Goldstar Cement Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 2/DEL/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0760 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law; Tangible material; Accommodation entries; Onus to prove; Condonation of delay; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 142(1); 205; 195; 250; 64; 43; 48; 13; 22; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A NO.6174/DEL/2013 (ASSESSMENT YEAR 2009-1 0) ASST.CIT CENTRAL CIRCLE-13, NEW DELHI. VS. M/S SUR BUILDCON PVT. LTD. 315, 3 RD FLOOR E-BLOCK INTERNATIONAL TRADE TOWER, NEHRU PLACE NEW DELHI. PAN-AALCF 7467F (APPELLANT) (RESPONDENT) C.O. NO.258/DEL/2015 ARISING OUT OF ITA NO.6174/DEL/2013 (ASSESSMENT YEAR 2009-10) M/S SUR BUILDCON PVT. LTD. 315, 3 RD FLOOR E-BLOCK INTERNATIONAL TRADE TOWER, NEHRU PLACE NEW DELHI. PAN-AALCF 7467F VS. DY. CIT CENTRAL CIRCLE-13, NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) 2 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO I.T.A NO.6176/DEL/2013 (ASSESSMENT YEAR 2008-09) ASST.CIT CENTRAL CIRCLE-13, NEW DELHI. VS. M/S BBN TRANSPORTATION PVT. LTD. 315, 3 RD FLOOR, E-BLOCK, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI PAN-AADCB 0182E (APPELLANT) (RESPONDENT) C.O. NO.260/DEL/2015 ARISING OUT OF ITA NO.6176/DEL/2013 (ASSESSMENT YEAR 2008-09) M/S BBN TRANSPORTATION PVT. LTD. 315, 3 RD FLOOR, E-BLOCK, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI PAN-AADCB 0182E VS. DY. CIT CENTRAL CIRCLE-13, NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) I.T.A NO.6177/DEL/2013 (ASSESSMENT YEAR 200 8-09) ASST.CIT CENTRAL CIRCLE-13, NEW DELHI. VS. M/S GOLDSTAR CEMENT PVT. LTD. 315, 3 RD FLOOR, E-BLOCK INTERNATIONAL TRADE TOWER, NEHRU PLACE NEW DELHI PAN-AACCG 8807E 3 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO (APPELLANT) (RESPONDENT) C.O. NO.02/DEL/2021 ARISING OUT OF ITA NO.6177/DEL/2013 (ASSESSMENT YEAR 2008-09) M/S GOLDSTAR CEMENT PVT. LTD. 315, 3 RD FLOOR, E-BLOCK INTERNATIONAL TRADE TOWER, NEHRU PLACE NEW DELHI PAN-AACCG 8807E VS. ASST.CIT CENTRAL CIRCLE-13, NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY MS. SUNITA SINGH, CIT-DR MS. SHIVANI BANSAL, SR. DR RESPONDENT BY SH. S.K. TULSIYAN, ADV. SH. BHOOMIJA VERMA, ADV. SH. LAKSHYA BIDHIRAJ, CA MS. ABHA AGARWAL, CA & MS. ANANYA RATH, ADV. DATE OF HEARING 10.06.2021 DATE OF PRONOUNCEMENT 15.07.2021 ORDER PER SUDHANSHU SRIVASTAVA, JM: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY TH E DEPARTMENT AGAINST SEPARATE IMPUGNED ORDERS DATED 1 9.09.2013 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) - 1, NEW 4 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO DELHI {CIT (A)} IN THE CASE OF THE CAPTIONED ASSESS EES, WHEREIN THE LD. CIT (A) HAS DELETED THE IMPUGNED ADDITIONS MADE U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) IN RESPECT OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY THE CAP TIONED THREE ASSESSES. THUS, THE DEPARTMENTAL APPEALS IN ALL THR EE CASES ARE HAVING A COMMON ISSUE. THE ASSESSEES HAVE ALSO FILE D THEIR RESPECTIVE CROSS OBJECTIONS CHALLENGING THE ORDERS OF THE LD. CIT (A) TO THE EXTENT THAT THE LD. CIT (A) HAS UPHELD THE A SSUMPTION OF JURISDICTION OF REOPENING THE ASSESSMENTS U/S 147/1 48 OF THE ACT AND TO THE EXTENT THE ASSESSMENT ORDERS PASSED BY T HE ASSESSING OFFICER (AO) HAVE BEEN PASSED IN VIOLATION OF PRINC IPLES OF NATURAL JUSTICE. THE APPEALS AND THE CROSS OBJECTIONS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2.0 THE COMMON FACTS RELATING TO THE THREE ASSESSE ES ARE THAT THE A.O. HAD, IN ALL THE THREE CASES, ISSUED NOTICE S U/S 148 OF THE ACT, AFTER RECORDING IDENTICAL REASONS FOR REOPENIN G THE ASSESSMENTS. 2.1 THE REASONS RECORDED IN THE CASE OF SUR BUILDC ON PVT. LTD. ARE BEING REPRODUCED HEREIN UNDER FOR THE SAKE OF C OMPLETENESS: 5 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO REASONS RECORDED FOR RE-OPENING THE CASE OF M/S SU R BUILDCON PVT. LTD. FOR THE A.Y. 2009-10 U/S 147 OF THE INCOM E TAX ACT, 1961: 19.09.2011: A SURVEY OPERATION WAS CONDUCTED ON 3 M ARCH 2010 BY THE OFFICERS OF THE INVESTIGATION WING OF T HE INCOME TAX DEPARTMENT ON THE CORPORATE OFFICE ADDRESS OF M/S S UR BUILDCON PVT. LTD. I.E. 315, E-BLOCK, 3 RD FLOOR, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI. IN THE SURVEY, IT WAS FOUND THAT IT WAS A PREMISE RUN OCCUPIED AND CONTROLLED BY THE MANAGE MENT OF BHUSHAN GROUP. DURING THE COURSE | OF SURVEY OPERAT ION IN THIS PREMISE, IT WAS FOUND THAT ALL THE STAFF MEMBERS OF THAT PREMISES WERE THE STAFF MEMBERS OF M/S BHUSHAN STEE L LTD. IN THE STATEMENT RECORDED ON OATH, SH. B.S. BISHT, ASS ISTANT SECRETARIAL OFFICER, WITH M/S BHUSHAN STEEI LTD. CA TEGORICALLY STATED THAT HIS JOB WAS TO LOOK AFTER THE ROC MATTE RS OF VARIOUS COMPANIES OF BHUSHAN GROUP AND THE COMPANIES WITH T HE REGISTERED OFFICE ADDRESS OF THIS PREMISE ARE JUS T PAPER COMPANIES WITH NO ACTUAL BUSINESS TO DO. THE RELEVA NT ABSTRACT OF THE STATEMENT OF SH. B.S. BISHT IS AS UNDER: - 'Q.5 WHICH ARE THE COMPANIES RUN FROM THIS PR EMISES & WHICH ARE THE COMPANIES GOT REGISTERED OFFICE IN TH IS PREMISE?' 6 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO B. I HAVE ALREADY GIVEN YOU A LIST IN ANSW ER TO Q.NO.3. TOTAL 41 COMPANIES (EXCEPT AT SI.NO.19) ARE BEING R UN FROM THIS PREMISE. FOLLOWING COMPANIES HAVE THEIR REGISTERED OFFICE AT 315, E- BLOCK, INTERNATIONAL TRADE TOWER, DELHI 1. ADAMINE CONSTRUCTIONS (P) LTD. 2. BBN TRANSPORTATION (P) LTD. 3. BNR INFOTECH (P) LTD. 4. BNS STEEL TRADING (P) LTD. 5. GOLD STAR CEMENT (P) LTD. 6. NRA IRON & STEEL (P) LTD. 7. STARLIGHT CONSUMER ELECTRONICS (P) LTD. 8. SUR BUILDCON (P) LTD. 9. TREMENDOUS MINING & MINERALS (P) LTD. 10. UNA POWER (P) LTD. 11. VISTRAT REAL ESTATE (P) LTD. Q.6 ARE YOU DIRECTOR IN ANY COMPANY. B. I AM NOT DIRECTOR IN ANY OF COMPANIES. Q. 7 WHAT ARE THE NATURE OF BUSINESS OF SUCH COM PANIES THAT RUN FROM THIS PREMISE ? 7 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO A. MAIN COMPANIES ARE M/S BHUSHAN STEEL LTD. & M/S BHUSHAN ENERGY LTD. THEY ARE DOING ACTUAL WORK OF S TEEL & ENERGY RESPECTIVELY/ REST OF THE COMPANIES ARE PAPE R COMPANY, THEY ARE NOT DOING ANY ACTUAL WORK OR BUSINESS. Q.8 WHO ARE DIRECTORS'OF SUCH COMPANIES ? A. I DON'T KNOW NAME OF DIRECTORS AT PRESENT. GENERALL Y, WHEN WE INCORPORATE A COMPANY. ON THE RECOMMENDATION OF SH. BRIJ BHUSHAN SINGHAL, CHAIRMAN OF OUR GROUP, WE APP OINT DIRECTORS OF THAT COMPANY, THE PERSONS TO WHOM DIRECTORSHIP IS OFFERED ARE GENERALLY EMPLOYEES OF GROUP COMPANIES AND ARE TRUST WORTHY OF MANAGEMENT'. 2. THE INCOME TAX RETURN OF THE COMPANY FOR TH E A.Y.200910 WAS EXAMINED AND IT HAS BEEN FOUND THAT COMPANY IS HAVING THE TOTAL SHARE CAPITAL OF RS.2,31,00,000 AND SECUR ITIES PREMIUM OF RS.17,10,000/-. THERE IS DEBIT BALANCE O F RS.7,39,005/- IN THE P&L ACCOUNT OF THE COMPANY. CO MPANY HAS SHOWN GROSS TOTAL INCOME IN ITS ITR OF RS.970 D URING THE F.Y. 2008-09 (RELEVANT TO A.Y.2009-10). AFTER CAREF UL EXAMINATION OF THE AFORESAID FACTS THE FOLLOWING IS SUES ARISES. 8 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO (I) THAT A COMPANY WHICH HAS BEEN FOUND NOT EXISTING AT THE ADDRESS OF ITS REGISTERED/CORPORATE OFFICE AND AS PER THE STATEMENT OF SH. B. S. BISHT WHICH IS A PAPER COMPA NY, THE GENUINENESS WITH RESPECT TO INTRODUCTION OF RS.2,30 ,00,000/- APPROXIMATELY IN THE SHAPE OF SHARE CAPITAL AND RS.17,10.00.000 IN THE SHAPE OF SECURITIES PREMIUM IS! QUESTIONABLE. 2.1. IT GIVES REASONS TO BELIEVE THAT THIS CO MPANY IS JUST A PAPER COMPANY ESTABLISHED FOR INTRODUCING MONEY FRO M UNEXPLAINED SOURCES. 2.2 FINANCIAL STATISTICS ABOUT THE COMPANY SHARE CAPITAL RS. 1,00,000/ - RS.2,31,00,000/- RS.2,31,00,000/- SHARE CAPITAL RS. 1,00,000/ - RS.2,31,00,000/- RS.2,31,00,000/- SHARE APPLICATION MONEY NIL NIL NIL SECURITIES PREMIUM RAISED NIL RS.17,10,00,000/ - RS.17,10,00,000/ - DEBIT BALANCE IN P&L ACCOUNT RS. 17,764/- RS.7,39,005/- RS.7,31,070/ DIVIDEND INCOME NIL NIL NIL RETURNED INCOME NIL RS.970/- RS.10,483; LOSSES CLAIMED TO BE CARRIED NIL NIL NIL 2.3 HENCE, FROM THE AFORESAID FACTS, I HAVE T HE REASONS TO BELIEVE THAT CERTAIN INCOME WHICH IS CHARGEABLE TAX HAS ESCAPED 9 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WHICH M AY BE IN FORM OF UNEXPLAINED MONEY CREDITED IN THE BOOKS OF COMPANY FROM UNEXPLAINED SOURCES (BOTH CAPITAL & REVENUE). 3. HENCE, THE CASE OF THE ASSESSEE FOR A.Y. 2009-10 IS RE- OPENED U/S 147 OFF THE I.T. ACT, 1961 ARE HEREBY IN ITIATED. ISSUE NOTICE U/S 148 OF THE INCOME TAX; ACT, 1961. 2.2 IN A NUTSHELL, THE IDENTICAL REASONS RECORDED BY THE A.O. STATE THAT DURING THE COURSE OF THE SURVEY OPERATIO N CONDUCTED BY THE INVESTIGATION WING AT THE CORPORATE OFFICE OF THE A SSESSEES, IT WAS FOUND THAT THE SAID PREMISES WAS RUN, OCCUPIED & CON TROLLED BY THE MANAGEMENT OF BHUSHAN GROUP, WHERE ALL THE STAFF MEM BERS PRESENT AT THE PREMISES OF THE ASSESSEES WERE, IN FACT, THE STAFF MEMBERS OF M/S. BHUSHAN STEEL LTD. A STATEMENT OF ONE SUCH EMP LOYEE, SHRI B.S. BISHT (ASSISTANT SECRETARIAL OFFICER OF M/S. B HUSHAN STEEL LTD.) WAS RECORDED WHEREIN HE HAD ACCEPTED THAT SEVERAL COM PANIES HAVING THE REGISTERED OFFICE ADDRESS OF M/S BHUSHAN STEEL LTD. WERE JUST PAPER COMPANIES WITH NO ACTUAL BUSINESS. THE A.O., T HUS, CONCLUDED THAT SINCE THE ASSESSEES WERE NOT FOUND EXISTING AT THE 10 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO REGISTERED/CORPORATE OFFICE AND AS PER THE STATEMEN T OF SHRI BISHT THE SAME WERE PAPER COMPANIES, IT GAVE REASON TO BELIEV E THAT THE SHARE CAPITAL AND THE SHARE PREMIUM INTRODUCED INTO THE A SSESSEE COMPANIES WERE QUESTIONABLE. 2.3 THE ASSESSEES FILED THEIR OBJECTIONS AGAINST T HE ISSUANCE OF NOTICE U/S 148 OF THE ACT BY CITING NON-EXISTENCE O F ANY LIVE LINK OR CASUAL NEXUS BETWEEN THE INFORMATION ON RECORD AND T HE REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEES HAD ESCAPE D ASSESSMENT. THE OBJECTIONS OF THE ASSESSEES WERE, HOWEVER, REJE CTED BY THE A.O. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, CER TAIN DOCUMENTS EVIDENCING THE IDENTITY, GENUINENESS AND CREDITWORTH INESS OF THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED WERE FURNI SHED BEFORE THE A.O. BY THE ASSESSEES IN RESPONSE TO THE NOTICE(S) ISSUED U/S 142(1) OF THE ACT. THESE DOCUMENTS WERE IN THE NATURE OF C ONFIRMATIONS, BANK ACCOUNTS, AND ITR ACKNOWLEDGMENTS OF THE INVEST ORS CONCERNED. 2.4 THE A.O. ISSUED SUMMONS U/S 131 OF THE ACT AND ALSO DIRECTED THAT SPOT ENQUIRY REPORTS BE OBTAINED IN M UMBAI AND KOLKATA (IN THE CASE OF ALL THREE ASSESSEES) AND AD DITIONALLY IN 11 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO GUWAHATI (IN THE CASE OF M/S SUR BUILDCON PVT. LTD. /GLOBUS REAL INFRA PVT. LTD.). THEREAFTER, THE A.O. OBSERVED THA T THE PARTIES IN MUMBAI EITHER DID NOT RESPOND TO THE SUMMONS SERVED ON THEM OR WERE NOT FOUND AT THE GIVEN ADDRESS OR THE ADDRESSES WERE EITHER INCOMPLETE OR INCORRECT OR THE PREMISES WERE FOUND TO BE LOCKED. INSOFAR AS THE PARTIES BASED IN KOLKATA WERE CONCER NED, ALL THE PARTIES HAD RESPONDED BY POST CONFIRMING THE INVEST MENTS MADE IN THE RESPECTIVE ASSESSEE COMPANIES ALONG WITH DOCUMEN TARY EVIDENCES BUT NONE OF THEM APPEARED IN PERSON. WITH RESPECT T O THE GUWAHATI BASED COMPANIES, AS PER THE REPORT, THE PARTIES WER E NOT FOUND TO BE EXISTING AT THE GIVEN ADDRESSES. 2.5 THE A.O., THEREAFTER, IDENTICALLY OBSERVED IN THE CASES OF ALL THREE ASSESSEES THAT, THE CREDITWORTHINESS OF THE INVESTORS IS NOT ESTABLISHED AS ALL THE INVESTORS ARE SHOWING NOMINA L INCOME. NEITHER THE INVESTOR COMPANY AND NOR THE ASSESSEE COMPANY H AS PRODUCED ANY PROOF TO SUBSTANTIATE THE CREDITWORTHINESS OF T HE INVESTORS (FOR EXAMPLE BALANCE SHEET OF THE INVESTOR COMPANY).THE GENUINENESS OF THE TRANSACTION IS ALSO IN DOUBT. . THE A.O. PROCEEDED TO ADD THE SHARE CAPITAL AND THE SHARE PREMIUM RECEIVED AS UNE XPLAINED CASH 12 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO CREDITS UNDER SEC.68 OF THE ACT IN THE CASE OF THE THREE ASSESSES AS UNDER: PARTICULARS BBN TRANSPORTATION PVT. LTD. GOLDSTAR CEMENT PVT. LTD. SUR BUILDCON PVT. LTD. RELEVA NT A.Y 2008-09 2008-09 2009-10 TOTAL IMPUGNED ADDITION U/S 68 RS. 9,40,00,000/- RS. 9,10,00,000/- RS. 18,00,00,000/- 2.6.0 AGGRIEVED, THE ASSESSEES PREFERRED APPEALS BEFORE T HE LD. CIT (A), ASSAILING THE ORDER OF THE A.O ON THE JURI SDICTION AS WELL AS ON MERITS. IN THE SAID APPEALS BEFORE THE LD. CIT ( A), ON THE ISSUE OF JURISDICTION, THE ASSESSEES AVERRED THAT THE PRE-RE QUIREMENTS FOR VALIDLY INVOKING THE JURISDICTION U/S 147/148 OF TH E ACT WERE NOT FULFILLED AND SATISFIED. THE ASSESSEES ALSO AVERRED THAT THE ASSESSMENT ORDERS WERE BAD IN LAW SINCE THEY WERE BAS ED ON THE RESULTS OF INVESTIGATION AND INQUIRY WHICH WAS NEVER CONFRONTED TO THE ASSESSEES AT ANY STAGE OF THE REASSESSMENT PROC EEDINGS, AND, THEREFORE, WERE VOID AB INITIO. ON MERITS, THE ASSESSEES AVERRED THAT THE A.O. HAD ERRED IN HOLDING THE CREDITS RECEIVED BY THE ASSESSEES TO BE UNEXPLAINED IN NATURE WITHOUT FIRST REFUTING T HE EVIDENCES 13 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO BROUGHT ON RECORD BY THE ASSESSEES TO ESTABLISH THE THREE INGREDIENTS OF SECTION 68. 2.6.1 THE LD. CIT (A), IN THE IMPUGNED ORDERS, REA CHED THE CONCLUSION THAT THE REASONING OF THE A.O. BEHIND MA KING THE ADDITIONS U/S 68 ON ACCOUNT OF SHARE CAPITAL AND SH ARE PREMIUM WAS INCORRECT AND LEGALLY UNSUSTAINABLE. THE FINDING OF THE LD. CIT (A) VIS--VIS M/S BBN TRANSPORTATION PVT. LTD IS BE ING REPRODUCED HERE IN UNDER {WHICH IS IDENTICAL IN THE CASES OF THE OTHER TWO ASSESSEES (APART FROM THE VARIATION IN FIGURES)}: 3.2 THE CASE OF THE REVENUE IS THAT SOME OF THE INVESTOR COMPANIES COULD NOT BE FOUND AT THE GIVEN ADDRESS A ND ALSO THAT SOME OF THE INVESTOR COMPANIES RESPONDED TO THE SUM MONS BY POST BUT DID NOT CAUSE APPEARANCE BEFORE THE TAX AU THORITIES IT IS ALSO STATED THAT THE INCOME OF MANY OF THE INVESTOR COMPANIES WAS TOO LOW OR MEAGRE TO ENABLE THEM TO MAKE SUCH L ARGE INVESTMENTS IN THE SHARE CAPITAL OF APPELLANT COMPA NY. IT IS FURTHER SUBMITTED THAT THERE APPEARS NO JUSTIFICATI ON FOR LARGE COMPONENT OF SHARE PREMIUM PAID TO THE APPELLANT AL ONG WITH THE SHARE CAPITAL. BASED ON THESE OBSERVATIONS, THE REV ENUE HAS HELD THAT THE SUBSCRIPTION TO SHARE CAPITAL, INCLUDING T HE SHARE PREMIUM. AMOUNTING TO RS.9,40,00,000/- AS UNEXPLAIN ED CREDITS 14 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO OF THE APPELLANTS AND HELD TO BE UNEXPLAINED INCOME . THE CASE OF THE APPELLANT, ON THE OTHER HAND, IS THAT IT HAD DI SCHARGED ITS ONUS TO ESTABLISH THE IDENTITY OF THE SHAREHOLDERS/ APPLICANTS, AND THE SOURCE OF THE MONEY BY FILING CONFIRMATIONS FRO M THE SAID PARTIES ALONG WITH COPIES OF BANK STATEMENTS AND IT RS. THEREFORE, THE QUESTION OF INVOKING THE PROVISIONS U/S 68 AGAI NST THE APPELLANT DID NOT ARISE. THE APPELLANT HAS ALSO REL IED ON SEVERAL CASE LAWS TO SUPPORT ITS CLAIM. 3.3 I HAVE CONSIDERED THE RIVAL CLAIMS. THE FACT TH AT APPELLANT FILED THE REQUISITE DOCUMENTS BEFORE THE AO IS UN DISPUTED. THUS, THE APPELLANT HAD DISCHARGED ITS PRIMARY ONUS OF ES TABLISHING THE IDENTITY OF THE SHAREHOLDERS/APPLICANTS AND SOURCE OF THE MONEY. THE ONLY REASON FOR THE REVENUE TO CAUSE FURTHER VE RIFICATION WAS THE REPORT RELATING TO SURVEY CONDUCTED AT THE PREM ISES OF THE APPELLANT WHICH FORMS PART OF THE SATISFACTION RECO RDED FOR REOPENING THE ASSESSMENT PROCEEDINGS. FROM THE SAID REPORT IT TRANSPIRES THAT THE BUSINESS PREMISES OF THE APPELL ANT ACTUALLY BELONGED TO M/S BHUSHAN STEEL LTD. AND SEVERAL OTHE R COMPANIES WERE HAVING THEIR REGISTERED OFFICES IN THE SAME PR EMISES. THIS LED TO THE SUSPICION THAT THESE COMPANIES WERE PAPE R COMPANIES. DURING FURTHER VERIFICATION OF THE IDENTITY OF THE 10 SHAREHOLDERS IN MUMBAI, THREE ADDRESSES WERE NOT FOUND, THREE SH AREHOLDERS WERE NOT FOUND AT THE GIVEN ADDRESS, TWO PREMISES W ERE LOCKED AND SUMMONS COULD NOT BE SERVED, AND OUT OF TWO PAR TIES ON 15 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO WHOM THE SUMMONS WAS SERVED ONE RESPONDED TO THE SUMMONS BUT THE OTHER D ID NOT. IN KOLKATA, NO RESPONSE WAS RECEIVED FROM THE SINGLE P ARTY. 3.4 THERE IS NO LAW THAT MORE THAN ONE COMPANY CANN OT HAVE ITS REGISTERED OFFICE AT ONE ADDRESS. THERE IS NO LAW T HAT COMPANIES CANNOT CHANGE THEIR REGISTERED OFFICE. SEVERAL COMP ANIES CAN HAVE THE SAME REGISTERED OFFICE. BUSINESSES RAISE C APITAL AND SUCH CAPITAL IS ROTATED IN ECONOMY FOR INCREASING P RODUCTION AND TRADE AND FOR MAKING MORE EFFICIENT USE OF CAPITAL. COMPANIES CHANGE HANDS, SOMETIMES IN QUICK SUCCESSION. THIS I S THE NORMAL FORMATION OF CAPITAL IN ANY OPEN ECONOMY AND THE PR OCESS OF CAPITAL FORMATION CANNOT BE TAKEN TO BE REPRESENTIN G ONLY UNACCOUNTED FUNDS OR IMPEDED. ALL THE COMPANIES HAV ING REGISTERED OFFICE AT THAT PREMISES UNDISPUTEDLY BELONGED TO BHUSHAN GROUP. TH E SOURCES OF CAPITAL INTRODUCED IN THESE COMPANIES WERE ESTAB LISHED DURING THE RESPECTIVE ASSESSMENT PROCEEDINGS, INCLUDING TH IS APPELLANT COMPANY. NO EVIDENCE WAS FOUND DURING THE SEARCH TO INDICATE INTRODUCTION OF UNACCOUNTED CASH / FUNDS IN THE FOR M OF SHARE CAPITAL IN THESE COMPANIES. IN THESE CIRCUMSTANCES, THE CONCLUSION BASED ON THE FACTS RELIED UPON BY THE RE VENUE THAT THE SHARE CAPITAL INTRODUCED IN THE COMPANIES BELONGING TO BHUSHAN GROUP, INCLUDING THE APPELLANT COMPANY, ARE UNEXPLA INED, IS PREMATURE. 16 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 3.5 IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE MAT TER, AND IN VIEW OF THE CASE LAWS RELIED UPON BY THE LD. AR, TH E ADDITION MADE CANNOT BE LEGALLY SUSTAINED AND IS DELETED. TH IS GROUND OF APPEAL IS ALLOWED. 2.6.2 ON THE GROUND OF JURISDICTION, THE LD. CIT ( A) IDENTICALLY OPINED THE FOLLOWING IN THE IMPUGNED ORDERS ACROSS A LL THE THREE ASSESSEES: 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND T HE SUBMISSIONS MADE. IT IS NOT THE CASE THAT THE APPELLANT WAS NOT SUPPLIED WITH THE REASONS RECORDED. IT RAISED OBJECTIONS TO THE REASO NS RECORDED, WHICH WERE DULY REPLIED TO BY THE REVENUE. TO THIS EXTENT, ITS CLAIM THAT THE REASONS OR RESULTS OF ENQUIRY WERE NOT SUP PLIED DURING THE ASSESSMENT IS INCORRECT. HOWEVER, DO NOT I FIND FROM THE ASSESSMENT ORDER THAT THE RESULT OF ENQUIRY MADE AT MUMBAI AND KOLKATA WAS MADE AVAILABLE TO THE APPELLANT. TO THA T EXTENT, THE RIGHT OF APPELLANT TO KNOW THE FACTS AND HAVE THE O PPORTUNITY TO REBUT THE EVIDENCE WAS NOT GRANTED. HOWEVER, THESE FINDINGS WERE MADE AVAILABLE TO THE APPELLANT IN THE ASSESSMENT O RDER AND THE APPELLANT HAD THE OPPORTUNITY DURING THE APPEAL PRO CEEDINGS TO PRESENT ITS POINT OF VIEW. SIGNIFICANTLY, THE APPEL LANT HAS NOT ADDUCED ANY ADDITIONAL EVIDENCE OR ESTABLISHED ANY NEW FACT. IN 17 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THIS VIEW OF THE MATTER, AND IN VIEW OF THE RELIEF ALLOWED TO THE APPELLANT ON MERITS, THIS GROUND RAISED AGAINST THE VALIDITY OF THE PROCEEDINGS FOR NOT FOLLOWING NATURAL JUSTICE DOES NOT SURVIVE AND IS DISMISSED ACCORDINGLY, 2.6.3 ON THE GROUND OF VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, THE FOLLOWING HAD BEEN IDENTICALLY OPINED B Y THE LD. CIT (A) ACROSS ALL THE THREE ASSESSEES: 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE. THE REASONS FOR REOPENING THE PROCEEDINGS WERE COMMUNICATED TO THE APPELLANT AND ITS OBJECTIONS WERE DULY CONSIDERED BY THE REVENUE. BASED ON THE REASONS RECORDED IN THE ASSESSMENT ORDER, THE REVEN UE REACHED THE CONCLUSION THAT THE SHARE CAPITAL OF THE APPELLANT WAS UNEXPLAINED. HENCE, THE REVENUE PASSED THE REASSESSMENT ORDER. D URING APPEAL THE APPELLANT GOT THE OPPORTUNITY TO CHALLENGE THE REASSESSMENT ORDER ON FACTS AND IN LAW. THE APPELLANT HAS BEEN A LLOWED RELIEF ON MERIT. THE ASSESSMENT ORDER STANDS MERGED IN THIS O RDER. THEREFORE, IT CANNOT BE SAID THAT THE REASSESSMENT PROCEEDING AND THE ORDER WAS BAD IN LAW. IN ANY CASE, THIS GROUND IS ONLY AC ADEMIC IN VIEW OF THE RELIEF ALLOWED TO THE APPELLANT ON MERIT. TH IS GROUND IS DISPOSED OFF ACCORDINGLY. 18 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 2.7 AGGRIEVED BY THE RELIEF GRANTED BY THE LD. CIT (A) ON MERITS, THE REVENUE IS IN APPEAL BEFORE US AGAINST THE IMPU GNED ORDERS WHILE THE ASSESSEES HAVE PREFERRED CROSS OBJECTIONS IN AL L THE THREE APPEALS. 2.8 THE RESPECTIVE GROUNDS TAKEN IN THE APPEALS AN D CROSS OBJECTIONS ARE AS UNDER: GROUNDS OF APPEAL IN ITA NO.6174/DEL/2013: 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.18,00,00,000/- MADE BY AO WITHOUT APPRECIATING THE FACT THAT THE IDENTITY AND THE CREDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLIS HED AS ALL THE INVESTORS WERE SHOWING A NOMINAL INCOME AND NEITHER THE INVESTOR COMPANY AND NOR THE ASSESSEE COMPANY HAD PRODUCED A NY PROOF TO SUBSTANTIATE THE CREDITWORTHINESS OF THE INVESTORS (FOR EXAMPLE BALANCE SHEET OF THE INVESTOR COMPANY). 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AN Y/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 19 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO GROUNDS OF APPEAL IN CROSS OBJECTION NO.258/DEL/201 5: THAT THE ORDER DATED 19.09.2013 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS)-I, NEW DELHI, IS AGAINST LAW AND FACTS ON THE FILE AND BAD IN LAW IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN RESORTING TO THE PROVISIONS OF SECTION 1 48 OF THE INCOME-TAX ACT, 1961. GROUNDS OF APPEAL IN ITA NO.6176/DEL/2013: 1 . THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AN D FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.9,40,00,000/- MADE BY AO WITHOUT APPRECIATING THE FACT THAT THE IDENTITY AND THE CREDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLIS HED AS ALL THE INVESTORS WERE SHOWING A NOMINAL INCOME AND NEITHER THE INVESTOR COMPANY AND NOR THE ASSESSEE COMPANY HAD PRODUCED A NY PROOF TO SUBSTANTIATE THE CREDITWORTHINESS OF THE INVESTORS (FOR EXAMPLE BALANCE SHEET OF THE INVESTOR COMPANY). 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL . 20 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO GROUNDS OF APPEAL IN CROSS OBJECTION NO.260/DEL/201 5: THAT THE ORDER DATED 19.09.2013 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS)-I, NEW DELHI, IS AGAINST LAW AND FACTS ON THE FILE AND BAD IN LAW IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN RESORTING TO THE PROVISIONS OF SECTION 1 48 OF THE INCOME-TAX ACT, 1961. GROUNDS OF APPEAL IN ITA NO.6177/DEL/2013: 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.9,10,00,000/- MADE BY AO WITHOUT APPRECIATING THE FACT THAT THE IDENTITY AND THE CREDITWORTHINESS OF THE INVESTORS WERE NOT ESTABLIS HED AS ALL THE INVESTORS WERE SHOWING A NOMINAL INCOME AND NEITHER THE INVESTOR COMPANY AND NOR THE ASSESSEE COMPANY HAD PRODUCED A NY PROOF TO SUBSTANTIATE THE CREDITWORTHINESS OF THE INVESTORS (FOR EXAMPLE BALANCE SHEET OF THE INVESTOR COMPANY). 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 21 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO GROUNDS OF APPEAL IN CROSS OBJECTION NO.02/DEL/2021 : 1. THAT THE ORDER DATED 19.09.2013 PASSED U/S 250 OF T HE INCOME-TAX ACT, 1961 BY THE LD. COMMISSIONER OF INC OME TAX (APPEALS)-I, NEW DELHI, IS BAD IN LAW IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN RESORTING TO THE PROVISIONS OF SEC.148 OF THE INCOME TAX ACT, 1961. 2. THAT THE LD. CIT(A) VIDE ORDER DATED 19.09 .2013 PASSED U/S 250 OF THE INCOME TAX ACT, 1961 ERRED IN DISMISSING THE APPEAL OF THE ASSESSEE CHALLENGING THE ORDER OF THE LD. ASSESSING OFFICER TO THE EXTENT IS WAS PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS THE RESULT OF ENQUIRIES MADE BY THE DEP ARTMENT ON THE BASIS OF WHICH THE IMPUGNED ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE WERE NEVER CONFRONTED TO THE ASSESSEE AT ANY STAGE OF THE ASSESSMENT PROCEEDINGS, THUS RENDERING THE ENTI RE ASSESSMENT PROCEEDINGS AS NON-EST, BAD-IN-LAW AND VOID AB INIT IO. 3.0 AT THE OUTSET, THE LD. A.R SUBMITTED THAT THER E WAS A DELAY IN FILLING OF CROSS OBJECTION IN THE CASE OF ACIT C C-3 VS. M/S GOLDSTAR CEMENT PVT. LTD. IN ITA NO. 6177/DEL/2013 FOR AY 2008-09. IT WAS SUBMITTED THAT THE SAID ASSESSEE HAD FILED AN APPLICATION FOR CONDONATION OF DELAY WHICH WAS ALSO ACCOMPANIED BY AN AFFIDAVIT. 22 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THE ISSUE WITH RESPECT TO THE CONDONATION OF DELAY WA S ADDRESSED BY THE LD. COUNSEL. HE REITERATED THE FACTS NARRATED I N THE APPLICATION, WHICH MAY BE SUMMARIZED AS UNDER: 3.1 IT WAS SUBMITTED THAT THE DEPARTMENT HAD INITI ALLY PREFERRED AN APPEAL BEFORE THIS TRIBUNAL ON 12.11.2 013 AFTER THE LD. CIT (A) HAD DELETED THE ADDITION MADE BY THE A.O. V IDE ORDER DATED 19.09.2013. IT WAS SUBMITTED THAT THE SAID APPEAL WA S NUMBERED AS ITA NO. 6177/DEL/2013. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD, THEREAFTER, FILED THE NECESSARY CROSS OBJECTIO N (NO. 261/DEL/2013) TO THE SAID APPEAL ON 09.05.2015 WHIC H WAS DELAYED BY 579 DAYS. 3.2 THE LD. AR FURTHER SUBMITTED THAT THE SAID APP EAL AND THE CROSS OBJECTION WERE LISTED FOR HEARING BEFORE THE T RIBUNAL ON 07.01.2016 WHEREIN THE REVENUES APPEAL WAS DISMISSED FOR BEING DEFECTIVE BECAUSE ONLY ONE SET (OUT OF THE FOUR SET S) OF FORM 36, THE GOA AND THE VERIFICATION WERE SIGNED. THE CROSS OBJ ECTIONS OF THE ASSESSEE WERE, THEREFORE, RENDERED IN FRUCTUOUS. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL, HOWEVER, IN THE INTERES T OF JU STICE, 23 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO GRANTED THE ASSESSEE THE LIBERTY TO FILE TO AN APPL ICATION TO RECALL THE ORDER ALONG WITH AN APPLICATION FOR THE CONDONATION OF DELAY IN PREFERRING THE SAID CROSS OBJECTION. THE LD. AR FUR THER SUBMITTED THAT THE DEPARTMENT PREFERRED MISCELLANEOUS APPLICA TION FOR THE RESTORATION OF THE APPEAL ON 21.12.2016 WHICH WAS HEA RD BY THIS TRIBUNAL ON 28.01.2019 WHEREIN NO ONE HAD APPEARED F OR THE ASSESSEE, SINCE NO NOTICE OF THE DATE OF HEARING HA D BEEN RECEIVED BY THE ASSESSEE. VIDE ORDER DATED 28. 01.2019, DEPARTM ENTS APPEAL NO. 6177/DEL/ 2013 WAS RESTORED. 3.3 IT WAS FURTHER SUBMITTED BY THE LD. AR THAT AS THE ASSESSEE WAS UNAWARE OF THE FILLING OF THE MISCELLANE OUS APPLICATION (HAVING NOT RECEIVED THE NOTICE OF HEARING), THE AS SESSEE DID NOT PREFER FRESH CROSS-OBJECTIONS OR AN APPLICATION SEE KING THE RESTORATION OF THE ORIGINAL CROSS OBJECTIONS AND THE MATTER REM AINED STATUS QUO TILL THE SECOND HALF OF THE YEAR 2020, WHERE DURING THE ONGOING COVID-19 PANDEMIC AND LOCKDOWN, THE ASSESSEE CHANGE D ITS COUNSEL WHO THEN TOOK OVER THIS MATTER AMONGST SEVERAL OTHER CASES OF THE 24 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO SAME GROUP, AND WHO UPON A STUDY OF THIS CASE FILE I NFORMED THE ASSESSEE OF THE SITUATION. 3.4 ON THE ISSUE OF CONDONATION OF DELAY, THE LD. A.R. REFERRED TO THE DECISION OF THE HONBLE APEX COURT IN COLLECTOR OF LAND ACQUISITION V. MAST. KATIJI AND ORS., MANU/SC/0460/ 1987 : 167 ITR 471 WHEREIN THE HON'BLE SUPREME COURT HAD OBSERVED THAT THE EXPRESSION SUFFICIENT CAUSE' EMPLOYED IN SECTION 5 OF LIMITATION ACT, 1963 IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER IN ORDER TO SERVE THE ENDS OF JUS TICE. IT WAS SUBMITTED THAT THE HONBLE APEX COURT HAS ITERATED THAT A LIBERAL APPROACH SHOULD BE ADOPTED IN THE MATTERS OF CONDON ATION OF DELAY IN CASES WHERE THERE IS NO DELIBERATE INACTION OR A LAC K OF BONA FIDE . HE ALSO REFERRED TO THE GUIDELINES ISSUED BY THE HON'B LE SUPREME COURT AND POINTED OUT THAT FROM THESE GUIDELINES IT BECOM ES CLEAR THAT A LIBERAL APPROACH MUST BE ADOPTED FOR CONDONING DELA Y, IN ORDER TO FURTHER THE CAUSE OF SUBSTANTIVE JUSTICE, ESPECIALL Y SINCE IN THIS CASE, THE DELAY WAS NOT ATTRIBUTABLE TO THE FAULT OF THE A SSESSEE. 25 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 3.5 THE LD. CIT DR OPPOSED THE ASSESSEES PRAYER FOR CONDONATION OF DELAY. 3.6 AFTER CONSIDERING THE SERIES OF EVENTS AND TH E SUBMISSION OF THE LD. A.R, WE ARE OF THE CONSIDERED OPINION TH AT IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE DELAY NEEDS TO BE CONDON ED. THE BONA FIDE OF THE REASONS HAVE NOT BEEN ASSAILED BY THE OTHER SIDE AND, THEREFORE, WE CONDONE THE DELAY CAUSED IN THE FILIN G OF THE CROSS OBJECTIONS BEFORE THE TRIBUNAL IN CASE OF ACIT CC-3 VS M/S GOLDSTAR CEMENT PVT. LTD. ITA NO. 6177/DEL/2013 FOR AY 2008- 09. 4.0 NOW WE TAKE UP THE APPLICATION FOR THE ADMISSI ON OF AN ADDITIONAL GROUND WHICH IS IDENTICAL IN THE CASES OF ACIT, CENTRAL CIRCLE-13, NEW DELHI VS.BBN TRANSPORTATION PVT. LTD ., ITA NO. 6176/DEL/2013 & CO 260/DEL/2013 FOR A.Y. 2008-09 & ACIT, CENTRAL CIRCLE-13, NEW DELHI VS. SUR BUILDCON PVT. L TD. (NOW KNOWN AS GLOBUS REAL INFRA PVT. LTD.), ITA NO. 6174/DEL/2 013 & CO 258/DEL/2013 FOR A.Y. 2009-10. THE SAID ADDITIONAL GROUND READS AS UNDER: 26 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THAT THE LD. CIT (A) VIDE ORDER DT. 19.09.2013 PASS ED U/S 250 OF THE INCOME TAX ACT, 1961 ERRED IN DISMISSING THE AP PEAL OF THE ASSESSEE CHALLENGING THE ORDER OF THE LD. DCIT, CC- 13, NEW DELHI TO THE EXTENT IT WAS PASSED IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS THE RESULTS OF ENQUIRES MADE BY THE D EPARTMENT ON THE BASIS OF WHICH THE IMPUGNED ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE WERE NEVER CONFRONTED TO THE ASSESS EE AT ANY STAGE OF THE ASSESSMENT PROCEEDINGS, THUS RENDERING THE E NTIRE ASSESSMENT PROCEEDINGS AS NON-EST, BAD-IN LAW AND V OID AB INTIO. 4.1 THE LD. A.R. SUBMITTED THAT THE ASSESSEES MAY BE PERMITTED TO RAISE THE ADDITIONAL GROUND TO THE CRO SS OBJECTION AS THE SAME IS A QUESTIONS OF LAW. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CHITTURI SUBBANA VS KUDAPA SUBBANA & OTHERS ( 1965 AIR 1325) AND NATIONAL THERMAL POWER CO. LTD. VS. CIT, (1998) 229 ITR 383 (SC) TO HOLD THAT THAT A QUESTION OF LAW CAN BE RAISED AT ANY STAGE OF PROCEEDINGS. 4.2 PER CONTRA, THE LD. CIT DR OPPOSED THE ASSES SEES PRAYER FOR ADMISSION OF ADDITIONAL GROUND. 4.3 WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. A.R. ALONG WITH THE CASE LAWS RELIED UPON. THE HONBL E SUPREME 27 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO COURT IN THE DECISION OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) HAS HELD AS UNDER: THE REFRAMED QUESTION, THEREFORE, IS ANSWERED IN TH E AFFIRMATIVE, I.E. THE TRIBUNAL HAS JURISDICTION TO EXAMINE A QUE STION OF LAW WHICH ARISES FROM THE FACTS AS FOUND BY THE AUTHORI TIES BELOW AND HAVING BEARING ON THE TAX LIABILITY OF THE ASSE SSEE. WE REMAND THE PROCEEDINGS TO THE TRIBUNAL FOR CONSIDER ATION OF THE NEW GROUNDS RAISED BY THE ASSESSEE ON THE MERITS. 4.4 THE ADDITIONAL GROUND RAISED BY THE ASSESSEES IS WITH RESPECT TO THE VIOLATION OF THE PRINCIPLES OF NATUR AL JUSTICE IN WHICH THE ASSESSEES CONTEND THAT THE ENQUIRES MADE BY THE DEPARTMENT TO MAKE THE IMPUGNED ADDITIONS IN THE HANDS OF THE ASS ESSEES WERE NEVER CONFRONTED TO THE ASSESSEES AT ANY STAGE OF T HE REASSESSMENT PROCEEDINGS. SINCE THE ADDITIONAL GROUND RAISED BY THE ASSESSEES IS A QUESTION OF LAW, WE ADMIT THIS GROUND IN THE CASE OF ACIT, CENTRAL CIRCLE-13, NEW DELHI VS. BBN TRANSPORTATION PVT. LTD ., ITA NO. 6176/DEL/2013 & CO 260/DEL/2013 FOR A.Y. 2008-09 AN D ACIT, CENTRAL CIRCLE-13, NEW DELHI VS. SUR BUILDCON PVT. L TD. (NOW GLOBUS 28 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO REAL INFRA PVT. LTD.), ITA NO. 6174/DEL/2013 & CO 2 58/DEL/2013 FOR A.Y. 2009-10. 5.0 NOW COMING TO THE CONTENTIONS RAISED BY THE LD. CIT D.R. AND THE LD. A.R. ON THE RESPECTIVE GROUNDS RAISED B Y THEM IN THEIR APPEAL AND CROSS OBJECTIONS, THE SUBMISSIONS OF BOT H THE PARTIES MAY BE SUMMARIZED AS UNDER: 5.1 THE LD. CIT D.R., ON BEHALF OF THE REVENUE, DE FENDED THE ASSESSMENT ORDERS BY SUBMITTING THAT THE A.O. HAD C ONDUCTED NECESSARY INVESTIGATIONS AND ENQUIRIES TO HOLD THAT THE GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN PROVED AND NEITHE R HAVE THE SAME BEEN EXPLAINED BY THE ASSESSEES. THE LD CIT D.R. SU BMITTED THAT THE LD. CIT (A) HAD ERRED IN OVERTURNING THE FINDINGS O F THE A.O. IN A SUMMARY MANNER WITHOUT ESTABLISHING HOW THE ASSESSEES HAD EFFECTIVELY REBUTTED THE DETAILED AND ADVERSE FINDI NGS EMANATING FROM THE ENQUIRIES CONDUCTED BY THE A.O. THE LD. CIT D.R . SUBMITTED THAT THE ASSESSEES HAD ONLY SUBMITTED ROUTINE DETAILS WH ICH WERE NOTHING BUT A FAADE TO COVER THE REAL PICTURE. PER THE LD. CIT D.R., THE INVESTORS, WHO HAVE PUT IN SUBSTANTIAL MONEY IN THE ASSESSEE COMPANIES, CANNOT SIMPLY DISAPPEAR OR BECOME UNTRAC EABLE OVER 29 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO TIME, AND, IF, THE SAID INVESTORS WERE GENUINE, THE ONUS WAS ON THE ASSESSEES TO SATISFY ALL THE QUERIES RAISED BY THE A.O. AND PRODUCE THE PARTIES. 5.2 THE LD. CIT D.R. SUBMITTED THAT IT WAS VISIBLE FROM THE ASSESSMENT ORDERS THAT AN EXTENSIVE INVESTIGATION H AD BEEN CONDUCTED BY THE A.O.IN ORDER TO VERIFY THE GENUINE NESS OF THE TRANSACTIONS, WHICH, FROM THE OUTCOME OF SUCH INDEP ENDENT INVESTIGATION AND ENQUIRY, HAS BEEN PROVED TO NOT E XIST. THUS, PER THE LD CIT D.R., RELIEF COULD NOT HAVE BEEN GRANTED TO THE ASSESSEES SINCE THE INITIAL ONUS CANNOT MERELY BE DISCHARGED BY SUB MITTING ROUTINE DETAILS. THE LD. CIT DR SUBMITTED THAT THE INITIAL BURDEN OF PROOF U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) IS HEAVILY CAST ON AN ASSESSEE TO FURNISH AN EXPLANATION WITH R ESPECT TO ANY SUM CREDITED IN THE BOOKS TO THE SATISFACTION OF TH E A.O. AND THAT HAS NOT BEEN DISCHARGED IN THE CASES AT HAND. IT WAS SUB MITTED THAT THE A.O. HAS BROUGHT ON RECORD SUFFICIENT MATERIAL TO L IFT THE ASSESSEES FAADE UPON CONDUCTING HIS OWN INDEPENDENT INVESTIG ATION AND ENQUIRY, TO WHICH THE ASSESSEES HAVE OFFERED NO EXPL ANATION. 30 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 5.3 THE LD. CIT D.R. ALSO RELIED ON SEVERAL DECISI ONS OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT TO SUBMIT T HAT THESE DECISIONS HAVE ADEQUATELY DISTINGUISHED THE DECISIO N OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. [216 CTR 195 SC] AND THE JUDGMENT OF THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT VS. GOURDIN HERBALS INDIA LTD. [IN ITA NO. 665/ 2009] - AS THE FORMER SET OF DECISIONS HAVE CLEARLY HELD THAT THE INITIAL ONUS U/S 68 CANNOT MERELY BE DISCHARGED BY AN ASSESSEE BY SU BMITTING THE ROUTINE DOCUMENTATION WHEN THERE IS SUFFICIENT EVIDE NCE AND MATERIAL ON RECORD TO SHOW THAT THE SUBSCRIBER WAS A PAPER CO MPANY AND NOT A GENUINE INVESTOR. 6.0 IN REBUTTAL, THE LD. A.R. SUBMITTED THAT THE A .O. HAS ERRONEOUSLY INVOKED JURISDICTION U/S 147/148 OF THE ACT SINCE THE BASIC PRE-CONDITION FOR THE INITIATION OF REASSESSM ENT PROCEEDINGS UNDER THE SAID SECTION VIZ. REASON TO BELIEVE ON THE PART OF THE A.O. TO ESTABLISH THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS NOT SATISFIED AND AS SUCH, THE CONSEQUENT ADDITIONS MADE U/S 68 OF THE A CT BY WAY OF THE ASSESSMENT ORDERS PASSED U/S 147/14(3) WERE VOID AB INITIO BECAUSE 31 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO NO LIVE LINK/CAUSAL NEXUS EXISTS BETWEEN THE INFORM ATION, THE ASSESSEES AND THE ALLEGED ESCAPED INCOME, THE ABSEN CE OF WHICH, AS PER THE SETTLED LAW, RENDERS THE ENTIRE REASSESSMENT PROCEEDINGS TO BE A NULLITY. THE ESTABLISHED CASE LAWS OF CALCUTTA DISCOUNT 1961 41 ITR 191(SC) AND ITO V. LAKMANI MEWAL DAS, 1976 103 ITR 437 (SC) WERE CITED IN SUPPORT, AMONGST OTHERS. 6.1 PER THE LD. A.R., THE REASONS RECORDED IN TH E PRESENT CASES CANNOT BE THE BASIS ON WHICH ANY SUCH REASON TO BELIEVE COULD BE ARRIVED AT WHICH WOULD EVEN PRIMA FACIE SHOW THAT THE SHARE CAPITAL OR SHARE PREMIUM RECEIVED BY THE ASSESSEES FOR THE AYS UNDER APPEAL WAS NOT GENUINE. PER THE LD. A.R., THE A.O. MUST HAVE IN HIS POSSESSION SPECIFIC INFORMATION OR MATERIAL TO SHOW THAT THE PARTICULAR TRANSACTIONS OF THE ASSESSEES WERE NOT G ENUINE OR FICTITIOUS. IT WAS SUBMITTED THAT THIS SPECIFIC INFO RMATION WAS, HOWEVER, ABSENT IN THE CASES AT HAND, THEREBY RENDE RING THE ENTIRE REASSESSMENT/S TO BE IN THE NATURE OF FISHING AND R OVING ENQUIRIES, BASED SOLELY ON BORROWED SATISFACTION DRAWN FROM T HE STATEMENT OF SHRI B.S. BISHT RECORDED BY THE INVESTIGATION WING. THE LD. AR 32 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO SUBMITTED THAT THE SAME IS IMPERMISSIBLE IN LAW IN L IGHT OF THE SEVERAL CITED DECISIONS OF THE HONBLE JURISDICTION AL DELHI HIGH COURT. 6.2 ON THE VIOLATION OF THE PRINCIPLE(S) OF NATURA L JUSTICE, THE LD. A.R. SUBMITTED THAT WHILE MAKING THE IMPUGNED AD DITIONS, THE A.O. HAS PRIMARILY RELIED UPON THE REPORTS OF INSPE CTORS WHO HAD BEEN DEPUTED TO CONDUCT FIELD ENQUIRIES IN ORDER TO VERIFY THE GENUINENESS OF THE INVESTOR COMPANIES. THESE REPORT S FORMED THE BASIS OF THE ASSESSMENT ORDERS. IT WAS SUBMITTED THA T THESE REPORTS WERE, HOWEVER, BASED ON AN INVESTIGATION CONDUCTED B EHIND THE BACK OF THE ASSESSES AND WERE NEVER PUT TO THE ASSESSEES FOR REBUTTAL, AS IS THE ASSESSEES RIGHT U/S 142(3) OF THE ACT. FURTHER MORE, GOING BY THE REASONS RECORDED, NEITHER HAD THE STATEMENT OF SH RI B.S. BISHT BEEN PROVIDED TO THE ASSESSEES NOR WAS ANY OPPORTUNI TY TO CROSS EXAMINE HIM BEEN GIVEN AS IS MANDATED BY LAW BY THE DECISION OF THE HONBLE APEX COURT IN ANDAMAN TIMBER INDUSTRIES V. CCE [2015] 62 TAXMANN.COM . PER THE LD. A.R., THE SAID VIOLATION OF NATURAL JUS TICE, THEREFORE, RENDERS THE ASSESSMENT ORDERS VOID AB INITIO . 6.3 ON MERITS, THE LD. A.R. DEFENDED THE IMPUGNED ORDERS OF THE LD. CIT (A) BY SUBMITTING THAT THE ASSESSEES HA D FURNISHED 33 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO DETAILED DOCUMENTARY EVIDENCES BEING THE PARTY NAME S, PAN AND ITR ACKNOWLEDGEMENTS, BANK STATEMENTS AND CONFIRMATIONS OF THE INVESTORS IN ORDER TO DULY DISCHARGE THE ONUS CAST UPON THEM U/S 68 SINCE AS PER THE LAW LAID DOWN IN LOVELY EXPORTS (SUPRA), WHICH IS THE APPLICABLE LAW FOR THE AYS IN QUESTION, THE ASSESSEE S ARE NOT REQUIRED TO PROVE THE SOURCE OF SOURCE OF THE SHARE SUBSCRIB ERS. THE LD. AR DREW OUR ATTENTION GO THE VOLUMINOUS EVIDENCES FILED WHICH FORMS PART OF PAPER BOOK PART 2A, 2B AND 2C FILED BY EACH OF THE ASSESSEES. 6.4 PER THE LD. A.R., THE LD. CIT D.R. HAS NOT POI NTED OUT TO ANY PORTION OF THE ASSESSMENT ORDERS WHEREIN THE A.O . HAS DISPROVED THESE EVIDENCES BROUGHT ON RECORD SINCE ALL THAT TH E A.O. HAS DONE IS TO RELY ON THE INSPECTORS REPORT WHICH AS PER LAW IS INSUFFICIENT IN ITSELF TO MAKE/SUSTAIN AN ADDITION U/S 68 OF THE AC T. IN SUPPORT, RELIANCE WAS PLACED ON THE DECISIONS OF PR. CIT VS. RAKAM MONEY MATTERS (P) LTD. (2018) 94 CCH 333 (DEL HC), CIT V M/S ORCHID INDUSTRIES PVT. LTD. IN ITA NO. 1433 OF 2014 (BOM H C), AMONGST OTHERS . 6.5 WITH RESPECT TO THE INSPECTORS REPORT CITED IN THE ASSESSMENT ORDERS, THE LD. A.R. SUBMITTED THAT THE LD. CIT (A) WAS CORRECT IN NOT RELYING ON THE SAME SINCE THESE REPO RTS ARE RIDDLED 34 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO WITH INCONSISTENCIES. FOR EXAMPLE, THE A.O. IN THE A SSESSMENT ORDERS, STATED THAT SUMMONS WERE SENT TO 41 INVESTOR COMPAN IES (IN CASE OF THE THREE ASSESSEES) AND POSTAL REPLIES WERE SUBMIT TED BY 39 INVESTOR COMPANIES. THIS IS ERRONEOUS, SINCE THE TOTAL INVES TORS OF ALL THE THREE ASSESSEES PUT TOGETHER ARE ONLY 39 AND, THEREFORE, THE FIGURE OF 41 IS FICTITIOUS. FURTHER, IF POSTAL REPLIES HAD BEEN SUB MITTED BY 39 INVESTOR COMPANIES, WHICH IS, IN FACT, THE TOTAL NUMBER OF IN VESTORS IN ALL, THEN HOW HAS THE A.O. MADE AN ADDITION U/S 68 BY HOL DING THAT 19 COMPANIES THAT WERE BASED IN MUMBAI AND GUWAHATI WERE EITHER NOT SERVED THE SUMMONS OR THEY NEVER RESPONDED? THUS, P ER THE LD. A.R. THE REPORTS CLEARLY CANNOT BE RELIED UPON TO MAKE A NY ADVERSE INFERENCE AGAINST THE ASSESSEES. 6.6 THE LD. A.R. ALSO SUBMITTED THAT THE MERE FACT THAT THE INVESTOR COMPANIES DID NOT HAVE THEIR OWN PROFIT-MAK ING APPARATUS OR HAD REPORTED MEAGRE INCOME DID NOT IPSO FACTO MEAN THAT THE INVESTORS HAD NO CREDITWORTHINESS. AS PER THE DECIS ION OF PCIT-1 VS. AMI INDUSTRIES LTD. [2020] 116 TAXMANN.COM 34 (BOM) , TH E INVESTMENTS MAY BE MADE FROM OWN FUNDS AVAILABLE IN SHARE CAPITA L/RESERVES ACCOUNT OR OUT OF BORROWED FUNDS AND NOT NECESSARIL Y OUT OF TAXABLE 35 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO INCOME ONLY, FURTHER THE BANK STATEMENTS ALSO EVIDE NCE THE SUFFICIENT AVAILABILITY OF FUNDS OF THE CREDITORS. 6.7 OUR ATTENTION WAS NEXT DRAWN TO THE DECISIONS O F THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE S OF CIT-II V. KAMDHENU STEEL & ALLOYS LTD. (2012) 19 TAXMANN.COM 26 (DEL), DWARKADHISH CAPITAL P. LTD. 330 ITR 298 (DEL HC) AND CIT V. WINSTRAL PETROCHEMICALS P. LTD. 330 ITR 603 (DEL) THAT HAVE UNIFORMLY HELD THAT THE MERE FACT THAT THE INSPECTORS REPORT ALLEGES T HE PARTIES TO BE NON-EXISTENT AT THE GIVEN ADDRESS WOULD NOT GIVE THE REVENUE A RIGHT TO INVOKE SECTION 68 WITHOUT ADDITIONAL MATERIAL IN SUPPORT, WHICH AS PER THE LD. A.R. DOES NOT EXIST IN THESE CASES, SIN CE THE IMPUGNED ADDITIONS HAVE BEEN MADE SOLELY ON SURMISES AND CON JECTURES, WITHOUT THE ASSESSING OFFICER HAVING BROUGHT ON RECO RD ANY SUCH MATERIAL TO DISCHARGE THE SHIFTED BURDEN OF PROOF T O REFUTE THE EVIDENCES PROVIDED BY THE ASSESSEES. 6.8 LASTLY, THE LD. A.R. DREW OUR ATTENTION TO THE DECISIONS RENDERED BY THE HONBLE SUPREME COURT, THE HONBLE JURISDICTIONAL DELHI HIGH COURT AND EVEN THE COORDINATE BENCH OF T HIS TRIBUNAL IN THE CASE OF GROUP COMPANIES WHEREIN SIMILAR ADDITION S U/S 68 ON 36 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO STRIKINGLY SIMILAR FACTS & CIRCUMSTANCES WERE DELET ED. THESE CASES ARE: - ACIT, CC-13 VS. SUPREME PLACEMENT SERVICES (P) LTD ., ITA NO. 5259/DEL/2013 MANU/ID/0205/2021, - PCIT (CENTRAL)-1 VS. ADAMINE CONSTRUCTION PVT. LTD. , MANU/DE/1566/2018 FOR A.Y. 2008-09 SLP FILED BY THE REVENUE DISMISSED BY THE HONBLE SC IN PCIT (CENTRAL)-1VS. ADAMINE CONSTRUCTION PVT. LTD., MANU/SCOR/42973/201 8, - PCIT (CENTRAL)-1 VS. ADAMINE CONSTRUCTIONS P. LTD., [2018] 99 TAXMANN.COM 44 (DELHI) FOR A.Y. 2009-10 SLP FILED BY THE REVENUE WAS DISMISSED BY THE HONBLE SC IN PCIT (CENTRAL)-1 VS. ADAMINE CONSTRUCTIONS P. LTD., [2018] 99 TAXMAN N.COM 45 (SC). 6.9 HENCE, PER THE LD. A.R., FOR THE AFORESAID REA SONS, NO ADDITION U/S 68 WAS CALLED FOR IN THE CASE OF THE AS SESSEES. 7.0 HAVING HEARD BOTH THE PARTIES AND AFTER DULY C ONSIDERING THE SUBMISSIONS MADE BY BOTH SIDES, WE ARE OF THE OP INION THAT THE CROSS OBJECTIONS FILED BY THE ASSESSEES SHOULD BE A DJUDICATED UPON FIRST SINCE THE SAME CHALLENGE THE VERY JURISDICTIO N OF THE A.O. TO INVOKE 147/148 AS WELL AS HIS ALLEGED VIOLATION OF T HE PRINCIPLE(S) OF NATURAL JUSTICE. THESE ISSUES THUS STRIKE AT THE VE RY ROOT OF THE 37 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO MATTER AND MUST BE DISPOSED OF AT THE INCEPTION ITS ELF, EVEN THOUGH THE APPEALS ARE OF THE REVENUE. 7.1 WITH RESPECT TO THE GROUNDS/ADDITIONAL GROUNDS TAKEN IN THE CROSS OBJECTIONS, WE HAVE CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS T HE MATERIAL AND THE RELEVANT PROVISIONS OF THE INCOME TAX ACT. WE A LSO HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY THE LD. A.R. B EFORE DECIDING ON THE ISSUE AS TO WHETHER THE INVOCATION OF JURISDICTI ON U/S 147/148 WAS VALID OR NOT, IT IS EXPEDIENT TO DISCUSS THE REL EVANT PROVISIONS INVOLVED. THE RELEVANT PORTION OF SEC. 147 OF THE A CT READS AS FOLLOWS: 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER I NCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PRO CEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIA TION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE AS SESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153REFERRED TO AS THE RELEVANT ASSESSMENT YE AR): 38 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO . 7.2 THE CRUCIAL ELEMENT THAT EMANATES FROM THE REA DING OF THE AFORESAID PROVISION IS THAT THE ASSESSING OFFICER S HOULD HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT. THE WORDS REASON TO BELIEVE AND ESCAP EMENT OF INCOME HAVE BEEN JUDICIALLY INTERPRETED BY VARIOUS COURTS TO MEAN THAT THE REASON FOR THE FORMATION OF BELIEF MUST HAVE A RATI ONAL CONNECTION WITH THE INFORMATION RECEIVED. RATIONAL CONNECTION P OSTULATES THAT THERE MUST BE SOME DIRECT NEXUS OR LIVE LINK BETWEE N THE MATERIAL COMING TO THE NOTICE OF THE INCOME TAX OFFICER AND THE FORMATION OF THE BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR. THIS PROPOS ITION OF LAW IS WELL ENCAPSULATED BY THE HONBLE SUPREME COURT IN THE FO LLOWING DECISIONS: - CALCUTTA DISCOUNT VS. ITO, 1961 41 ITR 191(SC): 37: THE NOTICES ISSUED BY THE INCOME TAX OFFICER I N THE CASE BEFORE US UNDOUBTEDLY FULFILL CONDITIONS (2) AND (3). NOTI CES OF REASSESSMENT WERE SERVED BEFORE THE EXPIRY OF EIGHT YEARS OF THE END OF THE RELEVANT YEARS OF ASSESSMENT. THE INCOME TAX OFFICER 39 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO ALSO RECORDED HIS REASONS IN THE REPORTS SUBMITTED BY HIM TO THE COMMISSIONER AND THE COMMISSIONER WAS SATISFIED THA T THEY WERE FIT CASES FOR THE ISSUE OF SUCH NOTICES. THE DISPUT E IN THE APPEAL RELATES MERELY TO THE FULFILLMENT OF THE TWO BRANCH ES OF THE FIRST CONDITION AND THAT IMMEDIATELY RAISES THE QUESTION ABOUT THE TRUE IMPORT OF THE EXPRESSION 'HAS REASON TO BELIEVE' IN S. 34(1)(A) . THE EXPRESSION REASON TO BELIEVE POSTULATES BELIEF AN D THE EXISTENCE OF REASONS FOR THAT BELIEF. THE BELIEF MUST BE HELD IN GOOD FAITH: IT CANNOT BE MERELY A PRETENCE. THE EXPRESSION DOES NO T MEAN A PURELY SUBJECTIVE SATISFACTION OF THE INCOME TAX OF FICER: THE FORUM OF DECISION AS TO THE EXISTENCE OF REASONS AND THE BEL IEF IS NOT IN THE MIND OF THE INCOME TAX OFFICER. IF IT BE ASSERTED T HAT THE INCOME TAX OFFICER HAD REASON TO BELIEVE THAT INCOME HAD BEEN UNDER ASSESSED BY REASON OF FAILURE TO DISCLOSE FULLY AND TRULY TH E FACTS MATERIAL FOR ASSESSMENT, THE EXISTENCE OF THE BELIEF AND THE REA SONS FOR THE BELIEF, BUT NOT THE SUFFICIENCY OF THE REASONS, WIL L BE JUSTICIABLE. THE EXPRESSION, THEREFORE, PREDICATES THAT THE INCOME T AX OFFICER HOLDS THE BELIEF INDUCED BY THE EXISTENCE OF REASONS FOR HOLDING SUCH BELIEF. IT CONTEMPLATES EXISTENCE OF REASONS ON WHI CH THE BELIEF IS FOUNDED, AND NOT MERELY A BELIEF IN THE EXISTENCE O F REASONS INDUCING THE BELIEF; IN OTHER WORDS, THE INCOME TAX OFFICER MUST ON INFORMATION AT HIS DISPOSAL BELIEVE THAT INCOME HAS BEEN UNDER ASSESSED BY REASON OF FAILURE FULLY AND TRULY TO DI SCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. SUCH A BELIEF, BE I T SAID, MAY NOT BE BASED ON MERE SUSPICION: IT MUST BE FOUNDED UPON INFORMATION. 40 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO - ITO V. LAKMANI MEWAL DAS, 1976 103 ITR 437 (SC): AS STATED EARLIER, THE REASONS FOR THE FORMATION O F THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMI NG TO THE NOTICE OF THE INCOME-TAX OFFICER AND THE FORMATION OF HIS BEL IEF THAT THERE HAS BEEN ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FAILURE TO DISCL OSE FULLY AND TRULY ALL MATERIAL FACTS. IT IS NO DOUBT TRUE THAT THE CO URT CANNOT GO INTO THE SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUB STITUTE ITS OWN OPINION FOR THAT OF THE INCOME-TAX OFFICER ON THE P OINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT . AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AN D EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF REL ATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSES SMENT. - SHEO NATH SINGH V. AACIT, 972 SCR (1) 175 (SC): 10:THERE CAN BE NO MANNER OF DOUBT THAT THE WORDS 'REASON TO BELIEVE' SUGGEST THAT THE BELIEF MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THAT THE INCOME TAX OFFICER MAY ACT ON DIRECT OR CIRCUMSTANT IAL EVIDENCE BUT NOT ON MERE SUSPICION, GOSSIP OR RUMOUR. THE INCOME TAX OFFICER WOULD BE ACTING WITHOUT JURISDICTION IF THE REASON FOR HIS BELIEF THAT 41 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS N OT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. THE COURT CAN ALWAYS EXAMINE THIS ASPECT THOUGH THE DECLARATION OR SUFFI CIENCY OF THE REASONS FOR THE BELIEF CANNOT BE INVESTIGATED BY TH E COURT. - S. NARAYANAPPA AND ORS. VS. COMMISSIONER OF INCOME TAX, BANGALORE, AIR 1967 SC 523 : 3.......IT IS TRUE THAT TWO CONDITIONS MUST BE SAT ISFIED IN ORDER TO CONFER JURISDICTION ON THE INCOME-TAX OFFICER TO IS SUE THE NOTICE UNDER S. 34 IN RESPECT OF ASSESSMENTS BEYOND THE PE RIOD OF FOUR YEARS, BUT WITHIN A PERIOD OF EIGHT YEARS, FROM THE END OF THE RELEVANT YEAR. THE FIRST CONDITION IS THAT THE INCO ME-TAX OFFICER MUST HAVE REASON TO BELIEVE THAT THE INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAD BEEN UNDER-ASSESSED. THE SECOND C ONDITION IS THAT HE MUST HAVE REASON TO BELIEVE THAT SUCH 'UNDE R-ASSESSMENT' HAD OCCURRED BY REASON OF EITHER (I) OMISSION OR FA ILURE ON THE PART OF AN ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER S. 22, OR (II) OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT FOR THAT YEAR. BOTH THESE CONDITIONS ARE CONDITIONS PRECEDEN T TO BE SATISFIED BEFORE THE INCOME-TAX OFFICER ACQUIRES JURISDICTION TO ISSUE A NOTICE UNDER THE SECTION. 4. THE BELIEF MUST BE HELD IN GOOD FAITH: IT CANNOT BE MERELY A PRETENCE. TO PUT IT DIFFERENTLY IT IS OPEN TO THE C OURT TO EXAMINE THE QUESTION WHETHER THE REASONS FOR THE BELIEF HAVE A RATIONAL 42 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO CONNECTION OR A RELEVANT BEARING TO THE FORMATION O F THE BELIEF AND ARE NOT EXTRANEOUS OR IRRELEVANT TO THE PURPOSE OF THE SECTION. TO THIS LIMITED EXTENT, THE ACTION OF THE INCOME-TAX O FFICER IN STARTING PROCEEDINGS UNDER S. 34 OF THE ACT IS OPEN TO CHALL ENGE IN A COURT OF LAW. - GANGA SARAN & SONS (P.) LTD. V. ITO, [1981] 130 ITR 1 (SC): 6. ......... THE IMPORTANT WORDS UNDER SECTION 147 (A) ARE 'HAS REASON TO BELIEVE' AND THESE WORDS ARE STRONGER THA N THE WORDS 'IS SATISFIED'. THE BELIEF ENTERTAINED BY THE ITO MUST NOT BE ARBITRARY OR IRRATIONAL. IT MUST BE REASONABLE OR IN OTHER WORDS , IT MUST BE BASED ON REASONS WHICH ARE RELEVANT AND MATERIAL. THE COU RT, OF COURSE, CANNOT INVESTIGATE INTO THE ADEQUACY OR SUFFICIENCY OF THE REASONS WHICH HAVE WEIGHED WITH THE ITO IN COMING TO THE BE LIEF, BUT THE COURT CAN CERTAINLY EXAMINE WHETHER THE REASONS ARE RELEVANT AND HAVE A BEARING ON THE MATTERS IN REGARD TO WHICH HE IS REQUIRED TO ENTERTAIN THE BELIEF BEFORE HE CAN ISSUE NOTICE UND ER SECTION 147(A ). IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BETW EEN THE REASONS AND THE BELIEF, SO THAT, ON SUCH REASONS, NO ONE PR OPERLY INSTRUCTED ON FACTS AND LAW COULD REASONABLY ENTERTAIN THE BEL IEF, THE CONCLUSION WOULD BE INESCAPABLE THAT THE ITO COULD NOT HAVE REASON TO BELIEVE THAT ANY PART OF THE INCOME OF THE ASSES SEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPEMENT WAS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL 43 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO MATERIAL FACTS AND THE NOTICE ISSUED BY HIM WOULD B E LIABLE TO BE STRUCK DOWN AS INVALID. - CIT VS. LUCAS TVS LTD., (2001) 249 ITR 306 (SC): IF THERE IS NO FAILURE ON PART OF ASSESSEE TO DISC LOSE FULLY AND TRULY MATERIAL FACTS, WRONG INTERPRETATION OF ACCOUNTS BY AO LEADING TO RELIEF CANNOT BE A GROUND FOR REOPENING AND, THUS, CANNOT CONFER JURISDICTION ON AO. THE REASON FOR THE FORMATION OF THE BELIEF MUST HAVE A RATIONAL CONNECTION WITH THE INFORMATION REC EIVED. RATIONAL CONNECTION POSTULATES THAT THERE MUST BE DIRECT NEX US OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF THE IN COME -TAX OFFICER AND THE FORMATION OF THE BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM ASSESSMENT IN THE PARTI CULAR YEAR BECAUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS. IT IS TO BE BORNE IN MIND THAT IT IS NOT ANY AND EVERY MA TERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT REMOTE AND FARFETCH ED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESC APEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. - CIT VS. KELVINATOR INDIA LTD., [2010] 320 ITR 561 ( SC): ..HENCE AFTER APRIL 1, 1989, THE ASSESSING OFFIC ER HAS THE POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS T ANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF 44 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO INCOME FROM ASSESSMENT. REASON MUST HAVE A LINK WIT H THE FORMATION OF THE BELIEF. 7.3 THUS, WE AGREE WITH THE CONTENTIONS RAISED BY THE LD. A.R. THAT THE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED FOR THE PURPOSES OF REOPENING ASSESSMENT U/S 147 R/ W 148 OF THE ACT CANNOT BE BASED ON SUSPICION, SURMISES, CONJECTURES BUT MUST BE BASED ON COGENT AND TANGIBLE MATERIAL THAT ESTABLIS HES A CAUSAL NEXUS BETWEEN THE INFORMATION AVAILABLE AND INFEREN CE DRAWN BY THE A.O. 7.4.0 A PERUSAL OF THE REASONS RECORDED, REPRODU CED ELSEWHERE IN THIS ORDER, IN THE CASE AT HAND MAKES IT EVIDENT THAT THE BROAD GROUNDS WHICH WERE RELIED UPON BY THE A.O. FOR REOPEN ING OF THE ASSESSMENT PROCEEDINGS ARE: (I) THAT A SURVEY WAS CONDUCTED ON 03.03.2010 AT THE COR PORATE OFFICE OF THE ASSESSEE-COMPANY BY THE OFFICERS OF T HE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. (II) THAT STATEMENT OF ONE SHRI B.S. BISHT, ASSISTANT SE CRETARIAL OFFICER WITH M/S. BSL WAS RECORDED WHEREIN HE PURPORTE DLY STATED AS UNDER: - THAT SEVERAL COMPANIES WERE BEING RUN FROM THE SAID PREMISES 45 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO - THAT THE MAIN COMPANIES OF THE GROUP WERE M/S. BHUS HAN STEEL LTD. & M/S. BHUSHAN ENERGY LTD. AND THE REMAI NING COMPANIES WERE ALLEGEDLY PAPER COMPANIES NOT DOING ANY ACTUAL BUSINESS. - THAT THE DIRECTORS OF THE COMPANIES RUN FROM THE SA ID PREMISES WERE GENERALLY EMPLOYEES OF THE GROUP COMP ANIES. 7.4.1 BASED ON THE SAME, THE A.O. CONCLUDED THAT T HE SHARE CAPITAL AND SHARE PREMIUM RECEIVED BY THE ASSESSEES WERE QUESTIONABLE IN NATURE AND HE CONCLUDED THAT HE H AD REASONS TO BELIEVE THAT THE ASSESSEES WERE JUST PAPER COMPANIE S ESTABLISHED FOR INTRODUCING MONEY FROM UNEXPLAINED SOURCES. 7.5 THE AFOREMENTIONED REASONS RECORDED NEITHER DISCUSS NOR BRING ON RECORD ANY SPECIFIC INFORMATION SHOWING THAT ANY PARTICULAR TRANSACTIONS MADE BETWEEN THE ASSESSEES AND THE CONCERNED INVESTORS WERE NOT GENUINE/FICTITIOUS. TH US, IT IS APPARENT FROM THE REASONS RECORDED ITSELF THAT THERE IS NO SPECIFIC INFORMATION/MATERIAL IN THE POSSESSION OF THE A.O. TO BACK HIS CLAIM THAT THE SHARE CAPITAL OR SHARE PREMIUM RECEIVED BY THE ASSESSEES FOR THE ASSESSMENT YEARS UNDER APPEAL WAS NOT GENUINE/ B OGUS. AS 46 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO ENCAPSULATED IN THE PRECEDING DECISIONS OF THE HON BLE APEX COURT, FOR THE PROCEEDINGS U/S 147/148 TO BE HELD TO BE JU RISDICTIONALLY VALID, THE A.O. MUST HAVE IN HIS POSSESSION SPECIFI C INFORMATION OR MATERIAL TO SHOW THAT THE TRANSACTIONS OF THE ASSES SEES WERE NOT GENUINE/FICTITIOUS TO ESTABLISH A LIVE LINK/CAUSAL NEXUS BETWEEN THE MATERIAL/EVIDENCE AVAILABLE ON RECORD AND THE ASSES SEES ESCAPED INCOME. HOWEVER, IN THE PRESENT CASE, THE REASONS RECORDED DO NOT IN ANY MANNER WHATSOEVER STATE THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OR THAT THE RECORDED STATEME NT OF SHRI B.S. BISHT POINTS TOWARDS THE SHARE CAPITAL AND/OR SHARE PREMIUM RECEIVED BY THE ASSESSEE COMPANIES TO BE NON GENUI NE/BOGUS. 7.6 HOWEVER, THE A.O IN THE CASE OF ALL THE THREE ASSESSEES, HAS SOUGHT TO DRAW CONCLUSION BASED ON THE STATEMENT OF SHRI B.S. BISHT (RECORDED BY THE INVESTIGATION WING) EVEN WHEN NO SPECIFIC ALLEGATIONS WERE MADE BY HIM VIS--VIS THE NON GENUINENESS OF THE SHARE CAPITAL OR SHARE PREMIUM RECEIVED BY THE ASSE SSEE COMPANIES FROM THE SHARE APPLICANTS. IT IS ALSO A MATTER OF R ECORD THAT THIS WITNESS WAS NEVER CONFRONTED TO THE ASSESSEES FOR THE PURPOSES OF 47 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO CROSS-EXAMINATION. FURTHER, AS OBSERVED BY THE LD. CIT (A) IN THE IMPUGNED ORDERS, THERE IS NOTHING IN LAW TO PROHIBIT SEVERAL COMPANIES FROM HAVING THEIR REGISTERED OFFICES AT T HE SAME ADDRESSES OR FOR COMPANIES TO SHARE COMMON INFRASTRUCTURE TO ECONOMIZE COSTS AND SUCH FACTS SHOULD NOT BE INTERPRETED IN AN ADVE RSE MANNER TO ERRONEOUSLY ASSUME JURISDICTION U/S 147 OF THE ACT, WITHOUT FIRST MEETING THE INGREDIENTS SET OUT IN THE SECTION ITSE LF. 7.7 IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE A.O. HAD NO SPECIFIC INFORMATION AND/OR MATERIA L IN HIS POSSESSION TO EVEN ARRIVE AT REASON TO BELIEVE TH AT THE SHARE CAPITAL OR SHARE PREMIUM RECEIVED BY THE ASSESSEES FROM ANY OF THE SHAREHOLDERS FOR THE ASSESSMENT YEARS IN QUESTION WE RE NOT GENUINE AND/OR BOGUS AND/OR REPRESENTED ASSESSEES OWN UNACC OUNTED FUNDS. THE A.O.S ASSUMPTION OF JURISDICTION U/S 14 7/148 OF THE ACT IS THEREFORE HELD TO BE ILLEGAL, ERRONEOUS AND IMPE RMISSIBLE IN LAW, RENDERING ALL SUBSEQUENT PROCEEDINGS TO BE NON EST . 7.8 THUS, ON IDENTICAL FACTS AND IDENTICAL REASONI NG, ALL THE THREE CROSS OBJECTIONS CHALLENGING THE JURISDICTION OF THE A.O. TO 48 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO INITIATE THE SEC.147/148 PROCEEDINGS ARE ALLOWED IN FAVOUR OF THE ASSESSEES. 7.9 WE SHALL NOW PROCEED TO ADJUDICATE THE NEXT CRO SS OBJECTION TAKEN BY THE ASSESSEES, WHICH IS IN RESPEC T TO THE VIOLATION OF PRINCIPLES OF NATURAL JUSTICE SINCE THE ENQUIRIE S MADE BY THE DEPARTMENT AND THE SUBSEQUENT INSPECTOR REPORTS WHIC H FORMULATED THE FOUNDATION OF THE IMPUGNED ADDITION(S) WERE NEV ER CONFRONTED TO EITHER OF THE ASSESSEES AT ANY STAGE OF THE REASSES SMENT PROCEEDINGS. ON A PERUSAL OF THE ASSESSMENT ORDERS, IT IS AMPLY CLEAR THAT THE A.O., PRIMARILY, HAD RELIED UPON THE INSPECTORS REP ORTS THAT WAS BASED ON THE FIELD ENQUIRIES CONDUCTED TO ASCERTAIN THE GENUINENESS OF THE INVESTOR COMPANIES. AS IS MADE EVIDENT FROM THE ASSESSMENT ORDERS ITSELF, THE INSPECTORS, VIDE THEIR RESPECTIV E REPORTS, HAVE STIPULATED THAT UPON ENQUIRY, EITHER THE CONCERNED PARTIES WERE NOT FOUND TO BE EXISTING AT THE GIVEN ADDRESS, OR THE A DDRESSES WERE NOT FOUND, OR THE PREMISES WAS FOUND LOCKED. THE RESULTS OF SUCH FIELD ENQUIRIES WERE NOT BROUGHT TO THE KNOWLEDGE OF THE A SSESSEES PRIOR TO THE PASSING OF THE ASSESSMENT ORDERS. THIS FACT, WHE N POINTED OUT BY 49 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THE LD. A.R. HAS NOT BEEN DISPUTED BY THE LD. CIT D .R. ALSO DURING THE COURSE OF HEARING BEFORE US. THE ENQUIRIES WERE , THUS, CONDUCTED BY THE A.O. BEHIND THE BACK OF THE ASSESSEES. THESE ENQUIRIES WERE THEN UTILIZED FOR THE PURPOSE OF MAKING THE ADDITIO NS WITHOUT CONFRONTING THE SAME TO THE ASSESSEES, WHICH AS PER SECTION 142 OF THE INCOME TAX ACT, IS IMPERMISSIBLE IN LAW. 7.10 TO ELABORATE, SECTION142 OF THE ACT PROVIDES FOR THE PROCEDURE TO BE FOLLOWED BY THE A.O. WHILE MAKING TH E REQUISITE ENQUIRIES BEFORE CONCLUDING AN ASSESSMENT. SECTION 142(1) OF THE ACT EMPOWERS THE A.O. TO CALL FOR INFORMATION/MATERIAL FROM THE ASSESSEE. SECTION142 (2) EMPOWERS THE A.O. TO MAKE SUCH ENQUIRY AS MAY BE NECESSARY FOR THE PURPOSE OF SUCH ASSESSMENT . SECTION 142 (3) MANDATES THAT THE INFORMATION/EVIDENCE COLLECTE D PURSUANT TO THE ENQUIRY CONDUCTED U/S 142(2), WHICH IS PROPOSED TO B E UTILIZED DURING THE ASSESSMENT, SHALL FIRST BE PUT TO THE AS SESSEE TO PROVIDE HIM/HER WITH AN OPPORTUNITY OF BEING HEARD BEFORE TH E SAME IS EVEN UTILIZED TO MAKE AN ADDITION/DISALLOWANCE U/S 143(3) . THERE IS, THUS, A SPECIFIC PROCEDURE THAT MUST BE FOLLOWED BY THE A .O. WHILE MAKING 50 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO AN ASSESSMENT UNDER THE INCOME TAX ACT. SECTION 142 (3) USES THE WORD SHALL, THUS, RENDERING THE SAME TO BE BY NO MEANS DISCRETIONARY UPON THE WHIMS AND FANCIES OF THE A.O. 7.11 APPLYING THE LAW TO THE CASE AT HAND, IT IS EV IDENT THAT THE INSPECTOR REPORTS, THAT HAD BEEN RELIED UPON BY THE A.O., HAVE BEEN REPRODUCED IN LENGTH FOR THE FIRST TIME IN THE ASSE SSMENT ORDERS ONLY. THE A.O.,BY FAILING TO CONFRONT THE ASSESSEES WITH T HE EVIDENCE HE HAD GATHERED U/S 142(2) ACT, HAS, THEREFORE, ERRONE OUSLY SKIPPED THE MANDATORY INTERMEDIARY STEP PRESCRIBED U/S 142(3) O F THE ACT. THUS, WHEN THE A.O. HAS DIRECTLY GONE ON TO PASS THE ASSES SMENT ORDERS U/S 147/143(3) OF THE ACT TO MAKE THE IMPUGNED ADDI TIONS U/S 68, THE SAME IS IN DIRECT VIOLATION OF THE PROCEDURE OF ENQUIRY PRESCRIBED IN THE STATUTE THAT INHERENTLY ENCOMPASSES THE PRIN CIPLE(S) OF NATURAL JUSTICE. WE DERIVE SUPPORT TO OUR LINE OF REASONING FROM THE DECISION OF THE COORDINATE BENCH OF THE HONBLE KOLKATA TRIB UNAL IN M/S. SPML INFRA LTD. VS. DCIT, ITA NO. 1228/KOL/2018 WHEREIN IT HAS BEEN HELD AS UNDER: 51 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 14. TO CONCLUDE: WE NOTE THAT NONE OF THE STATEMEN TS WERE RECORDED BY THE ASSESSING OFFICER OF THE ASSESSEE C OMPANY, AND NO OPPORTUNITY FOR CROSS EXAMINATION HAS BEEN PROVIDED TO THE ASSESSEE COMPANY. THE MANDATE OF LAW TO CONDUCT ENQ UIRY BY THE ASSESSING OFFICER ON DUE INFORMATION COMING TO HIM TO VERIFY AUTHENTICITY OF INFORMATION WAS NOT DONE AS PER SEC TION 142 OF THE ACT.THEREFORE, MERE RECEIPT OF UNSUBSTANTIATED STAT EMENT RECORDED BY SOME OTHER OFFICER IN SOME OTHER PROCEEDINGS MOR E PARTICULARLY HAVING NO BEARING ON THE TRANSACTION WITH THE ASSES SEE DOES NOT CREATE ANY MATERIAL EVIDENCE AGAINST THE ASSESSEE. THIS IS BECAUSE SECTION 142(2) MANDATES ANY SUCH MATERIAL ADVERSE T O THE FACTS OF ASSESSEE COLLECTED BY AO U/S 142(1) HAS TO BE NECES SARILY PUT TO THE ASSESSEE U/S 142(3) BEFORE UTILIZING THE SAME FOR A SSESSMENT SO AS TO CONSTITUTE AS RELIABLE MATERIAL EVIDENCE THROUGH THE PROCESS OF ASSESSMENT U/S 143(3) OF THE ACT. 7.12 WE ALSO DRAW SUPPORT FROM THE JUDGMENT OF THE HONBLE APEX COURT IN SWADESHI COTTON MILLS V. UNION OF INDIA, AIR 1981 S C 818, WHERE THE HONBLE SUPREME COURT HAS CLEARLY HELD THA T WHERE AUTHORITY FUNCTIONS UNDER A STATUTE AND THE STATUTE PROVIDES FOR THE OBSERVANCE OF THE PRINCIPLES OF NATURAL JUSTICE IN A PARTICULAR MANNER, NATURAL JUSTICE WILL HAVE TO BE OBSERVED IN THAT MA NNER AND NO OTHER. 52 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO NO WIDER RIGHT THAN THAT PROVIDED BY THE STATUTE CA N BE CLAIMED NOR CAN THE RIGHT BE NARROWED .' 7.13 WE FURTHER OBSERVE THAT THE STATEMENT OF SHRI B.S. BISHT AS STATED IN THE REASONS RECORDED HAS NOT BEEN UTILI ZED BY THE A.O. AS THE BASIS FOR PASSING THE ASSESSMENT ORDERS. THEREF ORE, WE ARE OF THE VIEW THAT THE QUESTION OF WHETHER THIS STATEMENT HAD BEEN PROVIDED TO THE ASSESSEES FOR CROSS EXAMINATION OR NOT, IS N OT REQUIRED TO BE GONE INTO. HOWEVER, IT WOULD NOT BE OUT OF PLACE TO HOLD THAT FOR THE REASONS SPECIFIED ABOVE, EVEN THE STATEMENT OF SHRI B.S. BISHT RECORDED BEHIND THE BACK OF THE ASSESSEES COULD NOT UNILATERALLY BE USED BY THE A.O. WITHOUT TESTING THE SAME ON THE ANV IL OF CROSS EXAMINATION AS IS NOW THE SETTLED LAW PER THE JUDGMEN T IN ANDAMAN TIMBER INDUSTRIES V. CCE [2015] 62 TAXMANN.COM 3. 7.14 SINCE THE RESULTS OF THE ENQUIRIES CONDUCTED BY THE A.O. U/S 142(2) OF THE ACT HAVE NOT BEEN CONFRONTED TO T HE ASSESSEES, WE ARE INCLINED TO AGREE WITH THE LD. A.R. THAT THERE H AS BEEN A VIOLATION OF THE PRINCIPLE(S) OF NATURAL JUSTICE IMPLIED WITHI N SECTION142 (2) OF THE ACT AND SUCH STATUTORY NON-COMPLIANCE VITIATES THE ENTIRE ASSESSMENT PROCEEDINGS, THEREFORE, RENDERING IT TO BE NULL AND VOID. 53 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THUS, THE CROSS OBJECTION TAKEN ON THE VIOLATION OF THE PRINCIPLE(S) OF NATURAL JUSTICE IS ALSO ALLOWED IN FAVOUR OF THE AS SESSEES. 8.0 CONSIDERING THE TOTALITY OF THE AFORESAID FACT UAL AND LEGAL POSITION, WE HAVE ALREADY QUASHED THE PROCEEDINGS U NDER SECTION148 OF THE ACT IN THE CASE OF ALL THREE ASSESSEES FOR B EING BEREFT OF JURISDICTION. AS A CONSEQUENCE, THE ISSUES ON MERIT S, THUS, NO LONGER SURVIVE. HOWEVER, FOR PURELY ACADEMIC REASONS, WE S EEK TO DISPOSE OF THE DEPARTMENTAL APPEALS. 9.0 COMING TO THE GROUNDS OF APPEAL FILED BY THE D EPARTMENT, IN THE SAID GROUNDS, THE DEPARTMENT HAS ON MERITS, SOUGHT TO CHALLENGE THE IMPUGNED ORDERS OF THE LD. CIT (A), WH O, AS PER THE DEPARTMENT, HAS ERRED IN DELETING THE IMPUGNED ADDI TIONS MADE BY THE A.O. U/S 68 OF THE ACT. BEFORE US, THE LD. CIT D.R. HAS SUBMITTED THAT THE LD. CIT (A) HAS ERRED IN SUMMARILY DELETIN G THE IMPUGNED ADDITIONS MADE BY THE A.O., WITHOUT APPRECIATING THE TRUE FACTS OF THE CASE, WHICH IS THAT THE IDENTITY, GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE INVESTORS HAD NOT BEEN E STABLISHED BY THE ASSESSEES TO THE SATISFACTION OF THE A.O., WHO HAD I N TURN BROUGHT SUFFICIENT MATERIAL ON RECORD THAT CASTS DOUBT ON T HE GENUINENESS OF 54 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THE TRANSACTIONS. THUS, AS PER THE LD. CIT D.R., TH E ASSESSEES, BY MERELY SUBMITTING ROUTINE DOCUMENTS, HAVE NOT DISCH ARGED THE INITIAL BURDEN OF PROOF THAT VESTED ON THEM U/S 68 OF THE A CT. THE LD. CIT DR HAS FURTHER SUBMITTED THAT WHEN ANY SUCH DOUBT ON THE GENUINENESS OF THE INVESTOR COMPANIES EXISTS IN THE MIND OF THE A.O., THEN THE LAW LAID DOWN IN LOVELY EXPORTS (SUPRA) WILL NOT APPLY SINCE THE SAID DECISION OF THE HONBLE SUPREME COURT HAS BEEN DISTINGUISHED IN FAVOUR OF THE REVENUE BY SEVERAL D ECISIONS OF THE HONBLE JURISDICTIONAL DELHI HIGH COURT SUCH AS CIT VS. NAVODYA CASTLES, [2014] 50 TAXMANN.COM 110, CIT VS. SOPHIA FINANCE LTD., 205 ITR 98 (DEL.) (F.B.), N.R. PORTFOILIO PVT. LTD., 87 DTR 0162 (DEL) AND 96 DTR 0281 (DEL), MAF ACADEMY PVT. LTD., 361 ITR 0285 8 (DELHI), ETC. WHICH, THEREFORE, MEANS THAT IN THE INSTANT CASES, T HE ASSESSEES OUGHT TO HAVE ALSO PROVEN THE SOURCE OF SOURCE OF T HE INVESTOR COMPANIES TO ESTABLISH THEIR GENUINENESS. 9.1 THE LD. A.R., ON THE OTHER HAND, HAS SUBMITTED THAT ALL THE DOCUMENTS ESTABLISHING THE IDENTITY, GENUINENESS AN D CREDITWORTHINESS OF THE TRANSACTIONS HAD BEEN SUBMIT TED BEFORE THE A.O. WHO HAS FAILED TO REFUTE THEM IN ANY MANNER. IT WAS SUBMITTED 55 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THAT IS NOW SETTLED LAW THAT PRE-01.04.2013, THE ASSE SSEES ARE REQUIRED TO ONLY PROVE THE IDENTITY, GENUINENESS AN D CREDITWORTHINESS OF THE TRANSACTIONS TO DISCHARGE THEIR INITIAL BURD EN ON PROOF UNDER SECTION 68. IT HAS ALSO BEEN ARGUED THAT THERE IS N O REQUIREMENT IN LAW FOR THE ASSESSEES TO PROVE THE SOURCE OF SOURCE OF THE INVESTORS. IN SUPPORT, THE DECISIONS OF THE HONBLE BOMBAY HIG H COURT IN AMI INDUSTRIES (SUPRA), THE HONBLE DELHI HIGH COURT IN CIT VS. DWARAKADHISH INVESTMENT P. LTD., [2011] 330 ITR 298 , THE DECISION OF THE HONBLE GUWAHATI HIGH COURT IN NEMI CHAND KOTHARI VS. CIT, [2004] 136 TAXMAN 213 (GAU), AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN DCIT VS. ROHINI BUILDERS, 256 ITR 360 (GUJARAT) WERE RELIED UPON. IT HAS BEEN CONTENDED THAT WHEN SUC H EVIDENCES HAVE REMAINED UN-REFUTED BY THE A.O., THE QUESTION OF MAKING AN ADDITION U/S 68 OF THE ACT DOES NOT ARISE. FURTHER, PER THE LD. A.R., RELIANCE ON THE REPORTS OF THE INSPECTORS WITHOUT FI RST PUTTING THE SAME TO THE ASSESSEEA FOR REBUTTAL U/S 142(3) OF TH E ACT IS IMPERMISSIBLE IN LAW. EVEN OTHERWISE, THE SAID REPORT S ARE RIDDLED WITH INCONSISTENCIES THAT QUESTION THEIR VERY LEGITI MACY. THEREFORE, WHEN NO SUCH ADVERSE STATEMENT AND/OR EVIDENCE EXIST S ON RECORD 56 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO THAT SHOW THAT THE TRANSACTIONS UNDERTAKEN BY THE I NVESTORS COMPANIES WERE BOGUS, THEN THE ADDITIONS U/S 68 DO NOT SURVIVE FOR THE SIMPLE REASON THAT THE A.O. HAS FAILED TO DISCH ARGE THE BURDEN OF PROOF THAT HAS BEEN SHIFTED UNTO THE DEPARTMENT. 10.0 WE HAVE DULY CONSIDERED THE SUBMISSIONS MADE BY BOTH SIDES, ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS THE MATERIAL AND THE RELEVANT PROVISIONS OF THE INCOME TAX ACT. WE ALSO HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY THE L D. CIT D.R AND THE LD. A.R. IN SUPPORT OF THEIR CONTENTIONS. IT HA S NOT BEEN DISPUTED THAT THE ASSESSEES HAVE FILED THEIR ORIGINAL RETURN S OF INCOME WHEREIN ALL THE PARTICULARS OF THE INVESTMENTS MADE BY INVE STOR COMPANIES OF KOLKATA, MUMBAI, GUWAHATI AND DELHI HAVE BEEN DISCLO SED BEFORE THE DEPARTMENT. FURTHER THE ASSESSEES HAD ALSO PROD UCED THE COPIES OF THE CONFIRMATIONS, BANK STATEMENTS AND THE INCOM E TAX RETURNS OF ALL THE INVESTOR COMPANIES BEFORE THE A.O. DURIN G THE COURSE OF THE REASSESSMENT PROCEEDINGS. THESE DOCUMENTS FORM PART OF THE PAPER BOOK 1B, 2B AND 3B FILED IN EACH OF THE APPEALS BY THE ASSESSEES. IT IS ALSO NOT IN DISPUTE THAT THE A.O., WHILE PASSING THE ASSESSMENT ORDERS, DID NOT RAISE ANY DOUBTS WITH RESPECT TO THE DOCUMENTARY 57 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO EVIDENCES SUBMITTED BEFORE HIM BY THE ASSESSEES. IT IS AGAIN NOT IN DISPUTE THAT ALL THE INVESTMENTS (IN THE FORM OF SH ARE CAPITAL AND SHARE PREMIUM) HAVE BEEN DULY MADE VIA BANKING CHAN NELS WHERE THE INVESTOR COMPANIES HAVE SHOWN SUFFICIENT BALANC ES IN THEIR BANK ACCOUNTS TO MAKE SUCH AN INVESTMENT IN THE ASSESSEE COMPANIES. FURTHER, UPON A PERUSAL OF THE BANK STATEMENTS BROU GHT ON RECORD BY THE ASSESSEES, IT IS ALSO EVIDENT THAT NO CASH WAS F OUND TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTOR COMP ANIES. ALL THE INVESTOR COMPANIES (IN THE CASE OF ALL THE THREE AS SESSEES) ARE REGISTERED COMPANIES AND ARE ASSESSED TO TAX ALSO, AS IS EVIDENT FROM THE BANK STATEMENTS AND/OR THE ITR ACKNOWLEDGMENTS. THEREFORE, THE IDENTITY, GENUINENESS OF THE TRANSACTION AND TH E CREDITWORTHINESS OF THE INVESTOR COMPANIES HAVE BEEN PROVED BY THE A SSESSEES AND THEY HAVE SUCCESSFULLY DISCHARGED THE INITIAL BURDE N OF PROOF THAT VESTED ON THEM U/S 68 OF THE ACT. THE A.O. HAS NOWHE RE, IN THE ASSESSMENT ORDERS, DISPUTED THIS INFORMATION/MATERI AL SUBMITTED BY THE ASSESSEES AND HAS MERELY SOUGHT TO RELY ON THE REPORTS PREPARED BY THE INSPECTORS. 58 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO 10.1.0 WE SHALL FIRST DEAL WITH THE CONTENTS OF THE SE FIELD ENQUIRIES/ REPORTS CONDUCTED BY THE A.O. THROUGH IN SPECTORS. A PERUSAL OF THE REPORTS QUOTED IN THE ASSESSMENT ORD ERS BRINGS TO LIGHT THAT IN THE CASE OF M/S BBN TRANSPORTATION PV T. LTD, THERE EXISTED 10 MUMBAI BASED PARTIES AND 1 KOLKATA BASED PARTY. IN THE CASE OF M/S GOLDSTAR CEMENT PVT. LTD, THERE EXISTED 4 MUMBAI BASED PARTIES, 5 KOLKATA BASED PARTIES AND 1 DELHI BASED PARTY. IN THE CASE OF M/S SUR BUILDCON PVT. LTD., THERE EXISTED 4 MUMB AI BASED PARTIES, 12 KOLKATA BASED PARTIES AND 2 GUWAHATI BASED PARTI ES. THE TOTAL NUMBER OF INVESTORS ACROSS ALL THREE ASSESSEESS FOR THE RESPECTIVE ASSESSMENT YEARS IS THEREFORE 39, WITH RESPECT TO WHI CH, AS OBSERVED ABOVE, THE ASSESSEES HAVE SUBMITTED THE REQUISITE E VIDENCES ESTABLISHING THE IDENTITY, GENUINENESS AND CREDITWOR THINESS OF THE TRANSACTIONS. NOW, THE A.O., WITHOUT QUESTIONING THE MATERIAL SUBMITTED BY THE ASSESSEESS, HAS PLACED PRIMARY REL IANCE ON THESE REPORTS TO PUT FORTH THE ARGUMENT THAT THE PARTIES ARE NOT GENUINE. THE QUESTION THAT REQUIRES ANSWER FIRST IS WHETHER T HESE REPORTS CAN EVEN BE RELIED UPON BEFORE THE CONTENTS OF THE SAME ARE GONE INTO. WE HAVE EARLIER HELD THAT THE SINCE THE SAID REPORTS H AD NOT BEEN 59 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO CONFRONTED TO THE ASSESSEES U/S 142(3) OF THE ACT, THEY COULD NOT HAVE BEEN UTILIZED BY THE A.O. BEHIND THEIR BACK TO PASS THE ASSESSMENT ORDERS UNDER SEC. 147/143(3) OF THE ACT. THE RELIANCE ON THE SAME BY THE A.O. IS, THEREFORE, RENDERED NUGATO RY FOR THE PURPOSE OF MAKING A 147/143(3) ASSESSMENT. HOWEVER, EVEN IF WE ARE TO ASSUME THAT THESE REPORTS COULD HAVE BEEN UTILIZED, THEN: 10.1.1 A PERUSAL OF THE KOLKATA BASED REPORTS SHOW A GLARING INCONSISTENCY EMANATING THERE FROM, I.E., T HEY ALL IDENTICALLY STATE THAT IN ALL THE ABOVE 41 CASES WHERE SUMMON WAS ISSUED NOBODY APPEARED ON BEHALF OF ANY OF THE COMPANY, ON LY SUBMISSION WERE RECEIVED THROUGH DAK IN THE 39 CASES WHICH CRE ATE A DOUBT ON THE IDENTITY OF THE ASSESSEE. HOW AND IN WHAT CONTEXT HAS THIS FIGURE EVEN BEEN ARRIVED AT HAS NOT BEEN RECONCILED/EXPLAI NED BY THE LD. CIT D.R. DURING THE HEARING. AS RIGHTLY POINTED OUT BY THE LD. A.R., THERE ARE, IN FACT, A TOTAL OF 39 PARTIES ACROSS AL L THREE ASSESSEES AND 15 KOLKATA BASED PARTIES IN TOTAL, MEANING THAT THE FIGURES SPECIFIED IN THE KOLKATA BASED REPORTS IS ERRONEOUS AND HAS G ONE UNEXPLAINED. ANY RELIANCE ON THE SAME, IS, THEREFORE, QUESTIONAB LE. IN FACT, HAD THE SAID KOLKATA BASED REPORTS BEEN CONFRONTED TO THE A SSESSEES U/S 142 60 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO (3) OF THE ACT, SUCH INCONSISTENCIES WOULD HAVE BEEN POINTED OUT AND REBUTTED BY THE ASSESSEES DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF. HOWEVER, SINCE THE SAME HAD NOT BEEN DONE BY THE A.O., THE ASSESSEES WHILE IN APPEAL, HAD TO EXPLAIN THAT ALL EVIDENCES ESTABLISHING THE 3 INGREDIENTS OF SECTION 68 HAD BE EN FURNISHED, WHERE ALL THE KOLKATA BASED PARTIES HAD RESPONDED VIA POST, CITING THEIR CONFIRMATIONS WITH DOCUMENTARY EVIDENCES IN SU PPORT NONE OF WHICH HAD BEEN REFUTED BY THE A.O. 10.1.2 FURTHERMORE, A PERUSAL OF THE KOLKATA BASED REPORTS, SHOWS THAT THE SAME ACCEPTS THAT THE BANK STATEMENTS EVIDENCING THE RECEIPT OF PAYMENT VIA CHEQUE HAD BEEN PRODUCED BY THE ASSESSES. HOWEVER, THE REPORTS HAVE ALSO STATED THA T THE ASSESSEE HAS NOT ENCLOSED THE BANK STATEMENT SHOWING THE SOU RCE OF FUND FOR SHARE APPLICATION MONEY MEANING THAT PER THE DEPARTMENT, THE SOURCE OF SOURCE WAS ALSO REQUIRED TO BE PROVED. HOWE VER, AS ALREADY OPINED, SINCE THE BANK STATEMENTS OF ALL THE INVEST OR COMPANIES EVIDENCE A SUFFICIENCY OF FUNDS TO MAKE THE RESPECT IVE INVESTMENTS IN THE ASSESSEE COMPANIES, THE CREDITWORTHINESS ALREADY STANDS PROVED IN LIGHT OF THE DECISION OF AMI INDUSTRIES (SUPRA) . FURTHER, SINCE THE 61 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO ASSESSMMENT YEARS INVOLVED ARE ALL PRE-AY 2013-2014 , WE ARE INCLINED TO HOLD IN SUPPORT OF THE SUBMISSIONS AND CASE LAWS CITED BY THE LD. A.R. WHICH IS THAT IN ORDER TO DISCHARGE THE INITIAL ONUS OF PROOF U/S 68 PRIOR TO 01.04.2013, THE ASSESSEES NEE D NOT BE REQUIRED TO PROVE THE SOURCE OF SOURCE OF SUCH INVESTORS. 10.1.3 IN RESPECT OF THE ONE INVESTOR PARTY FROM D ELHI IN THE CASE OF M/S GOLDSTAR CEMENT PVT. LTD., THE A.O. HAS NOT CONDUCTED ANY SUCH ENQUIRY U/S 142 (2) OF THE ACT. THEREFORE, WITHOUT CONDUCTING FURTHER ENQUIRES IN ORDER TO REBUT THE E VIDENCES SUBMITTED BY THE ASSESSEES, WE HOLD THAT THE A.O. CO ULD NOT HAVE ADDED BACK THE SAID INVESTMENTS RECEIVED FROM THE S AID DELHI PARTY. 10.1.4 MOVING ON TO THE REPORTS OBTAINED FROM MUMB AI AND GUWAHATI, A READING OF THE SAME MAKES IT EVIDENT TH AT IT IS NOT THE CASE OF THE A.O. THAT ALL THE PARTIES WERE NOT EXIS TING AT THE SPECIFIED ADDRESSES. THE REPORTS PROVIDE A MIXED BAG OF CONCL USIONS. THERE WERE ONLY IN 5 CASES OF THE MUMBAI PARTIES AND 2 CAS ES OF THE GUWAHATI PARTIES WHERE THE ADDRESSES NOT FOUND / NO T EXISTING. IN ALL OTHER CASES, EITHER THE ADDRESSES OF THE INVESTORS WERE FOUND TO BE INCOMPLETE, OR THE OFFICES OF THE INVESTORS WERE LO CKED, OR THE 62 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO SUMMONS HAD BEEN SERVED AND RESPONDED TO, OR THE SU MMONS THOUGH SERVED HAD NOT BEEN RESPONDED TO. BASED ON T HE ABOVE, WE OPINE THAT THE A.O. HAS ERRED IN UTILIZING THE MUMB AI AND GUWAHATI REPORTS IN A BLANKET FASHION TO ADD BACK THE ENTIRE SHARE CAPITAL AND SHARE APPLICATION MONEY RECEIVED FROM ALL THESE INV ESTORS AS BOGUS CREDITS U/S 68 OF THE ACT. 10.1.5 THE INSPECTOR REPORTS OF GUWAHATI AND MUMBA I COULD HAVE BEEN UTILIZED BY THE A.O. AGAINST THE AS SESSEES VIS--VIS THOSE INVESTOR PARTIES THAT HAD BEEN FOUND TO BE NO N-EXISTENT AT THE GIVEN ADDRESS CONTINGENT TO THE A.O. HAVING CONFRON TED THE ASSESSEES WITH THE SAID INSPECTOR REPORTS. HAD THE SAID REPORT S BEEN CONFRONTED TO THE ASSESSEES, THE DISCREPANCIES COUL D HAVE BEEN RECONCILED. HOWEVER, AS ALREADY HELD ABOVE, THESE R EPORTS HAD BEEN RECORDED AND RELIED UPON BY THE A.O. BEHIND THE BAC K OF THE ASSESSEES, AN ACT THAT IS IN DIRECT VIOLATION OF SE C.142 (3) OF THE ACT. 10.2 MOVING ON TO THE SUBMISSIONS OF THE LD. CIT - D.R. WHO HAS STATED THAT THE ASSESSES MUST PROVE THE INGREDI ENTS OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDIT ENTRI ES TO THE SATISFACTION OF THE A.O. AND, WHERE, IF ANY DOUBT ON THE GENUINENESS 63 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO OF THE INVESTOR COMPANIES EXITS IN THE MIND OF THE A.O., THEN EVEN THE SOURCE OF SOURCE MUST BE ESTABLISHED, WE OBSERVE TH AT THE CRITICAL DIFFERENCE HERE IS THAT THESE INSPECTOR REPORTS HAV E REMAINED UN- CONFRONTED TO THE ASSESSEES. HAD THE SAME BEEN CONF RONTED U/S 142 (3) OF THE ACT AND TO WHICH HAD THE ASSESSSESS NOT O FFERED ANY EXPLANATION, THE BURDEN OF PROOF WOULD HAD SHIFTED B ACK UNTO THE ASSESSEES AFTER THE A.O. WOULD HAVE BROUGHT ON RECOR D THAT THE INITIAL ONUS COULD NOT HAVE BEEN SAID TO BE DISCHARGED BY T HE ASSESSEES. IT IS IN THAT CONTEXT, THAT THE VARIOUS DECISIONS CITE D BY THE LD. CIT - D.R. WOULD HAVE FOUND RELEVANCE, REQUIRING THEIR CON TEXTUALIZED APPLICATION TO THE FACTS OF THIS PRESENT CASE. 10.3 WE FURTHER OBSERVE THAT IN THE LIST OF CASES CITED BY THE LD. CIT - D.R., THE CASES PERTAINING TOSEC.147/143(3) A SSESSMENTS HAVE NO APPLICABILITY TO THE PRESENT FACTS SINCE IN THOS E CASES, THE REASONS RECORDED CLEARLY SPECIFY THAT THE INFORMATION AVAIL ABLE ON RECORD (RECEIVED FROM THE INVESTIGATION WING) SHOWS THAT TH E ASSESSEES THEREIN HAD RECEIVED BOGUS ACCOMMODATION ENTRIES FR OM THE RESPECTIVE PARTIES. HOWEVER, AS ALREADY OBSERVED IN THE PRESENT APPEALS, NO SUCH INFORMATION/STATEMENT HAS BEEN CIT ED IN THE 64 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO REASONS RECORDED THAT ESTABLISH ANY SUCH MATERIAL E VEN EXISTING WITH THE A.O. THAT ALLEGE THE SHARE CAPITAL AND SHAR E PREMIUM RECEIVED BY THE THREE ASSESSEES TO BE BOGUS. 10.4 WE ALSO OBSERVE THAT THE CASES OF THE HONBLE JURISDICTIONAL HIGH COURT, AS CITED BY THE LD. CIT - D.R., HAVE AL L PROPOUNDED THE GENERAL AND SETTLED POSITION OF LAW VIS--VIS THE SHIFTING BURDEN OF PROOF U/S 68 OF THE ACT AND BASED ON THE SPECIFIC S ETS OF FACTS AND CIRCUMSTANCES IN EACH CASE THEREIN, THE HONBLE DEL HI HIGH COURT HAS HELD THE CASE TO BE IN FAVOUR OF A PARTICULAR P ARTY (THE REVENUE) OR HAS IN SOME CASES REMANDED THE MATTER FOR THE WAN T OF FURTHER INVESTIGATION. 10.5 IN THE CAPTIONED APPEALS BEFORE US, ON MERITS , WE HAVE ALREADY OBSERVED THAT THE ASSESSEES HAVE DISCHARGED THE INITIAL BURDEN OF PROOF, WHEREIN THE DOCUMENTS SUBMITTED BY THE ASSESSEES HAVE REMAINED UN-REFUTED BY THE A.O. THE LD. CIT - D.R. HAS SUBMITTED THAT THE DOCUMENTS WERE A FAADE SINCE TH E INSPECTOR REPORTS DRAW A VERY DIFFERENT PICTURE AND CAST A SH ADOW ON THE GENUINENESS OF THE INVESTORS. OUR VIEWS ON THE VERAC ITY OF THESE REPORTS AND WHY THE SAME COULD HAVE NOT BEEN UTILIZE D BY THE A.O. 65 ITA NOS. 6174, 6176 & 6177/DEL/ 2013 C.O. NOS.258,260 &261/DE L/2015 SUR BUILDCON PVT. LTD. & ORS VS. ITO BEHIND THE BACK OF THE ASSESSEES HAVE ALREADY BEEN EXPRESSED. THUS, IN LIGHT OF THE AFORESAID FINDINGS, THE GROUNDS TAK EN BY THE DEPARTMENT IN THE AFORESAID APPEALS ARE DISMISSED I N FAVOUR OF THE ASSESSEES. 11.0 IN THE FINAL RESULT, ALL THE THREE CROSS OBJE CTIONS FILED BY THE CAPTIONED ASSESSES ARE ALLOWED WHEREAS ALL THE T HREE APPEALS BY THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED ON 15 TH JULY, 2021 [ SD/- SD/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/07/2021 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI