee is also liable to be succeed on these contentions as well.
16. We further find that the AO despite recording the facts that in subsequent year (AY 2011-12) all investors have sold their shares to the group company i.e. Ramsons Ispat Limited at the price of face value. We find that the same AO while passing assessment in case of Ramsons Ispat Limited has accepted such transaction and no addition in made in case of Purchaser Company. Once, transfer of impugned share in case of Ramsons Ispat is 20 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur accepted by AO it cannot be doubted in the hand of share subscriber/ investors. Thus, the assessee is liable to succeed, on this basis as well.
17. The ratio of decisions relied by ld CIT-DR for the revenue is not applicable on the facts of present appeal, as facts of this appeal is at variance. In PCIT Vs NRA Iron and Steel Private Limited (supra) Hon'ble Supreme Court has held that the burden is on the assessee that if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books being treated as a receipt of income nature and that in the case of cash credit entries, it is necessary for the assessee to prove not only the identity of the creditors, but also the capacity of the creditors to advance money, and establish the genuineness of the transactions, hence the initial onus of proof lies on the assessee and if the assessee fails to discharge the onus by producing cogent evidence and explanation, the AO would be justified in making the additions back into the income of the assessee. However, in the present case, the assessee has fully discharged his onus. The AO simply relied on third party statement, who has no concern with the assessee. In Navodya Castle (P) Limited Vs CIT (supra), the assessee merely furnished certificate of incorporation, PAN etc., which were not considered sufficient for purpose of identification of subscriber company when there is material to show that subscriber was a paper company and not a genuine investor. However, in the case in hand the assessee furnished complete details to prove identity, creditworthy and genuineness of transaction. Moreover, when such investor again sold the shares to the group company it was accepted by same AO. Further, in case 21 ITA No.87/Nag/2019 (AY 2010-11) M/s. Ramsons Industries Limited, Nagpur of Pavan Kumar M. Sanghvi Vs ITO (supra) when the loan was given to that assessee, there was credit entry of similar amount and balance after transaction was very small amount, thus, facts of present case is also differ, as there is no such evidence in case of assessee. Hence, the order of ld CIT(A) is affirmed with our additional findings.
18. Thus, in view of aforesaid factual and legal discussions, we do not find any merit in all the grounds of appeal raised by the revenue, hence, all the grounds of appeal raise by the revenue are dismissed.
19. In result, the appeal of revenue is dismissed.
Order pronounced on 07.04.2026 as per Rule 34 of Income Tax (Appellate Tribunal) Rules-1963.
Sd Sd/-/- S SSd/- Sd/-
KHETTRA MOHAN ROY PAWAN SINGH
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 07/04/2026
Karishma J. Pawar, SR. PS
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The PCIT / CIT (Judicial);
(4) The DR, ITAT, Nagpur; and
(5) Guard file.
By Order
Assistant Registrar/Senior Private Secretary
ITAT, Nagpur
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