M/s. Purvi Fabrics & Texurise Pvt. Ltd, New Delhi V. ITO, New Delhi

CO 18/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5101 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-08-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-08-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 27-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Keywords: Unexplained cash credit; Bogus Share capital; Accommodation entries
• Section: 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SHRI C.L.SETHI, JM & SHRI K.G. BANSAL, AM I.T. A. NO.4383/DEL OF 2009 ASSESSMENT YEAR: 2001-02 INCOME-TAX OFFICER , M/S PURVI FABRICS & TEXTUR ISE P. LTD., WARD 14(4), NEW DELHI. VS 40-41, COMMUNITY CENTRE, NEW FRIENDS COLONY, NEWDELHI. C.O. NO.18/DEL OF 2010 (IN I.T. A. NO.4383/DEL OF 2009) ASSESSMENT YEAR: 2001-02 M/S PURVI FABRICS & TEXTURISE P. LTD., INCO ME-TAX OFFICER , 40-41, COMMUNITY CENTRE, VS WARD 14(4), NEW DELHI. NEW FRIENDS COLONY, NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY: SHRI R.S. SINGHVI DEPARTMENT BY: SMT. PRATIMA KAUSHIK, SR. DR ORDER PER C.L. SETHI, JM: THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 2 5.9.2009 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF AN ASSESSMENT M ADE U/S 143(3)/147 OF THE INCOME-TAX ACT, 1961 (THE ACT) PERTAINING TO AS STT. YEAR 2001-02. 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN R ELATION THERETO. 2 3. IN THE REVENUES APPEAL, THE REVENUE HAS TAKEN A GROUND THAT CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.17,50,000/ - MADE ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL BY THE AO. IT HAS BEEN C ONTENDED IN THE GROUNDS OF APPEAL THAT CIT(A) HAS ERRED IN DELETING THE ADD ITION BY RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS LOVELY EXPORTS P. LTD., 216 CTR 195 (SC). 4. IN THE CROSS OBJECTION, THE ASSESSEE HAS CHALLEN GED THE VALIDITY OF PROCEEDINGS INITIATED U/S 147 OF THE ACT BY CONTEND ING THAT THERE WAS NO LEGAL BASIS FOR ASSUMING JURISDICTION U/S 147 OF TH E ACT AS THERE WAS NO MATERIAL TO BELIEVE THAT ANY INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 5. THE FACTS GIVING RISE TO THE PRESENT APPEAL MAY BE DISCUSSED, IN BRIEF, AS UNDER: 5.1 IN THIS CASE THE ASSESSEE FILED ITS RETURN OF I NCOME ON 31.10.2001 DECLARING LOSS OF RS.2,65,657/-. THEREAFTER, THE A O ISSUED A NOTICE U/S 148 ON 14.3.2008 AFTER RECORDING THE REASONS TO ENTERTA IN A BELIEF THAT THE INCOME AMOUNTING TO RS.17,50,000/- HAD ESCAPED ASSESSMENT IN THE LIGHT OF THE INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT. THE AO HAD TAKEN NECESSARY APPROVAL IN WRITING FROM ADDL. COMMISSIONER OF INCOME-TAX, RANGE-XIV, NEW DELHI FOR ISSUING NOTICE U/S 148 OF THE ACT. THE ASSESSEE VIDE LETTER DATED 15.4.2008 STATED BEF ORE THE AO THAT THE 3 REGULAR RETURN FILED ON 31.10.2001 MAY BE TREATED A S A RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. 5.2 IN THE BODY OF THE ASSESSMENT ORDER, THE AO STA TED THAT THE CASE OF THE ASSESSEE WAS REOPENED ON THE GROUND THAT THE ASSESS EE DURING THE RELEVANT PERIOD HAD RECEIVED ACCOMMODATION ENTRIES AS WERE F OUND BY THE INVESTIGATION WING OF THE DEPARTMENT. THE NAMES OF THE PERSON FROM WHOM MONEY WAS TAKEN AND THE BANK ACCOUNT THROUGH WHICH THE MONEY WAS ROUTED ARE TABULATED IN THE ASSESSMENT ORDER. THE AO THEN DISCUSSED THE MODUS OPERANDI GENERALLY ADOPTED BY AN ENTRY OPERATOR. A FTER DISCUSSING THE GENERAL MODUS OPERANDI OF ENTRY OPERATOR, THE AO FU RTHER STATED THAT NOTICE U/S 133(6) OF THE ACT WERE ISSUED TO THE PERSONS FR OM WHOM THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED RS.17,50,000/-. THE NOTICE U/S 133(6) SENT THROUGH REGISTERED POST BUT IT WAS RECEIVED BACK WITH THE P OSTAL REMARK AS LEFT. THE AO THEN ASKED THE ASSESSEES COUNSEL SHRI VIMAL BAN KA, CA TO PRODUCE THE CONCERNED PARTIES AS THE NOTICE ISSUED TO THEM HAVE RECEIVED BACK WITH THE REMARK LEFT. IN REPLY THERETO, THE ASSESSEE SUBM ITTED THAT AS ON THAT DAY THE SAID PARTIES WERE NO MORE SHAREHOLDERS OF THE ASSES SEE COMPANY AS THE SHARES ALLOTTED TO THEM HAS ALREADY BEEN SOLD AND T RANSFERRED TO ANOTHER PERSON. THE AO THEN MADE THE ADDITION OF RS.17,50, 000/- BY OBSERVING THAT THE ASSESSEE HAS NOT DISCHARGED HIS PRIMARY OBLIGAT ION CAST UPON HIM 4 REGARDING GENUINENESS/CREDITWORTHINESS OF THE RECEI PT OF SHARE APPLICATION MONEY. 6. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 7. BEFORE THE LEARNED CIT(A), THE ASSESSEE HAS SUBM ITTED THAT THE AO WAS NOT JUSTIFIED IN TREATING THE SHARE APPLICATION MONEY AS UNEXPLAINED CREDIT DESPITE THE FACT THAT THE ASSESSEE HAD FILED CONFIRMATIONS FROM THE PARTIES, THEIR PERMANENT ACCOUNT NUMBER AND COPIES OF ACKNOWLEDGEMENT OF RETURNS. THE ASSESSEE FURTHER SUBMITTED BEFORE THE CIT(A) THAT THE GENUINENESS OF THE APPLICATIONS WERE NOT OPEN TO DO UBT SINCE ALL THE APPLICANTS WERE COMPANIES INCORPORATED UNDER THE CO MPANIES ACT. IT WAS THUS ARGUED BEFORE THE LEARNED CIT(A) THAT ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS PRIMARY BURDEN WITHIN MEANING OF SECT ION 68 OF THE ACT. THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF LOVELY EXPORTS P. LTD. (SUPRA) AS WELL AS THE DE CISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS SOPHIA FINAN CE LTD., 205 ITR 98 (DEL) AND STELLAR INVESTMENTS LTD., 251 ITR 263 (SC ). 8. AFTER CONSIDERING THE AOS ORDER AND THE SUBMISS IONS OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING T HAT, IN THE PRESENT CASE, 5 THE ASSESSEE HAS DISCHARGED ITS ONUS TO THE EXTENT OF ESTABLISHING THE IDENTITY OF THE SHAREHOLDERS BY FILING NECESSARY EVIDENCES. 9. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 10. THE LEARNED DR HAS SUBMITTED THAT THERE WAS SPE CIFIC INFORMATION AVAILABLE WITH THE AO BEING RECEIVED FROM INVESTIGA TION WING THAT THE ASSESSEE HAD AVAILED THE BENEFIT OF ACCOMMODATION E NTRY IN THE NATURE OF SHARE CAPITAL INTRODUCED IN THE NAME OF 5 PARTIES A GGREGATING TO RS.17,50,000/-. SHE FURTHER SUBMITTED THAT ALL THES E PARTIES WERE NOT AVAILABLE AT THEIR ORIGINAL POSTAL ADDRESS, AS THE NOTICE SENT TO THEM BY THE AO HAD RETURNED UNSERVED WITH THE POSTAL REMARKS L EFT. SHE, THEREFORE, SUBMITTED THAT THE IDENTITY OF THESE PARTIES WERE N OT ESTABLISHED AND AO WAS JUSTIFIED IN MAKING THE ADDITION OF RS.17,50,000/-, BEING SHARE CAPITAL INTRODUCED BY THE ASSESSEE IN THE NAME OF CERTAIN P ARTIES, NAME THEREOF HAS BEEN DETAILED IN THE ASSESSMENT ORDER. 11. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS EE SUBMITTED VARIOUS DETAILS IN SUPPORT OF THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM RESPECTIVE PARTIES AS WOULD BE CLEAR FROM THE LETTER DATED 10 TH SEPTEMBER, 2008 SUBMITTED BEFORE THE AO. HE FURTHE R SUBMITTED THAT THE AO HAS FAILED TO PROVIDE ANY MATERIAL OR I NFORMATION ALLEGEDLY 6 RECEIVED FROM THE INVESTIGATION WING TO THE ASSESSE E WITH A VIEW TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO HAVE ITS SAY IN THAT REGARD. HE FURTHER SUBMITTED THAT EVEN THE CONTENTS AND DETAILS OF THE INFORMATION HAD NOT EVEN DISCUSSED BY THE AO IN THE ASSESSMENT ORDER EXCEPT BY STATING THAT HE HAS RECEIVED INFORMATION FROM THE INVESTIGATION WING TH AT THE SHARE CAPITAL ISSUED BY THE ASSESSEE IS IN THE NATURE OF AN ACCOM MODATION ENTRY. HE FURTHER SUBMITTED THAT THE EVIDENCES FOR COMING TO CONCLUSION THAT THE SHARE CAPITAL RECEIVED BY ASSESSEE IS AN ACCOMMODATION EN TRY HAS NOWHERE BEEN DISCLOSED BY THE AO EITHER IN THE ASSESSMENT ORDER OR IN THE REASONS RECORDED FOR ISSUING THE NOTICE U/S 148 OF THE ACT. HE FURT HER SUBMITTED THAT THE ASSESSEE SPECIFICALLY ASKED THE AO THAT IN CASE ANY STATEMENT OF ANY PARTY HAS BEEN RECORDED, AND THERE WAS ANY ADVERSE MATERI AL AGAINST THE ASSESSEE, THE ASSESSEE SHOULD BE PROVIDED WITH THE RELEVANT D ETAILS AND ALSO A RIGHT TO CROSS EXAMINE THESE PARTIES, BUT THE AO HAS NOT MAD E ANY WHISPER IN THAT REGARD IN THE ORDER. HE, THEREFORE, SUBMITTED THAT IN THE LIGHT OF THE VARIOUS DETAILS AS TABULATED IN THE ASSESSEES LETTER DATED 10 TH SEPTEMBER, 2008, THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED FROM FIVE PARTIES AND THEREFORE, THE ADDITION HAS BEEN RIGHTLY DELETED BY THE LEARNED CIT(A). IN SUPPORT OF THE A SSESSEES CASE, RELIANCE 7 WAS PLACED ON THE DECISION OF JURISDICTION HIGH COU RT OF DELHI IN THE CASE OF CIT VS VICTOR ELECTRODES LTD. (2010) 42 DTR (DEL) 1 52. 12. IN REPLY, THE LEARNED DR SUBMITTED THAT IN CASE THERE WAS A FAILURE ON THE PART OF THE AO TO PROVIDE THE INFORMATION RECEI VED BY HIM FROM THE INVESTIGATION WING TO THE ASSESSEE AND TO PROVIDE T HE ASSESSEE A RIGHT OF CROSS EXAMINATION OF THE PERSON CONCERNED, THE MATT ER MAY KINDLY BE RESTORED BACK TO THE FILE OF THE AO FOR REMOVING TH E AFORESAID LACUNA SO THAT THE ASSESSEE MAY AVAIL THE OPPORTUNITY TO EXAMINE T HOSE INFORMATION AND TO CROSS EXAMINE THE PERSON CONCERNED. IN THIS RESPEC T, THE LEARNED DR RELIED UPON THE DECISION OF THE ITAT, DELHI BENCH F, NEW DELHI IN THE CASE OF CIT VS M/S OM LOGISTICS LTD., ITA NO.3197/DEL/2009 ORDER DATED 16 TH APRIL, 2010. IN THIS CONNECTION, THE LEARNED COUNS EL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF ITAT, DELHI BENCH F I N THE CASE OF ITO VS PAWAN KUMAR GUPTA REPORTED IN (2010) 42 DTR (TRIB) 148 WHERE THE ADDITION U/S 69A MADE BY THE AO ON THE BASIS OF STA TEMENTS OF THIRD PARTIES WITHOUT PROVIDING THE SUBMISSIONS TO THE ASSESSEE A ND WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE DE PONENTS DESPITE REPEATED REQUEST BY THE ASSESSEE IS NOT SUSTAINABLE. 13. RIVAL CONTENTIONS OF BOTH THE PARTIES HAVE BEEN CONSIDERED AND MATERIAL ON RECORD HAS CAREFULLY BEEN PERUSED. 8 14. IN THIS CASE, THE AO ISSUED NOTICE U/S 148 OF T HE ACT ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT. IN THE REASONS RECORDED, THE AO HAS STATED THAT ENQUIRIES WERE MADE BY THE DIRECTORATE OF INVESTIGATION ON THE VARIOUS PERSONS , WHO WERE INDULGED IN PROVIDING ACCOMMODATION ENTRIES/BOGUS SHARE APPLICA TION MONEY/BOGUS SHARE CAPITAL, IN THE COURSE OF WHICH SOME PERSONS HAD PROVIDED THE DETAILS OF VARIOUS PERSONS TO WHOM SUCH ACCOMMODATION OR BO GUS ENTRIES WERE PROVIDED. BASED ON SUCH ENQUIRIES MADE, THE DIRECT OR OF INVESTIGATION HAS PROVIDED THE DETAILS OF PERSONS, WHO WERE BENEFICIA RY/ENTRY OPERATORS OF SUCH ACCOMMODATION/BOGUS ENTRIES IN DELHI. ONE OF SUCH BENEFICIARY WAS MENTIONED TO BE THE PRESENT ASSESSEE, THAT IS, M/S PURVI FABRICS & TEXTURISES P. LTD. IN RESPECT OF AN AMOUNT OF RS.17,50,000/- R ECEIVED IN FINANCIAL YEAR 2000-01 RELEVANT TO THE ASSESSMENT YEAR 2001-02 ON ACCOUNT OF SHARE APPLICATION MONEY/SHARE CAPITAL. THE DETAILS OF TR ANSACTIONS WERE MENTIONED IN THE ANNEXURE TO THE REASONS RECORDED. 15. IN THE REASONS OR EVEN IN THE ASSESSMENT ORDER, THE AO HAS NO WHERE MENTIONED THE NAME OF THE PERSON CONCERNED, WHO HAD STATED BEFORE THE INVESTIGATION WING THAT THE TRANSACTION OF RECEIPT OF SHARE APPLICATION MONEY AMOUNTING TO RS.17.50 LACS BY THE ASSESSEE IS IN TH E NATURE OF ACCOMMODATION ENTRY. THE NAME AND IDENTITY OF THAT PERSON HAS NOT BEEN 9 DISCUSSED AND DISCLOSED EITHER IN THE REASONS RECOR DED OR IN THE ASSESSMENT ORDER. THE AO HAS MERELY RELIED UPON THE CONCLUSION OF INFORMATION ARRIVED AT BY THE DIRECTORATE OF INVESTIGATION WITHOUT REFE RRING TO THE EVIDENCES OR MATERIALS ON THE BASIS OF WHICH IT COULD BE SAID TH AT THE AMOUNT RECEIVED BY THE ASSESSEE WERE IN THE NATURE OF ACCOMMODATION EN TRY. THEREFORE, IN THIS CASE THE AO HAS MADE ADDITION MERELY FOR THE REASON THAT HE RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT THE SH ARE CAPITAL RECEIVED BY THE ASSESSEE TO THE EXTENT OF RS.17.50 LACS IS IN T HE NATURE OF ACCOMMODATION ENTRY. THE AO HAS NOT APPLIED ITS MIND TO THE MATER IALS OR EVIDENCES COLLECTED BY INVESTIGATION WING THROUGH THEIR ENQUI RY AND EVEN HAS NOT MENTIONED THAT IN THE ASSESSMENT ORDER. THERE IS N O WHISPER BY THE AO AS TO WHAT WAS THE EVIDENCES OR MATERIAL ON THE BASIS OF WHICH IT COULD BE SAID THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS IN THE NATUR E OF ACCOMMODATION ENTRY EXCEPT BY STATING THAT HE RECEIVED INFORMATION FROM THE INVESTIGATION WING THAT THE SHARE CAPITAL MONEY RECEIVED BY THE ASSESS EE IS IN THE NATURE OF ACCOMMODATION ENTRY. THEREFORE, THE QUESTION OF RE STORING THE MATTER BACK TO THE FILE OF AO FOR ALLOWING THE ASSESSEE TO CROS S-EXAMINE ANY PERSON OR PERSONS IS NOT WARRANTED. 16. HAD IT BEEN A CASE WHERE THE AO WOULD HAVE REFE RRED TO THE VARIOUS EVIDENCES INCLUDING THE STATEMENT OF ANY PERSON REP RESENTING THE SHARE 10 APPLICANTS ADMITTING THAT THE SHARE APPLICATION MON EY PAID BY THE CONCERNED PARTIES WERE NOTHING BUT AN ACCOMMODATION ENTRY, WE COULD HAVE SENT THE MATTER BACK TO THE AO FOR PROVIDING THOSE INFORMATI ON TO THE ASSESSEE TO HAVE ITS SAY IN THAT REGARD AND TO PROVIDE AN OPPOR TUNITY OF CROSS EXAMINATION OF ALL THOSE PERSONS WHOSE STATEMENTS W ERE RELIED ON FOR ARRIVING AT A CONCLUSION THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE ARE ACCOMMODATION ENTRIES, THROUGH WHICH T HE ASSESSEE HAD INTRODUCED ITS UNACCOUNTED MONEY IN THE BOOKS IN TH E GARB OF SHARE APPLICATION MONEY. BUT IN THE PRESENT CASE, THE AO HAS NOT MADE ANY REFERENCE AT ALL TO ANY SUCH EVIDENCE OR MATERIAL O N THE BASIS OF WHICH IT COULD BE PRIMA FACIE SAID THAT THE MONEY RECEIVED B Y THE ASSESSEE WAS NOTHING BUT AN ACCOMMODATION ENTRY EXCEPT THE CONCL USION ARRIVED AT BY THE INVESTIGATION WING AND THE INFORMATION PASSED OVER BY THE INVESTIGATION WING TO THE AO WITHOUT THERE BEING ANY REFERENCE TO ANY EVIDENCE OR MATERIAL ON THE BASIS OF WHICH THE AFORESAID INFORM ATION OR CONCLUSION WAS ARRIVED AT. 17. FURTHER, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHED FOLLOWING DETAILS IN RESPECT OF SHARE APPLICANTS TO JUSTIFY T HE ASSESSEES CLAIM THAT ASSESSEE HAD RECEIVED GENUINE SHARE APPLICATION MON EY FROM THE CONCERNED PARTIES: 11 (I) COPIES OF FORM OF SHARE APPLICATION MONEY; (II) COPIES OF BOARD RESOLUTION, BALANCE SHEET, PROFIT A ND LOSS ACCOUNT AND SCHEDULES; (III) COPIES OF BANK STATEMENTS (IV) COPIES OF CHEQUES RECEIVED; (V) COPIES OF INCOME-TAX RETURNS OF SHAREHOLDERS; (VI) COPY OF COMPUTATION OF TOTAL INCOME AND IN SOME CASES, THE COPY OF ASSESSMENT ORDER, CO PY OF FORM NOS.18 & 32 FILED WITH REGISTRAR OF COMPANIES WAS ALSO FILED. T HE TOTAL AMOUNT OF RS.17.50 LACS WERE RECEIVED BY THE ASSESSEE FROM TH E FOLLOWING FIVE PARTIES IN RESPECT OF WHICH THE AFORESAID INFORMATION WERE SUBMITTED BY THE ASSESSEE BEFORE THE AO: (I) M/S STAR GARMENTS P. LTD. (II) M/S MELODE ELECTRONICS P. LTD. (III) M/S NATRAJ COMMUNICATIONS P. LTD. (IV) M/S CHANGIA STEELS P. LTD. (V) M/S ABN ALUMINUM INDUSTRIES P. LTD. AS AGAINST THESE DETAILS FILED BY THE ASSESSEE, THE AO HAS NOT BROUGHT ANY MATERIAL TO CONTROVERT OR TO REBUT ANY OF THE DETAI LS FILED BY THE ASSESSEE. ALL THESE SHARE APPLICANTS ARE INCOME TAX ASSESSES AND COPIES THEIR INCOME-TAX RETURN AND PERMANENT ACCOUNT NUMBERS WERE FURNISHED . THE AO HAS NOT MADE ANY ENQUIRY FROM THE RESPECTIVE AO ASSESSING T HOSE SHARE APPLICANTS. 12 THE AO HAS ALSO NOT MADE ANY ENQUIRY FROM THE OFFIC E OF REGISTRARS OF COMPANIES ABOUT EXISTENCE OF THESE COMPANIES AND TH E DETAILS OF THEIR DIRECTORS. THE AO HAS MERELY MADE THE ADDITION BEC AUSE THE NOTICE ISSUED U/S 133(6) TO THE APPLICANTS WERE RETURNED UNSERVED WITH THE REMARK LEFT AND FOR THE REASON THAT ASSESSEE DID NOT PRODUCE TH E SHARE APPLICANTS BEFORE THE AO. IN THIS CONNECTION, THE FOLLOWING OBSERVAT IONS OF THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE ABOVE REF ERRED CASE OF CIT VS VICTOR ELECTRODES LTD (SUPRA) ARE NOTEWORTHY: 7. IT HAS BEEN DISPUTED BEFORE US THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BANKING CHANNELS. IT IS NOT THE CASE OF THE REVENUE THAT THE PAYMENT OF SHARE APPLICATION MONEY WAS NOT MADE FROM THE BANK ACCOUNT OF THE APPLICANT COMPANIES. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE AO. IT IS NOT THE CASE OF THE REVENUE THAT THE SHARE APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE APPLICANT COMPANIES AND WERE FORGED DOCUMENTS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WERE NOT ACTUALLY ALLOTTED TO THE COMPANIES. 8. THE ASSESSEE FILED COPIES OF RESOLUTIONS PASSED BY THE BOARD OF DIRECTORS OF APPLICANT COMPANIES, BESIDES THEIR BANK STATEMENTS AND IT RETURNS. THE ADDRESSES OF THE APPLICANT COMPANIES ARE RECORDED IN THESE DOCUMENTS. IT IS NOT THE CASE OF THE REVENUE THAT THE COPIES OF BOARD RESOLUTIONS, IT RETURNS AND BANK STATEMENTS WERE NOT GENUINE DOCUMENTS. THE AO DID NOT MAKE ANY VERIFICATION IN THIS REGARD EITHER FROM THE INTERNA L 13 RECORD OF THE DEPARTMENT OR FROM THE CONCERNED BANKS. IF HE SO WANTED, HE COULD HAVE CALLED FOR THE IT RETURNS OF THE SHARE APPLICANTS TO ASCERTAINS WHETHER THE INVESTMENT MADE IN THE ASSESSEE COMPANY WAS REFLECTED IN THEIR BALANCE SHEETS OR NOT. NOTHING PREVENTED THE AO FROM SUMMONING THE RECORD OF THE BANKS ON WHICH CHEQUES ISSUED BY THE APPLICANT COMPANIES WERE DRAWN. NO SUCH COURSE WAS, HOWEVER, ADOPTED BY HIM. 9. THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLICANT COMPANIES BEFORE THE AO. THEREFORE, FAILURE OF ASSESSEE TO PRODUCE THEM COULD NOT, BY ITSELF, FURNISHED DOCUMENTS, ON THE BASIS OF WHICH, THE AO, IF HE SO WANTED COULD HAVE SUMMONED THEM FOR VERIFICATION. NO ATTEMPT WAS MADE BY THE AO TO SUMMON THE DIRECTORS OF THE APPLICANT COMPANIES. THE ADDRESSES OF THESE COMPANIES MUST BE AVAILABLE ON THE SHARE APPLICATIONS, MEMORANDUM AND ARTICLES OF ASSOCIATION AND THEIR IT RETURNS. IF T HE AO HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLICANTS, HE COULD HAVE SUMMONED THE DIRECTORS OF THE APPLICANT COMPANIES. NO SUCH ATTEMPT WAS, HOWEVER, MADE BY HIM. THEREFORE, THE CIT(A) AND THE TRIBUNAL, IN OUR VIEW WERE JUSTIFIED IN HOLDING THAT THE IDENTITY OF SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS HAD BEEN ESTABLISHED BY THE ASSESSEE. 18. IN THE PRESENT CASE ALSO, IT IS NOT IN DISPUTE THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE BY WAY OF ACCOUN T PAYEE CHEQUES THROUGH NORMAL BANKING CHANNELS. ADMITTEDLY, COPIE S OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE AO. IT IS NOT THE CASE OF THE 14 REVENUE THAT SHARE APPLICATIONS WERE SENT ON BEHALF OF THE APPLICANT COMPANIES, AND WERE FORGED DOCUMENTS. NO SUCH FIND ING OR OBSERVATIONS HAS BEEN MADE BY THE AO EVEN IN THE LIGHT OF THE IN FORMATION RECEIVED FROM INVESTIGATION WING. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WERE ACTUALLY NOT ALLOTTED TO THE CONCERNED COMPANI ES. THE ASSESSEE HAS ALSO FILED COPIES OF RESOLUTION PASSED BY THE BOARD OF D IRECTORS AND HAS ALSO FILED INCOME-TAX RETURN AND DETAILS OF SHARE APPLICANTS. IN THE PRESENT CASE, THE AO DID NOT MAKE ANY VERIFICATION IN THIS REGARD EIT HER FROM THE INTERNAL RECORD OF THE INCOME-TAX DEPARTMENT OR FROM THE CON CERNED AO HAVING JURISDICTION OVER THE SHARE APPLICANTS OR FROM THE CONCERNED BANK. NOTHING PREVENTED THE AO FROM SUMMONING THE DIRECTORS OF TH E SHARE APPLICANTS AFTER OBTAINING THEIR PRESENT ADDRESS FROM THE REGISTRAR OF COMPANIES BUT THE AO HAS MADE THE ADDITION MERELY FOR THE REASON THAT AS SESSEE FAILED TO PRODUCE THE SHARE APPLICANTS. IT HAS BEEN CATEGORICALLY ST ATED BY THE HONBLE DELHI HIGH COURT IN THE ABOVE REFERRED CASE THAT THERE WA S NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTORS OR OTHER REP RESENTATIVE OF THE SHARE APPLICANT COMPANIES BEFORE THE AO AND FAILURE OF AS SESSEE TO PRODUCE THEM WOULD NOT BY ITSELF BE SUFFICIENT TO MAKE THE ADDIT ION BY THE AO PARTICULARLY WHEN THE ASSESSEE HAD FURNISHED DOCUMENTS IN SUPPOR T OF THE GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSE E. 15 19. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, WE, THEREFORE, UPHELD THE ORDER OF CIT(A) IN DELETING THE ADDITION. 20. IN THE LIGHT OF OUR DECISION TAKEN IN REVENUES APPEAL WHEREBY THE ORDER OF CIT(A) IS UPHELD IN DELETING THE ADDITION MADE BY THE AO, THE ISSUE RAISED IN CROSS OBJECTION BY THE ASSESSEE HAS BECOM E PURELY ACADEMIC AND NEED NO ADJUDICATION AT THIS STAGE AS SO UNDERSTAND ING WAS GIVEN AT THE TIME OF HEARING OF THIS APPEAL ITSELF. HENCE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS REDUNDANT. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS RED UNDANT. 22. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 3 TH 23. AUGUST, 2010. (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH AUGUST, 2010 VIJAY COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A)-XVII, NEW DELHI 16 5. DR ASSISTANT REGISTRAR