SETH CARBON AND ALLOYS PRIVATE LIMITED, MUMBAI v. DCIT CC-2(3), MUMBAI

ITA 2865/MUM/2019 | 2010-2011
Pronouncement Date: 17-05-2021 | Result: Partly Allowed

Appeal Details

RSA Number 286519914 RSA 2019
Assessee PAN AAKCS6084M
Bench Mumbai
Appeal Number ITA 2865/MUM/2019
Duration Of Justice 2 year(s) 11 day(s)
Appellant SETH CARBON AND ALLOYS PRIVATE LIMITED, MUMBAI
Respondent DCIT CC-2(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-05-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 17-05-2021
Last Hearing Date 21-04-2021
First Hearing Date 21-04-2021
Assessment Year 2010-2011
Appeal Filed On 06-05-2019
Judgment Text
IN THE I NCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE : SHRI M.BALAGANESH A CCOUNTANT M EMBER & SHRI PAVAN KUMAR GADALE JUDICIAL MEMBER ITA NO. 2865 /MUM/ 20 19 ( ASSESSMENT YEAR : 201 0 - 1 1 ) & ITA NO. 2866 /MUM/ 2019 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. SETH CARBON AND ALLOYS PRIVATE LIMITED OFFICE NO.26 FLOOR GROUND PLOT 234/240 BHABHA CHAWL 13 TH KHETWADI LANE GIRGAON MUMBAI 400 004 VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) OLD CGO BUILDING MUMBAI 400 020 PAN/GIR N O. AAKCS6084M (APPELLANT ) .. (RESPONDENT ) ITA NO. 2868 /MUM/ 2019 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. SETH IRON & STEEL PVT.LTD. OFFICE NO.26 FLOOR GROUND PLOT 234/240 BHABHA CHAWL 13 TH KHETWADI LANE GIRGAON MUMBAI 400 004 VS. DY. COMMISSIONER OF INCOM E TAX CENTRAL CIRCLE - 2(3) OLD CGO BUILDING MUMBAI 400 020 PAN/GIR NO. AAKCS6084M (APPELLANT ) .. (RESPONDENT ) ITA NO. 2864 /MUM/ 2019 ( ASSESSMENT YEAR : 2011 - 1 2 ) M/S. SETH STEEL AGE PVT. LTD. OFFICE NO.26 FLOOR GROUND PLOT 234/240 BHABHA CHAWL 13 TH KH ETWADI LANE VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) OLD CGO BUILDING MUMBAI 400 020 ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 2 GIRGAON MUMBAI 400 004 PAN/GIR NO. AAKCS6084M (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI NEEL KHANDELWAL REVENUE BY SHRI VIJAYKUMAR MENON DA TE OF HEARING 21 / 04 /202 1 DATE OF PRONOUNCEMENT 17 / 05 /202 1 / O R D E R PER M. BALAGANESH (A.M) : ITA NO.2865/MUM/2019 ( ASSESSMENT YEAR :2010 - 11 ) & ITA NO.2866/MUM/2019 ( ASSESSMENT YEAR :2012 - 13 ) THESE APPEAL S IN ITA NO. 2865/MUM/2019 & 2866/MUM/2019 FOR A.Y RS . 2010 - 11 & 2012 - 13 ARISE OUT OF THE ORDER BY THE LD . COMMISSIONER OF INCOME TAX (APPEALS) - 48 MUMBAI IN APPEAL NO S . CIT(A) - 48/IT - 75/DCCC - 2(3)/2016 - 17 & CIT(A) - 48/IT - 75/DCCC - 2(3)/2017 - 18 DATED 27/03/2019 & 28/02/2019 RESPECTIVELY (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 23/03/2016 & 25/10/2017` BY THE LD. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.2868 /MUM/2019 ( A.Y.2010 - 11) THIS APPEAL I N ITA NO. 2868/MUM/2019 FOR A.Y. 2010 - 11 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 48 MUMBAI IN APPEAL NO. CIT(A) - 48/IT - 74/DCCC - 2(3)/2017 - 18 DATED ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 3 25/02/2015 RESPECTIVELY (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PA SSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 24/10/2017 BY THE LD. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.2864/MUM/2019 ( A.Y.2011 - 12) THIS APPEAL IN ITA NO. 2864/MUM/2019 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 48 MUMBAI IN APPEAL NO. CIT(A) - 48/IT - 7 6 /DCCC - 2(3)/2017 - 18 DATED 2 8 /02/201 9 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) R.W.S. 147 OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 2 3 /10/2017 BY THE LD. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2(3) MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). AS IDENTICAL ISSUES ARE INVOLVED IN ALL THE SE APPEALS THEY ARE TAKEN UP TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.2865/MUM/2019 (A.Y.2010 - 11) 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ORDE R OF LEARNED ASSESSING OFFICER IN RESPECT OF THE RE - OPENING OF THE ASSESSMENT WHILE ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT 1961 INSPITE OF THE FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF INCOME TAX ACT 1961. THE ASSESSMENT U/S.143 (3) R.W.S. 147 OF THE INCOME TAX ACT 1961 WAS COMPLETED MERELY ON THE BASIS OF CHANGE OF OPINION. IN VIEW OF THE ABOVE THE SAID ORDER PASSED SHOULD BE SQUASHED AND NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 4 2. WITHOUT PREJUDICE TO ABOVE ON THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2 60 00 000/ - U/S.68 OF THE INCOME TAX ACT 1961. THE HONBLE CIT(A) HAS ERRED IN CONSIDERING THE SHARE CAPITAL ISSUED BY THE APPELLANT AS UNEXPLAIN ED CASH CREDIT FOR THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED THAT APPELLANT HAS SUBMITTED RELEVANT DOCUMENTS TO PROVE THE IDENTITY GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTY. IT IS THEREFORE PRAYED THAT ADDITION MADE ON ACCOUNT OF U NEXPLAINED CASH CREDIT SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 3. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.13 00 000/ - (1.5% OF RS.2 60 00 000/ - ) BEING ALLEGED UNACCOUNTED COMMISSION EXPENDITURE ON THE ABOVE SHARE CAPITAL ISSUED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. IT IS THEREFORE PRAYED THAT ABOVE ADDITION SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GI VEN IN THIS REGARD. 4. YOUR APPELLANT CRAVES TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 3. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE VALIDITY OF REOPENING OF ASSESSMENT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE FILED RETURN OF INCOME FOR A.Y.2010 - 11 DECLARING INCOME OF RS.9 40 910/ - ON 03.10.2010. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 20.03.2013 DETERMINING THE TOTAL INCOME AT RS.9 40 910/ - . SUBSEQUENTLY THE CASE WAS REOPENED BY ISSUANCE OF NOTICE U/S.148 DATED 27/03/2015 AFTER REC ORDING THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF NON - DISCLOSURE OF FULL AND TRUE MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE LD. AO OBSERVED THAT HE HAD RECEIVED THE INFORMATION FROM THE DGIT (INV) MUMBAI IN THE CASE OF THE A S SESSEE THAT THE ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 5 A SSESSEE WAS IN RECEIPT OF FUNDS IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM OF RS.2 60 00 000/ - FROM M/S AVANCE TECHNOLOGIES LTD. AND M/S PRABHAV IND USTRIES LTD. FURTHER THE STATEMENT OF DEVANG DINESH CHANDRA MASTER DIRECTOR OF M/S. EMPOWER INDIA LTD. HAS CONFIRMED THAT M/S AVANCE TECHNOLOGIES LTD. AND M/S PRABHAV IND USTRIES LTD. ARE CONTROLLED AND MANAGED BY SHIRISH CHANDRAKANT SHAH. THEREFORE BASED ON THE INFORMATION RECEIVED FROM THE DGIT (INV.) MUMBAI THE LD AO HAS MADE THE AD DITION OF RS.2 6 0 00 000/ - . 3.2. THE LD. AO OBSERVED THAT ASSESSEE HAD RECEIVED SHARE CAPITAL AND SHARE PREMIUM FROM THE FOLLOWING PARTIES DURING THE YEAR UNDER CONSIDERATION AS UNDER: - SL.NO. DATE OF TRANSACTION NAME NO.OF SHARES ALLOCATED ISSUE PRICE ( RS.) TOTAL VALUE TOTAL SECURITIES PREMIUM 1. 23.02.2010 AVANCE TECHNOLOGIES LTD. 12 500 10/ - PER SHARE 1 25 000 50 00 000 2. 