NAMITA YOGESH DAVE,MUMBAI vs. ITO WARD 25(3)(5), MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITO Ward 25(3)(5) 7th Lane, Mangaldas Aayakar Bhavan, M. K. Market, Marine Lines, Vs. Road, Marine Lines, Mumbai-400 002 Mumbai-400 020 PAN/GIR No. AADPD7167J (Applicant) (Respondent) Assessee by Shri Deepak Jain, Ld. AR Revenue by Shree Kumar C., Ld. DR Date of Hearing 24.06.2026 Date of Pronouncement 08.07.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 17/11/2025 passed by the Addl./JCIT(A), Prayagraj [hereinafter referred to as "the CIT(A)"], under section 250 of the Income-tax Act, 1961[hereinafter referred to as "the Act"], for A.Y. 2012-13. The appellate order arises from the assessment order dated 25/11/2019 passed by the Income Tax Officer, Ward

25(3)(5), Mumbai [hereinafter referred to as "Assessing Officer"], under section 143(3) read with section 147 of the Act. Facts of the Case 2. The assessee filed her return of income on 01/01/2013 declaring total income of Rs. 1,97,130/-. The Assessing Officer initiated proceedings under section 147 of the Act and issued notice under section 148 dated 28/03/2019 after obtaining prior sanction under section 151 of the Act. In response to the notice under section 148, the assessee filed return of income on 10/07/2019 declaring income of Rs. 1,97,130/-. Notice under section 143(2) was thereafter issued and the reasons recorded for reopening were made available to the assessee. Statutory notices under section 142(1) were also issued calling for various details. The Assessing Officer recorded that the assessee derived income chargeable under the head “Income from other sources”. 3. The proceedings under section 147 were initiated on the basis of information received from the DDIT (Investigation), Unit- 1(1), Ahmedabad, with respect to investment of Rs. 16,00,000/- made by the assessee in 80,000 equity shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. at premium of Rs. 10/- per share. The Assessing Officer noted that investigation/enquiries had been carried out into the share capital raised by M/s Riddhi Siddhi Recyclers Pvt. Ltd. at premium of Rs. 10/-, Rs. 70/- and Rs. 240/- per share, against face value of Rs. 10/- per share, by way of investment from various persons/entities. As per the said

Namita Yogesh Dave investigation, the financials of M/s Riddhi Siddhi Recyclers Pvt. Ltd. were not strong enough to issue shares at premium; most of the investors had no substantial sources of income either in the year in which investment was made or in other years; and the companies which had subscribed to the shares were found to be shell companies without any creditworthiness. On this basis, the Assessing Officer recorded that there was reason to believe that income of Rs. 16,00,000/- chargeable to tax in the hands of the assessee for A.Y. 2012-13 had escaped assessment within the meaning of section 147 of the Act. 4. During the course of reassessment proceedings, notice under section 142(1) dated 08/07/2019 was issued to ascertain the genuineness of the transaction. The assessee was required to explain the source of funds for investment in shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. and to substantiate the same with supporting documents, such as relevant bank statement, confirmation of loan, etc. In response, the assessee filed computation of total income, copy of her bank account statement with Union Bank of India reflecting certain payments made to M/s Riddhi Siddhi Recyclers Pvt. Ltd., and copy of share certificate issued by M/s Riddhi Siddhi Recyclers Pvt. Ltd. in the joint names of the assessee and Mr. Yogesh S. Dave. The Assessing Officer recorded that, as per the share certificate, the assessee was the first holder, but the remaining details called for were not filed.

Namita Yogesh Dave the assessee, approval or intimation to Ministry of Corporate Affairs or other governmental agencies, resolution for allotment, copy of assessee’s account in the books of the company, and audited financial statements for F.Y. 2011-12. The company did not respond to the notice under section 133(6). The Assessing Officer, therefore, recorded that in the absence of compliance by the assessee and failure on the part of the company to reply to notice under section 133(6), genuineness of the assessee’s transaction with M/s Riddhi Siddhi Recyclers Pvt. Ltd. remained unexplained. 7. Thereafter, final show cause notice dated 09/11/2019 was issued requiring the assessee to explain why her transaction in shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. should not be treated as non-genuine and sham, why source of payment of Rs. 16,00,000/- should not be treated as unexplained, and why the amount of Rs. 16,00,000/- should not be taxed as income chargeable to tax in her hands for the year under consideration. Summons under section 131 were also issued. The Assessing Officer recorded that the assessee neither replied to the show cause notice nor complied with the summons issued under section 131 of the Act. 8. The Assessing Officer further recorded that a survey action under section 133A was carried out on 05/02/2019 in the Kushal Group of cases by the Investigation Wing, Ahmedabad. According to the information received from DDIT (Investigation), Ahmedabad, M/s Riddhi Siddhi Recyclers Pvt. Ltd. had

Namita Yogesh Dave introduced share capital by allotting shares of face value of Rs. 10/- at premium, namely share capital of Rs. 6,00,00,000/- at premium of Rs. 10/- per share during F.Y. 2011-12, share capital of Rs. 7,43,75,000/- at premium of Rs. 240/- per share during F.Y. 2012-13, and share capital of Rs. 4,00,00,000/- at premium of Rs. 70/- per share during F.Y. 2015-16. The Assessing Officer also referred to investigation conducted by the Directorate of Income-tax (Investigation), Kolkata, into certain companies and recorded that some of the investor companies were shell companies, controlled by accommodation entry providers and operating from common small premises. 9. In relation to the assessee, the Assessing Officer specifically noted that during the financial year relevant to A.Y. 2012-13, the assessee had invested Rs. 16,00,000/- for allotment of 80,000 shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. at premium of Rs. 10/- per share. The Assessing Officer compared the said investment with the returned income of the assessee, namely Rs. 2,49,070/- for A.Y. 2011-12 and Rs. 1,97,130/- for A.Y. 2012-13. The Assessing Officer observed that the investor companies did not have creditworthiness to invest large amounts in shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. at high premium and that the financials of M/s Riddhi Siddhi Recyclers Pvt. Ltd. were not strong enough to justify issuance of shares at premium. 10. The Assessing Officer held that the onus was on the assessee to establish genuineness of the transaction. According to the Assessing Officer, the assessee had only submitted copy of

Namita Yogesh Dave bank account statement with Union Bank of India, Princess Street Branch, Mumbai, and copy of share certificate. The Assessing Officer observed that there was hardly any balance in the said bank account and just before the date of payment to M/s Riddhi Siddhi Recyclers Pvt. Ltd., there was huge credit from some other source, the source whereof was not explained by the assessee. The Assessing Officer further held that merely furnishing bank statement and share certificate did not prove genuineness of the transaction, and that the source of funds for investment was not explained with supporting documents. The weak financials of the company were also considered as casting doubt on genuineness of the assessee’s transaction. 11. On account of non-compliance with statutory notices, non- reply to the show cause notice and non-response to summons issued under section 131, the Assessing Officer proceeded to complete the assessment on the basis of material available on record, invoking the principles underlying section 144 of the Act. The Assessing Officer also referred to section 114(g) of the Indian Evidence Act, 1872, and drew adverse inference against the assessee. He held that the assessee did not have requisite evidence or satisfactory explanation with regard to source of funds for investment of Rs. 16,00,000/- in 80,000 shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. and genuineness of the transaction with the said company. 12. The Assessing Officer also recorded that not only the assessee, but other members of the Dave family had also been

Namita Yogesh Dave allotted large quantities of shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. at premium of Rs. 10/- per share and that some of those members had not filed returns of income for A.Ys. 2011-12 and 2012-13. Ultimately, the Assessing Officer held that the source of investment of Rs. 16,00,000/- claimed to have been made for acquiring 80,000 shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. at premium of Rs. 10/- per share was not satisfactorily explained by the assessee. He invoked section 69 of the Act and treated Rs. 16,00,000/- as deemed income of the assessee as unexplained investment. The total income was computed at Rs. 17,97,127/- and rounded off to Rs. 17,97,130/-. Penalty proceedings under section 271(1)(c) were also initiated. 13. In appeal, the learned CIT(A) recorded that the assessee had challenged the addition of Rs. 16,00,000/- made under section 69 of the Act as unexplained investment in shares of M/s Riddhi Siddhi Recyclers Pvt. Ltd. The assessee furnished written submission dated 19/05/2025, wherein she relied upon the passbook of savings bank account maintained with Union Bank of India, Princess Street, Mumbai, Account No. 319102010076979, for the period 01/04/2011 to 31/03/2012, from which payment for purchase of equity shares was stated to have been made. The assessee also stated that analysis of transactions as to sources of amount paid for purchase of equity shares was described in Annexure-III along with explanation and confirmations.