AAKASH UNIVERSAL LIMITED ( MERGED ENTITY RAJKIRAN TEXTILES PVT LTD),MUMBAI vs. INCOME TAX OFFICER WARD 13(3)(1), MUMBAI

ORDER \nPER SANDEEP GOSAIN, JM:\nThe present appeal has been filed by the assessee\nchallenging the impugned order dt. 19.01.2024 passed u/s\n250 of the Income Tax Act, 1961 (‘the Act'), by the National\nFaceless Appeal Centre, Delhi / CIT(A), for the A.Y 2010-11.\n2. First of all we take up Ground No.2, this ground No.\n2.1 to 2.4 are interrelated and interconnected to\nchallenging the order of Ld. CIT(A) in confirming the\nadditions made by AO u/s 68 of the Act. Therefore we\nhave decided to take up all the grounds together and to\nadjudicate the same through the present consolidated\norder.\n3. Ld. AR appearing on behalf of the assessee reiterated\nthe same arguments as were raised by him before the\nrevenue authorities and further relied upon his written\nsubmissions which are reproduced herein below:\n• The Appellant, M/s Rajkiran Textiles Pvt. Ltd. is intended to\nenter into the business of property during the year under\nassessment filed the return of income on 10-12-2010 declaring\nLoss of Rs.28,419/- which was processed u/s 143(1) of the\nIncome Tax Act, 1961 (the Act).\n• The case was reopened u/s 147 of the Act by issuing notice\nu/s 148 of the Act on 22.03.2016 and as required by assessing\nofficer vide notice issued u/s 143(2) and 142(1) of the Act from\ntime to time, the Appellant filed all the details as and when\ndemanded by the Assessing Officer (AO).\n• The order u/s 143(3) r.w.s 147 of the Act was passed on 27-\n12-2016 of the Act by adding a sum of Rs.2,50,00,000/- to the\nincome of the Appellant, which was received by the Appellant\ntowards the allotment of shares from various parties at a\npremium of Rs.990/- per share, on the ground that the purported\nshare application money of Rs.2,50,00,000/-were treated as a\ncash credits in the books of the assessee company, whose\nnature and source is not explained and, therefore, deemed to be\nthe assessee's income as envisaged in Section 68 of the Income\nTax Act, 1961, without considering the details furnished by the\nparties in response to notices issued to them u/s 133(6) of the\nAct\n• As mentioned in the order that in case of four parties, three\nnotices were returned with remark moved, these were never\ninformed to the Appellant by the AO. The two parties in case of\nnotices returned unserved, the addresses of the parties have\nchanged and are available at new addresses. However, the\nAppellant submitted copies of share application, copy of bank\nstatements and copies of balance sheets of all the parties to\nwhom the shares were allotted including these two parties where\nnotice returned unserved.\n• For that on the facts and in the circumstances of the case,\nthe Appellant never received any show cause notice mentioned in\nthe order and the learned assessing officer was highly\nunjustified in completing the assessment without considering the\nfacts of the case and ignoring the submissions made by the\nAppellant.\n• Aggrieved from the above assessee preferred and appeal\nbefore NATIONAL APPEALL CENTRE (NFAC) and NFAC\nerred in confirming the addition made by Ld.Assessing officer.\n• Further aggrieved from the above assessee preferred this\nappeal before HON'BLE ITAT raising following grounds of appeal\n:\nGrounds of Appeal\n1. FIRST GROUND OF APPEAL: - Order Bad in Law and\nFacts\n1.

1. The learned (CIT(A)) has erred in confirming the order of\nAssessing Officer (AO), by confirming the addition of Rs.\n25,000,000/- without considering the facts.\n2.

2. The learned CIT(A) has erred in upholding the addition u/s 68\nof the Act, being amount received on issue of shares on premium\nwithout appreciating the details submitted by the Appellant:\n2.

before or at any time of\nhearing of this Appeal.\nDuring the year, the appellant company has issued shares at\npremium to the following companies :\n• In view of the aforesaid details, the Appellant submits that\nall the Investor companies have positive net worth and have only\ninvested on an average 3.37% of their net worth in the Appellant.\nHence, the creditworthiness of the Investor companies cannot be\ndoubtful.\n• The Ld. Assessing officer noted that\na) There was always nominal bank balance in their bank\naccount.\nb) There were immediate deposits in their bank account\nbefore investing into share application money of the appellant\ncompany.\nc) None of the parties have enough credit worthiness as most\nof the share applicants are showing negligible income and they\ndon't have accumulated profits.\n• Accordingly the LD AO treated share capital and\nshare money as unexplained cash credit u/s 68 of the Act\nand made an addition of Rs.2,50,00,000/-\n1. During the course of assessment proceedings, the Ld.\nAssessing Officer has asked the appellant to submit the\ndocumentary proof and evidences to substantiate the\nCreditworthiness of the parties who have subscribed to the\nshares of the appellant.\n2. In response to this, appellant has submitted the following\ndocuments to prove the Identity, Creditworthiness and\nGenuineness of the above share transaction even though the\nappellant was not required to prove :\nTo prove the identity, appellant has submitted the addresses,\nPAN, certificate of incorporation, Memorandum and Articles of\nAssociation of the above subscribers who have subscribed to\nthe shares.\nTo prove the creditworthiness of the subscribers, appellant\nhas submitted the certificate of source of fund, Balance Sheet,\nProfit & Loss a/c and Return of Income ofshare applicants.\nTo prove Genuineness of above share transaction,\nappellant has submitted :\na) Copy of Bank Statement of M/s Rajkiran Textiles Pvt. Ltd.\nb) Copy of Share Certificate Counterfoil\nc) Copy of Extract of Statement showing no. of parties along\nwith the amount received as share application money during\nAY 10-11 along with board resolution\nd) Copy of Source of Funds Certificate\ne) Copy of ITR Acknowledgement\nf) Copy of Audit Report along with Balance Sheet\ng) Copy of Certificate of Incorporation\nh) Copy of Memorandum & Articles of Association\ni) Company Master Data showing status active\n3. The Learned AO added the share application money\namounting to Rs.2,50,00,000/- received from the above\nInvestors under section 68 of the Act on the alleged ground that\nit is unexplained cash credit.\nAt the outset, the Appellant would like to draw Your Honour's\nkind attention to the text of Section 68 of the Act that reads\nas under:\n“68.Where any sum is found credited in the books\nof an assessee maintained for any previous year,\nand the assessee offers no explanation about the\nnature and source thereof or the explanation\noffered by him is not, in the opinion of the\nAssessing officer, satisfactory, the sum SO\ncredited may be charged to income-tax as the\nincome of the assessee of that previous year.”\nFrom a reading of the above section, it is evident that the\nassessee should be able to provide satisfactory explanations\nabout the sum found to be credited in the books of the\nassessee. It is a fairly settled legal position held by various\ndecisions discussed subsequently that if the assessee proves\nthe following things then the addition under section 68 of the\nAct cannot be made:\nI. Identity of the shareholder;\nII. Genuineness of the transaction;\nIII. Credit worthiness of the shareholder\nYour honor can refer the page nos.21-218 of the Paper\nBook; the details in length were submitted.Each &every\nshare applicant has confirmed the transaction with the\nappellant company. Therefore, the findings given by the Ld. AO\nwere in contradiction of section 68 of the Act.\n1. By submitting the above details, the appellant has\ndischarged his primary onus of proving the Share Transaction\nas genuine Transaction. However, the Ld. Assessing Officer\nwithout considering the facts and circumstances of the case\nerred in making addition of Rs.2,50,00,000/- being the amount\nreceived towards share capital and share premium u/s.68 as\nUnexplained Cash Credit without having any jurisdiction.\n2. Merely because, some of the share applicants\n(i) were operating from same address,\n(ii) invested from capital or borrowed fund\n(iii) having low profit\n(iv) maintain nominal balance in bank account,\nIt cannot be a reason for disallowance and hence the Ld. AO\nhas taken wrong inference of the transaction.Further, whether\nthose companies were engaged in substantial business\nactivities or not that was not the look out of the appellant\ncompany.\nAll the share applicants have enough funds to invest into the\nappellant company.The factual position is verifiable from the\ncopies of balance sheet filed before your honor.\n3. After going through the above chart, your honor mау\nappreciate the fact that the share applicants had enough\namounts to invest into the shares of the appellant company.\nAnd therefore, the question of creditworthiness does not arise\nat all.In view of the above mentioned chart, we would request\nyour honor to distinguish the finding of the Ld. AO.\n4. The additions or dis-allowances under the income tax act\nwere governed by the specific provisions of the act and not on\nassumption or presumption or on human probabilities test.\n5. The confirmation of share applicants, сору of\nacknowledgement of return of income, audit report, board\nresolution and compliance under the companies act duly proves\nthe transactions were genuine and there were no infringement\nof any law.\nIn view of the above facts and contention, we would also\nlike to place reliance on the following judicial precedents\nwherein the addition under section 68 of the Act on\naccount of share application money was duly deleted by\nthe Hon'ble Supreme Court, High Court and Tribunal\nA. Bharat Securities (P.) Ltd Vs. PCIT [2020] 113\ntaxmann.com

32. (SC) order passed on 11th September,\n2019 in assessee’sfavour.\nHeld that once genuineness, creditworthiness and identity of\ninvestors are established, no addition could be made as cash\ncredit on ground that shares were issued at excess premium\nB. Rohtak Chain Co. (P.) Ltd vs. PCIT [2019] 110\ntaxmann.com

59. (SC) order passed on 5th August, 2019\nin assesseeʼsfavour.\nHeld that once genuineness, creditworthiness and identity of\ninvestors were established, no addition could be made as cash\ncredit on ground that shares were issued at excess premium\nC. PCIT vs. Chain House International (P) Ltd [2019] 103\ntaxmann.com 435 (SC)order passed on 18th Februrary,\n2019 in assessee’sfavour.\nIt was held that No reason to interfere. SLP dismissed.\nHigh Court held there is no limitation on the amount of\npremium that can be charged. The AO cannot question\nthe transaction merely because he thinks the investor\ncould have managed by paying a lesser amount as share\npremium. It is the prerogative of the Board of Directors\nto decide the premium and it is the wisdom of the\nshareholder whether they want to subscribe to shares at\nsuch a premium or not. S. 68 does not apply as the funds\nwere received through banking channels and the\nidentity, creditworthiness and genuineness of the\ninvestors was established\nBOMBAY HIGH COURT :-\nPCIT Vs. Ami Industries (India) P Ltd Income Tax Appeal\nNo. 1231 of 2017 order passed on 29th January, 2020 in\nassessee'sfavour.\nIn NRA Iron & Steel (P) Ltd (supra), the Assessing Officer had\nmade independent and detailed inquiry including survey of the\ninvestor companies. The field report revealed that the\nshareholders were either non-existent or lacked credit-\nworthiness. It is in these circumstances, Supreme Court held\nthat the onus to establish identity of the investor companies\nwas not discharged by the assessee. The aforesaid decision is,\ntherefore, clearly distinguishable on facts of the present case.\nHeld that identity of the creditors were not in doubt. Assessee\nhad furnished PAN, copies of the income tax returns of the\ncreditors as well as copy of bank accounts of the three\ncreditors in which the share application money was deposited\nin order to prove genuineness of the transactions. In so far\ncredit worthiness of the creditors were concerned, Tribunal\nrecorded that bank accounts of the creditors showed that the\ncreditors had funds to make payments for share application\nmoney and in this regard, resolutions were also passed by the\nBoard of Directors of the three creditors.\nBaba Bhootnath Trade & Commerce Ltd vs. ITO (ITAT\nKolkata)I.T.A. No.1494/Kol/2017 in Assesseeʼsfavour.\nIt was held that the judgement in PCIT vs. NRA Iron &\nSteel 103 TM.com