10.03.2010 PRABHAV IND. LTD. 12 500 10/ - PER SHARE 1 25 000 50 00 000 3. 12.03.2010 PRABHAV IND. LTD. 20 000 10/ - PER SHARE 2 0 0 000 80 00 000 4. 12.03.2010 PRABHAV IND. LTD. 20 000 10/ - PER SHARE 2 00 000 80 00 000 TOTAL 2 60 00 000 3. 3 . THE LD. AO OBSERVED THAT A SEARCH AND SURVEY ACTION WAS CARRIED OUT AT THE RESIDENCE AND OFFICES OF SHRI SHIRISH CHANDRAKANT SHAH AND A T THE RESIDENCE OF HIS KEY EMPLOYEES AND ASSOCIATES AT MUMBAI ON 09.04.2013. DURING THE COURSE OF SEARCH IT WAS FOUND THAT SHIRISH CHANDRAKANT SHAH IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES OF SHARE CAPITAL SHARE PREMIUM SHARE APPLICATION MONEY UNS ECURED LOANS LONG TERM CAPITAL GAINS SHORT TERM CAPITAL GAINS WHEREIN CASH IS ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 6 RECEIVED BY HIM FROM VARIOUS CLIENTS AND AGAINST THIS CASH HE PROVIDES THESE ACCOMMODATION ENTRIES. 3. 4 . DURING THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF SHIRISH CHAND RAKANT SHAH STATEMENTS WERE RECORDED FROM VARIOUS PERSONS ON OATH. SIMILARLY STATEMENT OF SHRI SHIRISH CHANDRAKANT SHAH WAS RECORDED U/S.13 2( 4 ) OF THE ACT ON 13/04/2013 WHEREIN HE HAD ACCEPTED THAT HE IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AGAINST RECEIPT OF CASH. IN THE SAID STATEMENT HE ALSO EXPLAINED THE MODUS OPERANDI FOLLOWED BY HIM IN PROVIDING VARIOUS ACCOMMODATION ENTRIES TO VARIOUS PEOPLE. FROM THE AFORESAID STATEMENTS THE LD. AO OBSERVED THAT M/S. AVANCE TECHNOLOGIES LTD. AND M/S. PRABH AV INDUSTRIES LTD. WERE CONTROLLED AND MANAGED BY THE SHRI SHIRISH CHANDRAKANT SHAH AND THESE COMPANIES ARE BOGUS ENTITIES FROM WHOM THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY AGAINST CASH. 3. 5 . SINCE THESE EVIDENCES WERE GATHERED BY THE LD. AO PU RSUANT TO SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF SHRI SHIRISH CHANDRAKANT SHAH THE SAID INFORMATION CONSTITUTES TANGIBLE INFORMATION AND ACCORDINGLY ASSESSMENT OF THE ASSESSEE WAS DULY REOPENED. IN THE INSTANT CASE THE REOPENING HAS BEEN MADE WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE HOLD THAT TANGIBLE INFORMATION WAS VERY MUCH AVAILABLE WITH THE LD. AO TO TRIGGER THE PROCESS OF REOPENING AND HENCE THE REOPENING IS HELD TO BE VALID AND ACCORDINGLY THE GROUND NO.1 RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT IS DISMISSED. 4. IT IS NOT IN DISPUTE THAT ASSESSEE HAD INDEED RECEIVED SHARE CAPITAL WITH SHARE PREMIUM FROM M/S. AVANCE TECHNOLOGIES LTD. AND M/S. ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 7 PRABHAV INDUSTRIES LTD. DURI NG THE YEAR UNDER CONSIDERATION. THE DETAILS OF THE RECEIPTS ARE ALREADY TABULATED HEREINABOVE. WE FIND THAT ASSESSEE HAD SUBMITTED THE FOLLOWING DOCUMENTS BEFORE THE LD. AO : - A ) DETAILS OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED ; B ) NAME AND ADDRESS OF THE SH AREHOLDERS FROM WHOM SHARE CAPITAL AND SHARE PREMIUMS WERE RECEIVED ; C ) BANK STATEMENTS OF SHAREHOLDERS FOR THE RELEVANT PERIOD ; D ) COPY OF ITR ACKNOWLEDGEMENT OF SHAREHOLDERS ; E ) COMPUTATION OF TOTAL INCOME OF SHAREHOLDERS FOR THE RELEVANT YEARS ; F ) RELEVANT ABSTRA CT OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF SHAREHOLDERS WHEREIN THE MONIES INVESTED IN THE ASSESSEE COMPANY ARE DULY REFLECTED ; G ) COPY O F SHARE APPLICATION FORM APPLYING FOR EQUITY SHARES ; H ) COPY OF PAN CARD OF THE SHAREHOLDERS ; I ) COPY OF MEMORANDUM OF A RTICLES AND ASSOCIATION OF THE SHAREHOLDER COMPANIES; J ) COPY OF CONFIRMATION OF ACCOUNTS CONFIRMING THE AMOUNT INVESTED TOWARDS SHARE CAPITAL AND SHARE PREMIUM IN THE ASSESSEE COMPANY ; K ) COPY OF SHARE CERTIFICATES RECEIVED FROM THE ASSESSEE COMPANY ; L ) COPY OF FO RM NO.2 FILED WITH REGISTRAR OF COMPAN IES FOR ALLOTMENT OF EQUITY SHARES AT PREMIUM BY THE ASSESSEE COMPANY ; M ) WORKINGS FOR VALUATION OF SHARES FOR A.Y.2010 - 11 ; N ) REASONS FOR ISSUANCE OF SHARES AT PREMIUM WITH SUPPORTING EXPLANATION THEREON. 4.1. WE FIND THA T THE LD. AO ISSUED A SHOW - CAUSE NOTICE TO THE ASSESSEE ON 09/03/2016 CALLING FOR VARIOUS DETAILS REGARDING THE VERACITY OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM THE SHAREHOLDERS. WE FIND ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 8 THAT THE LD. AO HAD OBSERVED IN HIS ORDER THAT ASSESSEE RESPONDED ON 22/03/2016 BY FURNISHING THE REQUISITE DOCUMENTS BUT DID NOT SUBMIT SHARE VALUATION REPORT. WE FIND THAT THE LD. AO OBSERVED THAT THE ASSESSEE HAD NOT JUSTIFIED THE RECEIPT OF PREMIUM AND CONCLUDED THAT THE AMOUNTS RECEIVED BY THE ASSESSEE WE RE MERELY ACCOMMODATION ENTRIES BY INTRODUCING ITS OWN UNACCOUNTED MONIES. THE LD. AO ALSO DREW SUPPORT FROM THE STATEMENTS RECORDED FROM SHRI SHIRISH CHANDRAKANT SHAH IN THIS REGARD. WITH THESE OBSERVATIONS THE LD. AO PROCEEDED TO TREAT THE RECEIPT OF SH ARE CAPITAL AND SHARE PREMIUM AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT AS ACCORDING TO HIM THE ASSESSEE HAD NOT PROVED THE THREE NECESSARY INGREDIENTS OF SECTION 68 OF THE ACT VIZ. IDENTITY OF THE SHAREHOLDERS CREDITWORTHINESS OF THE SHAREHOLDERS AN D GENUINENESS OF TRANSACTIONS. 4.2. WE FIND THAT THE LD. AO HAD ALSO OBSERVED THAT ASSESSEE HAD MERELY RECEIVED ACCOMMODATION ENTRIES IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM FROM THE AFORESAID ENTITIES. HENCE ASSESSEE COULD HAVE INCURRED COMMISSIO N EXPENDITURE FOR THE SAME WHICH WAS ESTIMATED TO BE 5% AND ACCORDINGLY THE SUM OF RS.13 LAKHS WAS ADDED TOWARDS UNEXPLAINED EXPENDIT UR E U/S.69C OF THE ACT BY THE LD. AO. 4.3. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). 4.4. WE FIND THAT AS SESSEE APART FROM SUBMITTING THE VARIOUS DOCUMENTS RELATED TO REC EI PT OF SHARE CAPITAL AND SHARE PREMIUM AS LISTED HEREINABOVE IT ALSO FURNISHED THE WORKINGS FOR SHARE VALUATION DURING THE A.Y.2010 - 11 AND FURNISHED EXPLANATION FOR ISSUING SHARES AT A PRE MIUM TAKING INTO ACCOUNT THE FUTURE GROWTH IN THE BUSINESS OF THE ASSESSEE AND ALSO CONSIDERING THE FUTURE PROSPECTS OF THE ASSESSEE BUSINESS. IT WAS ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 9 SUBMITTED THAT ASSESSEE IS IN THE BUSINES S SINCE 2007 AND COMMANDS SIGNIFICAN T G OODWILL EXCELLENT PAST PE RFORMANCE AND HIGH INVESTORS CONFIDENCE RESULTING INTO BRIGHT FUTURE PROSPECTS FOR THE ASSESSEE IN THE LONG RUN. IT WAS SUBMITTED THAT THESE ASPECTS WERE DULY APPRECIATED BY THE SHAREHOLDERS AND ACCORDINGLY THE SHAREHOLDERS HAD AGREED TO INVEST IN THE ASS ESSEE COMPANY AT A PREMIUM. 4.5. WE FIND THAT ASSESSEE BY FURNISHING ALL THE AFORESAID DOCUMENTS HAD DULY EXPLAINED THE NATURE AND SOURCE OF CREDIT IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM THE AFORESAID T WO SHAREHOLDERS . F ROM THE BALAN CE SHEET OF THE SHAREHOLDERS IT COULD BE SEEN THAT THEY ARE HAVING SUFFICIENT CREDITWORTHINESS TO MAKE INVESTMENT IN THE ASSESSEE COMPANY. SIMILARLY ALL THE SHAREHOLDERS ARE DULY ASSESSED TO TAX AND HAD FILED THEIR INCOME TAX RETURNS AND ROC RETURNS. THIS PROVES THE IDENTITY OF THE SHAREHOLDERS. ALL THE TRANSACTIONS ARE ROUTED THROUGH ACCOUNT PAYEE CHEQUES IN THE REGULAR BANKING