ITO 17(2)(2), MUMBAI v. RAKESHBHAI NATHALAL SHAH, MUMBAI

ITA 6194/MUM/2012 | 2006-2007
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 619419914 RSA 2012
Assessee PAN AAGPS3934D
Bench Mumbai
Appeal Number ITA 6194/MUM/2012
Duration Of Justice 4 year(s) 10 day(s)
Appellant ITO 17(2)(2), MUMBAI
Respondent RAKESHBHAI NATHALAL SHAH, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Bench Allotted D
Tribunal Order Date 19-10-2016
Date Of Final Hearing 12-11-2015
Next Hearing Date 12-11-2015
Assessment Year 2006-2007
Appeal Filed On 09-10-2012
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI SANJAY GARG (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.6194/MUM/2012 (ASSESSMENT YEAR: 2006-07) ITO 17(2)(2) MUMBAI VS SHRI RAKESHBHAI NATHALAL SH AH 207/E RAMKUTIR DR. AMBEDKAR ROAD MATUNGA MUMBAI 19. PAN : AAGPS3934D (APPELLANT) (RESPONDENT) C.O. NO.31/MUM/2016 (ARISING OUT OF I.T.A. NO.6194/MUM/2012) (ASSESSMENT YEAR: 2006-07) SHRI RAKESHBHAI NATHALAL SHAH 207/E RAMKUTIR DR. AMBEDKAR ROAD MATUNGA MUMBAI 19. VS ITO 17(2)(2) MUMBAI (CROSS OBJECTOR) (RESPONDENT) REVENUE BY SHRI B.S. BIST (SR. DR) RESPONDENT BY SHRI ASHWIN S. CHHAG (AR) DATE OF HEARING : 13 -10-2016 DATE OF PRONOUNCEMENT :19 -10-2016 O R D E R PER ASHWANI TANEJA AM: THIS APPEAL BY REVENUE AND THE CROSS OBJECTION BY T HE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER OF COMMISSIONER O F INCOME-TAX 2 I.T.A. NO.6194/MUM/2012 (APPEALS) [HEREINAFTER CALLED CIT(A)] PASSED AGAINS T THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT DATED 30-12-2010 F OR A.Y. 2006-07. 2. THE REVENUE HAS FILED THE APPEAL ON THE FOLLOWING G ROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF UNEXPL AINED INVESTMENT OF RS. 3.50 CRORES MADE U/S 69 OF THE I. T ACT WITHOUT CONSIDERING THE CONTRADICTIONS IN THE ASSESSEES CONTENTIONS RAISED DURING THE COURSE OF ASSESSMENT AS ALSO THE APPARENT INCONSISTENCIES IN THE ASSESSEES BANK STATEMENT WITH KOTAK MAHINDRA BANK. 2. 0N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CJT(A) HAS ERRED IN DELETING THE ADDITION OF UNEXPL AINED INVESTMENT OF RS. 3.50 CRORES MADE U/S. 69 OF THE I. T ACT BY ADMITTI NG THE FRESH EVIDENCES SUBMITTED BY ASSESSEE DURING THE APPELLATE PROCEEDI NGS WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER U /R 46A OF I. T RULES 1962 TO EXAMINE ITS VERACITY. ' 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT THE ASSESSING OFFICER BE RESTORED. 3. ON THE OTHER HAND THE ASSESSEE HAS FILED CROSS OBJ ECTION CHALLENGING THE JURISDICTIONAL ISSUES OF ORDER PASS ED U/S 147 OF THE ACT ON THE FOLLOWING GROUNDS:- 1. THAT THERE IS NOT REFERENCE OF SUCH REASONS REC ORDED IN THE ORDER OF ASSESSMENT EVEN FOR THE SAKE OF SHOWING THAT PRO CEEDING WAS VALIDLY INITIATED AND HENCE CREDIBILITY OF THE REA SONS RECORDED BEFORE THE ISSUE OF NOTICE ULS.148(2) AND THE AUTHORITY RE CORDING IT MAY BE VERIFIED. (2)THAT THE PROCEEDING INITIATED ULS.147 IS WITHOUT AUTHORITY OF THE LAW FOR WANT OF JURISDICTION AND HENCE MAY BE HELD AS BAD IN LAW FOR THE REASONS THAT THE REASONS RECORDED U/S. 148(2) AS EVIDENT THERE FROM THAT; (A) THE LD.AO HAD RECORDED THE REASONS WITHOUT APPL ICATION OF MIND; AS AO HIMSELF WAS NOT SURE AS FOR WHICH OF THE ASSESSM ENT YEAR HE WANTED TO RE-OPEN IT IS EVIDENT THAT HE HAD VERIFIED THE ROL FOR A.Y.2006-07 BUT STATED TO HAVE ISSUED THE NOTICE FOR A.Y.2005-0 6 WHICH SEEMS TO HAVE LATER ON TEMPERED TO MAKE IT 2006-07. 3 I.T.A. NO.6194/MUM/2012 (B)IT IS NOT EVIDENT FROM THE REASONS RECORDED THAT AO HIMSELF WAS UNDER AN HONEST BELIEF OF ESCAPEMENT OF INCOME AS I T REVEALS THAT THE RE-OPENING WAS TO VERIFY WHETHER CERTAIN DISCLOSURE WAS MADE THUS THE PRECONDITION TO INVOKE S. 147 WAS CERTAINTY OF ESCA PEMENT OF INCOME WAS LACKING WHICH MAKES THE CASE OF REVIEW WHICH IS NOT PERMISSIBLE UNDER THE LAW. (C) THAT THERE IS NO REFERENCE IN THE REASONS RECOR DED THAT THE BELIEF OF REASONS RECORDED WAS FOLLOWED BY THE TANGIBLE MATER IAL AVAILABLE ON RECORD TO APPLY HIS MIND THEREON. (D) THAT THE AO IS ERRED TO INVOKE S.147 TO DO THE FISHING INQUIRY FOLLOWING THE AIR INFORMATION TO LOOK FOR THE SOURC E OF THE INVESTMENT MADE AND SUPPORTING THEREOF WHICH IS OUTSIDE THE PU RVIEW OF S. 147 AS THIS REVEALS THAT S. 147 INVOKED WAS NOT UNDER BELI EF OF THE FACT OF ESCAPEMENT OF INCOME. IN THE ABSENCE OF THE AFORESAID IT IS EVIDENT THAT THE ORDER PASSED WAS U/S. 143(2) THOUGH STATED TO HAVE PASSED ULS.143(3) R.W.S.147 JUST TO EXTEND THE LIMITATION PERIOD MAKES THE ORDER BAD IN LAW AS BEING VOID AB INITIO. (2) THAT THE NOTICE ISSUED U/S. 143(2) IS WITHOUT A UTHORITY OF THE LAW. 4. DURING THE COURSE OF HEARING IT WAS STATED BY THE L D. COUNSEL OF THE ASSESSEE THAT THE CASE OF THE ASSESSEE IS COVERED I N ITS FAVOUR ON THE MERITS OF THE ISSUE INVOLVED AS WELL AS ON THE JURI SDICTIONAL ASPECTS. 5. PER CONTRA THE LD. DR FAIRLY STATED THAT THOUGH LD . CIT(A) HAS RECORDED WELL REASONED FINDING WHILE ALLOWING RELIE F TO THE ASSESSEE BUT THE LIMITED OBJECTION OF THE LD. DR WAS WITH REGARD TO EXAMINATION OF ADDITIONAL EVIDENCES BY THE LD.CIT(A) WHILE DELETIN G THE ADDITION MADE BY THE AO. BUT IT WAS FAIRLY STATED BY HIM THAT WITH THE HELP OF EVIDENCE BROUGHT ON RECORD THE ASSESSEE HAS TRIED TO PROPERL Y EXPLAIN THE SOURCE OF THE IMPUGNED INVESTMENT MADE BY HIM DURING THE YEAR UNDER CONSIDERATION FOR PURCHASE OF SHARES OF M/S BOMBAY RAYON FASHIONS LTD. 6. IN REPLY THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT COMPLETE EVIDENCES WERE AVAILABLE BEFORE THE AO. IN FACT O N THE BASIS OF THE 4 I.T.A. NO.6194/MUM/2012 DOCUMENTARY EVIDENCES AVAILABLE BEFORE THE AO THE REOPENING WAS DONE. THERE IS NO ADDITIONAL EVIDENCE WHICH HAS BEEN CONS IDERED BY THE LD. CIT(A) AND THE GROUND TAKEN BY THE DEPARTMENT IS FA CTUALLY INCORRECT. THE SOURCE OF PURCHASE OF SHARES HAS BEEN DULY EXPLAINE D BY THE ASSESSEE AND THEREFORE ADDITION MADE BY THE AO WAS FACTUALLY AN D LEGALLY INCORRECT AND THEREFORE RIGHTLY DELETED BY THE LD.CIT(A) AN D THEREFORE THE ORDER OF THE LD.CIT(A) SHOULD BE UPHELD ON MERITS AS WELL AS ON THE JURISDICTIONAL ASPECTS OF REOPENING OF THE IMPUGNED ASSESSMENT. 7. WE GAVE ANOTHER OPPORTUNITY TO THE LD. DR TO SHOW U S AS TO WHAT ADDITIONAL EVIDENCES HAVE BEEN CONSIDERED BY THE LD . CIT(A) AND FOR THIS PURPOSE ANOTHER DATE OF HEARING WAS FIXED. BUT ON THE NEXT DATE ALSO THE LD. DR WAS NOT ABLE TO POINT OUT AND IDENTIFY THE S O-CALLED ADDITIONAL EVIDENCES WHICH HAVE BEEN CONSIDERED BY THE LD. CIT (A). 8. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES AS WELL AS SUBMISSIONS MADE BY BOTH THE SIDES BEFOR E US. THE SOLE ISSUE TO BE DECIDED BY US IS WHETHER THE ASSESSEE HAS BEEN A BLE TO EXPLAIN THE SOURCES OF INVESTMENT MADE BY THE ASSESSEE FOR PURC HASE OF SHARES OF M/S BOMBAY RAYON FASHIONS LTD AMOUNTING TO RS.3.5 CRORE S FOR WHICH THE CASE OF THE ASSESSEE HAD BEEN REOPENED. 9. IT IS NOTED THAT THE AO HAD PASSED ASSESSMENT ORDER RELYING UPON INFORMATION RECEIVED AS PART OF AIR WHEREIN THE AO OF THE ASSESSEE WAS REQUIRED TO EXAMINE THE SOURCE OF THE IMPUGNED INVE STMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE EXPL AINED THE SOURCE AND ALSO SUBMITTED DOCUMENTARY EVIDENCES BUT THE AO WAS NOT SATISFIED AND THEREFORE HE MADE THE ADDITION. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND MADE DETAILED SUBM ISSIONS ALONG WITH 5 I.T.A. NO.6194/MUM/2012 REQUISITE EVIDENCES. RELEVANT PART OF THE SUBMISSI ONS MADE BY THE ASSESSEE BEFORE THE CIT(A) IS REPRODUCED BELOW: YOUR APPELLANT HAS RECEIVED A LETTER FROM BOMBAY R AYON FASHIONS LIMITED DATED 2210212012 STATING THE DETAILS OF SHA RES APPLIED AND SHARES ALLOTTED IN THE I. P. 0. OF BRFL. THE COPY O F LETTER IS ENCLOSED AS ANNEXURE I. 2. YOUR APPELLANT HAS ALSO RECEIVED STATEMENT OF AC COUNTS OF RAKESH N. SHAH REGARDING FUNDING FACILITY - BRFL ST ATING THE DETAILS OF FUNDING MADE AND REPAYMENT THEREOF BY L & T FINA NCE LIMITED AS PER ANNEXURE II. 3. YOUR APPELLANT HAS ALSO RECEIVED BANK STATEMENT OF KOTAK MAHINDRA BANK OF L & T FINANCE LTD. (POA) STATING T HE REFUND RECEIVED FROM BRFL FOR NON ALLOTTED SHARES OF RS. 3 38 27 4301- AND AMOUNT PAID BACK TO L & T FINANCE LTD. OF RS. 3 38 27 430/- AS PER ANNEXURE - LII. THE ABOVE SUBMISSION INFERS AS UNDER: (A) THE APPLICATION OF 5 00 000 SHARES @ RS. 701- P ER SHARE WAS MADE BY RAKESH N. SHAH IN BRFL L.P.O. IN NOVEMBER 2005 AS PER ANNEXURE I. (B) A SUM OF RS. 3 15 00 000/- WAS FUNDED BY L & T FINANCE LTD. AS PER ANNEXURE II AND A MARGIN AMOUNT OF RS. 35 00 00 0/- IS ALSO ARRANGED AS PER ANNEXURE II. ON THIS L & T FINANCE LTD. CHARGED AN INTEREST AND OTHER CHARGES OF RS.2 14 100/- AS PER ANNEXURE II. (C) OUT OF RS. 5 00 000 SHARES APPLIED 16 571 SHAR ES ALLOTTED BY BRFL I.P.O. AS PER ANNEXURE I WITH A TOTAL ALLOTME NT VALUE OF RS.11 72 5270/- AS PER ANNEXURE I & II. (D)THE BALANCE AMOUNT OF RS.3 50 00 000/- MINUS RS. 11 72 570/- EQUALS TO RS.3 38 27 430/- WAS REFUNDED BY BRFL AND THE CHEQUE WAS DEPOSITED IN KOTAK MAHINDRA BANK OPERATED BY L&T FI NANCE LTD POWER OF ATTORNEY HOLDER OF RAKESH N. SHAH AS PER A NNEXURE III. (E) RS.3 38 27 430/- WAS PAID BACK TO L&T FINANCE L TD FROM KOTAK MAHINDRA BANK AS PER ANNEXURE III. (F) THE BALANCE AMOUNT OF RS.23 27 430/- BEING EXCE SS RECEIVED WAS ADJUSTED AGAINST MARGIN MONEY FUNDING. THE WORKING OF MARGIN MONEY CAN BE SUMMARISED AS UN DER: 6 I.T.A. NO.6194/MUM/2012 MARGIN MONEY GIVEN TO L FINANCE LTD 35 00 000/- (AS PER ANNEXURE II) INTEREST PAID TO L&T FINANCE LTD 2 14 100/- (AS PER ANNEXURE II) ---------------- 37 14 100/- LESS: AMOUNT RECEIVED FROM L&T 23 27 430/- FINANCE LTD (AS PER ANNEXURE I I) LESS: SALE PROCEEDS RECEIVED FOR SALE OF 16 751 SHARES @RS.82.78/- 13 8 6 670/- ---------------- BALANCE NIL G) THE PROFIT ON SALE OF SHARES IS WORKED OUT AS UNDER: SALE PROCEEDS OF 16 751 SHARES @82.78/- 13 86 670/- LESS: COSTS OF SHARES 11 72 570/- ---------------- NET PROFIT 2 14 100/- LESS: INTEREST PAID TO L&T FINANCE LTD 2 14 100/- ---------------- BALANCE NIL 4. YOUR APPELLANT RESPECTFULLY SUBMITS THAT THE ANN EXURE I & II WERE OBTAINED BY A.O. DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND ARE ON THE RECORD WITH THE A.O. 5. YOUR APPELLANT HAS ALSO MADE A WRITTEN APPLICATI ON ON 13/02/2012 FOR OBTAINING THE COPY OF THE SAME TO A. O. SO AS TO PRODUCE BEFORE YOUR KIND HONOUR. THE COPY OF LETTE R IS ENCLOSED AS ANNEXURE IV. HOWEVER SO FAR IT IS NOT RECEIVED BY YOUR APPELLANT FROM THE A.O. 6. WE REFER TO ANNEXURE I OF OUR LETTER DATED 20/01 /2012. THE DISCREPANCY IN THE INTEREST CREDITED TO L&T FINANCE LTD AND SALE PROCEEDS OF 16 571 SHARES AS PER THIS ANNEXURE AND AS PER ANNEXURE II OF THIS LETTER IS DUE TO OTHER CHARGES OVER AND ABO VE INTEREST LEVIED BY L&T FINANCE LTD. AS PER ANNEXURE I AS PER ANNEXURE II 13 73 582/- 13 86 670/- LESS: 2 01 012/- 2 14 100/- NET 11 72 570/- 11 72 570/- 7. HAVING REGARD TO THE AFORESAID FACTS IT IS RESP ECTFULLY SUBMITTED THAT THE ORDER OF THE A.O. IS WRONG & ERR ONEOUS AS 7 I.T.A. NO.6194/MUM/2012 A) THE ASSESSMENT HAS BEEN FRAMED WITHOUT AFFORDING APPLICANT WITH SUFFICIENT OPPORTUNITY OF BEING HEARD & IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE & EQUITY; B) THE ADDITIONS MADE AS UNEXPLAINED INVESTMENT IS WITHOUT CONSIDERING THE RECORDS EVIDENCES DOCUMEN TS AVAILABLE ON THE RECORDS. C) THE BASIS ADOPTED FOR DETERMINING THE UNEXPLAINE D INVESTMENT IS ERRONEOUS & WRONG. 8. HAVING REGARD TO THE AFORESAID IT IS PRAYED THAT : A) PROPER SCRUTINY & VERIFICATION OF ALL DETAILS & DOCUMENTS BE MADE. B) THE ADDITION MADE BE DELETED. 10. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE EVIDENCES FILED ALONG WITH THE WRITTEN SUBMISSIONS THE LD. C IT(A) WAS SATISFIED THAT THE SOURCE OF INVESTMENT HAS BEEN DULY EXPLAINED AN D THEREFORE THE ADDITION MADE BY THE AO WAS DELETED BY HIM WITH THE FOLLOWING OBSERVATIONS: 5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE ARGUMENTS OF THE ASSESSING OFFICER AND THE WRITTEN SUBMISSION S OF THE AUTHORISED REPRESENTATIVE OF THE APPELLANT. DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER WANTED CONFIRMATI ON OF LOAN FROM BOMBAY RAYON FASHIONS LTD. FOR THE AMOUNT OF R S.3.50 CRORE. SINCE APPELLANT COULD NOT PRODUCE CONFIRMATI ON ON THE DATE OF HEARING THE AMOUNT WAS ADDED. DURING APPEAL PROCEED INGS APPELLANT HAS SUBMITTED A COPY OF THE LETTER FROM B RFL. HE HAS ALSO FILED COPY OF LETTER FROM L&T FINANCE LTD. WHO HAVE FINANCED THE ENTIRE TRANSACTION. APPELLANT HAS PLEA DED THAT HE COULD NOT PRODUCE SOME OF THE DETAILS AS THE ASSESS MENT WAS COMPLETED AT THE FAG END OF TIME BARRING PERIOD. IT IS ALSO MENTIONED BY THE APPELLANT THAT BANK STATEMENT FROM KOTAK MAHINDRA BANK AND DETAILS OF SHARES APPLIED AMOUNT PAID AND SHARES ALLOTTED BY BRFL WAS ALSO OBTAINED BY THE AS SESSING OFFICER FROM RESPECTIVE AUTHORITIES DURING THE COURSE OF AS SESSMENT PROCEEDINGS. ON PERUSAL OF BANK STATEMENT OF KOTAK MAHINDRA BANK IT APPEARS THAT L&T FINANCE LTD. WAS POWER OF ATTORNEY HOLDER OF BANK ACCOUNT OF APPELLANT IN KOTAK MAHINDRA BANK . THIS OFFICE HAS 8 I.T.A. NO.6194/MUM/2012 WRITTEN LETTER TO THE ASSESSING OFFICER TO SUBMIT T HE DOCUMENTS OBTAINED BY HIM FROM THIRD PARTIES. THE ASSESSING O FFICER HAS SUBMITTED A LETTER DATED 30.3.2012 ALONGWITH COPY O F LETTER FROM BRFL MENTIONING THE DETAILS OF APPLICATION MONEY A ND DETAILS OF SHARES APPLIED AND SHARES ALLOTTED. HE HAS ALSO SUB MITTED COPY OF BANK STATEMENT OBTAINED FROM KOTAK MAHINDRA BANK W HEREIN IT IS FOUND THAT OUT OF APPLICATION MONEY OF RS.3 50 0 0 000I- RS.3 38 27 4301- WAS REFUNDOD BY BRFL TO THE APPLIC ANT. THE CHEQUE WAS DEPOSITED IN KOTAK MAHINDRA BANK WHERE L &T FINANCE WAS THE POWER OF ATTORNEY HOLDER OF THAT BA NK ACCOUNT ON BEHALF OF THE APPLICANT AND RS.3 38 27 430/- WAS PAID BACK FROM KOTAK MAHINDRA BANK TO L&T FINANCE LTD. IN OTH ER WORDS L&T FINANCE MADE A FINANCE OF RS.3 15 00 000 AND R ECEIVED BACK RS.3 38 27 430/-. THE ABOVE FACTS ARE VERIFIED FROM BRFL STATEMENT AN D L&T FINANCE STATEMENT AND APPELLANT'S SUBMISSION AND KO TAK MAHINDRA BANK STATEMENT. THE APPELLANT HAS STATED T HAT NO MONEY WAS PAID BY HIM FOR APPLICATION OF SHARES AND ENTIRE TRANSACTION WAS FINANCED BY L&T FINANCE LTD AND MAR GIN MONEY FINANCIER. THIS IS ALSO EVIDENT FROM THE L&T FINANC E LTD. STATEMENT. THE APPELLANT HAS ALSO SUBMITTED THAT TH ERE IS NO EVIDENCE OF PAYMENT MADE OR PAYMENT RECEIVED IN HIS BANK ACCOUNT. IT IS ALSO SUBMITTED THAT THE SHARES WERE SOLD BY THE POWER OF ATTORNEY HOLDER AND THE SALE PROCEEDS WERE PAID TO MARGIN MONEY FINANCIER AGAINST ITS FINANCE AND INTE REST AND OTHER CHARGES. 5.1 FROM THE PERUSAL OF THE AVAILABLE DOCUMENTS I F IND THAT AN AMOUNT OF RS.3 15 00 000/- WAS FINANCED BY L&T FINANCE LTD. AND BALANCE AMOUNT WAS FINANCED BY MAR GIN MONEY FINANCIER. THE FUNDING WAS RS.3 15 00 000/- TOWARDS LOAN AND RS.35 00 000/- TOWARDS MARGIN MONEY. ALONG WITH INT EREST THE PAYABLE AMOUNT WAS RS.3 52 14 100/- AS PER L&T FINA NCE LTD. STATEMENT. OUT OF APPLICATION MONEY OF RS.3 50 00 0 00/- ONLY RS.11 72 570/- WAS ADJUSTED TOWARDS THE VALUE OF SH ARES ALLOTTED AND BALANCE AMOUNT WAS REFUNDED BY BRFL AM OUNTING TO RS.3 38 27 4301-. L&T FINANCE HAS RECEIVED RS.3 38 27 4301- FROM BRFL THROUGH KOTAK MAHINDRA BANK. L&T FINANCE LIMITED REFUNDED BALANCE AMOUNT OF RS.23 27 430/- (3 38 27 430 - 3 15 00 000) TO MARGIN MONEY FINANCIER. THIS IS EVI DENT FROM 9 I.T.A. NO.6194/MUM/2012 L&T FINANCE LTD. STATEMENT. NOW MARGIN MONEY FINANC IER HAD FINANCED RS.35 00 000/-. SO MARGIN MONEY FINANCIER HAD TO RECEIVE RS.35 00 000I-. OUT OF WHICH L&T FINANCE LT D. PAID RS.23 27 4301- TO MARGIN MONEY FINANCIER. THE ALLOT TED SHARES WERE SOLD IN THE MARKET FOR RS.13 86 6701- AND THE SAME AMOUNT WAS RECEIVED BY MARGIN MONEY FINANCIER. THUS MARGIN MONEY FINANCE RECEIVED RS.37 14 100/- [23 27 430+13 86 6 70] WHICH IS EVIDENT FROM L&T FINANCE LTD. STATEMENT. THUS EXCES S AMOUNT RECEIVED BY MARGIN MONEY FINANCIER WAS RS.2 14 100/ - WHICH WAS TREATED AS INTEREST AND OTHER CHARGES AS IT APPEARS IN L&T FINANCE LTD. STATEMENT. THE FACTS AND FIGURES OF L& T FINANCE LTD EXACTLY MATCH WITH THE SUBMISSION MADE BY THE APPEL LANT. THE APPELLANT HAS NEITHER INVESTED ANY MONEY NOR HAS RE CEIVED ANY REFUND IN HIS BANK ACCOUNT. HE HAS ALSO NOT RECEIVE D ANY SHARES ALLOTTED BY BRFL AND SHARES WHICH WERE SOLD BY POWE R OF ATTORNEY HOLDER. SINCE THE SOURCE IS FULLY EXPLAINE D ADDITION OF RS.3 50 00 000I- CANNOT BE SUSTAINED. THE ADDITIONA L EVIDENCE IS ADMITTED AS APPELLANT WAS PREVENTED BY REASONABLE C AUSE OF NOT BEING ABLE TO OBTAIN CONFIRMATION FROM THE FINA NCIER DURING THE ASSESSMENT PROCEEDINGS ALTHOUGH THE SAME WERE RECEIVED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS FROM BRFL AND KOTAK MAHINDRA BANK. ACCORDINGLY THE ADDITION O F RS.3 50 00 000I- AS UN EXPLAINED INVESTMENT IS DELETED. 11. WE HAVE GONE THROUGH THE DETAILED FINDINGS RECORDED BY THE LD. CIT(A). IT IS NOTED FROM THE FACTS NARRATED BY LD. CIT(A) THAT THE TRANSACTION OF INVESTMENT INTO SHARE APPLICATION MO NEY OF M/S BOMBAY RAYON FASHIONS LTD (BRFL) WAS FINANCED BY M/S L&T F INANCE LTD. A SUM OF RS.3.15 CRORES WAS FINANCED BY M/S L&T FINANCE LTD AND THE BALANCE SUM OF RS.35 LACS WAS FINANCED BY THE MARGIN MONEY FINA NCIER. THE ENTIRE TRANSACTION OF PAYMENT FLOWING FROM L&T FINANCE LTD AND MARGIN MONEY FINANCIER THROUGH KOTAK MAHINDRA BANK TO BRFL AS WE LL AS THE ENTIRE REPAYMENT OF REFUND OF PART AMOUNT OF SHARE APPLICA TION MONEY FROM BRFL TO ASSESSEE AND THEN IN TURN TO L&T FINANCE LT D AS WELL AS MARGIN MONEY FINANCIER TOWARDS THEIR RESPECTIVE DUES HAS BEEN DULY ESTABLISHED 10 I.T.A. NO.6194/MUM/2012 BY THE ASSESSEE AND CORRECTLY EXAMINED BY THE LD. C IT(A). ALL THE TRANSACTIONS ARE SUPPORTED BY PROPER DOCUMENTARY EV IDENCES. SINCE ALL OF THE TRANSACTIONS HAVE BEEN ROUTED THROUGH PROPER BA NKING CHANNELS NO PART OF THE SAME CAN BE SAID TO BE NOT PROPERLY SUB STANTIATED. IT IS FURTHER NOTED THAT OUT OF INVESTMENT INTO SHARE APPLICATION MONEY OF RS.3.5 CRORES A SUM OF RS.3 38 27 430 WAS REFUNDED BY BRF L TO THE ASSESSEE WHO IN TURN RETURNED THE AMOUNT TO M/S L&T FINANCE LTD. FURTHER NONE OF THE DOCUMENTARY EVIDENCES COULD BE SAID TO HAVE BEEN CREATED AS AN AFTER-THOUGHT. WE HAVE NOTHING BEFORE US TO DOUBT THE GENUINENESS OF THE TRANSACTION. THUS THE TRANSACTION IS DULY CON FIRMED AND ITS GENUINENESS IS ALSO ESTABLISHED. THE ENTIRE SOURCE OF THE INVESTMENT MADE IN SHARE APPLICATION MONEY OF BEFL STANDS DULY EXPLAINED BY THE ASSESSEE. FURTHER NOTHING HAS BEEN BROUGHT BEFORE US BY THE LD. DR TO NEGATE OR CONTROVERT ANY PART OF THE DETAILED AND W ELL REASONED FINDINGS RECORDED BY THE LD. CIT(A). UNDER THESE CIRCUMSTAN CES WE HAVE NO OTHER OPTION BUT TO UPHOLD THE ORDER OF THE LD. CIT(A). 12. AS A RESULT APPEAL OF THE REVENUE IS DISMISSED. 13. SINCE ACCEPTING THE REQUEST OF THE PARTIES THE RE LIEF HAS BEEN ALLOWED ON MERITS WE DO NOT FIND IT NECESSARY TO D ECIDE VARIOUS JURISDICTIONAL ISSUES RAISED BY THE ASSESSEE WITH R EGARD TO REOPENING OF THE IMPUGNED ASSESSMENT AND FRAMING OF THE RE-ASSESSMEN T ORDER U/S 147 OF THE ACT. THUS THE CROSS OBJECTION OF THE ASSESSEE IS TREATED AS INFRUCTUOUS AT THIS STAGE. 11 I.T.A. NO.6194/MUM/2012 14. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE CONCLUSIO N OF THE HEARING. SD/- SD/- (SANJAY GARG) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DT: 19 TH OCTOBER 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE D-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES