IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP &

MS PADMAVATHY S, AM I.T.A. No.786/Mum/2025 (Assessment Year: 2015-16)

I.T.A. No.785/Mum/2025 (Assessment Year: 2016-17)

ACIT, Central Circle-1, Nakul Markhedkar, Room No.10, 6^th Floor, A-Wing, 1905, Drewberry, Kolshet Road, Ashar I.T. Park, Road No. 16Z, Everest World, Thane (West), Vs.

Wagle Estate, Thane (West), Maharashtra -400604.

Maharashtra. PAN: CPQM1819G Appellant) : Respondent Appellant /Assessee by : Shri Vijay Mehta, AR Revenue / Respondent by : Shri Rakesh Ranjan - Sr. DR Date of Hearing : 22.04.2025 Date of Pronouncement : 30.04.2025 O R D E R Per Padmavathy S, AM:

These appeals by the Revenue are against the separate orders of the Commissioner of Income Tax (Appeals)-11, Pune [In short 'CIT(A)'] both dated 08.11.2024 for AY 2015-16 & 2016-17. The common issue contended by the revenue in both the appeals pertain to the CIT(A) deleting the addition made by the AO under section 56(2)(vii)(c) of the Income Tax Act, 1961 (the Act) by applying Rule 11UA of the Income Tax Rules, 1962 (the Rules).

2. For the purpose of adjudication, we will consider the revenue's appeal for AY 2015-16 as the lead case. The assessee is an individual and has not filed the original return of income for AY 2015-16. There was a search & seizure action under section 132 of the Act on 24.03.2021 on M/s Vikram Group which is engaged in the business of procuring and setting up power transmission and distribution lines on contract basis and assessee is included in the search operation. The Assessing Officer (AO) issued a notice under section 153A of the Act and in response the assessee filed the return for AY 2015-16 on 11.12.2021 declaring a total income of Rs. 1,25,000/-. During the proceedings the AO held that the assessee has indirectly acquired the shares of M/s Ratangiri Financial Advisory Pvt. Ltd (RFAPL) by purchasing shares of the holding companies of RFAPL Viz., M/s Farista Financial Consultants Pvt Limited and M/s Deb Suppliers & Traders Pvt Limited. The AO was of the view that the by acquiring the shares of the M/s Farista Financial Consultants Pvt Limited for a consideration the assessee has acquired the shares of RFAPL at a price which is lower than the Fair Market Value (FMV) of the shares of RFAPL. The allegations of the AO as summarised by the CIT(A) is extracted below –

“6.1 Shares of M/s Ratnagiri Financial Advisory Pvt Limited (now known as M/s Vikran Engineering & Exim Pvt Limited) was acquired by M/s Vikran Group by purchasing shares of its holding companies through the assessee and other family members.

6.2 M/s Ratnagiri Financial Advisory Pvt Limited (RFAPL) was incorporated on 04.06.2008 at Kolkata with the total share capital of Rs. 1,00,000/-. There was a change of promoters on 10.07.2008. The new promoters on 31.03.2009 ---raised further share capital of Rs. 28,03,780/- along with share premium of Rs. 13,73,85,220/- by issuing shares @ 500/- per share (Face value of Rs. 10 + premium of Rs. 490 per share). The AO has observed that the said company did not have any significant business activity during FY 2008-09 justifying the share premium of Rs. 490/- per share. As per assessing officer, the share capital of Rs. 14.02 crores was raised from shell companies being operated by accommodation entry operators in Kolkata.

6.3 Subsequently, on 31.03.2011, a total number of 1,44,430 shares of RFAPL were acquired by M/s Farista Financial Consultants Pvt Limited and 1,44,948 shares of RFAPL were acquired by M/s Deb Suppliers & Traders Pvt Limited for nominal amounts. As per assessing officers, these two companies were also operated by accommodation entry operator namely Shri Anand Sharma.

6.4 In the month of December, 2014, the shareholding pattern of M/s RFAPL was as under:

6.5 As per assessment order, the total number of shares issued by M/s Farista Financial Consultant Pvt Limited were 10,000 and these shares were held by Shri Abhinash Sharma (5000 shar