A,C.I.T. CENTRAL CIR.- 2(1), NAGPUR vs. M/S BALAJI STONE CRUSHER & INFRAVENTURE P. LTD., NAGPUR

',4 Nv,S/NAG/ZO1G Assessmwnt Year:2unz-13 IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P K. BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH; JUDICIAL MEMBER ITA No 49/N4G/2016 Assessment_year;2012-13 Vs Ms Balaji Stone Cruusher & Infravcnture Pvt. Ltd, 905 B' Wing, Lokmat Bhawan; Wardha Road, Nagpur, PAN:AADCB 5273.C (Respondent) A,CI.T Central Circle-2(1), Nagpur. [Appellant) Appellant by Respondent by Date_pf_hearing Date of pronouncement Shri Geetesh Kumar, D,R_ Shri K. P, Dewani, Advocate '20/11/2017 21/11/2017 QRDE PER PK_BANSAL_VP This appeal has been filed by the Revenue against the order of the CIT(A)-1, Nagpur dated 28/01/2016 relating to assessment year 2012-2013 by taking the following effective grounds of appeal: 1 Whether On the facts and in the circumstances of the case and in law; the Ld CIT(A) wa5 right in deleting the addition made On} protective basis of R5.2,00,02,500/- being share implication money and share premium? 2 Whether On the facts ad In the circumstances Of the case and in law, the Ld CIT(A} Wa5 justified in deleting the addition of Rs.2,00,02,500/- without appreciating the facts and evidences brought on the record by the AO to prove that share application money and share premium was not genuine ? !1H NmY/NAG/2OL6 issSSIWT:: Veelr:2012-13 13'

Whether On the facts and In the circumstances of the case and in law, the Ld._ CIT(A) was justified in deleting the additian of Rs.2,00,02,500/- ignoring the evidence found In incriminating diaries according to which cash was transferred to Mumbai through hawala operations which was received back a5 share capilal &d premium 7" issue involved in this appeal relates to the additian On 2 The only account of share application money ad share premium: The facts of the case, in brief; are that there has been search and seizure action ufs 132 of Act in the office of Bhangdiva Group on 19/07/2011_ the Income Tax of the search, several incriminating documents were During the course found and seized; From the seized material, it was noted by the Assessing Officer that item number 1-65 of Annexure-B seized from the residence of Shri Mitesh Bhangadiya are the diaries containing ledgers, daily cash books books maintained by Bhangariya Group: Statement of Shri and bank LAZ> was recorded on oath on 14/09/2011_ In his sworn Mitesh Bhangadiya the cqurse of search action; Shri Mitesh statement recorded during was confranted with the entries borne out from the seized Jwopn Bhangadiya diaries marked as B-L to B-65 ad to explain the contents of these diaries The Assessing Officer, on examination of the seized documents and tte information gathered from the bank statement and the balance sheet of the investor companies regarding the introduction of the share application money and share premium, under para 7 of its assessment order, noted that these investor companies hardly have any creditworthiness. The of the view that Shri Mitesh Bhangadiya has Assessing Officer was and brought it back to the group companies: The transferred the cash Assessing Officer noted following companies invested in the share capital of the assessee company which in his view were shell companies: L.'T,. No.4Y/NAG/2O16 {sxessment year:2012-13 Sr,No. Shareholder's Name Share capital received Jaso/ Maa Share Trading Pvt. Ltd. 40,00,500 Printage Offset Pvt; Ltd. 30,00,000 Urjita Commerce Pvt; Ltd. 50,01,000 [ Rangoli Commerce Pvt. Ltd: Prajan Trading Pvt, Ltd: TOTAL 50,01 ;O0Q 30,00,QQ0 2,0D,02,S0Q the Assessing Officer observed that the cash balance On this basis by inflating sub-contractor expenses were routed through generated investor companies to be infused to group companles a5 share application money a5 per the seized diaries of Annexure B-1 to B-65. The Assessing Officer, observed that Shri Mitesh G. Bhangdiya is 3 directly involved in the capacity of Directors or shareholders of Bhangdiya Groups af Companies. According to the Assessing Officer, over 30 crores laundered through bank account of shell companies The have been Officer ultimately cancluded that the Bhangdiya Group has Assessing transferred its unaccounted fund to Mumbai through Hawala by mediator who has subsequently brought through cash transfer funds RTGS of various amount in various bank account operated and controlled through various persons, The amount has been transferred from one bank account to another after 3-4 lavers of bank transaction on the same day and the amount appears a5 share application ad share premium into Bhangdiya Group of Companies after being laundered through several clearings The has laundered in the case of the assessee their Bhangdiya Group unaccounted Money as share application money including share premium of Rs.2,00,02,500/- through shell companies ad the sources of the said 3 A 3 27'.A, No.W')/NAG{ZOA6 AsScSSMlCI: !nr:2ulz-13 2 investment was from the cash balance available with the Bhangdiya Group as reflected on the receipts side of the diaries item number 1 to 65 af Annexure B. The Assessing Officer therefore, added Rs.2,00,02.500}- on protective basis in the hands f the assessee companies treating the same is bogus. 4 When the matter went before the CIT(A); the CIT(A) deleted the said addition by observing as under: "9.0 I have carefully considered the submissions Of the AR of the appellant; the order of the AO and the material on record, 9.1 During the relevant financial year under consideration; the appellant company has received share capital to the tune Of Rs,2.QO crore corporate share holders. The AR has contended that the Id. AO has made the detailed enquiry in respect to share application money received from various companies who have contributed towards share capital of appellate company. The appellant in the cOurse of assessment proceedings has submitted confirmations from investor corporate share holders in respect of the share capital subscribed by them. The appellant contends that the investment made by such corporate share holders was duly reflected in the regular books Of account ad the amounts of Investment have been received through banking channel The AR has placed on record the details of Assessing Officers of the investor corporate entities which are assessed at Mumbai The AR has also filed the financial statements of the corporate share holders including the PAN and ROC details Thus the AR cantends that the identity Of the share holders is fully established As regards to the seized material found in the case of Shri Mitesh Bhangdiya, the AR has contended that the same does not relate ta the appellate company; therefore , no adverse inference can be drawn. 9.2 The AR of the appellant has relied on the decision of Hon*ble Apex Court in the case of Lovely Exports Pvt: Ltd. reported in 216 CTR 195 (SC) 9.3 The corporate share holders are assessed to Income-tax and have submitted their income-tax returns with the Income-tax [74 MY/NA6/ZOJ6 3 Assussilcil yrar2012-13 EIc Department Therefore; according to the AR, the ratio laid down by the Hon ble Apex Court in the ca5e f Lovely Exports Pvt Ltd is applicable to the facts of the case of the appellant The AR further submitted that the appellant by furnishing the PAN &d ROC details has discharged the Onus cast on it The onus therefore is shifted on the revenue to prove the transactions otherwise aS not bona-fide: As regards to the issue Of invoking the provisions Of section 68 of the Act by the AO, the appellant has relied on the following decisions: Appeal (L) No. 2182 of 2009 (High Court of Bombay) 307 [TR 334 CIT V5 Mjs, Creative World Telefilms Ltd CIT vs, Value Capital Servvices (P) Ltd, Honble Bombay High Court judgment vide order dated 13.02.2012 in the case of CIT vS Goa Songe & Power Ltd. iii 9.4 The AR of the appellant has contended that the Id. AO has not brought any evidence on record to show that for contribution Of share capital, money has fown formh Coffers of appellant company. The AR further contended that assessment ufs. 143(3) KwS 153C of the Act has been completed wherein the income of the appellant company has been computed by the Id. AO a5 per the bOoks Of account in respect of its business activities ad no defect whatsoever has been found in the books of account of the appellant which has been accepted It is & fact emanated from the records that the books cf account of the appellant have not been rejected by the AO. Thus the contention raised by the AR that in the absence Of any evidence t the effect that money has flown from coffers of a5sessee the addition ujs. 68 cannot be made; carries substantial force: The AR Of the appellant in this regard has relied on the decision of Hon ble Delhi High Court in the case Of CIT VS; Value Capital Services Pvt: Ltd. reported in 307 ITR 334 (Del ), Thus the AR pleads that appellant has proved the identity, credit worthiness and genuineness of the transaction, 9.5 It i5 a fact a5 emanated from records that the AR of the appellant during the course of assessment proceedings has filed the details of share application money, induding the share application forms, confirmations from the respective companies with their complete names &d addresses ad PANs, Board Resolutions, bank statements and Income-tax returns; It i5 thus not disputed that the companies which have made investments with the appellant [1A Nu.l9/NA{/2016 Ansussineal year 2012-] { company in the form of share capital are assessed to tax ad have filed their returns af income for the relevant year It is also undisputed that the share application money in question has been received through the account payee cheques by the appellant company Thus, So far as the investor companies are concerned, the transactions af investment have been effected by account payee cheques through the banking channels, The AO; however; after conducting certain inquiries in respect of investor companies; has inferred and arrived at the conclusion that the share application money invested in the appellant company is nothing but appellant company5 own unaccounted money introduced under the guise of investment by the 08 companies; which are allegedly used as route to bring back such unaccounted money: 9,6 The cantention of the AR of the appellant i5 that the investor companies who have invested with the appellant company are limited companies, which are registered under the Companies Act; 1956, Therefore , locating the companies is not a impossible task; more particularly, when such companies are registered with the Registrar of Companies and have regularly filed their returns Of income It is thus not a case that the appellant has not filed any explanation Or details 35 regards to the companies which have invested with the appellant company: In fact; the AR has provided the details of Income-tax records &d registration of companies; including the PANs. The Ld AO had all the details as to the AOs of the investor companies, inspite of such details being available with AO nothing adverse has been brought on record that such companies in connivance has facilitated the appellant company to devise such colourful transactions. ELin2 9.7 It is seen from the records that the Id. AQ has drawn the inference that the share application money and the share premium introduced with the appellant company by the investor companies is bogus without bringing any adverse material on record The Ld, AO thus without examination of the investments made by these investor companies had arrived at the conclusion that the entire share capital of Rs.2,00,00,000/- by these companies is under the garb of bringing back the unaccounted money Of the appellant company. It; however; is a fact 35 emanated from the records that the Ld. AO has refralned from giving any finding in respect of these companies ad formed the general belief based on the seized material relating to the cash withdrawals from sub-contractors bank accounts. Therefore; the ratio laid down in the case of Hon'ble Apex Court in Orissa 22 1.7'. N#AY/NAC/20l6 AxesSMElyer:2n2 13 Corporation Pvt: Ltd: VS, CIT 159 ITR 78 (SC) is applicable to the facts Of the appellant company In 35 much a5 that in the case Of the appellant company the Ld. AO, apart from issuing notice ujs. 13306), did not pursue the matter further: 9,8 The AO has Observed that before investing the funds with the appellant company, all the investor companies have received the money in cash through several layers, which according to the AQ; is the cash available with the appellant utilised for the purpose of introduction of bogus capital with the appellant company through such investor companies: The AR of the appellant has objected to Such observation contending that the AO has not brought out & single instance which could show that the appellant company has deposited the cash In the bank accounts of investor companies with a motive to bring back are same in the form of share capital The AO has drawn the inference that cash balance generated by sub- contractor expenses were routed through investor companies to be infused in the group companies as share application money: The AO has further mentioned in para no. 7 that the Bhangdiya group has transferred its unaccounted fund ta Mumbai through Hawala mediators which amount is alleged to have been invested with the appellant company through the 05 investors However; no such evidence of cash transfer in the name of investor companies i5 brought on record 9.9 It i5 3 fact that the AO has caused the inquiries u/s 133(6) of the Act in respect Of investor companies However, whatever material has been gathered pursuant to such inquiries has not been confronted with the appellant infact perusal of assessment order does not indicate that any adverse material has been obtained from which anything adverse can be held as regard to contribution of share capital Thus the argument of the appellant that once the appellant has furnished the names and addresses and PANs Of Investors, including their Income-tax records the appellant is not concerned as regards to deposits in the account of third parties ad the Onus Of the appellant stands duly discharged carries much substance On the facts in issue: Therefore, the reliance placed by the AR on the decision of the Hon'ble Apex Court in the case Of CIT Vs. Lovely Exports Pvt Ltd. (2008), 216 CTR 195 is applicable to the facts of the present appellant; wherein the Apex Court has held a5 under: E.'I.A. Na 49/VAG/2016 455C*S04't year:2u1z-13 24 "Can the amount of share money be regarded as undisclosed income under 5. 