T HE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAVISH SOOD (JM) I.T.A. NO. 1229 /MUM/ 201 7 (ASSESSMENT YEAR 20 09 - 10 ) AKANSHA ISPAT PVT. LTD. PLOT NO. 275/276, NEAR GANESH HOTEL, KOLSA BUNDER, DARUKHANA REAY ROAD MUMBAI - 400 010. PAN : AAHCA2889F V S . ITO - 6(1)(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI PARESH SHAPARIA DEPARTMENT BY SHRI RAVINDER SINDHU DATE OF HEARING 13.01.202 0 DATE OF PRONOUNCEMENT 01.06 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THIS APPEAL BY THE ASSESSEE IS DIRECTED IN ORDER OF LEARNED CIT (A) DATED 2.12.2016 AND PERTAINS TO ASSESSMENT YEAR 2009 - 10. 2. T HE GROUNDS OF APPEAL READ AS UNDER : - I. CONFIRMATION OF ADDITION U/S 68 OF RS. 45,00,000 / - ON ACCOUNT SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 45,00,0007 - ON ACCOUNT OF SHARE APPLICATION MONEY & SHARE PREMIUM RECEIVED FROM BHAROSEMAND COMMODITIES P VT LTD U/S 68, TREATING THE SAME AS NOT GENUINE & FROM UNDISCLOSED SOURCE. 2. THE LEARNED CIT(A) OUGHT NOT TO HAVE MADE ADDITION U/S 68 OF RS. 45,00,0007 - ON ACCOUNT OF SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED. 3. THE ADDITION OF RS. 45, 00,000/ - U/S 68 ON ACCOUNT OF SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED REQUIRES TO BE DELETED. 2 3. B R I EF FACTS OF THE CASE ARE THAT ASSESSEE THIS CASE IS ENGAGED INTO BUSINESS OF INVESTMENT IN SHARES AND SECURITIES . D URING THE COURSE OF ASSESSMEN T ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS RECEIVED SHARE APPLICATION AND SHARE PREMIUM FROM SIXTEEN PARTIES, AMOUNTING TO RS. 2,24,00,000/ - . W ITH RESPECT TO THE RECEIPT OF SHARE AP PLICATION AND SHARE PREMIUM FROM M/S. BHAROSEMAND COMMODITIES PVT. LIMI TED, KOLKATA , T HE ASSESSING OFFICER MADE ENQUIRIES THROUGH DIT, KOLKATA. I T WAS FOUND THAT THE SAID COMPANY IS NOT AT ALL IN EXISTENCE AT THE SAID ADDRESS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO RESPOND. IN ABSENCE OF COGENT EXPLANATION FROM THE ASSES SEE ABOUT THE VERY EXISTENCE OF THE SAID COMPANY THE ASSESSING OFFICER PROCEED ED TO ADD THE SAID SUM OF RS. 45 , 00 , 000 AS SHARE APPLICATION AND SHARE PREMIUM TO BE UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE IT ACT. THE FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD ARE AS UNDER : - 5.6 IN ORDER TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTION AND ITS TRUE NATURE, THE ASSESSEE COMPANY WAS REQUIRED TO FURNISH THE FOLLOWING DETAILS: (I) IDENTITY OF THE PERSONS, CAPACITY AND CREDITWORTHINESS (II) P ROOF OF TRANSACTION - WITH BANK STATEMENT OF BOTH PARTIES AND CONFIRMATION (III) SHARE APPLICATION FORM AND SHAREHOLDERS RE G ISTER (IV) BASIS OF VALUATION WITH REPORT IF ANY (V) JUSTIFICATION FOR THE PREMIUM