48. (SC) is distinguishable on facts &\ndoes not apply to α case where the assessee has\ndischarged its onus to prove the identity,\ncreditworthiness and genuineness of the share\napplicants by producing the PAN details, bank account\nstatements, audited financial statements and Income\nTax acknowledgments and the investors have shown the\nsource of source & personally appeared before the AO in\nresponse to s.131 summons\nSN\nCITATION\nOBSERVATIONS\n1.\nIn the case of\nPrincipal\nCommissioner of\nIncome-tax,\nCentral-1\nv.Adamine\nConstruction (P.)\nLtd.\nbefore\nSUPREME COURT\nOF\nINDIASPECIAL\nLEAVE PETITION\n(CIVIL) DIARY\nNOS. 29917 OF\n2018\nINCOME TAX: Where High\nCourt upheld Tribunal's\norder deleting addition\nmade under section 68 in\nrespect\nof\nshare\napplication money received\nby assessee on ground that\nassessee had brought on\nrecord sufficient\ndocumentary evidence to\nprove identity\nand\ncreditworthiness of share\napplicants, SLP filed\nagainst said order was to\nbe dismissed\nSection 68 of the Income-tax\nAct, 1961 - Cash credits\n(Share capital) - Assessment\nyear 2008 09 - During\nrelevant year assessee\nreceived share application\nmoney from share applicants\nAssessing Officer doubting\nidentity and creditworthiness\nof those applicants, added\nsaid amount to assessee's\nincome under section 68\nTribunal, however, deleted\naddition made by Assessing\nOfficer High Court noted\nthat both assessee and later\nshare applicants upon\nreceiving notice under section\n131, had produced\ndocumentary proof\nSO\nproduced\nincluded assessments and\nreturns filed by share\napplicants as well as\nconfirmation\nand\nacknowledgment documents\nAccording to High court, if\nAssessing Officer wished to\npursue matter, there were\nsufficient clues for him to\nhave proceeded, for instance,\nit could have issued notices\nand obtained statements from\nbankers of share applicants\nor even balance sheets which\nexisted in records of their\nAssessing Officers However,\nAssessing Officer did not\nchoose to pursue said course\nof action High Court thus\nupheld Tribunal's order\ndeleting addition made by\nAssessing Officer Whether,\non facts, SLP filed against\norder of High Court was to be\ndismissed - Held, yes [Para 2]\n[In favour of assessee]\n20.\nIn the case of\nAdhoiVyapar(P.)\nLtd. υ. Income-\ntax Officer IN\nTHE\nITAT\nMUMBAI BENCH\n'A' IT APPEAL\nNOS. 7308 ΤΟ\n7311 (MUM.) OF\n2019\n[ASSESSMENT\nYEARS 2009-10\nTO 2012-13]\nINCOME TAX : Proviso to\nsection 68, which provides\nthat explanation furnished\nby assessee about nature\nand source of share\napplication money, etc.\nshall be not satisfactory\nunless person in whose\nname such credit is\nrecorded\nan\noffers\nsatisfactory explanation\nabout nature and source of\nsum SO credited, is\napplicable only from\n assessment year 2013-14\nand is not retrospective in\nnature\nINCOME TAX : Where\nassessee had discharged\ninitial onus of proving share\napplication transactions and\nAssessing Officer could not\nestablish\ngenerated\nthat\nassessee\nunaccounted\nmoney and routed same\nthrough banking channels in\ngarb of share-application\nmoney,\naddition\nunder\nsections 68 and 69C is not\nsustainable in law\nSection 68 of the Income-tax\nAct, 1961 - Cash credit\n(Proviso) - Assessment years\n2009-10, 2010-11, 2011-12\nand 2012-13 - Whether\nproviso inserted to section 68\nby Finance Act, 2012 with\neffect from 1-4-2013, which\nprovides that explanation\nfurnished by assessee about\nnature and source of share-\napplication money, share\ncapital, share premium etc.\nshall be deemed to be not\nsatisfactory unless person in\nwhose name such credit is\nrecorded also offers an\nexplanation about nature and\nsource of sum so credited and\nsuch explanation is found to\nbe satisfactory, is applicable\nonly from assessment year\n2013-14 and is not\nretrospective in nature - Held,\nyes [Para 6.5] [In favour of\nassessee] Section 68, read\nwith sections 69C and 147, of\nthe Income-tax Act, 1961 -\nCash credit (Burden of proof) -\n Assessment years 2009-10,\n2010-11, 2011-12 and 2012-\n13 - Whether where assessee\nhad discharged initial onus of\nproving share application\ntransactions in terms of\nrequirements of section 68,\nonus had shifted on\nAssessing Officer to dislodge\nassessee's documentary\nevidences and bring on record\ncogent material to establish\nthat assessee generated\nunaccounted money and\nrouted same through banking\nchannels in garb of share-\napplication money - Held, yes\n- Whether unless such an\ninvestigation is shown to\nhave been carried out,\nadditions would not be\nsustainable in law since it is\ntrite law that no addition\ncould be made on basis of\nmere suspicion, conjectures\nand surmises - Held, yes\n[Paras 6.4 and 6.8] [In favour\nof assessee]\n21.\nIn the case of\nPrincipal\nCommissioner of\nIncome-tax\nυ.\nRealvalue\nRealtors (P.) Ltd\nbefore\nHIGH\nCOURT\nOF\nBOMBAYIT\nAPPEAL NO. 957\nOF 2017†\nINCOME\nTAX:\nWhere\nassessee received share\napplication money and\nAssessing Officer made\nsection 68 addition in\nhands of assessee on\nground that assessee had\nfailed to discharge onus of\nestablishing genuineness\nof\ntransaction\nand\ncreditworthiness\nof\nshareholder, since\nsubstantial amount of said\nloan was received in\nearlier year and as regards\nbalance,\nsufficient\nevidence was produced,\nsame could not be added as\nunexplained investment in\nrelevant assessment year\nSection 68 of the Income-tax\nAct, 1961 - Cash credit (Share\ncapital) - Assessment year\n2007 08 - Assessee was\nengaged in business of\ndealing in property and\ntrading in shares and stock -\nAssessing Officer noted that\nin relevant previous year\nassessee had received an\namount from one shareholder\nas share application mоnеу\nbut had failed to discharge\nonus of establishing\ngenuineness of transaction\nand creditworthiness of same\nAssessing Officer treated\nsaid amount as unexplained\ncash credit - Commissioner\n(Appeals) noted that\nsubstantial part of said sum\nwas received in earlier\n assessment year and, thus, it\ncould not be added in\nimpugned assessment year -\nFurther, Commissioner\n(Appeals) observed that as\nregards balance sum,\nsufficient evidence was\nproduced in respect of\nidentity and genuineness of\nshareholder and he,\naccordingly, deleted said\naddition - Tribunal confirmed\nsaid order - Whether on facts,\nno substantial question of law\narose for consideration -\nHeld, yes [Para 7] [In favour\nof assessee]\n22.\nIn the case of\nPrincipal\nCommissioner of\nIncome-tax-1 υ.\nAmi Industries\n(India) (P.) Ltd.\nbefore\nHIGH\nCOURT\nOF\nBOMBAY\nIT\nAPPEAL\nNO.\n1231 OF 2017\nINCOME TAX: Where first\nappellate authority had\nreturned a clear finding of\nfact that assessee had\ndischarged its onus of\nproving\nidentity\nof\ncreditors, genuineness of\ntransactions and credit\nworthiness of creditors\nwhich finding of fact stood\naffirmed by Tribunal and\nrevenue had not been able\nto show any perversity in\naforesaid findings of fact\nby authorities below,\nTribunal was right in\nholding that no addition\ncould be made under\nsection 68\nSection 68 of the Income-tax\nAct, 1961 - Cash credit (Share\napplication money)\n Assessment year 2010-11 -\nAssessing Officer noted that\nassessee had disclosed funds\nfrom three Kolkata based\ncompanies as share\napplication money - But, since\nwhere abouts of above\ncompanies were doubtful and\ntheir identity could not be\nauthenticated, Assessing\nOfficer treated aforesaid\nfunds as money from\nunexplained sources and\nadded same to income of\nassessee as unexplained\ncash credit under section 68\nHowever, it was found that\nassessee-company had\nfurnished PAN, copies of\nincome tax returns of\ncreditors as well as copy of\nbank accounts of three\ncreditors through which share\napplication money was\ndeposited in order to prove\ngenuineness of transactions -\nFurther, insofar as\ncreditworthiness of creditors\nwere concerned, Tribunal\nrecorded that bank accounts\nof creditors showed that\ncreditors had funds to make\npayments for share\napplication money and in this\nregard, resolutions were also\npassed by Board of Directors\nof three creditors Thus, first\nappellate authority had\nreturned a clear finding of\nfact that assessee had\ndischarged its onus of proving\nidentity of creditors,\ngenuineness of transactions\nand creditworthiness of\ncreditors which finding of fact\nstood affirmed by Tribunal -\nRevenue had not been able to\nshow any perversity in\naforesaid findings of fact by\nauthorities below Whether\ntherefore, Tribunal was right\nin confirming order passed by\nCommissioner (Appeals) and\nholding that no addition could\nbe made under section 68 -\nHeld, yes [Paras 21, 23 and\n24] [In favour of assessee]\n23.\nIn the case of\nShree\nVeer\nBuildbest(P.)\nLtd. υ. Income-\ntax Officer IN\nTHE\nITAT\nAHMEDABAD\nBENCH 'C' IT\nAPPEAL NO. 892\n(AHD.) OF 2023\n[ASSESSMENT\nYEAR 2011-12]\nINCOME\nTAX : Where\nassessee received certain\namount as share\napplication money from a\nparty and documents\nfurnished by assessee\nestablished\nidentity,\ncreditworthiness\nand\ngenuineness of\nshare\napplication\nmoney\nreceived, addition under\nsection 68 was not\njustified\nIII. Section 68, of the Income-\ntax Act, 1961 - Cash credit\n(Share application money)\n Assessment year 2011-12 -\nAssessee received certain\namount as share application\nmoney from a party\nAssessing Officer added said\namount to assessee's income\nas unexplained under section\n68 on protective basis\nWhether since documents\nfurnished by assessee\nestablished identity,\ncreditworthiness and\ngenunineness of share\napplication money received\nand there was no substantive\naddition in hands of\naforesaid party and\nAssessing Officer's failure to\nprovide further substantial\nevidence or conduct thorough\ninvestigation meant that\nprotective addition of\naforesaid amount under\nsection 68 was not justified -\nHeld, yes [Paras 15, 15.2 and\n15.3] [In favour of assessee]\n24.\nIn the case of\nPrincipal\nCommissioner of\nIncome-tax\nυ.\nEsspal\nInternational\n(P.)\nLtd.D.B.\nbefore\nHIGH\nCOURT\nOF\nRAJASTHAN\nINCOME\nTAX : Where\nassessee received share\napplication money and had\nfurnished each and every\ndocument required for\nproving\nidentity,\ncreditworthiness of share\napplicants\nand\ngenunineness\nof\ntransactions, impugned\naddition\nmade\nunder\nsection 68 on ground that\nit was accommodation\nentry was to be deleted\nSection 68 of Income-tax Act,\n1961 - Cash credit (Share\napplication money)\n Assessment year 2014-15 -\nDuring a search conducted\nupon one SCS, it was found\nthat he was engaged in\nproviding accommodation\nentries of share capital, share\npremium, share application\nmoney, unsecured loans, long\nterm capital gains, short term\ncapital gains etc. in lieu of\ncash received by him and that\nit had also provided one-time\nentry of certain amount\ntowards share application\nmoney to assessee-company\nthrough a broker and such\ntransaction was not genuine\nAssessing Officer made\naddition under section 68 to\nincome of assessee on\naccount of same It was\nnoted that Tribunal had noted\nthat assessee had furnished\neach and every document\nrequired for proving identity,\ncreditworthiness of share\napplicants and genuineness\nof transactions, however,\nAssessing Officer had not\nbeen able to brought on\nrecord any evidence to show\nthat cash was paid by\nassessee to any person for\nobtaining accommodation\nentries in form of share\napplication money - Further,\non a glance at materials on\nrecord, it was found that\nAssessing Officer assessed\nassessee under section 143(3)\nonly on basis of statement\ngiven by SCS - However, it\nwas a matter of record that\nSCS had retracted his\nstatements given before\nAssessing Officer - Whether,\non facts, impugned addition\nmade by Assessing Officer\nwas without any basis - Held,\nyes [Para 14] [In favour of\nassessee]\n25.\nIn the case of\nPrincipal\nCommissioner of\nIncome-tax\nυ.\nSiyaram Metals\nUdyog (P.) before\nHIGH COURT OF\nGUJRAT\nTAX\nAPPEAL\nTAX\nAPPEAL NO. 508\nOF 2023\nINCOME TAX : Provisions of\nsection 68 could not be\ninvoked, more particularly\nwhen addition was made\non account of share\npremium\nand\nshare\napplication money by\ninvestors whose identity,\ncreditworthiness\nand\ngenunineness was proved by\nassessee\nI. Section 68 of the Income-tax\nAct, 1961 - Cash credit (Share\napplication\nmoney)\n Assessment year 2011-12 -\nAssessee-company\nwas\nincorporated\nin\nrelevant\nassessment\nyear\nby\nconverting\nproprietary\nconcern\nThereafter,\nassessee-company allotted\nshares\nat\npremium to\nproprietor and also to other\ninvestors During course of\nassessment proceedings,\nAssessing Officer noted that a\nsearch was conducted at\npremises of assessee wherein\nit was found that share\ncertificates were not issued to\ninvestors He, thus, made\nadditions under section 68 of\nentire credit of share capital\nand premium On appeal,\nCommissioner\n(Appeals)\ndeleted said additions\nTribunal upheld said order on\nground that identity of party\nwas established by\nfurnishing name, address and\nPAN detail, bank details, ITR\netc. Tribunal further held\nthat it was first year of\noperation of assessee-\ncompany and declaration of\ndividend by company had\nnothing to do with share\ncapital received by assessee\nand thus, assessee\ndischarged onus cast upon it\nunder section 68. Whether\nTribunal had rightly held that\nprovisions of section 68 could\nnot be invoked, more\nparticularly when addition\nwas made on account of\nshare premium and share\napplication money by\ninvestors whose identity,\ncreditworthiness\nand\ngenunineness was proved by\nassessee Held, yes [Para 3]\n[In favour of assessee]\n26.\nIn the case of\nAbhijavala\nDevelopers (P.)\nLtd. υ. Income\nTax\nOfficer\n9(1)(1), Mumbai\nIN THE ITAT\nMUMBAI BENCH\n'A' IT (APPEAL)\nNO. 952 (MUM)\nOF\n2019\n[ASSESSMENT\nYEAR 2012-13]\nINCOME\nTAX : Where\nassessee received share\ncapital and unsecured loan\nfrom several entities and\nproduced\ndocumentary\nevidences such as copy of\nconfirmation of accounts,\ncopy of PAN card, bank\nstatement\nacknowledgement\nITR\nand\nfinancial statements of all\ninvestors/lenders so as to\nsubstantiate\nthese\ntransactions and funds\nwere\ntransferred\nto\nassessee through proper\nbanking\nchannels, no\naddition under section 68\ncould be made on basis of\nthird party statements\nSection 68 of the Income-\ntax Act, 1961 - Cash credit\n(Share capital and\nunsecured loan) Assessment\nyear 2012-13 - During year,\nassessee company received\nunsecured loan and share\napplication money from six\ncorporate entities - Assessing\nOfficer noted that summons\nissued under section 131 to\nthese entities were returned\nback with remarks like not\nknown/incomplete address\nand assessee was unable to\nproduce any of these parties\nHe further noted that an\ninformation was received from\nDGIT (Inv.) that all these\nentities were involved in\nproviding bogus\naccommodation entries of\nvaried nature - Accordingly,\nhe held that unsecured loans\nas well as share application\nmoney received by assessee\nfrom all six entities was non-\ngenuine and a sham and\nadded these amount to\nincome of assessee under\nsection 68 - It was noted that\nassessee had furnished all\ndocumentary evidences such\nas copy of confirmation of\naccounts by lender/investor,\ncopy of PAN Card, bank\nstatement, ITR\nacknowledgement and copy of\nfinancial statements of all\ninvestor/lender entities\nFurther, all these six entities\nhad filed their return of\nincome after paying taxes\nThey had also duly confirmed\ntransactions carried out with\nassessee - All funds were\ntransferred to assessee\nthrough proper banking\nchannels and there was no\nimmediate cash deposits in\ntheir accounts before transfer\nof funds to assessee\nAllegations of revenue were\nnot supported by any\ncorroborative evidences - So\nfar as information of DGIT\n(Inv.) was concerned, these\nwere found merely third party\nstatements which were never\nconfronted to assessee and\nthose statements on\nstandalone basis could not\nform basis of making\nadditions in hands of\nassessee - Whether, on facts,\nimpugned additions made\nunder section 68 to income of\nassessee was unjustified and\nsame was to be deleted\nHeld, yes [Para 5] [In favour\nof assessee]\n27.\nIn the case of\nNextgenVyapaar\n(P) Ltd.\nPrincipal\nCommissioner of\nIncome Tax-4,\nKolkataΙΝ THE\nITAT KOLKATA\nBENCH 'A'\nAPPEAL\nIT\nNO.\n1176 (KOL.) OF\n2019\n[ASSESSMENT\nYEAR 2012-13]\nSection 68, read with section\n263, of the Income-tax Act,\n1961 Cash credit (Revision)\n Assessment year 2012-13 -\nAssessee company, engaged\nin business of dealing in\nshares and investments, filed\nits return of income\nAssessing Officer passed an\nassessment order under\nsection 143(3) making an\naddition of certain amount\nunder section 68 as\nunexplained cash credit on\naccount of share application\nmoney and premium received\nby assessee during year\nPrincipal\nCommissioner\ninvoked revision jurisdiction\nunder section 263 and\ndirected Assessing Officer to\ncarry out proper examination\nof books of account and bank\naccounts of assessee as well\nas investors\nAssessing\nOfficer passed an order under\nsection 263 determining total\nincome of assessee at lesser\namount by deleting addition\nunder section 68 on ground\nthat source of fund, identity,\ngenunineness\nand\ncreditworthiness of share\napplicants were verified and\nfound in order Pr.\nCommissioner issued another\nnotice under section 263 on\nground\nthat\nincome\ndetermined as per impugned\norder under section 263 was\nless than total income as\nassessed\nunder\nearlier\noriginal assessment order\nunder section 143(3), therefore,\nimpugned\nassessment\norder\nwas\nprejudicial to interest of\nrevenue It was noted that\nassessment orders of share\napplicant companies were\npassed under section 143(3)\nby revenue, thus, identity and\ncreditworthiness of share\napplicant companies were\nproved\nShare applicant\ncompanies had responded to\nnotices under section 133(6)\nand also appeared before\nAssessing Officer and\nfurnished copy of I.T.\nreturn/acknowledgement,\ncopy of annual audited\naccounts, balance sheet and\nprofit & loss account\nstatement and copy of bank\nstatement, etc. so as to prove\ngenunineness of transactions\nThus, Assessing Officer had\ntaken a plausible view in his\nfirst order passed under\nsection 263 Such a view\ncould not be termed as\nerroneous insofar as it was\nprejudicial to interest of\nrevenue Whether, on facts,\nimpugned invocation of\nrevision jurisdiction under\nsection 263 second time\nmerely because total income\ndetermined by Assessing\nOfficer in revision order was\nless than income determined\nin original assessment\nproceedings, was unjustified\n28.\nPCIT\nv/s\nHimachal fibers\nLtd. (2018) 98\ntaxmann.com 173\n(SC)\nIn the case of PCIT υ.\nHimachal Fibers Ltd [2018]\n98 taxmann.com 173 (SC) the\nHon'ble Supreme Court has\nobserved as under:\n“Where in course of appellate\nproceedings, High Court set\naside addition made by AO\nunder section 68 in respect of\nshare application money by\nholding that identity of\nshare applicants was\nclearly revealed but\nAssessing Officer did not\nconduct any further\nenquiry except resting his\nconclusions on surmises,\nSLP filed against said order\nwas to be dismissed.”\n29.\nCIT vs. Steller\nInvestment Ltd.\n(2001)251\nSC.\nITR 0236\nIt has been observed by the\nSupreme Court in the above\ncase that, \"According to High\nCourt, even if the subscribers\nto the increased share capital\nwere not genuine the amount\ncould not be regarded as\nundisclosed income of the\nassessee company and no\nquestion of law arose for\nreference-\nJustified-No\ninterference is called for.- CIT\nvs. stellar Investment Ltd.\n(1991)

99. CTR (Del) 40 :\n(1991) 192 ITR 287 (SC): TC\n55R.593 affirmed,.\"\n30.\nM/s V. R. Global\nEnergy Pvt. Ltd.\nv/s ITO Appeal No\n246 of 2017\ndated 01.09.2016\n(HC)\nPCIT (Central) - 4\nv/s M/s Acquatic\nRemedies Pvt. Ltd\n(HC)\nWhere assessee allotted\nshares to α company\nin\nsettlement of pre-existing\nliability of assessee to said\ncompany, since no cash was\ninvolved in transaction of\nsaid allotment of shares,\nconversion of these liabilities\ninto share capital and share\npremium could not be treated\nas unexplained cash credits\nunder section 68\nThus, the initial burden\nwas discharged by the\nrespondent in respect of\ncreditworthiness of the\ninvestor and nothing has\nbeen shown by the Revenue\nto doubt the same and/or\nsteps taken and result\nthereof. Thus, this objection\nof lack of creditworthiness of\nthe shareholder also does not\nsurvive. In fact, the impugned\norder of the Tribunal, on\nexamination of facts, has\ncome to the conclusion that\nthe investment made by the\nshareholders is not hit by\nSection 68 of the Act.\n31.\nCIT vs Oasis\nHospitalities Pvt.\nLtd. (ITA No.\n2093\nof\n2010),(HC)\n\"