DCIT 9(3)(1), MUMBAI vs. FERN INFRASTRUCTURE P.LTD, MUMBAI

आयकर अपील�य अ�धकरण “के” �यायपीठ मुंबई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAVISH SOOD, JM आयकर अपील सं./I.T.A. No. 3390/Mum/2016 (�नधा�रण वष� / Assessment Year: 2010-11) Dy. CIT-9(3)(1), M/s. Fern Infrastructure Pvt. Ltd. बनाम/ 215, Aayakar Bhavan, 2nd Floor, 6th Floor, Akurti Trade Centre, M. K. Marg, Mumbai-400 020 Road No. 7, Marol, MIDC, Vs. Andheri (E), Mumbai-400 093 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. AABCF 2322 C (Revenue) : (Assessee) आयकर अपील सं./I.T.A. No. 3141/Mum/2016 (�नधा�रण वष� / Assessment Year: 2010-11) बनाम/ M/s. Fern Infrastructure Pvt. Ltd. Dy. CIT-9(3)(1), Mumbai-400 093 Mumbai-400 020 Vs. �थायी लेखा सं./जीआइआर सं./PAN/GIR No. AABCF 2322 C (Assessee) (Revenue) : Revenue by : Shri Saurabh Deshpande Assessee by : Shri Vijay Mehta सुनवाई क� तार�ख / : 07.03.2018 Date of Hearing घोषणा क� तार�ख / : 31.05.2018 Date of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: These are cross appeals by the Revenue and the assessee arising out of the order of the ld. Commissioner of Income Tax (Appeals) dated 26.02.2016 and pertains to the assessment year 2010-11.

2 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. (i) "Whether on the facts and circumstances of the case, Ld. CIT (A) erred in deleting the addition made u/s 68 of the I. T. Act of Rs.38,12,79,600/- without appreciating the fact that the share application money received by the assessee from different entities were declared by the Sales Tax Department of Maharashtra as to be hawala dealer and the entities also did not respond to inquiries made by A. O." (ii) "Whether on the facts and circumstances of the case, Ld. CIT (A) erred in not appreciating the fact that the assessee had not produced any evidence before the AO and the Ld. CIT(A) admitted the additional evidence without appreciating the fact that assessee was to establish how and what prevented the assessee from filing the same evidence before the A.O". (iii) "Whether on the facts and circumstances of the case, Ld. CIT (A) erred in accepting the paper book submitted by the assessee and based on it has accepted the identity, genuineness and creditworthiness of the entities from whom the assessee has received monies". The appellant prays that the order of the CIT(A) on tjie above grounds be set aside and that of the AO be restored.

The assessee company is engaged in the business of buying and running

infrastructure facility and property development. The Assessing Officer observed that the

assessee has introduced share capital of Rs.38,12,79,600/- by way of "Issued, Subscribed

a Paid-up Share Capital" for 3,17,733 non-cumulative preference shares, details of which

are as under :-

Sr. No. Name of the shareholders No. of equity Amount (Rs.) shares 1 Sonal Cosmetic (Exports) Limited 16700 20040000 2 Sonal International Limited 16700 20040000 3 Sonali Sil – Chem Limited 16700 20040000 4 Dynachem Pharmaceuticals (Exports) Limited 16700 20040000 5 Aarika Steel and Metal Private ' Limited 8400 10080000 6 Priority Traders Private Limited 20900 25080000 7 Empower Industries India Limited 41700 50040000 8 Ealdor Retails Private Limited 20900 25080000 9 Tac Technosoft Private Limited 20900 25080000 10 Safford Mercantile Private Limited 8400 10080000

3 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 11 Benchmark Buildcon Private Limited 8400 10080000 12 Jagdamba Coplex Private Limited 8400 10080000 13 Proficient Merchandise Private Limited 8400 10080000 14 Nihal Mercantile Private Limited 8400 10080000 15 Prabhav Industries Limited 33400 40080000 16 Raw Gold Securities Private Limited 25033 30039600 17 Jyoti Foodtufe Limited 20900 25080000 18 Pasupati Enclave Private Limited 8400 10080000 19 Lilac Medicine Private Limited 8400 10080000 TOTAL 317733 381279600

of the above. The assessee failed to comply. Thereafter, the assessee submitted the

pass book and bank statements. The Assessing Officer issued summons u/s. 131(1) of

the Act to the above different shareholders. Majority of the notices were returned

unserved. The Assessing Officer also issued requisition u/s. 133 to the said

shareholders asking for details. The Assessing Officer noted that in the course of

hearing on 18.03.2013, the ld. Counsel of the assessee was finally asked to produce all

the shareholders on 22.03.2013 as the enquiries reveal non-existence of the

shareholders at the addresses provided by the assessee. In the background of the

aforesaid, the Assessing Officer held that identities of the shareholders have not been

proved. He noted that the assessee has merely furnished photo copies of share

application forms, balance sheets, relevant bank statements entries of the

shareholders. However, the Assessing Officer noted that even by doing so, the

assessee has not established the identity of the said shareholders as neither the

concerned persons have been produced nor their books of accounts been furnished.

4 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. The Assessing Officer further noted that as per the information available on the

official website of RoC(MCA), the preference shareholders listed hereinabove have

continued with the assessee company till 31.03.2012. The Assessing Officer noted

that the assessee has repeatedly conveyed that it is in close contact with all the said

concerns. However, the Assessing Officer noted that the assessee has not been able to

produce those persons. The Assessing Officer further observed that the assessee have

furnished photocopies of the share application and relevant bank statements to prove

the creditworthiness of the said shareholders. However, the Assessing Officer held

that these papers cannot be treated as evidence as they are not corroborated by the

records and books of accounts of the shareholders. The Assessing Officer further held

that by mere fact that the transactions have taken place through banking channels, it

cannot be constituted that the transactions are genuine as the relevant books of

account corroborating the said transactions has not been furnished by the shareholders

for verification. In these background, the Assessing Officer added the entire amount

as unexplained cash credit u/s. 68 amounting to Rs.38,12,79,600/-.

Income Tax (Appeals).

company has furnished the following details during the assessment proceedings:

Vide letter dt. 09.01.2013

5 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. e. Copy of correspondence and confirmation from preference shareholders showing payment made through RTGS or cheques f. Copy of bank statement in case of 4 shareholders g. Copy of share application forms h. Copy of board resolution of shareholder company Vide letter dt. 14.01.2013 b. Copy of acknowledgement of return of income & Balance sheet as on 31.03.2010 of 6 preference shareholders • Safford Mercantile Private Limited • Pasupati Enclave Private Limited • Nihal Mercantile Private Limited • Benchmark Buildcon Private Limited • Jagdamba Complex Private Limited • Aarika Steel and Metal Private Limited

Vide letter dt. 23.01.2013 c. Copy of acknowledgement of return of income & Balance sheet as on 31.03.2010 of 7 preference shareholders • Tac Technosoft Private Limited • Priority Traders Private Limited • Lilac Medicines Private Limited • Jyoti Foodstuff Limited • Ealdor Retails Private Limited • Prabhav Industries Limited • Empower Industries India Limited d. Valuation report of Chartered Accountant justifying issue of shares at premium, the rate of Rs. 1251/- per share Vide letter dt. 01.02.2013 c. Copy of acknowledgement of return of income & Balance sheet as on 31.03.2010 of 4 preference shareholders • Sonal Cosmetic (Exports) Limited • Sonal International Limited • SonalSil - Chem Limited • Dynachem Pharmaceuticals (Exports) Limited d. Statement showing details of Bank Accounts of preference shareholders (Name and address of Bank alongwith respective bank account numbers) The appellant company has also submitted bank statement of its own reflecting payment received from above shareholders.

Assessing Officer has issued summons u/s. 131. He also noted that the Inspector has

6 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. been deputed to find out some of the shareholders. The assessee made elaborate

submissions before the ld. Commissioner of Income Tax (Appeals). The ld.

Commissioner of Income Tax (Appeals) noted that the assessee has submitted various

documents by way of additional evidences which include the following:

i. Copy of acknowledgement of return of income and financial statement in case of Proficient Merchandise Private Limited&Raw Gold Securities Limited for A.Y. 2010-11 ii. Copy of signed application for applying to the issue of preference shares and board resolution of Priority Traders Private Limited iii. Copy of PAN card iv. Bank statements of shareholders v. Copy of signed confirmation for making investment in the preference shares of appellant company of the remaining shareholders.

these evidences and some of the documents and register were destroyed in fire on

03.12.2011. The ld. Commissioner of Income Tax (Appeals) remanded the additional

evidence to the Assessing Officer. Firstly, in the remand report, the Assessing Officer

requested not to accept the additional evidences. However, the ld. Commissioner of

Income Tax (Appeals) proceeded to accept the same. The ld. Commissioner of

Income Tax (Appeals) further noted that the evidences and details furnished are

almost the same which were furnished before the Assessing Officer, except a few

additional evidences. Thereafter, the ld. Commissioner of Income Tax (Appeals)

noted that during the remand report, the Assessing Officer had issued fresh notice u/s.

133(6) dated 29.04.2015 to the shareholders seeking them to file certain details. In

response, 18 shareholders have filed their reply and submitted the details. The

Assessing Officer observed that they have failed to furnish any new evidence.

7 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. Thereafter, the ld. Commissioner of Income Tax (Appeals) referred to an Inspectors

report which shows that the some of the parties actually existed. The ld.

Commissioner of Income Tax (Appeals) further examined the identity aspect of the

shareholders. He also examined the creditworthiness of the shareholders individually

and according to the discussion, he deleted all the additions except one. The order of

the ld. Commissioner of Income Tax (Appeals) in this regard may be gainfully

referred as under:

4.2.3 Thus from a bare reading of the exposition of law relating to the power of the Commissioner of Income-Tax (Appeals) to admit additional evidence as made by the Bombay High Court in the above cited case, it is evident that even if repeated opportunities were given to the appellant to produce evidence and if the appellant does not suomotu produce any additional evidence, in the spirit of justice and fair play, it is incumbent on the first appellate authority, being quasi-judicial authority, to require the appellant to produce requisite evidence or to make necessary inquiry and admit any such fresh and additional evidence, by virtue of section 250 (4) and (5) read with sub-rule (4) of Rule 46 A. 4.2.4 In the present case, the details submitted by the appellant are relevant to the grounds raised in appeal as the major reasons for addition made in the assessment. The appellant has clearly stated that the appellant was not provided with enough time of submitting other evidences. There was no intentional failure on the part of the appellant and evidences being material and supportive, and in the interest of justice the evidences produced by the applicant are admitted and taken on record after considering the principles laid down by the jurisdictional High Court in the case of Smt Prabhavati S. Shah. Further, the appellant had submitted most of the details during the assessment: proceedings itself as can be seen from the record. Only part of the details are submitted now. Even the said fact is accepted by the AO in para 15 of the remand report which is reproduced heiein below, as pointed cut by the AR of die appellant . "The evidences and details furnished now are the same as were furnished before the AO ' V except, few additional evidences which were already furnished before the CIT(Appeals)." "4.2.5 During the remand proceedings, the AO had issued fresh notices u/s. 133(6) dt. 29.04.2015 to the shareholders who have subscribed shares of the appellant company asking them to file certain details which is reproduced in the remand report at para 9. In response to the above, 18 shareholders have filed the reply and submitted the details summary of which is reproduced in para 12 of the remand report. After examining the details and evidences filed by the shareholders, the AO observed that they have failed to

8 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. furnish any new evidences and information to establish the credit worthiness of the parties and the genuineness of the share application money claimed to be invested in appellant company during the year. On perusal of the replies filed by the shareholders it can be observed that:

i. Notices were duly served on the given addresses and all the parties, except one, had filed their replies. Thus the parties were traceable at the given addresses. This proves their identity which is further supported by the documentary evidences filed by the appellant company during assessment proceeding and appellate proceeding. ii. AO had specifically asked the shareholders the source of making investment in the shares of the appellant company and shareholders have explained the source of the investment to the AO in their replies. iii. The shareholders have filed the confirmation of investing in the shares of appellant company and have further confirmed that they still hold the shares of the appellant company. iv. Alongwith confirmation, copy of financials were submitted which shows the credibility of the shareholder and bank statement were also submitted proving that the transaction is genuine, v. Copy of valuation report was also submitted which was considered as the basis for determining the premium for the share investment. vi. Out of 19 parties, 18 parties have replied to the notice u/s. 133(6) and one party i.e. Empower India Ltd had not replied. It was brought to my notice that the said party refused to cooperate and submit their details due to certain differences with the appellant company. However the appellant company submitted the details with respect to the said company.

4.2.6 Further, the Inspector was deputed to visit the premises of the following shareholders and to verify whether they actually exist in the given addresses. After visiting the premises, the Inspector has stated in his report that the following parties actually existed at the given addresses. Inspector's report is attached herewith; i) Aarika Steel and Metal Private Limited ii) Safford Mercantile Private Limited iii) Benchmark Buildcon Private Limited iv) Jagdamba Complex Private Limited v) Proficient Merchandise Private Limited vi) Nihal Mercantile Private Limited vii)Pasupati Enclave Private Limited

4.2.7 The appellant company had filed the copies of the replies received in response to notice u/ s. 133(6) notices in its submission and stated that the shareholders not only furnished the documentary evidences but also provided the explanation asked for by AO. Thus, AO is not correct in stating that they have failed to furnish any new evidences or information to establish the credit worthiness of the parties and the genuineness of the share application money claimed to be invested in the appellant company during the year.

9 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 4.2.8 As regards identity of the shareholder it has been stated in the remand report that the appellant company has merely furnished some documents but has not produced the parties for examination which AO wanted to carry out in the assessment proceedings. In response to the same the appellant company has submitted that identity is not said to be proved only if the parties are produced before Ld AO. Other documentary evidences such as PAN, IT return acknowledgement, financials of the company and the fact that notices u/s, 133(6) were delivered to the given addresses should not be ignored which proves the identity of the shareholder. And relied on decision in case of ACIT v. Kisco Casting (P.) Ltd (2013) 34 taxmann.com 37 (Chandigarh - Trib). According to the appellant, assessee company was ready to produce the parties before A.O. during remand proceedings but he did not insist it after receiving replies u/s,133(6) of the Act. '

4.2.9 Further the appellant company has made reference to the case of M/s. Citygold Education Research Private Limited wherein same issue was raised for A.Y. 2010-11. It has been stated that in the above mentioned company following shareholders were holding shares which are also shareholder of the appellant company. They appeared before the DDIT(Inv) at Ahmedabad and Baroda and parties at Ahmedabad gave their statements also in which they have confirmed that they held shares in the abovementioned company. Further they also explained business activities carried on by them and also produced audited accounts, investment register, return of income, bank statement before DDIT(Inv), Unit - 1(3), Ahmedabad. It not only proves that the above parties actually exists but also proves that they have capability to invest in the shares "f mediant company The details of companies examined by DDIT, Unit-1 (3) Ahmedabad is as under:

i. M/s. Prabhav Industries Ltd., Baroda ii. M/s. Sonal International Ltd. iii. M/s. SonalSilChem Ltd iv. M/s. Sonal Cosmetic Export Ltd v. M/s. Dynachem Pharmaceuticals Export Ltd vi. M/s. Raw Gold Securities Pvt Ltd. 4.2.10 The appellant submitted that from the facts, explanation, documentary evidences and also judicial pronouncements proves that addition u/s. 68 is not correct since, the identity and creditworthiness of the shareholders and genuineness of the transaction is proved beyond doubt. The appellant place reliance on following case laws in support that in the circumstances of the facts of the case of the appellant no addition under section 68 can be made on account of unexplained cash credit:

i. ACIT v. Kisco Casting (P.) Ltd (2013) 34 taxmann.com 37 ii. CIT v. Creative World Telefilms Ltd. (2011) 15 taxmann.com 183 (Bom)(HC) iii. CIT v. Orbital Communication (P) Ltd (2010) 327 ITR 560 (Delhi) iv. CIT v. Shree Rama Multi Tech Ltd. (2013) 34 taxmann.com 177 (Gujarat) v. CIT v. Orissa Corpn. (P.) Ltd. (1986) 25 TAXMAN 80F (SC) vi. CIT v. Apex Therm Packaging (P.) Ltd (2014) 42 taxmann.com 473 (Guj)

10 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. vii. CIT vs. MoraniAutomotives (P.) Ltd (2014) 45 taxmann.com 473 (Rajasthan) viii. CIT v. Nipuan Auto (P.) Ltd (2014) 49 taxmann.com 13 (Delhi) ix. CIT v. Vacmet Packaging (India) (P.) Ltd (2014) 45 taxmann.com 204 (Allahabad) x. CIT v. Misra Preservers (P.) Ltd. (2013) 31 taxmann.com 214 (Allahabad) xi. CIT v. Expo Globe India Ltd. (2014) 51 taxmann.com 208 (Delhi) ;;-::---,. xii. ACIT vs. Bahubali Dyes Ltd (2015) 55 taxmann.com 357 (Delhi - Trib)

5.1 Identity of shareholder 5.1.1 As per the AO, appellant company failed to prove the identity of the shareholders because the appellant company did not produce them or failed to ensure their compliance for verification of the transactions and failed to furnish any evidence to prove the identity of the said preference shareholders. AO also relied on the report of the inspector who could not find 7 shareholders on the addresses provided by the appellant company. 5.1.2 Merely not producing shareholders before the AO would not mean that the appellant company has not proved the identity of the shareholders. Ld. AO failed to consider other documentary evidences such as copy of acknowledgement of return of income, balance sheet, bank account details of the shareholders, confirmations of shareholders etc. which were submitted during assessment proceedings proving the identity of the shareholders. The appellant company has also filed share application forms

11 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. received from shareholders and copy of correspondence with the shareholders. It was contended that shareholders were not under command of appellant. They were not ready to ;•-; "come on requests of appellant. 5.1.3 AO himself has stated in the order that as per the information on the official website of the ROC (MCA) the preference shareholders have continued with the appellant company till 31.03.2012. This, itself, proves the identity of shareholder as they were registered with ROC and their information was available on the website of the ROC. 5.1.4 Further during the remand proceeding the notices u/s. 133(6) were duly served to the shareholders and all the shareholders, except one, filed their replies with the AO. 5.1.5 Inspector posted in office of CIT(A)-16 visited the premises of the 7 shareholders and as per his report those parties actually existed on the addresses which are as per ROC site.

5.1.6 Further in case of M/s. Citygold Education Research Private Limited which is a group concern of the appellant company, same issue was raised for A.Y. 2010-11. The following parties have also invested in M/s. Citygold Education Research Private Limited.

a. M/s. Prabhav Industries Ltd, Baroda b. M/s. Sonal International Ltd c. M/s. SonalSilChem Ltd d. M/s. Sonal Cosmetic Export Ltd e. M/s. Dynachem Pharmaceuticals Export Ltd f. M/s. Raw Gold Securities Pvt Ltd

The above parties are shareholders of the appellant company also. In case of M/s. CityGold Education Research Private Limited, the AO had issued Commission at Baroda and Ahmedabad to verify the identity of the above 6 parties. The copy of the report of the AO along with report of the Commission issued is on record of CIT(A)-16.

On perusal of the report of DDIT(Inv)-!, Baroda dt. 04.06.2014, it can be seen that M/s. Prabhav Industries Ltd had submitted copy of return of income for AY 2010-11, annual report for FY 2009-10, ledger account of the abovementioned company for the period 01.04.2009 to 31.03.2011 and copy of bank statements. It has been stated that the said company actually exists. It has been also stated that for the source of investment the said company had submitted its bank statement and also the company had enough of unsecured s 'VTo^ms^and reserves and surplus.

DDIT (Inv), Unit - 1(3), Ahmedabad vide letter dt. 02.03.2015 submitted his report wherein statement recorded on oath u/s. 131(1A) r.w.s. 131(1) of Shri Vimal Nemchand Gala (Director of M/s. Sonal International Ltd, M/s. Sonal Sil Chem Ltd and M/s. Sonal Cosmetic Export Ltd and authorized for the deposition by M/s. Dynachem Pharmaceuticals Export Ltd) and Shri Hiren C. Chhateawala (Consultant in M/s. Raw Gold Securities Pvt. Ltd.) was attached. My ld. Predecessor had considered the statement recorded by DDIT(Inv) Unit 1 (3), Ahmedabad and DDIT(Inv) Baroda in the case of M/s.

12 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. Citygold Education Research P. Ltd. in order No. CIT(A)-16/ITO 8(1)(3)/IT 178/2012-13 dated 22.05.2015. The observations of QT(A)-16 i.e. my predecessor is reproduced herein below:

"5.14 Report of the DDIT, (INV) Unit l-(3) dated 2-3-2015 is sub the AO. The DDIT (INV), Ahmedabad has also forwarded the states:-: Shri Vimal Nemchand Gala, director and authorised for the deposition . M/s Dynachem Pharmaceuticals (Exports) Limited, Sonal Internationa^ Limited, SonalSil - Chem Limited, Sonal Cosmetic (Exports) Limited. 5.15 Prom the statement of Shri Vimal Nemchand Gala it can be noticed as follows:

i. Business activities of the companies were explained. They are engaged in business of trading in chemicals (Ans to Q 4) ii. Confirmed the transaction of subscribing preference share of the appellant company. (Ans to Q 8) in. Details about business activities (Real estate) of appellant company were also provided. (Ans to Q 9) iv. The shares were subscribed for the purpose of investment and through common acquaintances. (Ans to Q9) v. Investment registers, audited accounts, return of income and bank statements were provided for the FY 2009-10 of all four companies. (Ans to Q 10,11) vi. Source of funds for making investment in the appellant company were explained. It was explained that the funds have been paid out of the share capital and short-term loans and advances of the company. He submitted bank statements of all the 4 companies highlighting the payments made to the appellant.(Ans to Q 12). It was again stated that the companies had surplus funds in the form of share capital The said funds were extended as loans to various parties. The investments have been made out of the share capital and the short-term loans taken from other parties or loan repayment is received by these companies (.(Ans to Q 13) vii. Justification of investing in the shares issued with premium of appellant company was provided. It is stated that the appellant company was coming up with a township at Khalapur and looking at the prospective profits of the said project they have invested in the said company. He submitted a copy of the project report of the said project. .(Ans to Q 17) . viii. It was confirmed that shares are still held with the all four companies and share certificates issued by the appellant company to all the four companies were submitted.,(Ans to Q 18,19) Thus, from the above statement recorded on oath and the documents provided by Shri VimolNemchand Gala, the identity & creditwortfuness of Lid, M/ s. SondSHChem Ltd, M/ s. Sonal Cosmetic Export Ltd. and M/s. Dyna Chem Pharmaceuticals Export Ltd. and genuineness of the transaction with the said companies is proved beyond doubt."

5.1.7 Thus from the above statement recorded on oath by the Department itself proves the identity and creditworthiness of the above mentioned 6 companies from which assessee company had received share application money.

13 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 5.1.8 It was also submitted that during remand proceedings appellant was ready to produce the principal offices companies from which share application money was received before A.O., but after receipt of responses u/s.l33(6) A.O. did not insists for it. ^ 5.1.9 Keeping in view the above aspects, it can be said that identity of the shareholders stands proved.

5.2 Creditworthiness of the Shareholder 5.2.1 LAO has relied on the statement recorded u/s. 131 on oath of Shri Jagdish Kumar Gupta, Director of J. Kumar Infraprojects Limited in which he has stated that that the said company has received bogus funds in the form of share application money pending allotment as on 31.03.2006 from a few companies whose credit worthiness is doubtful. In the said list, name of 3 companies were also appearing. 5.2.2 The said 3 companies were providing bogus funds to M/s. J Kumar Infraprojects Ltd, but it does not prove that the said companies has made bogus investment in the appellant company also. No such confession is available for investment in appellant company. Moreover, the investment made in the appellant company is after the date of search on J.Kumar Infra Projects Ltd i.e. 26.08.2009. 5.2.3 As regards issue of notice u/s. 133(6) to the bank and observation of AO that KYC forms do not reveal any particulars or specifics as may establish the identity of the person behind the shareholder company, it has been stated by the appellant that they are duly signed by the director of the company and also name of the authorised director is mentioned on the form and bank A/c itself proves the identity. 5.2.4 The appellant company had explained individual capacities of each shareholders to''snow its credibility to invest in shares of appellant company which is discussed in subsequent paragraphs of this order.

5.3 Genuineness of the transaction 5.3.1 AO stated that since appellant company had failed to prove the identity and creditworthiness of the shareholders, genuineness of the transaction is also not substantiated. 5.3.2 Although the mere fact that transaction have been taken through the banking channel would not constitute evidence of the genuineness of the transactions, however the fact cannot be ignored that the relevant books of accounts of the shareholders and their confirmation are also submitted. Further during the remand proceedings all the shareholders, except one, replied to the notice u/s. 133(6) and explained their source of investment also. Thus genuineness of the transaction cannot be doubted. 5.3.3 Further the AO had stated that notices were issued u/s. 133(6) to the bankers, shareholders and observed that there appears the name of the persons who were the same persons as appearing in the list of Hawala dealers issued by the Sales Tax (VAT) Department, State of Maharashtra, from the official website of the Sales Tax (VAT) Department. 5.3.3 It is rightly said by the appellant that AO has not passed any adverse comments on the bank statements of the shareholders. AO had nowhere mentioned that there were immediate cash withdrawals in the bank statement or there were many debit or credit entries. Also AO has not doubted the fact that the shareholders had enough balance to make the investment in the appellant company. Thus, capacity and credibility of the

14 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. shareholders is proved beyond any doubt. Further, their names appear in the list of Hawala dealers which is issued by Sales Tax Department which has no connection with the investment transaction with the appellant company. How the said information, collected by AO, relates to share applicants are not given to the appellant company. 6, Now let's discuss the identity, credibility and genuineness of transactions in respect to individual shareholders: 1. In the case of Sonal Cosmetics (Exports) Limited (Rs. 2,00,40,000/-), the said company has produced the 18th Annual Report in the year under consideration. This shows that it is an old company. The financial statement of the above company reveals the following: i. Equity share capital of Rs. 12,06,00,000 and securities premium of Rs.12,06,00,000. ii. Gross Block of Fixed Assets of Rs.3,21,21,162 iii. The company has huge investments of Rs.11,07,19,768. 1.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company. 1.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. Further, in case of M/s. Citygold Education Research Private Limited, the said party appeared before DDIT (Inv) and explained business activities carried on by them and also produced audited accounts, investment register, return of income, bank statement before DDIT(Inv), Unit - 1(3), Ahmedabad. The observation of the CIT(A)-16 i.e. my predecessor in case of abovementioned company is reproduced herein below: "5.9.3 ........... Further, in the statement recorded on oath u/s. 131 of Shri. Vimal Gala, director of Sonal Cosmetics (Export) Limited, he has confirmed the transaction of investing in the preference shares of the appellant company. The observation made by the AO were before the above statement taken on oath. However now, there is no room for doubt." 1.3 The appellant had also filed its confirmation also on page 11 of paper book where the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS & cheques. 1.4 The said company are holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 1.5 Hence addition made in the assessment is not correct. 2. In case of Sonal International Ltd (Rs. 2,00,40,000), the said company has produced 17th Annual Report in the year under consideration. This shows that the company is a very old company. The financial statement of the above company reveals the following: i. Equity share capital of Rs.6,27,00,000. ii. Gross Block of Fixed assets of Rs. 2,92,33,813. iii. The company has huge investments of Rs. 3,13,62,987 2.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company.

15 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 2.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. Further, in case of M/s. Citygold Education Research Private Limited, the said party appeared before DDIT (Inv) and explained business activities carried on by them and also produced audited accounts, investment register, return of income, bank statement before DDIT(Inv), Unit - 1(3), Ahmedabad. The observation of the CIT(A)-16 i.e. my predecessor in case of abovementioned company is reproduced herein below:

“5.13.5 The above company has specifically confirmed the transaction of making investment in the shares of appellant company vide confirmation filed by the appellant at page 254 of PB and also in the statement recorded on oath of u/s. 131 of Shri Virnal Gala, Director of Sonal International Limited, he has confirmed the transaction of investing in the preference shares of the appellant company. The observation made by the AO were before the above statement taken on oath. However now, there is no room far doubt."

2.3 The appellant had also filed its confirmation also on page 21 of paper book where the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS & cheques. 2.4 The said company were holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 2.5 Hence addition made in the assessment is not correct

16 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 3.3 The appellant had also filed its confirmation also on page 31 of PB where the the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS & cheques. 3.4 The said company are holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 3.5 Hence addition made in the assessment is not correct

4.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company. 4.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. Further, in case of M/s. Citygold Education Research Private Limited, the said party appeared before DDIT (Inv) and explained business activities carried on by them and also produced audited accounts, investment register, return of income, bank statement before DDIT(Inv), Unit - 1(3), Ahmedabad. The observation of the CIT(A)-16 i.e. my predecessor in case of abovementioned company is reproduced herein below: "5.12.5 The above company has specifically confirmed the transaction of making investment in the shares of appellant company vide confirmation filed by the appellant at page 224 of PB and also in the statement recorded on oath of u/s. 131 of Shri. Virnal Gala, authorized for the ^deposition by Dynachem Pharmaceuticals (Exports) Limited, he has confirmed the transaction of investing in the preference shares of the appellant company. The observation made by the AO loere before the above statement taken on oath. However now, there is no room for doubt." 4.3 The appellant had also filed its confirmation also on page 42 of PB where the the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS &cheques. 4.4 The said company were holding till date the shares of the appellant company as stated by it in its reply to notice u/s, 133(6). 4.5 Hence addition made in the assessment is not correct.

17 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 5.3 The appellant had also filed its confirmation also on page 54 of PB where the the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS &cheques. 5.4 The said company were holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). . 5.5 Hence addition made in the assessment is not correct.

7.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company. 7.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. 7.3 The bank account of the said company reflects the payment made to the appellant company for investing in shares. But there is no entry in bank accounts which reflects that the appellant company has paid back the amount of investment.

18 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 7.4 The appellant had also filed its confirmation also on page 96 of PB where the the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS & cheques. 7.5 However, the above party did not reply to the notice u/s. 133(6). In absence of any confirmation from M/s. Empower Industries India Ltd. onus of proving/ identity creditworthiness and genuineness of transaction is not discharged. Hence addition of Rs.5,00,40,000/- made in the assessment is confirmed.

19 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd.

20 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 12.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. 12.3 The bank account of the said company reflects the payment made to the appellant company for investing in shares. But there is no entry in bank accounts which reflects that the appellant company has paid back the amount of investment. 12.4 The appellant had also filed its confirmation which is placed on page 184 of paper book where the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS &cheques. 12.5 The said company is holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 12.6 "Hence addition made in the assessment is not correct

21 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 14.5 The said company is holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 14.6 .Hence addition made in the assessment is not correct

22 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 16.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company. 16.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. Further, in case of M/s. Citygold Education Research Private Limited, the said party appeared before DDIT (Inv) and explained business activities carried on by them and also produced audited accounts, investment register, return of income, bank statement before DDIT(Inv), Unit - 1(3), Ahrnedabad. The observation of the CIT(A) - 16 i.e. rny predecessor is reproduced herein below: "5.10.4 Further, Report of the DDIT,(Inv) Unit I-(3) dated 2-3-2015 is submitted by the AO. The DDIT (INV), Ahrnedabad has also forwarded the statement of Shri Hiren C Chhatrawala, authorized by the Board of Director for the deposition by M/s. Raw Gold Securities Pvt Ltd. following observations can be made from the statement of Shri Hiren C. Chhatrewala: i. Business activities of the companies of trading in commodities especially through commodity exchanges were explained. (Ans to Q 4) ii. Confirmed the transaction of subscribing preference share of the appellant company and submitted share application form. (Ans to Q 7) iii. Details about business activities of appellant company were also provided. (Ans toQ8) iv. The. shares were subscribed for the purpose of investment and through common acquaintances. (Ans to Q 8) v. Investment registers, audited accounts, return of income and bank statements were provided for the FY 2009-20 of all four companies. (Ans to Q 9,10) vi. Source of funds for making investment in the appellant company were explained. It was explained that the company had surplus funds inform of share capital. The said funds are extended as loans to various parties. The investments have been made out of the share capital and the short-term loans taken from other parties or loan repayments received by these companies. .(Ans to Q 12) vii. It was confirmed that shares are still held with the all four companies and share certificates issued by the appellant company to all the four companies were submitted. (Ans to Q 75,26) Thus, from the above statement recorded on oath and the documents provided by Shri Hiren C. Chhatrewala, the identity & creditworthiness of M/s. Raw Gold Securities Pvt Ltd and genuineness of the transaction with the said company cannot be doubted.” 16.3 The bank account of the said company reflects the payment made to the appellant company for investing in shares. But there is no entry in bank accounts which reflects that the appellant company has paid back the amount of investment 16.4 The appellant had also filed its confirmation which is placed on page 248 of paper book where the above company has confirmed of having applied for the shares at premium and has given details of payments made through RTGS & cheques. 16.5 The said company are holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 16.6 Hence addition made in the assessment is not correct.

23 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd.

24 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. ii. The company has investment of Rs. 7,90,40,000/- 19.1 19.1 The above details prove the credibility of the company and capacity to make investment in the appellant's company. 19.2 Identity was proved by submitting PAN card and registration address. Also notice u/s. 133(6) were duly served. 19.3 The bank account of the said company reflects the payment made to the appellant company for investing in shares. But there is no entry in bank accounts which reflects that the appellant company has paid back the amount of investment 19.4 The appellant had also filed its confirmation which is placed on page 90 of additional evidence paperbook where the above company has confirmed of having applied for the shares at premium and lias given details of payments made through RTGS & cheques. 19.5 The said company is holding till date the shares of the appellant company as stated by it in its reply to notice u/s. 133(6). 19.6 Hence addition made in the assessment is not correct.

25 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. In the appellant's case, the appellant along with the bank account details of the shareholders, has provided balance sheet of shareholders, confirmation of the shareholders and many other documentary evidences which show the identity and creditworthiness of the shareholder. iii. In case of Vijay Talwar v. CIT (2011) 330 ITR 1 wherein it is held that: "24. ....All the authorities below, in particular the Tribunal, /;," in unison that the assessee did not produce any evidence to re:".: presumption drawn against him under section 68 of the Act, by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz., realisation from the debtors of the erstwhile firm, in the opinion of the Assessing Officer, was not satisfactory. It is well settled that in view of section 68 of the Act, ivhere any sum is found credited in the books of the assessee for any previous year, the same may be charged to Income-tax as the income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory."

In the above case the assessee did not furnish any evidence which substantiates his claim. But the appellant company has submitted documentary evidences such as copy of correspondence with the shareholders, balance sheet of shareholders, bank account details of the shareholders, copy of share application and board resolution.

In view of the above analysis the case laws relied upon by the AO do not support him as the facts of the appellant's case proves all the necessary requirements. 8. Now I will refer to the cases relied upon by the appellant. i. In case of CIT v. Creative World Telefilms Ltd. (2011) 15 taxmann.com 183 (Bom)(HC) assessee had received share application money from shareholders. In order to prove genuineness of said transactions, assessee company had given names and addresses of shareholders etc. Assessing Officer rejected assessee's explanation and added amount so received to its taxable income. Tribunal, however, set aside addition made by Assessing Officer holding that if share application money was received by assessee- company from alleged bogus shareholders, whose names were given to Assessing Officer, then department could always proceed against them and if necessary reopen their individual assessments. Assessing Officer should have found out details of shareholders through PAN cards, bank account, etc., so as to reach them because all relevant details and particulars were given by assessee to Assessing Officer. Therefore, impugned order passed by Tribunal was upheld. ii. CIT v. Orbital Communication (P) Ltd (2010) 327 ITR 560 (Delhi) The assessee had produced substantial evidence to establish the identity and creditworthiness of creditors and genuineness of share application but failed to produce creditors; and on that ground, the Assessing Officer added share application money as the assessee's undisclosed income under section 68. Held that, non-production of creditors could not be considered to negate the evidentiary value of rest of the material and share application money could not be regarded as undisclosed income of the assessee under section 68.

26 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. iii. In the case of Shree Rama Multi Tech Ltd. v CIT (2013) 34 taxmann.com 177 (Guj) the assessee company had furnished complete details of receipt of share application money along with share application forms, names, addresses, PAN and other relevant details of share applicants. On the basis of this it was held by High Court of Gujarat that share application money could not be added as cash credit under section 68. iv. In case of CIT v. Orissa Corpn. (P.) Ltd. (1986) 25 TAXMAN 80F (SC) the Supreme Court affirmed the decision of High Court wherein Tribunal deleted the impugned addition as well as the penalty imposed on the grounds that (i) assessee have given the names and addresses of the creditors, (ii) it had also produced before ITO letters of confirmation, the discharged hundis and particulars of the different creditors including their general index numbers with the Income-tax Department and (iii) the revenue, apart from issuing notices under section 131 to creditors at instance of assessee, did not pursue the matter further, nor it examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. v. In case of CIT v. Apex Therm Packaging (P.) Ltd (2014) 42 taxmann.com 473 (Guj) it was held that when full particulars, inclusive of confirmation with name, address and PAN Number, copy of income tax returns, balance sheet, profit and loss account and computation of total income in respect of all creditors/lenders were furnished and when it had been found that loans were furnished through cheques and loan account were duly reflected in balance sheet, Assessing Officer was not justified in making addition. vi. In case of CIT vs. Morani Automotives (P.) Ltd. (2014) 45 taxmann.com 473 (rRajasthan) it was found that contributors were all Income tax assessees and their return of income and copies of confirmation along with PAN numbers had been furnished by assessee and also identity of cash creditors were established. It was thus held that addition was not justified.

vii. A regards share application money, in the case of CIT v. Nipuan Auto (P.) Ltd. (2014) 49 taxmann.com 13 (Delhi), the identity of the two companies which ir-sister companies stood established. Furthermore, this is not a case of mere furnishing of copies of bank accounts of the subscribers. But, in the present case, as noticed by the Commissioner (Appeals) the assessee had filed the IT returns of the subscriber companies as also their bank statements and balance sheet in addition to the confirmation letters from the said two companies. A copy of the Form No. 2 filed by the assessee with the ROC regarding the allotment of shares to the said two companies had also been furnished. It is in this backdrop that the Commissioner (Appeals) had concluded that the assessee had been able to prove its case and that the Assessing Officer could not shift the burden back on to the assessee-company without the Assessing Officer producing any tangible material to doubt the veracity of the documents furnished by the assessee. The Tribunal concurred with the views taken by the Commissioner (Appeals).

viii. The Tribunal in case of CIT v. Vacmet Packaging (India) (P.) Ltd (2014) 45 taxmarm.com 204 (Allahabad) held that the assessee had filed document evidence in order to prove the genuineness of the share application money consisting of: (i) share application forms; (ii) copies of bank accounts of the share applicants; (iii) copies of the income tax returns of the share allottees; (iv) balance sheets and (v) copies of share

27 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. allotment certificates and of the Board's resolution of the share applicants. The identity of the applicants was held to be established by the production of copies of the PAN cards and registration certificate with the Registrar of Companies. On this basis, the Tribunal held that the assessee had discharge the onus which lay on it to prove the identity of the applicant companies, their creditworthiness and genuineness of transactions.

ix. In case of CIT v. Misra Preservers (P.) Ltd. (2013) 31 taxmann.com 214 (Allahabad) Assessing Officer made addition to assessee's income in respect of unexplained share application money received from various persons. In appellate proceedings, assessee brought on record evidence establishing identity of share applicants. It was also proved that they made payment by cheques and most of them were assessed to tax. Tribunal thus, set aside addition made by Assessing Officer. Impugned order passed by Tribunal did not require any interference. x. In case of CIT v. Expo Globe India Ltd. (2014) 51 taxmann.com 208 (Delhi) assesses received share application money during relevant assessment year. Assessing Officer held that assessee had not given satisfactory explanation and included entire amount under section 68. On appeal, assessee furnished income-tax returns, balance sheets, ROC particulars and bank account statements of shareholders. Commissioner (Appeals) considering said materials held that share application money or source of share application money had been satisfactorily explained and deleted addition. Tribunal confirmed order of Commissioner (Appeals). Entire issue being purely factual, no interference was called for with Tribunal's order.

xi. In case of ACIT vs. Bahubali Dyes Ltd (2015) 55 taxmann.com 357 (Delhi - Trib) it was held that share capital as well as share premium/ reserve of all companies was several times more than amount invested by them in share capital of assessee company proving their creditworthiness. Thus, no addition could be made on account of unexplained cash credit. xii. In case of ACIT v. Kisco Casting (P.) Ltd (2013) 34 taxmann.com 37 (Chandigarh - Trib) assessee-company shown receipt of certain sum on account of share application money. In assessment proceedings, assessee had filed affidavit, confirmation indicating number of shares, amount invested, mode of investment as cheque, bank account number, source of funds etc., to prove identity and existence of subscribers as also evidence of investment in shares through banking channels. Assessing Officer made addition of said share capital money, as undisclosed income of assessee, on ground that persons who subscribed to share capital were not produced before him. Since Assessing Officer had failed to bring on record any relevant and credible material to neutralize documentary evidences filed by assessee, impugned addition was to be deleted.

28 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. A.O. once again issued notices u/s.133(6) on the latest address which were duly complied by the subscriber of shares alongwith all necessary details which were called by the A.O. except Empower Industries India Ltd. which has subscribed shares of Rs.5,40,00,000/-. All the subscribers of shares except Empower Industries India Ltd. furnished audited financials alongwith other necessary details as called by the A.O. Therefore, the only basis on which AO made addition u/s.!43(3) about non services of notice issued u/s.131/136 is no more valid because not only notices were served but complied by the recipient except one. The A.O. had not pointed out any defects in the information received in response to notices issued u/ s.l33(6). During appellate proceedings, it was also submitted that at the time of remand proceedings, appellant was ready to produce the principal officer of companies which had subscribed the shares of appellant company but after receipt of information u/s.l33(6) A.O. did not insist for it. Therefore keeping in view various facts as narrated about and various case laws discussed in the foregoing paragraphs out of addition of Rs.38,12,79,600/- made u/s.68, addition of Rs. 5,00,40,000/- in respect to shares subscribed by M/s. Empower Industries India Ltd. which had not complied with notice issued u/s.!33(6) is confirmed and remaining amount of Rs.33,12,39,600/- in respect of which evidences were furnished by the subscriber of share capital is deleted. 10. Against the above order, the assessee and the Revenue are in cross appeal

before us.

Representative relied upon the orders of the Assessing Officer.

submitted all the necessary details. He further submitted that the amendment to

section 68 has been held by the Hon'ble Bombay High Court to be prospective. The

summary of the ld. Counsel of the assessee submissions are as under:

29 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 15.10.2010 declaring taxable income at Rs. NIL and claimed carried forward loss of previous year relevant to A.Y.2010-11 amounting to Rs.8,67,35,476/-. The book profit u/s.115JB of the Act was disclosed at loss of Rs.8,79,47,093/- 3. The return of income was subjected to the scrutiny assessment. During the course of the assessment proceedings, the Assessing Officer called for details of preference shares. 4. The appellant company furnished the related details to the Assessing Officer. For the sake of ready reference, the list of shareholders who had. invested in preference share capital of the appellant is given below: Sr. Name of the shareholders (Rs.) No. 1. Sonal Cosmetic (Exports) Ltd. 2,00,40,000 2. Sonal International Ltd. 2,00,40,000 3. Sonali Sil-Chem Ltd. 2,00,40,000 4. Dynachem Pharmaceuticals (Exports) Ltd. 2,00,40,000 5. Aarika Steel and Metal P. Ltd. 1,00,080,000 6. Priority Traders P. Ltd. 2,50,80,000 7. Empower Industries India Ltd. 5,00,80,000 8. Ealdor Retails P. Ltd. 2,50,80,000 9. Tac Technosoft P. Ltd. 2,50,80,000 10 Safford Mercantile P. Ltd. 1,00,80,000 11 Benchmark Buildcon P. Ltd. 1,00,80,000 12 Jagdamba Coplex P. Ltd. 1,00,80,000 13 Proficient Merchandise P. Ltd. 1,00,80,000 14 Nihal Merchantile P. Ltd. 1,00,80,000 15 Prabhav Industries Ltd. 4,00,80,000 16 Raw Gold Securities P. Ltd. 3,03,39,600 17. Jyoti Foodstuff Ltd. 2,50,80,000 18. Pasupati Enclave P. Ltd. 1,00,80,000 19. Lilac Medicine P. Ltd. 1,00,80,000 Total 38,12,79,600

30 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. Assessing Officer also observed that bankers of some of the shareholders were same persons who were appearing in the list of Hawala Dealers furnished by the Sales Department of State of Maharashtra. The Assessing Officer also noted that the appellant had received share application money prior to passing of Special Resolution to increase its share capital. Therefore, the Assessing Officer concluded that the appellant has failed to prove the genuineness of preference share capital received by it. Accordingly, the total income was determined by the Assessing Officer vide assessment order dated 30.03.2013 passed u/s. 143(3) of the Act determining total income of the appellant as under:- Sr. No Particulars Rs. 1. Income from Business As per assessee's computation (-) 8,67,35,476, Add : Unexplained cash credits u/s. 68 38,12,79,600 Taxable income 29,45,44,124 Rounded off u/s.288A 29,45,44,120 2. Book profit u/s.H5JB of the Act As per assessee's computation (-) 8,79,47,093

a. All the parties except one i.e. Empower has duly confirmed the transactions in response to requisitions sent by the Assessing Officer u/s.!33(6) of the Act during the appellate proceedings, b. The Assessing Officer has not pointed out any defect in the information received in response to notices issued u/s.!33(6) of the Act. c. In view of information received in response to notices u/s.l33(6)' of the Act, the Assessing Officer did not insist upon producing the officers of the shareholders or issue notices u/s.131 of the Act although the appellant was ready to produce principal officers of the shareholders. d. The identity of the shareholders was established in view of the following: i. The Inspector had visited the premises of the shareholders and he had confirmed on such visits that the parties actually existed at the given addresses, [para 4.2.6 of the order of the CIT(A)]. Inspector posted by the CIT(A)-16 had visited the premises of 7 shareholders and found that parties actually existed on the addresses which are as per ROC site, [para 5.1.5 of the CIT(A)'s order]

31 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. ii. In the case of Citygold Education Research Ltd. similar addition was made and six parties namely, Prabhav Industries Ltd, Raw Gold Securities P. Ltd, Sonal International Ltd, Sonal Cosmetics (Exports) Ltd., Sonal Sil Chem Ltd. and Dynachem Pharmaceuticals Exports Ltd., had appeared before DDIT(Inv) at Ahmedabad and Baroda. The parties at Ahmedabad had given statements that they had made investments and produced relevant records such as investment register, audited accounts, ledger accounts, bank statements, etc. [para 4.2.9, 5.1.6 of the GT(A)'s order]. iii. The Assessing Officer had himself stated in his order that information on the official website of the ROC(MCA), the preference shareholders had continued with the appellant company till 31.03.2012 [para 5.1.3 of the CIT(A)'s order] e. The creditworthiness of the shareholders was established in view of the following findings given in para 5.2 of the CIT(A): i. Statement of Shri Jagdish Kumar Gupta relied upon by the Assessing Officer does not prove that three companies referred in his list did not make investment in the appellant. ii. The investment was made in the appellant company subsequent to the date of search on J. Kumar Infra Projects Ltd. i.e. 26.08.2009. iii. The appellant company had furnished details which show the individual capacity of the shareholder which had been discussed at length in the appellate order f. The reasons given by the Assessing Officer, to conclude genuineness of transactions had not been established, were untenable in view of the fact that the Assessing Officer had nowhere mentioned that there were immediate cash transactions in the bank statements and that the Assessing Officer has not doubted the fact that shareholders had enough balance to make the investment in the appellant. Similarly, the list of Hawala Dealers issued by the Sales-tax Department had no connection with the investment transactions with the appellant, [para 5.3.3 of the CIT(A)'s order]. g. The details submitted by the appellant prove the identity-, credibility and genuineness of transactions in the case of each shareholder. However, since Empower did not respond to notice u/s.!33(6) of the Act, the addition is sustained u/s.68 of the Act only in respect of investment made by it in the shares of the appellant, [para 6 read with sub-para 7 of the CIT(A)'s order].

Assessee's appeal 23. The appellant would like to first make submissions in respect of appeal filed by it. 24. It is submitted that the CIT(A) himself had referred to and relied upon the order passed by his predecessor in the case of Citygold Education Research Ltd. for A.Y.2010-

32 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 11 wherein identical issue was involved. The following six parties are common which had invested in the shares of the appellant and Citygold Education Research P. Ltd. i i) Prabhav Industries Ltd, ii) Raw Gold Securities P. Ltd, iii) Sonal International Ltd, iv) Sonal Cosmetics (Exports) Ltd., v) Sonal Sil Chem Ltd. and vi) Dynachem Pharmaceuticals Exports Ltd. 25. The CIT(A) has extracted the relevant portion of his predecessor on page 28 of his appellate order and by following the said order, the CIT(A) has deleted addition in respect of above six parties. However, the CIT(A) has failed to appreciate and refer to the para 5.6 of the order of the CIT(A) in the case of Citygold Education Research Ltd. for A.Y.2010-11 wherein the findings in respect of investment made by Empower is also discussed. 26. It is undisputed that the issues and circumstances in the case of Citygold Education Research Ltd. and in the case of the appellant are identical. The order of the CIT(A) deleting the addition made u/s.68 of the Act in the case of Citygold Education Research Ltd. for A.Y.2010-11 has been upheld by the Hon'ble Tribunal in ITA no.4742/Mum/2015 vide its order dated 31.01.2018. A copy of the said order of the Hon'ble Tribunal has been submitted to the Hon'ble Bench and the learned DR during the course of the hearing. 27. On its perusal, it can be seen that the Assessing Officer had also made addition in respect of investment made by Empower. In the case of Citygold Education Research Ltd. which is listed on page 3 of the said order of the Hon'ble Tribunal. The discussion made by the CIT(A) in respect of this party has been extracted on page 10 of the said order of the Hon'ble Tribunal. On its perusal, it can be seen that the CIT(A) has deleted the addition on the basis of fact that statement of Shri Devang Dinesh Chandra Master, Director of Empower, was recorded u/s.131 of the Act on 12.03.2013 (i.e. before the Assessing Officer passed the assessment order in the case of appellant) wherein he had admitted that trading activities were bogus but it did not mean that investments were bogus. The confirmation for having made investment by the party was filed by the assessee therein and that investment was held till that date. The Hon'ble Tribunal upheld the deletion vide para 6 of the order of the Hon'ble Tribunal wherein it has been considered that notices were served in the case of Empower and related details were on file, the party had confirmed transaction before DIT, Baroda and that the CIT(A) had deleted addition after taking into account the remand report of the Assessing Officer. 28. On perusal of the paper book filed by the appellant it can be seen that the appellant has filed the requisite details discharging the initial onus laid on it u/s.68 of the Act and that no other material is brought on record by the Assessing Officer to the contrary. Although the party had not responded to the notice issued u/s. 133(6) of the Act, the said party had confirmed the transaction with details of payments/RTGS as noted in para 7.4 page 35 of the order of the CIT(A). 29. Since the Hon'ble Tribunal has upheld the deletion made by the CIT(A) in respect of addition made by the Assessing Officer u/s.68 of the Act in the case of Citygold Education Research Ltd. for investment made by Empower in shares of Citygold

33 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. Education Research Ltd., it is humbly prayed that the addition made in the case the appellant assessee for investment made by Empower may kindly be deleted. It is submitted that Hon'ble Tribunal having noted that investment by Empower in the Citygold Education Research Ltd, as genuine, a different conclusion cannot be arrived at unless any contrary material is brought on record. It is submitted that the status of the shareholder on the website of MOCA is "active". Department's appeal 30. In respect of grounds filed by the Assessing Officer, it is submitted that the appellant assessee had filed all the necessary details to discharge its initial onus laid u/s.68 of the Act. The assessee had filed details such as PAN, bank statements, audited financials, resolutions passed, acknowledgment of return of income filed by the investors, etc. The details of such particulars filed have been incorporated on sample basis [i.e. in case of two investors namely Choice Exterio & Interio P. Ltd. (now known as Accelerate Tradestar P. Ltd. and formerly known as Priority Traders P. Ltd.) and Proficient Merchandise Ltd. in the paper book filed before Your Honours. 31. The Assessing Officer has duly submitted remand report taking into consideration the various details filed and no adverse material has been brought on record by the Assessing Officer to disprove the details filed by the appellant assessee. 32. It is submitted that the appellant assessee having discharged its primary onus and no adverse material on causing enquiries has been brought on record by the Assessing Officer, the addition made by the Assessing Officer u/s.68 of the Act should not be sustained. 33. It is submitted that the CIT(A) has deleted the addition after taking into account material available on the record and in accordance with the settled principles of law. 34. During the appellate proceedings, the Assessing Officer had caused fresh enquiries and furnished his remand report. The CIT(A) has also caused verification by deputing his inspector and found the information collected to be correct. Thus, it is submitted that it is not the case where no enquiries had been caused. The initial onus laid upon the assessee has been duly discharged and on further verification, no adverse material has been found. Therefore, the addition made by the Assessing Officer u/s. 68 of the Act has been righlty deleted by the CIT(A).

which are as under:

34 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 6. Orchid Industries Pvt. Ltd. vs. DCIT for A.Y. 2004-05 in ITA No. 1867/Mum/2012 dated 07.02.2014;

share applicant companies from the registrar of the company’s website are as under:

48 It is submitted that as directed by Your Honours, we have checked the status of the applicant companies on the website of Ministry of Corporate affairs. The summary of the verification done is as under:

Sr. No. Name of the shareholders Company 1. Sonal Cosmetic (Exports) Ltd. Active 2 Sonal International Ltd. Active 3. Sonali Sil-Chem Ltd. Active 4. Dynachem Pharmaceutical (Exports) Ltd. Active 5. Aarika Steel and Metal P. Ltd. Amalgamated 6. Accelerated Tradestar P. Ltd. Active (formerly known as Choice Exterio & Interio P. Ltd. and prior thereto known as Priority Traders P. Ltd. ) 7. Empower India Ltd. Active 8. Ealdor Retails P. Ltd. Amalgamated 9. Tac Technosoft P. Ltd. Active 10. Safford Mercantile P. Ltd. Active 11. Benchmark Buildcon P. Ltd. Active 12. Jagdamba Coplex P. Ltd. Strike off 13. Proficient Merchandise P. Ltd. Active 14. Nihal Merchantile P. Ltd. Amalgamated 15. Prabhav Industries Ltd. Active 16. Raw Gold Securities P. Ltd. Active 17. Wayforward Traders Ltd. (formerly Jyoti Foodstuff Ltd.) Active 18. Pasupati Enclave P. Ltd. Active 19. Lilac Medicine P. Ltd. Amalgamated

35 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 15. We have heard both the counsels and perused the records. Upon careful

consideration we note that assessee company in this case has received share application

money from 19 corporate entities. The assessee has submitted that documentary

evidences in connection with the share application money received. These included

various details like name, address, company incorporation details, share application

details, balance sheets, bank statements, permanent account number and income tax

returns. The assessing officer has taken adverse inference because he noted that assessee

has neither produced the concerned parties nor produced their books of accounts. The

assessing officer also noted that his requisitions and notices to the above parties have not

been responded. Before the ld. Commissioner of Income Tax (Appeals), the assessee

made elaborate submissions and also submitted some additional details. The ld.

Commissioner of Income Tax (Appeals) remanded the submissions to the assessing

officer. He also noted that the Inspector of the department was also deputed to find out

some of the shareholders and his reports were in the affirmative. The ld. Commissioner of

Income Tax (Appeals) also noted that upon fresh requisition sent by the assessing officer,

18 of the shareholders have filed their reply and submitted the details. Thereafter, the ld.

Commissioner of Income Tax (Appeals) elaborately discussed the details and financials

submitted by the share applicants companies. After elaborate findings about financial

positions of individual share applicants, in detail he finally gave a finding that since that

assessee has established the identity creditworthiness and genuineness of all the parties,

except confirmation from one of the party M/s. Empower Industries India Limited, the

addition in respect of all other 18 parties was deleted except an addition in respect of M/s.

36 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. Empower Industries India Limited which has not responded to the requisition u/s. 133(6)

of the assessing officer which was confirmed by the ld. Commissioner of Income Tax (Appeals).

under which the addition has been made provides as under:

Cash credits. 68. Where any sum is found credited in the books43 of an assessee maintained for any previous year, and the assessee offers no explanation43 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 may43 be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee 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.

similar share applications u/s. 68 in several case laws.

37 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 18. We may gainfully refer to the Hon’ble jurisdictional High Court expositions in this

case as under:

1) CIT vs. Gagandeep Infrastructure (P.) Ltd. [2017] 394 ITR 680 (Bom) had held as under: (e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation ofSection 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre- proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit.

(f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained.

2) CIT vs. Orchid Industries (P.) Ltd. [2017] 397 ITR 136 (Bom) had held as under: "5] ' The Assessing Officer added Rs.95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6] 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

38 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 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 application forms, 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" 19. From the expositions, it is clear that the assessee's case clearly false under the

realm of the above case laws. The proviso to section 68 has clearly and unambiguously

been held to be prospective and not retrospective. Admittedly the same is not applicable

in the assessment year which has been considered here, i.e., assessment year 2010 - 11.

Hence, adverse inference taken by the assessing officer that assessee could not produce

the share applicants and also could not produce their books of account, is not sustainable.

finding that in respect of the said share applications, genuineness of the transaction,

identity and the capacity of the parties are examined and found to be in order. We find

that the above finding of the ld. Commissioner of Income Tax (Appeals) is duly

corroborated by the various details submitted in respect of the above said corporate

entities which include name, addresses, permanent account number, financial statements,

bank statements and income tax return copies and confirmations given. The Income Tax

Inspector has also given in affirmative his report regarding the address of some of the

shareholders inspected by him. The requisitions given by assessing officer in the remand

proceedings have been duly complied with by all parties except for one party namely

M/s. Empower Industries India Ltd. We find that the facts and circumstances of the case

39 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. are also identical to the group case of the cases decided by this ITAT in the case of ITO

vs. City Gold Education Research Ltd. (in ITA No. 4742/Mum/2015 vide order dated

310.1.2018) . In this case ITAT had held as under:

40 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 8. From the above, it is clear that the assessee has completely produced the evidences before the AO i.e. the identity of the shareholder by filing the registered address with ROC, PAN No. along with copy of returns of income furnished with particular Ward of the department of the investors. The assessee has also received money from shareholders through account payee cheque and issued documents such as share certificate, return of allotment filed with ROC forms which were filed before the AO. The assessee has also filed copies of bank statement of the subscribers showing that it had sufficient balance in its accounts to enabled the subscriber to subscribe the share capital. In view of these facts and circumstances, once the AO has not rebutted the evidences, the AO cannot disbelieve the same. This issue is squarely covered by the decision of Hon'ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bom), wherein Hon'ble High Court had held as under : -

(e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation ofSection 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the pre-proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd.(supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit.

(f) In the above circumstances and particularly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law. Thus not entertained.

41 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. "5] ' The Assessing Officer added Rs.95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6] 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 application forms, 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"

(Appeals) in this case is in conformity with the expositions of the Hon’ble High Court

and the decision of ITAT in assessee's group case as above. Further, we note that these

companies are also existing in the records of registrar of companies. The report supplied

by the ld. Counsel of the assessee in this regard is as under:

42 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. 48 It is submitted that as directed by Your Honours, we have checked the status of the applicant companies on the website of Ministry of Corporate affairs. The summary of the verification done is as under:

Sr. No. Name of the shareholders Company 1. Sonal Cosmetic (Exports) Ltd. Active 2 Sonal International Ltd. Active 3. Sonali Sil-Chem Ltd. Active 4. Dynachem Pharmaceutical (Exports) Ltd. Active 5. Aarika Steel and Metal P. Ltd. Amalgamated 6. Accelerated Tradestar P. Ltd. Active (formerly known as Choice Exterio & Interio P. Ltd. and prior thereto known as Priority Traders P. Ltd. ) 7. Empower India Ltd. Active 8. Ealdor Retails P. Ltd. Amalgamated 9. Tac Technosoft P. Ltd. Active 10. Safford Mercantile P. Ltd. Active 11. Benchmark Buildcon P. Ltd. Active 12. Jagdamba Coplex P. Ltd. Strike off 13. Proficient Merchandise P. Ltd. Active 14. Nihal Merchantile P. Ltd. Amalgamated 15. Prabhav Industries Ltd. Active 16. Raw Gold Securities P. Ltd. Active 17. Wayforward Traders Ltd. (formerly Jyoti Foodstuff Ltd.) Active 18. Pasupati Enclave P. Ltd. Active 19. Lilac Medicine P. Ltd. Amalgamated

deleted by the ld. Commissioner of Income Tax (Appeals) are in accordance with the

above precedent's except for one share applicant namely Jagdamba Coplex Private

Limited. In the case of this company according to the submissions of the Ld counsel of

43 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. the assessee himself the name of the company has been struck off from the website of

Ministry of Corporate Affairs. The Ministry of Corporate Affairs has struck off some of

the shell companies/companies which are inactive with no activity for a long time.

However, we also note that in a number of such cases where names have been struck off,

fresh applications have been made by the CBDT with the Company Law Tribunal for

restoration of those companies whose name has been struck of so that Department can

pursue appeals related to them. In light of these facts, we deem it appropriate to remit the

issue of addition in the case of Jagdamba Complex Private Limited to the file of the

assessing officer so that assessing officer shall examine this case afresh.

of the ld. Commissioner of Income Tax (Appeals) are identical as in case of all other

share applicants, except that in this case there has been no reply to the requisition of the

assessing officer under section 133(6). All the relevant details like name, address, PAN

no., financial statements, income tax returns, bank statements were duly submitted. The

ld. Commissioner of Income Tax (Appeals) has confirmed the addition only for the

reason of non reply to the requisition u/s. 133(6). In this regard, it is the submission of the

ld. counsel of the assessee that response from this company was not obtained because of

not good relations with the assessee company. It was further submitted that share

application from this company has been found to be in-order by the tribunal in the case of

City Gold Education Research Ltd. (supra), a group company of the assessee. Further, the

44 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. website of the Ministry of Corporate Affairs also does not mention this company as struck off.

Sd/- Sd/- (Ravish Sood ) (Shamim Yahya) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 31.05.2018 व.�न.स./Roshani, Sr. PS

45 ITA Nos. 3390 & 3141/Mum/2016 M/s. Fern Infrastructure Pvt. Ltd. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT - concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, मुंबई / ITAT, Mumbai