BONANZA ONLINE.COM LTD.,MUMBAI vs. ITO - 6(1)(4), MUMBAI

AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:

This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-12/ITO-6(1)(4)/54/15-16 vide order dated 15.12.2016. The Assessment was framed by the Income Tax officer, Ward 6(1)(4), Mumbai (in short ‘ITO’/ AO’) for the A.Y. 2012-13 vide order dated ITAs No. 860/Mum/2017 25.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2. The only issue in this appeal of assessee is against the order of CIT(A) sustaining the addition made by the AO on account of share application money as unexplained under section 68 of the Act amounting to ₹ 50 lacs. For this assessee has raised the following three grounds: - “1. That the authorities below have erred in law and facts of the case in making and sustaining addition of Rs. 50,00,000/-. Thus the order passed by CIT (Appeals) is totally wrong, illegal and excess in nature.

2. That the learned C.I.T (Appeals) has wrongly upheld additions of Rs.50,00,000/- being share application money received without considering information and evidence submitted during the course of assessment proceeding. Thus the order passed by C.I.T (Appeals) confirming addition made merely on surmises and conjectures is totally wrong and illegal.

3. That learned CIT(Appeals) has erred in law and facts of the case in sustaining addition of Rs.50,00,000/- on wrong interpretation of Section 68 of the I T Act. Thus the order by CIT (Appeals) is totally wrong and illegal.”

ITAs No. 860/Mum/2017

Sr. No. Name of the investor Amount 1 Deepak Bhatkar 10,00,000 2 Himanshu Merchant 10,00,000 3 Pramod Hasora 10,00,000 4 Umesh Anjarlekar 10,00,000 5 Sanjay Thakaur 10,00,000 4. The AO require the assessee to explain the source of these share applicants. The assessee before AO explained that these five share applicants are employees of Bonanza Commodity Brokers P. ltd. and they do not have sufficient salary to make investment in the assessee company. When enquires were made by the AO, these share applicants stated that they have received loan from Bonanza Commodity Brokers P. Ltd. and in turn invested share application money with Bonanza Commodity Brokers P. Ltd. online dot.com. Ltd. The AO made addition by observing as under: - Sr. Name of the investor Amount Remark of the AO No. 1 Deepak Bhatkar 10,00,000 The appellant furnished the copy of ITR, 2 Himanshu Merchant 10,00,000 relevant bank statement, confirmations of these parties. The transaction in these cases 3 Pramod Hasora 10,00,000 are similar. Bank statement of Deepka 4 Umesh Anjarlekar 10,00,000 Bhatkar reveals that a sum of ₹ 10 lacs received from Bonanza Commodities received from Bonanza Commodities Brokers Pvt. Ltd. and this sum was given to the Bonanza Online.Com. He also received ₹ 10 lacs from Bonanza Portfolio ltd. which gets transferred to Bonanza Commodities Brokers Pvt. Ltd. balance sheet of all the four parties were not filed. There is no capacity of Shri Depak Bjhatkar to invest in the said company by way of share application money as seen from his return of income. 5 - - ITAs No. 860/Mum/2017 6 Sanjay Thakaur 10,00,000 With respect to this investor, the transaction are similar in nature as mentioned with respect to the investor Shri Deepak Bhatkar. Total 50,00,000 Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the AO by observing as under: - I have carefully perused the assessment order and the submission of the appellant. On perusal of the details submitted before me, I have made the following observations which is as under: - Sr. Name of the investor Remark No.

6. Sanjay Thakaur Shri Sanjay Thakur is a employee of Bonanza Portfolio Ltd and has shown gross total income of Rs 4,31,986/- in his income tax return. It is found in the bank statement of Shri Thakur that he had received fund of Rs 10 lacs on 23.02.2012 from Bonanza Commodities, which is utilised for acquiring shares of Bonanza online.com. Ltd. Thereafter, Shri Harsora received fund of Rs 10 lacs from Bonanza portfolio limited ITAs No. 860/Mum/2017 on 7.63.2012, which was utilised to repay the amount received from Bonanza commodities on 09.03.2016. There was no creditworthiness of Shri Harsora appearing in the bank statement. His salary income is not sufficient to repay the loan which is finally taken from Bonabza portfolio Limited Total In totality, it is seen That the employees of M/s Bonanza Portfolio Limited namely , Shri Deepak Bhatkar, Shri Himanshu Merchant, Shri Pramod Hasora / Shri Umesh Anjarlekar and Shri Sanjay Thakaur do not have sufficient salary to make investment in the appellant's company. Further, in all these cases, the fund is received for investment from Bonanza commodities and which was settled by finally taking loans from Bonanza Portfolio. The receipt of fund, making of investments and repayment of the loan by taking loan from employer (having group concerns) leads one to think as to why such as transactions are made. All these transactions appears to be pre planned. In all these transactions the actual fund was transferred from bonanza portfolio to bonanza online.com in the garb of share application money. The appellant has not furnished any evidence to conclude that these employees allotted the shares of Bonanza Online.com for which they have made the investment. In such circumstance, it cannot be held that these employees are genuine investors. Therefore, ITAs No. 860/Mum/2017 addition made by the AO u/s 68 on account of investment of these parties i.e. 10 lacs each) amounting to Rs 50, 00,000/- is confirmed.”

Aggrieved, now assessee is in second appeal before Tribunal.

5. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the above that these five persons namely Deepak Bhatkar, Himanshu Merchant, Pramod Hasora, Umesh Anjarlekar, Sanjay Thakaur has invested share application money of ₹ 10 lacs each in the assessee company. For example one Deepak Bhatkar filed copy of ITR, computation of income, relevant bank entries and confirmation. The AO on perusal of the same noted that the transactions in all the five cases are similar in nature. He noted that he has gone through the bank statement of Shri Deepak Bhatkar from where it is noticed that a sum of ₹ 10 lacs get credited in his account on 23.02.2012 from Bonanza Commodity Brokers P. ltd. and these amount again was invested on 28.02.2012 by way of share application money of ₹ Bonanza Online Dot Com i.e. the assessee company. The AO further noted in Para 5.3 that the above documents shows that Bonanza Commodity Brokers P. Ltd. is assessee’s associate concerns who gave this amount of ₹ 10 lacs to Deepak Bhatkar, who in turn give the same amount of ₹ 10 lacs to the assessee company as share application money. The AO further observed that this amount of ₹ 10 lacs received by Deepak Bhatkar is without consideration and no amount of any interest has also been paid by him. We find from the above facts that the immediate source of transaction is proved that it has come from Bonanza Commodity Brokers P. ltd. in the account of Deepak Bhatkar on 23.03.2012 and the same money was invested as share application in Bonanza Online Dot Com i.e. the assessee company on 28.02.2012. It 8 ITAs No. 860/Mum/2017 means that the immediate source of the transactions is proved and qua that Deepak Bhatkar has filed confirmation. The identity is proved, the genuineness of transactions is also proved by way of making it through banking channels and the immediate source of this transaction is clearly proved that it has come from Bonanza Commodity Brokers P Ltd. on 23.02.2012 in the account of the Deepak Bhatkar and from where it travelled to Bonanza Online Dot Com, the assessee company as share application money on 28.02.2012. There is no dilution of this transaction. From the above, we find that the AO has simply added this amount on the basis of conjuncture and surmise and without any basis. Exactly similar are the transaction as noted by the CIT(A) and the AO in other four parties, who have invested as share application money in the assessee company amounting to ₹ 10 lacs in each cases and same we have reproduced above. Even now before us, the assessee’s counsel claimed that these amounts are taken as loan by these five parties from Bonanza Commodity Brokers P. Ltd. and invested the same as share application money in Bonanza Online Dot Com, the assessee company. We are of the view that the ingredient of section 68 of the Act, are fulfilled and no further inquiry was carried out by the AO, that these transactions are not genuine. Hence, we are of the view that the addition made by AO and confirmed by CIT(A) cannot be sustained and hence, deleted.

Order pronounced in the open court on 30-01-2019. (राजेश कुमार / RAJESH KUMAR) (महावीर स िंह /MAHAVIR SINGH) (लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER) मुिंबई, ददनािंक/ Mumbai, Dated: 30-01-2019. स दीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS