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TMI Blog2021 (5) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITAT MUMBAI] , we delete the impugned additions. Consequently, the set-off of losses, as allowable under law, would be available to the assessee. We order so. The Ld. AO is directed to re-compute assessee s income in terms of our above order. No infirmity could be found in Ld. AO s action in reopening the case of the assessee. The stand of Ld. CIT(A), in this regard, stands confirmed. - I.T.A. No.627/Mum/2019 - - - Dated:- 3-5-2021 - Hon ble Shri Mahavir Singh, VP And Hon ble Shri Manoj Kumar Aggarwal, AM For the Assessee : Shri Vimal Punmiya Ld. AR For the Revenue : Shri Tharian Oommen Ld. Sr. DR ORDER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-49, Mumbai [in short referred to as CIT(A) ], Appeal No.CIT(A)-49/IT-165/2017-18 dated 05/12/2018 on following grounds of appeal: - 1. On the facts and circumstances of the case and in law the Ld. CIT(A) erred in confirming the reopening the case u/s 148 which is bad in law. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r respective creditworthiness and the genuineness of the transactions as per the requirements of Section 68. The Ld. DR, though relied upon the orders of lower authorities, however, could not controvert the fact that the issue has already been adjudicated by the Tribunal in assessee s own case for earlier years. 3. We have carefully heard the rival submissions and perused relevant material on record including the order of Tribunal in assessee s own case. We have also gone through the documentary evidences furnished by the assessee to establish the fulfillment of primary ingredients of Sec.68. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Assessment Proceedings 4.1 Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged as builders developers was subjected to an assessment u/s 143(3) r.w.s. 147 on 22/12/2017 wherein the assessee was saddled with certain addition of unexplained cash credit u/s 68 for ₹ 403.50 Lacs. The original return was processed u/s 143(1). However, pursuant to certain search / survey action on Lotus / Kamdhenu / Greenvalley group, the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved, the assessee assailed the action of Ld. AO on legal grounds as well as on merits. Challenging reassessment proceedings, the assessee submitted that the assessee group had no connection with Lotus / Kamdhenu / Greenvalley group except for the fact that one Shri Bhagwanji Patel of Lotus group was one of the ex-directors in one of the group companies of the assessee viz. Axayraj Buildwell Pvt. Ltd. but Shri Bhagwanji Patel ceased to be director of Axayraj Buildwell Pvt. Ltd. in 2009. The assessee submitted that in the absence of tangible material, Ld. AO had no jurisdiction to issue notice u/s 148. 5.2 However, the legal submissions challenging reassessment proceedings could not find favor with Ld. CIT(A) who observed that no scrutiny took place u/s 143(3) and there was no scope for Ld. AO to examine the issue of share capital / share premium. The Ld. AO had authentic information by way of appraisal report of the search in the case of Lotus group and the assessee s admissions during search compelled him to take action u/s 147 / 148. The subsequent retraction would not have any relevance since the onus would be on assessee to prove that the statement was factually wrong. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete object to be followed. Further, there was no justification for Kolkata based entities to make investment in Mumbai based entity and that too, at a premium of ₹ 90/- per share. At para 7.6, it was noted that all the entities purchased the shares of the assessee at premium of ₹ 90/-per share but they exited at face value of ₹ 10/- per share. Further, the retraction would not have any relevance in the light of decision of Mumbai Tribunal in Hiralal Maganlal and Co. V/s DCIT (97 TTJ 377). The case laws being relied upon by the assessee were held to be distinguishable rather reliance was placed on the decision of Hon ble Delhi High Court in Nova Promoters Finlease Pvt. Ltd. 342 ITR 169 to confirm the additions. Finally, the additions were confirmed by observing as under: - 7.8 The Learned Counsel also alleged that the AO made the addition on the basis of suspicion and not evidences. This also is not correct as the AO had brought in enough evidences both direct and corroborative to come to the conclusion that the share capital and premium received by the assessee are not genuine. As could be seen from the assessment order and from the discussion made above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In the case of the assessee s sister concern i.e. M/s. Bini Builders Pvt. Ltd. ITA. No.631 632/M/2019, the issue has been decided by Hon ble ITAT in favour of the assessee. The copy of order dated 12.03.2020 is on the file and the relevant finding is hereby reproduced as under.:- 6.3 On merits, the assessee assailed the quantum addition by way of elaborate submissions which have been extracted in para 7.1 of the impugned order. The assessee drew attention to the documents submitted by the assessee with respect to investor entities to establish their identity, creditworthiness and genuineness of the transactions. It was submitted that each and every shareholder confirmed the stated transactions therefore, findings rendered by Ld.AO run contrary to the provisions of Sec. 68. The assessee maintained that by submitting these details, it had discharged the primary onus of proving the stated transactions. All the investor entities had enough funds to invest in the assessee company. Reliance was placed on catena of judicial pronouncements to support the said submissions. These have already been tabulated in assessee s submissions. Therefore, the assessee submitted that additions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which have invested in the assessee company but also about the 67 companies which have invested in the said 11 companies. The AO had made exhaustive enquiry and analysis before reaching to this conclusion. The Learned Counsel has also alleged that the Third Party Unilateral Act cannot be the basis of addition but the addition, in this case, has been made not on the basis of Third Party Unilateral Act but on the basis of the assessee's own admission supported by other corroborative evidences. In the light of these facts and circumstances, the addition made by the AO is confirmed. The grounds of appeal are dismissed. Aggrieved the assessee is under further appeal before us. 7. We have carefully heard the arguments advanced by respective representatives and perused relevant material on record including documents placed in the paper-book. We have also deliberated on various judicial pronouncements as cited before us. We have already appreciated the settled legal position regarding addition u/s 68 as enumerated by us in the opening paragraphs. Our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. 8.1 Upon careful consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount of Share Capital invested Share Capital of investor entity Reserves of Investor entities Net worth of investor entities 1 Limelight Dealcom P. Ltd. 15,00,000 16,85,000 3,01,30,806 3,18,15,806 2 Classic Commotrade P. Ltd. 5,00,000 6,51,800 2,70,49,015 2,77,00,815 3 Divy Prakash Suppliers Pvt. Ltd. 25,00,000 1,00,02,450 33,68,50,695 34,68,53,145 4 Goldy Dealcom P. Ltd. 25,00,000 7,21,000 3,04,44,166 3,11,65,166 5 Nextgen Tradecom P. Ltd. 20,00,000 57,65,000 10,76,35,000 11,34,00,000 6 Rexnox Trexim P. Ltd. 18,00,000 1,15,57,100 15,93,97,977 17,09, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the assessee u/s 68. It is trite law that no additions could be made merely on the basis of suspicion, conjectures or surmises. 8.5 The Ld. DR has relied upon the case of Hon ble Supreme Court in Sumati Dayal Vs CIT (80 Taxman 89) Durga Prasad More (82 ITR 540 26/08/1971). No doubt that the revenue authorities were not required to put blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the documents produced before them. However, we find that no such inquiries have been made by the authorities except for the allegations that the share capital was bogus in nature. Nothing was brought on record that to substantiate the fact that the assessee s unaccounted money was routed in the books in the garb of share capital. 8.6 The entirety of facts and circumstances as enumerated hereinabove do not convince us to concur with the stand of Ld. CIT(A). The impugned additions, in our considered opinion, could not be sustained under law in the light of binding judicial pronouncements as enumerated by us in the opening paragraphs. Therefore, we delete the same. Consequently, the set-off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not liable to be relied upon the unless corroborated by the sufficient evidence on record. Moreover no opportunity of being heard was given to the assessee. However, in support of this contention, the Ld. Representative of the assessee has placed reliance upon the following law.:- 1. CIT Vs. Loverly Exports Pvt. Ltd. (2008) 216 CTR 195 (SC) 2. PCIT Vs. Himachal Fibers Ltd. (2018) 98 taxmann.com 173 (SC) 3. PCIT Vs. Bharat Securities P. Ltd. (2020) 13 taxmann.com 32 (SC) 4. PCIT Vs. Rohtak Chain Co. P. Ltd. (2019) 110 taxmann.com 59 (SC) 5. PCIT Vs. Ami Industries Pvt. Ltd. 1231 of 2017 6. CIT Vs. Gagandeep Infrastructure Pvt. Ltd. ITA. No.1613 of 2014 (Bom) 7. CIT Vs. Orchid Industries Pvt. Ltd., I. T. Appeal No. 1433 of 2014 8. Jasamrit Constructions Pvt. Ltd. Vs. ITO, ITA. No. 1091/M/2016 ITAT Mum dated 8 Feb, 2018 9. Pr. CIT Vs. M/s. ApeakInfotech, Nagpur ITA. No. 26/2017 (Bom. HC) dated 8 June, 2017 10. Umbrella Projects Pvt. Ltd. Vs. ITO 18(1) ITA. No. 5955/Del/2014 dated 23 Feb, 2018. Taking into account all the facts and circumstances mentioned above and also relying upon the decision of the Hon ble ITAT in the sister concern case M/s. Binn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd.; (iv) M/s Reality Barter Pvt. Ltd., we find that the assessee had furnished similar sufficient documentary evidences as follows: - (i) Share Application Form (ii) Copy of Cheque (iii) Copy of Cheque Deposit Slip (iv) Copy of investor s Bank Statement (v) Copy of Share Certificate Counterfoil (vI) Copy of source of funds certificate (vii) Copy of Audit Report along with financial statements of the investor entity (viii) Copy of ITR acknowledgement of the investor entity (ix) Copy of PAN Card (x) Copy of Certificate of incorporation of investor entity (xi) Memorandum Articles of Association of investor entity (xi) Company Master Data showing status as active (xii) Copy of Board Resolution (xiv) Copy of RBI certificate of registration Upon perusal of these documents, it could be said that the primary onus as casted on the assessee in terms of the requirement of Section 68, was duly fulfilled and the onus was on revenue to controvert the evidences furnished by the assessee. However, we find that nothing has been brought on record by the revenue to substantiate the fact that the assessee s unaccounted money was routed in the books in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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