LUMINANT INVESTMENTS LTD ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -40, MUMBAI

2. The CIT(A) erred in confirming the action of Assessing Officer in 2. The CIT(A) erred in confirming the action of Assessing Officer in 2. The CIT(A) erred in confirming the action of Assessing Officer in treating business loss as speculation loss by invoking the provisions treating business loss as speculation loss by invoking the provisions treating business loss as speculation loss by invoking the provisions of Explanation to se of Explanation to section 73 of the Act. The appellants contend that on the facts and circumstances of the The appellants contend that on the facts and circumstances of the The appellants contend that on the facts and circumstances of the case and in law, the provisions of Explanation to section 73 could case and in law, the provisions of Explanation to section 73 could case and in law, the provisions of Explanation to section 73 could not have been invoked by the Assessing Officer inasmuch as the not have been invoked by the Assessing Officer inasmuch as the not have been invoked by the Assessing Officer inasmuch as the same is beyond the scope of directions same is beyond the scope of directions of the Tribunal given in their of the Tribunal given in their order (1st round)and hence, CIT(A) has fallen in error in upholding order (1st round)and hence, CIT(A) has fallen in error in upholding order (1st round)and hence, CIT(A) has fallen in error in upholding the action of the Assessing Officer in treating the business loss as the action of the Assessing Officer in treating the business loss as the action of the Assessing Officer in treating the business loss as speculation speculation speculation loss loss loss by by by invoking invoking invoking the the the provisions provisions provisions of of of Explanation to to section 73.

2. Briefly stated, facts of the case are that the assessee filed ted, facts of the case are that the assessee filed ted, facts of the case are that the assessee filed return of income for the year under consideration on 25.11.2006 return of income for the year under consideration on 25.11.2006 return of income for the year under consideration on 25.11.2006 declaring total income at Nil. The return of income filed by the declaring total income at Nil. The return of income filed by the declaring total income at Nil. The return of income filed by the assessee was processed u/s 143(1) of the Income as processed u/s 143(1) of the Income-tax Act, 1961 (in tax Act, 1961 (in short ‘the Act’) and was thereafter selected for scrutiny. Statutory and was thereafter selected for scrutiny. Statutory and was thereafter selected for scrutiny. Statutory notices were issued in the course of such proceedings. The notices were issued in the course of such proceedings. notices were issued in the course of such proceedings. Assessing Officer (AO), in the course of scrutiny, noted that the Assessing Officer (AO), in the course of scrutiny, noted that the Assessing Officer (AO), in the course of scrutiny, noted that the company had received an aggregate amount of ₹27.78 appellant-company had received an aggregate amount of company had received an aggregate amount of crores, including share premium of crores, including share premium of ₹22.22 crores, by way of share 22.22 crores, by way of share subscription from a number of private companies, primarily based subscription from a number of private companies, primarily based subscription from a number of private companies, primarily based in Kolkata. These funds were ostensibly raised for the purpose of in Kolkata. These funds were ostensibly raised for the purpose of in Kolkata. These funds were ostensibly raised for the purpose of discharging the appellant's liabilities towards M/s Mahavpura discharging the appellant's liabilities towards M/s M discharging the appellant's liabilities towards M/s M Mercantile Co-operative Bank Ltd. operative Bank Ltd. Upon further investigation, it Upon further investigation, it was revealed that a special team constituted by the Central Board was revealed that a special team constituted by the Central Board was revealed that a special team constituted by the Central Board of Direct Taxes (CBDT) had been tasked with verifying the source of of Direct Taxes (CBDT) had been tasked with verifying the source of of Direct Taxes (CBDT) had been tasked with verifying the source of the said funds. The Investigation Wing of the Income-tax the said funds. The Investigation Wing of the In the said funds. The Investigation Wing of the In Department, Kolkata, undertook detailed inquiry and recorded Department, Kolkata, undertook detailed inquiry and recorded Department, Kolkata, undertook detailed inquiry and recorded statements of the directors of the alleged share subscriber statements of the directors of the alleged share subscriber statements of the directors of the alleged share subscriber companies. A list of such companies is reproduced as under: A list of such companies is reproduced as under: A list of such companies is reproduced as under: Details of increase in share capital Details of increase in share capital Sr. Name and Address Qty Total Name and Address JAISHREE COMMOTRADE PVT.LTD. 254000 12700000 1. JAISHREE COMMOTRADE PVT.LTD.

KANODIA VYAPAR PVT. LTD. 310000 15500000 KANODIA VYAPAR PVT. LTD. 2.

188000 9400000 3. BANSHIDHAR VYAPAR PVT.LTD. BANSHIDHAR VYAPAR PVT.LTD. PLATINUM COMMERCE PVT LTD. 346000 17300000 4. PLATINUM COMMERCE PVT LTD. YULAN MARKETING PVT. LTD. 400000 20000000 5. YULAN MARKETING PVT. LTD. PROMOTERS & FISCAL PVT. LTD. 310000 15500000 6. NILHAT PROMOTERS & FISCAL PVT. LTD. COSMIC TRADE & INV PVT. LTD. 470000 23500000 7. COSMIC TRADE & INV PVT. LTD. VENTEX TRADE PVT. LTD. 298000 14900000 8. VENTEX TRADE PVT. LTD. ANKITA FINVEST PVT. LTD. 190000 9500000 9. ANKITA FINVEST PVT. LTD. PENTEX EXPO PVT. LTD. 100000 5000000 10. PENTEX EXPO PVT. LTD. TUTICORIN TREXIM PVT. LTD. 170000 8500000 11. TUTICORIN TREXIM PVT. LTD. SNEHDEEP IMPEX PVT. LTD. SNEHDEEP IMPEX PVT. LTD. 50000 2500000 12.

“4.3 The Addl. DIT (Inv.) Unit 4.3 The Addl. DIT (Inv.) Unit-1, Kolkata has also recorded statement 1, Kolkata has also recorded statement of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, of one Shri Kishan Kumar Verma S/o Shri Vijay Kumar Verma, resident of Howrah resident of Howrah-2 who has admitted in his statement recorded 2 who has admitted in his statement recorded w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his w/s131 of I.T. Act, 1961 on 13.10.2006 that he rendered his individual Bank A/c as well his propriety concerns Bank A/c's to individual Bank A/c as well his propriety concerns Bank A/c's to individual Bank A/c as well his propriety concerns Bank A/c's to deposit cash in lieu of signed blank account payee cheques to Shri cash in lieu of signed blank account payee cheques to Shri cash in lieu of signed blank account payee cheques to Shri Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover Pawan Kumar Agarwal, S/o O.P. Agarwal, resident of 2C Dover Road, Kolkata Road, Kolkata-19 and Shri D.K. Nahata resident of Kolkata for a 19 and Shri D.K. Nahata resident of Kolkata for a commission of Rs. 100 for per Rs. 1,00,000/ commission of Rs. 100 for per Rs. 1,00,000/-. He also stated that . He also stated that similar transactions were made with one Shri Murari Agarwal. The r transactions were made with one Shri Murari Agarwal. The r transactions were made with one Shri Murari Agarwal. The blank cheques so issued were used by Shri Pawan Kumar Agarwal blank cheques so issued were used by Shri Pawan Kumar Agarwal blank cheques so issued were used by Shri Pawan Kumar Agarwal and Shri N.K. Nahata as and when required. He also stated that all and Shri N.K. Nahata as and when required. He also stated that all and Shri N.K. Nahata as and when required. He also stated that all the cash deposited in his A/c's were made by Delhi based parties the cash deposited in his A/c's were made by Delhi based parties the cash deposited in his A/c's were made by Delhi based parties which were not known to him. Later on statement of Shri Pawan ch were not known to him. Later on statement of Shri Pawan ch were not known to him. Later on statement of Shri Pawan Kumar Agarwal who was former Director of M/s Mrugiya Electornic Kumar Agarwal who was former Director of M/s Mrugiya Electornic Kumar Agarwal who was former Director of M/s Mrugiya Electornic Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit- Industreis P.Ltd. recorded by the Addl.DIT(Inv.) Unit-I, Kolkata u/s 131 of the I.T. Act. In his statement he has denied the ownershi 131 of the I.T. Act. In his statement he has denied the ownershi 131 of the I.T. Act. In his statement he has denied the ownership of the cash. But at the same time he has admitted that the cheques the cash. But at the same time he has admitted that the cheques the cash. But at the same time he has admitted that the cheques received from Shri Kishan Kumar Verma and Shri Murari Agarwal received from Shri Kishan Kumar Verma and Shri Murari Agarwal received from Shri Kishan Kumar Verma and Shri Murari Agarwal were utilized to invest in the share application money of M/s Chat were utilized to invest in the share application money of M/s Chat were utilized to invest in the share application money of M/s Chat Computers Pvt. Ltd.(formerly known as M/s Chitrakut Comput Computers Pvt. Ltd.(formerly known as M/s Chitrakut Comput Computers Pvt. Ltd.(formerly known as M/s Chitrakut Computers P. Ltd.). The modus operandi in this case is similar as in the case of Ltd.). The modus operandi in this case is similar as in the case of Ltd.). The modus operandi in this case is similar as in the case of M/s Chat Computers Pvt. LTd. It is very much clear from the above M/s Chat Computers Pvt. LTd. It is very much clear from the above M/s Chat Computers Pvt. LTd. It is very much clear from the above that the assessee has mobilized the unaccounted cash by creating that the assessee has mobilized the unaccounted cash by creating that the assessee has mobilized the unaccounted cash by creating various layers of transactions of which the assess various layers of transactions of which the assessee is an ultimate ee is an ultimate beneficiary. 4.4 Similar transactions have been done by the group concerns of the 4.4 Similar transactions have been done by the group concerns of the 4.4 Similar transactions have been done by the group concerns of the assessee which are given in Annexure 1 which is the report of assessee which are given in Annexure 1 which is the report of assessee which are given in Annexure 1 which is the report of Investigation wing of the department. Where in it is clearly Investigation wing of the department. Where in it is clearly Investigation wing of the department. Where in it is clearly established that cash was established that cash was deposited in one account and after deposited in one account and after passing through various levels it has eached to the assessee passing through various levels it has eached to the assessee passing through various levels it has eached to the assessee company, Few such instances are covered in the report annexed company, Few such instances are covered in the report annexed company, Few such instances are covered in the report annexed herewith.

