SUNIL EQUITRADE PRIVATE LIMITED,MUMBAI vs. ITO - WARD 14(3)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER and SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 5516/MUM/2025 Assessment Year: 2012-13 Sunil Equitrade Pvt Ltd Vs ITO, Ward – 14(3)(1) (earlier known as Sunil Optics Aayakar Bhavan, MK Road Pvt Ltd.) Mumbai Floor No. 3, Plot 66, Bhaudaji Cross Lane, Hansa Villa (Earlier Krishna Niwas)Matunga, Mumbai PAN: AAQCS3227A Appellant Respondent Present for: Appellant by : Shri Vijay Mehta, CA Respondent by : Shri Ritesh Mishra, Sr. DR Date of Hearing : 10.02.2026 Date of Pronouncement : 06.05.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi / CIT(A), vide order no. ITBA/NFAC/S/250/2025-26/1079140036(1), dated 31.07.2025, passed against the assessment order by Income Tax officer, Ward - 14(3)(1), Mumbai u/s 143(3) r.w.s 147 of the Income-tax Act (hereinafter referred to as the “Act”), dated 28.12.2019, for Assessment Year 2012-13.

2 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 1. REOPENING U/S 147 IS BAD IN LAW:

i) There is failure on the part of the appellant to fully and truly disclose all material facts in the original assessment proceedings.

ii) No details were called for in relation to issue of Compulsory Convertible Preference Shares (CCPS) by the AO during original assessment proceedings.

No proof or evidence was furnished by the appellant in original assessment proceedings for CCPS.

II. VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE:

ADDITION U/S 68 ON ACCOUNT OF COMPULSORY CONVERTIBLE PREFERENCE SHARES OF RS. 23,25,29,100:

3 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 3. The addition u/s 68 of Rs. 23,25,29,100/- on account of Compulsory Convertible Preference Shares requires to be deleted.

IV. ANY ADDITIONAL GROUNDS IF ANY TO BE ADDED

The appellant craves leave and reserves the right to add, alter, amend, modify or delete any of the ground/s before or during the course of the hearing.

The appellant reserves the right to produce additional evidence before or during the course of the hearing.

2.1 Ground nos. 1 and 2 along with their sub-ground challenges jurisdictional aspect of the impugned assessment, whereas ground no. 3 along with sub-ground relates to merits of the case for addition of Rs. 23,25,29,100/- made u/s 68 of the Act towards compulsorily convertible preference shares (CCPS) treating it as non-genuine, as contested by the assessee. Assessee also raised additional grounds vide application dated 18.10.2025 which according to it raises purely question of law and no new facts are required to be brought on record for the same. Additional grounds so raised by the assessee are reproduced as under: 1. The CIT(A) ought to have held that the order dated 9.7.2019 passed by the A.O. disposing the objections against the reopening is invalid. The A.O. had not furnished relied upon documents/statements/other records for reopening the assessment.

The appellant craves leave to add, alter, amend or delete any of the above ground.

4 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13

2.2 On these additional grounds, ld. Counsel for the assessee submitted that additional ground nos. 1 and 3 relates to the jurisdictional issue raised vide ground nos. 1 and 2 in Form -36 and have been taken to bring more clarity and support them. Additional ground nos. 2 and 4 are not pressed by the ld. Counsel. We note that additional ground nos. 1 and 3 are more in the nature of peripheral arguments to the main grounds and therefore needs no separate adjudication.

5 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 investments, their borrowings from banks and group entities, their return of income, turnover and inventories.It also includes references to their respective bank statement which forms part of the paper book placed on record.

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3.1 Originally, case of the assessee was selected for scrutiny assessment u/s 143(3) of the Act in the course of which ld. AO had issued statutory notices u/s 142(1), asking assessee to file details of shareholders, share capital, share application money and share premium. In this respect, reference is made to notice u/s 142(1)dated 21.07.2014 and in its annexure at point no. (vii)and(viii) which specifically requires details in respect of the aforesaid transactions. Assessee furnished its reply dated 12.08.2014 for which the relevant extraction is reproduced as under:

7 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 3.2 Another reply was furnished by the assessee dated 07.11.2014 whereby assessee had given a note on justification of the share premium and its implication along with corroborative documentary evidences which included PAN of each investor, their confirmation letter, income tax return acknowledgement, annual accounts, memorandum of association and share application farm. Assessee elaborately explained the transaction of CCPS undertaken by it by another reply on 05.03.2015.In this reply, it was specifically mentioned that since conversion ratio is 35:1, each investor will get equity share of Rs. 10/- each i.e. at face value, at the time of conversion against fully paid CCPS of Rs. 350/- each. According to the assessee,based on this conversion ratio, there is no premium upon conversion of CCPS into equity shares and allottees of these CCPS would get equity shares at par. It was reiterated that assessee has already submitted relevant corroborative documentary evidences to establish identity and creditworthiness of the investor and genuineness of the transactions. These documents included: a. Confirmations with PAN from applicants/allotees, b. Memorandum of Associations of applicants/allotees, c. Certificate of Incorporations of applicants/allotees, d. Balance sheets of applicants/allotees, e. Acknowledgements of return of income filed of applicants/allotees, f. PAN Card copy of applicants/allotees, g. Share application form of applicants/allotees, h. Board resolutions of applicants/allotees, i. Bank statements of applicants/allotees reflecting amount invested by them j. Letters and other supporting's of applicants/allotees, Details of source of applicants/allotees, etc. k.

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3.3 In the same submission, assessee explained various propositions as to why share premium is not taxable as income.It also referred to the amendment broughtin by Finance Act, 2012 effective from 01.04.2013 i.e. A.Y. 2013-14 in Sec. 2(24) r.w.s. 56(2)(viib) and Sec. 68 of the Act by way of proviso.

3.4. In the course of assessment proceedings, ld.AO issued summons u/s 133(6) of the Act to all the investor companies asking them to furnish the details as under: a. Nature of transaction with the above party.

b. Copy of ledger account for the relevant period.

c. Bank statement showing the corresponding entries in the above ledger account.

d. Any other information relevant in respect of transaction with the above party.

e. Copy of return of income alongwith annexures of you. Documentary evidence of share premium/share application money. f.

3.5. All these summon were duly served on each of the respective investor companies and were duly complied with, who submitted their respective documentary evidences directly to the ld. Assessing Officer, confirming the transactions undertaken by them with the assessee, thereby establishing their identity, proving their creditworthiness and confirming the genuineness of the transactions. Ld. AO after due verification, detailed enquiry and application of mind, completed assessment u/s 143(3) of the Act, accepting the income returned by the assessee as such.

9 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 4. Subsequently, Investment Wing of Department conducted survey u/s 133A of the Act, dated 23.06.2017 on 3 of the 11 investor companies namely Makshi Real Estate Developers Pvt Ltd, Glowster Properties Pvt Ltd and White Lion Real Estate Developers Pvt Ltd as well as three other companies who were not connectedwith the transaction of CCPS with the assessee. In the course of this survey proceedings, statements of various persons were recorded and some of whom were directors of the three aforesaid companies who were allotted CCPS by the assessee. Based on the statements recorded of some of these directors of the three aforesaid investor companies, a view was farmed for all the 11 investor companies that they all are paper / dummy companies.

4.1. Subsequently, assessee was summoned 131(1)(A) on 31.12.2018 by the DDIT(Investigation Wing), Unit -8(1), Mumbai, in response to which assessee submitted the details called for which had already been furnished in the course of original assessment proceedings u/s 143(3) of the Act. Shri Sunil Shah was one of the Director of the assessee company who had resigned from the said directorship on 25.09.2018.In the proceedings before the DDIT (Investigation Wing), statement of Shri Sunil Shah i.e ex-Director was recorded on 23.02.2019 wherein various aspect relating to issue of CCPS was elaborately dealt with. Shri Sunil Shah furnished all required details even though an ex-Director of the assessee company vide his submission dated 20.02.2019, addressed to DDIT (Inv Wing), Mumbai.

10 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 (Inv Wing), Unit – 8(1), Mumbai.Based on the information so received from the Investigation Wing pertaining to statement recorded of certain directors of the three aforesaid investor companies and that of the ex-Director of the assessee company i.e. Shri Sunil Shah,it was alleged by the ld. AO that assessee has introduced unaccounted money in the garb of share premium into its books of accounts by undertaking the transaction of issuing impugned CCPS. According to the ld. Assessing Officer, income liable for tax had escaped assessment on account of alleged sham / bogus transaction of issuing CCPS to the 11 investor companies. The premise adopted by the ld. AO in the reasons to believe so recorded mentions that Directors of the 3 aforesaid investor companies had admitted that they are dummy Directors and that they do not know anything about the operations of their company. Based on this, ld. AO inferred that these companies introduced share capital in the assessee company are merely paper companies and had used as conduit to introduce unaccounted money of the assessee by way of share capital. He also noted that financials of the investor companies as well as of the assessee company do not justify the issue of share capital on such high premium.

5.1. Allegations of the ld. AO which forms the reasons for him to arrive at the belief that income has escaped assessment by undertaking transaction of the CCPS can be summarised as under: a. CCPS were issued at huge premium despite no profits.name b. Allottee companies have same addresses and were dummy companies. c. Directors of allottee companies admitted to being dummy directors. d. Mr. Sunil Shah allegedly could not explain valuation or CCPS conversion. e. The assessee had allegedly introduced unaccounted money in the guise of share premium.

11 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 f. The Investigation Wing material was not available during original assessment proceedings and therefore reopening was justified under Explanation 1 to section 147. 5.2. Assessee raised its objections on the impugned reopening proceedings which were rejected by the ld. Assessing Officer.Details and explanationsas called by the ld. AO in the impugned reassessment proceedings for which assessee filed comprehensive reply included: a. Details of CCPS already filed in original assessment and before DDIT(Inv). b. Clarification that there was no premium on conversion of CCPS1. c. Evidence to show allottee companies were operating entities and not dummy companies by furnishing all the records which were given in original proceedings. (PB-I Pp 155 summary) d. Affidavits of directors of allottee companies with confirmations etc. (PB-I Pp 156-184) e. Request for cross-examination of persons whose statements were relied upon was also made. f. Copies of the documents/Forms filed in 2012 with ROC regarding allotment of CCPS g. Order dated 26.03.2019 by Hon Appellate Tribunal of Benami Transaction (Prohibition) Act wherein the claim of the department that in one of the Companies surveyed is dummy company under Benami Act is not sustained. (PB-I Pp 215-234)

5.3. Ld. AO completed the impugned reassessment by making addition of Rs. 23,25,29,100/- u/s 68 towards CCPS for which assessee went in appeal before the ld. CIT(A) who confirmed the addition so made. Ld. CIT(A) also did not agree with the assessee on the jurisdictional issue raised before him, upholding the reassessment proceedings valid. Aggrieved, assessee is in appeal before the Tribunal.

12 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 the propositions made in the course of hearing.Also, paper books in three volumes are placed on record including one for judicial precedents relied upon. We have heard both the parties and gave our thoughtful consideration to the submissions made before us.We have also perused the orders of the authorities below as well as material placed on recordwhich shall be dealt by us as we adjudicate in the foregoing paragraphs.

(b) Since the impugned reassessment is beyond the four years, conditionsstipulated in the proviso to Sec. 147 are not complied, that is, there is no reference to what is the failure on the part of the assessee in fully and truly disclosing the material relevant for the purpose of making the assessment;

(c) There is no new tangible material brought on record having live link to the reasons to believe recorded by the ld. AO which is based merely on the information received from the Investigation Wing of the Department which tantamount to borrowed satisfaction and therefore, the notice issued for reopening is mechanical in nature and is based on conjectures and surmises.

7.1. It is trite law that assessment cannot be reopened on the basis of mere change of opining.There is a conceptual difference between power to reassess and power to review.Ld. AO has power to reopen provided there is fresh tangible material by which he comes to

13 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 conclude that there is an escapement of income from assessment.The conclusion arrived at by him while recording the reasons to believe must have live link with the formation of the said belief. Hon’ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd, 320 ITR 561 (SC) had elaborately dealt on the concept of ‘change of opinion’which exists as an inbuilt test to check abuse of power by the ld. AO. In the original assessment,once the AO has farmed a view based on his examination and verification of the details and documents furnished before him, subsequently review cannot be taken u/s 148 of the Act by formulation of different view on the same set of facts.

7.2. In the present case before us, as already narrated above, it is an admitted fact that ld. AO had specifically raised query on the transaction of CCPS undertaken by the assessee during the year for which detailed submissions were furnished, coupled with exhaustive documentary evidences,more so, ld. AO himself had conducted enquires by issuing summons u/s 133(6) of the Act to all the 11 investor companies who had directly replied to him on all the details and documents called for by ld. AO in the said summons and had confirmed the transaction undertaken by them with the assessee company for the CCPS subscribed by them. Ld. AO has consciously considered detailed and exhaustive submissions which is directly evident from the material placed on record against which nothing contrary has been brought on record by the Revenue to disprove the same. Assessee has duly discharged its onus as casted u/s 68 and has established the identity and creditworthiness of the investor companies and genuineness of the transactions.Assessee has furnished financial details of each of the investor company and the investments made by them in the assessee which is a small fraction

14 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 oftheir total investments made by them as apparent in their relevant audited financial statements.Relevant details in this respect are extracted as under:

7.3. Furthermore, from the perusal of the reasons to believe recorded by the ld. Assessing Officer, there is nothing mentioned as towhat is the omissions or failure on the part of the assessee for not disclosing the primary facts which in fact were all available before the ld. AO in the course of original assessment proceedings. In the present case, the reopening proceedings have been initiated after the end of 4 years from the end of the relevant assessment year and therefore, the onus is on the revenue to establish the failure on the part of the assessee to disclose fully and truly all material facts, necessary for assessment. Assessee has reportedits transaction in the audit financial statements, disclosed all the primary facts before the ld. AO, explained the queries raised in the course of assessment proceedings by furnishing corroborative documentary evidences.Thus, it cannot be said that assessee did not disclose fully and truly all the material facts necessary for the assessment. Proviso to Sec. 147comes into play in the given set of facts and squarely supports the case of the assessee.

7.4. From the perusal of the material placed on record as well as from the impugned reassessment order, it is noted that assessee has repeatedly, time and again requested ld. AO to supply /

15 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 providestatements of persons and directors which have been relied upon for tainting the impugned transaction of CCPS as bogus / sham and making the addition in the hands of the assessee. The request made by the assessee to the ld. AO included supplying the following documents for supplying to it: a. Statement recorded of Mr Sunil Shah by the Investigation Wing on 13 February 2019, Director of the Company referred to in the Para 3.2 and 5.2 of the reasons recorded.

b. Statement recorded of Mr Amit R Sawhney, Mr Balwinder S Malhotra, Mr Nadarajan Ramani, MrShivaji D Bate, Mr Placid Jacob Narhona and Mr Mehulanil Bavshi by the Investigation Wing referred to in the Para 2.2 of the reasons recorded.

c. Copies of the information received from Dy Director of Income tax (Investigation), Unit 8(1), Mumbai.

d. Report of Survey Proceedings in case of M/s Makshi Real Estate Developers, M/s Glowster Properties Private Limited and M/s White Lion Real Estate Developers Pvt Ltd referred to in Para 5.4 of the reasons recorded. e. Inspection of Original Assessment records.

7.5. In para 5 of the impugned assessment order, ld. AO states that aforesaid request made by the assessee was not granted in view of the fact that the statements / documents were part of the confidential record of the Department which could not be disclosed. He however noted that copy of the statement of the director of the assessee i.e. Shri Sunil Shah recorded by the Investigation Wing was provided to the assessee company. Assessee was also allowed to inspect the original case record. He further noticed in the same paragraphs, the request of the assessee to provide copies of documents which were on record in the original assessment record folders were not allowed since the documents which are on record in the original assessment folder are third-party documents obtained by the ld. AO during the course of original assessment proceedings conducted in the case. This evidently

16 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 establishes the violation of principles of natural justice and at the same time confirms that in the course of original assessment proceedings,ld. Assessing Officer had conducted enquiries with the investor companies and their documents were on record which in this para 5 are referred as “third party documents obtained by the AO.”

7.6. At this juncture, it is important taking note of provision contained in Sec. 142(3) which provides that in respect of any material gathered by the ld. AO and proposed to be utilized for the purpose of the assessment, assessee shall be given an opportunity of being heard in respect of the said material.The requirement prescribed u/s 142(3) is mandatory statutory procedural requirement for undertaking assessment proceedings u/s 143(3),any non-compliance of which would vitiate the entire assessment. From the perusal of the impugned reassessment order it is also noted that ld. AO had conducted certain enquiries with the bankers of the investor companies who have supplied the relevant bank statements.However, the material so gathered has not been supplied to the assessee for its rebuttal, violatingthe principles of natural justice.Contentions of the assessee in this regard are summarized as under: a. Copies of statements of persons referred in reasons recorded and relied upon in assessment order notprovided to the appellant inspite of specific requests b. No cross examination of persons whose statements were referred in reasons recorded and relied uponin assessment order were provided to the appellant inspite of specific requests c. Copies of Documents referred in reasons recorded and relied upon in assessment order not providedto appellant inspite of specific requests. d. No proper inspection granted nor copies of documents which were part of original asst proceedings was given. Even the appellant representative was not allowed to take noting or notes of extract of documents. e. Copies of enquires done by original AO/ proceedings sheet not provided/allowed.

17 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 f. The AO referred few extracts of statements of few persons relied upon for the first time in Assessment order. Even in SCN the same were not referred. The appellant was not informed about the contents ofthe statements and other documents even when the whole reopening and proceedings were based on the same. g. The AO had done some the enquiry from Banks of Investor and obtained bank statements of the Investor companies during the reassessment proceedings. Neither appellant knew nor the same was referred in SCN also. This was done without intimating the appellant or providing any reasonable opportunity to the appellant of providing adequate explanation. h. The AO has referred the statements of 6 directors and Survey report on 3 out of 11 companies and alleged inference drawn was then extended to all other companies without any evidence i. Copy of statement of Sunil Shah (Ex Director) statement relied upon was given to appellant on 10.12.2019 and request for his cross examination was not granted. j. Not speaking order - many contentions of appellant not dealt with at all nor referred or have been dealt without giving proper reasoning for conclusions

7.7. Assessee has repeatedly asked for cross examination of the persons / directors of the three investor companies and others which have also been not afforded by the ld. Assessing Officer.Assessee has placed on record their affidavits whereby they have confirmed the transaction undertaken by their respective investor companies with the assessee.Thus, in view of contradiction in the statement given by them in a third-party survey which had no relevance with the assessee and the subsequent affidavits by the same directors / persons now furnished by the assessee before the ld. Assessing Officer, certainly warranted their cross examination so as to establish the correctness of the facts before taking an adverse view. Hon’ble Supreme Court in the case of Andaman Timber Pvt Ltd vs. CCE, 281 CTR 214(SC) has held that denial to the assessee of right to cross examination the witness whose statement was made the basis of impugned order is a serious flaw which makes order a nullity inasmuch as it amounted to violation

18 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 of principles of natural justice because of which assessee was adversely affected.

8.1. Further, in para 9 of the said decision, Hon'ble Supreme Court has observed as under: "9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports

19 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 revealed that the share-holders were either non-existent, or lacked credit- worthiness." 8.2. Thereafter, Hon'ble Supreme Court summed up the principles which emerged by deliberating upon various case laws as under: "11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Office is duty bound to investigate the credit-worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of namelenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary onus contemplated by Section 68 of the Act.” 8.3. Hon'ble Supreme Court, thus, held that once the assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness of the subscribers, then, AO is duty bound to conduct an independent enquiry to verify the same. However, as noted above, ld. AO in this case has not made any independent enquiry in the course of impugned reassessment proceedings to verify the genuineness of the transactions. Assessee, having furnished all the details and documents before the ld. AO and the ld. AO has not pointed out any discrepancy or insufficiency in the said evidences and details furnished by the assessee before him. As observed above, the assessee having discharged its initial burden casted upon it to furnish the evidences to prove the identity and creditworthiness of the share subscribers and genuineness of the transaction, onus shifted on the ld. AO to examine the evidences furnished and make independent inquiries and thereafter, to state

20 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 that on what account he was not satisfied with the details and evidences furnished by the assessee by confronting with the same to the assessee.

8.4. Further, in the course of assessment proceedings u/s 143(3), ld. AO has conducted the required enquiries as enunciated by the Hon’ble Supreme Court by issuing summons u/s 133(6) which were duly complied by all the 11 investor companies.

8.5. In the conspectus of the above detailed discussion on the jurisdictional aspect raised by the assessee vide ground nos. 1 and 2, we hold that the impugned reassessment proceedings tantamountto change of opinion, inadmissible under the provisions of the Act as there is no fresh tangible material is brought on record which demonstrates allegation of the ld. AO about income escaping assessment.Also,impugned reassessment proceedings are vitiated on account of violation of principles of natural justices as well as provisions contained in 142(3).Thus,ground nos. 1 and 2 raised by the assessee are allowed.

21 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 9.1. In the course of the present reassessment proceedings, ld. AO being not convinced by the details and documentary evidences already on record,has relied upon the statement of various persons / directors wherein some of them allegedly stated that they were unaware of their company operations and were dummy directors who worked on the instruction of senior executives and other directors and close associates of the promoters of holding / group company, namely Mr. Sonpal Jain, Mr. Hemant Bhatia and Mr. Sachin Pathak. Merely based on the statements of above persons, ld. AO has formed adverse view.Assessee has furnished affidavits of these very persons who have confirmed making of investment in the CCPS issued by the assessee company by furnishing corroborative documentary evidences where no discrepancy or deficiency has been pointed out by the ld. AO to disprove the same. Thus, these statements relied upon by the AO and the affidavit filed by the assessee of the very same alleged dummy directors needed cross examinations to find out the truth for the deviation between the two, so as to draw correct conclusion.Assessee has repeatedly requested for granting cross examination opportunity which has been explicitly denied by the ld. Assessing Officer in his impugned reassessment order. Statements of these alleged dummy directors were pre-existing and were recorded by the investigation unit in different proceedings under different context and therefore, essentially needed cross examination.

9.2. Ld. AO had called for bank statement from the respective banks of the investor companies from where he has drawn adverse conclusion by stating that these entities received funds from inter group companies or third party and then, subscribed to the CCPS of the assessee. Ld. AO has not carried out any further enquiry to evidently demonstrate the allegation raised onthe assessee of it

22 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 bringing in unaccounted money in the garb of CCPS. We find that ld. AO has not pointed out discrepancies or insufficiency in the evidence and details furnished by the assessee.

9.3. We refer to the decision of Hon’ble Jurisdictional High Court of Bombay in the case of PCIT vs. Paradise Inland Shipping Pvt Ltd, [2017] 84 taxmann.com 58(Bom),wherein it was held that once the assessee has produced documentary evidence to establish the existing subscribe companies, burden would shift on the revenue to establish its case.

9.4. It is relevant to quote the decision of Hon’ble jurisdictional High Court of Bombay in the case ofCIT v. Creative World Telefilms P. Ltd. (2011) 333 ITR 100 (Bom)wherein it was held as under: “In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable". The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal could not be faulted. No substantial question of law was involved in the appeal.''

9.5. Similar view was taken by the Hon’ble High Court of Madras in the case of Pranav foundations Ltd. (2015) 229 Taxman 58 (Mad) wherein it was held as under: “In view of the fact that all the four parties, who are subscribers of the shares, are limited companies and enquiries were made and received from the four companies and all the companies accepted their investment. Thus, the assessee has categorically established the nature and source of the said sum and discharged the onus that lies on it in terms of section 68. When the nature and source of the amount so invested is known, it cannot be said to undisclosed income. Therefore, the addition of such subscriptions as unexplained credit under section 68 is unwarranted.”

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9.6. Further, reliance is placed on the decision of Hon’ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) wherein it was held as under: “In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise. The High Court was, therefore, right in refusing to refer the questions sought for. Decision of the High Court affirmed.”

9.7. We also note that provisions of section 56(2)(viib) have been inserted with effect from 01.04.2013 and applies from assessment year 2013 – 14 onwards and cannot be applied retrospectively to bring to charge the excess share premium. For this, we derive force from the decision of Hon’ble jurisdictional High Court of Bombay in the case of Gagandeep Infrastructure Pvt. Ltd. [2017] 394 ITR 680 (Bom) wherein it was held that it is the prerogative of the board of directors of the company to decide the share premium and it is at the wisdom of the shareholders to subscribe to the share premium and further that section 56(2)(viib) inserted with effect from 01.04.2013 cannot be applied retrospectively.

24 ITA No. 5516/Mum/2025 Sunil Equitrade Pvt Ltd AY 2012-13 has discharged its onus to prove the identity and creditworthiness of the share subscribing companies and the genuineness of the transactions. Accordingly, considering these facts and in the light of the judicial precedents referred above, we delete the addition made by the ld. AO towards CCPS u/s. 68 of the Act. Accordingly, ground no. 3 raised by the assessee is allowed.

Order pronounced in the open court on 06.05.2026.

Sd/- Sd/- [Amit Shukla] [Girish Agrawal] Judicial Member Accountant Member Dated: 06.05.2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai