M/s NPMG Developers P. Ltd., New Delhi V. ACIT, New Delhi

CO 119/DEL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6972 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-01-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 18-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S KOCHAR
• Assessee Lawyers: R S NEGI
• Keywords: Unexplained cash credit; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 131; 68; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI G.D. AGRAWAL, HONBLE VICE-PRESIDENT AN D SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO. 1372/DEL/2011 ASSESSMENT YEAR: 2001-02 ASSISTANT CIT, VS. M/S. NPMG DEVELOPERS P.LTD., CIRCLE 13(1), 56-NAVJEEVAN VIHAR, NEW DELHI. NEW DELHI. (PAN: AABCN2229E) (APPELLANT) (RESPONDENT) ( CROSS OBJ. NO. 119/DEL/2011 ) ITA NO. 1372/DEL/2011 ASSESSMENT YEAR: 2001-02 M/S. NPMG DEVELOPERS P.LTD., VS. ASSISTANT CIT, 56-NAVJEEVAN VIHAR, CIRCLE 13(1), NEW DELHI. NEW DELHI. (PAN: AABCN2229E) (APPELLANT) (RESPONDENT) REVENUE BY: SHRI RS NEGI, SR. DR RESPONDENT BY: SHRI JS KOCHAR, C A DATE OF HEARING : 13.01.2012 DATE OF PRONOUNCEMENT : 29.02.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED CIT(APPEALS) DATED 19.11.2010 PASSED FOR ASSESSMENT YEAR 2001-02. ON RECEIPT OF NOTICE IN THE REVENUE S APPEAL, ASSESSE E HAS FILED THE CROSS- OBJECTION BEARING NO.119/DEL/2011. IN THE CROSS-OBJ ECTION, ASSESSEE HAS 2 TAKEN PRELIMINARY OBJECTION, THEREFORE, FIRST WE PR OCEED TO DISPOSE OF THE CROSS-OBJECTION FILED BY THE ASSESSEE. GROUND NOS. 1, 2, 2A AND 3 TAKEN IN THE CROSS-OBJECTION ARE INTER-CONNECTED TO EACH OTH ERS. IN THESE GROUNDS OF APPEAL, ASSESSEE HAS PLEADED THAT LEARNED CIT(APPEA LS) HAS ERRED IN HOLDING THAT ITO, WARD 13(2) WAS COMPETENT TO PASS THE ASSE SSMENT ORDER UNDER SECTION 147 READ WITH SECTION 143(3) OF THE ACT WHE REAS THE REASSESSMENT PROCEEDINGS WERE INITIATED BY ACIT, CIRCLE 13(1), W HO HAD JURISDICTION OVER THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT REASONS FOR INITIATING REASSESSMENT PROCEEDINGS WERE RECORDED B Y ACIT, CIRCLE 13(1). HE SERVED A NOTICE UPON THE ASSESSEE UNDER SEC. 148 . THE ASSESSMENT ORDER HAS BEEN PASSED BY THE ITO, WARD 13(2). THERE IS NO ORDER AVAILABLE ON THE RECORD UNDER SEC. 127 OF THE ACT. HE FURTHER CONTEN DED THAT THE LEARNED CIT(APPEALS) IS NOT JUSTIFIED IN OBSERVING THAT SIN CE ASSESSEE HAS NOT RAISED ANY OBJECTION OVER THE JURISDICTION OF ITO, WARD 13 (2), DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CANNOT RAISE OBJECTION I N THE APPELLATE PROCEEDINGS. ON THE OTHER HAND, LEARNED DR RELIED U PON THE ORDER OF LEARNED CIT(APPEALS) AND SUBMITTED THAT LEARNED ACI T, CIRCLE 13(1) AS WELL AS ITO, WARD 13(2) HAD CONCURRENT JURISDICTION OVER THE ASSESSEE. ACCORDING TO THE INTERNAL MECHANISM, IF RETURNED IN COME OF AN ASSESSEE IS 3 LESS THAN RS. 10 LACS THEN JURISDICTION OVER SUCH A N ASSESSEE WOULD BE OF THE ITO OTHERWISE ASSESSMENT WOULD HAVE BEEN PASSED BY THE ACIT. 2. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE WAS UNABLE TO EXPLAI N THAT ITO, WARD 13(2), HAS NOT THE CONCURRENT JURISDICTION OVER THE ASSESS EE. LEARNED FIRST APPELLATE AUTHORITY HAS OBSERVED THAT IN A CIRCLE UNDER AN AC IT, THERE IS A CONCURRENT JURISDICTION WITH ALL ASSESSING OFFICERS OF A RANGE , THIS ASPECT HAS DULY BEEN CONSIDERED BY THE LEARNED FIRST APPELLATE AUTH ORITY AND WE DO NOT FIND ANY FLAW IN TAKING JURISDICTION OVER THE ASSESSEE A ND MORE SO ASSESSEE DID NOT RAISE ANY OBJECTION DURING THE COURSE OF ASSESS MENT PROCEEDINGS IN THIS REGARD, THEREFORE, LEARNED FIRST APPELLATE AUTHORIT Y HAS RIGHTLY REJECTED THE ARGUMENTS OF ASSESSEE ON THESE ASPECTS. THESE GROUN DS OF CROSS-OBJECTION ARE REJECTED. 3. IN GROUND NOS. 4 AND 5, ASSESSEE HAS PLEADED THA T NOTICE UNDER SEC. 143(2) OF THE ACT WAS NOT SERVED UPON IT WITHIN THE STATUTORY TIME PERIOD AND, THEREFORE, REASSESSMENT PROCEEDING IS BAD IN T HE EYES OF LAW. 4. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORDS CAREFULLY. THE ISSUE REGARDING VALID SE RVICE OF NOTICE UNDER 4 SECTION 143(2) IS IRRELEVANT IN THIS CASE. SECTION 143(2) OF THE ACT PROVIDES THAT WHERE A RETURN HAS BEEN FURNISHED UNDER SECTIO N 139 OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTION 142 OF THE ACT, ASSESSING OFFICER SHALL;- I) WHERE HE HAS REASON TO BELIEVE THAT ANY CLAIM OF LO SS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MADE IN T HE RETURN IS INADMISSIBLE, SERVE ON THE ASSESSEE A NOTICE SPECIF YING PARTICULARS OF SUCH CLAIM OF LOSS, EXEMPTION, DEDUC TION, ALLOWANCE OR RELIEF AND REQUIRE HIM ON A DATE TO B E SPECIFIED ASSIGN TO PRODUCE OR INFLUENCED TO BE PRODUCED ANY EVIDENCE OR PARTICULARS SPECIFIED THEREIN OR ON WHICH THE ASSES SEE MAY RELY IN SUPPORT OF SUCH CLAIM; PROVIDED - X X X X X X X X II) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (1), I F HE CONSIDERS IT NECESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED INCOME OR NOT COMPUTED EXCESSIV E LOSS OR HAS NOT PAID THE BONUS IN ANY MANNER, SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM, ON A DATE TO BE SPECIFIED THE REIN EITHER TO ATTAIN HIS OFFICE OR TO PRODUCE OR INFLUENCED TO BE PRODUCED IN EVIDENCE OF WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN. PROVIDED - X X X X X X X X 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS FILED A LETTER ON 15 TH SEPTEMBER 2008, STATING THEREIN THAT THE RETURN FI LED ON 5 30 TH OCTOBER 2001 FOR THE YEAR UNDER CONSIDERATION MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SEC. 148 OF T HE ACT. THEREFORE, ASSESSING OFFICER OUGHT TO HAVE ISSUED A NOTICE UND ER SEC. 143(2) UPON THE ASSESSEE. WITH THE HELP OF COPY OF DISPATCH REGISTE R AND THE COPY OF THE LETTER DATED 10.11.2008, IST OF SEPTEMBER, 2008 AVAILABLE ON PAGES 5, 9 AND 44A OF THE PAPER BOOK, HE SUBMITTED THAT NO NOTICE WAS SER VED UPON THE ASSESSEE. ON DUE EXAMINATION OF THESE RECORDS, WE FIND THAT N OTICE UNDER SEC. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER ON 27.3.2008. IT WAS DULY SERVED UPON THE ASSESSEE OTHERWISE ASSESSE E WOULD HAVE ARGUED THAT THIS NOTICE WAS NOT ISSUED AND SERVED UPON IT WITHIN A PERIOD OF SIX YEARS FROM THE END OF THE ASSESSMENT YEAR AND WHOLE PROCE EDING WOULD BE A NULLITY. THE ASSESSEE HAS CONTENDED THAT RETURN FIL ED ORIGINALLY BE TREATED AS FILED IN RESPONSE TO THE NOTICE UNDER SEC. 148 OF T HE ACT. THIS WAS MADE BY THE ASSESSEE ON 15 TH SEPTEMBER 2008. BY THAT TIME, ASSESSING OFFICER HA S ALREADY SET THE ASSESSMENT MACHINERY IN MOTION. THE REQUIREMENT UNDER SEC. 143(2) IS TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE , WHAT HE WANTS TO SAY IN SUPPORT OF THE RETURN? [CLAUSES (I) AND (II) OF SEC TION 143(2) OF THE ACT SPECIFICALLY CONTEMPLATES THAT ANY EVIDENCE ASSESSE E WANTS TO RELY UPON IN SUPPORT OF HIS RETURN, BUT WHERE THE RETURN HAS NOT BEEN FURNISHED WITHIN THE DUE PERIOD THEN WHAT OPPORTUNITY ASSESSEE WOULD EXP ECT. ASSESSING OFFICER 6 HAD ISSUED NOTICES UNDER SEC. 142 AND CALLED FOR IN FORMATION IN THE SHAPE OF BANK STATEMENTS ETC. VIDE HIS LETTER DATED IST OF S EPTEMBER, 2008 WHICH HAS DULY BEEN FURNISHED BY THE ASSESSEE. THE SITUATION CAN BE EXPLAINED BY A SIMPLE EXAMPLE, SAY, NOTICE UNDER SEC. 148 WAS SERV ED UPON THE ASSESSEE ON 29.3.2008. ASSESSING OFFICER HAS TO PASS THE ASSESS MENT ORDER BEFORE DECEMBER 31, 2008. THE ASSESSEE DID NOT FILE THE RE TURN IN RESPONSE TO THE NOTICE U/S. 148, BUT THE ASSESSING OFFICER STARTED THE ASSESSMENT PROCEEDINGS, CALLED FOR INFORMATION UNDER SEC. 142( 2) AND UNDER OTHER PROVISIONS. ON 28.12.2008, ASSESSEE FILED A LETTER THAT RETURN FILED BY THE ASSESSEE ORIGINALLY BE TREATED AS FILED IN RESPONSE TO THE NOTICE UNDER SEC. 148 AND THEN EXPECT THAT A NOTICE UNDER SEC. 143(2) WOU LD BE SERVED UPON HIM. IN SUCH A SITUATION, THE ASSESSMENT PROCEEDINGS WILL B E AT THE WILL OF AN ASSESSEE. THE INCOME-TAX ACT, 1961 DOES NOT CONTEMP LATE SUCH A SITUATION, THEREFORE, THERE IS NO VIOLATION AT THE END OF ASSE SSING OFFICER IN CONDUCTING THE PROCEEDINGS AND WE DONT FIND ANY MERIT IN GROU ND NOS.4 AND 5 OF THE CROSS-OBJECTION, THESE ARE REJECTED. 6. IN GROUND NOS.6 AND 7, ASSESSEE HAS PLEADED THAT THE LEARNED CIT(APPEALS) HAS ERRED IN UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS. IT FURTHER PLEADED THAT ADDITIONAL CIT HAD GRANTED APPROVAL UNDER SEC. 151 WITHOUT APPLICATION OF MIND. WE HAVE DULY CONSIDERED THE 7 RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREF ULLY. ON PAGE NOS. 7 & 8 OF THE PAPER BOOK, COPY OF THE REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER SEC. 148 HAS BEEN PLACED. THE APPROVAL OF LEARNED A DDITIONAL CIT IS ALSO AVAILABLE AT THE END OF THE REASONS. LEARNED ASSESS ING OFFICER HAS ELABORATELY NOTICED TWO INFORMATION REMITTED BY THE INVESTIGATION WING ABOUT THE ACCOMMODATION ENTRY AVAILED BY THE ASSESS EE. AT THIS STAGE, HE HAS JUST TO FORM A PRIMA FACIE OPINION TO THE EFFECT TH AT INCOME HAS ESCAPED ASSESSMENT OR NOT. TO OUR MIND, ON THE BASIS OF THE REASONS RECORDED BY THE ASSESSING OFFICER, IT IS POSSIBLE TO HARBOR A BELIE F THAT INCOME HAS ESCAPED. THERE IS NO SCRUTINY ASSESSMENT IN THE CASE OF THE ASSESSEE. LEARNED ADDITIONAL CIT AFTER PERUSAL OF THESE REASONS HAS R ECORDED THAT HE IS SATISFIED ABOUT THE ESCAPEMENT OF INCOME AND A FIT CASE FOR R EOPENING OF ASSESSMENT. ON DUE CONSIDERATION OF THESE MATERIAL, WE DO NOT F IND ANY MERIT IN THESE GROUNDS OF APPEAL ALSO. THEY ARE REJECTED. 7. NOW, WE TAKE UP THE APPEAL OF THE REVENUE : 8. THE GRIEVANCE OF THE REVENUE IN ITS APPEAL IS T HAT THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 12 LACS WHICH WAS MADE BY THE ASSESSING OFFICER WITH THE AID OF SECTI ON 68 OF THE ACT. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESS ING OFFICER THAT ASSESSEE HAS ISSUED 3,40,000 SHARES OF RS.10 EACH. IT HAS RE CEIVED A SUM OF RS.34 LACS 8 AS SHARE APPLICATION MONEY. OUT OF THAT RS.12 LACS HAS BEEN RECEIVED FROM THE FOLLOWING THREE PARTIES: S.NO. NAME & ADDRESS AMOUNT (RS.) 1. M/S. WELCOME COIR INDIA LTD. 4,00,000 2. M/S. PERFORMANCE TRADING & INVESTMENT P. LTD. 3,00,000 3. M/S. DINA NATH LUHARIWALA SPINNING MILLS P. LTD. 5,00,000 9. ACCORDING TO THE ASSESSING OFFICER, THESE PARTIE S WERE MANAGED BY SHRI MAHESH GARG AND MAHESH BATRA WHO WERE INDULGED IN PROVIDING ACCOMMODATION ENTRY AFTER RECEIPT OF CASH. LEARNED ASSESSING OFFICER TERMED THE TRANSACTION AS NON GENUINE AND MADE THE ADDITION. 10. ON APPEAL, LEARNED FIRST APPELLATE AUTHORITY HA S DELETED THE ADDITION BY RECORDING FOLLOWING REASONS: 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT COMPANY. THE RECEIP T OF RS.12,00,000 BY THE APPELLANT COMPANY DURING THE YEAR HELD TO BE UNEXPLAINED CREDITS U/S. 68 OF THE ACT IS STATED TO BE SHARE CA PITAL/SHARE APPLICATION MONEY FROM THREE PARTIES I.E. M/S.WELCOME COIR INDI A LTD. (RS. 4 LACS); M/S. PERFORMANCE TRADING & INVESTMENTS P. LT D. (RS.3 LACS ) AND M/S. DEENA NATH LOHARI WALA SPINNING MILLS LTD. (RS. 5 LACS). 9 THE ASSESSING OFFICER HAS PROCEEDED TO MECHANICALLY ADD THE RECEIPTS FROM THE AFORESAID COMPANIES ON THE BASIS OF THE RE PORT OF THE INVESTIGATION WING WITHOUT BRINGING ON RECORD ANY M ATERIAL TO ESTABLISH THAT THESE WERE ACTUALLY THE UNDISCLOSED INCOME OF THE APPELLANT COMPANY. WHEN THE APPELLANT HAD FURNISHED THE CERTIFICATES OF INCORPORATION OF THE SHAREHOLDER COMPANIES, THEI R ASSESSMENT PARTICULARS, COPIES OF THEIR INCOME TAX RETURNS ACK NOWLEDGEMENTS, COPIES OF THEIR BANK STATEMENTS AND THE COPY OF THE RETURN OF ALLOTMENT FILED WITH THE ROC, THERE REMAINS NO DOUBT ABOUT TH E IDENTITY OF THESE SHAREHOLDERS. WHILE MAKING AN ADDITION OF RS.12,00,000 ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT FROM TH E ABOVE MENTIONED THREE PARTIES, THE ASSESSING OFFICER HAS OVERLOOKED THE RATIO OF THE CASE OF CIT VS. LOVELY EXPORTS PVT. LT D. (2008) 216 ITR 195 WHEREIN THE HONBLE APEX COURT, WHILE ANSWERING THE QUESTION THAT CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME U/S. 68 OF IT ACT, 1961 HELD THAT IF THE SH ARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE A.O., THE N THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSES SMENTS IN ACCORDANCE WITH LAW. THE DETAILS FILED DURING THE RE-ASSESSMENT AND APPE LLATE PROCEEDINGS (INCOME-TAX PARTICULARS OF ABOVE SAID THREE PARTIES , COPY OF THEIR BANK STATEMENTS, COPY OF RETURN FILED WITH ROC) SUPPORT THE IDENTITY OF THE INVESTORS/SHARE APPLICANTS AND ALSO PROVE THAT THE SHARE APPLICATION 10 TRANSACTION ENTERED BY THE APPELLANT WITH THE SAID INVESTORS IN GENUINE TRANSACTION. AFTER CONSIDERING THE VARIOUS JUDGMENT S OF THE JURISDICTIONAL HIGH COURT AS WELL AS OF HON'BLE SUP REME COURT, I AM OF THE VIEW THAT NO ADDITION ON ACCOUNT OF SHARE AP PLICATION MONEY CAN BE MADE IN THE HANDS OF THE APPELLANT COMPANY. THE ASSESSING OFFICER HAS NOT EFFECTED ANY INQUIRIES TO BRING OUT ANY FACT WHICH COULD SUGGEST THAT THESE THREE PARTIES HAD GIVEN AC COMMODATION ENTRIES TO THE APPELLANT AND THAT THE MONEY RECEIVE D FROM THESE PARTIES WAS APPELLANTS OWN UNDISCLOSED INCOME AND ROUTED B ACK TO THE APPELLANT COMPANY IN THE GUISE OF SHARE APPLICATION MONEY. THE FACT IS THAT THE ASSESSING OFFICER HAS SIMPLY RELIED UPON T HE INFORMATION PROVIDED BY THE INVESTIGATION WING OF THE DEPARTMEN T WITH NO CONCRETE EFFORTS TO VERIFY THE FACTS STATED THEREIN . REFERENCE CAN ALSO BE MADE TO THE JUDGEMENT OF HONBLE APEX COURT IN T HE CASE OF STELLER INVESTMENT LTD (2001) 251 ITR 263 (S.C), WH EREIN IT WAS HELD THAT EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSESSEE COMPANY WERE NOT GENUINE, THE AMOUNT COULD NOT BE R EGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THE ABO VE VIEW POINT OF THE HONBLE APEX COURT HAS ALSO BEEN EXPRESSED BY J URISDICTIONAL HIGH COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 268 (DEL.), A-ONE HOUSING COMPLEX LTD. VS. ITO 110 ITD 361 (DEL.), CIT VS. VALUE CAPITAL SERVICE PVT. LTD. 307 ITR 334 (DEL.) AND CIT VS. GENERAL EXPORTS AND CREDITS LTD. (2008) 299 ITR 268 (DEL.). HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIV INE LEASING & FINANCE LTD. (SUPRA) HAS LAID DOWN THE LAW ON THE S UBJECT AS TO WHAT IS THE EXTENT OF THE BURDEN THAT LIES ON THE ASSESSEE TO PROVE THE CASH CREDIT IN THE SHAPE OF SHARE CAPITAL. THE HONBLE C OURT HELD THAT IF THE 11 RELEVANT DETAILS OF THE ADDRESS OR PAN, IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH THE COPIES OF SHARE HOLDERS REGISTER, SHARE APPLICATIO N MONEY FORMS, SHARE TRANSFER REGISTER, ETC., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. THE DEPARTM ENT WOULD NOT BE JUSTIFIED IN DRAWING ON ADVERSE INFERENCE ONLY BECA USE THE CREDITORS/SUBSCRIBERS FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES. THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUB SCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE N OR SHOULD THE A.O. TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT , WITHOUT MORE AGAINST THE ASSESSEE. THE DEPARTMENT FILED AN SLP AGAINST THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DIVINE LEASING AND FINANCE LTD. (SUPRA) WHERE THE APEX COURT, WHIL E DISMISSING THE APPEAL FILED BY THE DEPARTMENT HELD AS FOLLOWS: WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FO R THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEI VED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE A.O., THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. M/S . PONDY METAL AND ROLLING MILLS PVT. LTD. (ITA NO. 788/2006) DATE D 19.02.2007 HAS CONCURRED WITH THE FINDINGS OF THE APPELLATE TRIBUN AL, DELHI BENCH, F, NEW DELHI THAT ONCE THE IDENTITY OF THE INVEST OR HAS BEEN MANIFEST AND IS PROVED, THE INVESTMENT CANNOT BE SAID TO BE THE UNDISCLOSED 12 INCOME OF THE ASSESSEE. AT BEST, THE AMOUNT COULD B E ADDED IN THE HANDS OF THE INVESTOR BUT IT CERTAINLY COULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE APPEAL FILE D AGAINST THE SAID DECISION, WAS DISMISSED BY THE HON'BLE SUPREME COUR T IN C.C. 12860 DATED 08/01/2008. AS NO ADVERSE/INCRIMINATING MATER IAL HAS BEEN GATHERED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HENCE, I DO NOT SEE ANY JUSTIFICATION O N THE PART OF THE ASSESSING OFFICER TO MAKE ANY ADDITION ON ACCOUNT O F SHARE APPLICATION MONEY RECEIVED FROM M/S. WELCOME COIR I NDIA LTD.; M/S. PERFORMANCE TRADING & INVESTMENTS P. LTD. AND M/S. DEENA NATH LOHARI WALA SPINNING MILLS LTD. ESPECIALLY WHEN THE ASSESSING OFFICER HAS BEEN PROVIDE WITH DOCUMENTARY EVIDENCES TO PROVE THE IDENTITY OF THE SHARE SUBSCRIBERS. IN VIEW OF THE A BOVE, IT IS CLEAR THAT THE APPELLANT HAD DISCHARGED THE INITIAL ONUS OF ES TABLISHING THE IDENTITY OF THE SUBSCRIBERS AND THE BONA-FINES OF T HE TRANSACTIONS AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE H AS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO ESTABLISH THA T THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT F ROM THE SAID PARTIES REPRESENTS ITS OWN UNDISCLOSED INCOME. WHEN THE INITIAL ONUS WHICH LAY ON THE APPELLANT HAD BEEN DISCHARGED BY I T, IT WAS NOT JUSTIFIED ON THE PART OF THE ASSESSING OFFICER TO D RAW AN ADVERSE INFERENCE MERELY BECAUSE THE SUMMONS ISSUED TO THE THREE SHAREHOLDERS WERE RECEIVED BACK UNSERVED. IN THIS R EGARD THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ORI SSA CORPORATION 159 ITR 78 THAT IF THE REVENUE MERELY ISSUED SUMMON S U/S. 131 AND DID NOT PURSUE THE MATTER FURTHER, THE ASSESSEE CAN NOT BE HELD TO BE 13 RESPONSIBLE FOR THE SAME, EVEN IF THE LOAN CREDITOR DID NOT APPEAR, IS RELEVANT. IT HAS BEEN HELD BY VARIOUS HONBLE COURT S INCLUDING THE HON'BLE HIGH COURT OF MADRAS THAT AN ASSESSEE ALSO CANNOT BE PRESUMED TO HAVE SPECIAL KNOWLEDGE ABOUT THE SOURCE OF SOURCE OR THE ORIGIN OF ORIGIN [S. HASTIMAL VS. CIT, (1963) 49 IT R 273, 279 (MAD.). THE HONBLE COURT WAS OF THE VIEW THAT EVEN IF THE CREDIT IS IN THE NAME OF A CLOSE RELATION E.G. THE WIFE, THE ASSESSE E CANNOT BE PRESUMED TO HAVE KNOWLEDGE OF THE SOURCE FROM WHICH THE DEPOSITOR OBTAINED THE MONEY. THUS, WHEN THE SHARE CAPITAL HA D BEEN RECEIVED BY THE APPELLANT FROM THE THREE PARTIES BY ACCOUNT PAYEE CHEQUES, NO ADVERSE INFERENCE COULD BE DRAWN ONLY FOR THE REASO N THAT ONE OF THE SHARE APPLICANTS IN TURN HAD RECEIVED THE AMOUNT FR OM A THIRD PARTY AND THERE WERE CASH DEPOSITS IN THE ACCOUNT OF THAT THIRTY PARTY. IN VIEW OF THE AFORESAID DISCUSSION, I DIRECT THE ASSE SSING OFFICER TO DELETE THE ADDITION OF RS.12,00,000 MADE U/S. 68 OF THE ACT. GROUND NOS. 3 TO 7 ARE THEREFORE, ALLOWED. 11. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORDS CAREFULLY. THE CASE OF THE ASSESSING OF FICER IS THAT SHARE APPLICANT COMPANIES WERE COMPANIES ONLY FOR NAME SA KE AND THEY ARE EXISTING ON PAPERS. THEY WERE NOT DOING ANY BUSINES S. THE SUMMONS ISSUED TO THEM RECEIVED BACK UNSERVED. THEREFORE, THE TRAN SACTION IS NOT GENUINE WHEREAS THE CASE OF THE ASSESSEE IS THAT IT HAS FIL ED ALL DOCUMENTARY EVIDENCE EXHIBITING THE EXISTENCE OF A COMPANY, THEY ARE ASS ESSED TO TAX. THE SHARE 14 APPLICATION MONEY WAS RECEIVED THROUGH ACCOUNT PAYE E CHEQUES. LEARNED FIRST APPELLATE AUTHORITY HAS DISCUSSED THIS ASPECT IN DETAIL IN THE FINDINGS EXTRACTED SUPRA. TO OUR MIND, ASSESSING OFFICER HAS DISBELIEVED THE CONTENTIONS OF THE ASSESSEE BY DRAWING INFERENCE FR OM THE FACTS REMITTED TO HIM BY THE INVESTIGATION WING AND THE NON-PRODUCTIO N OF THE PRINCIPAL OFFICERS OF THE SHARE APPLICANTS. HON'BLE DELHI HIG H COURT IN THE CASE OF VICTOR ELECTRONICS LTD. RENDERED IN ITA NO. 586/DEL /2010 HAS HELD THAT THERE WAS NO OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTORS OR OTHER REPRESENTATIVES OF THE APPLICANT COMPANY BEFORE THE ASSESSING OFFICER. THE FAILURE OF ASSESSEE TO PRODUCE THEM COULD NOT, BY I TSELF, WOULD JUSTIFY THE ADDITIONS MADE BY THE ASSESSING OFFICER, WHEN THE A SSESSEE HAD FURNISHED DOCUMENTS, ON THE BASIS OF WHICH THE ASSESSING OFFI CER COULD PROCURE THEIR ATTENDANCE. TAKING INTO CONSIDERATION THE DETAILED FINDING OF THE LEARNED CIT(APPEALS), WE DO NOT FIND ANY MERIT IN THIS APPE AL OF THE REVENUE. ACCORDINGLY, THE APPEAL AS WELL AS THE CROSS-OBJECT ION ARE DISMISSED. SD/- SD/- ( G.D. AGRAWAL ) ( RAJPAL YADAV) VICE-PRESIDENT JUDICIAL MEMBER DATED: 29/02/2012 MOHAN LAL 15 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR:ITAT: NEW DELHI. ASSISTANT REGISTRAR