9911796707
TMI Blog2021 (12) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... see against the revision order of the ld. Commissioner of Income Tax-II, Hyderabad u/s.263 of the Act dated 28/03/2013. 2. These appeals of the assessee pertain to ITAT Hyderabad 'B' Bench numbered as ITA No. 18/Hyd/2012 and ITA No. 790/Hyd/2013. CBDT made a request for hearing of this appeal by a Special Bench and accordingly on 14/12/2012, this matter was fixed under the caption 'Other Matters' for hearing as a Special Bench Reference. Finally, the Bench referred the matter to the President, ITAT with their comments. Finally, the Hon'ble President constituted the Special Bench vide order dated 05/03/2013. The assessee challenged the order constituting Special Bench of Hon'ble ITAT before Hon'ble Bombay High Court. Hon'ble Bombay High Court vide order dated 10/08/2015 reported as Jagati Publications Ltd., vs. President, Income Tax Appellate Tribunal and Others in (2015) 377 ITR 31 (Bom) quashed the constitution of Special Bench by observing in para 57 as under:- "57. To sum up, the president was under obligation to give hearing to the parties.. The Regular Bench had not unequivocally recommended constitution of the special bench and it had merely recommended that the matter be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal may take in this appeal, would have its impact on the investigation being carried out by CBI and Enforcement Directorate and so on. Last but not the least, the Revenue impact on the appeal is also very huge and the matter requires in depth and exhaustive consideration. 17. In this context, we observe that most of the appeals coming before the Tribunal, involve complex facts and intricate questions of law. If we go by the argument of the Department, then every such appeal has to be decided by a special bench. In all such cases, any one of the parties to the litigation will seek resolving the issue by constituting a special bench. This would create serious impediment in the functioning of the Tribunal. Similarly, the contention of the learned Departmental Representative that a decision of the division Bench of the Income Tax Appellate Tribunal is not followed by another Bench of Income Tax Appellate Tribunal and, therefore, the appeal has to be heard by a special bench is also not correct. The decision of a Division Bench certainly has a binding effect and is generally followed by other division benches of the ITAT unless it is factually distinguishable or there is a cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appropriate Bench outside Andhra Pradesh, specifically at Head Office level, for the hearing and adjudication on this appeal. Such a step would snuff out even a slightest doubt and apprehension in the mind of any of the party to the litigation with regard to the fairness of the proceedings and the ultimate decision making process. 21. With the above comments, this proposal is forwarded to the Hon'ble Vice president, to place the same with his comments, before the Hon'ble president, for appropriate decision in the matter." (Emphasis Supplied) Based on those observations Mr. Rana submitted that when the Regular Bench stated that an 'Appropriate Bench' may be constituted outside Andhra Pradesh, it meant a 'special bench'. Mr. Mistri submitted that the Regular Bench had categorically opined that a 'special bench' is not necessary and all that it recommended was that the matter be heard outside Andhra Pradesh. 30. We have perused the observations carefully. In the context of the Act, special bench is not a term of common parlance. It is a statutory phrase. A special bench is constituted under Section 255(3). The Regular Bench was not expected to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade clear that although the assessee has not pressed for the instant earlier hearing applications fixed on 19/03/2021, keeping in mind its regular date as 24/05/2021, it shall be very much at liberty to file for the necessary relief afresh with better particulars; if so advised, as per law. The registry is directed to ensure necessary compliance as per law. 2.4. Pursuant to this, the President, ITAT, considering the decision of Hon'ble Bombay High Court; the recommendations of the Division Bench of Hyderabad ITAT originally to hear this appeal outside Andhra Pradesh and also considering the fact that the order of Hon'ble Bombay High Court had not been stayed by Hon'ble Supreme Court, proceeded to constitute a Division Bench for disposal of the aforesaid appeal. 2.5. When this matter was called for hearing, at the outset, ld. Sr. Standing Counsel Mr. K.V. Arvind and ld. Sr. Counsel for the assessee Shri J.D.Mistry was appraised of the fact that there is SLP filed in the Supreme Court against the judgment of Hon'ble Bombay High Court. Both the Counsels categorically stated that there is no stay of operation of judgment of Hon'ble Bombay High Court and Tribunal can hear this matter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 2,50,000 350 15.10.2007 90,000,000 2008-09 166666 350 14.02.2008 60,000,000 TOTAL 4,16,666 150,000,000 GILCHRIST INVESTMENTS PVT.LTO 2008-09 5,55,554 350 15.10.2007 199999440 2008-09 4,16,666 350 14.02.2008 149999760 2008-09 1,38,889 350 13.03.2008 50000040 TOTAL 11,11,109 39,99,99,240 GROUP TOTAL 19,44,441 69,99,99,240 3. INVESTMENTS SOURCED FROM SALE OF SHARES IN TANLA SOLUTIONS LTD. SANDESH LABS PVT.LTD 2008-09 6,66,664 350 15.10.2007 2,40,000,000 SPUME SOLUTIONS PVT.LTD 2008-09 66,666 350 13.03.2008 2,40,00,000 TOTAL 733330 26,40,00,000 MR.G.SRINIVASA RAJU 2008-09 1,27,777 350 13.03.2008 46,000,000 TOTAL 1,27,777 46,000,000 GROUP TOTAL 8,61,107 31,00,00,000 4. PVP GROUP (MR. POTLURI PRASAD) PVP BUSINESS VENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANIES SHRINE FINANCE & INVESTMENTS PVT LTD 2008-09 541666 350 13.03.2008 19,50,00,000 SATABDI INVESTMENTS 2008-09 986111 350 13.03.2008 35,50,00,000 GROUP TOTAL 1527777 55,00,00,000 10 THE INDIA CEMENTS LTD. #827, ANNAI SALAI, CHENNAI 2008-09 5,55,555 350 14.02.2008 200,000,000 2008-09 416667 350 13.03.2008 150,000,000 TOTAL 972222 350,000,000 KOLKATA / MUMBAI / RAJKOT COMPANIES 11 ARTILLEGENCE BIO INNOVATINS LTD. AMRITHDHAM SUIT # 5 & 6, NITYANAND NAGAR, BAKULTALLA, HOWRAH -711109 2008-09 13,888 350 14.02,2008 5,000,000 12 DELTON EXIM PVT.LTD. #3, AUPORE ROAD, KOLKOTA-700027. 2008-09 6,944 350 14.02.2008 2,500,000 13 HINGORA FINVEST PVT.LTD., SIVAJI RAJE SCHEME, 8-10/14, MHADA, 101, EKTA NAGAR, MALAD -WEST, MUMBAI - 400062. 2008-09 6,944 350 14.02.2008 2,500,000 14 KIRTI ELECTRO SYSTEMS PVT.LTD., NITYANAND NAGAR, BAKULTALLA, HOWRAH 2008-09 13,888 350 14.02.2008 5,000,000 15 MOON ENTERPRISES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased stakes in Shri Y.S. Jagan Mohan Reddy's (promoter) businesses were allotted land, projects and contracts, including special Economic Zones (SEZ) by the Andhra Pradesh government led by his father. * Shri Ayodhya Rami Reddy- the promoter of Ramky Group held shares in Jagathi Publications Pvt. Ltd., (JPPL) through Eres Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., who bought 55,555 JPPL shares, was allotted land for an SEZ at Visakhapatnam along with various irrigation projects. * Shri B. Paratha Saradhi Reddy, Promoter of Hetero Drugs Group-held 1,11,109 JPPL shares, through Hetero Health Care Ltd., Hetero Care Ltd., Hetero Drugs Ltd., and Hetero Labs was allotted land for two SEZs at Nakkapalli and Jadcherla. * Building rules were relaxed in respect of a hotel to be constructed at Road No.2, Banjara Hills, Hyderabad, Shri P. Pratap Reddy, Promoter of Pennar Cements, who holds 5,55,555 of JPPL shares through one of the concerns, in which he has substantial interest i.e. Pioneer Infrastructure Holding Ltd., * Land was allotted in Nadargul, Ranga Reddy District to concerns relating to Shri Prasad V. Potluri, who has substantial interest in M/s. PVP Business Ventur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er readership has substantially reduced with the commencement of many news channels in the television media and further due to increase in the usage of internet, the entire newspaper industry has been adversely impacted both in its circulation as well as its advertisement revenues. 6.4. In view of the same, the ld. AO observed that the assessee company could not have commanded huge premium of Rs. 350/- per share and hence, the same becomes highly questionable. He also observed that despite substantial funding is made by the second category of shareholders (i.e. other than promoters), the major voting power still vests only with the promoter's family and accordingly, he concluded that the premium received by the assessee company is not justified. He also observed that the investors had not been given any return on their investments by way of dividend by the assessee company. The ld. AO specifically observed that with regard to share capital and share premium received from second category investors i.e. other than promoters group, that assessee company is only a private limited company and not listed company and that the gain in share market on sale of shares cannot be a reason for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changed to Mumbai. The concerned person did not remember to have made any investment in assessee company. The income earned by all these companies were very negligible. The perusal of the bank statements of these companies would show that there are credit deposits without any description and therefore, unverifiable. (vi) With respect to Hyderabad based investors, majority funds were received only from Ramky group of companies for investing in assessee's company. Certain entities did not respond to summons issued u/s.131 of the Act when they were asked to appear before the ld. AO. The assessee company was also asked to produce shareholders which it had failed to do so. 6.6. By making the aforesaid observations, the ld. AO sought to treat the amount received towards share capital and share premium from the following companies as unexplained cash credit u/s.68 of the Act:- Sr. No. Name Amount(Rs.) 1. Artillegence Bio Innovations Ltd., 50,00,000/- 2. Kirti Electro Systems Pvt. Ltd., 50,00,000/- 3. Delton Exim Pvt.Ltd., 1,00,00,000/- 4. Stocknet International Ltd., 25,00,000 5. Hingora Finvest Pvt. Ltd., 25,00,000/- 6. Moon Enterprises Pvt. Ltd., 2,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is shareholder in the assessee company, there were certain money transfers that had happened through RTGS credits. The said money received by the shareholder company did not stay with it and were immediately transferred either to assessee company or to other shareholders company which in turn had made similar kind of investment in assessee company towards share capital and share premium. He observed that the nature of money received by the said shareholder company through RTGS credit could not be explained by the assessee herein. In other words, the ld. AO observed that source of source of the investor company was not proved by the assessee in the instant case. b) Kirti Electro Systems Pvt. Ltd - Investment made Rs. 50,00,000/- The ld. AO made similar observations as was made in the case of Artillegence Bio Innovations Ltd., He further observed that on perusal of the bank statement of the investor company a sum of Rs. 35,00,000/- was received from Online Information Technology Ltd., and immediately a sum of Rs. 25,00,000/- was transferred to the assessee company. He ultimately concluded that genuineness of the transactions and creditworthiness of the shareholding company could no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in effect concluded that assessee has not proved the source of source of the investor company. g) Eres Project Pvt. Ltd., Hyderabad - Investment made : Rs. 8,00,00,000/- The assessee furnished latest address of the said investor company. Notice u/s.133(6) of the Act was issued by the ld. AO. In response to the same, the ld. AO observed that the said shareholder company furnished all the requisite details through post. He further observed that as per the bank account of the investor company, the source was explained as amount routed through Axis Bank Account No.008010200058362. The ld. AO also observed that the said bank statement of the investor company revealed that the investment was made on assessee company on 18/02/2008 vide Cheque No.941418 for Rs. 8,00,00,000/-. The said amount was sourced from transfer of funds from Ramky Estates and Farms Pvt. Ltd., on 15/02/2008. He observed that prior to transfer of funds from Ramky group to the said investor company i.e Eres Projects Pvt. Ltd., the investor company did not have sufficient bank balance. Accordingly, the ld. AO concluded that the funds received by the investor company from Ramky Group is only an accommodation entry which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the ld. AO observed that as per the statement recorded u/s.131 of the Act from its Director Shri K. Prasad Reddy, it was noticed that family related group concern i.e. Aurobindo Pharma Ltd., was allotted SEZ land at Mahboob Nagar by the Government of Andhra Pradesh. 6.14. In respect of share capital and share premium received from Hetero Group of companies, totalling to Rs. 4,50,00,000/- for allotment of 1,24,997 shares at a premium of Rs. 350/- per share, the ld. AO observed that as per the statement recorded u/s.131 of the Act from its Director Shri G Srinivasa Reddy, it was noticed that their group concerns had been allotted 75 acres of SEZ land on lease basis for a period of 33 years by Government of Andhra Pradesh. 6.15. In respect of share capital and share premium received from two companies i.e. Sandesh Labs Pvt. Ltd., (Rs. 24,00,00,000/-), M/s. Spume Solutions Pvt. Ltd., (Rs. 2,40,00,000/-) and from an individual Shri G. Srinivasa Raju (Rs. 4,60,00,000/-), the ld. AO observed that the above two companies and the individual had sold their shares held in M/s. Tanla Solutions Ltd., which were acquired by them in secondary market and total sale proceeds thereon were utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 277,56,88,650/- represents benefit derived by the assessee in terms of Section 28(iv) of the Act which is taxable as business income of the assessee or alternatively the same is taxable under the head 'income from other sources'. However, the share capital portion at par value of Rs. 10 per share from the very same shareholders were accepted to be genuine by the ld AO. Similarly the share capital portion at par value of Rs. 10 per share received from the promoters category were also accepted to be genuine by the ld AO. (ii) The ld. AO observed that in respect of share capital and share premium received in the sum of Rs. 15,00,00,000/- from shareholders at Kolkata, Bangalore, Mumbai and Hyderabad comprising of eight parties, the genuineness of the investments and creditworthiness of the investors were not established by the assessee and hence taxable as unexplained cash credit u/s.68 of the Act. 7. With regard to the addition made u/s.28(iv) of the Act, the assessee submitted before the ld. CIT(A), that there was no nexus between the assessee company and the benefit derived by any of the group concerns of the investor companies. It was specifically pointed out that if benefits w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived in form of share premium, amounting to Rs. 277,56,88,650/-, in my considered view, cannot be taxed treating as business income under that section." 8.1. The revenue is not in appeal before us against this finding of the ld. CIT(A) by deleting the addition made u/s 28(iv) of the Act. 8.2. The ld. CIT(A) thereafter proceeded to tax the said receipt of share premium in the sum of Rs. 277,56,88,650/- as 'income from other sources' and for which purpose he proceeded to adjudicate the valuation reports submitted by M/s. Jagadisan and Co., Chartered Accountants and M/s. Deloitte. At the outset, he agreed that these two valuation reports were duly submitted before the ld. AO which justified premium of Rs. 350/- per share charged by the assessee. 8.3. The ld. CIT(A) observed that with respect to share premium, the valuation report prepared by M/s. Jagadisan and Co. dated 12/07/2007 did not provide any clarity with respect to (i) when the reference was made by the assessee company seeking valuation from the Chartered Accountants Firm ; (ii) the valuation amounting to Rs. 3,450 Crores did not specify the date for which the valuation of the company was determined. 8.4. With respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that the ld. AO had rightly observed that assessee has not been able to establish the creditworthiness of the investors and genuineness of the investments made in assessee company. With these observations, the ld. CIT(A) confirmed the addition made in the sum of Rs. 15,00,00,000/- as unexplained cash credit u/s.68 of the Act in respect of share capital and share premium received from eight companies listed supra. 9. At the outset the ld. AR vehemently submitted that the entire investments made by the investors in assessee company towards share capital and share premium were made based on the valuation reports of two Chartered Accountants namely M/s. Jagadisan & Co., & M/s. Deloitte, who had apparently valued the assessee company at more than 3000 Crores. He argued that these valuation reports were prepared based on estimates on future projections with regard to the performance of the assessee company. Subsequently, the actual performance of the company had ratified the estimates made in the valuation report. Hence, the entire allegations of the ld. AO that the assessee company could not have commanded huge premium is totally unwarranted. He vehemently submitted that the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profile of key management personnel of assessee company. 9.3. The ld. AR also drew the attention from the paper book containing the valuation report issued by Jagadisan and Co., dated 12.7.2007, wherein they had adopted Discounted Cash Flow (DCF) method to be the proper method for the purpose of valuing the shares of the assessee company by stating that the assessee company is at nascent stage and hence, it would be appropriate to value the company based on discounted cash flow method of valuation. In the said valuation report, since assessee is in nascent stage, the potential risk in news paper business would be moderate and accordingly, they had used a discount rate of 14% to discount the future cash flows while doing the valuation. They had also specifically taken into account the advertising revenues by selling advertising space in the news paper by the advertising agencies based on the certified figures published by Audit Bureau of Circulations, Mumbai. The ld AR submitted that the valuer M/s Jagadisan & Co. had also taken into consideration the peculiar features of proposed newspaper of the assessee as under:- * JPPL is planning to offer 18 colour newspaper pages in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences is dealt with hereinbelow in detail. Admissibility of Additional Evidences filed by the Revenue: 12. The Revenue vide letter dated 16.04.2013 vide F.No.DC-2(3)/AABCJ7667G/13-14 filed five paper books containing pages 1 to 229 and also requested that the documents contain the statements and the informations in these paper books in 5 volumes and these documents constitute additional evidences. It was requested that as per rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 (hereinafter the 'Rules') the same may be admitted. Similar application was filed vide letter dated 19.06.2013 vide F.No.DC-2(3)/AABCJ7667G/13-14 and filed paper book No.6. Similar application and paper books No.7 & 8 were filed vide applications dated 04.07.2013 vide F.No.DC-2(3)/AABCJ7667G/12-13. 12.1. Now during the course of hearing on 09.08.2021 the Revenue filed a consolidated application under Rule 29 of the Rules for admission of additional evidence/documents filed by the Revenue. The relevant text of the application reads as under: "1. The applicant is respondent in the above matter and Assessing Officer of the appellant assessee hereinabove. Hence this application by the applicant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the chargesheet filed by the CBI authorities, the same is also within the knowledge of the appellant. The entire set of documents referred to in the Annexure has already been served on the appellant at the time of filing of the same before this Hon'ble Tribunal. 7. It is submitted that insofar as the statements recorded by the Assessing Officer in the course of the penalty proceedings under section 271(1)(c) of the Act and the Statements recorded in the course of assessment proceedings for the subsequent assessment years, having bearing on the issue as the some of the investments were continuous, the said statements are having important bearing upon the case, required to be taken into consideration to arrive at a just and correct conclusion on the controversy for adjudication of the dispute by this Hon'ble Tribunal. 8. It is submitted that it is settled position of law that any evidence or document which was in existence at the time of passing the order, however even exercise of due diligence the same was not available, the said documents/evidence produced at the time of appeal is Just and necessary for adjudication of disputes, It is further held by the Apex Court that any evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .N.Sudarshan dated28.12.2010 before ACIT-2(1) Sr.Director In Deloitte Already part of evidence on record 26-28 I 4 Statement of Sri.Poondi Narayanan Sudarshanrecorded by -CBI authorities on 27/10/2011 Sr.Director In Deloitte Admission by Shri P.N Sudershan that he completed the report only in mid April 2008 but back dated to 16/11/2007 as per request of Shri Vijay Sai Reddy 29-32 I 5 Section 164 CRPC statement of Sri. Poondi Narayanan Sudarshan by the core of the II MetropolitanMagistrate for Railways and Secundrabad on 8/11/2011. Sr.Director In Deloitte The facts in Sl No 4 confirmed by Shri P.N Sudershan before Metropolitan Magistrate u/s 164 CrPC 33-35 I 6 Valuation Report of Jagadisan and co dated12.7.2007 along with working papers in connection with the valuation In contravention of report dated01/11/2006 (at Sl Na 1 above), sameJagadisan& Co. takes different figures and values Jagati Publications Pvt. Ltd. at Rs. 3459 Cr though there is no change in circumstances. 36-63 I 7 Statement of Shri JagdisanPrabhakaran recorded by CBI authorities on 31/10/2011 Demonstrates the contradictory valuation of Jagati Publications Pvt. Ltd. on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otment letter at Rs. 7 lakhs /acre against the price of Rs. 15 lakhs/acre. 28-29 II 18 Request from M/s Lee Pharma Ltd to APIIC for allotment of 10 acres at Jadcherla SEZ dated 113/11/2006 and statement of AllaVenkataReddy before CBI Authorities dated 09/03/2012. Request of another applicant during the same period though appears to be accepted, however no approval letter was issued to the said party and he was informed that his application was deferred. This applicant is not an investor in Jagati Publications Pvt Ltd 30-35 II 19 Order sheet noting dated 30/04/2007 regarding allotment of land M/s AurobindoPharma Ltd and M/s Hetero Drugs Ltd at Jadcherla SEZ fixing the rate at Rs. 7 laksh/acre wherein it is Stated the extent and rate were decided in the presence of CM. Shows that the land was allotted at Rs. 7 lakhs/acre against 15 lakhs fixed by the committee at the intervention of Chief Minister who is father of the Promoter of the assessee. 36-37 II 20 Notification dated 13/06/2007 by GOI establishing SEZ at Jadcherla. Establishes that the Jand at SEZ wa, allotted to M/s AurobindoPharma Ltd and M/s Hetero Drugs Ltd even pin, to the notification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that funds were borrowed to invest in the assessee by promoters of Aurobindo group. 72-76 II 31 Cheques and pay in-slips showing investment by Smt K. Rajeswari and Trident Life Sciences in the assessee. 77-88 II 32 Application for loan by Shri P.V. Ramprasad Reddy from IL&FS dated 27/11/2007 and sanction by IL&FS for renewal of loan dated 10/12/2007 and sanction of loan dated 11/12/2007. 89-104 II 33 Minutes of meeting held in the chamber of CM on 11/09/2004 regarding reduction of "No development zone" from 1 Km to 500 meters. The documents show that in the case of land of 2143 acres allotted to Pharma City developed by Ramky group at Parwada, Visakhapatnam, the green belt zone which was supposed to be 1 km within the boundaries of Pharma City land was reduced to 250 meters and the balance was transferred to outside lands adjacent to the boundary of Pharma City (with a reduced limit of 250 meters). Even the 250 meters inside the boundary of Pharma City was apparently reduced to meters. In fact, the whole issue was subject to revision much later 1n 2011. 105 & 106 II 34 Minutes of meeting dated 20/06/2005 in the chamber of CM reducing the buffer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Letter dated 26/11/2008 from APIIC allotting 3190 acres land to Lepakshi Knowledge Hub Pvt Ltd in Ananthpur District 26 III 47 GO Rt No 112 dated 21/02/2009 by Industries and Commerce Dept, AP granting incentives and concessions to Lepakhsi Knowledge Hub Pvt Ltd 27 to 29 III 48 Letter dated 30/08/2009 from Lepakshi Knowledge Hub Pvt Ltd requesting NOC for deposit of title deed with Financial Institutions for loan facility to its group companies 30 III 49 Letter dated 05/09/2009 granting NOC M/s Lepakshi Knowledge Hub Pvt Ltd for deposit of titles deeds of land with Financial Institutions for borrowings by its group companies 31 III 50 Letter of Bank of India dated 18/11/2010 granting loan to M/s Indu Projects Ltd (group company of Lepakshi) on pledge of land acquired from APIC inAnanthpur District 32-58 III 51 Term loan agreement and MOU with PNB dated 30/08/2010 granting loan to M/s Indu Projects Ltd on pledge of lands acquired by Lepakshi 59-68 III 52 Hypothecation agreement with IL&FS by Indu Projects Ltd sanctioning loan against pledge of land granted by APIIC to Lepakshi 69-110 III 53 Sale cum power of attorney dated 16/11/2006 betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 08/01/2013 Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations at the intervention of CM. It is stated that APIIC people telephoned him to meet CM. The process of allotment of land and investment were contemporaneous 1-10 V 65 Statement of Shri P. Sarat Chandra Reddy {of Aurobindo group) recorded on 08/01/2013 during penalty proceedings Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations. The Process of allotment of land and investment were contemporaneous 11-15 V 66 Statement of Shri K. Prasad Reddy (of Aurobindo group) recorded on 08/01/2013 during penalty proceedings Contradicts Shri K. Nityananda Reddy's version and states that he saw valuation of report of Deloitte. Demonstrates that investment in assessee was not business prudence and the same was a consideration for allotment of land and other concessions by APIIC flouting the norms of regulations. The process of allotment of land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment is at the instance of Shri Vijay Sai Reddy 83-85 V 77 Statement of Shri A. AyodhyaRami Reddy (Chairman, Ramky group) recorded on 08/01/2013 in penalty proceedings Establishment of RamkyPharmacity during contemporaneous period 86-90 V 78 Statement of Shri M. Sambasiva Rao (TWC Infrastructure) recorded on 08/01/2013 in penalty proceedings TWC infrastructure was a loss making company, no activity and no creditworthiness 91-96 V 79 Statement of Shri E. Rajesekhar Reddy recorded on 08/01/2013 in penalty proceedings Eres Projects Ltd has no activity and no creditworthiness 97-101 V 80 Statement of Shri M. Vasudeva Reddy recorded on 22/01/2013 in penalty proceedings Shows that TWC and Eres are onlyconduits and do not have creditworthiness. 102-106 V 81 Statement of Shri M. Rama Krishna Reddy recorded on 29.01.2013 in penalty proceedings Shows that Eres and TWC are only mail box companies. 107-109 V 82 Statement of Shri A. Ramakrishna Reddy recorded on 24.01.2013 in penalty proceedings States that he suggested investment to Eres and TWC without even seeing any valuation report or meeting of people of JPPL 110-113 V 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g transactions in the form of accommodation entries through various companies for investment in assessee for subsequent assessment year. No creditworthiness of genuineness of any of the companies. The assessee was requested to produce the directors and key persons at Kolkata but he did not. The assessee also did not appear for cross examination even when it was communicated to him that the directors/key persons were summoned at Kolkata. Some of the investments are continuing investments from A.Y. 2008-09. 158-162 V 87 Statement of Shri Sanjay Mitra recorded on 18/03/2013 in case of Bharathi Cements Ltd Transactions establishing modus operandi of receiving back cash from sale of alleged investments at premium by Dalmia group in Bharathi Cements Ltd which is sister concern of assessee managed by the same promoters. These transactions were also in the contemporaneous period indicating preponderance of probability 163-165 V 88 Statement of Shri Sanjay Mitra dated 27-01-2012 during search in case of Dalmia group 166-178 V 89 Statement of ShriJoydeepBasu dated 18-03-2013 in case of Bharathi Cements Ltd 179 & 180 V 90 Statement of ShriJoydeepBasu dated 27-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing opinion of Advocate General on the above issue concessionaire agreement. 15-23 VI 103 Letter from CM's office dated 11-12-2007 that Secretary, Infrastructure will handle the subject of ports and airports instead of INCAP This decision is directly related to the issue of change of actual agreement from what was submitted for approval of Cabinet in case of Vanpic Ports Ltd who is concern of group Shri Nimmagadda Prasad and the group is one of the major investors in assesse 24 VI 104 Handing of bid documents by MD, INCAP to Secretary, Infrastructure dated 20/02/2008 regarding regional Airport bids No bids were called for Ongole and Nellore Airports on the plea that the project on G to G Basis whereas bids were called for other ports. In reality, it was the Nimmagadda group which was holding substantial share in the entire project which got further increased later on, RAK Investment Authority did not undertake any development activity and it was only a dormant partner. 25-28 VI 105 RFP prepared by INCAP, Govt. of AP for regional airports 29-44 VI 106 Order sheet notings of I &I Dept with reference to bids on development of regional airports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115 Letter of RAK Investment Authority dated 25/06/2008 requesting Govt of AP to allot airport at Ongole Sequence of events showing that benefits were to be bestowed to the Nimmagadda group despite opposition from Chief Secretary 116 & 117 VI 116 Letter of Special SecyI&IDept to various epartments to attend meeting by CM to discuss modifications in proposed Ongole and Nellore Airport projects 118 & 119 VI 117 Minutes of meeting held by CM on 13/12/2008 120-128 VI 118 Comparative analysis of Project Development Agreement of On gole Airport with that of Rajiv Gandhi International Airport and approved PDS for PPP Projects 129-135 VI 119 Order sheet noting wherein CM rejected the view of Chief Secretary objecting to extending of state support to On gole Airport 136-142 VI 120 Statement of Shri V. Vijay Sai Reddy recorded on 07/01/2013 in penalty roceedings and proceedings for A.Y 2010-11 The assertions made by Shri V. Vijay Sai Reddy that it was open private placement was unsubstantiated because enquiries with the prospective investors named by him in his statement and the assertion that he/Satya Reddy went to Kolkata and arranged investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/02/2013 18 & 19 VII 129 Search list of CBI dated 18/08/2011 Demonstrates that during search of CBI in 18/08/2011, the premises stated to be housing M/s Artificial Big Innovations Ltd, Kirti Electro Systems Ltd, Charishma Engineering, Globex Corporation Lt, Shakti Ispat Industries Pvt Ltd and Bay Inland Pvt Ltd were locked and no one was available. The premises were sealed by CBI 20 & 21 VII 130 Charge sheet filed by CBI in the case of Dalmia Cements Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-64 VIII 131 Charge sheet filed by CBI in the case of India Cements Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-67 IX 132 Charge sheet filed by CBI in the case of P. Pratap Reddy &Penna group of companies Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-84 X 133 Charge sheet filed by CBI in case of Bharathi Cement Corporation Ltd Demonstrates the modus operandi of collection of money under the guise of investment by the assessee group 1-188 XI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court in the case of Basir Ahmed Sisodia vs. ITO reported in (2020) 424 ITR 1 (SC) by referring to paras 10 & 14 thereon. 3. Decision of Hon'ble Supreme Court in the case of K. Venkataramaih vs. A. Seetharama Reddy & others reported in (1964) 2 SCR 35 (SC) referred to paras 10 to 20. 4. Decision of Hon'bleDelhi High Court in the case of HL Malhotra & Co. (P) Ltd. reported in (2021) 431 ITR 148 (Del.) by referring to paras 8, 10, 20 and 22 to 25. 5. Decision of Hon'bleBombay High Court in the case of Braganza Construction Pvt. Ltd. vs. ACIT reported in (2020) 425 ITR 115 (Bom.) by referring to paras 8 to 11. 6. Decision of Hon'ble Punjab & Haryana High Court in the case of Smt. ShakuntlaThrukral vs. CIT reported in (2014) 366 ITR 644 (P&H) by referring to paras 4 & 5. 7. Decision of Hon'ble Madras High Court in the case of CIT vs. Ku. Pa. Krishnan reported in (2012) 345 ITR 38 (MAD) by referring to paras 6, 10, 12, 14, 16 & 17. 8. Decision of Hon'ble Supreme Court in the case of UOI vs. K.V. Lakshman& others reported in (2016) 13 SCC 124 by referring to para 13, 15 and 32 to 41. 12.5. The Ld. Special Counsel for the Revenue vehemently pleaded that all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets filed under various sections of CrPC are merely allegations levelled by the State and they cannot be construed as an evidence. He also placed reliance on certain case laws on the aspect as to how a charge sheet should be looked into. He placed reliance on the decision of Chennai Tribunal in the case of ACIT vs. Shri Ramcharan Tej Konidala in ITA No.2074/Chny/2018 for A.Y. 2009-10 dated 28.04.2021. The ld. AR also placed reliance on the decision of Hon'ble Madras High Court in the case of R.S.S. Shanmugam Pillai and Sons vs. CIT reported in (1974) 95 ITR 109 (Mad). The ld. AR also placed reliance on the decision of Bangalore Tribunal in the case of Shri Ratan Babulal Lath vs. DCIT in ITA No.355/Bang/2017 for A.Y. 2009-10 dated 15.06.2018. 13.1. The ld. AR vehemently argued that the Revenue was trying to prove that there were some QUID PRO QUO arrangement between assessee and all the investor companies and for this purpose only the Revenue had filed lot of additional evidences before this Tribunal. But there is a memo filed by CBI in Hyderabad CBI Court stating that no QUID PRO QUO stood established pursuant to CBI investigation wherein the list of investor companies were als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers had already expired. Hence, all the statements recorded during penalty proceedings are of absolutely no relevance for adjudication of the appeals before us. The ld. AR also distinguished the decision relied upon by the Ld. Special Counsel for the Revenue in the case of Basir Ahmed Sisodia vs. ITO reported in (2020) 424 ITR 1 (SC) by stating that the same is factually distinguishable in as much as in that case the assessee did not furnish any details in the original quantum assessment proceedings and since those details were furnished during penalty proceedings, the Hon'ble Supreme Court held that the evidences gathered in subsequent penalty proceedings need to be considered in quantum assessment proceedings. He pleaded that the decision of Hon'ble Supreme Court relied upon by ld. Special Counsel for the Revenue is factually distinguishable. 13.5. The ld. AR also referred to the statement recorded from Shri Neel Kamal Berry on 27.01.2012 which is enclosed in Sl. No.92 of the table submitted by the ld. Special Counsel for the Revenue. In the said statement, no question was relevant to the assessee company herein. Similarly, he referred to statement recorded of Mr. Joydip Basu da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble CBI Court. In fact the Hon'ble CBI Court is even yet to take any cognizance of the charge-sheets filed and has not given any verdict on the same and therefore, these documents in the paper book of the department are only in the form of allegations and does not possess any evidentiary value, based on which no addition could be fastened in the hands of the assessee company. The ld. AR also referred to Section 28 of the Indian Evidence Act 1872 to drive home the point that the statement recorded by the Police authorities are not admissible as evidence. 13.9. With regard to yet another objection made by ld. Special Counsel for the Revenue that this Tribunal should pass a separate order on admission of additional evidences before proceeding to dispose of the main appeal, the ld. AR argued that the case law relied upon by the ld. Special Counsel for the Revenue in 179 CTR 265 (SC) is factually distinguishable in as much as in that case, the Tribunal disposed of the main appeal without considering the additional evidences filed in terms of Rule 29 of the ITAT Rules. Hence, the Hon'ble Supreme Court directed the Tribunal to dispose of the additional evidences first and then proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial cause and, thirdly, in the event of a situation that the Income Tax Authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them. It is only in a situation of demand attributable to these requirements, the Tribunal gets the statutory power to allow such documents to be produced or witness to be examined or affidavit to be filed or allowance of such evidence to be adduced. This has been answered by Hon'ble Delhi High Court in the case of CIT vs. Text Hundred India (P.) Ltd.(2013) 351 ITR 57 (Del.), wherein it is held as under: "13. The aforesaid case law clearly lays down a neat principle of law that discretion lies with the Tribunal to admit additional evidence in the interest of justice once the Tribunal affirms the opinion that doing so would be necessary for proper adjudication of the matter. This can be done even when application is filed by one of the parties to the appeal and it need not to be a suo motto action of the Tribunal. The aforesaid rule is made enabling the Tribunal to admit the additional evidence in its discretion if the Tribunal holds the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce as it stands, some inherent lacuna or defect becomes apparent, not where a discovery is made, outside the court of fresh evidence and the application is made to impart it. The true test, therefore, is whether the Appellate Court is able to pronounce judgment on the materials before it without taking into consideration the additional evidence sought to be adduced." (Emphasis supplied)" 14.2. The above case law was referred by ld. Special Counsel for the Revenue Shri K.V. Aravind but he could not make out what is the inability of the Tribunal to decide the issue before us which is on the issue of share premium under section 56 of the Act and second issue of addition of share premium under section 68 of the Act. Once this is not explained that how these additional evidences are beneficial for the pronouncement of judgment of this Tribunal on the material available before it, the case law of Hon'ble Delhi High Court in the case of Text Hundred India (P.) Ltd. (supra) is not applicable to the facts before us, rather it negates the argument of Revenue. 14.3. We also noted that the ld. Special Counsel for the Revenue relied on the decision of Hon'ble Supreme Court in the case of Jyot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l requires the evidence to enable it to pass orders or for any other substantial cause, or if the ld. AO has decided the case without giving sufficing opportunity to the assessee to adduce evidence on the points specified by him or not specified by him. We are conscious enough that rule 29 does not enable the assessee or the Department to tender fresh evidence to support a new point or to make out a new case. Hon'ble Bombay High Court in the case of Velji Deoraj & Co. vs. CIT (1968) 68 ITR 708, 713-14 held that the admission of additional evidences at the appellate stage is not referable to any right of the party to produce the evidence but is dependent solely on the requirement of the court and it is for the court to decide whether for pronouncing its judgment or for any other substantial cause it is necessary to have the additional evidence before it. 14.7. The assessee relied on many case laws but we have considered these but will reproduce the relevant finding from the decision of Hon'ble Bombay High Court in the case of CIT vs. Smt. Kamal C. Mehboobbani (1995) 214 ITR 15 (Bom.) wherein Hon'ble Bombay High Court has considered this issue. The relevant reads as under: "3. ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence if it is of the opinion that it is necessary to do so to enable it to pass order or for any other substantial cause. For doing this also, the Tribunal has to record reasons. In the present case, the Tribunal has not issued any such direction. On the other hand, it has stated that it is not satisfied that any such direction should be issued. In that view of the matter, we do not find any infirmity in the order of the Tribunal requiring to entertain the additional evidence sought to be produced by the revenue at the time of hearing of the appeal." 14.8. In entirety of facts and the above proposition of law, we are of the considered view that the additional evidence filed in the form of Revenue's paper book 1 to 14 which mainly contains the CBI charge sheets, statements recorded before CBI under section 161 of CrPC and 164 CrPC before Magistrate, correspondences between the companies and the Govt. of Andhra Pradesh, documents procured from various State Govt. Authorities i.e. Govt. of Andhra Pradesh, statements recorded by the AO during the penalty proceedings, various documents containing allotment of land etc., in our view, are not relevant for deciding the issues before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from where it was found that the current newspapers are seem to be partisan and / or indicate poor credibility hence, the newspaper which provides news without any bias will become popular among the readers. He also drew our attention that the assessee company had proposed to use technology like "Computer to plate" (CTP) for which it had imported machines from Canada which would provide quality presentation in terms of news, photographs and consequently better readability. Thereafter, he specifically drew the attention of the Bench to the projections of sales used in the financials of the assessee company for future years for the purpose of valuation under DCF method. It was specifically argued that on the date of its launch, the newspaper 'Sakshi' had a record sale order of 1286670 numbers. Further readership figures projection has been achieved by the assessee company as per the below mentioned chart:- Period Sakshi Eenadu (Rival Newspaper) Jan-Jun 2009 1256809 1316883 Jul-Dec 2009 1218485 1293275 Jan-Jun 2010 1414175 1507359 15.2. The aforesaid sale order figures prove that assessee company is not a mere shell company but is a well organized and profession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears whereas the rival newspaper 'Eenadu' has achieved its success in 30 years of its operation. He also referred to the statement of facts filed before the ld. CIT(A) that the newspaper launched by the assessee company was in 'Limca Book of Records' stating that "Sakshi", a Telugu Broadsheet morning daily with all colour pages was launched simultaneously from 23 different cities including 19 cities in Andhra Pradesh and four metros on a single day in March 2008 becoming the first news paper to be launched simultaneously from most cities. 15.4. The ld AR argued that the revenue had not brought on record any corroborative material by conducting any independent inquiry that the transactions between the assessee and the investor companies are in the nature of quid -pro- quo arrangement. It was vehemently submitted that the department failed to conduct any enquiry and bring on record any direct material that can serve as an evidence linking the transactions between the investor companies and the assessee company to show that the capital investment in the assessee company was due to the grant of any land or project by the Government of Andhra Pradesh, even after a lapse of more than 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavily relied upon by the ld. Special Counsel for the Revenue, he argued that the aforesaid statement recorded by CBI cannot be considered to be a relevant evidence. He also argued that the statement provided by Shri P.N. Sudarshan before the CBI authorities is self-contradictory since he himself has admitted that the date of valuation report is academic as the date of valuation of the company as on 31/12/2007 remained unchanged. Further Shri P.N. Sudarshan has submitted that the valuation was based on future projections and as such change of date of valuation report would not impact the valuation per se. 15.8. The ld. AR also met the arguments of the ld. DR that M/s. Jagadisan & Co., had originally issued valuation report dated 01/11/2006 which is enclosed in the paper book of the department. The ld. AR drew our attention that the said valuation report assignment was carried out for valuing M/s. Caramel Asia Pvt. Ltd., which is a holding company of the assessee company. At that point in time, the assessee company being a subsidiary, was also subject matter of valuation and that the said valuation of assessee was done based on business plan and business model submitted by the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore." 15.9. As far as the allegation of back dating of the valuation report of the valuer is concerned, the ld AR submitted that the department has not brought on record any material or documentary evidence other than the aforesaid statement. It is trite law that suspicion however strong cannot partake the nature of evidence. It was submitted that even otherwise the courts have time and again held that merely on the basis of statement without anything more, additions cannot be made and huge tax liabilities cannot be fastened on an assessee. It had to be appreciated while evaluating evidence contemporaneous genuine documentary evidence has to be given precedence over unsupported and uncorroborated statement. Reliance in this regard was placed on the decision of Hon'ble Bombay High Court in the case of CIT vs Omprakash K Jain & Ors reported in 24 DTR 157 (Bom) wherein it was held :- 6. ........... The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind. The AO will have to comply with the settled principle of law. Documentary evidence if genuine must prevail over the oral statement. 15.10. The ld AR also placed reliance on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Bench of Mumbai Tribunal in the case of DCIT vs. Brand Marketing India Pvt. Ltd., reported in 113 Taxmann.com 15. e. Decision of Mumbai Tribunal in the case of ITO vs. Chiripal Poly Films Limited in ITA No. 2671/Mum/2016 for A.Y.2011-12 dated 19/02/2019. f. Decision of Hon'ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt. Ltd., reported in 394 ITR 680 (Bom). g. Decision of Hon'ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd., reported in 159 ITR 78. 15.13. With regard to statements recorded in the penalty proceedings by the ld. AO from various parties which are enclosed in the additional evidences filed by the Revenue, the ld. AR argued that even if those additional evidences are admitted, still, the ld. Special Counsel for the Revenue had not stated what he wants to rely from those statements and how the same are against the assessee. With regard to specific case law relied upon by the ld. Counsel for the Revenue on the decision of Hon'ble Apex Court in the case of Basir Ahmed Sisodia vs. ITO reported in 424 ITR 1, the ld. Special Counsel had argued that any evidence gathered from assessee during penalty proceedings would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of CIT (Appeals) and the documents on record insofar as identity creditworthiness, genuineness of transaction of M/s. Aadhaar ventures (I) Ltd, M/s. Dhanush Technologies Ltd, M/s. Emporis Projects Ltd and M/s. L.N. Industries Ltd (formarly known as L.N. Polyster Ltd) came to the conclusion that the assessee company having receipt share application money through bank channel and furnished complete details of bank statements, copy of accounts and complied with notices issued and the directors of the subscriber company also appeared with books of accounts before the appellate authority and confirmed the investment made by them with the assessee company, therefore, the identity and creditworthiness of investor and genuineness of transaction of the share applicant has been proved in the light of the ratio laid down by the M.P. High Court, Delhi High Court and the Hon'ble Supreme Court and were of the opinion that the onus cast upon the assessee as provided under Section 68 of the Act has been duly discharged by the assessee the identity of the share subscriber, creditworthiness and genuineness of the transaction is not to be doubted. The learned ITAT considered the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further held that share premium realised from the issue of shares is of capital nature and forms part of the share capital of the company and therefore cannot be taxed as a revenue receipt u/s 56 of the Act. The said decision of Mumbai Tribunal had been affirmed by the Hon'ble Bombay High Court in the case of Green Infra Limited reported in 392 ITR 7 (Bom). 15.16. With regard to the addition made in the sum of Rs. 15 crores u/s 68 of the Act, the ld AR submitted that the assessee company had submitted various documentary evidences with respect to the investors to prove their identity, creditworthiness and genuineness of transactions. It was pointed out that the identity of the credit entries could be established by the assessee by providing name and PAN of the parties through whom it had received the sum of money. The genuineness of the transaction could be demonstrated by showing that the assessee had infact received money from the said shareholder and it came from the bank accounts of that shareholder. The bank statements of the investors proves the creditworthiness or financial strength of the parties as they possessed sufficient bank balances to make investment in the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meeting Notices. It is to be added that the ld. AO has also stated that (i) M/s. Delton Exim Pvt, Ltd. has responded to him on 24.12.2010. Further, the investor companies i.e. (ii) M/s. Artillence Bio-Innovations Limited, (iii) Kirti Electro Systems Pvt. Ltd. and (iv) Stocknet International Ltd. had responded and submitted confirmation letters on 27.12.2010 before the ld. AO. Also, ld. AO has confirmed that the assessee company has filed confirmation letters in respect of these four companies. Information from (v) M/s. ERES Project Pvt. Ltd. and (vi) TWC Infrastructure Pvt. Ltd. was received by the ld. AO on 16.12.2010 which contained details of directors, bank statements etc. The ld AR submitted that the ld. AO has also confirmed that he was in possession of the Income Tax Returns filed by these eight investor companies, wherein he has discussed that the income of these parties were meagre. Further, the assessee company had furnished the correct address of M/s. TWC Infrastructure Pvt. Ltd. and M/s. ERES Projects Pvt. Ltd. before the ld. AO vide letter dated 09.12.2010. 15.19. The ld. AR further submitted that the assessee has proved the identity of shareholders by furnishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestors was not established by the assessee company, it was stated that it needs to be appreciated that the assessee company is required to establish the creditworthiness of the investor companies only to the extent of the investment made by them in the assessee company. Therefore, once these parties have produced the bank statements from where it could be seen that they had sufficient bank balances in their kitty to make investment and confirmed the transaction and the share capital is received through banking channel the creditworthiness of the investor companies to the extent of the investment made in the assessee company stands proved. 15.22. The ld. AR also submitted that assessee, by discharging the initial burden of proof by proving the three necessary ingredients of Section 68 of the Act, is not obliged to prove the source of source of the investor companies atleast for the year under consideration. Once the primary onus is discharged by the assessee, then the onus of proof shifts to the Revenue and just because the share applicants could not be found at the address given, it would not give the Revenue an automatic right to make an addition u/s.68 of the Act. The ld. AR al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company based on the development that had cropped up between 2006 and 2007 had enabled M/s. Jagadisan & Co., to determine the value of the assessee company at Rs. 3,450 crores. 16.1. The ld. Special Counsel for the Revenue vehemently argued that the ld. CIT(A) had sustained the addition under the head 'income from other sources' in respect of share premium received from outsiders' category in the sum of Rs. 277,56,88,650/-. He argued that though the ld. CIT(A) had not mentioned the section under which such addition had been sustained, from the reading of the order of the ld. CIT(A) and the order of ld. AO, it could be reasonably inferred that the lower authorities were only trying to apply the provisions of Section 68 of the Act. The ld. Special Counsel for the Revenue also pointed out that Section 68 also falls under the head 'income from other sources'. He argued that the head of income i.e. 'income from other sources' falls under Chapter IV F and Section 68 also would fall under the same. Hence, he pleaded that the entire addition made on account of share premium should be viewed from the context of provisions of Section 68 of the Act and not otherwise. To counter t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trident Life Sciences Pvt. Ltd.), Shri K. Prasad Reddy and Smt. K. Rajeshwari. e. Penna Cements Group: Pioneer Infrastructure Holdings Ltd., f. India Cements Group: India Cements Ltd., g. P.V.P. Group: P.V.P. Business Ventures Pvt. Ltd., h. Sandesh Labs Group: Sandesh Labs Pvt. Ltd., Spume Solutions Pvt. Ltd., and Shri G.Srinivasaraju i. Shri A.K.Dandamudi j. Shrine Finance and Investments Pvt. Ltd., and Satabdi Investments Pvt. Ltd., k. Artillegence Bio Innovations Pvt. Ltd., Kirti Electrosystems Pvt. Ltd., Delton Exim Pvt. Ltd., Stocknet Internaitonal Ltd., Hingora Finvest Pvt. Ltd., and Moon Enterprises Pvt. Ltd., 16.4. The ld. Special Counsel for the Revenue in respect of the aforesaid parties reiterated what is mentioned in the Assessment order and additionally also placed reliance on the charge-sheets filed by the CBI before the Hon'ble Special Court of CBI in respect of certain parties. The ld. AR vehemently argued that he had already made his submissions for non-admission of additional evidences filed by the department in the instant case. Hence, any reference made by the ld. Special Counsel for the Revenue to those additional evidences should not be given an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is to be noted is both the ld. AO as well as the ld. CIT(A) had only made addition on account of share premium addition made for Rs. 277.57 Crores only under the head 'income from other sources' and that Section 68 of the Act does not fall under the head 'income from other sources' as they fall in different chapters of the Act altogether. Not even a single word has been mentioned on account of section 68 of the Act by the lower authorities while making the addition on account of share premium in the sum of Rs. 277.57 Crores. The ld. AR also pointed out that the ld. AO had time and again mentioned that the nature and character of receipt in the hands of the assessee was share capital and share premium and that the share capital portion received at par value of Rs. 10/- per share is accepted and found to be reasonable and that the share premium portion received from very same investors alone has been concluded to be beyond human probabilities. He also argued that the ld. Special Counsel for the Revenue had vehemently argued that this premium component had arose to the assessee only pursuant to quid pro quo arrangement in view of the investors and their allied companies getting som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re premium portion? Reliance in this regard was placed by the ld AR on the decision of Kolkata Tribunal in the case of ITO vs. Trend Infra Developers Pvt. Ltd., in ITA No.2270/Kol/2016 for A.Y.2012-13 dated 26/10/2018, wherein under similar facts and circumstances, the share capital was accepted by the Revenue as genuine and share premium was sought to be taxed u/s.68 of the Act which was deleted by the Kolkata Tribunal. 16.6. With regard to addition made u/s.68 of the Act in the sum of Rs. 15 Crores, the ld. AO as well as the ld. Special Counsel for the Revenue by placing reliance on various documents produced by the assessee and various information gathered by them, vehemently argued that monies were invested by ERES Projects Pvt. Ltd., and TWC Infrastructure Pvt. Ltd., totalling to Rs. 10 Crores in assessee company and that those two parties were provided funds by Ramky group. This is a classic case of department itself proving the source of source of the investor company. He argued that the provisions of Section 68 of the Act pre-supposes introduction of assessee's own money. When the orders of the lower authorities itself state that monies have been provided by Ramky group to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy reliance on the additional evidences in the form of CBI chargesheets, statements recorded during penalty proceedings, various correspondences between investor and their group companies with the Government of Andhra Pradesh for their routine business matters, share valuation report etc. We have already held hereinabove that these charge sheets are not admissible as they are not relevant for adjudication of the issues before us and also in view of the fact that most of them do not fall under the category of being construed as an 'evidence'. With regard to various paper books relied upon by the learned special counsel for the revenue in the form of additional evidences, though these additional evidences were not admitted by this tribunal for reasons stated elaborately hereinabove, the bench still gave the liberty to the learned special counsel for the revenue to refer to those evidences for addressing the issue in dispute. 17.1. We hold that the chargesheets filed before the Hon'ble CBI Court are nothing but mere allegations levelled on various parties involved thereon and absolutely loses the character of having any evidentiary value thereon to be used for the purpose of income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for the impugned appeals. 17.3. It is not in dispute that the investor companies had decided to make investments in the assessee company at a premium of Rs. 350 per share by placing reliance on the valuation reports issued by M/s Jagadisan & Co., Chartered Accountants dated 12/07/2007 and by M/s Deloitte dated 16/11/2007. Admittedly, these two valuers had valued the assessee company at more than Rs. 3000 crores, by taking into account the proposed publication of 'Sakshi' newspaper and the untapped market in the news paper readership in Andhra Pradesh which is later certified by the Audit Bureau of Circulations, Mumbai, which justifies the allotment of shares to the investor companies at a premium of Rs. 350 per share. We find from the perusal of the valuation reports, they had clearly defined the various parameters used by them for valuing the assessee company together with the method used for valuation after due consideration of the financial projections given by the management of the assessee company and after duly considering the market forces and the datas available in respect of competitors and others in the market. The entire parameters used in the said valuation reports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s admitted that the date of valuation report is academic as the date for which valuation of the company remained unchanged. Further Shri P.N. Sudarshan has submitted that the valuation was based on future projections and as such change of date of valuation report would not impact the valuation per se. This is a very crucial factor in as much as even if some adverse inference is to be drawn on the aspect of valuation report being pre-dated , still it would not impact the valuation, as the date for which valuation is done would be relevant and not the date of valuation report. 17.3.3. One more crucial fact which requires consideration is that there was a complete change in business plan from A.Y. 2007-08 right from the numbers with regard to newspaper circulation figures between the first valuation and the second valuation report given by M/s Jagadisan & Co., Chartered Accountants. In this regard, we find that in the first valuation report dated 01/11/2006, the management of the assessee company ahd projected sale of only 600000 copies per day in Year 5, which figure had increased to 1500000 copies per day in the second valuation report dated 12/07/2007. This specifically proves tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as long as the difference is not alarming or huge, the figures reflected in the projections attain greater credibility. Hence in the DCF method used by the valuer wherein the projections and cost estimates used by the management and submitted to the valuers for preparation of valuation reports were prepared in a very scientific manner. The ld. AR had also pointed out that as per the Indian Readership Survey (IRS), which is the survey conducted by Media Research Users Council (MRUC), an autonomous body of advertising agencies and publications, around the year provides results of publications every quarter. The IRS number of Sakshi for the average issue readership is 48.16 per quarter while that of the total issue readership is 133.78 lakhs per quarter which can be tabulated as under: Readership Sakshi Eenadu Andhra Jyoti Vaartha Average 48.16 60.91 22.51 6.37 Total 133.78 147.94 56.35 25.55 17.3.6. Based on the aforesaid figures, the ld. AR stated that the publication of newspaper by the assessee company has indeed reached the targeted figures within 1 ½ years whereas the rival newspaper 'Eenadu' has achieved its success in 30 years of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates the contention of the assessee that the issue of shares during the year under consideration was genuine. The burden of proof to show that the assessee company as alleged had such an arrangement for fastening such huge additions is on the revenue and that burden cannot be said to be discharged by merely referring to the chargesheets filed by CBI which are yet to reach finality /conclusion before the Hon'ble Special Court of CBI. In any case, these charge sheets are not admitted as additional evidences by this tribunal for elaborate reasons stated supra. 17.5. We find that the lower authorities had made an addition under the head 'income from other sources' without mentioning the relevant section under which the addition is sought to be made. If the same is to be considered as an addition made u/s 56(1) of the Act, then the receipt should be income. We find that the lower authorities had categorically accepted to the fact that the nature of receipt was only share capital and share premium from the investor companies. Their only allegation is that these investor companies had paid share capital and share premium to the assessee company and that the share capital component at par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2012 w.e.f. 1-4-2013 (viii) ......Inserted by Finance (No.2) Act, 2009 w.e.f. 1-4-2010 (ix) ...... Inserted by Finance (No.2) Act, 2014 w.e.f. 1-4-2015 (x) ......... Inserted by Finance Act, 2016 w.e.f. 1-4-2017 17.5.2. We find that the ld. Special Counsel for the Revenue vehemently argued that the addition was sought to be made u/s 68 of the Act by the lower authorities under the head 'income from other sources'. In this regard, the ld. Special Counsel for the Revenue placed reliance on the proviso to section 68 of the Act to drive home the point that share premium could be brought to tax as income of the assessee company. We find that the proviso to section 68 of the Act has been inserted by the Finance Act, 2012 w.e.f. 1.4.2013 i.e. from Asst Year 2013-14 onwards. The only closest sub-section in section 56 of the Act which may be made applicable to the issue in dispute before us is section 56(2)(viib) of the Act and that is made applicable only from Asst Year 2013-14 onwards. Similarly the closest section is proviso to section 68 of the Act. The said amendments has been made effective only from Asst Year 2013-14 onwards and prospective in operation only as held by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s they are not germane to the issue before us. 17.5.4. We are now left only with one section i.e section 56(1) of the Act. Let us see whether the addition made by the lower authorities fit into the said section. We find that the said section starts with the expression "income of every kind". As observed earlier, first the receipt of share capital and share premium should be income u/s 2(24) of the Act. It is trite law that the receipt of share capital and share premium are only capital receipts, not chargeable to tax at all under any of the provisions of the Act, atleast for the year under consideration. Hence a receipt , once it is not chargeable to tax at all under any of the provisions of the Act, it cannot be brought to tax under the head 'Income from other sources'. Similar addition of share capital and share premium sought to be made by the revenue u/s 56(1) of the Act (i.e income from other sources) was subject matter of adjudication by Mumbai Tribunal in the case of Green Infra Ltd vs ITO reported in 145 ITD 240 (Mum ITAT) dated 23/08/2013 wherein it was observed as under:- 10.3 A simple reading of this section show that income of every kind which is not to be excluded f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is held by IDFC Private Equity Fund-II which is a front manager of IDFC Ltd., and the contributors in IDFC Private Equity Fund-II are LIC, Union of India, Oriental Bank of Commerce, Indian Overseas Bank and Canara Bank which are public sector undertakings. 11.2 Now the only point of dispute is the nature of transaction which according to the Revenue authorities is beyond any logical sense and which is the charging of share premium at the rate of Rs. 490/- per share. According to the Revenue authorities this is a sham transaction . So far till now, we have seen and examined the sources of funds. Let us see the application of funds and who are the ultimate beneficiaries of this share premium which may clear the clouds over the transaction alleged to be a sham. We find that the assessee company has invested funds in its three subsidiary companies namely (i) Green Infra Corporate Wind Ltd. (ii) Green Infra Wind Assets Ltd and (iii) Green Infra Wind Farms Ltd., wherein the assessee is holding 99.88% of share capital which means that the funds have not been diverted to an outsider. This clears the doubt about the application of funds and the credibility of the company in whom the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes no grievance of the identity of the subscribers. So far as the genuineness of the transaction of share subscriber is concerned, it concludes as the entire transaction is recorded in the Books of Accounts and reflected in the financial statements of the assessee since the subscription was done through the banking channels as evidenced by bank statements which were examined by the Tribunal. With regard to the capacity of the subscribers the impugned order records a finding that 98% of the shares is held by IDFC Private Equity Fund-II which is a Fund Manager of IDFC Ltd. Moreover, the contributions in IDFC Private Equity Fund-II are all by public sector undertakings. (c) Mr. Chhotaray the learned counsel for the Revenue states that the impugned order itself holds that share premium of Rs. 490/- per share defies all commercial prudence. Therefore it has to be considered to be cash credit. We find that the Tribunal has examined the case of the Revenue on the parameters of Section 68 of the Act and found on facts that it is not so hit. Therefore, Section 68 of the Act cannot be invoked. The Revenue has not been able to show in any manner the factual finding recorded by the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is private limited company had obtained 2 valuation reports from independent experts in support of allotment of shares at a premium of Rs. 350 per share, despite the fact that there was no bar in law for the assessee to charge high premium. The revenue cannot step into the shoes of the assessee company and question the business decision taken by it by questioning the premium component charged by the assessee company, especially for the year under consideration. We find force in the argument of the ld. AR that it is always the prerogative of the Board of Directors to decide the premium component and it is the wisdom of the shareholders whether they want to subscribe to shares at such a premium or not as long as the same is within the four corners of law. Reliance in this regard was rightly placed by the ld AR on the decision of Hon'ble Madhyapradesh High Court in the case of PCIT vs Chain House International (P) Ltd reported in 408 ITR 561 (MP), the operative portion of which is already reproduced hereinabove. Against this decision, the revenue preferred Special Leave Petition (SLP) before the Hon'ble Supreme Court and the same was dismissed in 113 taxmann.com 32 (SC). 17.5.9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following documents before the lower authorities in respect of the aforesaid parties:- Artilligence Bio-Innovations Limited:- * Copy of share application form * Copy of PAN Card * Copy of Board Resolution * Copy of Bank statement * Copy of notice of Annual General Body Meeting * Copy of Annual report with audited financials * Copy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Delton Exim Pvt. Ltd., * Copy of share application form * Copy of PAN Card * Copy of Board Resolution * Copy of Bank statement * Copy of notice of Annual General Body Meeting * Copy of Annual report with audited financials * Copy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Hingora Finvest Pvt. Ltd., * Copy of share application form * Copy of PAN Card * Copy of Board Resolution * Copy of Bank statement * Copy of Annual report with audited financials * Copy of Memorandum of Association and Articles of Association * Copy of Certificate of Incorporation Kirti Electro Systems Pvt. Ltd., Copy of share application form Copy of PAN Card Copy of Board Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tence of such company. We also find that in case of M/s. Moon Enterprises Pvt. Ltd., enquires were sought to be carried out by the Mumbai Investigation Wing and Mumbai Investigation Wing vide their report dated 28/12/2010 had stated that the said company owns 11 flats in Kandivali since 2004 and had been deriving rental income from such flats. This clearly establishes even the source for those companies which in turn had been utilised for making investment in the assessee company apart from proving the identity and genuineness of the transaction. 18.3.1. We find that the ld. AO has simply relied on the report of the Investigation Wing on the basis of which he has raised the following objections / allegations:- i. In case of Hingora Finvest Pvt. Ltd.. the address of M/s. Hingora Finvest Pvt. Ltd. is vague and there is no address which exact matches the given address. Further one premises was found which was originally purchased by one Shri Sharif Farooq Mohiuddin and later sold to Shri Alam Shaikh. Both the persons are not aware of the entity M/s. Hingora Finvest Pvt. Ltd. ii. Further in the case of M/s. Moon Enterprises IM. Ltd.. one of the directors Shri Pradeep Ratanlal Pari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation & Articles of Association and Certificate of Incorporation. Therefore, merely on the basis of statement without anything more, additions cannot be made and huge tax liabilities cannot be fastened on the assessee company. We find that the law is now very well settled that it has to be appreciated while evaluating evidence, contemporaneous genuine documentary evidence has to be given precedence over unsupported and uncorroborated statement. Reliance for the aforesaid contention is placed on the judgement of the Hon'ble Bombay High Court in case of C1T vs Omprakash K Jain & Ors reported at 24 DTR 157 (Bom) has held as under: "The test of evidentiary value of the oral evidence and the documentary evidence has to be borne in mind. The AO will have to comply with the willed principle of law. Documentary evidence if genuine must prevail over she oral statement ". 18.3.4. In any case, we further find that the allegations made by the Investigation Wing in it's reports cannot be considered for making additions since these allegations or contentions have not been made by the ld. AO independently. The contentions made by Shri Pradeep Ratanlal Parikh have not been independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions had been routed through regular banking channels. The assessee had also furnished the copy of share certificates together with the relevant share application form in respect of all the eight investor companies. Six out of eight investor companies had indeed confirmed the fact of having made investments in the assessee company at a premium of Rs. 350/- per share. In respect of Hingora Finvest Ltd., & Moon Enterprises Pvt. Ltd., as stated above, independent enquiries were carried out by Mumbai Investigation Wing. All these facts and supporting documents duly prove the genuineness of transactions also. Apart from that we find that six out of eight investor companies had sufficient net worth amounting to several crores much more than the amount of investment made by them in the assessee company. The relevant details of net worth of these six companies have already been tabulated in para 15.19 hereinabove. 18.5. In fact, even in respect of these Kolkata parties i.e. Artilligence Bio-Innovations Ltd., Kirti Electro Systems Pvt. Ltd., Delta Exim Pvt. Ltd., and Stocknet International Ltd., enquiries were sought to be carried out by Kolkata Investigation Wing of Income Tax department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished all the relevant documents even with regard to these two companies by also mentioning the correct address of the companies. The very fact that the ld. AO had not chosen to exclude the physical presence of Directors of these two companies before him, itself goes to prove that the ld. AO was convinced with the documentary evidences furnished by the assessee. 18.7. Heavy reliance was placed on the decision of Mumbai Tribunal in the case of Bini Builders Pvt. Ltd., vs. DCIT in ITA Nos. 631 & 632/Mum/2019 for A.Yrs. 2011-12 & 2012-13 respectively dated 12/03/2020 wherein the various decisions quoted by the ld. Special Counsel for the Revenue were also considered. For the sake of convenience, the said order is reproduced hereinbelow. As per the provisions of section 68 of the Income-tax Act, 1961, where any sum is found credited in the assessee's books and assessee offers no explanation about the nature and source thereof or the explanation furnished is found to be unsatisfactory, the sum so credited may be charged to Income-Tax as the income of the assessee of that previous year. A proviso has been inserted to the said section by Finance Act, 2012 w.e.f. 01/04/2013 to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gagandeep Infrastructure (P.) Ltd. (supra), & subsequently in CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502 (Bom.). The Hon'ble Delhi High Court followed the said decision in Pr. CIT v. Adamine Construction (P.) Ltd. [107 taxmann.com 84 against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Adamine construction (P.) Ltd. [2019] 107 taxmann.com 85/264 Taxman 279. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 172 against which revenue's Special Leave Petition was dismissed by Hon'ble Supreme Court in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 173/259 Taxman 3. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT v. Chain House International (P.) Ltd. [2018] 98 Taxmann.com 47 against which revenue's Special Leave Petition has recently been dismissed by Hon'ble Supreme Court on 18/02/2019 reported at Pr. CIT v. Chain House International (P.) Ltd. [2019] 103 taxmann.com 435/262 Taxman 207. 3. Similar is the recent decision of Hon'ble Bombay High Court in Pr. CIT v. Ami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. Simply put, the section provides that if there is any cash credit disclosed by the assessee in his return of income for the previous year under consideration and the assessee offers no explanation for the same or if the assessee offers explanation which the Assessing Officer finds to be not satisfactory, then the said amount is to be added to the income of the assessee to be charged to income tax for the corresponding assessment year. 14. Section 68 of the Act has received considerable judicial attention through various pronouncements of the Courts. It is now well settled that under section 68 of the Act, the assessee is required to prove identity of the creditor; genuineness of the transaction; and credit worthiness of the creditor. In fact, in NRA Iron & Steel (P.) Ltd. (supra), Supreme Court surveyed the relevant judgments and culled out the following principles: "11. The principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of taxable income only. It may be brought out of borrowed funds. It was further held that non-responding to notice would not ipso facto mean that the creditors had no credit worthiness. In such circumstances, the first appellate authority held that where all material evidence in support of explanation of credits in terms of identity, genuineness of the transaction and creditworthiness of the creditors were available, without any infirmity in such evidence and the explanation required under section 68 of the Act having been discharged, Assessing Officer was not justified in making the additions. Therefore, the additions were deleted. 19. In appeal, Tribunal noted that before the Assessing Officer, assessee had submitted the following documents of the three creditors: (a) PAN number of the companies; (b) Copies of Income-tax return filed by these three companies for assessment year 2010-11; (c) Confirmation Letter in respect of share application money paid by them; and (d) Copy of Bank Statement through which cheques were issued. 20. Tribunal noted that Assessing Officer had referred the matter to the investigation wing of the department at Kolkata for making inquiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same." 21. From the above, it is seen that identity of the creditors were not in doubt. Assessee had furnished PAN, copies of the income tax returns of the creditors as well as copy of bank accounts of the three creditors in which the share application money was deposited in order to prove genuineness of the transactions. In so far credit worthiness of the creditors were concerned, Tribunal recorded that bank accounts of the creditors showed that the creditors had funds to make payments for share application money and in this regard, resolutions were also passed by the Board of Directors of the three creditors. Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source. 22. In NRA Iron & Steel (P.) Ltd. (supra), the Assessing Officer had made independent and detailed inquiry including survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked credit-worthiness. It is in these circumstances, Supreme Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investors were showing meagre income in their Income Tax Returns for the assessment year under consideration, it is submitted that the assessee company has established the identity of the investor companies. It had provided evidences like confirmation letters, copies of bank statement/Income Tax Return Acknowledgements and it's own bank statement to prove the genuineness and credit-worthiness of transactions. The assessee company has given the entire details of the investor companies like their ITR Acknowledgement. PAN details, certificate of incorporation. Memorandum of Association, Articles of Association and their bank statements wherein the payments made to the assessee company are reflected. We also find that all these investor companies have sufficient net worth in their balance sheets as tabulated supra. Therefore, only because the said companies have shown meagre income it cannot be made the basis of addition in the hands of the assessee company. Reliance for this contention is placed on the judgement of Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms (P.) Ltd. ITA No. 71/2015 wherein the Hon'ble High Court has held as under: "3. Ms. Suruch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Waive, learned standing counsel, has pointed out that the creditor had no regular source of income to justify1 the advancement of the credit to the assessee, we arc of the view that the assessee had discharged the or, us which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he was not required to explain the sources of the money provided by the creditor Smt. Savitn Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. 16. Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of (he assessee as undisclosed cash credit under section 6% of the Act. " 18.11. With regard to heavy reliance placed on the decisions of Hon'ble Supreme Court by the ld. Special Counsel for the Revenue in the cases of Sumati Dayal vs. CIT reported in 214 ITR 801 and CIT vs. Durga Prasad More 82 ITR 540, we hold that no doubt that the revenue authorities were not required to put blinkers while looking at the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt and cannot be brought to tax as income of the assessee as has been held by the Hon'ble Bombay High Court in the case of Vodafone India Services Ltd., reported in 368 ITR 1, which decision has been accepted by the CBDT by not preferring further appeal to Hon'ble Supreme Court. In fact, the CBDT had also issued instruction No.2/2015 dated 29/01/2015 to all its field officers to accept the said decision of the Hon'ble Bombay High Court. In our considered opinion, the said instruction is binding on the lower authorities. 18.14. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we have no hesitation in deleting the addition made in the sum of Rs. 15 Crores u/s.68 of the Act. Accordingly, the grounds raised by the assessee in this regard are allowed. 19. In the result, appeal of the assessee in ITA No. 18/Hyd/2012 for A.Y.2008-09 is partly allowed. ITA No.790/H/2013 (A.Y.2008-09)-Assessee appeal against Section 263 Order 20. Though the assessee has raised several grounds of appeal before us, we find the only effective issue to be decided in this case is as to whether the ld. Administrative CIT-2, Hyderabad (CIT i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of quid-pro-quo arrangement by the common investor in the Carmel Asia and the assessee. The common investors had received various benefits from the Government of Andhra Pradesh and the possibility of routing investment by them cannot be ruled out and Sri YVST Sai, Addl.CIT, Range-2, Hyderabad has emphasized on this issue. 5. Mere filing of a confirmation letter from Carmel Asia does not absolve the assessee from establishing the capacity and genuineness of the transactions 21.3 The ld. CIT also observed in his order that the aspect of quid pro quo arrangement was examined by the ld. AO with reference to other investors but not with reference to Carmel Asia. The ld. CIT also observed that assessee's case has to be viewed in the backdrop of quid pro quo arrangement by the investors or share holders in Caramel Asia and the assessee. 21.4. The assessee made preliminary objections before the ld. CIT by stating that money has been received by the assessee company only from its holding company and there is nothing unusual for holding company to have substantial investment in its subsidiary company. The holding company is having sufficient source in its kitty to make investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payer and the common investors. At this stage, the information on record reveals that the AO, at the time of passing the original assessment order did not examine the capacity and genuineness of the investment of the Caramel Asia into the share capital of the tax payer and also the quid pro quo arrangement by the common investors. The AO is hereby directed to examine these three issues mainly genuineness, capacity of the Carmel Asia and quid pro quo arrangement of common investors and beside the issue in accordance with the provisions of law. For this limited purpose, I set aside the assessment made by the AO on 31/12/2010. The AO should adhere to the principles of natural justice strictly. The AO should pass a fresh assessment order in accordance with the provisions of law after a thorough enquiry of the investment by the Carmel Asia in the share capital of the assessee. 21.6. On going through the various documents enclosed in paper book No.1 comprising of pages 1-358 and paper book No.2 comprising of pages 359-614 filed by the assessee, which was sought to be referred to, at the time of hearing, we find that the very same issue was indeed examined by the ld. AO in the original a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment apparently had triggered based on the search conducted by CBI in the case of Shri Jaganmohan Reddy and his group companies on 18/08/2011 wherein certain documents were found connected to Caramel Asia (holding company) that it had received share capital and share premium from various companies at a huge premium in A.Y.2007-08. The list of those companies from whom share capital and share premium were received by Caramel Asia were listed out in the reasons recorded by the Assessing Officer assessing the holding company. We also find that in the said reasons, there is also an observation that on the basis of investigations by the CBI that companies have received certain benefits from Government of Andhra Pradesh and that those companies had invested in share capital and share premium of holding company which was sought to be taxed by ld. Assessing Officer assessing the holding company, for which assessment for A.Y.2007-08 of holding company was reopened. In fact in the said reasons, the ld. Assessing Officer assessing the holding company had even mentioned that income of Rs. 60,59,51,640/- had escaped assessment in the hands of Caramel Asia Holdings Pvt. Ltd., (holding company) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AO did not make any addition and accepted the income returned by the assessee. It is pertinent to note that this re-assessment order for A.Y.2007-08 was framed on 30/03/2015 which is much after the date of filing of charge sheets by the CBI before the Hon'ble CBI Court. The CBI chargesheet filed was filed on 31/03/2012. The revision order for A.Y.2008-09 was passed by the ld. CIT u/s.263 of the Act on 28/03/2013. Despite CBI chargesheets dated 31/03/2012 and revision order of ld. CIT dated 28/03/2013 for A.Y.2008-09, the ld. AO in the re-assessment framed for A.Y.2007-08 vide his order dated 30/03/2015 had not made any addition and simply accepted the returned income of the assessee. 21.13. We find that the Co-ordinate Bench of Bangalore Tribunal in the case of holding company of assessee i.e. Caramel Asia Holding Ltd., in ITA Nos.700 and 701/Bang/2018 for A.Yrs. 2007-08 and 2008-09 dated 02/08/2019 had quashed re-assessment proceedings for A.Y.2007-08 and 2008-09 in the hands of the holding company. We further find that the Bangalore Tribunal had also addressed the merits of the addition. Even on merits, we find that Bangalore Tribunal had deleted the addition made on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as has been elaborately dealt by us in ITA No.18/Hyd/2012 for A.Y.2008-09 hereinabove, the allotment of shares at par has been accepted by the ld. AO to be genuine and reasonable based on the performance of the assessee company. While this is so, where is the scope for the ld. CIT to say that the ld. AO had not examined the issue on receipt of share capital at par from its holding company. This is a classic case of the ld. CIT trying to substitute his view in the place of view already taken by the ld. AO in the course of assessment proceedings. There is a categorical finding given by the ld. AO in his assessment order in several places that the receipt of share capital portion from all the investors (which includes the receipt from holding company also) to be reasonable and he had accepted the same. This conclusion of the ld. AO had been accepted and endorsed by the ld. CIT(A) also in his appellate order. In fact the ld. CIT(A) had not resorted to make any enhancement by adding the share capital portion which was allotted at par though the entire issue of addition made on account of share premium from outsiders category and share capital with share premium in respect of eight inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any for A.Y.2008-09 u/s.143(3) of the Act dated 31/12/2010, the ld. AO had given a categorical finding on more than one occasion at several places of his order, that the receipt of share capital at par value from the promoters category (which includes the holding company i.e. Caremel Asia) and outsiders category are accepted as genuine and reasonable. This has been admittedly done by the ld. AO after considering all the relevant documents with supporting evidences furnished by the assessee company including the direct confirmations filed by those investor companies before the ld. AO in response to the notices issued u/s.133(6) or summons u/s.131 of the Act. Hence, the ld. AO in the light of these supporting documents had indeed taken a possible view. We find that the ld. CIT by invoking his revisionary powers is only trying to substitute his view in place of the view already taken by the ld. AO. This is not permitted in the light of the decision of the Hon'ble Bombay High Court in the case of Gabriel India Ltd., reported in 203 ITR 108 and also on the decision of Mumbai Tribunal in the case of Cricket Club India Ltd., vs. PCIT for A.Y.2013-14 dated 03/08/2018 reported in (2018) 66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The Revenue placed reliance upon the decision of the Delhi High Court in D.G. Housing Projects Ltd., (supra) that as the Assessing Officer had not enquired into the source of the source of the gifts received by the Assessee, the Assessment Order is erroneous. The aforesaid decision holds that the power of Revision under Section 263 of the Act would normally be exercised in case of no enquiry and not in cases of inadequate enquiry. However, even in case of inadequate enquiry by the Assessing Officer, the order of the Assessing Officer could be erroneous in two classes of situation. The first class would be where orders passed by the Assessing Officer are ex facie erroneous i.e. a decision rendered ignoring a binding decision in favour of the Revenue or where enquiry is per se mandated on the basis of the record available before the Assessing Officer and that is not done. In the second class of cases, where the order is not ex facie erroneous, then the CIT must himself conduct an enquiry and determine it to be so. The Court held that it is not permissible to the CIT while exercising power under Section 263 of the Act to remit the issue to the Assessing Officer to re-examine the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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