ITO 13(2)(3), MUMBAI vs. SNS REAL ESTATE LLP, MUMBAI

This appeal by the Revenue is directed against order dated 31.10.2019 passed by the Ld. Commissioner of Income-tax (Appeals)-21, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:

1. On the facts and circumstances of the case and in Law, the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr. without appreciating the fact that the assessee has received 20 Cr. as share capital and share premium M/s SNS Real Estate LLP M/s SNS Real Estate LLP 2 ITA No. 543/M/2020 from six parties and the assessee has not discharged from six parties and the assessee has not discharged from six parties and the assessee has not discharged its onus of producing the investors who has subscribed its onus of producing the investors who has subscribed its onus of producing the investors who has subscribed the share capital and share premium. Thus, the the share capital and share premium. Thus, the the share capital and share premium. Thus, the identity, creditworthiness an identity, creditworthiness and genuineness of the d genuineness of the transaction has not been established. transaction has not been established.

2. On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. the Ld. CIT (A) has erred in deleting the addition of Rs. the Ld. CIT (A) has erred in deleting the addition of Rs. 20 Cr., without giving due consideration to the judgment 20 Cr., without giving due consideration to the judgment 20 Cr., without giving due consideration to the judgment of Hon'ble Supreme Court in of Hon'ble Supreme Court in the case of M/s. NRA Iron the case of M/s. NRA Iron and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated and Steel Pvt.Ltd, in SLP CC No. 29855 of 2018 dated 05.03.2019 on the similar issue, confirming the addition 05.03.2019 on the similar issue, confirming the addition 05.03.2019 on the similar issue, confirming the addition of entire share capital and share premium as the of entire share capital and share premium as the of entire share capital and share premium as the assessee failed to discharge his onus required under assessee failed to discharge his onus required under assessee failed to discharge his onus required under section 68 of the section 68 of the income tax Act, 1961.

M/s SNS Real Estate LLP M/s SNS Real Estate LLP 3 ITA No. 543/M/2020 “5.11 I have carefully considered the entire 5.11 I have carefully considered the entire spectrum of facts spectrum of facts and circumstances of the case and have carefully perused and circumstances of the case and have carefully perused and circumstances of the case and have carefully perused the assessment order, written arguments of the appellant, the assessment order, written arguments of the appellant, the assessment order, written arguments of the appellant, counter arguments of the AR and have considered the counter arguments of the AR and have considered the counter arguments of the AR and have considered the evidences on record, I find that the AO has doubted the evidences on record, I find that the AO has doubted the evidences on record, I find that the AO has doubted the share applicati share application money and premium or investment of M/s on money and premium or investment of M/s View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s View Mercantile Pvt Ltd, M/s Laksh Mercantile Pvt Ltd, M/s Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, Niti Mercantile Co Pvt Ltd, M/s Vertex Multitrade Co Pvt Ltd, M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. M/s Anuva Mercantile Pvt Ltd, M/s. Sarang Mercantile Pvt. Ltd. of Rs.20,00,00,000/ Ltd. of Rs.20,00,00,000/-. The Assessing Officer has ssing Officer has admitted in assessment order that the appellant has issued admitted in assessment order that the appellant has issued admitted in assessment order that the appellant has issued shares to these 6 companies and as per the counter shares to these 6 companies and as per the counter shares to these 6 companies and as per the counter representation of the AR when in response to notices u/s representation of the AR when in response to notices u/s representation of the AR when in response to notices u/s 133(6) of the Act filed the details by these 6 companies, then 133(6) of the Act filed the details by these 6 companies, then 133(6) of the Act filed the details by these 6 companies, then there is no reason for doubting the existence of investors. I no reason for doubting the existence of investors. I no reason for doubting the existence of investors. I therefore, find force in the argument of AR. It is very therefore, find force in the argument of AR. It is very therefore, find force in the argument of AR. It is very important to mention that the appellant has discharged its important to mention that the appellant has discharged its important to mention that the appellant has discharged its onus and the AO has not proved otherwise than doubting the onus and the AO has not proved otherwise than doubting the onus and the AO has not proved otherwise than doubting the investment made by the compa investment made by the companies owned/related with Shri nies owned/related with Shri Dilip Mehta. The AO had asked the appellant to furnish the Dilip Mehta. The AO had asked the appellant to furnish the Dilip Mehta. The AO had asked the appellant to furnish the details related to Share application, Share Allotment, and details related to Share application, Share Allotment, and details related to Share application, Share Allotment, and issue of share certificates and in compliance the appellant issue of share certificates and in compliance the appellant issue of share certificates and in compliance the appellant has furnished all the required details. While fur has furnished all the required details. While fur has furnished all the required details. While furnishing the required required required details details details the the the appellant appellant appellant has has has also also also furnished furnished furnished confirmations from these 6 companies and also submitted confirmations from these 6 companies and also submitted confirmations from these 6 companies and also submitted copy of Form No 2 which in return of allotment filed with ROC copy of Form No 2 which in return of allotment filed with ROC copy of Form No 2 which in return of allotment filed with ROC of the companies. After receipt of information/ evidences of the companies. After receipt of information/ evidences of the companies. After receipt of information/ evidences /documents from th /documents from the appellant and also investors the AO did e appellant and also investors the AO did nothing. It is to be kept in mind that, earlier the AO had nothing. It is to be kept in mind that, earlier the AO had nothing. It is to be kept in mind that, earlier the AO had issued a letter requiring the appellant to prove the identity, issued a letter requiring the appellant to prove the identity, issued a letter requiring the appellant to prove the identity, genuineness and creditworthiness of these 6 parties and genuineness and creditworthiness of these 6 parties and genuineness and creditworthiness of these 6 parties and also communicating that these compan also communicating that these companies were not available ies were not available at their given address. In compliance of the letter, the at their given address. In compliance of the letter, the at their given address. In compliance of the letter, the Appellant has provided new addresses of these 6 parties. Appellant has provided new addresses of these 6 parties. Appellant has provided new addresses of these 6 parties. However the AO did not proceed further. Finally the AO However the AO did not proceed further. Finally the AO However the AO did not proceed further. Finally the AO issued a show cause notice. issued a show cause notice. 5.12 In response, the appellant subm 5.12 In response, the appellant submitted the reply, but the itted the reply, but the AO has not refuted with any contrary evidence/finding and AO has not refuted with any contrary evidence/finding and AO has not refuted with any contrary evidence/finding and has has has proceeded proceeded proceeded to to to mention mention mention the the the Modus Modus Modus Operandi Operandi Operandi of of of accommodation entry operation. Apparently, AO has not accommodation entry operation. Apparently, AO has not accommodation entry operation. Apparently, AO has not substantiated his presumption, his doubt with any verifiable substantiated his presumption, his doubt with any verifiable substantiated his presumption, his doubt with any verifiable documents. documents. He has merely described the statement of Shri He has merely described the statement of Shri M/s SNS Real Estate LLP M/s SNS Real Estate LLP 4 ITA No. 543/M/2020 Dilip Merita& his associates as communicated by the Dilip Merita& his associates as communicated by the Dilip Merita& his associates as communicated by the Investigation Wing Mumbai. Thus, it is very evident that the Investigation Wing Mumbai. Thus, it is very evident that the Investigation Wing Mumbai. Thus, it is very evident that the C has not made any independent enquiry in order to C has not made any independent enquiry in order to C has not made any independent enquiry in order to establish the non establish the non-genuineness of investment, if any, with f any, with any contrary evidence. Opportunity for cross examination any contrary evidence. Opportunity for cross examination any contrary evidence. Opportunity for cross examination was also not given. Hence such statement could not be was also not given. Hence such statement could not be was also not given. Hence such statement could not be utilised against the appellant without giving full and proper utilised against the appellant without giving full and proper utilised against the appellant without giving full and proper opportunity of cross examination as held in the caseof opportunity of cross examination as held in the caseof opportunity of cross examination as held in the caseof Mahesh Gulabrai Mahesh Gulabrai Joshi Vs CIT(A) (2005) 95 ITD 300 Mumbai Joshi Vs CIT(A) (2005) 95 ITD 300 Mumbai ITAT and Mon'ble Supreme Court decision in the case of ITAT and Mon'ble Supreme Court decision in the case of ITAT and Mon'ble Supreme Court decision in the case of KisinchandChellaram V CIT (125 IT 713 SC) KisinchandChellaram V CIT (125 IT 713 SC) A perusal of the documentary evidences brought on record by A perusal of the documentary evidences brought on record by A perusal of the documentary evidences brought on record by the appellant shows the appellant shows the appellant shows that that the onus of proving the that the onus of proving the the onus of proving the genuineness of transaction, identity and capacity of the ss of transaction, identity and capacity of the ss of transaction, identity and capacity of the lenders and share applicants has been discharged by the lenders and share applicants has been discharged by the lenders and share applicants has been discharged by the appellant. The same is evident from the list of documents appellant. The same is evident from the list of documents appellant. The same is evident from the list of documents submitted by the appellant before the AO as well as before submitted by the appellant before the AO as well as before submitted by the appellant before the AO as well as before me with respect to money received f me with respect to money received from share applicants. rom share applicants. Appellant has placed on record the copies of Annual audited Appellant has placed on record the copies of Annual audited Appellant has placed on record the copies of Annual audited report, Directors' Report, PAN, Share certificates issued, bank report, Directors' Report, PAN, Share certificates issued, bank report, Directors' Report, PAN, Share certificates issued, bank statement showing payments received, ROC filings, copy of statement showing payments received, ROC filings, copy of statement showing payments received, ROC filings, copy of income tax returns of share applicants, return of al income tax returns of share applicants, return of al income tax returns of share applicants, return of allotment of shares etc which is mentioned in the assessment order. From shares etc which is mentioned in the assessment order. From shares etc which is mentioned in the assessment order. From the details submitted it can be seen that the share applicants the details submitted it can be seen that the share applicants the details submitted it can be seen that the share applicants have made payments from their bank accounts through have made payments from their bank accounts through have made payments from their bank accounts through account payee cheques, therefore these transactions cannot account payee cheques, therefore these transactions cannot account payee cheques, therefore these transactions cannot be treated as bogus. The AO has not been able to bring on as bogus. The AO has not been able to bring on as bogus. The AO has not been able to bring on record any valid material or evidence to discredit the record any valid material or evidence to discredit the record any valid material or evidence to discredit the evidences and explanation given by the appellant other than evidences and explanation given by the appellant other than evidences and explanation given by the appellant other than merely relying on discreet information received from merely relying on discreet information received from merely relying on discreet information received from investigation wing. Mumbai without himsel investigation wing. Mumbai without himself making any f making any other efforts to bring on record any valid or corroborative or other efforts to bring on record any valid or corroborative or other efforts to bring on record any valid or corroborative or concrete evidence against the appellant. The other reasons concrete evidence against the appellant. The other reasons concrete evidence against the appellant. The other reasons adduced by the AO have no real connection with the addition adduced by the AO have no real connection with the addition adduced by the AO have no real connection with the addition under section 68 of the Act made in case of the appellant. under section 68 of the Act made in case of the appellant. under section 68 of the Act made in case of the appellant. To prove all the ingredients of section 68 appellant company prove all the ingredients of section 68 appellant company prove all the ingredients of section 68 appellant company had submitted the following documents pertains to investors had submitted the following documents pertains to investors had submitted the following documents pertains to investors which have also been filed before me: which have also been filed before me: 1) Certified copy of Memorandum of Association 1) Certified copy of Memorandum of Association 2) Certified copy of Articles of Association. 2) Certified copy of Articles of Association.

M/s SNS Real Estate LLP M/s SNS Real Estate LLP 5 ITA No. 543/M/2020 3) Copy of Incorporation certificate issued by Registrar of y of Incorporation certificate issued by Registrar of y of Incorporation certificate issued by Registrar of companies. 4) Copy of Resolution of the company grating companies 4) Copy of Resolution of the company grating companies 4) Copy of Resolution of the company grating companies permission to make investment. permission to make investment. 5) Copy of confirmatory letter. 5) Copy of confirmatory letter. 6) Details of cheque issued alongwith copies of Bank 6) Details of cheque issued alongwith copies of Bank 6) Details of cheque issued alongwith copies of Bank statement duly marke statement duly marked. 7) Copy of Audited P&L A/c, Balance sheet, Directors Report 7) Copy of Audited P&L A/c, Balance sheet, Directors Report 7) Copy of Audited P&L A/c, Balance sheet, Directors Report & Schedules thereto. & Schedules thereto. 8) Copy of PAN Card. 8) Copy of PAN Card. 9) Copy of Acknowledgement of ROl filed. 9) Copy of Acknowledgement of ROl filed. The legal position is very well settled i.e. where any credits The legal position is very well settled i.e. where any credits The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onu are found in the books of the assessee, the onu are found in the books of the assessee, the onus is on the assessee to prove the genuineness of the same and on assessee to prove the genuineness of the same and on assessee to prove the genuineness of the same and on failure of the assessee, the presumption us. 68 becomes failure of the assessee, the presumption us. 68 becomes failure of the assessee, the presumption us. 68 becomes absolute and the credits are treated as 'income' of the absolute and the credits are treated as 'income' of the absolute and the credits are treated as 'income' of the assessee. The assessee can discharge the onus by producing assessee. The assessee can discharge the onus by producing assessee. The assessee can discharge the onus by producing year is confirmation year is confirmation from the share applicants, and proving from the share applicants, and proving the source of the credits. Itis submitted by the AR that, when the source of the credits. Itis submitted by the AR that, when the source of the credits. Itis submitted by the AR that, when the share applicants accept/own the share application the share applicants accept/own the share application the share applicants accept/own the share application money paid, theassessee is deemed to have discharged his money paid, theassessee is deemed to have discharged his money paid, theassessee is deemed to have discharged his onus and no further responsibility lies on onus and no further responsibility lies on the assessee to the assessee to prove the source from where the share applicants have prove the source from where the share applicants have prove the source from where the share applicants have acquired the amounts advanced to the assessee and in this acquired the amounts advanced to the assessee and in this acquired the amounts advanced to the assessee and in this regard, the AR appropriately placed reliance upon the regard, the AR appropriately placed reliance upon the regard, the AR appropriately placed reliance upon the decision of the Hon'ble Bombay High Court in the case of decision of the Hon'ble Bombay High Court in the case of decision of the Hon'ble Bombay High Court in the case of Orient Trading C Orient Trading Co. Ltd. VIs. (1963)49 ITR 723 (Bom.). o. Ltd. VIs. (1963)49 ITR 723 (Bom.). 5.13 As is evident, the assessee has produced all evidences 5.13 As is evident, the assessee has produced all evidences 5.13 As is evident, the assessee has produced all evidences to prove the identity, source and the genuineness and credit to prove the identity, source and the genuineness and credit to prove the identity, source and the genuineness and credit worthiness. It is submitted that the assessee has done worthiness. It is submitted that the assessee has done worthiness. It is submitted that the assessee has done everything in its control to establish the everything in its control to establish the bonafides. It is aiso bonafides. It is aiso submitted that, even if it proved that the creditor has submitted that, even if it proved that the creditor has submitted that, even if it proved that the creditor has advanced funds from undisclosed sources, then it would be advanced funds from undisclosed sources, then it would be advanced funds from undisclosed sources, then it would be the income of the creditor. the income of the creditor.

M/s SNS Real Estate LLP M/s SNS Real Estate LLP 6 ITA No. 543/M/2020 5.14 The assessee has produced all the details, confirmation 5.14 The assessee has produced all the details, confirmation 5.14 The assessee has produced all the details, confirmation with PAN, even the return of i with PAN, even the return of income of the share applicants. ncome of the share applicants. When such material is produced the assessee can be said to When such material is produced the assessee can be said to When such material is produced the assessee can be said to have discharged his onus and the onus would shift to the AO have discharged his onus and the onus would shift to the AO have discharged his onus and the onus would shift to the AO to bring some material on record which would prove that the to bring some material on record which would prove that the to bring some material on record which would prove that the material's produced by the assessee is either material's produced by the assessee is either not genuine or not genuine or are insufficient. The AO's response to the assessee's are insufficient. The AO's response to the assessee's are insufficient. The AO's response to the assessee's submission of details was only that the assessee has not submission of details was only that the assessee has not submission of details was only that the assessee has not proved the genuineness of the transaction. The AR also proved the genuineness of the transaction. The AR also proved the genuineness of the transaction. The AR also submitted and referred that, in the case of CIT VIs. U.M. submitted and referred that, in the case of CIT VIs. U.M. submitted and referred that, in the case of CIT VIs. U.M. Shah, Proprietor, Shah, Proprietor, Shrenik Trading Co. 90 IT 396 (Bom.). the Shrenik Trading Co. 90 IT 396 (Bom.). the Hon'ble jurisdictional High Court held that once credible Hon'ble jurisdictional High Court held that once credible Hon'ble jurisdictional High Court held that once credible material is produced before the AQ, the AQ is expected to material is produced before the AQ, the AQ is expected to material is produced before the AQ, the AQ is expected to make efforts to dislodge the explanation given by the make efforts to dislodge the explanation given by the make efforts to dislodge the explanation given by the assessee. No such thing has been done by th assessee. No such thing has been done by the AQ. The AO e AQ. The AO cannot simply reject explanation/materials produced by the cannot simply reject explanation/materials produced by the cannot simply reject explanation/materials produced by the assessee without bringing any contrary findings on record. assessee without bringing any contrary findings on record. assessee without bringing any contrary findings on record. It is seen from the assessinent order that in the statement It is seen from the assessinent order that in the statement It is seen from the assessinent order that in the statement recorded, Shri. Amar Natwarlal Shall, Directur of the recorded, Shri. Amar Natwarlal Shall, Directur of the recorded, Shri. Amar Natwarlal Shall, Directur of the appellant company categorically stated that the amounts ompany categorically stated that the amounts ompany categorically stated that the amounts received were actual payments but not accommodation received were actual payments but not accommodation received were actual payments but not accommodation entries (statement dated 23/03/2015 answer to question no entries (statement dated 23/03/2015 answer to question no entries (statement dated 23/03/2015 answer to question no 28) The AO has not been able to refute the clear cut and cogent The AO has not been able to refute the clear cut and cogent The AO has not been able to refute the clear cut and cogent evidence submitted by the appellant a evidence submitted by the appellant and available on the nd available on the record, testifying to the genuineness of the share application record, testifying to the genuineness of the share application record, testifying to the genuineness of the share application money. The source of the said money thus stands proven. As money. The source of the said money thus stands proven. As money. The source of the said money thus stands proven. As has been held in several decisions of judicial authorities has been held in several decisions of judicial authorities has been held in several decisions of judicial authorities (Murlidhar (Murlidhar (Murlidhar Lahorimal Lahorimal Lahorimal Vs Vs Vs CIT CIT CIT 280 280 280 IT IT IT 512 512 512 (Gui).CLabhchand (Gui).CLabhchandbohra v ITO (219 ITR 571 (Rai) and CIT v bohra v ITO (219 ITR 571 (Rai) and CIT v Dhwarkadhish Investment Pvt Ltd Dhwarkadhish Investment Pvt Ltd (299 ITR 268 (Del)), the assessee cannot be called to prove (299 ITR 268 (Del)), the assessee cannot be called to prove (299 ITR 268 (Del)), the assessee cannot be called to prove the source of the source of this money. Nevertfeless, it is the source of the source of this money. Nevertfeless, it is the source of the source of this money. Nevertfeless, it is submitted that the appellant produced the bank account submitted that the appellant produced the bank account submitted that the appellant produced the bank account copies ofall the investor companies, and it can be seen from fall the investor companies, and it can be seen from fall the investor companies, and it can be seen from these bank accounts, that there were no cash deposits in the these bank accounts, that there were no cash deposits in the these bank accounts, that there were no cash deposits in the bank accounts of the investor companies during the relevant bank accounts of the investor companies during the relevant bank accounts of the investor companies during the relevant period. Moreover all the companies have been incorporated way Moreover all the companies have been incorporated way Moreover all the companies have been incorporated way back in 2007 and are back in 2007 and are carrying on business as per the objects carrying on business as per the objects M/s SNS Real Estate LLP M/s SNS Real Estate LLP 7 ITA No. 543/M/2020 mentioned in the MO & A registered with Registrar of mentioned in the MO & A registered with Registrar of mentioned in the MO & A registered with Registrar of companies. Hence, it cannot be said that these companies companies. Hence, it cannot be said that these companies companies. Hence, it cannot be said that these companies have been formed / incorporated recently to subscribe to the have been formed / incorporated recently to subscribe to the have been formed / incorporated recently to subscribe to the share capital of the appellant company. share capital of the appellant company. The AR has made further submission and brought te my AR has made further submission and brought te my AR has made further submission and brought te my notice the decision of Hon'ble Jurisdictional Bombay High notice the decision of Hon'ble Jurisdictional Bombay High notice the decision of Hon'ble Jurisdictional Bombay High Court decision in the case of M/s Aditya Birla Telecom Ltd IT Court decision in the case of M/s Aditya Birla Telecom Ltd IT Court decision in the case of M/s Aditya Birla Telecom Ltd IT No. 1502 of 2016 dated 26.03.2019 and submitted that No. 1502 of 2016 dated 26.03.2019 and submitted that No. 1502 of 2016 dated 26.03.2019 and submitted that merely because huge premium has be merely because huge premium has been received the en received the investing company is not receiving any return on investment investing company is not receiving any return on investment investing company is not receiving any return on investment made, account has been closed after making investment, and made, account has been closed after making investment, and made, account has been closed after making investment, and the source of source is not explained cannot be the reason for the source of source is not explained cannot be the reason for the source of source is not explained cannot be the reason for treating the transaction suspicious when the appellant treating the transaction suspicious when the appellant treating the transaction suspicious when the appellant company had provided all the evidences to prove the pany had provided all the evidences to prove the pany had provided all the evidences to prove the transaction as genuine by providing all the necessary transaction as genuine by providing all the necessary transaction as genuine by providing all the necessary evidences in respect of identity, bank alc proof to prove evidences in respect of identity, bank alc proof to prove evidences in respect of identity, bank alc proof to prove creditworthiness and evidences in respect of genuineness. creditworthiness and evidences in respect of genuineness. creditworthiness and evidences in respect of genuineness. During the appellate proceedings, the During the appellate proceedings, the appellant has also appellant has also submitted a note with regard to the judgment of Hon'ble submitted a note with regard to the judgment of Hon'ble submitted a note with regard to the judgment of Hon'ble Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 Supreme Court in the case of NRA Iron & Steel (Pvt. ) Ltd 103 taxmann.com 48. The gist of the difference between the taxmann.com 48. The gist of the difference between the taxmann.com 48. The gist of the difference between the assessee and NRA Iron & Steel are that the address are assessee and NRA Iron & Steel are that the address are assessee and NRA Iron & Steel are that the address are incorrect, failure to investors to respond to the notices issued t, failure to investors to respond to the notices issued t, failure to investors to respond to the notices issued by the Assessing Officer, non by the Assessing Officer, non-submission of bank statement submission of bank statement by the investors in support of their creditworthiness. In the by the investors in support of their creditworthiness. In the by the investors in support of their creditworthiness. In the instant case such features are not there. Therefore, the instant case such features are not there. Therefore, the instant case such features are not there. Therefore, the Hon'ble Supreme Court Hon'ble Supreme Court judgment in the case of NRA Iron & judgment in the case of NRA Iron & Steel Pvt Ltd is not applicable to the facts of the appellant's Steel Pvt Ltd is not applicable to the facts of the appellant's Steel Pvt Ltd is not applicable to the facts of the appellant's case. During the course of appellate proceedings the AR filed During the course of appellate proceedings the AR filed During the course of appellate proceedings the AR filed copies of decisions of copies of decisions of Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Hon'ble Jurisdictional ITAT Mumbai in the case of M/s Arceli Realty Ltd., (Formerly known as Ellora Electricals Ltd.) v/s Ltd., (Formerly known as Ellora Electricals Ltd.) v/s Ltd., (Formerly known as Ellora Electricals Ltd.) v/s ITO 15(1)(1), Mum ITO 15(1)(1), Mum-ITA No.6492/Mum/2016 AY 2007 AY 2007-08 order dated 21/04/2017, M/s Reliance Corporation v/s ITO order dated 21/04/2017, M/s Reliance Corporation v/s ITO order dated 21/04/2017, M/s Reliance Corporation v/s ITO Ward 32(3)(2), Mumbai Ward 32(3)(2), Mumbai -1069 to 1071/Mum/2017 dated 1069 to 1071/Mum/2017 dated 12/04/2017 and M/s Laxman Industrial resourc 12/04/2017 and M/s Laxman Industrial resourc 12/04/2017 and M/s Laxman Industrial resources Ltd VIs Pr CIT-5 M/s SNS Real Estate LLP M/s SNS Real Estate LLP 8 ITA No. 543/M/2020 Mumbai- CM Appl 7385/2017 dated ITA No. 169/2017, CM Appl 7385/2017 dated ITA No. 169/2017, CM Appl 7385/2017 dated 14/03/2017. Judgement of Hon'ble Jurisdictional High Court 14/03/2017. Judgement of Hon'ble Jurisdictional High Court 14/03/2017. Judgement of Hon'ble Jurisdictional High Court in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd in the case of CIT v/s M/s Gagandeep Infrastructure (P) Ltd in ITA No. 1613 of 2014 dated 20/03/2017. These are extracted as No. 1613 of 2014 dated 20/03/2017. These are extracted as No. 1613 of 2014 dated 20/03/2017. These are extracted as under: [TO 15(1)(1). Mum [TO 15(1)(1). Mum-ITA No.6492/Mum/2016 AY 2007 ITA No.6492/Mum/2016 AY 2007-08 order dated 21/04/2017 the er dated 21/04/2017 the Hon'ble ITAT has held as Hon'ble ITAT has held as under: 2.22. If the totality of facts and the judicial pronouncements, 2.22. If the totality of facts and the judicial pronouncements, 2.22. If the totality of facts and the judicial pronouncements, discussed hereinabove, are analyzed, we are of the discussed hereinabove, are analyzed, we are of the discussed hereinabove, are analyzed, we are of the considered opinion that the considered opinion that the onus caste upon the assessee, as onus caste upon the assessee, as provided u/s 68 of the Act, has been duly discharged by the provided u/s 68 of the Act, has been duly discharged by the provided u/s 68 of the Act, has been duly discharged by the assessee assessee assessee as as as the the the identity identity identity of of of the the the share share share subscribers, subscribers, subscribers, creditworthiness and genuineness of the transaction is not in creditworthiness and genuineness of the transaction is not in creditworthiness and genuineness of the transaction is not in doubt or it can be said that the same has been doubt or it can be said that the same has been doubt or it can be said that the same has been proved/explained by the assessee. Now, The onus has oved/explained by the assessee. Now, The onus has oved/explained by the assessee. Now, The onus has reverted back upon the Revenue to prove otherwise. The Ld. reverted back upon the Revenue to prove otherwise. The Ld. reverted back upon the Revenue to prove otherwise. The Ld. Assessing Officer merely relied upon the information received Assessing Officer merely relied upon the information received Assessing Officer merely relied upon the information received from the investigation wing and did not made any from the investigation wing and did not made any from the investigation wing and did not made any independent enquiry. The Assessing O independent enquiry. The Assessing Officer was expected to fficer was expected to disprove the claim of the assessee with the help of evidence, disprove the claim of the assessee with the help of evidence, disprove the claim of the assessee with the help of evidence, if any, received from the investigation wing, as has been if any, received from the investigation wing, as has been if any, received from the investigation wing, as has been claimed by the Revenue. The Revenue has nowhere proved claimed by the Revenue. The Revenue has nowhere proved claimed by the Revenue. The Revenue has nowhere proved that any malafide is done by the assessee. Failure to do s that any malafide is done by the assessee. Failure to do s that any malafide is done by the assessee. Failure to do so, vitiate the addition made under the set of facts. Reference vitiate the addition made under the set of facts. Reference vitiate the addition made under the set of facts. Reference can be made to the decision in CIT vs Orissa Corporation Pvt. can be made to the decision in CIT vs Orissa Corporation Pvt. can be made to the decision in CIT vs Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Ltd. 158 ITR 78 (SC) and the ratio laid down in Khandelwal Construction vs CIT 227 ITR 900(Guw.). The satisfaction has Construction vs CIT 227 ITR 900(Guw.). The satisfaction has Construction vs CIT 227 ITR 900(Guw.). The satisfaction has to be derived from the relevant facts and that to on the basis d from the relevant facts and that to on the basis d from the relevant facts and that to on the basis of proper enquiry by the Assessing Officer and such enquiry of proper enquiry by the Assessing Officer and such enquiry of proper enquiry by the Assessing Officer and such enquiry must be reasonable and just. In the present case, the must be reasonable and just. In the present case, the must be reasonable and just. In the present case, the Assessing Officer has not brought any evidence on record Assessing Officer has not brought any evidence on record Assessing Officer has not brought any evidence on record that the amounts received from M/s that the amounts received from M/s Alka Diamond Alka Diamond Industries Ltd. and M/s Yash Industries Ltd. and M/s Yash-V-Jewels Ltd. are merely Jewels Ltd. are merely accommodation entries. As mentioned earlier, the Ld. accommodation entries. As mentioned earlier, the Ld. accommodation entries. As mentioned earlier, the Ld. Assessing Officer has acted merely on the basis of Assessing Officer has acted merely on the basis of Assessing Officer has acted merely on the basis of information received from the Investigation wing. The ratio information received from the Investigation wing. The ratio information received from the Investigation wing. The ratio laid down by Hon'ble Del laid down by Hon'ble Delhi High Court in CIT vs Vrindaban hi High Court in CIT vs Vrindaban Farms Pvt. Ltd. squarely gives shelter to the assessee, Farms Pvt. Ltd. squarely gives shelter to the assessee, Farms Pvt. Ltd. squarely gives shelter to the assessee, M/s SNS Real Estate LLP M/s SNS Real Estate LLP 9 ITA No. 543/M/2020 wherein, it was held that if the identity and other details of wherein, it was held that if the identity and other details of wherein, it was held that if the identity and other details of share applicant are available, the share application money share applicant are available, the share application money share applicant are available, the share application money cannot be treated as undisclosed income in t cannot be treated as undisclosed income in the hands of the he hands of the company. In the present case, the assessee even has proved company. In the present case, the assessee even has proved company. In the present case, the assessee even has proved the source of source, therefore, the creditworthiness was also the source of source, therefore, the creditworthiness was also the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act proved, consequently, no addition made u/s 68 of the Act proved, consequently, no addition made u/s 68 of the Act can be said to be justified. The ratio laid down in Creative can be said to be justified. The ratio laid down in Creative can be said to be justified. The ratio laid down in Creative World Telefilms Ltd. (supra) by Hon'ble jurisdictional High World Telefilms Ltd. (supra) by Hon'ble jurisdictional High World Telefilms Ltd. (supra) by Hon'ble jurisdictional High Court squarely comes to the rescue of the assessee. The Court squarely comes to the rescue of the assessee. The Court squarely comes to the rescue of the assessee. The assessee duly furnished the proof of identity like PAN, bank assessee duly furnished the proof of identity like PAN, bank assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, account details from the bank, other relevant material, account details from the bank, other relevant material, genuineness of the tran genuineness of the transaction, payment through banking saction, payment through banking channel and even the source of source, therefore, the channel and even the source of source, therefore, the channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the assessee has proved the conditions laid down u/s 68 of the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Ld. Act. It is also noted that in spite of repeated request, the Ld. Act. It is also noted that in spite of repeated request, the Ld. Assessing Officer did not provide opportunity Assessing Officer did not provide opportunity Assessing Officer did not provide opportunity to cross examine the concerned persons and even the relevant examine the concerned persons and even the relevant examine the concerned persons and even the relevant information and allegation, if any, made therein, which has information and allegation, if any, made therein, which has information and allegation, if any, made therein, which has been used against the assessee, was not provided to the been used against the assessee, was not provided to the been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is assessee. At this stage, we add here that mere information is assessee. At this stage, we add here that mere information is not enough rathe not enough rather it has to be substantiated with facts. The r it has to be substantiated with facts. The information may and may not be correct. For fastening the information may and may not be correct. For fastening the information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the liability upon anybody, the Department has to provide the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom authenticity of the information to the person against whom authenticity of the information to the person against whom such information is used. The princi such information is used. The principle of natural justice, ple of natural justice, demands that without confronting the assessee of such demands that without confronting the assessee of such demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. evidence, if any, or the information, no addition can be made. evidence, if any, or the information, no addition can be made. Even otherwise, as per Article Even otherwise, as per Article-265 of the Constitution of 265 of the Constitution of India, only legitimate taxes has to be levied and collect India, only legitimate taxes has to be levied and collect India, only legitimate taxes has to be levied and collected. In our humble opinion, the assessee has duly discharged the our humble opinion, the assessee has duly discharged the our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the onus caste upon it, therefore, respectfully following the onus caste upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and decisions from Hon'ble Apex Court, Hon'ble High Courts and decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the Hon'ble jurisdictional High Court, we reverse the order of the Hon'ble jurisdictional High Court, we reverse the order of the Ld. Commissi Ld. Commissioner of Income Tax (Appeal), resultantly, this oner of Income Tax (Appeal), resultantly, this ground of the assessee is allowed. ground of the assessee is allowed. (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation (ii) The Hon’ble ITAT in the case of M/s Reliance Corporation v. ITO Ward 32(3)(2), Mumbai v. ITO Ward 32(3)(2), Mumbai – 1069 to 1071/Mum/2017 1069 to 1071/Mum/2017 dated 12/04/2017 has held as under: dated 12/04/2017 has held as under: 8. We have heard the ri 8. We have heard the rival contentions perused the material val contentions perused the material placed before us including the orders of authorities below placed before us including the orders of authorities below placed before us including the orders of authorities below and orders relied upon by the parties. We find that and orders relied upon by the parties. We find that and orders relied upon by the parties. We find that M/s SNS Real Estate LLP M/s SNS Real Estate LLP 10 ITA No. 543/M/2020 undisputedly the assessee has borrowed money by way of undisputedly the assessee has borrowed money by way of undisputedly the assessee has borrowed money by way of loan from three aforesaid three parties i.e M/s Laxmi loan from three aforesaid three parties i.e M/s Laxmi loan from three aforesaid three parties i.e M/s Laxmi Trading Company, M/s Rose Impex and Megha Gems from whom the Company, M/s Rose Impex and Megha Gems from whom the Company, M/s Rose Impex and Megha Gems from whom the assessee borrowed the money and total outstanding assessee borrowed the money and total outstanding assessee borrowed the money and total outstanding including the interest as on 31.3.2010 were amounting to including the interest as on 31.3.2010 were amounting to including the interest as on 31.3.2010 were amounting to Rs.1,29,04,231/ Rs.1,29,04,231/-. The case of the assessee was re . The case of the assessee was re-opened upon receiving the information upon receiving the information from DGIT(Inv), Mumbai that from DGIT(Inv), Mumbai that the assessee was one of the beneficiary of the said the assessee was one of the beneficiary of the said the assessee was one of the beneficiary of the said accommodation entries provided by Mr.Bhanwarlal Jain and accommodation entries provided by Mr.Bhanwarlal Jain and accommodation entries provided by Mr.Bhanwarlal Jain and group. We find from the record that the assessee filed during group. We find from the record that the assessee filed during group. We find from the record that the assessee filed during the course of assessment proceedings all the details lik the course of assessment proceedings all the details lik the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, confirmation letters from the creditors, PAN of the creditors, confirmation letters from the creditors, PAN of the creditors, bank statements og the creditors and the assessee, form bank statements og the creditors and the assessee, form bank statements og the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and no.16 qua TDS on interest ,profit and loss account and no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, balance sheet including the ledger account of the creditors, balance sheet including the ledger account of the creditors, and ITR etc. M and ITR etc. Moreover, the loan creditors also appeared oreover, the loan creditors also appeared before the AO in compliance to the notice issued under before the AO in compliance to the notice issued under before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the section 133(6) of the Act and filed confirmations before the section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all AO that loans were actually given to the assessee. From all AO that loans were actually given to the assessee. From all these details and facts on record, we these details and facts on record, we find that the assessee find that the assessee has discharged its onus cast upon it by filing all the has discharged its onus cast upon it by filing all the has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the necessary details as called for by the AO to corroborate the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied transactions of borrowing the money and thereby satisfied transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the all the three main ingredients i.e. creditworthiness of the all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors, genuineness of the transactions and identity of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which creditors by filing all the details as discussed above which creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the proved that the identity of the creditors, genuineness of the proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been transactions and creditworthiness of the creditors have been transactions and creditworthiness of the creditors have been established by the assessee. So much so that the loan hed by the assessee. So much so that the loan hed by the assessee. So much so that the loan creditors in response to the notice issued under section creditors in response to the notice issued under section creditors in response to the notice issued under section 133(6) appeared before the AO and confirmed the that they 133(6) appeared before the AO and confirmed the that they 133(6) appeared before the AO and confirmed the that they have given interest bearing loans to the assessee on which have given interest bearing loans to the assessee on which have given interest bearing loans to the assessee on which TDS have been deducted and paid and TDS have been deducted and paid and form no.16A issued form no.16A issued to the loan creditors also filed before the AO. Once the to the loan creditors also filed before the AO. Once the to the loan creditors also filed before the AO. Once the assessee has filed all the necessary documents before the assessee has filed all the necessary documents before the assessee has filed all the necessary documents before the AO then the onus is shifted to the department to disprove the AO then the onus is shifted to the department to disprove the AO then the onus is shifted to the department to disprove the stand of the assessee, which department has failed to do so stand of the assessee, which department has failed to do so stand of the assessee, which department has failed to do so in the present case. The AO has merely proceeded and relied in the present case. The AO has merely proceeded and relied in the present case. The AO has merely proceeded and relied on the information received from the DGIT(Inv), Mumbai that on the information received from the DGIT(Inv), Mumbai that on the information received from the DGIT(Inv), Mumbai that the assessee is one of the beneficiary of the accommodation the assessee is one of the beneficiary of the accommodation the assessee is one of the beneficiary of the accommodation entries without bringing any material against the assessee entries without bringing any material against the assessee entries without bringing any material against the assessee on record by cont on record by contrary to the defense put up by the assessee rary to the defense put up by the assessee during the course of appellant proceedings. No cross during the course of appellant proceedings. No cross during the course of appellant proceedings. No cross M/s SNS Real Estate LLP M/s SNS Real Estate LLP 11 ITA No. 543/M/2020 examination was allowed to the assessee and information examination was allowed to the assessee and information examination was allowed to the assessee and information was used against the assessee causing violation of natural was used against the assessee causing violation of natural was used against the assessee causing violation of natural justice. The FAA dismissed the appeal of the justice. The FAA dismissed the appeal of the justice. The FAA dismissed the appeal of the assessee exparte for non attendance of the ld.AR. exparte for non attendance of the ld.AR. (iii) In the case of MIs Laxman Industrial resources Ltd VIs Pr ) In the case of MIs Laxman Industrial resources Ltd VIs Pr ) In the case of MIs Laxman Industrial resources Ltd VIs Pr CIT-5 Mumbai 5 Mumbai- ITANo.169/2017, CM Appl 7385/2017 cated ITANo.169/2017, CM Appl 7385/2017 cated 14/03/2017, the Hon'ble Delhi High Court has observed as 14/03/2017, the Hon'ble Delhi High Court has observed as 14/03/2017, the Hon'ble Delhi High Court has observed as under: Reliance is placed on Reliance is placed on the following decisions of the Apex the following decisions of the Apex Court and the jurisdictional High Court of Delhi: Court and the jurisdictional High Court of Delhi:- (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Lovely Exports (P) Ltd. 2008 (216) CTR (SC) 195; (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (i) CIT v. Divine Leasing & Finance Ltd. 2007 (299) IT 268 (Del). Hon'ble Delhi HighCourt in paras 13.& 16 ha (Del). Hon'ble Delhi HighCourt in paras 13.& 16 ha (Del). Hon'ble Delhi HighCourt in paras 13.& 16 has held as under: “13. There cannot be two opinions on the aspect that the “13. There cannot be two opinions on the aspect that the “13. There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money pernicious practice of conversion of unaccounted money pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the through the masquerade or channel of investment in the through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the share capital of a company must be firmly excoriated by the share capital of a company must be firmly excoriated by the revenue. Equ revenue. Equally, where the preponderance of evidence ally, where the preponderance of evidence indicates absence of culpability and complexity of the indicates absence of culpability and complexity of the indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's assessee it should not be harassed by the Revenue's assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a insistence that it should prove the negative. In the case of a insistence that it should prove the negative. In the case of a public issue. the Company concerned cannot b public issue. the Company concerned cannot be expected to e expected to know every detail pertaining to the identity as well as know every detail pertaining to the identity as well as know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company financial worth of each of its subscribers. The Company financial worth of each of its subscribers. The Company must, however, maintain and make available to the must, however, maintain and make available to the must, however, maintain and make available to the Assessing Officer for his perusal, all the information Assessing Officer for his perusal, all the information Assessing Officer for his perusal, all the information contained in the statutor contained in the statutory share application documents. In y share application documents. In the case of private placement the legal regime would not be the case of private placement the legal regime would not be the case of private placement the legal regime would not be the same. A delicate balance must be maintained while the same. A delicate balance must be maintained while the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The walking the tightrope of sections 68 and 69 of the IT Act. The walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to t burden of proof can seldom be discharged to the hilt by the he hilt by the assessee: if the Assessing Officer harbours doubts of the assessee: if the Assessing Officer harbours doubts of the assessee: if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty legitimacy of any subscription he is empowered, nay duty legitimacy of any subscription he is empowered, nay duty- bound, to carry out thorough investigations. But if the bound, to carry out thorough investigations. But if the bound, to carry out thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal Assessing Officer fails to unearth any wrong or illegal Assessing Officer fails to unearth any wrong or illegal dealings, he c dealings, he cannot obdurately adhere to his suspicions and annot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed income of the treat the subscribed capital as the undisclosed income of the treat the subscribed capital as the undisclosed income of the Company M/s SNS Real Estate LLP M/s SNS Real Estate LLP 12 ITA No. 543/M/2020

16. In this analysis, a distillation of the precedents yields the 16. In this analysis, a distillation of the precedents yields the 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of following propositions of law in the context of Section 68 of following propositions of law in the context of Section 68 of the Income T the Income Tax act. The assessee has to prima facie prove ax act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely: whether it (2) the genuineness of the transaction, namely: whether it (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable has been transmitted through banking or other indisputable has been transmitted through banking or other indisputable channels: (3) the creditworthiness or financi (3) the creditworthiness or financial strength of the al strength of the creditor/subscriber: creditor/subscriber: (4) If relevant details of the address or PAN identity of the (4) If relevant details of the address or PAN identity of the (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along creditor/subscriber are furnished to the Department along creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application with copies of the Shareholders Register, Share Application with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. Forms, Share Transfer Register etc. it would constitute it would constitute acceptable proof or acceptable explanation by the assessee. acceptable proof or acceptable explanation by the assessee. acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an (5) The Department would not be justified in drawing an (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails adverse inference only because the creditor/subscriber fails adverse inference only because the creditor/subscriber fails or neglects to respond to its notices: or neglects to respond to its notices: (6) (6) the the onus onus would woul d not not stand stand discharged discharged if if the the creditor/subscriber denies or repudiates the transaction set creditor/subscriber denies or repudiates the transaction set creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the Assessing Officer take up by the assessee nor should the Assessing Officer take up by the assessee nor should the Assessing Officer take such repudiation at face value and construe it, without more, such repudiation at face value and construe it, without more, such repudiation at face value and construe it, without more, against the assessee. against the assessee. (7) The Assessing Offic (7) The Assessing Officer is duty-bound to investigate the bound to investigate the creditworthiness of the creditor/subscriber the genuineness creditworthiness of the creditor/subscriber the genuineness creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. of the transaction and the veracity of the repudiation. of the transaction and the veracity of the repudiation.” 4. Before us, the Ld. DR submitted that the Ld. CIT(A) has Before us, the Ld. DR submitted that the Ld. CIT(A) has Before us, the Ld. DR submitted that the Ld. CIT(A) has decided the appeal assuming wrong facts that decided the appeal assuming wrong facts that the assessee provided the assessee provided new address of the share applicant new address of the share applicants for issuing notice u/s 133(6) of for issuing notice u/s 133(6) of the Act by the Assessing Officer. However, after the Act by the Assessing Officer. However, after returned back of returned back of noticesissued u/s 133(6) u/s 133(6) forfirst time the , Assessing Officer Assessing Officer issued summons u/s 131 of the Act a summons u/s 131 of the Act and at the request of the assessee, at the request of the assessee, provided the same to the assessee for service on those share the same to the assessee for service on those share the same to the assessee for service on those share M/s SNS Real Estate LLP M/s SNS Real Estate LLP 13 applicants. However, applicants. However, neither those share applicant those share applicant attended in compliance to summons issued nor compliance to summons issued nor were not produced by the were not produced by the assessee before the Assessing Officer a assessee before the Assessing Officer and therefore, the Assessing nd therefore, the Assessing Officer held the amount Officer held the amount of share subscription received as share subscription received as unexplained cash credit u/s 68 of the unexplained cash credit u/s 68 of the Act.

“5.7. Further, it is submitted that at the first stage the 5.7. Further, it is submitted that at the first stage the 5.7. Further, it is submitted that at the first stage the appellant had submitted to Assessing Officer, the addresses appellant had submitted to Assessing Officer, the addresses appellant had submitted to Assessing Officer, the addresses of share applicants based on the addresses those appearing of share applicants based on the addresses those appearing of share applicants based on the addresses those appearing in share application forms and those appearing in Share in share application forms and those appearing in Share in share application forms and those appearing in Share Holders Register. It is Holders Register. It is also submitted that the appellant was also submitted that the appellant was not informed by the share applicants of changes in their not informed by the share applicants of changes in their not informed by the share applicants of changes in their addresses, that is why, when Assessing Officer informed to addresses, that is why, when Assessing Officer informed to addresses, that is why, when Assessing Officer informed to the appellant that notices us 133(6) issued to the share the appellant that notices us 133(6) issued to the share the appellant that notices us 133(6) issued to the share applicants at addresses given by the appella applicants at addresses given by the appellant have been nt have been returned unserved, the appellant after making inquiries the appellant after making inquiries returned unserved, with the offices of share applicants provided the with the offices of share applicants provided the with the offices of share applicants provided the changed changed changed addresses addresses addresses of of of share share share applicants applicants applicants to to to the the the Assessing Officer and thereafter, Assessing Officer Assessing Officer and thereafter, Assessing Officer Assessing Officer and thereafter, Assessing Officer issued fresh Notices us 133(6) of the Ac issued fresh Notices us 133(6) of the Act at the new t at the new addresses which have been duly served upon.It is addresses which have been duly served upon.It is addresses which have been duly served upon.It is further submitted that the respective share applicants further submitted that the respective share applicants further submitted that the respective share applicants thereafter filed all the relevant evidences directly te thereafter filed all the relevant evidences directly te thereafter filed all the relevant evidences directly te the the the Assessing Assessing Assessing Officer Officer Officer to to to prove prove prove identity, identity, identity, creditworthiness and genuineness. It is al creditworthiness and genuineness. It is also submitted so submitted that notices us. 131 issued to the appellant, also that notices us. 131 issued to the appellant, also that notices us. 131 issued to the appellant, also M/s SNS Real Estate LLP M/s SNS Real Estate LLP 14 enclosing notices us 131 to the witnesses to produce enclosing notices us 131 to the witnesses to produce enclosing notices us 131 to the witnesses to produce them before the Assessing Officer. The AR submitted them before the Assessing Officer. The AR submitted them before the Assessing Officer. The AR submitted that the summons were forwarded to the witnesses that the summons were forwarded to the witnesses that the summons were forwarded to the witnesses and it appears they filed all the deta and it appears they filed all the details to the ils to the Assessing Officer in response to the earlier notices Assessing Officer in response to the earlier notices Assessing Officer in response to the earlier notices issued u/s. 133(6). issued u/s. 133(6). After receiving the details the Assessing After receiving the details the Assessing Officer did not issue any notice to the appellant. Without Officer did not issue any notice to the appellant. Without Officer did not issue any notice to the appellant. Without prejudice to the above, the appellant relied on the decision of prejudice to the above, the appellant relied on the decision of prejudice to the above, the appellant relied on the decision of H'ble high court of Bombay in the case of CIT vs. Nikunj igh court of Bombay in the case of CIT vs. Nikunj igh court of Bombay in the case of CIT vs. Nikunj Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held Eximp Pt Ltd 53 taxmann.com 144, wherein, it has been held that non appearance to notices should not result in addition. that non appearance to notices should not result in addition. that non appearance to notices should not result in addition.” 5.1 Relying on this assumption of facts, the Ld. CIT(A) concluded Relying on this assumption of facts, the Ld. CIT(A) concluded Relying on this assumption of facts, the Ld. CIT(A) concluded the appeal in favour of the assessee ur of the assessee, whereas the Assessing Officer whereas the Assessing Officer in para 13 has recorded that despite specifically asking the in para 13 has recorded that despite specifically in para 13 has recorded that despite specifically assessee to produce share applicants assessee to produce share applicants, same were not produced same were not produced before him for cross him for cross-examination. The relevant finding the examination. The relevant finding the Assessing Officer is repr Assessing Officer is reproduced as under:

“13. The assessee has claimed that it has genuinely received 13. The assessee has claimed that it has genuinely received 13. The assessee has claimed that it has genuinely received the share premium of Rs. 20 crores from these business the share premium of Rs. 20 crores from these business the share premium of Rs. 20 crores from these business entities. Hence, these parties are its own witnesses. It was entities. Hence, these parties are its own witnesses. It was entities. Hence, these parties are its own witnesses. It was the primary onus of the assessee to justify the amount the primary onus of the assessee to justify the amount the primary onus of the assessee to justify the amount credited to its books of account and to establish the d to its books of account and to establish the d to its books of account and to establish the genuineness of transaction and creditworthiness of the genuineness of transaction and creditworthiness of the genuineness of transaction and creditworthiness of the investors. Rather than discharging this onus, it is amazing investors. Rather than discharging this onus, it is amazing investors. Rather than discharging this onus, it is amazing that the assessee wanted to cross that the assessee wanted to cross-examine its own witness examine its own witness to establish the genuineness of its to establish the genuineness of its transaction. As the assessee was failed to discharge its onus to establish As the assessee was failed to discharge its onus to establish As the assessee was failed to discharge its onus to establish the genuineness of transaction and creditworthiness of the genuineness of transaction and creditworthiness of the genuineness of transaction and creditworthiness of investor parties, the assessee was asked to produce its investor parties, the assessee was asked to produce its investor parties, the assessee was asked to produce its investors for examination and to ascertain the genuineness investors for examination and to ascertain the genuineness investors for examination and to ascertain the genuineness ion. Further, as a principle of natural justice, Further, as a principle of natural justice, of transaction. an opportunity was given to the assessee to establish an opportunity was given to the assessee to establish an opportunity was given to the assessee to establish identity and genuineness and creditworthiness of its identity and genuineness and creditworthiness of its identity and genuineness and creditworthiness of its investors. Summons us 131 were issued to assessee investors. Summons us 131 were issued to assessee investors. Summons us 131 were issued to assessee and principal officers of all the six investor and and principal officers of all the six investor and and principal officers of all the six investor and also to five people viz. Shri Dilip Mehta, Shri Mahaveer to five people viz. Shri Dilip Mehta, Shri Mahaveer to five people viz. Shri Dilip Mehta, Shri Mahaveer M/s SNS Real Estate LLP M/s SNS Real Estate LLP 15 ITA No. 543/M/2020 Duggar, Umesh C Mehta, Shri Girishchand Yadav and Duggar, Umesh C Mehta, Shri Girishchand Yadav and Duggar, Umesh C Mehta, Shri Girishchand Yadav and Smt. Sangeeta J Sawant on 30.11.2016.Copy of Smt. Sangeeta J Sawant on 30.11.2016.Copy of Smt. Sangeeta J Sawant on 30.11.2016.Copy of summons were given to assessee in case of all the six summons were given to assessee in case of all the six summons were given to assessee in case of all the six investors as well the summons was given to the investors as well the summons was given to the investors as well the summons was given to the assessee. The assessee was required to produce its own sessee. The assessee was required to produce its own sessee. The assessee was required to produce its own witnesses witnesses witnesses and and and itself itself itself for for for verification verification verification and and and cross cross cross examination. Neither the assessee nor the investor examination. Neither the assessee nor the investor examination. Neither the assessee nor the investor parties and above five persons attended on the parties and above five persons attended on the parties and above five persons attended on the stipulated date for verification. stipulated date for verification. This clearly establish This clearly establish that the assessee and its own investors were hand in gloves that the assessee and its own investors were hand in gloves that the assessee and its own investors were hand in gloves in avoiding the scrutiny in the eyes of the law as their so in avoiding the scrutiny in the eyes of the law as their so in avoiding the scrutiny in the eyes of the law as their so called transaction was bogus. called transaction was bogus. The Hon'ble Delhi High Court's Decision in the case of N.R. The Hon'ble Delhi High Court's Decision in the case of N.R. The Hon'ble Delhi High Court's Decision in the case of N.R. Portfolio fits to the assessee when it comes t Portfolio fits to the assessee when it comes to the assessee's o the assessee's liability of onus as under: liability of onus as under: "An assessee's duty to establish that the amounts which the "An assessee's duty to establish that the amounts which the "An assessee's duty to establish that the amounts which the AO proposes to add back, under section 68 are properly AO proposes to add back, under section 68 are properly AO proposes to add back, under section 68 are properly sourced, does not cease by merely furnishing the names, sourced, does not cease by merely furnishing the names, sourced, does not cease by merely furnishing the names, addresses and PAN particulars of relying addresses and PAN particulars of relying on the entries in a on the entries in a Registrar of Companies website. One must remember that in Registrar of Companies website. One must remember that in Registrar of Companies website. One must remember that in all such cases, more often than not, the company is a private all such cases, more often than not, the company is a private all such cases, more often than not, the company is a private one, and share applicants are known to it, since they are one, and share applicants are known to it, since they are one, and share applicants are known to it, since they are issued on private placement or even issued on private placement or even15. It is felt necessa 15. It is felt necessary to discuss the balance sheet of investors in question from whom discuss the balance sheet of investors in question from whom discuss the balance sheet of investors in question from whom the assessee has received the share premium of Rs.20 the assessee has received the share premium of Rs.20 the assessee has received the share premium of Rs.20 crores. The balance sheet for F.Y. 2011 The balance sheet for F.Y. 2011-2012 (A.Y. 2012 2012 (A.Y. 2012-2013) was not provided in case of 1)Anuva Mercantile, 2) Sarang not provided in case of 1)Anuva Mercantile, 2) Sarang not provided in case of 1)Anuva Mercantile, 2) Sarang Mercantile, 3)La Mercantile, 3)LakshMerchantile Pvt. Limited. The balance sheet of rest three parties are Limited. The balance sheet of rest three parties are Limited. The balance sheet of rest three parties are discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited discussed below: a.)M/s Niti Merchantile Co. Pvt. Limited :For A. Y. 2.012 :For A. Y. 2.012-2013, the Reserve and surplus is 5230, the 2013, the Reserve and surplus is 5230, the investment are Rs.7.34.00,000/ investment are Rs.7.34.00,000/- against against which trade which trade creditors are creditors are Rs.7,33,34,750/-. The sales turnover is NIL and . The sales turnover is NIL and income is NIL. income is NIL. It has invested in share premium from sundry creditors. It has invested in share premium from sundry creditors. It has invested in share premium from sundry creditors. Therefore Therefore Therefore the the the source source source of of of the the the share share share premium premium premium and and and creditworthiness is sham. creditworthiness is sham.

M/s SNS Real Estate LLP M/s SNS Real Estate LLP 16 ITA No. 543/M/2020 b) MIs View Marchantile Put. Limited: For A.Y. 2012 b) MIs View Marchantile Put. Limited: For A.Y. 2012 b) MIs View Marchantile Put. Limited: For A.Y. 2012-2013, the Reserve and surplus is 33300 the investment are Rs. serve and surplus is 33300 the investment are Rs. serve and surplus is 33300 the investment are Rs. 1,34, 10,000/ 1,34, 10,000/- against which trade creditors are Rs. 1,34, against which trade creditors are Rs. 1,34, 10,000/- . The sales turnover is NIL and income is NIL. . The sales turnover is NIL and income is NIL. . The sales turnover is NIL and income is NIL. It has invested in share premium from sundry creditors. It has invested in share premium from sundry creditors. It has invested in share premium from sundry creditors. Therefore Therefore the the source source of of the the share share premium p remium and and creditworthiness is sham... creditworthiness is sham... c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012 c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012 c) Vertex MultitradeCo.Pvt.Lid. :For A.Y. 2012-2013, the Reserve Reserve Reserve and and and surplus surplus surplus is is is 6268, 6268, 6268, the the the investment investment investment are are are Rs.3,97,00,000/ Rs.3,97,00,000/- against against which which trade trade creditors creditors are are Rs.3,96,41,658/ Rs.3,96,41,658/-. The sales turnover is NIL and income is . The sales turnover is NIL and income is NIL. It has invested inshare premium from sundry creditors. It has invested inshare premium from sundry creditors. It has invested inshare premium from sundry creditors. Therefore Therefore Therefore the the the source source source of of of the the the share share share premium premium premium and and and creditworthiness is sham. creditworthiness is sham. Apart from this, details of no other investors for A.Y Apart from this, details of no other investors for A.Y Apart from this, details of no other investors for A.Y- 2012-13 were submitted by the assessee. The directors of above six were submitted by the assessee. The directors of above six were submitted by the assessee. The directors of above six companies viz. anies viz. Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Girishchand R Yadav, Peon and Smt. Sangeeta J. Sawant, Computer and entry operator are working in the office of Shri Computer and entry operator are working in the office of Shri Computer and entry operator are working in the office of Shri Dilip Mehta and they do not know anything about the share Dilip Mehta and they do not know anything about the share Dilip Mehta and they do not know anything about the share premium transactions and or about any of the companies It premium transactions and or about any of the companies It premium transactions and or about any of the companies It is beyond co is beyond comprehension that these so called investor mprehension that these so called investor companies run by the peon and computer operator with nil companies run by the peon and computer operator with nil companies run by the peon and computer operator with nil income had made all these huge investments in the assessee income had made all these huge investments in the assessee income had made all these huge investments in the assessee company as well as other concerns. company as well as other concerns.

10. This Girishchandyadav at a nominal face value of Rs.

10. This Girishchandyadav at a nominal face value of Rs.