68 of IT Act; 19617 We find no merit in this Special Leave Petition for the simple reason that If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the department is free o proceed to reopen their individual assessments in accordance with law: Hence; we find no infirmity with the impugned judgment: 9,.10 The AR of the appellant has vehemently argued that the 50 called clinching evidence gathered pursuant tp the inquiries conducted by the department has not been discussed In the assessment arder The AR further agitated that the Ld. AO has not supplied any material a5 evidence in the course of hearings to show that the assessee has deposited its Own money in the various assessment order The AR further contends that no incriminating material has been found during the investigation by the DDIT (Inv) and the AO which can show that appellant has used its own money for introduction of share capital in the name of third company investors under the garb to convert the black money into white 9.11 In support of his contentions, the AR of the appellant has relied on the following judicial decisions: "1) The Supreme Court in the case of CIT Vs. Gujarat Heavy Chemicals Ltd (256 ITR 795) has affirmed the decision of Gujrat High Court and has held that;, "CITIA} and the Tribunal having found no justification for the addition of the amount of investment made In the shares of the assessee-company by another company 35 25 per cent shares 0f the assessee were held by one group and all the companies, Indian a5 weii a5 foreign, which had advanced money to the assessee towards subscription of shares had links with the said group matter involves question of appreciation of evidence; application under s. 256(2)} rightly rejected. We have read the order Of the High Court ad heard learned counsel for the appellant: We are satisfied that upon the facts, no interference with the order of the High Court i5 called for. The civil appeals are dismissed. 2) Further in the case of CIT Vs: Lovely Exports (P) Ltd, (216 CTR 195), The Supreme Court of India has made it & established Iaw that "if the share application money i5 received Arek 1*T.

No#"/NAG/ZOI6 Assssmenlt year;2012.13 29 by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments In accordance with IaW; but it cannot be regarded as undisclosed income of the assessee company 3) In the case of CIT Vs. Orissa Corporation Pvt: Ltd (159 ITR 78), The Supreme Court of India has held that; "The assessee had given the names ad addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees, Their index number was in the file of the Revenue: The Revenue; apart from issuing notices under 5. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source Of income of the said alleged creditors tp find out whether they were credit-worthy Or were Such who cOuld advance the allowed Ijans: There was no effort made to pursue the 5O-called alleged creditors, In those circumstances; the assessee could not do any further: In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence: If the conclusion is based on some evidence on which & conclusion could be arrived at, no question of law a5 Such arises. It cannot; therefore; be said that any question of Iaw arose In these cases; The High Court was, therefore; right in refusing to refer the questions sought for 92 #?X The Supreme Court in the Case of CIT Vs. Stellar Investment Ltd. (251 ITR 263) has held that "the decision of the tribunal was Won 0n the facts S0 that no interference was called for It was further held that "Could it be assumed that the decision endorses the view that unexplained Share Capital could never be treated a5 the Income of the company and that section 68 which places the responsibility on the assessee to prove the nature ad sources of credit has no application in respect of paid-up share capital and share application money: 5) The Calcutta High Court in case of Hindustan Tea Co. Ltd Vs, CIT (263 ITR 289} has held that "the assessee has disclosed all the particulars available with it along with the names & addresses of each subscriber In such 3 case; the could not have been expected to establish the asse55ee Relt_ 6 1.T.. Nu9/NAC/2Q16 Assessncnt YCalr:2012-13 20 genuineness of amount and the amount could not be treated the income of the company without any material to suggest any link between the subscribed amount ad the company. The AQ i5 not justified in treating this 35 assessee's income especially where particulars were given in the application and since the amounts were received by cheque 6} The Delhi High Court in the case of CIT Vs. Iliac Investment Pvt. Ltd (287 ITR 135), after review of decision in CIT V5; Antarctica Investment Pvt: Ltd (262 ITR 493) &d Cit Vs, Sophia Finance Ltd, (205 ITR 98), held that "where the assessee is capable of identifying the subscriber and also place evidence of their creditworthiness by their bank statements and als0 submitted the confirmations, nothing more could be expected of the company . It follows that such amount 0f share capital to be assessable a5 that of the company, there should be something more to justify such addition. In this regard, the amount received as share capital stands on & different footing to some extent; than any other borrowing 7) ITAT Chennai Bench in the case of Midas Golden Distilleries (P) Ltd Vs, CIT (25 DT 337) has held that "assessee company bought On record complete identity of Shareholders by providing their addresses ad confirmation to the effect that they have contributed to the share capital Of the assessee Moneys were received through banking channels. AlI the applicants are regularly assessed to tax ad assessment particulars relating to each of them were made available to the assessing authority, Mere subjective opinion of the AO that the Source of money with the shareholders Or their creditworthiness is not established is not Sufficient to treat the share capital as deemed income u/s 68. Even if the applicant companies are to be treated as bogus share holders; Revenue is free to re-open their individual assessments and bring to tax such unexplained money in their respective hands. Addition in the assessee's hand is liable to be deleted. 8} Further, the Nagpur Bench of ITAT in the case of ACIT Cir-2 Vs. Kasana Foods Pvt. Ltd (61 & 62 / Nagl 2007) vide & joint order dated 241 July 2009 has held that; "The facts of the case f the assessee is identical t2 the facts in case Of Orissa Corporation (P) Ltd. (Supra) Tin this case the assessee has furnished all the particulars Of share applicant including its Rrmm 1'#'.A. No49/NAGZC]6 Lssessment year:2012-13 27 Pan. The AO apart from issuing notice s. 133(6) did not pursue the matter further. Therefore, the notice issued to the Share applicant returned unserved cannot be the criteria to treat the share application 25 unexplained cash credit in the hands Of the assessee. The copies of ali the above judgments are enclosed herewith a5 'Annexure 10"' 1O.O In the light of the above facts, it is evident that the appellant has placed sufficient legal evidences Qn record to the identify; creditworthiness and genuineness Of demonstrate contribution of share capital. Thus there remains no Scope for making addition for the same: The claim Of the appellant for contribution of capital IS acceptable; therefore; the protective addition made by the AO is directed to be deteted, FPPELLAA 5 Coming to the appeal of the Revenue regarding the deietion of the 2 addition of Rs.2,00,02,500/- which were added by the AO on protective MW the share application money and share premium; We have basis being heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. The Ld. DR before US relied on the order Of the AO while Ld. AR relied on the order of the CIT(A) ad reiterated the submissions made before the CIT(A) He also relied on the following cases: (2008) 216 CTR 0195 (SC) CIT vs. Lovely Exports (P} Ltd. (2008) 307 ITR 0334 (Delhi) I) CIT vs. Value Capital Services (P) Ltd. 1,[.f. N)/NAG/20I6 A#sessmrht Yrar:2012-13 Hon ble Bombay High Court order in ITA (L) No. 2182 pf 200g in the case of M/s. Creative 1ft } World Telefilms Ltd (Earlier known} a5 Link International Services Pvt Ltd; ) vide order dated 12/10/2009, Hon ble Bombay High Court in Tax Appeal No. iv} 16 of 2012 In the case Of Goa Sponge ad Pawer Ltd vide arder dated 13/02/2012 Hon'ble High Court of Bombay in ITA No: 1613 Of 2014 In the case Of M/s. Gagandeep v) Infrastructure Pvt: Ltd: vide order dated 20/03/2017. (2014) 368 ITR 0001 (Bom ) Vi} Vodafone India Services Pvt Ltd. VS. ACIT Hon ble Haryana High Court in ITA No. 386 of vii) 2010 (0 & M} in the case Of Ms; KC Pipes Pvt. Ltd. vide order dated 02/08/2016. Hon ble Bombay High Court in Writ Petition No. 3027 f 2015 in the case of Khubchandani viii } Healthparks Pvt: Ltd, vide order dated 10/02/2016. The copies of these case laws were filed before US which we have gone through: We noted the said addition has been made by the AO on protective basis treating the following companies individual to be the shell company investor in the assessee company in respect of amount of the share application money a5 enumerated here under: Sr No. Shareholder's Name 'Share capital receivved 1 Jasol Maa Share Trading Pvt. Ltd. 40,00,500 2 3 Prirtage Offset Pvt: Ltd. 30,00,000 Urjita Commerce Pvt. Ltd. 50,01,000 ReLi? 2 !. Nc.A9/NAG/2016 Asarsymut Ytar;2012-13 29 Rangoli Commerce Pvt. Ltd, 50,01,000 IPrajan Trading Pvt; Ltd. 30,00,QQO TOTAL 2,00,02, 500 6. The AO Was of the view that Bhangdiya Group has transferred its unaccounted cash at Mumbai through Hawala by the Mediator, who has thereafter introduced through cash transfer funds RTGS Of variaus amount in various banks account operated and controlled through various persons. The assessee company in his view , has alsp to the extent the share application money was in receipt of sums out of the said funds The AQ therefore, added the said amount of Rs.2,00,02,500/- in the hands of the assessee on pratective basis holding the share application money including the share premium to be bogus. The CIT(A) deleted the said addition, The Ld. DR before uS even though vehemently relied an the order of the AQ but could not adduce before us any cogent material Qr evidence which may prove that the share application money including the share premium received by the assessee is bogus. This is & settled law in view of the decision of Honble Supreme Court in the case of Daulatram Rawatmal 87 ITR 349(SC) that onus is On the person who alleges that apparent is not real. The CIT(A) in this case noted that the assessee had submitted complete details, the copy of which were also filed before US, being confirmation from shareholders, financial statement; bank statement copy of Permanent Account Number ad details of Income-Tax Return to substantiate the contribution of share capital. It is not denled that the amount was received through proper banking channel ad all the corporate shareholders and are assessed to tax. These evidences prove that the assessee, in our opinion, has discharged the onus which lies on him U/s. 68 PEL L"'4 Ni49/NAG/ZOib Assessmnt yrar:2u1z 13 3c Section 68 as was in inexistence during the of the Income-tax Act; impugned assessment year lays down as under: Where any Sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers not explanation about the nature and source thereof Or the offered by him is not in the opinion of the explanation Officer; satisfactory; the Sum sO credited may be Assessing charged to income-tax as the income of the assessee of that previous year" 7 From the reading of the said section; it is apparent that for making addition u/s; 68 the following conditians must be satisfied, Sum must be found credited in the books of the assessee (a) maintained for the previous year. The assessee offers no explanation about the nature and (b) source of such credit or the explanation offered by the assessee Is not in the opinion of the AO satisfactory- If both the conditions are satisfied the AO is empowered to charge S0 credited found in the books of the assessee to Income-tax and sum treat the same as the income of the assessee of that previous year: In this we noted the AO found aforesaid sum of Rs.2,00,02, SOO/ - credited in case, the books of the assessee: The assessee has submitted the explanation; explaining the nature and source Of such credit: The AO did not accept the explanation of the assessee merely 0n the basis of the assumption that the found recorded in the diary selzed during the course of search in cash Bhangdiya Group has been utilized by the said Group for getting the share application money ad premium from the various persons in the assessee company, The AO while rejecting the explanation of the assessee did not bring any evidence on record except relying on the seized dlary that the money was sent by the assessee to the mediator at Mumbai for obtaining the share application money through Hawala, No particular evidence or the 1T4 Ne#9/NAGZO[G AssessMet year:ZU1z 63 I3 material what ta taik of the corroborative evidence was brought on the record while rejecting the explanation of the assessee by the AO that the money brought in by the company as share application money comes out of the money sent by the Bhangdiya Group to Mumbai It Is not denied that there had been search in the case of Bhangdiya Group on dated 19.07.2011 and during the course of the search, diaries being item number 1 to 65 Annexure B-1 were found which according to the AO contain the details of the receipt and the payment: The money sQ received represents the cash recelved by the Bhangdiya Group from the Group Companies by making the withdrawal from their bank account as well as cash received from sub-contractors by making withdrawal by the sub-contractors from their bank account: It is not denied that Bhangdiya Groups Company as well as the sub-contractor from whose bank account the cash has been withdrawn and recorded in the diary found and seized comes out of their bank account which were duly disclosed to the Income-tax Department; These bank accounts were not undisclosed bank account AIl these Group Companies as well as sub-contractors wvere assessed to Income-tax: Therefore; the source of the money shown as received in the diaries were out of the receipts of the parties which have duly been disclosed by them while filing their Income-tax Return and has been assessed to tax while making their respective assessment by the AQ. Section 68 did not; in our opinion; empower the AO to reject each ad every explanation given by the assessee. Whether the explanation is satisfactory or not depends on facts of each case; If the assessee has submitted all the evidences proving the identity , creditworthiness and genuineness of the transactions, the explanation given bv the assessee cannot be regarded to be not satisfactory- The identity of each of the party who has contributed the share applicatian money is proved beyond doubt as all of them are assessed to tax having the Permanent Account Number, The assessee has Qn1 E.T,4 NuAS/NAG/ZUI6 Ass8SSre ut vvar-2012-13 filed details of their Income-tax Return . Not only this, we noted the assessee has submitted the details being confirmation from shareholders, their financial statements, bank statements to substantiate that they have contributed to the share capital; The share capitals have been received by the assessee company through banking channels: There had been search and seizure in the case of the Bhangdiya Group but no clinching evidence showing linkage of the parties who has contributed towards the share capital was found or brought on record except to draw an inference from the diary that the money sent to Mumbai has been used for bringing back into the company by way of share capital, In our view; since the receipt found recorded in the diary comes out of the trading receipt of those concerns Bhangdiya Group and cannot be regarded to be the undisclosed income of the assessee, therefore, the money utilized out of that amount can also not be regarded to be utilized of unaccounted money of the assessee No businessman will convert its tax paid Money into unaccounted money and then convert into accounted money, The assessee company has received the contribution into the share capital proves the genuineness of transaction. The AO in the course of the assessment proceedings verified the transaction of the contribution of the share capital by issue of the notice Ws, 13306), No adverse evidence obtained in such enquiry was brought on record Even Ld. DR has also not produced any evidence in this regard which may prove that the share capital contribution received by the assessee company Was not genuine Since the assessee,; in Qur opinion; has discharged his onus of proving identity , creditworthiness and genuineness of the transaction;, the explanation given by the assessee cannot be regarded to be non satisfactory: EL 1 3 2 HozH 1"4 X4S/NAG/2OIG AssussmeuttyC-r 20]2-133 23 9 In our opinion; the AO just in the absence of any evidence being found was the view that the money has flown from the coffer of the assessee_ We have gone through the decision in the case 0f CIT vs. Value Capital Services P Ltd, 307 ITR 334 (Del): We noted in this case the Hon'bie Delhi High Court has categorically held that the additional burden was on the department to show even if the shareholders did not have the means to make the investment: Investment made by them actually emanated from the coffers of the assessee s0 as to enable it to be treated as the undisclosed income of the assessee_ It is not denied that the company who has invested in the share capital are Iimited companies duly registered under the Companies Act therefore, these companies could have been well located They are registered with the Registrar of very Companies and have regularly filed their returns of Income It is not a case the assessee has not filed any explanation or details as regards to the companies which have contributed into the share capital of the assessee The assessee has filed all the details which; in our opinion; a man of ordinary prudence would have filed. We did not find any adverse inference being brought on record by the AO which may prove that these companies in connivance has facilitated the assessee companies to devise colourful transactions; We find force in the submission of the Ld; AR that since all the companies who have contributed towards the share capital of the assessee are regular assessee have the Permanent Account Number, If the AO has not pursued the matter apart from issuing the notice us. 133(6) in view of the decision of Hon'ble Supreme Court in the case of Odissa Corporation Pvt, Ltd_ Vs CIT _ 159 ITR 78 (SC), no addition can be made in the hands of the assessee. Similar view has been taken by this Tribunal in the case of ACIT CENTRAL CIR 201), Nagpur VS_ MITZ INFRAPROJECT PVT LTD_ in I.T.A.No.SS/NAG/2016 vide order dated 3 #al 29/06/2017. 1.7.A. No.V/NAC/ZOI6 Assessment year;2012-13 10 The CIT(A}; in our opinion, has passed a detailed and explicit order after considering the submissions of the assessee which have been reiterated before US aS well as the order of the Assessing Officer and given the finding of the facts. The CIT(A) has also dealt with the various case laws which, in our opinion, support the case of the assessee 11. This is not a fit case which warrants our interference. We accordingly confirm the order of the CIT(A) and dismiss the ground taken by the Revenue 12 In the result; the appeal of the Revenue stands dismissed. (Order was pronounced in the open court on 21/11/2017 0 _ , (PAWAN SINGH) Judicial Member P. K: BANSAL ) Vice President Dated:21/11/2017 *Singh Cgpx of_theorder forwarded_to 1 2. 3, 4. 5. 5 The Appellant The Respondent. Concerned CIT The CIT(A) DR_ (d4a4d Ale S0 Eaee #razt wit4 34orn Income Tax Arpallate Tribunat TNY? t8 / Nagpur Berch: 24