CHARGED VIS - - VIS THE INTRIN SIC VALUE OF THE SHARES 5.7 IN RESPONSE, THE ASSESSEE COMPANY SUBMITTED THE FOLLOWING: (I) ACKNOWLEDGMENT OF RETURN OF INCOME OF THE PERSONS (II) P&L AND BALANCE SHEET IN RESPECT OF PERSONS (III) CONFIRMATION IN RESPE CT OF PERSONS (IV) VALUATION REPORT 5.8 NOTICES U/S.133 (6) WERE ALSO ISSUED TO THE 14 CONCERNS AT THE STATED ADDRESS FROM WHOM PREMIUM HAS BEEN RECEIVED BY THE ASSESSEE. THE DETAIL REPLIES FILED IN THIS RESPECT ARE TAKEN ON RECORD. IT IS LE ARNT THAT PARTY AT KOLKATTA NAMELY M/S BHAROSEMAND COMMODITIES PVT. L TD . HAS NOT COMPLIED TO NOTICE U/S 1 33(6) OF I .T ACT 1961.THER F ORE COMMISSION WAS ISSUED TO KOLKATTA OFFICE AS PER LETTER DATED 13 - 03 - 2015 AND INSPECTOR OF RANGE SHRI BIBROTA ROY CHAUDHUR Y HAS BEEN DEPUTED FOR FIELD ENQUIRY. THE INSPECTOR 3 CONDUCTED ENQUIRY ALONGWITH THE INSPECTOR SHRI V I NAY KUMAR SONWANI FROM OFFICE OF D I T (I&CI ) , KOLKATTA. THE ENQUIRY REPORT OF THE INSPECTOR HAS BEEN RECEIVED AND THE SAME IS TAKEN ON RECOR D. TH E CONTENTS O F ENQUIRY REPORT IS REPRODUCED BELOW FOR REFERENCE: 'AS DIRECTED VERIFICATION OF THE SAID PARTY LOCATED AT P - 72.PRINCE STREET , 3 RD FLOOR KOLKATTA 7 0000 7 2 IS CARRIED OUT ON 16/03/2015.THE SAID PARTY WAS NOT FOUND IN THE G IVEN ADDRESS, WHEN ENQU IRED FROM TH E PEOPLE OF THE LOCALI TY ABOUT THE ABOVE MENTIONED PART Y , THE Y S T A T ED THAT NO SUCH COMPANY OPERATES FROM THE SAID PREMISES, HENCE THE VERIFICAT ION OF PARTY COULD NOT BE DONE. ' THEREAFTER ON 23RD MARCH 2015, DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSE SSEE'S REPRESENTATIVE HAH BEEN INTIMATED ABOUT THE RESULTS O F THE ENQUIRY AND INTIMATED TO THE ASSESSEE COMPANY FOR ITS RESPONSE. IT WAS ALSO INSTRUCTED TO PRODUCE THE PERSONS (DIRECTORS) FOR VERIFICATION................................. [EVIDENCE PRODUCE D OR NOT PRODUCED............... IDENTITY ESTABLISHED OR NOT CAPACITY AND CREDIT WORTHINESS - NO BUSINESS, SUBSTANTIAL SHARE CAPITAL WITH HUGE SHARE PREMIUM IN THE HANDS OF THE INVESTOR COMPANIES AS WELL BANK STATEMENT IMMEDIATE CREDITS AND ISSUE OF CHEQUES 5.9 THE ASSESSEE FILED ITS JUSTIFICATION ALONG WITH VALUATION REPORT AS PER ITS LETTER DATED 27 - 03 - 2015. IN RESPECT OF PRODUCTION OF M/S BHAROSEMAND COMMODITIES P VT . L TD . ASSESSEE FILED SEPARATE LETTER DATED 27 - 03 - 2015 AND SHOWN HIS INAB ILITY TO PRODUCE THIS PARTY FOR EXAMINATION. 5.10 FROM THE ABOVE, IT WAS EVIDENT THAT THE ASSESSEE COMPANY HAS MISERABLY FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND ITS TRUE NATURE IN RESPECT OF SHARE PREMIUM TO THE EXTENT OF RS 45.00,0 00 FROM M/S BHAROSEMAND COMMODITIES PVT L TD. CONSIDERING THE PARAMETERS AS DISCUSSED SUPRA, IT IS ESTABLISHED BEYOND DOUBTS THAT THE ASSESSEE COMPANY COULD NOT SUBSTANTIATE ITS CLAIM OF HAVING RECEIVED THE SAID SUMS OF MONEY FROM THE STATED PERSON TOWARDS SHARE APPLICATION/SHARE CAPITAL AND SHARE PREMIUM. 4. T HEREAFTER THE ASSESSING OFFICER ALSO REFERRED TO A CATENA OF CASE LAWS IN SUPPORT OF HIS PRO POSITION . 5. A GAINST THE ORDER ASSESSEE APPEALED BEFORE THE LEARNED CIT (A) . 6. LEARNED CIT (A) NOTED THAT A FTER DETAILED ENQUIRY AT K OLKATA THE ASSESSING OFFICER HAS FOUND THAT THE SAID PARTY NAMELY M/S BHAROSEMAND COMMODITIES PVT. LTD. WAS NOT AVAILABLE AT THE GIVEN ADDRESS. THAT PERSONS RESIDING NEARBY 4 ALSO STATED THAT NO SUCH COMPANY OPERATES FROM THE SAID ADDRESS. HENCE LEARNED CIT (A) HELD THAT THE ONUS SHIFTED TO THE ASSESSEE TO PROVE THE EXISTENCE OF THE SAID COMPANY. IN ABSENCE OF THE SAME LEARNED CIT (A) UPHELD THE ORDER OF THE ASSESSING OFFICER. THE FINDINGS OF THE LEARNED CIT (A) IN THIS REGARD READ S A S UNDER : - ' I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE APPELLANT HAS ARGUED THAT SHARE PREMIUM IS A CAPITAL RECEIPT AND HENCE NOT INCOME. I DO NOT FIND MERIT IN THE SUBMISSION OF THE APPELLANT. THERE ARE VARIOU S INSTANCES WHEREIN THE ADDITION ON ACCOUNT OF RECEIVING OF MONIES IN THE GARB OF SHARE PREMIUM IS CONFIRMED BY VARIOUS JUDICIARY AUTHORITIES. HENCE, IT CANNOT BE SAID THAT ONCE IT IS ACCOUNTED FO R IN THE BOOKS AS SHARE CAPITAL /SHARE PREMIUM IT IS A CAPITA L RECEIPT. IN THE CASE OF VODAFONE INDIA SERVICES LIMITED THERE IS INDEED SHARE CAPITAL AND SHARE PREMIUM BUT THE APPELLANT HAS TO PROVE THAT IT IS INDEED SHARE CAPITAL AND SHARE PREMIUM. THE APPELLANT ALSO RELIED ON VARIOUS CASE LAWS BUT IT IS NOT USEFUL TO THE APPELLANT UNLESS AND UNTIL IT PROVES THAT IT HAS RECEIVED SUCH SHARE CAPITAL AND SHARE PREMIUM FROM THE IDENTIFIED PERSONS AND THE TRANSACTION IS GENUINE AND TRUE. THE ADDITION IS MADE U/S 68 AND THEREFORE, THE APPELLANT HAS TO PROVE THE IDENTITY & CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTION . THE APPELLANT DURING ASSESSMENT PROCEEDINGS FURNISHED THE COPY OF ITR WITH ALL ANNEXURES, CONFIRMATIONS OF THE PERSON AND VALUATION REPORT. NO DOUBT, THE PRIMARY EVIDENCE WAS FURNISHED B Y THE APPELLANT. THE AO THEREAFTER, MADE THE REQUIRED ENQUIRY F F AND FOUND OUT THAT THE PARTY M/S BHAROSEMAND COMMODITIES PVT LTD WAS NOT AVAILABLE ON THE GIVEN ADDRESS AND THE A.O. ALSO NOTED THAT THE PERSONS RESIDING NEARBY STATED THAT NO SUCH COMPANY OPERATES FROM SUCH PREMISES. THEREAFTER, THE ONUS SHIFTED ON THE APPELLANT TO PROVE THAT THE SAID COMPANY, M/S BHAROSEMAND COMMODITIES PVT LTD IS IN EXISTENCE. THE APPELLANT SHOULD HAVE GIVEN THE CORRECT ADDRESS, THE NAME AND ADDRESS OF THE CONCERNED PERSO N SO THAT IT CAN BE SAID THAT THE APPELLANT HAS ESTABLISHED THE ONUS LYING ON IT. BUT, IN THE INSTANT CASE, THE APPELLANT HAS MERELY RELIED ON VARIOUS CASE LAWS AND NOT TIRED TO EXPLAIN WHY SUCH A HUGE FUND IS RECEIVED FROM SUCH NON - EXISTENT ENTITY. IN VA RIOUS INSTANCES, IT IS FOUND THAT THERE ARE SHELL COMPANIES AND THEY JUST FILE THE RETURN OF INCOME AND ALSO MAKE THE COMPLIANCE TO THE CONCERNED AUTHORITY BUT THERE IS NO GENUINE BUSINESS AND THEY ARE ALSO NOT AVAILABLE ON THE GIVEN ADDRESS. IN MY OPINION , THE APPELLANT SHOULD HAVE GIVEN THE CORRECT ADDRESS AND THE NAME AND ADDRESS OF THE CONCERNED PERSONS OF THE SAID ENTITY. THE APPELLANT COMPANY IS A PRIVATE LIMITED COMPANY AND IN SUCH CIRCUMSTANCE IT CANNOT SAID THAT IT HAS NO KNOWLEDGE ABOUT THE SAID I NVESTOR. IN THE PRIVATE LIMITED COMPANY, THE OUTSIDER RARELY INVESTS. THE INVESTOR PARTIES CAN INVEST IF IT HAS KNOWLEDGE ABOUT THE FUTURE PROGRESS OF THE COMPANY AND, SUCH THINGS ARE AVAILABLE TO THE CLOSELY HELD PERSONS ONLY. BUT, IT SEEMS THAT, THE PERS ON WHO HAS INVESTED HAS NOTHING TO DO WITH THE APPELLANT COMPANY AND THE APPELLANT COMPANY HAS ALSO NO KNOWLEDGE ABOUT SUCH PERSON THEREFORE SUCH TRANSACTION CAN BE VIEWED SUSPICIOUSLY WITH PREPONDERANCE OF HUMAN CONDUCT AND PROBABILITIES. 5 AS THE APPELLANT HAS NOT DISCHARGED THE ONUS LYING ON IT TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. I FIND NO MERIT IN THE SUBMISSION OF THE APPELLANT. THE A.O. HAS ALSO PASSED A VERY SPEAKING ORDER AND CLEARLY BROUGHT OUT THE REASONS ON RECORD AS TO WHY HE IS MAKING THE ADDITION U/S . 68 . 7. A GAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US . 8. WE HAVE HEARD BOTH THE COUN S EL AND PERUSED THE RECORDS, LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS FURNISHED ALL THE NECESS ARY DOCUMENTS IN SUPPORT OF THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. HE SUBMITTED THAT THE FINANCIAL S OF THE SAI D PARTY HAS ALSO BEEN SUBMITTED . HE SUBMITTED THAT INCOME TAX ORDER OF THE PAST YEARS HAS ALSO BEEN GIVEN. HE FURTHER S UBMITTED THAT THE TRANSACTION IS THROUGH BANKING CHANNELS, HE ALSO SUBMITTED THAT ALL THE PAPERS OF SHARE APPLICATION AND SHARE ISSUE ARE AVAILABLE, HE REFERRED TO SEVERAL CASE LAWS IN SUPPORT OF HIS PROPOSITION INCLUDING THE FOLLOWING : - CIT VS GAGANDEEP INFRASTRUCTURE ( P ) LTD 80 TAXMANN.COM 272 (BOM HC) CIT VS GREEN INFRA LIMITED 78 TAXMANN.COM (BOM HC) C IT VS ORCHID INDUSTRIES PVT LTD. 1433 OF 2014 (BOMBAY HC) CIT VS HARESH D MEHTA 86 TAXMANN.COM 22 (BOMBAY HC) PR CIT VS PARADISE INLAND SHIPPING (P) LTD. 84 TAXMANN.COM 2017 (BOM HC) 9. P ER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 10. UPON CAREFUL CONSIDERATION WE FIND THAT THE SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM 16 PARTIES. IN CASE OF ONE PARTY IN THIS CASE THERE IS NO PROOF AT ALL ABOUT THE EXISTENCE OF THE SAID PARTY WHICH HAD CONTRIBUTED THE SAID SHARE PREMIUM AND SHARE APPLICATION AMOUNT. WE NOTE THAT ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY THROUGH INCOME TAX OFFICE KOLKATA. THE SAID PA RTY WAS FOUND TO BE NOT AT ALL EXISTING AT THE SAID ADDRESS. THE ENQUIRY FROM THE NEARBY PERSONS ALSO INDICATED THAT NO SUCH COMPANY OPERATED FROM THE SAID ADDRESS. 6 11. THE LEARNED CIT (A) IS QUITE CORRECT IN OBSERVING THAT IN CASE OF A PRIVATE LIMITED COM PANY IF A PERSON IS CONTRIBUTING SO MUCH MONEY IN SHARE APPLICATION AND SHARE PREMIUM THE ASSESSEE COMPANY WAS OBLIGED TO GIVE THE CORRECT WHEREABOUTS OF THE SAID COMPANY. WE FIND OURSELVES FULLY IN AGREEMENT WITH THE ABOVE FINDINGS. WHEN IT HAS BEEN CATEG ORICALLY PROVED THAT THERE IS NO PHYSICAL EXISTENCE OF THE SAID COMPANY AT THE GIVEN ADDRESS THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT H I S SUBMISSIONS REGARDING PAPERS SUBMITTED IN THIS REGARD SHOULD BE GIVEN PRECEDENCE OVER THE ACTUAL FAC T ABOUT THE NON - EXISTENCE OF THE SAID PARTY IS ABSOLUTELY UNSUSTAINABLE. IT IS SETTLED LAW THAT REVENUE AUTHORITIES ARE NOT SUPPOSED TO PUT ON BLINKERS. THIS HAS BEEN DULY EXPOUNDED BY HONOURABLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT ( 80 TAXMAN 0089) 12. F URTHERMORE WE FIND THAT THE DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF PCIT VS. NRA IRON & STEEL PVT. LTD ( TS - 106 - SC - 2019) IS APPLICABLE ON ALL FOURS IN THIS CASE. IN THE SAID CASE HONOURABLE SUPREME COURT HAS UPHELD THE FI NDING OF THE ASSESSING OFFICER WHICH WAS GIVEN ON THE BASIS OF FINDING THAT THE SAID PARTIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESS. THE ADDITION UNDER SECTION 68 IN SIMILAR CIRCUMSTANCES WAS UPHELD . 13. IN THE BACKGROUND OF THE AFORESAID FACTS AND CA SE LAWS IN OUR CONSIDERED OPINION THE CASE LAWS REFERRED BY THE LEARNED COUNSEL OF THE ASSESSEE ARE NOT AT ALL APPLICABLE ON THE FACTS OF THE PRESENT CASE. MOREOVER IN NONE OF CASES REFERRED BY LEARNED COUNSEL OF THE ASSESSEE THE EXPOSITION IS THAT WHEN TH ERE IS ABSOLUTE FINDING OF NONEXISTENCE OF THE SHARE APPLICANT THE AMOUNT OF SHARE APPLICATION MONEY SHOULD BE ACCEPTED AS GENUINE . 14. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT IN OUR CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ORDER OF LEARNED CIT APPEALS. ACCORDINGLY WE UPHOLD THE SAME. 7 15. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STATS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 01.06 . 20 20 . SD/ - SD/ - ( RAVISH SOOD ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 01 / 0 6 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI