MOTISONS ENTERTAINMENT (INDIA) PVT. LTD., Jaipur v. ACIT, Jaipur

ITA 386/JPR/2017 | 2011-2012
Pronouncement Date: 09-11-2017 | Result: Dismissed

Appeal Details

RSA Number 38623114 RSA 2017
Assessee PAN AAECM9733B
Bench Jaipur
Appeal Number ITA 386/JPR/2017
Duration Of Justice 5 month(s) 23 day(s)
Appellant MOTISONS ENTERTAINMENT (INDIA) PVT. LTD., Jaipur
Respondent ACIT, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 09-11-2017
Assessment Year 2011-2012
Appeal Filed On 17-05-2017
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHES JAIPUR JH HKKXPUN] YS[KK LNL; O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND AM & SHRI KUL BHAR AT JM VK;DJ VIHY LA-@ ITA NO. 386 & 387/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2011-12 & 2012-13 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT. LTD 7 TH FLOOR SB-110 MOTISONS TOWER LAL KOTHI TONK ROAD JAIPUR CUKE VS. THE ACIT CENTRAL CIRCLE-2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAECM 9733 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 483 484 & 485/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2009-10 2011-12 & 2012-13 THE DCIT CENTRAL CIRCLE-2 JAIPUR CUKE VS. M/S. MOTISONS ENTERTAINMENT (INDIA) PVT. LTD 7 TH FLOOR SB-110 MOTISONS TOWER LAL KOTHI TONK ROAD JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAECM 9733 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI VIJAY GOYAL CA AND SHRI GULSHAN AGARWAL CA JKTLO DH VKSJ LS@ REVENUE BY:SMT. ROLEE AGARWAL CIT - DR SHRI PRAVEEN KUMAR MITTAL DCIT SHRI KAMLESH KUMAR MEENA DCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11/10/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 09 /11/2017 VKNS'K@ ORDER PER BENCH THE ASSESSEE HAS FILED TWO APPEALS FOR THE A.Y. 201 1-12 AND 2012- 13 AND THE REVENUE HAS FILED THREE APPEALS FOR T HE A.Y. 2009-10 2011- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 2 12 AND 2012-13 WHICH PERTAINS TO THREE SEPARATE O RDERS OF THE LD. CIT(A)-4 JAIPUR DATED 31-03-2017. 2.1 FIRST OF ALL WE TAKE UP THE APPEAL OF THE REVE NUE IN ITA NO. 483/JP/2017 FOR THE ASSESSMENT YEAR 2009-10 WHEREIN THE REVENUE HAS RAISED THE SOLITARY GROUND AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 3 40 00 000/- MADE U/S 56(1) OF THE ACT IGNORING THE FACT THAT ASSETS OF THE ASSESSEE COMPANY DONT COMMENSURATE TO PREMIUM CHARGED AND F URTHER IGNORING THE FACT THAT NEITHER ANY BUSINESS ACTIVIT Y WAS PERFORMED NOR ANY BUSINESS INCOME HAS BEEN SHOWN BY THE ASSESSEE. 3.1 APROPOS SOLITARY GROUND OF THE REVENUE THE AO MADE THE ADDITION OF RS.3 40 00 000/- U/S 56(1) OF THE ACT IN THE HAN DS OF THE ASSESSEE COMPANY BY OBSERVING AS UNDER:- 16. HAVING DEALT WITH EACH OF THE CONTENTION OF T HE ASSESSEE AND HAVING FOUND THE SAME TO BE UNTENABLE IT IS IMP ORTANT TO PLACE ON RECORD CERTAIN ASPECTS WHICH HAVE A BEARING ON THE ISSUE AT HAND. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTI L IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EX ECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX HAS TO HAVE SOME RECITALS MADE IN A DOCUM ENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE NOT ENTITLED TO LOO K INTO THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 3 SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. 17. IN THE ABOVE BACK GROUND OF THE FACTS AND CIRCU MSTANCES SURROUNDING THIS CASE IT IS HEREBY HELD THAT THE R ECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS PART OF A COLOURFUL TRANSACTI ON BY WAY OF WHICH A SUM OF RS. 3 40 00 000/- WAS INTRODUCED INTO THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SHARE PREMIUM ATTAC HED TO THE SHARE CAPITAL. AS DISCUSSION ABOVE THE PREMIUM OF RS. 1 90/- PER SHARE WAS NOT JUSTIFIED AT ALL ON THE BASIS OF ABSOLUTELY NO ASSETS COMMENSURATE TO PREMIUM CHARGED NO BUSINESS ACTIVITY NO INCOME NO NET WORTH NOR ANY PROMISE FOR CREATION OF ANY ASSETS BUSINESS AC TIVITY INCOME OR NET WORTH IN THE FUTURE. ACCORDINGLY THE CHARGING AND RECEIPT OF SHARE PREMIUM/ SHARE CAPITAL TO THE TUNE OF RS. 3 40 00 0 00/- IS HELD TO BE INCOME OF THE ASSESSEE COMPANY IN THE NATURE OF INC OME ENVISAGED U/S 56(1) OF THE INCOME TAX ACT 1961. THE SAME IS ADDE D BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 IN FIRST APPEAL THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 3 40 00 000/- MADE BY THE AO BY OBSERVING AT PAGES 93 & 94 OF HIS ORDER AS UNDER:- 3.2.2 I HAVE CONSIDERED ASSESSEE'S SUBMISSION AND CAREFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALSO TAKE A NOTE OF FACTUA L MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. I HAVE ALREADY GIVEN A DETAILED FINDINGS IN PARA 2.1.4.7 WHEREIN TOTAL OF RS. 8 71 97 727/- HAS BEEN SUSTAINED IN THE HANDS OF M/S. . MOTISONS GLOBAL PVT. LTD M/S. MOTISONS ENTERTAINMENT PVT. LTD M/S. MOTISONS BUILDTECH PVT. LTD AND M/S. SHIVANSH BUILDTECH PVT. LTD DETAILS OF WHICH ARE AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2 75 00 000 - 2 75 00 000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6 96 50 000 - 6 96 50 000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 4 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3 40 00 000 - 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1 95 00 000 - 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 - 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 8 6 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 00 000 - 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 - 10 30 00 000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2 90 00 000 - 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 00 000 - 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 94 14 07 100 8 71 97 727 85 42 09 373 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE ADDITION OF RS. 3 40 00 000/- MADE ON A/C OF BOGUS SHARE CAPITAL IN THE HANDS OF M/S. MOTISONS ENTERTAINMENT (INDIA) PVT. L TD IS HEREBY DELETED. ASSESSEE GETS RELIEF IN GR NO. 2 & 3. PARA 2.1.4.7 READS OF LD. CIT(A)S ORDER AS UNDER:- 2.1.4.7 IN VIEW OF THE ABOVE FINDINGS IT IS ALSO SEEN THAT THIS CASH /DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/ STAGE. THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPAN IES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. HOWEVER ON PERUS AL OF WRITTEN SUBMISSIONS AND COMPLIANCE TO SHOW CAUSE LETTER IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATE D BY SHRI SANTOSH CHOUBE SHRI RAJESH KR SINGH AND SHRI AJIT SHARMA A ND ALSO COULD NOT SATISFACTORILY EXPLAIN THE REASONS OF CASH DEPOSITS MADE TO THOSE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 5 ACCOUNTS. THEREFORE DULY CONSIDERING THOSE FACTS AS EVIDENCES (BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH AND & PO ST-SEARCH OPERATION ADDITION TO THE EXTENT OF RS. 8 71 97 72 7/- IS SUSTAINED AND BALANCE IS DELETED DETAILS GIVEN AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2 75 00 000 - 2 75 00 000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6 96 50 000 - 6 96 50 000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3 40 00 000 - 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1 95 00 000 - 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 - 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 8 6 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 00 000 - 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 - 10 30 00 000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2 90 00 000 - 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 00 000 - 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 94 14 07 100 8 71 97 727 85 42 09 373 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 6 IT IS PERTINENT TO MENTION HERE THAT M/S. MAYUKH VINIMAY PVT.LTD RECEIVED SHARE APPLICATION OF RS. 10 54 95 000/- IN AY 2009- 10 WHICH WAS ADDED AS INCOME OF M/S.MAYUKH VINIMAY PVT. LTD IN A.Y. 2009-10. THEREA FTER IN SUBSEQUENT YEARS THE PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTE D IN THE COMPANIES UNDER APPEAL AS UNDER:- S.N. NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1. MOTISONS GLOBAL PVT. LTD 2012-13 6 93 49 800 2. MOTISONS GLOBAL PVT. LTD 2013-14 2 24 50 000 3. MOTISONS ENTERTAINMENT (INDIA)PVT LTD. 2012-13 1 55 00 000 TOTAL 10 72 29 800 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO MENTIONED HERE THAT AS PER LD. ARS REQUEST APPELLATE PROCEEDINGS IN CASE OF M/S. MAYUKHVINIMAY PVT. LTD HAVE BEEN KE PT IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY HON'BLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS NOW ADDITIONS MADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO GROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. 3.3 DURING THE COURSE OF HEARING THE LD. DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE ORDER OF THE LD. CIT(A) M AY BE SET ASIDE . 3.4 ON THE OTHER HAND THE LD.AR SUPPORTED THE ORDE R OF THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE FILED THE FOLLO WING WRITTEN SUBMISSION PRAYING THEREIN TO DISMISS THE APPEAL OF THE DEPART MENT. 2.01.2 SUBMISSION OF ASSESSEE:- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 7 A) DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALLOTTED 1 70 000 EQUITY SHARES OF RS. 10 EACH TO VARIOUS COMPANIES A T A PREMIUM OF RS. 190/- PER SHARE DETAIL OF WHICH IS AS UNDER: - S.N. NAME NO. OF SHARES ALLOTED/ APPLIED DURING THE YEAR AMOUNT ADJUSTED AGAINST SHARE CAPITAL RATE PER SHARE AMOUNT ADJUSTED AGAINST SHARE PREMIUM RATE OF PREMIUM PER SHARE ISSUE PRICE OF THE SHARE TOTAL CONSIDERATION RECEIVED 1 BHOLENATH TRADERS PVT. LTD 17500 1 75 000 10 33 25 000 190 200 35 00 000 2 DEBDARU VINIMAY PVT. LTD 25000 2 50 000 10 47 50 000 190 200 50 00 000 3 INDIGO VINIMAY PVT. LTD 25000 2 50 000 10 47 50 000 190 200 50 00 000 4 KINGFISHER VINIMAY PVT. LTD 10000 1 00 000 10 19 00 000 190 200 20 00 000 5 REALITY MERCHANT PVT. LTD 12500 1 25 000 10 23 75 000 190 200 25 00 000 6 SHREYA TIE UP PVT. LTD 37500 3 75 000 10 71 25 000 190 200 75 00 000 7 SUMERU VINCOM PVT. LTD 17500 1 75 000 10 33 25 000 190 200 35 00 000 8 VICTOR TRADCOM PVT. LTD 25000 2 50 000 10 47 50 000 190 200 50 00 000 TOTAL 170000 17 00 000 3 23 00 000 3 40 00 000 B) INITIALLY VIDE SHOW CAUSE NOTICE DATED 06.02.201 5 (COPY AT PB PAGE 96-99) THE LD. AO OPINED THAT ENTIRE SHARE CAPITAL/SHARE PREMIUM OF RS. 3 40 00 000/- SHOULD BE ADDED IN TOTAL INCOME OF TH E ASSESSEE. C). THE LD. AO HAS NOT MADE THE ADDITION UNDER THE DEEMING PROVISIONS OF SECTION 68 OF INCOME TAX ACT. THE LD AO MADE THE AD DITION BY APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT ON THE GROUND THAT THE ASSETS OF THE ASSESSEE COMPANY DON T COMMENSURATE TO PREMIUM CHARGED AND ANY BUSINESS ACTIVITY WAS NOT P ERFORMED OR ANY BUSINESS INCOME HAS NOT BEEN SHOWN BY THE ASSESSEE. THE LD CIT(A) HAS NOT CONFIRMED THE ADDITION MADE BY LD AO BY APP LYING THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 8 PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT ON T HE BASIS OF HIS DETAILED FINDINGS AT PAGE 38-42 OF HIS ORDER. THE ASSESSEE RELIES ON THE FINDINGS OF LD CIT(A). D ) JUSTIFICATION OF CHARGING SHARE PREMIUM THE ASSESSEE HAS SUBMITTED THE JUSTIFICATION FOR CH ARGING THE SHARE PREMIUM WHICH IS SUMMARIZED AS UNDER: - NAME OF COMPANY REASON FOR CHARGING SHARE PREMIUM MOTISONS ENTERTAINMENT (I) PVT. LTD 1. THE ASSESSEE COMPANY BOOKED A BIG SPACE (MEANT FOR CINEMA HALL) IN UNDER CONSTRUCTION COMPLEX NAMING WORLD TRADE PARK FURTHER THE LEASING OUT THIS SPACE TO WORLD FAMOUS CINEMA THEATRE OPERATOR CINEPOLIS WAS UNDER PROCESS. 2. GOODWILL OF MOTISONS GROUP. E) SHARE PREMIUM/CAPITAL IS CAPITAL RECEIPT: IF SHARES ARE ISSUED AT PREMIUM THEN CAPITAL RECEIP T AGGREGATE AMOUNT OF PREMIUM IS TO BE TRANSFERRED TO AN ACCOUNT CALLE D THE SHARE PREMIUM ACCOUNT. THIS SHARE PREMIUM ACCOUNT IS NOT DISTRIBU TABLE AS INCOME JUST LIKE AS ANY OTHER CAPITAL ASSETS. ON WINDING UP TH E SURPLUS MONIES IN THE SHARE PREMIUM ACCOUNT IS TO BE RETURNED TO THE SHARE HOLDERS AS CAPITAL. SO LONG AS THE COMPANY IS A GOING CONCERN THE MONIES IN SHARE PREMIUM ACCOUNT CAN NEVER BE RETURNED TO THE SHAREH OLDERS EXCEPT THROUGH THE MEDIUM OF A REDUCTION PETITION OR IN OTHER WORDS EXCEPT UNDER EXACTLY THE SAME CONDITIONS AS THOSE UNDER WH ICH ANY OTHER CAPITAL ASSET CAN REACH THE SHAREHOLDERS HANDS. DIS TRIBUTION OF SHARE PREMIUM AMOUNT IS NOT PERMITTED THROUGH DIVIDEND. I T IS TAKEN OUT OF THE CATEGORY OF DIVISIBLE PROFITS. THE PROVISIONS I N RESPECT OF ISSUE OF SHARES AT PREMIUM ARE THE SAME IN THE OLD COMPANY A CT AS WELL AS IN THE NEW COMPANY ACT. HENCE COMPANIES ACT CLEARLY ME NTIONS THAT AMOUNT RECEIVED AS PREMIUM IS CAPITAL RECEIPT AND N OT A REVENUE RECEIPT. THE SHARE PREMIUM IS ALSO VERIFIABLE FROM RETURNS OF ALLOTMENT SUBMITTED IN ROC. AS PER DEPARTMENTAL CIRCULAR (MCA ) NO. 3/77 DATED 15.04.1977 THE MONIES IN THE SHARE PREMIUM ACCOUNT CANNOT BE TREATED AS FREE RESERVES AS THEY ARE IN THE NATURE OF CAPI TAL RESERVES. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 9 F) ON THE ISSUE OF SHARES AT PREMIUM THE LD. ITAT MUMBAI BENCH IN THE CASE OF ACIT V/S GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T1 0L- 656-ITAT-MUM (PB PG 354-359 OF CASE LAWS) OBSERVED THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION W HICH DOES NOT REQUIRE ANY JUSTIFICATION . THE FINDING OF THE ITAT WAS CONFIRMED BY MUMBAI HIGH COURT IN ITS DECISION DATED 20.03.2017 IN APPEAL NO. 1613 OF 2014. PB PAGE 306-366 /CASE LAWS) FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACC ORDANCE WITH SECTION 78 OF COMPANIES ACT 1956. FURTHER THE COMPANY IS NO T REQUIRED TO PROVE THE GENUINENESS PURPOSE OR JUSTIFICATION FOR CHARG ING PREMIUM OF SHARES SHARE PREMIUM BY ITS VERY NATURE IS A CAPIT AL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE . IN THE CASE BEFORE MUMBAI BENCH HAS TO CONSIDER A CASE WHERE PREMIUM OF RS.190 PER SHARE W AS CHARGED. THE TRIBUNAL OBSERVED AS UNDER ( PG 358 TO 359/CASE LAWS) : 11. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LO WER AUTHORITIES. IN OUR CONSIDERED VIEW THE ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUST IFICATION. FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SEC. 78 OF THE COMPANIES ACT 1956. FURTHER THE COMPANY IS NOT REQUIRED TO PROVE THE GENUINENESS P URPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SHARES SHARE PREMIUM BY ITS VERY NATURE IN A CAPITAL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD F ILED ALL THE REQUISITE DETAILS/DOCUMENTS WHICH ARE REQUIRED TO EXPLAIN CRE DITS IN THE BOOKS OF ACCOUNTS BY THE PROVISIONS OF SEC. 68 OF THE ACT . THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED THE IDENTITY OF THE COMPAN IES WHO HAVE PURCHASED SHARES AT A PREMIUM. THE ASSESSEE HAS ALS O FILED BANK DETAILS TO EXPLAIN THE SOURCE OF THE SHARE HOLDERS AND THE GENUINENESS OF THE TRANSACTION WAS ALSO ESTABLISHED BY FILING C OPIES OF SHARE APPLICATION FORMS AND FORM NO. 2 FILED WITH THE REG ISTRAR OF COMPANIES. THE ENTIRE DISPUTE REVOLVES AROUND THE F ACT THAT THE ASSESSEE HAS CHARGED A PREMIUM OF 190/- PER SHARE. NO DOUBT A NON-EST COMPANY OR A ZERO BALANCE SHEET COMPANY ASK ING FOR 190/- PER SHARE DEFIES ALL COMMERCIAL PRUDENCE BUT AT THE SAME TIME WE CANNOT IGNORE THE FACT THAT IT IS A PREROGATIVE OF THE BOARD OF DIRECTORS OF THE COMPANY TO DECIDE THE PREMIUM AMOU NT AND IT IS THE WISDOM OF THE SHARE HOLDERS WHETHER THEY WANT TO SU BSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUEST ION THE CHARGING OF SUCH HUGE PREMIUM WITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE AMENDMENT HAS BEEN BROUGHT IN THE INCOME TAX ACT UNDER THE HEAD 'INCOME FROM OTHER SOURCES' BY I NSERTING CLAUSE (VIIB) TO SEC. 56 OF THE ACT WHEREIN IT HAS BEEN PR OVIDED THAT ANY ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 10 CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FAIR VALUE OF SUCH SHARES THE AGGREGATE CONSIDERATION RECEIVED FOR SU CH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL B E TREATED AS THE INCOME OF THE ASSESSEE BUT THE LEGISLATURE IN ITS W ISDOM HAS MADE THIS PROVISION APPLICABLE W.E.F 1.4.2013 I.E. ON AND FRO M A.Y. 2013-14. IN SO FAR AS THE YEAR UNDER CONSIDERATION IS CONCERNED THE TRANSACTION HAS TO BE CONSIDERED IN THE LIGHT OF THE PROVISIONS OF SEC. 68 OF THE ACT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS GIVE N DETAILS OF NAMES AND ADDRESSES OF THE SHARE HOLDERS THEIR PAN NOS THE BANK DETAILS AND THE CONFIRMATORY LETTERS. 11.1. CONSIDERING ALL THESE UNDISPUTED FACTS IT CA N BE SAFELY CONCLUDED THAT THE INITIAL BURDEN OF PROOF AS RESTE D UPON THE ASSESSEE HAS BEEN SUCCESSFULLY DISCHARGED BY THE ASSESSEE . EVEN IF IT IS HELD THAT EXCESS PREMIUM HAS BEEN CHARGED IT DOES NOT B ECOME INCOME AS IT IS A CAPITAL RECEIPT. THE RECEIPT IS NOT IN THE REVENUE FIELD. WHAT IS TO BE PROBED BY THE AO IS WHETHER THE IDENTITY OF T HE ASSESSEE IS PROVED OR NOT. IN THE CASE OF SHARE CAPITAL IF THE IDENTITY IS PROVED NO ADDITION CAN BE MADE U/S. 68 OF THE ACT. WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F LOEVELY EXPORTS PVT. LTD. 317 ITR 218. WE THEREFORE DO NOT FIND AN Y ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). GROUND NO. 1 IS ACCORDINGLY DISMISSED. G) AS PER PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT 1961 INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOT AL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEA D 'INCOME FROM OTHER SOURCES' IF IT IS NOT CHARGEABLE TO INCOME-T AX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 ITEMS A TO E. IN THE CASE OF THE ASSESSEE COMPANY THE AMOUNT WAS RECEIVED FROM INVESTORS WER E AGAINST SHARE APPLICATION AND THE SAME IS CAPITAL RECEIPT WHICH W AS ADJUSTED AGAINST SHARE CAPITAL AND SHARE PREMIUM. THE MONEY SO RECEI VED TO ASSESSEE COMPANY WAS CAPITAL RECEIPT AND WAS NOT REVENUE REC EIPT THEREFORE THE SAME CANNOT BE TAXED IN THE HANDS OF ASSESSEE COMPA NY UNDER SECTION 56(1) OF INCOME TAX ACT 1961 BECAUSE THIS SECTION DEAL WITH INCOME AND NOT WITH CAPITAL RECEIPTS. THE INVESTORS WHO SU BSCRIBED THE SHARE CAPITAL OF ASSESSEE COMPANY IS ALSO SHOWING THE AMO UNT PAID TO ASSESSEE AS THEIR INVESTMENT IN SHARES OF ASSESSEE COMPANY A ND NECESSARY DOCUMENTS IN THIS REGARD WAS SUBMITTED TO LD. AO. T HEREFORE THE ASSESSEE HAS PROVED WITH DOCUMENTARY EVIDENCES THAT THE AMOUNT WAS RECEIVED AGAINST SHARE APPLICATION I.E. CAPITAL REC EIPT THEREFORE THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE. FURTHE R FOR TREATING THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 11 SHARE CAPITAL/SHARE PREMIUM AS INCOME OF THE ASSESS EE COMPANY NO COGENT REASON HAS BEEN GIVEN BY LD. AO. FURTHER TH ERE IS NO DEEMING FICTION HAS BEEN GIVEN IN SECTION 56(1) OF INCOME T AX ACT 1961 WHEREIN THE INCOME CAN BE TAXED UNDER DEEMING PROVI SION. H) BY FINANCE ACT 2012 A NEW CLAUSE (VIIB) WAS INSE RTED IN 56(2). MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BIL L 2012 STATED AS UNDER:- SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE IS TO BE TREATED AS INCOME. SECTION 56(2) PROVIDES FOR THE SPECIFIC CATEGORY O F INCOMES THAT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. IT IS PROPOSED TO INSERT A NEW CLAUSE IN 56(2). THE NEW CLAUSE WILL APPLY WHERE ACCOMPANY NOT BEING A COM PANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED RECEIVES IN A NY PREVIOUS YEAR FROM ANY PERSON BEING A RESIDENT ANY CONSIDERATION FOR ISSUE OF SHARES. IN SUCH A CASE IF THE CONSIDERATION RECEIVED FOR ISSUE OF SHARES EXCEEDS THE FACE VALUE OF SHARES THE AGGREGATE CONSIDERATI ON RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHAR ES SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FR OM OTHER SOURCES. THIS AMENDMENT EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SU BSEQUENT ASSESSMENT YEARS. IN THE MEMORANDUM IT IS MENTIONED THAT PREMIUM IN EXCESS OF FAIR MARKET VALUE IS TO BE TREATED AS INC OME. THIS SUGGESTS THAT PREMIUM IN EXCESS OF FAIR MARKET VALUE WAS NOT AN INCOME BUT IS TO BE TREATED AS INCOME DUE TO AMENDED PROVISION. BEFO RE THE AMENDMENT CONSIDERATION RECEIVED AS PREMIUM WAS NO T INCOME. THE LEGISLATURE IN ITS WISDOM REQUIRED THE SHARE PREMIU M IN EXCESS OF FAIR MARKET VALUE TO BE INCOME FROM ASSESSMENT YEAR 2013 -14 AND NOT THE ENTIRE PREMIUM TO BE TREATED AS INCOME. CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED THAT PROVI SIONS OF 56(2)(VII B) WILL BE APPLICABLE FOR ASSESSMENT YEAR 2013-14 ONWARD . THEREFORE AMENDMENT IN SECTION 56(2)(VIIB) OF INCO ME TAX ACT 1961 EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT Y EARS AND THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 12 PROVISIONS OF THIS SECTION CANNOT BE MADE APPLICABL E IN PREVIOUS YEARS. IN THIS REGARD THE RATIO HAS BEEN LAID DOWN IN FOLL OWING JUDGMENTS: - A) BY FINANCE ACT 1994 SECTION 55(2) WAS AMENDED TO PROVIDE THAT COST OF ACQUISITION OF A TENANCY RIGHT WILL BE TAKEN AS NIL. THE HONBLE APEX COURT IN THE CASE OF D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA) HELD THAT AMENDMENT TOOK EFFECT FROM 1 ST APRIL 1995 AND THEREFORE WILL NOT BE APPLICABLE FOR A.Y. 1987-88. SIMILAR FINDING HAS BEEN RECORDED BY HONBLE RAJ HIGH COURT IN THE CASE OF GOTAN LIME S TONE KHANIJ UDHYOG. THE RATIO OF LAW IN RESPECT OF AMENDMENT IN 55(2) BEING HELD AS PROSPECTIVE IS APPLICABLE FOR 56(2)(VIBE) AND HENCE SHARE PREMIUM IN EXCESS OF FA IR MARKET VALUE CAN NOT BE HELD TAXABLE FOR A.Y. 2011- 12. B) RECENTLY THE HONBLE APEX COURT IN THE CASE OF M.G. PICTURES (MADRAS) LTD V/S ACIT 373 ITR 39 HELD THAT AMENDMENT IN SECTION 40A(3) W.E.F. FROM 1.4.19 96 IS PROSPECTIVE AND CANNOT BE APPLIED TO PREVIOUS YE ARS OF BLOCK PERIOD PRIOR TO F.Y. 1995-96. C) THE FIGURE OF 10 000 WAS CHANGED TO 20 000 U/S 4 0A(3) OF INCOME TAX ACT 1961 AND 269SS OF INCOME TAX ACT 1961 BY DIRECT TAX LAWS (AMENDMENT) ACT 1987 W.E.F. 1.4.1989. THE CBDT VIDE CIRCULAR NO.522 DATED 18.08.1988 STATED THAT AMENDMENT IN SECTION 40A(3) IS APPLICABLE FOR A.Y. 1989-90 AS IT IS A SUBSTANTI VE PROVISION AND SINCE 269SS IS A PROCEDURAL PROVISION THE EFFECTIVE DATE WILL BE 1.4.89 I.E. PREVIOUS YEAR RE LEVANT TO A.Y. 89-90. D) THE FIVE JUDGE CONSTITUTION BENCH IN THE CASE OF CIT V VATIKA TOWNSHIP (P) LTD. 367 ITR 466 HAD AN OCCASION TO CONSIDER AS TO WHETHER PROVISO ADDED TO SECTION 113 OF THE I.T. ACT IS PROSPECTIVE OR RETROSPECTIVE. THE HONBLE APEX COURT WHILE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 13 CONSIDERING THE VARIOUS DECISIONS HELD (AS PER PAGE 469 OF ITR 367). THAT SURCHARGE LEVIED BY ASSESSING OFFICER FOR THE BLOCK ASSESSMENT PERTAINING TO THE PERIOD FROM JUNE 1 2002 WAS LIABLE TO BE DELETED. AN AMENDMENT MADE TO A TAXING STATUTE CAN BE SAID TO BE INTENDED TO REMOVE HARDSHIPS ONLY OF THE ASSESSEE NOT OF THE DEPARTMENT. IMPOSING A RETROSPECTIVE LEVY ON THE ASSESSEE WOULD HAVE CAUSE D UNDUE HARDSHIP AND FOR THAT REASON PARLIAMENT SPECIFICALLY CHOSE TO MAKE THE PROVISO EFFECTIVE FR OM JUNE 1 2002. WHERE A BENEFIT IS CONFERRED BY A LEGISLATION THE RULE AGAINST A RETROSPECTIVE CONSTRUCTION IS DIFFER ENT. IN A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOM E OTHER PERSON OR ON THE PUBLIC GENERALLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISL ATORS OBJECTS THEN PRESUMPTION WOULD BE THAT SUCH A LEGISLATION GIVING IT A PURPOSIVE CONSTRUCTION WO ULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISION AS RETROSPECTIVE. WHERE A LAW IS ENACTED FOR THE BENEF IT OF COMMUNITY AS A WHOLE EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTI VE IN NATURE. THE HONBLE APEX COURT FURTHER NOTICED THAT CBDT CIRCULAR MENTIONED THAT PROVISO IS APPLICABLE FROM 1.6.2002. IN RESPECT OF 56(2)(VII B) CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED THAT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FOR ASSESSMENT YEAR 2013-14 ONWARD. HENCE SHARE PREMIUM EVEN IF IN EXCESS OF FAIR MARKE T VALUE IS NOT TAXABLE U/S 56(1) FOR THE A.Y. 2011-12 . ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 14 I) SECTION 56 IS NOT A CHARGING SECTION. THIS SECTI ON STARTS WITH THE FOLLOWING SENTENCE. INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED F ROM THE TOTAL INCOME UNDER THE ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD. INCOME FROM OTHER SOURCES IF IT IS NOT CHARG EABLE TO INCOME TAX. UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 ITE MS A TO E. FOR AN INCOME TO BE TAXED U/S 56 IT HAS TO SATISFY THREE CONDITIONS. (A) IT SHALL BE CLASSIFIABLE AS INCOME AS PER THE C HARGING SECTION OF THE ACT. (B) IT SHALL NOT BE EXCLUDED FROM THE TOTAL INCOME (E.G. SECTION10). (C) IT IS NOT CHARGEABLE TO TAX UNDER ANY OF THE SP ECIFIED HEADS IN SECTION 14 ITEMS A TO E. THE FINANCE BILL 2012 AS PRESENTED ON 16 TH MARCH 2012 INCLUDED A NEW CLAUSE (VIIB) U/S 56(2) OF I.T. ACT [342 ITR1(ST)]. NO PROPOSAL IN THE ORIGINAL BILL TO INSERT A NEW CLAUSE U/S 2(24). SUB SEQUENTLY NOTICE OF AMENDMENTS TO FINANCE BILL WAS GIVEN [SEE 343 ITR 3 7(ST)] AND AMENDMENTS ALSO MADE IN CHARGING SECTION 2(24) IN I NSERTING CLAUSE (XVI) IN 2(24) OF I.T. ACT W.E.F. 1.4.2013 READS AS UNDER: (XVI) ANY CONSIDERATION RECEIVED FOR ISSUE OF SHARE S AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES REFERRED TO IN CLAU SE (VIIB) OF SUBSECTION (2) OF 56. THE AMENDMENT MADE IN 2(24) IS ALSO APPLICABLE W.E. F. 01.04.2013 AND IT CANNOT BE APPLIED EARLIER TO 01-0 4-2013. J) THE INCOME FOR THE PURPOSE OF THE INCOME TAX ACT IS DEFINED IN SECTION 2(24) OF THE INCOME TAX ACT 1961. SECTION 2(24) OF THE INCOME ACT 1961 GIVES INCLUSIVE DEFINITION OF INCOME BUT THE I NCOME SHOULD BE LOOK INTO ITS NORMAL MEANING. THE INCOME WILL NOT INCLUD E CAPITAL RECEIPTS UNLESS IT IS SPECIFIED IN INCOME TAX ACT. THIS ARGU MENT FINDS SUPPORTS FROM THE AMENDMENT MADE BY FINANCE ACT 2012 W.E.F. 1.4.2013 IN SECTION 56(VIIB) AND CLAUSE (XVI) OF SECTION 2(24) OF INCOME TAX ACT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 15 1961 WHEREIN CERTAIN SHARE PREMIUMS WERE MADE TAXAB LE W.E.F. 01.04.2013. IF THE SAME WERE ALREADY TAXABLE U/S 56 (1)/ 2(24) OF INCOME TAX ACT 1961 THEN THERE WAS NO NEED TO MAKE THESE AMENDMENTS IN THE ACT. IN CASE THERE IS NO CHARGING PROVISION FOR SPECIFIC RECEIPT THEN IT CANNOT BE TAXED. THE FIVE MEMBER BENCH OF THE APEX COURT IN CIT V VATIKA TOWNSHIP P LTD 367 ITR 4 66 (PB PG 19/CASE LAWS) . TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RIG HTS AND PROPERTY INTERESTS AND ARE THEREFORE SUBJECT TO S TRICT CONSTRUCTION AND ANY AMBIGUITY MUST BE RESOLVED AGA INST IMPOSITION OF THE TAX. IN BILLINGS V U.S 232 U.S.26 1 AT PAGE 265 34 S.CT 421 (1914) THE SUPREME COURT CLEARLY ACKNOWLEDGED THIS BASIC AND LONG STANDING RULE OF S TATUTORY CONSTRUCTION. TAX STATUTES SHOULD BE STRICTLY CONSTRUED AND IF ANY AMBIGUITY BE FOUND TO EXIST IT MUST BE RESOLVED IN FAVOUR OF CITIZEN... IF A PERSON SOUGHT TO BE TAXED COMES WITHIN THE LETTER OF THE LAW HE MUST BE TAXED HOWEVER GREAT T HE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND IF THE CROWN SEEKING TO RECOVER THE TAX CANNOT BRING THE SUBJECT WITHIN THE LETTER OF THE LAW THE SUBJECT IS FREE HOWEVER APPARENTLY WITHIN THE SPRIT OF THE LAW THE CASE MIG HT OTHERWISE APPEAR TO BE AS OBSERVED IN PARTINGTON V ATTOMEY G ENERAL LR4HL100. SINCE FOR THE YEAR UNDER CONSIDERATION THERE WAS NO PROVISION IN INCOME TAX ACT 1961 WHEREIN THE FAIR VALUE OF SHAR E COULD BE COMPUTED AND THE EXCESS SHARE PREMIUM COULD BE TAXE D THEREFORE IN ABSENCE OF COMPUTATION PROVISION THE S AME CANNOT BE TAXED. THE RELIANCE IS ALSO PLACED ON FOLLOWING CASES: - I) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MILLS CO.(P) LTD. V CIT 249 ITR 265 (PB 22- 41/CASE LAWS) HAD AN OCCASION TO CONSIDER THE TAXABILITY OF A SUM RECEIVED IN RESPECT OF CONSIDER ATION ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 16 OF TENANCY RIGHT. HONBLE HIGH COURT HELD THAT SURRENDER OF TENANCY RIGHT WHICH WAS NOT CHARGABLE TO TAX AS CAPITAL GAIN UNDER SECTION 45 COULD NOT BE T AXED AS CASUAL AND NON RECURRING RECEIPT UNDER SECTION 1 0(3) R.W. S. 56 UNDER THE HEAD INCOME FROM OTHER SOURCE S. II) THE HONBLE APEX COURT IN THE CASE OF CIT V D.P. SANDU BROS. CHEMBUR (P) LTD 273 ITR 1 (PB 42- 49/CASE LAWS) ALSO HOLD THAT AS PER 2(24)(VI) ONLY INCOME WHICH IS CHARGEABLE U/S 45 IS TO BE INCLUDED IN INCOME AND IF COMPUTATION PROVISION U/S 45 FAILS TH EN CHARGING PROVISIONS WILL FAIL. REF. TO CIT V B.C. SRINIVASA SETTY 128 ITR 294. III) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE O F CIT V GOTAN LIME STONE KHANIJ UDYOG 269 ITR 399 (PB 56-65/CASE LAWS) ALSO HELD THAT IN CASE COMPUTATION PROVISION U/S 48 COULD NOT BE APPLIED F OR WANT OF ASCERTAINABLE COST OF ACQUISITION THEN CAP ITAL GAIN DOES NOT ARISE TO BE INCLUDED IN TOTAL INCOME ON ACCOUNT OF FAILURE OF APPLICABILITY OF COMPUTATION PROVISION. THE HONBLE HIGH COURT REFERRED TO DECIS ION OF BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MIL LS CO (P) LTD. (SUPRA). IV) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF S. ZORASTER AND CO. V/S CIT 322 ITR 35 (PB 66- 68/CASE LAWS) HAD ON OCCASION TO CONSIDER THE TAXABILITY OF RECEIPT OF RS.20 000 RECEIVED BY VEND EE ON DEFAULT OF THE PURCHASER AS PER AGREEMENT FOR SELL OF PREM PRAKASH TALKIES. THE HONBLE HIGH COURT AFTER REFERRING TO THE DECISION OF APEX COURT IN THE CASE OF TRAVANCORE RUBBER AND TEA CO LTD. V CIT 243 ITR 158 HELD THAT SUCH RECEIPT IS CAPITAL RECEIPT. SUCH CAPITAL RECEIPT IS NOT TAXABLE IN VIEW OF JUDGMENT OF APEX COURT IN D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA). HENCE CAPITAL RECEIPT IS NOT TAXABLE UNLES S THERE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 17 IS CHARGING PROVISION FOR A CAPITAL RECEIPT AND COMPUTATION PROVISIONS ARE ALSO APPLICABLE. V) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VODAFONE INDIA SERVICES P. LTD. V/S UOI 368 ITR 1 (PB 76-107/CASE LAWS) HAD AN OCCASION TO CONSIDER THE DIFFERENCE BETWEEN THE SHARE PREMIUM DETERMINED BY REVENUE AND THE SHARE PREMIUM CHARGED AS DEEMED LOAN AND TAXING OF NATIONAL INTEREST ON DEEMED LOAN . THE HONBLE BOMBAY HIGH COURT HAS REFERRED TO THE DECISION OF APEX COURT IN THE CASE OF MATHURAM AGGARWAL V/S STATE OF MP (1999) 8 SCC 667 FOR THE TEST TO INTERPRET A TAXING STATUE WHICH READS AS UN DER: THE INTENTION OF THE LEGISLATURE IS A TAXATION ST ATUTE IS TO BE GATHERED FROM THE LANGUAGE OF THE PROVISIONS PARTICULARLY WHERE THE LANGUAGE IS PLAIN AND UNAMBIGUOUS. IN A TAXING ACT IT IS NOT POSSIBLE TO ASSUME ANY INTENTION OR GOVERNING PURPOSE OF THE STATUTE MORE THAN WHAT IS STATED IN THE PLAIN LANGU AGE. IT IS NOT THE ECONOMIC RESULTS SOUGHT TO BE OBTAINED B Y MAKING THE PROVISION WHICH IS RELEVANT IN INTERPRET ING A FISCAL STATUTE. EQUALLY IMPERMISSIBLE IS AN INTERPR ETATION WHICH DOES NOT FLOW FROM THE PLAIN UNAMBIGUOUS LANGUAGE OF THE STATUTE. WORDS CANNOT BE ADDED TO O R SUBSTITUTED SO AS TO GIVE A MEANING TO THE STATUTE WHICH WILL SERVE THE SPENT AND INTENTION OF THE LEGISLATU RE. THE STATUTE SHOULD CLEARLY AND UNAMBIGUOUSLY CONVEY THE THREE COMPONENTS OF THE TAX LAW I.E. SUBJECT OF THE TAX THE PERSON WHO IS LIABLE TO PAY THE TAX AND THE RAT E AT WHICH THE TAX IS TO BE PAID. IF THERE IS ANY AMBIGU ITY REGARDING ANY OF THESE INGREDIENTS IN A TAXATION ST ATUTE THEN THERE IS NO TAX IN LAW. THEN IT IS FOR THE LEG ISLATURE TO DO THE NEEDFUL IN THE MATTER. HONBLE BOMBAY HIGH COURT IN THIS CASE (VODAFONE CASE) OBSERVED THAT ISSUE OF SHARES AT A PREMIUM IS ON CAPITAL ACCOUNT AND GIVES RISE TO NO INCOME. 56(1) ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 18 PROVIDES THE INCOME OF EVERY KIND WHICH IS NOT EXCLUDED FROM THE TOTAL INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. HOWEVER BEFORE SECTION 56 OF THE ACT CAN BE APPLIED THERE MUST BE INCOME WHICH ARISES. IF THE RECEIPT IS CAPITAL THEN IT IS NOT INCOME. HENCE SHARE PREMIUM IS NOT AN INCOME. I) THE CBDT VIDE CIRCULAR/INSTRUCTION NO.2 DATED 29.01 .2015 HAS STATED AS UNDER [371 ITR 6(ST)]. IN REFERENCE TO THE ABOVE CITED SUBJECT I AM DIRE CTED TO DRAW YOUR ATTENTION TO DECISION OF THE HIGH COURT OF BOM BAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD V UOI FOR THE ASSESSMENT YEAR 2009-10 (WP NO.871 OF 2014) WHEREIN THE COURT HAS HELD INTERALIA THAT THE PREMIUM ON SHARE ISSUE WAS ON ACCOUNT OF A CAPITAL ACCOUNT TRANSACTION AND DOE S NOT GIVE RISE TO INCOME AND HENCE NOT LIABLE TO TRANSFER PR ICING ADJUSTMENT. IT IS HEREBY INFORMED THAT THE BOARD HAS ACCEPTED T HE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE M ENTIONED WRIT PETITION. IN VIEW OF THE ACCEPTANCE OF THE ABO VE JUDGMENT IT IS DIRECTED THAT THE RATIO DECIDENDI OF THE JUDG MENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THE ISSUE IS INVOLVED. THIS MAY ALSO BE BROUGHT TO THE NOTICE OF THE ITAT DRPS AND CIT (APPEALS). IN VIEW OF ABOVE INSTRUCTION IT IS CLEAR THAT RATI O DECIDING OF TREATING OF SHARE PREMIUM AS CAPITAL RECEIPT IS BIN DING ON REVENUE AUTHORITIES. J. IN VIEW OF THE ABOVE SUBMISSIONS IT IS CLEAR TH AT SHARE PREMIUM RECEIVED IS A CAPITAL RECEIPT AND CONSIDERATION REC EIVED CANNOT BE CONSIDERED AS INCOME FOR THE YEAR UNDER CONSIDERATI ON BY APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT. K. THE LD CIT(A) ISSUED SHOW CAUSE NOTICE TO ASSESS EE TO TAX THE SHARE CAPITAL UNDER SECTION 68 OF ITAX ACT AS AGAINST 56( 1) APPLIED BY LD ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 19 AO BUT HE SATISFIED ABOUT THE INGREDIENTS OF SECTIO N 68 OF I.TAX ACT AND NO ADDITION WAS SUSTAINED FOR AY 2009-10 EVEN U /S 68 OF I.TAX ACT. THE LD AO ISSUED SEVERAL NOTICES TO ASSESSEE TO EX PLAIN THE SHARE CAPITAL. THE ASSESSEE SUBMITTED DETAILED REPLY AND DOCUMENTS FROM TIME TO TIME AS UNDER:- S.NO PARTICULARS COPY AT PB PG NO 1 COPY OF QUERY LETTER OF AO DATED 05.01.2015. 85-8 6 2 COPY OF REPLY OF ASSESSEE DATED 13.01.2015 FILED IN RESPONSE TO QUERY LETTER DATED 05.01.2015. 87-91 3 COPY OF SHOW CAUSE NOTICE OF AO DATED 06.02.2015. 92-95 4 COPY OF REPLY OF ASSESSEE DATED 13.02.2015 FILED IN RESPONSE TO SHOW CAUSE NOTICE DATED 06.02.2015. 96-99 5 COPY OF REPLY OF ASSESSEE DATED 03.03.2015. 100 6 COPIES OF DOCUMENTS FILED BEFORE AO ALONG WITH VARIOUS SUBMISSION IN RESPECT OF IDENTITY CREDITWORTHINESS OF SHAREHOLDER AND GENUINENESS OF TRANSACTIONS 102-254 THE ASSESSEE HAS SUBMITTED SUFFICIENT DOCUMENTS BE FORE THE LD AO TO PROVE IDENTITY CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL AND LD AO SATISFIED THAT ADDITION UNDER SECTION 68 CANN OT BE MADE SO HE APPLIED SECTION 56(1) OF ITAX ACT TO MAKE THE ADDIT ION. THE ASSESSEE SUBMITTED DETAILED REPLY BEFORE LD C IT(A) VIDE LETTER DATED 12/07/2016 (COPY AT PB PG 255-307). LD CIT(A) WHEN SATISFIED THAT THE ADDITION U/S 56(1) CANT BE MADE HE TRIED TO SUSTAIN THE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF INCOME TAX ACT. HE ISSUED A SHOW CAUSE NOTICE VIDE LETTER DATE D 09/03/2017 (COPY AT PB PG 308-354). THE ASSESSEE SUBMITTED DETAILED REPLY ON THE SHOW CAUSE NOTICE OF LD CIT(A) VIDE LETTER DATED 24-03-2 017 & 28/03/2017 ALONGWITH DOCUMENTS (COPY AT PB PG 355-442) . TO SUPPORT THAT SHAREHOLDERS WERE GENUINE AND CREDITWORTHINESS IS P ROVED THE ASSESSEE HAS FILED ALL DETAILS IN RESPECT OF INCORPORATION/ EXISTENCE OF INVESTORS AND DETAILS OF CHEQUES VIDE WHICH AMOUNTS WERE RECE IVED. THE CAPACITY OF SHAREHOLDERS IS VERIFIABLE FROM THE COPY OF THE BALANCE SHEET OF THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 20 SHAREHOLDERS. THE SHAREHOLDERS HAVE FUNDS ON A PRIO R DATE FROM THE ALLOTMENT OF SHARES GIVEN BY THE ASSESSEE COMPANY A ND SUCH FUNDS WERE MORE THAN THE AMOUNT OF SHARE APPLICATION. L) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS TO PROVE THEIR IDENTITY OF SHAREHOLDERS CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF TRANSACTION WITH THEM: - NAME OF SHAREHOLDER PARTICULARS OF DOCUMENTS SUBMITTED COPY AT PB PAGE BHOLENATH TRADERS PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 102-103 104 105 106 107-108 109 110-119 120 DEBDARU VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 121-122 123 124 125 126 127-134 135 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 21 INDIGO VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2008-09. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.08. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 136-137 138 139 140 141 142 143-152 153 KINGFISHER VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 154-155 156 157 158-161 162 163 164-171 172 REALITY MERCHANT PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 173-174 175 176 177 178-179 180 181-191 192 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 22 SHREYA TIE UP PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 193-196 197 198 199 200 201-202 203-214 215 SUMERU VINCOM PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 216-217 218 219 220-222 223 224 225-234 235 VICTOR TRADCOM PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. COPY OF ACK. OF ITR OF AY 2009-10. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.09. DECLARATION OF SOURCE OF FUNDS WITH PARTY COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 236-237 238 239 240-241 242 243-252 253 254 M) ALL THE SHARE CAPITAL/SHARE APPLICATION WAS REC EIVED THROUGH A/C PAYEE CHEQUES AND VERIFIABLE FROM BANK STATEMENT OF ASSES SEE AS WELL AS BANK STATEMENT OF THE PARTY. THE ONUS U/S 68 OF THE ASSE SSEE IS TO PROVE THE IDENTITY CAPACITY AND GENUINENESS OF THE TRANSACTI ONS HAS BEEN DISCHARGED WHICH MAY BE SEEN FROM THE FOLLOWINGS:- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 23 I) IDENTITY:- THE ASSESSEE PROVED THE IDENTITY OF ALL THE COMPA NIES BY FILING THE SHARE APPLICATION RECEIVED FROM THE PARTIES AND THE PARTIES ARE DULY IN EXISTENCE AND THE EXISTENCE OF THE PART IES CAN BE VERIFIED FROM THE OFFICIAL WEBSITE OF MCA. THE LD. AO ALSO NOT DOUBTED THE IDENTITY OF THE ABOVE NAMED COMPANIES. FURTHER THE NOTICE ISSUED U/S 133(6) OF INCOME TAX ACT 1961 WA S DULY SERVED ON ALL THE COMPANIES WHICH ALSO PROVE THE ID ENTITY OF THE PARTIES. II) CREDITWORTHINESS ALL THE COMPANIES ARE INCOME TAX ASSESSEE AND DU LY FILING THE INCOME TAX RETURN AND BALANCE SHEETS. THERE IS SUFF ICIENT SOURCE OF FUNDS WITH ALL THE COMPANIES TO INVESTMEN T SHARE CAPITAL/SHARE APPLICATION IN THE ASSESSEE COMPANY. THE ASSESSEE SUBMITTED THE COPIES OF BANK ACCOUNT/DECLARATION OF SOURCE OF FUNDS WITH THEM OF INVESTOR COMPANIES. THE BANK STA TEMENT SHOWS THE HUGE TRANSACTION OF HIGH VALUE IN THE ACC OUNTS OF THE COMPANIES. THE CHART SHOWING THE AMOUNT INVESTED BY THE ABOVE NAMED COMPANIES IN ASSESSEE COMPANY VIZ A VIZ OWN FUNDS WITH THE INVESTOR COMPANY ARE AS UNDER: - NAME OF THE INVESTOR COMPANY AMOUNT INVESTED IN ASSESSEE COMPANY SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2009 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2008 BHOLENATH TRADERS PVT. LTD 35 00 000 5 44 50 000 1 00 000 DEBDARU VINIMAY PVT. LTD 50 00 000 14 20 06 978 NA INDIGO VINIMAY PVT. LTD 50 00 000 14 32 02 148 NA KINGFISHER VINIMAY PVT. LTD 20 00 000 19 97 71 977 NA REALITY MERCHANT PVT. LTD 25 00 000 6 06 50 773 1 00 000 SHREYA TIE UP PVT. LTD 75 00 000 9 60 60 000 9 60 60 000 SUMERU VINCOM PVT. LTD 35 00 000 12 39 52 904 NA VICTOR TRADCOM PVT. LTD 50 00 000 15 45 13 835 NA FROM THE ABOVE CHART IT IS CLEAR THAT ALL THE INVE STOR COMPANIES WERE HAVING THEIR OWN SHARE CAPITAL AND RESERVE & S URPLUS WHICH WERE MUCH MORE THAN TO THE AMOUNT INVESTED IN THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 24 ASSESSEE COMPANY. FROM THE AUDITED P & L ACCOUNT OF THESE COMPANIES IT IS APPARENT THAT THESE COMPANIES HAD T RADING ACTIVITIES OF LARGE AMOUNT. THE ABOVE CHART SHOWS T HAT THE INVESTOR COMPANIES WERE HAVING THEIR OWN INDEPENDEN T FUNDS AND HAVING THEIR INDEPENDENT SOURCE TO INVEST IN TH E SHARES OF THE ASSESSEE COMPANY. APART FROM THE INVESTMENT MAD E IN THE SHARES OF ASSESSEE COMPANIES THE INVESTOR COMPANIE S WERE ALSO HAVING INVESTMENTS IN SHARES OF OTHER COMPANIES OR LOANS & ADVANCES TO PARTIES WHICH IS MUCH MORE THAN TO THE AMOUNT INVESTED IN THE ASSESSEE COMPANY THEREFORE FROM TH E BANK STATEMENT AS WELL AS FINANCIALS STATEMENTS OF THE I NVESTOR COMPANIES THEIR CREDITWORTHINESS IS DULY PROVED. III) GENUINENESS THE ASSESSEE SUBMITTED THE SHARE APPLICATION FORM RECEIVED FROM ABOVE COMPANIES AGAINST THE SHARE APPLICATION RECEIVED FROM THE COMPANIES. THE SHARE APPLICATION IS SUPPOR TED BY BOARD RESOLUTION PASSED IN THE INVESTOR COMPANIES. THE ASSESSEE COMPANY HAS ALLOTTED THE SHARES TO THE INV ESTOR COMPANIES. THE PROPER RETURNS WERE FILED BEFORE THE ROC AGAINST ALLOTMENT OF THE SHARES TO THESE COMPANIES. FURTHERMORE THE DEPARTMENT HAS CARRIED OUT INTENSI VE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCRIMINATI NG MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST THE SHARE ALLOTMENT WAS OWN MONEY OF THE COMPANY. SHARES CERTIFICATES W ERE ISSUED AGAINST THE ALLOTMENT OF THE SHARES TO THESE COMPANIES WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE COMPANY OR ITS DIRECTOR OR EMPLOYEES. THIS FACT SHOWS THAT AFT ER ALLOTMENT OF SHARES BY THE APPELLANT COMPANY SHARE CERTIFICATES WERE DISPATCHED TO THE SUBSCRIBER COMPANIES. NO ANY ENTR Y IN BOOKS OF ACCOUNT OR DOCUMENT WAS FOUND SHOWING PAYMENT OF CASH TO THESE INVESTOR COMPANIES AGAINST RECEIPT OF CHEQUES FROM THESE COMPANIES AGAINST ALLOTMENT OF SHARES. THEREFORE TH E GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. N) ONUS TO PROVE SOURCE OF SOURCE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 25 FROM THE SHOW CAUSE NOTICE GIVEN BY LD CIT(A) AND EXCEL SHEET PROVIDED TO THE ASSESSEE SHOWING CHAIN OF SOURCE IT IS APPARENT THAT EVEN THERE IS NO CASH DEPOSIT TILL 3 RD STAGE OF CHANNEL SOURCE (COPY AT PB PG 669 TO 698/ AY 2012-13) . IF THERE IS ANY CASH DEPOSITED AT 4 TH CHANNEL OR BEYOND TO THAT STAGE THEN THE INQUIRY S HOULD HAVE BEEN MADE FROM THE CONCERNS IN WHOSE BANK A/C SUCH FUNDS FLOATED AND NECESSARY ACTION SHOULD HAVE BEEN TAKEN IN THE CASE S OF SUCH CONCERN BUT THE ASSESSEE CANNOT BE HOLD RESPONSIBLE FOR CAS H DEPOSIT IN SOME ACCOUNT AT 4 TH CHANNEL. UNDER SECTION 68 OF INCOME TAX ACT 1961 THE ONUS OF THE ASSESSEE IS TO PROVE THE SOURCE OF CREDIT ENTRY AND THERE IS NO ONUS OF ASSESSEE TO PROVE THE SOURCE OF SOURCE OR SOURCE OF ALL CHANNEL SOURCES. THE AMENDMENT IN SECTION 68 OF I. TAX WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F. 01/04/2013 WHICH REQUIRE TO PROVE SOURCE OF FINDS I N THE HANDS OF SHAREHOLDER COMPANY. THOUGH NOT REQUIRED BY LAW BUT STILL THE ASSESSEE HAS PROVED SOURCE OF FINDS IN THE HANDS OF SHAREHOLDER COMPANY. THE AMENDED SECTION EVEN DOES NOT REQUIRE TO PROVE SOURCE OF FUNDS IN THE HANDS OF 3 RD OR 4 TH STAGE. FURTHER THE AMENDMENT IN SECTION 68 OF I.TAX WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 ' PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED) A ND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY SHARE CAPITAL SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY UNLESS (A) THE PERSON BEING A RESIDENT IN WHOSE NAME SUC H CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: THE ABOVE PROVISO WAS INSERTED WITH EFFECT FROM THE 1ST DAY OF APRIL 2013 SO IT CANNOT BE APPLIED RETROSPECTIVELY. THEREFORE AS PER LAW THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 26 ASSESSEE HAS NO ONUS TO PROVE SOURCE OF SOURCE. HO NBLE MUMBAI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX 1 VS M/S. GAGANDEEP INFRASTRUCTURE PVT.LTD HELD AS UNDER:- (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 201314 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT BEFORE THE TRIBUNAL IT WAS NOT EVEN THE CASE OF THE REVENUE T HAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT W AS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT IT IS DECLARATORY. THE REFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE AC T IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUI NENESS OF THE TRANSACTION IDENTITY AND THE CAPACITY OF THE INVES TOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEH ALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) IN TH E CONTEXT TO THE PRE AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHE RE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HA S BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME T AX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHO LDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DO ES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A ) AND THE TRIBUNAL THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. BUT IN THE CASE OF THE ASSESSEE THE FACT REMAINS TH AT THE ASSESSEE HAS ALSO PROVED SOURCE OF SOURCE BY SUBMITTING THE COPY OF BANK STATEMENT OF THE SHARE APPLICANT COMPANY WHEREIN NO CASH DEPOSIT WAS MADE AGAINST THE SHARE APPLICATION MONEY. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 27 THEREFORE THE ADDITION ON SHARE APPLICATION RECEI VED BY THE ASSESSEE CAN NEITHER BE MADE U/S 56(1) OF INCOME TAX ACT 1 961 NOR U/S 68 OF INCOME TAX ACT 1961. THE VARIOUS JUDGMENTS AND ARG UMENTS REGARDING ADDITION MADE U/S 56(1) OF INCOME TAX ACT 1961 HAS BEEN SUBMITTED IN FORGOING PARAS. THE VARIOUS JUDGMENTS REGARDING ADDITION CANNOT BE MADE U/S 68 OF INCOME TAX ACT 1961 HAS B EEN CITED IN THE SUBMISSION MADE FOR AY 2012-13 IN ASSESSEES APPEAL ITA NO 387/JP/17 . IN VIEW OF THE ABOVE SUBMISSION THE HUMBLE ASSES SEE PRAYS YOUR HONOR KINDLY TO DISMISS THE APPEAL FILED BY THE DEP ARTMENT. 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE HAS BEEN DEALT WITH AND DECIDED BY THIS BENCH OF ITAT V IDE ITS ORDER DATED 30-10-2017 IN THE CASE OF ACIT CENTRAL CIRCLE-2 JAIPUR VS MOTISONS BUILDTECH PVT. LTD IN ITA NO. 481/JP/2017 (REVENUE S APPEAL) FOR THE ASSESSMENT YEAR 2009-10 BY OBSERVING AS UNDER:- 4.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE THAT THE DEPART MENT CARRIED OUT SEARCH OVER MOTISONS GROUP ON 31-10-2012. THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDING OBSERVED THAT IN THE COURSE OF SEARCH AND SEIZURE A CTION U/S 132 OF THE ACT CASH JEWELLERY VALUABLES STOCK-IN-TRADE DOCUMENTS BO OKS OF ACCOUNT AND / OR LOOSE PAPERS WERE FOUND AND / OR SEIZED FROM THE PREMISES OF THE MEMBERS OF THE MOTISONS GROUP OF WHICH ONE SUCH MEMBER HAPPENS TO BE THE AS SESSEE. THE AO ALSO NOTED THAT THE GROUP IS INVOLVED IN INTRODUCING LARGE SHARE CA PITAL ON HIGH PREMIUM IN ACCOUNTS OF VARIOUS GROUP COMPANIES THROUGH THE KOLKATA BASE D COMPANIES. THE AO HAS MENTIONED THESE DETAILS AT PAGE 3 AND 4 OF HIS ASSE SSMENT ORDER. THE AO FURTHER NOTED THAT THE RECEIPT OF SHARE CAPITAL IS RS. 3 03 000/- AND THE PREMIUM IS TO THE TUNE OF RS. 2 99 97 000/- DURING THE YEAR UNDER CONSIDERATI ON WHICH IS NOT ONLY ABNORMAL BUT ALSO APPEARED TO BE PART OF A WELL PLANNED EXERCISE OF TAX EVASION. ACCORDINGLY THE AO ISSUED THE SHOW CAUSE NOTICE DATED 6-02-2015 TO THE ASSESSEE COMPANY REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AMOUNT OF RS. 3 03 00 000/- SHOULD NOT BE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 28 TREATED AS INCOME OF THE ASSESSEE U/S 56(1) OF THE ACT. THE ASSESSEE SUBMITTED THE REPLY BEFORE THE AO WHO REJECTED THE ASSESSEE'S CON TENTION AND MADE THE ADDITION OF RS. 3 03 00 000/- U/S 56(1) OF THE ACT IN THE HANDS OF THE ASSESSEE COMPANY. IN FIRST APPEAL THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 3 03 00 000/- MADE BY THE AO. THE RELEVANT PORTION OF LD. CIT(A)S ORDER FROM PARA 2.1.4.2 TO 2.1.47 IS REPRODUCED HEREUNDER:- 2.1.4.2 FINAL OBSERVATION : 2.1.4.2.1 I HAVE CONSIDERED ASSESSEES SUBMISSION AND ALSO T AKEN A NOTE OF JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT AS WELL AS THE FACTUAL MATRIX OF THE CASE. THE BRIE F FACTS OF THE CASE ARE THAT MOTISONS GROUP HAS S EVERAL COMPANIES. THESE COMPANIES ISSUED SHARE CAPITAL ON PREMIUM TO VARIOU S OTHER COMPANIES. THE AO HELD THAT THE RECEIPTS ON ACCOUNT OF SHARE CAPITAL ON PREMIUM IS TAXABLE INCOME U/S 56(1) OF I. TAX AC T ACCORDINGLY HE MADE THE ADDITIONS IN THE HANDS O F VARIOUS COMPANIES AS UNDER:- S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. 1 MOTISONS GLOBAL PVT. LTD 2009-10 BHOLENATH TRADER S PVT. LTD 25 00 000 DEBRAJ VINCOM PVT. LTD 15 00 000 KINGFISHER VINIMAY PVT. LTD 20 00 000 NAWAB VYAPAR PVT. LTD 50 00 000 REALITY MERCHANT PVT. LTD 47 00 000 SANMUKH VINCOM PVT. LTD 15 00 000 SHREYA TIE UP PVT. LTD 53 00 000 VICTOR TRADCOM PVT. LTD 50 00 000 TOTAL 2 75 00 000 2 MOTISONS GLOBAL PVT. LTD 2011-12 ADARSH DEAL TRAD E PVT. LTD 5 00 000 ADHUNIK DEALMARK PVT. LTD 42 00 000 AXION COMMODEAL PVT. LTD 36 00 000 BHOLENATH TRADERS PVT. LTD 1 03 00 000 BHUSAN DISTRIBUTORS PVT. LTD 25 00 000 CONTRA VANIJYA PVT. LTD 78 00 000 DEBDARU VINIMAY PVT. LTD 21 00 000 DEEP COMMOSALES PVT. LTD 50 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 29 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. DHANLABH TRADELINKS PVT. LTD 27 00 000 PUSPA DEALERS PVT. LTD 60 00 000 PUSPA TRADING PVT. LTD 12 50 000 RUPA TRACOM PVT. LTD 60 00 000 SPANGLE DEALTRADE PVT. LTD 70 00 000 SURYA DEAL TRADE PVT. LTD 14 00 000 SWABHIMAN DEALERS PVT. LTD 68 00 000 VIKASH TRADECOM PVT. LTD 25 00 000 TOTAL 6 96 50 000 3 MOTISONS GLOBAL PVT. LTD 2012-13 ALLIANCE TRADECO M PVT. LTD 3 05 00 000 EVERSHINE SUPPLIERS PVT. LTD 1 60 00 000 ALLIANCE TRADECOM PVT. LTD 3 95 58 900 EVERSHINE SUPPLIERS PVT. LTD 4 86 99 600 MAYUKH VINIMAY PVT. LTD 6 93 49 800 MAYUKH VINTRADE PVT. LTD 13 99 800 REGENT BARTER PVT. LTD 4 04 71 800 REGENT DEALERS PVT. LTD 7 59 99 900 ROSE SUPPLIERS PVT. LTD 9 87 49 800 TOTAL 42 07 29 600 4 MOTISONS GLOBAL PVT. LTD 13-14 ALLIANCE TRADECOM PVT. LTD 50 50 000 EVERSHINE SUPPLIERS PVT. LTD 1 45 00 000 MAYUKH VINIMAY PVT. LTD 2 24 50 000 REGENT DEALERS PVT. LTD 16 00 000 ROSE SUPPLIERS PVT. LTD 5 00 000 TOTAL 4 41 00 000 5 MOTISONS ENTERTAINMENT (I) PVT. LTD 2009-10 BHOLE NATH TRADERS PVT. LTD 35 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 30 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. DEBDARU VINIMAY PVT. LTD 50 00 000 INDIGO VINIMAY PVT. LTD 50 00 000 KINGFISHER VINIMAY PVT. LTD 20 00 000 REALITY MERCHANT PVT. LTD 25 00 000 SHREYA TIE UP PVT. LTD 75 00 000 SUMERU VINCOM PVT. LTD 35 00 000 VICTOR TRADCOM PVT. LTD 50 00 000 TOTAL 3 40 00 000 6 MOTISONS ENTERTAINMENT (I) PVT. LTD 2011-12 ACCES S TRADELINK PVT. LTD 20 00 000 BHOLENATH TRADERS PVT. LTD 40 00 000 CHAKRA DEAL TRADE PVT. LTD 15 00 000 DEBDARU VINIMAY PVT. LTD 15 00 000 INTERLINK SAVING AND FINANCE P LTD 25 00 000 PUJA TIE UP PVT. LTD 15 00 000 SANMUKH VINCOM PVT. LTD 45 00 000 TARA VINIMAY PVT. LTD 20 00 000 TOTAL 1 95 00 000 7 MOTISONS ENTERTAINMENT (I) PVT. LTD 2012-13 ALLIA NCE TRADECOM PVT. LTD 1 59 00 000 EVERSHINE SUPPLIERS PVT. LTD 93 00 000 EVERSHINE SUPPLIERS PVT. LTD 17 00 000 MAYUKH VINIMAY PVT. LTD 1 55 00 000 REGENT BARTER PVT. LTD 1 79 00 000 REGENT DEALERS PVT. LTD 1 40 00 000 ROSE SUPPLIERS PVT. LTD 35 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 31 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. TOTAL 7 78 00 000 8 MOTISONS BUILDTECH PVT. LTD 2009-10 ARCADE DEALC OM PVT. LTD 30 00 000 DEBDARU VINIMAY PVT. LTD 25 00 000 DEBDOOT VINIMAY PVT. LTD 35 00 000 MATRABHUMI DEALERS PVT. LTD 44 00 000 PUJA TIE-UP PVT. LTD 50 00 000 PUSHPA DEALERS PVT. LTD 25 00 000 PUSHPA TRADING PVT. LTD 40 00 000 SHREYA TIE UP PVT. LTD 10 00 000 TARANH SUPPLIERS PVT. LTD 34 00 000 VANDANA DEALERS PVT. LTD 10 00 000 TOTAL 3 03 00 000 9 MOTISONS BUILDTECH PVT. LTD 2012-13 ALLIANCE TRA DECOM PVT. LTD 1 80 00 000 EVERSHINE SUPPLIERS PVT. LTD 28 00 000 REGENT BARTER PVT. LTD 1 60 27 500 TOTAL 3 68 27 500 10 GODAWARI ESTATES PVT. LTD 2010-11 DEBDARU VINIMA Y PVT. LTD 25 00 000 JAI PITRESHWAR VYAPAAR PVT. LTD 15 00 000 MAINAK VINCOM PVT. LTD 50 00 000 PUSPA DEALERS PVT. LTD 50 00 000 SNOWFALL COMMERCIAL PVT. LTD 25 00 000 VIGNESH INFO SERVICES PVT. LTD 35 00 000 TOTAL 2 00 00 000 11 GODAWARI ESTATES PVT. LTD 2012-13 BAKLIWAL VYAPA AR PVT. LTD. 1 23 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 32 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. JASMINE COMMODITIES PVT. LTD 65 00 000 BUNIYAD VANIJYA PVT LTD 50 00 000 PUJA BARTER PVT. LTD. 60 00 000 DHANLABH TRADELINKS PVT. LTD 25 00 000 DEVANG COMMERCIAL PVT. LTD 50 00 000 EXTENT VINIMAY PVT. LTD 25 00 000 NEHA DEAL TRADE PVT LTD 20 00 000 SPRING SALESPVT LTD 67 00 000 MANALI TRADECOM PVT LTD. 50 00 000 TARGET VINCOM PVT LTD 50 00 000 BERNSTAIN MARKETING PVT LTD 15 00 000 KESARINANDAN VANIJYA PVT LTD 5 00 000 DEEP COMMOSALE PVT LTD 50 00 000 APOLLO VINTRADE PVT LTD 25 00 000 INNOVA COMMERCIAL PVT LTD 25 00 000 PRAYASH DEALTRADE PVT LTD 40 00 000 JUSTIFY VANIJYA PVT LTD 50 00 000 SOLTY FINANCIAL CONSULTANTS P LTD 50 00 000 ACHIEVER COMMOTRADE PVT LTD 50 00 000 SISHMAHAL COMMOTRADE PVT. LTD 20 00 000 ADVANTAGE DEALTRADE PVT. LTD 25 00 000 ORIGIN VINIMAYPVT LTD 40 00 000 RUKMANI INTERNATIONAL PVT LTD 50 00 000 TOTAL 10 30 00 000 12 BHOLENATH REAL ESTATES PVT. LTD 2009-10 LAVENDER DEALCOM PVT. LTD. 30 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 33 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT OF SHARE CAPITAL AND PREMIUM. ARCADE DEALCOM PVT. LTD 20 00 000 TARANG SUPPLIERS PVT. LTD 15 00 000 TRANSIT VINIMAY PVT. LTD 62 00 000 VANDANA DEALERS PVT. LTD 98 00 000 VARIETY DEALCOM PVT. LTD 25 00 000 VANILA VINIMAY PVT. LTD 15 00 000 OUTLOOK TRACOM PVT. LTD 25 00 000 TOTAL 2 90 00 000 13 RAINBOW BUILDCON PVT LTD 2009-10 ANURAJ SECURITI ES PVT LTD 20 00 000 MATRIBHUMI DEALERS PVT LTD 25 00 000 NAROTTAMKA TRADE & VYAPAAR PVT LTD 15 00 000 PUJA DEALCOM PVT LTD 40 00 000 TARANG SUPPLIERS PVT LTD 30 00 000 VANDANA DEALERS PVT LTD 30 00 000 PUJA TIE-UP PVT LTD 40 00 000 TOTAL 2 00 00 000 14 SHIVANSH BUILDCON PVT. LTD 2012-13 EVERSHINE SUP PLIERS PVT. LTD 90 00 000 TOTAL 90 00 000 TOTAL ADDITIONS 94 14 07 100 DURING THE APPELLATE PROCEEDING SH VIJAY KR GOYAL HAS REQUESTED TO KEEP THE APPELLATE MATTER PENDING FOR TIME BEING IN CASE OF M/S MAYUKH VINIMAY PVT LTD AS THE APPEAL AGAINST THE ORDER OF 263 IS PENDING FOR ADJU DICATION BEFORE THE HONBLE ITAT KOLKATA WHERE MATTER PERTAINING TO JURISDICTION OF CIT WHO PASSED THE ORDER OF 263 H AS BEEN CHALLENGED. IT IS FURTHER SUBMITTED THAT ASSESSEE H AS ALSO MADE REQUEST TO ITAT KOLKATA TO TRANSFER TH E SAID CASE TO ITAT JAIPUR WHICH IS STILL PENDING FOR CONSIDERATION. IN RESPECT OF ADDITION MADE ON A/C OF BOGUS SHARE CAP ITAL AO HAS ALSO MADE SIMILAR ADDITION OF RS. 10 54 95 000/= IN THE HANDS OF M/S MAYUKH VINIMAY P LTD TANTAMOUNTS TO D OUBLE ADDITION . AFTER DULY TAKING A NOTE OF THE SAME APPELLATE ORD ER IN CASE OF M/S MAYUKH VINIMAY PVT LTD IS BEING K EPT IN ABEYANCE TILL THE DISPOSAL OF SAID APPEAL BY HONBLE ITAT. W ITH REGARD TO DECISIONS RELIED UPON BY THE UNDERSIG NED SH VIJAY GOYAL WERE DIFFERENTIATED ON FACTS AS UNDER: ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 34 (I) NOVA PROMOTERS & FINLEASE PVT. LTD (2012) 342 I TR 169 (DELHI HIGH COURT): SUMMONS SENT TO THE COMPANIES RECEIVED BACK UNSERVED AND OTHER SUMMONS REMAINED UNCOMPLIED WITH WHEREAS IN THE CASE OF ASSESSEE COMPANIES NOTICE U/S 133(6) WAS SENT TO I NVESTOR COMPANIES ALL OF WHICH WERE SERVED AND MOS T OF THEM WERE COMPLIED WITH. (II) CIT V/S N. R. PORTFOLIO PVT. LTD 206 (2014 ) DLT (DB) (DEL)/ 264 CTR 0258 (DEL) : ASSESSED U/S 144 OF ITAX ACT. IN THIS CASE THE AO ISSUED SEVERAL NOTICES AND SHOW CAUSE NOTICE WHICH WAS NOT SERVED/COMPLIED AN D ASSESSMENT WAS FRAMED U/S 144 OF INCOME TAX ACT. IN OUR CASE ALL THE COMPLIANCES WERE MADE AND EVIDENC ES SUBMITTED. (III) N TARIKS PROPERTIES PVT. LTD 227 TAXMANN.COM 373 (WITH REFERENCE TO DECISION OF DELHI HIGH COURT IN 264 CTR 472) : AO NOTICED THAT EXTRACTS OF BANK ACCOUNT HAD BEEN F ABRICATED AND AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKIN G PAY ORDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CA SH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHA REHOLDER COMPANY . (IV) CIT V/S NAVODAYA CASTLE PVT. LTD 367 ITR 306 ( DELHI HIGH COURT): AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY O RDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CASH. I N OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHO LDER COMPANY. (V) CIT V/S MAF ACADEMY PVT. LTD 206 (2014) DLT 277 (DB)(DEL)/ 361 ITR 0285 (DEL) : AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR TH E PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THERE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK AC COUNT OF SHAREHOLDER COMPANY. FURTHER THE SUMMONS U/S SECTION 131 OF I.TAX ACT W ERE SENT TO THE SHAREHOLDERS WHICH WERE RECEIVED BACK UNSERVED. (VI) RAJMANDIR ESTATES PVT. LTD 70 TAXMANN.COM 124: RELATES TO ORDER PASSED BY CIT U/S 263 OF NCOME TAX ACT 1961. (VII) CIT V/S SUMATI DAYAL (1995) 80 TAXMAN 89 (SC) & CIT V/S DURGA PRASAD MORE [1971] 82 ITR 540 (SC) : NO APPLICATION AS AMPLE EVIDENCE HAVE BEEN FILED BY ASSESSEE. FURTHER NO SOURCE OF CONCEALED INCOME WAS FOUND. FURTHER NO D OCUMENT WAS FOUND AS THE RESULT OF INTENSIVE SEARCH OPERATIONS TO SHOW OUTFLOW OF UNACCOUNTED MONEY AGAINST THE RECEI PTS OF SHARE APPLICATION MONEY THROUGH THE BANKING CHANNELS. THIS SHOW THE PREPONDERANCE OF PROBABILITIES IS IN FAVOUR OF ASSE SSEE. (VIII) CIT V/S MUSSADILAL RAM BHAROSE [1987] 165 IT R 14 THIS JUDGMENT RELATES TO PENALTY U/S 271(1)(C). IN SUPPORT OF ITS CONTENTION ASSESSEE THROUGH AR H AS RELIED UPON FOLLOWING JUDGMENTS FACT OF WHICH AR E IDENTICAL TO THE FACT OF THE CASE OF ASSESSEE: JURISDICTIONAL RAJASTHAN HIGH COURT (I) CIT-1 JAIPUR V/S M/S. ARL INFRATECH LTD WHEREIN HONBLE RAJASTHAN HIGH COURT HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09/2016. (II) COMMISSIONER OF INCOME-TAX JAIPUR II VERSUS MORANI AUTOMOTIVES (P .) LTD. NO.- D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23 2013 (RAJASTHAN HIGH COUR T). (III) BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (005) 197 CTR (RAJ) 432. (IV) CIT VS. FIRST POINT FINANCE LTD. (2006) 206 CT R (RAJ) 626 : (2006) 286 ITR 477 (RAJ HC). ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 35 (V) COMMISSIONER OF INCOME TAX VS. BHAVAL SYNTHETICS ( RAJ HC) (2013) 84 DTR 0449 (RAJ). (VI) COMMISSIONER OF INCOME TAX VS. AKJ GRANITES (P ) LTD. (RAJ HC) (2008) 301 ITR 0298 . I) COMMISSIONER OF INCOME-TAX CENTRAL JAIPUR VERSUS SUPERTECH DIAMOND TOOLS (PVT) LTD. (RAJ HC) D. B. IT APPEAL NO. 74 OF 2012 DATED: - 12 DECEMBER 2013. VIII) COMMISSIONER OF INCOME-TAX - I JAIPUR VERSUS AL LALPURIA CONSTRUCTION (P.) LTD (RAJ HC) D.B. IT APPEAL NOS. 256 OF 2010 AND 26 & 39 OF 2011 DATE D: - 25 FEBRUARY 2013. (IX) COMMISSIONER OF INCOME-TAX AJMER VERSUS HS. B UILDERS (P.) LTD. D.B. INCOME TAX (RAJ HC) APPEAL NO. 48 OF 2006 DATED: - 03 MARCH 2012. (X) CIT VS JAI KUMAR BAKLIWAL (2014) 101 DTR (RAJ) 377 : (2014) 267 CTR (RAJ) 396. NO LIABILITY TO PROVE SOURCE OF SOURCE (XI) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008 ) 8 DTR (RAJ) 199. BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ES TABLISHED AND HE CONFIRMS THE LOANS. (XII) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 I TR 281 (RAJ) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ES TABLISHED AND HE CONFIRMS THE LOANS. SINCE THE COMMON ISSUES ARE INVOLVED IN ALL THESE 15 COMPANIES THEREFORE FOR CONVENIENCE I AM DEALI NG THE ISSUE IN COMPOSITE MANNER FIRST ON THE BASIS OF FAC TS AND THEN ON LEGALITY ALSO . THE FOLLOWINGS FACTS ISSUES EMERGE FROM THE FINDINGS OF AO AND SUBMISSIONS SUBMITTED BY LD AR. A) ISSUE OF ACCORDING OPPORTUNITY OF CROSS EXAMINATION OF SH SANTOSH CHOUBE SH AJIT SHARMA & SH RAJESH K UMAR SINGH TO THE ASSESSEE. B) CHARGING OF PREMIUM ON SHARES AND TAXABILITY BY APP LYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT. C) ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 O F INCOME TAX ACT 2.1.4.2 (A) ACCORDING OPPORTUNITY TO CROSS EX AMINE SH SANTOSH CHOUBE SH AJIT SHARMA & SH RAJESH KUMAR SINGH BUT BEFORE ASKING FOR AN OPPORTUNITY FOR CROSS EXAM INING THEM ASSESSEES HAS TO DISPROVE THE CORRECTNE SS OF THEIR ASSERTIONS AS EMANATING FROM THE STATEMENTS RECORDED OF SH SANTOS H CHOUBE SH AJIT SHARMA AND SH RAJESH KUMAR SINGH. CORROBORATIVE EVIDENCES IN FORM OF BANK STATEMENTS OBTAINED IN TH IS REGARD AND THEIR ANALYSIS FURTHER PROVES THE THE ORY OF CASH DEPOSIT PRIOR TO TRANSFER OF SHARE APPLICATION MONEY. VIDE SHOW CAUS E LETTER ISSUED ASSESSEE HAS ALREADY BEEN CONFRON TED WITH THE ORAL EVIDENCES GATHERED DURING THE SURVEY OPERATION FROM AFOREMENT IONED 3 PERSONS BY INVESTIGATION DIRECTORATE KOLKAT A. FURTHER THE RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AS DECID ED IN NATH INTERNATIONAL SALES VS. UOI AIR 1992 (DEL) 295) WHEREIN HON'BLE SUPREME COURT HAS ALSO HELD THAT THE RIGHT OF HEARING DOES NOT NECESSARILY INCLUDE RIGHT OF CROSS EXAMINATION. THE RIGHT OF CROSS EXAMINATION MUST DEPEND UPON THE CIR CUMSTANCES OF EACH CASE. IN THIS REGARD ASSESSEE IS TRYING TO USE THIS SHIELD OF ABSENCE OF OPPORTUNITY TO CROSS-EXAMINE OF SH SANTOSH CHOUBE SH AJIT SHARMA AND SH RAJESH KUMAR SINGH. IT WILL BE MISCARRIAGE OF JUSTICE IF ASSESSEE BE GIVEN BENEFIT ON THIS A/C. IT IS ALSO NOT POSSIBLE TO ALLOW OPPO RTUNITY OF CROSS-EXAMINATION OF EACH PARTIES. ASSESSEE IS SUPPOSED TO CONTROVERT AL L FACTS GATHERED FROM THE ORAL EVIDENCES AS WELL AS FROM BANK ENQUIRIES. IN VIEW OF THESE FACTS ASSESSEES GRIEVANCE IS NOT JUSTIFI ED AS PROPER OPPORTUNITY DURING THE APPELLATE PROCE EDING HAS ALREADY BEEN GIVEN TO CONTROVERT THOSE FINDINGS AS MENTIONED IN THE SH OW-CAUSE LETTER. 2.1.4.2 (B) CHARGING OF PREMIUM ON SHARES & ITS TAX ABILITY . THE AO HAS OBSERVED THAT COMPANIES HAVE RECEIVED AB NORMAL SHARE PREMIUM WHEREAS AS PER THE AUDITED P&L ACCOUNT AND BALANCE SHEET THESE COMPANIES DO NOT HAVE ANY BUS INESS/PROFIT AND PHYSICAL ASSETS/ASSETS ARE NOT IN COMMENSURATE TO VALUE OF SHARE WITH THE COMPANIES WHICH APPEARED TO BE A PAR T OF A WELL PLANNED EXERCISE OF TAX EVASION. IN THI S REGARD LD AR HAS SUBMITTED FOLLOWING REASONS FOR CHARGING OF PREMIUM : ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 36 NAME OF COMPANY REASON FOR CHARGING SHARE PREMIUM MOTISONS GLOBAL PVT. LTD 1. OWING A BIG AND VALUABL E LAND IN THE HEART OF CITY AT LAL KOTHI TONK ROAD JAIPUR AND CONSTRUCTING ONE OF THE MOST BEAUTIFUL BUILDING OF JAIPUR CITY THEREON. 2. GOODWILL OF MOTISONS GROUP. MOTISONS ENTERTAINMENT (I) PVT. LTD 1. THE ASSESSE E COMPANY BOOKED A BIG SPACE (MEANT FOR CINEMA HALL ) IN UNDER CONSTRUCTION COMPLEX NAMING WORLD TRADE PARK FURTHER THE LEA SING OUT THIS SPACE TO WORLD FAMOUS CINEMA THEATRE OPERATOR CINEPOLIS WAS UNDER PROCESS. 2. GOODWILL OF MOTISONS GROUP. MOTISONS BUILDTECH PVT. LTD 1. OWING A BIG AND VALU ABLE AGRICULTURE LAND AT VILLAGE DUDU GIDANI NOLYA (AT AJMER ROAD NEAR DUDU) FOR WHICH PLANNING OF TOWNSHIP WAS THERE. 2. OWNING VALUABLE LAND IN THE HEART OF CITY AT C-S CHEME AND CONSTRUCTING THE BUILDING THEREON 2. GOODWILL OF MOTISONS GROUP. GODAWARI ESTATES PVT. LTD 1. NBFC COMPANY EXPECTING GOOD REVENUE. 2. GOODWILL OF MOTISONS GROUP. BHOLENATH REAL ESTATES PVT LTD (I) OWWING LARGE CHU NK OF AGRICULTURAL LAND AT VILLAGE GAIJI TEHSIL MO JAMABAD DISTT JAIPUR (IN BETWEEN BAGRU TO DUDU AT MAIN NH JAIPUR AJMER ROAD) AND PLANNING DEVELOPMENT OF TOWNSHIP THEREON. (II) MARKET RATE OF LAND WAS VERY HIGH THAN BOOK VA LUE WHICH WAS ON COST. (III) GOODWILL OF MOTISONS GROUP. RAINBOW BUILDCON PVT. LTD 1. OWNING LARGE CHUNK OF AGRICULTURAL LAND AT VILLA GE GIDANI (NEAR DUDU AT MAIN NH JAIPUR AJMER ROAD AND PLANNING DEVELOPMENT OF TOWNSHIP THEREON. 2. THE MARKET RATE OF THIS LAND WAS VERY HIGH THAN BOOK VALUE. 3. GOODWILL OF MOTISONS GROUP. SHIVANSH BUILDCON PVT. LTD 1. OWNING A VALUABLE LAN D IN THE HEART OF CITY AT SEEWAD AREA BAPU NAGAR JAIPUR AND PLANNING A COMMERCIAL PROJECT THEREON. 2. GOODWILL OF MOTISONS GROUP. THE LD AR HAS FURTHER SUBMITTED THAT THAT THE SHAR ES WERE ALLOTTED TO THE INVESTOR COMPANIES AT PREMI UM AFTER MUTUAL DISCUSSION BETWEEN ASSESSEE COMPANIES AND INVESTOR COMPANIES. MOTISONS GROUP ENJOYS VERY HIGH REPUTATION AND GOODWILL IN MARKE T WHICH WAS MAIN REASON FOR HIGH PREMIUM. HONBLE ITA T MUMBAI BENCH IN THE CASE OF ACIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T10L-656-ITAT-MUM HAS HELD THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION W HICH DOES NOT REQUIRE ANY JUSTIFICATION . THE ASSESSEE FURTHER SUBMITTED THAT WHEREVER THE AUTHORIZED SHARE CAPITAL IS REQUIRED TO BE INCREASE THE SAME HAS BEEN INCREASED IT WAS PUREL Y A COMMERCIAL DECISION OF THE COMPANIES ON WHICH I NCOME-TAX DEPARTMENT CANNOT STEP INTO SHOES OF ASSESSEE. IN VIEW OF THIS IT WOULD BE WORTHWHILE TO REPRODUCE SECTION 56(1) OF THE ACT HERE AS UNDER: INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FRO M OTHER SOURCES' IF IT IS NOT CHARGEABLE TO INCOME - TAX UNDER ANY OF THE HEADS SPECIFIED IN SECTION 14 ITEMS A TO E. HERE I FIND THAT THE MONEY SO RECEIVED AGAINST THE SHARE CAPITAL AND SHARE PREMIUM IS CAPITAL RECEIPT AND NOT REVENUE RECEIPT THEREFORE THE SAME CANNOT BE TAXED IN THE HANDS OF ASSESSEE COMPANIES UNDER SECTION 56(1) OF INCOME TA X ACT 1961. THE CBDT VIDE CIRCULAR/INSTRUCTION NO.2 DATED 29.01.2015 HAS STATED AS UNDER [371 ITR 6(ST)]. IN REFERENCE TO THE ABOVE CITED SUBJECT I AM DIREC TED TO DRAW YOUR ATTENTION TO DECISION OF THE HIGH COURT OF BOMBAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD V UOI FOR THE ASSESSMENT YEAR 2009-10 (WP NO.87 1 OF 2014) WHEREIN THE COURT HAS HELD INTERALIA THAT TH E PREMIUM ON SHARE ISSUE WAS ON ACCOUNT OF A CAPITA L ACCOUNT TRANSACTION AND DOES NOT GIVE RISE TO INCOME AND HE NCE NOT LIABLE TO TRANSFER PRICING ADJUSTMENT. IT IS HEREBY INFORMED THAT THE BOARD HAS ACCEPTED T HE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE MENTIONED WRIT PETITION. IN VIEW OF THE ACCEP TANCE OF THE ABOVE JUDGMENT IT IS DIRECTED THAT TH E RATIO DECIDENDI OF THE JUDGMENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THE ISSUE IS INV OLVED. THIS MAY ALSO BE BROUGHT TO THE NOTICE OF THE ITAT DRP S AND CIT (APPEALS). IN VIEW OF ABOVE INSTRUCTION OF CBDT SHARE PREMIUM CANNOT BE TREATED AS REVENUE RECEIPT TAXABLE U/S 56 (1) OF INCOME TAX ACT. FURTHER THIS SHOULD BE SEEN WITH RE FERENCE TO AMENDMENT MADE BY FINANCE ACT 2012 BY IN SERTION OF ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 37 CLAUSE (VIIB) TO SECTION 56 OF INCOME TAX ACT 1961 . THIS AMENDMENT WAS MADE EFFECTIVE FROM 01/04/2013 . MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BIL L 2012 STATED AS UNDER : SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE I S TO BE TREATED AS INCOME. SECTION 56(2) PROVIDES FOR THE SPECIFIC CATEGORY OF INCOMES THAT SHALL BE CHARGEABLE TO INCOME TAX UND ER THE HEAD INCOME FROM OTHER SOURCES. IT IS PROPOSE D TO INSERT A NEW CLAUSE IN 56(2). THE NEW CLAUSE W ILL APPLY WHERE ACCOMPANY NOT BEING A COMPANY IN WHIC H THE PUBLIC ARE SUBSTANTIALLY INTERESTED RECEIVES IN ANY PREVIOUS YEAR FROM ANY PERSON BEING A RESID ENT ANY CONSIDERATION FOR ISSUE OF SHARES. IN SUCH A CASE IF THE CONSIDERATION RECEIVED FOR ISSUE OF SHA RES EXCEEDS THE FACE VALUE OF SHARES THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS T HE FAIR MARKET VALUE OF THE SHARES SHALL BE CHARGEA BLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SO URCES . THE SAID AMENDMENT IS EFFECTIVE FROM 1 ST APRIL 2013 IT WILL ACCORDINGLY APPLY IN RELATION TO AY 2013-14 AND SUBSEQUENT AYS. IN THE MEMORANDUM IT IS MENTIONED THAT PREMIUM IN EXCE SS OF FAIR MARKET VALUE IS TO BE TREATED AS INCOME. CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED TH AT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FO R ASSESSMENT YEAR 2013-14 ONWARD . IN ALL THE CASES OF FOLLOWING ASSESSEE COMPANIES SHARE CAPITAL AND PREMIUM WAS RECEIVED IN THE ASSES SMENT YEARS EARLIER TO AY 2013-14 EXCEPT THE FOLLOWING ONE:- NAME OF COMPANY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE NO OF SHARES SHARE CAPITAL @ RS. 10 PER SHARE SHARE PREMIUM RATE OF PREMIUM PER SHARE TOTAL AMOUNT MOTISONS GLOBAL PVT. LTD ALLIANCE TRADECOM PVT. LTD 12625 1 26 250 49 23 750 390 50 50 000 EVERSHINE SUPPLIERS PVT. LTD 36250 3 62 500 1 41 37 500 390 1 45 00 000 MAYUKH VINIMAY PVT. LTD 56125 5 61 250 2 18 88 75 0 390 2 24 50 000 REGENT DEALERS PVT. LTD 4000 40 000 15 60 000 390 16 00 000 ROSE SUPPLIERS PVT. LTD 1250 12 500 4 87 500 390 5 00 000 TOTAL 1 10 250 11 02 500 4 29 97 500 4 41 00 000 THEREFORE IN VIEW OF CLAUSE (VIIB) OF SECTION 56 OF I.TAX ACT THE SHARE PREMIUM CHARGED BY M/S MOTISO NS GLOBAL PVT LTD IN AY 2013-14 CAN BE EXAMINED WHETHER IT EXCEEDS THE FAIR MARKET VALUE OF THE SHARES OR NOT. IN THIS REGARD THE ASSESSEE HAS EXPLAINED THAT THE SHARE PREMIUM IN EXCESS TO VALUE COMPUTED AS PER MANNER & METHOD PROVIDED IN THIS SECTION R.W .R. 11UA OF INCOME TAX RULES 1962 CAN ONLY BE TAXED BY APPLYING PROVISIONS OF SECTION 56(VIIB) OF THE ACT. THE VALUE OF SHAR ES OF THE ASSESSEE COMPANY COMPUTED AS PER MANNER & METHOD OF THIS RULES IS AS UNDER: PARTICULARS AS PER METHOD (A) (NET ASSETS VALUE METHOD) AS PER METHOD (B) (DISCOUNTED FREE CASH FLOW METHOD) BOOK VALUE OF TOTAL ASSETS LESS PREPAID EXPENSES & PRELIMINARY EXPENSES AS ON LAST B/S I.E. 31.03.2012 53 88 09 212 53 88 09 212 ADD: - APPRECIATION IN MARKET VALUE OF ASSETS (IN E XCESS TO BOOK VALUE) LAND AT SB-110* NA 25 52 48 216 TOTAL ASSETS (A) 53 88 09 212 79 40 57 428 TOTAL LIABILITIES EXCLUDING SHARE CAPITAL AND RESE RVES & SURPLUS (L) 76 56 570 76 56 570 TOTAL AMOUNT OF PAID UP EQUITY SHARE CAPITAL AS SHO WN IN B/S (PE) 2 05 05 820 2 05 05 820 PAID UP VALUE OF SUCH EQUITY SHARES (PV) 10 FAIR MARKET VALUE OF SHARES [(A-L)/PE]*PV [(53 88 09 212- 7656570)/2 05 05 820]*10 = RS. 259 PER SHARES [(79 40 57 428-7656570)/2 05 05 820]*10 = RS. 384 PER SHARES* ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 38 FOR DECIDING THE ISSUE PRICE OF SHARES THE ASSESSEE COMPANY CHOOSE THE PRICE AS DETERMINED BY OPTION 2 AND CONSIDERING THE VALUE OF GOODWILL & ENHANCEMENT IN VALUE OF OTHER ASSETS THE ISSUE PRIC E OF SHARES DECIDED RS. 400 PER SHARES WHICH IS QUI TE REASONABLE. THE ASSESSEE HAS FURTHER CLARIFIED THAT THE MARKET VALUE OF LAND AT SB-110 TONK ROAD JAIPUR IS TAKE N ON THE BASIS OF VALUE OF ADJACENT LAND AT SB-111 PURCHASED DURING THE YEAR U NDER CONSIDERATION (JUST ADJOINING TO LAND AT SB-110) AND AREA OF BOTH THE LANDS ARE ALMOST SAME. IT WAS FURTHER STATED BY THE ASSESSEE THAT IN OPTION TWO THE APPRECIATION IN VA LUE OF ASSETS HAS BEEN TAKEN ONLY IN RESPECT TO LAND AS FOR THIS THE DIRECT EVID ENCE IS AVAILABLE. THE VALUE OF OTHER ASSETS & GOOD WILL IS NOT TAKEN IN ABOVE COMPUTATIONS. HOWEVER WHILE DECIDING THE VALUE OF S HARES THE SAME SHOULD ALSO BE TAKEN INTO CONSIDERAT ION. THEREFORE I FOUND THE EXPLANATION OF ASSESSEE IN CASE OF MOTISONS GLOBAL PVT LTD THAT THE ISSUE PRIC E OF THE SHARES IN AY 2013-14 IS IN ACCORDANCE WITH THE VALU E OF SHARES AS COMPUTED AS PER RULE 11UA OF INCOME TAX RULES 1962 AND IT IS ACCEPTABLE. ACCORDINGLY NO ADDITION CAN BE MADE IN AY 2013-14 ALSO AS INCOME OF M/S MOTISON S GLOBAL PVT LTD AS PER PROVISIONS OF SECTION 56(2)(VIIB)OF THE ACT 1961. THEREFORE AOS ACTION IN THIS REGARD IS NOT CORRECT AS PER THE APPLICABLE PROVISIONS OF THE ACT. 2.1.4.2 (C) ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT THE ASSESSEE SUBMITTED THAT IN ALL THE CASES CRED IT ENTRIES ARE SUPPORTED BY SHARE APPLICATION CONTA INING (I) NAME/ ADDRESS /PAN OF PARTY (II) DETAIL OF PAYMENT RECEI VED (III) COPY OF BOARD RESOLUTION (IV) COPY OF P AN CARD OF PARTY (V) COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE (VI) DECLARATION OF SOURCE OF FUNDS W ITH PARTY (VII) COPY OF ACK. OF ITR AND COMPUTATION (VIII) COPY OF AUDIT R EPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE . NONE OF NOTICE SENT U/S 133(6) RECEIVED BACK AS UN-SERVED . FURTHER IT IS ALSO SUBMITTED THAT THE LD AO HAS NOT MADE THE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT SO IT CANNOT BE APPLIED BY CIT(A). AS PER SECTION 251 (1)(A) OF IN COME TAX ACT 1961 THE CIT (A) HAVE THE POWER IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIRM REDUCE ENHANCE OR ANNUAL THE ASSESSMENT BUT HE HAS NO POWER TO MODIFY THE BASIC THEME OF AS SESSMENT ORDER. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE HAS SUBMITTED AMPLE DOCUMENTS AND SATISFIED THE LD AO. THE LD. AO BEING SATISFIED WITH THE SUBMISSION OF ASSESSEE ON SECTION 68 OF THE ACT HAS NOT APPLIED SECTION 68 OF THE ACT F OR THE ADDITION. THE PROVISIONS OF SECTION 68 SPECI FIED THE AUTHORITY MENTIONED AS ASSESSING OFFICER . THE CIT(A) IS NOT ASSESSING OFFICER SO HE CANNOT STEP INTO THE SATISFACTION OF AO FOR MAKING THE AD DITION WHEN THE LD AO HAS SATISFIED ABOUT THE INGREDIENTS OF SECTION 68 OF INCOME TAX ACT. HONBLE ITAT DELHI BENCH IN THE CASE OF SH. SHAMSHER SINGH GILL C/O S.K. MONGA & ASSOCIATES VERSUS ITO WARD-2 HARIDWAR ITA NO 2987/DEL/2015 ORDER DATED 28/02/2017. IT WAS FURTHER STATED BY LD AR THAT THE ASSESSEE HA S SUBMITTED AMPLE DOCUMENTS TO PROVE IDENTITY CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL. UNDER SECTION 68 OF INCOME TAX ACT 1961 THE ONUS OF THE ASSESSEE IS TO PROVE THE SOURCE OF CREDIT ENTRY AND THERE IS NO ONUS OF ASSESSEE TO PROVE THE SOURCE OF SOURCE OR SOURCE OF ALL CHANNEL SOURCES. THE AMENDMENT IN SECTION 68 OF THE ACT WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 WHICH REQUIRE TO PROVE SOURCE OF FUNDS IN THE HANDS OF SH AREHOLDER COMPANY. THOUGH NOT REQUIRED BY LAW BUT S TILL THE ASSESSEE PROVED SOURCE OF FUNDS IN THE HANDS OF SHAREHOLDER COMPANY . THE AMENDED SECTION EVEN DOES NOT REQUIRE TO PROV E SOURCE OF FUNDS IN THE HANDS OF 3 RD OR 4 TH STAGE. I HAVE ALSO PERUSED THE CASE RECORDS. IN T HIS REGARD I FIND THAT THE AO HAS ISSUED NOTICE U/ S 133(6) OF THE ACT TO INQUIRY THE IDENTITY CREDITWORTHINESS AND G ENUINENESS OF TRANSACTIONS. AO HAS ISSUED TOTAL 94 NOTICES FOR SHARE CAPITAL OF RS. 35 29 50 000/-. ON PERUSAL OF CASE RECORDS IT IS SEEN THAT COMPLIANCE WAS MADE FOR 41 NOTICES ISS UED U/S 133(6) OF THE ACT WHICH INVOLVESD SHARE CAPITAL AMOUNTING TO TOTAL OF RS. 15 59 00 000/-. THE STATUS OF NOTICES ISSUED U /S 133(6) OF INCOME TAX ACT CAN BE SEEN FROM CHART GIVEN BELOW: NAME OF ASSESSEE COMPANY TOTAL NOTICE ISSUED TOTAL AMOUNT FOR NOTICE ISSUED RECEIVED UN- SERVED NUMBER OF COMPLIANCE AMOUNT UNDER COMPLIANCE MOTISONS GLOBAL PVT. LTD AY 2009-10 8 2 75 00 000 0 4 1 00 00 000 MOTISONS GLOBAL PVT. LTD AY 20111-12 16 6 96 50 000 0 9 3 64 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2009-10) 8 3 40 00 000 0 3 1 20 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 39 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2011-12) 8 1 95 00 000 0 3 75 00 000 MOTISONS BUILDTECH PVT. LTD AY 2009-10 10 3 03 00 000 0 3 70 00 000 GODAWARI ESTATES PVT. LTD AY 2010-11 6 2 00 00 000 0 3 1 10 00 000 GODAWARI ESTATES PVT. LTD AY 2012-13 24 10 30 00 00 0 0 15 6 22 00 000 BHOLENATH REAL ESTATES PVT. LTD AY 2009-10 7 2 90 00 000 0 1 98 00 000 RAINBOW BUILDCON PVT. LTD AY 2009-10 7 2 00 00 000 0 0 0 TOTAL 94 35 29 50 000 0 41 15 59 00 000 2.1.4.3 FURTHER IN RESPONSE TO SHOW CAUSE NOTICE ISSUED B Y ME U/S 250 (4) OF THE ACT IS SUBMITTED THAT THE ASSESSEE HAS ALSO CARRIED OUT SEARCH OVER THE ROC S ITE AND FOUND THAT CHARGE HAS BEEN REGISTERED OVER THE ASSETS OF SOME OF THE INVESTOR COMPANIES UNDER COMPANIES ACT IN FAVOUR OF LEADING BANKS LIKE SBI ETC FOR CRORES OF RUPEES WH ICH PROVES THAT THE SHAREHOLDER COMPANIES ARE NOT SHELL COMPANY-RATHER CREATING OF CHARGE PROVES CREDITWORTHINESS OF THE C OMPANIES. THE ASSESSEE SUBMITTED THE FOLLOWING CHART WITH SEARCH REPORT ON ROC SITE: NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED RUKMANI INTERNATIONAL PVT LTD GODAWARI ESTATES PVT. LTD 50 00 000 50 CRORE SRN C05684162 CHARGE ID 10501185 DATE 24/03/14 AXIS BANK LTD NAROTTAMKA TRADE & VYAPAAR PVT LTD RAINBOW BUILDCON PVT LTD 15 00 000 85.50 CRORE SRN C72436744 CHARGE ID 10606561 DATE 30/09/15 UNION BANK OF INDIA VIKASH TRADECOM PVT. LTD MOTISONS GLOBAL PVT. LTD 25 00 000 9.43 CRORE SRN C67525196 CHARGE ID 10345786 DATE10/02/2012 PUNJAB NATIONAL BANK . ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 40 NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED ARCADE DEALCOM PVT. LTD MOTISONS BUILDTECH PVT. LTD 30 00 000 3.22 CRORE SRN B44276514 CHARGE ID 10366837 DATE 29/06/2012 PUNJAB NATIONAL BANK . ARCADE DEALCOM PVT. LTD BHOLENATH REAL ESTATES PVT. LTD 20 00 000 3.22 CRORE SRN B44276514 CHARGE ID 10366837 DATE 29/06/2012 PUNJAB NATIONAL BANK . MATRIBHUMI DEALERS PVT LTD RAINBOW BUILDCON PVT LTD 25 00 000 50.00 CRORE SRN C05683776 CHARGE ID 10501186 DATE 24/03/2014 AXIS BANK LTD PUJA TIE UP PVT. LTD (I) MOTISONS ENTERTAINMENT (I) PVT. LTD 15 00 000 2.50 CRORE SRN C71816029 CHARGE ID 10431745 DATE 24/05/2013 PUNJAB NATIONAL BANK . (II) MOTISONS BUILDTECH PVT. LTD 50 00 000 2.25 CRORE SRN C718166656 CHARGE ID 10431744 DATE 24/05/2013 (III) RAINBOW BUILDCON PVT LTD 40 00 000 1.65 CRORE SRN C71814016 CHARGE ID 10431742 DATE 18/05/2013 1.95 CRORE SRN C71817654 CHARGE ID 10431746 DATE 22/05/2013 KINGFISHER VINIMAY PVT. LTD (I) MOTISONS GLOBAL PVT. LTD 20 00 000 87.50 CRORE SRN C03615010 CHARGE ID 10490641 DATE 31/03/2014 STATE BANK OF INDIA (II) MOTISONS ENTERTAINMENT (I) PVT. LTD 20 00 000 101.94 CRORE SRN B73228603 CHARGE ID 10419836 DATE 21/03/2013 NAWAB VYAPAR PVT. LTD MOTISONS GLOBAL PVT. LTD 50 00 000 9.95 CRORE SRN C67525006 CHARGE ID 10345784 DATE 10/02/2012 PUNJAB NATIONAL BANK ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 41 NAME OF SHAREHOLDER (INVESTOR COMPANY) NAME OF ASSESSEE COMPANY IN WHICH SHARE WERE TAKEN AMOUNT OF SHARE CAPITAL OF THE INVESTOR COMPANY AMOUNT SRN AND CHARGE ID AND DATE OF CHARGE CREATED NAME OF BANK/FINANCIAL INSTITUTION IN WHOSE FAVOUR CHARGE WAS CREATED SNOWFALL COMMERCIAL PVT. LTD GODAWARI ESTATES PVT. LTD 25 00 000 8.00 CRORE SRN B94083011 CHARGE ID 10289761 DATE 04/05/2011 BANK OF INDIA TOTAL 3 85 00 000 THE ASSESSEE FURTHER CLARIFIED THAT OUT OF ABOVE 1 0 CASES IN 4 CASES WHICH HAVE SHARE CAPITAL OF RS. 1.15 CRORES WITH THE FOLLOWING APPELLANT COMPANIES NOTICES U/S 133(6) S ENT BY AO WERE ALSO COMPLIED BY THESE COMPANIES NAME OF ASSESSEE COMPANY NAME OF INVESTOR COMPANY AMOUNT OF SHARE APPLICATION RECEIVED MOTISONS GLOBAL PVT. LTD AY 2009-10 KINGFISHER VINIMAY PVT. LTD 20 00 000 MOTISONS GLOBAL PVT. LTD AY 2011-12 VIKASH TRADE COM PVT LTD 25 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2009-10) KI NGFISHER VINIMAY PVT. LTD 20 00 000 GODAWARI ESTATES PVT. LTD (AY 2012-13) RUKMANI INTE RNATIONAL PVT LTD 50 00 000 TOTAL 1 15 00 000 HOWEVER IN CASE OF FOLLOWING 9 PARTIES CASES HAVIN G SHARE CAPITAL OF RS. 2.70 CRORES WITH FOLLOWING A PPELLANT COMPANIES NOTICES U/S 133(6) ISSUED REMAINED UN - COMPLIED OR NOT COMPLIED BUT THEIR IDENTITY AND CREDITWORTHINESS IS FURTHER PROVED FROM REGISTRATION OF CHARGE UNDER COMPANIES ACT NAME OF ASSESSEE COMPANY NAME OF INVESTOR COMPANY A MOUNT OF SHARE APPLICATION RECEIVED MOTISONS GLOBAL PVT. LTD (AY 2009-10) NAWAB VYAPAR PVT LTD 50 00 000 MOTISONS BUILDTECH PVT. LTD (AY 2009-10) ARCADE DEA LCOM PVT. LTD 30 00 000 MOTISONS BUILDTECH PVT. LTD (AY 2009-10) PUJA TIE U P PVT. LTD 50 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD (AY 2011-12) PUJA TIE UP PVT. LTD 15 00 000 GODAWARI ESTATES PVT. LTD (AY 2010-11) SNOWFALL CO MMERCIAL PVT. LTD 25 00 000 BHOLENATH REAL ESTATES PVT LTD (AY 2009-10) ARCADE DEALCOM PVT. LTD 20 00 000 RAINBOW BUILDCON PVT LTD (AY 2009-10) MATRIBHUMI DE ALERS PVT LTD 25 00 000 RAINBOW BUILDCON PVT LTD (AY 2009-10) PUJA TIE UP P VT LTD 40 00 000 RAINBOW BUILDCON PVT LTD (AY 2009-10) NAROTTAMA TRA DE & YYAPAAR PVT LTD 15 00 000 TOTAL 2 70 00 000 FURTHER SIX SHARE APPLICANT COMPANIES WERE ASSESSED BY THE SAME AO FOR AY 2013-14 WHEREIN GENUINENESS OF THESE COMPANIES WERE NOT DOUBTED . FURTHER OUT OF THESE SIX COMPANIES THE ASSESSME NT OF ONE M/S MAYUKHA VINIMAY PVT LTD FOR AY 2009-10 WAS MADE IN SAME CIRCLE I.E. CENTRAL CIRCLE-2 JAI PUR WHEREIN ADDITION OF RS. 10 54 95 000/- WAS MADE ON ACCOUNT OF ITS SHARE CAPITAL BY PASSING ORDER U /S 143(3) R.W.S.263 OF THE ACT. IN OTHER COMPANIES CASES ASSESSMENT F OR AY 2009- 10 WAS MADE U/S 148 OF THE ACT BY THEIR RESPECTIVE JURISDICTIONAL AO WHEREIN THEIR FUNDS/ SHARE CAPITA L WAS ASSESSED. THE SHARE CAPITAL RECEIVED FROM THESE COMPANIES ARE AS UNDER: S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 42 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT 3 MOTISONS GLOBAL PVT. LTD 2012-13 ALLIANCE TRADECO M PVT. LTD 3 05 00 000 EVERSHINE SUPPLIERS PVT. LTD 1 60 00 000 ALLIANCE TRADECOM PVT. LTD 3 95 58 900 EVERSHINE SUPPLIERS PVT. LTD 4 86 99 600 MAYUKH VINIMAY PVT. LTD 6 93 49 800 REGENT BARTER PVT. LTD 4 04 71 800 REGENT DEALERS PVT. LTD 7 59 99 900 ROSE SUPPLIERS PVT. LTD 9 87 49 800 TOTAL 41 93 29 800 4 MOTISONS GLOBAL PVT. LTD 13-14 ALLIANCE TRADECOM PVT. LTD 50 50 000 EVERSHINE SUPPLIERS PVT. LTD 1 45 00 000 MAYUKH VINIMAY PVT. LTD 2 24 50 000 REGENT DEALERS PVT. LTD 16 00 000 ROSE SUPPLIERS PVT. LTD 5 00 000 TOTAL 4 41 00 000 7 MOTISONS ENTERTAINMENT (I) PVT. LTD 2012-13 ALLIA NCE TRADECOM PVT. LTD 1 59 00 000 EVERSHINE SUPPLIERS PVT. LTD 93 00 000 EVERSHINE SUPPLIERS PVT. LTD 17 00 000 MAYUKH VINIMAY PVT. LTD 1 55 00 000 REGENT BARTER PVT. LTD 1 79 00 000 REGENT DEALERS PVT. LTD 1 40 00 000 ROSE SUPPLIERS PVT. LTD 35 00 000 TOTAL 7 78 00 000 9 MOTISONS BUILDTECH PVT. LTD 2012-13 ALLIANCE TRA DECOM PVT. LTD 1 80 00 000 EVERSHINE SUPPLIERS PVT. LTD 28 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 43 S. NO. NAME OF COMPANY AY DETAIL OF SHARE CAPITAL ISSUED NAME OF ALLOTTEE TOTAL AMOUNT REGENT BARTER PVT. LTD 1 60 27 500 TOTAL 3 68 27 500 14 SHIVANSH BUILDCON PVT. LTD 2012-13 EVERSHINE SUP PLIERS PVT. LTD 90 00 000 TOTAL 90 00 000 TOTAL ADDITIONS 58 70 57 300 2.1.4.4 AS REGARD SEIZED DOCUMENTS [PARTY-1/EXHIBIT AS-3/PGE21] SH VIJAY GOYAL THE LD AR OF THE ASSESSEE HAS FURTHER CLARIFIED THAT FMV AND MAXIMUM APPRECIATION WRITTEN 250/- AND SHARES WERE ALSO ALLOTTED FOR RS. 250/- IN THAT PERIOD. IT IS PERTINENT TO ALSO NOTE THAT THERE IS NO INCRIMINATING NOTING TO SHOW THAT SHARE CAPITAL WAS ACQUIRED AGAINST THE UNACCOUNTED CASH OF ASSESSEE GROUP. AS REGARD TALLY ACCOUNTS THE LD AR OF ASSESSEE HAS EXPLAINED THAT T HE TALLY ACCOUNTS OF SIX COMPANIES (ASSESSED BY SAME AO FOR AY 2013-14 ) WERE FOUND IN PEN DRIVE OF ACCOUNTANT SHRI BANWARI LAL YOGI FOUND AND SEIZED FROM RESIDENCE OF CHHABRA BROTHERS. SAME WER E RECEIVED FOR RECONCILIATION PURPOSE. SINCE THE UP TO DATE ACCOUNTS WERE NOT THERE IN TALLY AND MISSING SUPPORTING BILLS AND VOUCHERS FROM THE SEARCHED PREMISE CLEARLY INDICAT ES THAT ASSESSEE GROUP WAS NOT MAINTAINING THE BOOKS OF ACCOUNT OF SHAREHOLDER COMPANIES. FURTHER IN SUCH TALLY ACCOUNT THERE IS NO ENTRY OF OUTFLOW OF ANY IN THIS REGARD IT IS ALSO SEEN THAT THE ASSESSMENT OF THESE SIX COMPANIES WERE MADE BY SAME AO FOR AY 2013-14 WHEREIN HE HAS NOT MADE ANY ADVERSE COMMENTS . FURTHER THE TALLY ACCOUNT HAVE NO MATERIAL TO SH OW THAT THE APPELLANT COMPANIES OBTAINED THE SHARE CAPITAL BY GIVING UNACCOUNTED CASH. AS REGARD THE STATEMENTS OF EMPLOYEES OF MOTISONS GROUP/DIRE CTORS OF THESE SIX INVESTOR COMPANIES THE AR OF THE APPELLANT COMPANI ES HAS GIVEN A PLAUSIBLE EXPLANATION THAT EMPLOYEES OF MOTISONS GROUP WERE DIRECTORS OF SIX COMPANIES. MAJOR SHARE HOLDIN G COMPANY OF THESE SIX COMPANIES WAS M/S MAYUKH VIN TRADE PVT. LTD AND SHAREHOLDER OF THIS COMPANY WAS CHHABRA FAMILY MEMB ERS (OWNER OF MOTISONS GROUP) THEREFORE THE KNOWN DIRECTOR WERE APPOINTED IN THESE SIX COMPANIES. FURTHER NONE OF T HE EMPLOYEE ADMITTED TO HAVE MANAGED THE UNACCOUNTE D MONEY OF THE ASSESSEE COMPANY ROUTED IN ITS BOOKS THROUGH SHARE CAPITAL. 2.1.4.5 HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT -1 JAIPUR VS M/S. ARL INFRATECH LTD HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORD ER DATED 28/09/2016. HONBLE ITAT JAIPUR BENCH IN THIS CASE HAS MADE THE FOLLOWING FINDINGS : ..BEFORE WE PROCEED TO DECIDE THE ISSUE ON MERIT S WE WOULD LIKE TO DISCUSS THE SCHEME OF THE ACT AND PRECEDENTS ON THE ISSUE INVOLVED IN THIS APPEAL AS UNDER: IN CASES WHERE SHARE APPLICATION MONEY IS FOUND RE CORDED IN THE BOOKS OF AN ASSESSEE WHICH MAY REPRESENT CREDIT IN THE BOOKS AND THE SHARE APPLICA NT IS IDENTIFIED THAT AMOUNT CANNOT BE ADDED IN TH E ASSESSEE'S HANDS U/S 68 OF THE ACT. THE HON'BLE RAJ ASTHAN HIGH COURT HAS REPEATEDLY REITERATED THE ABOVE LEGAL POSITION. THESE CASES ARE: (I) CIT VS. SHREE BARKHA SYNTHETICS LTD. 182 CTR 17 5 (RAJ.) (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005) 197 CT R 432 (RAJ).13 IN COMING TO THE ABOVE CONCLUSION THE HON'BLE JURI SDICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLE R INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHICH HAS CONFIRMED THE DECISION OF HON'BL E DELHI HIGH COURT REPORTED IN (1992) 192 ITR 287. THE HON'BLE COURT HAS GONE TO THE EXTENT OF ST ATING THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBE R TO THE SHARECAPITAL ARE NOT GENUINE NEVERTHELESS UND ER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE THE SHARE SUBSCRIBER IS IDENTIFIED. T HERE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 44 CAN BE NO DISPUTE REGARDING THE ABOVE STATED LEGAL POSITION. THE FOLLOWING DECISIONS ALSO LAY DOWN THE SAME RATIO : (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR 308 (S C) (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 19 0 (DEL.) (III) CIT VS. GUJARAT HEAVY CHEMICALS LTD. (202) 25 6 ITR 795(SC) (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST.) 85 (SC) THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD ME MBER IN THE CASE OF UMA POLYMERS (P) LTD. VS. DCIT (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JODHPUR. 2.6 ADVERTING THE FACTS OF THE GIVEN CASE WE ARE OF THE CONSIDERED OPINION THAT ALL THE SHARE APPLIC ANTS STAND IDENTIFIED. THE ASSESSEE HAS PROVIDED PANS OF THE S HARE APPLICANTS. THE MODE OF PAYMENT HAS ALSO BEEN MADE EXPLAINED. THERE IS NO DIRECT OR INDIRECT RELA TION BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANTS. THE STATEMENTS RECORDED DURING SURVEY H AS GOT NO EVIDENTIARY VALUE AND THE LAW IS VERY MUC H SETTLED ON THIS ISSUE. IN ANY CASE EVEN UNDER THE PROVISIONS OF SECTION 68 OF THE ACT THE ASSESSEE C ANNOT BE FORCED TO PROVE THE SOURCE OF THE SOURCE. THE LAW O N THIS SUBJECT IS ALSO SETTLED BY NUMEROUS DECISION S. THE ALLEGED REPORT OF THE INSPECTOR OF THE DEPARTMENT W HO IS STATED TO HAVE VISITED AT THE GIVEN ADDRESSES OF THE SHARE APPLICANTS WAS NEVER PUT OR CONFRONTED TO THE ASSESSEE. THE CUMULATIVE EFFECTS OF THESE REASONS IS THAT THE IMPUGNED ADDITION CANNOT BE ADDED IN THE H ANDS OF THE ASSESSEE COMPANY. ACCORDINGLY WE ORDER TO DELETE THE ENTIRE ADDITIONS AND ALLOW THE APPEAL OF THE ASSESSEE. 3.0 IN THE RESULT THE APPEAL OF THE ASSESSEE STAN DS ALLOWED.. THE DEPARTMENT FILED APPEAL BEFORE HONBLE RAJASTH AN HIGH COURT. HONBLE RAJASTHAN HIGH COURT CONFIRM ED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09 /2016. FURTHER HONBLE RAJASTHAN HIGH COURT IN ANOTHER CASE COMMIS SIONER OF INCOME-TAX JAIPURII VERSUS MORANI AUTOMOTIVES (P.) LTD. NO. D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23 2013 HELD THAT : 10. THE POINTS AS SOUGHT TO BE RAISED BY THE APPELL ANT-REVENUE IN THE PRESENT CASE ARE ALL THE MATTERS RELATING TO APPRECIATION OF EVIDENCE. THE RELEVANT FACTORS H AVE BEEN TAKEN INTO ACCOUNT AND CONSIDERED BY THE APPELLATE AUTHORITIES BEFORE RETURNING THE FINDINGS IN FAVOUR OF THE ASSESSEE. EVEN AS REGARDS THE THR EE REFERRED SHARE CAPITAL CONTRIBUTORS IT IS NOTICED THAT THEY ARE EXISTING ASSESSEES HAVING PA NUMBERS; AND ARE BEING REGULARLY ASSESSED TO TAX. THE APPELLATE AUTHORITIES CANNOT BE SAID TO HAVE ERRED IN DELETIN G THE ADDITIONS IN THEIR REGARD TOO AT THE HANDS OF ASSES SEE-COMPANY. 11. ULTIMATELY THE QUESTION AS TO WHETHER THE SOUR CE OF INVESTMENT OR OF CREDIT HAS BEEN SATISFACTORI LY EXPLAINED OR NOT REMAINS WITHIN THE REALM OF APPREC IATION OF EVIDENCE; AND THE COURTS HAVE CONSISTENTL Y HELD THAT SUCH A MATTER DOES NOT GIVE RISE TO ANY S UBSTANTIAL QUESTION OF LAW. IN THE CASE OF CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78 (SC) THE HON'BLE SUPREME COURT HELD AS UNDER:- '13. IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDI TORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE DID N OT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO CO ULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES THE ASSESSEE COULD NOT DO ANY THING FURTHER. IN THE PRE MISES IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BUR DEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT NO QUESTION OF LAW AS SUCH ARISES.' ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 45 12. IN THE CASE OF CIT V. CHANDRA PRAKASH RANA [200 1] 48 DTR 271 (RAJ.) THIS COURT NOTICED SIMILAR NATURE GROUNDS URGED ON BEHALF OF THE REVENUE AND F OUND THE SAME NOT LEADING TO ANY SUBSTANTIAL QUESTION OF LAW. THIS COURT NOTICED OBSERVED AND HELD AS UNDER: '7. LEARNED COUNSEL FOR THE APPELLANT (REVENUE) CONTEND ED THAT FIRSTLY TRIBUNAL ERRED IN ACCEPTING THE EXPLANATION OFFERED BY ASSESSEE IN RELATION TO SOURCE OF INCOME. HIS SECOND SUBMISSION WAS THAT WHAT WAS OFFERED BY ASSESSEE WAS NO EXPLAN ATION AND HENCE SHOULD NOT HAVE BEEN ACCEPTED AND LASTLY LEARNED COUNSEL MADE SINCERE AT TEMPT ON HIS PART AFTER TAKING US THROUGH FACTUAL SCENARIO OF THE EXPLANATION AND CONTENDED T HAT IT CAN NEVER BE TAKEN AS SATISFACTORY EXPLANATION FOR DELETING THE ADDITION MADE BY AO. W E DO NOT AGREE TO THIS SUBMISSION FOR MORE THAN ONE REASON. 8. IN THE FIRST PLACE IT IS A PURE QUESTION OF FAC T WHAT TO SAY QUESTION OF LAW MUCH LESS SUBSTANTI AL QUESTION OF LAW. SECONDLY THIS COURT CANNOT AGAIN IN THIS APPEAL UNDERTAKE THE EXAMINATION OF FACTUAL ISSUES NOR CAN DRAW FACTUAL INFERENCES ON THE BASIS OF EXPLANATION OFFERED BY ASSESSEE. THIRDLY ONCE THE EXPLANATION IS ACCEPTED BY THE TWO APPELLATE COURTS I.E. CIT(A) AND TRIBUNAL IN THIS CASE THEN IN SUCH EVEN T A CONCURRENT FINDING RECORDED ON SUCH EXPLANATION BY TWO APPELLATE COURTS IS BINDING ON T HE HIGH COURT. 9. PERUSAL OF IMPUGNED FINDING QUOTED SUPRA WOULD G O TO SHOW THAT TRIBUNAL DID EXAMINE THE EXPLANATION OFFERED BY ASSESSEE IN DETAIL AND THEN RECORDED A FINDING FOR ITS ACCEPTANCE. SUCH FINDING WHEN CHALLENGED DOES NOT CONSTITUTE A SUBST ANTIAL QUESTION OF LAW WITHIN THE MEANING OF S. 260A IBID IN AN APPEAL ARISING OUT OF SUCH ORDER. 10. IN OUR OPINION THEREFORE ONCE THE CIT(A) AND TRIBUNAL ACCEPTED THE EXPLANATION OF ASSESSEE AND ACCORDINGLY DELETED CERTAIN ADDITIONS MADE BY AO HOLDING THE TRANSACTION OF SHARES TO BE GENUINE THEN IT WOULD NOT INVOLVE ANY SUBSTANTI AL ISSUE OF LAW AS SUCH. IN OTHER WORDS THIS COURT IN ITS APPELLATE JURISDICTION UNDER S. 2 60A IBID WOULD NOT AGAIN DE NOVO HOLD YET ANOTHER FACTUAL INQUIRY WITH A VIEW TO FIND OUT AS TO WHETHER EXPLANATION OFFERED BY ASSESSEE AND WHICH FOUND ACCEPTANCE TO THE CIT(A) AND TRIBUN AL IS GOOD OR BAD OR WHETHER IT WAS RIGHTLY ACCEPTED OR NOT. IT IS ONLY WHEN THE FACTU AL FINDING RECORDED HAD BEEN ENTIRELY DE HORS THE SUBJECT OR THAT IT HAD BEEN BASED ON NO R EASONING OR BASED ON ABSURD REASONING TO THE EXTENT THAT NO PRUDENT MAN OF AVERAGE JUDICIAL CAPACITY COULD EVER REACH TO SUCH CONCLUSION OR THAT IT HAD BEEN FOUND AGAINST ANY P ROVISION OF LAW THEN A CASE FOR FORMULATION OF SUBSTANTIAL QUESTION OF LAW ON SUCH FINDING CAN BE SAID TO HAVE BEEN MADE OUT. 11. IN OUR VIEW NO SUCH ERROR COULD BE NOTICED BY US IN THE IMPUGNED ORDER BECAUSE AS OBSERVED SUPRA THE TRIBUNAL DID GO INTO THE DETAILS OF EXPL ANATION OFFERED BY ASSESSEE AND THEN ACCEPTED THE EXPLANATION BY PLACING RELIANCE ON THE DOCUMENTS FILED BY ASSESSEE. AS A CONSEQUENCE THEREOF THE ADDITIONS MADE BY AO CAME TO BE DELETED.' 13. IN CIT V. SHREE BARKHA SYNTHETICS LTD. [2004] 2 70 ITR 477 (RAJ.) IN A SIMILAR NATURE MATTER THIS COURT OBSERVED THAT THE TRIBUNAL HAVING FOUND THAT THE COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HAD BEEN RECEIVED BY THE ASSESSEE -COMPANY WERE GENUINELY EXISTING AND THE IDENTITY OF THE INDIVIDUAL INVESTORS WERE ALSO ESTABLISHED AND THEY HAD CONFIRMED THE FACT OF MAKING INVESTMENT THE FINDING THAT ASSESSE E HAD DISCHARGED INITIAL BURDEN AND ADDITION UNDER SECTION 68 COULD NOT BE SUSTAINED W AS ESSENTIALLY A FINDING OF FACT. THIS COURT SAID - '19. A PERUSAL OF THE AFORESAID FINDING GOES TO SHO W THAT DELETION HAS BEEN MADE ON APPRECIATION OFEVIDENCE WHICH WAS ON RECORD FIN DING THAT THERE WAS EXISTENCE OF INVESTORS AND THEIR CONFIRMATION HAS B EEN OBTAINED WERE FOUND TO BE SATISFACTORY. ALL THESE CONCLUSIONS ARE CONCLUSIONS OF FACT BASED ON MATERIAL ON RECORD AND THEREFORE CANNOT BE SAID TO BE PERVERS E SO AS TO GIVE RISE TO QUESTION OF LAW WHICH MAY BE REQUIRED TO BE CONSID ERED IN THIS APPEAL UNDER S.260A OF THE IT ACT.' 14. THE RATIO OF THE DECISIONS AFORESAID DIRECTLY A PPLIES TO THE PRESENT CASE TOO. HEREIN AS NOTICED THE APPELLATE AUTHORITIES HAVE RETURNED THE FINDING S OF FACT IN FAVOUR OF THE ASSESSEE AFTER DUE APPRECIATION OF THE EVIDENCE ON RECORD ON RELEVANT CONSIDERATIONS AND ON SOUND REASONINGS. THESE FINDINGS HAVE NEITHER BEEN SHOWN SUFFERING FR OM ANY PERVERSITY NOR APPEAR ABSURD NOR ARE OF SUCH NATURE THAT CANNOT BE REACHED AT ALL. T HUS NO CASE FOR INTERFERENCE IN THE FINDINGS OF THE APPELLATE AUTHORITIES IS MADE OUT. IN THE RESULT THE APPEAL FAILS AND IS THEREFORE DISMISSED. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 46 LD AR SH VIJAY GOYAL HAS ALSO SUBMITTED THAT THE DE CISIONS OF JURISDICTIONAL HIGH COURT IS BINDING FOR ALL THE REVENUE AUTHORITIES AS HELD BY HONBLE APEX COURT IN THE CA SE OF CIT VS G.M MITTAL STAINLESS STEEL (P) CIT (2003) 263 ITR 255 WHEREIN IT HAS HELD BY HONBLE SUPREME COURT THAT DECISION OF JURISDICTIONAL HIGH COURT IS BINDING ON THE REVENUE AUTHORITIES WITHIN THE STATE. REVENUE AUTHORITIES W ITHIN THE STATE CANNOT REFUSE TO FOLLOW THE JURISDI CTIONAL HIGH COURTS DECISION ON THE GROUND THAT THE DECISION OF SOME OT HER HIGH COURT WAS PENDING DISPOSAL BEFORE THE SUPR EME COURT . THERE ARE NO MATERIAL CHANGE IN THE FACTS OF THE APPELLAN T COMPANIES WITH THE FACTS OF THE ABOVE CITED CASES DECIDED BY HONBLE RAJASTHAN HIGH COURT AS THE APPELLANT COMPANIES HAV E SUBMITTED DOCUMENTS SUCH AS (I) SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN OF PARTY (II) DETAIL OF PAYMENT R ECEIVED ETC. (III) COPY OF BOARD RESOLUTION (IV) C OPY OF PAN CARD OF PARTY (V) COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE (VI) DECLARATION OF SO URCE OF FUNDS WITH PARTY (VII) COPY OF ACK. OF ITR AND COMPUTATION (V III) COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE PROVED ALL THE INGREDIENTS OF SECTION 68 OF THE AC T. APART FROM THIS IT IS ALSO TO BE NOTED HERE THA T SIX COMPANIES INVOLVING SHARE CAPITAL OF RS. 58 70 57 300/- TO AP PELLANT COMPANIES WERE ASSESSED BY SAME AO FOR AY 2 013-14 AND IN OTHER CASES AS PER THE FACTS AVAILABLE FROM RECORDS NON O F THE NOTICES ISSUED U/S 133(6) OF THE ACT REMAINED UNSERVED AND MANY OF THEM HAVE ALSO MADE COMPLIANCE TO THE NOTICES ISSUED U/S 133(6) OF THE ACT. FURTHER FROM SEARCH REPORT OF R OC IT IS ALSO SEEN THAT SOME OF THE INVESTOR COMPANIES HAVE CHARGE REGISTER ED UNDER COMPANIES ACT IN FAVOUR OF LEADING BANKS F OR CRORES OF RUPEES. 2.1.4.6 THEREFORE IN VIEW OF THE FINDINGS OF HONBLE JUR ISDICTIONAL HIGH COURT THE IDENTITY CREDITWORTHIN ESS AND GENUINENESS OF TRANSACTION OF THESE COMPANIES CANNO T BE HELD AS DOUBTFUL AND ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT CANNOT BE UPHELD. HOWEVER IT IS ALSO TO BE SEEN THAT THE INVESTIGATION DIRECTORATE HAS CARRIE D OUT INVESTIGATION FOR DEPOSIT OF CASH/DD AT FOURTH STAGE OF CHANNEL SOURCE IN SOM E CASES. THE CHART SHOWING CASH DEPOSIT/DD DEPOSIT AT 4TH CHANNEL AS PER INQUIRIES MADE BY INVESTIGATION WING IS AS UNDER: COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS BUILDTECH P LTD 2012-2013 15 00 000 EVERSH INE SUPPLIERS P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 20 00 000 ALLIA NCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECUR ITIES MOTISONS BUILDTECH P LTD 2012-2013 17 00 000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 30 00 000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS TOTAL 82 00 000 MOTISONS ENTERTAINMENT P LTD 2012-2013 18 00 000 RO SE SUPPLIERS P LTD SHYAM FASHION AND DURGA ENTERPRI SES MOTISONS ENTERTAINMENT P LTD 2012-2013 46 00 000 RE GENT BARTER P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 4 50 000 MAY UKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPRIS ES MOTISONS ENTERTAINMENT P LTD 2012-2013 10 00 000 M AYUKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPR ISES MOTISONS ENTERTAINMENT P LTD 2012-2013 16 00 000 RE GENT DEALERS P LTD SHYAM FASHION MOTISONS ENTERTAINMENT P LTD 2012-2013 10 00 000 RE GENT DEALERS P LTD DURGA ENTERPRISES MOTISONS ENTERTAINMENT P LTD 2012-2013 8 00 000 REG ENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 29 00 000 A LLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL S ECURITIES TOTAL 1 41 50 000 MOTISONS GLOBAL P LTD 2012-2013 17 00 000 ROSE SUP PLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHION ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 47 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL P LTD 2012-2013 18 00 000 ROSE SUPP LIERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 19 00 000 ROSE SUPP LIERS P LTD NIBU NAGI AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 3 50 000 ROSE SUPPL IERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 14 00 000 ROSE SUPP LIERS P LTD SHYAM FASHION MOTISONS GLOBAL P LTD 2012-2013 18 50 000 ROSE SUPP LIERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 18 00 000 REGENT BA RTER P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18 00 000 MAYUKH VI NIMAY P LTD NIBU NAGI AND KEVILHULIE SUNOTSU MOTISONS GLOBAL P LTD 2012-2013 35 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16 00 000 MAYUKH VI NIMAY P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 15 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 41 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16 47 727 EVERSHINE SUPPLIERS P LTD PNB AXIS BANK SILIGURI MOTISONS GLOBAL P LTD 2012-2013 36 00 000 EVERSHINE SUPPLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHIO N MOTISONS GLOBAL P LTD 2012-2013 18 00 000 EVERSHINE P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9 00 000 REGENT DEA LERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18 00 000 REGENT DE ALERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9 00 000 REGENT DEA LERS P LTD KEVIHULIE SINOTSU MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 28 50 000 REGENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM F ASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 18 50 000 REGENT DEALERS P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 22 00 000 ALLIANCE TRADECOM P LTD PNB AXIS BANK SILIGURI SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 35 00 000 ALLIANCE TRADECOM P LTD M/S SWASTIK TRADERS GLOBAL SECURITIES AXIS BANK SILIGURI MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16 00 000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 48 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 9 50 000 ALLIANCE TRADECOM P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10 00 000 ALLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA EN TERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 3000000 A LLIANCE P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16 00 000 ALLIANCE P LTD P LTD NIBU NAGI MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 19 50 000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2013-2014 5050000 A LLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA ENTE RPRISES TOTAL 6 44 97 727 SHIVANSH BUILDCON P LTD 2012-2013 3 50 000 EVERSHIN E SUPPLIERS P LTD DURGA ENTERPRISES SWASTIK AND SHYAM FASHION TOTAL 3 50 000 GRAND TOTAL 8 71 97 727 2.1.4.7 IN VIEW OF ABOVE FINDINGS IT IS ALSO SEEN THAT THIS CASH/DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/STAGE . THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPAN IES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. H OWEVER ON PERUSAL OF WRITTEN SUBMISSIONS AND COMPLIANCE TO SH OW CAUSE LETTER IT IS ALSO SEEN THAT ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATED BY SH SANTOSH CHOUBE SH RAJESH KR S INGH AND SH AJIT SHARMA AND ALSO COULD NOT SATISFAC TORILY EXPLAIN THE REASONS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS . THEREFORE DULY CONSIDERING THOSE FACTS AND EVID ENCES( BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH & POST-S EARCH OPERATION ADDITION TO THE EXTENT OF RS. 8 7 1 97 727/= IS SUSTAINED AND BALANCE IS DELETED DETAILS GIVEN AS UNDER: NAME OF APPELLANT COMPANY ITA NO AY ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/ RELIEF GIVEN MOTISONS GLOBAL PVT. LTD 753/14-15 2009-10 2 75 00 000 ------------- 2 75 00 000 MOTISONS GLOBAL PVT. LTD 754/14-15 2011-12 6 96 50 000 --------------- 6 96 50 000 MOTISONS GLOBAL PVT. LTD 767/14-15 2012-13 42 07 2 9 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT. LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 200 9-10 3 40 00 000 --------------- 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 201 1-12 1 95 00 000 ---------------- 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 201 2-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 --------------- 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 86 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 0 0 000 -------------- 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 -------------- 10 30 00 000 BHOLENATH REAL ESTATES PVT LTD 770/14-15 2009-10 2 90 00 000 --------------- 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 0 0 000 --------------- 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 TOTAL ADDITIONS 94 14 07 100 8 71 97 727 85 42 09 373 IT IS PERTINENT TO MENTION HERE THAT M/S MAYUKH VIN IMAY PVT LTD RECEIVED SHARE APPLICATION OF RS. 10 54 95 000/- IN AY 2009-10 WHICH WAS ADDED AS INCOME OF M/S MAYUKH VINIMAY PVT LTD IN AY 2009-10. THEREAFTER IN SUBSEQUENT YEARS THE PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTED IN THE COMPANIES UNDER APPEAL AS UNDER: ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 49 S.NO NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1 MOTISONS GLOBAL PVT LTD 2012-13 6 93 49 800 2. MOTISONS GLOBAL PVT LTD 2013-14 2 24 50 000 3 MOTISONS ENTERTAINMENT (INDIA) PVT LTD 2012-13 1 55 00 000 TOTAL 10 72 99 800 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO M ENTIONED HERE THAT AS PER LD ARS REQUEST APPELLATE PROCEEDINGS IN CASE OF M/S MAYUKH VINIMAY PVT LTD HAVE BEEN KEP T IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY HONBLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS NOW ADDITIONS M ADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO G ROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. SECTION 68 OF THE ACT PROVIDES REGARDING ANY SUM F OUND CREDITED IN THE BOOKS OF AN ASSESSE MAINTAINED AND EXPLANATION OFFERED BY THE A SSESSEE IS NOT SATISFACTORY IN THE OPINION OF THE AO THEN SUCH SUM CREDITED BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE SECTION 68 READS AS UNDER:- SECTION 68 CASH CREDITS: WHERE ANY SUM IS FOUND C REDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YE AR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE (ASSESSING) OF FICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THUS THE SUM SO RECEIVED BY ASSESSEE TOWARDS SHARE APPLICATION AND SHARE PREMIUM COULD HAVE BEEN TAXED AS INCOME U/S 68 OF THE ACT. HOWEVER THE AO HAS NOT INVOKED PROVISIONS OF SEC 68 OF THE ACT. THE AO INVOK ED THE PROVISIONS OF SEC 56(1) OF THE ACT WHICH READS AS UNDER:- 56. INCOME FROM OTHER SOURCES . (1) INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED F ROM THE TOTAL INCOME UNDER THE ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD. INCOME FR OM OTHER SOURCES IF IT IS NOT CHARGEABLE TO INCOME TAX UNDER ANY OF THE HEADS SPECIFIED IN SECT ION 14 ITEMS A TO E. THE PROVISIONS OF SECTION 56(1) THE ACT CAN BE INV OKED TO TAX INCOME OF EVERY KIND WHICH IS NOT CHARGEABLE TO TAX UNDER ANY HEAD SPECI FIED IN SECTION 14 FROM ITEM NO. A TO E IS CHARGEABLE UNDER THE HEAD INCOME FROM OT HER SOURCES BY THE PROVISIONS OF SECTION 56 OF THE ACT. . THEREFORE PROVISIONS OF SEC 56(1) ARE NOT APPLICABLE. FURTHER THE AMENDED PROVISIONS OF SEC 56 (2) OF THE I.T. AC T 1961 SPECIFY THE VARIOUS INCOME TO BE ASSESSED UNDER THIS SECTION. THE PREMIUM ON SHARES HAS BEEN INCLUDED BY PROVISION OF SEC 56(2)(VIIIB)OF THE ACT W.E.F. 01-0 4-2014 WHICH IS REPRODUCED AS UNDER: 56(2) IN PARTICULAR AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIONS OF SUB-SECTION (1) THE FOLLOWING INCOMES SHALL BE CH ARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCES NAMELY:- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 50 (I) DIVIDENDS (IA) TO (VIIA) (VIIB) WHERE A COMPANY NOT BEING A COMPANY IN WHI CH THE PUBLIC ARE SUBSTANTIALLY INTERESTED RECEIVES IN ANY PREVIOUS YEAR FROM ANY PERSON BEING A RESIDENT ANY CONSIDERATION FOR ISSUE OF SHARES THA T EXCEEDS THE FACE VALUE OF SUCH SHARES THE AGGREGATE CONSIDERATION RECEIVED FOR SU CH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: THIS HAS ALSO BEEN INCLUDED IN THE DEFINITION OF IN COME U/S 2(24)OF THE ACT W.E.F. 01- 04-2013. THE RELEVANT PORTION READS AS UNDER:- (XVI) ANY CONSIDERATION RECEIVED FOR ISSUE OF SHA RES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARE REFERRED TO IN CLAUSE (VIIB) OF SUB-SECTION ( 2) OF SECTION 56;] TO TAX THE INCOME UNDER THE ACT IT MUST COME UNDER THE DEFINITION OF INCOME AS PROVIDED U/S 2(24) OF THE I.T. ACT 1961. THERE WER E AMENDMENTS IN SEC 2(24) OF THE ACT AND IN SECTION 56(2) OF THE ACT W.E.F. 01-04-20 13 ARE NOT APPLICABLE TO A.Y. UNDER CONSIDERATION. BY THESE AMENDED PROVISIONS ANY CON SIDERATION RECEIVED FOR ISSUE OF SHARES THAT EXCEEDS THE FACE MARKET VALUE OF SUCH S HARES THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE TAXABLE AS PER CLAUSE (VIIB) OF SUB-SECTION 2 OF SECTION 56 OF THE ACT. THE CBDT VIDE CIRCULAR NO. 3 OF 2012 DATED 12-06-2012 HAS ALSO MENTIONED T HAT PROVISION OF SECTION 56(2)(VIIB) WILL BE APPLICABLE FOR A.Y. 2013-14. TH US THE RELEVANT PORTION OF CBDT CIRCULAR IS REPRODUCED IS AS UNDER:- SHARE PREMIUM IN EXCESS OF FAIR MARKET VALUE TO BE TREATED AS INCOME IN THE FINANCE BILL 2012 IT HAD BEEN PROPOSED [SE CTION 56(2) AS SUB-CLAUSE [(VIIB)] THAT IN CASE OF A COMPANY NOT BEING A COMPANY IN WHICH THE PUBLIC AR E SUBSTANTIALLY INTERESTED WHICH RECEIVES IN ANY PREVIOUS YEAR FROM ANY PERSON BEING A RESIDENT AN Y CONSIDERATION FOR ISSUE OF SHARES AND THE CONSIDERATION RECEIVED FOR ISSUE OF SUCH SHARES EXC EEDS THE FACE VALUE OF SUCH SHARES THEN THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE CHARGEABLE TO INCOME TAX. AN EXEMPTION WAS PROVI DED IN A CASE WHERE THE CONSIDERATION FOR ISSUE OF SHARES IS RECEIVED BY A VENTURE CAPITAL UNDERTAKING FROM A VENTURE CAPITAL COMPANY OR A VENTURE CAPITAL FUND. (I) IT HAS NOW BEEN FURTHER PROVIDED THAT SUCH EXC ESS SHARE PREMIUM IS INCLUDED IN THE DEFINITION OF 'INCOME' UNDER SUB-CLAUSE (XVI) OF CLAUSE (24) OF S ECTION 2. (II) CONSIDERING THAT THE PROPOSED AMENDMENT MAY C AUSE AVOIDABLE DIFFICULTY TO INVESTORS WHO INVEST IN START-UPS WHERE THE FAIR MARKET VALUE MAY NOT BE DETERMINED ACCURATELY IT IS PROPOSED TO PROVIDE AN EXEMPTION TO ANY OTHER CLASS OF INVESTOR S AS MAY BE NOTIFIED BY THE CENTRAL GOVERNMENT. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL 2 013 AND WILL ACCORDINGLY APPLY IN RELATION TO THE ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT Y EARS. THE PROVISIONS OF SEC 56(2)(VIIB) OF INCOME-TAX AC T 1961 ARE APPLICABLE W.E.F. 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. THE INCOME AS MENTIONE D IN SECTION 56(2)(VIIB) IS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 51 INCLUDED IN DEFINITION OF SECTION 2(24) OF THE ACT W.E.F. 01-04-2013. THEREFORE THE PROVISIONS OF THESE SECTIONS CANNOT BE MADE APPLICA BLE PRIOR TO THAT A.Y. 2013-14. IT IS PERTINENT TO NOTE THAT THE LD. CIT(A) HAD ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE TO TAX THE SHARE CAPITAL UNDER SECTION 68 OF THE I.T. ACT 1961 AS AGAINST SECTION 56(1) APPLIED BY THE AO. HOWEVER HE HAD N OT MADE ANY ADDITION UNDER SECTION 68 OF THE ACT. HIS OBSERVATION ON THIS ISSU E IS IN PARA 2.1.4.6 WHICH READS AS UNDER:- 2.1.4.6 THEREFORE IN VIEW OF THE FINDINGS OF HON 'BLE JURISDICTIONAL HIGH COURT THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF THESE COMPANIES CANNOT BE HELD AS DOUBTFUL AND ADDITION BY APPLYING THE PROVISIONS OF SEC 68 OF TH E ACT CANNOT BE UPHELD. THE REVENUE HAS NOT PREFERRED APPEAL AGAINST THIS F INDINGS THE LD. CIT(A). IT IS ALSO PERTINENT TO NOTE THAT AO HAS MADE WHOLE ADDITION B Y INVOKING SECTION 56 OF THE ACT HENCE THE AMENDED PROVISION W.E.F. 01-04-2013 ARE A PPLICABLE ONLY ON SHARES PREMIUM RECEIVED ON FAIR MARKET VALUE. IN VIEW OF THESE FACTS CIRCUMSTANCES OF THE CASE AND THE CASE LAWS RELIED ON BY THE LD.AR OF TH E ASSESSEE (SUPRA) IT IS CLEAR THAT SHARE PREMIUM RECEIVED CANNOT BE CONSIDERED AS INCO ME FOR THE YEAR UNDER CONSIDERATION BY INVOKING PROVISIONS OF SECTION 56 (1) OF THE ACT. THEREFORE IN OUR CONSIDERED VIEW THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 3 03 00 000/- AND WE CONCUR WITH HIS FINDINGS ON THE ISSUE IN QUE STION THUS THE REVENUES APPEAL IN ITA NO. 481/JP/2017 IS DISMISSED. SINCE THE ISSUE RAISED BY THE REVENUE IN THE PRES ENT APPEAL IS SAME AS DECIDED IN THE APPEAL OF THE REVENUE IN ITA NO.481 /JP/2017FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF ACIT CENTRA L CIRCLE-2 JAIPUR VS MOTISONS BUILDTECH PVT. LTD JAIPUR WHICH SHALL APP LY MUTATIS MUTANDIS IN THIS APPEAL OF REVENUE ALSO. THUS SOLITARY GROU ND OF THE REVENUES APPEAL FOR THE A.Y. 2009-10 IS DISMISSED. IN THE RE SULT THE APPEAL OF THE REVENUE IN ITA NO.483/JP/2017 STANDS DISMISSED. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 52 4.1 NOW WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.484/JP/2017 FOR THE 2011-12 FOR ADJUDICATION WHEREIN THE REVENU E HAS RAISED THE SOLITARY GROUND AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS .1 95 00 000/- MADE U/S 56(1) OF THE ACT IGNORING THE FACT THAT ASSETS OF THE ASSESSEE COMPANY DONT COMMENSURATE TO PREMIUM CHARGED AND F URTHER IGNORING THE FACT THAT NEITHER ANY BUSINESS ACTIVIT Y WAS PERFORMED NOR ANY BUSINESS INCOME HAS BEEN SHOWN BY THE ASSESSEE. 5.1 APROPOS SOLITARY GROUND OF THE REVENUE THE AO MADE THE ADDITION OF RS. 1 95 00 000/- U/S 56(1) OF THE ACT IN THE HA NDS OF THE ASSESSEE COMPANY BY OBSERVING AS UNDER:- 16. HAVING DEALT WITH EACH OF THE CONTENTION OF T HE ASSESSEE AND HAVING FOUND THE SAME TO BE UNTENABLE IT IS IMP ORTANT TO PLACE ON RECORD CERTAIN ASPECTS WHICH HAVE A BEARING ON THE ISSUE AT HAND. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTI L IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EX ECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX HAS TO HAVE SOME RECITALS MADE IN A DOCUM ENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE NOT ENTITLED TO LOO K INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 53 17. IN THE ABOVE BACK GROUND OF THE FACTS AND CIRCU MSTANCES SURROUNDING THIS CASE IT IS HEREBY HELD THAT THE R ECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS PART OF A COLOURFUL TRANSACTI ON BY WAY OF WHICH A SUM OF RS. 1 95 00 000/- WAS INTRODUCED INTO THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SHARE PREMIUM ATTAC HED TO THE SHARE CAPITAL. AS DISCUSSION ABOVE THE PREMIUM OF RS. 990/- PER SHARE WAS NOT JUSTIFIED AT ALL ON THE BASIS OF ABSOLUTELY NO ASSETS COMMENSURATE TO PREMIUM CHARGED NO BUSINESS ACTIVITY NO INCOME NO NET WORTH NOR ANY PROMISE FOR CREATION OF THIS MUCH ASSETS BUSIN ESS ACTIVITY INCOME OR NET WORTH IN THE FUTURE. ACCORDINGLY THE CHARGI NG AND RECEIPT OF SHARE PREMIUM/ SHARE CAPITAL TO THE TUNE OF RS. 1 9 5 00 000/- IS HELD TO BE INCOME OF THE ASSESSEE COMPANY IN THE NATURE OF INCOME ENVISAGED U/S 56(1) OF THE INCOME TAX ACT 1961. THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 5.2 IN FIRST APPEAL THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 1 95 00 000 /- MADE BY THE AO BY OBSERVING AT PAGES 96 OF HIS OR DER AS UNDER:- 3.2.2 I HAVE CONSIDERED ASSESSEE'S SUBMISSION AN D CAREFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALSO TAKE A NOTE O F FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. I HAVE ALREADY GIVEN A DETAILED FINDINGS IN PARA 2.1.4.7 WHEREIN TOTAL OF RS. 8 71 97 727/- HAS BEEN SUSTAINED IN THE HANDS OF M/S. . MOTISONS GLOBAL PVT. LTD M /S. MOTISONS ENTERTAINMENT PVT. LTD M/S. MOTISONS BUILDTECH PVT. LTD AND M/S. SHIVANSH BUILDTECH PVT. LTD DETAILS OF WHICH ARE AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2 75 00 000 - 2 75 00 000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6 96 50 000 - 6 96 50 000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3 40 00 000 - 3 40 00 000 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 54 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1 95 00 000 - 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 - 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 8 6 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 00 000 - 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 - 10 30 00 000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2 90 00 000 - 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 00 000 - 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 94 14 07 100 8 71 97 727 85 42 09 373 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE ADDITION OF RS.1 95 00 000/- MADE ON A/C OF BOGUS SHARE CAPITAL IN THE HANDS OF M/S. MOTISONS ENTERTAINMENT (INDIA) PVT. LTD IS HEREBY DELETED. ASSESSEE GETS RELIEF IN GR NO. 2 & 3. PARA 2.1.4.7 READS OF LD. CIT(A)S ORDER AS UNDER:- 2.1.4.7 IN VIEW OF THE ABOVE FINDINGS IT IS ALSO SEEN THAT THIS CASH /DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/ STAGE. THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPAN IES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. HOWEVER ON PERUS AL OF WRITTEN SUBMISSIONS AND COMPLIANCE TO SHOW CAUSE LETTER IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATE D BY SHRI SANTOSH CHOUBE SHRI RAJESH KR SINGH AND SHRI AJIT SHARMA A ND ALSO COULD NOT SATISFACTORILY EXPLAIN THE REASONS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS. THEREFORE DULY CONSIDERING THOSE FACTS AS EVIDENCES (BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH AND & PO ST-SEARCH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 55 OPERATION ADDITION TO THE EXTENT OF RS. 8 71 97 72 7/- IS SUSTAINED AND BALANCE IS DELETED DETAILS GIVEN AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2 75 00 000 - 2 75 00 000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6 96 50 000 - 6 96 50 000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3 40 00 000 - 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1 95 00 000 - 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 - 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 8 6 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 00 000 - 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 - 10 30 00 000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2 90 00 000 - 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 00 000 - 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 94 14 07 100 8 71 97 727 85 42 09 373 IT IS PERTINENT TO MENTION HERE THAT M/S. MAYUKH VINIMAY PVT.LTD RECEIVED SHARE APPLICATION OF RS. 10 54 95 000/- IN AY 2009- 10 WHICH WAS ADDED AS INCOME OF M/S.MAYUKH VINIMAY PVT. LTD IND A.Y. 2009-10. THERE AFTER IN SUBSEQUENT YEARS THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 56 PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTE D IN THE COMPANIES UNDER APPEAL AS UNDER:- S.N. NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1. MOTISONS GLOBAL PVT. LTD 2012-13 6 93 49 800 2. MOTISONS GLOBAL PVT. LTD 2013-14 2 24 50 000 3. MOTISONS ENTERTAINMENT (INDIA)PVT LTD. 2012-13 1 55 00 000 TOTAL 10 72 29 800 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO MENTIONED HERE THAT AS PER LD. ARS REQUEST APPELLATE PROCEEDINGS IN CASE OF M/S. MAYUKHVINIMAY PVT. LTD HAVE BEEN KE PT IN ABEYANCE TILL THE DISPOSTAL OF APPEAL BY HON'BLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS NOW ADDITIONS MADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO GROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. 5.3 DURING THE COURSE OF HEARING THE LD. DR SUPPOR TED THE ORDER OF THE AO AND SUBMITTED THAT THE ORDER OF THE LD. CIT(A) M AY BE SET ASIDE. 5.4 ON THE OTHER HAND THE LD.AR OF THE ASSESSEE S UPPORTED THE ORDER OF THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION PRAYING THEREIN TO DISMISS THE A PPEAL OF THE DEPARTMENT. 2.02.1.2 SUBMISSION OF ASSESSEE:- THE FACTS AND CIRCUMSTANCES OF THE ISSUE RAISED IN THE DEPARTMENTAL APPEAL FOR THE AY 2011-12 UNDER GROUND NO 1 ARE EXACTLY SIMILAR TO GROUND NO 1 FOR AY 2009-10 IN IT A NO ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 57 483/JP/2017. THE ASSESSEE HAS MADE DETAILED SUBMISS ION IN AY 2009- 10 FOR ITA NO 483/JP/2017. IN ORDER TO AVOID REPETI TION WE PRAY YOUR HONOR KINDLY TO CONSIDER THE SUBMISSION MADE FOR IT A NO 483/JP/2017 FOR AY 2009-10 UNDER PARA 2.01.2 ABOVE AS ALSO MADE FOR AY 2011- 12 UNDER GROUND NO 1 OF ITA NO 484/JP/2017. 5.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE HAS BEEN DEALT WITH AND DECIDED BY THIS BENCH OF ITAT V IDE ITS ORDER DATED 30-10-2017 IN THE CASE OF ACIT CENTRAL CIRCLE-2 J AIPUR VS MOTISONS BUILDTECH PVT. LTD IN ITA NO. 481/JP/2017 (REVENUE S APPEAL) FOR THE ASSESSMENT YEAR 2009-10. SINCE THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS SAME AS DECIDED IN THE APPEAL OF THE REVENUE IN ITA NO.481/JP/2017FOR THE ASSESSMENT YEAR 2009-10 IN TH E CASE OF ACIT CENTRAL CIRCLE-2 JAIPUR VS MOTISONS BUILDTECH PVT. LTD JAIPUR (SUPRA) WHICH SHALL APPLY MUTATIS MUTANDIS IN THIS APPEAL OF REVENUE ALSO. THUS SOLITARY GROUND OF THE REVENUES APPEAL IN ITA NO. 484/JP/2017 FOR THE A.Y. 2011-12 IS DISMISSED. IN THE RESULT THE APPE AL OF THE REVENUE IN ITA NO.484/JP/2017 STANDS DISMISSED. 6.1 THE ASSESSEE IN ITA NO. 386/JP/2017 FOR THE ASS ESSMENT YEAR 2011-12 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 58 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE ORDER PASSED U/S 153A READ WITH SECTION 153B OF THE I.T. ACT 1961 IS BAD IN LAW VOID AB INITIO AND DESERVES TO BE ANNULLED AS THE ASSESSMENT FOR THE A.Y. 2011- 12 WAS NOT ABATED AND LD. CIT(A) ERRED IN HOLDING THAT THE AO WAS JUSTIFIED IN REASSESSING THE COMPLETED ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS. 1 41 648/- MADE BY AO BY DISALLOWING THE ENTIRE EXP ENSES INCURRED DURING THE YEAR. 7.1 DURING THE COURSE OF HEARING THE LD.AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1 AND 2. HENCE THE SAME ARE DISMISSED BEING NOT PRESSED. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA NO. 386/JP/2017 IS DISMISSED. 8.1 THE REVENUE IN ITA NO.485/JP/2017 FOR THE A.Y. 2012-13 HAS RAISED THE SOLITARY GROUND AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS .6 36 50 000/- OUT OF TOTAL ADDITION OF RS. 7 78 00 000/- MADE U/S 56(1) OF THE ACT IGNORING THE FACT THAT ASSETS OF THE ASSESSEE COMPANY DONT COMMENSURATE TO PREMIUM CHARGED AND FURTHER IGNORING THE FACT THAT NEITHER ANY BUSINESS ACTIVITY WAS PERFORMED NOR ANY BUSINESS IN COME HAS BEEN SHOWN BY THE ASSESSEE. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 59 9.1 APROPOS SOLITARY GROUND OF THE REVENUE THE AO MADE THE ADDITION OF RS. 7 78 00 000/- U/S 56(1) OF THE ACT IN THE HA NDS OF THE ASSESSEE COMPANY BY OBSERVING AS UNDER:- 24. HAVING DEALT WITH EACH OF THE CONTENTION OF T HE ASSESSEE AND HAVING FOUND THE SAME TO BE UNTENABLE IT IS IMP ORTANT TO PLACE ON RECORD CERTAIN ASPECTS WHICH HAVE A BEARING ON THE ISSUE AT HAND. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTI L IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EX ECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX HAS TO HAVE SOME RECITALS MADE IN A DOCUM ENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. TH E TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE NOT ENTITLED TO LOO K INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS. 25. IN THE ABOVE BACK GROUND OF THE FACTS AND CIRCU MSTANCES SURROUNDING THIS CASE IT IS HEREBY HELD THAT THE R ECEIPT OF SHARE CAPITAL AND SHARE PREMIUM WAS PART OF A COLOURFUL TRANSACTI ON BY WAY OF WHICH A SUM OF RS. 7 78 00 000/- WAS INTRODUCED INTO THE BOOKS OF THE ASSESSEE COMPANY IN THE FORM OF SHARE PREMIUM ATTAC HED TO THE SHARE CAPITAL. AS DISCUSSION ABOVE THE PREMIUM OF RS.40/- & RS. 90/- PER SHARE WAS NOT JUSTIFIED AT ALL ON THE BASIS OF ABSOLUTELY NO ASSETS COMMENSURATE TO PREMIUM CHARGED NO BUSINESS ACTIVI TY NO INCOME NO NET WORTH NOR ANY PROMISE FOR CREATION OF THIS M UCH ASSETS BUSINESS ACTIVITY INCOME OR NET WORTH IN THE FUTU RE. ACCORDINGLY THE CHARGING AND RECEIPT OF SHARE PREMIUM/ SHARE CAPITA L TO THE TUNE OF RS. 7 78 00 000/- IS HELD TO BE INCOME OF THE ASSESSEE COMPANY IN THE NATURE OF INCOME ENVISAGED U/S 56(1) OF THE INCOME TAX ACT 1961. THE SAME IS ADDED BACK TO THE TOTAL INCOME OF THE A SSESSEE. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 60 9.2 IN FIRST APPEAL THE LD. CIT(A) HAS DELETED THE ADDITION OF RS. 6 36 50 000 /- OUT OF ADDITION OF RS. 7 78 00 000/- MADE BY THE A O AND SUSTAINED THE ADDITION OF RS. 1 41 50 000/- BY OBSERVING AT PAGES 60 TO 107 OF HIS ORDER AS UNDER:- 3.1.2 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND CAREFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALS O TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CA SE LAWS RELIED UPON. FACTS OF THE CASE ARE THAT NO SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT WAS DONE IN ASSESSEES CASE FOR AY 2012-13 AND THE ORIGINAL RETURN FILED ON 28.09.2012 DECLARING RS. 1 99 770/- TOTAL INCOME WAS ONLY PROCESSED U/S 143(1) OF THE ACT. VARIOUS COURTS HAVE HELD THAT PROCESSING OF RETURNS U/S 143(1) OF THE ACT IS NO A SSESSMENT. IT IS OBVIOUS THAT IF NO INCRIMINATING MATERIAL IS FOUND DURING S EARCH THEN ADDITIONS IF ANY HAVE TO BE MADE IN THE INCOME SHOWN IN THE RET URN OF INCOME ( IN THE CASE OF PENDING ASSESSMENTS WHICH ABATE ) AND TO THE COMPUTED INCOME (IN CASE OF ASSESSMENTS WERE COMPLETED ) . THUS EFFECTIVELY WHAT WAS SAID IN THE CASE OF KABUL CHAWLA WAS THAT MAKING ANY ADDITION IN THE RETURNED INCOME OR INCOME EARLIER A SSESSED WAS NOT ALLOWED IF NO MATERIAL WAS FOUND IN THE SEARCH WHIC H COULD LEAD TO AN ADDITION ON THE BASIS OF THE SAID MATERIAL. NOW IN THIS REGARD I WOULD LIKE TO DISCUSS THE ISSUE PERTAINING TO ASSESSMENT COMPLETED U/S 153A R.W.S 143(3) OF THE ACT WHEN NO INCRIMINATING DOCUM ENTS WERE FOUND FROM THE ASSESSEES PREMISES. BEFORE COMING TO THE FACTS OF THE PRESENT CASE IT WOULD BE APPROPRIATE TO MENTION SEC . 153A OF THE ACT THE RELEVANT PART OF WHICH READS AS UNDER: ' 153A. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 IN THE CA SE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUME NTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003 THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURN ISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETURN OF INCOME IN R ESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE (B) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 61 PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN W HICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MAD E : PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUC H SIX ASSESSMENT YEARS: PROVIDED FURTHER THAT ASSESSMENT OR REASSESSMENT I F ANY RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN HE PERIOD OF SIX ASSESSMENT YEA RS REFERRED TO IN THIS SUB-SECTION PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A AS THE CASE MAY BE SHALL ABATE . AS PER THE PROVISIONS OF THIS SECTION WHERE A SEARC H IS INITIATED U/S 132 OF THE ACT THE A.O SHALL ISSUE A NOTICE REQUIR ING THE PERSON SEARCHED TO FURNISH HIS RETURN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATEL Y PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE. ONCE SUCH RETURNS ARE FILED THE AO HAS TO ASSESS OR REASSESS THE TOTAL INCOME OF SUCH SIX ASSESSMENT YEARS. (EMPHASIS SUPPLIED BY ME). ( THE DECISIVE WORDS USED IN THE PROVISIONS ARE TO 'ASSESSEE OR REASSESS THE TOTAL I NCOME' ). THE A.O. IS THUS DUTY BOUND TO DETERMINE THE 'TOTAL INCOME' OF THE ASSESSEE FOR SUCH SIX ASSESSMENT YEARS AND IT IS OBVIOUS THAT 'T OTAL INCOME' REFERS TO THE SUM TOTAL OF INCOME IN RESPECT OF WHICH A PERSO N IS ASSESSABLE. THE TOTAL INCOME THEREFORE WILL COVER NOT ONLY THE INCO ME EMANATING FROM DECLARED SOURCES OR ANY MATERIAL PLACED BEFORE THE ASSESSING OFFICER BUT FROM ALL SOURCES INCLUDING THE UNDISCLOSED ONES OR BASED ON THE UNPLACED MATERIAL BEFORE THE AO. SOME RELATED JUDGMENTS A) CIT VS. KABUL CHAWLA (DELHI HIGH COURT) : COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESS MENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERI AL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH W ERE NOT B) GURINDER SINGH BAWA VS. DCIT (ITAT MUMBAI) : IN ALL CARGO GLOBAL LOGISTICS 137 ITD 287 (MUM)(SB) THE SPECIAL BENCH HELD THAT IN A CASE WHERE THE ASSESSMENT HAS ABATED THE AO CAN MAKE ADDI TIONS IN THE ASSESSMENT EVEN IF NO INCRIMINATING MATERIAL HAS B EEN FOUND. HOWEVER IN A CASE WHERE THE ASSESSMENT HAS NOT ABATED . ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 62 C) ANIL KUMAR BHATIA VS. ACIT (ITAT DELHI) : S. 153A DOES NOT AUTHORIZE THE MAKING OF A DE NOVO ASSESSMENT. WHILE UNDER THE 1ST PROVISO THE AO IS EMPOWERED TO FRAME ASSESSMENT FOR SIX YEARS UND ER THE 2ND PROVISO ONLY THE ASSESSMENTS WHICH ARE PENDING ON THE DATE OF INITIATION OF SEARCH ABATE. D) SANJAY AGGARWAL VS. DCIT (ITAT DELHI) : S. 153A: ADDITION IN A SEARCH ASSESSMENT FOR A AY WHICH IS NOT PENDING CAN BE MADE ONLY IF INCRIMINATING MATERIAL IS FOUND DURING SEARCH (I) THE LANGUAGE OF S. 153A HAS BEEN STRUCTURED IN SUCH A WAY SO AS NOT TO PERMIT THE MAKING OF ADDITION FOR THE ASS ESSMENT E) TRISHUL HI-TECH INDUSTRIES VS. DCIT (ITAT KOLKATA) : IT HAS BEEN HELD BY THE ITAT KOLKATA BENCH IN THE CASE OF LMJ INTERN ATIONAL LIMITED VS. DCIT 119 TTJ (KOL) 214 WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELATING TO ANY ASSESSMENT YEARS THE ASS ESSMENTS FOR. F) IT HAS BEEN HELD BY THE ITAT KOLKATA BENCH IN THE CASE OF LMJ INTERNATIONAL LIMITED VS. DCIT 119 TTJ (KOL) 214 WHERE NOTHING INCRIMINATING IS FOUND IN THE COURSE OF SEARCH RELA TING TO ANY ASSESSMENT YEARS THE ASSESSMENTS FOR SUCH ASSESSMENT YEARS CA NNOT BE DISTURBED U/S 153C OF THE ACT. THUS IT IS CLEAR THAT THE PROVI SIONS OF SECTION 153C OF THE ACT CANNOT BE INVOKED AUTOMATICALLY IN RESPECT O F ANY ASSESSMENT YEAR UNLESS THERE EXISTS INCRIMINATING DOCUMENTS FOR THA T PREVIOUS YEAR. THE PROVISION OF SECTION 153C OF THE ACT CANNOT BE INVOK ED ON ROUTINE INFORMATION OR ON INCOME ALREADY ACCOUNTED/DISCLOSE D IN THE ORIGINAL RETURN THE ASSESSMENT OF WHICH IS COMPLETE. IN THI S REGARD WE MAY GAINFULLY REFER TO THE DECISION OF THE MUMBAI SPECI AL BENCH OF THE ITAT IN THE CASE OF AL CARGO GLOBAL LOGISTICS LTD VS. DCIT. APART FROM ABOVE THERE ARE SEVERAL DECISIONS OF VA RIOUS JUDICIAL AUTHORITIES WHERE IT HAS BEEN HELD THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH ADD ITIONS MADE ON THE ASSESSED INCOME ARE UNSUSTAINABLE IN LAW. SO ME OF THESE DECISIONS ARE DISCUSSED IN THE FOLLOWING PARAGRAPHS : (I) IN THE CASE OF CIT VS. KABUL CHAWLA REPORTED IN 281 CTR 45 DELHI IT HAS BEEN HELD BY THE HON'BLE DELHI HIGH COURT THAT: ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT READ WITH THE PROVISOS THERETO AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS THE LEGAL POSITION THAT EMERGES IS AS UNDER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT NOTICE UNDER SECTION 153 A(L) WILL HAVE TO BE MANDATORILY ISSUED TO THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 63 PERSON SEARCHED REQUIRINGHIM TO FILE RETURNS FOR SI X AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPU TED BY THE AOS AS A FRESHEXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH OR OTHER POST-SEARCH MATERIAL OR INFORMATIO N AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOU SLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY O N THE BASIS OF SEIZEDMATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL THE CO MPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSM ENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESS MENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARAT ELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASI S OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERLY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 64 (II) IN THE CASE OF ACIT VS. PACL INDIA LTD. NEW DELHI THE HON'BLE ITAT F. BENCH DELHI HAS CONSIDERED THE VARIOUS DECISIONS O F DIFFERENT JUDICIAL AUTHORITIES AND IN PARA 10 OF THE ORDER HAS HELD TH AT: 'THEREFORE THE QUESTION ARISES WHETHER AO CAN MAKE ANY ADDITION IN THE REASSESSMENT PROCEEDINGS U/S 153(A) AFTER MAKING IN QUIRIES WHICH ARE NOT SUGGESTED BY ANY D DOCUMENTS OR ASSET SEIZED DURING THE SEARCH. IT DEPENDS ON THE NATURE OF ADDITION. THE FACTS AND CIRCUMSTAN CES OF THE ASSESSEE CLEARLY SHOW THAT NO INCRIMINATING DOCUMENT FOUND RELATING TO THE LAND DEVELOPMENT EXPENSES DEBITED IN THE BOOKS OF ACCOUNTS. NO MATER IAL WAS ON THE RECORD ON THAT BASIS WHICH INCOME OF ASSESSEE COULD BE FURTHE R ASSESSED BY ASSESSING OFFICER. THEREFORE THE ASSESSING OFFICER HAS NO JU RISDICTION TO MAKE OR TO RESORT TO ROVING AND FISHING INQUIRIES TO FIND OUT WHETHER ANY INCOME HAS ESCAPED ASSESSMENT DURING THESE REASSESSMENT PROCEE DINGS. PARTICULARLY WHEN THERE IS NO INCRIMINATING MATERIAL FOUND AND S EIZED DURING THE COURSE OF SEARCH U/S 132(1) OF THE ACT AND NOTHING IS AVAILAB LE IN RECORD TO REASSESS THE INCOME OF ASSESSEE. IN VIEW OF THE ABOVE THIS IS N OT A FIT CASE FOR MAKING THE ADDITION IN THE YEAR UNDER CONSIDERATION THE SAME ARE DELETED.' (III) IN THE CASE OF M/S IDEAL APPLIANCE COMPANY PVT. LTD . VS. DCIT CENTRAL CIRCLE-44 MUMBAI THE FOLLOWING LEGAL ISSUES WERE RAISED BEFORE THE HON'BLE ITAT'1' BENCH MUMBAI: '1. THE LD CIT (A) FAILED TO APPRECIATE THE FACT TH AT NO INCRIMINATING DOCUMENTS /EVIDENCES WERE FOUND DURING THE COURSE O F SEARCH OF THIRD PARTY AND HENCE RE-COMPUTING THE INCOME U/S I53A IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THE LD CIT (A) FAILED TO APPRECIATE THE FACT TH AT ORIGINAL ASSESSMENT WAS MADE U/S 143(3) VIDE ORDER 31ST AUGUST 2007 AFTER C ONSIDERING ALL THE DOCUMENTS AND MATERIALS ON RECORD AND DUE APPLICATION FF MIND AND HENCE RE-COMPUTING THE INCOME BY MERELY CHANGING HEAD OF INCOME FOR THE SAID YEAR UNDER THE GRAB OF SECTION 153A BASED ON SAME DOCUME NTS AND MATERIALS IS BAD IN LAW AND ORDER IS LIABLE TO BE QUASHED 3. THE LD CIT (A) ERRED IN CONFIRMING THE ACTION OF TH E AO REASSESSING THE INCOME U/S 143(3) R.W.S I53A WITHOUT APPRECIATING THE FAC T THAT ONLY PENDING ASSESSMENT ABET AND NOT THE COMPLETED ASSESSMENTS A ND HENCE THE ORDER U/S 143(3) R.W.S I53A IS BAD IN LAW AND LIABLE TO BE QU ASHED. 4. THE LD CIT (A) ERRED IN NOT ALLOWING THE DECISION O F JURISDICTIONAL HIGH COURT WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE U/ S I53A IF NO INCRIMINATING MATERIAL / DOCUMENTS ARE FOUND DURING SEARCH. THERE FORE THE ORDER OF THE CIT (A) IS BAD IN LAW.' ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 65 (IV) ON THESE ISSUES IT WAS HELD BY THE HON'BLE ITAT TH AT: '9. FROM THE ABOVE SETTLED LEGAL POSITION OF THE I SSUE THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH ADDITI ONS MADE ON THE ASSESSED INCOME ARE UNSUSTAINABLE IN LAW WE ARE OF THE CONSIDERED OPINION THAT THE ADDITIONS MADE IN THE INSTANT CASE ARE NOT SUST AINABLE AND ACCORDINGLY WE DELETE THE SAME. CONSIDERING OUR DECISION ON THE LE GAL ISSUE IN FAVOUR OF THE ASSESSEE THE OTHER GROUNDS DEMAND NO SPECIFIC ADJU DICATION. THUS ON THE LEGAL GROUND THE ASSESSEE SUCCEEDS AND REST OF THE GROUND S ARE DISMISSED AS ACADEMIC. 9.1. FURTHER REGARDING THE NON-ABATED NATURE OF T HE ASSESSMENTS RELATING TO THE AYS 2007-2008 2008-2009 AND 2009-2010 IT IS A DECIDED ISSUED THAT THE TIME LIMIT FOR THE ISSUE OF NOTICE U/S 143(2) IN THE SAID AYS SINC E EXPIRED ON 30.9.2008 AND THEY CONSTITUTE NON-ABATED ASSESSMENTS AND THEREFORE TH E ASSESSMENTS FOR THOSE AYS HAVE TO BE REASSESSED UNDER THE SPECIAL PROVISIONS IN THE LIGHT OF THE INCRIMINATING MATERIAL SEIZED DURING THE SEARCH. THE ABOVE SAID R ATIO WAS ALSO FOLLOWED BY THE TRIBUNAL IN THE CASE OF GURINDER SINGH BAWA VS. CIT (SUPRA) WHEREIN IT WAS HELD THAT WHERE THE ASSESSMENT HAD BEEN COMPLETED UNDER SUMM ARY SCHEME UNDER SECTION 143(1) AND TIME LIMIT FOR ISSU E OF NOTICE UNDER SECTION 143(2) HAD EXPIRED ON THE DATE OF SEARCH ..THERE WAS NO ASSESSMENT PENDING IN SUCH A CASE THERE WAS NO QUESTION OF ABATEMENT. THEREFORE ADDITION COULD BE MADE ONLY ON THE BASIS OF INCRIMI NATING MATERIAL FOUND DURING SEARCH.' (V) THE RELEVANT ISSUES AS ARISING OUT OF THE DECISION IN THE CASE OF KABUL CHAWLA AS UNDER: 1) WHEN THERE IS NO CONDITION IN SECTION 153A OF T HE ACT THAT ADDITIONS CANNOT BE MADE WITHOUT RELEVANCE TO OR WITHOUT NEXUS TO SEIZE D MATERIAL THEN IS IT FOR THE COURTS TO READ THAT CONDITION INTO THE PROVISIONS O F SECTION 153A OF THE ACT? THE ANSWER IS NO FOR THE REASON THAT THE APPLICATION OF SECTION 148 OF THE ACT HAS BEEN OUSTED BY THE NON-OBSTANTE CLAUSE WITH WHICH S ECTION 153A STARTS. THEREFORE EVEN IF NO INCRIMINATING MATERIAL IS FOU ND DURING SEARCH IF ANY UNDISCLOSED INCOME HAS TO BE ASSESSED FOR THE RELEV ANT 6 YEARS IT HAS TO BE IN THE PROCEEDINGS UNDER SECTION 153A OF THE ACT. A) NOW THERE ARE TWO SITUATIONS - EITHER THE ASSESS MENT WAS COMPLETE BEFORE THE SEARCH OR PENDING AT THAT TIME. IF THE ASSESSM ENT WAS COMPLETE AND IF ANY INCOME WHICH HAD ESCAPED ASSESSMENT IN THE REGU LAR ASSESSMENT IS FOUND DURING PROCEEDINGS U/S 153A WHAT IS THE AO SUPPOSE D TO DO? HE HAS NO POWER TO ACT U/S 147/148 BECAUSE OF THE NON-OBSTANTE CLAU SE. HE IS NOW PRECLUDED FROM INVOKING PROVISIONS OF SECTION 148 BECAUSE OF THE CONCLUSION DRAWN IN KABUL CHAWLA. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 66 B) THE SITUATION IS EVEN MORE SERIOUS IF A PENDING ASSESSMENT OR REASSESSMENT ABATES. WHAT IF A SHOW-CAUSE NOTICE HAD BEEN ISSUE D ON AN UNDISCLOSED INCOME PRIOR TO SEARCH? ACCORDING TO KABUL CHAWLA I F NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH THEN NO ACTION CAN BE TAKEN IN SUCH CASES ALSO. NO INTERPRETATION OF A PROVISION OF AN ACT CAN BE SUCH THAT IT LEADS TO RESULTS WHICH WERE NEVER INTENDED. BY DRAWING A CO NCLUSION THAT THE PRESENCE OF INCRIMINATING MATERIAL AND ADDITION THEREON IS NECESSARY FOR MAKING AN ADDITION WHICH IS NOT BASED ON MATERIAL FOUND DURIN G SEARCH KABUL CHAWLA HAS DONE EXACTLY THAT AND SO IT HAS TO BE HELD THAT TH E CONCLUSION SO DRAWN IS PER INCURIAM. IN THIS REGARD I DRAW SOLACE FROM THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. RAJ KUMAR ARORA [2014] 367 ITR 517(ALL.) AND THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF FILATEX INDIA LTD. V. CIT[2014] 49 TAXMANN.COM 465(DELHI) BOTH OF WHICH PRECEDE THE DECISION IN THE CASE OF KABUL CHAWLA. 2) THERE IS ANOTHER SITUATION WHICH HAS NOT BEEN AN TICIPATED IN KABUL CHAWLA. IN THAT CASE THE HONBLE HIGH COURT PROCEEDED ON THE GROUND S THAT PROCESSING OF A CASE U/S 143(1) WAS ALSO ASSESSMENT. IT ACCORDINGLY HEL D THAT EVEN IF THE RETURNS HAVE BEEN PROCESSED U/S 143(1) IT WILL BE TREATED AS IF THE ASSESSMENTS ARE COMPLETE. NOW AFTER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DEPUTY COMMISSIONER OF INCOME-TAX V. ZUARI ESTATE DEVELOPM ENT & INVESTMENT CO. LTD. [2015] 373 ITR 661 (SC) AND ASSISTANT COMMISSIONER OF INCOME-TAX V. RAJESH JHAVERI STOCK BROKERS P. LTD. [2007] 291 ITR 500(SC) IT IS CLEAR THAT PROCESSING OF A CASE U/S 143(1) IS NOT AN ASSESSMEN T WHICH FACT HAS BEEN ADMITTED BY THE DELHI HIGH COURT IN THE CASE OF INDU LATA RANGWALA V. DEPUTY COMMISSIONER OF INCOME-TAX WP(C) 1393/2002 IN THEIR DECISION DATED 18.05.2016. 3) HENCE THERE NOW OCCURS A THIRD CATEGORY OF CA SES WHICH HAVE NEITHER BEEN COMPLETED NOR ARE PENDING ON THE DATE OF SEARCH. KA BUL CHAWLA IS SILENT ON THIS SITUATION PERHAPS BECAUSE IT WAS NOT ENVISAGED AT THAT TIME. IN VIEW OF THESE FACTS AND LEGAL POSITION THAT THE PREMISE DEVELOPED IN KABUL CHAWLA THAT ADDITIONS CAN BE MADE IN THE COMPLETED OR ABATED ASSESSMENTS ONLY IF THERE IS INCRIMINATING MATERIAL IN A PROCEEDING U/S 153A CANNOT AND WILL NOT APPLY TO SUCH A SITUATION. 4) NOW WE COME TO THE QUESTION OF WHETHER IT IS NECESSARY TO HAVE INCRIMINATING MATERIAL IN ALL THE 6 YEARS FOR AN ADDITION TO ME M ADE ON ISSUES NOT COVERED BY SEARCH. THOUGH THERE IS AN ATTEMPT TO INTERPRET KAB UL CHAWLA IN A WAY THAT INCRIMINATING MATERIAL IS REQUIRED IN ALL THE 6 YEA RS THIS INTERPRETATION IS INCORRECT BECAUSE: ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 67 WHILE GIVING THESE DECISIONS THE HON'BLE ITAT MUM BAI AS WELL AS THE HON'BLE ITAT DELHI BENCH HAS REFERRED TO THE DECISION OF T HE HON'BLE MUMBAI HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIM ITED VS. DCIT CENTRAL CIRCLE- 44 MUMBAI AND THE DECISION OF HON'BLE DELHI HIGH C OURT IN THE CASE OF CIT VS. KABUL CHAWLA IN ITA NO. 707/2014 DATED 22.8.2015 . HERE IT IS PERTINENT TO MENTION THAT THE DEPARTMENT HAS NOT ACCEPTED THE DE CISIONS OF HON'BLE MUMBAI HIGH COURT IN THE CASE OF M/S ALL CARGO GLOB AL LOGISTICS AS WELL AS CONTINENTAL WAREHOUSING (NHAVA SHEVA) LTD. AND SLP HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT. THE HON'BLE SUPREME COURT HA S GRANTED LEAVE VIDE ORDER DATED 12.10.2015 AS REPORTED IN 64 TAXMANN.COM 34 (S.C.). SIMILARLY IN THE CASE OF KABUL CHAWLA SLP HAS ALSO BEEN FILED. NOW AFTER THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF DEPUTY COMMISSIONER OF INCOME-TAX V. ZUARI ESTATE D EVELOPMENT & INVESTMENT CO. LTD. [2015] 373 ITR 661 (SC) AND ASSISTANT COMMISSIONER OF INCOME-TAX V. RAJESH JHAVERI STOCK BROKERS P. LT D. [2007] 291 ITR 500(SC) IT IS CLEAR THAT PROCESSING OF A CASE U/S 143(1) I S NOT AN ASSESSMENT WHICH FACT HAS BEEN ADMITTED BY THE DEL HI HIGH COURT IN THE CASE OF INDU LATA RANGWALA V. DEPUTY COMMISSIONER OF INCOME - ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 68 TAX WP(C) 1393/2002 IN THEIR DECISION DATED 18.05.2016. HENCE THERE NOW OCCURS A THIRD CATEGORY OF CASES WHICH HAVE N EITHER BEEN COMPLETED NOR ARE PENDING ON THE DATE OF SEARCH. KABUL CHAWLA IS SILENT ON THIS SITUATION PERHAPS BECAUSE IT WAS NO T ENVISAGED AT THAT TIME. IT IS MY CONTENTION THAT THE PREMISE DEVELOP ED IN KABUL CHAWLA THAT ADDITIONS CAN BE MADE IN THE COMPLETED OR ABAT ED ASSESSMENTS ONLY IF THERE IS INCRIMINATING MATERIAL IN A PROCEE DING U/S 153A CANNOT AND WILL NOT APPLY TO SUCH A SITUATION. NOW WE COME TO THE QUESTION OF WHETHER IT IS NECESS ARY TO HAVE INCRIMINATING MATERIAL IN ALL THE 6 YEARS FOR AN AD DITION TO ME MADE ON ISSUES NOT COVERED BY SEARCH. THOUGH THERE IS AN AT TEMPT TO INTERPRET KABUL CHAWLA IN A WAY THAT INCRIMINATING MATERIAL I S REQUIRED IN ALL THE 6 YEARS THIS INTERPRETATION IS INCORRECT BECAUSE : A) THIS PROPOSITION HAS NOT BEEN SPECIFICALLY SPELT OUT IN THE KABUL CHAWLA CASE; B) THE DELHI HIGH COURT IN THE CASE OF CIT V. CHETAN DAS LACHMAN DAS [2012] 211 TAXMAN 61 (DEL.)/[2012] 254 CTR 392 (DEL.) HAS SPECIFICALLY RAISED AND THEN ANSWERED THE QUESTION IN FAVOUR OF THE REVENUE. IT HAS STATED THAT ADDITIONS ON NON-SEARCH ISSUES CAN BE MADE EVEN IF THERE IS INCRIMINATING MATERIAL IN EVEN ONE YEAR. THIS CASE IS EXTREMELY IMPORTANT FOR US. SIMILAR SENTIMENTS HAVE BEEN EXPRESSED IN THE CASE OF CIT V. ANIL KUMAR BHATIA [2013] 352 ITR 493 (DEL) WHERE ONLY ONE UNSIGNED DOCUMENT DATED 10.02.2003 SHOWING A LOAN OF RS. 1 5 0 000/- WAS FOUND DURING SEARCH CONDUCTED ON 13.12.2005. THE HO NBLE HIGH COURT HELD THAT THIS MATERIAL WAS ENOUGH TO JUSTIFY ADDITIONS IN ALL THE 6 YEARS. C) RECENTLY THE KERALA HIGH COURT IN SUNNY JACOB JEWELLERS AND WEDDING CENTRE V. DEPUTY COMMISSIONER OF INCOME-TAX [2014] 362 ITR 664 (KER) HAS ALSO VERY CATEGORICALLY STATED THAT INCRIMINATING MATERIAL FOUND DURING SEARCH IS NOT NECESSARY IN ALL THE 6 YEARS FOR ADDITIONS TO BE MADE ON OTHER ISSUE S. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 69 THEREFORE IN VIEW OF ABOVE DISCUSSION WITH RE GARD TO THE PROVISIONS OF SEC 153A OF THE ACT IT IS SEEN THAT FROM 01.06. 2003 ONWARDS THE NUMBER OF YEARS FROM WHICH ASSESSMENTS COULD BE FRA MED AFTER SEARCH WERE REDUCED FROM 10 TO SIX. SECTION 153A OF THE AC T HAS MANDATED THAT THERE HAVE TO BE 6 SEPARATE ASSESSMENTS INSTEA D OF A BLOCK ASSESSMENT. IT ALSO STARTED WITH A NON-OBSTANTE CLAUSE WHICH STATED THAT THE OPERATION OF SECTIONS 139 147 148 149 151 AND 153 WAS OUSTED. IN OTHER WORDS WHEN AN ASSESSMENT WAS BEING COMPLETED U/S 153A THE SECTIONS MENTIONED ABOVE COULD NOT BE INVOKED. THE SECTION DID NOT REPEATS AND DID NOT MENTION THAT FOR MAKING AN ASSESSMENT U /S 153A OF THE ACT IT WAS NECESSARY TO HAVE SOME INCRIMINATING MATER IAL FOUND DURING SEARCH. IN THE CASE OF KABUL CHAWLA IT WAS STATED THAT ASSESSMENTS HAD TO BE COMPLETED U/S 153A OF THE ACT THE MOMENT A SEARCH HAS TAKEN PLACE. THIS IS A COMMON GROUND IN ALL JUDICIAL PRONOUNCEMENTS AND NOBODY HAS ANY OBJECTION TO THE SAID CONCLUSION. IT WAS ALSO STATED IN THE ABOVE CASE THAT THOUGH NOT PRESCRIBED IN THE ACT BUT ADDITIONS HAD TO BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH. THE AD DITIONS COULD NOT BE ARBITRARY. THIS CONCLUSION AND OTHERS ARRIVED AT IN PARA 37 OF THE JUDGMENT STARTED THE PRESENT CONTROVERSY. IT IS OBV IOUS THAT IF NO INCRIMINATING MATERIAL IS FOUND DURING SEARCH THEN ADDITIONS IF ANY HAVE TO BE MADE IN THE INCOME SHOWN IN THE RETURN O F INCOME ( IN THE CASE OF PENDING ASSESSMENTS WHICH ABATE ) AND TO THE COMPUTED INCOME ( IN CASE OF ASSESSMENTS WERE COMPLETE) . THUS EFFECTIVELY WHAT WAS SAID IN THE CASE OF KABUL CHAWLA WAS THAT MAKING ANY ADDITION IN THE RETURNED INCOME OR INCOME EARLIER ASSESSED WAS NOT ALLOWED IF NO MATERIAL WAS FOUND IN THE SEARCH WHICH COULD LEAD T O AN ADDITION ON THE BASIS OF THE SAID MATERIAL. THEREFORE FACTS OF CASE LAWS RELIED UPON BY THE ASSESS EE ARE QUITE DISTINGUISHABLE WITH THAT OF THE PRESENT CASE. IN V IEW OF THESE FACTS ASSESSEES CONTENTION IS NOT CORRECT THAT AO WAS NOT JUSTIFIED IN REASSESSING THE COMPLETED ASSESSMENT. ASSESSEES AP PEAL FAILS IN GR NO 1. 3.2 GROUND NO. 2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO ERRED IN MAKING ADDITION OF RS. 7 78 00 000/- BY APPLYING THE P ROVISIONS OF SECTION 56(1) OF ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 70 INCOME TAX ACT 1961 TREATING THE SHARE CAPITAL AND PREMIUM THEREON RECEIVED FROM VARIOUS PVT LTD COMPANIES AS INCOME OF THE ASSESSEE. GROUND NO. 3: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO ERRED IN HOLDING THAT THE RECEIPT OF SHARE CAPITAL AND PREMIUM DURI NG THE YEAR FROM VARIOUS COMPANIES IS NOT JUSTIFIABLE AND PART OF A WELL PLANNED EXERCI SE OF INTRODUCING UNACCOUNTED MONEY IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM MORE SO WHEN THE ASSESSEE WAS NO CAPABLE TO EARN SUCH HUGE UNDISCLOSED INCOME. 3.2.1 SUBMISSION MADE : RELEVANT EXTRACTS OF WHICH AR OF THE ASSESSEE ARE REPRODUCED HERE AS UNDER: .. .. 1) DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALLOTTED 10 30 000 EQUITY SHARES OF RS. 10 EACH TO VARIOUS COMPANIES A T A PREMIUM OF RS. 40 & 90 ON VARIOUS DATES DETAIL OF WHICH IS AS UNDE R: - S.N. NAME NO. OF SHARES ALLOTED/ APPLIED DURING THE YEAR AMOUNT ADJUSTED AGAINST SHARE CAPITAL RATE PER SHARE AMOUNT ADJUSTED AGAINST SHARE PREMIUM RATE OF PREMIUM PER SHARE ISSUE PRICE OF THE SHARE TOTAL CONSIDERATION RECEIVED 1. ALLIANCE TRADECOM PVT. LTD 3 18 000 31 80 000 10 1 27 20 000 40 50 1 59 00 000 2. EVERSHINE SUPPLIERS PVT. LTD 1 86 000 18 60 000 10 74 40 000 40 50 93 00 000 EVERSHINE SUPPLIERS PVT. LTD 17 000 1 70 000 10 15 30 000 90 100 17 00 000 3. MAYUKH VINIMAY PVT. LTD 1 55 000 15 50 000 10 1 39 50 000 90 100 1 55 00 000 4. REGENT BARTER PVT. LTD 1 79 000 17 90 000 10 1 61 10 000 90 100 1 79 00 000 5. REGENT DEALERS PVT. LTD 1 40 000 14 00 000 10 1 26 00 000 90 100 1 40 00 000 6. ROSE SUPPLIERS PVT. LTD 35 000 3 50 000 10 31 50 000 90 100 35 00 000 TOTAL 10 30 000 1 03 00 000 6 75 00 000 7 78 00 000 2) DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS TO PROVE THEIR IDENTITY OF SHAR EHOLDERS CREDITWORTHINESS OF SHAREHOLDERS AND GENUINENESS OF TRANSACTION WITH THEM: - ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 71 NAME OF SHAREHOLDER PARTICULARS OF DOCUMENTS SUBMITTED COPY AT PB PAGE ALLIANCE TRADECOM PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 114 - 116 117 118-119 120-121 122-123 124-133 134 EVERSHINE SUPPLIERS PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 135 - 138 139-140 141 142-145 146-147 148-149 150-160 161 MAYUKH VINIMAY PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. 162 - 171 172 173 174-175 176-177 178-179 180-189 REGENT BARTER PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 190 - 200 201 202 203-205 206-207 208 209-219 220 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 72 REGENT DEALERS PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 221 - 230 231 232 233-236 237-238 239-240 241-250 251 ROSE SUPPLIERS PVT. LTD SHARE APPLICATION CONTAINING THE NAME/ADDRESS/PAN O F PARTY DETAIL OF PAYMENT RECEIVED ETC. COPY OF BOARD RESOLUTION. COPY OF PAN CARD OF PARTY COPY OF BANK STATEMENT SHOWING THE ENTRY OF PAYMENT MADE TO ASSESSEE. DECLARATION OF SOURCE OF FUNDS WITH PARTY. COPY OF ACK. OF ITR AND COMPUTATION OF AY 2012-13. COPY OF AUDIT REPORT AND AUDITED BALANCE SHEET ALONG WITH ANNEXURE OF 31.03.12. COPY OF REGISTRATION CERTIFICATE ISSUED BY ROC. 252 - 253 254 255 256-257 258 259-260 261-269 270 3. ALL THE SHARE CAPITAL/SHARE APPLICATION WAS RECEI VED THROUGH A/C PAYEE CHEQUES AND VERIFIABLE FROM BANK STATEMENT OF ASSESSEE AS W ELL AS BANK STATEMENT OF THE PARTY. THE ONUS U/S 68 OF THE ASSESSEE IS TO PROVE THE IDENTITY CAPACITY AND GENUINENESS OF THE TRANSACTIONS HAS BEEN DISCHARGED WHICH MAY BE SEEN FROM THE FOLLOWINGS:- I) IDENTITY:- THE ASSESSEE PROVED THE IDENTITY OF ALL THE COMPA NIES BY FILING THE SHARE APPLICATION RECEIVED FROM THE PARTIES AND THE PARTI ES ARE DULY IN EXISTENCE AND THE EXISTENCE OF THE PARTIES CAN BE VERIFIED FROM T HE OFFICIAL WEBSITE OF MCA. THE LD. AO ALSO NOT DOUBTED THE IDENTITY OF THE ABOVE NA MED COMPANIES. FURTHER THE ASSESSMENT OF AY 2009-10 (COPY AT PB PAGE 284 TO 285 298 TO 299 312 TO 313 326 TO 328 340 TO 342 AND 355 TO 357 ) AND AY 2013-14 OF THESE COMPANIES WERE ALSO COMPLETED AT RETURNED IN COME. IN THE CASE OF M/S MAYUKH VINMAY PVT LTD ORIGINAL ASSESSMENT U/S 148 W AS MADE FOR AY 2009- 10 (COPY AT PB PG 312 TO 313). LD CIT III KOLKOTTA PASS ED ORDER U/S 263 DIRECTING TO PASS THE AFRESH ORDER FOR AY 2009-10 (CO PY AT PB PG 457 TO 460) AND IN PURSUANCE TO ORDER U/S 263 THE SAME AO PASSED ORDER U/S 143(3) R.W.S. 263 OF INCOME TAX ACT 1961 DATED 21.0 3.2014 AT TOTAL INCOME OF RS. 10 55 58 280/- (COPY OF ORDER AT PB PA GE 461 TO 470) THE ASSESSMENT OF AY 2013-14 WAS COMPLETED BY THE SAME AO OF ALL THE ABOVE COMPANIES WHO COMPLETED THE ASSESSMENT OF THE ASSE SSEE IN THE SAME MONTH. THE COPIES OF ASSESSMENT ORDER ARE AT PB PG 372 TO 374 388 TO 390 404 TO 406 422 TO 424 438 TO 440 454 TO 456. IT IS FURTHER RELEVANT TO MENTION HERE THAT THE DEPARTMENT ALSO CARRIED OUT T HE SURVEY OPERATIONS OVER THESE PARTIES WHICH ALSO PROVE THE EXISTENCE OF THE SE PARTIES. II) CREDITWORTHINESS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 73 ALL THE COMPANIES ARE INCOME TAX ASSESSEE AND DULY FILING THE INCOME TAX RETURN AND BALANCE SHEETS. THERE IS SUFFICIENT SOUR CE OF FUNDS WITH ALL THE COMPANIES TO INVESTMENT SHARE CAPITAL/SHARE APPLICA TION IN THE ASSESSEE COMPANY. THE ASSESSEE SUBMITTED THE COPIES OF BANK ACCOUNT/DECLARATION OF SOURCE OF FUNDS WITH THEM OF INVESTOR COMPANIES. TH E BANK STATEMENT SHOWS THE HUGE TRANSACTION OF HIGH VALUE IN THE ACCOUNTS OF T HE COMPANIES. THE CHART SHOWING THE AMOUNT INVESTED BY THE ABOVE NAMED COMP ANIES IN ASSESSEE COMPANY VIZ A VIZ OWN FUNDS WITH THE INVESTOR COMPA NY ARE AS UNDER: - NAME OF THE INVESTOR COMPANY AMOUNT INVESTED IN ASSESSEE COMPANY SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2012 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2011 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2009 ALL IANCE TRADECOM PVT. LTD 1 59 00 000 11 05 42 868 11 07 03 338 11 07 00 991 EVERSHINE SUPPLIERS PVT. LTD 1 10 00 000 10 41 99 989 10 42 52 807 10 42 50 971 MAYUKH VINIMAY PVT. LTD 1 55 00 000 10 82 38 912 10 83 03 077 10 83 01 020 REGENT BARTER PVT. LTD 1 79 00 000 10 51 11 109 10 52 03 352 10 52 01 041 REGENT DEALERS PVT. LTD 1 40 00 000 9 33 85 686 9 34 53 097 9 34 50 971 ROSE SUPPLIERS PVT. LTD 35 00 000 10 34 93 371 10 35 53 105 10 35 51 183 FROM THE ABOVE CHART IT IS CLEAR THAT ALL THE INVES TOR COMPANIES WERE HAVING THEIR OWN SHARE CAPITAL AND RESERVE & SURPLUS WHICH WERE MORE THAN TO THE AMOUNT INVESTED IN THE ASSESSEE COMPANY. THE ABOVE CHART SHOWS THAT TH E INVESTOR COMPANIES WERE HAVING THEIR OWN INDEPENDENT FUNDS AND HAVING THEIR INDEPENDENT SOURCE TO INVEST IN THE SHARES OF THE ASSESSEE COMPANY. APART FROM THE INVESTMENT MADE IN THE SHARES OF ASSESSEE GROUP THE INVESTOR COMPANIES WERE ALSO HA VING INVESTMENTS IN SHARES OF OTHER COMPANIES OR LOANS & ADVANCES TO OTHER PARTIE S THEREFORE FROM THE BANK STATEMENT AS WELL AS FINANCIALS STATEMENTS OF THE I NVESTOR COMPANIES THEIR CREDITWORTHINESS IS DULY PROVED. FURTHER ASSESSMENT OF ABOVE NAMED COMPANIES FOR AY 2009-10 (EXCEPT M/S MAYUKH VINTRADE PVT. LTD) WAS COMPLETED BY THE DEPARTMENT WHEREIN THE SOURCE OF FUNDS WITH THESE COMPANIES WH EREBY THE NET WORTH OF THESE COMPANIES WAS CREATED WAS ACCEPTED BY THE DEPARTMEN T. IN THE CASE OF M/S MAYUKH VINMAY PVT LTD ORIGINAL ASSESSMENT U/S 148 WAS MADE FOR AY 2009-10 (COPY AT PB PG 313 TO 313). LD. CIT III KOLKOTTA PASSED ORDER U/ S 263 DIRECTING TO PASS THE AFRESH ORDER FOR AY 2009-10 (COPY AT PB PG 457 TO 460) AND IN PURSUANCE TO ORDER U/S 263 THE SAME AO PASSED ORDER U/S 143( 3) R.W.S. 263 OF INCOME TAX ACT 1961 DATED 21.03.2014 AT TOTAL INCOME OF RS. 10 55 58 280/- (COPY OF ORDER AT PB PAGE 461 TO 470). THIS SHOWS THAT THE INVES TOR COMPANIES WERE HAVE THEIR OWN INDEPENDENT FUND TO INVEST. III) GENUINENESS THE ASSESSEE SUBMITTED THE SHARE APPLICATION FORMS RECEIVED FROM ABOVE COMPANIES AGAINST THE SHARE APPLICATION RECEIVED FR OM THE COMPANIES. THE SHARE APPLICATION IS SUPPORTED BY BOARD RESOLUTION PASSED IN THE INVESTOR COMPANIES. THE ASSESSEE COMPANY HAS ALLOTTED THE SHARES TO THE INVESTOR COMPANIES. THE PROPER RETURNS WERE FILED BEFORE THE ROC AGAINST AL LOTMENT OF THE SHARES TO THESE COMPANIES. FURTHERMORE THE DEPARTMENT HAS CARRIED OUT INTENSIVE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCRIMINATI NG MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST THE SHARE ALLOTMENT WAS OWN MONEY OF THE COMPANY. SHARES CERTIFICATES WERE ISSUED AGAINST TH E ALLOTMENT OF THE SHARES TO ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 74 THESE COMPANIES WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE COMPANY OR ITS DIRECTOR OR EMPLOYEES. THIS FACT SHOWS THAT AFTER ALLOTMENT OF SHARES BY THE APPELLANT COMPANY SHARE CERTIFICATES WERE DISPATCHE D TO THE SUBSCRIBER COMPANIES. NO ANY ENTRY IN BOOKS OF ACCOUNT OR DOCU MENT WAS FOUND SHOWING PAYMENT OF CASH TO THESE INVESTOR COMPANIES AGAINST RECEIPT OF CHEQUES FROM THESE COMPANIES AGAINST ALLOTMENT OF SHARES. THEREF ORE THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. THE DEPARTMENT ALSO CARRIED OUT SURVEY OVER THE INVESTOR COMPANIES (EXCEPT MAYUKH VINTRADE PVT. LTD ) AND DURING THE COURSE OF SURVEY NO MATERIAL WAS FOUND TO PRESUME THAT THE IN VESTMENT MADE BY THEM IS NOT GENUINE. 4. THE LD. AO HAS ALSO NOT DOUBTED THE IDENTITY OF T HE SHAREHOLDERS AND HE ONLY DOUBTED THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS ON THE BASIS OF CERTAIN INQUIRIES CARRIED OUT BY INVESTIGATION W ING MODUS OPERANDI OF WHICH HAS BEEN DISCUSSED BY LD. AO IN PARA 10 TO 16 OF ASS ESSMENT ORDER AT PAGE 5 TO 15 OF ASSESSMENT ORDER. FROM EXAMINATION OF FINDING OF LD. AO YOUR HONOR WILL FIND THAT THE ENTIRE DISCUSSION IS BASED ON THE INV ESTIGATION MADE BY INVESTIGATION WING AND NO INDEPENDENT INQUIRIES WER E MADE BY LD. AO AT HIS OWN. FURTHER WHATEVER MATERIAL/INQUIRIES WHICH IS B EING DISCUSS BY LD. AO AND ON WHICH THE LD. AO IS RELYING WERE COLLECTED BEHIND THE BACK OF THE ASSESSEE AND THE SAME WAS NEVER BROUGHT IN KNOWLEDGE OF THE ASSESSEE AND OPPORTUNITY TO CONFRONT THE MATERIAL WAS NOT PROVIDED TO THE AS SESSEE. THE FINDING OF LD. AO ON SUCH MODUS OPERANDI AND SUBMISSION OF THE ASSESS EE ON SUCH IS AS UNDER: - A) FINDING OF LD. AO (PARA 10): - ON EXAMINATION BY THE INVESTIGATION WING IT IS CLEA RLY FOUND THAT SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS AT TIME AS MANY AS SIX ACCOUNTS IN A SINGLE DAY (OR AT THE MOST TWO TO THREE DAYS). MAJO R EXERCISE HAS BEEN DONE IN TWO OF THE SIX COMPANIES ALLIANCE TRADECOM PVT. LT D AND EVERSHINE SUPPLIERS PVT. LTD. SUBMISSION OF ASSESSEE: - FROM THIS FINDING NO WHERE IT PROVES THAT THE FUNDS WERE INTRODUCED IN SUCH COMPANIES BY THE ASSESSEE COMPANY. WHATEVER AMOUNT RECEIVED BY THE ASSESSEE WAS RECEIVED THROUGH A/C PAYEE CHEQUES AND SOURCE WITH INVESTOR COMPANIES WAS ALSO PROVED. THE INVESTOR COMPANY HAS ALSO CONFIRMED THE INVESTMENT IN SHARES OF ASSESSEE COMPANY MADE BY TH EM. IT IS RELEVANT TO MENTION HERE THAT IF SOMEONE IS INVESTING THE MONEY IN THE ASSESSEE COMPANY HE MUST BE HAVING THE INFLOW OF MONEY FROM SOME SOURCE . WHAT IS THE SOURCE OF INFLOW WITH THE INVESTOR COMPANY AND HOW IT IS MANA GING ITS AFFAIRS IS NOT CONCERN OF THE ASSESSEE. IN THE CASE OF THE ASSESSE E IT HAS FULL FILLED ITS LEGAL OBLIGATION. THE ASSESSEE HAS PROVED THE SOURCE OF M ONEY WITH THE INVESTOR COMPANIES. THUS IN THE CASE OF THE ASSESSEE THE SOU RCE OF MONEY IS WELL PROVED. FURTHER THE TRANSFER OF FUNDS FROM SEVERAL ACCOUNTS IN SAME DAY OR WITHIN COUPLE OF DAYS DOES NOT AUTOMATICALLY LEAD TO THE CONCLUSI ON OF THAT THE SAME WERE MANAGED AFFAIRS OF THE ASSESSEE GROUP. IT IS RELEVA NT TO MENTION HERE THAT IF SOMEONE IS GIVING MONEY TO OTHER ONE THERE IS NO CO MPULSION THAT SUCH FUNDS SHOULD REMAIN IN HIS A/C FOR SOME PERIOD AND NO PRU DENT BUSINESS MAN WILL KEEP IDEAL THE FUNDS IN ITS BANK A/C. THE TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS IN A SINGLE DAY OR WITHIN FEW DAYS WAS BEC AUSE OF THE REASON THAT BEFORE INFLOW OF FUNDS WITH THE CONCERNING PARTY TH E OUTFLOW OF FUND WAS PREDETERMINED BUT THE SAME DOES NOT LEAD TO CONCLUD E THAT THE SAME WERE OWN MANAGED FUNDS OF THE ASSESSEE. FURTHER IF THE SOUR CE OF INVESTMENT IN THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 75 HANDS OF INVESTOR COMPANY IS DOUBTFUL THAN THE ADDI TION CAN BE MADE IN THE HANDS OF INVESTOR COMPANY NOT IN THE HANDS OF THE A SSESSEE. THE ASSESSEE HAS NO ONUS TO PROVE SOURCE OF SOURCE. RELIANCE IS PLACE D ON THE FOLLOWING DECISIONS. I) CIT VS JAI KUMAR BAKLIWAL (2014) 101 DTR (RAJ) 37 7 : (2014) 267 CTR (RAJ) 396. HEAD NOTES OF THE CASE IS AS UNDER:- INCOME FROM UNDISCLOSED SOURCESCASH CREDITGENUINE NESS AND CREDITWORTHINESS OF TRANSACTION ADDITION VALIDI TY ASSESSEE WAS CARRYING ON BUSINESS OF FINANCE AND EARNING INCOME BY WAY OF INTERESTDURING COURSE OF WORK OF FINANCING AND MONEY LENDING HAD RAISED LOA NS FROM CERTAIN PARTIESAS PER AO MOST OF PARTIES WERE RELATIVES OF ASSESSEE AN D THEY WERE SAID TO BE UNSECURED LOANSIT HAD BEEN CLAIMED BY AO THAT IN MO ST OF CASES THOUGH AMOUNT WAS RECEIVED BY ACCOUNT PAYEE CHEQUE AND MOS T OF CREDITORS WERE ASSESSED TO INCOME TAX ACT AND HAD EVEN PROVIDED THE IR PERMANENT ACCOUNT NUMBER BUT ON DESIRE OF AO OF PRODUCING SAID PARTIES NONE OF PARTIES WERE ABLE TO PROVE SOURCE OF AMOUNT ADVANCED TO ASSESSEETHUS AO MADE ADDITION U/S 68 AS INCOME FROM UNDISCLOSED SOURCESCIT(A) DELETE D ADDITION HOLDING THAT SOURCE OF CASH CREDITORS WAS NOT REQUIRED TO BE PRO VED BY ASSESSEE ONCE IDENTITY CAPACITY AND GENUINENESS STANDS PROVEDIT AT DISMISSED REVENUES APPEALHELD ALL CASH CREDITORS HAD AFFIRMED IN THE IR EXAMINATION THAT THEY HAD ADVANCED MONEY TO ASSESSEE FROM THEIR OWN RESPECTIV E BANK ACCOUNTSTHEREFORE WHEN THERE WAS CATEGORICAL FIND ING EVEN BY AO THAT MONEY CAME FROM RESPECTIVE BANK ACCOUNTS OF CREDITORS WH ICH DID NOT FLOW IN SHAPE OF MONEY THEN SUCH ADDITION COULD NOT BE SUSTAINED A ND HAD BEEN RIGHTLY DELETED BY BOTH TWO APPELLATE AUTHORITIESTHERE WAS NO CLIN CHING EVIDENCE IN PRESENT CASE NOR AO HAD BEEN ABLE TO PROVE THAT MONEY ACTUAL LY BELONGED TO NONE BUT ASSESSEE HIMSELFACTION OF AO WAS BASED ON MERE SUSPI CIONACCORDINGLY ITAT AFTER APPRECIATION OF EVIDENCE HAD RIGHTLY DISMISSE D REVENUES APPEALIT WAS PURE FINDING OF FACT REVENUES APPEAL DISMISSED HELD: ALL CASH CREDITORS HAD AFFIRMED IN THEIR EXAMINATION THAT THEY HAD ADVANCED MONEY TO ASSESSEE FROM THEIR OWN RESPECTIVE BANK AC COUNTS. THEREFORE WHEN THERE WAS CATEGORICAL FINDING EVEN BY AO THAT MONEY CAME FROM RESPECTIVE BANK ACCOUNTS OF CREDITORS WHICH DID NOT FLOW IN SHAPE OF MONEY THEN SUCH ADDITION COULD NOT BE SUSTAINED AND HAD BEEN RIGHTLY DELETED BY BOTH TWO APPELLATE AUTHORITIES. THERE WAS NO CLINCHING EVIDENCE IN PRE SENT CASE NOR HAD AO BEEN ABLE TO PROVE THAT MONEY ACTUALLY BELONGED TO NONE BUT ASSESSEE HIMSELF. ACTION OF AO WAS BASED ON MERE SUSPICION. ACCORDINGLY ITAT AFTER APPRECIATION OF EVIDENCE HAD RIGHTLY DISMISSED REVENUES APPEAL. WH EN THERE WAS APPRECIATION OF EVIDENCE THEN IT WAS PURELY FINDING OF FACT AND NO QUESTION MUCH LESS SUBSTANTIAL QUESTION OF LAW COULD BE SAID TO EMERGE OUT OF SAID ORDER OF THE TRIBUNAL. THERE WAS NOT ANY INFIRMITY OR PERVERSITY IN THE ORDER OF THE ITAT SO AS TO CALL FOR ANY INTERFERENCE. REVENUES APPEAL DISMI SSED. II) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC ) THE ASSESSEE HAD GIVEN NAMED AND ADDRESSES OF THE C ASH CREDITORS WHO WERE INCOME TAX ASSESSEES. REVENUE APART FROM ISSUING SU MMON U/S 131NOTICES TO CREDITORS DID NOT PURSUE THE MATTER FURTHER- IT DI D NOT EXAMINE CREDITWORTHINESS OF THE CREDITORS- ASSESSEE COULD NOT UNDER THE CIR CUMSTANCES DO ANYTHING FURTHER. HELD THAT THE ADDITIONS WERE RIGHTLY DELET ED. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 76 III) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008) 8 DTR (RAJ) 199. ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDITS THE ASSESSEES ONUS STANDS DISCHARGED AND THE ASSES SEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAV E ACQUIRED THE MONEY DEPOSITED WITH HIM. HELD THAT MERELY BECAUSE THE DE POSITORS EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCEPTABLE TO THE AO IT CANNOT BE PRESUMED THAT THE DEPOSITS MADE BY THE CREDITORS IS MONEY BELONGI NG TO THE ASSESSEE ITSELF. IV) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 ITR 281 (RA J) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CONFIRMS THE LOANS. B) FINDING OF LD. AO (PARA 11): - IT CAN BE EASILY SEEN THAT THERE ARE CROSS-HOLDINGS AMONGST SIX COMPANIES BUT MAJOR SHAREHOLDING IS OF A 7TH COMPANY I.E. MAYUK H VINTRADE PVT. LTD. THUS THIS LATTER COMPANY IS THE HOLDING COMPANY OF 6 COM PANIES NAMED EARLIER. SURPRISINGLY OR INCIDENTALLY THE HOLDING COMPANY I S ENTIRELY OWNED BY INDIVIDUALS OR HUFS OF CHHABRA FAMILIES. IT IS ALL CLEAR THAT THE WEBS OF COMPANIES THROUGH WHICH TRANSACTIONS HAVE BEEN ROUT ED TO CREATE A CORPORATE VEIL SUBMISSION OF ASSESSEE: - ADMITTEDLY THE ASSESSEE GROUP WERE ENTIRELY OWNING T HE SHARES OF THE COMPANY NAMING M/S MAYUKH VINTRADE PVT. LTD AND THIS COMPAN Y IS MAJOR SHAREHOLDER IN OTHER COMPANIES WHEREFROM THE SUBSTANTIAL AMOUNT OF SHARE CAPITAL WAS RECEIVED TO THE ASSESSEE GROUP. BUT THIS SHAREHOLDI NG PATTERN IS NOT OF THE YEAR UNDER CONSIDERATION AND THE SAME WAS ALSO AS ON 31. 03.2011 TOO. RATHER THIS PROVES THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION. HERE THE MOOT QUESTION IS FROM WHERE THE INFLOW OF THE FUNDS WAS- WHETHER IT WAS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY OR FROM THE INDEPEND ENT FUNDS OF THE INVESTOR COMPANIES. FURTHER HOLDING OF SHARE CAPITAL BY DIR ECTOR OR THEIR FAMILY MEMBERS OF THE ASSESSEE COMPANY IN ONE OF THE COMPANY WHO I S HOLDING THE SHARES IN INVESTOR COMPANIES DOES NOT MEAN THAT THE FUNDS IN SUCH INVESTOR COMPANIES WERE GIVEN BY THE ASSESSEE COMPANY MORE SO WHEN THE FUNDS FROM SUCH COMPANIES IS AVAILABLE WITH THEM FROM 31.03.2009 I. E. MUCH PRIOR TO THE INVESTMENT MADE IN THE ASSESSEE COMPANY AND ASSESSM ENT OF AY 2009-10 OF SUCH COMPANIES WERE MADE BY THE DEPARTMENT WHEREIN SUCH FUNDS AND ASSETS/INVESTMENTS AGAINST SUCH FUNDS WAS TREATED A S GENUINE AND IN ONE OTHER COMPANY M/S MAYUKH VINIMAY PVT LTD HUGE INCOME WAS ASSESSED FOR AY 2009- 10 IN THE ORDER PASSED U/S 143(3) READ WITH SECTION 263 OF INCOME TAX ACT. THE SEPARATE ASSESSMENT IN THE HANDS OF THE INVESTOR CO MPANIES SHOWS THAT THESE COMPANIES ARE INDEPENDENT COMPANY. FURTHER M/S MAYU KH VINTRADE PVT. LTD IS NOT HOLDING COMPANY OF THE OTHER COMPANIES AS ITS H OLDING IN SUCH COMPANIES IS BELOW TO 50%. C) FINDING OF LD. AO (PARA 12): - TO PEEP INTO REALITY OF EACH AND EVERY BANK TRANSAC TION OF MOTISONS GROUP WHICH EMANATED FROM THESE SIX COMPANIES AN ATTEMPT TO LIF T THE CURTAIN OVER THE SUSPICIOUS TRANSACTIONS. THE ASSESSEE HAD MADE SEVE RAL TRANSACTIONS TO HIDE THE ACTUAL PICTURE AND A SERIES OF TRANSACTIONS WAS MADE TO COLOUR ILLEGAL TRANSACTIONS. THE LD AO REPRODUCED THE SHARE HOLDING PATTERN OF THE VARIOUS COMPANIES AS ON 19/02/2013. SUBMISSION OF ASSESSEE: - ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 77 FROM THE CHART OF SHARE HOLDING PRODUCED AT PAGE 6 TO 8 OF ASSESSMENT ORDER IT CAN BE SEEN THE SHAREHOLDING PATTERN OF THE INVESTOR COMPA NIES BUT THIS CHART DO NOT HAVE ANY MATERIAL TO SHOW THAT THE INFLOW OF FUNDS WAS FROM THE ASSESSEE COMPANY. ALL THE COMPANIES ARE INDEPENDENT COMPANY SEPARATELY ASSESS ED BY THE SAME AO. THE CHART OF SHAREHOLDING PRODUCED BY THE AO IS TOTALLY IRRELE VANT TO ESTABLISH THAT THE UNDISCLOSED INCOME OF THE ASSESSEE COMPANY WAS INTR ODUCED UNDER THE GARB OF SHARE CAPITAL. ALSO THERE IS NO INTRODUCTION OF ANY SUSPICIOUS FUND S IN THE COMPANIES WHO SUBSCRIBED THE SHARE CAPITAL OF THE ASSESSEE. THE FINDING OF L D. AO THAT SERIES OF TRANSACTIONS HAS BEEN MADE TO COLOUR ILLEGAL TRANSACTION IS NOT BACK ED WITH ANY SUPPORTING DOCUMENTS AND THE SAME IS ONLY ON THE BASIS OF PRESUMPTION AN D ASSUMPTIONS. THE LD. AO AS A RESULT TO SEARCH OR AS A RESULT OF LONG INQUIRIES F AILED TO PROVE THAT ANY SHORT OF SUSPICIOUS FUNDS HAS BEEN TRANSFERRED TO THE ASSESS EE AND THE FULL PROOF EVIDENCES SUBMITTED BY THE ASSESSEE HAS BEEN DISBELIEVE BY LD . AO MERELY ON SURMISES AND CONJECTURES. D) FINDING OF LD. AO (PARA 13): - IT CAN BE NOTICED FROM THE ABOVE TABLES THAT THE FI RST RECEIPTS IN THE MOTISONS GROUP ENTITIES ARE EVIDENCED ON 12.7.2011. SUBSEQUE NTLY THERE HAVE BEEN RECEIPTS FROM VARIOUS COMPANIES AND UP TO 8.12.2011 THEY HAVE NECESSARILY GONE TO MOTISONS GROUP ENTITIES. IT CAN EASILY BE N OTICED THAT THE PAYMENTS TO SANDEEP CHHABRA AND SANJAY CHHABRA HAVE BEEN REFLEC TED AS LOANS BY THESE COMPANIES. WHILE THE PAYMENTS TO MOTISONS GROUP COM PANIES HAVE BEEN REFLECTED AS SHARE APPLICATION MONEY BY RECIPIENT C OMPANIES. IT IS THUS CLEAR THAT THE TWO DIFFERENTLY REFLECTED TYPE OF TRANSACTIONS IS THE SAME SET OF COMPANIES INDICATES USE OF COLOURABLE DEVICE. THIS ISSUE HAS BEEN EXAMINED DURING THE SEARCH OP ERATION AND ALL THESE SIX COMPANIES SITUATED AT KOLKATA WERE COVERE D THROUGH SURVEY U/S 133A. IT WAS FOUND THAT THESE COMPANIES HAD OPENED BANK A CCOUNTS IN HDFC BANK ASHOK MARG JAIPUR IN NOVEMBER 2011. IN POST-SEARCH PROCEEDINGS THE STATEMENT OF ACCOUNTS OF THESE SIX COMPANIES IN IDB I GIRISH PARK KOLKATA AND HDFC BANK JAIPUR WERE OBTAINED. THESE STATEMENTS W ERE JUXTAPOSED WITH BANK BOOKS OF TALLY ACCOUNTS OF EACH COMPANY AND EFFORTS WERE MADE TO TRACE BACKWARDS EACH AND EVERY TRANSACTION FOR SOURCE BEGINNING WIT H THE BENEFICIARY MOTISONS GROUP ENTITIES. THE CHARTS AVAILABLE WITH THIS OFFICE NUMBERED (1) TO (6) SUPRA IN PARA 12 ONE FOR EACH OF THE SIX SHELL COMPANIES CLEARLY INDICATE SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNT S AT TIME AS MANY AS SIX ACCOUNTS IN A SINGLE DAY ( OR AT THE MOST TWO TO THREE DAYS). MAJOR EXERCISE HAS BEEN DONE IN TWO OF THE S IX COMPANIES ALLIANCE TRADECOM PVT. LTD AND EVERSHINE SUPPLIERS PVT. LTD. HOWEVER IT WOULD BE NOTICED THAT IN OTHER FOUR CASES ALSO THE PATTERN OF TRANSACTIONS HAS BEEN FOUND TO BE IDENTICAL WHERE THE SAME SET OF COMPANIES B ANK ACCOUNTS HAVE BEEN USED FOR LAYERING THE TRANSFER OF FUNDS. AT THE REGISTERED OFFICE OF THE KOLKATA BASED CO MPANIES PHYSICALLY IT WAS FOUND THAT THE OFFICE WAS MERELY A ROOM WHERE C OPIES OF ITR AND BANK STATEMENTS OF ALL THE COMPANIES WERE KEPT. ONE EMPL OYEE PRESENT THERE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS OF THESE COMPANI ES. HE INFORMED THAT NO BOOKS OF ACCOUNTS WERE KEPT AT THIS OFFICE AND THAT ONE BANWARI YOGI OF JAIPUR USED TO SEND THE FINAL ACCOUNTS TO HIM FROM JAIPUR ON THE BASIS OF WHICH THE ITR AND AUDIT REPORTS WERE PREPARED BY HIM. HE FURTHER ADMITTED THAT THE BANK ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 78 ACCOUNTS OF THESE COMPANIES HAVE BEEN OPENED IN THE HDFC BANK AT JAIPUR. DURING THE COURSE OF SEARCH AT RESIDENCE OF CHHABRA FAMILY THE TALLY ACCOUNTS MCA COMPLIANCE DATA AND IMPORTANTLY COMPLETE TALLY A CCOUNTS OF SIX KOLKATA SHELL COMPANIES WAS FOUND IN A PEN DRIVE BELONGING TO SHRI BANWARI LAL YOGI. SUBMISSION OF ASSESSEE : - I) IN THE CHART OF SHAREHOLDING OF INVESTOR COMPANIES GIVEN IN PARA 12 OF THE ASSESSMENT ORDER THE SHAREHOLDING IS GIVEN AS ON TO 19.02.2013 I.E. RELEVANT TO AY 2013-14. IT IS NOT UNDERSTANDABLE THAT SHAREHOLDI NG OF SOME DATE OF AY 2013-14 IS HOW RELEVANT TO UNDERSTAND THE TRANSACTI ONS MADE DURING THE YEAR UNDER CONSIDERATION. HOWEVER IT IS RELEVANT TO MENT ION HERE THAT THE SHAREHOLDING MENTION IN THIS PARA WAS SAME IN AY 201 1-12 AND AY 2012-13. II) DURING THE YEAR UNDER CONSIDERATION THE FIRST RECEI PT FROM THE INVESTOR COMPANIES WAS FROM 04.08.2011 AND THE SAME RECEIVED UP TO DEC EMBER-2011 BUT THE FUNDS WHICH WERE INVESTED BY THE INVESTOR COMPANIES IN TH E ASSESSEE COMPANY WERE BEING OWNED BY THEM MUCH PRIOR TO THE INVESTMENT MA DE IN THE ASSESSEE COMPANY AND THE INVESTMENT WAS MADE BY THEM BY REAL IZING THE FUNDS PREVIOUSLY INVESTED BY THEM AT SOME OTHER PLACE. TH IS IS NOT A CASE WHERE SOURCE OF THE FUNDS WAS FROM THE ASSESSEE COMPANY. THE INV ESTOR COMPANIES WERE OWNING THEIR FUNDS MUCH PRIOR TO INVESTMENT MADE IN THE ASSESSEE COMPANY AND THE SAME WAS ASSESSED AND ACCEPTED BY THE INCOME TA X DEPARTMENT ALSO. ONCE THE SOURCE OF FUNDS WITH THE INVESTOR COMPANIES HAS BEEN ACCEPTED BY DEPARTMENT AS GENUINE WHICH WAS OWING BY THEM MUCH PRIOR TO INVESTMENT MADE IN THE ASSESSEE COMPANY THAN HOW THE SAME CAN BE ADDED AS INCOME OF THE ASSESSEE TREATING THE SAME AS NON GENUINE. III) THE AMOUNT GIVEN BY THE INVESTOR COMPANIES TO SHRI SANDE EEP CHHABRA AND SHRI SANJAY CHHABRA WAS LOAN TO THESE PERSONS AND TH E AMOUNT GIVEN TO ASSESSEE WAS SHARE APPLICATION MONEY. THE LOAN GIVEN BY THESE COMPANIES TO SHRI SANDEEEP CHHABRA AND SHRI SANJAY CHHABRA WAS ACCEPTED GENUINE BY THE LD. AO HIMSELF A ND ONLY THE SHARE APPLICATION MONEY GIVEN TO THE ASSESSEE COMPANY IS BEING TREATED AS NON GENUINE. FURTHER THE ALLEGATION OF LD. AO THAT TWO D IFFERENT REFLECTED TYPE OF TRANSACTIONS INDICATES USE OF COLORABLE DEVICE THI S IS TO SUBMIT THAT THE TRANSACTIONS HAS BEEN REFLECTED AS PER THEIR TRUE N ATURE. THE AMOUNT GIVEN TO SHRI SANDEEP CHHABRA AND SHRI SANJAY CHHABRA WAS AC TUALLY LOAN BY THESE COMPANIES AND THE SAME WAS LATER ON REPAID BY THESE PERSONS AND THE SAME WAS ACCEPTED AS GENUINE BY LD. AO. THE AMOUNT GIVEN BY INVESTOR COMPANIES TO THE ASSESSEE COMPANY WAS ACTUALLY SHARE APPLICATION MONEY AND THE SAME WAS DULY SUPPORTED BY SHARE APPLICATION SUBMITTED BY TH ESE COMPANIES. FURTHER IT IS NOT UNDERSTANDABLE THAT THE LOAN BY THESE COMPANIES TO SHRI SANDEEEP CHHABRA AND SHRI SANJAY CHHABRA AND SHARE APPLICATION MONEY TO ASSESSEE COMPANY HOW CAN BE THE COLORABLE DEVICE. IV) AS HIMSELF MENTIONED BY LD. AO IN THIS PARA THAT THE SURVEY U/S 133A OF INCOME TAX ACT 1961 WAS CARRIED OUT BY THE INCOME TAX DEPA RTMENT OVER THESE COMPANIES AND FROM THE ASSESSMENT ORDER IT IS WELL PROVED THAT DURING THE COURSE OF SURVEY NO EVIDENCE WAS FOUND TO SHOW THAT THE INFLOW OF FUNDS IN THE INVESTOR COMPANIES WAS FROM THE ASSESSEE COMPANY. W HEN THE DEPARTMENT CARRIED OUT INTENSIVE SEARCH OVER THE ASSESSEE GROU P AND SURVEY OVER THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 79 INVESTOR COMPANIES AND DURING THE COURSE OF BOTH OP ERATIONS NOT A SINGLE EVIDENCE WAS FOUND TO SHOW THAT THE SHARE APPLICATI ON MONEY RECEIVED BY THE ASSESSEE WAS MANAGED AFFAIRS TO MANAGE ITS UNACCOUN TED FUNDS THAN HOW IT CAN BE PRESUMED THAT THE SHARE APPLICATION RECEIVED BY THE ASSESSEE IS NON GENUINE. ADMITTEDLY THOSE COMPANIES OPENED THE BANK ACCOUNTS IN HDFC JAIPUR BUT THE SAME WERE BECAUSE OF THE REASON THAT THEY PLANNED TO MADE THE INVESTMENT IN THE ASSESSEE GROUP AND THEIR DIRECTOR S WERE ALSO RESIDING IN JAIPUR THEREFORE IN ORDER TO BETTER & SMOOTH MANAG EMENT TO FUNDS THE BANK ACCOUNTS WERE OPENED IN JAIPUR BRANCH. FURTHER FOR CONSIDERING A TRANSACTION AS GENUINE THE GENUINENESS OF SOURCE OF FUNDS IS TO BE EXAMINED WHICH IS WELL PROVED AS GENUINE IN THIS CASE. THE MAINTAINING BAN K A/C BY THE COMPANIES IN JAIPUR CANNOT BE A BASIS FOR TREATING THE TRANSACTI ON AS NON GENUINE. V) THE ASSESSEE GROUP WAS NOT MAINTAINING THE BOOKS OF ACCOUNTS OF THE INVESTOR COMPANIES AND THE SAME IS EVIDENT FROM THE SEARCH A CTION CARRIED OUT BY THE DEPARTMENT AS DURING THE COURSE OF WHICH NO PHYSICA L RECORD I.E. BOOKS OF ACCOUNTS BANK STATEMENTS ETC. FOUND FROM THE PREMI SES OF THE ASSESSEE GROUP AND THE SAME WERE FOUND AT KOLKATTA OFFICE OF THESE COMPANIES. ADMITTEDLY SOME SOFT COPIES OF BOOKS OF ACCOUNTS AND MCA COMPLI ANCE DATA WERE FOUND IN A PEN DRIVE OF SHRI BANWARI YOGI BUT THE SAME WAS REC EIVED FROM DIRECTORS OF THESE COMPANIES BECAUSE AFTER BEING INVESTED HUGE S HARE CAPITAL BY THESE COMPANIES IN THE ASSESSEE COMPANY THE DIRECTORS OF THE ASSESSEE COMPANY HAD A MEETING WITH THE DIRECTORS OF THE INVESTOR COMPAN IES TO CHECK WHETHER THE PROPER RECORDS ARE BEING MAINTAINED BY SUCH COMPANI ES OR PROPER LEGAL COMPLIANCE HAS BEEN BEING DONE BY SUCH COMPANIES BE CAUSE THE ASSESSEE GROUP RECEIVED SUBSTANTIAL SHARE CAPITAL FROM THESE COMPANY AND ANY KIND OF DEFAULT MADE BY THOSE COMPANIES MAY LEAD TO DIFFICU LTY TO THE ASSESSEE GROUP ALSO. THE DATA RELATING TO THESE COMPANIES FOUND IN PEN DRIVE OF ACCOUNTANT OF THE ASSESSEE GROUP WAS GIVEN BY DIRECTOR OF INVESTO R COMPANIES DURING THEIR MEET WITH DIRECTORS OF ASSESSEE COMPANIES. THE MOST IMPORTANT THING WHICH THE LD AO IGNORED THAT NO ANY ENTRY WAS FOUND FROM THE P EN DRIVE DATA TO SHOW THE INFLOW OF UNDISCLOSED MONEY OR CASH FROM THE ASSESS EE COMPANY OR ASSESSEE GROUP TO THESE INVESTOR COMPANY. THEREFORE FROM TH E IRRELEVANT MATERIAL IT CANNOT BE HELD THAT THE SHARE CAPITAL OF THE ASSESS EE COMPANY WAS NOT GENUINE. E) FINDING OF LD. AO (PARA 14): - IT WAS NOTICED THAT THE MOTISONS GROUP COMPANIES HA VE ALLOTTED SHARES TO KOLKATA BASED COMPANIES IN THE DIFFERENT FINANCIAL YEARS. HOWEVER UPTO FY 2010-11 THE ALLOTMENT OF SHARES TO KOLKATA BASED CO MPANIES WAS NOT MUCH. THE ALLOTMENT WAS INCREASED MANIFOLD DURING THE FY 2011 -12 WHEREIN NEARLY 32 CRORES WORTH OF SUCH SHARES WERE ALLOTTED. IT MAY B E POINTED OUT AT THIS STAGE THAT MOTISONS GROUP COMPANIES ALLOTTED SHARES AT A VERY HIGH PREMIUM TO KOLKATA BASED COMPANIES. ON THE OTHER HAND THE VER Y SAME SHARES IN THE VERY SAME YEAR HAS BEEN ALLOTTED AT VERY NOMINAL PRICES TO THE FAMILY MEMBERS AND OTHER GROUP RELATED CONCERNS. A PERSON WITH PRUDENT MIND CAN EASILY THINK OF THIS FRAUDULENCE. IT IS CLEAR THAT THE KOLKATA BASE D COMPANIES PRACTICALLY HAVING NO BUSINESS HAVE ACQUIRED THE SHARES OF MOTISONS GR OUP COMPANIES AT VERY HIGH RATES FOR THE REASONS BEST KNOWN TO THEM. IN CONNEC TION WITH THIS THE DETAILS WERE EXPLORED IN RESPECT OF THE WHEREABOUTS OF THES E COMPANIES. FROM DETAILED ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 80 ANALYSIS IT COULD EASILY BE INFERRED THAT ALL OF TH E COMPANIES ARE OWNED BY THE EMPLOYEES OF MOTISONS GROUP. SUBMISSION OF ASSESSEE: - I) THE LD. AO IS WRONG IN HOLDING THAT THE MOTISONS GRO UP COMPANIES ALLOTTED THE SHARES TO THE KOLKATTA BASED COMPANIES AT VERY HIGH PREMIUM AND THE SAME SHARES IN THE VERY SAME YEARS WERE ALLOTTED AT VERY NOMINAL PRICES TO THE FAMILY MEMBERS AND OTHER GROUP RELATED CONCERNS. FROM THE EXAMINATION OF DETAILS OF SHARES ALLOTTED DURING THE YEAR (COPY AT PB PAGE 112 TO 113) YOUR HONOR WILL FIND THAT DURING THE YEAR UNDER CONSIDERATION NO SH ARE WAS ALLOTTED BY THE ASSESSEE COMPANY TO OTHER GROUP CONCERNS OR FAMILY MEMBERS OF DIRECTORS. AS REGARD TO ALLOTMENT OF SHARES IN OTHER COMPANIES TH IS IS TO SUBMIT THAT IN THE YEAR UNDER CONSIDERATION ONLY ONE COMPANY OF THE AS SESSEE GROUP M/S SHIVANSH BUILDCON PVT. LTD ALLOTTED THE SHARES TO M /S EVERSHINE SUPPLIERS PVT. LTD AS WELL AS TO SHRI SANJAY CHHABRA AND SHRI SAND EEP CHHABRA AND THE SAME WAS ALLOTTED AT THE SAME RATE. THE SHARES TO EVERSH INE SUPPLIERS PVT. LTD WERE ALLOTTED @ 20 PER SHARES AND SHARES TO SHRI SANJAY CHHABRA AND SHRI SANDEEP CHHABRA WERE ALSO ALLOTTED @ 20 PER SHARES. THUS TH IS FINDING OF LD. AO IS WRONG PERVERSE WITH SOLE MOTIVE TO INFLUENCE THE A PPELLATE AUTHORITIES BY MENTIONING THE WRONG FACTS. II) THE INVESTOR COMPANIES ACQUIRED THE SHARES OF THE A SSESSEE COMPANY AT HIGH PREMIUM BUT THE SAME FOR THE REASONS AS DESCRIBE IN COMING PARAS AND THE SAME WAS THEIR INDIVIDUAL COMMERCIAL DECISION. ITAT MUMBAI BENCH IN THE CASE OF ACIT V/S GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T10L -656-ITAT-MUM OBSERVED THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUSTIFICATION . III) THE LD. AO HELD THAT ALL THE INVESTOR COMPANIES ARE OWNED BY THE EMPLOYEES OF THE MOTISONS GROUP IS AGAIN A FACT WHICH IS CONTRA TO THE MATERIAL AVAILABLE ON THE RECORD. THE COMPANY IS ALWAYS OWNED BY THE SHAR EHOLDERS AND FROM SHAREHOLDING OF THE INVESTOR COMPANIES YOUR HONOR W ILL FIND THAT NONE OF THE EMPLOYEE OF THE MOTISONS GROUP IS SHAREHOLDER IN TH E INVESTOR COMPANIES. IF NONE OF THE EMPLOYEE OF THE MOTISONS GROUP IS OWING THE SHARES OF THE INVESTOR COMPANIES THAN HOW THEY CAN BE THE OWNER OF SUCH CO MPANIES. THUS THIS FINDING OF LD. AO IS ALSO WRONG PERVERSE WITH SOLE MOTIVE T O INFLUENCE THE APPELLATE AUTHORITIES BY MENTIONING THE WRONG FACTS. F) FINDING OF LD. AO (PARA 15): - IT IS CLEAR THAT THESE COMPANIES ARE MERELY PAPER C OMPANIES HAVING NO BUSINESS ACTIVITY AND IT IS MERELY NAME LENDING CONCERN PROV IDING ACCOMMODATION ENTRIES TO THE MOTISONS GROUP. WHOLE STATEMENT OF AFFAIRS H AS BEEN DESIGNED TO INTRODUCE MONEY THROUGH BANKING CHANNELS BY THE GRO UP IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM. SUBMISSION OF ASSESSEE: - I) THE FINDING OF LD AO PERVERSE. THE ASSESSMENT OF ONE OF THE INVESTOR COMPANY M/S MAYUKH VINIMAY PVT LTD WAS MADE IN THE SAME CIR CLES AT HUGE INCOME OF RS. 10 55 58 280/- FOR THE AY 2009-10 BY PASSING ORDE R U/S 143(3) R.W.S 263 OF INCOME TAX ACT. HOW CAN BE SUCH A HUGE INCOME OF A P APER COMPANY. FROM THE DOCUMENTS SUBMITTED TO THE LD. AO NO WHERE IT PROVES THAT ALL THE COMPANIES ARE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 81 SIMPLY PAPER COMPANIES AND PROVIDING ONLY ACCOMMODA TION ENTRIES AND THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPANY IS NOT GENUINE. THE FINDING OF THE LD. AO IS BASED ON THE ASSUMPTION AND PRESUMP TION. THE ASSESSMENTS OF ALL THESE COMPANIES WERE MADE BY SAME AO FOR AY 2013- 14. II) THE RATE OF SHARE WAS DECIDED AFTER DISCUSSION OF ASSESSEE COMPANY AND INVESTOR COMPANY. THE SHARES WERE ISSUED TO THE INV ESTOR COMPANIES AT PREMIUM BECAUSE OF THE REASONS MENTIONED IN COMING PARAS. III) DURING THE COURSE OF SEARCH OVER MOTISONS GROU P NO DOCUMENTS/EVIDENCE WAS FOUND TO SHOW THAT THE COMPANIES WHO MADE INVESTMEN T IN SHARES OF THE ASSESSEE COMPANY WERE FUNDED BY MOTISONS GROUP. THU S IF THE LD. AO IS NOT IN POSSESSION OF ANY POSITIVE MATERIAL AGAINST THE ASS ESSEE OR ITS INVESTOR COMPANIES TO PROVE HIS CONTENTION THAN THE ADDITION CANNOT BE MADE MERELY ON GUESS PRESUMPTION AND ASSUMPTION. FURTHER THERE IS NOTHING POSITIVE IN THE INQUIRIES TO ALLEGE THAT THE ASSESSEE HAS INTRODUCE D ITS OWN UNEXPLAINED MONEY UNDER THE GARB OF SHARE CAPITAL AND SHARE PREMIUM. IV) THE ALLEGATION OF LD. AO THAT THE STATEMENT OF AFFAI RS HAS BEEN DESIGNED TO INTRODUCE MONEY THROUGH BANKING CHANNELS BY THE GRO UP IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM IS COMPLETELY WRONG PERVERSE AND CONTRARY TO THE FACTS AVAILABLE ON RECORD. IN FORGOING PARAS WE HAVE SUBM ITTED THE DETAIL OF NET WORTH OF THE INVESTOR COMPANIES AND FROM EXAMINATION OF S UCH NET WORTH OF THE INVESTOR COMPANIES YOUR HONOR WILL FIND THAT SUCH COMPANIES OWING THEIR NET WORTH MUCH PRIOR TO INVESTMENT MADE IN THE ASSESSEE COMPANY WH ICH HAS ALSO BEEN ASSESSED AND ACCEPTED BY THE DEPARTMENT IN THEIR AS SESSMENT PROCEEDINGS. FURTHER THE NET WORTH OF THOSE COMPANIES WERE BEING OWNED FROM THE YEAR WHEN THEY WERE NO WAY RELATED/CONCERNED FROM ASSESSEE GR OUP. THEREAFTER THERE IS NO CHANGE IN THE NET WORTH OF INVESTOR COMPANIES EX CEPT ACCUMULATED PROFIT OF THE YEAR TO YEAR ADDED IN NET WORTH. WHEN THE INVES TOR COMPANIES OWING THE NET WORTH PRIOR TO THEIR RELATIONSHIP WITH THE ASSESSEE COMPANY THAN HOW IT CAN BE PRESUMED THAT THE ASSESSEE GROUP MANAGED THE FUNDS OF SUCH COMPANIES AND DESIGNED THEIR STATEMENTS OF AFFAIRS AS PER ITS SWE ET WILL. G) FINDING OF LD. AO (PARA 16 ): - THE FINDING OF LD. AO REGARDING SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS BASED ON THE FOLLOWING : - (I) SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACC OUNTS AT TIMES AS MANY AS SIX ACCOUNTS IN A SINGLE DAY (OR AT THE MOST TWO TO TH REE DAYS). THUS IN MOST OF THE CASES MONEY WAS TRANSFERRED FROM ONE BANK ACCOUNT TO ANOTHER THROUGH RTGS FINALLY REACHING THE BENEFICIARY (MOTISONS GROUP CO MPANY) ON THE SAME DAY. (II) THE RESPECTIVE DATE-BANDS HAVE BEEN COLOUR-COD ED ON THE EXCEL SHEETS (1) TO (6) AVAILABLE WITH THIS OFFICE TO HIGHLIGHT THE ABOVE C ONCLUSION. (III) INITIALLY THE SIX COMPANIES HAVE RECEIVED MO NEY FROM DIVERSE SOURCES. BUT GOING BACKWARDS IT IS OBSERVED THAT MONEY WAS BEING TRAN SFERRED FROM THE ACCOUNTS OF ONLY A FEW COMPANIES FASTNER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS DEALERS PVT LTD SWATI VANIJYA PVT LTD DO VER DISTRIBUTORS PVT. LTD OLYMPIC VYAPAAR PVT LTD. (IV) THE MONEY COMING INTO THE ACCOUNTS OF THESE CO MPANIES IS FOUND TO BE COMING MAINLY FROM THREE MAJOR SOURCES (1) FOUR KOLKATA- BASED PROPRIETORSHIP ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 82 CONCERNS (2) BANK ACCOUNTS OF NIBU NAGI /KEVILHULI E SENOTSU DIMAPUR AND (3) THROUGH INSTRUMENTS OF BANKS IN BHUTAN. (V) THE FOUR FIRMS REFERRED-TO ABOVE ARE (A) DURGA ENTERPRISES (B) SHYAM FASHIONS (PROP. RAJESH KR. SINGH) (PROP. AJIT SHARMA (C) GLOBAL SECURITIES (D) SWASTIK TRADERS (PROP. ASHOK KR. RAI) (PROP. RAJ KR. OSWAL) THE DETAIL DISCUSSION ON ABOVE ISSUE HAS BEEN MADE BY LD. AO AT PAGE 10 TO 15 OF THE ASSESSMENT ORDER. SUBMISSION OF ASSESSEE : - I) IT HAS BEEN HELD THAT SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS AT TIMES AS MANY AS SIX ACCOUNTS IN A SINGLE DAY (OR A T THE MOST TWO TO THREE DAYS) THIS IS TO SUBMIT THAT FROM THIS FINDING NO WHERE I T PROVES THAT THE FUNDS WERE INTRODUCED IN SUCH COMPANIES BY THE ASSESSEE COMPAN Y. WHATEVER AMOUNT RECEIVED BY THE ASSESSEE WAS RECEIVED THROUGH A/C P AYEE CHEQUES AND SOURCE WITH INVESTOR COMPANIES WAS ALSO PROVED. IT IS RELE VANT TO MENTION HERE THAT IF SOMEONE IS INVESTING THE MONEY IN THE ASSESSEE COMP ANY HE MUST BE HAVING THE INFLOW OF MONEY FROM SOME SOURCE. WHAT IS THE SOURC E OF INFLOW WITH THE INVESTOR COMPANY AND HOW IT IS MANAGING ITS AFFAIRS IS NOT C ONCERN OF THE ASSESSEE. THE TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS IN A SING LE DAY OR WITHIN FEW DAYS WAS BECAUSE OF THE REASON THAT THE BEFORE INFLOW OF FUNDS WITH THE CONCERNING PARTY THE OUTFLOW OF FUND WAS PREDETERMINED BUT THE SAME DOES NOT LEAD TO CONCLUDE THAT THE SAME WERE FUNDS OF THE ASSESSEE. NONE OF THE ABOVE COMPANY IS OWNED BY THE ASSESSEE COMPANY OR GROUP. II) THE EXCEL SHEET WHICH IS BEING DISCUSS BY LD. AO IS NOT IN KNOWLEDGE OF THE ASSESSEE AND THE SAME IS ALSO NOT APPEARING IN ASSE SSMENT ORDER TOO. III) THE SIX INVESTOR COMPANIES HAVE NOT RECEIVED THE MO NIES FROM HIDDEN SOURCES. INITIALLY THESE COMPANIES RECEIVED THE MONEY FROM S ALES OF THEIR OWN SHARES WHICH THEY INVESTED IN PREVIOUS YEARS AND THEY INVE STED IN THE ASSESSEE COMPANY BY REALIZING THEIR OLD INVESTMENT. THEREFOR E THE SOURCE IN THE HANDS OF THE INVESTOR COMPANY WAS NOT HIDDEN. THE LD. AO HEL D THAT THE MONEY IN THE SIX COMPANIES WERE TRANSFERRED FROM THE COMPANIES NAMIN G FASTER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS DEALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND OLYMPIC VYAPAAR PVT . LTD THIS IS CONTRARY TO THE FACTS AVAILABLE IN RECORD. FROM THE EXAMINATION OF DECLARATION OF SOURCE OF FUNDS AVAILABLE WITH INVESTOR COMPANIES TO INVEST THE SAM E IN THE ASSESSEE COMPANY YOUR HONOR WILL FIND THAT NOT A SINGLE AMOUNT WAS R ECEIVED BY THE INVESTOR COMPANIES FROM THE COMPANIES NAMED BY LD. AO. THE I NVESTOR COMPANIES RECEIVED THE FUNDS FROM OTHER COMPANIES/PARTIES WHI CH ARE NOT IN THE LIST NAMED BY THE LD. AO AND SUCH COMPANIES/PERSONS WERE NOT SU SPECTED BY LD. AO. FURTHER APART FROM THE INVESTMENT MADE BY INVESTOR COMPANIES IN THE ASSESSEE GROUP THEY ALSO HAVING OTHER INVESTMENTS/ASSETS WHI CH HAS BEEN TREATED AS GENUINE BY THE DEPARTMENT THEN HOW THE INVESTMENT M ADE IN THE ASSESSEE GROUP CAN ONLY BE TREATED AS NON GENUINE. EVEN OTHERWISE ALSO THE ASSESSEE COMPANY HAS NO CONCERN FOR THE SOURCE IN THE HANDS OF THE I NVESTOR COMPANY. FURTHER THE ASSESSEE COMPANY AND MOTISONS GROUP HAVE NO CONCERN WITH M/S FASTER ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 83 VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS D EALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND O LYMPIC VYAPAAR PVT. LTD. IV) THE LD. AO MENTIONED THAT MONEY IN THE COMPANIES NAM ING FASTER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS DEALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND OLYMPIC VYAPAAR PVT . LTD COMING FROM SOME PROPRIETORSHIP CONCERNS BANK A/C OF NIBHU NEGI/KEV ILHULIE DIMPUR AND THROUGH INSTRUMENTS AT BANK OF BHUTAN AND IN SUCH ACCOUNTS SOME SUSPECTED FUNDS WERE DEPOSITED. IN THIS REGARD WE MAY SUBMIT AS UND ER: - 1) FIRST OF ALL AS STATED EARLIER THE ASSESSEE GROU P OR ITS INVESTOR COMPANIES NOT RECEIVED ANY AMOUNT FROM ABOVE NAMED COMPANIES THE REFORE IT IS NOT UNDERSTANDABLE THAT HOW THE ALLEGED SUSPICIOUS FUND S DEPLOYED IN ABOVE NAMED COMPANIES IS BEING TREATED AS MANAGED BY THE ASSESSEE AND HOW THE ASSESSEE IS BENEFICIARY OF SUCH FUNDS. IF THE ABOVE NAMED COMPANIED NAMING FASTER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBA TROSS DEALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND OLYMPIC VYAPAAR PVT. LTD HAVING INFLOW OF SOME SUSPICIOUS FUNDS AND THEN THE SAME IS BEING UTILIZING BY THEM THEN INVESTIGATION OF SUCH FUNDS SHOULD HAVE B EEN MADE IN THE CASE OF SUCH COMPANIES AND THE NECESSARY ACTION REGARDING T O SUCH SHOULD HAVE BEEN TAKEN AGAINST SUCH COMPANIES AS THESE COMPANIES ARE INDEPENDENT ASSESSEE. THERE IS NO WHISPER IN THE ASSESSMENT ORDER THAT AN Y SHORT OF INQUIRIES WERE MADE FROM THESE COMPANIES IN THIS REGARD. THE LD AO HAS NO POSITIVE MATERIAL AGAINST THE ASSESSEE TO ESTABLISH THAT ALLEGED SUSP ICIOUS FUNDS WERE BELONGING TO ASSESSES GROUP. THERE IS NO FINDING AND EVIDENCE AS A RESULT OF SEARCH OR AS A RESULT OF INVESTIGATION THAT ALL CHANNEL SOURCE WER E BEING MANAGED BY THE ASSESSEE GROUP. IF IN SOME INTERMEDIATE CHANNEL SOU RCE SOME SUSPICIOUS FUNDS HAS BEEN DEPLOYED THAN THE ACTION SHOULD BE TAKEN I N THEIR HANDS. THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THE DEFAULT OF THIRD OR FOURTH CHANNEL. THE ONUS UNDER THE LAW IS TO PROVE SOURCE AND NOT SOURCE OF SOURCE. HERE THE LD AO IS PUTTING THE RESPONSIBILITY OF THE ASSESSEE TO PROVE SOURCE OF ALL SOURCES. 2) THE LD. AO HELD THAT MONEYS IN THE A/C OF COMPANI ES NAMING FASTER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS DEALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND OLYMPIC VYAPAAR PVT . LTD WERE DEPOSITED FROM FOUR PROPRIETORSHIP CONCERNS AND IN BANK A/C OF SUC H CONCERNS THE CASH WAS DEPOSITED. AS MENTIONED EARLIER THE ASSESSEE COMPANY OR ITS INVESTOR COMPANIES DID NOT RECEIVE ANY AMOUNT FROM THESE NAMED COMPANI ES THEREFORE THEY ARE NOT RESPONSIBLE FOR THEIR SOURCE OF FUNDS AND THE NECES SARY ACTION SHOULD HAVE BEEN TAKEN IN THEIR HANDS. THERE IS NO WHISPER IN THE AS SESSMENT ORDER THAT ANY SHORT OF INQUIRIES/ACTION WERE TAKEN ON SUCH COMPANIES TO PROVE THAT THE FUNDS IN SUCH COMPANIES WERE MANAGED FOR THE BENEFIT OF THE ASSESSEE GROUP BY THE ASSESSEE GROUP. IN THE CASE OF THE ASSESSEE THE DEP ARTMENT CAN EXAMINE THE SOURCE OF SOURCE IN THE CASE OF ASSESSEE BUT FURTHE R SOURCE OF SUCH SOURCE TILL FOURTH OR FIVE CHANNEL CANNOT BE EXAMINED TO TAKE A CTION AGAINST THE ASSESSEE. IF ON INQUIRY OF SOURCE OF SOURCE SOMETHING IS FOUND WRONG THE NECESSARY ACTION IN THIS REGARD SHOULD HAVE BEEN TAKEN AGAINST SUCH PER SON IN WHOSE A/C SUCH FUNDS WERE INTRODUCED BUT NOT IN THE CASE OF ASSESS EE AS THERE IS NO CONTRARY EVIDENCE AGAINST THE ASSESSEE. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 84 3) AS REGARD TO CASH DEPOSITED BY SUCH CONCERNS IN T HEIR BANK A/C LOW ITR/NON FILING OF ITR BY THEIR PROPRIETOR OR SOME THE PROPRI ETORSHIP CONCERN BEING MANAGED BY OTHER PERSON THIS IS TO SUBMIT THAT FROM ALL THESE IT CAN BE PRESUMED THAT SOME UNACCOUNTED/UNEXPLAINED FUNDS HAVE BEEN I NTRODUCED IN BANK A/C OF SUCH CONCERNS BUT FROM THIS HOW IT CAN BE PRESUME/P ROVED THAT SUCH FUNDS WERE BELONGING OF THE ASSESSEE AND THE SAME WERE MANAGED BY THE ASSESSEE. THE NECESSARY ACTION OF SUCH UNEXPLAINED/UNACCOUNTED FU NDS SHOULD HAVE BEEN TAKEN AGAINST THE PERSONS IN WHOSE BANK A/C IT WAS DEPOSITED OR AGAINST THE PERSON WHO ADMITTED TO MANAGE SUCH BANK A/C AND BY STRETCH OF NO IMAGINATION THE ACTION CANNOT BE TAKEN AGAINST THE ASSESSEE. IF THIS POSITION/PRESUMPTION OF THE DEPARTMENT IS PRESUME TO BE CORRECT THAT IN EAC H AND EVERY CASE WHERE A PERSON DEPOSIT THE CASH IN BANK A/C AND THEN AFTER THE SAME UTILIZED FOR ITS OWN VARIOUS PURPOSES THAN THE TAX SHOULD HAVE BEEN COLL ECTED FROM THE PERSONS IN WHOSE HANDS THE FUNDS WERE FINALLY REACHED AND NOT FROM THE PERSON IN WHOSE BANK A/C THE CASH WAS DEPOSITED. BUT AS PER ESTABLI SH AND ADMITTED LEGAL POSITION ALWAYS THE SOURCE OF SUCH CASH DEPOSIT IS BEING ASKED FROM THE PERSON WHO IN OWING THE BANK A/C AND ACTION IS BEING TAKEN AGAINST SUCH PERSON AND NOT AGAINST OTHER PERSON TO WHOM SUCH FUNDS WERE GI VEN. IN THESE TYPE OF CASES THE ACTION AGAINST ANOTHER PERSON CAN ONLY BE TAKEN IF ANY POSITIVE MATERIAL/EVIDENCE AGAINST SUCH PERSON IS FOUND TO S HOW THAT SUCH FUNDS BELONG TO HIM. IN THE CASE OF THE ASSESSEE THERE IS NO EVI DENCE TO PROVE THAT THE CASH DEPOSIT IN BANK A/C OF FOURTH/FIFTH CHANNEL BELONG TO THE ASSESSEE. IF THIS KIND OF PRACTICE IS APPROVED THAN THE OWNER OF THE BANK A/C WILL ENJOY BY DEPOSITING THE UNACCOUNTED/UNEXPLAINED CASH IN BANK A/C FREELY AND ON BEING CAUGHT BY DEPARTMENT TO AVOID THE TAX IMPLICATION PENALTIES ETC. THEY WILL SHIFT THEIR BURDEN ON SOME OTHER ONE. 4) AS REGARD TO THE STATEMENT OF SHRI SANTOSH CHOUBE Y THIS IS TO SUBMIT THAT AS APPARENT FROM THE ASSESSMENT ORDER THIS PERSON ADMI TTED TO DEPOSIT THE CASH IN BANK A/C IN BANK A/C OF SOME OF THE CONCERNS BUT HE NOWHERE ADMITTED THAT HE DEPOSITED THE UNACCOUNTED CASH IN THE BANK A/C. THE RE IS NO FINDING IN ASSESSMENT ORDER IN THIS REGARD. THERE MAY BE POSSI BILITY THAT HE MAY DEPOSIT THE CASH FROM DISCLOSE SOURCE BUT IT APPEARS THAT N O INVESTIGATION HAS BEEN MADE IN THIS REGARD. FURTHER THIS IS TO SUBMIT THAT THE ASSESSEE GROUP OR ITS INVESTOR COMPANIES HAVE NO CONCERN WITH THE CONCERN S MANAGED BY PERSON NAMING SANTOSH CHOUBEY. FURTHER IF SANTOSH CHOUBEY IS ADMITTING THAT HE HAS DEPOSITED THE CASH IN BANK A/C OF SUCH CONCERNS THA N PRIMARY ONUS IS ON HIM TO PROVE THE SOURCE OF SUCH CASH AND IF HE IS NOT ABLE TO EXPLAIN THE SOURCE THE ACTION IN THIS REGARD SHOULD HAVE BEEN TAKEN IN HIS CASE AND NOT IN THE CASE OF THE ASSESSEE. THERE IS NO WHISPER IN THE ASSESSMENT ORDER THAT WHY THOSE CASH DEPOSITS ARE BEING TREATED AS BELONGING TO THE ASSE SSEE GROUP AND WHY NO ACTION HAD BEEN TAKEN AGAINST SHRI SANTOSH CHOUBEY. THE ASSESSEE GROUP OR ITS INVESTOR COMPANIES DOES NOT KNOW TO ANY SANTOSH CHO UBEY AND HAVE NO CONCERN FROM THIS PERSON. 5) SIMILARLY AS REGARD TO CASH DEPOSITED IN BANK A/ C OF NIBHU NAGI/KEVIHULIE SENTOSHU AND NON FILING OF ITR BY THESE PERSONS DOES NOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT THE SAME MONEY BELONGS TO THE A SSESSEE GROUP. NO INQUIRIES IN THIS REGARD WERE MADE FROM THESE TWO PERSONS AND THE BURDEN WAS SHIFTED OVER THE ASSESSEE SIMPLY ON THE GROUND THAT THESE P ERSONS ARE NOT FILING THEIR ITR. THE FINDINGS OF LD AO THAT THEIR NAME AND IDENT ITIES ARE BEING USED BY THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 85 ASSESSEE FOR OPERATING BANK A/C WHERE HUGE CASH TRA NSACTIONS ARE BEING UNDERTAKEN IS WITHOUT ANY BASIS OR MATERIAL. THE ON US WAS ON THE DEPARTMENT TO PROVE THAT THE APPARENT IS NOT REAL AND THE SAID ON US WAS NOT DISCHARGED. THE PRIMARY ONUS TO PROVE THE SOURCE OF CASH DEPOSITED IN BANK A/C IS ON THESE PERSONS AND NO INQUIRIES WERE MADE BY DEPARTMENT FR OM THESE TWO PERSONS OR IMMEDIATE BENEFICIARY OF FUNDS OF SUCH BANK A/C. IF STILL IT IS PRESUMED THAT THERE BANK A/C WERE BEING MANAGED BY SOME OTHER ONE THAN WHO WAS THAT PERSON AND WHY HE WAS DOING SO. FOR FINDING OUT THIS TRUTH THE DETAIL INQUIRIES SHOULD HAD BEEN MADE BY THE DEPARTMENT BUT SINCE THE DEPAR TMENT CARRIED OUT THE SEARCH OVER THE ASSESSEE GROUP AND THE SEARCH PARTY HAD PRE SET MIND THAT THE SHARE CAPITAL OF THE ASSESSEE GROUP WAS BOGUS THERE FORE THE TWISTED THE FACTS AND INQUIRES. FURTHER FROM THE FINDING OF THE ASSES SMENT ORDER NO WHERE IT PROVES THAT THE CASH DEPOSITED IN THESE BANK A/C WA S FROM UNDISCLOSED SOURCE. THERE MAY BE POSSIBILITY THAT THE CASH MAY HAVE BEE N DEPOSITED OUT OF DISCLOSED SOURCES. BUT THE DEPARTMENT HAS NOT MADE ANY INQUIR IES IN THIS REGARD FROM HOLDERS OF THESE BANK A/CS. 6) REGARDING FUNDS TRANSFERRED IN A/C OF COMPANIES N AMING FASTER VINIMAY PVT LTD WISE MERCHANTS PVT LTD ALBATROSS DEALERS PVT. LTD SWATI VANIJYA PVT. LTD DOVER DISTRIBUTORS PVT. LTD AND OLYMPIC VYAPAAR PVT . LTD THROUGH DEMAND DRAFTS OF BHUTAN NATIONAL BANK AND DRUNK PNB BANK L TD IT IS NOT CLEAR FROM THE ASSESSMENT ORDER THAT WHY THE SAME ARE BEING TREATE D AS NON GENUINE. THERE IS NO FINDING IN THE ASSESSMENT ORDER THAT SOME SUSPIC IOUS FUNDS WERE INTRODUCED TO OBTAIN SUCH DEMAND DRAFTS AND IF IT IS PRESUMED TO BE SO THAN STILL THERE NO CONTRARY MATERIAL TO SHOW THAT THE SAME WAS BELONGI NG TO THE ASSESSEE. THERE IS NO INQUIRY THAT HOW SUCH DEMAND DRAFTS WERE ORIGINA TED AND WHO MANAGED SUCH AFFAIRS. WHAT WAS THE SOURCE OF FUNDS TO OBTAI N THE BANK DRAFTS. THIS ALSO PROVES THAT THE INQUIRIES ON WHICH THE DEPARTMENT I S RELYING ARE TOTALLY IRRELEVANT FOR THE DETERMINATION OF THE SHARE CAPITAL RECEIVED BY THE ASSESSEE IS OWN FUND OF THE ASSESSEE GROUP. H) IT IS AGAIN RELEVANT TO MENTION HERE WHATEVER FI NDING/INQUIRIES DISCUSSED ABOVE WAS NEVER BOUGHT IN THE KNOWLEDGE OF THE ASSESSEE A ND THE SAME WAS NEVER CONFRONTED FROM THE ASSESSES. NOW IT IS SETTLED LAW THAT EVIDENCES FILED BY ASSESSEE ARE TO BE EVALUATED AND BE ACCEPTED AND TH E EXCEPTION IS WHEN A.O. COLLECTS MATERIAL IN SUPPORT OF HIS FINDING CONFRO NTS IT TO THE ASSESSEE GIVES HIM REASONABLE OPPORTUNITY OF REBUTTING SUCH MATERIAL A ND AFTER CONSIDERING REPLY OF ASSESSEE PASSES A SPEAKING ORDER. THE A.O. WAS REQUI RED TO CONFRONT THE ASSESSEE WITH ANY MATERIAL COLLECTED AT THE BACK OF THE ASSESSEE AND IN CASE OF STATEMENT OF THIRD PARTY RECORDED AT THE BACK OF TH E ASSESSEE OPPORTUNITY OF CROSS EXAMINATION HAS TO BE OFFERED TO THE ASSESSEE FAILING WHICH THE SAID MATERIAL STATEMENT ETC WILL BE RENDERED UNRELIABLE AND ADDITION MADE ON SUCH MATERIAL/STATEMENT WILL BE ILLEGAL AS HELD IN : - A) R.B. MITTAL V CIT 246 ITR 283 (AP) B) KHANDELWAL CONSTRUCTIONS V CIT 227 ITR 900 (GUJ) C) CIT V ORISSA CORPORATION PVT. LTD. 158 ITR 78(SC ) D) CIT V INDER KUMAR 2014-TIOL-791-HC-RAJ-IT IT IS A FUNDAMENTAL PRINCIPLE OF NATURAL JUSTICE TH AT NO MATERIAL SHOULD BE RELIED UPON AGAINST A PARTY WITHOUT GIVING HIM AN OPPORTUN ITY OF EXPLAINING THE SAME. THE RIGHT TO KNOW THE MATERIALS ON WHICH A.O. IS GOI NG TO TAKE A DECISION IS A ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 86 PART OF THE RIGHT TO DEFEND ON SELF. THE A.O. IS OBL IGED TO PROVIDE A REASONABLE OPPORTUNITY OF BEING HEARD. REASONABLE OPPORTUNITY D OES NOT MERELY MEAN AN OPPORTUNITY GIVEN BUT OPPORTUNITY MUST BE REASONABL E. THERE SHOULD BE ADEQUATE NOTICE. DUTY OF ACT FAIRLY IS PART OF THE PROCEDURE . FAIR HEARING MEANS THAT THE PARTY MUST BE AWARE OF THE CASE AGAINST HIM AND HE MUST ALSO KNOW WHAT EVIDENCE IS BEING CONSIDERED TO DRAW A PRESUMPTION AFFECTING HIM. I) IN THIS REGARD WE FURTHER PLACE RELIANCE ON FOLLOWI NG DECISIONS: - I) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF BARKHA SYN THETICS LTD V ACIT 155 TAXMAN 289 HAS HELD THAT ONUS ON ASSESSEE IS TO PROVE THE EXISTENCE OF THE PARTY AND IN CASE THE MONEY IS REC EIVED THROUGH BANKING CHANNEL THEN IT IS NOT THE BURDEN ON THE ASSESSEE T O PROVE THAT SUCH PARTY HAS INVESTED HIS OWN MONEY OR SOME OTHER PERSON MADE IN VESTMENT IN THE NAME OF THAT PERSON. BURDEN ON ASSESSEE IS TO ESTABLISH THE TRANSACTION BETWEEN ASSESSEE AND CREDITOR. IF THE REVENUE FEELS THAT MO NEY INVESTED BELONGS TO ASSESSEE THAN ONUS SHIFTS ON IT. ONUS IS TO BE DISC HARGED BY COLLECTING EVIDENCES. MENTIONING OF MODUS OPERANDI IS NOT SUFFICIENT AND IT WILL NOT TAKE THE PLACE OF EVIDENCE. II) THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S JAI KUMAR BAKLIWAL 366 ITR 217 HAS REFERRED TO THE DEPOSIT OF CASH IN THE ACCOUNT OF THE CREDITOR AND OBSERVED AS UNDER: - CERTAINLY DEPOSIT OF CASH AND IMMEDIATE TRANSFER OF CHEQUE OR CLEARANCE OF THE CHEQUE WITHIN A DAY OR TWO CASTS A DOUBT AS THE TRA NSACTION APPEARS TO BE SOMEWHAT DOUBTFUL BUT SUSPICION HOWSOEVER STRONG IT MAY BE IS NOT SUFFICIENT ITSELF. IN THE CASE OF THE ASSESSEE THE ASSESSEE HAS PROV IDED ALL DETAILS AND COMPANIES WHICH APPLIED FOR SHARES ARE FILING I. T AX RETURN AND INVESTMENT IS REFLECTED IN THEIR BALANCE SHEET. THE HONBLE RAJ HIGH COURT IN THE CASE OF JAI KUMAR BAKLIWAL (SUPRA) HAS HELD THAT ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JAI KUMAR BAKLIWAL (SUPRA) HAS REFERRED TO SOME OBSERVATIONS FROM SOME DECISIONS AND THESE ARE REPRODUCED AS UNDER: HONBLE APEX COURT IN THE CASE OF CIT V DAULAT RAM RA WATMUL [1973] 87 ITR 349 HELD AS UNDER: THE ONUS TO PROVE THAT THE APPARENT IS NOT THE RE AL IS ON THE PARTY WHO CLAIMS IT TO BE SO. AS IT WAS THE DEPARTMENT WHICH CLAIMED THA T THE AMOUNT OF FIXED DEPOSIT RECEIPT BELONGED TO THE RESPONDENT FIRM EVE N THOUGH THE RECEIPT HAD BEEN ISSUED IN THE NAME OF BISWANATH THE BURDEN LAY ON THE DEPARTMENT TO PROVE THAT THE RESPONDENT WAS THE OWNER OF THE AMOUNT DES PITE THE FACT THAT THE RECEIPT WAS IN THE NAME OF BISWANATH. A SIMPLE WAY OF DISCHARGING THE ONUS AND RESOLVING THE CONTROVERSY WAS TO TRACE THE SOUR CE AND ORIGIN OF THE AMOUNT AND FIND OUT ITS ULTIMATE DESTINATION. SO FAR AS TH E SOURCE IS CONCERNED THERE IS NOT MATERIAL ON THE RECORD TO SHOW THAT THE AMOUNT COME FROM THE COFFERS OF THE RESPONDENT-FIRM OR THAT IT WAS TENDERED IN BURRABAZ AR CALCUTTA BRANCH OF THE CENTRAL BANK ON NOVEMBER 15 1944 ON BEHALF OF TH E RESPONDENT. AS REGARDS THE DESTINATION OF THE AMOUNT IT HAS ALREADY BEEN MENTIONED THAT THERE IS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 87 NOTHING TO SHOW THAT IT WENT TO THE COFFERS OF THE RESPONDENT. ON THE CONTRARY THERE IS POSITIVE EVIDENCE THAT THE AMOUNT WAS RECE IVED BY BISWANATH ON JANUARY 22 1946. IT WOULD THUS FOLLOW THAT BOTH AS REGARDS THE SOURCE AS WELL AS THE DESTINATION OF THE AMOUNT THE MATERIAL ON T HE RECORD GIVES NO SUPPORT TO THE CLAIM OF THE DEPARTMENT. THE GAUHATI HIGH COURT IN THE CASE OF NEMI CHAND V. CIT [2 003] 264 ITR 254/[2004] 136 TAXMAN 213 HELD THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OR SOURCES FROM WHE RE THE CREDITOR HAD ACCUMULATED THE AMOUNT WHICH HE HAD ADVANCED IN THE FORM OF LOAN TO THE ASSESSEE AND SECTION 68 CANNOT BE READ TO SHOW THAT IN THE CASE OF FAILURE OF SUB-CREDITORS TO PROVE THEIR CREDITWORTHINESS THE A MOUNT ADVANCED AS LOAN TO THE ASSESSEE BY THE CREDITOR SHALL HAVE TO BE READ AS C OROLLARY AS THE INCOME FROM UNDISCLOSED SOURCE OF THE ASSESSEE HIMSELF. THIS COURT IN THE CASE OF KANHAILAL JANGID V. ASSTT. CIT [IT APPEAL NO.85 OF 2001 DATED 2.1.2007] HELD THAT THE BURDEN DOES NOT GO BEYOND TO PUT THE ASSESSEE UNDER AN OBLIGATION TO FURTHER PRO VE THAT WHERE FROM THE CREDITOR HAS GOT OR PROCURED THE MONEY TO BE DEPOSI TED OR ADVANCED TO THE ASSESSEE. THE FACT THAT THE EXPLANATION FURNISHED B Y THE CREDITOR ABOUT THE SOURCE FROM WHERE HE PROCURED THE MONEY TO BE DEPOS ITED OR ADVANCED TO THE ASSESSEE IS NOT RELEVANT FOR THE PURPOSES OF REJECT ING THE EXPLANATION FURNISHED BY THE ASSESSEE AND MAKE ADDITIONS OF SUCH DEPOSITS AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES BY INVOKING SEC.68 UNLESS IT CAN BE SHOWN BY THE DEPARTMENT THAT SOURCE OF SUCH MONEY COMES FROM THE ASSESSEE HIMSELF OR SUCH SOURCE COULD BE TRACED TO THE ASSESSEE ITSELF. THIS COURT IN THE CASE OF ARAVALI TRADING CO. V ITO [20 10] 187 TAXMAN 338 (RAJ.) HAS GONE TO THE EXTENT OF OBSERVING THE FACT THAT THE EXPLANATION FURNISHED BY THE FOUR CREDITORS ABOUT THE SOURCES W HERE FROM THEY ACQUIRED THE MONEY WAS NOT ACCEPTABLE BY THE REVENUE COULD NOT P ROVIDE NECESSARY NEXUS FOR DRAWING INFERENCE THAT THE AMOUNT ADMITTED TO BE DE POSITED BY THESE FOUR PERSONS BELONGED TO THE ASSESSEE. THE ASSESSEE HAVI NG DISCHARGED HIS BURDEN BY PROVING THE EXISTENCE OF THE DEPOSITORS AND THE DEPOSITORS OWING THEIR DEPOSITS HE WAS NOT FURTHER REQUIRED TO PROVE SOUR CE OF SOURCE. AS OBSERVED HEREIN ABOVE THOUGH U/S 68 AO IS FREE TO SHOW WITH THE HELP OF THE ENQUIRY CONDUCTED BY HIM INTO THE TRANSACTION WHICH HAS TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB-CREDITOR THAT THE TRANSACT ION BETWEEN TWO WERE NOT GENUINE AND THAT THE SUB-CREDITOR HAD NO CREDITWORT HINESS IT WILL NOT NECESSARILY MEAN THAT LOAN ADVANCED BY THE SUB-CREDITOR TO THE CREDITORS WAS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES UNLESS THERE IS E VIDENCE DIRECT OR CIRCUMSTANTIAL TO SHOW THAT THE AMOUNT WHICH HAD B EEN ADVANCED BY THE SUB- CREDITOR TO THE CREDITOR HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITOR FROM THE ASSESSEE. THE LOGICAL INTERPRETATION WILL BE THAT WHILE THE ASSESSEE HAS TO PROVE AS SPECIAL KNOWLEDGE I.E. FROM WHERE HE HAS RECEIVED THE CREDI T AND ONCE HE DISCLOSED THE SOURCE FROM WHICH HE HAS RECEIVED MONEY HE MUST AL SO ESTABLISH THAT SO FAR AS HIS TRANSACTION WITH HIS CREDITOR IS CONCERNED THE SAME IS GENUINE AND HIS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 88 CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE LO AN WHICH THE ASSESSEE HAD RECEIVED. WHEN THE ASSESSEE DISCHARGES THE BURDEN S O PLACED ON HIM ONUS THEN SHIFTS TO THE AO IF THE AO ASSESSES THE SAID LOAN A S THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE HE HAS TO PROVE EITHER BY D IRECT EVIDENCE OR INDIRECT/CIRCUMSTANTIAL EVIDENCE THAT THE MONEY WHI CH THE ASSESSEE RECEIVED FROM THE CREDITOR ACTUALLY BELONG TO AND WAS OWNED BY THE ASSESSEE HIMSELF. IF THERE IS DIRECT EVIDENCE TO SHOW THAT THE LOAN RECEIVED BY THE ASSESSEE ACTUALLY BELONG TO THE ASSESSEE THERE WILL BE NO D IFFICULTY IN ASSESSING SUCH AMOUNT AS THE INCOME OF THE ASSESSEE FROM UNDISCLOS ED SOURCE BUT IF THERE IS NO DIRECT EVIDENCE IN THIS REGARD THEN THE INDIRECT O R CIRCUMSTANTIAL EVIDENCE HAS TO BE CONCLUSIVE IN NATURE AND SHOULD POINT TO THE ASS ESSEE AS THE PERSON FROM WHOM THE MONEY HAS ACTUALLY FLOWN TO THE HANDS OF T HE CREDITOR AND THEN FROM THE HANDS OF THE CREDITOR TO THE HANDS OF THE CREDI TOR. III) THE LD. DELHI BENCH OF INCOME TAX TRIBUNAL IN THE CASE O F ITO V M/S. RELIANCE MARKETING PVT. LTD. 2015-TIOL-319-TAT-DEL AT PARA 16 OBSERVED AS UNDER: WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSEE FURNISHED THE EVIDE NCES TO PROVE THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY FURNISHING THEIR PAN NUMBER AND COPY OF ACKNOWLEDGMENT OF INCOME-TAX RETURN. THE AMOUNT ON A CCOUNT OF SHARE APPLICATION WAS RECEIVED THROUGH BANKING CHANNEL C OPIES OF THE CONFIRMATION ALONGWITH AFFIDAVIT OF THE PARTIES WERE FURNISHED. THE ASSESSEE ALSO FURNISHED THE COPY OF SHARE APPLICATION FORMS COPY OF FORM N O.2 FILED WITH REGISTER OF COMPANIES (ROC) SHOWING ALLOTMENT OF SHARES TO THE APPLICANTS. THEREFORE THE ASSESSEE DISCHARGED THE ONUS CAST UPON IT AS SUCH THE LD. CIT (A) WAS FULLY JUSTIFIED IN DELETING THE IMPUGNED ADDITION MADE BY THE AO. FURTHERMORE THE LD. CIT (A) WHILE DECIDING THE ISSUE IN FAVOUR OF THE A SSESSEE RELIED UPON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS DWARKADSHISH INVESTMENT PVT. LTD. (SUPRA) AND THE J UDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. (SUPRA) THEREFORE WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CI T (A) AND ACCORDINGLY DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. IV). THE HONBLE APEX COURT IN THE CASE OF LALCHAND BHAGAT AMB ICA RAM V CIT 37 ITR 288 HAS HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF SURMISES AND CONJECTURES. IN THIS CASE THE A.O. MADE ADDITION ON THE BASIS OF SURROUNDING CIRCUMSTANCES AND ENTERTAINED A SUSPICI ON THAT ASSESSEE WAS INDULGING IN SMUGGLING OF FOOD GRAINS TO BENGAL AS WAS THE NOTORIETY OF GRAIN MERCHANTS. THE ASSESSEE COULD NOT BE SAID TO BE IND ULGING IN SMUGGLING WITHOUT AN IOTA OF EVIDENCE. THE ADDITION COULD NOT BE MADE AS THE FINDING THAT SUM OF HIGH DENOMINATION NOTES WAS SECRETED PROFITS WAS BA SED ON SURMISES SUSPICIOUS AND CONJECTURES. V). THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V AKJ GRANITES P. LTD 301 ITR 298 OBSERVED THAT SHARE APPLICATION MONEY GIVEN BY VAR IOUS PERSONS CANNOT BE PRESUMED THAT SAME BELONGS TO ASS ESSEE AND CANNOT BE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 89 ASSESSED IN HIS HANDS AS UNDISCLOSED SOURCES UNLESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MONEY FOR AUGMENTING THE INV ESTMENT IN BUSINESS HAS FLOWED FROM THE ASSESSEES OWN MONEY. VI). THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V VALUE CAP ITAL SERVICES P LTD. 307 ITR 334 (DELHI) HELD THAT THERE IS ADDITIONAL BURDEN ON THE DEPARTMENT TO SHOW THAT EVEN IF SHARE APPLICANTS DI D NOT HAVE THE MEANS TO MAKE INVESTMENT THE INVESTMENT MADE BY THEM ACTUAL LY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TR EATED AS UNDISCLOSED INCOME OF THE ASSESSEE. VII) THE HONBLE DELHI HIGH COURT IN THE CASE OF DIVINE LEASI NG AND FINANCE LTD. 299 ITR 268 MENTIONED THAT THERE IS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE CHANNEL OF INVESTMENT IN SHARE CA PITAL. BUT THE ASSESSEE SHOULD NOT BE HARASSED TO PROVE THE NEGATIVE. IF TH E A.O. HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED TO C ARRY OUT THROUGH INVESTIGATION BUT IF THE A.O. FAILS TO UNEARTH ANY W RONG OR ILLEGAL DEALINGS HE CAN NOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT T HE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE ASSESSEE. VIII) THE HONBLE DELHI HIGH COURT AFTER CONSIDERING VARIOUS J UDGMENTS IN THE CASE OF CIT V KAMDHENU STEEL AND ALLOYS LTD. 361 ITR 22 0 HELD THAT IF ADEQUATE EVIDENCE/MATERIALS GIVEN BY ASSESEE PRIMA FACIE DISCHARGE THE BURDEN AND IF SUCH EVIDENCE IS NOT DISCARDED OR POURED THA T EVIDENCE HAS BEEN CREATED THEN NO ADDITION SHOULD BE MADE. THE MATTER IS NOT TO BE SET ASIDE AS THERE IS NO PROCEDURAL DEFECT OR IRREGULARITY AND NO FRESH INNI NGS TO A.O. FOR HIS NEGLIGENCE IF HE FAILS TO COLLECT INFORMATION. IX) SHARES WERE ISSUED ON PREMIUM TO EMPLOYEES HAVI NG MEAGER TAXABLE INCOME THOUGH COMPANY DID NOT HAVE FIXED ASSETS BUT OF IDE NTITY OF SHARE HOLDERS PROVED THEN ONUS ON REVENUE TO ESTABLISH N BRING MA TERIAL TO PROVE THAT DOCUMENTS FILED BY ASSESSEE BE NOT ACCEPTED. REF. CHARTERED MOTORS PVT LTD. V ACIT (ITAT AHM) 2014-TIOL-610-ITAT-AHM. X) THE LD. JAIPUR TRIBUNAL IN THE CASE OF DCIT V M/S KAMDHE NU STEEL AND ALLOYS LTD. 2014-TIOL-709-ITAT -JAIPUR HAD AN OCCASION TO CONSIDER A CASE WHERE SEARCH OPERATIONS WERE CONDUCTED AND THE COMP ANY HAS ISSUED SHARES ON PREMIUM. THE LD. JAIPUR TRIBUNAL IN PARA 6 & 7 H AS MENTIONED AS UNDER: AT THE OUTSET THE LEARNED A.R. FOR THE ASSESSEE ARGU ED THAT IN ASSESSEES OWN CASE IN ITA NO.972/2009 CIT VS. KAMDHENU STEEL AND O THER COMPANY FOR A.Y. 2004-05 = 2012-TIOL-236-HC-DEL-IT HELD THAT THE ASS ESSEE HAD SUBMITTED THE PARTICULARS OF REGISTRATION OF THE APPLICANT COMPAN Y THE CONFIRMATION FROM THE SHARE APPLICANTS BANK ACCOUNT DETAILS FROM WHICH P AYMENT THROUGH ACCOUNT PAYEE CHEQUES IT HAS BEEN HELD BY THE HONBLE DELH I HIGH COURT THAT THE ASSESSEE HAD DISCHARGED ITS INITIALLY ONUS. WITH TH E REGISTRATION OF THE COMPANY THE IDENTITY HAS BEEN ESTABLISHED THE APPLICANT CO MPANY WAS HAVING BANK ACCOUNT IT HAD MADE THE PAYMENTS THROUGH ACCOUNT P AYEE CHEQUES. IT IS FURTHER HELD THAT IT WOULD NOT AUTOMATICALLY FOLLOW THAT TH E SAID MONEY BELONGS TO THE ASSESSEE AND BECOME UNACCOUNTED MONEY. ACCORDING THE HONBLE HIGH COURT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 90 THE ASSESSEE APPEARS TO BE CORRECT ON THIS ASPECT. THE HONBLE COURT FELT THAT SOMETHING MORE WHICH WAS NECESSARY AND REQUIRED TO BE DONE BY THE ASSESSING OFFICER WAS NOT DONE. THE ASSESSING OFFICE R FAILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHER INVESTIG ATION. THE LEARNED A.R. FURTHER DRAWN OUR ATTENTION ON THE FINDINGS GIVEN BY THE HO NBLE COURT THAT JUST BECAUSE OF THE CREDITOR/SHARE APPLICANT COULD NOT BE FOUND AT THE ADDRESSES GIVEN IT WOULD NOT GIVE THE REVENUE A RIGHT TO INVOKE SECTIO N 68 OF THE IT ACT WITHOUT ANY ADDITIONAL MATERIAL TO SUPPORT SUCH A MOVE. THE HON BLE DELHI HIGH COURT ALSO NOT ALLOWED TO REMIT BACK THE ISSUE TO THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY ON ADDITION MADE U/S 68 OF THE ACT ON THE GR OUND THAT THERE IS NO REASON TO SEND BACK TO THE ASSESSING OFFICER ONLYH SUBSTAN TIAL QUESTION OF LAW CAN BE DECIDED AND SECOND INNING CANNOT BE ALLOWED TO THE REVENUE. THE LEARNED AR FURTHER SUBMITTED THAT DURING THE COURSE OF SEARCH NO INDISCRIMINATING DOCUMENTS WERE FOUND AT THE BUSINESS PREMISES OF TH E ASSESSEE. THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE ACT TO THE S HARE SUBSCRIBERS WHICH HAS BEEN SERVED BY THE POSTAL AUTHORITIES. THE LEARNED ASSESSING OFFICER MADE INQUIRY FROM THE FIELD OFFICE AT ITS BACK WITHOUT I NFORMING THEM AND USED THE INFORMATION AGAINST THE ASSESSEE BUT THE LEARNED CI T (A) HAD PROVIDED OPPORTUNITY ON IT. THUS THE APPELLANT HAD DISCHARG ED HIS ONUS AND PROVED THE IDENTITY OF THE PERSONS BY FOLLOWING COMPANY MASTER DETAILS OF ROC COPY OF PAN NO. CONFIRMATION. THE APPELLANT HAD RECEIVED THESE SUBSCRIPTIONS THROUGH BANKING CHANNELS THEREFORE THESE TRANSACTIONS ARE GENUINE. COPY OF RETURN FILED SHOWS THAT SUBSCRIBERS HAVE SUFFICIENT FUND TO APPL Y THE SHARE SUBSCRIPTION. IT CAN BE PROVED FROM THE BANK ACCOUNT OF THE SUBSCRIB ERS ON WHICH JAWAHAR MARKET HAD BEEN MENTIONED. THEREFORE HE PRAYED TO CONFIRM THE ORDER OF THE LEARNED CIT(A). WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS UNDISPUTED THAT DURI NG THE COURSE OF SEARCH RELEVANT TO A.Y. 2009-10 NO INCRIMINATING DOCUMENTS WERE FOUND IN KAMDHENU GROUP CASES. THE APPELLANT FILED CONFIRMATION OF PAN NO. ADDRESSES OF THE SUBSCRIBERS & COMPANY MASTER DETAIL OF ROC. THE SHAR E CAPITAL WAS RECEIVED THROUGH PROPER BANKING CHANNELS. THE ASSESSING OFFIC ER COLLECTED INFORMATION U/S 133(6) OF THE ACT WHICH WAS SERVED ON ALL THE S UBSCRIBERS; THEREFORE THESE ARE THE SUFFICIENT PROOF OF IDENTITY GENUINENESS A ND CREDITWORTHINESS OF THE SUBSCRIBERS. THE LEARNED ASSESSING OFFICER HEAVILY R ELIED UPON THE INSPECTORS REPORT WHICH WAS AGAINST THE NATURAL JUSTICE AS TH E COPY WAS PROVIDED ON 06.06.2011 TO THE APPELLANT WHEREAS ASSESSMENT ORDE R WAS COMPLETED BY THE LEARNED ASSESSING OFFICER ON 26.12.2010. JAWAHAR MAR KET IS EVIDENT FROM THE COPY OF BANK ACCOUNT OF SUBSCRIBER ON WHICH THIS A DDRESS HAD BEEN MENTIONED AS WELL AS ON MASTER DETAIL OF ROC. THE SHARE CAPITA L WAS SUBSCRIBED IN F.Y. 2005-06 AND INQUIRIES WERE MADE IN F.Y. 2010-11. TH ERE IS A TIME GAP OF NEAR ABOUT 5 YEARS THE SHARE APPLICANT MIGHT HAVE CHANG ED THEIR ADDRESSES WHICH COULD BE VERIFIED FROM THE ROC BY THE ASSESSING OFFIC ER TO SUBSTANTIATE HIS FINDINGS WHICH HAS NOT BEEN DONE BY HIM. THE LEARN ED CIT (A) HAS CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER ON FURNISHI NG OF COPY OF BANK ACCOUNT OF M/S MEGATRONICS SYSTEMS PVT. LTD. AT THE TIME OF APPELLATE PROCEEDINGS. FURTHER THE HONBLE DELHI HIGH COURT HAS DECIDED AS SESSEES OWN CASE ON SIMILAR FACTS IN ITS FAVOUR IN A.Y. 2006-07. THE LEA RNED CIT D.R. HAS NOT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 91 CONTROVERTED THE FINDINGS GIVEN BY THE LEARNED CIT (A). THEREFORE WE UPHELD THE ORDER OF THE LEARNED CIT (A). J) THUS IN VIEW OF ABOVE SUBMISSION THIS IS TO SUBM IT THAT THERE IS NO COGENT REASON WITH LD. AO EITHER AS A RESULT OF SEARCH OVER THE A SSESSEE AS WELL AS ON INQUIRIES CARRIED OUT BY THE DEPARTMENT TO PRESUME THAT THE A SSESSEE INTRODUCED ITS UNACCOUNTED MONEY IN BOOKS OF ACCOUNTS IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM. THE INTERMEDIATE COMPANIES/PERSONS ARE SEP ARATE INCOME TAX ASSESSEE AND HAVING THEIR OWN NET WORTH OWN SOURCE OF FUNDS MUCH PRIOR TO THE INVESTMENT MADE IN THE ASSESSEE COMPANY AND IF SOME SUSPICIOUS FUNDS HAD BEEN INTRODUCED IN ACCOUNTS OF SUCH COMPANIES THEN THE EXPLANATION OF SUCH FUNDS SHOULD HAVE BEEN CALLED FROM CONCERNING PERSO N/COMPANY AND IN CASE OF FAILURE TO DO SO THE ACTION SHOULD HAVE BEEN TAKEN IN THE CASE OF CONCERNING PERSON. INSTEAD OF DOING SO THE DEPARTMENT ADOPTED A SHORT CUT METHOD OF TREATING SUCH SUSPICIOUS MONEY AS UNEXPLAINED MONEY OF THE ASSESSEE AND ADDED THE SAME INCOME OF THE ASSESSEE WITHOUT CARRY ING NECESSARY INQUIRIES OR TAKING NECESSARY ACTION AGAINST SUCH PERSONS BY JUS TIFYING ITS ACTION ON THE BASIS OF SOME IRRELEVANT INQUIRIES. THERE IS NO CAS E OR EVIDENCE WITH THE DEPARTMENT TO PRESUME THAT THE ASSESSEE HAS INTRODU CED ITS EXPLAINED MONEY IN ACCOUNTS OF SUCH INVESTOR COMPANIES. K) IN THIS REGARD WE WILL LIKE TO DRAW YOUR KIND AT TENTION TOWARDS THE ORDER PASSED BY DCIT-CC-2 JAIPUR IN THE CASE OF M/S MAYUKH VINI MAY PVT. LTD FOR AY 2009- 10 WHEREIN THE ADDITION OF RS. 10 54 95 000/- WAS BY LD. AO IN RETURN INCOME OF THE ASSESSEE BY PASSING AN ORDER U/S 143(3) READ WI TH SECTION 263 OF INCOME TAX ACT TREATING THE SHARE PREMIUM AS BOGUS AND ADDE D THE SAME TOTAL INCOME OF THAT ASSESSEE. THE SHARE PREMIUM WAS ADDED AS IN COME OF THE THAT ASSESSEE BUT CONSEQUENTLY THE INVESTMENTS & OTHER ASSETS PUR CHASED BY UTILIZING SUCH SHARE PREMIUM WERE TREATED GENUINE. FOLLOWING THE SAME ANALOGY IN THE CASE OF THE AS SESSES COMPANY IF THE SOURCE OF FUNDS WITH THE INVESTOR COMPANIES IS BEIN G TREATED AS NON GENUINE THAN THE ADDITIONS OF THE SAME SHOULD HAVE BEEN MAD E IN THE HANDS OF SUCH COMPANIES IN THE INITIAL YEAR WHEREIN THE SOURCE OF FUNDS WERE GENERATED AND NOT IN THE HANDS OF THE ASSESSEE COMPANY. IN THE C ASE OF THE ASSESSEE THE SOURCE OF FUNDS WITH INVESTOR COMPANIES HAS BEEN WE LL PROVED AND THE SAME IS OUT OF REALIZATION FROM PREVIOUS INVESTMENTS/ASSETS WHICH HAS BEEN CONSIDERED AS EXPLAINED BY THE DEPARTMENT ITSELF IN THE ASSESS MENT ORDER OF SUCH COMPANIES. ONCE THE DEPARTMENT ITSELF TREATED INVES TMENTS/ASSETS OF A COMPANY AS GENUINE AND IF SUCH COMPANY IS REINVESTING THE F UNDS REALIZED FROM SUCH INVESTMENTS/ASSETS THAN HOW THE SAME CAN BE TREATED AS NON GENUINE. WITHOUT PREJUDICE TO OUR ALL SUBMISSION IT IS SUBMIT TED THAT THE ASSESSEE RECEIVED SHARE APPLICATION OF RS. 1 55 00 000/- FROM M/S MAYUKH VINIMAY PVT. LTD AND THE INITIAL SOURCE OF FUN DS WITH MAYUKH VINIMAY HAS ALREADY BEEN ADDED AS INCOME OF M/S MAY UKH VINIMAY PVT. LTD AND THE INVESTMENT BY THIS COMPANY IN THE ASSESSE E COMPANY WAS MADE OUT OF ROTATION OF SUCH FUNDS THAN HOW THE SAM E CAN BE AGAIN ADDED AS INCOME OF THE ASSESSEE. THE SAME WILL RESULT ED TO THE DOUBLE ADDITION OF THE SAME AMOUNT. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 92 5. AFTER BEING DOUBTED THE CREDITWORTHINESS AND GEN UINENESS OF THE TRANSACTIONS ON THE BASIS OF REASONS/INQUIRIES/ANALYSIS DISCUSS IN PARA 4 ABOVE THE LD. AO FURTHER DOUBTED THE CREDITWORTHINESS AND GENUINENES S OF THE TRANSACTIONS FOR THE FOLLOWING REASONS AS GIVEN IN PARA 17 (A TO C) AND PARA 18 OF THE ASSESSMENT ORDER: - I) THE ASSESSEE COMPANY WAS INCORPORATED ON 01.07.2 007 WITH THE SUBSCRIBE CAPITAL OF RS. 1 00 000/- ONLY. THE ASSESSEE COMPANY RECEIVED THE HUGE SHARE PREMIUM JUST AFTER FEW YEAR OF ITS INCORPORATION. II) AS PER THE AUDITED P&L ACCOUNT AND BALANCE SHEET THE ASSESSEE COMPANY DID NOT HAVE ANY BUSINESS WHAT SO EVER. III) PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE C OMPANY REVEALED THAT THERE WERE NO PHYSICAL ASSETS/ASSETS ARE NOT IN COMMENSURATE T O VALUE OF SHARE WITH THE COMPANY WITHER IN THE FORM OF FIXED ASSETS PLANT & MACHINERY ETC. IN THE ABOVE BACKGROUND THE RECEIPT OF SHARE CAPITA L RS. 1 03 00 000/- AND PREMIUM TO THE TUNE OF RS. 6 75 00 000/- DURING THE YEAR UND ER CONSIDERATION WAS NOT ONLY ABNORMAL BUT ALSO APPEARED TO BE A PART OF A WELL P LANNED EXERCISE OF TAX EVASION AS DISCUSSED EARLIER. REGARDING THESE FINDINGS/OBSERVATIONS OF LD. AO WE MA Y SUBMIT AS UNDER: - I) ADMITTEDLY THE ASSESSEE COMPANY RECEIVED HUGE SHARE PREMIUM JUST AFTER FEW YEARS OF ITS INCORPORATION BUT THE SAME DOES NOT AU TOMATICALLY MAKE THE SHARE PREMIUM AS NON GENUINE AND TAXABLE IN THE HANDS OF THE ASSESSEE. THE INVESTMENT BY THE INVESTEE COMPANIES WAS MADE AFTER BEING CONVINCED WITH THE FUTURE BUSINESS PLANNING OF THE ASSESSEE COMPANY. T HE ASSESSEE COMPANY BOOKED A BIG SPACE (MEANT FOR CINEMA HALL) IN UNDER CONSTRUCTION COMPLEX NAMING WORLD TRADE PARK WHICH IS IN ONE OF THE PR ESTIGIOUS COMMERCIAL COMPLEX OF THE CITY AND SITUATED AT VERY PRIME LOCA TION OF THE CITY. THE SUBSTANTIAL AMOUNT WAS ALREADY GIVEN AS ADVANCE FOR BOOKING IN PREVIOUS YEARS AS WELL AS IN THE YEAR UNDER CONSIDERATION. FURTHER THE LEASING OUT THIS SPACE TO WORLD FAMOUS CINEMA THEATRE OPERATOR CINEPOLIS WAS UNDER PROCESS. THE ASSESSEE COMPANY WAS EXPECTING GOOD REVENUE FROM OP ERATION/LETTING OF SUCH BUILDING TO CINEPOLIS AND THE INVESTOR COMPANIES WERE CONVINCED TO BE PARTNER OF SUCH PRESTIGIOUS PROJECT THEREFORE THEY INVESTED THE FUNDS IN THE ASSESSEE COMPANY. THUS THE INVESTMENT MADE BY THE I NVESTEE COMPANIES IN SHARES OF THE ASSESSEE COMPANY ON THE BASIS OF FUTU RE BUSINESS PLANS OF THE ASSESSEE COMPANY AND OUTCOME THERE FROM. II) ADMITTEDLY WHEN THE SHARE PREMIUM WAS RECEIVED THER E WAS NO BUSINESS IN THE ASSESSEE COMPANY IN COMMENSURATE TO SHARE PREMIUM B UT AS STATED EARLIER THE INVESTMENT WAS MADE BY THE INVESTEE COMPANIES IN SH ARES OF THE ASSESSEE COMPANY ON THE BASIS OF FUTURE BUSINESS EXPANSION P LANS OF THE ASSESSEE COMPANY AND OUTCOME THEREFROM. FURTHER THE ASSESSEE COMPANY IS ONE OF THE GROUP COMPANY OF MOTISONS GROUP. THE MOTISONS GROUP IS VERY PRESTIGIOUS AND WELL KNOW GROUP OF THE NORTHERN PART OF INDIA THER EFORE THE INVESTOR COMPANY INVESTED THE FUNDS IN THE ASSESSEE COMPANY ON THE G OODWILL OF THE MOTISONS GROUP AFTER KNOWING THEIR FUTURE PLANS AND FUTURE E ARNINGS. THEREFORE THE SHARE CAPITAL/SHARE PREMIUM INVESTED BY INVESTOR COMPANIE S WAS NOT ON THE BASIS OF ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 93 CURRENT AFFAIRS OF THE ASSESSEE COMPANY BUT THE SAM E WAS RESULT OF FUTURE BUSINESS EXPLANATION PLANS COUPLED WITH GOODWILL OF MOTISONS GROUP. III) ADMITTEDLY WHEN THE SHARE WERE ISSUED THE BOOK VALUE OF THE ASSETS OF THE ASSESSEE COMPANY WAS NOT IN COMMENSURATE TO THE VAL UE OF THE SHARES BUT WHILE MAKING THE INVESTMENTS THE CURRENT MARKET VAL UE OF THE ASSETS AND FUTURE POTENTIALITY & PROFITABILITY OF THE PROJECT/ASSETS ARE ALSO TAKEN INTO CONSIDERATION AND THEN THE INVESTMENTS ARE MADE. THERE ARE LOTS O F COMPANIES WHICH ISSUE THE SHARES IN MARKET THROUGH IPO AND THE SHARES OF SUCH COMPANIES ARE SUBSCRIBED ON THE BASIS OF THEIR DECLARATION REGARDING THEIR F UTURE BUSINESS PLANNING FOR WHICH THE FUNDS RAISED IN IPO. THUS THE EXISTING FI XED ASSETS OF THE COMPANY ALWAYS NOT TO BE THE CRITERIA FOR DECIDING THE INVE STMENT IN SHARES BY INVESTOR COMPANIES. THE ASSESSEE COMPANY IS ALSO IN BUSINESS OF REAL ES TATE AND IT IS AN ADMITTED FACT THAT MARKET VALUE OF IMMOVABLE ASSETS INCREASE AND BOOK VALUE DOES NOT REPRESENT THE REAL VALUE. SHARES OF REAL ESTATE COM PANIES COMMAND PREMIUM. THE REASONABLENESS OF SHARE PREMIUM IS JUSTIFIABLE FROM THE FOLLOWING DETAILS :- REAL ESTATE COMPANY FACE VALUE HIGH 2010 HIGH 2011 5 YEAR PERIOD HIGH LOW DLF 2 322 270 392 104 INDIA BULLS REAL 2 207 137 212 42 UNITECH 2 87.8 66.9 97 8 SOBHA DEVLOPERS 10 367 272 558 189 HDIL 10 290 183 296.3 26.9 GODREJ ENTERPRISES 5 361 372 378 155 BRIGADE ENTERPRISES 10 148 94 173 40.9 IV) REGARDING OBSERVATION OF LD. AO THAT SHARE CAPITAL AN D PREMIUM APPEARED TO BE A PART OF A WELL PLANNED EXERCISE OF TAX EVASION AS DISCUSSED EARLIER THIS IS TO SUBMIT THAT TAXING EVENT AROSE WHEN THE INCOME IS E ARNED AND THE TAX EVASION IS AROSE WHEN THE UNDISCLOSED INCOME IS GENERATED. IN THE FORGOING PARAS THE LD. AO HIMSELF DOUBTED THE SHARE PREMIUM ON THE GROUND THAT THE ASSESSEE COMPANY DID NOT HAVE ANY BUSINESS SO EVER I N COMMENSURATE TO THE SHARE PREMIUM. WHEN THE ASSESSEE COMPANY IS NOT HAVI NG ANY SUCH BUSINESS WHEREFROM THIS MUCH OF INCOME COULD BE EARN ED THAN QUESTION OF TAX EVASION THEREON DOES NOT ARISE. THE HONBLE APEX COURT IN THE CASE OF CIT V SATI OIL UDYO G LTD 372 ITR 746 AT PAGE 761 OBSERVED: THE BURDEN OF PROVING THAT THE ASSESSEE HAS ATTEMPT ED TO EVADE TAX ON THE REVENUE BY ESTABLISHING FACTS AND CIRCUMSTANCES FROM WHICH A R EASONABLE INFERENCE CAN BE DRAWN THAT THE ASSESSEE HAS IN FACT ATTEMPTED TO EVADE TAX LAWFULLY PAID BY IT. THEREFORE IN VIEW OF FINDING GIVEN IN THESE PARAS B Y THE LD. AO IT HAD TO BE PROVED FIRST BY THE DEPARTMENT THAT THE ASSESSEE WAS HAVING SOME INCOME ON WHICH IT HAS NOT PAID THE TAX AND THE SAME BROUGHT IN BOOKS OF ACCOU NTS IN THE FORM OF SHARE CAPITAL & PREMIUM THEREON. BUT IN THE INSTANT CASE THE DEPART MENT COULD NOT PROVE ANY KIND OF UNDISCLOSED SOURCE OF INCOME OF THE ASSESSEE AS A R ESULT OF SEARCH OVER ASSESSEE AS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 94 WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS . AS A RESULT OF SO CALLED LONG INQUIRIES/ANALYSIS THE DEPARTMENT COULD NOT EVIDENT IARY PROVED THAT THE ASSESSEE COMPANY MANAGED ITS FUNDS WITH INVESTOR COMPANIES T O BROUGHT THE SAME IN BOOKS OF ACCOUNTS IN THE FORM OF SHARE CAPITAL & PREMIUM THE REON MORE SO WHEN THE INVESTOR COMPANIES HAVING THEIR OWN SUFFICIENT FUNDS TO INVE ST IN THE ASSESSEE COMPANY MUCH PRIOR TO INVESTMENT MADE IN THE ASSESSEE COMPANY AN D APART FROM INVESTMENT MADE IN ASSESSEE GROUP HAVING OTHER INVESTMENTS/ASSETS WHIC H WERE TREATED AS GENUINE BY THE DEPARTMENT. FURTHER IN THE ASSESSMENT OF SUCH I NVESTOR COMPANIES THE SOURCE OF FUNDS AND APPLICATION OF FUNDS IS BEING TREATED AS GENUINE BY THE DEPARTMENT THAN HOW THE SAME CAN BE TREATED AS NON GENUINE IN THE C ASE OF ASSESSEE COMPANY. RELIANCE IS PLACED ON THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS SMT. P. K. NOORJAHAN 237 ITR 570 (SC) AND CIT VS BHARAT ENGINEERING AND CONSTRUCTION CO. (1972) 83 ITR 187 (SC) 6. THE LD. AO BY DOUBTING THE CREDITWORTHINESS AND G ENUINENESS OF THE SHARE CAPITAL/SHARE PREMIUM IN ABOVE PARAS ISSUED A SHOW CAUSE NOTICE DATED 06.02.2015 (COPY AT PB PAGE 105 TO 108) TO THE ASSESSEE FOR TREATING THE SHARE CAPITAL/PREMIUM AS INCOME OF THE ASSESSEE ON THE FOLLOWING GROUNDS: - A) SHARE PREMIUM/SHARE CAPITAL PAID BY INVESTOR COM PANIES IS NOT JUSTIFIED ON ANY ACCOUNT AND IT IS CLEAR THAT ENTIRE MONEY HAS BEEN INTRODUCED IN THE ASSESSEE COMPANY IN THE GARB OF SHARE PREMIUM. THE PURPOSE A ND JUSTIFICATION OF CHARGING THE SHARE PREMIUM IN EXCESS OF THE JUSTIFIABLE AMOU NT WHICH IN THIS CASE CANNOT BE MORE THAN RS.10/- PER SHARE IS ABSENT FROM THE ABOVE EXERCISE OF ISSUE AND SUBSCRIPTION OF SHARES AT A PREMIUM OF RS.290 PER SH ARE. B) THE DETAILED ENQUIRIES REVEALED THAT MOST OF THE COMPANIES ARE KOLKATTA BASED. DIRECTORS OF THESE COMPANIES ARE THE EMPLOYEES OF M OTI SONS GROUP OR THE FAMILY MEMBERS OF CHHABRA FAMILY. DETAILED ANALYSIS SHOWED THE FOLLOWING FACTS: (I) ALL THE DIRECTORS WERE RESIDENTS OF JAIPUR (II) INTERNET SEARCH SHOWED THAT DIRECTORS OF THES E KOLKATTA BASED COMPANIES ARE RELATED TO MOTISONS GROUP COMPANIES THROUGH EMPLOYM ENT OR OTHERWISE (III) ITDMS AND ITD SEARCH ON PAN OF THESE DIRECTOR S CORROBORATED THE GIVEN ADDRESSES TO A LARGE EXTENT (IV) RESIDENTIAL ADDRESS OF RAJEEV JAIN WAS THE SAME AS THAT OF MOTISONS SHARES PVT. LTD. MENTIONED ON THE VISITING CARD OF HARIDW AR OFFICE AS BRANCH HEAD. (V) ALL THESE DIRECTORS APPOINTED BETWEEN 12 TH AND 17 TH OCTOBER 2011 WHICH WAS MORE THAN A COINCIDENCE (THE PREVIOUSLY EXISTING DI RECTORS RESIGNED IN FEBRUARY 2012) (VI) THE EMAIL ID GIVEN ON MCA WEBSITE FOR ALL THE COMPANIES IS COMMON AND THE SAME IS FOR MOTISONS GROUP COMPANIES. THE COMPLIANC E OFFICER MS. NEHA JAIN COMPANY SECRETARY IS COMMON BETWEEN THESE AND MOTIS ONS GROUP COMPANIES INDICATING ABSOLUTE CONTROL OF MOTISONS GROUP UPON THESE KOLKATA BASED COMPANIES. (VII) REGISTERED ADDRESS OF ALL THE COMPANIES IS TH E SAME WHICH HAS BEEN CHANGED ON 01.03.2012. (VIII) TWO OF THE SAID COMPANIES INFORMATION ON MC A WEBSITE WERE EXAMINED IN DETAIL. M/S. ALLIANCE TRADECOM & M/S. EVERSHINE SUPPLIERS PV T. LTD WERE INCORPORATED ON 25.11.2008 AND 05.01.2009 RESPECTIVELY. THE INFL OW OF CAPITAL UPON INCORPORATION WAS THROUGH SHARE SOLD AT A VERY HIGH PREMIUM AND THEREAFTER THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 95 SAID CAPITAL WAS CLAIMED TO BE INVESTED IN UNQUOTED SHARES WORTH RS.11.06 CRORES AND RS.10.39 CRORES RESPECTIVELY. (IX) ALL ABOVE FACTORS INDICATE SYSTEMATIC AND DELI BERATE CREATION OF A COLURABLE DEVICE TO INTRODUCE SHARE CAPITAL INTO MOTISONS GRO UP COMPANIES. 7. IN RESPONSE TO SHOW CAUSE NOTICE THE ASSESSEE FI LED ITS REPLY VIDE LETTER DATED 13.02.2015 (COPY AT PB PAGE 109 TO 111). THE SUBMISSION OF THE ASSESSEE ON THE OBSERVATIONS OF LD. AO AS MENTIONED ABOVE IN PAR A 6 ABOVE IS AS UNDER: - A) THE SHARE PREMIUM WAS DECIDED BY THE COMPANY AND INVESTORS MUTUALLY AND SHARE APPLICANT COMPANIES HAVE AGREED TO PAY THIS S HARE PREMIUM. THERE WAS NO BAR TO ISSUE SHARES ON PREMIUM UNDER COMPANIES AC T AND INCOME TAX ACT FOR THE PERIOD UNDER RELEVANT. FURTHER THE LD. AO HELD T HAT THE ------IT IS CLEAR THAT ENTIRE MONEY HAS BEEN INTRODUCED IN THE ASSESSEE CO MPANY IN THE GARB OF SHARE PREMIUM---- BUT THE LD. AO DID NOT CLEAR THAT WHAT WAS THE SOURCE OF SUCH MONEY WITH THE ASSESSEE WHICH IT INTRODUCED IN THE GARB OF SHARE PREMIUM. THE SHOW CAUSE NOTICE AS WELL AS ASSESSMENT ORDER IS CO MPLETELY SILENT ON THIS ISSUE. WITHOUT HAVING SOME MONEY IT CANNOT BE INTRO DUCE IN BOOKS OF ACCOUNTS AND FOR HAVING THE MONEY THERE SHOULD BE SOME UNEXP LAINED SOURCE OF INCOME. IN THE CASE OF ASSESSEE THE DEPARTMENT AS A RESULT OF SEARCH AS WELL AS DURING ASSESSMENT PROCEEDINGS OR AS A RESULT OF INVESTIGAT ION COULD NOT PROVE THE SOURCE OF INCOME OF THE ASSESSEE WHEREFROM THIS MUC H OF MONEY WAS EARNED THEREFORE THE FINDING OF LD. AO ON THIS ISSUE IS TOT ALLY INCORRECT AND DOES NOT MAINTAINABLE IN THE EYE OF LAW. THE ALLEGATION OF LD. AO IS PATENTLY WRONG WITHOUT A NY BASIS AND MERELY ON SURMISES AND CONJECTURES. HONBLE JUSTICE HIDAYA TULLAH OF THE SUPREME COURT IN THE CASE OF SREELEKHA BANERJEE VS CIT [1 963] 49 ITR 112 (SC); 120 OBSERVED THAT THE INCOME TAX DEPARTMENT CANNOT BY MERELY REJECTING UNREASONABLY A GOOD EXPLANATION C ONVERT GOOD PROOF INTO NO PROOF HONBLE SUPREME COURT IN THE CASE OF UMA CHARAN SHAW & BROS CO VS CIT 37 ITR 271 HAS HELD THAT THE SURMISES AN D CONJECTURES AND THE CONCLUSION IS THE RESULT OF SUS PICION WHICH CANNOT TAKE THE PLACE OF PROOF. HONBLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR (2008) 299 ITR 179 (P & H ) ALSO HELD THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. B) REGARDING THE INQUIRIES WHICH ARE BEING DISCUSS I N THE SHOW CAUSE NOTICE THIS IS TO SUBMIT THAT WHATEVER INQUIRED BEING DISCUSS BY L D. AO WAS NOT IN KNOWLEDGE OF THE ASSESSEE THAT WHAT SORT OF INQUIRIES HAS BEE N MADE BY THE DEPARTMENT AND WHAT ARE THE OUTCOMES OF SUCH INQUIRIES. THEREF ORE THE ASSESSEE REQUESTED FROM THE LD. AO TO PROVIDE THE DETAILS OF INQUIRIES CONDUCED IN THIS REGARD ALONG WITH SUPPORTING DOCUMENTS BUT THE SAME NOT PROVIDED TO THE ASSESSEE. HOWEVER ON THE ISSUE RAISED BY THE LD. AO ON THE BASIS OF SO CALLED INQUIRIES WE SUBMIT AS UNDER: - I) THE ABOVE FINDING OF THE LD AO IS NOT RELEVANT AT AL L IN DECIDING THE ISSUE OF CREDITWORTHINESS OF THE INVESTOR COMPANY AND GENUIN ENESS OF THE TRANSACTIONS. EVEN IF IT IS PRESUMED THAT THE INVESTOR COMPANIES ARE UNDER THE CONTROL OF THE DIRECTORS OF THE ASSESSEE THEN ALSO THE TRANSACTIO N CANNOT BE TREATED AS NOT GENUINE AS THE MAIN ISSUE IS AVAILABILITY OF FUNDS IN THE HANDS OF THE INVESTOR ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 96 COMPANY AND IF THAT IS EXPLAINABLE THEN NO QUESTION IS ARISE FOR TREATING THE SHARE CAPITAL AS NOT GENUINE. (II) THE LOW CREDITABILITY OF DIRECTORS OF ALLOTTEE COMPANY THEIR RELATIONSHIP WITH MOTISONS GROUP ETC. HAVE NO RELEVANCE FOR EXAMINING THE GENUINENESS OF SHARE CAPITAL AND CREDITWORTHINESS OF THE INVESTOR COMPAN Y AS IN THE CASE OF ASSESSEE IT IS WELL PROVED BY DOCUMENTARY EVIDENCE THAT THE AMOUNT AGAINST SHARE APPLICATION MONEY WAS RECEIVED THROUGH GENUINE SOUR CE OF FUNDS WITH INVESTOR COMPANIES AND THE AMOUNT WAS ADJUSTED AGAINST ALLOT MENT OF SHARES. THE SOURCE OF FUNDS WITH THE INVESTOR COMPANIES WHICH T HEY INVESTED IN ASSESSEE COMPANY WAS ALSO WELL EXPLAINED GENUINELY. IF DEPAR TMENT HAVE SOME DOUBT REGARDING GENUINENESS OF FUNDS WITH INVESTOR COMPAN IES THE NECESSARY INVESTIGATION OF SUCH FUNDS SHOULD HAD BEEN MADE IN THE CASE OF INVESTOR COMPANIES AND THE NECESSARY ACTION SHOULD HAD BEEN TAKEN IN THEIR CASE. IT IS RELEVANT TO MENTION HERE THAT APART FROM THE INVEST MENT MADE IN THE ASSESSEE GROUP THE INVESTOR COMPANIES WERE HAVING OTHER ASSE TS/INVESTMENT WHICH WERE ALSO MANAGED BY THOSE COMPANIES AT THEIR OWN. IT IS ALSO RELEVANT TO NOTICE HERE THAT WHY ONLY THE INVESTMENT MADE BY THOSE INVESTME NT COMPANIES IN THE ASSESSEE GROUP IS BEING TREATED AS NON GENUINE AND OTHER INVESTMENT/ASSETS OF THOSE COMPANY IS BEING TREATED AS GENUINE. THIS SHO WS THAT THE ASSESSMENT ORDER WAS PASSED BY LD. AO WITH SETTLED MINDSET THAT THE AMOUNT IS TO BE ADDED AS INCOME OF THE ASSESSEE. (III) FURTHER WHATEVER INQUIRIES/ANALYSIS DISCUSS B Y LD. AO IN HIS SHOW CAUSE NOTICE HAVE NO RELEVANCE IN THE CASE OF THE ASSESSEE BECAU SE FROM SUCH DISCUSSION ONLY IT CAN BE PROVED (NOT CONCLUSIVELY) THAT THE E MPLOYEES OF ASSESSEE GROUP WAS MANAGING AFFAIRS OF SOME OF THE COMPANIES WHO M ADE THE INVESTMENT IN SOME YEARS IN THE ASSESSEE/COMPANIES OF ASSESSEE GR OUP BUT SUCH INQUIRIES NOWHERE PROVES THAT THE FUNDS WITH SUCH COMPANIES W AS NOT FROM THEIR OWN INDEPENDENT SOURCES AND THE SAME WAS INTRODUCED BY THE ASSESSEE COMPANY. IN THE INSTANT CASE FOR ADDING THE SHARE CAPITAL/PREMI UM AS INCOME OF THE ASSESSEE THE DEPARTMENT HAS TO PROVE THAT THE AMOUN T SO RECEIVED WAS REVENUE RECEIPT OF THE ASSESSEE AND IN THE INSTANT CASE THE DEPARTMENT COULD NOT PROVE THE SAME AS A RESULT OF SEARCH PROCEEDINGS OVER THE ASSESSEE GROUP OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR AS A RESULT OF INVESTIGATION/ANALYSIS. WITHOUT PROVING THE SOURCE OF INCOME OR WITHOUT PRO VING THAT AMOUNT SO RECEIVED IS INCOME OF THE ASSESSEE THE SAME CANNOT BE TREATE D AS INCOME OF THE ASSESSEE MERELY ON PRESUMPTION ASSUMPTION AND SUSPICIOUS. C) THE LD. AO OPINED THAT THE ANALYSIS/INQUIRIES IND ICATE THE SYSTEMATIC AND DELIBERATE CREATION OF A COLOURABLE DEVICE TO INTRO DUCE SHARE CAPITAL IN MOTISONS GROUP COMPANIES. THE INVESTMENT IN SHARE CAPITAL OF ASSESSEE COMPANY BY ABOVE NAMED COMPANIES WAS INDEPENDENT DECISION/JUDG MENT OF THOSE COMPANIES. THE ASSESSEE HAS FILED COPY OF THE BOARD RESOLUTION OF THE INVESTOR COMPANY. THE INCOME TAX DEPARTMENT CARRIED OUT INTE NSIVE SEARCH OVER MOTISONS GROUP AND DURING THE COURSE OF SEARCH NO DOCUMENTS/ EVIDENCE WAS FOUND TO SHOW THAT THE COMPANIES WHO MADE INVESTMENT IN SHAR ES OF ASSESSEE COMPANY IN THE YEAR UNDER CONSIDERATION WERE FUNDED OR UNDI SCLOSED CASH WAS GIVEN BY MOTISONS GROUP. IF THESE INVESTOR COMPANIES HAVE TH EIR OWN INDEPENDENT FUNDS THE SAME CAN BE INVESTED ANYWHERE. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 97 IT IS ADMITTED FACTS THAT DURING THE YEAR UNDER CO NSIDERATION AS WELL AS IN PREVIOUS YEARS THE ASSESSEE COMPANY IS NOT HAVING A NY SUCH BUSINESS ACTIVITIES WHEREFROM THIS MUCH UNDISCLOSED INCOME COULD BE EAR NED THAN HOW THE SAME CAN BE MANAGED TO BROUGHT IN BOOKS OF ACCOUNTS IN F ORM OF SHARE CAPITAL. IN THIS CASE THE DEPARTMENT COULD NOT PROVE ANY KIND OF UND ISCLOSED SOURCE OF INCOME OF THE ASSESSEE AS A RESULT OF SEARCH OVER ASSESSEE AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR AS A RESULT OF INQUIRIES. AS A RESULT OF SO CALLED LONG INQUIRIES THE DEPARTMENT COULD NOT EVIDENTIARY PROV ED THAT THE ASSESSEE COMPANY MANAGED ITS FUNDS WITH INVESTOR COMPANIES T O BROUGHT THE SAME IN BOOKS OF ACCOUNTS IN THE FORM OF SHARE CAPITAL MORE SO WHEN THE INVESTOR COMPANIES HAVING THEIR OWN SUFFICIENT FUNDS TO INVE ST IN THE ASSESSEE COMPANY MUCH PRIOR TO INVESTMENT MADE IN THE ASSESSEE COMPA NY. THUS FROM THE ABOVE SUBMISSION AND RECORD IT IS WE LL PROVED THAT THE AMOUNT SO RECEIVED BY THE ASSESSEE COMPANY FROM ABOVE NAMED C OMPANIES WAS RECEIVED AGAINST SHARE CAPITAL AND THE INVESTMENT WAS MADE B Y THEM BY THEIR OWN DISCLOSED SOURCE THEREFORE NO ADDITION IN ANY WAY CAN BE MADE IN THE HANDS OF THE ASSESSEE. 8. AFTER CONSIDERING THE REPLY OF THE ASSESSEE ON S HOW CAUSE NOTICE ISSUED BY LD. AO HE POINTED CERTAIN ISSUES IN THE REPLY OF THE ASSESSEE WHICH HAVE BEEN DISCUSS ON PAGE 23 TO 31 (PARA 21 TO 25) OF ASSESSMENT. THE FINDING OF LD. AO AND SUBMISSION OF ASSESSEE ON SUCH FINDINGS IS AS UNDER: - (A) FINDING OF AO: - IDENTITY CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN PROVED BY FILING CERTAIN DOC UMENTS. THE ASSESSEE COMPANY HAS ATTEMPTED TO LIMIT THE SCOPE WITHIN WHI CH REVENUE AUTHORITIES CAN OPERATE ONLY WITH A SELF SERVING INTEREST TO MAKE I T APPEAR THAT THE TRANSACTIONS ENTERED INTO GET JUSTIFIED. THE THREE ASPECTS CERTA INLY ARE SOME OF THOSE ANGLES BUT TO SAY THAT THE REVENUE CANNOT GO BEYOND IS NO T APPARENTLY VESTED WITH SELF SERVING INTEREST BUT ALSO WITH IGNORANCE OF LAW. CERTAINLY SIMPLY BECAUSE SOME FORM OF IDENTIFICATI ON ON PAPER HAS BEEN PROVIDED DOES NOT MEAN THAT THE TRANSACTION STANDS EXPLAINED FROM THE VIEWPOINT OF THE CREDIT WORTHINESS AND GENUINENESS. SUBMISSION OF ASSESSEE: - I) THE ASSESSEE SUBMITTED AMPLE DOCUMENTS IN SUPPOR TED TO SHARE APPLICATION MONEY RECEIVED TO PROVE THE IDENTITY CREDITWORTHIN ESS AND GENUINENESS OF TRANSACTIONS AND FROM EXAMINATION OF THOSE DOCUMENT S ITS PROVES THAT THE INVESTING COMPANIES WERE HAVING SUFFICIENT FUNDS TO MAKE INVESTMENT IN SHARE CAPITAL OF THE ASSESSEE COMPANY. THERE WAS NO CASH DEPOSIT IN BANK A/C OF THE INVESTOR COMPANY FOR SUBSCRIBING THE SHARE CAPITAL OF ASSESSEE COMPANY. THE LD. AO REJECTED THESE EVIDENCES ON SURMISES AND CONJ ECTURES. HONBLE JUSTICE HIDAYATULLAH OF THE SUPREME COURT IN THE CASE OF SR EELEKHA BANERJEE VS CIT [1963] 49 ITR 112 (SC); 120 OBSERVED THAT THE INCOME TAX DEPARTMENT CANNOT BY MERELY REJECTING UNREASONABLY A GOOD EXPLANATION C ONVERT GOOD PROOF INTO NO PROOF HONBLE SUPREME COURT IN THE CASE OF UMA CH ARAN SHAW & BROS CO VS CIT 37 ITR 271 HAS HELD THAT THE SURMISES AND CONJECTURES AND THE CONCLUSION IS THE RESULT OF SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 98 KAPOOR (2008) 299 ITR 179 (P & H) ALSO HELD THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. II) FROM EXAMINATION OF FINANCIAL STATEMENTS OF INV ESTOR COMPANIES YOUR HONOR WILL FIND THAT THE INVESTOR COMPANIES HAD HUGE SHARE CAP ITAL AND RESERVES. APART FROM THE INVESTMENT MADE IN THE ASSESSEE GROUP THEY HAVE OTHER INVESTMENTS/ADVANCES. AS PER DECLARATION OF SOURCE O F FUNDS SUBMITTED BY THEM THEY REALIZED MONEY FROM THEIR OLD INVESTMENTS AND MADE THE SAME MONEY WAS UTILIZED FOR MAKING THE INVESTMENT IN ASSESSEE COMP ANY. THESE COMPANIES ARE ASSESSEE OF INCOME TAX DEPARTMENT AND THERE ASSESSM ENT FOR AY 2009-10 AND AY 2013-14 WAS MADE BY THE DEPARTMENT WHEREIN THE SO URCE AND APPLICATION OF FUNDS WERE ADMITTED AS GENUINE. ONLY IN THE CASE OF MAYUKH VINIMAY PVT. LTD THE SHARE PREMIUM RECEIVED BY THIS COMPANY WAS ADDE D AS INCOME OF THIS COMPANY AND SUCH FUNDS WERE UTILIZED FOR INVESTMENT IN SHARES OF ASSESSEE COMPANY THAN HOW THE SAME CAN BE ADDED AS INCOME OF THE ASSESSEE CONSIDERING THE SAME AS NON GENUINE. IN CASE OF AN Y DOUBT NECESSARY ACTION COULD BE TAKEN IN THE HANDS OF THESE COMPANIES AND IF THESE COMPANIES FAILED TO EXPLAIN THE SOURCE OF INVESTMENT NECESSARY ADDITIO N CAN BE MADE IN THE HANDS OF THESE COMPANIES BY APPLYING THE PROVISIONS OF SE CTION 69 OF INCOME TAX ACT. HOWEVER THE LD. AO MADE THE ADDITION IN THE HANDS OF ASSESSEE COMPANY UNDER THE COMPLETE DISREGARD OF PROVISIONS OF INCOME TAX ACT AND MERELY ON SURMISES AND CONJECTURES. THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. 216 CTR 0195/ 6 DTR 308 (SC) HELD THA T IF THE SHARE CAPITAL MONEY IS RECEIVED BY THE ASSESSEE COMPANY FR OM ALLEGED BOGUS SHAREHOLDERS THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUCH SHAREHOLDERS IN ACCORDA NCE WITH LAW. SUCH SHARE APPLICATION MONEY CANNOT BE REGARDED AS UND ISCLOSED INCOME OF THE ASSESSEE COMPANY (III) AS ALLEGED BY LD. AO THE ASSESSEE IS NOT ATTEMP TED TO LIMIT THE SCOPE WITHIN WHICH REVENUE AUTHORITIES CAN OPERATE AND THE ASSES SEE ALSO ACCEPT THAT THE REVENUE AUTHORITIES CAN EXAMINE THE TRANSACTIONS FR OM ALL POSSIBLE ANGLES. IN THE LAW IN THE CASE OF CREDIT ENTRY (SUCH AS LOAN SHAR E CAPITAL ETC.) THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE CREDIT ENTR IES HAS TO BE EXAMINE AND IN THE INSTANT CASE THE ASSESSEE HAS PROVED ALL THESE THREE INGREDIENTS AND THE LD. AO DID NOT FIND ANY INFIRMITY IN SUCH DETAILS. IF TH E LD. AO IS HAVING DOUBT REGARDING THE DETAIL AND SUBMISSION FILED BY THE AS SESSEE THAN HE COULD SURELY GO BEYOND FOR FURTHER INQUIRIES BUT THE INQUIRIES S HOULD HAVE BEEN WITH THE ANGEL TO UNEARTH THE TRUTH OF THE TRANSACTIONS AND IN THE INSTANT CASE THE INQUIRIES SHOULD HAVE BEEN MADE WITH THE ANGEL TO FIND OUT TH E FOLLOWING: - THE HUGE AMOUNT RECEIVED IN THE FORM OF SHARE CAPIT AL/SHARE PREMIUM. WHETHER THE MONEY SO RECEIVED IS ACTUALLY CAPITAL R ECEIPT IN THE HANDS OF THE ASSESSEE? WHETHER MONEY RECEIVED IN THE HANDS OF THE ASSESSEE COMPANY WAS FROM GENUINE SOURCE OR THE SAME WAS OWN FUNDS OF THE ASS ESSEE? IF THE MONEY WHICH FLOW IN THE HANDS OF THE ASSESS ES WAS MANAGED AFFAIRS OF THE ASSESSEE THAN WHAT WAS THE SOURCE OF INFLOW OF SUCH MONEY? IV) THE LD. AO HAS NOT CARRIED OUT ANY SHORT OF INQU IRIES IN THIS REGARD IN THE CASE OF THE ASSESSEE. NO INQUIRIES FROM THE SHAREHOLDERS T HEIR BANKERS HAVE BEEN MADE TO PROVE THE CONTENTION OF THE ASSESSEE TO BE WRONG . THERE IS NO EVIDENCE THAT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 99 THE MONEY RECEIVED IS A/C OF THE ASSESSEES OWN UND ISCLOSED INCOME. THE ASSESSEE FILED SUFFICIENT DOCUMENTS TO PROVE THAT T HE AMOUNT SO RECEIVED WAS CAPITAL RECEIPT AND THE SAME WAS RECEIVED AGAINST S HARE CAPITAL/SHARE PREMIUM. THE SOURCE OF THE FUNDS FROM INVESTOR COMPANIES WAS ALSO PROVED AND THERE IS NO POSITIVE MATERIAL TO SHOW THAT THE INVESTOR COMP ANIES WAS NOT HAVING SUFFICIENT SOURCE TO INVEST THE MONEY IN THE ASSESS EE COMPANY. IF THE LD. AO IS HAVING DOUBT REGARDING GENUINENESS OF SOURCE OF FUN DS WITH THE INVESTOR COMPANIES HE COULD HAVE MAKE THE INQUIRED IN THE CA SE OF SUCH COMPANIES AND IF SOMETHING FOUND ADVERSE THAN THE NECESSARY ADDITION S COULD HAVE BEEN MADE IN THE HANDS OF SUCH INVESTOR COMPANY ONLY AND IN THE INQUIRY IF SOMETHING POSITIVE REVEALS THAT THE SOURCE OF FUNDS WITH SUCH INVESTOR COMPANIES WAS FUNDED BY THE ASSESSEE COMPANY THAN ONLY THE ADDITION COULD B E MADE IN THE HANDS OF THE ASSESSEE COMPANY. IT IS ADMITTED FACTS THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY WAS NOT HAVING ANY SUCH SOURCE OF INCOME FROM WHICH THIS MUCH OF INCOME COULD BE EARNED AND THE LD. AO IS COMPLETELY SILENT ON THIS ISSUE THAT WHERE FROM THIS MUCH OF MONEY WAS EARNED BY THE ASSESSEE COMPANY. FURTHER AS A RESULT OF SO CALLED LONG INQU IRES BY INVESTIGATION WING IT COULD NOT BE PROVED EVIDENTIARY THAT THE ASSESSEE M ANAGED THE FUNDS IN INTERMEDIATE COMPANIES TO BROUGHT THE SAME IN BOOKS OF ACCOUNTS IN THE SHAPE OF SHARE CAPITAL/SHARE PREMIUM. V) THE FINDING OF LD. AO THAT SIMPLY BECAUSE SOME FO RM OF IDENTIFICATION ON PAPER HAS BEEN PROVIDED DOES NOT MEAN THAT THE TRANSACTIO N STANDS EXPLAINED FROM THE VIEWPOINT OF THE CREDIT WORTHINESS AND GENUINENESS THIS IS TO SUBMIT THAT BY FILING THE SUFFICIENT DOCUMENTS THE ASSESSEE DISCHA RGE ITS ONUS CAST ON IT BY THE LAW AND NOW ONUS IN ON THE DEPARTMENT TO DISPROVE T HE SUBMISSION AND DOCUMENTS OF THE ASSESSEE BY POSITIVE EVIDENCE. THE DEPARTMENT HAS NOT DISCHARGED ITS ONUS AND NO INQUIRED WERE CARRIED OU T AND NO EVIDENCE IS IN POSSESSION WITH THE DEPARTMENT TO DISPROVE THE CLAI M OF THE ASSESSEE. ON THE ONE HAND THE LD. AO IS CLAIMING THAT THE REVENUE AUT HORITIES CAN EXAMINE THE TRANSACTION FROM ALL POSSIBLE ANGLES AND ON THE OTH ER HANDS THE TRANSACTIONS ARE BEING DOUBTED AND ADDED MERELY ON SURMISES CONJECT URES AND ON THE BASIS OF SOME INQUIRIES CARRIED OUT BY INVESTIGATION WING WH ICH NOT PROVES ANYTHING CONTRA AGAINST THE ASSESSEE. IT IS FURTHER SUBMITTE D THAT IF THE DOCUMENTS SUBMITTED BY THE ASSESSEE WAS NOT FELT SUFFICIENT T O ACCEPT THE TRANSACTION THAN THE LD. AO COULD ASK FROM ASSESSEE TO SUBMIT THE FUR THER DETAILS/DOCUMENTS WHICH IS FELT NECESSARY FOR DECIDING THE MATTER IN JUSTICE & FAIR MANNER BUT THE SAME WAS NOT DONE BY LD. AO. B) FINDING OF AO : - REGARDING NO BAR OF ISSUING OF SHARES AT PREMIUM TH E ASSESSEE COMPANY HAS ATTEMPTED TO TAKE AN ADVANTAGE OUT OF THE ABSENCE OF A SPECIFIC PROVISION WHICH BARS THE ACCEPTANCE OF SHA RE PREMIUM WHICH DOES NOT MATCH THE NET WORTH OF THE ISSUING COMPANY. IN THIS REGARD IT NEEDS TO BE POINTED OUT THAT MERE ABSENCE OF A SPECIFIC PROVISI ON DOES NOT BY ITSELF MEAN THAT A PARTICULAR COLORABLE DEVICE OR A SHAM TRANSACTION ACQUIRES LEGAL SANCTITY THERE ARE NUMEROUS PROVISIONS RELATED TO GIFT SALE CONSI DERATION ON SALE OF ASSETS WHICH CAME INTO BEING AT A LATER STAGE BUT THE IL LEGAL AND TAX CONTRAVENING TRANSACTIONS WERE STILL TAKEN UP AND TAXED BY REVEN UE AUTHORITY OF COURSE AFTER THE SPECIFIC INCLUSION OF GOVERNING STATUTES THE M ATTER REQUIRES TO BE DEALT WITHIN THE FRAMEWORK OF THE SPECIFIC PROVISION. BUT TILL SUCH TIME IT CANNOT BE SAID ABOUT A TRANSACTION WHICH IS PATENTLY BEYOND THE REALMS OF ACCEPTABILITY AND WHICH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 100 ALSO ARE EMBEDDED WITH IN HERE TAX IMPLICATIONS TH AT THEY NEED TO BE LEFT ALONE ONLY BECAUSE THERE WAS NO SPECIFIC BAR. SECTION 56 OF THE IT ACT HAS ALREADY BEEN EXISTENCE SINCE LONG AND SUBSECTION (1) OF SECTION 56 ADEQUATELY COVERED TRANSACTIONS LIKE THE ONE BEING DEALT WITH AT PRESENT. ONLY BECAUSE SUB-SECTION (1) WAS A BROAD MANIFESTATION OF THE INTENT OF REVENUE SUB SECTION (2) WHICH WAS MORE SPECIFIC IN CONTENT WAS INTRODUCED TO TAKE CASE OF THE MISINTERPRETATION & CONFUSION WHIC H WAS BEING DERIVED OUT OF SUB SECTION (4). IT MUST BE APPRECIATED THAT INTROD UCTION OF SUB SECTION (2) OF SECTION 56 OF THE ACT WAS ONLY A SPECIFIC EXPRESSION OF THE MANNER IN WHICH A SPECIFIC TRANSACTION REQUIRES TO BE DEALT WITH THE INTENT OF LEGISLATURE AND THE CONTENT THEREOF ALREADY EXISTED WITHIN THE SAME ACT AND WITHIN THE SAME SECTION AND IN THE PRECEDING SUB-SECTION NO NEW IDEA WHICH WAS CONCEPTUALLY DISTRICT FROM SECTION 56(1) OF THE ACT WAS BROUGHT INTO BEING . HENCE THE ASSESSEE COMPANY CANNOT BE ALLOWED TO ES CAPE THE PROVISION OF LAW SIMPLY BECAUSE IT CONTAINED A BROADER & WIDER MANIF ESTATION OF ITS TRUE INTENT WHICH WAS ENUNCIATED ONLY AFTER THE TRANSACTION TOO K PLACE. THE CONTENTION OF THE ASSESSEE IS A PERVERT ARGUMENT & DESERVES TO BE REJECTED. SUBMISSION OF ASSESSEE: - I) SHARE PREMIUM IS CAPITAL RECEIPT : IF SHARES ARE ISSUED AT PREMIUM THEN CAPITAL RECEIP T AGGREGATE AMOUNT OF PREMIUM IS TO BE TRANSFERRED TO AN ACCOUNT CALLED T HE SHARE PREMIUM ACCOUNT. THIS SHARE PREMIUM ACCOUNT IS NOT DISTRIBUTABLE AS INCOME JUST LIKE AS ANY OTHER CAPITAL ASSETS. ON WINDING UP THE SURPLUS MONIES I N THE SHARE PREMIUM ACCOUNT IS TO BE RETURNED TO THE SHARE HOLDERS AS CAPITAL. SO LONG AS THE COMPANY IS A GOING CONCERN THE MONIES IN SHARE PREMIUM ACCOUNT CAN NEVER BE RETURNED TO THE SHAREHOLDERS EXCEPT THROUGH THE MEDIUM OF A RED UCTION PETITION OR IN OTHER WORDS EXCEPT UNDER EXACTLY THE SAME CONDITIONS AS THOSE UNDER WHICH ANY OTHER CAPITAL ASSET CAN REACH THE SHAREHOLDERS HAND S. DISTRIBUTION OF SHARE PREMIUM AMOUNT IS NOT PERMITTED THROUGH DIVIDEND. I T IS TAKEN OUT OF THE CATEGORY OF DIVISIBLE PROFITS. THE PROVISIONS IN RE SPECT OF ISSUE OF SHARES AT PREMIUM ARE THE SAME IN THE OLD COMPANY ACT AS WELL AS IN THE NEW COMPANY ACT. HENCE COMPANIES ACT CLEARLY MENTIONS THAT AMOUNT RECEIVED AS PREMIUM IS CAPITAL RECEIPT AND NOT A REVENUE RECEIPT. THE SHAR E PREMIUM IS ALSO VERIFIABLE FROM RETURNS OF ALLOTMENT SUBMITTED IN ROC. AS PER DE PARTMENTAL CIRCULAR (MCA) NO. 3/77 DATED 15.04.1977 THE MONIES IN THE SHARE P REMIUM ACCOUNT CANNOT BE TREATED AS FREE RESERVES AS THEY ARE IN THE NATURE OF CAPITAL RESERVES. II) ON THE ISSUE OF SHARES AT PREMIUM THE LD. ITAT MUM BAI BENCH IN THE CASE OF ACIT V/S GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T10L- 656-ITAT-MUM OBSERVED THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION WHICH DOES NOT REQUIRE ANY JUSTIFICATION . FURTHER THE PREMIUM IS A CAPITAL RECEIPT WHICH HAS TO BE DEALT WITH IN ACCORDANCE WITH SECTI ON 78 OF COMPANIES ACT 1956. FURTHER THE COMPANY IS NOT REQUIRED TO PROVE THE GE NUINENESS PURPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SHARES SHARE PREMIUM BY ITS VERY NATURE IS A CAPITAL RECEIPTS AND IS NOT INCOME FOR ITS ORDINA RY SENSE . IN THE CASE BEFORE MUMBAI BENCH HAS TO CONSIDER A CASE WHERE PREMIUM O F RS.190 PER SHARE WAS CHARGED. THE TRIBUNAL OBSERVED AS UNDER: NO DOUBT A NON-EST COMPANY OR A ZERO BALANCE SHEET COMPANY ASKING FOR RS.190 PER SHARE DEFIES ALL COMMERCIAL PRUDENCE BUT AT THE SAME TIME WE CANNOT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 101 IGNORE THE FACT THAT IT IS A PREROGATIVE OF THE BOA RD OF DIRECTORS OF THE COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF T HE SHAREHOLDERS WHETHER THEY WANT TO SUBSCRIBE TO SUCH A HEAVY PREMIUM. THE REVENUE AUTHORITIES CANNOT QUESTION THE CHARGING OF SUCH HUGE PREMIUM W ITHOUT ANY BAR FROM ANY LEGISLATED LAW OF THE LAND. THE AMENDMENT HAS BEEN BROUGHT IN THE INCOME TAX ACT UNDER THE HEAD INCOME FROM OTHER SOURCES BY IN SERTING CLAUSE.(VII B) TO SECTION 56 OF THE ACT WHEREIN IT HAS BEEN PROVIDED T HAT ANY CONSIDERATION FOR ISSUE OF SHARES THAT EXCEEDS THE FAIR VALUE OF SUC H SHARES THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS T HE FAIR MARKET VALUE OF THE SHARES SHALL BE TREATED AS THE INCOME OF THE ASSESS EE BUT THE LEGISLATURE IN ITS WISDOM HAS MADE. THE PROVISION APPLICABLE W.E.F. 1. 4.2013 I.E. ON AND FROM A.Y. 2013-14. III) THE LD. AO TAXED THE SHARE CAPITAL/SHARE PREMIUM BY HOLDING THAT MERE ABSENCE OF A SPECIFIC PROVISION DOES NOT BY ITSELF MEAN THA T A PARTICULAR COLORABLE DEVICE OR A SHAM TRANSACTION ACQUIRES LEGAL SANCTITY AND A TRANSACTION WHICH IS PATENTLY BEYOND THE REALMS OF ACCEPTABILITY AND WHI CH ALSO ARE EMBEDDED WITHIN HERE TAX IMPLICATIONS THAT THEY NEED TO BE LEFT ALONE ONLY BECAUSE THERE WAS NO SPECIFIC BAR THIS IS TO SUBMIT THAT FOR BRIN GING A TRANSACTION INTO A INCOME TAX TERRITORY FIRST IT IS TO PROVED BY THE REVENUE AUTHORITIES THAT THE TRANSACTION IS COLORABLE DEVICE OR A SHAM TRANSACTION. IN THE CASE OF THE ASSESSEE THE INVESTOR COMPANIES ARE CONFIRMING THAT THEY HAVE GAVE THE AM OUNT TO THE ASSESSEE COMPANY AS SHARE PREMIUM AND THE ASSESSEE COMPANY I S ENTERING SUCH AMOUNT IN ITS BOOKS OF ACCOUNTS AS A SHARE PREMIUM. THERE IS NO EVIDENCE ON RECORD TO PROVE THAT THE TRANSACTION IS SHAM TRANSACTIONS OR NOT REAL TRANSACTION. THE ONUS IS ON DEPARTMENT TO PROVE THAT THE TRANSACTION IS S HAM OR NOT REAL. THE ALLEGATION SHOULD BE BASED ON THE EVIDENCES. THE LD. AO IS DUT Y BOUND TO PROVE A TRANSACTION NOT REAL AND NOT ACCEPTABLE WITH EVIDEN CES WHICH IS ABSENT IN THE INSTANT CASE. ADMITTEDLY THERE ARE NUMEROUS DEEMING PROVISIONS RELATED TO GIFT SALE CONSIDERATION ON SALE OF ASSETS UNDER WHICH TH E DEEMED INCOME ARE TAXED BUT THE DEEMING FICTION CAN ONLY STRICTLY APPLIED O N THE TRANSACTIONS FOR WHICH IT WAS MADE APPLICABLE. THE SAME CANNOT BE EXTENDED FU RTHER FOR OTHER TRANSACTIONS UNTIL AND UNLESS SUCH TRANSACTION IS C OVERED IN THE DEFINITION OF INCOME OR DEEMED INCOME AS PER INCOME TAX LAW. IF S OME SPECIFIC TRANSACTION IS NOT INCOME OR DEEMED INCOME IN THE INCOME TAX LAW T HAN THE SAME CANNOT BE PRESUMED AS INCOME BY THE REVENUE AUTHORITIES AT TH EIR OWN WITHOUT HAVING ANY POSITIVE MATERIAL TO PRESUME THAT THE SAME IS ACTUA LLY INCOME OF THE ASSESSEE. THESE TYPE OF TRANSACTION CAN ONLY BE DEALT WITHIN THE FRAMEWORK OF THE SPECIFIC PROVISION AFTER THE SPECIFIC INCLUSION OF GOVERNING STATUTES. IN THE INCOME TAX ACT THE CHARGING OF CERTAIN AMOUNTS SHARE PREMIUM DEEME D TO BE INCOME OF THE RECIPIENT COMPANIES W.E.F. 1.4.2013 I.E. ON AND FRO M A.Y. 2013-14 AND THE SAME CANNOT BE MADE APPLICABLE RETROSPECTIVELY. IV) ADMITTEDLY THE SECTION 56 OF THE IT ACT HAS ALREA DY BEEN EXISTENCE SINCE LONG AND BUT SUB-SECTION (1) OF SECTION 56 ONLY COVERS T HE TAXING THE REVENUE TRANSACTIONS WHICH NOT COVERED UNDER OTHER HEAD OF INCOME BUT THE SAME ARE INCLUDED IN THE DEFINITION OF INCOME. THE SECTION 5 6(1) DOES NOT COVER THE TAXING THE DEEMING CAPITAL RECEIPTS AND SUCH RECEIPTS CAN ONLY TAXED UNDER SUB SECTION 56 (2) OF INCOME TAX ACT 1961 IF CONSISTING SPECIFI C EXPRESSION OF THE MANNER IN WHICH A SPECIFIC TRANSACTION REQUIRES TO BE DEALT W ITH THE INTENT OF LEGISLATURE. IN THE INCOME TAX ACT THE CHARGING OF CERTAIN AMOUNTS O F SHARE PREMIUM DEEMED TO ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 102 BE INCOME OF THE RECIPIENT COMPANIES W.E.F. 1.4.201 3 I.E. ON AND FROM A.Y. 2013- 14 THEREFORE THE SHARE PREMIUM RECEIVED PRIOR TO T HAT PERIOD CANNOT BE TAXED AS INCOME OF THE ASSESSEE. C) FINDING OF LD. AO : - IT IS WHOLLY INCORRECT TO SAY THAT THE ALLEGATION I S BASED ON SURMISES AND CONJECTURES. THE FACTS CLEARLY PROVE T HAT THE ASSESSEE HAD ENTERED INTO SHAM TRANSACTIONS AS PART OF A WELL PLANNED EX ERCISE OF INTRODUCING UNEXPLAINED MONEY IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM WITHOUT ANY JUSTIFICATION OF THE VALUE HAVING BEEN PROVIDED EIT HER BY THE ISSUING COMPANY OR THE SUBSCRIBING COMPANY. THE MONEY SO RECEIVED WAS THEN IMMEDIATELY INVESTED IN THE SUBSCRIPTION OF SHARE CAPITAL AT HIGH PREMIU M WITH OTHER COMPANIES WHO IN TURN CONTINUED THE EXERCISE IN THE SAME FORM. TH E ASSESSEE COMPANY WAS THUS PART OF THIS CIRCULAR RING WHEREBY UNJUSTIFIED AND UNSUBSTANTIATED SHARE PREMIUM WAS BEING INTRODUCED. SUBMISSION OF ASSESSEE : - I) THE FINDING OF LD AO IS PATENTLY WRONG PERVERSE AND NOT BACKED WITH ANY SUPPORTING EVIDENCE. FIRST OF ALL REGARDING ALLEGAT ION THAT THE ASSESSEE INTRODUCED ITS OWN UNEXPLAINED MONEY IN THE SHARE C APITAL AND SHARE PREMIUM THIS IS TO SUBMIT THAT THE DEPARTMENT CARRIED OUT I NTENSIVE SEARCH OVER THE ASSESSEE AND DURING THE COURSE OF SEARCH NOT A SING LE DOCUMENT/EVIDENCE WAS FOUND TO SHOW THAT THE ASSESSEE WAS HAVING SOME UND ISCLOSED INCOME OR HAVING SOME UNEXPLAINED MONEY. AS A RESULT OF INQUIRIES CAR RIED OUT BY THE INVESTIGATION WING THEY ALSO COULD NOT GATHERED ANY POSITIVE EVID ENCE TO SHOW THAT THE ASSESSEE WAS HAVING ANY UNDISCLOSED INCOME OR UNEXP LAINED MONEY. IF THERE IS NO PROOF WITH THE DEPARTMENT TO PROVE THAT THE ASSE SSEE WAS HAVING SOME UNEXPLAINED MONEY THAN HOW IT CAN BE ALLEGED THAT T HE ASSESSEE HAS INTRODUCED ITS UNEXPLAINED MONEY IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM. THIS IS COMPLETELY ON THE BASIS OF SURMISES AND CONJECTURES . II) AS REGARD TO NOT PROVIDING THE JUSTIFICATION OF THE VALUE OF SHARES THIS IS TO SUBMIT THAT THE SHARES ISSUED AT HIGH RATES DOES NOT MAKE THE TRANSACTIONS ITSELF SHAME OR COLOURFUL DEVICE TO EVADE THE TAX. FROM THE RECO RD IT IS WELL PROVED THAT THE AMOUNT WAS RECEIVED FROM THE INVESTOR COMPANIES AGA INST SHARE CAPITAL & SHARE PREMIUM THEREFORE THE TRANSACTION ARE BEING GENUIN E. AS STATED IN EARLIER PARAS THE HONBLE ITAT MUMBAI BENCH IN THE CASE OF ACIT V/S GAGANDEEP INFRASTRUCTURE PVT. LTD. 2014-T10L-656-ITAT-MUM OBSERVED THAT ISSUE OF SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION W HICH DOES NOT REQUIRE ANY JUSTIFICATION . FURTHER THE COMPANY IS NOT REQUIRE TO PROVE THE G ENUINENESS PURPOSE OR JUSTIFICATION FOR CHARGING PREMIUM OF SH ARES SHARE PREMIUM BY ITS VERY NATURE IS A CAPITAL RECEIPTS AND IS NOT INCOME FOR ITS ORDINARY SENSE . III) THE ALLEGATION OF LD. AO IS THAT THE MONEY SO R ECEIVED WAS THEN IMMEDIATELY INVESTED IN THE SUBSCRIPTION OF SHARE CAPITAL AT HI GH PREMIUM WITH OTHER COMPANIES WHO IN TURN CONTINUED THE EXERCISE IN TH E SAME FORM AND THE ASSESSEE COMPANY WAS THUS PART OF THIS CIRCULAR RIN G WHEREBY UNJUSTIFIED AND UNSUBSTANTIATED SHARE PREMIUM WAS BEING INTRODUCED. IN THIS REGARD THIS IS TO SUBMIT THAT IF SOMEONE IS INVESTING THE MONEY IN TH E ASSESSEE COMPANY HE MUST BE HAVING THE INFLOW OF MONEY FROM SOME SOURCE. WHA T IS THE SOURCE OF INFLOW WITH THE INVESTOR COMPANY AND HOW IT IS MANAGING IT S AFFAIRS IS NOT CONCERN OF ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 103 THE ASSESSEE. IN THE CASE OF THE ASSESSEE IT HAS F ULL FILLED ITS LEGAL OBLIGATION. THE ASSESSEE HAS PROVED THE SOURCE OF MONEY WITH TH E INVESTOR COMPANIES. THUS IN THE CASE OF THE ASSESSEE THE SOURCE OF MONEY IS WELL PROVED. IF THE INVESTOR COMPANIES IS NOT HAVING PROPER SOURCE OF FUNDS WITH THEM THAN THE ACTION SHOULD HAVE BEEN TAKEN IN THEIR HANDS AND THE SAME CANNOT BE ADDED AS INCOME OF THE ASSESSEE MERELY BY HOLDING THAT THE ASSESSEE PLANNE D THE FUNDS OF ALL THE COMPANIES. THERE IS NO ONUS TO PROVE SOURCE OF SOUR CE. IN THIS REGARD THE ASSESSEE RELIES ON THE FOLLOWING DECISIONS:- (I) HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO VS INCOME TAX OFFICER (2008) 8 DTR (RAJ) 199 HAS HELD THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWN THE CREDIT S THE ASSESSEES ONUS STANDS DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS COULD HAVE ACQUIRED THE MONEY D EPOSITED WITH HIM. HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT MERELY BECA USE THE DEPOSITORS EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCE PTABLE TO THE AO IT CANNOT BE PRESUMED THAT THE DEPOSIT MADE BY THE CREDITORS IS MONEY BELONGING TO THE ASSESSEE ITSELF. (II) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) THE ASSESSEE HAD GIVEN NAMED AND ADDRESSES OF THE C ASH CREDITORS WHO WERE INCOME TAX ASSESSEES. REVENUE APART FROM ISSUING SU MMON U/S 131 NOTICES TO CREDITORS DID NOT PURSUE THE MATTER FURTHER- IT DI D NOT EXAMINE CREDITWORTHINESS OF THE CREDITORS- ASSESSEE COULD NOT UNDER THE CIR CUMSTANCES DO ANYTHING FURTHER. HELD THAT THE ADDITIONS WERE RIGHTLY DELET ED. (III) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 ITR 281 (RAJ) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE I DENTITY OF THE CREDITORS IS ESTABLISHED AND HE CONFIRMS THE LOANS. IT IS FURTHER SUBMITTED THAT THE INVESTOR COMPANIES WERE HAVING SUFFICIENT ACCUMULATED FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES & SURPLUS MUCH PRIOR TO THE INVESTMENT MADE IN THE ASSESSEE COMPAN Y AND THE SAME ARE MORE THAN TO INVESTMENT MADE IN THE SHARES OF ASSESSEE G ROUP COMPANIES. THE SAME FUNDS WERE BEING MANAGED BY SUCH COMPANY AT THEIR O WN AND HAVING INVESTMENT IN SHARES OF OTHER COMPANIES/LOANS & ADV ANCES TO VARIOUS PARTIES. THE OTHER INVESTMENTS/ASSETS OF INVESTOR COMPANIES ARE BEING TREATED AS GENUINE THAN HOW THE INVESTMENT MADE IN THE ASSESSE E GROUP CAN ONLY BE NON GENUINE. FURTHER IF THE ALLEGATION OF THE DEPARTMEN T IS THAT THE ASSESSEE MANAGED ITS UNEXPLAINED FUNDS IN SUCH COMPANIES THA N THERE SHOULD BE INFLOW OF NEW CAPITAL IN SUCH COMPANIES FOR MAKING THE PAY MENT TO THE ASSESSEE COMPANY WHICH HAS NOT BEEN DONE IN THE INSTANT CASE . THE INVESTMENT WAS MADE IN THE ASSESSEE COMPANY OUT OF FUNDS REALIZED FROM PREVIOUS INVESTMENTS/ADVANCES. IF THE PAYMENT WAS MADE BY RE ALIZING THE FUNDS ALREADY INVESTED BY SUCH COMPANY HOW SUCH FUNDS CAN BE TREA TED AS UNEXPLAINED MONEY OF THE ASSESSEE. D) FINDING OF LD. AO : - THE CONTENTION OF THE ASSESSEE COMPANY IS ONLY BAS ED ON ACCOUNTING JUGGLERY BY WAY OF WHICH THE TRANSACTION HAS BEEN RECORDED IN THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 104 BOOKS OF ACCOUNTS OF ALL SUCH PERSONS INCLUDING THE ASSESSEE COMPANY WHO HAVE PARTICIPATED IN THIS EXERCISE. IT NEEDS TO BE UNDERSTOOD THAT MERELY BECAUSE THE ASSESSEE COMPANY ADJUSTED THE MONEY RECEIVED A S SHARE CAPITAL/SHARE PREMIUM IN ITS BOOKS OF ACCOUNT THE TRANSACTION CA NNOT BE SHOWED WITH THE CHARACTER OF A CAPITAL RECEIPT. IT MUST BE SAID THA T THE FACE VALUE OF A SHARE IS INTRINSICALLY CAPITAL IN NATURE BECAUSE IT IMPARTS TO THE SUBSCRIBER A RIGHT OF PARTICIPATION AND OWNERSHIP IN THE ISSUING COMPANY. HOWEVER THE SHARE PREMIUM ATTACHED TO EACH SUCH SHARE DOES NOT ENTITL E THE SUBSCRIBED OF ANYTHING ELSE OTHER THAN WHAT THE FACE VALUE BY ITSELF HAS A CHIEVED FOR HIM. THIS PARTICIPATION AND OWNERSHIP IN THE ISSUING COMPANY REMAINS THE SAME. IT IS IN FACT A COST WHICH THE SUBSCRIBER BEARS FOR 1) THE VALUE OR WORTH OF ASSETS & PROFITS WHICH THE ISSUER COMPANY ALREADY POSSESSES OR DERIVER OR 2) THE VALUE OR WORTH OF SUCH ASSETS OR PROFITS WH ICH THE ISSUES COMPANY MAY CREATE IN THE FURTHER OR MAY DERIVE FOR THE PR OPORTIONATE BENEFIT OF THE SUBSCRIBER. IN THE INSTANT CASE BOTH OF ABOVE ARE ABSENT. NEIT HER DOES THE ISSUING COMPANY POSSESS ANY ASSET WORTH ITS NAME NOR DOES IT DERIVE ANY PROFIT. NEITHER DOES THE ASSESSEE COMPANY HOLD ANY PROMISE FOR THE CREATION OF ASSETS OR WEALTH IN THE FUTURE NOR IS THERE ANY FORESEEABL E POSSIBILITY OF ANY PROFIT BEING DERIVED IN THE FUTURE. THE QUESTION WHICH THUS ARISES IS THAT WHAT IS IT T HAT THE SUBSCRIBER COMPANY PAID FOR IN FORM OF THE SHARE HAVING FACE VALUE OF RS. 10. THE ASSESSEE COMPANY HAS FAILED TO ANSWER THIS QUESTION EVEN WHEN A SPEC IFIC QUERY IN THIS REGARD HAD BEEN RAISED THUS THE SAME CREATES DOUBTS REGARDING GENUINENESS OF SHARE CAPITAL AND PREMIUM THEREON CREDITED IN BOOKS OF AC COUNTS SUBMISSION OF ASSESSEE : - I) THE TRANSFER OF SHARE APPLICATION INTO SHARE CAP ITAL & SHARE PREMIUM IS NOT ONLY BASED ON ACCOUNTING ENTRIES BUT THEY ARE SUPPORTED BY DOCUMENTARY EVIDENCE. IT IS NOT A CASE WHERE THE CERTAIN RECEIPTS HAS BEEN A CCOUNTED FOR BY ASSESSEE COMPANY AS PER ITS OWN SWEET WILL. THE INVESTOR COM PANIES FILED THE SHARE APPLICATION FORMS TO SUBSCRIBE THE SHARES OF THE AS SESSES COMPANY AND IN THE SHARE APPLICATION FORM THE DETAIL OF SHARE PREMIUM IS ALSO MENTIONED. THUS THIS IS NOT A CASE WHERE THE CLAIM OF THE ASSESSEE IS BA SED ON ACCOUNTING ENTRIES. THERE IS NO CONTRA MATERIAL WITH THE DEPARTMENT TO PROVE THAT THE ADJUSTMENT MADE IN BOOKS OF ACCOUNTS BY THE ASSESSEE IS NOT CO RRECT OR NOT BASED ON DOCUMENTS. II) THE LD. AO HIMSELF ADMITTED THAT THE FACE VALUE OF A SHARE IS INTRINSICALLY CAPITAL IN NATURE BECAUSE IT IMPARTS TO THE SUBSCRIBER A RI GHT OF PARTICIPATION AND OWNERSHIP IN THE ISSUING COMPANY AND STILL WHILE MA KING THE ADDITION HE MADE THE ADDITION OF THE SHARE CAPITAL AS WELL AS SHARE PREMIUM. FURTHER IF THE SHARES ARE ISSUED AT PREMIUM THEN CAPITAL RECEIPT AGGREGAT E AMOUNT OF PREMIUM IS TO BE TRANSFERRED TO AN ACCOUNT CALLED THE SHARE PREMIUM ACCOUNT. THE BOOK VALUE OF THE SHARE IS INCREASED BY THE AMOUNT CREDITED IN SH ARE PREMIUM ACCOUNT. THIS SHARE PREMIUM ACCOUNT IS NOT DISTRIBUTABLE AS INCOM E JUST LIKE AS ANY OTHER CAPITAL ASSETS. ON WINDING UP THE SURPLUS MONIES I N THE SHARE PREMIUM ACCOUNT IS TO BE RETURNED TO THE SHARE HOLDERS AS CAPITAL. SO LONG AS THE COMPANY IS A GOING CONCERN THE MONIES IN SHARE PREMIUM ACCOUNT CAN NEVER BE RETURNED TO THE SHAREHOLDERS EXCEPT THROUGH THE MEDIUM OF A RED UCTION PETITION OR IN OTHER WORDS EXCEPT UNDER EXACTLY THE SAME CONDITIONS AS THOSE UNDER WHICH ANY ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 105 OTHER CAPITAL ASSET CAN REACH THE SHAREHOLDERS HAND S. DISTRIBUTION OF SHARE PREMIUM AMOUNT IS NOT PERMITTED THROUGH DIVIDEND. T HE COMPANIES ACT CLEARLY MENTIONS THAT AMOUNT RECEIVED AS PREMIUM IS CAPITAL RECEIPT AND NOT A REVENUE RECEIPT. III) AS HIMSELF ADMITTED BY LD. AO ONE OF THE DECIDIN G FACTOR FOR SHARE PREMIUM IS THE VALUE OR WORTH OF SUCH ASSETS OR PROFITS WHICH THE ISSUES COMPANY MAY CREATE IN THE FURTHER OR MAY DERIVE FOR THE PROPORTIONATE BE NEFIT OF THE SUBSCRIBER. IN FORGOING PARAS WE HAVE DESCRIBED THE FUTURE PLANNIN G OF THE ASSESSEE BY USING THE FUNDS RECEIVED FROM SHAREHOLDERS WHICH ALSO JUS TIFIED THE SHARE PREMIUM RECEIVED FROM THE INVESTOR COMPANIES. THEREFORE THE LD. AO IS WRONG IN HOLDING THAT IN THE INSTANT CASE NEITHER DOES THE ASSESSEE COMPANY HOLD ANY PROMISE FOR THE CREATION OF ASSETS OR WEALTH IN THE FUTURE NOR IS THERE ANY FORESEEABLE POSSIBILITY OF ANY PROFIT BEING DERIVED IN THE FUTURE. FROM THE FINANCIALS OF THE ASSESSEE COMPANY THE JUSTIFICATION GIVEN BY THE ASSESSEE IN FORGOING PARA REGARDING ACQUISITION OF ASSETS AND FUTURE PLANNING FOR EARNING OF PROFIT CAN BE DULY VERIFY. FURTHER AS STATED IN FORGOING PARAS THE SHARES AT PREMIUM IS ALWAYS A COMMERCIAL DECISION BETWEEN INVESTOR AND INVESTEE COMPANIES WHICH DOES NOT REQUIRE ANY J USTIFICATION. E) FINDING OF LD. AO: - THE INQUIRIES WHICH ARE BEING DISCUSSED IN SHOW CAU SE NOTICE ARE IN RELATION TO ALLOTTEE COMPANIES AND AS HELD IN EARLIER PARAS THAT THERE ARE CROSS-HOLDINGS AMONGST SIX COMPANIES NAMI NG ALLIANCE TRADECOM PVT. LTD EVERSHINE SUPPLIERS PVT. LTD REGENT BARTER PVT . LTD REGENT DEALERS PVT. LTD ROSE SUPPLIERS PVT. LTD AND MAYUKH VINIMAYA PVT . LTD BUT MAJOR SHAREHOLDING IS OF A 7TH COMPANY I.E. MAYUKH VINT RADE PVT. LTD. THUS THIS LATTER COMPANY IS THE HOLDING COMPANY OF 6 COMPANIE S NAMED EARLIER. THE HOLDING COMPANY IS ENTIRELY OWNED BY INDIVIDUALS OR HUFS OF CHHABRA FAMILIES. IT IS ALL CLEAR THAT THE WEB OF COMPANIES THROUGH W HICH TRANSACTIONS HAVE BEEN ROUTED TO CREATE A CORPORATE VEIL. IT CAN EASILY BE NOTICED THAT THE PAYMENTS TO SANDEEP CHHABRA AND SANJAY CHHABRA HAVE BEEN REFLEC TED AS LOANS BY THESE COMPANIES. WHILE THE PAYMENTS TO MOTISONS GROUP COM PANIES HAVE BEEN REFLECTED AS SHARE APPLICATION MONEY BY RECIPIENT C OMPANIES. ON FURTHER EXAMINATION BY INVESTIGATION WING IT CLEARLY INDICA TE SYSTEMATIC TRANSFER OF FUNDS ACROSS SEVERAL ACCOUNTS AT TIME AS MANY AS SIX ACC OUNTS IN A SINGLE DAY (OR AT THE MOST TWO TO THREE DAYS). MAJOR EXERCISE HAS BEE N DONE IN TWO OF THE SIX COMPANIES ALLIANCE TRADECOM PVT. LTD AND EVERSHINE SUPPLIERS PVT. LTD. SUBMISSION OF ASSESSEE: - I) THE DETAIL SUBMISSION ON THIS ISSUE HAS ALREADY BEE N SUBMITTED IN PARA 4 ABOVE OF OUR SUBMISSION. II) IN ADDITION TO ABOVE THIS IS TO FURTHER SUBMIT THAT THERE IS NO EVIDENCE WITH THE DEPARTMENT TO PROVE THAT THE COMPANIES TO WHOM SHAR ES WERE ISSUED DURING THE YEAR WERE BEING FUNDED BY THE ASSESSEE COMPANY. ALL THE COMPANIES HAVE THEIR OWN INDEPENDENT FUNDS TO INVEST AT THEIR WISDOM. IT IS FURTHER RELEVANT TO MENTION HERE THAT WHATEVER FUNDS PAID BY THE INVEST OR COMPANIES TO THE ASSESSEE COMPANY WERE TRANSFERRED FROM THEIR OWN SO URCE OF FUNDS WHICH THEY WERE POSSESSING MUCH PRIOR TO INVESTMENT MADE IN TH E ASSESSEE COMPANY AND BY NO STRETCH OF IMAGINATION IT CAN BE PRESUMED THA T THE THOSE FUNDS WERE INTRODUCED BY THE ASSESSEE COMPANY IN THE INVESTOR COMPANIES. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 106 III) FURTHER FROM THE SHOW CAUSE INQUIRIES ON THE B ASIS OF WHICH THE MODUS OPERANDI OF ISSUE OF SHARES ON SHARE PREMIUM IS BEING JUSTIF Y BY THE LD. AO NO WHERE IT PROVES THAT THE FUNDS WERE INTRODUCED IN SUCH COMPA NIES BY THE ASSESSEE COMPANY. THERE IS NO COGENT REASON TO HAVE SUCH PRE SUMPTION EITHER AS A RESULT OF SEARCH OVER THE ASSESSEE AS WELL AS INQUIRIES CA RRIED OUT BY THE DEPARTMENT. IF WE BELIEVE ON THE INQUIRIES CARRIED OUT BY THE DEPA RTMENT THAN THERE MAY BE INTRODUCTION OF SOME SUSPICIOUS FUNDS IN THE INTERM EDIATE COMPANIES WHERE FROM THE FLOW OF FUNDS STARTED FROM ONE COMPANY/PERSON T O OTHER COMPANY/PERSON AND PART OF SUCH WAS RECEIVED TO THE ASSESSEE COMPA NY BUT STILL A QUESTION AROSE THAT HOW ITS PROVE THAT THE SAME WAS UNEXPLAI NED MONEY OF THE ASSESSEE COMPANY. THE COMPANIES/PERSONS FROM WHOM THE ASSESS EE COMPANY RECEIVED THE SHARE APPLICATION MONEY AND THE PERSONS/COMPANI ES FROM WHOM THE INVESTOR COMPANIES OF THE ASSESSEE RECEIVED THE FUN DS ARE SEPARATE INCOME TAX ASSESSEE AND HAVING THEIR OWN NET WORTH OWN SOURCE OF FUNDS MUCH PRIOR TO THE INVESTMENT MADE IN THE ASSESSEE COMPANY AND IF SOME SUSPICIOUS FUNDS HAD BEEN INTRODUCED IN ACCOUNTS OF SUCH COMPANIES THEN THE EXPLANATION OF SUCH FUNDS SHOULD HAVE BEEN CALLED FROM CONCERNING PERSO N/COMPANY AND IN CASE OF FAILURE TO DO SO THE ACTION SHOULD HAVE BEEN TAKEN IN THE CASE OF CONCERNING PERSON. INSTEAD OF DOING SO THE DEPARTMENT ADOPTED A SHORT CUT METHOD OF TREATING SUCH SUSPICIOUS MONEY AS UNEXPLAINED MONEY OF THE ASSESSEE AND ADDED THE SAME INCOME OF THE ASSESSEE WITHOUT CARRY ING NECESSARY INQUIRIES OR TAKING NECESSARY ACTION AGAINST SUCH PERSONS BY JUS TIFYING ITS ACTION ON THE BASIS OF SOME IRRELEVANT INQUIRIES. THERE IS NO CAS E OR EVIDENCE WITH THE DEPARTMENT TO PRESUME THAT THE ASSESSEE HAS INTRODU CED ITS EXPLAINED MONEY IN ACCOUNTS OF SUCH INVESTOR COMPANIES. F) FINDING OF LD. AO : - ADMITTEDLY DURING THE COURSE OF SEARCH OVER MOTISON S GROUP NO DOCUMENTS/EVIDENCE WAS FOUND TO SHOW THAT SHARE CAPITAL AND PREMIUM THEREON WAS NOT GENUINE OR UNACCOUNTED INCO ME WAS INTRODUCED IN THE GARB OF SHARE PREMIUM BUT FROM THE INQUIRIES AND MO DUS OPERANDI ITS REVEALS THAT THE ALLOTTEE COMPANIES ARE MERELY PAPER COMPAN IES AND PROVIDING ACCOMMODATION ENTRIES. THEREFORE THE INDIRECT EVIDE NCE/INQUIRIES CONDUCTED GIVE CLEAR SIGN OF INTRODUCTION OF LARGE MONEY IN THE CO MPANY IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM MORE SO WHEN THE JUSTIFICATIO N OF CHARGING SUCH HIGHER RATE NOT GENUINELY PROVED. SUBMISSION OF AO : - I) IN THIS PARA THE LD. AO HIMSELF ADMITTED THAT DUR ING THE COURSE OF SEARCH OVER MOTISONS GROUP NO DOCUMENTS/EVIDENCE WAS FOUND TO S HOW THAT SHARE CAPITAL AND PREMIUM THEREON WAS NOT GENUINE OR UNACCOUNTED INCOME WAS INTRODUCED IN THE GARB OF SHARE PREMIUM. THUS IF THE DEPARTMENT I S NOT IN POSSESSION OF ANY POSITIVE MATERIAL AGAINST THE ASSESSEE OR ITS INVES TOR COMPANIES THAN HOW THE SHARE CAPITAL AND PREMIUM RECEIVED THEREON CAN BE T REATED AS NON GENUINE OR BOGUS. FURTHER FROM THE SHOW CAUSE INDIRECT EVIDENC ES/INQUIRIES CONDUCTED DURING WE HAVE GIVEN OUR SUBMISSION IN DETAIL ON SU CH INQUIRIES AND THERE IS NO POSITIVE/DIRECT EVIDENCE AGAINST THE ASSESSEE TO AL LEGED THAT THE ASSESSEE HAS INTRODUCED ITS OWN UNEXPLAINED MONEY UNDER THE GARB OF SHARE CAPITAL AND SHARE PREMIUM. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 107 II) THE RATE OF SHARE WAS DECIDED AFTER DISCUSSION OF ASSESSEE COMPANY AND INVESTOR COMPANY. THE SHARES WERE ISSUED TO THE INV ESTOR COMPANIES AT PREMIUM BECAUSE OF THE REASONS MENTIONED IN FORGOING PARAS. FROM THE DOCUMENTS SUBMITTED TO THE AO NO WHERE IT PROVES THAT ALL THE COMPANIES ARE SIMPLY PAPER COMPANIES AND PROVIDING ONLY ACCOMMODATION ENTRIES AND THE INVESTMENT MADE BY THEM IN THE ASSESSEE COMPANY IS NOT GENUINE. THE FINDING OF THE LD. AO IS BASED ON THE ASSUMPTION AND PRESUMPTION. G) FINDING OF LD. AO : - IT IS CLEAR THAT WHAT IS APPARENT IS NOT REAL AND T HE ASSESSEE'S CLAIM OF HAVING RECEIVED INVESTMENT IS N OT GENUINE. AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S SU MATI DAYAL (1995) 80 TAXMAN 89 (SC) APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO LOOK INTO THE SURROUNDING CIRCUMSTAN CES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TES T OF HUMAN PROBABILITIES. THE EVIDENCES HAVE TO BE JUDGED BY APPLYING THE TEST OF HUMAN PROBABILITIES. IMPORTING THE RATIO OF THE HON'BLE SUPREME COURT OF INDIA AS PROPOUNDED IN THE CASE OF SUMATI DAYAL (SUPRA) THERE IS NO DISPUTE T HAT THE AMOUNT HAS BEEN RECEIVED BY THE APPELLANT FROM VARIOUS COMPANIES S OME OF WHICH ARE LISTED COMPANIES AND THE FUNDS HAVE BEEN RECEIVED AGAINST THE ISSUE OF SHARES AND THAT THE FUNDS HAVE BEEN RECEIVED THROUGH BANKING C HANNELS. WHAT IS DISPUTED IS WHETHER THE FUNDS RECEIVED BY THE ASSESSEE IS AC TUALLY GENUINE INVESTMENT OR THE UNACCOUNTED INCOME INTRODUCED IN THE GARB OF IN VESTMENT. THIS RAISES THE QUESTION WHETHER THE APPARENT COULD BE CONSIDERED A S REAL. IN THE PRESENT CASE THE CLAIM OF THE ASSESSEE HAVING RECEIVED GENUINE I NVESTMENT IS INCORRECT. SUBMISSION OF ASSESSEE : - I) AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S SUMATI DAYAL (1995) 80 TAXMAN 89 (SC) (ALSO RELIED BY LD. AO) APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY A ND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILIT IES. THE EVIDENCES HAVE TO BE JUDGED BY APPLYING THE TEST OF HUMAN PROBABILITIES. II) THE LD. AO IS ALSO ADMITTING IN THIS PARA THAT THE A MOUNT HAS BEEN RECEIVED BY THE APPELLANT FROM VARIOUS COMPANIES AND THE FUNDS HAVE BEEN RECEIVED AGAINST THE ISSUE OF SHARES AND THAT THE FUNDS HAVE BEEN RE CEIVED THROUGH BANKING CHANNELS. THE DISPUTE IS WHETHER THE FUNDS RECEIVED BY THE AS SESSEE ARE ACTUALLY GENUINE CAPITAL APPLICATION OR THE UNACCOUNTED INCOME INTRO DUCED IN THE FORM OF SHARE APPLICATION. IN THIS REGARD THIS IS TO SUBMIT THAT THERE IS NO REASON WITH THE DEPARTMENT TO PRESUME THAT THE AMOUNT RECEIVED FROM THE ABOVE MENTIONED COMPANIES IS ACCOMMODATION ENTRIES TO BROUGHT THE U NACCOUNTED MONEY OF THE ASSESSEE IN BOOKS OF ACCOUNTS. FURTHER DURING THE COURSE OF SEARCH THE DEPARTMENT HAS NOT FOUND ANY UNDISCLOSED SOURCE OF INCOME OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION BY WHICH THIS MUCH OF INCOME COULD BE EARNED WHICH ALSO PROVES THAT THE SHARE CAPITAL RECEIVED B Y THE ASSESSEE IS GENUINE. CIT VS BHARAT ENGINEERING AND CONSTRUCTION CO. (1972) 83 ITR 187 (SC) ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 108 IN THIS CASE TRIBUNAL CAME TO THE CONCLUSION THAT U NEXPLAINED CASH CREDIT ENTRIES IN THE FIRST YEAR OF BUSINESS OF ENGINEERIN G CONSTRUCTION COMPANY COULD NOT BE INCOME OF ASSESSEE. THE HIGH COURT AFTER CAR EFUL EXAMINATION OF THE VARIOUS FINDINGS REACHED BY THE TRIBUNAL HAS COME T O THE CONCLUSION THAT THE TRIBUNAL'S FINDINGS ARE FINDINGS OF FACT. HONBLE A PEX COURT CONFIRMED THAT CONCLUSION. THIS GIVES THE ANSWER IN FAVOR OF THE ASSESSEE TH AT IN THIS CASE THE APPARENT SHOULD BE CONSIDERED AS REAL AS THE ASSESS EE COMPANY IS NOT HAVING ANY SOURCE OF INCOME FROM WHICH THIS MUCH OF INCOME COULD BE EARNED THAN RECEIVED OF NON GENUINE SHARE CAPITAL TO BROUGHT IT S UNACCOUNTED INCOME IN ITS BOOKS OF ACCOUNTS DOES NOT ARISE. III) THE ASSESSING OFFICER MERELY DISBELIEVED THE EXPLAN ATION/STATEMENTS GIVEN BY THE ASSESSEE AND HAS CONVERTED GOOD PROOF INTO NO P ROOF. HONBLE JUSTICE HIDAYATULLAH OF THE SUPREME COURT IN THE CASE OF SREELEKHA BANERJEE VS CIT [1963] 49 ITR 112 (SC); 120 OBSERVED THAT THE INCOME TAX DEPARTMENT CANNOT BY MERELY REJECTING UNREASONABLY A GOOD EXPL ANATION CONVERT GOOD PROOF INTO NO PROOF HONBLE SUPREME COURT IN THE CASE OF UMA CHARAN SHAW & BROS CO VS CIT 37 ITR 271 HAS HELD THAT THE SURMISES AND CONJECTURES AND THE CONCLUSION IS THE RESULT OF SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V S ANUPAM KAPOOR (2008) 299 ITR 179 (P & H) ALSO HELD THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROOF. 9. BY GIVING THE ABOVE FINDINGS THE LD. MADE ADDITI ON OF RS. 7 78 00 000/- IN TOTAL INCOME OF THE ASSESSEE U/S 56(1) OF INCOME TAX ACT 1961. REGARDING THE APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT 1961 WE MAY SUBMIT AS UNDER: - A) AS PER PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT 1961 INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INCOME U NDER THIS ACT SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD 'INCOME FRO M OTHER SOURCES' IF IT IS NOT CHARGEABLE TO INCOME-TAX UNDER ANY OF THE HEADS SPE CIFIED IN SECTION 14 ITEMS A TO E. IN THE CASE OF THE ASSESSEE COMPANY THE AMOUNT WA S RECEIVED FROM INVESTOR COMPANIES WERE AGAINST SHARE APPLICATION AND THE SA ME IS CAPITAL RECEIPT WHICH WAS ADJUSTED AGAINST SHARE CAPITAL AND SHARE PREMIU M. THE MONEY SO RECEIVED TO ASSESSEE COMPANY WAS CAPITAL RECEIPT AND WAS NOT REVENUE RECEIPT THEREFORE THE SAME CANNOT BE TAXED IN THE HANDS OF ASSESSEE C OMPANY UNDER SECTION 56(1) OF INCOME TAX ACT 1961 BECAUSE THIS SECTION DEAL WI TH INCOME AND NOT WITH CAPITAL RECEIPTS. THE INVESTORS WHO SUBSCRIBED THE SHARE CAPITAL OF ASSESSEE COMPANY IS ALSO SHOWING THE AMOUNT PAID TO ASSESSEE AS THEIR INVESTMENT IN SHARES OF ASSESSEE COMPANY AND NECESSARY DOCUMENTS IN THIS REGARD WAS SUBMITTED TO LD. AO. THEREFORE THE ASSESSEE HAS PROV ED WITH DOCUMENTARY EVIDENCES THAT THE AMOUNT WAS RECEIVED AGAINST SHAR E APPLICATION I.E. CAPITAL RECEIPT THEREFORE THE SAME CANNOT BE TREATED AS IN COME OF THE ASSESSEE. FURTHER ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 109 FOR TREATING THE SHARE CAPITAL/SHARE PREMIUM AS INC OME OF THE ASSESSEE COMPANY NO COGENT REASON HAS BEEN GIVEN BY LD. AO. B) THERE IS NO DEEMING FICTION HAS BEEN GIVEN IN SE CTION 56(1) OF INCOME TAX ACT 1961 WHEREIN THE INCOME CAN BE TAXED UNDER DEEMING PROVISION. CERTAIN DEEMING INCOME HAS BEEN CHARGED AS INCOME TAX ACT WH ICH HAS BEEN PROVIDED IN SECTION 56(2) OF INCOME TAX ACT 1961 AND AS PER PROVISION OF SECTION 56(2) OF INCOME TAX ACT 1961 THE SHARE PREMIUM RECEIVED PRIO R TO AY 2013-14 WERE NOT TAXABLE IN ANY CIRCUMSTANCES IF THE ASSESSEE HAS PR OVED THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. C) THE INCOME FOR THE PURPOSE OF THE INCOME TAX ACT HAS A WELL UNDERSTOOD MEANING AS DEFINED IN SECTION 2(24) OF THE INCOME T AX ACT 1961. IT IS TRUE THAT SECTION 2(24) OF THE INCOME ACT 1961 CONTAINS INCLUS IVE DEFINITION BUT IT CANNOT BE DISPUTED THAT INCOME SHOULD HAVE BEEN LOOK INTO ITS NORMAL MEANING. THE INCOME WILL NOT INCLUDE CAPITAL RECEIPTS UNLESS IT IS SPEC IFIED IN INCOME TAX ACT. THIS ARGUMENT CLARIFIES AFTER THE AMENDMENT MADE BY FINA NCE ACT 2012 W.E.F. 1.4.2013 IN SECTION 56(VIIB) OF INCOME TAX ACT 1961 WHEREIN CERTAIN SHARE PREMIUMS WERE MADE TAXABLE W.E.F. 01.04.2013. IF TH E SAME WERE ALREADY TAXABLE U/S 56(1) O INCOME TAX ACT 1961 AND THE SAM E WAS ALREADY INCLUDED IN THE DEFINITION OF INCOME THAN WHY THIS AMENDMENT WA S MADE. THEREFORE THE LD. AO IS WRONG IN MAKING THE ADDITION U/S 56(1) OF INCO ME TAX ACT 1961. D) CHARGE OF TAX IS ON INCOME AS UNDERSTOOD IN THE I. TAX ACT AND MEASURE OF INCOME AS PER THE COMPUTATION PROVISION. IN CASE TH ERE IS NO CHARGING PROVISION FOR SPECIFIC RECEIPT THEN IT CANNOT BE TAXED. THE FIVE MEMBER BENCH OF THE APEX COURT IN CIT V VATIKA TOWNSHIP P LTD 367 ITR 466 OBSERVED AT PAGE 494. TAX LAWS ARE CLEARLY IN DEROGATION OF PERSONAL RI GHTS AND PROPERTY INTERESTS AND ARE THEREFORE SUBJECT TO STRICT CONSTRUCTION AND ANY AMBIGUITY MUST BE RESOLVED AGAINST IMPOSITION OF THE TAX. IN BILLINGS V U.S 232 U.S.261 AT PAGE 265 34 S.CT 421 (1914) THE SUPREME COURT CLEARLY ACKNOWLEDGED THIS BASIC AND LONG STANDING RULE OF STATUTORY CONSTRUCTION. TAX STATUTES SHOULD BE STRICTLY CONSTRUED AND IF ANY AMBIGUITY BE FOUND TO EXIST IT MUST BE RESOLVED IN FAVOUR OF CITIZEN. IF A PERSON SOUGHT TO BE TAXED COMES WITHIN THE L ETTER OF THE LAW HE MUST BE TAXED HOWEVER GREAT THE HARDSHIP MAY APPEAR TO THE JUDICIAL MIND TO BE. ON THE OTHER HAND IF THE CROWN SEEKING TO RECOVER THE TAX CANNOT BRING THE SUBJECT WITHIN THE LETTER OF THE LAW THE SUBJECT IS FREE HOWEVER APPARENTLY WITHIN THE SPRIT OF THE LAW THE CASE MIGHT OTHERWISE APPEAR TO BE AS OBSERVED IN PARTINGTON V ATTOMEY GENERAL LR4HL100. SINCE FOR THE YEAR UNDER CONSIDERATION THERE WAS N O PROVISIONS IN INCOME TAX ACT 1961 WHEREIN THE FAIR VALUE OF SHARE COULD BE C OMPUTED AND THE EXCESS SHARE PREMIUM COULD BE TAXED THEREFORE IN ABSENCE OF COMPUTATION PROVISION THE SAME CANNOT BE TAXED. THE RELIANCE IS PLACED IN FOL LOWING CASES: - I) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MILLS CO.(P) LTD. V CIT 249 ITR 265 HAD AN OCCASION TO CONSIDER THE TAXABILITY OF A SU M RECEIVED IN RESPECT OF CONSIDERATION OF TENANCY RIGHT. IT WA S ACCEPTED BOTH BY REVENUE AND THE ASSESSEE THAT TENANCY RIGHT IS A CAPITAL RE CEIPT. INCOME AS DEFINED IN SECTION 2(24)(VI) IS THE INCOME CHARGEABLE U/S 45. HENCE CAPITAL GAIN CHARGEABLE U/S 45 OR NOT WILL BE TAXABLE IN CASE THE ARGUMENT OF THE REVENUE IS ACCEPTED. LEGISLATURE HAS NOT STOPPED WITH THE WORD CAPITAL G AIN BUT HAS MENTIONED THAT CAPITAL GAIN CHARGEABLE U/S 45. BEFORE THE BOMBAY H IGH COURT IT WAS ARGUED ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 110 THAT IN CASE SURRENDER OF TENANCY RIGHTS IS NOT TAX ABLE U/S 45 THEN IT SHOULD FALL U/S 56 OF I.T. ACT. IF THE CAPITAL ASSET HAS NO COST THEN ENTIRE RECEIPT IS CAPITAL RECEIPT. BEFORE THE HONBLE HIGH COURT THE REVENUE CONTENDED THAT SECTION 14 IT IS MENTIONED AS CAPITAL GAIN AND NOT CAPITAL GAIN C HARGEABLE U/S 45. THIS CONTENTION WAS NOT ACCEPTED BY THE HIGH COURT. IF T HE COMPUTATION PROVISION DO NOT APPLY TO A CASE THEN SUCH A CASE WILL NOT BE CO VERED UNDER CHARGING SECTION. AT LATER STAGE A REFERENCE WILL BE MADE TO 56 (VII B) INSERTED BY FINANCE ACT 2012 W.E.F. 1.4.2013 AS THE SAME WILL BE A COMPUTATION P ROVISION. FOR THE A.Y. 2011- 12 COMPUTATION PROVISION WERE NOT THERE. IN ABSENC E OF COMPUTATION PROVISION ENTIRE VALUE OF SHARE PREMIUM CAN NOT BE TAXED U/S 56. AS FOR TENANCY RIGHT THE FULL CONSIDERATION CAN NOT BE TAXED U/S 56 SIMILAR LY ENTIRE SHARE PREMIUM IS NOT TAXABLE U/S 56(1). II) THE HONBLE APEX COURT IN THE CASE OF CIT V D.P. SANDU BROS. CHEMBUR (P) LTD 273 ITR 1 ALSO HOLD THAT AS PER 2(24)(VI) ONLY INCOME WHICH IS CHARGEABLE U/S 45 IS TO BE INCLUDED IN INCOME AND IF COMPUTATI ON PROVISION U/S 45 FAILS THEN CHARGING PROVISIONS WILL FAIL. REF. TO CIT V B.C. SRINIVASA SETTY 128 ITR 294. IV) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V GOTA N LIME STONE KHANIJ UDYOG 269 ITR 399 ALSO HELD THAT IN CASE COMPUTATION PROVISION U/S 48 COULD NOT BE APPLIED FOR WANT OF ASCERTAINABLE C OST OF ACQUISITION THEN CAPITAL GAIN DOES NOT ARISE TO BE INCLUDED IN TOTAL INCOME ON ACCOUNT OF FAILURE OF APPLICABILITY OF COMPUTATION PROVISION. THE HONBLE HIGH COURT REFERRED TO DECISION OF BOMBAY HIGH COURT IN THE CASE OF CADELL WVG. MILLS CO (P) LTD. (SUPRA). V) THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF S. ZORAST ER AND CO. V/S CIT 322 ITR 35 HAD ON OCCASION TO CONSIDER THE TAXABILITY OF RECE IPT OF RS.20 000 RECEIVED BY VENDEE ON DEFAULT OF THE PURCH ASER AS PER AGREEMENT FOR SELL OF PREM PRAKASH TALKIES. THE HONBLE HIGH COUR T AFTER REFERRING TO THE DECISION OF APEX COURT IN THE CASE OF TRAVANCORE RUBBER AND TEA CO LTD. V CIT 243 ITR 158 HELD THAT SUCH RECEIPT IS CAPITAL RECEIPT. SUCH CAP ITAL RECEIPT IS NOT TAXABLE IN VIEW OF JUDGMENT OF APEX COURT IN D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA). HENCE CAPITAL RECEIPT IS NOT TAXAB LE UNLESS THERE IS CHARGING PROVISION FOR A CAPITAL RECEIPT AND COMPUTATION PRO VISIONS ARE ALSO APPLICABLE. E) THE HONBLE BOMBAY HIGH COURT IN THE CASE OF VODAFONE INDIA SERVICES P. LTD. V UOI 368 ITR 1 HAD AN OCCASION TO CONSIDER THE DIFFERENCE BETWEEN THE SHARE PREMIUM DETERMINED BY REVENUE AND THE SHARE P REMIUM CHARGED AS DEEMED LOAN AND TAXING OF NATIONAL INTEREST ON DEEM ED LOAN. THE HONBLE BOMBAY HIGH COURT HAS REFERRED TO THE DECISION OF A PEX COURT IN THE CASE OF MATHURAM AGGARWAL V/S STATE OF MP (1999) 8 SCC 667 FOR THE TEST TO INTERPRET A TAXING STATUE WHICH READS AS UNDER: THE INTENTION OF THE LEGISLATURE IS A TAXATION S TATUTE IS TO BE GATHERED FROM THE LANGUAGE OF THE PROVISIONS PARTICULARLY WHERE THE L ANGUAGE IS PLAIN AND UNAMBIGUOUS. IN A TAXING ACT IT IS NOT POSSIBLE TO A SSUME ANY INTENTION OR GOVERNING PURPOSE OF THE STATUTE MORE THAN WHAT IS STATED IN THE PLAIN LANGUAGE. IT IS NOT THE ECONOMIC RESULTS SOUGHT TO BE OBTAINE D BY MAKING THE PROVISION WHICH IS RELEVANT IN INTERPRETING A FISCAL STATUTE. EQUALLY IMPERMISSIBLE IS AN INTERPRETATION WHICH DOES NOT FLOW FROM THE PLAIN UNAMBIGUOUS LANGUAGE OF THE STATUTE. WORDS CANNOT BE ADDED TO OR SUBSTITUTED SO AS TO GIVE A MEANING TO THE STATUTE WHICH WILL SERVE THE SPENT AND INTENTION OF THE LEGISLATURE. THE STATUTE SHOULD CLEARLY AND UNAMBIGUOUSLY CONVEY THE THREE C OMPONENTS OF THE TAX LAW ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 111 I.E. SUBJECT OF THE TAX THE PERSON WHO IS LIABLE T O PAY THE TAX AND THE RATE AT WHICH THE TAX IS TO BE PAID. IF THERE IS ANY AMBIGU ITY REGARDING ANY OF THESE INGREDIENTS IN A TAXATION STATUTE THEN THERE IS NO TAX IN LAW. THEN IT IS FOR THE LEGISLATURE TO DO THE NEEDFUL IN THE MATTER. HONBLE BOMBAY HIGH COURT IN THIS CASE (VODAFONE C ASE) OBSERVED THAT ISSUE OF SHARES AT A PREMIUM IS ON CAPITAL ACCOUNT AND GIVES RISE TO NO INCOME. SECTION 56(1) PROVIDES THE INCOME OF EVERY KIND WHICH IS NO T EXCLUDED FROM THE TOTAL INCOME IS CHARGEABLE UNDER THE HEAD INCOME FROM OTH ER SOURCES. HOWEVER BEFORE SECTION 56 OF THE ACT CAN BE APPLIED THERE MUST BE I NCOME WHICH ARISES. IF THE RECEIPT IS CAPITAL THEN IT IS NOT INCOME. HENCE SHA RE PREMIUM IS NOT AN INCOME. F) THE CBDT VIDE CIRCULAR/INSTRUCTION NO.2 DATED 29 .01.2015 HAS STATED AS UNDER [371 ITR 6(ST)]. IN REFERENCE TO THE ABOVE CITED SUBJECT I AM DIRE CTED TO DRAW YOUR ATTENTION TO DECISION OF THE HIGH COURT OF BOMBAY IN THE CASE OF VODAFONE INDIA SERVICES PVT. LTD V UOI FOR THE ASSESSMENT YEAR 2009-10 (WP NO.871 OF 2014) WHEREIN THE COURT HAS HELD INTERALIA THAT THE PREMIUM ON SHARE ISSUE WAS ON ACCOUNT OF A CAPITAL ACCOUNT TRANSACTION AND DOES NOT GIVE RISE TO INCOME AND HENCE NOT LIABLE TO TRANSFER PRICING ADJUSTMENT. IT IS HEREBY INFORMED THAT THE BOARD HAS ACCEPTED THE DECISION OF THE HIGH COURT OF BOMBAY IN THE ABOVE MENTIONED WRIT PETITION. IN VIEW OF THE ACCEPTANCE OF THE ABOVE JUDGMENT IT IS DIRECTED THAT THE RATIO DECID ENDI OF THE JUDGMENT MUST BE ADHERED TO BY THE FIELD OFFICERS IN ALL CASES WHERE THE ISSUE IS INVOLVED. THIS MAY ALSO BE BROUGHT TO THE NOTICE OF THE ITAT DRPS AND CIT (APPEALS). IN VIEW OF ABOVE INSTRUCTION IT IS CLEAR THAT RATI O DECIDING OF TREATING OF SHARE PREMIUM AS CAPITAL RECEIPT IS BINDING ON REVENUE AUTHORITIE S. G) BY FINANCE ACT 2012 A NEW CLAUSE (VIIB) WAS INSER TED IN 56(2). MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE BILL 2012 STAT ED AS UNDER:- SHARE PREMIUM IN EXCESS OF THE FAIR MARKET VALUE I S TO BE TREATED AS INCOME. SECTION 56(2) PROVIDES FOR THE SPECIFIC CATEGORY OF INCOMES THAT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES. IT IS PROPOSED TO INSERT A NEW CLAUSE IN 56(2). THE NEW C LAUSE WILL APPLY WHERE ACCOMPANY NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED RECEIVES IN ANY PREVIOUS YEAR FROM AN Y PERSON BEING A RESIDENT ANY CONSIDERATION FOR ISSUE OF SHARES. IN SUCH A CASE I F THE CONSIDERATION RECEIVED FOR ISSUE OF SHARES EXCEEDS THE FACE VALUE OF SHARES T HE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD INCOME FR OM OTHER SOURCES. THIS AMENDMENT EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS. IN THE MEMORANDUM IT IS MENTIONED THAT PREMIUM IN EXCESS O F FAIR MARKET VALUE IS TO BE TREATED AS INCOME. THIS SUGGESTS THAT PREMIUM IN EXCESS OF FAIR MARKET VALUE WAS NOT AN INCOME BUT IS TO BE TREATED AS INCOME DU E TO AMENDED PROVISION. BEFORE THE AMENDMENT CONSIDERATION RECEIVED AS PRE MIUM WAS NOT INCOME. THE LEGISLATURE IN ITS WISDOM REQUIRED THE SHARE PREMIU M IN EXCESS OF FAIR MARKET VALUE TO BE INCOME FROM ASSESSMENT YEAR 2013-14 AND NOT THE ENTIRE PREMIUM TO BE TREATED AS INCOME. CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MENTIONED THAT PROVISIONS OF 56(2)(VII B) W ILL BE APPLICABLE FOR ASSESSMENT YEAR 2013-14 ONWARD . H) SECTION 56 IS NOT A CHARGING SECTION. THIS SECTI ON STARTS WITH THE FOLLOWING SENTENCE. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 112 INCOME OF EVERY KIND WHICH IS NOT TO BE EXCLUDED FROM THE TOTAL INCOME UNDER THE ACT SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD. INCOME FROM OTHER SOURCES IF IT IS NOT CHARGEABLE TO INCOME TAX. UNDE R ANY OF THE HEADS SPECIFIED IN SECTION 14 ITEMS A TO E. FOR AN INCOME TO BE TAXED U/S 56 IT HAS TO SATIS FY THREE CONDITIONS. (A) IT SHALL BE CLASSIFIABLE AS INCOME AS PER THE C HARGING SECTION OF THE ACT. (B) IT SHALL NOT BE EXCLUDED FROM THE TOTAL INCOME (E.G. SECTION10). (C) IT IS NOT CHARGEABLE TO TAX UNDER ANY OF THE SP ECIFIED HEADS IN SECTION 14 ITEMS A TO E. THE FINANCE BILL 2012 AS PRESENTED ON 16 TH MARCH 2012 INCLUDED A NEW CLAUSE (VIIB) U/S 56(2) OF I.T. ACT [342 ITR1(ST)]. NO PROPO SAL IN THE ORIGINAL BILL TO INSERT A NEW CLAUSE U/S 2(24). SUBSEQUENTLY NOTICE OF AMENDM ENTS TO FINANCE BILL WAS GIVEN [SEE 343 ITR 37(ST)] AND AMENDMENTS ALSO INCLU DED THE IN SECTION OF CLAUSE (XVI) IN 2(24) OF I.T. ACT AND SUCH CLAUSE IS AS UND ER: (XVI) ANY CONSIDERATION RECEIVED FOR ISSUE OF SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES REFERRED TO IN CLAUSE (VIIB) OF SUBSE CTION (2) OF 56. THE AMENDMENT INTRODUCED IN 2(24) SIGNIFIES THAT SE CTION 56 IS NOT A CHARGING SECTION. UNLESS THE INCOME WHICH IS TO BE TAXED U/S 56(2)(VI I B) IS INCLUDED IN THE DEFINITION OF INCOME THEN IT CAN BE TAXED AND BE P ART OF TOTAL INCOME. NATURE OF INCOME AS MENTIONED IN SECTION 28(IIIA) (IIIB) (I IIC) (IIID) AND (IIIE) ARE ALSO INCLUDED IN DEFINITION OF INCOME. I) THIS AMENDMENT IF SECTION 56(2)(VIIB) OF INCOME TAX ACT 1961 EFFECTIVE FROM 1 ST APRIL 2013 AND WILL ACCORDINGLY APPLY IN RELATION T O ASSESSMENT YEAR 2013-14 AND SUBSEQUENT ASSESSMENT YEARS AND THE PROVISIONS OF THIS SECTION CANNOT BE MADE APPLY IN PREVIOUS YEARS. IN THIS REGARD THE RA TIO HAS BEEN LAID DOWN IN FOLLOWING JUDGMENTS: - A) BY FINANCE ACT 1994 SECTION 55(2) WAS AMENDED TO PROVIDE THAT COST OF ACQUISITION OF A TENANCY RIGHT WILL BE TAKEN AS NIL . THE HONBLE APEX COURT IN THE CASE OF D.P. SANDU BROS. CHEMBUR (P) LTD (SUPRA) HELD THAT AMENDMENT TOOK EFFECT FROM 1 ST APRIL 1995 AND THEREFORE WILL NOT BE APPLICABLE F OR A.Y. 1987- 88. SIMILAR FINDING HAS BEEN RECORDED BY HONBLE RA J HIGH COURT IN THE CASE OF GOTAN LIME STONE KHANIJ UDHYOG. THE RATIO OF LAW IN RESPECT OF AMENDMENT IN 55(2) BEING HELD AS PROSPECTIVE IS APPLICABLE FOR 56(2)(VIBE) AND HENCE SHARE PREMIUM IN EXCESS OF FAIR MARKET VALUE CAN NOT BE HELD TAXABLE FOR A.Y. 2011-12. B) RECENTLY THE HONBLE APEX COURT IN THE CASE OF M.G. PICTURES (MADR AS) LTD V/S ACIT 373 ITR 39 HELD THAT AMENDMENT IN SECTION 40A(3) W.E.F. FROM 1.4.1996 IS PROSPECTIVE AND CANNOT BE APPLIED TO PR EVIOUS YEARS OF BLOCK PERIOD PRIOR TO F.Y. 1995-96. C) THE FIGURE OF 10 000 WAS CHANGED TO 20 000 U/S 4 0A(3) OF INCOME TAX ACT 1961 AND 269SS OF INCOME TAX ACT 1961 BY DIRECT TAX LAWS (AMENDMENT) ACT 1987 W.E.F. 1.4.1989. THE CBDT VIDE CIRCULAR NO.522 DATED 18.08.1988 STATED THAT AMENDMENT IN SECTION 40A(3) IS APPLICABLE FOR A.Y. 1989-90 AS IT IS A SUBSTANTIVE PROVISION AND SINCE 269SS IS A PROCEDUR AL PROVISION THE EFFECTIVE DATE WILL BE 1.4.89 I.E. PREVIOUS YEAR RELEVANT TO A.Y. 89-90. D) THE FIVE JUDGE CONSTITUTION BENCH IN THE CASE OF CIT V VATIKA TOWNSHIP (P) LTD. 367 ITR 466 HAD AN OCCASION TO CONSIDER AS TO WHETHER PROVISO ADDED TO SECTION 113 OF THE I.T. ACT IS PROSPECTIVE OR RETRO SPECTIVE. THE HONBLE APEX COURT WHILE CONSIDERING THE VARIOUS DECISIONS HELD (AS PER PAGE 469 OF ITR 367). ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 113 THAT SURCHARGE LEVIED BY ASSESSING OFFICER FOR THE BLOCK ASSESSMENT PERTAINING TO THE PERIOD FROM JUNE 1 2002 WAS LIABLE TO BE DE LETED. AN AMENDMENT MADE TO A TAXING STATUTE CAN BE SAID T O BE INTENDED TO REMOVE HARDSHIPS ONLY OF THE ASSESSEE NOT OF THE DEPARTME NT. IMPOSING A RETROSPECTIVE LEVY ON THE ASSESSEE WOULD HAVE CAUSED UNDUE HARDSH IP AND FOR THAT REASON PARLIAMENT SPECIFICALLY CHOSE TO MAKE THE PROVISO E FFECTIVE FROM JUNE 1 2002. WHERE A BENEFIT IS CONFERRED BY A LEGISLATION THE RULE AGAINST A RETROSPECTIVE CONSTRUCTION IS DIFFERENT. IN A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOM E OTHER PERSON OR ON THE PUBLIC GENERALLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECTS THEN PRESUMPTION WOULD BE THAT SUCH A LEGISLATION GIVING IT A PURPOSIVE CONSTRUCTION WOULD WARRANT IT TO BE GIVE N A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PR OVISION AS RETROSPECTIVE. WHERE A LAW IS ENACTED FOR THE BENEFIT OF COMMUNITY AS A WH OLE EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTI VE IN NATURE. THE HONBLE APEX COURT FURTHER NOTICED THAT CBDT C IRCULAR MENTIONED THAT PROVISO IS APPLICABLE FROM 1.6.2002. IN RESPECT OF 56(2)(VII B) CBDT VIDE CIRCULAR NO.3 OF 2012 DATED 12.06.2012 HAS ALSO MEN TIONED THAT PROVISIONS OF 56(2)(VII B) WILL BE APPLICABLE FOR A SSESSMENT YEAR 2013-14 ONWARD. HENCE SHARE PREMIUM EVEN IF IN EXCESS OF FAIR MARKE T VALUE IS NOT TAXABLE U/S 56(1) FOR THE A.Y. 2011-12. 9. IN VIEW OF THE ABOVE SUBMISSIONS IT IS CLEAR TH AT SHARE PREMIUM RECEIVED IS A CAPITAL RECEIPT AND CONSIDERATION RECEIVED CANNOT B E CONSIDERED AS INCOME FOR THE YEAR UNDER CONSIDERATION. WITHOUT PREJUDICE TO OUR SUBMISSION IN THIS REGARD THIS IS TO SUBMIT IN THE IN THE SHOW CAUSE NOTICE T HE LD. AO MENTIONED THAT SHARE PREMIUM/SHARE CAPITAL SHOULD BE TAXABLE IN THE HAND S OF ASSESSEE COMPANY U/S 56(1) OF INCOME TAX ACT 1961 ON A/C OF SHARE PR EMIUM/SHARE CAPITAL ALLEGED TO BE NOT IN ACCORDANCE WITH THE VALUE OF T HE SHARES. IN THIS REGARD WITHOUT PREJUDICE TO OUR SUBMISSION ON THIS ISSUE T HIS IS TO SUBMIT THAT IN CASE THE SHARE PREMIUM IS MADE TAXABLE AS INCOME OF THE ASSESSEE ON THE GROUND THAT THE SAME IS NOT AS PER FAIR MARKET VALUE AND H ELD AS TAXABLE THAN STILL THE AMOUNT RECEIVED AGAINST SHARE CAPITAL AMOUNTING TO RS. 1 03 00 000/- CANNOT BE TREATED AS INCOME OF THE ASSESSEE. 10. IN ADDITION OF ABOVE SUBMISSION IT IS FURTHER S UBMITTED THAT THE ASSESSEE SUBMITTED SUFFICIENT DOCUMENTS TO PROVE IDENTITY C REDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL. TO SUPPORT THAT SHARE HOLDERS WERE GENUINE AND CREDITWORTHINESS IS PROVED THE ASSESSEE ENCLOSED N ECESSARY DETAILS IN RESPECT OF INCORPORATION OF SUCH COMPANIES AND DETAILS OF C HEQUES VIDE WHICH AMOUNTS WERE RECEIVED. THE CAPACITY OF SHAREHOLDERS IS VERI FIABLE FROM THE COPY OF THE BALANCE SHEET OF THE SHAREHOLDERS. THE SHAREHOLDERS HAVE FUNDS ON A PRIOR DATE FROM THE ALLOTMENT OF SHARES GIVEN BY THE ASSESSEE COMPANY AND SUCH FUNDS WERE MORE THAN THE AMOUNT OF SHARE APPLICATION. THE REFORE THE ADDITION ON SHARE APPLICATION RECEIVED TO THE ASSESSEE NEITHER CAN BE MADE U/S 56(1) OF INCOME TAX ACT 1961 NOR CAN BE MADE U/S 68 OF INCOM E TAX ACT 1961. THE VARIOUS JUDGMENTS AND ARGUMENTS REGARDING ADDITION MADE U/S 56(1) OF INCOME TAX ACT 1961 HAS BEEN SUBMITTED IN FORGOING PARAS. THE RELIANCE REGARDING ADDITION CANNOT BE MADE U/S 68 OF INCOME TAX CAT 1 961 IS PLACED ON THE FOLLOWING DECISIONS: - I) SHALIMAR BUILDCON (P) LTD. VS ITO (2011) 128 ITD 039 6 (JAIPUR) ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 114 IN THIS CASE HONBLE ITAT JAIPUR BENCH HAS RELIED ON I TS OLD DECISION IN THE CASE OF HOTEL GAUDAVAN ITA NO. 1162 AND 1137/JP/2008 AND ADDITION ON ACCOUNT OF SHARE CAPITAL WAS DELETED. 28.5 ON IDENTICAL ISSUE THE TRIBUNAL JAIPUR BENCH IN THE CASE OF HOTEL GAUDAVAN (P) LTD. (SUPRA) HAS HELD AS UNDER : '6. AS REGARDS THE ISSUE ON MERIT IN THE DEPARTMENTA L APPEAL WE CONCUR WITH THE VIEWS OF THE LEARNED CIT(A) THAT THE AO HAS NOT CONS IDERED THE EXPLANATION OF THE ASSESSEE. THE AMOUNT UNDER CONSIDERATION OF RS. 1.89 CRORE HAS BEEN RECEIVED BY THE ASSESSEE AS SHARE APPLICATION MONEY FROM M/S JALKANTA TECHNICAL & FINANCIAL SERVICE (P) LTD. (JTFSPL) AFT ER A PROPER RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE AFORESAID COMPANY THROUGH BANKING CHANNEL. M/S JTFSPL IS HAVING PERMANENT ACCOUNT AND FILING I TS RETURN OF INCOME REGULARLY. THE AO HAS NOWHERE MENTIONED THAT MONEY B ELONGS TO THE ASSESSEE COMPANY AND THEREFORE PROVISIONS OF S. 68 CANNOT B E INVOKED. THE LEARNED CIT(A) HAS RIGHTLY RELIED UPON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 WHICH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT OF INDIA. TH E LEARNED CIT(A) HAS ALSO RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005) 197 CTR (RAJ) 432 AND ALSO THE DECISION OF TRIBUNAL JODHPUR BENCH IN THE CASE OF UMA POLYMERS (P) LTD. VS. DY. CIT (DT. 27TH FEB. 2006) [REPORTED AT (2006) 101 T TJ (JD)(TM) 124ED.] WHERE IT HAS BEEN HELD THAT THE ASSESSEE HAS TO PROVE THE EX ISTENCE OF THE SHAREHOLDERS WHICH IN THE PRESENT CASE IS NOT UNDER DISPUTE. THE REFORE THE ASSESSEE HAS DISCHARGED THE BURDEN AND THEREFORE THE AO WAS NOT J USTIFIED IN MAKING ANY ADDITION UNDER S. 68 OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS REFERRED TO THE DECISION OF HONBLE SUPREME COURT O F INDIA IN THE CASE OF DIVINE LEASING & FINANCE LTD. DT. 21ST JAN. 2008 THE COP Y OF WHICH IS PLACED ON RECORD WHERE IT HAS BEEN OBSERVED BY THE SUPREME CO URT AS UNDER : CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDI SCLOSED INCOME UNDER S. 68 OF IT ACT 1961 ? WE FIND NO MERIT IN THIS SLP FOR T HE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW. THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) WITH THE IMPUGNED JUDGMENT. THE SAID DECISION OF HONBLE SUPREME COURT OF INDI A HAS BEEN FOLLOWED BY THE TRIBUNAL DELHI BENCH IN THE CASE OF ITO VS. BHOR M AL DHANSI RAM LTD. IN ITA NO. 4670/DEL/2007 DT. 3RD MARCH 2006. THE COPY OF THE SAID DECISION OF TRIBUNAL DELHI BENCH IS PLACED ON RECORD. THE LEARNED COUNSE L FOR THE ASSESSEE SHRI H.M. SINGHVI CHARTERED ACCOUNTANT HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT OF INDIA ON THE SAID ISSUE IN THE CAS E OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN T O THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 115 ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS U NDISCLOSED INCOME OF ASSESSEE COMPANY.' 28.6 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . DIVINE LEASING & FINANCE LTD. (SUPRA) HAD AN OCCASION TO CONSIDER THE ADDITI ON ON ACCOUNT OF SHARE APPLICATION MONEY. WE ARE REPRODUCING THE HELD PORT ION FROM THE DECISION OF HONBLE DELHI HIGH COURT AS MENTIONED IN (2007) 207 CTR (DEL) 38 (SUPRA). 'INCOMECASH CREDITSHARE APPLICATION MONEYBURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEEIF THE AO HAR BOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED NAY DUTY-BOUND TO CARRY OUT THOROUGH INVESTIGATIONSBUT IF THE AO FAILS TO UNEA RTH ANY WRONG OR ILLEGAL DEALINGS HE CANNOT OBDURATELY ADHERE TO HIS SUSPIC IONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURN ISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTERS SHARE AP PLICATION FORMS SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLE CTS TO RESPOND TO ITS NOTICES TRIBUNAL HAS NOTED THAT THE ASSESSEE COMPANY IS A P UBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSU E THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULATION) ACT 1956 AS ALSO THE RULES AN D REGULATIONS OF DELHI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHEDTRIBUNAL H AS FURTHER FOUND THAT THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL OR EVI DENCE WHICH WOULD INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCES.' 28.7 THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVE LY EXPORTS (P) LTD. (SUPRA) HELD THAT IF THE SHARE CAPITAL MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUCH SHAREHOLDERS IN ACCO RDANCE WITH LAW. SUCH SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDIS CLOSED INCOME OF THE ASSESSEE COMPANY. 28.8 THE HONBLE HIGH COURT IN THE CASE OF FIRST POINT FINANCE LTD. (SUPRA) HELD THAT BURDEN OF PROOF ON THE ASSESSEE COMPANY LIES TO THE EXTENT OF MAKING OUT A CASE THAT INVESTOR EXISTS AND THEREAFTER IT IS NOT FOR T HE ASSESSEE TO FURTHER PROVE WHERE THEY HAVE BROUGHT MONEY FROM TO INVEST WITH I T. 28.9 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . UNITED BIO-TECH (P) LTD. 2010 TIOL-533-HC-DEL HELD THAT IN CASE THE IDENTITY OF T HE SHARE APPLICANTS HAS BEEN ESTABLISHED AND IT IS FOUND THAT THE SAID APPLICANT S ARE CORPORATE ASSESSEES WHO ARE ASSESSED TO TAX WITH IT DEPARTMENT THEN THERE I S NO CASE OF ANY SUBSTANTIAL QUESTION OF LAW. IN THE INSTANT CASE THE SHARE APP LICANTS ARE CORPORATE ASSESSEES. 28.10 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS . SAMIR BIO-TECH (P) LTD. (SUPRA) HELD THAT IF INVESTMENTS HAVE BEEN SHOWN BY THE SHARE APPLICANTS IN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 116 THEIR AUDITED BALANCE SHEET THEN THE ADDITION CANNO T BE MADE UNDER S. 68 OF THE ACT. 28.11 IN VIEW OF THE LEGAL POSITION AS DISCUSSED ABOVE THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 1.10 CRORE WITHOUT BRING ING ON RECORD ANY MATERIAL FOR THE ADDITION. SIMPLY ON THE BASIS OF INFORMATION WH ICH IS NOT SUBSTANTIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS AGAINST THE AS SESSEE THE AO COULD NOT HAVE ADDED THE AMOUNT. (II) THE HONBLE ITAT JAIPUR BENCH JAIPUR IN ITS REC ENT JUDGMENT THE CASE OF M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD. B -1 TRIMUTRI CIRCLE GOVIND MARG JAIPUR IN ITA NO. 686/JP/2014 DATED 14. 12.2015 GAVE THE FOLLOWING FINDINGS:- .6.1 ON FACTS ALSO THE ASSESSEE HAS PRODUCED BE FORE THE ASSESSING OFFICER COPY OF SHARE APPLICATION CONFIRMATION OF THE CASH CREDITORS COPY OF PAN COPY OF BOARD RESOLUTION COPY OF DIRECTORS REPORT AUD ITORS REPORT COPY OF BALANCE SHEET COPY OF P&L ACCOUNT COPY OF BANK ACCOUNT IN ALL THE CASES TO PROVE THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE C ASH CREDITORS. THE LD ASSESSING OFFICER MADE ADDITION ON THE BASIS OF INVE STIGATION CONDUCTED BY THE ITO INVESTIGATION WING KOLKATA BUT THE LD ASSESSIN G OFFICER OF THE ASSESSEE HAS NOT CLARIFIED WHAT INQUIRY HAD BEEN CONDUCTED AND W HAT EVIDENCES COLLECTED WHICH GOES AGAINST THE ASSESSEE. THE NOTICE U/S 131 ISSUED BY THE ITO INVESTIGATION WING KOLKATA WERE SERVED IN CASE OF VIDYA AGENCIES PVT. LTD. AND SHIVARPAN MERCANTILES PVT. LTD. BUT COMPLIANCE COU LD NOT BE MADE ON THE GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVE. IN CAS E OF MIDDLETON GOODS PVT. LTD. AND LACTRODRYER MARKETING PVT. LTD. NOTICES WE RE SERVED ON THE ASSESSEE AND IN COMPLIANCE TO THE NOTICE THE PARTY SUBMITTE D ALL THE DOCUMENTS IN THE IT OFFICE. THE CASE LAW REFERRED BY THE LD CIT(A) I.E. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT AND VIJAY POWER GENERATOR LTD. VS CIT (SUPRA) ARE NOT SQUAREL Y APPLICABLE ON THE FACTS OF THE CASE AS THERE WAS SHORT TIME AVAILABLE WITH THE ASSESSING OFFICER AS WELL AS INVESTIGATION WING OF KOLKATA. THE COPY OF INQUIRY HAS NOT BEEN PROVIDED BY THE ASSESSING OFFICER TO THE ASSESSEE. AS PER FINDINGS OF THE HON'BLE DELHI HIGH COURT IN THE CASE NIPUN BUILDERS AND DEVELOPERS PVT . LTD. VS. CIT (SUPRA) THE INVESTIGATION OFFICER AT KOLKATA HAD NOT DEPUTED IN SPECTOR TO ENQUIRE THE WHEREABOUTS OF THE COMPANY. THE CASE LAWS REFERRED BY THE ASSESSEE ARE SQUARELY APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THEREFORE WE REVERSE THE ORDER OF THE LD CIT(A) ON TECHNICAL GROUND AS WELL AS ON MERIT ALSO. (III) CIT V/S. SHREE BARKHA SYNTHETICS LTD. (2003) 182 CT R (RAJ) 175 APPEAL(HIGH COURT)SUBSTANTIAL QUESTION OF LAWCASH CREDIT VIS-A-VIS SHARE APPLICATION MONEYTRIBUNAL FOUND THAT 6 OUT OF 7 CO MPANIES FROM WHICH THE SHARE APPLICATION MONEY HAD BEEN RECEIVED WERE GENU INELY EXISTING AND NO ENQUIRY WAS CONDUCTED IN RESPECT OF THE SOURCE OF S HARE APPLICATION MONEY AT THE TIME OF MAKING THE INVESTMENT IN THE ASSESSEE-C OMPANY AND THUS THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN EXCEPT I N ONE CASEAS REGARDS INDIVIDUAL INVESTORS THE TRIBUNAL FOUND THAT IDENT ITY OF 9 OUT OF 10 INVESTORS HAS BEEN ESTABLISHED AND THEY HAVE CONFIRMED THE FACT O F MAKING INVESTMENT IN THE SHARES OF THE ASSESSEE-COMPANY AND NO FURTHER ENQUI RY WAS DIRECTED BY THE AOTHUS ADDITIONS WERE SUSTAINED ONLY IN RESPECT OF INVESTMENTS SAID TO HAVE BEEN MADE BY U AN INDIVIDUAL INVESTOR AND BY W LTD . FOR THE REASON THAT SUCH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 117 INVESTMENTS WERE NOT PROVEDFINDING OF THE TRIBUNAL IS ESSENTIALLY A FINDING OF FACT WHICH IS NOT VITIATED IN LAWNO SUBSTANTIAL QU ESTION OF LAW ARISE FOR CONSIDERATION IV) CIT VS. FIRST POINT FINANCE LTD. (2006) 206 CTR (RAJ) 626 : (2006) 286 ITR 77 (RAJ) INCOMECASH CREDITSHARE APPLICATION MONEYTRIBUNA L FOUND THAT THE INVESTORS ARE GENUINELY EXISTING PERSONS AND TH EY HAVE FILED CONFIRMATIONS IN RESPECT OF INVESTMENTS MADE BY THEM AND THEIR STATE MENTS WERE ALSO RECORDED AMOUNT OF SHARE CAPITAL/SHARE APPLICATION MONEY COUL D NOT BE TREATED AS UNEXPLAINED CASH CREDITS AND NO ADDITION COULD BE M ADE UNDER S. 68NO SUBSTANTIAL QUESTION OF LAW ARISES. (V) 2014 (8) TMI 605 - MADRAS HIGH COURT THE COMMISSIONER OF INCOME TAX VERSUS PRANAV FOUNDATIONS LTD. T. C. (A). NO. 262 OF 2014 DATED - 12 AUGUST 2014 ADDITION U/S 68 SHARE APPLICATION AND SHARE PREMIU M AMOUNT CREDITED BUT NOT PROVED - WHETHER THE TRIBUNAL WAS RIGHT IN UPHOLDIN G THE ORDER OF THE CIT(A) WHO DELETED THE ADDITION MADE U/S 68 BEING THE SHARE A PPLICATION MONEY AND SHARE PREMIUM AMOUNT CREDITED BY THE ASSESSEE WHICH WAS N OT PROVED HELD THAT:- FOLLOWING THE DECISION IN CIT V. LOVELY EXPORTS (P) LTD. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - ALL THE FOUR PARTIES WHO A RE SUBSCRIBERS OF THE SHARES ARE LIMITED COMPANIES AND ENQUIRIES WERE MA DE AND RECEIVED FROM THE FOUR COMPANIES AND ALL THE COMPANIES ACCEPTED THEIR INVESTMENT - THE ASSESSEE HAS CATEGORICALLY ESTABLISHED THE NATURE AND SOURCE OF THE SUM AND DISCHARGED THE ONUS THAT LIES ON IT IN TERMS OF SECTION 68 OF THE ACT - WHEN THE NATURE AND SOURCE OF THE AMOUNT SO INVESTED IS KNOWN IT CANNO T BE SAID TO BE UNDISCLOSED INCOME - THE ADDITION OF SUCH SUBSCRIPTIONS AS UNEX PLAINED CREDIT UNDER SECTION 68 OF THE ACT IS UNWARRANTED DECIDED AGAINST REVENU E. (VI) INCOME TAX OFFICER VS. MS. SUPERLINE CONSTRUCTION P. LTD. ITAT BOMBAY TRIBUNAL (A) ITA NO. 3644 TO 3648 3650 3651M UM/2014 30TH NOVEMBER 2015 (2015) 45 CCH 0281 MUMTRIB ADDITIONADDITION ON ACCOUNT OF BOGUS SHARE APPLICA TION MONEYASSESSEE WAS IN BUSINESS OF BUILDER AND DEVELOPERASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147RE-ASSESSMENT PROCEEDINGS WERE INI TIATED ON BASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INCOME-TAX (INVESTIGATION) WITHOUT RECORDING AOS OWN SATISFACTION AND INFORMATION WAS ACCEPTED IN MECHANICAL MANNERAFTER REOPENING OF ASSESSMENT U/S 147 AO MAD E ADDITION OF RS.40 LAKHS RECEIVED BY ASSESSEE FROM VARIOUS CORPORATE E NTITIESADDITION WAS MADE BY AO ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY UN DER PROVISIONS OF S 68 CIT(A) DELETED ADDITION MADE BY AOHELD IN CASE OF CIT VS. M/S. LOVELY EXPORTS (PVT) LTD REPORTED IN [2008] 216 CTR 195 (S C) IT WAS HELD THAT IF SHARE APPLICATION MONEY WAS RECEIVED BY ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME WERE GIVEN TO AO THEN DEPART MENT WAS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW BUT IT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF ASSE SSEE COMPANYIT WAS SUBMITTED BY ASSESSEE THAT AO HAD FAILED TO APPRECI ATE STATEMENTS OF ANY PERSON RECORDED U/S 143(3) R.W.S. 147THAT ASSESSEE -COMPANY HAD FULLY DISCHARGED BURDEN OF PROOF ONUS OF PROOF AND EXPLA INED SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED BY ESTABLISHED IDENTITY CRED ITWORTHINESS AND ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 118 GENUINENESS OF TRANSACTION BY BANKING INSTRUMENTS W ITH DOCUMENTARY EVIDENCESASSESSEE COMPANY SUBSTANTIATED DETAILS WIT H DOCUMENTARY EVIDENCES AS EXTRACTED FROM WEBSITE OF MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF INDIA BEFORE AOTHESE FACTS HAD NOT BE EN REBUTTED ON BEHALF OF REVENUEITAT WAS NOT INCLINED TO INTERFERE WITH FINDI NGS OF CIT(A) WHO THUS RIGHTLY DELETED ENTIRE IMPUGNED ADDITIONS OF RS.40 L AKHS MADE BY AO U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED BY A SSESSEE-COMPANY HELD: IT WAS POINTED OUT IN THE CASE OF CIT VS. M/S. LOV ELY EXPORTS (PVT) LTD REPORTED IN [2008] 216 CTR 195 (SC) THAT IF THE SHARE APPLICA TION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WH OSE NAME ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REO PEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. (PARA 2.3) IN THIS BACKGROUND IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THERE WA S NO DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE-COMPANY TO SUPPORT SUCH IMPUGN ED ADDITIONS. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE STATEMENTS OF ANY PERSON RECORDED U/S 143( 3) R.W.S. 147. THE ASSESSEE- COMPANY HAD FULLY DISCHARGED THE BURDEN OF PROOF O NUS OF PROOF AND EXPLAINED THE SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED B Y ESTABLISHED THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION BY BANKING INSTRUMENTS WITH DOCUMENTARY EVIDENCES. THE FURTHER STAND OF THE ASS ESSEE HAD BEEN THAT THE ASSESSEE-COMPANY SUBSTANTIATED THE DETAILS WITH THE DOCUMENTARY EVIDENCES AS EXTRACTED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF INDIA BEFORE THE ASSESSING OFFICER. THESE FACTS HAD NOT BE EN REBUTTED ON BEHALF OF THE REVENUE. (PARA 2.4) IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE AS WELL AS CONSIDERING THE DECISIONS AS DISCUSSED ABOVE ON THE SIMILAR ISS UE ITAT WAS NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT(A) WHO HAD R IGHTLY DELETED THE ENTIRE IMPUGNED ADDITIONS OF RS.40 LAKHS MADE BY THE ASSESSI NG OFFICER U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVE D BY THE ASSESSEE-COMPANY. (PARA 2.5) CONCLUSION: WHEN ASSESSEE-COMPANY HAD SUBSTANTIATED DETAILS WIT H DOCUMENTARY EVIDENCES AS EXTRACTED FROM WEBSITE OF MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF INDIA BEFORE AO THEN ADDITIONS MADE B Y AO U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED BY ASSESSEE- COMPANY WAS RIGHTLY DELETED. VII) CIT VS. ILLAC INVESTMENT (P) LTD. (2007) 207 CTR (DEL) 687; ASSESSEE- COMPANY HAS SATISFACTORILY ESTABLISHED THE IDENTITY OF THE SHARE SUBSCRIBERS AND DELETED THE ADDITION UNDER S. 68 NO SUBSTANTIAL QU ESTION OF LAW ARISES FOR CONSIDERATION. VIII) CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 20 7 CTR (DEL) 38; INCOME CASH CREDITSHARE APPLICATION MONEYBURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEEIF THE AO HAR BOURS DOUBTS OF THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 119 LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED NAY DUTYBOUND TO CARRYOUT THOROUGH INVESTIGATIONSBUT IF THE AO FAILS TO UNEA RTH ANY WRONG OR ILLEGAL DEALINGS HE CANNOT OBDURATELY ADHERE TO HIS SUSPIC IONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURN ISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER SHARE APP LICATION FORMS SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLE CTS TO RESPOND TO ITS NOTICES TRIBUNAL HAS NOTED THAT THE ASSESSEE-COMPANY IS A P UBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSU E THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULATION) ACT 1956 AS ALSO THE RULES AN D REGULATIONS OF DELHI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHEDTRIBUNAL H AS FURTHER FOUND THAT THE AO HAS NOT BROUGHT ANY POSITIVE MATERIAL OR EVI DENCE WHICH WOULD INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCESAS REGARDS RECEIPT OF SHARE CAPITAL ON ISSUE OF RIGHTS SHARES TO FIVE COMPANIES THESE COMPANIES WERE DULY INCORPORATED U NDER THE SIKKIMESE COMPANIES ACT AND WERE ASSESSED UNDER THE SIKKIMESE TAXATION MANUALTHEIR SHARE SUBSCRIPTIONS WERE ALSO RECEIVED THROUGH BANK ING CHANNELS AND FOUND TO BE VALID BY THE JURISDICTIONAL AOTHEREFORE NO ADDI TION COULD BE MADE UNDER S. 68 IX) BHAV SHAKTI STEEL MINES (P) LTD. VS. CIT (2009) 18 DTR (DEL) 194 INCOME CASH CREDITGENUINENESSCIT(A) NOT ONLY FOUND THAT THE IDENTITY OF EACH OF THE SHAREHOLDERS STOOD ESTABLISHED BUT ALSO EXAMINED T HE FACT THAT EACH OF THEM WERE INCOME-TAX ASSESSEES AND HAD DISCLOSED THE SHA RE APPLICATION MONEY IN THEIR ACCOUNTS WHICH WERE DULY REFLECTED IN THEIR I T RETURNS AS WELL AS IN THEIR BALANCE SHEETSTRIBUNAL WAS NOT THEREFORE JUSTIFIED IN COMING TO THE CONCLUSION THAT THE CIT(A) HAD NOT CONSIDERED THE MATTER IN TH E RIGHT PERSPECTIVEORDER PASSED BY TRIBUNAL REMANDING THE MATTER FOR EXAMINI NG THE SHARE APPLICANTS SET ASIDE AND THAT OF CIT(A) RESTORED X) MEERA ENGINEERING & COMMERCIAL CO. (P) LTD. VS. A SSTT. CIT (1997) 58 TTJ (JAB) 527 INCOMECASH CREDITSGENUINENESS OF SHARE CAPITAL OF COMPANYALL THE 51 SHAREHOLDERS FILED THEIR AFFIDAVITS AND CONF IRMATORY LETTERS AND 24 OF THEM FILED THEIR REPLIES ALSO TO NOTICE UNDER S. 133(6) NAMES OF PARTIES PURCHASING THE SHARES WITH AMOUNT SUBSCRIBED WERE FURNISHED BEFORE AOALL DOCUMENTS CLEARLY SHOW THAT SHAREHOLDERS DO EXIST ASSESSEE-CO MPANY HAD DISCHARGED ITS ONUS OF EXPLAINING THE CASH CREDITS AS REQUIRED UND ER LAWIF THE COMPANY IS ABLE TO ESTABLISH THAT SHAREHOLDERS EXISTED AND THE Y HAVE INVESTED MONEY FOR PURCHASE OF SHARES BURDEN OF COMPANY TO PROVE THE C REDIT IS DISCHARGED IDENTITY OF SHAREHOLDERS NOT IN DISPUTEASSESSEE IS NOT REQUIRED TO PROVE CREDIT- WORTHINESS OF SHAREHOLDERSADDITION DELETED XI) ALLEN BRADLEY INDIA LTD. VS. DY. CIT (2002) 74 TTJ (DEL) 604 : (2002) 80 ITD 43 (DEL); INCOMECASH CREDITSUBSCRIPTION TO SHARE CAPITAL AN D LOANIN CASE OF LIMITED COMPANIES JURISDICTION OF AO WOULD B E LIMITED ONLY TO SEE WHETHER IDENTITY OF SHAREHOLDERS IS ESTABLISHED AND WHETHER THEY EXIST OR NOT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 120 ONCE IDENTITY IS ESTABLISHED THEN POSSIBLY NO FUR THER ENQUIRIES NEED TO BE MADESINCE THE SHAREHOLDERS OF ASSESSEE-COMPANY WER E IN EXISTENCE THEY WERE ASSESSED TO TAX COMPLETE DETAILS WERE AVAILAB LE SHARE CAPITAL MONEY AS WELL AS LOAN WERE RECEIVED THROUGH ACCOUNT PAYEE CH EQUES AND THEY WERE CLEARED THROUGH PROPER BANKING CHANNELS AO WAS NOT JUSTIFIED IN DISBELIEVING THE CAPITAL INVESTED BY THE SHAREHOLDER COMPANIESS IMILARLY AO WAS NOT JUSTIFIED IN DISBELIEVING THE LOAN TAKEN FROM DTL A S THE CHEQUES WERE CLEARED THROUGH BANK CHANNELS AND CONFIRMATION AND SUPPORTI NG EVIDENCE WAS FILED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS. XII) CIT VS STL EXTRUSION (P) LTD. 333 ITR 269 (MP) INCOMECASH CREDITSHARE APPLICATION MONEYASSESSEE HAS DULY ESTABLISHED THE IDENTITY AND SOURCE OF CREDITSASSESSEE HAVING DULY FURNISHED THE NAME AGE ADDRESS DATE OF FILING THE APPLICATION OF SHARES NUMBER OF SHARES OF EACH SUBSCRIBER THERE WAS NO JUSTIFICATION FOR THE AO FOR MAKING THE IMPUGNED ADD ITIONONCE THE EXISTENCE OF THE INVESTORS/SHARE SUBSCRIBERS IS PROVED ONUS SHI FTS ON THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPLICANTS ARE BOGU S OR THE IMPUGNED MONEY BELONGS TO THE ASSESSEE ITSELFADDITIONS NOT SUSTAIN ABLE. XIII) CIT VS ARUNANDA TEXTILES (P) LTD. 333 ITR 116 (KARNATAKA) INCOME CASH CREDITSHARE APPLICATION MONEYASSESSEE ABLE TO IDENTIFY THE SHAREHOLDERSIT IS NOT FOR THE ASSESSEE-COMPANY TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO ENQUIRE WITH THE INVESTORS ABOUT THE CAPACITY TO INVEST THE AMOUNT IN THE SHARES XIV) UMA POLYMER (P) LTD. 101 TTJ 124 JODHPUR INCOMECASH CREDITSHARE APPLICATION MONEYIN RESPECT OF SHARE CAPITAL MONEY THE ASSESSEE-COMPANY HAS TO PROVE ONLY THE EXISTENCE OF THE PERSON IN WH OSE NAME SHARE APPLICATION IS RECEIVEDNO FURTHER BURDEN IS CAST ON THE ASSESSEE TO PROVE WHETHER THAT PERSON HIMSELF HAS INVESTED THE MONEY OR SOME OTHER PERSON HAS MADE THE INVESTMENT IN HIS NAMEBURDEN TO PROVE THAT THE MON EY DID NOT BELONG TO HIM BUT TO SOMEBODY ELSE IS ON THE REVENUEDISTINCTION B ETWEEN A PUBLIC COMPANY AND A PRIVATE COMPANY IS NOT VERY MATERIAL FOR THIS PURPOSEAO TREATED THE INVESTMENTS MADE BY TEN SHAREHOLDERS IN THE ASSESSE E-COMPANY AS BOGUS AND MADE ADDITION UNDER S. 68 NOT JUSTIFIEDIN ALL THE CASES EXCEPT THAT OF V AO HAD OBTAINED THE BANK STATEMENTS OF THE SHAREHOLDER S WHICH CLEARLY SHOW THAT THE ACCOUNTS WERE REGULARLY MAINTAINED AND THE SHAR EHOLDERS HAD MADE DEPOSITSFURTHER THE SHAREHOLDERS ARE ALSO ASSESSE D TO TAXSIMPLY BECAUSE SCRUTINY ASSESSMENTS WERE NOT MADE IN THE CASE OF S HAREHOLDERS SUCH ASSESSMENTS COULD NOT BE MADE IN THE COURSE OF ASSE SSMENT OF THE ASSESSEE HAVING REGARD TO THE INFORMATION COLLECTED BY THE A O FROM THE BANKS IDENTITY OF THE SHAREHOLDERS WAS FULLY ESTABLISHEDIF ANY SHARE HOLDER IS FOUND TO HAVE MADE UNEXPLAINED INVESTMENT THEN ADDITION OF SUCH INVESTMENT IS REQUIRED TO BE MADE IN THE HANDS OF THE SHAREHOLDER AND NOT IN THE ACCOUNT OF THE ASSESSEEU HAD INVESTED IN THE SHARE CAPITAL THROUGH CHEQUE EX CEPT FOR A SMALL SUM WHICH WAS RETURNED TO HERHER BANK ACCOUNT SHOWS SEVERAL ENTRIES BOTH CREDIT AND DEBIT WHICH HAVE NO RELATION WITH THE AMOUNT INVES TED WITH THE ASSESSEE- COMPANYMERELY BECAUSE SHE HAS NOT SUBMITTED HER RE TURNS AFTER THE ASST. YR. 1984-85 IT CANNOT BE SAID THAT SHE WAS NOT ASSESSE D TO TAXTHOUGH V HAS NOT BEEN SHOWN TO BE ASSESSED TO TAX HE HAD MADE MAJOR PART OF INVESTMENTS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 121 TOWARDS SHARE CAPITAL THROUGH CHEQUES AND HIS IDENT ITY IS NOT DOUBTED ACCORDINGLY SHARE CAPITAL ADVANCED BY U AND V IS AL SO TO BE ACCEPTED AS GENUINETHEREFORE NO ADDITION OF SHARE CAPITAL MON EY COULD BE MADE IN THE HANDS OF THE ASSESSEE-COMPANY. 11. WITHOUT PREJUDICE TO ABOVE THIS IS TO SUBMIT TH AT THE SHARE APPLICATION MONEY CANNOT BE TREATED AS INCOME OF THE ASSESSEE. RELIAN CE IS PLACED IN FOLLOWING DECISIONS: - I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 INCOMECASH CREDITSHARE APPLICATION MONEYIF THE SHARE APPLICA TION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY II) CIT VS. STELLER INVESTMENT LTD. (200) 251 ITR 263 (SC) EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSES SEE-COMPANY WERE NOT GENUINE THE AMOUNT COULD NOT BE REGARDED AS UNDISC LOSED INCOME OF THE ASSESSEE-COMPANY. III) COMMISSIONER OF INCOME TAX VS. BHAVAL SYNTHETICS ( RAJ HC) (2013) 84 DTR 0449 (RAJ) HELD THAT EVEN IN CASE OF DOUBT ABOUT SUBSCRIBERS TO INCREASED SHARE CAPITAL AMOUNT OF SHARE CAPITAL COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF COMPANYAMOUNT REFERABLE TO SHARE APPLICA TION COULD NOT BE ATTRIBUTED TO ASSESSEE AND COULD NOT BE ASSESSED IN ITS HANDSAPPEAL DISMISSED IV) COMMISSIONER OF INCOME TAX VS. AKJ GRANITES (P) LTD. ( RAJ HC) (2008) 301 ITR 0298 HELD THAT IN RESPECT OF SHARE APPLICATIONS RECEIVED FROM DIFFERENT PLACES ACCOMPANIED WITH SHARE APPLICATION MONEY NO PRESUM PTION CAN BE DRAWN THAT SAME BELONG TO THE ASSESSEE AND CANNOT BE ASSESSED IN HIS HANDS AS HIS UNDISCLOSED INCOME UNLESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MONEY FOR AUGMENTING THE INVESTMENT IN BUSINESS HAS FLOWN FROM ASSESSEES OWN MONEYNO SUBSTANTIAL QUESTION OF LAW ARISES BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005) 197 CTR (RAJ) 432 FOLLOWED. IN VIEW OF THE ABOVE SUBMISSION THIS IS TO SUBMIT THAT THE ADDITION MADE BY LD. AO IS UNJUSTIFIED AND DESERVE TO BE DELETED. 3.2.2 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION AND CA REFULLY GONE THROUGH ASSESSMENT ORDER. I HAVE ALSO TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. I HAVE ALREADY GIVEN A DETAILED FINDINGS IN PARA 2.1.4.7 W HEREIN TOTAL OF RS. 8 71 97 727/= HAS BEEN SUSTAINED IN THE HANDS OF M/ S MOTISONS GLOBAL PVT LTD M/S MOTISONS ENTERTAINMENT PVT LTD M/S MO TISONS BUILDTECH PVT LTD AND M/S SHIVANSH BUILDCON PVT LTD DETAILS OF W HICH ARE AS UNDER: ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 122 NAME OF APPELLANT COMPANY ITA N O AY ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/ RELIEF GIVEN MOTISONS GLOBAL PVT. LTD 753/14 - 15 2009 - 10 2 75 00 000 ------------- 2 75 00 000 MOTISONS GLOBAL PVT. LTD 754/14 - 15 2011 - 12 6 96 50 000 --------------- 6 96 50 000 MOTISONS GLOBAL PVT. LTD 767/14 - 15 2012 - 13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT. LTD 755/14 - 15 2013 - 14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14 - 15 2009 - 10 3 40 00 000 --------------- 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14 - 15 2011 - 12 1 95 00 000 ---------------- 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14 - 15 2012 - 13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14 - 15 2009 - 10 3 03 00 000 --------------- 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14 - 15 2012 - 13 3 68 27 500 82 00 000 2 86 27 500 GODAWARI ESTATES PVT. LTD 769/14 - 15 2010 - 11 2 00 00 000 -------------- 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14 - 15 2012 - 13 10 30 00 000 -------------- 10 30 00 000 BHOLENATH REAL ESTATES PVT LTD 770/14 - 15 2009 - 10 2 90 00 000 --------------- 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14 - 15 2009 - 10 2 00 00 000 --------------- 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14 - 15 2012 - 13 90 00 000 3 50 000 86 50 000 TOTAL ADDITIONS 94 14 07 100 8 71 97 727 85 42 09 373 IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E AS DISCUSSED ABOVE ADDITION OF RS. 6 36 50 000/= MADE ON A/C OF BOGUS SHARE CAPITAL IN THE HANDS OF ASSESSEE M/S MOTISONS ENTER TAINMENT (INDIA) PVT LTD IS HERE BY DELETED. ASSESSEE GET RELIEF IN GR N O. 2 & 3. PARA 2.1.4.7 READS OF LD. CIT(A)S ORDER AS UNDER:- 2.1.4.7 IN VIEW OF THE ABOVE FINDINGS IT IS ALSO SEEN THAT THIS CASH /DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/ STAGE. THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPANIES THROUGH TH E SIX COMPANIES ASSESSED IN JAIPUR. HOWEVER ON PERUSAL OF WRITTEN SUBMISSIO NS AND COMPLIANCE TO SHOW CAUSE LETTER IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATED BY SHRI SANTOSH CHOUBE SHRI RAJESH KR SIN GH AND SHRI AJIT SHARMA AND ALSO COULD NOT SATISFACTORILY EXPLAIN THE REASO NS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS. THEREFORE DULY CONSIDERING THOSE FACTS AS EVIDENCES (BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH AND & PO ST-SEARCH OPERATION ADDITION TO THE EXTENT OF RS. 8 71 97 727/- IS SUST AINED AND BALANCE IS DELETED DETAILS GIVEN AS UNDER:- NAME OF APPELLANT COMPANY ITA NO. A.Y. ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/RELIEF GIVEN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 123 MOTISONS GLOBAL PVT LTD 753/14-15 2009-10 2 75 00 000 - 2 75 00 000 MOTISONS GLOBAL PVT LTD 754/14-15 2011-12 6 96 50 000 - 6 96 50 000 MOTISONS GLOBAL PVT LTD 767/14-15 2012-13 42 07 29 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 2009-10 3 40 00 000 - 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 2011-12 1 95 00 000 - 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 2012-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 - 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 8 6 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 00 000 - 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 - 10 30 00 000 BHOLENATH REAL ESTATES PVT. LTD. 770/14-15 2009-10 2 90 00 000 - 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 00 000 - 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 94 14 07 100 8 71 97 727 85 42 09 373 IT IS PERTINENT TO MENTION HERE THAT M/S. MAYUKH V INIMAY PVT.LTD RECEIVED SHARE APPLICATION OF RS. 10 54 95 000/- IN AY 2009-10 WHI CH WAS ADDED AS INCOME OF M/S.MAYUKH VINIMAY PVT. LTD IN A.Y. 2009-10. THEREA FTER IN SUBSEQUENT YEARS THE PART OF THE FUNDS OWNED BY THIS COMPANY WAS INVESTE D IN THE COMPANIES UNDER APPEAL AS UNDER:- S.N. NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1. MOTISONS GLOBAL 2012-13 6 93 49 800 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 124 PVT. LTD 2. MOTISONS GLOBAL PVT. LTD 2013-14 2 24 50 000 3. MOTISONS ENTERTAINMENT (INDIA)PVT LTD. 2012-13 1 55 00 000 TOTAL 10 72 29 800 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO MENTIONED HERE THAT AS PER LD. ARS REQUEST APPELLATE PROCEEDINGS IN CASE OF M/S. MAYUKHVINIMAY PVT. LTD HAVE BEEN KE PT IN ABEYANCE TILL THE DISPOSTAL OF APPEAL BY HON'BLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS NOW ADDITIONS M ADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO GROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSESSEE IN PARA BELOW. 9.3 DURING THE COURSE OF HEARING THE LD. DR SUPPOR TED THE ORDER OF THE AO AND SUBMITTED THAT THE ORDER OF THE LD. CIT(A) M AY BE SET ASIDE. 9.4 TO THIS EFFECT THE LD.AR OF THE ASSESSEE FILE D THE FOLLOWING WRITTEN SUBMISSION PRAYING THEREIN TO DISMISS THE APPEAL OF THE DEPARTMENT. 2.03.1.2 SUBMISSION OF ASSESSEE:- THE FACTS AND CIRCUMSTANCES OF THE ISSUE RAISED IN THE DEPARTMENTAL APPEAL FOR THE AY 2012-13 UNDER GROUND NO 1 ARE EXA CTLY SIMILAR TO GROUND NO 1 FOR AY 2009-10 IN ITA NO 486/JP/2017. T HE ASSESSEE HAS MADE DETAILED SUBMISSION IN AY 2009-10 FOR ITA NO 486/JP/2017. IN ORDER TO AVOID REPETITION WE PRAY YOUR HONOR KI NDLY TO CONSIDER THE SUBMISSION MADE FOR ITA NO 486/JP/2017 FOR AY 2009- 10 UNDER PARA 2.01.2 ABOVE AS ALSO MADE FOR AY 2011-12 UNDER GROU ND NO 1 OF ITA NO 488/JP/2017. 9.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE HAS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 125 BEEN DEALT WITH AND DECIDED BY THIS BENCH OF ITAT V IDE ITS ORDER DATED 30-10-2017 IN THE CASE OF ACIT CENTRAL CIRCLE-2 J AIPUR VS MOTISONS BUILDTECH PVT. LTD IN ITA NO. 481/JP/2017 (REVENUE S APPEAL) FOR THE ASSESSMENT YEAR 2009-10. SINCE THE ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS SAME AS DECIDED IN THE APPEAL OF THE REVENUE IN ITA NO.481/JP/2017FOR THE ASSESSMENT YEAR 2009-10 IN TH E CASE OF ACIT CENTRAL CIRCLE-2 JAIPUR VS MOTISONS BUILDTECH PVT. LTD JAIPUR (SUPRA) WHICH SHALL APPLY MUTATIS MUTANDIS IN THE PRESENT A PPEAL OF REVENUE ALSO. THUS SOLITARY GROUND OF ITA NO.485/JP/2017 FOR THE A.Y. 2012-13 OF REVENUES APPEAL IS DISMISSED. IN THE RESULT THE A PPEAL OF THE REVENUE IN ITA NO.485/JP/2017 IS DISMISSED. 10.1 THE ASSESSEE IN ITA NO. 387/JP/2017 FOR THE AS SESSMENT YEAR 2012-13 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A) ERRED IN: - A) CONFIRMING THE ADDITION OF RS. 1 41 50 000/- OU T OF TOTAL ADDITION OF RS. 7 78 00 000/- MADE BY LD. AO TREATING THE FOLLOWING AMOUNT RECEIVED BY THE ASSESSEE AGAINST SHARE CAPITAL AND PREMIUM FROM COMPANY MENTIONED AS UNDER AS INCOME OF THE ASSESSEE. DATE AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRA FT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING 12.12.2011 1800000 ROSE SUPPLIERS PRIVATE LIMITED SHYAM FASHION AND DU RGA ENTERPRISES 05.11.2011 4600000 REGENT BARTER PRIVATE LIMITED DURGA ENTERPRISES AND SHYAM FASHION ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 126 21.11.2011 450000 MAYUKH VINIMAY PRIVATE LIMITED SHYAM FASHION AND DU RGA ENTERPRISES 25.11.2011 1000000 MAYUKH VINIMAY PRIVATE LIMITED SHYAM FASHION AND DU RGA ENTERPRISES 05.11.2011 1600000 REGENT DEALERS PRIVATE LIMITED SHYAM FASHION 17.11.2011 1000000 REGENT DEALERS PRIVATE LIMITED DURGA ENTERPRISES 21.11.2011 800000 REGENT DEALERS PRIVATE LIMITED DURGA ENTERPRISES AN D SHYAM FASHION 10.08.2011 2900000 ALLIANCE TRADECOM PRIVATE LIMITED SWASTIK TRADERS A ND GLOBAL SECURITIES TOTAL 14150000 B) CONFIRMING THE ADDITION OF RS. 1 41 50 000/- BY HOLDING THAT THE ASSESSEE COULD NOT EXPLAIN THE DEPOSIT OF CASH/DD IN THE ACCOUNTS OF OTHER PARTIES/PERSONS AT 4 TH CHANNEL OF SOURCE/STAGE AND FURTHER ERRED IN NOT PROVIDING OPPORTUNITY OF CROSS EXAMINATION OF SHRI SANTOSH CHOUBE SHRI AJIT SHARMA AND SH RAJESH KUMAR SINGH AND OTHER PER SONS; AND C) CONFIRMING THE ADDITION OF RS. 1 41 50 000/- MOR E SO WHEN HE HAS CATEGORICALLY HELD THAT THE ADDITION MADE BY LD. AO U/S 56(1) OF INCOME TAX ACT 1961 IS NOT SUSTAINABLE AND THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF THE TRANSACTION CANNO T BE HELD AS DOUBTFUL AND THE ADDITION BY APPLYING THE PROVISIONS OF SECT ION 68 OF I.TAX ACT CANNOT BE UPHELD. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 2 36 274/- MADE BY T HE AO BY DISALLOWING THE ENTIRE EXPENSES INCURRED DURING THE YEAR. 11.1 AS REGARDS GROUND NO. 2 OF THE ASSESSEE REGARDING C ONFIRMING THE THE ADDITION OF RS.2 36 274/- BY THE LD. CIT(A) THE LD.AR OF THE ASSESSEE DURING THE COURSE OF HEARING HAS NOT PRESS ED THE GROUND NO. 2. HENCE THE SAME IS DISMISSED BEING NOT PRESSED. 12.1 IN GROUND NO. 1 (ITA NO. 387/JP/2017) THE ASS ESSEE IS AGGRIEVED THAT THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF R S. 1 41 50 000/- IN THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 127 HANDS OF THE ASSESSEE. THE RELEVANT OBSERVATION OF THE LD. CIT(A) AT PAGE 51 TO 54 OF HIS ORDER IS AS UNDER:- 2.1.4.6 THEREFORE IN VIEW OF THE FINDINGS OF HONBLE JURI SDICTIONAL HIGH COURT THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF THESE COMPANIES CANNOT BE HELD AS DOUBTFUL AND ADDI TION BY APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT CA NNOT BE UPHELD. HOWEVER IT IS ALSO TO BE SEEN THAT THE INVESTIGATION DIRECTORATE HAS CARRIED OUT INVESTIGATION FOR DEPOS IT OF CASH/DD AT FOURTH STAGE OF CHANNEL SOURCE IN SOME CASES. THE CHART SHOWING CASH DEPOSIT/DD DEPOSIT AT 4TH CHANNE L AS PER INQUIRIES MADE BY INVESTIGATION WING IS AS UNDER: COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS BUILDTECH P LTD 2012-2013 15 00 000 EVERSH INE SUPPLIERS P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 20 00 000 ALLIA NCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECUR ITIES MOTISONS BUILDTECH P LTD 2012-2013 17 00 000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS MOTISONS BUILDTECH P LTD 2012-2013 30 00 000 ALLIAN CE TRADECOM P LTD SWASTIK TRADERS TOTAL 82 00 000 MOTISONS ENTERTAINMENT P LTD 2012-2013 18 00 000 RO SE SUPPLIERS P LTD SHYAM FASHION AND DURGA ENTERPRI SES MOTISONS ENTERTAINMENT P LTD 2012-2013 46 00 000 RE GENT BARTER P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 4 50 000 MAY UKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPRIS ES MOTISONS ENTERTAINMENT P LTD 2012-2013 10 00 000 M AYUKH VINIMAY P LTD SHYAM FASHION AND DURGA ENTERPR ISES MOTISONS ENTERTAINMENT P LTD 2012-2013 16 00 000 RE GENT DEALERS P LTD SHYAM FASHION MOTISONS ENTERTAINMENT P LTD 2012-2013 10 00 000 RE GENT DEALERS P LTD DURGA ENTERPRISES MOTISONS ENTERTAINMENT P LTD 2012-2013 8 00 000 REG ENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM FASHI ON MOTISONS ENTERTAINMENT P LTD 2012-2013 29 00 000 A LLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL S ECURITIES TOTAL 1 41 50 000 MOTISONS GLOBAL P LTD 2012-2013 17 00 000 ROSE SUP PLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHION MOTISONS GLOBAL P LTD 2012-2013 18 00 000 ROSE SUPP LIERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 19 00 000 ROSE SUPP LIERS P LTD NIBU NAGI AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 3 50 000 ROSE SUPPL IERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 14 00 000 ROSE SUPP LIERS P LTD SHYAM FASHION MOTISONS GLOBAL P LTD 2012-2013 18 50 000 ROSE SUPP LIERS P LTD DURGA ENTERPRISES ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 128 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL P LTD 2012-2013 18 00 000 REGENT BA RTER P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18 00 000 MAYUKH VI NIMAY P LTD NIBU NAGI AND KEVILHULIE SUNOTSU MOTISONS GLOBAL P LTD 2012-2013 35 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16 00 000 MAYUKH VI NIMAY P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 15 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 41 00 000 MAYUKH VI NIMAY P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 16 47 727 EVERSHINE SUPPLIERS P LTD PNB AXIS BANK SILIGURI MOTISONS GLOBAL P LTD 2012-2013 36 00 000 EVERSHINE SUPPLIERS P LTD DURGA ENTERPRISES AND SHYAM FASHIO N MOTISONS GLOBAL P LTD 2012-2013 18 00 000 EVERSHINE P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9 00 000 REGENT DEA LERS P LTD NIBU NAGI MOTISONS GLOBAL P LTD 2012-2013 18 00 000 REGENT DE ALERS P LTD DURGA ENTERPRISES MOTISONS GLOBAL P LTD 2012-2013 9 00 000 REGENT DEA LERS P LTD KEVIHULIE SINOTSU MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 28 50 000 REGENT DEALERS P LTD DURGA ENTERPRISES AND SHYAM F ASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 18 50 000 REGENT DEALERS P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 22 00 000 ALLIANCE TRADECOM P LTD PNB AXIS BANK SILIGURI S WASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 35 00 000 ALLIANCE TRADECOM P LTD M/S SWASTIK TRADERS GLOBAL SECURITIES AXIS BANK SILIGURI MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 20 00 000 ALLIANCE TRADECOM P LTD SWASTIK TRADERS AND GLOBAL SECURITIES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16 00 000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 9 50 000 ALLIANCE TRADECOM P LTD SHYAM FASHION MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 10 00 000 ALLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA EN TERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 3000000 A LLIANCE P LTD SHYAM FASHION AND DURGA ENTERPRISES MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 16 00 000 ALLIANCE P LTD P LTD NIBU NAGI MOTISONS GLOBAL PRIVATE LIMITED 2012-2013 19 50 000 ALLIANCE TRADECOM P LTD DURGA ENTERPRISES ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 129 COMPANY A.Y. AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING MOTISONS GLOBAL PRIVATE LIMITED 2013-2014 5050000 A LLIANCE TRADECOM P LTD SHYAM FASHION AND DURGA ENTE RPRISES TOTAL 6 44 97 727 SHIVANSH BUILDCON P LTD 2012-2013 3 50 000 EVERSHIN E SUPPLIERS P LTD DURGA ENTERPRISES SWASTIK AND SHYAM FASHION TOTAL 3 50 000 GRAND TOTAL 8 71 97 727 2.1.4.7 IN VIEW OF ABOVE FINDINGS IT IS ALSO SEEN THAT THIS CASH/DD WAS DEPOSITED AT 4 TH CHANNEL OF SOURCE/STAGE . THIS MONEY CAME TO THE HANDS OF SOME OF APPELLANT COMPANIES THROUGH THE SIX COMPANIES ASSESSED IN JAIPUR. HOWEVER ON PERUSAL OF WRITTEN SUBMISSIO NS AND COMPLIANCE TO SHOW CAUSE LETTER IT IS ALSO SEEN THAT ASSESSEE HAS NOT CONTROVERTED THE FACTS NARRATED BY SH SANTOSH CHOUBE SH RAJESH KR SINGH AND SH AJIT SHARMA AND ALSO COULD NOT SATISFACTORILY EXPLAIN TH E REASONS OF CASH DEPOSITS MADE TO THOSE ACCOUNTS. THEREFORE DULY CONSIDERING THOSE FACTS AND EVIDENC ES( BOTH DOCUMENTARY & ORAL) GATHERED DURING SEARCH & POST-SEARCH OPERATION ADDITION TO THE EXTENT OF R S. 8 71 97 727/= IS SUSTAINED AND BALANCE IS DELET ED DETAILS GIVEN AS UNDER: NAME OF APPELLANT COMPANY ITA NO AY ADDITION MADE BY AO ADDITION SUSTAINED ADDITION DELETED/ RELIEF GIVEN MOTISONS GLOBAL PVT. LTD 753/14-15 2009-10 2 75 00 000 ------------- 2 75 00 000 MOTISONS GLOBAL PVT. LTD 754/14-15 2011-12 6 96 50 000 --------------- 6 96 50 000 MOTISONS GLOBAL PVT. LTD 767/14-15 2012-13 42 07 2 9 600 5 94 47 727 36 12 81 873 MOTISONS GLOBAL PVT. LTD 755/14-15 2013-14 4 41 00 000 50 50 000 3 90 50 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 760/14-15 200 9-10 3 40 00 000 --------------- 3 40 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 766/14-15 201 1-12 1 95 00 000 ---------------- 1 95 00 000 MOTISONS ENTERTAINMENT (I) PVT. LTD 756/14-15 201 2-13 7 78 00 000 1 41 50 000 6 36 50 000 MOTISONS BUILDTECH PVT. LTD 758/14-15 2009-10 3 03 00 000 --------------- 3 03 00 000 MOTISONS BUILDTECH PVT. LTD 759/14-15 2012-13 3 68 27 500 82 00 000 2 86 27 500 GODAWARI ESTATES PVT. LTD 769/14-15 2010-11 2 00 0 0 000 -------------- 2 00 00 000 GODAWARI ESTATES PVT. LTD 768/14-15 2012-13 10 30 00 000 -------------- 10 30 00 000 BHOLENATH REAL ESTATES PVT LTD 770/14-15 2009-10 2 90 00 000 --------------- 2 90 00 000 RAINBOW BUILDCON PVT. LTD 757/14-15 2009-10 2 00 0 0 000 --------------- 2 00 00 000 SHIVANSH BUILDCON PVT. LTD 771/14-15 2012-13 90 00 000 3 50 000 86 50 000 TOTAL ADDITIONS 94 14 07 100 8 71 97 727 85 42 09 373 IT IS PERTINENT TO MENTION HERE THAT M/S MAYUKH VIN IMAY PVT LTD RECEIVED SHARE APPLICATION OF RS. 10 54 95 000/- IN AY 2009-10 WHICH WAS ADDED AS INCOME OF M/S MAYUKH VINIMAY PVT LTD IN AY 2009-10. THEREAFTER IN SUBSEQUENT YEARS THE PART OF THE FUND S OWNED BY THIS COMPANY WAS INVESTED IN THE COMPANI ES UNDER APPEAL AS UNDER: S.NO NAME OF COMPANY (UNDER YOUR APPEAL) ASSESSMENT YEAR AMOUNT 1 MOTISONS GLOBAL PVT LTD 2012-13 6 93 49 800 2. MOTISONS GLOBAL PVT LTD 2013-14 2 24 50 000 3 MOTISONS ENTERTAINMENT (INDIA) PVT LTD 2012-13 1 55 00 000 TOTAL 10 72 99 800 ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 130 FURTHER IT IS ALSO SUBMITTED THAT ADDITION MADE BY THE AO TANTAMOUNT TO DOUBLE ADDITION. IT IS ALSO MENTIONED HERE THAT AS PER LD ARS REQUEST AP PELLATE PROCEEDINGS IN CASE OF M/S MAYUKH VINIMAY P VT LTD HAVE BEEN KEPT IN ABEYANCE TILL THE DISPOSAL OF APPEAL BY HONBLE ITAT. IN VIEW OF AFOREMENTIONED FINDINGS NOW ADDITIONS M ADE BY THE AO ARE BEING DISCUSSED WITH RESPECT TO GROUNDS OF APPEAL RAISED BY THE RESPECTIVE ASSES SEE IN PARA BELOW. THUS THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 1 41 50 000/- IN THE HANDS OF THE ASSESSEE. 12.2 DURING THE COURSE OF HEARING THE LD.AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION CONFIRMED BY THE LD. CIT(A) AM OUNTING TO RS. 1 41 50 000/- FOR WHICH THE LD.AR OF THE ASSESSEE F ILED THE FOLLOWING WRITTEN SUBMISSION. 2.05.1.2 SUBMISSION OF ASSESSEE:- A) THE ASSESSEE HAS SUBMITTED SUFFICIENT DOCUMENTS BEFORE THE LD AO TO PROVE IDENTITY CREDITWORTHINESS AND GENUINENESS OF SHARE CAPITAL AND LD AO SATISFIED THAT ADDITION UNDER SECTION 68 CANN OT BE MADE. THE LD AO MADE THE ADDITION OF RS. RS.7 78 00 000/- ON ACCOUNT OF SHARE CAPITAL RECEIVED BY THE ASSESSEE DURING THIS YEAR B Y APPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT ON TH E GROUND THAT THE ASSETS OF THE ASSESSEE COMPANY DONT COMMENSURATE T O PREMIUM CHARGED AND ANY BUSINESS ACTIVITY WAS NOT PERFORMED OR ANY BUSINESS INCOME HAS NOT BEEN SHOWN BY THE ASSESSEE. HOWEVER THE LD CIT(A) ISSUED SHOW CAUSE NOTICE TO ASSESSEE TO TAX THE SHA RE CAPITAL UNDER SECTION 68 OF ITAX ACT AS AGAINST 56(1) APPLIED BY LD AO. THE ASSESSEE SUBMITTED DETAILED REPLY BEFORE LD CIT(A) VIDE LETTER DATED 12/07/2016 (COPY AT PB PG 471-544). THE LD CIT(A) HAS NOT CONFIRMED/SUSTAINED THE ADDITION MADE BY LD AO BY A PPLYING THE PROVISIONS OF SECTION 56(1) OF INCOME TAX ACT ON T HE BASIS OF HIS DETAILED FINDINGS AT PAGE 38-41 OF HIS ORDER. LD CIT(A) WHEN SATISFIED THAT THE ADDITION U/S 56(1) CANT BE MADE HE TRIED TO SUSTAIN THE ADDITION BY APPLYING THE PROVISIONS OF SECTION 68 OF INCOME TAX ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 131 ACT. HE ISSUED A SHOW CAUSE NOTICE VIDE LETTER DATE D 09/03/2017 (COPY AT PB PG 545-591). THE ASSESSEE SUBMITTED DETAILED REPLY ON THE SHOW CAUSE NOTICE OF LD CIT(A) VIDE LETTER DATED 24-03-2 017 & 28/03/2017 ALONGWITH DOCUMENTS (COPY AT PB PG 592-666) . TO SUPPORT THAT SHAREHOLDERS WERE GENUINE AND CREDITWORTHINESS IS P ROVED THE ASSESSEE HAS FILED ALL DETAILS IN RESPECT OF INCORPORATION/ EXISTENCE OF INVESTORS AND DETAILS OF CHEQUES VIDE WHICH AMOUNTS WERE RECE IVED. THE CAPACITY OF SHAREHOLDERS IS VERIFIABLE FROM THE COPY OF THE BALANCE SHEET OF THE SHAREHOLDERS. THE SHAREHOLDERS HAVE FUNDS ON A PRIO R DATE FROM THE ALLOTMENT OF SHARES GIVEN BY THE ASSESSEE COMPANY A ND SUCH FUNDS WERE MORE THAN THE AMOUNT OF SHARE APPLICATION. LD CIT(A) SATISFIED ABOUT THE INGREDIENTS OF SECTION 68 OF I.TAX ACT HO WEVER HE SUSTAINED THE ADDITION OF RS. 1 41 50 000/- ON ACCO UNT OF CASH/DD DEPOSITED AT 4 TH CHANNEL STAGE. THE COMPANY WISE BREAKUP OF THIS AMOUNT IS GIVEN AT PG 51-53 OF THE ORDER OF LD CIT( A). THE DETAILS ARE AS UNDER:- DATE AMOUNT FROM COMPANY CASH DEPOSIT /DEMAND DRAFT AT 4TH CHANNEL AS PER INQUIRY BY INVESTIGATION WING PB PAGE NO 12.12.2011 1800000 ROSE SUPPLIERS PRIVATE LIMITED SHYAM FASHION AND DURGA ENTERPRISES PB PG 681/2012-13 05.11.2011 4600000 REGENT BARTER PRIVATE LIMITED DURGA ENTERPRISES AND SHYAM FASHION PB PG 685-686/2012-13 21.11.2011 450000 MAYUKH VINIMAY PRIVATE LIMITED SHYAM FASHION AND DURGA ENTERPRISES PB PG 695/2012-13 25.11.2011 1000000 MAYUKH VINIMAY PRIVATE LIMITED SHYAM FASHION AND DURGA ENTERPRISES PB PG 695/2012-13 05.11.2011 1600000 REGENT DEALERS PRIVATE LIMITED SHYAM FASHION PB PG 691/2012-13 17.11.2011 1000000 REGENT DEALERS PRIVATE LIMITED DURGA ENTERPRISES PB PG 690/2012-13 21.11.2011 800000 REGENT DEALERS PRIVATE LIMITED DURGA ENTERPRISES AND SHYAM FASHION PB PG 690/2012-13 10.08.2011 2900000 ALLIANCE TRADECOM PRIVATE LIMITED SWASTIK TRADERS AND GLOBAL SECURITIES PB PG 671/2012-13 TOTAL 14150000 B) REGARDING APPLICATION OF 68 OF ITAX ACT 1961 B Y CIT(A) I) SECTION 68 WAS NOT APPLIED BY AO THEREFORE THE CIT(A) CANNOT APPLY IT. II) IT IS RELEVANT TO MENTION HERE THAT AS PER SEC TION 251 (1)(A) OF INCOME TAX ACT 1961 THE CIT (A) SHALL HAVE THE POW ER IN AN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 132 APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIR M REDUCE ENHANCE OR ANNUAL THE ASSESSMENT. AS REGARD APPLICABILITY OF SECTION 68 OF I.TAX ACT BY CIT(A) WE SUBMIT THAT TH E ASSESSEE HAS MADE DETAILED SUBMISSION BEFORE THE LD AO AND S ATISFIED THE LD AO THAT IT HAS DISCHARGED ITS ONUS LAID DOWN UNDER SECTION 68 OF INCOME TAX ACT. THE LD AO BEING SATIS FIED WITH THE SUBMISSION OF ASSESSEE ON SECTION 68 HAS NOT A PPLIED SECTION 68 OF INCOME TAX ACT FOR THE ADDITION. THE PROVISIONS OF SECTION 68 SPECIFY THE AUTHORITY MENTIONED AS ASSESSING OFFICER . FOR THE SAKE OF CLARITY WE ARE REPRODUCING THE PRO VISIONS OF SECTION 68 OF I.TAX ACT AS STOOD FOR AY 2012-13 AS UNDER:- WHERE ANY SUM IS FOUND CREDITED IN THE BOOK OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION O F THE ASSESSING OFFICER SATISFACTORY THE SUM SO CREDITE D MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THEREFORE ADDITION UNDER SECTION 68 OF ITAX ACT CA N BE MADE ONLY HE THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY IN THE OPINION OF ASSESSING OFFICER. THE ASSESSING OFFICER HAS BEEN DEFINED U/S 2(7A) O F INCOME TAX ACT AS UNDER:- (7A) ASSESSING OFFICER' MEANS THE ASSISTANT COMMISSIONER 31 [OR DEPUTY COMMISSIONER] 32 [OR ASSISTANT DIRECTOR] 31 [OR DEPUTY DIRECTOR] OR THE INCOME-TAX OFFICER WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSU ED UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT AND THE 33 [ADDITIONAL COMMISSIONER OR] 34 [ADDITIONAL DIRECTOR OR] 35 [JOINT COMMISSIONER OR JOINT DIRECTOR] WHO IS DIRECTED UND ER CLAUSE (B) OF SUB-SECTION (4) OF THAT SECTION TO EX ERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER UNDER THIS ACT ;] THEREFORE CIT(A) IS NOT ASSESSING OFFICER SO HE C ANNOT INVOKE THE PROVISIONS OF SECTION 68 FOR MAKING THE ADDITIO N PARTICULARLY WHEN THE ASSESSING OFFICER HAS SATISFIED ABOUT THE INGREDIENTS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 133 OF SECTION 68 OF INCOME TAX ACT. IN THE CASE OF THE ASSESSEE THE LD. AO HAS NOT FRAMED AN OPINION THAT THE EXPLANATI ON GIVEN BY THE ASSESSEE WAS NOT SATISFACTORY BUT HE FRAMED AN OPINION AFTER EXAMINING THE FACTS DOCUMENTS AND EXPLANATION THAT THE ADDITIONS OF SHARE CAPITAL CANNOT BE MADE U/S 68 BU T IT SHOULD HAVE BEEN MADE U/S 56(1) OF INCOME TAX ACT 1961 TH EN THE JURISDICTION OF CIT (A) IN LIMITED TO DECIDING THE MATTER WHETHER THE ADDITION UNDER THIS SECTION IS CORRECT OR NOT. IN THE APPELLATE PROCEEDING THE ADDITION CANNOT BE CONFIRM ED BY APPLYING ALL TOGETHER DIFFERENT SECTION BY INVOKING A SECTION FOR WHICH SATISFACTION IS REQUIRED TO BE BY ASSESSING OFFICER AND THE ASSESSING OFFICER AFTER CONSIDERING THE DETAILE D REPLY AND DOCUMENTS WAS SATISFIED ABOUT THE INGREDIENTS OF SE CTION 68. C) REGARDING CONFIRMING THE ADDITION OF RS. 1 41 50 000/- BY CIT(A) A) ALL THE SHARE CAPITAL/SHARE APPLICATION WAS REC EIVED THROUGH A/C PAYEE CHEQUES AND VERIFIABLE FROM BANK STATEMENT OF ASSES SEE AS WELL AS BANK STATEMENT OF THE PARTY. THE ONUS U/S 68 OF THE ASSE SSEE IS TO PROVE THE IDENTITY CAPACITY AND GENUINENESS OF THE TRANSACTI ONS HAS BEEN DISCHARGED WHICH MAY BE SEEN FROM THE FOLLOWINGS:- I) IDENTITY:- THE ASSESSEE PROVED THE IDENTITY OF ALL THE COMPA NIES BY FILING THE SHARE APPLICATION RECEIVED FROM THE PARTIES AND THE PARTIES ARE DULY IN EXISTENCE AND THE EXISTENCE OF THE PART IES CAN BE VERIFIED FROM THE OFFICIAL WEBSITE OF MCA. THE LD. AO ALSO NOT DOUBTED THE IDENTITY OF THE ABOVE NAMED COMPANIES. FURTHER THE ASSESSMENT FOR AY 2009-10 (COPY AT PB PAGE 271-357 & 457-470 ) AND FOR AY 2013-14 (COPY AT PB PAGE 358-456 ) OF THESE COMPANIES WERE ALSO COMPLETED U/S 143(3) OF INCOME TAX ACT. IN THE CASE OF M/S MAYUKH VINMAY PVT LTD ORIGINAL ASSESSMENT U/S 148 WAS MADE FOR AY 2009-10 (COPY AT PB PG 312-313). LD CIT III KOLKOTTA PASSED ORDER U/S 263 DIRECTING TO PASS THE AFRESH ORDER FOR AY 2009-10 ( COPY AT PB PG 457 TO 460) AND IN PURSUANCE TO ORDER U/S 263 THE SAME AO PASSED ORDER U/S 143(3) R.W.S. 263 OF INCOM E TAX ACT 1961 DATED 21.03.2014 AT TOTAL INCOME OF RS. 10 55 58 280/- (COPY OF ORDER AT PB PAGE 461 TO 470). ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 134 THE ASSESSMENT OF AY 2013-14 WAS COMPLETED BY THE SAME AO OF ALL THE ABOVE COMPANIES (EXCEPT MAYUKH V INTRADE PVT. LTD) WHO COMPLETED THE ASSESSMENT OF THE ASSES SEE IN THE SAME MONTH. THE COPIES OF ASSESSMENT ORDER AND OTHE R RELEVANT DOCUMENTS ARE AT PB PG 358 TO 456. IT IS FURTHER RELEVANT TO MENTION HERE THAT THE DEPARTMENT ALSO CARRIED OUT T HE SURVEY OPERATIONS OVER THESE PARTIES (EXCEPT MAYUKH VINTRA DE PVT. LTD) WHICH ALSO PROVE THE EXISTENCE OF THESE PARTIE S. II) CREDITWORTHINESS ALL THE COMPANIES ARE INCOME TAX ASSESSEE AND DU LY FILING THE INCOME TAX RETURN AND BALANCE SHEETS. THERE IS SUFF ICIENT SOURCE OF FUNDS WITH ALL THE COMPANIES TO INVESTMEN T SHARE CAPITAL/SHARE APPLICATION IN THE ASSESSEE COMPANY. THE ASSESSEE SUBMITTED THE COPIES OF BANK ACCOUNT/DECLARATION OF SOURCE OF FUNDS WITH THEM OF INVESTOR COMPANIES. THE BANK STA TEMENT SHOWS THE HUGE TRANSACTION OF HIGH VALUE IN THE ACC OUNTS OF THE COMPANIES. THE CHART SHOWING THE AMOUNT INVESTED BY THE ABOVE NAMED COMPANIES IN ASSESSEE COMPANY VIZ A VIZ OWN FUNDS WITH THE INVESTOR COMPANY ARE AS UNDER: - NAME OF THE INVESTOR COMPANY AMOUNT INVESTED IN ASSESSEE COMPANY SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2012 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2011 SHARE CAPITAL AND RESERVE & SURPLUS WITH INVESTOR COMPANIES AS ON 31.03.2009 ALLIANCE TRADECOM PVT. LTD 1 59 00 000 11 05 42 868 11 07 03 338 11 07 00 991 EVERSHINE SUPPLIERS PVT. LTD 1 10 00 000 10 41 99 9 89 10 42 52 807 10 42 50 971 MAYUKH VINIMAY PVT. LTD 1 55 00 000 10 82 38 912 10 83 03 077 10 83 01 020 REGENT BARTER PVT. LTD 1 79 00 000 10 51 11 109 10 52 03 352 10 52 01 041 REGENT DEALERS PVT. LTD 1 40 00 000 9 33 85 686 9 3 4 53 097 9 34 50 971 ROSE SUPPLIERS PVT. LTD 35 00 000 10 34 93 371 10 3 5 53 105 10 35 51 183 FROM THE ABOVE CHART IT IS CLEAR THAT ALL THE INVE STOR COMPANIES WERE HAVING THEIR OWN SHARE CAPITAL AND RESERVE & S URPLUS WHICH WERE MORE THAN TO THE AMOUNT INVESTED IN THE ASSESSEE COMPANY. THE ABOVE CHART SHOWS THAT THE INVESTOR CO MPANIES WERE HAVING THEIR OWN INDEPENDENT FUNDS AND HAVING THEIR INDEPENDENT SOURCE TO INVEST IN THE SHARES OF THE A SSESSEE COMPANY. APART FROM THE INVESTMENT MADE IN THE SHAR ES OF ASSESSEE GROUP THE INVESTOR COMPANIES WERE ALSO HA VING INVESTMENTS IN SHARES OF OTHER COMPANIES OR LOANS & ADVANCES TO OTHER PARTIES THEREFORE FROM THE BANK STATEMENT AS WELL AS FINANCIALS STATEMENTS OF THE INVESTOR COMPANIES THE IR CREDITWORTHINESS IS DULY PROVED. FURTHER ASSESSMENT OF ABOVE NAMED COMPANIES FOR AY 2009-10 (EXCEPT M/S MAYUKH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 135 VINTRADE PVT. LTD) WAS COMPLETED BY THE DEPARTMENT WHEREIN THE SOURCE OF FUNDS WITH THESE COMPANIES WHEREBY TH E NET WORTH OF THESE COMPANIES WAS CREATED WAS ACCEPTED B Y THE DEPARTMENT. IN THE CASE OF M/S MAYUKH VINMAY PVT LT D ORIGINAL ASSESSMENT U/S 148 WAS MADE FOR AY 2009-10 (COPY AT PB PG 312-313). LD CIT III KOLKOTTA PASSED ORDER U /S 263 DIRECTING TO PASS THE AFRESH ORDER FOR AY 2009-10 ( COPY AT PB PG 457 TO 460) AND IN PURSUANCE TO ORDER U/S 263 THE SAME AO PASSED ORDER U/S 143(3) R.W.S. 263 OF INCOM E TAX ACT 1961 DATED 21.03.2014 AT TOTAL INCOME OF RS. 10 55 58 280/- (COPY OF ORDER AT PB PAGE 461 TO 470). THIS SHOWS THAT THE INVESTOR COMPANIES WERE HAVE THEIR O WN INDEPENDENT FUND TO INVEST. III) GENUINENESS THE ASSESSEE SUBMITTED THE SHARE APPLICATION FORMS RECEIVED FROM ABOVE COMPANIES AGAINST THE SHARE APPLICATION RECEIVED FROM THE COMPANIES. THE SHARE APPLICATION IS SUPPOR TED BY BOARD RESOLUTION PASSED IN THE INVESTOR COMPANIES. THE ASSESSEE COMPANY HAS ALLOTTED THE SHARES TO THE INV ESTOR COMPANIES. THE PROPER RETURNS WERE FILED BEFORE THE ROC AGAINST ALLOTMENT OF THE SHARES TO THESE COMPANIES. FURTHERMORE THE DEPARTMENT HAS CARRIED OUT INTENSI VE SEARCH OPERATIONS OVER THE ASSESSEE AND NO ANY INCRIMINATI NG MATERIAL WAS FOUND TO SHOW THAT THE MONEY AGAINST THE SHARE ALLOTMENT WAS OWN MONEY OF THE COMPANY. SHARES CERTIFICATES W ERE ISSUED AGAINST THE ALLOTMENT OF THE SHARES TO THESE COMPANIES WERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE COMPANY OR ITS DIRECTOR OR EMPLOYEES. THIS FACT SHOWS THAT AFT ER ALLOTMENT OF SHARES BY THE APPELLANT COMPANY SHARE CERTIFICATES WERE DISPATCHED TO THE SUBSCRIBER COMPANIES. NO ANY ENTR Y IN BOOKS OF ACCOUNT OR DOCUMENT WAS FOUND SHOWING PAYMENT OF CASH TO THESE INVESTOR COMPANIES AGAINST RECEIPT OF CHEQUES FROM THESE COMPANIES AGAINST ALLOTMENT OF SHARES. THEREFORE TH E GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. THE DEPARTMENT ALSO CARRIED OUT SURVEY OVER THE INVESTO R COMPANIES (EXCEPT MAYUKH VINTRADE PVT. LTD) AND DURING THE CO URSE OF SURVEY NO MATERIAL WAS FOUND TO PRESUME THAT THE IN VESTMENT MADE BY THEM IS NOT GENUINE. B) ONUS TO PROVE SOURCE OF SOURCE FROM THE SHOW CAUSE NOTICE GIVEN BY LD CIT(A) AND EXCEL SHEET PROVIDED TO THE ASSESSEE SHOWING CHAIN OF SOURCE IT IS APPARENT THAT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 136 EVEN THERE IS NO CASH DEPOSIT TILL 3 RD STAGE OF CHANNEL SOURCE (COPY AT PB PG 669 TO 698/ AY 2012-13) . THE LD CIT(A) CONFIRMED THE ADDITION OF RS. 1 41 50 000/- ON ACCOUNT OF CASH/DD DEPOSITED AT 4 TH CHANNEL OR BEYOND TO THAT STAGE . IN SUCH CASES THE INQUIRY SHOULD HAVE BEEN MADE FROM THE CONCERNS IN WHOSE BANK A/C SUCH FUNDS FLOATED AND NECESSARY ACT ION SHOULD HAVE BEEN TAKEN IN THE CASES OF SUCH CONCERN BUT THE ASS ESSEE CANNOT BE HOLD RESPONSIBLE FOR CASH/DD DEPOSIT IN SOME ACCOUNT AT 4 TH CHANNEL. UNDER SECTION 68 OF INCOME TAX ACT 1961 THE ONUS O F THE ASSESSEE IS TO PROVE THE SOURCE OF CREDIT ENTRY AND THERE IS NO ONUS OF ASSESSEE TO PROVE THE SOURCE OF SOURCE OR SOURCE OF ALL CHANNEL SOURCES. THE AMENDMENT IN SECTION 68 OF I. TAX WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 WHICH REQUIRE TO PROVE SOURCE OF FINDS IN THE HANDS OF SH AREHOLDER COMPANY. THOUGH NOT REQUIRED BY LAW BUT STILL THE ASSESSEE H AS PROVED SOURCE OF FINDS IN THE HANDS OF SHAREHOLDER COMPANY . THE AMENDED SECTION EVEN DOES NOT REQUIRE TO PROVE SOURCE OF FU NDS IN THE HANDS OF 3 RD OR 4 TH STAGE. FURTHER THE AMENDMENT IN SECTION 68 OF I.TAX WAS MADE BY INSERTING THE FOLLOWING PROVISO TO SECTION 68 W.E.F . 01/04/2013 ' PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED) A ND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY SHARE CAPITAL SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY UNLESS (A) THE PERSON BEING A RESIDENT IN WHOSE NAME SUC H CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: THE ABOVE PROVISO WAS INSERTED WITH EFFECT FROM THE 1ST DAY OF APRIL 2013 SO IT CANNOT BE APPLIED RETROSPECTIVELY. THEREFORE AS PER LAW THE ASSESSEE HAS NO ONUS TO PROVE SOURCE OF SOURCE. HO NBLE MUMBAI HIGH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 137 COURT IN THE CASE OF COMMISSIONER OF INCOME TAX 1 VS M/S. GAGANDEEP INFRASTRUCTURE PVT.LTD HELD AS UNDER:- (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 201314 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT BEFORE THE TRIBUNAL IT WAS NOT EVEN THE CASE OF THE REVENUE T HAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT W AS INTRODUCED FOR REMOVAL OF DOUBTS OR THAT IT IS DECLARATORY. THE REFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SECTION 68 OF THE AC T IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATION OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUI NENESS OF THE TRANSACTION IDENTITY AND THE CAPACITY OF THE INVES TOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTHER IT WAS A SUBMISSION ON BEH ALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) IN TH E CONTEXT TO THE PRE AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHE RE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HA S BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME T AX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHO LDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DO ES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. (F) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A ) AND THE TRIBUNAL THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. BUT IN THE CASE OF THE ASSESSEE THE FACT REMAINS TH AT THE ASSESSEE HAS ALSO PROVED SOURCE OF SOURCE BY SUBMITTING THE COPY OF BANK STATEMENT OF THE SHARE APPLICANT COMPANY WHEREIN NO CASH DEPOSIT WAS MADE AGAINST THE SHARE APPLICATION MONEY. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 138 C) AS REGARD TO THE STATEMENT OF SHRI SANTOSH CHOUBE SHRI AJIT SHARMA AND SHRI RAJESH KUMAR SINGH AS MENTIONED IN SHOW CAUSE NOTICE OF LD CIT(A) PB PG 403-408 THE ASSESSEE HAS SUBMITTED BEFORE LD CIT(A) THAT:- I) AS REGARD TO THE STATEMENT OF SHRI SANTOSH CHOUBEY FIRST OF ALL THIS IS TO SUBMIT THE ASSESSEE GROUP OR ITS SHAREHO LDER (INVESTOR) COMPANIES HAVE NO CONCERN WITH THIS PERSON OR CONCE RNS MANAGED BY SHRI SANTOSH CHOUBEY. THE ASSESSEE GROUP DO NOT KNOW TO ANY PERSON NAMING SHRI SANTOSH CHOUBEY. REG ARDING THE STATEMENT OF SHRI SANTOSH CHOUBEY AND ITS RELIA NCE FOR TAKING THE ADVERSE ACTION AGAINST THE ASSESSEE WE S UBMIT AS UNDER: - A) THIS PERSON ADMITTED TO MAINTAIN THE BANK A/C OF SHRI AJIT SHARMA AND RAJESH KUMAR SINGH AND USED FOR ITS OWN PURPOSE THEREFORE ONUS TO PROVE THE SOURCE OF AMOUNT DEPOSITED IN THEIR BANK ACCOUNTS PRIMARILY L AY ON THIS PERSON . B) AT Q. NO. 12 OF STATEMENT OF THIS PERSON HE SAID THAT THE MOTISONS JEWELLERS GROUP OF JAIPUR WAS THE BENEFICIARY OF ACCOMMODATION ENTRIES ARRANGED BY ME THROUGH THE BANK ACCOUNTS OF THE ABOVE PROP. CONCER NS. THE CASH WAS RECEIVED BY ME FROM MOTISONS JEWELLERS GROUP FROM TIME TO TIME AND WAS DEPOSITED INTO A NUMBER OF BANK ACCOUNTS INCLUDING THE TWO BANK ACCOUNTS OF M/S SHYAM FASHION (PROP. AJIT SHARMA) AND M/S DURGA ENTERPRISES (PROP. RAJESH KR SINGH) I N IDBI GIRISH PARK BRANCH KOLKATA. IN THIS REGARD IT IS QUITE INTERESTING TO NOTE THA T A PERSON STATING THAT MOTISONS JEWELLERS GROUP WAS THE BENEFICIARY OF THE ACCOMMODATION ENTRIES ARRANGED B Y HIM AND HE IS ALSO ADMITTING THAT CASH WAS RECEIVED BY HIM FROM MOTISONS JEWELLERS GROUP TO DEPOSIT THE SAME IS BANK ACCOUNTS MAINTAINING BY HIM BUT NO FURTHER QUESTIONS WERE MADE FROM HIM TO CONTROVERT THAT WHATEVER HE IS STATING IS TRUE OR NOT. THE IMPORTAN T THING IS THAT MOTISONS JEWELLERS GROUP IS NOT A HUMAN BEI NG THEREFORE IT WAS NECESSARY AND FOR THE INTEREST OF EQUITIES FAIRNESS AND JUSTICE TO ASK QUESTIONS TH AT : - ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 139 WHAT IS THE IDENTITY OF THE M/S MOTISONS JEWELLERS. IN JAIPUR WHERE THE MOTISONS GROUP EXISTS? WHO ARE THE OWNERS OF THIS GROUP? WHO WAS THE PERSON WHO WAS CONTACTING TO HIM REGARDING CASH DEALING? HOW THE CASH REACHED TO HIM? FROM WHOM HE WAS COMMUNICATING AND HOW HE WAS COMMUNICATING? WHAT ARE HIS TELEPHONE NUMBER. WHETHER HE EVER VISITED THE OFFICE OF MOTISONS GROUP OR EVER MEET TO OWNERS OR THEIR EMPLOYEES OF MOTISONS GROUP? WHO WERE THE BROKERS OF KOLKATTA THROUGH WHOM HE KNOW THE MOTISONS GROUP? AS THIS PERSON HAD ADMITTED THAT HE RECEIVED THE C ASH FROM MOTISONS JEWELLERS GROUP THEN HE SHOULD KNOW THE ANSWERS OF ALL THE ABOVE QUESTIONS. THE FACT IS THAT HE HAS MADE WRONG STATEMENTS AND THESE WORDS WERE P UT IN HIS MOUTH BY THE PERSON WHO RECORDED HIS STATEME NT. FURTHER EVEN IF HIS STATEMENTS ARE CONSIDERED AS TR UE THEN ALSO ADDITIONS CANNOT BE MADE IN THE HANDS OF ASSESSEE COMPANY AND IN SUCH SITUATION (WITHOUT CONSENTING ) AT THE WORST THE ADDITION COULD BE MADE IN THE HANDS OF MOTISONS JEWELLERS GROUP. FURTHER IN HIS STATEMENT THIS PERSON ALSO ADMITTED THAT MONEY WAS FINALLY TRANSFERRED TO THE A/C OF MOTISONS JEWELLER S GROUP BUT NO QUESTION WERE ASKED FROM THIS PERSON T HAT WHAT IS THE DETAIL OF SUCH ACCOUNTS IN WHICH THE MO NEY WERE TRANSFERRED. IT IS MOST IMPORTANTLY RELEVANT T O NOTICE THAT M/S MOTISONS JEWELLERS DID NOT RECEIVE ANY SHARE APPLICATION FROM THE SIX COMPANIES THAN HOW T HIS PERSON CHOOSE TO TAKE THE NAME OF MOTISONS JEWELLER S AND HOW HE KNOW THE NAME OF MOTISONS JEWELLERS AND HOW HE COME TO KNOW THAT THE ASSESSEE GROUP IS ENGAGED IN THE JEWELLERY BUSINESS TOO. THIS SHOWS T HAT THE NAME OF MOTISONS JEWELLERS GROUP WAS PUT INTO THE MOUTH OF THIS PERSON BY THE SEARCH PARTY WITH A MOTIVE TO MAKE THEIR CASE STRONG. THE AO AND INVESTIGATION TEAM NEITHER FOLLOWED THE PRINCIPLE OF LAW NOR PRINCIPLE OF EVIDENCE RATHER ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 140 APPEARED TO BE BENT UPON MAKING HUGE ADDITIONS WITHOUT ANY BASIS. THE AO HAS NOT MADE INDEPENDENT INQUIRY ON THIS ISSUE. A) IT IS SETTLED LAW THAT THE AO IS QUASI-JUDICIAL AUTHORITY AND SHOULD BE GOVERNED IN HIS FUNCTION BY JUDICIAL CONSIDERATION AND MUST CONFORM TO THE RULES OF NATU RAL JUSTICE AND MUST PROCEED WITHOUT BIAS- TIN BOX CO. VS CIT 249 ITR 216 (SC). B) IT IS ALSO SETTLED LAW THAT THE AO MUST ACT HONE STLY ON THE MATERIAL BEFORE HIM AND NOT VINDICTIVELY CAPRICIOUSLY OR ARBITRARILY- GURUMUKH SINGH VS CIT 12 ITR 393 427 (FB) DAKESHWARI COTTON MILLS LTD VS CIT 26 ITR 775 C) IT IS ALSO SETTLED LAW THAT THE AO IS NOT ENTITL ED TO MAKE A PURE GUESS WITHOUT ANY EVIDENCE OR MATERIAL AT AL L - DAKESHWARI COTTON MILLS LTD VS CIT 26 ITR 775 BUT IN THE CASE OF ASSESSEE THE LD AO AND THE INV ESTIGATING TEAM HAS BRUSHED ASIDE ALL THE PRINCIPLES OF LAW A ND UTILIZING A STATEMENT WHICH IS TOTALLY IRRELEVANT UNACCEPTABLE TO FRAME A HIGH-PITCHED ASSESSMENT PURELY ON SURMISES CONJECT URES AND SUSPICION. C) IN VIEW OF ABOVE MENTIONED THE STATEMENTS OF THI S PERSON HAVE NO LEGAL SANCTITY AND CANNOT BE RELIED UPON. FROM T HE READING STATEMENT OF THIS PERSON ITS APPEARS THAT THE INVES TIGATING PARTY RECORDED THE STATEMENT BY PUTTING WORDS IN HIS MOUT H WITH SOLE MOTIVE TO USE THE SAME AGAINST THE ASSESSEE GROUP T O MAKE A STRONG CASE AGAINST THE ASSESSEE. THEREFORE WE SUB MIT THAT THE STATEMENT OF THIS PERSON IS COMPLETELY FALSE INCOR RECT AND NOT ACCEPTABLE AND THEREFORE CANNOT BE RELIED UPON UNLE SS THE OPPORTUNITY OF CROSS EXAMINATION IS NOT GIVEN TO TH E ASSESSEE. D) IN THE LIGHT OF ABOVE MENTIONED SERIOUS DEFECTS IN THE STATEMENT OF THIS PERSON THE CROSS EXAMINATION OF THIS PERSON IS WARRANTED TO DECIDED THE MATTER IN FAIR AND JUST MA NNER . IT IS FURTHER RELEVANT TO MENTION HERE THAT IT IS SETT LE LEGAL POSITION THAT BEFORE USING SOME MATERIAL AND STATEMENTS AGAI NST THE ASSESSEE THE OPPORTUNITY OF CROSS EXAMINATION AND C ONFRONTATION SHOULD HAVE BEEN PROVIDED TO THE ASSESSEE. THEREFOR E THE CIRCUMSTANCES STRONGLY WARRANTED IN THIS CASE FOR C ROSS EXAMINATION OF STATEMENT OF THIS PERSON. IN THIS RE GARD WE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 141 WOULD LIKE TO REFER THE RECENT JUDGMENT OF JAIPUR B ENCH OF ITAT PASSED IN THE CASE OF SHRI PRATEEK KOTHARI IN APPEAL NO. 159/JP/16 WHEREIN IT WAS HELD AS UNDER: - 2.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. THE TRANSACTION UNDER QUESTION RELATES TO UNSECURED LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS 1 CRORES FROM M/S MEHUL GEMS PVT LTD DURING THE IMPUNGED ASSESSMENT YEAR AN D NOT ACCEPTING THE SAID LOAN TRANSACTION AS A GENUIN E TRANSACTION BY THE ASSESSING OFFICER AND THE RESULT ANT ADDITION MADE UNDER SECTION 68 OF THE ACT. UNDISPUTEDLY THE PRIMARY ONUS TO ESTABLISH GENUINE NESS OF THE LOAN TRANSACTION IS ON THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE HAS PROVIDED THE NECESSARY EXPLANATION FURNISHED DOCUMENTARY EVIDENCE IN TERM S OF TAX FILINGS AFFIDAVITS AND CONFIRMATION OF THE DIRECTORS BANK STATEMENTS OF THE LENDER BALANCE S HEET OF THE LENDER COMPANY AND AN INDEPENDENT CONFIRMATION HAS ALSO BEEN OBTAINED BY THE ASSESSIN G OFFICER TO SATISFY THE CARDINAL TEST OF IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION. HOWEVER THE ASSESSING OFFICER HAS NOT GIVEN ANY FINDING IN RESPECT OF SUCH EXPLANATION DOCUMENTARY EVIDENCE AS WELL AS INDEPENDENT CONFIRMATION. APPARENTLY THE REASON FOR NOT ACCEPT ING THE SAME IS THAT THE ASSESSING OFFICER WAS IN RECEI PT OF CERTAIN INFORMATION FROM THE INVESTIGATION WING OF THE TAX DEPARTMENT AS PER WHICH THE TRANSACTION UNDER CONSIDERATION IS A BOGUS LOAN TRANSACTION. THE SAID INFORMATION RECEIVED FROM THE INVESTIGATION WING TH US OVERWEIGHED THE MIND OF THE ASSESSING OFFICER. THE ASSESSING OFFICER STATED THAT THE PRIMARY ONUS IS O N THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTION CLAIMED BY IT AND IF THE INVESTIGATION DONE BY THE DEPARTMENT LEADS TO DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS IT IS INCUMBENT ON THE ASSESSEE T O PRODUCE THE PARTIES ALONGWITH NECESSARY DOCUMENTS T O ESTABLISH THE GENUINENESS OF THE TRANSACTION. IN RESPONSE THE ASSESSEE SUBMITTED THAT SHRI BHANWARL AL JAIN IS NOT KNOWN TO HIM AND REGARDING VARIOUS INCRIMINATING DOCUMENTARY EVIDENCES SEIZED DURING T HE COURSE OF SEARCH AND STATEMENTS RECORDED OF SHRI ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 142 BHANWARLAL JAIN AND OTHER PERSONS HE SPECIFICALLY REQUESTED THE AO TO PROVIDE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENT OF ALL VARIOU S PERSONS RECORDED IN THIS REGARD AND PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SUCH PERSONS. HOWEVER THE AO DIDNT PROVIDE TO THE ASSE SSEE COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMEN TS OF VARIOUS PERSONS RECORDED AND ALLOW THE CROSS- EXAMINATION OF ANY OF THESE PERSONS. WHILE DOING SO THE AO STATED THAT IN HIS STATEMENTS BHANWARLAL JAIN HAD DESCRIBED THAT THEY ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS AND ADVANCES THROUGH VARIOUS BENAMI CONCERNS (70) OPERATED AND MANAGED BY THEM. THIS ADMISSION AUTOMATICALLY MAKES ALL THE TRANSACTIONS DONE BY TH EM AS MERE PAPER TRANSACTIONS AND IN THESE CIRCUMSTANC ES FURTHER AS PER THE INFORMATION NAME AND ADDRESS OF ASSESSEE AND THE BENAMI CONCERN THROUGH WHICH ACCOMMODATION ENTRY OF UNSECURED LOANS WAS PROVIDED IS APPEARING IN THE LIST OF BENEFICIARIES TO WHOM T HE SAID GROUP HAS PROVIDED. THIS ADMISSION IS SUFFICIENT TO REJECT THE CONTENTIONS OF THE ASSEESSE. FURTHER REGARDING CROSS EXAMINATION THE AO STATED THAT TH E RIGHT OF CROSS EXAMINATION IS NOT AN ABSOLUTE RIGHT AND IT DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE AND ALS O ON THE STATUTE CONCERNED. IN THE PRESENT CASE NO S UCH CIRCUMSTANCES ARE WARRANTED AS IN THE LIST OF BENEFICIARIES TO WHOM ACCOMMODATION ENTRIES WERE PROVIDED BY THE SAID GROUP CATEGORICALLY CONTAINS T HE NAME AND ADDRESS OF THE ASSESSEE. FURTHER THE GROUP HAS CATEGORICALLY ADMITTED TO PROVIDING OF ACCOMMODATION ENTRIES OF UNSECURED LOANS THROUGH VARIOUS BENAMI CONCERNS. THE AO FURTHER RELIED UPO N THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F C. VASANTLAL & CO. VS. CIT 45 ITR 206(SC) AND HONBLE RAJASTHAN HIGH COURT IN CASE OF RAMESHWARLAL MALI V S. CIT 256 ITR 536(RAJ.) AMONG OTHERS. IN THIS REGARD IT WAS SUBMITTED BY THE ASSESSEE THAT IF THE ENTRIES A ND MATERIAL ARE GATHERED BEHIND THE BACK OF THE ASSESS EE AND IF THE AO PROPOSES TO ACT ON SUCH MATERIAL AS H E MIGHT HAVE GATHERED AS A RESULT OF HIS PRIVATE ENQU IRIES HE MUST DISCLOSE ALL SUCH MATERIAL TO THE ASSESSEE AND ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 143 ALSO ALLOW THE CROSS EXAMINATION AND IF THIS IS NOT DONE THE PRINCIPLES OF NATURAL JUSTICE STAND VIOLATED. 2.9 IN LIGHT OF ABOVE DISCUSSIONS IN OUR VIEW TH E CRUX OF THE ISSUE AT HAND IS THAT WHETHER THE PRINCIPLE OF NATU RAL JUSTICE STAND VIOLATED IN THE INSTANT CASE. IN OTHE R WORDS WHERE THE AO DOESNT WANT TO ACCEPT THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTATION FURNISHED REGARD ING THE GENUINENESS OF THE LOAN TRANSACTION AND INSTEAD WANTS TO RELY UPON THE INFORMATION INDEPENDENTLY RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT IN RESPECT OF INVESTIGATION CARRIED OUT AT A THIRD PARTY CAN THE SAID INFORMATION BE USED AGAINST THE ASSESS EE WITHOUT SHARING SUCH INFORMATION WITH THE ASSESSEE AND ALLOWING AN OPPORTUNITY TO THE ASSESSEE TO EXAMINE SUCH INFORMATION AND EXPLAIN ITS POSITION ESPECIALLY WHE N THE ASSESSEE HAS REQUESTED THE SAME TO THE ASSESSING OFFICER. 2.10 IN THIS REGARD THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 7 75 (SC) HAS HELD THAT THE RULE OF LAW ON THIS SUBJECT HAS BEEN FAIRLY AND RIGHTLY STATED BY THE LAHORE HIGH C OURT IN THE CASE OF SETH GURMUKH SINQH WHERE IT WAS STAT ED THAT WHILE PROCEEDING UNDER SUB-SECTION (3) OF SECT ION 23 THE INCOME-TAX OFFICER THOUGH NOT BOUND TO REL Y ON EVIDENCE PRODUCED BY THE ASSESSEE AS HE CONSIDERS T O BE FALSE YET IF HE PROPOSES TO MAKE AN ESTIMATE IN DISREGARD OF THAT EVIDENCE HE SHOULD IN FAIRNESS DISCLOSE TO THE ASSESSEE THE MATERIAL ON WHICH HE I S GOING TO FIND THAT ESTIMATE; AND THAT IN CASE HE PR OPOSES TO USE AGAINST THE ASSESSEE THE RESULT OF ANY PRIVA TE INQUIRIES MADE BY HIM HE MUST COMMUNICATE TO THE ASSESSEE THE SUBSTANCE OF THE INFORMATION SO PROPOS ED TO BE UTILIZED TO SUCH AN EXTENT AS TO PUT THE ASSE SSEE IN POSSESSION OF FULL PARTICULARS OF THE CASE HE IS EX PECTED TO MEET AND THAT HE SHOULD FURTHER GIVE HIM AMPLE OPPORTUNITY TO MEET IT. IT WAS HELD IN THAT CASE T HAT IN THIS CASE WE ARE OF THE OPINION THAT THE TRIBUNAL VIOLATED CERTAIN FUNDAMENTAL RULES OF JUSTICE IN RE ACHING ITS CONCLUSIONS. FIRSTLY IT DID NOT DISCLOSE TO TH E ASSESSEE WHAT INFORMATION HAD BEEN SUPPLIED TO IT B Y THE DEPARTMENTAL REPRESENTATIVE. NEXT IT DID NOT GIVE ANY ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 144 OPPORTUNITY TO THE COMPANY TO REBUT THE MATERIAL FURNISHED TO IT BY HIM AND LASTLY IT DECLINED TO TAKE ALL THE MATERIAL THAT THE ASSESSEE WANTED TO PRODUCE IN SUPPORT OF ITS CASE. THE RESULT IS THAT THE ASSESSE E HAD NOT HAD A FAIR HEARING. THE HONBLE SUPREME COURT IN CASE OF C. VASANTLAL & CO. VS. CIT 45 ITR 206 (SC) HAS HELD THAT THE ITO IS NOT BOUND BY ANY TECHNICAL RULES OF THE LAW OF EVID ENCE. IT IS OPEN TO HIM TO COLLECT MATERIAL TO FACILITATE ASSESSMENT EVEN BY PRIVATE ENQUIRY. BUT IF HE DESI RES TO USE THE MATERIAL SO COLLECTED THE ASSESSEE MUST BE INFORMED ABOUT THE MATERIAL AND GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. THE STATEMENTS MADE BY PRAVEEN JAIN AND GROUP WERE MATERIAL ON WHICH THE I T AUTHORITIES COULD ACT PROVIDED THE MATERIAL WAS DISCLOSED AND THE ASSESSEE HAD AN OPPORTUNITY TO RE NDER THEIR EXPLANATION IN THAT REGARD. THE HONBLE SUPREME COURT IN CASE OF KISHINCHAND CHELLARAM V. CIT (1980) 125 ITR 713 (SC) HAS HELD THAT WHETHER THERE WAS ANY MATERIAL EVIDENCE TO JU STIFY THE FINDINGS OF THE TRIBUNAL THAT THE AMOUNT OF RS. 1 07 350 SAID TO HAVE BEEN REMITTED BY TILOKCHAND F ROM MADRAS REPRESENTED THE UNDISCLOSED INCOME OF THE ASSESSEE. THE ONLY EVIDENCE ON WHICH THE TRIBUNAL COULD RELY FOR THE PURPOSE OF ARRIVING AT THIS FIND ING WAS THE LETTER DATED 18-2-1955 SAID TO HAVE BEEN ADDRE SSED BY THE MANAGER OF THE BANK TO THE ITO. NOW IT IS DIFFICULT TO SEE HOW THIS LETTER COULD AT ALL BE RE LIED UPON BY THE TRIBUNAL AS A MATERIAL PIECE OF EVIDENCE SUPPORTIVE OF ITS FINDING. IN THE FIRST PLACE THIS LETTER WAS NOT DISCLOSED TO THE ASSESSEE BY THE ITO AND EV EN THOUGH THE AAC REPRODUCED AN EXTRACT FROM IT IN HIS ORDER HE DID NOT CARE TO PRODUCE IT BEFORE THE ASS ESSEE OR GIVE A COPY OF IT TO THE ASSESSEE. THE SAME POSI TION OBTAINED ALSO BEFORE THE TRIBUNAL AND THE HIGH COUR T AND IT WAS ONLY WHEN A SUPPLEMENTAL STATEMENT OF TH E CASE WAS CALLED FOR BY THIS COURT BY ITS ORDER DAT ED 16- 8-1979 THAT ACCORDING TO THE ITO THIS LETTER WAS TRACED BY HIM AND EVEN THEN IT WAS NOT SHOWN BY HIM TO THE ASSESSEE BUT IT WAS FORWARDED TO THE TRIBUNAL AND I T WAS FOR THE FIRST TIME AT THE HEARING BEFORE THE TRIBUN AL IN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 145 REGARD TO THE PREPARATION OF THE SUPPLEMENTAL STATE MENT OF THE CASE THAT THIS LETTER WAS SHOWN TO THE ASSES SEE. IT WILL THEREFORE BE SEEN THAT EVEN IF WE ASSUME TH AT THIS LETTER WAS IN FACT ADDRESSED BY THE MANAGER OF THE BANK TO THE ITO NO RELIANCE COULD BE PLACED UPON IT SI NCE IT WAS NOT SHOWN TO THE ASSESSEE UNTIL AT THE STAGE OF PREPARATION OF THE SUPPLEMENTAL STATEMENT OF THE CA SE AND NO OPPORTUNITY TO CROSS EXAMINE THE MANAGER OF THE BANK COULD IN THE CIRCUMSTANCES BE SOUGHT OR AVAILE D OF BY THE ASSESSEE. IT IS TRUE THAT THE PROCEEDINGS UN DER THE INCOME-TAX LAW ARE NOT GOVERNED BY THE STRICT RULES OF EVIDENCE AND THEREFORE IT MIGHT BE SAID THAT EVEN WITHOUT CALLING THE MANAGER OF THE BANK IN EVIDENCE TO PROVE THIS LETTER IT COULD BE TAKEN INTO ACCOUNT A S EVIDENCE. BUT BEFORE THE INCOME-TAX AUTHORITIES COU LD RELY UPON IT THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTU NITY TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO THE STATEMENTS MADE BY HIM. 2.10 IN LIGHT OF ABOVE PROPOSITION IN LAW AND ESPE CIALLY TAKING INTO CONSIDERATION THE DECISION OF THE HONB LE SUPREME COURT IN CASE OF C. VASANTLAL & CO. (SUPRA) RELIED UPON BY THE REVENUE AND WHICH ACTUALLY SUPPO RTS THE CASE OF THE ASSESSEE IN THE INSTANT CASE THE ASSESSMENT WAS COMPLETED BY THE AO RELYING SOLELY O N THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G STATEMENT RECORDED U/S 132(4) OF SHRI BHANWARLAL JA IN AND OTHERS AND VARIOUS INCRIMINATING DOCUMENTARY EVIDENCE FOUND FROM THE SEARCH AND SEIZURE CARRIED OUT BY INVESTIGATION WING MUMBAI ON THE SHRI BHANWARLA L JAIN GROUP ON 03.10.2013. IT REMAINS UNDISPUTED THA T THE ASSESSEE WAS NEVER PROVIDED COPIES OF SUCH INCRIMINATING DOCUMENTS AND STATEMENTS OF SHRI BHANWARLAL JAIN AND VARIOUS PERSONS AND AN OPPORTUNITY TO CROSS EXAMINE SUCH PERSONS THOUGH HE SPECIFICALLY ASKED FOR SUCH DOCUMENTS AND CROSS EXAMINATION. ON THE OTHER HAND THE BURDEN WAS SOUG HT TO BE SHIFTED ON THE ITA NO. 159/JP/16 THE ACIT CENTRAL -2 JAIPUR VS. M/S PRATEEK KOTHARI JAIPUR 21 ASSESSEE BY THE A.O. IT IS CLEAR CASE WHERE THE PRI NCIPLE OF NATURAL JUSTICE STAND VIOLATED AND THE ADDITIONS MADE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 146 UNDER SECTION 68 THEREFORE ARE UNSUSTAINABLE IN THE EYE OF LAW AND WE HEREBY DELETE THE SAME. THE ORDER OF THE LD CIT(A) IS ACCORDINGLY CONFIRMED AND THE GROUND O F THE REVENUE IS DISMISSED. II) IT IS RELEVANT TO MENTION HERE THAT STATEMENTS OF S HRI AJIT SHARMA AND SHRI RAJESH KUMAR SINGH ARE NO RELEVANCE IN THE CASE OF THE ASSESSEE BECAUSE IN THEIR STATEM ENT THESE PERSONS HAVE NOT ADMITTED THAT THEY WERE MAINTAINING THE BANK ACCOUNT FOR THE BENEFIT OF ASS ESSEE GROUP. THEY ADMIT TO MAINTAIN THEIR BANK ACCOUNT BY SOME SHRI SANTOSH CHOUBEY. THEREFORE THE ADDITION ON SHARE APPLICATION RECEI VED BY THE ASSESSEE CAN NEITHER BE MADE U/S 56(1) OF INCOME TAX ACT 1 961 NOR U/S 68 OF INCOME TAX ACT 1961. THE VARIOUS JUDGMENTS AND ARG UMENTS REGARDING ADDITION MADE U/S 56(1) OF INCOME TAX ACT 1961 HAS BEEN SUBMITTED IN FORGOING PARAS. THE RELIANCE REGARDING ADDITION CANNOT BE MADE U/S 68 OF INCOME TAX CAT 1961 IS PLACED ON TH E FOLLOWING DECISIONS: - A) RAJASTHAN HIGH COURT: - (I) CIT-1 JAIPUR V/S M/S. ARL INFRATECH LTD (PB P G 130 TO 143/CASE LAWS) WHEREIN HONBLE RAJASTHAN HIGH COURT HAS RECENTLY CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN D B ITA NO 24/2014 VIDE ORDER DATED 28/09/2016 REGARDIN G DELETION OF ADDITION OF SHARE CAPITAL MADE BY APPL YING THE PROVISIONS OF 68 OF INCOME TAX ACT 1961. (II) COMMISSIONER OF INCOME-TAX JAIPUR II VERSUS MORANI AUTOMOTIVES (P.) LTD. NO.- D.B. IT APPEAL NO. 619 OF 2011 DATED.- OCTOBER 23 2013 (RAJASTHAN HIGH COURT) (PB PG 144 TO 149/CASE LAWS). THE FINDINGS OF HONBLE RAJASTHAN HIGH COURT WAS AS UNDER:- 10. THE POINTS AS SOUGHT TO BE RAISED BY THE APPELL ANT- REVENUE IN THE PRESENT CASE ARE ALL THE MATTERS REL ATING TO APPRECIATION OF EVIDENCE. THE RELEVANT FACTORS H AVE BEEN TAKEN INTO ACCOUNT AND CONSIDERED BY THE APPEL LATE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 147 AUTHORITIES BEFORE RETURNING THE FINDINGS IN FAVOUR OF THE ASSESSEE. EVEN AS REGARDS THE THREE REFERRED SHARE CAPITAL CONTRIBUTORS IT IS NOTICED THAT THEY ARE E XISTING ASSESSEES HAVING PA NUMBERS; AND ARE BEING REGULARL Y ASSESSED TO TAX. THE APPELLATE AUTHORITIES CANNOT B E SAID TO HAVE ERRED IN DELETING THE ADDITIONS IN THEIR RE GARD TOO AT THE HANDS OF ASSESSEE-COMPANY. 11. ULTIMATELY THE QUESTION AS TO WHETHER THE SOURCE OF INVESTMENT OR OF CREDIT HAS BEEN SATISFACTORILY EXPLAINED OR NOT REMAINS WITHIN THE REALM OF APPRECIATION OF EVIDENCE; AND THE COURTS H AVE CONSISTENTLY HELD THAT SUCH A MATTER DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. IN THE CASE OF CIT V. ORISSA CORPN. (P.) LTD. [1986) 159 ITR 78 (SC) THE HON'BLE SUPREME COURT HELD AS UNDER:- '13. IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WA S IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITOR S WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE APART FROM ISSUING NOTICES UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WER E CREDIT-WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE T HE SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES THE ASSESSEE COULD NOT DO ANY THING FURTHER. IN THE PRE MISES IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASS ESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT NO QUESTION OF LAW AS SUCH ARISES.' 12. IN THE CASE OF CIT V. CHANDRA PRAKASH RANA [200 1] 48 DTR 271 (RAJ.) THIS COURT NOTICED SIMILAR NATUR E GROUNDS URGED ON BEHALF OF THE REVENUE AND FOUND TH E SAME NOT LEADING TO ANY SUBSTANTIAL QUESTION OF LAW . THIS COURT NOTICED OBSERVED AND HELD AS UNDER:- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 148 '7. LEARNED COUNSEL FOR THE APPELLANT (REVENUE) CONTENDED THAT FIRSTLY TRIBUNAL ERRED IN ACCEPTING THE EXPLANATION OFFERED BY ASSESSEE IN RELATION TO SOURCE OF INCOME. HIS SECOND SUBMISSION WAS THAT WHAT WAS OFFERED BY ASSESSEE WAS NO EXPLANATION AND HENCE SHOULD NOT HAVE BEEN ACCEPTED AND LASTLY LEAR NED COUNSEL MADE SINCERE ATTEMPT ON HIS PART AFTER TAKI NG US THROUGH FACTUAL SCENARIO OF THE EXPLANATION AND CONTENDED THAT IT CAN NEVER BE TAKEN AS SATISFACTOR Y EXPLANATION FOR DELETING THE ADDITION MADE BY AO. W E DO NOT AGREE TO THIS SUBMISSION FOR MORE THAN ONE REASON. 8. IN THE FIRST PLACE IT IS A PURE QUESTION OF FAC T WHAT TO SAY QUESTION OF LAW MUCH LESS SUBSTANTIAL QUESTION OF LAW. SECONDLY THIS COURT CANNOT AGAIN IN THIS APPEAL UNDERTAKE THE EXAMINATION OF FACTUAL IS SUES NOR CAN DRAW FACTUAL INFERENCES ON THE BASIS OF EXPLANATION OFFERED BY ASSESSEE. THIRDLY ONCE THE EXPLANATION IS ACCEPTED BY THE TWO APPELLATE CO URTS I.E. CIT(A) AND TRIBUNAL IN THIS CASE THEN IN SUCH EVENT A CONCURRENT FINDING RECORDED ON SUCH EXPLANATION B Y TWO APPELLATE COURTS IS BINDING ON THE HIGH COURT. 9. PERUSAL OF IMPUGNED FINDING QUOTED SUPRA WOULD GO TO SHOW THAT TRIBUNAL DID EXAMINE THE EXPLANATION OFFERED BY ASSESSEE IN DETAIL AND THEN RECORDED A FINDING FOR ITS ACCEPTANCE. SUCH FINDING WHEN CHALLENGED DOES NOT CONSTITUTE A SUBSTANTIAL QUESTION OF LAW WITHIN THE MEANING OF S. 260A IBID IN AN APPEAL ARISING OUT OF SUCH ORDER. 10. IN OUR OPINION THEREFORE ONCE THE CIT(A) AND TRIBUNAL ACCEPTED THE EXPLANATION OF ASSESSEE A ND ACCORDINGLY DELETED CERTAIN ADDITIONS MADE BY AO HOLDING THE TRANSACTION OF SHARES TO BE GENUINE TH EN IT WOULD NOT INVOLVE ANY SUBSTANTIAL ISSUE OF LAW AS S UCH. IN OTHER WORDS THIS COURT IN ITS APPELLATE JURISDI CTION UNDER S. 260A IBID WOULD NOT AGAIN DE NOVO HOLD YE T ANOTHER FACTUAL INQUIRY WITH A VIEW TO FIND OUT AS TO WHETHER EXPLANATION OFFERED BY ASSESSEE AND WHICH FOUND ACCEPTANCE TO THE CIT(A) AND TRIBUNAL IS GOOD OR BAD OR WHETHER IT WAS RIGHTLY ACCEPTED OR NOT. IT IS ONLY ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 149 WHEN THE FACTUAL FINDING RECORDED HAD BEEN ENTIRELY DE HORS THE SUBJECT OR THAT IT HAD BEEN BASED ON NO REASONING OR BASED ON ABSURD REASONING TO THE EXTE NT THAT NO PRUDENT MAN OF AVERAGE JUDICIAL CAPACITY CO ULD EVER REACH TO SUCH CONCLUSION OR THAT IT HAD BEEN FOUND AGAINST ANY PROVISION OF LAW THEN A CASE FOR FORMULATION OF SUBSTANTIAL QUESTION OF LAW ON SUCH FINDING CAN BE SAID TO HAVE BEEN MADE OUT. 11. IN OUR VIEW NO SUCH ERROR COULD BE NOTICED BY US IN THE IMPUGNED ORDER BECAUSE AS OBSERVED SUP RA THE TRIBUNAL DID GO INTO THE DETAILS OF EXPLANATION OFFERED BY ASSESSEE AND THEN ACCEPTED THE EXPLANATI ON BY PLACING RELIANCE ON THE DOCUMENTS FILED BY ASSES SEE. AS A CONSEQUENCE THEREOF THE ADDITIONS MADE BY AO CAME TO BE DELETED.' 13. IN CIT V. SHREE BARKHA SYNTHETICS LTD. [2004] 2 70 ITR 477 (RAJ.) IN A SIMILAR NATURE MATTER THIS CO URT OBSERVED THAT THE TRIBUNAL HAVING FOUND THAT THE COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HA D BEEN RECEIVED BY THE ASSESSEE-COMPANY WERE GENUINEL Y EXISTING AND THE IDENTITY OF THE INDIVIDUAL INVESTO RS WERE ALSO ESTABLISHED AND THEY HAD CONFIRMED THE FACT OF MAKING INVESTMENT THE FINDING THAT ASSESSE E HAD DISCHARGED INITIAL BURDEN AND ADDITION UNDER SECTIO N 68 COULD NOT BE SUSTAINED WAS ESSENTIALLY A FINDING O F FACT. THIS COURT SAID - '19. A PERUSAL OF THE AFORESAID FINDING GOES TO SHOW THAT DELETION HAS BEEN MADE ON APPRECIATION OFEVIDENCE WHICH WAS ON RECORD FINDIN G THAT THERE WAS EXISTENCE OF INVESTORS AND THEIR CONFIRMATION HAS BEEN OBTAINED WERE FOUND TO BE SATISFACTORY. ALL THESE CONCLUSIONS ARE CONCLUSIONS OF FACT BASED ON MATERIAL ON RECORD AND THEREFORE CANNOT BE SAID TO BE PERVERSE SO AS TO G IVE RISE TO QUESTION OF LAW WHICH MAY BE REQUIRED TO B E CONSIDERED IN THIS APPEAL UNDER S.260A OF THE IT AC T.' 14. THE RATIO OF THE DECISIONS AFORESAID DIRECTLY A PPLIES TO THE PRESENT CASE TOO. HEREIN AS NOTICED THE AP PELLATE AUTHORITIES HAVE RETURNED THE FINDINGS OF FACT IN ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 150 FAVOUR OF THE ASSESSEE AFTER DUE APPRECIATION OF TH E EVIDENCE ON RECORD ON RELEVANT CONSIDERATIONS AND ON SOUND REASONINGS. THESE FINDINGS HAVE NEITHER BEEN SHOWN SUFFERING FROM ANY PERVERSITY NOR APPEAR ABSU RD NOR ARE OF SUCH NATURE THAT CANNOT BE REACHED AT AL L. THUS NO CASE FOR INTERFERENCE IN THE FINDINGS OF T HE APPELLATE AUTHORITIES IS MADE OUT. IN THE RESULT THE APPEAL FAILS AND IS THEREFORE DISMISSED. (III) BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (005) 197 CTR (RAJ) 432. (PB PG 150 TO 156/CASE LAWS) SUBSTANTIAL QUESTION OF LAWCASH CREDIT VIS-A-VIS S HARE APPLICATION MONEYTRIBUNAL FOUND THAT 6 OUT OF 7 COMPANIES FROM WHICH THE SHARE APPLICATION MONEY HA D BEEN RECEIVED WERE GENUINELY EXISTING AND NO ENQUIR Y WAS CONDUCTED IN RESPECT OF THE SOURCE OF SHARE APPLICATION MONEY AT THE TIME OF MAKING THE INVESTM ENT IN THE ASSESSEE-COMPANY AND THUS THE ASSESSEE HAS DISCHARGED ITS INITIAL BURDEN EXCEPT IN ONE CASEAS REGARDS INDIVIDUAL INVESTORS THE TRIBUNAL FOUND TH AT IDENTITY OF 9 OUT OF 10 INVESTORS HAS BEEN ESTABLIS HED AND THEY HAVE CONFIRMED THE FACT OF MAKING INVESTME NT IN THE SHARES OF THE ASSESSEE-COMPANY AND NO FURTHE R ENQUIRY WAS DIRECTED BY THE AOTHUS ADDITIONS WERE SUSTAINED ONLY IN RESPECT OF INVESTMENTS SAID TO HA VE BEEN MADE BY U AN INDIVIDUAL INVESTOR AND BY W LTD . FOR THE REASON THAT SUCH INVESTMENTS WERE NOT PROVE D FINDING OF THE TRIBUNAL IS ESSENTIALLY A FINDING OF FACT WHICH IS NOT VITIATED IN LAWNO SUBSTANTIAL QUESTIO N OF LAW ARISE FOR CONSIDERATION. (IV) CIT VS. FIRST POINT FINANCE LTD. (2006) 206 CT R (RAJ) 626 : (2006) 286 ITR 477 (RAJ HC). (PB PG 157 TO 162/CASE LAWS) INCOMECASH CREDITSHARE APPLICATION MONEY TRIBUNAL FOUND THAT THE INVESTORS ARE GENUINELY EXI STING PERSONS AND THEY HAVE FILED CONFIRMATIONS IN RESPEC T OF INVESTMENTS MADE BY THEM AND THEIR STATEMENTS WERE ALSO RECORDEDAMOUNT OF SHARE CAPITAL/SHARE APPLICATION MONEY COULD NOT BE TREATED AS UNEXPLAIN ED ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 151 CASH CREDITS AND NO ADDITION COULD BE MADE UNDER S. 68NO SUBSTANTIAL QUESTION OF LAW ARISES. (V) COMMISSIONER OF INCOME TAX VS. BHAVAL SYNTHETICS ( RAJ HC) (2013) 84 DTR 0449 (RAJ) (PB PG 163 TO 165/CASE LAWS) HELD THAT EVEN IN CASE OF DOUBT ABOUT SUBSCRIBERS TO INCREASED SHARE CAPITAL AMOUNT OF S HARE CAPITAL COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF COMPANYAMOUNT REFERABLE TO SHARE APPLICATION COULD NOT BE ATTRIBUTED TO ASSESSEE AND COULD NOT BE ASSE SSED IN ITS HANDSAPPEAL DISMISSED (VI) COMMISSIONER OF INCOME TAX VS. AKJ GRANITES (P ) LTD. ( RAJ HC) (2008) 301 ITR 0298 (PB PG 166 TO 168/CASE LAWS) HELD THAT IN RESPECT OF SHARE APPLICATIONS RECEIVED FROM DIFFERENT PLACES ACCOMPA NIED WITH SHARE APPLICATION MONEY NO PRESUMPTION CAN BE DRAWN THAT SAME BELONG TO THE ASSESSEE AND CANNOT B E ASSESSED IN HIS HANDS AS HIS UNDISCLOSED INCOME UNL ESS SOME NEXUS IS ESTABLISHED THAT SHARE APPLICATION MO NEY FOR AUGMENTING THE INVESTMENT IN BUSINESS HAS FLOWN FROM ASSESSEES OWN MONEYNO SUBSTANTIAL QUESTION OF LAW ARISESBARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005) 197 CTR (RAJ) 432 FOLLOWED. (VII) COMMISSIONER OF INCOME-TAX CENTRAL JAIPUR VERSUS SUPERTECH DIAMOND TOOLS (PVT) LTD. (RAJ HC) D. B. IT APPEAL NO. 74 OF 2012 DATED: - 12 DECEMBER 2013. (PB PG 169 TO 174/CASE LAWS) (VIII) COMMISSIONER OF INCOME-TAX - I JAIPUR VERSU S AL LALPURIA CONSTRUCTION (P.) LTD (RAJ HC) D.B. IT APPEAL NOS. 256 OF 2010 AND 26 & 39 OF 2011 DATED: - 25 FEBRUARY 2013. (PB PG 175 TO 176/CASE LAWS) (IX) COMMISSIONER OF INCOME-TAX AJMER VERSUS HS. BUILDERS (P.) LTD. D.B. INCOME TAX (RAJ HC) APPEAL NO. 48 OF 2006 DATED: - 03 MARCH 2012. (PB PG 177 TO 185/CASE LAWS) (X) CIT VS JAI KUMAR BAKLIWAL (2014) 101 DTR (RAJ) 377 : (2014) 267 CTR (RAJ) 396 (PB PG 186 TO ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 152 192/CASE LAWS). NO LIABILITY TO PROVE SOURCE OF SOURCE. (XI) ARAVALI TRADING CO VS INCOME TAX OFFICER (2008 ) 8 DTR (RAJ) 199. (PB PG 193 TO 200/CASE LAWS) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CON FIRMS THE LOANS. (XII) CIT VS HEERA LAL CHAGAN LAL TANK (2002) 157 I TR 281 (RAJ) (PB PG 201 TO 202/CASE LAWS) BURDEN OF THE ASSESSEE STANDS DISCHARGED WHEN THE IDENTITY OF THE CREDITORS IS ESTABLISHED AND HE CONFIRMS THE LOANS. B) ITAT JAIPUR/JODHPUR I) SHALIMAR BUILDCON (P) LTD. VS ITO (2011) 128 ITD 0396 (JAIPUR) (PB PG 214 TO 238/CASE LAWS) IN THIS CASE HONBLE ITAT JAIPUR BENCH HAS RELIED ON ITS OLD DECISION IN THE CASE OF HOTEL GAUDAVAN ITA NO. 1162 AND 1137/JP/2008 AND ADDITION ON ACCOUNT O F SHARE CAPITAL WAS DELETED. 28.5 ON IDENTICAL ISSUE THE TRIBUNAL JAIPUR BENCH IN THE CASE OF HOTEL GAUDAVAN (P) LTD. (SUPRA) HAS HEL D AS UNDER : '6. AS REGARDS THE ISSUE ON MERIT IN THE DEPARTMENT AL APPEAL WE CONCUR WITH THE VIEWS OF THE LEARNED CIT (A) THAT THE AO HAS NOT CONSIDERED THE EXPLANATION OF T HE ASSESSEE. THE AMOUNT UNDER CONSIDERATION OF RS. 1.8 9 CRORE HAS BEEN RECEIVED BY THE ASSESSEE AS SHARE APPLICATION MONEY FROM M/S JALKANTA TECHNICAL & FINANCIAL SERVICE (P) LTD. (JTFSPL) AFTER A PROPER RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE AFORESAID COMPANY THROUGH BANKING CHANNEL. M/S JTFSPL IS HAVING PERMANENT ACCOUNT AND FILING ITS RETURN OF INCOME REGULARLY. THE AO HAS NOWHERE MENTIONED THAT MONEY BELONGS TO THE ASSESSEE COMPAN Y AND THEREFORE PROVISIONS OF S. 68 CANNOT BE INVOKE D. THE LEARNED CIT(A) HAS RIGHTLY RELIED UPON THE DECI SION ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 153 OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLER INVESTMENT LTD. (2000) 164 CTR (SC) 287 WHI CH HAS BEEN CONFIRMED BY THE HONBLE SUPREME COURT OF INDIA. THE LEARNED CIT(A) HAS ALSO RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF BARKHA SYNTHETICS LTD. VS. ASSTT. CIT (2005 ) 197 CTR (RAJ) 432 AND ALSO THE DECISION OF TRIBUNAL JODHPUR BENCH IN THE CASE OF UMA POLYMERS (P) LTD. VS. DY. CIT (DT. 27TH FEB. 2006) [REPORTED AT (2006) 1 01 TTJ (JD)(TM) 124ED.] WHERE IT HAS BEEN HELD THAT T HE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE SHAREHOL DERS WHICH IN THE PRESENT CASE IS NOT UNDER DISPUTE. THEREFORE THE ASSESSEE HAS DISCHARGED THE BURDEN A ND THEREFORE THE AO WAS NOT JUSTIFIED IN MAKING ANY ADDITION UNDER S. 68 OF THE ACT. THE LEARNED COUNSE L FOR THE ASSESSEE HAS REFERRED TO THE DECISION OF HONBL E SUPREME COURT OF INDIA IN THE CASE OF DIVINE LEASIN G & FINANCE LTD. DT. 21ST JAN. 2008 THE COPY OF WHICH IS PLACED ON RECORD WHERE IT HAS BEEN OBSERVED BY THE SUPREME COURT AS UNDER : CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S. 68 OF IT ACT 1961 ? WE FIND NO MERIT IN THIS SLP FOR THE SIMPLE REASON THA T IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS I N ACCORDANCE WITH LAW. THEREFORE WE FIND NO INFIRMIT Y IN THE ORDER OF THE LEARNED CIT(A) WITH THE IMPUGNED JUDGMENT. THE SAID DECISION OF HONBLE SUPREME COURT OF INDIA HAS BEEN FOLLOWED BY THE TRIBUNAL DELHI BENCH IN T HE CASE OF ITO VS. BHOR MAL DHANSI RAM LTD. IN ITA NO. 4670/DEL/2007 DT. 3RD MARCH 2006. THE COPY OF THE SAID DECISION OF TRIBUNAL DELHI BENCH IS PLACED ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI H .M. SINGHVI CHARTERED ACCOUNTANT HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT OF INDIA ON THE S AID ISSUE IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD . (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 308 WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICAT ION ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 154 MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN T O THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOM E OF ASSESSEE COMPANY.' 28.6 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. (SUPRA) HAD AN OCCASION TO CONSIDER THE ADDITION ON ACCOUNT OF SHA RE APPLICATION MONEY. WE ARE REPRODUCING THE HELD PORT ION FROM THE DECISION OF HONBLE DELHI HIGH COURT AS MENTIONED IN (2007) 207 CTR (DEL) 38 (SUPRA). 'INCOMECASH CREDITSHARE APPLICATION MONEY BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HIL T BY THE ASSESSEEIF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED NAY DUTY-BOUND TO CARRY OUT THOROUGH INVESTIGATIONSBU T IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALIN GS HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND T REAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURNISHED TO THE DEPARTMENT ALO NG WITH COPIES OF THE SHAREHOLDERS REGISTERS SHARE APPLICATION FORMS SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICESTRIBUNAL HAS NOTED THAT THE ASSESSEE COMPAN Y IS A PUBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSUE THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULAT ION) ACT 1956 AS ALSO THE RULES AND REGULATIONS OF DEL HI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHED TRIBUNAL HAS FURTHER FOUND THAT THE AO HAS NOT BROU GHT ANY POSITIVE MATERIAL OR EVIDENCE WHICH WOULD INDIC ATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCES.' ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 155 28.7 THE HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (SUPRA) HELD THAT IF THE SH ARE CAPITAL MONEY IS RECEIVED BY THE ASSESSEE COMPANY F ROM ALLEGED BOGUS SHAREHOLDERS THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUCH SHAREHOLDERS IN ACCORDANCE WITH LAW. SUCH SHARE APPLICATION MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. 28.8 THE HONBLE HIGH COURT IN THE CASE OF FIRST POINT FINANCE LTD. (SUPRA) HELD THAT BURDEN OF PROOF ON T HE ASSESSEE COMPANY LIES TO THE EXTENT OF MAKING OUT A CASE THAT INVESTOR EXISTS AND THEREAFTER IT IS NOT FOR T HE ASSESSEE TO FURTHER PROVE WHERE THEY HAVE BROUGHT MONEY FROM TO INVEST WITH IT. 28.9 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. UNITED BIO-TECH (P) LTD. 2010 TIOL-533-HC-DEL HELD THAT IN CASE THE IDENTITY OF THE SHARE APPLICA NTS HAS BEEN ESTABLISHED AND IT IS FOUND THAT THE SAID APPL ICANTS ARE CORPORATE ASSESSEES WHO ARE ASSESSED TO TAX WIT H IT DEPARTMENT THEN THERE IS NO CASE OF ANY SUBSTANTIAL QUESTION OF LAW. IN THE INSTANT CASE THE SHARE APP LICANTS ARE CORPORATE ASSESSEES. 28.10 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMIR BIO-TECH (P) LTD. (SUPRA) HELD THAT IF INVESTMENTS HAVE BEEN SHOWN BY THE SHARE APPLICANTS IN THEIR AUDITED BALANCE SHEET THEN THE ADDITION CANNO T BE MADE UNDER S. 68 OF THE ACT. 28.11 IN VIEW OF THE LEGAL POSITION AS DISCUSSED ABOVE THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 1.10 CRORE WITHOUT BRINGING ON RECORD ANY MATERIAL FOR THE ADDITION. SIMPLY ON THE BASIS OF INFORMATION WH ICH IS NOT SUBSTANTIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE THE AO COULD NOT HAVE ADDED THE AMOUNT. (II) THE HONBLE ITAT JAIPUR BENCH JAIPUR IN ITS JUDGMENT THE CASE OF M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD. B-1 TRIMUTRI CIRCLE GOVIND MARG JAIPUR IN ITA NO. 686/JP/2014 DATED ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 156 14.12.2015 (PB PG 239 TO 267/CASE LAWS) GAVE THE FOLLOWING FINDINGS:- .6.1 ON FACTS ALSO THE ASSESSEE HAS PRODUCED BEF ORE THE ASSESSING OFFICER COPY OF SHARE APPLICATION CONFIRMATION OF THE CASH CREDITORS COPY OF PAN CO PY OF BOARD RESOLUTION COPY OF DIRECTORS REPORT AUDITO RS REPORT COPY OF BALANCE SHEET COPY OF P&L ACCOUNT COPY OF BANK ACCOUNT IN ALL THE CASES TO PROVE THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THE C ASH CREDITORS. THE LD ASSESSING OFFICER MADE ADDITION O N THE BASIS OF INVESTIGATION CONDUCTED BY THE ITO INVESTIGATION WING KOLKATA BUT THE LD ASSESSING OF FICER OF THE ASSESSEE HAS NOT CLARIFIED WHAT INQUIRY HAD BEEN CONDUCTED AND WHAT EVIDENCES COLLECTED WHICH GOES AGAINST THE ASSESSEE. THE NOTICE U/S 131 ISSUED BY THE ITO INVESTIGATION WING KOLKATA WERE SERVED IN CAS E OF VIDYA AGENCIES PVT. LTD. AND SHIVARPAN MERCANTILES PVT. LTD. BUT COMPLIANCE COULD NOT BE MADE ON THE GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVE. IN CASE OF MIDDLETON GOODS PVT. LTD. AND LACTRODRYER MARKETING PVT. LTD. NOTICES WERE SERVED ON THE ASS ESSEE AND IN COMPLIANCE TO THE NOTICE THE PARTY SUBMITTE D ALL THE DOCUMENTS IN THE IT OFFICE. THE CASE LAW REFERR ED BY THE LD CIT(A) I.E. DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. L TD. VS. CIT AND VIJAY POWER GENERATOR LTD. VS CIT (SUPR A) ARE NOT SQUARELY APPLICABLE ON THE FACTS OF THE CAS E AS THERE WAS SHORT TIME AVAILABLE WITH THE ASSESSING OFFICER AS WELL AS INVESTIGATION WING OF KOLKATA. T HE COPY OF INQUIRY HAS NOT BEEN PROVIDED BY THE ASSESS ING OFFICER TO THE ASSESSEE. AS PER FINDINGS OF THE HON 'BLE DELHI HIGH COURT IN THE CASE NIPUN BUILDERS AND DEVELOPERS PVT. LTD. VS. CIT (SUPRA) THE INVESTIGA TION OFFICER AT KOLKATA HAD NOT DEPUTED INSPECTOR TO ENQ UIRE THE WHEREABOUTS OF THE COMPANY. THE CASE LAWS REFER RED BY THE ASSESSEE ARE SQUARELY APPLICABLE ON THE FACT S AND CIRCUMSTANCES OF THE APPELLANTS CASE THEREFORE W E REVERSE THE ORDER OF THE LD CIT(A) ON TECHNICAL GRO UND AS WELL AS ON MERIT ALSO. (III) UMA POLYMER (P) LTD. 101 TTJ 124 JODHPUR (PB PG 282 TO 318/CASE LAWS) INCOMECASH CREDIT SHARE APPLICATION MONEYIN RESPECT OF SHARE CAPITAL ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 157 MONEY THE ASSESSEE-COMPANY HAS TO PROVE ONLY THE EXISTENCE OF THE PERSON IN WHOSE NAME SHARE APPLICA TION IS RECEIVEDNO FURTHER BURDEN IS CAST ON THE ASSESS EE TO PROVE WHETHER THAT PERSON HIMSELF HAS INVESTED THE MONEY OR SOME OTHER PERSON HAS MADE THE INVESTMENT IN HIS NAMEBURDEN TO PROVE THAT THE MONEY DID NOT BELONG TO HIM BUT TO SOMEBODY ELSE IS ON THE REVENUEDISTINCTION BETWEEN A PUBLIC COMPANY AND A PRIVATE COMPANY IS NOT VERY MATERIAL FOR THIS PURPO SE AO TREATED THE INVESTMENTS MADE BY TEN SHAREHOLDERS IN THE ASSESSEE-COMPANY AS BOGUS AND MADE ADDITION UNDER S. 68 NOT JUSTIFIEDIN ALL THE CASES EXCEPT THAT OF V AO HAD OBTAINED THE BANK STATEMENTS OF THE SHAREHOLDERS WHICH CLEARLY SHOW THAT THE ACCOUNTS W ERE REGULARLY MAINTAINED AND THE SHAREHOLDERS HAD MADE DEPOSITSFURTHER THE SHAREHOLDERS ARE ALSO ASSESSE D TO TAXSIMPLY BECAUSE SCRUTINY ASSESSMENTS WERE NOT MADE IN THE CASE OF SHAREHOLDERS SUCH ASSESSMENTS COULD NOT BE MADE IN THE COURSE OF ASSESSMENT OF TH E ASSESSEEHAVING REGARD TO THE INFORMATION COLLECTED BY THE AO FROM THE BANKS IDENTITY OF THE SHAREHOLD ERS WAS FULLY ESTABLISHEDIF ANY SHAREHOLDER IS FOUND T O HAVE MADE UNEXPLAINED INVESTMENT THEN ADDITION OF SUCH INVESTMENT IS REQUIRED TO BE MADE IN THE HANDS OF THE SHAREHOLDER AND NOT IN THE ACCOUNT OF THE ASSES SEE U HAD INVESTED IN THE SHARE CAPITAL THROUGH CHEQUE EXCEPT FOR A SMALL SUM WHICH WAS RETURNED TO HERHE R BANK ACCOUNT SHOWS SEVERAL ENTRIES BOTH CREDIT AND DEBIT WHICH HAVE NO RELATION WITH THE AMOUNT INVES TED WITH THE ASSESSEE-COMPANYMERELY BECAUSE SHE HAS NOT SUBMITTED HER RETURNS AFTER THE ASST. YR. 1984- 85 IT CANNOT BE SAID THAT SHE WAS NOT ASSESSED TO TAXTHO UGH V HAS NOT BEEN SHOWN TO BE ASSESSED TO TAX HE HAD MADE MAJOR PART OF INVESTMENTS TOWARDS SHARE CAPITA L THROUGH CHEQUES AND HIS IDENTITY IS NOT DOUBTED ACCORDINGLY SHARE CAPITAL ADVANCED BY U AND V IS A LSO TO BE ACCEPTED AS GENUINETHEREFORE NO ADDITION OF SHARE CAPITAL MONEY COULD BE MADE IN THE HANDS OF T HE ASSESSEE-COMPANY. (IV) THE LD. JAIPUR TRIBUNAL IN THE CASE OF DCIT V M/S KAMDHENU STEEL AND ALLOYS LTD. 2014-TIOL-709- ITAT - (PB PG 203 TO 213/CASE LAWS) CASE RELATES TO ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 158 SEARCH AND ISSUE OF SHARES ON PREMIUM. HELD THAT T HE ASSESSEE HAD SUBMITTED THE PARTICULARS OF REGISTRAT ION OF THE APPLICANT COMPANY THE CONFIRMATION FROM THE SH ARE APPLICANTS BANK ACCOUNT DETAILS FROM WHICH PAYMENT THROUGH ACCOUNT PAYEE CHEQUES SO THE ASSESSEE HAD DISCHARGED ITS INITIALLY ONUS. (V) M/S. ARL INFRATECH LTD. VS. THE ACIT ITA NO. 619/JP/2013 (PB PG 268 TO 281/CASE LAWS) ITAT JAIPUR. THE FINDINGS OF HONBLE ITAT WAS AS UNDER:- BEFORE WE PROCEED TO DECIDE THE ISSUE ON MERITS W E WOULD LIKE TO DISCUSS THE SCHEME OF THE ACT AND PRE CEDENTS ON THE ISSUE INVOLVED IN THIS APPEAL AS UNDER:- IN CASES WHERE SHARE APPLICATION MONEY IS FOUND R ECORDED IN THE BOOKS OF AN ASSESSEE WHICH MAY REPRESENT CRE DIT IN THE BOOKS AND THE SHARE APPLICANT IS IDENTIFIED THAT A MOUNT CANNOT BE ADDED IN THE ASSESSEE'S HANDS U/S 68 OF T HE ACT. THE HON'BLE RAJASTHAN HIGH COURT HAS REPEATEDLY REI TERATED THE ABOVE LEGAL POSITION. THESE CASES ARE: (I) CIT VS. SHREE BARKHA SYNTHETICS LTD. 182 CTR 17 5 (RAJ.) (II) BARKHA SYNTHETICS LTD. VS. ACIT (2005) 197 CT R 432 (RAJ).13 IN COMING TO THE ABOVE CONCLUSION THE HON'BLE JURISDICTIONAL HIGH COURT HAS CONSIDERED AT LENGTH THE RELEVANT DECISIONS ON THE ISSUE LIKE CIT VS. STELLE R INVESTMENT LTD. (2000) 164 CTR (SC) 287 = 251 ITR 263 (SC) WHI CH HAS CONFIRMED THE DECISION OF HON'BLE DELHI HIGH COURT REPORTED IN (1992) 192 ITR 287. THE HON'BLE COURT HAS GONE T O THE EXTENT OF STATING THAT EVEN IF IT BE ASSUMED THAT T HE SUBSCRIBER TO THE SHARE CAPITAL ARE NOT GENUINE NEVERTHELESS UNDER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE RE GARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS CASE THE SHARE SUBSCRIBER IS IDENTIFIED. THERE CAN BE NO DISPUTE R EGARDING THE ABOVE STATED LEGAL POSITION. THE FOLLOWING DECI SIONS ALSO LAY DOWN THE SAME RATIO:- (I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 6 DTR 30 8 (SC) (II) CIT VS. DOLPHIN CONPACK LTD. (2006) 283 ITR 19 0 (DEL.) (III) CIT VS. GUJARAT HEAVY CHEMICALS LTD. (202) 25 6 ITR 795(SC) (IV) CIT VS. KWICK TRAVELS (1992) 199 ITR (ST.) 85 (SC) THIS ISSUE HAS BEEN DEALT AT LENGTH BY THE THIRD ME MBER IN THE CASE OF UMA POLYMERS (P) LTD. VS. DCIT (2006) 101 TTJ (JD.) T.M. 126 = (2006) 284 ITR (AT) 1 JODHPUR. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 159 2.6 ADVERTING THE FACTS OF THE GIVEN CASE WE ARE OF THE CONSIDERED OPINION THAT ALL THE SHARE APPLICANTS ST AND IDENTIFIED. THE ASSESSEE HAS PROVIDED PANS OF THE S HARE APPLICANTS. THE MODE OF PAYMENT HAS ALSO BEEN MADE EXPLAINED. THERE IS NO DIRECT OR INDIRECT RELATION BETWEEN THE ASSESSEE COMPANY AND THE SHARE APPLICANTS. THE STAT EMENTS RECORDED DURING SURVEY HAS GOT NO EVIDENTIARY VALUE AND THE LAW IS VERY MUCH SETTLED ON THIS ISSUE. IN ANY CASE EVEN UNDER THE PROVISIONS OF SECTION 68 OF THE ACT THE ASSESSEE CANNOT BE FORCED TO PROVE THE SOURCE OF THE SOURCE. THE LAW ON THIS SUBJECT IS ALSO SETTLED BY NUMEROUS DECISIO NS. THE ALLEGED REPORT OF THE INSPECTOR OF THE DEPARTMENT W HO IS STATED TO HAVE VISITED AT THE GIVEN ADDRESSES OF TH E SHARE APPLICANTS WAS NEVER PUT OR CONFRONTED TO THE ASSES SEE. THE CUMULATIVE EFFECTS OF THESE REASONS IS THAT THE IMP UGNED ADDITION CANNOT BE ADDED IN THE HANDS OF THE ASSESS EE COMPANY. ACCORDINGLY WE ORDER TO DELETE THE ENTIRE ADDITIONS AND ALLOW THE APPEAL OF THE ASSESSEE. 3.0 IN THE RESULT THE APPEAL OF THE ASSESSEE STAND S ALLOWED. THE DEPARTMENT FILED APPEAL BEFORE HONBLE RAJASTHAN HIGH COURT. HONBLE RAJASTHAN HIGH COURT CONFIRMED THE FINDINGS OF HONBLE ITAT BY DECIDING THE APPEAL OF REVENUE IN DB ITA NO 24/2014 VIDE ORDER DATED 28/09/2016 (C) OTHER HIGH COURTS (I) 2014 (8) TMI 605 - MADRAS HIGH COURT THE COMMISSIONER OF INCOME TAX VERSUS PRANAV FOUNDATIONS LTD. T. C. (A). NO. 262 OF 2014 DATED - 12 AUGUST 2014 (PB PG 343 TO 346/CASE LAWS) ADDITION U/S 68 SHARE APPLICATION AND SHARE PREMI UM AMOUNT CREDITED BUT NOT PROVED - WHETHER THE TRIBUN AL WAS RIGHT IN UPHOLDING THE ORDER OF THE CIT(A) WHO DELETED THE ADDITION MADE U/S 68 BEING THE SHARE APPLICATION MONEY AND SHARE PREMIUM AMOUNT CREDITED BY THE ASSESSEE WHICH WAS NOT PROVED HELD THAT:- FOLLOWING THE DECISION IN CIT V. LOVELY EXPORTS (P) LTD. [2008 (1) TMI 575 - SUPREME COURT OF INDIA] - ALL THE FOUR PARTIES WHO ARE SUBSCRIBERS OF THE SHARES ARE LIMITED COMPANIES AND ENQUIRIES WERE MA DE AND RECEIVED FROM THE FOUR COMPANIES AND ALL THE COMPANIES ACCEPTED THEIR INVESTMENT - THE ASSESSEE HAS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 160 CATEGORICALLY ESTABLISHED THE NATURE AND SOURCE OF THE SUM AND DISCHARGED THE ONUS THAT LIES ON IT IN TERM S OF SECTION 68 OF THE ACT - WHEN THE NATURE AND SOURCE OF THE AMOUNT SO INVESTED IS KNOWN IT CANNOT BE SAID TO BE UNDISCLOSED INCOME - THE ADDITION OF SUCH SUBSCRIPT IONS AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT I S UNWARRANTED DECIDED AGAINST REVENUE. (II) CIT VS. ILLAC INVESTMENT (P) LTD. (2007) 207 C TR (DEL) 687; (PB PG 341 TO 342/CASE LAWS) ASSESSEE- COMPANY HAS SATISFACTORILY ESTABLISHED THE IDENTITY OF THE SHARE SUBSCRIBERS AND DELETED THE ADDITION UNDE R S. 68 NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. (III) CIT VS. DIVINE LEASING & FINANCE LTD. (2007) 207 CTR (DEL) 38; (PB PG 321 TO 340/CASE LAWS) INCOMECASH CREDITSHARE APPLICATION MONEY BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HIL T BY THE ASSESSEEIF THE AO HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED NAY DUTYBOUND TO CARRYOUT THOROUGH INVESTIGATIONSBUT IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALIN GS HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREA T THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANYIF RELEVANT DETAILS OF ADDRESS AND IDENTITY OF THE SUBSCRIBERS ARE FURNISHED TO THE DEPARTMENT ALO NG WITH COPIES OF THE SHAREHOLDERS REGISTER SHARE APPLICATION FORMS SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR EXPLANATION BY THE ASSESSEEDEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWI NG AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICESTRIBUNAL HAS NOTED THAT THE ASSESSEE-COMPAN Y IS A PUBLIC LIMITED COMPANY WHICH HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC ISSUE THROUGH BANKING CHANNELS AND THE SHARES WERE ALLOTTED IN CONSONANCE WITH THE PROVISIONS OF SECURITIES CONTRACT (REGULAT ION) ACT 1956 AS ALSO THE RULES AND REGULATIONS OF DEL HI STOCK EXCHANGECOMPLETE DETAILS WERE FURNISHED TRIBUNAL HAS FURTHER FOUND THAT THE AO HAS NOT BROU GHT ANY POSITIVE MATERIAL OR EVIDENCE WHICH WOULD INDIC ATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 161 PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED COMPANYS OWN INCOME FROM UNDISCLOSED SOURCESAS REGARDS RECEIPT OF SHARE CAPITAL ON ISSUE OF RIGHTS SHARES TO FIVE COMPANIES THESE COMPANIES WERE DULY INCORPORATED UNDER THE SIKKIMESE COMPANIES ACT AND WERE ASSESSED UNDER THE SIKKIMESE TAXATION MANUAL THEIR SHARE SUBSCRIPTIONS WERE ALSO RECEIVED THROUG H BANKING CHANNELS AND FOUND TO BE VALID BY THE JURISDICTIONAL AOTHEREFORE NO ADDITION COULD BE MADE UNDER S. 68 (IV) CIT V/S VALUE CAPITAL SERVICES P LTD. 307 ITR 334 (DELHI) (PB PG 319-3202/CASE LAWS) HELD THAT THERE IS ADDITIONAL BURDEN ON THE DEPARTMENT TO SHOW THAT EV EN IF SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE INVESTMENT THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS UNDISCLOSED INCOME OF TH E ASSESSEE. (V) CIT V/S STL EXTRUSION (P) LTD. 333 ITR 269 (MP) (PB PG 347 TO 350/CASE LAWS) INCOMECASH CREDIT SHARE APPLICATION MONEYASSESSEE HAS DULY ESTABLISHED THE IDENTITY AND SOURCE OF CREDITS ADDITIONS NOT SUSTAINABLE. (VI) CIT V/S ARUNANDA TEXTILES (P) LTD. 333 ITR 116 (KARNATAKA) (PB PG 351 TO 353/CASE LAWS) SHARE APPLICATION MONEYASSESSEE ABLE TO IDENTIFY THE SHAREHOLDERSIT IS NOT FOR THE ASSESSEE-COMPANY TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO ENQUIRE W ITH THE INVESTORS ABOUT THE CAPACITY TO INVEST THE AMOUNT I N THE SHARES. (VII) BHAV SHAKTI STEEL MINES (P) LTD. VS. CIT (200 9) 18 DTR (DEL) 194 INCOMECASH CREDITGENUINENESS CIT(A) NOT ONLY FOUND THAT THE IDENTITY OF EACH OF THE SHAREHOLDERS STOOD ESTABLISHED BUT ALSO EXAMINED T HE FACT THAT EACH OF THEM WERE INCOME-TAX ASSESSEES AN D HAD DISCLOSED THE SHARE APPLICATION MONEY IN THEIR ACCOUNTS WHICH WERE DULY REFLECTED IN THEIR IT RETU RNS AS WELL AS IN THEIR BALANCE SHEETSTRIBUNAL WAS NOT THEREFORE JUSTIFIED IN COMING TO THE CONCLUSION THA T THE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 162 CIT(A) HAD NOT CONSIDERED THE MATTER IN THE RIGHT PERSPECTIVEORDER PASSED BY TRIBUNAL REMANDING THE MATTER FOR EXAMINING THE SHARE APPLICANTS SET ASIDE AND THAT OF CIT(A) RESTORED (D) OTHER BENCHES OF ITAT (I) ITO V M/S. RELIANCE MARKETING PVT. LTD. 2015- TIOL-319-TAT-DEL (PB PG 367 TO 375/CASE LAWS) IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY FURNI SHING THEIR PAN NUMBER AND COPY OF ACKNOWLEDGMENT OF INCOME-TAX RETURN. THE AMOUNT ON ACCOUNT OF SHARE APPLICATION WAS RECEIVED THROUGH BANKING CHANNEL COPIES OF THE CONFIRMATION ALONGWITH AFFIDAVIT OF T HE PARTIES WERE FURNISHED. THE ASSESSEE ALSO FURNISHED THE COPY OF SHARE APPLICATION FORMS COPY OF FORM NO.2 FILED WITH REGISTER OF COMPANIES (ROC) SHOWING ALLOTMENT OF SHARES TO THE APPLICANTS. THEREFORE T HE ASSESSEE DISCHARGED THE ONUS CAST UPON IT (II) INCOME TAX OFFICER VS. MS. SUPERLINE CONSTRUCTION P. LTD. ITAT BOMBAY TRIBUNAL (A) ITA NO. 3644 TO 3648 3650 3651MUM/2014 30TH NOVEMBER 2015 (2015) 45 CCH 0281 MUM TRIB. (PB PG 376 TO 392/CASE LAWS) ADDITIONADDITION ON ACCOUNT OF BOGUS SHARE APPLICATION MONEYASSESSEE WAS IN BUSINESS OF BUILDER AND DEVELOPERASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147RE-ASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM DIRECTORATE OF INCOME-TAX (INVESTIGATION) WITHOUT RECORDING AOS OWN SATISFACTION AND INFORMATION WAS ACCEPTED IN MECHANICAL MANNERAFTER REOPENING OF ASSESSMENT U/S 147 AO MADE ADDITION OF RS.40 LAKHS RECEIVED BY ASSESSEE FROM VARIOUS CORPORATE ENTITIE S ADDITION WAS MADE BY AO ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY UNDER PROVISIONS OF S 68CIT(A) DELETED ADDITION MADE BY AOHELD IN CASE OF CIT VS . M/S. LOVELY EXPORTS (PVT) LTD REPORTED IN [2008] 2 16 CTR 195 (SC) IT WAS HELD THAT IF SHARE APPLICATION MONEY WAS RECEIVED BY ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME WERE GIVEN TO AO THEN DEPARTMENT WAS FREE TO PROCEED TO REOPEN THEIR ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 163 INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT I T COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF ASSE SSEE COMPANYIT WAS SUBMITTED BY ASSESSEE THAT AO HAD FAILED TO APPRECIATE STATEMENTS OF ANY PERSON RECOR DED U/S 143(3) R.W.S. 147THAT ASSESSEE-COMPANY HAD FUL LY DISCHARGED BURDEN OF PROOF ONUS OF PROOF AND EXPLA INED SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED BY ESTABLISHED IDENTITY CREDITWORTHINESS AND GENUINEN ESS OF TRANSACTION BY BANKING INSTRUMENTS WITH DOCUMENT ARY EVIDENCESASSESSEE COMPANY SUBSTANTIATED DETAILS WITH DOCUMENTARY EVIDENCES AS EXTRACTED FROM WEBSIT E OF MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF IND IA BEFORE AOTHESE FACTS HAD NOT BEEN REBUTTED ON BEHALF OF REVENUEITAT WAS NOT INCLINED TO INTERFER E WITH FINDINGS OF CIT(A) WHO THUS RIGHTLY DELETED EN TIRE IMPUGNED ADDITIONS OF RS.40 LAKHS MADE BY AO U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED B Y ASSESSEE-COMPANY HELD: IT WAS POINTED OUT IN THE CASE OF CIT VS. M/S. LOV ELY EXPORTS (PVT) LTD REPORTED IN [2008] 216 CTR 195 ( SC) THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAME ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. (PARA 2.3) IN THIS BACKGROUND IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRE CIATE THAT THERE WAS NO DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE-COMPANY TO SUPPORT SUCH IMPUGNED ADDITIONS . IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THE ASSESSING OFFICER FAILED TO APPRECIATE THAT THE STATEMENTS OF ANY PERSON RECORDED U/S 143(3) R.W.S. 147. THE ASSESSEE-COMPANY HAD FULLY DISCHARGED THE BURDE N OF PROOF ONUS OF PROOF AND EXPLAINED THE SOURCE OF SHARE CAPITAL AND ADVANCES RECEIVED BY ESTABLISHED THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION BY BANKING INSTRUMENTS WITH DOCUMENTARY EVIDENCES. THE FURTHER STAND OF THE ASSESSEE HAD BE EN THAT THE ASSESSEE-COMPANY SUBSTANTIATED THE DETAILS WITH ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 164 THE DOCUMENTARY EVIDENCES AS EXTRACTED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS GOVERNMEN T OF INDIA BEFORE THE ASSESSING OFFICER. THESE FACTS HAD NOT BEEN REBUTTED ON BEHALF OF THE REVENUE. (PARA 2.4) IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS WELL AS CONSIDERING THE DECISIONS A S DISCUSSED ABOVE ON THE SIMILAR ISSUE ITAT WAS NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE CIT( A) WHO HAD RIGHTLY DELETED THE ENTIRE IMPUGNED ADDITIO NS OF RS.40 LAKHS MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED BY THE ASSESSEE-COMPANY. (PARA 2.5) CONCLUSION: WHEN ASSESSEE-COMPANY HAD SUBSTANTIATED DETAILS WITH DOCUMENTARY EVIDENCES AS EXTRACTED FRO M WEBSITE OF MINISTRY OF CORPORATE AFFAIRS GOVERNMEN T OF INDIA BEFORE AO THEN ADDITIONS MADE BY AO U/S 6 8 ON ACCOUNT OF SHARE CAPITAL SUBSCRIPTION RECEIVED B Y ASSESSEE-COMPANY WAS RIGHTLY DELETED. (III) MEERA ENGINEERING & COMMERCIAL CO. (P) LTD. V S. ASSTT. CIT (1997) 58 TTJ (JAB) 527 (PB PG 393 TO 399/CASE LAWS) INCOMECASH CREDITSGENUINENESS OF SHARE CAPITAL OF COMPANYALL THE 51 SHAREHOLDERS FILED THEIR AFFIDAVITS AND CONFIRMATORY LETTERS AND 24 OF THEM FILED THEIR REPLIES ALSO TO NOTICE UNDER S. 13 3(6) NAMES OF PARTIES PURCHASING THE SHARES WITH AMOUNT SUBSCRIBED WERE FURNISHED BEFORE AOALL DOCUMENTS CLEARLY SHOW THAT SHAREHOLDERS DO EXIST ASSESSEE- COMPANY HAD DISCHARGED ITS ONUS OF EXPLAINING THE C ASH CREDITS AS REQUIRED UNDER LAWIF THE COMPANY IS ABL E TO ESTABLISH THAT SHAREHOLDERS EXISTED AND THEY HAVE INVESTED MONEY FOR PURCHASE OF SHARES BURDEN OF COMPANY TO PROVE THE CREDIT IS DISCHARGEDIDENTITY OF SHAREHOLDERS NOT IN DISPUTEASSESSEE IS NOT REQUIRE D TO PROVE CREDIT-WORTHINESS OF SHAREHOLDERSADDITION DELETED (IV) ALLEN BRADLEY INDIA LTD. VS. DY. CIT (2002) 74 TTJ (DEL) 604 : (2002) 80 ITD 43 (DEL); INCOMECASH CREDITSUBSCRIPTION TO SHARE CAPITAL AND LOANIN CA SE ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 165 OF LIMITED COMPANIES JURISDICTION OF AO WOULD BE LIMITED ONLY TO SEE WHETHER IDENTITY OF SHAREHOLDER S IS ESTABLISHED AND WHETHER THEY EXIST OR NOTONCE IDENTITY IS ESTABLISHED THEN POSSIBLY NO FURTHER ENQUIRIES NEED TO BE MADESINCE THE SHAREHOLDERS OF ASSESSEE-COMPANY WERE IN EXISTENCE THEY WERE ASSES SED TO TAX COMPLETE DETAILS WERE AVAILABLE SHARE CAPI TAL MONEY AS WELL AS LOAN WERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND THEY WERE CLEARED THROUGH PROPER BANKING CHANNELS AO WAS NOT JUSTIFIED IN DISBELIEV ING THE CAPITAL INVESTED BY THE SHAREHOLDER COMPANIES SIMILARLY AO WAS NOT JUSTIFIED IN DISBELIEVING THE LOAN TAKEN FROM DTL AS THE CHEQUES WERE CLEARED THROUGH BANK CHANNELS AND CONFIRMATION AND SUPPORTING EVIDENCE WAS FILEDCIT(A) WAS JUSTIFIED IN DELETING THE ADDITIONS. (V) 2017 (3) TMI 1047-ITAT AHMEDABAD INCOME TAX OFFICER WARD 8 (1) AHMEDABAD VERSUS SEVEN STAR AVIATION SERVICES PVT. LTD (PB PG 400 TO 404/CASE LAWS) ADDITION U/S 68 - SHARE APPLICATION MONEY AND UNSECURED LOAN RECEIVED. HELD THAT: - WHE N THE DEPOSITORS ARE REGULAR TAX PAYERS AND THE ADVAN CES MADE BY SUCH DEPOSITORS AS ALSO SHARE APPLICATION MONIES PAID BY SUCH SHAREHOLDERS ARE DULY ACCEPTED IN THEIR PERSONAL ASSESSMENTS THERE CANNOT BE ANY OCC ASION TO HOLD THAT THESE AMOUNTS ARE UNEXPLAINED IN THE H ANDS OF THE COMPANY. THE CREDIT WORTHINESS OR IDENTITY CANNOT BE AN ISSUE IN SUCH A SITUATION. (VI) 2016 (10) TMI 920 - ITAT HYDERABAD M/S. HARIOM CONCAST AND STEEL PVT. LTD. VERSUS INCOME TAX OFFICER WARD-2 (2) HYDERABD (PB PG 405 TO 411/CASE LAWS) ADDITION FOR SHARES ISSUED ON PREMIUM. HELD THAT: - SHARE PREMIUM CANNOT BE BROUG HT TO TAX INVOKING THE PROVISIONS OF SECTION 68 UNLES S THERE IS A LINK WITH EITHER QUID PRO QUO TRANSACTIO N OR INVESTING BY ASSESSEE-COMPANY IN THEIR ACCOUNTS SO AS TO RECEIVE IT BACK AS SHARE CAPITAL. NO SUCH EVIDENCE WAS BROUGHT ON RECORD. (E) SUPREME COURT ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 166 I) CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195 INCOMECASH CREDITSHARE APPLICATION MONEYIF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMEN T IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSES SMENTS IN ACCORDANCE WITH LAW BUT IT CANNOT BE REGARDED A S UNDISCLOSED INCOME OF ASSESSEE COMPANY. II) CIT VS. STELLER INVESTMENT LTD. (200) 251 ITR 263 (SC) EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSESSEE-COMPANY WERE NOT GENUINE THE AMOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. (III) CIT VS ORISSA CORPORATION (P) LTD (1986) 159 ITR 79 (SC) D) RATIO LAID DOWN IN FOLLOWING CASES NOT APPLICABL E TO THE FACTS OF THE CASE OF ASSESSEE:- A) NOVA PROMOTERS & FINLEASE PVT. LTD (2012) 342 IT R 169 (DELHI HIGH COURT): - SUMMONS SENT TO THE COMPANIES RECEIV ED BACK UNSERVED AND OTHER SUMMONS REMAINED UNCOMPLIED WITH WHEREAS IN THE CASE OF THIS ASSESSEE COMPANY NOTI CE U/S 133(6) WAS SENT TO INVESTOR COMPANIES ALL OF WHICH WERE SERVE D AND SOME OF THEM WERE COMPLIED WITH. B) CIT V/S N. R. PORTFOLIO PVT. LTD 206 (2014) DLT (DB) (DEL)/ 264 CTR 0258 (DEL) ASSESSED U/S 144 OF ITAX ACT. IN THIS CASE THE AO ISSUED SEVERAL NOTICES AND SHOW CAUSE NOTICE WHICH WAS NOT SERVED/COMPLIED AND ASSESSMENT WAS FRAMED U/S 144 O F INCOME TAX ACT. IN OUR CASE ALL THE COMPLIANCES WERE MADE AND EVIDENCES SUBMITTED. C) N TARIKS PROPERTIES PVT. LTD 227 TAXMANN.COM 373 (WITH REFERENCE TO DECISION OF DELHI HIGH COURT IN 264 CT R 472) AO NOTICED THAT EXTRACTS OF BANK ACCOUNT HAD BEEN FABR ICATED AND AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THERE WAS DEPOS IT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHA REHOLDER COMPANY. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 167 D) CIT V/S NAVODAYA CASTLE PVT. LTD 367 ITR 306 (DE LHI HIGH COURT) AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQU ES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMAND DRAFT THE RE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHOLDER COMPANY. E) CIT V/S MAF ACADEMY PVT. LTD 206 (2014) DLT 277 (DB)(DEL)/ 361 ITR 0285 (DEL) AO FOUND THAT IMMEDIATELY BEFORE ISSUANCE OF CHEQUES FOR THE PURPOSE OF MAKING PAY ORDER OR DEMA ND DRAFT THERE WAS DEPOSIT OF CASH. IN OUR CASE NO CASH DEPOSIT IN THE BANK ACCOUNT OF SHAREHOLDER COMPANY. FURTHER THE SUMMONS U/S SE CTION 131 OF I.TAX ACT WERE SENT TO THE SHAREHOLDERS WHICH WERE RECEIVED BACK UN- SERVED. IN VIEW OF THE ABOVE SUBMISSION THE HUMBLE ASSES SEE PRAYS YOUR HONOR KINDLY TO DELETE THE ADDITION OF RS. 1 41 50 000/- CONFIRMED BY LD CIT(A) 12.3 ON THE OTHER HAND THE LD. DR RELIED ON THE OREDER OF THE AO. 12.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO MENTION THA T THE SIMILAR ISSUE HAS BEEN DEALT WITH AND DECIED BY THIS BENCH OF ITAT IN THE CASE OF MOTISONS BUILDTECH PVT. LTD VS ACIT CENTRAL CIRCLE-2 JAIPUR VIDE ITS ORDER DATED 30-10-2017 IN ITA NO.385/JP/2017 (ASSESSEE'S APPEAL )FOR THE ASSESSMENT YEAR 2012-13 BY OBSERVING AS UNDER:- 8.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. IN THIS GROUND IT IS NOTED THAT THE AO MADE THE ADDITION OF RS.3 68 27 500/- OUT OF WHICH THE LD CIT(A) DELETED THE ADDITION OF RS. 2 86 27 5 00/- AND SUSTAINED THE ADDITION OF RS.82.00 LACS AS MENTIONE D AT PARA ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 168 3.2.2. AND 2.1.4.6 & 2.1.4.7 OF THE LD. CIT(A)S ORDER (SUPRA). THE QUESTION ARISES AS TO WHETHER THE LD C IT(A) CAN MAKE THE ADDITION U/S 68 OF THE ACT OR NOT. FOR THI S PURPOSE THE DEFINITION OF SECTION 68 OF THE ACT IS AS UNDER :- WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE [ASSES SING] OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. FROM THE ABOVE DEFINITION IT IS NOTED THAT SECTION 68 OF THE ACT DOES NOT EMPOWER THE LD. CIT(A) TO MAKE ADDITION UNDER THIS ACT. THUS THE ADDITION U/S 68 CAN ONLY BE MADE BY THE ASSESSING O FFICER. THE DEFINITION OF THE ASSESSING OFFICER HAS BEEN PROVID ED IN SECTION 2(7A) OF THE ACT WHICH READS AS UNDER:- [( 7A ) ASSESSING OFFICER MEANS THE ASSISTANT COMMISSIO NER [OR DEPUTY COMMISSIONER] [OR ASSISTANT DIRECTOR] [OR DE PUTY DIRECTOR] OR THE INCOME-TAX OFFICER WHO IS VESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB-SECTION (1) O R SUB-SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT AND THE [ADDIT IONAL COMMISSIONER OR] [ADDITIONAL DIRECTOR OR] [JOINT CO MMISSIONER OR JOINT DIRECTOR] WHO IS DIRECTED UNDER CLAUSE ( B ) OF SUB-SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON OR ASSIGNED TO AN ASSESSING OFFICER UNDER THIS ACT ;] THUS THE LD. CIT(A) IS NOT THE ASSESSING OFFICER AS PER INCOME-TAX ACT. THEREFORE THE LD. CIT(A) DOES NOT HAVE ANY LEGAL S ANCTION TO MAKE THE ADDITION U/S 68 OF THE ACT. LD. CIT(A) IN HIS ORDER AT PARA 2.1.4.6 HAD CLEARLY HELD THAT THE IDENTITY CREDITWORTHINESS AND GENUIN ENESS OF TRANSACTIONS OF THESE COMPANIES CANNOT BE HELD DOUBTFUL AND ADDITIO N BY APPLYING THE PROVISION OF SEC 68 OF THE ACT CANNOT BE UPHELD. TH E LD. CIT(A) HAS SUSTAINED THE ADDITION OF RS. 82.00 LACS WITHOUT SPECIFYING A NY PROVISION OF INCOME TAX ACT. NO SUCH ADDITION CAN BE SUSTAINED WITHOUT INVO KING THE RELEVANT PROVISIONS OF THE ACT. MOREOVER THE ADDITION HAS B EEN SUSTAINED IN THE HANDS OF THAT ASSESSEE WHERE CASH /DD WAS DEPOSITED AT 4 TH CHANNEL. HON'BLE RAJASTHAN HIGH COURT AND OTHER HON'BLE COURTS HELD THAT ASSESSEE CANNOT BE ASKED TO EXPLAIN THE SOURCE OF THE SOURCE. THE REL EVANT PORTIONS OF THE VERDICTS GIVEN BY HON'BLE HIGH COURTS IN THE FOLLOW ING CASES ARE AS UNDER:- ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 169 (I) IN THE CASE OF CIT VS JAI KUMAR BAKLIWAL (2014 ) 366 ITR 217 (RAJ):- HELD DISMISSING THE APPEAL THAT ALL THE CASH CREDITORS WERE ASSESSED TO INCOME-TAX AND THEY PROVIDED A CONFIRMATION AS WELL AS THEIR PERMANENT ACCOUNT NUMBER. THEY HAD THEIR OWN RESPECTIVE BANK ACCOUNTS WHICH THEY HAD BEEN OPERATING AND IT WAS NOT THE CLAIM OF THE ASSE SSING OFFICER THAT THE ASSESSEE WAS OPERATING THEIR BANK ACCOUNTS. MOST OF THE CASH CREDITORS APPEARED BEFORE THE ASSESSING OFFICER AND THEIR STA TEMENTS UNDER SECTION 131 OF THE INCOME-TAX ACT 1961 WERE ALSO RECORDED ON OATH. THERE WAS NO CLINCHING EVIDENCE NOR HAD THE ASSESSING OFFICER BE EN ABLE TO PROVE THAT THE MONEY ACTUALLY BELONGED TO NONE BUT THE ASSESSEE. T HE ADDITION OF RS. 17 27 250 UNDER SECTION 68 WAS NOT JUSTIFIED. (II) IN THE CASE OF NEMI CHAND KOTHARI VS CIT (20 03) 264 ITR 254 (GAU): HELD THAT IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OR SOURCES FROM WHERE THE CREDITOR HAD ACCUMULATED THE AMOUNT WHICH HE HAD ADVANCED IN THE FORM OF LOAN TO THE ASSESSEE AND SE CTION 68 CANNOT BE READ TO SHOW THAT IN THE CASE OF FAILURE OF SUB-CREDITORS T O PROVE THEIR CREDITWORTHINESS THE AMOUNT ADVANCED AS LOAN TO THE ASSESSEE BY THE CREDITOR SHALL HAVE TO BE READ AS COROLLARY AS THE INCOME FROM UNDISCLOSED SO URCE OF THE ASSESSEE HIMSELF . (III) IN THE CASE OF SHANKAR INDUSTRIES VS CIT (19 78) 114 ITR 689 (CAL.): OBSERVED THAT THAT MERE ESTABLISHING IDENTITY OF TH E CREDITOR AND NOTHING MORE IS NOT SUFFICIENT AND SOMETHING MORE IS TO BE PROVE D BY THE ASSESSEE AND IN THE AFORESAID CASE THE ASSESSEE WAS UNABLE TO PROVE BE YOND IDENTITY AND THEREFORE THE CALCUTTA HIGH COURT UPHELD THE FINDI NGS OF THE TRIBUNAL. HOWEVER IN THE PRESENT CASE WE NOTICE THAT NOT ON LY THE IDENTITY OF THE CREDITOR HAS BEEN PROVED BUT FROM THE FACTS WHICH H AVE BEEN CULLED OUT THE ASSESSEE HAS BEEN ABLE TO PROVE THE GENUINENESS ALS O. (IV) IN THE CASE OF KANHAILAL JANGID VS ACIT (2008) 217 CTR 354 (RAJ): HELD THAT THE BURDEN DOES NOT GO BEYOND TO PUT THE ASSESSEE UNDER AN OBLIGATION TO FURTHER PROVE THAT WHERE FROM THE CRE DITOR HAS GOT OR PROCURED THE MONEY TO BE DEPOSITED OR ADVANCED TO THE ASSESSEE. THE FACT THAT THE EXPLANATION FURNISHED BY THE CREDITOR ABOUT THE SOU RCE FROM WHERE HE PROCURED THE MONEY TO BE DEPOSITED OR ADVANCED TO THE ASSESS EE IS NOT RELEVANT FOR THE PURPOSES OF REJECTING THE EXPLANATION FURNISHED BY THE ASSESSEE AND MAKE ADDITIONS OF SUCH DEPOSITS AS INCOME OF THE ASSESSE E FROM UNDISCLOSED SOURCES BY INVOKING SECTION 68 UNLESS IT CAN BE SHOWN BY TH E DEPARTMENT THAT SOURCE OF SUCH MONEY COMES FROM THE ASSESSEE HIMSELF OR SU CH SOURCE COULD BE TRACED TO THE ASSESSEE ITSELF. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 170 (V) IN THE CASE OF ARAVALI TRADING CO. VS ITO (2008 ) 220 CTR (RAJ): OBSERVED THAT THE FACT THAT THE EXPLANATION FURNIS HED BY THE FOUR CREDITORS ABOUT THE SOURCES WHERE FROM THEY ACQUIRED THE MONE Y WAS NOT ACCEPTABLE BY THE REVENUE COULD NOT PROVIDE NECESSARY NEXUS FOR D RAWING INFERENCE THAT THE AMOUNT ADMITTED TO BE DEPOSITED BY THESE FOUR PERSO NS BELONGED TO THE ASSESSEE. THE ASSESSEE HAVING DISCHARGED HIS BURDEN BY PROVING THE EXISTENCE OF THE DEPOSITORS AND THE DEPOSITORS OWING THEIR DE POSITS HE WAS NOT FURTHER REQUIRED TO PROVE SOURCE OF SOURCE . TAKING INTO CONSIDERATION THE FACTS AND CIRCUMSTANC ES OF THE CASE AND CASE LAWS RELIED ON (SUPRA) THE LD. CIT(A) IS NOT JUSTI FIED IN CONFIRMING THE ADDITION OF RS. 82.00 LACS WHICH IS DIRECTED TO BE DELETED. IT IS ALSO NOTED THAT DURING THE COURSE OF HEARING OF APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE HAD REQUESTED FOR CROSS EXAMINATION OF SHRI SANBTOSH CHOUBEY SHRI AJIT SHARMA SHRI RAJESHKUMAR SINGH AND OTHER PERSONS WHICH WAS DENIE D BY THE LD. CIT(A). THE ITAT COORDINATE BENCH IN THE CASE OF PRATEEK K OTHARI (SUPRA) HAS GIVEN VERDICT THAT WITHOUT PROVIDING OPPORTUNITY OF CROSS EXAMINATION OF THE MATERIALS GATHERED AND STATEMENT RECORDED BEHIND TH E ASSESSEE CANNOT BE USED. HOWEVER WE HOLD THAT REVENUE IS FREE TO INITIATE P ROCEEDINGS IN THE HANDS OF THESE CONCERNS WHO HAVE RECEIVED THE AMOUNT AFTER D EPOSIT IN CASH/DD IN RESPECTIVE BANK A/CS. THUS GROUND NO. 1 OF THE ASSE SSEE IS ALLOWED. IT MAY BE FURTHER NOTED THAT THE ISSUE RAISED BY TH E ASSESSEE IN GROUND NO.1 OF THE PRESENT APPEAL IS SAME AND THE DECISION TAKEN IN THE APPEAL OF THE ASSESSEE IN ITA NO. 385/JP/2017 FOR THE ASSESSM ENT YEAR 2012-13 IN THE CASE OF MOTISONS BUILTECH VS ACIT CENTRAL CIRC LE-2 JAIPUR (SUPRA) SHALL APPLY MUTATIS MUTANDIS IN THE PRESENT GROUND OF APPEAL NO. 1 OF THE ASSESSEE. THUS GROUND NO. 1 OF THE ASSESSEES APPEA L IN ITA NO. 387/JP/2017 IS ALLOWED. ITA NO. 386/JP/2017 M/S. MOTISONS ENTERTAINMENT (INDIA) PVT.LTD. JAIPUR VS ACIT CENTRAL CIRCLE-2 JAIPUR 171 13.0 IN THE RESULT THE APPEALS FILED BY THE ASSES SEE IN ITA NO. 386/JP/2017 IS DISMISSED & ITA NO.387/JP/2017 IS PA RTLY ALLOWED AND THE APPEALS OF THE REVENUE IN ITA NO.483 TO 485/JP/ 2017 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 -11-201 7. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 /11/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. MOTISONS GLOBAL PVT. LTD. JAI PUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT /DCIT CENTRAL CIRCLE-2 JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 386/JP/2017) VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ @ ASSISTANT. REGISTRAR