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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN, JM & HON’BLE SHRI G. MANJUNATHA, AM
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. आदेश / O R D E R Sandeep Gosain, Judicial Member: The present appeal as well as cross objection filed by the revenue and assessee are against the order of Ld. Commissioner of Income Tax (Appeals)-9, Mumbai dated 11.09.17 for AY 2009-10.
Since, the facts raised in this appeal as well as C.O. filed by the revenue and assessee are identical, therefore for the sake of convenience; they are clubbed, heard and disposed of by this consolidated order.
First of all we take up appeal in AY 2009-10 on the grounds mentioned herein below:- 1. "On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred deleting the addition made by the AO u/s 68 amounting to Rs. 1,75,00,000/- on bogus share application money received without appreciating the fact that the entries of these share application money in the books of accounts are bogus C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. accommodation entries which have been provided by Mr. Vipul Bhatt and his key employee and associate group in the form of share application in F. Y. 2008-09 pertaining to A. Y. 2009-10."
2. "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary."
The brief facts of the present case are that the assessee is engaged in the business of ‘development of properties’. The return of income for the year under consideration was filed on 12.09.09 declaring total income at NIL. Subsequently, information was received by the AO from ADIT(Inv.), Mumbai related to bogus purchase entries. Thereafter, the case was selected for scrutiny and after serving statutory notices and seeking reply of the assessee, the case was reopened and assessment order was passed u/s 143(3) r.w.s. 147 of the Act on 28.12.16 thereby making additions of Rs. 1,75,00,000/- to the total income of the assessee u/s 68 of the Act.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 5. Aggrieved by the order of the AO, the assessee preferred appeal before Ld. CIT(A), Mumbai and Ld.CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee.
Now before us, the revenue as well as assessee have preferred their respective appeal/ cross objection. Firstly we are dealing with the appeal filed by the revenue.
Ground No. 1. 7. This ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition made by the AO u/s 68 on bogus share application money received.
At the very outset, Ld. DR relied upon the orders passed by AO and submitted that on the information received from Assistant Director of Income Tax (Investigation), Mumbai, the case of the assessee was reopened as there was a search action against one Vipul Vidhur Bhat and related entities wherein it was revealed that he was a hawala operator and was involved in C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. business of accommodation entries for various beneficiaries in lieu of commission.
8.1 Ld. DR further submitted that assessee had received share application from four parties i.e. M/s. Victory Sales Pvt. Ltd., M/s. Shipra Fabrics Pvt. Ltd., M/s. Santoshima Lease Finance & Investment (India) Pvt. Ltd. and M/s. Dolex Commercial Pvt. Ltd. Thus required notices were served upon the assessee in order to prove the identity of the parties, creditworthiness and genuineness of the transactions, but assessee failed to submit required documents and reply, therefore, the AO had rightly made additions u/s 68 of the I.T. Act.
On the other hand, Ld. AR reiterated the same arguments as were raised by him before Ld. CIT(A), which are at para no. 2.3.1 and the same are reproduced below:-
2.3.1 Ld. AR has, inter alia, submitted the following arguments: "7.1) The Appellants have received share application money from following four parties during the year:-
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Name Amount (Rs.) M/s. Victory Sales Pvt. Ltd. 40,00,000/- M/s. Shipra Fabrics Pvt. Ltd. 55,00,000/ M/s. Santoshima Lease Finance & Investment (India) 20.00.000/- Pvt. Ltd. M/s. Do/ex Commercial Pvt. Ltd. 60,00,000/- Total 1,75,00,000/- 7.2)The assessment has been reopened u/s 147 / 148 of the Income Tax Act, 1961 (the Act) and the chronology of the events is as under: Date Particulars 30/03/2016 The Assessing Officer issued the Notice u/s 148 of the Act for reopening the assessment for A. Y. 2009-10. The copy placed at Page 1 of the Paper Book. Notice dated 20th April, 2016 u/s 142(1) of the 20/04/2016 Act asking for various details. Received by the appellant on 21/04/2016 23/04/2016 The Appellants filed a reply along with acknowledgement of original return of income filed, Computation of Income, copy of Audited Accounts and also requested for providing reasons on the basis of which the assessment is reopened. The copies are placed at Page 2 to 17 of the Paper Book.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 10/05.2016 The Assessing Officer furnished the reasons dated 29th March, 2016 for reopening of the assessment and the copy is placed at Page 19 and 19 of the Paper Book. 04/07/2016 The Assessing Officer issued a show cause notice for non compliance of Notice dated 20th April, 2016 u/s 142(1) and 143(2) of the Act, 07/07/2016 The Appellants filed objections to the reasons for reopening and asked for further details such as, copies of information available with Assessing Officer and/or office of ADIT (investigation) including copies of statements recorded of the parties wherein those parties have allegedly stated that they have given accommodation entry to the Appellants. The Appellants further stated that the above particulars will enable the appellant to make further submission. The copy of letter dated 5th July, 2016 objecting to the reopening is placed at Pages 21 to 23 of the Paper Book.
08/07/2016 Received by The appellant On 12/07/2016 Order u/s 148 read with Section 147 rejecting the objection, copy is placed at Page 24 to 29 of the Paper Book.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 7.3)As per statement of reasons for reopening of the assessment provided, the information is received from ADIT (Investigation), Unit 7(4), Mumbai, stating that following four private limited companies are bogus entities and are involved in business of accommodation entries to the various beneficiaries for c Sr. No. Name Amount o m i) M/s. SantoshimaTradelinks Limited Rs. 20,00,000/ m H) M/s. Do/ex Commercial Private Rs. 60.00.000/- i Limited s Hi) M/s. Victory Sales Private Limited Rs. 40,00,000/- s iv) M/s. Shipra Fabrics Private Limited Rs. 55.00.000/- i o It is further stated that the Appellant Company is one of such entity who has obtained accommodation entry from the above concerns. 7.4)During the year, the Appellant Company has received share application money of Rs. 2,30,00,000/- from various parties for which shares have been allotted in the subsequent period. 7.5) The Appellant Company has not taken any accommodation entry from any party including above entities. 7.6)Section 147 of the Act requires that the Assessing Officer should have a reason to believe that the income chargeable to tax has escaped assessment. In the instant case the assessment is reopened on the basis of information received from office of the Additional Director of Income Tax (Investigation), Mumbai vide letter dated 28th March, 2016. On the basis of this information only the Assessing Officer recorded the reasons on C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 29th March, 2016, obtained the approval of the Commissioner of Income and issued Notice u/s 148 to the Appellant on 30th March, 2016. The date shows the whole process is carried out mechanically without the Assessing Officer himself satisfying that income has escaped assessment. The Assessing Officer himself has not applied his mind. He has just reproduced the conclusion of the investigation team and reopened the assessment. It is submitted that the reassessment is therefore unjustified. The Appellant relies on the following decisions: a) Principal Commissioner of Income-tax-6 vs. Meenakshi Overseas (P.) Ltd. [2017] 82 taxmann.com 300 (Delhi) b) Aavkar infrastructure Company vs. DC/7"[2012] 21 taxmann.com 488 (Delhi) c) Kothi Steel Ltd. v/s ACIT, 72 taxmann. com 252 (Guj) d) CIT v/s Akot Ginning and Pressing Factory Ltd., 66 taxmann.com 80 (Bombay) 7.7) The reasons further states that - "the true natures of all these transactions with above entities are not known. As a result the income of the Assessee Company has been understated and further there was failure on the part of the Assessee Company to fully disclose the details for year under consideration." 7.8) That in the first line it is stated that true nature of transaction is not known. In such case, how it is concluded in the second line that the income of the Appellant Company has been understated. This shows the assessment has been reopened to make enquiries. 7.9) That it further states that there was a failure on the part of the Appellant Company to fully disclose the details for year under consideration. It is respectfully submitted that all the details required as per return of income under efiling system has 10 and C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. been furnished. The reasons do not specify what is the information which was required to be disclosed and not disclosed by the Appellant. 7.10) That the amount is received as share application money and it is a capital receipt which is not in the nature of taxable income. 7.11) Thus it is submitted that the reopening proceedings are unjustified and the same be deleted." 2.3.1) In respect of addition of Rs. 1,75,00,000/- on merits, the learned AR has submitted the following arguments:
"8.1) The date-wise sequence of event is as under: 08/07/2016 The Appellants furnished the details as per Notice dated 2th April, 2016 u/s 142(1) of the Act including (please refer Pages 30 to 33 of the Paper Book)- i) Details with supporting documents of the following parties along with Application forms, Resolution of the Company, Bank Statement of the parties highlighting the transactions and other documents as annexed herewith: a) M/s. Do/ex Commercial Pvt. Ltd. (Pages 34 to 79 of the Paper Book) b) M/s. Victory Sales Pvt. Ltd. (Pages 80 to 121 of the Paper Book) ] c) M/s. SantoshimaTradelinks Ltd. (formerly known as M/s. Satoshima Lease Finance and Investment (India) Ltd. (Pages 122 to 199 of the Paper Book)
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. d) M/s. Shipra Fabrics Pvt. Ltd. (Pages 200 to 239 of the Paper Book) ii) Confirmation from the above parties.
11/07/2016 to Copy of Notice dated 2nd August, 2016 u/s 02/08/2016 133(6) to M/s. Shantoshima Lease Finance & Investment (India) Ltd., which is duly acknowledged by them. Copy of Notice dated 2nd August, 2016 u/s 133(6) to M/s. Do/ex Commercial Pvt. Ltd., which is duly acknowledged by them. Copy of Notice dated 2nd August, 2016 u/s 133(6) to M/s. Victory \ Sales Pvt. Ltd. Copy of Notice dated 2nd August, 2016 u/s 133(6) to M/s. Shipra Fabrics Pvt. Ltd. 28/07/2016 Show Cause Notice^ stating that the Notices sent u/s 133(6) are received back with postal remark ‘Left’ and the Assessing Officer asked to furnish their name, latest address, PAN, copy of ITR, ledger, bank statement.
01/08/2016 M/s. Victory Sales Pvt. Ltd. filed the details as per Notice u/s 133(6). Copy is placed at Page 24 1 of the Paper Book.
01/08/2016 M/s. Shipra Fabrics Pvt. Ltd. filed the details as per Notice u/s 133(6). Copy is placed at Page 243 of the Paper Book.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 17/08/2016 M/s. Santoshima Lease Finance & Investment (India) Pvt. Ltd. filed the details as per Notice u/s 133(6). Copy is placed at Page 242 of the Paper Book. 17/08/2016 M/s. Do/ex Commercial Pvt. Ltd. filed the details as per Notice u/s 133(6). Copy is placed at Page 240 of the Paper Book. 18/08/2016 The Appellants filed the submission along with fresh confirmation and copies of ITR-V for the A. Y. 2009-10, 2011-12 and 2015-16 for all above four parties. Please refer Pages 244 to 268 of the Paper Book.
29/08/2016 Summons to the Assessee u/s 131 of the Act. received by the Appellant on 01/09/16 02/09/2016 The Appellants requested for adjournment 16/09/2016 Show Cause Notice for non compliance of summons. 10/10/2016 Summarizing all the details submitted during the course of hearing. Please refer Page 271 of the Paper Book. 8.2) The Assessing Officer has not issued any fresh notice u/s 142(1) and/or 143(2) of the Act after passing of the order u/s 148 read with section 147 rejecting the objections of the Appellant. He started with the reassessment proceedings. The C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Appellant furnished all the details vide letter dated 5th July, 2016 (filed with the Assessing Officer on 8th July, 2016) with the Assessing Officer. The details included following particulars in respect of each of the four parties referred to in the reasons for reopening: i) Copies of Share Application Forms ii) Copy of resolution passed by the Company for investment in shares of Appellants. iii) Copy of Memorandum and Article of Association of the Company iv) Copies of bank statements of the company v) Copy of Audited Statement of Account as at 31st March, 2009 vi) Copy of acknowledgement of Return of Income filed for the A. Y. 2009-10 The details are submitted from Pages 34 to 239 of the Paper Book. 8.3) The Appellant furnished all the particulars which are necessary to substantiate the receipt of share application money. 8.4) The Assessing Officer issued notices u/s 133(6) of the Act to the four parties. As per Show Cause Notice dated 28th July, 2016, the Notices u/s 133(6) of the Act dated 11th July, 2016 has been received returned unserved with postal remark "left". However, the fact is notices were served by hand delivery and there is an acknowledgement of two of the parties on the notice. Without prejudice, these parties are now witness of the department and, therefore, the department will have all their current address and whereabouts. Also the fact is all the four parties have furnished the required particulars including - C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. a) Copy of ITR, Computation of Total Income and Financial Statement along with their annexure forA.Y. 2009-10. b) Details of the bank Statement highlighting payments made in M/s. Mayuresh Logistics Pvt. Ltd. c) Copy of statement explaining the source of funds along with the documents confirming the transaction. d) Copy of Share allotment evidence. Copies of the letters filed by the four parties are placed at Pages to 240 to 243 of the Paper Book. 8.5)The Assessing Officer had not found any fault with any of the details furnished by the Appellant or by these four parties. 8.6)In the assessment order the Assessing Officer has reproduced and findings of the investigation made and relying on the same, he has made the addition of Rs. 1,75,00,000/- u/s 68 of the Act. In para 33, page 14 of the assessment order, the Assessing Officer has held that the /Assesses Company failed to prove the true identities of the investors, creditworthiness and genuineness of all these transactions made with above corporate investors who have invested as share application money in Assessee's Company. He has not pointed out as what is not furnished to prove identity, creditworthiness and genuineness of these transactions. 8.7)The Appellant vide letter dated 21st April, 2016 has requested the Assessing Officer to arrange to furnish the following particulars:
(a) A copy of the proposal given to Commissioner of Income Tax/Additional Commissioner of Income Tax for issuing the said Notice; and C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. (b) A copy of the approval received from the office of the Commissioner of Income Tax, Mumbai City or Additional Commissioner of Income Tax Mumbai. These details are not yet furnished to the Appellant. 8.8)The Appellant made request vide letters dated 5th July, 2016 and 18th August, 2016 to the Assessing Officer to arrange to furnish following particulars to the Appellant Company: i) Copy of information available with ADIT (Investigation), Unit 7(4), Mumbai. ii) Copy of information available with Your Honour, iii) Copies of statements recorded of the above parties wherein these parties have allegedly stated that they have issued accommodation entries to the Company. These particulars are not furnished to the Appellant. 8.9)The Assessing Officer has used certain evidence/information against the Appellants without providing the copies of the same to the appellant and also an opportunity to make submission or rebut the same. The Appellant relies on the following decisions: i) KishinchandChellaram v. CIT (1980) 125 ITR 713 (SC) ii) CIT v. J. M. D. Communications P. LTD (2010) 320 ITR 17 (ST) (SC) (ITA NO 106 OF 2007 DT 16-1-2009(Delhi)(HC) Hi) M/s. R. W. Promotions )(P) Ltd. v/s ACIT (Bombay High Court) of 2013 (order dated 13th July, 2015) (Copy enclosed) iv) Tin Box Co. v. CIT (2001) 249 ITR 216 (SC) v) CIT v. Eastern Commercial Enterprises (1994)210 ITR 103 (Cal.)(HC) vi) International Forest Co. v/s CIT; 101 ITR 721 (J & K High Court)
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 8.10) The addition has been made u/s 68 of the Act in respect of share application money received from four private limited companies. Section 68 of the Act reads as under: "68. Cash credits. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:
Provided that where the assesses is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 8.11) In the instant case before Your Honour the Appellant has furnished the detailed explanation about the nature and source C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. of the amount received and the Assessing Officer has not pointed out any mistake on any of the particulars furnished by the Appellant and also by these parties directly. The Assessing Officer has made the addition on the basis of report received from investigation wing, the copy whereof is also not given to the Appellant. 8.12) The Appellant rely on the following decisions: i) CIT v/s Lovely Exports Pvt. Ltd., 216 CTR 195 (SC); ii) CIT v/s Gagandeep Infrastructure Pvt. Ltd., 80 taxmann.com 272 (Bombay) Hi) CIT v/s Green Infra Ltd., 392 ITR 7 (Bombay) iv) Pr. CIT v/s Jatin Investment Pvt. Ltd., & 44 of 2016 (www.itatonline.org) v) Pr. CIT v/s Laxman Industrial Resources Ltd., ITA No. 169 of 2017 (www.itatonline.org). 8.13) A proviso is added to section 68 by Finance Act, 2012 with effect from 1st April, 2013. It is submitted that the proviso is prospective and not retrospective. This view has been taken by the Hon'ble Bombay High Court in the case of CIT v/s Gagandeep Infrastructure Pvt. Ltd., 80 taxmann.com 272. Without prejudice all the four companies have furnished the information along with the supporting for furnishing the return of income and the Assessing Officer has not pointed out any mistakes or any requirement in respect of the same. 8.14) In view of the above, Your Honour may be pleased to give a direction to delete the addition of Rs. 1,75,00,000/-u/s 68 of the Act."
2.4) Ground No. 17 regarding rate of tax: 2.4.1) The learned AR has submitted the following arguments:
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. "9.1) In Tax Calculation, the Assessing Officer has taken the rate of tax as 42.23% as against the applicable rate of tax of 33.99% applicable for the A. Y. 2009-10. 9.2)The Appellant has also filed an Application u/s 154 of the Act, the copy whereof is placed at Page 272 of the Paper Book. No final rectification order has yet been passed. 9.3) Your Honour may be pleased to give a direction to apply the correct rate of tax in tax calculation." 2.4.2) Further, the Id. AR submitted a copy of affidavit of Vipul Vidhur Bhatt dated 2nd September, 2016 wherein he had retracted the statement made before the tax department at the time of search."
9.1 Ld. AR also relied upon various judgments of Hon’ble Supreme Courts and High Courts, which are mentioned in the order of Ld. CIT(A) and submitted that the facts contained in the decision of Hon’ble Supreme Court in the case of PCIT Vrs. NRA Iron Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) is different to that of the present case.
We have heard the counsels for both the parties at length and we have also perused the judgments cited by the parties, material placed on record as well as the orders passed by revenue authorities.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The operative portion of the order of Ld. CIT(A) is contained at page no. 2.4.22 to 2.5 of its order and the same is reproduced below:-
2.4.22. Ground No. 3 to 16 relates to the merits of the addition and being interrelated, these are disposed of simultaneously. Ld AO has made the addition on the basis of information received from the investigation wing. He came to the conclusion that the identity, credit worthiness of the lender and the genuineness of the transaction were not proved and found to be unsatisfactory. He therefore, made the addition of Rs. 1,75,00,0007-.
2.4.23. Ld. AR drew my attention to the documents such as share application form, resolution of respective companies, memorandum and articles of the companies, copies audited statement of accounts, bank statements of respective companies and also copies of acknowledgement of income tax return filed for A.Ys. 2009-10, 2011-12 and 2015-16. He also filed the copies of confirmation of the respective parties and the copies of letters filed by all the four parties 'pursuant to notice issued u/s. 133(6) of the Act. Ld. AR also relied on the affidavit of Vipul Vidhur Bhatt dated 2nd September, 2016 wherein he has retracted the statement made before the Department at the time of search, 2.4.24. Ld. AR argued that the copies of evidence / information against the appellant were not provided to it and no opportunity to make submission or rebut the same was given to appellant.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Therefore, such evidence / information, according to him, could not be used against the appellant. For this, the Ld. AR has relied on the decision of Hon'ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 and also the jurisdictional High Court decision in the case of M/s. R. W. Promotions Pvt. Ltd. v/s ACIT. Ltd. AR also relied on various other decisions.
2.4.25. Ld. AR further stated that the Appellant had explained the nature and source of amount received as share application money and the Ld.AO had not pointed out any mistake on any of the particulars furnished by the appellant and/or the parties directly. In the instant case, in response to notices issued by Ld.AO, all the 4 parties have filed the required particulars. He, thereafter, furher relied on following decisions: i) CIT v/s Lovely Exports Pvt. Ltd., 216 CTR 195 (SC); ii) CIT v/s Gagandeep Infrastructure Pvt. Ltd., 80 taxmann.com 272 (Bombay)
Hi) CIT v/s Green Infra Ltd., 392ITR 7 (Bombay) iv) Pr. CIT v/s Jatin Investment Pvt. Ltd., & 44 of 2016 (www. itatonline. org) v) Pr. CIT v/s Laxman Industrial Resources Ltd., ITA No. 169 of 2017 (www.itatonline.org).
2.4.26. I find that on similar such issue, there are a plethora of judgments. For instance, the Jurisdictional High Court in the case of CIT vs. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom) has held that when the assessee had given the details of name and address of the shareholder, their PAN/GIR Number and had also given cheque number, name of bank, and the AO C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. did nothing except issuing summons which were ultimately returned back with an endorsement "Not Traceable", Tribunal was justified in deleting the addition of cash credit in respect of share application money.
2.4.27. The Hon'ble Jurisdictional High Court in the case of CIT v Gagandeep Infrastructure Pvt Ltd (ITA 1613 of 2014 dated 20.03.2017) has held that the Hon'ble Supreme Court decision in CIT v Lovely Exports P Ltd (317 ITR 218) is applicable for all Assessment Years prior to AY 2013-14. In the said decision in Lovely Exports P Ltd (supra), the Hon'ble Supreme Court has held that if the amounts have been subscribed by bogus shareholders, it is for the Revenue to proceed against such shareholders by reopening their assessments. Hon'ble Bombay High Court held that the proviso to Section 68, which states that the assessee has to prove the 'source of source', ,is prospective from AY 2013-14 onwards and cannot apply to past years. This 'feeing the law of the land, it must be applied to the appellant's case. Ld. AR has further submitted the copy of decision of the Jurisdictional High Court in the case of CIT v/s Orchid Industries Pvt. Ltd, in of 2014, wherein following the earlier decision in the case of Gagandeep Infrastructure (P) Ltd., the Hon'be Court did not agree with the Revenue.
2.4.28. Recently, the Hon'ble Mumbai ITAT in the case of Arceli Realty Ltd v ITO (ITA 6492/M/2016), has followed the decision of Jurisdictional High Court in the case of Gagandeep Infrastructre P Ltd (supra). The facts of the case are directly related with the facts of the present case as the issue involved therein was also related to share application money accepted by C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. the assessee from Pravin Jain Group of companies and the information in this regard had been received by the AO from the DGIT (Inv) Mumbai. In that case also the assessee had submitted the supporting documentary evidences such as copy of ITR, Balance Sheet and bank statement of the investor companies, Board Resolution, confirmation, ROC return etc. In that case, the Hon'ble ITAT held that - "The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Id AO did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any, or the information, no addition can be made. Even otherwise, as per Article 265 of the Constitution only legitimate taxes have to be levied and collected. In our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions of Hon'ble Courts, we reverse the order - of the Ld. CIT(A) , resultantly, this ground of the assessee is allowed."
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 2.4.29. As the Hon'ble Mumbai ITAT has decided the appeal in favour of the assessee which is similar to the case of the appellant and since both are alleged beneficiaries of alleged hawala operators, the decision of Ld. AO cannot be sustained.
2.4.30. The most recent decision of Hon'ble Bombay High Court in CIT v Orchid Industries Ltd (ITXA 1433 of 2014) dated 5th July 2017 is in the same context of bogus share application money. In this case, a survey was conducted u/s 133A of the Income Tax Act, 1961 on 24.11.2004. In the assessment order passed u/s 143(3) dated 29-12-2006, an addition of Rs.95,00,000/- was made in respect of share capital and share premium received from the seven parties on the basis of enquiry made by ADIT (Inv) - Unit IV, Kolkata as the identity and credit worthiness of the parties and genuineness of the transaction could not be proved. An appeal was filed before CIT(A) against the aforesaid addition made in the assessment order. During the appeal proceedings, it was argued that no proper opportunity was given to the assessee to produce the parties even though the parties were ready to appear before the authorities. Therefore, considering this request of the assessee, the matter was remanded back to the assessing officer with a direction to give one more opportunity to the assessee to produce the parties. However, even during the course of remand report proceedings which lasted for almost two years, the parties could not be produced in spite of several opportunities given by the assessing officer. Therefore, the addition of Rs.95,00,000/- was confirmed by the Ld.CIT(A) vide his order dated 17.06.2011. On further appeal, the appeal was allowed by Hon'ble ITAT on the ground that all the relevant documentary evidences were produced and thus, the genuineness of the transaction and identity and credit C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. worthiness of the parties had been established. Thus, the addition of Rs. 95,00,000/- was deleted by Hon'ble ITAT vide its order dated 07-02-2014. 2.4.31. The Department filed an appeal to Hon'ble Bombay High Court raising the following Questions of Law:
"Whether on the facts and in the circumstances of the case and in law, orders of the Tribunal was perverse in deleting the addition of Rs.95,00,000/made u/s. 68 of the Act, relying only on the documentary evidence produced by the Respondent Company while ignoring the key factor that these entities were not-traceable at their given addresses?
Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in not appreciating the observations made by the Delhi High Court in Nova Promoters and Fin/ease Pvt. Ltd. 18 Taxman.com 217 wherein the Court has observed that cases of this type cannot be decided only on the basis of documentary evidences above and there is need to take into account the surrounding circumstances?
The Tribunal ought to have taken note of the fact that the assesses was not able to produce even a single party before the AO despite agreeing before the CIT(A) that it will produce all parties before the AO during Remand proceedings."
2.4.32. Hon'ble Bombay High Court observed that the assessee had produced the documents such as PAN, confirmation, bank statement, allotment letters, and financial statements. The Balance Sheets showed significant funds to invest in shares of the assessee. The Hon'ble Bombay High Court held that C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. considering the voluminous documentary evidence, only because those persons had not appeared before the Ld.AO would not negate the case of the assessee. The Hon'ble Bombay High Court held as under:
"The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share app/icationforms, allotment letters and share certificates, so also the books of account.
The Balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case."
2.4.33. In the case of Orchid Industries P Ltd (supra), the AO issued 133(6) notices to the parties. Despite the fact that the parties did not appear before the AO, the Hon'ble Bombay High Court held that the transaction was genuine as the assessee produced voluminous documentary evidence. I find that the facts of this case are identical to that of the appellant's case.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 2.4.34. Therefore, in view of the binding decisions of the jurisdictional High Court in similar set of facts, the addition u/s. 68 cannot be upheld and is hereby deleted. Accordingly, Ground Nos.3-16 are Allowed.
2.4.35. Ground No. 17 is in respect of rate of tax oh the sums held as unexplained cash credit. In view of the decision rendered supra on merits of the addition, this ground becomes infructuous and is accordingly, Dismissed.
2.4.36. Ground No. 18 is against charging of interest u/s. 234B of the Act and the same being mandatory as well as consequential, this ground is Dismissed.
2.5. In the result, the appeal for A.Y. 2009-10 is Partly Allowed.
10.1 After having gone through the facts of the present case as well as considering the orders passed by revenue authorities and submissions made by both the parties, we find from the records that the assessee had received share application money from four parties i.e. M/s Victor sales Pvt. Ltd, M/s Shipra Fabrics Pvt. Ltd, M/s Santoshima Lease Finance & Investment India Pvt. Ltd and M/s Dolex Commercial Pvt. Ltd. The AO made additions by holding that the identity, credit worthiness of the lender and the genuineness of the transaction were not proved. Whereas the C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. assessee had placed on record the documents in the shape of share application form, resolution of respective companies, memorandum and articles of the companies, copies audited statement of accounts, bank statements of respective companies and also copies of acknowledgement of income tax return filed for A.Ys. 2009-10, 2011-12 and 2015-16. Apart from above, documents in the shape of copies of confirmation of the respective parties and the copies of letters filed by all the four parties pursuant to notice issued u/s. 133(6) of the Act. Affidavit of Vipul Vidhur Bhatt dated 2nd September, 2016, wherein he has retracted the statement made before the Department at the time of search was also filed.
10.2 We also noticed that although, the assessee vide letter dated 5th July 2016 and 18th Aug 2016 had requested the AO to arrange to furnish i) copy of information available with ADIT (Inv), ii) copy of information available with AO, iii) copies of statements recorded of the parties, wherein these parties have allegedly stated that they had issued accommodation entries to the assessee, but the same was not provided to it and no C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. opportunity to make submission or rebut the same was given to the assessee. Thus, any such evidence cannot be used against the assessee. In this respect, we draw strength from the decision of Hon'ble Supreme Court in the case of Kishanchand Chellaram 125 ITR 713 and also the jurisdictional High Court decision in the case of M/s. R. W. Promotions Pvt. Ltd. v/s ACIT. The assessee had fully explained the nature and source of amount received as share application money and AO had not pointed out any mistake on any of the particulars furnished by the assessee and/or the parties directly. It is also important to mention here that all the parties responded to the notices u/s 133(6) of the Act and submitted all the required documents /particulars. In this respect, under these circumstances, Ld. AR relied upon the following decisions: i) CIT v/s Lovely Exports Pvt. Ltd., 216 CTR 195 (SC); ii) CIT v/s Gagandeep Infrastructure Pvt. Ltd., 80 taxmann.com 272 (Bombay)
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Hi) CIT v/s Green Infra Ltd., 392ITR 7 (Bombay) iv) Pr. CIT v/s Jatin Investment Pvt. Ltd., & 44 of 2016 (www. itatonline. org) v) Pr. CIT v/s Laxman Industrial Resources Ltd., ITA No. 169 of 2017 (www.itatonline.org).
10.3 We have also noticed that the assessee had complied with all the notices and even the parties had also submitted all the required documents in the shape of copies of share application forms, copy of resolution passed by the company for investment in shares of assessee, copy of memorandum and article of association of the company, copies of bank statements of the company, copy of audited statement of account as on 31st March 2009, copy of acknowledgement of Return of Income filed for AY 2009-10, copy of ITR, computation of total income and financial statement alongwith their annexures for AY 2009-10, details of bank statement highlighting payments made in assessee company, copy of statement explaining the source of funds alongwith documents confirming the transactions, copy of share allotment evidence.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. 10.4 All the above documents goes to prove the identity of the investors, creditworthiness and genuineness of the transactions. Ld. DR has not been able to pin point any defects in the documents so supplied by the assessee/parties.
10.5 We find that Coordinate Benches of the Tribunal, different Hon’ble High Courts, Hon’ble Supreme Court had already dealt with similar situations and there are a plethora of judgments on the identical grounds. For instance, the Jurisdictional High Court in the case of CIT vs. Creative World Telefilms Ltd (2011) 333 ITR 100 (Bom) has held that when the assessee had given the details of name and address of the shareholder, their PAN/GIR Number and had also given cheque number, name of bank, and the AO did nothing except issuing summons which were ultimately returned back with an endorsement "Not Traceable", Tribunal was justified in deleting the addition of cash credit in respect of share application money, In the case of CIT v Gagandeep Infrastructure Pvt Ltd (ITA 1613 of 2014 dated 20.03.2017) has held that the Hon'ble Supreme Court decision in CIT v Lovely Exports P Ltd (317 ITR 218) is applicable for all C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Assessment Years prior to AY 2013-14. In the said decision in Lovely Exports P Ltd (supra), the Hon'ble Supreme Court has held that if the amounts have been subscribed by bogus shareholders, it is for the Revenue to proceed against such shareholders by reopening their assessments. Hon'ble Bombay High Court held that the proviso to Section 68, which states that the assessee has to prove the 'source of source', is prospective from AY 2013-14 onwards and cannot apply to past years. The similar principles were also laid down in the case of CIT v/s Orchid Industries Pvt. Ltd, in of 2014. 10.6 The Coordinate Bench of ITAT in the case of Arceli Realty Ltd v ITO (ITA 6492/M/2016), had followed the decision of Jurisdictional High Court in the case of Gagandeep Infrastructre P Ltd (supra). As far as the facts in the above case (supra) are concerned, the same are also identical with the present case as the issue involved therein was also related to share application money accepted by the assessee from Pravin Jain Group of companies and the information in this regard had been received by the AO from the DGIT (Inv) Mumbai. In that 32 I.T.A. No. 6691/Mum/2017 and C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. case also the assessee had submitted the supporting documentary evidences such as copy of ITR, Balance Sheet and bank statement of the investor companies, Board Resolution, confirmation, ROC return etc. In that case, the Hon'ble ITAT held that -
The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that in spite of repeated request, the Id AO did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather it has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the Department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of such evidence, if any, or the C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. information, no addition can be made. Even otherwise, as per Article 265 of the Constitution only legitimate taxes have to be levied and collected. In our humble opinion, the assessee has duly discharged the onus caste upon it, therefore, respectfully following the decisions of Hon'ble Courts, we reverse the order -of the Ld. CIT(A) , resultantly, this ground of the assessee is allowed.
