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Income Tax Officer 10(2)(1), Mumbai Vs. Income Tax Officer 10(2)(3), 431, 4th Floor, Aaykar Bhavan, Mumbai - 400020
September, 29th 2015
           IN THE INCOME TAX APPELLATE TRIBUNAL
                MUMBAI "D" BENCH, MUMBAI


     BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL
                     MEMBER,
   AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER.


                ITA. Nos. 2117 & 2118/Mum/2014
              (Assessment Years: 2006-07 & 2007-08)


Income Tax Officer ­ 10(2)(1),
Mumbai                                            Appellant

                                 Vs.

M/s. Deep Darshan Properties Pvt. Ltd.,
Flat No.401, Sai Siddhi Apartment, 11th
Road, Chembur, Mumbai - 400071                   Respondent


PAN: AABCD6978J
                                 &

                     ITA. No. 2160/Mum/2014
                    (Assessment Year: 2006-07)

Income Tax Officer ­ 10(2)(3),
431, 4th Floor, Aaykar Bhavan,
Mumbai - 400020                                   Appellant

                                 Vs.
Aajivan Computers Pvt. Ltd.,
101, Vallabh Vihar, M G Road,
Ghatkopar East Mumbai -77                        Respondent

PAN: AACCA6574C
                                     &
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 2




                                             ITA. No. 2116/Mum/2014
                                            (Assessment Year: 2006-07)


Income Tax Officer ­ 10(2)(1),
Mumbai                                                                                           Appellant

                                                                 Vs.

M/s. Karamveer Real Estate Pvt. Ltd.,
101, Vallabh Vihar, M G Road,
Ghatkopar (E), Mumbai - 400077                                                                  Respondent


PAN: AABCK9237D

                                                                       &


                                             ITA. No. 2157/Mum/2014
                                            (Assessment Year: 2006-07)


Income Tax Officer ­ 10(2)(3),
431, 4th Floor, Aaykar Bhavan,
Mumbai - 400020                                                                                  Appellant

                               Vs.
Dignity Securities Trading Pvt. Ltd.,
101, Vallabh Vihar, M G Road,
Ghatkopar East Mumbai - 77                                                                      Respondent


PAN: AAACD6519L

                                                                       &

                                             ITA. No. 2119/Mum/2014
                                            (Assessment Year: 2006-07)
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 3




Income Tax Officer ­ 10(2)(1),
Mumbai                                                                                           Appellant

                                                                 Vs.

M/s. Blue Hill Properties Pvt. Ltd.,
101, Vallabh Vihar, M G Road,
Ghatkopar (E), Mumbai - 400077                                                                  Respondent


PAN: AACCB7551N

               / By Revenue                                                  : Shri Chandra Vijay, D.R.
              / By Assessee                                                  : Dr. P. Daniel, A.R.
              /Date of Hearing
                                                                              : 21.09.2015
             /Date of
          Pronouncement                                                      : 28.09.2015


                                                             ORDER

PER BENCH :

          All these appeals pertain to different assessee of same
group filed by Revenue are arising out from the respective
orders of CIT(A)-21, Mumbai, dated 30.01.2014 for all appeals
on similar issue.                         So, they are being disposed of by way of
common order for the sake of convenience.

2.        In ITA No. 2117/Mum/2014 for A.Y. 2006-07 in case of
M/s. Deep Darshan Properties P. Ltd., Revenue has filed the
appeal on the following grounds:
          "1.        On the facts and in the circumstances of the case and
                     in law, the Ld. CIT(A) erred in deleting the addition of
                     Rs.35,00,000 / - made under section 68 of the I.T. Act
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 4




                     in respect of share application money without
                     appreciating the fact that addition was bases on
                     specific information provided by the Investigation Wing
                     of Income Tax Department that investor companies
                     had issued cheques towards the alleged share
                     application money in return of cash."

          2.         On the facts and in the circumstances of the case and
                     in law, the Ld. CIT(A) erred in not appreciating the fact
                     that the assessee has failed to discharge the
                     onus cast upon it to prove the credit entries of share
                     application money as required under the statute."

          3.         The appellant craves leave to add, amend, vary, omit or
                     substitute any of the aforesaid grounds of appeal at
                     any time before or at the time of hearing of appeal.

          4.         The appellant prays that the order of CIT(A) on the
                     above ground be set aside and that of the assessing
                     officer be restored."

3.        The facts of the case are that assessee is engaged in the
business of financial services. Assessee received share capital
subscription of Rs.35 lacs from M/s. Sonal Cosmetics (Export)
Ltd., M/s. Gabriel Investment P. Ltd., M/s. Jaihind Synthetics
Ltd., M/s. Sonal Silichem Ltd. and M/s. Mihir Agencies P. Ltd.
These companies were floated by Mr. Mukesh Choksi.                                              He
along with all related concern was searched by Investigation
Wing.             The said Mukesh Choksi and Mr. Jayesh Sampat,
admitted before DIT(Inv.) that companies have received cash
from the corporate entity by charging a omission of 0.15% to
1.25%, they have issued cheques in favour of the assessee. On
receiving the above information, Assessing Officer issued notice
u/s.148 and added Rs.35 lacs u/s.68 for share application
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 5







money subscribed by Mr. Mukesh Choksi who promoted the
company.

4.        Matter was carried before the CIT(A), wherein various
contentions were raised on behalf of assessee and having
considered the same, CIT(A) upheld the order of reopening
which is not issue before us.                                          On merit, CIT(A) allowed the
appeal following various case laws on the point.                                                Same has
been opposed before us, inter alia submitting that CIT(A) was
not justified in deleting the addition of Rs.35 lacs made u/s.68
of Income Tax Act in respect of share application.                                               Without
appreciating the fact that addition was based on specific
information provided by the Investigation Wing of Income Tax
that investor companies had issued cheques towards the
alleged share application money in return of cash.                                                 Thus,
assessee failed to discharge onus cast upon him to establish
the credit entries of share application money as required under
the statute. Accordingly, the order of CIT(A) be set aside and
that of Assessing Officer be restored. On other hand, learned
Authorized Representative supported the order of CIT(A) and
submitted that this issue is covered in favour of assessee by
various case laws including ITAT, Mumbai `J' Bench in case of
ITO vs. J. J. Multitrade Pvt. Ltd. in ITA Nos. 2158 &
2159/Mum/2014 for A.Ys. 2007-08 & 2008-09. ITAT, Mumbai
`E' Bench in case of M/s. SDB Estate Pvt. Ltd. vs. ITO in ITA
No.584/M/2015 for A.Y. 2008-09 and ITAT, Mumbai Bench in
case of Smt. Jyoti D. Shah vs. ITO in ITA No. 1843/Mum/2012
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 6




for A.Y. 2003-04.                             In this background, learned Authorized
Representative submitted that order of CIT(A) be upheld.

5.        After going through rival submissions and material on
record, we find that assessee has received share application of
Rs.35 lacs from five companies, as per details given in the
assessment order.                              The investigation wing had conducted
search and seizure on Mr. Mukesh Choksi and Mr. Jayesh
Sampat and companies. In their statement, they have stated
that they were receiving money from various corporate entities
after charging commission of 0.15% to 1.25%, they have issued
cheques in favour of corporate entities for share application
money.                 On receiving this information, Assessing Officer
reopened the assessee's case u/s.148 and added the share
application money u/s.68 of the Income Tax Act.                                                 In similar
facts and circumstances, where these shareholders have
invested money in corporate entity as share application money,
the ITAT, Jaipur Bench in case of Charti Syntex Ltd. vs. DCIT
in ITA Nos. 172 & 173/Jp/2010 has held in para 24.4 as
under:

          "24.4      In this case also no cross examination was
          allowed to the assessee. Therefore, adverse inference cannot
          be drawn only on the statement of Shri Mukesh Choksi. We
          further noted that all other necessary details have been filed
          before AO. Amounts were received through account payee
          cheque. Both the companies are assessed to tax in Mumbai.
          Confirmation along with copies of share certificate bank
          statement memorandum of articles copy of share
          Application money audited balance sheet and P&L a/ c of
          these parties were filed. These are similar details as were
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 7




          filed in case of three other companies for asst. yr.
          2005-06. We have already disposed of the appeal for asst.
          yr. 2005-06 whereby we have held that the assessee has
          discharged its onus by filing necessary details and further
          have relied on the decisions of Hon'ble Supreme Court and
          Hon'ble Delhi High Court along with various other decisions
          of Tribunal and have held that addition cannot be made
          under s.68 in the hands of the assessee company.
          Therefore, in view of the same reasoning, we cancel the
          entire addition made and confirmed by the lower authorities
          here also."

The above decision of ITAT, Jaipur Bench also related to Mr.
Mukesh Choksi's case of investment in share application. The
ratio of Charti Syntex Ltd. (supra) makes it clear that if a share
holder has invested the money and if assessee receives such
money as share application money and assessee during
assessment proceedings provides the details like name and
address of corporate entity, PAN no., ROC no., then this may
be referred to the concerned Assessing Officer for proceedings
against such share holders instead of adding the amount
u/s.68 of the Act in the hands of assessee company. This view
has been upheld by Hon'ble Bombay High Court in case of CIT
vs. Creative World Telefilms Ltd. (2011) 333 ITR 100 (Bom) by
observing as under:

          "If the share application money is received by the assessee
          company from alleged bogus shareholders, whose names
          are given to the Assessing Officer, then the Department can
          always proceed against them and if necessary reopen their
          individual assessments.
          Held, dismissing the appeal, that there was no dispute that
          the assessee had given the details of names and addresses
          of the share holders, their PAN/GIR numbers and had also
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 8




          given the cheque numbers, name of the bankers. The
          Assessing Officer ought to have found out their details
          through PAN cards, bank accounts details or from their
          bankers so as to reach the share holders. Thus, the view
          taken by the Tribunal could not be faulted."

Further Hon'ble Supreme Court in the case of Lovely Exports 6
DTR 308 (SC) has held as under:

                     "If the share application money is received by the
                     assessee company from alleged bogus share holders
                     who's name are given to the AO then the department is
                     free to proceed to reopen their individual assessments
                     in accordance with law but it cannot be regarded as
                     undisclosed income of assessee company."

6.        Coming back to the facts of the present case, it is seen
that investment in the capital share of the assessee company
was made by five companies.                                           These companies exist on the
records of ROC.                         All these companies are assessed with the
Income Tax Department, therefore, these exist on the record of
Income Tax Department.                                        The assessee company also filed
before the AO Form No.5 and 2 and PAN No. and address of all
these share holders, thereby establishing identity and all these
companies.                   Further payment was received by the assessee
company through banking channels. The investment has been
reflected by these share holders companies in the respective
balance sheets. Thus, creditworthiness of these share holders
was also established. It is noted from the record that following
evidence have been furnished by the assessee with respect to
each of the share holders.
-Memorandum and Article of Association
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4   Page 9




-Copy            of ROC Form                           No.-2           (alongwith      details of share
application and share allotment)
-Copy of Audited Balance Sheet full set.
-Copy of the Confirmation letter
-Copy of PAN Card and
-Copy of IT acknowledgment evidences filing of return
-Copy of Balance Sheet.
In our considered view, the assessee has discharged its
primary onus by establishing identity and creditworthiness of
the share holders. The transactions stood confirmed also, on
the basis of confirmation letters of all these share holders. The
AO doubted the genuineness by relying upon some statements
which were not recorded by the Assessing Officer.                                                  The
statements relied by ld. Assessing Officer were not tested in the
assessment proceedings conducted by the Assessing Officer.
No opportunity of cross examination was provided by the
Assessing Officer to the assessee before using these statements
against the Assessing Officer. Following submissions have been
made before us, in support of the claim made by the assessee:-


(i)       The share application form is the confirmation of the
          share applicant. The share allotment in compliance of
          Companies Act 1956 in Form NO.2 is factually evident of
          the share capital.

(ii)       Funds of the share capital subscription are through
           banking channel and reflected in the bank statement.

(iii)      The allotments of the shares are recorded in the minutes
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4            Page 10







           of the company which are kept in accordance with the
           applicable provisions of the Companies Act 1956.

(iv)       All shares subscription of the company are duly incurred
           by corporate entities having Income Tax Permanent
           Account Number and are filing returns of income and are
           duly    assessed     and     thus,  identity    of   the
           shareholders is also established.

(v)        Applicant's name is not mentioned in any of the
           statement of Mr. C. Choksi Group recorded by the IT
           Department.

In view of these peculiar facts and circumstances, we find that
the assessee discharged its onus as per law, as stipulated
section 68 of the Act. On the other hand, the Assessing Officer
was not in position to controvert the factual material and
documentary evidences placed by the assessee and he could
not        bring           anything                contrary               on           record      to     negate   the
documentary evidences furnished by the assessee. In view of
the peculiar facts and circumstances of this case, order of
ld.CIT(A) is upheld. Appeal filed by the Revenue is dismissed.

7.        Similar issue arose in other Revenues' appeals.                                                          The
details of same are as under:

          ITA Nos.                                     In case of                                Additions
     2118/Ahd/2014                              M/s. Deep Darshan                           Rs.75,00,000/-
                                                Properties Pvt. Ltd.
     2160/Ahd/2014                              Aajivan      Computers                      Rs.10,00,000/-
                                                Pvt. Ltd.
     2116/Ahd/2014                              M/s. Karamveer Real                         Rs.50,00,000/-
                                                Estate Pvt. Ltd.
     2157/Ahd/2014                              Dignity       Securities                    Rs.50,00,000/-
I TA N o s . 2 1 1 7 , 2 1 1 8 , 2 1 6 0 , 2 1 1 6 , 2 1 5 7 & 2 1 1 9 / M u m / 1 4    Page 11




                                                Trading Pvt. Ltd.
     2119/Ahd/2014                              M/s.      Blue       Hill Rs.1,12,00,000/-
                                                Properties Pvt. Ltd.

8.        These additions made on similar line have been deleted by
concerned CIT(A) in their respective orders with similar
reasoning as in case of M/s. Deep Darshan Properties Pvt. Ltd.
(supra). Facts being similar, so following same reasoning, we
are not inclined to interfere in the orders of CIT(A) who has
granted relief to all these assessees with reasoned findings.
Same are upheld.

9.        As a result, all appeals filed by Revenue are dismissed.

Pronounced in the open Court on this the 28th day of
September, 2015.

       Sd/-                                                                     Sd/-
 (ASHWANI TANEJA)                                                    (SHAILENDRA KUMAR YADAV)
ACCOUNTANT MEMBER                                                        JUDICIAL MEMBER
Mumbai: Dated 28/09/2015
                                                      True Copy
S.K.SINHA
                      / Copy of Order Forwarded to:-
1.   / Revenue
2.  / Assessee
3.      / Concerned CIT
4.   -  / CIT (A)
5.    ,     ,  /
   DR, ITAT, Mumbai
6.   / Guard file.
                                                                                                  By order/  ,




                                                                                                  / 
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