AJOOBA WATER WORLD PRIVATE LIMITED,. vs. ITO WARD -1(1), FBD, .

The assessee furnished the following documents of various investors: – A. Certificate of Incorporation along with Memorandum and Article of Association B. Audited financial statements for the year ended 31-3-2016 C. Income tax return acknowledgement D. Share application form E. Confirmation of accounts F. Bank statement of investor companies.

These documents are enclosed from pages 91 to 337 of the Paper Book. The share capital portion was received for face value of ₹10 per share and share premium portion was ₹40 per share. The assessee used Net Asset Value method (NAV), which is one of the prescribed methods in Rule 11UA of Income Tax Rules in valuation of unquoted shares. The said valuation report is enclosed in pages 377 to 379 of the paper book. The ld AO issued notice u/s 133(6) of the Act to all the 6 parties asking them to furnish relevant information and confirmation of the investment made for the subscription of shares in the assessee company. It is pertinent to note that out of aforesaid 6 parties, no monies towards share capital and share premium were received from 3 parties namely M/s. Balgopal Builders Pvt. Ltd, M/s. Beta Nirman Pvt Ltd and Omshivam Contractors Pvt Ltd. These 3 parties did not respond to the notice issued u/s 133(6) of the Act before the ld AO, as there were no transactions during the year under consideration and there was only opening balance. The remaining 3 parties with whom transactions were carried out during the year duly responded directly before the ld AO to the notice u/s 133(6) of the Act by furnishing relevant documents and confirming the fact of investment being made in the shares & 1293/Del/2024 Ajooba Water World Pvt. Ltd of the assessee company with share premium. The ld AO completely ignored the documents submitted both by the assessee as well as by the investors directly in response to notice u/s 133(6) of the Act and proceeded to treat the entire sum of receipt of share capital and share premium from all the six parties totaling to ₹92,30,000/- as unexplained cash credit u/s 68 of the Act by raising doubt over the credibility and identity of the investors and genuineness of the transactions. The basis of the addition was the alleged failure of the assessee to furnish the requisite documents before the ld AO as well as during the appellate proceedings to substantiate the identity and creditworthiness of the investors company and genuineness of the impugned transactions, which eventually lead to confirmation of the additions u/s 68 of the Act by the ld CIT(A).

The ld AR in his written submissions submitted that the assessee company could not furnish all the requisite documents through e-filing portal due to certain technical glitches and constraint of the portal before the ld AO. Hence, left with no other option, the assessee furnished all those documents and evidences as additional evidences before the NFAC under Rule 46A of the Income Tax Rules by a detailed paper book together with the valuation report using NAV method in terms of Rule 11UA of the Income Tax Rules enclosed in Pages 377 to 379 of the Paper Book. We find on perusal of the order of NFAC, there is no mentioning of assessee filing the complete details in the form of detailed paperwork as additional evidences under Rule 46A of the Income Tax Rules. The assessee indeed vide letter dated 18.06.2022, had made a request before the ld NFAC to admit the additional evidences under Rule 46A of the Income Tax Rules containing all the relevant documents in respect of the investors and also narrating the reasons for filing the same as additional evidences. The said letter dated 18.06.2022 is enclosed in pages 338 to 342 of the paper book. But since & 1293/Del/2024 Ajooba Water World Pvt. Ltd these additional evidences were not considered by the ld NFAC and ultimately these evidences require factual verification by the ld AO, we deem it fit and appropriate in the interest of justice and fairplay, to restore this issue to the file of ld AO for de novo adjudication in accordance with law to decide in the light of the evidences placed on record by the assessee. The assessee is also given liberty to furnish fresh evidences if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly grounds raised by the assessee are allowed for statistical purposes for assessment year 2016-17 in the above mentioned terms. for Assessment Year 2017-18.

Dispute involved in AY 2017-18 is identical to dispute for Assessment Year 2016-17. In AY 2017-18, an amount of Rs. 45 lakhs was received from 1 party i.e. Zenic Traders Pvt. Ltd on 29.06.2016. The assessment was framed u/s 144 of the Act by the ld AO and additional evidences were filed by the assessee before the ld NFAC furnishing the complete details of the investor. The request to admit the additional evidences are enclosed in pages 140 to 144 of the paper book. Ld NFAC as was done in AY 2016-17 had not mentioned about these additional evidences, even in AY 2017-18. Hence we find that these evidences require factual verification by the ld AO and accordingly, we deem it fit and appropriate to restore this issue to the file of the ld AO for de novo adjudication in accordance with law. The assessee is at liberty to furnish fresh evidences, if any, in support of its contentions. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly grounds raised by the assessee for & 1293/Del/2024 Ajooba Water World Pvt. Ltd assessment year 2017-18 are allowed for statistical purposes in the above mentioned terms.

In the result, both the appeals of the assessee are allowed for statistical purposes.