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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
1. This appeal is filed by the assessee namely Shiv Shakti Enclaves Pvt Ltd [the appellant/assessee] against the order passed by the Commissioner of income tax, appeal – 49, Mumbai (the learned CIT – A) for assessment year 2009 – 10 dated 15 December 2021 wherein the appeal filed by the assessee against the order passed by the Deputy Commissioner of income tax, central circle – 7 (3), Mumbai (the learned AO) dated 28 December 2016 passed u/s 143 (3) read with Section 147 of the income tax act (the act) was dismissed confirming
2. Assessee/appellant aggrieved has preferred following grounds of appeal: –
1. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in conforming the initiation of the reassessment proceedings under section 143 (3) r.w.s 147 of the income tax act.
2. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in conforming the view of the ld. AO in creating reasons to believed escaped assessment u/s 147.
3. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the order passed under section 143 (3) r.w.s 147 by the ld. AO which was against the principal of natural justice and barred in law.
4. On the facts and circumstances of the case and in law the Ld. CIT (A) erred in confirming the addition of Rs 41,00,000 received on account of share capital and share premium treating the same as unexplained cash credit under section 68 of the income tax act 1961.
5. The Ld. Commissioner of Income tax 49 initiated penalty proceedings under section 234B, 234C, 234D of the Income Tax Act 1961.
7. The assessee craves leave to add further grounds or to amend or alter the existing grounds of appeals on or before the date of hearing.”
3. As per information available on record and mentioned in the orders of the lower authorities, assessee is a company engaged in the business of real estate development, filed its return of income on 30 September 2009 disclosing nil income as it has incurred a loss of ₹ 646,860/–. Subsequently, case of the assessee was reopened u/s 147 of the act and notice u/s 148 of the act was issued on 28 March 2016. The reason for reopening was that there was a search in Lotus/Green Valley group of cases wherein it was noted that assessee has received a sum of ₹ 3,690,000 from various companies based out of Calcutta. One accommodation entry provider Mr. Rajesh Agrawal has received accommodation entries including the assessee for financial year 2008 – 09 to 2011 – 12. Mr. Agrawal admitted the undisclosed income of the group u/s 131 of the income tax act dated 9 October 2014. Subsequently, in response to notice u/s 148, assessee submitted a letter dated 4 April 2016 stating that return filed on 30 September 2009 May be treated as return in response to the notice. The reasons were asked for which were made available to the assessee. During the course of assessment proceedings, it was found that assessee has issued 41,000 equity shares of ₹ 10/– each at a premium of ₹ 90 per share is and accordingly, issued share capital of ₹ 41 lakhs. Details of issue of said capital is as Under; – serial name of the number of share share total number company to shares capital at premium at amount whom shares allotted the rate of the rate of ₹ are allotted ₹ 10/– 19/– per share 1 Cherry tie-up 5000 50,000/– 4,50,000/– 5,00,000/– private limited 2 Deepa 10,000 100,000/– 900,000/– 10,00,000/- holding private limited 3 Hill view 5000 50,000 4,50,000 500,000 higher purchase private limited 4 Motcab 15,000 1,50,000 13,50,000 15 lakhs finance private limited 5 Shagun 6000 60,000 5,40,000 600,000 merchants private limited Total 41,000 4,10,000 36,90,000 41,00,000
During the course of assessment proceedings, a. On the issue of reopening of assessment proceedings, assessee submitted that reassessment is not proper, as Mr. Rajesh Agrawal has retracted his statement on 16/10/2014. Therefore, there is no tangible material available with the learned AO for reopening of assessment. Further, learned AO has also relied on “some reliable sources” and therefore information is vague. b. On the merits, assessee submitted share application forms, bank statements, share certificate counter foils, statement of source of funds of the investors, board resolutions of the investors, audit report along with balance sheet of investors, return of income filed by the investors, certificate of incorporation along with memorandum and articles of association as well as company Master data of the investors. In case of some of the investors who are registered nonbanking financial companies with the reserve Bank of India, there certificate of registration as nonbanking financial company was also submitted. On the basis of above submissions, assessee submitted that reopening of the assessment is bad and even otherwise assessee has established initial
