DCIT CC, 4(3), MUMBAI, MUMBAI vs. NOUVEAU GLOBAL VENTURES LIMITED, MUMBAI

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ITA 3609/MUM/2023Status: DisposedITAT Mumbai31 July 2024AY 2011-1221 pages

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National Thermal Power Co. Ltd. v. CIT
229 ITR 283 · 1998 · SC
5,818 citing

Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN

For Appellant: Mr. Ashok Bansal, &, Mr. Ajay Daga

For Respondent: Mr. S. Srinivasu, CIT-DR &, Mr. Ashok Kumar Ambastha, Sr. DR

Hearing: 30/05/2024Pronounced: 31/07/2024

These appeals by the Revenue and cross These appeals by the Revenue and cross-objection by the objection by the assessee are directed against a common order dated 12.07.2023 assessee are directed against a common order dated 12.07.2023 assessee are directed against a common order dated 12.07.2023 passed by the Ld. Commissioner of Income passed by the Ld. Commissioner of Income-tax (Appeals) tax (Appeals)-52, Mumbai [in short ‘the Ld. CIT(A)’] for assessment years 2010-11 to Mumbai [in short ‘the Ld. CIT(A)’] for assessment years 2010 Mumbai [in short ‘the Ld. CIT(A)’] for assessment years 2010 2012-13 respectively. ectively.

As common grounds are involved in these appeals and cross As common grounds are involved in these appeals and cross As common grounds are involved in these appeals and cross- objections, therefore, objections, therefore, same were heard together and disposed off by same were heard together and disposed off by way of this consolidated order for convenience. way of this consolidated order for convenience.

3. The grounds raised by the Revenue and cross The grounds raised by the Revenue and cross- -objection raised 11 are reproduced as by the assessee in assessment year 2010 by the assessee in assessment year 2010-11 are reproduced as under:

1) On the facts & in the circumstances of the case, Ld.CIT(A) erred in 1) On the facts & in the circumstances of the case, Ld.CIT(A) erred in 1) On the facts & in the circumstances of the case, Ld.CIT(A) erred in deleting addition on account of bogus turnover on estima deleting addition on account of bogus turnover on estimate basis @ 1% of te basis @ 1% of total turnover of company amounting to Rs. 1,35,02,150, without total turnover of company amounting to Rs. 1,35,02,150, without total turnover of company amounting to Rs. 1,35,02,150, without appreciating the fact that these transactions and figures are fictitious, appreciating the fact that these transactions and figures are fictitious, appreciating the fact that these transactions and figures are fictitious, non genuine and manipulated with sole intention to record desired non genuine and manipulated with sole intention to record desired non genuine and manipulated with sole intention to record desired turnover so as to support the artif turnover so as to support the artificial spurt shown in the price of the icial spurt shown in the price of the penny stock at various timelines. penny stock at various timelines. 2) On the facts & in the circumstances of the case, Ld. CIT(A) erred in 2) On the facts & in the circumstances of the case, Ld. CIT(A) erred in 2) On the facts & in the circumstances of the case, Ld. CIT(A) erred in deleting addition of Rs. 9,25,68,000/ deleting addition of Rs. 9,25,68,000/- as unexplained cash credit u/s 68 as unexplained cash credit u/s 68 of the Act in respect of share capital of the Act in respect of share capital raised during the year. Cross-objection of the Assessee objection of the Assessee

3. The id. CIT(A) erred in holding that opportunity of cross 3. The id. CIT(A) erred in holding that opportunity of cross 3. The id. CIT(A) erred in holding that opportunity of cross-examination was not necessary. was not necessary. 4. The Id. CIT(A) though allowed the ground challenging the addition 4. The Id. CIT(A) though allowed the ground challenging the addition 4. The Id. CIT(A) though allowed the ground challenging the addition based on estim based on estimation of incie, however, erred in confirming the action of ation of incie, however, erred in confirming the action of the AO of rejection of books of account. the AO of rejection of books of account. It is submitted that there is delay of about 21 days in filing of cross It is submitted that there is delay of about 21 days in filing of cross It is submitted that there is delay of about 21 days in filing of cross- objections. This happened as the Mg. Director & the other working objections. This happened as the Mg. Director & the other working objections. This happened as the Mg. Director & the other working directors of the a directors of the appellant company had gone to Australia on 21 April, ppellant company had gone to Australia on 21 April, 2024 to attend marriage in their family and came back on 3rd May, 2024 2024 to attend marriage in their family and came back on 3rd May, 2024 2024 to attend marriage in their family and came back on 3rd May, 2024 and immediately on return, the matter was entrusted to a senior CA who and immediately on return, the matter was entrusted to a senior CA who and immediately on return, the matter was entrusted to a senior CA who took some time to study the case and have now finalized the cr took some time to study the case and have now finalized the cr took some time to study the case and have now finalized the cross- objections which are now being fled. It is submitted that the delay in objections which are now being fled. It is submitted that the delay in objections which are now being fled. It is submitted that the delay in filing of cross- -objections is not wilful and that the cross objections is not wilful and that the cross-objector was prevented by reasonable cause as brought out hereinabove and your prevented by reasonable cause as brought out hereinabove and your prevented by reasonable cause as brought out hereinabove and your honors may be pleased to condone the delay honors may be pleased to condone the delay and admit the same which and admit the same which will meet with the ends of justice. will meet with the ends of justice. 4. The ld counsel for the assessee submitted that cross The ld counsel for the assessee submitted that cross The ld counsel for the assessee submitted that cross- objections were filed with delay of 21 days for the reason that objections were filed with delay of 21 days for the reason that objections were filed with delay of 21 days for the reason that during relevant period during relevant period, managing director of the assessee company irector of the assessee company had gone abroad for attending marriage function in family. The ld had gone abroad for attending marriage function in family. The ld had gone abroad for attending marriage function in family. The ld DR did not object seriously for admission of cross DR did not object seriously for admission of cross-objections. objections. After considering submission of parties, the cross considering submission of parties, the cross-objections of the objections of the assessee were admitted for assessee were admitted for adjudication in view of decision of adjudication in view of decision of Hon’ble Supreme Court in the case of Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) NTPC Ltd. 229 ITR 283 (SC) as only legal issues have been raised in cross as only legal issues have been raised in cross-objections without objections without requirement of investigation of fresh facts requirement of investigation of fresh facts 4.1 Briefly stated, facts of the case are tha Briefly stated, facts of the case are that in the search action t in the search action carried out u/s 132 of the Income carried out u/s 132 of the Income-tax Act, 1961 (in short ‘the Act’) tax Act, 1961 (in short ‘the Act’) by the Investigation Wing, Income by the Investigation Wing, Income-tax Departmental, Delhi tax Departmental, Delhi in the Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 4 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 case of ‘sh Rajkumar Kedia Rajkumar Kedia’ Group on 13.06.2014, it was found that it was found that share/scrip of the assessee comp crip of the assessee company had been misused for been misused for providing accommodation entries in the form of bogus long term providing accommodation entries in the form of bogus long term providing accommodation entries in the form of bogus long term capital gain (LTCG) to beneficiaries and (LTCG) to beneficiaries and short term capital loss short term capital loss (STCL) to exit providers. The Assessing Officer has referred to to exit providers. The Assessing Officer has referred to to exit providers. The Assessing Officer has referred to various material seized during the cour seized during the course of search se of search including ‘tally’ accounting data, ledger of beneficiaries etc. ledger of beneficiaries etc. Consequent to ledger of beneficiaries etc. documents pertaining to assessee company found and seized in documents pertaining to assessee company found and seized in documents pertaining to assessee company found and seized in search proceedings of proceedings of Shri Kedia, a satisfaction note as required satisfaction note as required under the provisions of section 153C under the provisions of section 153C of the Act was recorded by the of the Act was recorded by the Assessing Officer(s) and (s) and notices u/s 153C r.w.s. 153A was issued notices u/s 153C r.w.s. 153A was issued in the case of the assessee for in the case of the assessee for six assessment year assessment years including the three assessment years three assessment years, i.e. AYs 2010-11;2011-12 and 12 and 2012-13, which are before us. In the as which are before us. In the assessments completed u/s completed u/s 153C r.w.s. 143(3) of the Act dated 26.12.2016, the Assessing Officer referred to 143(3) of the Act dated 26.12.2016, the Assessing Officer referred to 143(3) of the Act dated 26.12.2016, the Assessing Officer referred to various incriminating material and statements of Shri R.K. Kedia, various incriminating material and statements of Shri R.K. Kedia, various incriminating material and statements of Shri R.K. Kedia, and Shri Manish Arora Shri Manish Arora ( i.e. associates of sh Kedia) etc. etc. recorded on oath u/s 132(4) of the Act. oath u/s 132(4) of the Act. The Assessing Officer also referred to The Assessing Officer also referred to the statement of other the statement of other persons including sh Suresh Jajodiya, sh Suresh Jajodiya, Mumbai and Shri Anil Kumar Mittal Shri Anil Kumar Mittal, Mumbai , who , Mumbai , who were engaged in providing accommodation entries of in providing accommodation entries of LTCG in other s in other scrips with the help of Shri R.K. Kedia. The Assessing Officer analyzed Shri R.K. Kedia. The Assessing Officer analyzed Shri R.K. Kedia. The Assessing Officer analyzed artificial raising of the price of the shares of the assessee company by Shri raising of the price of the shares of the assessee company by Sh raising of the price of the shares of the assessee company by Sh R.K. Kedia. The Assessing Officer R.K. Kedia. The Assessing Officer further referred referred to statement of Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 5 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 Shri R.K. Kedia , wherein he , wherein he admitted that assessee company was hat assessee company was under control and management of under control and management of ‘Shri Krishan Kumar Khadaria Shri Krishan Kumar Khadaria,, Mumbai who was a close friend of him and was engaged in the a close friend of him and was engaged in the a close friend of him and was engaged in the business of providing accommodation entries. Shri Manish Arora providing accommodation entries. Shri Manish Arora providing accommodation entries. Shri Manish Arora i.e. the main employee of Shri Rajkumar Kedia i.e. the main employee of Shri Rajkumar Kedia who who used to keep unaccounted transactions of Shri R.K. Kedia unaccounted transactions of Shri R.K. Kedia, also admitted that also admitted that shares of the assessee company shares of the assessee company were jacked up with with involvement of Shri Rajkumar Kedia. The Assessing Officer also referred to Shri Rajkumar Kedia. The Assessing Officer also referred to Shri Rajkumar Kedia. The Assessing Officer also referred to statement of Shri Natwarlal Daga, who admitted t Natwarlal Daga, who admitted the role of Shri Natwarlal Daga, who admitted t Rajkumar Kedia in arranging investors of preferential issue. During Rajkumar Kedia in arranging investors of preferential issue. During Rajkumar Kedia in arranging investors of preferential issue. During the course of search the course of search, statement of Shri Krishan Kumar Khadaria of Shri Krishan Kumar Khadaria was also recorded, but , but he could not explain reason of reason of huge rise in shares of the assessee company. During the shares of the assessee company. During the course of search course of search enquiries, Shri Rakesh Sahnewal Shri Rakesh Sahnewal i.e. an employee of Shri Krishan employee of Shri Krishan Kumar Khadaria, admitted that various cash transactions admitted that various cash transactions of admitted that various cash transactions accommodation entries were provided. The Assessing Officer has entries were provided. The Assessing Officer has entries were provided. The Assessing Officer has reproduced the financial statement and concluded that there is no reproduced the financial statement and concluded th reproduced the financial statement and concluded th substantial business transaction substantial business transaction to support the huge huge rise in the share of the prices. According to him, the assessee has shown share of the prices. According to him, the assessee has shown share of the prices. According to him, the assessee has shown fictitious sale of Rs.135.02 crores fictitious sale of Rs.135.02 crores in its books of account in its books of account. He observed that trading transactions are fictitious, observed that trading transactions are fictitious, non non-genuine and manipulated with sole intention to record desired turnover so as to manipulated with sole intention to record desired turnover so as to manipulated with sole intention to record desired turnover so as to support the artificial spurt in the price of the shares of the support the artificial spurt in the price of the shares of the support the artificial spurt in the price of the shares of the company. The Assessing Officer rejected books of account invoking company. The Assessing Officer rejected books of account invoking company. The Assessing Officer rejected books of account invoking

Andheri (Bast), Mumbai - - 400 093 PAN: AAACT2717J Kashish Multi Trade Pvt. Ltd. Kashish Multi Trade Pvt. Ltd. Sale of Film Rights Sale of Film Rights 360000 A/401, Pearl Arcade, Opp. P. K. Jewellers, A/401, Pearl Arcade, Opp. P. K. Jewellers, Dawood Baug Lane, Off J. P. Road, Dawood Baug Lane, Off J. P. Road, Andheri (West), Mumbai - - 400 058 PAN: AACCK7596A Prasar Bharati Sale of Film Rights Sale of Film Rights 1614600 Broadcasting Corporation of India Broadcasting Corporation of India Directorate General, Doordarshan, Directorate General, Doordarshan, Copernicus Marg, New Delhi - 110 001 Copernicus Marg, New Delhi Total 404697345 7.1 The Ld. Assessing Officer however rejected the claim of the The Ld. Assessing Officer however rejected the claim of the The Ld. Assessing Officer however rejected the claim of the assessee and in view of material seized from the premises of Shri assessee and in view of material seized from the premises of Shri assessee and in view of material seized from the premises of Shri R.K. Kedia and statement of Shri R.K. Kedia, Manoj Tiwari R.K. Kedia and statement of Shri R.K. Kedia, R.K. Kedia and statement of Shri R.K. Kedia, (employee of Shri R.K. Kedia) and others held the purchases and (employee of Shri R.K. Kedia) and others held the purchases and (employee of Shri R.K. Kedia) and others held the purchases and sale transactions recorded in the books of accounts of the assessee nsactions recorded in the books of accounts of the assessee nsactions recorded in the books of accounts of the assessee as fictitious, which were arranged only to give legitimacy were arranged only to give legitimacy were arranged only to give legitimacy to price rise in the shares of the assessee company. In absence of any rise in the shares of the assessee company. In absence of any rise in the shares of the assessee company. In absence of any evidence to support the transact evidence to support the transaction of purchase and sale shares, ion of purchase and sale shares, the Assessing Officer held he Assessing Officer held same to be fictitious and commission and commission earned on arranging such entries earned on arranging such entries @ 1% of the total turnover @ 1% of the total turnover was estimated as profit. Before the Ld. CIT(A), the assessee contested profit. Before the Ld. CIT(A), the assessee contested profit. Before the Ld. CIT(A), the assessee contested genuineness of the business activity. The Ld. CIT(A) called for genuineness of the business activity. The Ld. CIT(A) called genuineness of the business activity. The Ld. CIT(A) called remand report from the Assessing Officer however in the part of the remand report from the Assessing Officer however in the part of the remand report from the Assessing Officer however in the part of the remand report of the Assessing Officer the Assessing Officer which has been reproduced which has been reproduced by the Ld. CIT(A) in the impugned order, i . CIT(A) in the impugned order, it is observed that t is observed that enquiries were partly carried in respect of addition of share capital enquiries were partly carried in respect of addition of sh enquiries were partly carried in respect of addition of sh

Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 9 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 but no verification or inquiry verification or inquiry was carried out with regard to alleged carried out with regard to alleged trading activity of the assessee. The Ld. CIT(A) however referred to trading activity of the assessee. The Ld. CIT(A) however referred to trading activity of the assessee. The Ld. CIT(A) however referred to the finding of his predecessor in other two companies i.e. M/s the finding of his predecessor in other two companies i.e. M/s the finding of his predecessor in other two companies i.e. M/s Mukta Agriculture Ltd. and M/s Mystic Mukta Agriculture Ltd. and M/s Mystic Electronics Ltd. who were Electronics Ltd. who were also being operated by Shri Krishan Khadaria. The Ld. CIT(A) also being operated by Shri Krishan Khadaria. The Ld. CIT(A) also being operated by Shri Krishan Khadaria. The Ld. CIT(A) observed that in those two companies observed that in those two companies, his predecessor upheld predecessor upheld commission income @ 1% of the turnover. But in the instant case, commission income @ 1% of the turnover. But in the instant case, commission income @ 1% of the turnover. But in the instant case, the Ld. CIT(A) distinguished the facts of t the Ld. CIT(A) distinguished the facts of those two cases. The Ld. hose two cases. The Ld. CIT(A) noted that in those two companies CIT(A) noted that in those two companies, there were no employees there were no employees as against six employees in the case of the assessee. The Ld. CIT(A) as against six employees in the case of the assessee. The Ld. CIT(A) as against six employees in the case of the assessee. The Ld. CIT(A) also observed that in the instant case there was no specific finding also observed that in the instant case there was no specific finding also observed that in the instant case there was no specific finding of non-existence of the ware existence of the warehousing or business activities. The Ld. housing or business activities. The Ld. CIT(A) further noted that in those two cases inquiries were carried CIT(A) further noted that in those two cases inquiries were carried CIT(A) further noted that in those two cases inquiries were carried out by the AO with the purchaser and seller out by the AO with the purchaser and seller and the delivery and the delivery challans submitted by those challans submitted by those assessee’s did not bear any did not bear any transportation and movement of transportation and movement of the goods whereas in the instant whereas in the instant case he did not find any such observation. The finding of the Ld. case he did not find any such observation. The finding of the Ld. case he did not find any such observation. The finding of the Ld. CIT(A) on the issue is reproduced as under: CIT(A) on the issue is reproduced as under:

Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 10 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 ii. Order dt. 29.11.2017 in the case of M/s Mystic Electronics Ltd. for Order dt. 29.11.2017 in the case of M/s Mystic Electronics Ltd. for Order dt. 29.11.2017 in the case of M/s Mystic Electronics Ltd. for AY 2015 AY 2015-16. 6.6. It is also fa 6.6. It is also fact that in the cases of Sh. KrishanKhadaria, Director of these ct that in the cases of Sh. KrishanKhadaria, Director of these entities which are simultaneously being adjudicated, it has been held that entities which are simultaneously being adjudicated, it has been held that entities which are simultaneously being adjudicated, it has been held that the entities namelyNouveau Global Ventures Ltd.,M/s Mukta Agriculture the entities namelyNouveau Global Ventures Ltd.,M/s Mukta Agriculture the entities namelyNouveau Global Ventures Ltd.,M/s Mukta Agriculture Ltd. andM/s Mystic Electronics Ltd. have been us Ltd. andM/s Mystic Electronics Ltd. have been us Ltd. andM/s Mystic Electronics Ltd. have been used to provide accommodation entries of bogus LTCG. accommodation entries of bogus LTCG. Thus, there has definitely been a Thus, there has definitely been a sugar coating / manipulation of the financials. sugar coating / manipulation of the financials. 6.7. At the same time, there are few material differences. The statement of 6.7. At the same time, there are few material differences. The statement of 6.7. At the same time, there are few material differences. The statement of Sh. NareshKedia employee of Sh. KrishanKhadaria NareshKedia employee of Sh. KrishanKhadaria was recorded under was recorded under oath. In the appellate order for M/s Mystic Electronics Ltd. for AY 2015 oath. In the appellate order for M/s Mystic Electronics Ltd. for AY 2015 oath. In the appellate order for M/s Mystic Electronics Ltd. for AY 2015-16, my Id. Predecessor had given a finding as follows: my Id. Predecessor had given a finding as follows:- "7.3. ...it was revealed that the purchase/sale bills of the assessee "7.3. ...it was revealed that the purchase/sale bills of the assessee "7.3. ...it was revealed that the purchase/sale bills of the assessee company (formerly known as Pearl Ele company (formerly known as Pearl Electronics Ltd.) and of its related ctronics Ltd.) and of its related company, M/s. company, M/s. Mukta Agriculture Ltd. (formerly known as Pearl Mukta Agriculture Ltd. (formerly known as Pearl Agriculture Ltd.) were not backed by any evidence of transportation. Agriculture Ltd.) were not backed by any evidence of transportation. Agriculture Ltd.) were not backed by any evidence of transportation. It was further revealed that the purchases made by the assessee It was further revealed that the purchases made by the assessee It was further revealed that the purchases made by the assessee company have been made from company have been made from M/s Unisys Software & Holding M/s Unisys Software & Holding Industries Ltd. and M/s JMD Telefilms Industries Ltd which are Industries Ltd. and M/s JMD Telefilms Industries Ltd which are Industries Ltd. and M/s JMD Telefilms Industries Ltd which are dummy concerns of one Entry Operator, ShriJagdishPurohit of dummy concerns of one Entry Operator, ShriJagdishPurohit of dummy concerns of one Entry Operator, ShriJagdishPurohit of Kolkata. Moreover, in the case of M/s Pearl Agriculture Ltd., it was Kolkata. Moreover, in the case of M/s Pearl Agriculture Ltd., it was Kolkata. Moreover, in the case of M/s Pearl Agriculture Ltd., it was found that in a number of instanc found that in a number of instances, the sale as well as the es, the sale as well as the purchase parties were common and bogus circular transactions have purchase parties were common and bogus circular transactions have purchase parties were common and bogus circular transactions have been entered into. The parties whose names figured as seller as well been entered into. The parties whose names figured as seller as well been entered into. The parties whose names figured as seller as well as buyer included M/s Krishna Industries Ltd., M/s Nirmal Agro as buyer included M/s Krishna Industries Ltd., M/s Nirmal Agro as buyer included M/s Krishna Industries Ltd., M/s Nirmal Agro Products, M/s Champion Agro Lt Products, M/s Champion Agro Ltd. and M/s Globe Soya Products d. and M/s Globe Soya Products Ltd. Ltd. Ltd. On On On being being being confronted, confronted, confronted, neither neither neither ShriNareshKedia ShriNareshKedia ShriNareshKedia nor nor nor ShriKishanKhadaria could give any satisfactory explanation as to ShriKishanKhadaria could give any satisfactory explanation as to ShriKishanKhadaria could give any satisfactory explanation as to why the purchase as well as sale parties are common in M/s Pearl why the purchase as well as sale parties are common in M/s Pearl why the purchase as well as sale parties are common in M/s Pearl Agriculture Ltd. Further, ShriKishanKhada Agriculture Ltd. Further, ShriKishanKhadaria could not give any ria could not give any details of the alleged warehouse of the said related company at details of the alleged warehouse of the said related company at details of the alleged warehouse of the said related company at Rajkot. Thus, in course of the search action, the assessee company Thus, in course of the search action, the assessee company as well as M/s. as well as M/s. Pearl Agriculture Ltd. were found to be not carrying Pearl Agriculture Ltd. were found to be not carrying out any real business and with ex out any real business and with extremely weak fundamentals. tremely weak fundamentals. 7.4. ..Therefore, the action of the AO of rejecting the books of the 7.4. ..Therefore, the action of the AO of rejecting the books of the 7.4. ..Therefore, the action of the AO of rejecting the books of the assessee, cannot be faulted. Moreover, for showing fictitious assessee, cannot be faulted. Moreover, for showing fictitious assessee, cannot be faulted. Moreover, for showing fictitious accommodation transactions etc, the assessee would have surely accommodation transactions etc, the assessee would have surely accommodation transactions etc, the assessee would have surely incurred some unexplained expenses incurred some unexplained expenses on account of commission on account of commission payments. It is observed that the AO has been very reasonable in payments. It is observed that the AO has been very reasonable in payments. It is observed that the AO has been very reasonable in estimating the profits @ 1% of the turnover. Therefore, no infirmity is estimating the profits @ 1% of the turnover. Therefore, no infirmity is estimating the profits @ 1% of the turnover. Therefore, no infirmity is found in the action of the AO of rejecting the book results and found in the action of the AO of rejecting the book results and found in the action of the AO of rejecting the book results and estimating the profits to be o estimating the profits to be of Rs. 41,264/-@1% of the operational @1% of the operational turnover... turnover... 6.8. In the statement of Sh. KrishanKhadariadt. 13.06.2014, he stated as 6.8. In the statement of Sh. KrishanKhadariadt. 13.06.2014, he stated as 6.8. In the statement of Sh. KrishanKhadariadt. 13.06.2014, he stated as under, as regards the employees in various entities managed by him: under, as regards the employees in various entities managed by him: under, as regards the employees in various entities managed by him:-

A10. Sir, / would like to state that all the above companies do not Sir, / would like to state that all the above companies do not Sir, / would like to state that all the above companies do not have separate employees on the payrolls. The staff is mainly have separate employees on the payrolls. The staff is mainly have separate employees on the payrolls. The staff is mainly employed for Nouveau Global Venture Ltd. and Khadaria& Co. which employed for Nouveau Global Venture Ltd. and Khadaria& Co. which employed for Nouveau Global Venture Ltd. and Khadaria& Co. which have about 6 & 4 employees respectively. Other than for these two about 6 & 4 employees respectively. Other than for these two about 6 & 4 employees respectively. Other than for these two companies the work of companies the work of the other companies is carried out by me the other companies is carried out by me alone. There are no employees in the other companies. alone. There are no employees in the other companies. alone. There are no employees in the other companies. 6.9. From the above it can been seen that Nouveau Global Ventures Ltd. has 6.9. From the above it can been seen that Nouveau Global Ventures Ltd. has 6.9. From the above it can been seen that Nouveau Global Ventures Ltd. has 6 employees unlike in the case of other entities cited above. Moreover, unlike mployees unlike in the case of other entities cited above. Moreover, unlike mployees unlike in the case of other entities cited above. Moreover, unlike in the case of other two entities, there is no specific findings as regards the in the case of other two entities, there is no specific findings as regards the in the case of other two entities, there is no specific findings as regards the appellant like non appellant like non-existence of warehouse or business activities. In those existence of warehouse or business activities. In those cases, it was also pointe cases, it was also pointed out by the AO that the enquiries made with d out by the AO that the enquiries made with purchasers / sellers was not fruitful and that the delivery challans purchasers / sellers was not fruitful and that the delivery challans purchasers / sellers was not fruitful and that the delivery challans submitted by the appellant did not bear transportation and movement submitted by the appellant did not bear transportation and movement submitted by the appellant did not bear transportation and movement details. Hence, to this extent the appellant's has to be treated different details. Hence, to this extent the appellant's has to be treated different details. Hence, to this extent the appellant's has to be treated differently from that of M/s Mukta Agriculture Ltd. andM/s Mystic Electronics Ltd. from that of M/s Mukta Agriculture Ltd. andM/s Mystic Electronics Ltd. from that of M/s Mukta Agriculture Ltd. andM/s Mystic Electronics Ltd. 6.10. A comparison of the computation of income filed by the appellant for 6.10. A comparison of the computation of income filed by the appellant for 6.10. A comparison of the computation of income filed by the appellant for various years is summarised as under: various years is summarised as under:- AY Income from Business Income from Gross Total Gross Total Business House Income other sources income as income Property per ROI estimated by AO* 2010-11 0 48,52,094 6,55,593 55,05,687 1,35,02,150 2011-12 69,300 37,40,175 43,95,933 82,05,408 1.43,89.328 2012-13 1.38,600 29.75,010 46,74,422 77,88,032 1.97,85,045 2013-14 1,33,056 (23,92,765) 51,94,064 29.34,355 11,37.439 2014-15 0 21.70.401 0 21,70.401 9.51,746 2015-16 15,98.285 (88,91,686) 64,68,643 Nil 6.02.047

*Besides, other income shown in the P&L Account has been assessed and *Besides, other income shown in the P&L Account has been assessed and *Besides, other income shown in the P&L Account has been assessed and added to the above by the AO. added to the above by the AO. From the above, it can be seen that the appellant has indeed offered above, it can be seen that the appellant has indeed offered above, it can be seen that the appellant has indeed offered substantial amounts for taxation barring AY 2015 substantial amounts for taxation barring AY 2015-16. Although the 16. Although the appellant's role in providing appellant's role in providing accommodation entries in the nature of bogus accommodation entries in the nature of bogus LTCG is evident from the search action, several other LTCG is evident from the search action, several other factors (in the form of factors (in the form of discrepancies) are of much lesser intensity as compared to its two other discrepancies) are of much lesser intensity as compared to its two other discrepancies) are of much lesser intensity as compared to its two other sister entities of the same promoter group. sister entities of the same promoter group. 6.11. In the case of ACIT vs Grasim Industries Ltd in ITA No. 6.11. In the case of ACIT vs Grasim Industries Ltd in ITA No. 6.11. In the case of ACIT vs Grasim Industries Ltd in 1519/Mum/2002 for for AY AY "1992-93 "1992 93 dated dated 17.11.2006, 17.11.2006, (https://indiankanoon.org/doc/874242/), the Hon'ble ITAT held as follows: s://indiankanoon.org/doc/874242/), the Hon'ble ITAT held as follows: s://indiankanoon.org/doc/874242/), the Hon'ble ITAT held as follows: "The task of the "The task of the Tribunal would, therefore, be to analyse the Tribunal would, therefore, be to analyse the materials relied on by both the sides and evaluate the relative merits and reliability. It is on by both the sides and evaluate the relative merits and reliability. It is on by both the sides and evaluate the relative merits and reliability. It is sometimes in the nature of a co sometimes in the nature of a comparative exercise to measure the degree of mparative exercise to measure the degree of Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 12 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 reliability between the materials relied on by the revenue and the materials reliability between the materials relied on by the revenue and the materials reliability between the materials relied on by the revenue and the materials relied on by the assessee. This degree of reliability seems to be the crucial relied on by the assessee. This degree of reliability seems to be the crucial relied on by the assessee. This degree of reliability seems to be the crucial test in the present case in applying the principles of pr test in the present case in applying the principles of pr test in the present case in applying the principles of preponderance of probability. We think that this is the way to proceed to find a balance of probability. We think that this is the way to proceed to find a balance of probability. We think that this is the way to proceed to find a balance of convenience on which alone it might be possible for us to come to a fair convenience on which alone it might be possible for us to come to a fair convenience on which alone it might be possible for us to come to a fair decision." Eventually, the Hon'ble Tribunal held that balance of convenience decision." Eventually, the Hon'ble Tribunal held that balance of convenience decision." Eventually, the Hon'ble Tribunal held that balance of convenience was apparently t was apparently tilting in favour of the assessee and ruled as such. ilting in favour of the assessee and ruled as such. 6.12. Applying the above ratio, given the set of facts before me, I am of the 6.12. Applying the above ratio, given the set of facts before me, I am of the 6.12. Applying the above ratio, given the set of facts before me, I am of the view that balance of convenience lies in favour of the appellant as far as view that balance of convenience lies in favour of the appellant as far as view that balance of convenience lies in favour of the appellant as far as income estimation is concerned. Thus, even while up income estimation is concerned. Thus, even while upholding the rejection of holding the rejection of books of account of the appellant, I am of the view that no further estimation books of account of the appellant, I am of the view that no further estimation books of account of the appellant, I am of the view that no further estimation of income on the basis of turnover is warranted in view of the specific facts of income on the basis of turnover is warranted in view of the specific facts of income on the basis of turnover is warranted in view of the specific facts of the case. The relief is granted to the appellant in respect of estimati of the case. The relief is granted to the appellant in respect of estimati of the case. The relief is granted to the appellant in respect of estimation of additional business income. additional business income.”

We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. Before us, the issue in dispute is relevant material on record. Before us, the issue in dispute is relevant material on record. Before us, the issue in dispute is whether the purchase and sales of the software/hardware and other whether the purchase and sales of the software/hardware and other whether the purchase and sales of the software/hardware and other products shown by the assessee products shown by the assessee are genuine or not. We find that genuine or not. We find that the Ld. CIT(A) has though upheld the rejection of the books of the Ld. CIT(A) has though upheld the rejection of the books of the Ld. CIT(A) has though upheld the rejection of the books of accounts but has deleted the estimation of the profit mainly for the accounts but has deleted the estimation of the profit mainly for the accounts but has deleted the estimation of the profit mainly for the reason that firstly, there are six employees working in the company there are six employees working in the company there are six employees working in the company as against no employees in the case of M/s Mukta Agriculture Ltd. as against no employees in the case of M/s Mukta Agricul as against no employees in the case of M/s Mukta Agricul and M/s Mystic Electronics Ltd. Secondly, there are no observation and M/s Mystic Electronics Ltd. , there are no observation regarding non-existence of the warehouse or the business activity in existence of the warehouse or the business activity in existence of the warehouse or the business activity in the case of the assessee as against such observation in the case of the case of the assessee as against such observation in the case of the case of the assessee as against such observation in the case of M/s Mukta Agriculture Ltd. and M/s Mystic M/s Mukta Agriculture Ltd. and M/s Mystic Electronics Ltd. Electronics Ltd. Thirdly, no observation observation in the case of the assessee to establish in the case of the assessee to establish whether purchaser or seller whether purchaser or seller are not genuine or the delivery of the not genuine or the delivery of the goods was actually goods was actually not carried out as against carried out as against no evidence of transportation or movement of goods observed i transportation or movement of goods observed in n such inquiries carried out in the case of M/s Mukta Agriculture Ltd. and M/s carried out in the case of M/s Mukta Agriculture Ltd. and M/s carried out in the case of M/s Mukta Agriculture Ltd. and M/s

38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, “38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, “38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst is made more as a check on the abuse of power and authority by the AO. Whilst is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the true that it is the obligation of the AO to conduct proper scrutiny of the true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums material, given the fact that the two appellate authorities above are also forums material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the finding, in the event of AO failing to discharge his functions properly, the finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of o conduct proper inquiry on facts would naturally shift to the door of o conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one the said appellate authority. For such purposes, we only need to point out one the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax step in the procedure in appeal as prescribed in Section 250 of the Income Tax step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it bei Act wherein, besides it being obligatory for the right of hearing to be afforded not ng obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the only to the assessee but also the AO, the first appellate authority is given the only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, further inquiry", in terms of sub-section (4) liberty to make, or cause to be made, "further inquiry", in terms of sub liberty to make, or cause to be made, "further inquiry", in terms of sub which reads as under: which reads as under:— "The Commissioner (Appeals) may, before disposing of any appeal, make issioner (Appeals) may, before disposing of any appeal, make issioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer such further inquiry as he thinks fit, or may direct the Assessing Officer such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the to make further inquiry and report the result of the same to the to make further inquiry and report the result of the same to the Commissioner (Appeals)." Commissioner (Appeals)."

Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 14 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 making the payment, its creditworthiness and genuineness of the transaction. making the payment, its creditworthiness and genuineness of the transaction. making the payment, its creditworthiness and genuineness of the transaction. Whilst it is true that the assessee cannot be Whilst it is true that the assessee cannot be called upon to adduce conclusive called upon to adduce conclusive proof on all these three questions, it is nonetheless legitimate expectation of the proof on all these three questions, it is nonetheless legitimate expectation of the proof on all these three questions, it is nonetheless legitimate expectation of the process that he would bring in some proof so as to discharge the initial burden process that he would bring in some proof so as to discharge the initial burden process that he would bring in some proof so as to discharge the initial burden placed on him. Since Section 68 itself declares that the c placed on him. Since Section 68 itself declares that the credited sum would have redited sum would have to be included in the income of the assessee in the absence of explanation, or in to be included in the income of the assessee in the absence of explanation, or in to be included in the income of the assessee in the absence of explanation, or in the event of explanation being not satisfactory, it naturally follows that the the event of explanation being not satisfactory, it naturally follows that the the event of explanation being not satisfactory, it naturally follows that the material submitted by the assessee with his explanation must itself be material submitted by the assessee with his explanation must itself be material submitted by the assessee with his explanation must itself be wholesome or not untrue. It is only when the explanation and the material holesome or not untrue. It is only when the explanation and the material holesome or not untrue. It is only when the explanation and the material offered by the assessee at this stage passes this muster that the initial onus offered by the assessee at this stage passes this muster that the initial onus offered by the assessee at this stage passes this muster that the initial onus placed on him would shift leaving it to the AO to start inquiring into the affairs of placed on him would shift leaving it to the AO to start inquiring into the affairs of placed on him would shift leaving it to the AO to start inquiring into the affairs of the third party.

40.

The CIT (Appeals), as also the ITAT, in the case at hand, in our view, 40. The CIT (Appeals), as also the ITAT, in the case at hand, in our view, 40. The CIT (Appeals), as also the ITAT, in the case at hand, in our view, unjustifiably criticized the AO for not having confronted the assessee with the unjustifiably criticized the AO for not having confronted the assessee with the unjustifiably criticized the AO for not having confronted the assessee with the facts regarding return of some of the summons under Section 131 or not having facts regarding return of some of the summons under Section 131 or not having facts regarding return of some of the summons under Section 131 or not having given opportunity for t given opportunity for the identity of all the share applicants to be properly he identity of all the share applicants to be properly established. The order sheet entries taken note of in the order of CIT (Appeals) established. The order sheet entries taken note of in the order of CIT (Appeals) established. The order sheet entries taken note of in the order of CIT (Appeals) seem to indicate otherwise. The order of CIT (Appeals), which was confirmed by seem to indicate otherwise. The order of CIT (Appeals), which was confirmed by seem to indicate otherwise. The order of CIT (Appeals), which was confirmed by ITAT in the second appeal, does not demon ITAT in the second appeal, does not demonstrate as to on the basis of which strate as to on the basis of which material it had been concluded that the genuineness of the transactions had material it had been concluded that the genuineness of the transactions had material it had been concluded that the genuineness of the transactions had been duly established. There is virtually no discussion in the said orders on such been duly established. There is virtually no discussion in the said orders on such been duly established. There is virtually no discussion in the said orders on such score, except for vague description of the material submitted score, except for vague description of the material submitted by the assessee at by the assessee at the appellate stage. Whilst it does appear that the time given to the assessee for the appellate stage. Whilst it does appear that the time given to the assessee for the appellate stage. Whilst it does appear that the time given to the assessee for proving the identity of the third party was too short, and further that it is proving the identity of the third party was too short, and further that it is proving the identity of the third party was too short, and further that it is probably not always possible for the assessee placed in such situation to be able probably not always possible for the assessee placed in such situation to be probably not always possible for the assessee placed in such situation to be to enforce the physical attendance of such third party (who, in the case of share to enforce the physical attendance of such third party (who, in the case of share to enforce the physical attendance of such third party (who, in the case of share applicants vis-à-vis a company, would be individuals at large and may not be vis a company, would be individuals at large and may not be vis a company, would be individuals at large and may not be even in direct or personal contact), the curtains on such exercise at verification even in direct or personal contact), the curtains on such exercise at verification even in direct or personal contact), the curtains on such exercise at verification may not be drawn and adverse inferences reached only on the basis of returning be drawn and adverse inferences reached only on the basis of returning be drawn and adverse inferences reached only on the basis of returning undelivered of the summonses under Section 131. Conversely, with doubts as to undelivered of the summonses under Section 131. Conversely, with doubts as to undelivered of the summonses under Section 131. Conversely, with doubts as to the genuineness of some of the parties persisting on account of non- delivery of the genuineness of some of the parties persisting on account of non the genuineness of some of the parties persisting on account of non the processes, the initial the processes, the initial burden on the assessee to adduce proof of identity burden on the assessee to adduce proof of identity cannot be treated as discharged. cannot be treated as discharged.” 8.1 Since in the case, it is not available on record whether any Since in the case, it is not available on record whether any Since in the case, it is not available on record whether any enquiries or verification of the alleged trading transactions has been enquiries or verification of the alleged trading transaction enquiries or verification of the alleged trading transaction carried out during remand proceedi during remand proceedings, particularly keeping in particularly keeping in mind various incriminating observation mind various incriminating observations in search proceedings in search proceedings referred in impugned assessment order referred in impugned assessment order, we feel it appropriate to , we feel it appropriate to restore this issue back to the file of the Ld. Assessing Officer for restore this issue back to the file of the Ld. Assessing Officer for restore this issue back to the file of the Ld. Assessing Officer for carrying out necessary inquiry out necessary inquiry for verification whether whether the purchase and sales recorded by the assessee in his books of accounts are and sales recorded by the assessee in his books of accounts and sales recorded by the assessee in his books of accounts

10.

Briefly stated facts of the case are that the Assessing Officer Briefly stated facts of the case are that the Assessing Officer Briefly stated facts of the case are that the Assessing Officer on the basis of the observations in search proceedings in the case of on the basis of the observations in search proceedings in the case of on the basis of the observations in search proceedings in the case of Shri R.K. Kedia and others i R.K. Kedia and others, observed that assessee company has observed that assessee company has raised share capital by way of the issue of preference share raised share capital by way of the issue of preference share raised share capital by way of the issue of preference share allotments/warrants etc. which were only paper transaction for allotments/warrants etc. which were only paper transaction for allotments/warrants etc. which were only paper transaction for giving benefit of long term capital gain to the beneficiaries. The giving benefit of long term capital gain to the beneficiaries. The giving benefit of long term capital gain to the beneficiaries. The assessee on the other hand submitted detail of the share see on the other hand submitted detail of the share see on the other hand submitted detail of the share subscribers, copy of which is available on Paper Book page 62 to 77 copy of which is available on Paper Book page 62 to 77 copy of which is available on Paper Book page 62 to 77 it was submitted that during the year under consideration increase it was submitted that during the year under consideration i it was submitted that during the year under consideration i share capital from Rs.6,17,12,000/ share capital from Rs.6,17,12,000/- to Rs.15,42,80,000/ to Rs.15,42,80,000/- by way of issue of 92,56,800 equity shares of Rs. 10 each at par on rights sue of 92,56,800 equity shares of Rs. 10 each at par on rights sue of 92,56,800 equity shares of Rs. 10 each at par on rights basis in the ratio of 3:2. During the appellate basis in the ratio of 3:2. During the appellate proceedings, remand proceedings, remand report was called for called for from the Assessing Officer, from the Assessing Officer, wherein the Assessing Officer made part inquiry by Assessing Officer made part inquiry by way of issue of notice u issue of notice u/s Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 16 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 133(6) of the Act in case of 29 parties. The Assessing Officer 133(6) of the Act in case of 29 parties. The Assessing Officer 133(6) of the Act in case of 29 parties. The Assessing Officer observed that three parties were having Nil income amount and in observed that three parties were having Nil income amount and observed that three parties were having Nil income amount and balance cases, their return of income their return of income shown meager income as shown meager income as compared to the share application money the share application money invested. . However, after taking into consideration rejoinder of the assessee taking into consideration rejoinder of the assessee, , the Ld. CIT(A), held that identity and creditworthiness of the investors is fully held that identity and creditworthiness of the investors is fully held that identity and creditworthiness of the investors is fully established. The relevant finding of the Ld. CIT(A) is reproduced as established. The relevant finding of the Ld. CIT(A) is reproduced as established. The relevant finding of the Ld. CIT(A) is reproduced as under:

7.7. I have considered the facts of the 7.7. I have considered the facts of the case. It is the case of the AO that case. It is the case of the AO that the subscribers to the share capital of the company are harvesting bogus the subscribers to the share capital of the company are harvesting bogus the subscribers to the share capital of the company are harvesting bogus LTCG. In fact, this aspect has been upheld by this office while LTCG. In fact, this aspect has been upheld by this office while LTCG. In fact, this aspect has been upheld by this office while adjudicating appeal in the case of Sh. adjudicating appeal in the case of Sh. KrishanRaghunath Prasad KrishanRaghunath Prasad Khadaria, wherein hi Khadaria, wherein his commission income on account of such activities s commission income on account of such activities has been estimated and restricted to 1%. Unlike in the case of its sister has been estimated and restricted to 1%. Unlike in the case of its sister has been estimated and restricted to 1%. Unlike in the case of its sister entity M/s Mystic Electronics for AY 2015 entity M/s Mystic Electronics for AY 2015-16 where a preferential issue 16 where a preferential issue was made and part addition us 68 was upheld by my Id. Predec was made and part addition us 68 was upheld by my Id. Predec was made and part addition us 68 was upheld by my Id. Predecessor, the appellant's case is one of rights issue. The appellant has furnished a the appellant's case is one of rights issue. The appellant has furnished a the appellant's case is one of rights issue. The appellant has furnished a list of 622 subscribers (some of them are repetitive, may be due to list of 622 subscribers (some of them are repetitive, may be due to list of 622 subscribers (some of them are repetitive, may be due to different folios). PAN numbers and addresses are available for all the different folios). PAN numbers and addresses are available for all the different folios). PAN numbers and addresses are available for all the subscribers. The rights issue was m subscribers. The rights issue was made in the ratio of 3:2 and is ade in the ratio of 3:2 and is available to all existing shareholders. Thus, it would be imprudent to hold available to all existing shareholders. Thus, it would be imprudent to hold available to all existing shareholders. Thus, it would be imprudent to hold that section 68 addition would lie in the case of the appellant. that section 68 addition would lie in the case of the appellant. that section 68 addition would lie in the case of the appellant. 7.8. I concur with the submission of the appellant that even assuming 7.8. I concur with the submission of the appellant that "even assuming 7.8. I concur with the submission of the appellant that "even assuming without admitting if the allegation that the appellant company is in the ting if the allegation that the appellant company is in the ting if the allegation that the appellant company is in the business of providing long business of providing long-term capital gain to various beneficiaries is term capital gain to various beneficiaries is correct still no addition can be made u/s 68 of the Act as the identity & correct still no addition can be made u/s 68 of the Act as the identity & correct still no addition can be made u/s 68 of the Act as the identity & creditworthiness of the investors and genuineness creditworthiness of the investors and genuineness of the transaction is of the transaction is fully established." The AO's contention that the return income in The AO's contention that the return income in fully established." certain cases is lower than share subscriber amount cannot be certain cases is lower than share subscriber amount cannot be certain cases is lower than share subscriber amount cannot be the basis for making the basis for making-an addition as subscription can also be an addition as subscription can also be made by liquidating other investments /other made by liquidating other investments /other sources. There is no sources. There is no independent independent independent material material material or or or evidence evidence evidence to to to show show show that that that these these these subscriptions are not genuine subscriptions are not genuine. Hence, this addition gets DELETED. . Hence, this addition gets DELETED.”

11.

We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the is in respect of relevant material on record. The issue in dispute relevant material on record. The issue in dispute genuineness of share capital of Rs.9,25,68,0000/ share capital of Rs.9,25,68,0000/ share capital of Rs.9,25,68,0000/-, which was Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 17 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 increased during the year. T increased during the year. The Assessing Officer has though relied he Assessing Officer has though relied on the statements and material gathered during the search of Shri and material gathered during the search of Shri and material gathered during the search of Shri R.K. Kedia, but made addition mainly for the but made addition mainly for the reason reason of failure on the part of the assessee the part of the assessee in establishing identity, creditworthiness identity, creditworthiness of share subscribers and genuineness of the transaction. The Ld. and genuineness of the transaction. The Ld. and genuineness of the transaction. The Ld. CIT(A) though referred to finding of his predecessor in the case of CIT(A) though referred to finding of his predecessor in the case of CIT(A) though referred to finding of his predecessor in the case of M/s Mystic Electronics for assess M/s Mystic Electronics for assessment year 2015 ment year 2015-16 where part addition were upheld addition were upheld, but distinguished the case of the assessee but distinguished the case of the assessee being of the rights issue. Further, the Ld. CIT(A) held that identity being of the rights issue. Further, the Ld. CIT(A) held that identity being of the rights issue. Further, the Ld. CIT(A) held that identity and creditworthiness of the investors and genuineness of the and creditworthiness of the investors and genuineness of the and creditworthiness of the investors and genuineness of the transaction are fully establish fully established. However, we do not find any ed. However, we do not find any evidences referred by the ld CIT(A), which could establish evidences referred by the ld CIT(A), which could establish evidences referred by the ld CIT(A), which could establish creditworthiness of share subscriber parties of share subscriber parties. Further . Further, the identity also needs to be established as during the re also needs to be established as during the remand proceedings also mand proceedings also only replies from share subscriber parties from share subscriber parties were received were received only by post. Since the finding of the Ld. CIT(A) are not based on any the finding of the Ld. CIT(A) are not based on any the finding of the Ld. CIT(A) are not based on any supporting material, therefore, we set aside the finding of the Ld. supporting material, therefore, we set aside the finding of the Ld. supporting material, therefore, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore he issue in dispute and restore the matter back to the file the matter back to the file of the Ld. Assessing Officer for examining the credits the Ld. Assessing Officer for examining the credits corresponding the Ld. Assessing Officer for examining the credits to share capital as per the provisions of u/s 68 of the Act. The as per the provisions of u/s 68 of the Act. The as per the provisions of u/s 68 of the Act. The ground No. 2 of the appeal of the Revenue is accordingly allowed for ground No. 2 of the appeal of the Revenue is accordingly allowed for ground No. 2 of the appeal of the Revenue is accordingly allowed for statistical purposes.

“5.3. I have considered the facts of the case and submissions of the 5.3. I have considered the facts of the case and submissions of the 5.3. I have considered the facts of the case and submissions of the appellant. One of the contention of the appellant is that the assessment appellant. One of the contention of the appellant is that the assessment appellant. One of the contention of the appellant is that the assessment could not have been disturbed in the absence of any incriminating could not have been disturbed in the absence of any incriminating could not have been disturbed in the absence of any incriminating material. In this case, it is seen that a search action was mounted on R. ial. In this case, it is seen that a search action was mounted on R. ial. In this case, it is seen that a search action was mounted on R. K. KediaGroup on 13.06.2014 by Investigation K. KediaGroup on 13.06.2014 by Investigation Directorate at New Directorate at New-Delhi. The appellant being an important part of the activities related to the The appellant being an important part of the activities related to the The appellant being an important part of the activities related to the group was also covered. The main allegation a group was also covered. The main allegation against the group was gainst the group was arising that it was engaged in providing various types of accommodation arising that it was engaged in providing various types of accommodation arising that it was engaged in providing various types of accommodation entries to large number of beneficiaries all over the country. One such entries to large number of beneficiaries all over the country. One such entries to large number of beneficiaries all over the country. One such type of accommodation entry is that of bogus LTCG by prearranged type of accommodation entry is that of bogus LTCG by prearranged type of accommodation entry is that of bogus LTCG by prearranged trading in shares of vario trading in shares of various non-descript listed companies. The recovery descript listed companies. The recovery of ledger accounts running into 870 number of pages having a total of of ledger accounts running into 870 number of pages having a total of of ledger accounts running into 870 number of pages having a total of 224 ledgers of 30 groups from the premises of Sh. R K Kedia has been 224 ledgers of 30 groups from the premises of Sh. R K Kedia has been 224 ledgers of 30 groups from the premises of Sh. R K Kedia has been highlighted by the AO. It is seen that the transactions also depicted highlighted by the AO. It is seen that the transactions also depicted highlighted by the AO. It is seen that the transactions also depicted cash payments running into hundreds of crores amongst various entry payments running into hundreds of crores amongst various entry payments running into hundreds of crores amongst various entry operators. The ledgers highlighted the transactions with Khadaria have operators. The ledgers highlighted the transactions with Khadaria have operators. The ledgers highlighted the transactions with Khadaria have been summarized in page 4 and 5 of the assessment order. Sh. R K been summarized in page 4 and 5 of the assessment order. Sh. R K been summarized in page 4 and 5 of the assessment order. Sh. R K Kedia has in its statements elaborated the modus ope Kedia has in its statements elaborated the modus ope Kedia has in its statements elaborated the modus operandi and transaction recorded in the ledger accounts and also identified various transaction recorded in the ledger accounts and also identified various transaction recorded in the ledger accounts and also identified various individuals including the appellant. As per the AO, these transactions are individuals including the appellant. As per the AO, these transactions are individuals including the appellant. As per the AO, these transactions are also independently corroborated with the bank statements appearing in also independently corroborated with the bank statements appearing in also independently corroborated with the bank statements appearing in the statements / books of acc the statements / books of account of such other individuals. The linkage ount of such other individuals. The linkage of the appellant with Sh. R. K Kedia is also very much visible from the of the appellant with Sh. R. K Kedia is also very much visible from the of the appellant with Sh. R. K Kedia is also very much visible from the seized records. For instance, in the letter dt. 15.12.2016 addressed by seized records. For instance, in the letter dt. 15.12.2016 addressed by seized records. For instance, in the letter dt. 15.12.2016 addressed by Nouveau Global Ventures Ltd Nouveau Global Ventures Ltd 19 3609, 3608/MUM/2023 & ITA Nos. 3611, 3609, CO Nos. 64 to 66/M/2024 the appellant to the AO while explaining page No. 4 of Annexure A6 the appellant to the AO while explaining page No. 4 of Annexure A6 the appellant to the AO while explaining page No. 4 of Annexure A6 (Query No. 30) found at office at Pearl Arcade, the sheet does indicate an Query No. 30) found at office at Pearl Arcade, the sheet does indicate an Query No. 30) found at office at Pearl Arcade, the sheet does indicate an offer from Sh. R. K. Kedia to buy stake in M/s Nouveau Global Venture offer from Sh. R. K. Kedia to buy stake in M/s Nouveau Global Venture offer from Sh. R. K. Kedia to buy stake in M/s Nouveau Global Venture Ltd. for Rs. 40,00,000/ Ltd. for Rs. 40,00,000/-. The fact that the appellant has linkages with . The fact that the appellant has linkages with Sh. R. K. Kedia is also evident from its Sh. R. K. Kedia is also evident from its reply dt. 15.12.2016 before the reply dt. 15.12.2016 before the AO, "Query No. 8 AO, "Query No. 8 - The details of my transaction with Mr. RajkumarKedia The details of my transaction with Mr. RajkumarKedia is already submitted to investigation wing, Delhi and I am not able to is already submitted to investigation wing, Delhi and I am not able to is already submitted to investigation wing, Delhi and I am not able to recollect and the same is not readily available." The SMS of Sh. recollect and the same is not readily available." The SMS of Sh. recollect and the same is not readily available." The SMS of Sh. Natawarlal Daga Daga and Sh. Rajesh Omprakash Agarwal also corroborate also corroborate the relationship apart from the cash transactions. The appellant's relationship apart from the cash transactions. The appellant's relationship apart from the cash transactions. The appellant's contention that "the extract of ledger accounts pertain to one Mr. contention that "the extract of ledger accounts pertain to one Mr. contention that "the extract of ledger accounts pertain to one Mr. Khadaria which cannot lead to the conclusion that the same belong to Khadaria which cannot lead to the conclusion that the same belong to Khadaria which cannot lead to the conclusion that the same belong to me. Merely because the surname is the same it cannot be concluded that me. Merely because the surname is the same it cannot be concluded that me. Merely because the surname is the same it cannot be concluded that the same pertains to me as Krishan the same pertains to me as Krishan Khadaria", cannot be accepted for Khadaria", cannot be accepted for the reasons stated above the reasons stated above 5.4. There are sufficient evidences to show that the entire group was 5.4. There are sufficient evidences to show that the entire group was 5.4. There are sufficient evidences to show that the entire group was involved /complicit i involved /complicit in providing accommodation entries and that there is n providing accommodation entries and that there is more than enough incriminating material. more than enough incriminating material.” 13.1 The Ld. CIT(A) further referred to various decisions and The Ld. CIT(A) further referred to various decisions and The Ld. CIT(A) further referred to various decisions and thereafter concluded as under: thereafter concluded as under:

“5.11. It was also held that unlike criminal proceedings where the ch 5.11. It was also held that unlike criminal proceedings where the ch 5.11. It was also held that unlike criminal proceedings where the charge has to be proved beyond doubt, income has to be proved beyond doubt, income-tax proceedings are quasi tax proceedings are quasi- judicial. Tax liability in cases of suspicious transactions has to be judicial. Tax liability in cases of suspicious transactions has to be judicial. Tax liability in cases of suspicious transactions has to be assessed on the basis of the material avallable on record, surrounding assessed on the basis of the material avallable on record, surrounding assessed on the basis of the material avallable on record, surrounding circumstances, human conduct and preponderance circumstances, human conduct and preponderance of probabilities. Rules of probabilities. Rules of evidence do not govern income tax proceedings and the AO is not of evidence do not govern income tax proceedings and the AO is not of evidence do not govern income tax proceedings and the AO is not fettered or bound by technical rules contained in the Indian Evidence Act fettered or bound by technical rules contained in the Indian Evidence Act fettered or bound by technical rules contained in the Indian Evidence Act and is entitled to act on material which may not be accepted as evidence and is entitled to act on material which may not be accepted as evidence and is entitled to act on material which may not be accepted as evidence in a court of law in a court of law. 5.12. In view of the above, the contentions of the appellant that there is 5.12. In view of the above, the contentions of the appellant that there is 5.12. In view of the above, the contentions of the appellant that there is no incriminating material cannot be accepted. This part of the ground no incriminating material cannot be accepted. This part of the ground no incriminating material cannot be accepted. This part of the ground stands REJECTED stands REJECTED.” 13.2 In view of the finding of the Ld. CIT(A) In view of the finding of the Ld. CIT(A), the contention contention of the Ld. counsel for the as Ld. counsel for the assessee of non-existence of the incriminating existence of the incriminating material are rejected as there are ample instances of ledger material are rejected as there are ample instances of ledger material are rejected as there are ample instances of ledger accounts of beneficiaries appearing in the books of accounts of Shri accounts of beneficiaries appearing in the books of accounts of Shri accounts of beneficiaries appearing in the books of accounts of Shri R.K. Kedia. Thus, the ground No. 2 of the cross the ground No. 2 of the cross the ground No. 2 of the cross-objection is accordingly rejected. .