4.5 As per the statements of the Directors of various Kolkata based As per the statements of the Directors of various Kolkata based As per the statements of the Directors of various Kolkata based companies it is clea companies it is clear that the assessee had given cash to the above r that the assessee had given cash to the above mentioned companies which in turn issued back to assessee mentioned companies which in turn issued back to assessee mentioned companies which in turn issued back to assessee cheques/Demand Draft of equivalent amount. This fact was stated cheques/Demand Draft of equivalent amount. This fact was stated cheques/Demand Draft of equivalent amount. This fact was stated on oath by the Directors of the said companies. However, Director of on oath by the Directors of the said companies. However, Director of on oath by the Directors of the said companies. However, Director of the assessee Mr. the assessee Mr. Vishal Pancholi denied to have paid any cash to the Vishal Pancholi denied to have paid any cash to the these companies in his statement before ADIT(Inv.) Unit these companies in his statement before ADIT(Inv.) Unit these companies in his statement before ADIT(Inv.) Unit-IX(2), Mumbai. In his statement he stated his intention to cross examine the Mumbai. In his statement he stated his intention to cross examine the Mumbai. In his statement he stated his intention to cross examine the aforesaid Directors to prove his stand. DDIT(Inv.) Unit aforesaid Directors to prove his stand. DDIT(Inv.) Unit aforesaid Directors to prove his stand. DDIT(Inv.) Unit-I (2), Kolkata has given several opportunities to the assessee to cross examine the has given several opportunities to the assessee to cross examine the has given several opportunities to the assessee to cross examine the aforesaid Directors at its Kolkata office. Inspite of repeated aforesaid Directors at its Kolkata office. Inspite of repeated aforesaid Directors at its Kolkata office. Inspite of repeated opportunities given to the assessee, the said cross examination could opportunities given to the assessee, the said cross examination could opportunities given to the assessee, the said cross examination could not take place as the assessee sought adjournments eve not take place as the assessee sought adjournments eve not take place as the assessee sought adjournments every time. Thereafter, the assesee stated that "he would exercise his right of Thereafter, the assesee stated that "he would exercise his right of Thereafter, the assesee stated that "he would exercise his right of cross examina cross examination at the time of assessment".” 2.2 The Assessing Officer provided due opportunity to the The Assessing Officer provided due opportunity to the The Assessing Officer provided due opportunity to the managing director of the assessee company to cross-examine managing director of the assessee company to cross managing director of the assessee company to cross directors of the share share subscriber companies but the assessee subscriber companies but the assessee sought adjournment every time. Further, the Assessing Officer sought adjournment every time. Further, the Assessing Officer sought adjournment every time. Further, the Assessing Officer asked the assessee to produce directors of the share subscription asked the assessee to produce directors of the share subscription asked the assessee to produce directors of the share subscription companies but the assessee failed in discharging his burden. The companies but the assessee failed in discharging his burden. The companies but the assessee failed in discharging his burden. The relevant observation of the Assessing Officer is reproduced as servation of the Assessing Officer is reproduced as servation of the Assessing Officer is reproduced as under:

“4.8 In response to this letter the assessee failed to produce any 4.8 In response to this letter the assessee failed to produce any 4.8 In response to this letter the assessee failed to produce any Director personally, instead he filed a letter dtd. 8.10.2008 stating Director personally, instead he filed a letter dtd. 8.10.2008 stating Director personally, instead he filed a letter dtd. 8.10.2008 stating that copies of share application, acknowledgement slip, cert that copies of share application, acknowledgement slip, cert that copies of share application, acknowledgement slip, certificate of incorporation etc. have been filed vide their letter dated 8.9.2008. incorporation etc. have been filed vide their letter dated 8.9.2008. incorporation etc. have been filed vide their letter dated 8.9.2008. Therefore, genuineness of the confirmation could not be established. Therefore, genuineness of the confirmation could not be established. Therefore, genuineness of the confirmation could not be established. The burden of proving genuineness of transaction pertains to so The burden of proving genuineness of transaction pertains to so The burden of proving genuineness of transaction pertains to so- called corporate bodies, is on the assessee called corporate bodies, is on the assessee and the assessee has and the assessee has failed to carry the burden. The assessee cannot get away from this failed to carry the burden. The assessee cannot get away from this failed to carry the burden. The assessee cannot get away from this responsibility by putting it on the shoulders of the Assessing Officer. responsibility by putting it on the shoulders of the Assessing Officer. responsibility by putting it on the shoulders of the Assessing Officer. It is the assessee's responsibility to produce Directors of so called It is the assessee's responsibility to produce Directors of so called It is the assessee's responsibility to produce Directors of so called Kolkata based companies f Kolkata based companies for cross verification. Secondly, assessee or cross verification. Secondly, assessee has failed to file original confirmation for all so called share applicant has failed to file original confirmation for all so called share applicant has failed to file original confirmation for all so called share applicant companies from the Directors. companies from the Directors.

4.9 In the view of the above facts and relying upon the investigation 4.9 In the view of the above facts and relying upon the investigation 4.9 In the view of the above facts and relying upon the investigation reports of Addi.DIT(Inv.I) Unit reports of Addi.DIT(Inv.I) Unit-I, Kolkata which reveals that the source ata which reveals that the source of investment in the assessee's company is the cash received by the of investment in the assessee's company is the cash received by the of investment in the assessee's company is the cash received by the Directors of the Kolkata based companies from the assessee himself. Directors of the Kolkata based companies from the assessee himself. Directors of the Kolkata based companies from the assessee himself. The Directors of investing companies, in there sworn statement The Directors of investing companies, in there sworn statement The Directors of investing companies, in there sworn statement recorded u/s. 131 has s recorded u/s. 131 has stated that they got cash of equivalent amount tated that they got cash of equivalent amount from the assessee and against the same cheques/demand draft have from the assessee and against the same cheques/demand draft have from the assessee and against the same cheques/demand draft have been issued. 4.10 Thus the amount received on account of share allotment of 4.10 Thus the amount received on account of share allotment of 4.10 Thus the amount received on account of share allotment of shares is Rs 27,78,50,000 and the same is treated as cash credit shares is Rs 27,78,50,000 and the same is treated as cash credit shares is Rs 27,78,50,000 and the same is treated as cash credit u/s. 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to 68 of the Income Tax Act. Hence, Rs 27,78,50,000 is added to assessee's total total income.” 2.3 The AO, relying upon the findings of the Investigation Wing, The AO, relying upon the findings of the Investigation Wing, The AO, relying upon the findings of the Investigation Wing, concluded that the appellant had routed unaccounted cash through concluded that the appellant had routed unaccounted cash through concluded that the appellant had routed unaccounted cash through y bringing it back in the guise several layers of companies, ultimatel several layers of companies, ultimately bringing it back in the guise of share application money. The statements of key individuals— of share application money. The statements of key individuals of share application money. The statements of key individuals established that intermediaries and company representatives intermediaries and company representatives—established that these were sham transactions. The appellant, though provided these were sham transactions. The appellant, though provided these were sham transactions. The appellant, though provided opportunities, repeatedly failed to cross opportunities, repeatedly failed to cross-examine the witnesses or examine the witnesses or produce the directors of the subscriber companies. Based on the produce the directors of the subscriber companies. Based on the produce the directors of the subscriber companies. Based on the material gathered and after considering the conduct of the assessee, material gathered and after considering the conduct of the assessee, material gathered and after considering the conduct of the assessee, the AO made an addition of the AO made an addition of ₹27.78 crores under Section 68 of the 27.78 crores under Section 68 of the Act, treating the said amount as Act, treating the said amount as unexplained cash credit. unexplained cash credit. The Assessing Officer also disallowed the share trading loss of Assessing Officer also disallowed the share trading loss of Assessing Officer also disallowed the share trading loss of Rs.1,34,056/-. The detail of the total income computed by the . The detail of the total income computed by the AO is . The detail of the total income computed by the reproduced as under: reproduced as under:

BUSINESS INCOME 8,34,210 Net loss as per Profit and Loss Account Net loss as per Profit and Loss Account Rs. (-) Add : Inadmissible expenses and Income not included Add : Inadmissible expenses and Income not included 4,73,950 Increase in Authorised capital Rs. 1,40,350 General Expenses - stamp fees Rs. 2,19,910 Rs (-) The business loss Rs. 2,19,910/- - is treated as speculation loss and allowed to be c is treated as speculation loss and allowed to be carried forward as speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other speculation loss in view of Explanation below Sec. 73 and no set off is allowed on income from other sources Add : Income as discussed above para 4.9 Add : Income as discussed above para 4.9 Rs.27.78.50.000 Rs.27,78,50,000 Total Income 2.4 The appeal preferred before the The appeal preferred before the Ld. CIT(A) was dismissed vide was dismissed vide order dated 20.05.2009. Upon further appeal, the Income Tax order dated 20.05.2009. Upon further appeal, the Income Tax order dated 20.05.2009. Upon further appeal, the Income Tax Appellate Tribunal (ITAT), vide order in Appellate Tribunal (ITAT), vide order in Appellate Tribunal (ITAT), vide order in ITA No. 3925/Mum/2009, set aside the matter, directing the CIT(A) to (i) furnish copies of all set aside the matter, directing the CIT(A) to (i) furnish copies of al set aside the matter, directing the CIT(A) to (i) furnish copies of al documents and statements relied upon by the AO, and (ii) provide documents and statements relied upon by the AO, and (ii) provide documents and statements relied upon by the AO, and (ii) provide the appellant an effective opportunity to discharge the burden cast the appellant an effective opportunity to discharge the burden cast the appellant an effective opportunity to discharge the burden cast under Section 68 of the Act. under Section 68 of the Act. The relevant finding of the Tribunal in relevant finding of the Tribunal in ITA No. 3925/Mum/2009 has been reproduced by the Ld. CIT(A) in ITA No. 3925/Mum/2009 has been reproduced by the Ld. ITA No. 3925/Mum/2009 has been reproduced by the Ld. the impugned order. For ready reference, same is reproduced as the impugned order. For ready reference, same is reproduced as the impugned order. For ready reference, same is reproduced as under:

“3.1 The principal issue arising in the instant case, agitated by the 3.1 The principal issue arising in the instant case, agitated by the 3.1 The principal issue arising in the instant case, agitated by the assessee per its ground no.1 is the maintainability in law of the assessee per its ground no.1 is the maintainability in law of the assessee per its ground no.1 is the maintainability in law of the assessment of share application money assessment of share application money in the sum of Rs. 2778.50 in the sum of Rs. 2778.50 lacs as unexplained income u/s.68 of the Act. In other words, lacs as unexplained income u/s.68 of the Act. In other words, lacs as unexplained income u/s.68 of the Act. In other words, whether the assessee has been able to prove the said credit in whether the assessee has been able to prove the said credit in whether the assessee has been able to prove the said credit in terms of the said provision of the Act? terms of the said provision of the Act? 3.2 It would be relevant to reproduce the background facts of the 3.2 It would be relevant to reproduce the background facts of the 3.2 It would be relevant to reproduce the background facts of the case, which are not disputed. The assessee filed its return of income case, which are not disputed. The assessee filed its return of income case, which are not disputed. The assessee filed its return of income on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed on 25.11.2006, disclosing loss at Rs.8.34 lacs. This was followed by filing of the financial statements on 05.10.2007. The return, by filing of the financial statements on 05.10.2007. The return, by filing of the financial statements on 05.10.2007. The return, subsequent to its processing u/s. 143(1), was subject subsequent to its processing u/s. 143(1), was subject subsequent to its processing u/s. 143(1), was subject to the verification procedure by the issue of notice u/s. 143(2). It was verification procedure by the issue of notice u/s. 143(2). It was verification procedure by the issue of notice u/s. 143(2). It was observed by the Assessing Officer (A.O.) in the assessment observed by the Assessing Officer (A.O.) in the assessment observed by the Assessing Officer (A.O.) in the assessment proceedings that the assessee had factual repayment of loan to the proceedings that the assessee had factual repayment of loan to the proceedings that the assessee had factual repayment of loan to the tune of Rs. 25.6 crores to the bank. The same was done by tune of Rs. 25.6 crores to the bank. The same was done by tune of Rs. 25.6 crores to the bank. The same was done by raising share allotment money in the sum of Rs. 2778.5 crores. The same share allotment money in the sum of Rs. 2778.5 crores. The same share allotment money in the sum of Rs. 2778.5 crores. The same was found to have been received by way of share application was found to have been received by way of share application was found to have been received by way of share application money toward 555.7 lacs shares of the face value of Rs. 10/ money toward 555.7 lacs shares of the face value of Rs. 10/ money toward 555.7 lacs shares of the face value of Rs. 10/- each a premium of Rs.40/ a premium of Rs.40/- each. The names of the share applica each. The names of the share applicants, being 41 in number, and the corresponding amounts received by being 41 in number, and the corresponding amounts received by being 41 in number, and the corresponding amounts received by way of application money, are listed at pgs.2 to 4 of the assessment way of application money, are listed at pgs.2 to 4 of the assessment way of application money, are listed at pgs.2 to 4 of the assessment order. The same, with an exception of an odd or two, are from order. The same, with an exception of an odd or two, are from order. The same, with an exception of an odd or two, are from private limited companies. The said transaction had in fac private limited companies. The said transaction had in fac private limited companies. The said transaction had in fact been a subject matter of detailed investigation by the investigation wing of subject matter of detailed investigation by the investigation wing of subject matter of detailed investigation by the investigation wing of the department, a special team having been constituted for the the department, a special team having been constituted for the the department, a special team having been constituted for the purpose by the CBDT. The reports in the matter were received by purpose by the CBDT. The reports in the matter were received by purpose by the CBDT. The reports in the matter were received by the A.O. from AddI. DIT (Investigation Unit 1), Ko the A.O. from AddI. DIT (Investigation Unit 1), Ko the A.O. from AddI. DIT (Investigation Unit 1), Kolkata on 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during 04.12.2006, 29.12.2006, 23.03.2007 and 24.04.2007, i.e., during the course of the assessment proceedings. In fine, the Revenue had the course of the assessment proceedings. In fine, the Revenue had the course of the assessment proceedings. In fine, the Revenue had followed the money trail up to fourth layer, i.e., whereat the cash followed the money trail up to fourth layer, i.e., whereat the cash followed the money trail up to fourth layer, i.e., whereat the cash was found deposited in the bank accounts of pers was found deposited in the bank accounts of pers was found deposited in the bank accounts of persons with no credibility. The amount was accordingly assessed as income u/s. credibility. The amount was accordingly assessed as income u/s. credibility. The amount was accordingly assessed as income u/s. 68, and confirmed on the same basis; the assessee only producing 68, and confirmed on the same basis; the assessee only producing 68, and confirmed on the same basis; the assessee only producing documents in relation to the amounts being received through the documents in relation to the amounts being received through the documents in relation to the amounts being received through the banking channel and toward share allotment. banking channel and toward share allotment. 3.3 The furnishing of a satisfactory explanation as to the nature furnishing of a satisfactory explanation as to the nature furnishing of a satisfactory explanation as to the nature and source of a credit appearing in the books of the assessee, and source of a credit appearing in the books of the assessee, and source of a credit appearing in the books of the assessee, which is to be on the parameters of identity and capacity (of the which is to be on the parameters of identity and capacity (of the which is to be on the parameters of identity and capacity (of the creditor) and the genuineness (of the credit transaction), is creditor) and the genuineness (of the credit transaction), is creditor) and the genuineness (of the credit transaction), is essentially a matter of fact. We may, however, before delineating ially a matter of fact. We may, however, before delineating ially a matter of fact. We may, however, before delineating and examining the facts of the case, advert to the legal position and examining the facts of the case, advert to the legal position and examining the facts of the case, advert to the legal position obtaining in the matter as clarified by the hon'ble courts. Section 68 obtaining in the matter as clarified by the hon'ble courts. Section 68 obtaining in the matter as clarified by the hon'ble courts. Section 68 of the Act is a rule of evidence casting an obligation on t of the Act is a rule of evidence casting an obligation on t of the Act is a rule of evidence casting an obligation on the assessee to satisfactorily explain a credit in its books of account. The to satisfactorily explain a credit in its books of account. The to satisfactorily explain a credit in its books of account. The admitted fact of the receipt of the sum is an evidence against the admitted fact of the receipt of the sum is an evidence against the admitted fact of the receipt of the sum is an evidence against the assessee, and in the absence of it being satisfactorily explained as assessee, and in the absence of it being satisfactorily explained as assessee, and in the absence of it being satisfactorily explained as to its nature and source, the same is liable to its nature and source, the same is liable to deemed as the income to deemed as the income of the assessee for the relevant year, i.e., the year in which the said of the assessee for the relevant year, i.e., the year in which the said of the assessee for the relevant year, i.e., the year in which the said sum is found so credited. This capsules the trite law, equally sum is found so credited. This capsules the trite law, equally sum is found so credited. This capsules the trite law, equally applicable to the share application money or share capital, applicable to the share application money or share capital, applicable to the share application money or share capital, expounded and elucidated by the apex expounded and elucidated by the apex court in and over a number court in and over a number of decisions, which are considered as locus classicus on the subject, of decisions, which are considered as locus classicus on the subject, of decisions, which are considered as locus classicus on the subject, viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale viz. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC); Kale Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha Khan Mohammad Hanif vs. CIT [1963) 50 ITR 1 (SC), Sreelekha Banerjee & Ors. vs. CIT [1963] 49 Banerjee & Ors. vs. CIT [1963] 49 ITR 112 (SC), Roshan Di Hatti vs. ITR 112 (SC), Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. CIT [1977] 107 ITR 938 (SC); and CIT vs. P Mohanakala & Ors. [2007] 291 ITR 278 (SC), most of which have been relied upon by [2007] 291 ITR 278 (SC), most of which have been relied upon by [2007] 291 ITR 278 (SC), most of which have been relied upon by the Revenue. The Revenue is under no obligation to show from what the Revenue. The Revenue is under no obligation to show from what the Revenue. The Revenue is under no obligation to show from what source the-income was derived income was derived by the assessee and why it should by the assessee and why it should be treated as its concealed income. As stated in Govindarajalu be treated as its concealed income. As stated in Govindarajalu be treated as its concealed income. As stated in Govindarajalu Mudaliar (supra) (at pg.810) the same is as under: Mudaliar (supra) (at pg.810) the same is as under:

"Now the contention of the appellant is that assuming that he had "Now the contention of the appellant is that assuming that he had "Now the contention of the appellant is that assuming that he had failed to establish the case put forward b failed to establish the case put forward by him, it does not follow as y him, it does not follow as a matter of law that the amounts in question were income received a matter of law that the amounts in question were income received a matter of law that the amounts in question were income received or accrued during the previous year, that it was the duty of the or accrued during the previous year, that it was the duty of the or accrued during the previous year, that it was the duty of the Department to adduce evidence to show from what source the Department to adduce evidence to show from what source the Department to adduce evidence to show from what source the income was derived and why it should income was derived and why it should be treated as concealed be treated as concealed income. In the absence of such evidence, it is argued, the finding is income. In the absence of such evidence, it is argued, the finding is income. In the absence of such evidence, it is argued, the finding is erroneous. We are unable to agree. Whether a receipt is to be erroneous. We are unable to agree. Whether a receipt is to be erroneous. We are unable to agree. Whether a receipt is to be treated as income or not, must depend very largely on the facts and treated as income or not, must depend very largely on the facts and treated as income or not, must depend very largely on the facts and circumstances of each case. In t circumstances of each case. In the present case the receipts are he present case the receipts are shown in the account books of a firm of which the appellant and shown in the account books of a firm of which the appellant and shown in the account books of a firm of which the appellant and Govindaswamy Mudaliar were partners. When he was called upon Govindaswamy Mudaliar were partners. When he was called upon Govindaswamy Mudaliar were partners. When he was called upon to give explanation he put forward two explanations, one being a to give explanation he put forward two explanations, one being a to give explanation he put forward two explanations, one being a gift of Rs. 80,000 and the other gift of Rs. 80,000 and the other being receipt of Rs. 42,000 from being receipt of Rs. 42,000 from business of which he claimed to be the real owner. When both these business of which he claimed to be the real owner. When both these business of which he claimed to be the real owner. When both these explanations were rejected, as they have been, it was clearly upon explanations were rejected, as they have been, it was clearly upon explanations were rejected, as they have been, it was clearly upon to the Income to the Income-tax Officer to hold that the income must be concealed tax Officer to hold that the income must be concealed income. There is ampl income. There is ample authority for the position that where an e authority for the position that where an assessee fails to prove satisfactorily the source and nature of assessee fails to prove satisfactorily the source and nature of assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the certain amount of cash received during the accounting year, the certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipt tax Officer is entitled to draw the inference that the receipt tax Officer is entitled to draw the inference that the receipt are of an asses are of an assessable nature. The conclusion to which the Appellate sable nature. The conclusion to which the Appellate Tribunal came appears to us to be amply warranted by the facts of Tribunal came appears to us to be amply warranted by the facts of Tribunal came appears to us to be amply warranted by the facts of the case. There is no ground for interfering with that finding, and the case. There is no ground for interfering with that finding, and the case. There is no ground for interfering with that finding, and these appeals are accordingly dismissed with costs". these appeals are accordingly dismissed with costs". Reference in this Reference in this regard may also be made to the decision in the regard may also be made to the decision in the case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 case of CIT v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) and CIT vs. Biju Patnaik [1986] 160 ITR 674. (SC) and CIT vs. Biju Patnaik [1986] 160 ITR 674. 3.4 Over the recent years there has been some doubt with regard to 3.4 Over the recent years there has been some doubt with regard to 3.4 Over the recent years there has been some doubt with regard to the nature of the duty cast the nature of the duty cast on the Revenue in the face of inadequate on the Revenue in the face of inadequate evidence or incomplete information, i.e., qua the parameters of evidence or incomplete information, i.e., qua the parameters of evidence or incomplete information, i.e., qua the parameters of identity, capacity and genuineness being brought forth by the identity, capacity and genuineness being brought forth by the identity, capacity and genuineness being brought forth by the assessed, where the credit is in respect of share capital/share assessed, where the credit is in respect of share capital/share assessed, where the credit is in respect of share capital/share application money followi application money following the decision by the Delhi high court in ng the decision by the Delhi high court in the decision reported at CIT vs. Divine Leasing & Finance Ltd. the decision reported at CIT vs. Divine Leasing & Finance Ltd. the decision reported at CIT vs. Divine Leasing & Finance Ltd. [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which [2008] 299 ITR 268 (Del), dismissing the Revenue's appeals, which is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine is in respect of three appeals, i.e., in the case of CIT vs. (1) Divine Leasing and Leasing and Finance Limited (2) General Exports and Credits Ltd. Finance Limited (2) General Exports and Credits Ltd. and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court and (3) Lovely Exports P. Ltd. [2008] 299 ITR 268 (Del). The court after examining the legal position, which it clarified to remain after examining the legal position, which it clarified to remain after examining the legal position, which it clarified to remain unchanged, i.e., with regard to the legal principles and positions unchanged, i.e., with regard to the legal principles and positions unchanged, i.e., with regard to the legal principles and positions involved, to be essentially a matter of fact, so that no question of lved, to be essentially a matter of fact, so that no question of lved, to be essentially a matter of fact, so that no question of law, much less substantial question of law arose for consideration. law, much less substantial question of law arose for consideration. law, much less substantial question of law arose for consideration. With regard to the issue of discharge or otherwise of the onus cast With regard to the issue of discharge or otherwise of the onus cast With regard to the issue of discharge or otherwise of the onus cast on the assessee it will be relevant to reproduce the re on the assessee it will be relevant to reproduce the re on the assessee it will be relevant to reproduce the relevant observation of the court, which is as under: observation of the court, which is as under: “There cannot be two opinions on the aspect that the pernicious “There cannot be two opinions on the aspect that the pernicious “There cannot be two opinions on the aspect that the pernicious practice of conversion of unaccounted money through practice of conversion of unaccounted practice of conversion of unaccounted money money through the through the the masquerade or channel of investment in the share capital of a masquerade or channel of investment in the share capital of a masquerade or channel of investment in the share capital of a company must be firmly company must be firmly excoriated by the Revenue. Equally, where excoriated by the Revenue. Equally, where the preponderance of evidence indicates absence of culpability and the preponderance of evidence indicates absence of culpability and the preponderance of evidence indicates absence of culpability and complexity (complicity) of the assessed it should not be harassed by complexity (complicity) of the assessed it should not be harassed by complexity (complicity) of the assessed it should not be harassed by the Revenue's insistence that it should prove the negative. In the the Revenue's insistence that it should prove the negative. In the the Revenue's insistence that it should prove the negative. In the case of a public issue, the company concerned cannot be expected public issue, the company concerned cannot be expected public issue, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial to know every detail pertaining to the identity as well as financial to know every detail pertaining to the identity as well as financial worth of each of its Subscribers. The company must, Assessing worth of each of its Subscribers. The company must, Assessing worth of each of its Subscribers. The company must, Assessing however, maintain and make available to the Officer for his perusal, however, maintain and make available to the Officer for his perusal, however, maintain and make available to the Officer for his perusal, all the information contained in the statutory share application ll the information contained in the statutory share application ll the information contained in the statutory share application documents. In the case of private placement the legal regime would documents. In the case of private placement the legal regime would documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while not be the same. A delicate balance must be maintained while not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the Income walking the tightrope of sections 68 and 69 of the Income walking the tightrope of sections 68 and 69 of the Income-tax Act. The burden of proof can seldom be discharged to the hilt by the The burden of proof can seldom be discharged to the hilt by the The burden of proof can seldom be discharged to the hilt by the assessee if the Assessing Officer harbours doubts of the legitimacy assessee if the Assessing Officer harbours doubts of the legitimacy assessee if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty bound, to carryout of any subscription he is empowered, nay duty bound, to carryout of any subscription he is empowered, nay duty bound, to carryout thorough investigations. But if the Assessing Officer fa thorough investigations. But if the Assessing Officer fa thorough investigations. But if the Assessing Officer fails to unearth any wrong or illegal dealings, he cannot obdurately adhere to his any wrong or illegal dealings, he cannot obdurately adhere to his any wrong or illegal dealings, he cannot obdurately adhere to his suspicions and treat the subscribed capital as the undisclosed suspicions and treat the subscribed capital as the undisclosed suspicions and treat the subscribed capital as the undisclosed income of the company." income of the company." We may here emphasis that the share application money is We may here emphasis that the share application money is We may here emphasis that the share application money is generally received through the generally received through the public offer route by public company, public offer route by public company, making it difficult for discharging the burden of proof on the making it difficult for discharging the burden of proof on the making it difficult for discharging the burden of proof on the assessee- recipient company in terms of section 68 to the hilt, as recipient company in terms of section 68 to the hilt, as recipient company in terms of section 68 to the hilt, as observed by the hon'ble court. The assessee in the instant case is, observed by the hon'ble court. The assessee in the instant case is, observed by the hon'ble court. The assessee in the instant case is, however a private li however a private limited company, in which the public is not mited company, in which the public is not substantially interested and which can have a maximum of 50% substantially interested and which can have a maximum of 50% substantially interested and which can have a maximum of 50% shareholders. Persons including companies, investing therein would shareholders. Persons including companies, investing therein would shareholders. Persons including companies, investing therein would unarguably by known persons (or company's control by such unarguably by known persons (or company's control by such unarguably by known persons (or company's control by such persons) as nobody would oth persons) as nobody would otherwise risk its capital erwise risk its capital - which is largely illiquid with an unknown entity and, further, made on largely illiquid with an unknown entity and, further, made on largely illiquid with an unknown entity and, further, made on assessment of the business potential and prospects. The onus, assessment of the business potential and prospects. The onus, assessment of the business potential and prospects. The onus, therefore, on the assessee therefore, on the assessee-debtor, which would only be with debtor, which would only be with reference to its facts and circumstan reference to its facts and circumstances of the case, is without much ces of the case, is without much more. Further, that the shares have been issued in the instant case more. Further, that the shares have been issued in the instant case more. Further, that the shares have been issued in the instant case at a premium of 400% of the face value further corroborates the at a premium of 400% of the face value further corroborates the at a premium of 400% of the face value further corroborates the inference of a complete and intimate knowledge of the affairs of the inference of a complete and intimate knowledge of the affairs of the inference of a complete and intimate knowledge of the affairs of the assessee-company. company. Further on, the matter has been examined in depth by the hon'ble ther on, the matter has been examined in depth by the hon'ble ther on, the matter has been examined in depth by the hon'ble court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR court in CIT vs. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR 169 (Del), reviving the case law in the matter, and placing the 169 (Del), reviving the case law in the matter, and placing the 169 (Del), reviving the case law in the matter, and placing the earlier decisions in proper prospective, the same is in respec earlier decisions in proper prospective, the same is in respec earlier decisions in proper prospective, the same is in respect of a private limited company and brings out the full scope of the nature private limited company and brings out the full scope of the nature private limited company and brings out the full scope of the nature and duty cast both on the assessee and the Revenue in the matter. and duty cast both on the assessee and the Revenue in the matter. and duty cast both on the assessee and the Revenue in the matter. This in fact is followed by a series of a decision by the said court, This in fact is followed by a series of a decision by the said court, This in fact is followed by a series of a decision by the said court, as in CIT vs. Titan Securities Ltd. [2013] 35 as in CIT vs. Titan Securities Ltd. [2013] 357 ITR 184 (Del) and CIT 7 ITR 184 (Del) and CIT vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may vs. Youth Construction P. Ltd. [2013] 357 ITR 197 (Del). We may reproduce for the sake of clarity the observations by the hon'ble reproduce for the sake of clarity the observations by the hon'ble reproduce for the sake of clarity the observations by the hon'ble court in the later case: court in the later case: "Section 68 of the Income "Section 68 of the Income-tax Act, 1961, applies equally to share tax Act, 1961, applies equally to share application monies received by an assessee and, therefore, the monies received by an assessee and, therefore, the monies received by an assessee and, therefore, the burden is on the assessee to prove the nature and source thereof, to burden is on the assessee to prove the nature and source thereof, to burden is on the assessee to prove the nature and source thereof, to the satisfaction of the Assessing Officer. It involves there the satisfaction of the Assessing Officer. It involves there the satisfaction of the Assessing Officer. It involves there ingredients, namely, the proof regarding identity of the share ingredients, namely, the proof regarding identity of the share ingredients, namely, the proof regarding identity of the share applicants, their creditworthiness to purchase the shares and the their creditworthiness to purchase the shares and the their creditworthiness to purchase the shares and the genuineness of the transaction as a whole. genuineness of the transaction as a whole. Held, that there was enough material in the possession of the Held, that there was enough material in the possession of the Held, that there was enough material in the possession of the Assessing Officer which warranted explanation from the assessee Assessing Officer which warranted explanation from the assessee Assessing Officer which warranted explanation from the assessee regarding the nature and source regarding the nature and source of the share application monies. of the share application monies. The assessee had done little to discharge its burden under the The assessee had done little to discharge its burden under the The assessee had done little to discharge its burden under the section. The Tribunal had failed to keep in view the broader picture section. The Tribunal had failed to keep in view the broader picture section. The Tribunal had failed to keep in view the broader picture and had taken a rather simplistic view of the matter, ignoring the and had taken a rather simplistic view of the matter, ignoring the and had taken a rather simplistic view of the matter, ignoring the factual aspects and surr factual aspects and surrounding circumstances present in the case. ounding circumstances present in the case. It should have dealt with the case in a holistic manner dealing with It should have dealt with the case in a holistic manner dealing with It should have dealt with the case in a holistic manner dealing with the entire evidence relied upon and having regard to the report of the entire evidence relied upon and having regard to the report of the entire evidence relied upon and having regard to the report of the investigation wing, the manner in which entries were made in the investigation wing, the manner in which entries were made in the investigation wing, the manner in which entries were made in the bank accounts of the three companies, the statement of PKJ and ounts of the three companies, the statement of PKJ and ounts of the three companies, the statement of PKJ and denial thereof by AKK, as also the other surrounding circumstances denial thereof by AKK, as also the other surrounding circumstances denial thereof by AKK, as also the other surrounding circumstances of the case." 3.5 Coming to the facts of the instant case, we find the first 3.5 Coming to the facts of the instant case, we find the first 3.5 Coming to the facts of the instant case, we find the first observation over the assessee as even, as much as not fur observation over the assessee as even, as much as not fur observation over the assessee as even, as much as not furnished confirmation letters from the creditors. The Revenue has sufficient confirmation letters from the creditors. The Revenue has sufficient confirmation letters from the creditors. The Revenue has sufficient material that it impugning the transaction as being in fact a result of material that it impugning the transaction as being in fact a result of material that it impugning the transaction as being in fact a result of a deliberated and or casted scheme of routing of cash, tracking the a deliberated and or casted scheme of routing of cash, tracking the a deliberated and or casted scheme of routing of cash, tracking the money trail, since unearth by the efforts money trail, since unearth by the efforts of the Investigation wing of of the Investigation wing of the department (also refer paras 3.2 & 3.4). The money has been the department (also refer paras 3.2 & 3.4). The money has been the department (also refer paras 3.2 & 3.4). The money has been followed upto the point where the cash has been deposited and followed upto the point where the cash has been deposited and followed upto the point where the cash has been deposited and which extends to the forth tier, as detail transaction which extends to the forth tier, as detail transaction which extends to the forth tier, as detail transaction- wise by the Revenue per the reports of its i Revenue per the reports of its investigation wing, and which forms nvestigation wing, and which forms part of the assessment order as Annexure 1 thereto. This is coupled part of the assessment order as Annexure 1 thereto. This is coupled part of the assessment order as Annexure 1 thereto. This is coupled with the statement of the persons providing access to their bank with the statement of the persons providing access to their bank with the statement of the persons providing access to their bank account or the deposit of their cash, as well as by the directors of account or the deposit of their cash, as well as by the directors of account or the deposit of their cash, as well as by the directors of the investors compa the investors companies, admitting to the transaction beign bogus nies, admitting to the transaction beign bogus inasmuch as they are only providing accommodation entries for a inasmuch as they are only providing accommodation entries for a inasmuch as they are only providing accommodation entries for a commission, the rate of which has also been stated. Further, there commission, the rate of which has also been stated. Further, there commission, the rate of which has also been stated. Further, there has been no rebut of those statements. The Revenue is, therefore, has been no rebut of those statements. The Revenue is, therefore, has been no rebut of those statements. The Revenue is, therefore, fully entitle to rely on them and in fact, entitled serious doubt with e to rely on them and in fact, entitled serious doubt with e to rely on them and in fact, entitled serious doubt with regard to the genuineness of the said credits which in fact reveal regard to the genuineness of the said credits which in fact reveal regard to the genuineness of the said credits which in fact reveal the pernicious scheme, as held by the hon'ble court in the case of the pernicious scheme, as held by the hon'ble court in the case of the pernicious scheme, as held by the hon'ble court in the case of Divine Leasing & Finance Ltd. (supra) of conversion of unaccoun Divine Leasing & Finance Ltd. (supra) of conversion of unaccoun Divine Leasing & Finance Ltd. (supra) of conversion of unaccounted money, by masquerading his share capital of a company. money, by masquerading his share capital of a company. money, by masquerading his share capital of a company. The assessee has done little except raising a legal plea of non The assessee has done little except raising a legal plea of non The assessee has done little except raising a legal plea of non- production of the said directors or deponents for cross examination. production of the said directors or deponents for cross examination. production of the said directors or deponents for cross examination. The same has been disregarded by the Revenue on the ground that The same has been disregarded by the Revenue on the ground that The same has been disregarded by the Revenue on the ground that sufficient opportunity is toward the same were granted during the sufficient opportunity is toward the same were granted during the sufficient opportunity is toward the same were granted during the course of the proceedings before the investigation wing and which course of the proceedings before the investigation wing and which course of the proceedings before the investigation wing and which deliberately evaded by the assessee on pretext or the other. This deliberately evaded by the assessee on pretext or the other. This deliberately evaded by the assessee on pretext or the other. This conduct needs to be seriously depreciated inasmuch as the conduct needs to be seriously depreciated inasmuch as the conduct needs to be seriously depreciated inasmuch as the investigation wing being fully in position of the fact and rather in a investigation wing being fully in position of the fact and rather in a investigation wing being fully in position of the fact and rather in a much better position to investigate the facts, both in terms of the much better position to investigate the facts, both in terms of the much better position to investigate the facts, both in terms of the information in their position as well as in terms of time, as information in their position as well as in terms of time, as information in their position as well as in terms of time, as information tends to be dissipated with the lapse of t information tends to be dissipated with the lapse of t information tends to be dissipated with the lapse of time. Further, how, we wonder could the assessee this legal plea inasmuch as the how, we wonder could the assessee this legal plea inasmuch as the how, we wonder could the assessee this legal plea inasmuch as the confirmations as afore confirmations as afore-noted from the creditors have not been filled noted from the creditors have not been filled by it. True, the A.O. has not created any further investigation in the by it. True, the A.O. has not created any further investigation in the by it. True, the A.O. has not created any further investigation in the matter relying solely on the finding matter relying solely on the findings by the investigation wing. s by the investigation wing. However, firstly, as afore However, firstly, as afore-stated he is fully entitled to do so, and stated he is fully entitled to do so, and secondly, the question of the same would only where the assessee secondly, the question of the same would only where the assessee secondly, the question of the same would only where the assessee furnishes any material controverting the said incriminating furnishes any material controverting the said incriminating furnishes any material controverting the said incriminating information in the position of th information in the position of the Revenue. The furnishing of the e Revenue. The furnishing of the documentary evidences, viz. the share application money, balance documentary evidences, viz. the share application money, balance documentary evidences, viz. the share application money, balance- sheet of the creditor companies is of little evidential value in the sheet of the creditor companies is of little evidential value in the sheet of the creditor companies is of little evidential value in the facts of unearth and late bear by the Revenue. Rather, it needs to facts of unearth and late bear by the Revenue. Rather, it needs to facts of unearth and late bear by the Revenue. Rather, it needs to be appreciated that if be appreciated that if the evidence by way of book entries were to the evidence by way of book entries were to be itself sufficient to prove cash credits, section 68 would itself to be be itself sufficient to prove cash credits, section 68 would itself to be be itself sufficient to prove cash credits, section 68 would itself to be misconceived and redundant inasmuch as it is only based on the misconceived and redundant inasmuch as it is only based on the misconceived and redundant inasmuch as it is only based on the credit appearing in the books of account. As clarified earlier, it is a credit appearing in the books of account. As clarified earlier, it is a credit appearing in the books of account. As clarified earlier, it is a rule of evidence casting the burden of proof to exhibit that the said le of evidence casting the burden of proof to exhibit that the said le of evidence casting the burden of proof to exhibit that the said credit in act represents a genuine credit transaction. credit in act represents a genuine credit transaction. 3.6 At the same time, however, we also find that, rather strangely, 3.6 At the same time, however, we also find that, rather strangely, 3.6 At the same time, however, we also find that, rather strangely, the matter in the position of the A.O. has not been provided to t the matter in the position of the A.O. has not been provided to t the matter in the position of the A.O. has not been provided to the assessee. The assessee has raised a specific plea in this regard assessee. The assessee has raised a specific plea in this regard assessee. The assessee has raised a specific plea in this regard before the Id. CIT(A) (vide its ground no.2). This is material and before the Id. CIT(A) (vide its ground no.2). This is material and before the Id. CIT(A) (vide its ground no.2). This is material and definitely amounts to a denial of opportunity to the assessee to definitely amounts to a denial of opportunity to the assessee to definitely amounts to a denial of opportunity to the assessee to present its case. Though, in our view, the assessee ough present its case. Though, in our view, the assessee ough present its case. Though, in our view, the assessee ought to have asked for the same, the primary onus being on it, and with it having asked for the same, the primary onus being on it, and with it having asked for the same, the primary onus being on it, and with it having not even furnished the confirmations. However, the Revenue relying not even furnished the confirmations. However, the Revenue relying not even furnished the confirmations. However, the Revenue relying on the findings of its investigation wing which though no doubt are on the findings of its investigation wing which though no doubt are on the findings of its investigation wing which though no doubt are relevant and it is fully entitled to do so relevant and it is fully entitled to do so. It was incumbent in the . It was incumbent in the fairness of procedure and principle of justice to confront those fairness of procedure and principle of justice to confront those fairness of procedure and principle of justice to confront those materials to the assessee. The Id. CIT(A) has not dealt with this materials to the assessee. The Id. CIT(A) has not dealt with this materials to the assessee. The Id. CIT(A) has not dealt with this aspect of the matter. We decide aspect of the matter. We decide accordingly." 2.5 In compliance, the In compliance, the ld. CIT(A) issued multiple not CIT(A) issued multiple notices to the appellant between January 2019 and May 2024, furnishing the appellant between January 2019 and May 2024, furnishing the appellant between January 2019 and May 2024, furnishing the relevant documents and affording sufficient opportunity for relevant documents and affording sufficient opportunity for relevant documents and affording sufficient opportunity for representation. Despite this, the appellant neither submitted any representation. Despite this, the appellant neither submitted any representation. Despite this, the appellant neither submitted any fresh explanation nor availed the opportunity to rebut the evidence fresh explanation nor availed the opportunity to rebut the fresh explanation nor availed the opportunity to rebut the furnished. Instead, it merely reiterated the photocopies of furnished. Instead, it merely reiterated the photocopies of furnished. Instead, it merely reiterated the photocopies of submissions earlier placed before the Tribunal, without addressing submissions earlier placed before the Tribunal, without addressing submissions earlier placed before the Tribunal, without addressing the factual matrix or the findings of the Investigation Wing. The the factual matrix or the findings of the Investigation Wing. the factual matrix or the findings of the Investigation Wing. relevant detail is reproduced relevant detail is reproduced as under:

“5. In view of the above directions of Hon’ble ITAT, the present of the above directions of Hon’ble ITAT, the present of the above directions of Hon’ble ITAT, the present appellate proceedings were initiated. Thereafter, the appellant was appellate proceedings were initiated. Thereafter, the appellant was appellate proceedings were initiated. Thereafter, the appellant was given multiple opportunities of hearing by issuing notices, as given multiple opportunities of hearing by issuing notices, as given multiple opportunities of hearing by issuing notices, as detailed below: detailed below:- S. No. Date of Notice Date of Notice Date of Hearing Date of Hearing 1. 07/01/2019 07/01/2019 17/01/2019 2. 04/03/2024 07/03/2024 04/03/2024 3. 08/03/2024 08/03/2024 14/03/2024 4. 15/03/2024 21/03/2024 15/03/2024 5. 22/03/2024 28/03/2024 22/03/2024 6. 24/04/2024 24/04/2024 01/05/2024 2.6 In view of non-compliance on the part of the assessee, the Ld. compliance on the part of the assessee, the Ld. compliance on the part of the assessee, the Ld. CIT(A) provided one more final opportunity on 08.05.2024 but the CIT(A) provided one more final opportunity on 08.05.2024 but the CIT(A) provided one more final opportunity on 08.05.2024 but the assessee sought adjournment assessee sought adjournment for compiling of the Paper Book compiling of the Paper Book. Thereafter, the assessee filed only photocopies of the submissions , the assessee filed only photocopies of the submissions , the assessee filed only photocopies of the submissions which were filed before the Tribunal in ITA No. 3925/Mum/2009. which were filed before the Tribunal in ITA No. 3925/Mum/2009. which were filed before the Tribunal in ITA No. 3925/Mum/2009.

2.7 The Ld. CIT(A) provided material which Ld. CIT(A) provided material which was in was in possession of the AO and which was which was relied upon while making addition relied upon while making addition. The CIT(A), in his impugned order dated 20.06.2024, noted the CIT(A), in his impugned order dated 20.06.2024, noted the CIT(A), in his impugned order dated 20.06.2024, noted the continued non-cooperation of the assessee and confirmed the cooperation of the assessee and confirmed the cooperation of the assessee and confirmed the addition made under Section 68 of the Act, observing that the addition made under Section 68 of the Act, observing that the addition made under Section 68 of the Act, observing that the appellant had failed to discharge the statutory onus of establishing appellant had failed to discharge the statutory onus of establishing appellant had failed to discharge the statutory onus of establishing the identity, creditworthiness, and genuineness of the alleged share the identity, creditworthiness, and genuineness of the alleged share the identity, creditworthiness, and genuineness of the alleged share applicants. He dismissed the grounds of appeal of the assessee dismissed the grounds of appeal of the assessee dismissed the grounds of appeal of the assessee, observing as under:

“9. It was noticed that in the appeal filed in Form No. 35 before It was noticed that in the appeal filed in Form No. 35 before It was noticed that in the appeal filed in Form No. 35 before CIT(Appeals) against the assessment order u/s.143(3) dated CIT(Appeals) against the assessment order u/s.143(3) dated CIT(Appeals) against the assessment order u/s.143(3) dated 07/11/2008, vide Ground No.2, the appellant had, inter alia, 07/11/2008, vide Ground No.2, the appellant had, inter alia, 07/11/2008, vide Ground No.2, the appellant had, inter alia, contended that the Assessing Officer had violated the principles of contended that the Assessing Officer had violated the principles of contended that the Assessing Officer had violated the principles of natural justice in not furnishing, before passing the impugned l justice in not furnishing, before passing the impugned l justice in not furnishing, before passing the impugned assessment order, the various statements on oath of directors of assessment order, the various statements on oath of directors of assessment order, the various statements on oath of directors of various companies to whom shares had been allotted. Accordingly, various companies to whom shares had been allotted. Accordingly, various companies to whom shares had been allotted. Accordingly, in compliance with the directions of Hon'ble ITAT, copies of such in compliance with the directions of Hon'ble ITAT, copies of such in compliance with the directions of Hon'ble ITAT, copies of such statements were provided to the AR of the appellant during the tements were provided to the AR of the appellant during the tements were provided to the AR of the appellant during the course of hearing on 21.03.2024 so as to enable the appellant to course of hearing on 21.03.2024 so as to enable the appellant to course of hearing on 21.03.2024 so as to enable the appellant to present its case. However, despite three notices of hearing issued present its case. However, despite three notices of hearing issued present its case. However, despite three notices of hearing issued thereafter, the appellant did not file any written submissions a thereafter, the appellant did not file any written submissions a thereafter, the appellant did not file any written submissions as to why why why the the the action action action of of of the the the AO AO AO in in in treating treating treating the the the amount amount amount of of of Rs.27,85,50,000/ Rs.27,85,50,000/-, found credited in its books of accounts as , found credited in its books of accounts as amount received on allotment of its shares (including share amount received on allotment of its shares (including share amount received on allotment of its shares (including share premium), as unexplained cash credit and consequently adding the premium), as unexplained cash credit and consequently adding the premium), as unexplained cash credit and consequently adding the same to its total income u/s.68 of the Act, upheld by the learned otal income u/s.68 of the Act, upheld by the learned otal income u/s.68 of the Act, upheld by the learned CIT(Appeals) vide order dated 20/05/2009, is not justified. In CIT(Appeals) vide order dated 20/05/2009, is not justified. In CIT(Appeals) vide order dated 20/05/2009, is not justified. In response to the notice of hearing issued on 02/05/2024 granting response to the notice of hearing issued on 02/05/2024 granting response to the notice of hearing issued on 02/05/2024 granting final opportunity, the appellant sought adjournment on the ground final opportunity, the appellant sought adjournment on the ground final opportunity, the appellant sought adjournment on the ground that they were in the process of compiling the paper book. The were in the process of compiling the paper book. The were in the process of compiling the paper book. The adjournment was granted and the hearing was re adjournment was granted and the hearing was re adjournment was granted and the hearing was re- fixed for 20/06/2024. However, even then, the appellant has filed only the 20/06/2024. However, even then, the appellant has filed only the 20/06/2024. However, even then, the appellant has filed only the photo copy of the submissions filed before Hon'ble ITAT. It is seen photo copy of the submissions filed before Hon'ble ITAT. It is seen photo copy of the submissions filed before Hon'ble ITAT. It is seen that these submissions had been filed by the appellant before the ubmissions had been filed by the appellant before the ubmissions had been filed by the appellant before the ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are ITAT as per the directions of Hon'ble Bench on 11/08/2017 and are a summary of the evidences in respect of the receipt of share a summary of the evidences in respect of the receipt of share a summary of the evidences in respect of the receipt of share application monies as submitted by the appellant with the application monies as submitted by the appellant with the application monies as submitted by the appellant with the Assessing Office Assessing Officer and the CIT(A). Thus, the appellant has failed to r and the CIT(A). Thus, the appellant has failed to bring any new facts/material on record to support its case, despite bring any new facts/material on record to support its case, despite bring any new facts/material on record to support its case, despite being given fresh and adequate opportunity during the course of the being given fresh and adequate opportunity during the course of the being given fresh and adequate opportunity during the course of the present proceedings as per the directions of the Hon'ble ITAT. present proceedings as per the directions of the Hon'ble ITAT. present proceedings as per the directions of the Hon'ble ITAT.

4.1 Upon careful consideration, we find no infirmity in the orders Upon careful consideration, we find no infirmity in the orders Upon careful consideration, we find no infirmity in the orders passed by the lower authorities. The investigation undertaken by passed by the lower authorities. The investigation undertaken by passed by the lower authorities. The investigation undertaken by the Department was comprehensive and based on concrete the Department was comprehensive and based on concrete the Department was comprehensive and based on concrete statements and documentation. The appellant failed at every stage statements and documentation. The appellant failed at every stage statements and documentation. The appellant failed at every stage to discharge the initial burden placed upon it under Section 68 of harge the initial burden placed upon it under Section 68 of harge the initial burden placed upon it under Section 68 of the Act. The settled position in law, as enunciated by Hon’ble the Act. The settled position in law, as enunciated by the Act. The settled position in law, as enunciated by Supreme Court in CIT v. P. Mohanakala CIT v. P. Mohanakala [(2007) 291 ITR 278 (SC)], [(2007) 291 ITR 278 (SC)], Kale Khan Mohammad Hanif v. CIT Kale Khan Mohammad Hanif v. CIT [(1963) 50 ITR 1 (SC)], is that [(1963) 50 ITR 1 (SC)], is that the burden lies squarely upon the assessee to offer a satisfactory burden lies squarely upon the assessee to offer a satisfactory burden lies squarely upon the assessee to offer a satisfactory explanation regarding the nature and source of any credit in its explanation regarding the nature and source of any credit in its explanation regarding the nature and source of any credit in its books, failing which such amount may be deemed as the assessee’s books, failing which such amount may be deemed as the assessee’s books, failing which such amount may be deemed as the assessee’s income. The Tribunal, in its earlier order, rightly held that S The Tribunal, in its earlier order, rightly held that S The Tribunal, in its earlier order, rightly held that Section 68 is a rule of evidence and mandates the assessee to prove all 68 is a rule of evidence and mandates the assessee to prove all 68 is a rule of evidence and mandates the assessee to prove all three components—identity, creditworthiness, and genuineness. It identity, creditworthiness, and genuineness. It identity, creditworthiness, and genuineness. It also rightly distinguished the decision of the Delhi High Court in also rightly distinguished the decision of the Delhi High Court in also rightly distinguished the decision of the Delhi High Court in CIT v. Lovely Exports Pvt. Ltd. CIT v. Lovely Exports Pvt. Ltd. [(2008) 299 ITR 268 ( [(2008) 299 ITR 268 (Del)] as inapplicable to the facts of the present case, particularly in light of inapplicable to the facts of the present case, particularly in light of inapplicable to the facts of the present case, particularly in light of the appellant being a closely held company and the overwhelming the appellant being a closely held company and the overwhelming the appellant being a closely held company and the overwhelming evidence against it. The non The non-furnishing of confirmation letters, the furnishing of confirmation letters, the failure failure to to produce produce directors, directors, the the evasive evasive conduct conduct during during investigation, and the absence of any credible rebuttal cumulatively investigation, and the absence of any credible rebuttal cumulatively investigation, and the absence of any credible rebuttal cumulatively demonstrate that the assessee has not acted in good faith and has demonstrate that the assessee has not acted in good faith and has demonstrate that the assessee has not acted in good faith and has failed to meet the evidentiary threshold prescribed under the law. In failed to meet the evidentiary threshold prescribed under the law. failed to meet the evidentiary threshold prescribed under the law. the circumstances, we see no error i the circumstances, we see no error in the order passed by the n the order passed by the learned CIT(A) in confirming the addition made under Section 68 of learned CIT(A) in confirming the addition made under Section 68 of learned CIT(A) in confirming the addition made under Section 68 of the Act. The findings are consistent with the material available on the Act. The findings are consistent with the material available on the Act. The findings are consistent with the material available on record and are in conformity with the principles laid down by record and are in conformity with the principles laid down by record and are in conformity with the principles laid down by Hon’ble Supreme Court Hon’ble Supreme Court. The grounds of appeal of the assessee are s of appeal of the assessee are accordingly dismissed. accordingly dismissed.