The learned AO rejected the contentions of the assessee. He was of the view that when Mr. Rajesh Agarwal initially owned that the amount invested by various companies are his own unaccounted money, subsequent retraction u/s 131 of the act during the course of assessment proceedings as well as after giving the statement during the course of survey does not have any validity. The original statement given will stand. He noted that when confronted with the evidences during the course of survey Shri Agarwal admitted under oath that the entries pertaining to the issue of share capital were bogus entries acquired in lieu of cash and he has introduced his unaccounted money by booking the transactions as share application money. Immediately after the conclusion of the survey, Shri Agarwal submitted an affidavit of retraction on 8/11/2016. During the course of assessment proceedings, he confirmed that the transactions are genuine. Therefore, AO noted that such changing stand goes against the assessee. AO noted that the projects of the assessee is lying dead at the moment, there is no business receipt and still assessee got investors for making in the assessee company. AO stated that the shares were acquired through
6. Aggrieved, assessee preferred an appeal before the learned CIT – A. Assessee challenged the reopening of the assessment as per ground number 1 – 2 of the appeal, violation of the principles of natural justice by ground number 3 and the merits of the addition by ground number 4. The learned CIT – A upheld the reopening of the assessment holding that learned AO has recorded specific reasons, statement of Shri Rajesh Agrawal is the tangible material and the return of income filed originally by the assessee was accepted without scrutiny. He relied upon the decision of the honourable Supreme Court in the case of Raymond woolen Mills Ltd versus ITO as well as ACIT
7. With respect to merits of the case, he accepted that statement-recorded u/s 133A does not have any evidentiary value unless it is act by credible evidence. Despite this, he held that when AO issued notices u/s 133 (6) of the assessee to the investor, it was returned back by the postal authorities. When confronted, assessee obtained all those confirmation of the parties and submitted before the AO, but as those parties have not independently responded to the notice issued by the AO, he confirmed the action of the assessing officer of making addition u/s 68 of the act. He also confirmed the action of the AO for the reasons recorded in paragraph number 9.1 of the assessment order. Thus, he confirmed the addition on merits.
8. Assessee, aggrieved with the order of the learned CIT – A has preferred this appeal. The learned authorised representative first referred to the paper book submitted before the learned CIT – A containing 253 pages wherein all the possible information with respect to all the investors were provided for. He also referred to his 27 pages of written submission challenging the reopening as well as on the merits of the addition. With respect to the reopening he submitted that the reopening was made merely to verify the transaction of premium on
On the merits of the addition, he referred to the page number 50 – 253 to show that complete information with respect to the identity, creditworthiness, and genuineness of the transactions are submitted. It was stated that despite availability of these overwhelming evidence, the learned assessing officer has not conducted any enquiry with respect to the depositors and further though the investors have not given information directly to the assessing officer u/s 133 (6) but has independently given information to the assessing officer. Merely non-reply of the notice u/s 133 (6) to the assessing officer directly, but furnishing all the information before the assessing officer by the investor through assessee, does not allow the AO to take any adverse view.
He submitted a paper book containing six and judicial precedents of the various benches of ITAT saying that b. He also referred to the decision in case of Binni builders private limited for assessment year 2009 – 10 in ITA number 1321/M/2021 dated 28/4/22 wherein Moto cab finance private limited and heal view higher purchase private limited have been considered and addition is deleted. He referred to paper book page number 87 – 88. c. With respect to Shagun merchants private limited he submitted that though this party is not covered by any of the above decisions of the facts are identical. He referred to the decision of the coordinate bench in assessee’s own case for assessment year 2010 – 11 wherein the depositor Moto cab finance private limited and Deepa Holdings private limited were also considered and addition with respect to these two parties were deleted. With respect to Shagun merchants private limited he submitted that identical facts and circumstances exists and similar details were submitted. He referred to page number 218 – d. Therefore, issue involved in this appeal is squarely covered in favour of the assessee by the above six decisions of the coordinate bench rendered in the sister concern and assessee itself on the same facts.
The learned departmental representative vehemently supported the order of the lower authorities. It was stated that the reopening has been correctly made by the learned assessing officer as the original return of income of the assessee was not picked up for scrutiny, subsequently the statement of the director of the group was obtained, though in survey but it is a tangible material available with the assessing officer for reopening of the assessment.
On the merits, he supported the orders of the lower authorities and stated that when during the course of survey it is apparent that these companies have not entered into genuine transaction with the assessee and directors have confessed that it is their own money, despite restrictions letter on, the assumption of a bogus share capital issue remains intact.
We have carefully considered the rival contention and perused the orders of the lower authorities. We have also considered all the six judicial precedents relied upon by the learned authorised representative as well as the evidence furnished in the paper book with respect to the creditors/depositors/shareholders.
Ground number 1 – 3 is with respect to the reopening of the assessment. We find that assessee has filed its return of income, the same return of income has been accepted as it is without any scrutiny, later on the information is available in the form of statement during the course of survey of the directors of one of the group companies that the share capital obtained by the assessee is bogus, the learned assessing officer cannot be found fault for issuing a notice u/s 148 of the act beyond four years as assessee has failed to disclose the true character of the share capital issued by it. The case of the assessee is squarely covered in favour of the revenue by the decision of the honourable Supreme Court in case of Raymond woolen Mills Ltd versus
Ground number 4 of the appeal is with respect to the addition of ₹ 41 lakhs received on account of share capital and share premium treating the same as an unexplained cash credit u/s 68 of the income tax act by the learned AO and confirmed by the learned CIT – A. We find that on identcals facts and circusmastaces of the case for various years all these shareholder companies are shareholders in different group companies where the ld Ao has made addition u/s 68 o the Income tax Act in the hands of group companies. When the matter reached the coordinate benches all the addition with respect to these parties were deleted as under :-
Sr Assessee ITA No & Date Shareholders No and AY 1 Shiv shakti 629/M/2019 Deep Hodings Limited & Enclaves Pvt dated 4/6/2021 Motcab Finance Limited Ltd AY 2010-11 2 Binni 1321/M/2021 Deepa Holdings Limited and Builders 28/4/2022 Ay Motocab Finance P Ltd Limitd 2009-10 3 Binni & Cherry Tie UP P Ltd Builders P 631/M /2019 Deepa Holdings P Ltd Ltd dated 12/3/2021
Hill View Hire P Ltd AY 2011-12 & 2012-13 Mot Cab Finance Limited 4 Mongipia 625 to Cherry Tie UP P Ltd Development 627/M/2019 Deepa Holdings P Ltd & Infra Ltd Ay 2009-10 201- Hill View Hire P Ltd 11 and 2011-12
Mot Cab Finance Limited
Complete facts are recorded in Decided by the coordinate bench in case of assessee for Ay 2010-11 vide order dated 4/6/2021 , which are identical to facts in the case of assessee as well as all these orders of coordinate bench cited above , as under :-
“2. The Brief facts of the case are that the assessee company is engaged in the business as builder and developers. The assessee has filed the return of income electronically on 14.09.2010 with a total income of Rs. 2,53,121/- on 14.09.2010, and the return of income was processed u/s 143(1) of the Act. Subsequently, the A.O Shri Shiv Shakti Enclave Pvt Ltd., Mumbai found certain information was not disclosed by the assessee and therefore the income has escaped the assessment. The A.O. after recording the reasons for reopening has issued notice u/s 148 of the Act. In response to the notice, the assessee has filed a letter dated 21.03.2017 to treat the return of income filed on 14.09.2010 as due compliance and requested for reasons recorded for reopening of assessment. The assessee has also filed a return of income on 11.09.2017 with a total income of Rs.2,53,121/-.Subsequently, the A.O. has issued notice u/s 143(2) and 142(1) of the Act. In compliance, the Ld. AR of the assessee appeared from time to time and furnished the details and reply to the queries and also submitted the documentary evidences in respect of the information. There was a search and seizure operations conducted in the Loutus/Kamadhenu/Green valley Group cases. and During the financial year 2009-10 the assessee company has received a sum of Rs.92,00,000/-as share capital including share premium. One Shri Rajesh Agarwal, an associate of the group found to have received sum of Rs. 30 Crore in 4 corporate entities including assessee company in the F.Y 2008- 09 to 2011-12 and the statement was recorded u/s 131 of the Act. The A.O on perusal of the balance sheet of the company found that ITA No. 629/Mum/2019 Shri Shiv Shakti Enclave Pvt Ltd., Mumbai the assessee has issued 92,000 equity shares of Rs. 10/- each paid up at a premium of Rs. 90 per share. The A.O has observed that the assessee company derives interest and rental income. The A.O. required the assessee to submit the details in respect of share application, allotment and premium collected. The A.O found that the investors who have made an application for allotment of shares are related to one of the group concern. Whereas the A.O has relied on the statement of Mr. Rajesh Agarwal who is associate of Lotus Group and has received the share application money from various Kolkata based companies. The A.O on perusal of the facts, is of the opinion that the assessee is associated with Mr. Rajesh Agarwal in availing accommodation entries in the guise of share application money. The assessee has received the share application money along with premium from the existing share holders referred at page 3 Para 3.1.5 of the order as under:
"3.1.5 On perusal of the detail s f il ed during the assessment proceedings it is seen that the f ollowing entities had been allotted share during the year; Sr.No Name and No of Money Money Total Address share received received money allotted as share as share received premium 1 M/s Anmol 26000 260000 2340000 2600000 commerce Pvt Ltd., Kol kata 2 M/s 25000 250000 2250000 2500000 Shri Shiv Shakti Enclave Pvt Ltd., Mumbai Priyamada Finvest Pvt Ltd, Kolkata 3 M/s Motacab 28500 285000 2565000 2850000 Finance Pvt Ltd, Kolkata 4 M/s Deepa 4500 45000 405000 450000 Holdings Pvt Ltd., Kol kata 5 M/s Rexnox 8000 80000 720000 800000 Trexim Pvt Ltd, Kolkata Total 92000 920000 8280000 92,00,000
The A.O to verify the claim of genuineness issued notice u/s 133(6) of the Act to these 5 entities and the A.O. has dealt on the facts, details, information and affidavit of the Mr Rajesh Agarwal and observed that the assessee has not established the identity, creditworthiness and genuineness of the transactions. The A.O found that no information was received from the parties in respect of notice issued u/s 133(6) of the Act. The A.O. is of opinion that the assessee company has failed to prove the identity, creditworthiness and genuineness of the share holders/investors in spite evidences/ financial statements of the investors are filed. Finally the A.O. concluded that the assessee company has filed the details/evidences but could not satisfied the test of identity, creditworthiness and genuineness of the transactions and relied on the judicial decisions and Shri Shiv Shakti Enclave Pvt Ltd., Mumbai treated the amount credited in the books of account as income of the assessee under the provisions of Sec. 68 of the Act and assessed the total income of Rs94,53,120/- and passed the order u/s 143(3) r.w.s 147 of the Act dated 22.12.2017.
4. Aggrieved by the order, the assessee has filed an appeal with the CIT(A) and first challenged the reassessment proceedings.
The CIT(A) dealt on the facts and obtained information on the report of search and seizure and the reasons recorded on the investments. The CIT(A) found that the assessment is valid and dismiss the grounds of appeal on the validity of re assessment. On the second disputed issue, the assessee has filed the elaborate submissions referred in the appellate order. The assessee has submitted the documents/evidences in respect of investors to substantiate that the shareholders has satisfied identity, creditworthiness and genuineness of the transactions and complied with the requirement of Sec. 68 of the Act. The Ld.AR contentions are that the investors have sufficient/surplus funds to invest in the assessee company. The CIT(A) noted the information and considered the documents submitted by the assessee in respect of 5 shareholders. The CIT(A) has gone through the activities of the investor companies and formed an opinion that the investor companies could not make the investment in the assessee company. Finally CIT(A) having dealt on the catena of judicial decisions has observed that the assessee company cannot substantiate its claim and confirmed the addition u/s 68 of the Act and granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the order, the assessee has filed an appeal before the Honble Tribunal.
5.At the time of hearing, the Ld.AR submitted that the CIT(A) has erred in not considering the various aspects of investments and the assessee has filed the financial details in respect of these companies which cannot be overlooked. The Ld.AR referred to the paper book and demonstrated the submissions made before the CIT(A).The Ld.AR mentioned that the assessee has submitted the details/evidences in respect of the five shareholder companies to satisfy the identity, creditworthiness and genuineness of the transaction and substantiated with share application form, copy of bank statement, copy of share certificate, copy of Board resolution, copy of audit report and audited Balance sheet and enclosures, copy of certificate of incorporation, and Active status of company from MCA web site. The Ld. AR relied on the catena of Honble High Court and Honble Tribunal decisions. The Ld.AR emphasized that on similar and identical facts, the Hon'ble Tribunal has confirmed Shri Shiv Shakti Enclave Pvt Ltd., Mumbai the genuineness, identity and creditworthiness of the investors for the same assessment year. Further the Ld.AR substantiated his arguments with paper book, judicial decisions and orders of the Hon'ble Tribunal and prayed for allowing the appeal .Contra, Ld.DR relied on the CIT(A) order.
6.We heard the rival submissions and perused the material on record. The sole crux of the disputed issue as envisaged by the Ld.AR is with respect to addition u/s. 68 of the Act on the amount received on the share application from five investors for allotment of shares during the financial year. We find that the assessee has submitted the substantial details before the assessing officer and appellate authority. The Ld.AR submitted that these 5 investor companies have made investment in the assessee company considering the future prospects. We find that no statement has been recorded in respect of these companies in the assessement proceedings. The A.O without going into the detail aspects has made addition and further we found that that the A.O has dealt elaborately on the statement of Shri Rajesh Agarwal who was connected to these shareholder companies and further Shri Rajesh Agarwal has retracted his statement and it was also brought to the knowledge of the A.O. The A.O has made addition based on surmises and Shri Shiv Shakti Enclave Pvt Ltd., Mumbai conjunctions without proper verification and enquiry. During hearing proceedings, it was brought to the knowledge of the bench by the Ld.AR that these companies financial stability were already test checked and dealt by the Hon'ble Tribunal in the case of M/s. Bini Builders pvt Ltd Vs DCIT in ITA Nos. 631 & 632/M/2019 for the A.Y 2009-10 2010-11 dt 12-03-2020 and similarly in the case of M/s. Moongipa Development and Infrastructure Ltd. Vs DCIT in ITANo. 625 & 626/M/2019 for the A.Y 2009-10&2010-11. The Hon'ble Tribunal has dealt on the identical issues covered in favour of the assessee. We find that 4 investor companies financial statements were dealt and the findings are that the investors companies have a positive net worth and only a small percentage of investments were deployed which cannot be disputed. We considered it appropriate to refer the Hon'ble Tribunal observations at page 11 as under:
" The investor companies have positive net worth and only invested 1.6% and 1.2% of their net worth. The assessee submitted Form of application of shares, Photocopy of the cheque receipt towards the share application, photo copy of the bank deposit slip reflecting the deposit of the above cheque, extract of Bank Statement of all subscribers duly highlighting the entries of share money and premium money given by them to the appellant company along with copy of board resolution, resolving the decision of investment into appellant company. To prove the Shri Shiv Shakti Enclave Pvt Ltd., Mumbai genuineness of the transaction the assessee produced the confirmation, bank statement, financial of the lender. Nothing came into noticed that the transaction were found bogus. Retracted statement of Shri Rajesh Agarwal was not liable to be relied upon the unless corroborated by the sufficient evidence on record. Moreover no opportunity of being heard was given to the assessee. However, in support of this contention, the Ld. Representative of the assessee has placed reliance upon the following law.:-
CIT Vs. Loverly Exports Pvt. Ltd. (2008) 216 CTR 195 (SC)
PCIT Vs. Himachal Fibers Ltd. (2018) 98 taxmann.com 173 (SC)
3. PCIT Vs. Bharat Securities P. Ltd. (2020) 13 taxmann.com 32 (SC)
4. PCIT Vs. Rohtak Chain Co. P. Ltd. (2019) 110 taxmann.com 59 (SC)
5. PCIT Vs. Ami Industries Pvt. Ltd. 1231 of 2017
CIT Vs. Gagandeep Infrastructure Pvt. Ltd. of 2014 (Bom)
7. CIT Vs. Orchid Industries Pvt. Ltd., I. T. Appeal No. 1433 of
Jasamrit Constructions Pvt. Ltd. Vs. ITO, ITAT Mum dated 8 Feb, 2018
9. Pr. CIT Vs. M/s. ApeakInfotech, Nagpur (Bom. HC) dated 8 June, 2017
10. Umbrella Projects Pvt. Ltd. Vs. ITO 18(1) dated 23 Feb, 2018.
Taking into account all the facts and circumstances mentioned above and also relying upon the decision of the Hon'ble ITAT in the sister concern case M/s. Binni Builder Pvt. Ltd. (supra) in which the issue has been decided on the basis of similar facts and circumstances, we set aside the finding of the CIT(A) on this and decided this issue in favour of the assessee against the revenue"
7.Similarly the Hon'ble Tribunal in the case of M/s.Bini Builders P. Ltd Vs DCIT in dated 05.05.2021 has dealt on the common facts, being identical and similar relating to these five investor companies at page 7 Para 6 and 7 of the order which is read as under:
" 6. Upon careful consideration, as rightly pointed out by Ld. AR, the issue is squarely covered in assessee's favor by the earlier decision of coordinate bench of this Tribunal in assessee's own case for AYs 2011-12 & 2012-13, & 632/Mum/2019 common order dated 12/03/2020. The relevant findings of the bench were as under: -
We have carefully heard the arguments advanced by respective representatives and perused relevant material on record including documents placed in the paper-book. We have also deliberated on various judicial pronouncements as cited before us. We have already appreciated the settled legal position regarding addition u/s 68 as enumerated by us in the opening paragraphs. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs.
8.1 Upon careful consideration, the facts that emerges are that the assessee has issued 20.70 Lacs shares to as many as 11 corporate entities during the year as tabulated in para 5.3 above. As evident from documents on record, these shares were issued at face value of Rs.10/- per share. The Share Capital of the assessee increased by Rs.207 Lacs during the year under consideration. In the light of settled legal position as enumerated by us in the opening paragraphs, it is quite evident that the primary onus was on assessee to prove the fulfilment of three ingredients of Sec. 68 viz. (i) identity of the investor; (ii) creditworthiness of the investors; & (iii) genuineness of the transactions.
8.2 To demonstrate fulfillment of these ingredients, the assessee had during the course of assessment proceedings as well as appellate proceedings, furnished following broad documentary evidences with respect to all the 11 entities: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor's Bank Statement (v) Copy of Share Certificate Counterfoil (vi) Copy of Audit Report along with financial statements of the investor entity (vii) Copy of ITR acknowledgement of the investor entity (viii) Copy of Certificate of incorporation of investor entity (ix) Memorandum & Articles of Association of investor entity (x) Company Master Data showing status as active (xi) Copy of Board Resolution The assessee's own bank statement was also placed on record which would show that all the transactions have taken through banking channels. Upon careful consideration of these documents, we find that so far as the identity of the investor entities are concerned, the same stand proved by certificate of incorporation which is held to be conclusive proof of registration of a corporate entity. The creditworthiness of the entities would stand satisfied by the financial statements of the investor entities, which are also placed on record. The genuineness of the transactions would stand proved by the fact that the transactions were duly supported by share application form, share certificates, copy of board resolution and by the fact that ultimately the shares were allotted to all these entities. The assessee has tabulated the net worth of all these entities in the following manner: - N Name of Amo un t of Sh are Reserves of Net wor th of o. in ves tor sh ar e c ap it al of Inv es tor en tit ies in ves tor ent it ies c ap it al inves tor inves ted en tit y 1 Limel igh t 15,0 0,0 00 16,8 5,00 0 3,01,30 ,8 06 3,18,15 ,8 06 De al co m P Ltd . Cl ass ic 5,0 0,00 0 6,5 1,800 2,70,49 ,0 45 2,77,00 ,8 15 2 Comm otr ade P Ltd 3 Divya Pr akas h 25,0 0,0 00 1,0 0,02,450 33,6 8,5 0, 695 34,6 8,5 3,145 Suppl iers P vt Ltd 4 Gol dy 25,0 0,0 00 7,2 1,000 3,04,44 ,1 66 3,11,65 ,1 66 De al co m P Ltd Shri Shiv Shakti Enclave Pvt Ltd., Mumbai - 13 - 5 Nex tgen 20,0 0,0 00 57,6 5,00 0 10,7 6,3 5, 000 11,3 4,0 0,000 Tr adeco m P Ltd 6 Rexno x Trex im 18,0 0,0 00 1,1 5,57,100 15,9 3,9 7, 977 17,0 9,5 5,077 P Ltd 7 Rajl ax m i 18,0 0,0 00 60,1 0,00 0 11,2 2,9 5, 755 11,8 3,0 5,755 De al co m P Ltd 8 Van il l a T ie u p 15,0 0,0 00 13,5 0,00 0 6,12,92 ,9 89 6,26,42 ,8 98 Pvt Ltd 9 Kamakhy 24,0 0,0 00 7,7 2,000 3,29,46 ,1 26 3,37,18 ,1 26 Good s P L td 1 Camel l ia 10,0 0,0 00 8,3 2,280 3,58,97 ,6 44 3,67,29 ,9 24 0 Comm erc ial P Ltd 1 Anmol 32,0 0,0 00 1,8 1,03,500 28,2 4,3 8, 553 30,0 5,4 2,053 1 Comm ercep Ltd Tot al 20 7,00, 000 5,7 4,50,130 1,21,63 ,7 8,635 1,27,38 ,2 8,765 The perusal of net worth chart would reveal that all the investor entities had sufficient net worth to make stated investment in the assessee company. Upon perusal of all these documentary evidences, it could safely be concluded that the assessee had successfully discharged the onus casted upon him u/s 68 and the onus was on revenue to rebut assessee's evidences. 8.3 Proceeding further, we find that the sole basis of making impugned addition is the statement of one of the directors as recorded during the course of survey proceedings u/s 133A. However, this statement has been retracted within a span of 7 days. It is settled law that statements recorded during the course of survey proceedings would not have much evidentiary value unless the same are backed by credible evidences. This position has been settled by Hon'ble Supreme Court in the case of CIT V/s S.Khader Khan & Sons (25 Taxmann.com 413). The CBDT instructions No. F.No.286/98/2013-IT (Inv. II) dated 18/12/2014 also discourages confessional statements without any credible evidences. No incriminating material is shown to have been found during the course of survey proceedings.
8.4 We also find that learned CIT(A) has gone by irrelevant considerations to confirm the impugned additions. The object clause of the investor would have no relevance vis-à-vis proposed additions in the hands of the assessee u/s 68. It is trite law that no additions could be made merely on the basis of suspicion, conjectures or surmises. 8.5 The Ld. DR has relied upon the case of Hon'ble Supreme Court in Sumati Dayal Vs CIT (80 Taxman 89) & Durga Prasad More (82 ITR 540 26/08/1971). No doubt that the revenue authorities were not required to put blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the documents produced before them. However, we find that no such inquiries have been made by the authorities except for the allegations that the share capital was bogus in nature. Nothing was brought on record that to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital.
8.6 The entirety of facts and circumstances as enumerated hereinabove do not convince us to concur with the stand of Ld. CIT(A). The impugned additions, in our considered opinion, could not be sustained under law in the light of binding judicial pronouncements as enumerated by us in the opening paragraphs. Therefore, we delete the same. Consequently, the set-off of losses, as allowable under law, would be available to the assessee. Ground Nos. 4 stand allowed. Ground No.5 stand allowed for statistical purposes. Ground Nos. 6 to 8, being consequential in nature, would not require any specific adjudication on our part.
8.7 So far as the legal grounds are concerned, we find that the original return was processed u/s 143(1) and the only requirement in law to trigger assessment was that Ld. AO certain reasons to believe that certain income escaped assessment in the hands of the assessee. We find that Ld. AO was clinched with tangible information from investigation wing which suggested possible escapement of income in the hands of the assessee. In our opinion, nothing more was required at this stage since Ld. AO had sufficient reasons to form such a belief. Therefore, we do not find much substance in assessee's legal grounds. Ground Nos. 1 to 3 stand dismissed. 8.8 The appeal stands partly allowed in terms of our above order. This decision has subsequently been followed by another coordinate bench of the Tribunal in the case of assessee's sister concern namely M/s Moongipa Development & Inf. Ltd. for AYs 2009-10 & 2010-11, & 626/Mum/2019 common order dated 04/12/2020 on identical facts and circumstances.
7. We find that facts in this year are quite identical to the facts of earlier years. In fact, Ld. AR has demonstrated that 13 entities out of the 16 entities are common entities as dealt with by the Tribunal in the captioned appeals as is evident from the following tabulation: - No. Name of Investor Entity BBPL* 2011- MDIL** MDIL** 12 & 2012-13 2009-10 2010-11 1 Anmol Commerce P Ltd Yes Yes 2 Rexnox Trexim P Ltd Yes Yes 3 SSA Motor Finance P Ltd Yes 4 Priyamvada Finvest P Ltd Yes 5 Motocab Finance P Ltd Yes 6 Camellia Commercial Pvt Yes Ltd 7 Cherry Tieup P Ltd Yes 8 Deepa Holding P Ltd Yes Yes 9 Hill View Hire Purchase Pvt Yes Ltd 10 Mandyati Dealcom P Ltd Yes 11 Nextgen Tradecom Pvt Ltd Yes 12 Vanilla Tie up Pvt Ltd Yes 13 Kamakhya Goods P Ltd Yes Yes *BBPL - Assessee (M/s Bini Builders Pvt Ltd)
**MDIL - Sister concer of assessee (M/s Moongipa Dev. & Inf.
Ltd)
Regarding remaining 3 entities i.e. (i) M/s Gorsia Marine Equipment Pvt. Ltd.; (ii) M/s Sitaram Investment Pvt. Ltd.; (iii) M/s Marudhar Suppliers Pvt. Ltd., we find that the assessee had furnished similar sufficient documentary evidences as follows: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor's Bank Statement (v) Copy of Share Certificate Counterfoil (vI) Copy of source of funds certificate (vii) Copy of Audit Report along with financial statements of the investor entity (viii) Copy of ITR acknowledgement of the investor entity (ix) Copy of PAN Card (x) Copy of Certificate of incorporation of investor entity (xi) Memorandum & Articles of Association of investor entity (xi) Company Master Data showing status as active (xii) Copy of Board Resolution (xiv) Copy of RBI certificate of registration Upon perusal of these documents, it could be said that the primary onus as casted on the assessee in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee's unaccounted money was routed in the books in the garb of share capital. It is trite law that no addition could be made merely on the basis of allegation, suspicion, conjectures or surmises. Upon perusal of assessee's written submissions as placed on record, another pertinent fact to be noted is that all the 16 investor entities has sufficient net worth (shares capital + reserves & surplus) to make investment in the assessee and the percentage of investment made by them in the assessee company is merely in the range of 0.47% to 5.45% of their respective net worth.
8.We find these five investors companies invested in the share capital at share premium in the assessee company referred at Sr. No. 1,2,4,5 and 8 of the chart referred at page 15 above, where the Honble Tribunal has considered the financial aspects and observed that these companies can make investments and the investments percentage range from .47% to 5.45%. Further, we find that all the five investor companies contributed the share capital and premium were subject matter of adjudication by the Hon'ble Tribunal and was treated as genuine in the above cases. We find that these five investor companies are part of the decisions of the Hon'ble Tribunal for the same assessment year. We Considering the overall facts, circumstances, submissions and Hon'ble Tribunal decisions, are of the substantive opinion that the assessee could able to substantiate its case and satisfy three ingredients being identity, creditworthiness and genuineness of the transactions. The Hon'ble Tribunal has dealt elaborately on the net worth of these companies and percentage of the investments are comparatively lower than total net worth of the investor companies. Accordingly, we respectfully follow the judicial precedence and set aside the order of the CIT(A) and direct the assessing officer to delete the addition and allow this ground of appeal in favour of the assessee.”
19. Ground No 5 to 7 are consequential, premature, or general, hence dismissed.
In the result appeal of the assessee is partly allowed.
Order pronounced in the open court on 07.07.2022.