CHANNELS. THE JUSTIFICATION FOR PREMIUM WAS ALSO DULY MADE BY THE ASSESSEE BY GIVING EXPLANATION IN WRITING. THIS CLEARLY PROVES THE GENUINENESS OF THE TRANSACTIONS. WE FIND THAT THE LD. AO AFTER RECEIVING ALL THE INFORMATION IN THE FORM OF VARIOUS DOCUMENTARY EVIDENCE REMAIN ED SILENT . WE FIND THAT THE LD. AO DID NOT RESORT TO MAKE ANY VERIFICATION IN ANY MANNER WHATSOEVER EITHER BY ISSUING NOTICE U/S.133(6) OF THE ACT OR ISSUING SUMMONS U/S.131 OF THE ACT TO THE CONCERNED SHAREHOLDERS IN ORDER TO EXMINE THE VERACITY OF SUCH DOCUMENTS. WE FIND THAT THE LD. AO WITHOUT RESORTING TO ANY SORT OF VERIFICATION IN THE MANNER KNOWN TO LAW H AD SIMPLY PROCEEDED TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE BY TREATING THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM AS ACCOMMODATION ENTRIES MERELY BY RELYING ON THE STATEMENT RECORDED FROM SHRI SHIRISH CHANDRAKANT SHAH AND HIS KEY EMPLOYESS. IN A NY CASE WE ALSO FIND THAT THE STATEMENT OF SHRI SHIRISH ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 10 CHANDRAKANT SHAH AND HIS KEY EMPLOYEES WERE NEVER FURNISHED TO THE ASSESSEE FOR ITS REBUTTAL. HENCE THE SAID STATEMENTS CANNOT BE RELIED UPON AS S O LE BASIS FOR FRAMING ADDITION IN THE HANDS OF THE AS SESSEE. WE HOLD THAT THE ADDIT I ON MADE U/S.68 OF THE ACT IN THE CASE OF THE ASSESSEE IS MERELY BASED ON SURMISE AND CONJECT URE AND ABSOLUTELY WITHOUT ANY BASIS AND ABSOLUTELY WITHOUT ANY VERIFICATION IN THE MANNER KNOWN TO LAW. ACCORDINGLY WE HAVE NO HESI TATION IN DELETING THE ADDIITON MADE U/S.68 OF THE ACT IN THE CASE OF THE ASSESSEE. 4.6. SINCE WE HAVE ALREADY HELD THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM ARE NOT ACCOMMODATION ENTRIES THERE CANNOT BE ANY ADDITION THAT COULD SURVIVE ON ACCO UNT OF COMMISSION U/S.69C OF THE ACT. HENCE WE ARE DELETING THE SAME. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO.2865/MUM/2019 FOR A.Y.2010 - 11 IS PARTLY ALLOWED. ITA NO.2866/MUM/2019 (A.Y.2012 - 13) 6. THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS: - 1. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICER IN RESPECT OF THE RE - OPENING OF THE ASSESSMENT WHILE ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT 1961 INSPITE OF THE FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF INCOME TAX ACT 1961. THE ASSESSMENT U/S.143 (3) R.W.S. 147 OF THE INCOME TAX ACT 1961 WAS COMPLETED MERELY ON THE BASIS OF CHANGE OF OPINION. IN VIEW OF THE ABOVE THE SAID ORDER PASSED SHOULD BE SQUASHED AND NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 2. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 3 01 00 000/ - U/S.68 OF THE INCOME TAX ACT 1961. THE HONBLE CIT(A) HAS ERRED IN CON SIDERING THE SHARE CAPITAL ISSUED BY THE APPELLANT AS ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 11 UNEXPLAINED CASH CREDIT FOR THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED THAT A PPELLANT HAS SUBMITTED RELEVANT DOCUMENTS TO PROVE THE IDENTITY GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE P ARTY. IT IS THEREFORE PRAYED THAT ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 3. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 4 51 500/ - (1.5% OF RS. 3 01 00 000/ - ) BEING UNACCOUNTED COMMISSION EXPENDITURE ON THE ABOVE SHARE CAPITAL ISSUED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. IT IS THEREFORE PRAYED THAT ABOVE ADDITIO N SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 4. YOUR APPELLANT CRAVES TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATER IAL AVAILABLE ON RECORD. AT THE OUTSET WE FIND THAT ASSESSEE HAD CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT. THE DECISION RENDERED BY US ON THE SAME IN ASSESSEES OWN CASE FOR A.Y.2010 - 11 SUPRA WOULD HOLD GOOD FOR THIS ASSESSMENT YEAR ALSO. ACCOR DINGLY THE GROUND NO.1 RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT IS HEREBY DISMISSED. 7.1. WE FIND THAT ASSESSEE HAD RECEIVED SHARE CAPITAL AND SHARE PREMIUM DURING THE YEAR UNDER CONSIDERATION FROM THE FOLLOWING PARTIES: - NAME OF THE SHAREHOLDERS AMOUNT M/S. PRA B HA V INDUSTRIES LTD. RS.50 00 000/ - M/S. EMPOWER INDUSTRIES INDIA LTD. RS.1 26 00 000/ - M/S. PRRANETA INDUSTRIES LTD. (EARLIER KNOWN AS AA A DHAR VENTURES INDIA LTD. ) RS.50 00 000/ - SECUNDERABAD HEALTHCARE I NDIA RS.50 00 000/ - ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 12 LTD. SANGUINE MEDIA LTD. RS.25 00 000/ - 7.2. THE LD. AO TREATED THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM IN THE SUM OF RS.3 01 00 000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT ON THE SAME REASONING AS WAS DISCUSSED HE REINABOVE IN ASSESSEES OWN CASE FOR A.Y.2010 - 11 SUPRA. THE LD. CIT(A) ALSO CONFIRMED THE ASSESSMENT FOR THE SAME REASON AS WAS GIVEN FOR ASSESSMENT YEAR 2010 - 11 IN ASSESSEES OWN CASE. 7.3. WE FIND THAT EVEN IN THIS ASSESSMENT YEAR THE ASSESSEE HAD DULY FURNISHED ALL THE DOCUMENTS IN SUPPORT OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM FROM THE AFORESAID FIVE PARTIES AND ALL THESE DOCUMENTS ARE ENCLOSED IN PAPER BOOK FILED BEFORE US. WE FIND THAT THE LD. AO HAD NOT RESORTED TO MAKE ANY VERIFICATION TO E XAMINE THE VERACITY OF DOCUMENTS EITHER BY ISSUING NOTICE U/S.133(6) OF THE ACT OR BY ISSUING SUMMONS U/S.131 OF THE ACT TO THE SHAREHOLDERS. WE HAVE ALSO HELD THAT THE A.Y.2010 - 11 IN ASSESSEES OWN CASE UNDER SIMILAR FACTS AND CIRCUMSTANCES THAT NO ADDITI ON COULD BE MADE U/S.68 OF THE ACT WITHOUT TESTING THE DOCUMENTS FILED BY THE ASSESSEE IN THE MANNER KNOW N TO LAW. 7.4. EVEN OTHERWISE WE FIND THAT ALL THESE PARTIES FROM WHOM SHARE CAPITAL AND SHARE PREMIUMS WERE RECEIVED BY DIFFERENT ASSESSEES WERE SU BJECT MATTER OF ADJUDICATION BY THIS TRIBUNAL AND WERE ACCEPTED AS GENUINE IN THE FOLLOWING CASES : - A) ITO - 6(1)(2) VS. AMIRASHMI FINSTOCK PVT. LTD. IN ITA NO.4558 - 4559/MUM/2017 DATED 22/10/2020. ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 13 B) TAPER TRADING LLP VS. PCIT IN ITA NO.1470/MUM/2018 FOR A. Y.2013 - 14 DATED 31/12/2018 7.5. WE FIND THAT FOR BOTH THE ASSESSMENT YEARS 2010 - 11 AND 2012 - 13 IN SUPPORT OF RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM THE ASSESSEE HAD FURNISHED ALL THE RELEVANT DOCUMENTARY EVIDENCES THEREBY DISCHARGING PRIMARY ONUS CAS T ON THE ASSESSEE IN TERMS OF SECTION 68 OF THE ACT. WE HOLD THAT THE ONUS THUS THEREAFTER SHIFTS TO THE REVENUE TO REBUT THE ASSESSEES STAND AS WELL AS DOCUMENTARY EVIDENCES BY BRINGING ON RECORD COGENT MATERIAL TO DIS LODGE THE SAME. THIS WAS ADMITTEDLY NOT DONE BY THE LD. AO FOR BOTH THE YEARS. WE FIND THAT THE ADDITION WAS SOLELY MADE BASED ON A THIRD PARTY STATEMENT WHICH WAS NEVER CONFRONTED TO THE ASSESSEE EITHER BY PROVIDING STATEMENT TOGETHER WITH EVIDENCES IF ANY FOR THE REBUTTAL OF THE ASSESSEE OR FOR CROSS - EXAMINATION OF THE ASSESSEE. WE ALSO FIND FROM THE PERUSAL OF THE TRIBUNAL ORDER DATED 22/10/2020 IN THE CASE OF AMIRASHMI FINSTOCK PVT. LTD THAT THIS TRIBUNAL HAD ALSO RECORDED THE FINDING THAT SHRI SHIRISH CHANDRAKANT SHAH HAD EVEN FILED AN AFFIDAVIT ON 20/12/2019 WHEREIN HE HAD CATEGORICALLY DENIED HAVING PROVIDED ANY ACCOMMODATION ENTRIES. IN VIEW OF THE AFORESAID OBSERVATIONS AND RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE WE HOLD THAT NO CASE WAS MADE OUT BY THE REVENUE TO TREAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. SINCE WE HAVE ALREADY HELD THAT THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM ARE NOT ACCOMMODATION ENTRIES THERE IS NO QUESTION OF MAKING ADDITION TOWARDS UNEXPLAINED COMMISSION EXPENDITURE THEREON. HENCE THE SAME IS ALSO HEREBY DIRECTED TO BE DELETED. ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 14 8. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.2866/MUM/2019 FOR A.Y.2012 - 13 IS PARTLY ALLOWED. ITA NO.2828/MUM/2019 (A.Y.2010 - 11) 9. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICER IN RESPECT OF THE RE - OPENING OF THE ASSESSMENT WHILE ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT 1961 INSPITE OF THE FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF INCOME TAX ACT 1961. THE ASSESSMENT U/S.143 (3) R.W.S. 147 OF THE INCOME TAX ACT 1961 WAS COMPLETED MERELY ON THE BASIS OF INFORMATION RECEIVED FROM DCIT CENTRAL CIRCLE - 2(2). IN VIEW OF THE ABOVE THE SAID ORDER PASSED SHOULD BE SQUASHED AND NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 2. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.5 00 00 000/ - U/S.68 OF THE INCOME TAX ACT 1961. THE HONBLE CIT(A) HAS ERRED IN CONSIDERING THE SHARE CAPITAL ISSUED BY THE APPELLANT AS UNEXPLAINED CASH CREDIT FOR THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED THAT APPELLANT HAS SUBMITTED RELEVANT DOCUMENTS TO PROVE THE GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTY. IT IS THEREFORE PRAYED THAT ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 3. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.7 50 000/ - (1.5% OF RS. 5 0 0 00 000/ - ) BEING UNACCOUNTED COMMISSION EXPENDITURE ON THE ABOVE SHARE CAPITAL ISSUED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. IT IS THEREFORE PRAYED THAT ABOVE ADDITION SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 4. YOUR APPELLANT CRAVES TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE HAS RECEIVED SHARE CAPITAL AND SHARE PREMIUM FROM THE FOLLOWING PARTIES : - ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 15 NAME OF THE PARTY NO. OF SHARES AMOUNT PAID UP SHARE PREMIUM TOTAL AMOUNT RECEIVED YANTRA NATURAL RESOURCES (EARLIER KNOWN AS SHRI GANESH SPINNERS LTD) 12500 5 00 000/ - 2 45 00 000/ - 2 50 00 000/ - ADVANCE TECHNOLOGIES LIMITED 62500 4 00 000/ - 1 96 00 000/ - 2 00 00 000/ - MAHAN INDUSTRIES LTD. 50000 1 00 000/ - 49 00 00 0 - 50 00 000/ - TOTAL 125000 10 00 000/ - 4 90 00 000 5 00 00 000/ - 1 0.1 . BOTH THE PARTIES BEFORE US MUTUALLY AGREED THAT THE FACTS OF THE CASE PREVAILING IN THE CASE OF THIS ASSESSEE ARE EXACTLY IDENTICAL TO THE FACTS PREVAILING IN THE CASE OF SETH CARBO N AND ALLOYS PVT. LTD. FOR A.Y.2010 - 11 EXCEPT WITH VARIANCE IN THE NAME OF THE SHAREHOLDERS AND FIGURES. THE ADDITION HAS BEEN MADE U/S.68 OF THE ACT FOR THE SAME REASONS OF SETH CARBON AND ALLOYS PVT. LTD. HENCE THE DECISION RENDERED THEREON WOULD APP LY WITH EQUAL FORCE FOR THIS ASSESSEE ALSO EXCEPT WITH NAME OF THE SHAREHOLDERS AND FIGURES. 1 1 . IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.2868/MUM/2019 IS PARTLY ALLOWED. ITA NO.2864/MUM/2019 (A.Y.2011 - 12) 1 2 . ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL: - ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 16 1. THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF LEARNED ASSESSING OFFICER IN RESPECT OF THE RE - OPENING OF THE ASSESSMENT WHILE ISSUING NOTICE U/S.148 OF THE INCOME TAX ACT 1961 INSPITE OF THE FACT THAT ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF INCOME TAX ACT 1961. THE ASSESSMENT U/S.143 (3) R.W.S. 147 OF THE INCOME TAX ACT 1961 WAS COMPLETED MERELY ON THE BASIS OF CHANGE OF OPINION. IN VIEW OF THE ABOVE THE SAID ORDER PASSED SHOULD BE SQUASHED AND NECESSARY DIRECTION SHOULD BE GIVEN IN THIS REGARD. 2. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1 30 00 000/ - U/S.68 OF THE INCOME TAX ACT 1961. THE HONBLE CIT(A) HAS ER RED IN CONSIDERING THE SHARE CAPITAL ISSUED BY THE APPELLANT AS UNEXPLAINED CASH CREDIT FOR THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED THAT APPELLANT HAS SUBMITTED RELEVANT DOCUMENTS TO PROVE THE IDENTITY GENUINENESS OF TRANSACTIONS AND CREDITWORTHINES S OF THE PARTY. IT IS THEREFORE PRAYED THAT ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 3. WITHOUT PREJUDICE TO ABOVE ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HONBLE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1 95 000/ - (1.5% OF RS.1 30 00 000/ - ) BEING UNACCOUNTED COMMISSION EXPENDITURE ON THE ABOVE SHARE CAPITAL ISSUED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. IT IS THEREFORE PRAYED THAT AB OVE ADDITION SHALL BE DELETED AND NECESSARY DIRECTION SHALL BE GIVEN IN THIS REGARD. 4. YOUR APPELLANT CRAVES TO ADD ALTER OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEAL 1 2.1 . WE FIND THAT ASSESSEE WAS IN RECEIPT OF S HARE CAPITAL AND SHARE PREMIUM FROM EMPOWER INDUSTRIES INDIA LTD. TO THE EXTENT OF RS.1 30 00 000/ - . IN THE OPINION OF THE LD AO THIS ENTITY IS MANAGED AND CONTROLLED BY SHRI SHIRISH CHANDRAKANT SHAH. THE FACTS PREVAILING IN THIS ASSESSMENT YEAR ARE IDEN TICAL WITH THOSE FACTS PREVAILING IN THE CASE OF SETH CARBON AND ALLOYS PVT. LTD. FOR A.Y.2010 - 11 AND ADDITION HAS BEEN MADE HEREIN FOR THE VERY SAME REASONS STATED BY THE LD. AO IN THE CASE OF SETH CARBON AND ALLOYS PVT. LTD. THE LD. AO WHILE FRAMING TH E ASSESSMENT IN THE CASE OF THE PRESENT ASSESSEE TREATED THE RECEIPT OF SHARE CAPITAL AND SHARE PREMIUM AS ACCOMMODATION ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 17 ENTRY AND PROCEEDED TO ADD A SUM OF RS.1 30 00 000/ - AS UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. SINCE THEY WERE TREATED AS ACCOMMODA TION ENTRIES THE LD. AO ALSO PROCEEDED TO ADD UNEXPLAINED COMMISSION EXPENDITURE TO THE TUNE OF RS.1 95 000/ - U/S.69C OF THE ACT FOR RECEIPT OF AFORESAID ACCOMMODATION ENTRY. WE FIND THAT THE LD. CIT(A) HAD UPHELD THE ASSESSMENT FOR THE SAME REASONING GIV EN BY HIM IN THE CASE OF SETH CARBON AND ALLOYS PVT. LTD. 1 2.2 . WE FIND THAT THE FACTS ARE EXACTLY IDENTICAL WITH SETH CARBON AND ALLOYS PVT. LTD. AND THE DECISION RENDERED THEREON SHALL APPLY MUTATIS MUTANDIS TO THE PRESENT ASSESSEE ALSO EXCEPT WITH VA RIANCE IN FIGURES. ACCORDINGLY THE APPEAL IS PARTLY ALLOWED. 1 3 . IN THE RESULT ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 17 / 05 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( PAV AN KUMAR GADALE ) S D/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 17 / 05 / 2021 KARUNA SR.PS ITA NO . 2865/MUM/2019 AND OTHER APPEALS M/S. SETH CARBON & ALLOYS PVT. LTD. 18 COPY OF THE ORDER FORWARDED TO : BY ORDER ( ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMB AI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//