JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned Senior Standing Counsel Mr. Karan G. Sanghani for the appellant. 2. This appeal is preferred under section 260A of the Income Tax Act, 1961 (For short “the Act”) raising the following substantial question of law arising out of order dated 28.03.2024 passed by the Income Tax Appellate Tribunal, Rajkot (For short “the Tribunal”) in ITA No.373/Rjt/2015 for Assessment Year 2011-2012: “i) Whether the Appellate Tribunal has erred in law and on facts in deleting the addition made under section 68 of the Act without appreciating that the assessee has introduced unaccounted money in form of bogus share capital and share premium raised from paper companies/ accommodation entries and therefore, the same is an unexplained capital introduction under section 68 of Income-tax Act, 1961?" 3. Brief facts of the case are that the assessee is a private limited company and engaged in the business of manufacturing Brass products. 4. The Assessing Officer passed an order dated 13.02.2015 under Section 153A read with section 143(3) of the Act for the year under consideration assessing total income at Rs.13,73,05,004/-. 5. Being aggrieved, the respondent assessee preferred an appeal before the CIT(Appeals) who by order dated 14.05.2015 partly allowed the appeal and deleted the addition made under section 68 of the Act. 6. The appellant Revenue preferred an appeal before the Tribunal who by order dated 24.02.2023 dismissed the appeal confirming the order passed by CIT(Appeals) on the issue of addition under section 68 of the Act. 7. Being aggrieved, the Revenue preferred Tax Appeal No.508 of 2023 before this Court which was also dismissed by order dated 29.08.2023. 8. It appears that against the order dated 24.2.2023 passed by the Tribunal, the appellant Revenue had also preferred Miscellaneous Application No.33/Rjt/2023 before the Tribunal on the ground that the arguments and the submissions made by the departmental representative was not considered in the order. The fact of preferring Miscellaneous Application was not disclosed before this Court. The Tribunal however, without considering the order passed by this Court dated 29.08.2023 recalled the order dated 24.02.2023 passed in ITA No. 373/Rjt/2015. 9. The fact of preferring Miscellaneous Application was not disclosed before this Court. The Tribunal however, without considering the order passed by this Court dated 29.08.2023 recalled the order dated 24.02.2023 passed in ITA No. 373/Rjt/2015. 9. It is pertinent to note that once this Court has passed the order dated 29.08.2023 dismissing the tax appeal of the Revenue, order passed by the Tribunal on 24.02.2023 had already merged into order of this Court and therefore, the Tribunal could not have recalled the said order. 10. Be that as it may, the Tribunal thereafter again by the impugned order dated 28.03.2024 dismissed the appeal of the Revenue reiterating the same reasoning which were given in order dated 24.02.2023 dismissing the appeal of the Revenue which is confirmed by this Court. 11. The Tribunal while recalling its order dated 24.02.2023, has observed as under: “12. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case are not in dispute. Therefore, we are not inclined to repeat the same. The provisions of Section 68 of the Act fasten the liability on the assessee to provide the identity of the lenders/creditor/investor, establish the genuineness of the transactions and creditworthiness of the lenders/creditor/investor. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon'ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd. 208 ITR 465 wherein it was held as under: "It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough." 12.1 Now first we proceed to understand the identity of the party. The identity of the party refers to the existence of such a party, which can be proved based on evidence. As such, the identity of a party can be established by furnishing the name, address and PAN detail, bank details, ITR etc. 12.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers to what has been asserted to be true and authentic. As such, the identity of a party can be established by furnishing the name, address and PAN detail, bank details, ITR etc. 12.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers to what has been asserted to be true and authentic. A genuine transaction must be proved to be genuine in all respects, not merely on a piece of paper. The documentary evidence should not be a mask to cover the actual transaction or designed in a way to present the transaction as true but the same is not. The genuineness of transaction can be proved by submitting confirmation of the parties along with the details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient to prove the genuineness. As such, the same should also be proved by circumstantial surrounding evidence as held by the Flontle Supreme Court in the case of Shri Durga Prasad More, 82 ITR 540 and in the case of Smt. Sumati Dayal, 214 ITR 801. 12.3 The last stage comes to verify the creditworthiness of the parties. The term creditworthiness as per Black Law Dictionary refers as: "creditworthy, adj. (1924) (Of a borrower) financially sound enough that a lender will extend credit in the belief default is unlikely; fiscally healthy-creditworthiness." 12.4 Similarly in The New Lexicon Webster's Dictionary, the word "creditworthy" has been defined as under: "creditworthy, adj. of one who is a good risk as a borrower." 12.5 It is the duty of the assessee to establish that creditor/investor party has capacity to make investment and having requisite fund in its books of account and banks. The capacity to invest can be established by showing sufficient income, capital and reserve or other funds in the hands of the investors. It is required by the AO to find out the financial strength of the investor to invest in shares with a judicious approach and in accordance with materials available on record but not in an arbitrary and mechanical manner. 12.6 In the light of the above discussion, we proceed to adjudicate the issue at hand. It is required by the AO to find out the financial strength of the investor to invest in shares with a judicious approach and in accordance with materials available on record but not in an arbitrary and mechanical manner. 12.6 In the light of the above discussion, we proceed to adjudicate the issue at hand. As far as the question of identity of the investor parties are concern, we note that the same has been establish beyond doubt as all these parties are corporate assessee (except 1 namely Shri Manesh G Grodia), their PAN, ITR and other details are available on record. The learned DR also did not dispute the identity of the investors. 12.7 Coming to the issue of genuineness and creditworthiness. Before going into the same it is pertinent to highlight that the assessee company was formed during the year under consideration (i.e. on 1st June 2010) by taking running business of proprietary concern of promoter Shri Ramgopal Maheshwari with 1 lakh shares of Rs. 10 per share. After incorporation, the assessee further issued/allotted 41,200 shares to promotor Ramgopal Maheswari and 134160 shares to 12 outside parties as on 31st March 2011. The amount credited from those 12 outside parties in the form of share capital & Premium are in dispute before us. At the outset, we note there were 2 investors namely Inox Trade Pvt Ltd and Vitrag Mines & Mineral Pvt Ltd in which entire amount of share capital & premium was received by the proprietary concern in the immediate previous assessment year i.e. 2010- 11 and shown as loan and after conversion of the company, the loan amount was converted into share capital. Similarly, there were 6 parties in which cases part of the amount was received by the assessee in A.Y. 2010-11 when it was proprietary concern and shown as loan. After conversion to company, the loan was converted into shares. In the case of proprietary concern, the assessment under section 153A of the Act was framed for the A.Y. 2010-11 where genuineness of loan credit from said parties was examined and accepted by the AO. Therefore, in our considered view once the credit of such loan credit in erstwhile proprietary concern was accepted, then the conversion of such loan credit into share capital and premium thereon on subsequent occasion cannot be doubted. Therefore, in our considered view once the credit of such loan credit in erstwhile proprietary concern was accepted, then the conversion of such loan credit into share capital and premium thereon on subsequent occasion cannot be doubted. 12.8 Be that as may be, we find that during the assessment proceedings details such as name of investors, their addresses, PAN, ITR, audited financial statements, bank statement, share application form & letter, share allotment letter and confirmation letter etc were furnished. The AO issued notices under section 133(6)/131(1) of the Act for verification. The AO recorded finding that in the second attempt the investors made reply in response to notices issued to them where in they have responded/answered to each, and every query raised by the AO and furnished the required documents. However, the AO without pointing any deficiency in the above primary document and explanation furnished by the parties in response to notice under section 133(6) held that same is not sufficient enough and accordingly held that the assessee failed to explain the genuineness of the credit of share capital for the reason that the physical share certificates were not issued to the investors, charging of premium was not justified satisfactory and there was no dividend issued. 12.9 The entire thrust of the Revenue for treating share capital shown by the assessee as unexplained cash credit under section 68 of the Act is misplaced. It is for the reason that the fact that the physical share certificates issued to the shareholders were lying with the assessee cannot replace the other documentary evidence, as discussed above, filed by the assessee during the assessment proceedings. In other words, the fact that the share certificates were lying with the assessee can create suspicion in the mind but the same cannot partake the colour of the evidence especially in the circumstances where there was no change in the shareholder list till as on 31st of March, 2022. As such, all the shares subscribers who subscribed the shares in the year ending as on 31 March 2011 were still the shareholders in the assessee company till 31 March 2022. Had the shareholders been bogus, those shareholders would have transferred the shares to the director's/promoters of the company or their relatives or the associated enterprises. As such, all the shares subscribers who subscribed the shares in the year ending as on 31 March 2011 were still the shareholders in the assessee company till 31 March 2022. Had the shareholders been bogus, those shareholders would have transferred the shares to the director's/promoters of the company or their relatives or the associated enterprises. But it has not been done so, which implies that those shareholders are still holding control of the assessee company in the capacity of shareholders. As regard to the principles laid down by the Hon'ble SC in the case of NRA Iron Steel Pvt. Ltd. (Supra), we note that the facts are distinguishable from the present facts of the case. For this purpose, we refer to the order of Pune Tribunal in the case of Deputy Commissioner of Income Tax Central Circle, Aurangabad v. Mahalaxmi TMT (P.) Ltd. 190 ITD 582 wherein it was held as under: …… 12.10 Coming to the argument of the learned DR made before us. The learned DR submitted that bank statement of the investor parties provided by the assessee is not proper for the reason that statement was containing transaction for merely one or two days only. In this regard, we note that the statement shows relevant transfer entry to assessee and the same matches the bank statement of the assessee. The relevant bank statement also shows that before the transfer of amount to the assessee there was sufficient balance on account of credit from other parties through the banking channel. Thus, the amount transferred to the assessee company was not out of any cash deposit in the bank of the investor parties. However, a doubt may arise in the mind of prudent person regarding the fact there were immediate credit in the bank of the investor company equivalent to the amount transferred to the assessee which needs inquiry to draw any inference, but no such inquiry carried by the revenue. It also to be kept in mind that under the provision of section 68 of the Act, as applicable for the year under dispute, the assessee is only expected to explain the source of credit in its books and not the source of credit in the books of the party. It also to be kept in mind that under the provision of section 68 of the Act, as applicable for the year under dispute, the assessee is only expected to explain the source of credit in its books and not the source of credit in the books of the party. The learned DR pointed out that in the case of the M/s Blueprint Securities, the bank statement submitted did not contain name of account holder and account number. In this regard, we note that the assessee has provided total 4 pages of bank statement of the impugned party (Blueprint Securities Ltd) containing transaction for the month of June 2009, July 2010, august 2010 and October 2010 and assessee received an amount of Rs. 50 Lakh in each said month. The bank statement containing transaction for the month of July and august 2010 was not containing account number and holder name but other two pages duly contain this information. However, the transfer entry dated 12-07-2010 and 19-08- 2010 duly contains the name of the assessee and the same was credited in the bank of the assessee in the name of M/s Blueprint Securities as evident from the bank statement of the assessee. Hence, considering the facts in entirety, the argument raised by the learned DR does not hold good. Likewise in the case of M/s Spring Sales Pvt Ltd, the learned DR pointed out that only an amount of Rs. 16 lakh was found debited in the bank of the party against total receipt of Rs. 25 Lakh. The argument raised by the learned DR was duly controverted by the learned AR in rejoinder. The learned AR substantiated that there were 2 entries of Rs. 9 lakh and 16 lakh which appearing in the bank statement of the party and the assessee available at page 537 to 540 of the paper books. 12.11 The learned DR also referred to the spot inquiry conducted by the AO through investigation wing in the case of the investor parties and as a result of the same the parties were not found at their given address. In this regard, we note that the assessee before the AO has explained that the parties have changed their address therefore, they were not found at the old address. In this regard, we note that the assessee before the AO has explained that the parties have changed their address therefore, they were not found at the old address. The assessee also provided new addresses of the parties on which fresh notices under section 133(6) of the Act were issued by the AO in which the series of question asked by the AO from the investor to which all the investors duly complied with and provided all the required details. Therefore, in our considered opinion spot enquiry report by the investigation report become redundant as all the investor parties, notice under section 133(6) of the Act, were duly served in second attempt which were issued after fresh addresses provided by the assessee. 12.12 Now coming to judgment of Hon'ble Gujarat High Court in the case of Umesh Krishnani vs. ITO (supra) and Pavankumar M. Sanghvi vs. ITO (supra) relied by the learned DR, in this regard, we note that the fact of the assessee case viz-a-viz above-mentioned case are different. In the case of Umesh Krishanani, it was found that there were cash deposits in the bank of the creditor parties immediately before the transfer of lund in the guise of loan. Further, the loan parties before the revenue also did not explain such cash deposit in their bank and the loan extended by them to Shri Umehs Krishanani was found non-genuine. Likewise in the case of Parvinkumar M Sangvai, it was found that the parties from whom unsecured loan credited were paper companies engaged in the activity of accommodation entry. But in the present case there is no such finding of the investigation. The investigation wing deputed for spot enquiry only submitted the parties were not found at their address and such report based on statement of random people working building/locality where investor parties situated. Furthermore, in the present case, the genuineness of the transactions and creditworthiness of most of the parties were accepted by the Revenue in the earlier year discussed above. in the same 12.13 In view of the above and after considering the facts in entirety, in our humble understanding, the principles laid down by the Hon'ble Supreme Court and High Court in the case of NRA Iron & Steel Pvt. Ltd. (Supra), Shri Umehs Krishanani and Parvinkumar M. Sangvai, are not applicable in the given facts and circumstances. in the same 12.13 In view of the above and after considering the facts in entirety, in our humble understanding, the principles laid down by the Hon'ble Supreme Court and High Court in the case of NRA Iron & Steel Pvt. Ltd. (Supra), Shri Umehs Krishanani and Parvinkumar M. Sangvai, are not applicable in the given facts and circumstances. 12.14 It is equally important to note that it was the 1st year of operation of the assessee company and that might be the reason for not declaring the dividend. Moreover, the declaration of the dividend by the company has nothing to do with the share capital received by the assessee. Accordingly, we are of the view that no adverse inference can be drawn against the assessee in the event of non-declaration of dividend in the year under consideration. 12.15 In view of the above elaborated discussion and after considering the facts in totality, we hereby hold the assessee discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal of the Revenue on merit is hereby dismissed.” 12. This Court has already dismissed the appeal arising out of order of the Tribunal dated 24.02.2023 in Tax Appeal No. 508 of 2023, wherein it is observed as under: “3 Considering the above finding of facts arrived at by the Tribunal confirming the finding of the CIT(A), we are of the opinion that in view of the concurrent findings by both the lower authorities, no question of law, much less any substantial question of law arises sofar as question No.1 is concerned, in view of the fact that the Tribunal has rightly held that the provisions of Sec.68 of the Act cannot be invoked, more particularly when the addition is made on account of the share premium and the share application money by the investors whose identity, creditworthiness and genuineness is proved by the assessee before the authority.” 13. In view of the above, when the Tribunal has recorded the findings of fact firstly in order dated 24.02.2023 and again in detail in the impugned order dated 28.03.2024, we are of the opinion that in view of the concurrent findings arrived at by both the authorities, no question of law much-less any substantial question of law arises for our consideration from the impugned order of the Tribunal so far as proposed question of law is concerned in view of the fact that the Tribunal has rightly held that provisions of section 68 of the Act cannot be invoked when addition is made on account of share premium and share application money by the investor whose identity, creditworthiness and genuineness is proved before the authority. 14. Appeal therefore, being devoid of any merit is accordingly dismissed.