10.7 In the recent decision of Hon'ble Bombay High Court in the case of CIT v Orchid Industries Ltd (ITXA 1433 of 2014) dated 5th July 2017, the additions were deleted as in that case, a survey was conducted u/s 133A of the Income Tax Act, 1961 on 24.11.2004. In the assessment order passed u/s 143(3) dated 29- 12-2006, an addition of Rs.95,00,000/- was made in respect of share capital and share premium received from the seven parties on the basis of enquiry made by ADIT (Inv) - Unit IV, Kolkata as the identity and credit worthiness of the parties and genuineness of the transaction could not be proved. An appeal was filed before CIT(A) against the aforesaid addition made in the assessment order. During the appeal proceedings, it was C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. argued that no proper opportunity was given to the assessee to produce the parties even though the parties were ready to appear before the authorities. Therefore, considering this request of the assessee, the matter was remanded back to the assessing officer with a direction to give one more opportunity to the assessee to produce the parties. However, even during the course of remand report proceedings which lasted for almost two years, the parties could not be produced in spite of several opportunities given by the assessing officer. Therefore, the addition of Rs.95,00,000/- was confirmed by the Ld.CIT(A) vide his order dated 17.06.2011. On further appeal, the appeal was allowed by Hon'ble ITAT on the ground that all the relevant documentary evidences were produced and thus, the genuineness of the transaction and identity and credit worthiness of the parties had been established. Thus, the addition of Rs. 95,00,000/- was deleted by Hon'ble ITAT vide its order dated 07-02-2014. The Department filed an appeal to Hon'ble Bombay High Court raising the following Questions of Law:
"Whether on the facts and in the circumstances of the case and in law, orders of the Tribunal was perverse in C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. deleting the addition of Rs.95,00,000/made u/s. 68 of the Act, relying only on the documentary evidence produced by the Respondent Company while ignoring the key factor that these entities were not- traceable at their given addresses?
Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in not appreciating the observations made by the Delhi High Court in Nova Promoters and Fin/ease Pvt. Ltd. 18 Taxman.com 217 wherein the Court has observed that cases of this type cannot be decided only on the basis of documentary evidences above and there is need to take into account the surrounding circumstances?
The Tribunal ought to have taken note of the fact that the assesses was not able to produce even a single party before the AO despite agreeing before the CIT(A) that it will produce all parties before the AO during Remand proceedings."
10.8 The Hon'ble Bombay High Court observed that the assessee had produced the documents such as PAN, confirmation, bank statement, allotment letters, and financial statements. The Balance Sheets showed significant funds to C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. invest in shares of the assessee. The Hon'ble Bombay High Court held that considering the voluminous documentary evidence, only because those persons had not appeared before the Ld.AO would not negate the case of the assessee. The Hon'ble Bombay High Court held as under:
"The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the assessee has also produced the entire record regarding issuance of shares i.e. allotment of shares to these parties, their share app/icationforms, allotment letters and share certificates, so also the books of account.
The Balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. Infrastructure (P.) Ltd. (supra) would be applicable in the facts and circumstances of the present case."
10.9 In the case of Orchid Industries P Ltd (supra), the AO issued 133(6) notices to the parties. Despite the fact that the parties did not appear before the AO, the Hon'ble Bombay High Court held that the transaction was genuine as the assessee produced voluminous documentary evidence.
10.10 Ld. AR has also drawn our attention and distinguish the facts of the present case with the facts contained in the case of Pr.CIT Vrs. NRA Iron and Steel Pvt. Ltd. (2019) 103 taxmann.com 48 (SC), it was submitted that in the present case, the investing companies have credibility and in this respect all the required documents and financials have already been record. It was also submitted that all the notices issued 133(6) of the Act were duly complied with and bank statement showing source of investing companies was also submitted. Thus, the decision in the case of Pr.CIT Vrs. NRA Iron and Steel Pvt. Ltd. (2019) 103 C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. taxmann.com 48 (SC) is not applicable to the facts of the present case as the facts in the above case (supra) were entirely different. 10.11 Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, we see no reasons to interfere into or deviate from the findings recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this ground raised by the revenue stands dismissed.
Ground No. 2
This ground raised by the revenue is general in nature, thus requires no specific adjudication.
Consequently, the appeal filed by the revenue stands dismissed.
C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. C.O. No. 47/Mum/2019 for AY 2009-10 14. Now we take up C.O. No. 47/Mum/2019 for AY 2009-10 filed by the assessee.
At the very outset, Ld. AR appearing on behalf of the assessee drawn our attention towards letter dated 30.01,19 which relates to condonation of delay in filing CO before Hon’ble ITAT. Ld. AR submitted that the present CO could not be filed within time because of the reasons mentioned in affidavit and thus there was a delay of 32 days in filing the present Cross Objection.
On the other hand, Ld. DR requested for dismissal of the said application.
We have heard the counsels for both the parties on the application for seeking condonation of delay and while taking into consideration the contents of application filed by the assessee, supporting affidavit, whereby the assessee has mentioned the reasons in detail for not filing the CO within limitation, therefore keeping in view the reasons mentioned in C.O. No. 47/Mum/2019 M/s Mayuresh Logistics Pvt. Ltd. the affidavit and following the principles laid down by Hon’ble Supreme Court in case of “Land Acquisition Collector Vrs. MstKitzi, AIR 1987 S.C. 1353/(1987) 167 ITR 471 (SC), we condone the delay of 32 days in filing the CO. Resultantly, this application is allowed and CO is admitted to be heard on merits.
Since we have already upheld the order of Ld. CIT(A) and dismissed the appeal of revenue. Therefore in view of our above findings in Cross Objection filed by the assessee has become academic.