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2019 (7) TMI 868 - ITAT MUMBAIReopening of assessment u/s 147 - addition towards share capital and share premium raised during the year u/s 68 - investing company is a registered NBFC - in case of investing company AO taken reassessment proceedings on the ground that company had received share premium of ₹ 30.94 crores source of which was not proved but after verification the AO has accepted the returned income without any addition - HELD THAT:- As in CIT vs. Gagandeep Infrastructure Pvt. Ltd. [2017 (3) TMI 1263 - BOMBAY HIGH COURT] wherein the Hon’ble Courts have held that once the steps have been taken by the Revenue against the shareholder no action lies against the company on the ground that income has escaped assessment by the reason of investments/subscription in the share of the assessee company by the investors whose cases have been taken up by the Revenue in order to verify the transactions. We find merit in the arguments of the Ld. A.R. that there has to be live link between the material coming to the possession of the AO and formation of belief regarding escapement of income and is squarely covered by the ratio laid down by the jurisdictional High Court in the case of Pr. CIT vs. Shodiman Investment Pvt. Ltd. [2018 (4) TMI 1287 - BOMBAY HIGH COURT]. As perused the decision relied upon by the Revenue and found that they have been rendered on the different facts and are not applicable to the present case. We, therefore, in view of the aforesaid facts and ratio laid down by the various judicial forums hold that reopening as made by the AO is not proper and without valid jurisdiction and accordingly we set aside the order of Ld. CIT(A) on this issue. Accordingly we hold that the re-assessment proceedings u/s 147 are without any valid jurisdiction invalid and is quashed. Ground No.1 is allowed. Addition u/s 68 - proviso to section 68 as amended by Faiance Act 2012 w.e.f. 1.4.2013 is effective from assessment year 2013-14 - HELD THAT:- The assessee has proved the source of investments by the investors to be out of share capital and reserves and source of source is not to be proved. As in Aditya Birla Telephone Ltd. [2019 (4) TMI 63 - BOMBAY HIGH COURT] held source of source is not required to be proved. In the present case, the AO has not conducted any enquiries with respect to identities and creditworthiness of the investors and genuineness of the transactions despite the fact that assessee has filed all the evidences with the AO. The facts of the assessee’s case are clearly distinguishable from the facts in the case of PCIT vs. NRA Iron and Steel Pvt. Ltd. [2019 (3) TMI 323 - SUPREME COURT] and therefore the ratio laid down by the Hon’ble Supreme Court is not applicable as the AO has not investigated the matter despite assessee having filed all the evidences. In view of the aforesaid facts and circumstances and the ratio laid down by the various decisions we are not in agreement with the conclusion drawn by the Ld. CIT(A) on this issue. Accordingly, we hold that the addition as confirmed by the Ld. CIT(A) under section 68 is wrong and consequently can not be sustained. - Decided in favour of assessee.
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