M/s. Shyam Indus Power Solutions Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 249/DEL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3435 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 12-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Gift; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Earning of tax free income; Retrospective amendment; Additional evidence; Question of law; Accommodation entries; Scheme of amalgamation; Assessment record; Capital receipt; Commercial expediency; Onus to prove; Bogus loan; Documents seized
• Section: 143(3); 153A; 14A; 133(6); 131; 68; 69; 148; 132

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3223 & 3224 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) ACIT, CENTRAL CIRCLE - 17, ROOM NO. 103, FIRST FLOOR, HALL NO. 1, ARA CENTRE, E - 2, JHANDEWALAN, NEW DELHI VS. M/S. SHYAM INDUS POWER SOLUTIONS PVT. LTD, 129, TRANSPORT CENTRE, ROHTAK ROAD, PUNJABI BAGH, NEW DELHI PAN:AAICS3625E (APPELLANT) (RESPONDENT) CO NO. 249 & 250 /DEL/2016 (IN ITA NO. 322 3 AND 3224 /DEL/2016) (ASSESSMENT YEAR: 2012 - 13 & 2013 - 14 ) M/ S. SHYAM INDUS POWER SOLUTIONS PVT. LTD, 129, TRANSPORT CENTRE, ROHTAK ROAD, PUNJABI BAGH, NEW DELHI PAN:AAICS3625E VS. ACIT, CENTRAL CIRCLE - 17, ROOM NO. 103, FIRST FLOOR, HALL NO. 1, ARA CENTRE, E - 2, JHANDEWALAN, NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : MS. RACHNA SINGH, CIT DR ASSESSEE BY: SHRI SAJJAN KUMAR TULSIYAN, ADV MS. NISHA RACHH , CA SHRI KARAN KUM R A , CA DATE OF HEARING 30/11/2017 DATE OF PRONOUNCEMENT 2 9 /01/2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THESE ARE THE TWO APPEAL S PREFERRED BY THE LD. ACIT , CENTRAL CIRCLE - 17, NEW DELHI [ THE LD AO] AND THE CROSS OBJECTION S FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 27, NEW DELHI [ THE LD CIT (A)] DATED 22.03.2016 FOR THE ASSESSMENT YEAR 2012 - 13 AND 2013 - 14 . ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 2 2. FOR AY 2012 - 13, THE LD AO HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD COMMISSIONER OF INC OME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 4,81,801/ - MADE BY AO ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A RULE 8D OF THE IT ACT, 1961. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 22,92,00,000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 FROM KOLKATA BASED COMPANIES. 3. THAT THE LD. CIT(A) HAS ERRED IN IGNORING THE FACTS AS THE ASSESSEE COMPANY FAILED TO DISCHARGE THE ONUS U/S 68 OF THE I.T. ACT 1961 TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE BY THE INVESTORS. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN IGNORING THE FACT THAT COM PANIES WHICH HAVE PROVIDED UNSECURED LOANS DONT HAVE THE CAPACITY/CREDITWORTHINESS TO GRANT SUCH LOANS AS EVIDENT FROM THEIR BANK STATEMENT AND P/L ACCOUNT & RETURN OF INCOME. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACT S IN DELETING THE ADDITION OF RS. 10,05,974/ MADE ON ACCOUNT OF INTEREST PAID WITHOUT APPRECIATING THE FACT THAT THE LOANS ON WHICH SUCH INTEREST PAID ARE BOGUS. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 15 , 50, 00,000 / - MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 FROM NON KOLKATA BASED COMPANIES. 7. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 7,22,730/ - MADE BY AO ON ACCOUNT OF INTEREST PAYMENTS ON FRESH UNEXPLAINED CASH CREDIT/LOANS FROM NON KOLKATA BASED COMPANIES WITHOUT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 3 APPRECIATING THE FACT THAT THE LOANS ON WHICH SUCH INTEREST PAID ARE BOGUS. 8. THE LD. COMMISSIONER OF INCOME TAX (APP EAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 10,05,974/ - MADE ON ACCOUNT OF INTEREST PAID WITHOUT APPRECIATING THE FACT THAT THE LOANS ON WHICH SUCH INTEREST PAID ARE BOGUS. 9. (A) THE ORDER OF THE CIT ( APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 3. FOR AY 2012 - 13 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN CROSS OBJECTION: - 1) THAT THE LD. CIT. (A) ON THE FACTS OF THE CASE AND IN LAW HAS RIGHTLY DELETED THE DISALLOWANCE OF RS. 4,81,801/ - MADE U/S. 14A OF THE ACT R.W.R. 8D OF THE RULES AND THE SAME SHOULD BE UPHELD. 2) THAT THE LD. CIT. (A) AFTER CONSIDERING THAT NO EXEMPT INCOME WAS RECEIVED DURING THE YEAR HAS, ON FACTS AND IN LAW, RIGHTLY DELETED THE ADDITION U/S. 14A R.W.R. 8D OF THE RULES BY RELYING ON SEVERAL JUDICIAL PRONOUNCEMENTS. 3) THAT THE DEPARTMENTAL APPEAL CHALLENGING DELETION OF ADDITIONS OF RS. 22,92,00,000/ - AND RS. 15,50,00,000/ - U/S. 68 OF THE ACT BY THE LD. CIT. (A) IS COMPLETELY VAGUE WITH IGNORING THE EVIDENCES PLACED AND AVAILABLE O N RECORD BY THE RESPONDENT IN DISCHARGING BURDEN OF PROOF IN TERMS OF PROVISIONS OF SEC. 68 OF THE ACT AND ESTABLISHING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CORPORATE SHARE APPLICANTS. 4) THAT THE LD CIT ( A) HAS RIGHTLY DELETED THE ADDITION AFTER VERIFYING AND SATISFYING HERSELF ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. 5) THAT SINCE THE LD. CIT(A) HAS BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, RIGHTLY ACCEPTED AND UPH ELD THE GENUINENESS OF UNSECURED LOANS IN THE BOOKS OF THE RESPONDENT, SHE HAS RIGHTLY DELETED THE ADDITIONS OF RS. 10,05,974 AND RS. 7,22,730 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 4 MADE BY THE AO FOR DISALLOWANCE OF INTEREST ON SUCH UNSECURED LOANS. 6) THAT THE LD. CIT ( A) HAS ERRED IN NOT ADJ UDICATING ON THE GROUND RAISED BY THE UNDERSIGNED RESPONDENT, WHEREBY SINCE NO INCRIMINATING MATERIAL WAS DISCOVERED PURSUANT TO SEARCH U/S. 132 AND THE ORIGINAL ASSESSMENT HAD BEEN COMPLETED, IN TERMS OF THE RATIO OF THE DECISION OF HON'BLE DELHI HIGH COU RT IN THE CASE OF CIT VS. KABUL CHAWLA [61 TAXMANN.COM 412 (DEL)], NO ADDITION WAS WARRANTED IN ASSESSMENT U/S. 143(3) R.W.S. 153 A OF THE ACT. 4. FOR AY 2013 - 14 THE LD AO HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. THE LD COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 579232/ - MADE BY AO ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A RULE 8D OF THE IT ACT, 1961. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HA S ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 61500000/ - MADE BY AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 FROM KOLKATA BASED COMPANIES. 3. THAT THE LD. CIT(A) HAS ERRED IN IGNORING THE FACTS AS THE ASSESSEE COMP ANY FAILED TO DISCHARGE THE ONUS U/S 68 OF THE I.T. ACT 1961 TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE BY THE INVESTORS. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN IGNORING THE FACT THAT COMPANIES WHICH HAVE PROVIDED UNSECURED LOANS DONT HAVE THE CAPACITY/CREDITWORTHINESS TO GRANT SUCH LOANS AS EVIDENT FROM THEIR BANK STATEMENT AND P/L ACCOUNT & RETURN OF INCOME. 5. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW A ND ON THE FACTS IN DELETING THE ADDITION OF RS. 4890986/ - MADE ON ACCOUNT OF INTEREST PAID WITHOUT APPRECIATING THE FACT THAT THE LOANS ON WHICH SUCH INTEREST PAID ARE BOGUS. 6. THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS. 3000000/ - MADE BY AO ON ACCOUNT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 5 OF UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 FROM NON KOLKATA BASED COMPANIES. 7. THAT THE LD CIT ( A) HAS ERRED IN IGNORING THE FACTS AS THE ASSESSEE COMPANY FAILED TO DISCHARGE THE O NUS U/S 68 OF THE IT ACT, 1961 TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE BY THE INVESTORS. 9. (A) THE ORDER OF THE CIT ( APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. 5. FOR AY 2013 - 14 THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN ITS CROSS OBJECTION : - . 1) THAT THE LD. C.I.T.(A) ON THE FACTS OF THE CASE AND IN LAW HAS RIGHTLY DELETED THE DISALLOWANCE OF RS. 579232/ - MADE U/S. 14A OF THE ACT R.W.R. 8D OF THE RULES AND THE SAME SHOULD BE UPHELD. 2) THAT THE LD. CIT. (A) AFTER CONSIDERING THAT NO EXEMPT INCOME WAS RECEIVED DURING THE YEAR HAS, ON FACTS AND IN LAW, RIGHTLY DELETED THE ADDITION U/S. 14A R.W.R. 8D OF THE RULES BY RELYING ON SEVERAL JUDICIAL PRONOUNCEMENTS. 3) THAT THE DEPARTMEN TAL APPEAL CHALLENGING DELETION OF ADDITIONS OF RS. 61500000/ - AND RS. 3000000/ - U/S. 68 OF THE ACT BY THE LD. CIT. (A) IS COMPLETELY VAGUE WITH IGNORING THE EVIDENCES PLACED AND AVAILABLE ON RECORD BY THE RESPONDENT IN DISCHARGING BURDEN OF PROOF IN TERMS OF PROVISIONS OF SEC. 68 OF THE ACT AND ESTABLISHING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CORPORATE SHARE APPLICANTS. 4) THAT THE LD CIT(A) HAS RIGHTLY DELETED THE ADDITION AFTER VERIFYING AND SATISFYING HERSELF ABOUT THE IDENTITY, CREDITWORTH INESS AND GENUINENESS OF THE TRANSACTION. 5) THAT SINCE THE LD. CIT(A) HAS BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, RIGHTLY ACCEPTED AND UPHELD THE GENUINENESS OF UNSECURED LOANS IN THE BOOKS OF THE RESPONDENT, SHE HAS RIGHTLY DELETED THE ADDITIO NS OF RS. 4890986/ - MADE BY THE AO FOR DISALLOWANCE OF INTEREST ON SUCH UNSECURED LOANS. 6. AS THE FACTS IN BOTH THESE APPEALS OF THE REVENUE AND CROSS OBJECTIONS ARE IDENTICAL EXCEPT THE AMOUNT OF ADDITION/ ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 6 DISALLOWANCES, BOTH THESE APPEALS ARE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. ITA NO. 3223/DEL/2016 & CO NO. 249/DEL/2016 ASSESSMENT YEAR 2012 - 13 7. WE FIRST BRIEFLY STATE THE FACTS FOR AY 2012 - 13 . A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF TRANSMISSION, DISTRIBUTION OF POWER WITH STATE ELECTRICITY BOARDS AND SERVICING AND MAINTENANCE OF TRANSMISSION AND DISTRIBUTION NETWORKS. THE COMPANY ALONG WITH ITS SISTER CONCERNS WAS SUBJECTED TO SEARCH AND SEIZURE OPERATIONS UNDER SECTION 132/133A OF THE INCOME TAX ACT, 1961 ON 12/04/2012. N OTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 23/10/2013 . I N RESPONSE, ASSESSEE FILED RETURN F OR RS. 89391530/ ON 16/05/2014. CO NSEQUENTLY, ASSESSMENT UNDER SECTION 153A, READ WITH SECTION 143 (3) OF THE INCOME TAX ACT , 1961 [ THE ACT] WAS PASSED BY THE LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 17, NEW DELHI (HEREINAFTER REFERRED TO AS THE LD. AO) AT RS. 475915230 / WHEREIN FOLLOWING DISALLOWANCES WERE MADE: - I. DISALLOWANCE UNDER SECTION 14 A OF RS. 481801/ II. DISALLOWANCE OF DEDUCTION OF ESI PAYMENT OF RS. 113193 / - III. UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF RS. 229200000/ AND CONSEQUENT DISALLOWANCE OF INTEREST PA YMENT ON UNSECURED LOAN OF RS. 1005974 / IV. UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT OF RS. 155000000/ - AND CONSEQUENT DISALLOWANCE OF INTEREST OF RS. 722730/ 8. SIMILAR DISALLOWANCES WERE MADE BY THE LD AO FOR AY 2013 - 14 WHICH ARE AS UNDER : - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 7 I. DISALLOWANCE UNDER SECTION 14A OF RS. 579232/ II. UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF RS. 61500000/ - III. UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT OF RS. 30 , 00 , 000/ - IV. CONSEQUENT DISALLOWANCE OF INTEREST OF RS. 4890986/ - 9. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD. CIT ( APPEALS ) 27, NEW DELHI, WHO AS PER ORDER DATED 22 03 2016 PASSED A COMPOS ITE ORDER FOR ASSESSMENT YE AR 2011 12, 2012 13 AND 2013 14 WHERE SHE DEALT WITH THE ABO VE DISALLOWANCES MADE BY THE LD. ASSESSING OFFICER AS UNDER: - A. ON DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT SHE NOTED THAT ASSESSEE HAS NOT EARNED ANY DIVIDEND OR OTHER EXEMPT INCOME DURING THE YEAR. THEREFORE, RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CHEMINVEST LTD VERSUS CIT (ITA NO 749/2014) DATED 2/9/2015 , SHE DELETED THE DISALLOWANCE. B. DISALLOWANC E OF RS. 1 13193/ ON ACCOUNT OF EMPLOYEES STATE INSURANCE SCHEME , SHE RESTRICTED THE DISALLOWANCE TO RS. 99685/ BECAUSE THE ASSESSEE SUBMITTED BEFORE HER THAT THERE IS A DELAY IN PAYMENT OF THE ABOVE SUM ONLY AND ASSESSEE WANTED TO AVOID PROTRACTED LITI GATION. C. WITH RESPECT TO UNSECURED LOANS RECEIVED FROM SEVERAL COMPANIES OF RS. 9 , 75 , 00 , 000 / - AND SHARE APPLICATION MONEY OF RS. 13 , 17 , 00,000/ - TOTALING TO RS. 22,92 , 00, 000/ . SHE DELETED THE ABOVE ADDITION A FTER EXAMINATION OF ASSESSMENT RECORD REQUISITI ONED BY HER . WITH RESPECT TO THE UNSECURED LOAN , SHE HELD THAT ASSESSEE HAS DISCHARGED ITS INITIAL ONUS CAST UNDER SECTION 68 OF THE INCOME TAX ACT AS ASSESSEE HAS FURNISHED VARIOUS DETAILS LIKE NAME, ADDRESS, AND PERMANENT ACCOUNT NUMBER, AND BANK STATEMENT, COPY OF INCOME TAX ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 8 RETURNS AND CONFIRMATION OF THE ABOVE SAID COMPANIES. SHE FURTHER HELD THAT INVESTORS ARE CORPORATE ENTITY AND ARE MAINTAINING PROPER BOOKS OF ACCOUNTS, WHICH ARE SUBJECTED TO AUDIT AND AUDITED BALANCE SHEET, AND PROFIT AND L OSS ACCOUNT ALONG WITH THE INCOME TAX RETURNS WERE FILED BEFORE THE ASSESSING OFFICER . THEREFORE, THE PROOF OF THEIR EXISTENCE IS AVAILABLE AS DEMONSTRATED BY THE REGISTRAR OF COMPANIES RECORDS AND THERE IS NO ALLEGATION THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE INVESTOR OR COMPANIES OR HAVE BEEN RO U TED THROUGH THE ASSESSEE. SHE FURTHER EXAMINED THE BANK STATEMENTS OF THE INVESTORS COMPANY, WHICH REVEALED THAT THE SOURCE OF SOURCE WAS ALSO EXPLAINED AND IT WAS CARRIED OUT THROUGH BANKING TRANSACT ION. SHE ALSO DEALT WITH THE VARIOUS DECISIONS RELIED UPON BY THE LD. ASSESSING OFFICER . SHE FURTHER REJECTED THE INSPECTORS REPORT AS INSPECTOR HAD NOT CONDUCTED THE ENQUIRY IN THE APPELLANTS CASE AND EVEN OTHERWISE, THE INSPECTORS REPORT WAS REFEREEIN G TO INVESTOR / LENDER COMPANIES OTHER THAN THE COMPANIES FOR WHICH ADDITION IS MADE IN THE CASE OF THE ASSESSEE . WITH RESPECT TO SHARE APPLICATION MONEY, SHE HELD THAT THERE COULD BE NO REASON TO DOUBT THE EXISTENCE OR IDENTITY OF THESE COMPANIES S INCE THESE COMPANIES HAVE MERGED INTO P ARAM MITRA HOLDINGS PRIVATE LIMITED V IDE ORDER OF THE HONBLE DELHI HIGH COURT DATED 9/11/2010. THEREFORE, SHE DELETED THE ADDITION OF RS. 22 , 92 , 00,000/ MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT . SIMILARLY, ADDITION FOR AY 2013 - 14 WAS ALSO DELETED. D. SHE FURTHER DELETED THE ADDITION OF RS. 15 , 50 , 00 , 000/ MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, AS UNEXPLAINED CASH CREDIT RECEIVED BY ASSESSEE AS UNSECURED LOANS F ROM 8 COMPANIES. SHE HELD THAT ASSESSEE HAS FURNISHED NAME, ADDRESS I.E. IDENTITY OF THE DEPOSITORS, ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 9 PERMANENT ACCOUNT NUMBER DETAIL, PHOTOCOPY OF INCOME TAX RETURNS, PHOTOCOPY OF BANK STATEMENTS OF THE DEPOSITORS , THEIR BALANCE SHEETS AND PROFIT AND LOSS ACCOUNT AND CONFIRMATION FROM THE DEPOSITORS. SHE FURTHER HELD THAT ASSESSEE HAS FURNISHED THE COMPLETED DETAILS ABOUT THE INVESTOR. THEREFORE, FOR THE REASONS GIVEN BY HER FOR DELETION OF ADDITION OF RS. 22, 9 2 , 00 ,000/ , FOR THE SIMILAR REASONS , SHE DELET ED THIS ADDITION TOO. SIMILARLY, ADDITION FOR AY 2013 - 14 WAS ALSO DELETED. E. WITH RESPECT TO THE PAYMENT OF INTEREST ON ABO VE T W O ADDITIONS OF LOAN UNDER SECTION 68 OF THE INCOME TAX ACT , THE LD. ASSESSING OFFICE R DISALLOWED INTEREST EXPENDITURE PAID TO THESE COMPANIES ON THE ABOVE - UNSECURED LOAN, WHICH WERE DELETED BY THE LD. CIT AND THEREFORE SHE DELETED THE INTEREST EXPENDITURE DISALLOWANCE MADE BY THE LD. AO. SIMILARLY, DISALLOWANCE FOR AY 2013 - 14 WAS ALSO DELETED. 10. REVENU E AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) HAS PREFERRED THESE TWO APPEALS BEF ORE US ON ALL THE DISALLOWANCES/ ADDITIONS DELETED BY THE LD. CIT (A). HOWEVER, ON READING OF THE GROUNDS OF APPEAL, THE REVENUE IS ONLY CONTESTING THE DISALLOWANCE DELETED BY THE LD. CIT (A) OF EXPENSES UNDER SECTION 14 A, READ WITH RULE 8D OF THE INCOME TAX RULES AS WELL AS THE ADDITIONS DELETED UNDER SECTION 68 OF THE ACT AND THE INTEREST THEREON . 11. THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS; HOWEVER , THEY ARE ONLY SUPPORTING THE ORDER OF THE LD. CIT (A). THEREFORE, THEY ARE ONLY SUPPORTIVE IN NATURE. 12. WE FIRST TAKE UP THE APPEAL OF REVENUE FOR AY 2012 - 13 . 13. THE 1 ST GROUND OF APPEAL OF THE REVENUE IS WITH R ESPECT TO DISALLOWANCE OF RS. 4 81801/ MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF EXPENSES IN RELATION TO EXEMPT INCOME U/S 14 A, READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 DELETED BY THE LD. CIT (A). ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 10 14. THE LD. CIT DR RELIED UPON THE ORDER OF THE LD. AO. SHE REFERRED TO THE PAGE NO. 2 OF THE A SSESSMENT ORDER AT PARA NO. 5 AND SUBMITTED THAT THE LD. ASSESSING OFFICER HAS RECORDED H IS SATISFACTION THAT CLAIM OF THE ASSESSEE THAT IT HAS NOT INCURRED ANY EXPENDITURE ON THE INVESTMENT IS INCORRECT. S HE FURTHER STATED THAT RULE 8D OF THE INCOME TAX RULES, 1962 IS MANDATORY WHICH HAS BEEN FOLLOWED BY THE LD. ASSESSING OFFICER THEREFORE THERE CANNOT BE ANY FAULT FOUND WITH THE ASSESSMENT ORDER. SHE FURTHER RELIED UPON THE PROVISIONS OF SECTION 14 A OF THE ACT AND ALSO ON CIRCULAR NO. 14/2006 DATED 28/1 2/2006, WHEREIN IT IS STATED THAT THE LEGISLATIVE INTENT BECOMES CRYSTAL CLEAR BY THE FACT THAT DISALLOWANCES TO BE MADE EVEN IF NO INCOME IS EARNED DURING THE YEAR. SHE FURTHER REFERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF TAIKIS HA ENGINEERING INDIA LTD, INDIA BULLS FINANCIAL SERVICES LTD VERSUS DCIT, 76 TAXMANN.COM 268 AND DECISION OF THE HONBLE SUPREME COURT IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD VERSUS DCIT, 81 TAXMANN.COM 111. SHE FURTHER RELIED UPON THE SEVERAL DECISI ONS OF THE COORDINATE BENCHES. SHE FURTHER RELIED HEAVILY ON PRINCIPLES OF INTERPRETATION OF TAX STATUTE AND SUBMITTED THAT IN THE LIGHT OF ALL THESE DECISIONS AND THE LOGICAL INTERPRETATION OF SECTION 14 A, EVEN IF THERE IS NO EXEMPT INCOME THE DISALLOWANCE IS REQUIRED TO BE MADE. SHE STATED THAT THE LD. ASSESSING OFFICER HAS CORRECTLY DISALLOWED THE CLAIM OF EXPENDITURE PERTAINING TO EXEMPT INCOME WITHIN THE AMBIT OF LAW AND PROVISIONS OF THE ACT. 15. THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CHEMINVEST VERSUS CIT (SUPRA) AND SUBMITTED THAT AS ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR THE DISALLOWANCE UNDER SECTION 14 A CANNOT BE MADE. HE SUBMITTED THAT : - ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 11 1961 A.Y.2012 - 13 : RS.44,70,116/ - : GRD 1 OF DEPARTMENTAL APPEAL GRDS 1&2 OF ASSESSEES CROSS OBJECTION A.Y.2013 - 14 :RS.5,79,232/ - :GRD 1 OF DEPARTMENTAL APPEAL :GRDS 1&2 OF ASSESSEES CROSS OBJECTION IN THIS REGARD, DISALLOWANCES WERE MADE AS BROUGHT OUT IN THE CHART ATTACHED ABOVE. IN REGARD TO SAID DISALLOWANCE THE UNDER - SIGNED WOULD LIKE TO SUBMIT AS UNDER: - BRIEF FACTS OF THE CASE OF THE RESPONDENT - ASSESSEE A S UNDER: - BEFORE THE LEARNED AO, THE APPELLANT HAD SUBMITTED THAT ALL THE INVESTMENTS WERE MADE IN EARLIER YEARS OUT OF THE APPELLANT COMPANYS OWN FUNDS, AND THE APPELLANT COMPANY DID NOT MAKE ANY EFFORTS OR DEVOTE TIME TOWARDS SUCH INVESTMENTS IN THE PREVIOUS YEAR. AS ON THE BEGINNING AND END OF T HE RELEVANT FINANCIAL YEAR THE AMOUNT OF INVESTMENT WAS RS. 1,00,000/ - . IN THE RELEVANT YEAR THE APPELLANT DID NOT DERIVE ANY EXEMPTED INCOME. A COPY OF THE INVESTMENT SCHEDULES AND AUDITED FINANCIAL STATEMENT S OF THE APPELLANT WERE ALSO FURNISHED. IT WAS ALSO SUBMITTED BEFORE THE LEARNED AO THAT THE APPELLANT DID NOT DEVOTE ANY TIME OR EFFORT TOWARDS SUCH INVESTMENT AS THE SUBSIDIARY COMPANY WAS RUN INDEPENDENTLY BY A SEPARATE TEAM. IT IS FURTHER SUBMITTED THA T THE LD. AO HAS FAILED TO APPRECIATE INVESTMENT BY THE APPELLANT WAS IN GROUP COMPANY FOR WHICH NIL EXPENSES HAS BEEN INCURRED TO EARN DIVIDEND INCOME. THE LD AO ALSO FAILED TO CREATE ANY NEXUS BETWEEN THE EXEMPT DIVIDEND INCOME AND THE EXPENDITURE DISALL OWED WHICH IS THE REAL ESSENCE OF APPLICATION OF SECTION 14A OF INCOME TAX ACT, 1961 READ WITH RULE 8D OF INCOME TAX RULES. FURTHER, THE APPLICATION OF RULE 8D BY THE LD AO IS NOT JUSTIFIED. THE REFERENCE TO RULE 8D SHOULD ONLY BE INVITED IN THE CASE WHERE AO CONCLUDES THAT CERTAIN EXPENDITURE HAS BEEN INCURRED TO EARN EXEMPT INCOME WHICH IS NOT THE CASE OF ASSESSEE COMPANY. SUCH INVESTMENT WAS NOT MADE BY THE RESPONDENT - ASSESSEE WITH AN INTENTION OR OBJECTIVE OF EARNING DIVIDEND INCOME, INSTEAD SUCH INVEST MENT WAS STRATEGIC IN NATURE. THE LD. A.O. WITHOUT RECORDING ANY SATISFACTION AS TO HOW THE CLAIM OF THE ASSESSEE IS INCORRECT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, HAS IPSO APPLIED THE METHOD PRESCRIBED BY ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 12 RULES. THE ID. A.O. IN HIS CALCULATION H AS TAKEN THE AVERAGE OF ALL THE OPENING AND CLOSING INVESTMENTS AND CALCULATED THE DISALLOWANCE @1/2 % IN ACCORDANCE WITH RULE 8D BY FOLLOWING CIRCULAR NO. 5 DATED 11/02/2014. AGGRIEVED THE ABOVE ORDER OF THE LD. A.O., APPEAL WAS DULY PREFERRED BEFORE THE LD. CIT(A) PURSUANT TO WHICH THE LD. CIT(A) BAS ED ON THE FACTS OF THE CASE OF THE ASSESSEE ALLOWED RELIEF TO THE ASSESSEE, AS BROUGHT OUT IN THE CHART ABOVE. AGGRIEVED BY THE ABOVE, THE DEPARTMENT IS ACCORDINGLY IN APPEAL BEFORE YOUR HONOURS FOLLOWED BY TH E CROSS - OBJECTION OF THE ASSESSEE. IN CONNECTION TO THE ABOVE, IT IS SUBMITTED BEFORE YOUR HONOURS AS ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT INVESTMENTS CONSIDERED BY THE LD. A.O. FOR DISALLOWANCE FOR ABOVE A.YS WERE THE INVESTMENTS OF THE ASSESSEE COMP ANY IN GROUP COMPANIES WHEREIN THE SAME ARE MADE AS STRATEGIC INVESTMENTS, PURELY ON ACCOUNT OF COMMERCIAL EXPEDIENCY TO PROMOTE THE SAID COMPANIES AND NOT FOR PURPOSES OF EARNING CAPITAL GAINS OR DIVIDEND INCOME AND ANY DIVIDEND INCOME, IF ANY, ARISING TH EREFROM IS PURELY INCIDENTAL IN NATURE. THE SAID INVESTMENTS ARE ONLY FOR OBTAINING CONTROLLING INTEREST IN THE SAID COMPANIES AND TO FURTHER THE BUSINESS INTERESTS OF THE ASSESSEE IN THE SAID COMPANY. FURTHER IT IS SUBMITTED THAT THE SAID STRATEGIC INVEST MENTS IN GROUP COMPANIES ARE LONG TERM INVESTMENTS AND NO EXPENSES AS SUCH ARE INCURRED FOR MAINTAINING THE PORTFOLIO OF THESE INVESTMENTS OR FOR HOLDING THE SAME. THE SAID INVESTMENTS IN THE CASE OF THE ASSESSEE, AS IS EVIDENT FROM THE BALANCE SHEET WERE ALL LONG TERM AND WERE CARRIED FORWARD FROM EARLIER YEARS AND THUS NO EXPENSES WERE INCURRED ON THE SAME. THUS IT IS SUBMITTED THAT NO DISALLOWANCE U/S 14ACAN BE MADE WITH RESPECT TO THESE INVESTMENTS. IN THIS REGARD, IT MAY KINDLY BE NOTED THAT THE CASE OF THE ASSESSEE STANDS FULLY COVERED BY THE VERY RECENT DECISION DATED 15/09/2017 PASSED IN THE CASE OF A GROUP CONCERN OF THE ASSESSEE BY THE HONBLE IT AT, B BENCH, NEW DELHI, IN THE CASE OFSINDHU TRADE LINKS LTD. WHICH IS ONE OF THE COMPANIES BELONG ING TO THE ARYAN SAINIK GROUP OF WHICH THE ASSESSEE COMPANY IS ALSO A PART. (COPY ENCLOSED) ON THE IDENTICAL FACT RELATING TO INVESTMENTS IN GROUP COMPANIES, IT WAS HELD BY THE HONBLE ITAT BENCH AS UNDER: 4. HONBLE JURISDICTIONAL HIGH COURT IN CHEMINVEST VS CIT (2015) 378 ITR 33 (DEL), NO DISALLOWANCE U /S 14A CAN BE MADE IN THE CASE OF STRATEGIC INVESTMENTS MADE IN GROUP CONCERNS. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 13 SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE MADRAS HISH COURT IN CIT VS. CHETTINAD LOGISTICS PVT. LTD. (2017) 98 CCH0151 CHENHC THUS IT BECOMES CLEAR THAT THE LD. CIT(A) REDUCED SUCH INVESTMENTS FROM THE TOTAL AMOUNT OF INVESTMENTS FOR PURPOSES OF CALCULATING % OF DISALLOWANCE UNDER RULE 8D(2)(III). IN VIEW OF THE ABOVE DISCUSSION, WE ARE SATISFIED THAT THE LD. CIT(A) WAS JUSTIFI ED IN REDUCING THE DISALLOWANCE PRO TANTO FOR BOTH THE YEARS UNDER CONSIDERATION. A PERUSAL OF THE ABOVE REVEALS THAT THE HONBLE ITAT BENCH IN THE CASE OF THE GROUP COMPANY ITSELF, ON IDENTICAL FACTS, AFTER CONSIDERING THE RELEVANT DECISIONS ON THE SUBJEC T, HAS LAID OUT THAT INVESTMENTS IN GROUP COMPANIES DO NOT QUALIFY FOR DISALLOWANCE U/S 14A OF THE ACT AND THUS DIVIDENDS EARNED ON THE SAME THOUGH EXEMPT CANNOT FORM PART OF DISALLOWANCE U/S 14A OF THE ACT R.W.R. 8D. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT (A) HAS MENTIONED THAT ASSESSEES INVESTMENTS HAVE BEEN MADE IN - GROUP CONCERN FOR EXERCISING CONTROL AND MANAGEMENT OF SUCH CONCERNS AND IN THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS NOT DERIVED ANY EXEMPT INCOME. THIS FACT IS NOT DISPUTED BY THE REVENUE. THEREFORE, AS THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CHEMI NVEST VERSUS CIT ( SUPRA) , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) IN DELETING THE DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT. IN THE RESULT GROUND NO. 1 OF THE APPEAL OF REVENUE IS DISMISSED. 17. THE SECOND GROUND OF APPEAL OF REVENUE RELATES TO ADDITION OF RS. 22 , 92 , 00, 000/ MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT FROM KOLKATA BASED COMPANIES DELETED BY THE LD. CIT (A). THE LD. ASSESSING OFFICER HAS MADE ADDITION V IDE PARA NO. 7 OF ASSESSMENT O RDER AT PAGE NO. 6 32 FOR AY 2012 - 13 ARE AS UNDER: - UNEXPLAINED CASH CREDIT OF RS.22,92,00,000/ - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 14 7. ONE OF THE ALLEGATIONS AGAINST THE ARYAN SAINIK GROUP (I.E. ASSESSEES COMPANY GROUP) WAS THAT IT HAS ROUTED ITS UNACCOUNTED MONEY EARNED FROM APPLICATION MONEY ISSUED AT HIGH PREMIUM THROUGH THE VARIOUS KOLKATA BASED COMPANIES AND THE SAME HAS BEEN BROUGHT INTO VARIOUS COMPANIES OF THE GROUP. FURTHER, FROM THE INVESTIGATION/ENQUIRY CONDUCTED BY THE INVESTIGATION WING, IT HAS BEEN PROVED THAT THE ASSESSEE GROUP COMPANIES HAS RECEIVED MONEY THROUGH VARIOUS KOLKATA BASED COMPANIES AND WHICH IN TERM HAVE GOT MONEY THROUGH ANOTHER SET OF KOLKATA BASED COMPANIES, WHOSE BUSINESS ACTIVITIES ARE SUSPICIOUS AND THE ENTIRE CIRCULATION OF MONEY IS THROUGH TH OSE COMPANIES WHICH ARE INDULGING IN ENTRY OPERATION AND NO BUSINESS ACTIVITIES AT ALL. MOREOVER, THE DETAILS IN RESPECT OF SHARE APPLICATION MONEY/SHARE PREMIUM/ UNSECURED LOANS RECEIVED FROM THE VARIOUS KOLKATA BASED COMPANIES HAVE ALSO BEEN RETRIEVED FR OM THE SEIZED DOCUMENTS/HARD DISK SEIZED/IMPOUNDED DURING THE SEARCH AND SEIZURE OPERATION. FROM THE PERUSAL OF P&L A/C AND THE REPLY SUBMITTED BY THE ASSESSEE FOR THE FY 2011 - 12, IT WAS OBSERVED THAT AN AMOUNT OF RS.9,75,00,000/ - WAS SHOWN AS UNSECURED LO AN AS ON 31.03.2012 FROM KOLKATA BASED COMPANIES AND RS. 13,17,00,000/ - AS SHARE CAPITAL FROM VARIOUS COMPANIES BASED IN KOLKATA. THE DETAILS OF WHICH ARE GIVEN AS UNDER: UNSECURED LOANS: ST NO. NAME OF THE PARTY ADDRESS PAN UNSECURED LOANS TAKEN 1 WELLBUILD MARKETINGS PVT. LTD. SAYED AMIR ALL AVENEU, KOLKATA, WEST BENGAL - 19 AAACW9123F 3,00,00,000/ - 2 CONCRETE CREDIT LTD. R. NO. 226, 1, CROOKED LANE, 2 ND FLOOR, DALHOUSE, KOLKATA, WEST BENGAL - 01 AAHCS4459D 55,00,000/ - 3 EAGLE DEAL TRADE PVT. LTD. BLOCK - B, 9/12, LAI BAZAR, STREET, DALHOUSE, KOLKATA, WEST BENGAL, 01 AACCE6122G 40,00,000/ - 4 JAGDHATRI COMMODITIES PVT. LTD. H/6, ELIOT LANE, GROUND FLOOR, KOLKATA, WEST BENGAL - 16 AABCJ9134E 1,75,00,000/ - 5 KAILASH PATI VINCOM PVT. LTD. R. NO. 2 7A, 1 FLOOR, 23A, NS ROAD, DALHOUSE, KOLKATA, WEST BENGAL - 01 AAECK5648K 70,00,000/ - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 15 6 OSCAR RETAILERS LTD. 2ND FLOOR, R.NO.226, 1, CROOKED LANE, 2 ND FLOOR, DALHOUSE, KOLKATA, WEST BENGAL - 01 AABC04147N 75,00,000/ - 7 VIDHAN SALES AGENCIES PVT. LTD. 9 TH FLOOR, R. NO. 907 - C, MARSHALL HOUSE, 33/1, NS ROAD, DALHOUSE, KOLKATA, WEST BENGAL - 01 AABCB3775D 75,00,000/ - 8 WINNER COMMOSALES PVT. LTD 28D, NAYAN CHAND DUTTA STREET, GIRISH PARK, KOLKATA, WEST BENGAL - 06 AABCW1153E 60,00,000/ - 9 JUBILEE VINCOM PVT. LTD. 28/D, NAYAN CHAND DUTTA STREET, FIRISH PARK, KOLKATA, WEST BENGAL - 06 AACCJ6266E 75,00,000/ - 10 KHETAN TRACON PVT. LTD. R.NO. 3A, ASHIRWAD APPTT. 171/12, ROY BAHADUR ROAD, KOLKATA, WEST BENGAL - 34 AABCK9871F 50,00,000/ - 9,75,00,000 SHARE APPLICATION MONEY NAME OF THE PARTY ADDRESS AMOUNT IN (RS) AMANAT AGENCIES PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENQAL - 12 4,40,00,000 SKIPPER VINMAY PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENQAL - 12 3,22,00,000 OASIS COMMOTRADE PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENGAL - 12 5,55,00,000 TOTAL 13,17,00,000/ - FURTHER, FROM THE DETAILS SUBMITTED BY THE ASSESSEE IN RESPECT OF THE ABOVE NOTED COMPANIES WHICH HAVE INVESTED SHARE CAPITAL IN THE ASSESSEE COMPANY, IT IS SEEN THAT THE ASSESSEE HAS FURNISHED THE ADDRESS OF THE FOLLOWING INVESTORS I.E. M/S AMANAT AGENCIE S PVT. LTD., M/S SKIPPER VINMAY PVT. LTD. AND M/S OASIS COMMOTRADE PVT. LTD. HAVE BEEN SHOWN AS 129, TRANSPORT CENTRE, PUNJABI BAGH, NEW DELHI. FROM THE PERUSAL OF THE DETAILS/ADDRESSES OF THE ASSESSEE GROUP COMPANIES IT IS OBSERVED THAT THIS ADDRESS OF PU NJABI BAGH IS THE ADDRESS OF VARIOUS GROUP COMPANIES OF THE ASSESSEE COMPANY. HOWEVER, FROM PERUSAL OF BANK STATEMENT IT IS ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 16 SEEN THAT THE FOLLOWING ADDRESSES HAVE BEEN INDICATED/REFLECTED IN THE BANK ACCOUNTS OF THE FOLLOWING COMPANIES. NAME OF THE PARTY ADDRESS AMANAT AGENCIES PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENGAL - 12 SKIPPER VINMAY PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENGAL - 12 OASIS COMMOTRADE PVT. LTD. 14, WESTON STREET, KOLKATA, WEST BENGAL - 12 ALSO THE PAN DATA BASE OF THE DEPARTMENT WAS ALSO SEARCHED AND IT IS SEEN THAT ALL THESE COMPANIES ARE KOLKATA BASED ONLY WITH THEIR ADDRESS SHOWN AS BELOW: - NAME OF THE PARTY PAN JURISDICTION ADDRESS AMANAT AGENCIES PVT. LTD. AAGCA4515M ITO, WARD - 6(3), KOLKATA 4 TH , FLOOR R. NO 109, 5/1, CLIVQ ROW, KOLKATA. SKIPPER VINMAY PVT. LTD. AAMCS1544G ITO, WARD - 1 (3), KOLKATA 7/1 A, GRANT LANE, KOLKATA OASIS COMMOTRADE PVT. LTD. AABCO0636Q ITO, WARD - 1(2), KOLKATA 14, WESTON STREET, KOLKATA THUS, FROM THE ABOVE IT IS SEEN THAT THE ASSESSEE HAS WRONGLY SHOWN THEIR DELHI ADDRESSES WHEREAS IT APPEAR THAT AT THE TIME OF TRANSACTION ALL THESE COMPANIES WERE KOLKATA BASED ONLY. THUS, AT BEST THE ABOVE NOTED COMPANIES MAY HAVE BEEN ACQUIRED BY THE ASSESSEE GROUP, THE DETAILS OF WHICH ARE N OT DISCLOSED WITH DEPARTMENT AND BASED ON THE FACTS AVAILABLE IN IT AMPLY CLEAR THAT THESE ENTITIES ARE KOLKATA BASED COMPANIES ONLY BEFORE COMING TO THE FACTS OF THE PRESENT CASE, IT IS FIRST REQUIRED TO EXAMINE THE ASSESSEES CASE OF HAVING RECEIVED THE UNSECURED LOANS FROM THE PERSPECTIVE OF SEC.68 OF THE I. T. ACT, 1961. THE SEC.68 OF THE I. T. ACT PROVIDES AS UNDER : 68. CASH CREDITS. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 17 THE VA RIOUS COURTS INCLUDING THE HONBLE SUPREME COURT, WHILE INTERPRETING THE PROVISIONS OF SEC.68 HAS HELD THAT THE INITIAL BURDEN IS ON THE ASSESSEE TO PROVE 3(THREE) THINGS, VIZ., THE IDENTITY OF THE CREDITORS, THE CAPACITY (CREDITWORTHINESS) OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTIONS. THE OBSERVATIONS OF HON TILE SUPREME COURT IN THE CASE OF [2007] 161 TAXMAN 169 (SC), COMMISSIONER OF INCOME - TAX VS. P. MOHANAKALA WITH REGARD TO NATURE 8S SCOPE OF SEC.68 IS VERY PERTINENT AND THE SAME IS REPRODUC ED BELOW: 14. THE QUESTION IS WHAT IS THE TRUE NATURE AND SCOPE OF SECTION 68 OF THE ACT? WHEN AND IN WHAT CIRCUMSTANCES SECTION 68 OF THE ACT WOULD COME INTO PLAY? THAT - A BARE READING OF SECTION 68 SUGGESTS THAT THERE HAS TO BE CREDIT OF AMOUNTS IN THE BO OKS MAINTAINED BY AN ASSESSEES; SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR; AND THE ASSESSEES OFFER NO EXPLANATION ABOUT THE NATURE, AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS; OR. THE EXPLANATION OFFERED BY THE ASSESSEES IN THE OPINION OF T HE ASSESSING OFFICER IS NOT SATISFACTORY, IT IS ONLY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEES OF THAT PREVIOUS YEAR. THE EXPRESSION 'THE ASSESSEES OFFER NO EXPLANATION' MEANS WHERE THE ASSESSEES OFFET NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSESSEES. IT IS TRUE THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEES AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APPLICATION OF MIND IS THE SIN E QUA NON FOR FORMING THE OPINION. FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT OF CALCUTTA IN THE CASE OF SHANKAR INDUSTRIES VS. CIT [1978] 114 ITR 689 (CAL), WHILE DISCUSSING THE UNREPORTED DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF KNITTING MACHINERIES SYNDICATE (INDIA) PRIVATE LTD. VS COMMISSIONER OF INCOME - TAX, DATED THE 6TH SEPTEMBER, 1972 HAS OBSERVED AS UNDER: MR. SEN ALSO CITED AN UNREPORTED DECISION OF THIS COURT IN INCOME - TAX REFERENCE NO. 20 OF 1967 INTITULED KNITTING MACHIN ERIES SYNDICATE (INDIA) PRIVATE LTD. V. COMMISSIONER OF INCOME - TAX, DATED THE 6TH SEPTEMBER, 1972. THE FACTS IN THIS CASE WERE THAT IN THE BOOKS OF THE ASSESSEE CREDITS APPEARED IN THE NAME OF ONE R.L. AGARWALA, A BROTHER - IN - LAW OF A DIRECTOR OF THE ASSESS EE ON A LOAN ACCOUNT THE INCOME - TAX OFFICER EXAMINED THE ALLEGED CREDITOR, REJECTED HIS EXPLANATION AND ADDED THE AMOUNT TO THE ASSESSEE'S INCOME. THE APPELLATE ASSISTANT COMMISSIONER CONFIRMED THE ORDER OF THE'INCOME - TAX OFFICER. THE TRIBUNAL, ON FURTHER APPEAL, FOUND THAT THE ALLEGED CREDITOR DID NOT HAVE THE MEANS TO ADVANCE THE AMOUNT OF LOAN. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT HE HAS DISCHARGED HIS ONUS IN PROVING A CREDIT IN THE NAME OF A THIRD PARTY BY PRODUCING THE CREDITOR AND BY PRODU CING HIS ASSESSMENT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 18 ORDERS AND IT WAS NOT NECESSARY FOR HIM TO DO ANYTHING MORE. THIS CONTENTION WAS NOT ACCEPTED BY THE TRIBUNAL. ON A REFERENCE, THIS COURT CONSIDERED A NUMBER OF DECISIONS OF THE OTHER HIGH COURTS AND OBSERVED AS FOLLOWS: 'WE FIND THAT B Y A SERIES OF DECISIONS OF DIFFERENT HIGH COURTS AS WELL AS OF THE SUPREME COURT IT HAS BEEN CONSISTENTLY LAID DOWN THAT WHEN AN ASSESSEE CLAIMS THAT HE HAS BORROWED MONEY FROM A THIRD PARTY THE INITIAL ONUS LIES ON THE ASSESSEE TO ESTABLISH, (A) THE EXIST ENCE OF THE THIRD PARTY; (B) THE ABILITY OF THE THIRD PARTY TO ADVANCE MONEYS; AND (C) THAT PRIMA FACIE THE LOAN IS A GENUINE ONE. THE ASSESSEE BY PROVING THESE FACTS DISCHARGES THE ONUS UPON HIM. BUT THAT DOES NOT PREVENT THE AUTHORITY CONCERNED TO PROBE 'FURTHER INTO THE MATTER AND INVESTIGATE THE CASE ON MATERIALS AVAILABLE TO THE AUTHORITY TO COME TO AN INDEPENDENT AND UNBIASED FINDING AS TO THE GENUINENESS OF THE TRANSACTION. IT IS TRUE THAT THE TAX AUTHORITY IS NOT ENTITLED TO REJECT THE ASSESSEE'S CA SE SUMMARILY OR ARBITRARILY OR WITHOUT SUFFICIENT REASON. IT IS TRUE THAT THE AUTHORITY'S DUTY IS TO EXAMINE ALL THE MATERIALS CAREFULLY AND OBJECTIVELY. BUT IF IT IS FOUND THAT THE AUTHORITY CONCERNED AFTER CAREFUL CONSIDERATION OF ALL RELEVANT MATERIALS HAS COME TO THE CONCLUSION THAT THE ASSESSEE'S CASE OF A LOAN FROM A THIRD PARTY CANNOT BE ACCEPTED IT IS NOT OPEN TO THIS COURT TO DISTURB THE FINDING IN A REFERENCE UNDER SECTION 66(1). ' THUS, IN VIEW OF THE ABOVE DECISIONS / OBSERVATIONS OF THE HONTOLE COURTS AND THE SETTLED LAW POSITION THAT ONUS IS ON THE ASSESSEE TO NOT ONLY PROVE THE IDENTITY & CAPACITY (CREDITWORTHINESS) OF THE CREDITORS, BUT ALSO TO PROVE GENUINENESS OF TRANSACTIONS, THE FACTS OF THE PRESENT CASE IN RESPECT OF UNSECURED LOANS ARE ANALYZED BELOW. TO VERIFY THE GENUINENESS UNSECURED LOANS/SHARE CAPITAL INTRODUCED IN THE ASSESSEE COMPANY, QUERIES WERE ASKED THROUGH SEVERAL LETTERS AND THE DETAILS OF SOME OF THEM ARE GIVEN BELOW: - VIDE THIS OFFICE LETTER DATED 15.10.2014, THE ASSESSEE COMPANY WAS REQUESTED TO FURNISH THE FOLLOWING DETAILS: 13. COPIES OF ACCOUNT DULY CONFIRMED IN RESPECT OF THE UNSECURED LOANS CLAIMED TO HAVE BEEN RAISED DURING THE YEAR INDICATING PAN AND WARD/CIRCLE OF THE LOAN CREDITOR SHOULD BE GIVEN. 20. FURNISH DET AILS OF SHARE APPLICATION MONEY RECEIVED IN THE FOLLOWING FORMAT: A. NAME AND ADDRESS OF THE SUBSCRIBER. B. PAN & INCOME TAX JURISDICTIONAL DETAILS. C. AMOUNT OF SHARE APPLICATION MONEY ATTRIBUTED TO HIM/HER/CO. D. DATE OF RECEIPT E. MODE OF RECEIPT. F. IF RECEIVED BY CHEQUE / PAY ORDER, PLEASE GIVE DETAILS OF CHEQUE NO., DATE, AMOUNT AND OTHER DETAILS. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 19 G. IF RECEIVED BY CHEQUE/PAY ORDER, DATE OF CREDIT IN YOUR ACCOUNT. PRODUCE COPY OF BANK STATEMENT OF SUBSCRIBER.' FURTHER, AS THE ASSESSEE FAILED TO FURNISH THE REQUISITE REPLIES, THE ASSESSEE WAS AGAIN ASKED TO FURNISH THE DETAILS IN RESPECT OF SUCH LOANS BY WAY OF ANOTHER SHOW CAUSE NOTICE DATED 23.11.2015, THE RELEVANT EXTRACT OF WHICH IS REPRODUCED BELOW1: IT IS ALSO NOTICED, FROM THE EXTRACT OF H ARD DISK OF A - L, SEIZED FROM. BS - 14, THAT THERE WERE DETAILS OF UNSECURED LOANS, ICD GIVEN AS ON 17.06.2010 AND DETAILS OF SHARE APPLICATION MONEY (EMPHASIS SUPPLIED). THE RELEVANT DETAILS OF THE SAME ARE AS UNDER: DETAILS OF UNSECURED LOANS AS ON 17.06.20 10 SI . NO. PARTICULAR AMOUNT (RS.) 1 GOOD HOPE VYAPAAR PVT. LTD. 16,91,00,000.00 2 JAGNATH COMMODITIES 15,20,00,000.00 3 KOMAL TIE UP PVT. LTD 2,40,00,000.00 4 OMKARA AGENCIES PVT. LTD. 3,80,00,000.00 5 SINDHU HOLDINGS LTD. (UL) 4,60,00,000.00 6 SINDHU TRADE LINKS LTD. (UL) 9,00,00,000.00 TOTAL 51,91,00,000.00 DETAILS OF ICD GIVEN AS ON 17.06.2010 SI. NO. PARTICULAR AMOUNT (RS.) 1 BHANDARI CONSULTANCY & FINANCE LTD. (UL) 2,00,00,000.00 2 HARI BHOOMI COMMUNICATION PVT. LTD. 2,50,00,000.00 DETAILS OF SHARE APPLICATION MONEY SI NO. PARTICULAR AMOUNT (RS.) 1 SINDHU TRADE LINKS LTD. 3,00,00,000.00 THE ASSESSEE COMPANY WAS SPECIFICALLY REQUESTED TO SUBMIT THE INFORMATION OF SEIZED DOCUMENTS FROM TIME TO TIME, IT IS STATED THAT NO PAPER WAS FOUND/SEIZED. HOWEVER, ON GOING THROUGH THE SEIZED MATERIAL IN THE FORM OF HARD DISK AND LOOSE PAPERS ETC. CERTAIN PAPERS WERE FOUND. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 20 FURTHER, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS FROM THE FOLLOWING ENTITIES IN AY 2010 - 11. THE D ETAILS OF THE SAME ARE AS UNDER: - SI. NO. PARTICULAR AMOUNT (RS.) 1 GOOD HOPE VYAPAAR PVT. LTD. 16,91,00,000.00 2 JAGNATH COMMODITIES 2,40,00,000.00 3 KOMAL TIE UP PVT. LTD 3,80,00,000.00 4 OMKARA AGENCIES PVT. LTD. 4,60,00,000.00 TOTAL RS.27,71,00,000/ - FROM THE PERUSAL OF RECORDS, IT IS SEEN THAT ALL THESE COMPANIES ARE KOLKATA BASED COMPANIES AND FOUND PAPER SHELL COMPANIES. IN RESPECT OF THESE COMPANIES, THE INSPECTOR OF THIS OFFICE WAS CONDUCTED INQUIRES/ INVESTIGATION IN RESPECT OF ASSESSMENTS MADE O F GROUP COMPANIES EARLIER AND THE ADDRESS GIVEN WERE NOT FOUND CORRECT. THE INVESTIGATION WING ALSO CONDUCTED INQUIRES/INVESTIGATION IN RESPECT OF THESE COMPANIES AND IT HAS GIVEN ADVERSE FINDING IN RESPECT OF THESE COMPANIES/IDENTITIES. THE ABOVE MENTIO NED COMPANIES INTRODUCED HUGE SHARE CAPITAL AND SHARE PREMIUM IN THE GROUP COMPANIES OF ACB NAMELY M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. AND M/S SINDHU HOLDINGS LTD. ETC. FURTHER, FROM THE PERUSAL OF DOCUMENTS, IT IS AGAIN SEEN THAT THE IDENTITY, CREDI TWORTHINESS IS DOUBTFUL AS HAS ALREADY HELD BY MY PREDECESSOR IN HIS ASSESSMENT ORDERS IN THE CASE OF M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. AND M/S SINDHU HOLDINGS LTD FOR AY 2009 - 10 & AY 2010 - 11 AND CONCLUDED THAT GENUINENESS OF THE TRANSACTION IN RES PECT OF THE ABOVE MENTIONED COMPANIES WERE NOT PROVED. THUS, IT IS ONCE AGAIN REQUESTED TO EXPLAIN THE SAME, OTHERWISE ADVERSE VIEW WILL BE TAKEN.' THE ASSESSEE FURNISHED THE REPLY WHICH WAS INCOMPLETE, AMBIGUOUS AND NOT CLEAR. FURTHER, THE ASSESSEES REPL Y IS DISCUSSED IN DETAIL IN THE BELOW NOTED PARAGRAPHS: - IDENTITY OF THE CREDITORS THOUGH THE ASSESSEE HAS FURNISHED THE NAMES, PAN, ADDRESS AND CONFIRMATIONS FROM THE PERSONS FROM WHOM UNSECURED LOANS WAS RECEIVED HOWEVER, FROM THE ENQUIRES/PHYSICAL INSPE CTION CONDUCTED AT THE' ADDRESSES PROVIDED BY THE ASSESSEE HAS BEEN REVEALED THAT MOST OF THE COMPANIES ARE NOT EXISTING AT THE ADDRESSES MENTIONED/PROVIDED BY THE ASSESSEE COMPANY. TO CONDUCT THE PHYSICAL ENQUIRY, THE INSPECTOR OF THE OFFICE WAS DEPUTED T O CONDUCT THE PHYSICAL ENQUIRY IN RESPECT OF THE VARIOUS COMPANIES WHICH HAVE PROVIDED UNSECURED LOAN/SHARE APPLICATION MONEY AND IT HAS COME TO NOTICE THAT MOST OF THE COMPANIES EITHER ARE NOT EXISTING AT THE ADDRESS GIVEN AND EVEN THE OTHER OCCUPANTS OF SUCH ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 21 ADDRESSES ARE NOT AWARE OF THE WHEREABOUTS OF SOME COMPANIES. FOR READY REFERENCE, THE RELEVANT EXTRACT /FINDINGS OF THE INSPECTORS REPORT IN RESPECT OF SOME OF THESE COMPANIES ARE AS UNDER: M/S GOODHOPE VYAPAAR PVT. LTD.: PREMISE FOUND CLOSED. NO NAME PLATE FOUND AT PREMISE. NEIGHBORS HAVE NO IDEA ABOUT BUSINESS/NATURE OF THE SHOP, NAME OR OWNER. M/S JAGANNATH COMMODITIES PVT. LTD.: INSUFFICIENT ADDRESS TO LOCATE THE PREMISE, NO ROOM NO. OR BLOCK OR FLOOR PROVIDED. APPORX. 600 SHOPS RUNNING FROM 71, CANNING STREET, KOLKATA. M/S KOMAL TIE UP PVT. LTD.: PREMISE FOUND CLOSED. NO NAME PLATE FOUND AT PREMISE. PERSON AVAILABLE AT THE PREMISE HAS NEVER HEARD THE NAME OF COMPANY. HE HAS BEEN WORKING FROM THE ADDRESS FOR LAST 2 YEARS. M/S OMKARA AGENCIES PVT. LTD.: PREMISE FOUND CLOSED. NO NAME PLATE FOUND AT PREMISE. PERSON AVAILABLE AT THE PREMISE HAS NEVER HEARD THE NAME OF COMPANY. HE HAS BEEN WORKING FROM THE ADDRESS FOR LAST 2 YEARS. M/S SKIPPER VINMAY PVT. LTD.: R.NO. 4 IS NOT AVAILABLE AT THE GIVENADDRESS. ROOM NOS. AT IHE FLOOR OF THE GIVEN ADDRESS ARE LIKE 4A, 4B, 4C', 4D, 4E.... THE NAME PLATE OF COMPANY HAS NOT BEEN FOUND AT THE PREMISE. *BANERJEE SHIPPING AGENCY RUNNING FROM RNO.4A OF THE ADDRESS. THE PERSON AVAILABLE AT PREMISE NEVER HEAD THE NAME OF M/S SKIPPER VINMAY LIMITED. FURTHER, THE INSPECTOR IN HIS REPORT HAS STATED THAT EITHER THE ADDRESSES ARE NOT AVAILABLE OR IF THE SAME WAS AVAILABLE THEN NO TRACES OF THE COMPANIES HAVE BEEN FOUND FOR MOST OF THE ENTITIES IN KOLKATA. A VERY STRIKING FEATURE ALSO COMES TO NOTICE THAT THOUGH THE THREE COMPANIES (I.E. AMANT AGENCIES PVT. LTD SKIPPER VINMAY PVT. LTD OASIS COMMOTRADE PVT LTD ) HAVE CONTRIBUTED HUGE SHARE CAPITAL OF RS. 13.17 CRS IN ONLY ONCE COMPANY OF THE ASSESSE E GROUP BUT STILL THEIR ADDRESS IS COMMON AND ON PHYSICAL ENQUIRIES CONDUCTED, THE WHEREABOUTS OF THESE COMPANIES ARE NOT FOUND. INSPECTORS REPORT HAVE BEEN DULY CONFRONTED TO BE ASSESSEE VIDE SHOW CAUSE NOTICE DATED 11.02.2015 AND THE RELEVANT EXTRACT OF THE SHOW CAUSE NOTICE IS REPRODUCED BELOW: - 2. ON SCRUTINY OF THE COPY OF RETURN FILED AND REPLIES SUBMITTED ON VARIOUS DATES I HAVE NOTICED THAT: 1. THERE IS PENDING SHARE APPLICATION MONEY. 2. INCREASE IN THE SECURITY PREMIUM 3. THE COMPANY HAS RA ISED UNSECURED LOANS IN THIS CONNECTION IT IS HEREBY REQUESTED THAT THE ABOVE MAY PLEASE BE JUSTIFIED BY ADDUCING NECESSARY EVIDENCES AND EXPLANATION. IT WOULD NOT BE OUT OF PLACED TO MENTION THAT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 22 SHARE APPLICATION MONEY AND SHARE PREMIUM RECEIVED FROM KOL KATA BASED COMPANIES ARE NOT GENUINE IN VIEW OF THE REPORT SUBMITTED BY THE INSPECTOR PLACED ON RECORD WHO HAS REPORTED THAT EITHER THE COMPANY WAS NOT FOUND ON THE ADDRESS GIVEN OR THE COMPANIES FROM WHOM RECEIPTS HAVE BEEN SHOWN ARE NOT DOING ANY BUSINES S BEING A PAPER COMPANY, THEREFORE, YOU ARE REQUIRED TO EXPLAIN WHY THE RECEIPTS SHOWN FROM THESE COMPANIES MAY NOT BE TREATED AS UNEXPLAINED INCOME OF THE COMPANY AND ADDITIONS IN RESPECTIVE YEARS MAY NOT BE MADE WHILE COMPUTING THE INCOME OF THE COMPANY FOR EACH YEAR IN ADDITION TO THE OTHER DISALLOWANCE WARRANTED AGAINST VARIOUS HEAD DETAILED ABOVE BEING INAPPROPRIATE/ EXCESSIVE/ INADMISSIBLE. FROM THE PERUSAL OF RECORDS, IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED ANY REASONS IN RESPECT OF THE DEPAR TMENTS CONTENTION THAT THE COMPANIES WHICH HAVE PROVIDED HUGE LOANS/SHARE CAPITAL HAVE NOT BEEN FOUND AT THE. ADDRESSES MENTIONED. FURTHER, THE ASSESSEE WAS AGAIN ASKED VIDE SHOW CAUSE NOTICE DATED 23.11.2015 FOR THE BLOCK PERIOD (COVERING THE CURRENT YEA R ALSO) AND THE RELEVANT EXTRACT OF THE SHOW CAUSE NOTICE IS REPRODUCED AS UNDER: 'IT IS ALSO NOTICED, FROM THE EXTRACT OF HARD DISK OF A - L, SEIZED FROM BS - 14, THAT THERE WERE DETAILS OF UNSECURED LOANS, ICD GIVEN AS ON 17.06.2010 AND DETAILS OF SHARE APPL ICATION MONEY (EMPHASIS SUPPLIED). THE RELEVANT DETAILS OF THE SAME ARE AS UNDER: SI NO. PARTICULAR AMOUNT (RS.) 1 GOOD HOPE VYAPAAR PVT. LTD. 16,91,00,000.00 2 JAGNATH COMMODITIES 15,20,00,000.00 3 KOMAL TIE UP PVT. LTD 2,40,00,000.00 4 OMKARA AGENCIES PVT. LTD. 3,80,00,000.00 5 SINDHU HOLDINGS LTD. (UL) 4,60,00,000.00 6 SINDHU TRADE LINKS LTD. (UL) 9,00,00,000.00 TOTAL 51,91,00,000.00 SI. NO. PARTICULAR AMOUNT (RS.) 1 BHANDARI CONSULTANCY 8B FINANCE LTD. (UL) 2,00,00,000.00 2 HARI BHOOMI COMMUNICATION PVT. LTD. 2,50,00,000.00 SI. NO. PARTICULAR AMOUNT (RS.) 1 SINDHU TRADE LINKS LTD. 3,00,00,000.00 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 23 THE ASSESSEE COMPANY WAS SPECIFICALLY REQUESTED TO SUBMIT THE INFORMATION OF SEIZED DOCUMENTS FROM TIME TO TIME, IT IS STATED THAT NO PAPER WAS FOUND/SEIZED. HOWEVER, ON GOING THROUGH THE SEIZED MATERIAL IN THE FORM OF HARD DISK AND LOOSE PAPERS ETC. CERTAIN PAPERS WERE FOUND. FURTHER, IT HAS BEEN OBSERVED THAT THE ASSESSEE HAS TAKEN* UNSECURED LOANS FROM THE FOLLOWING ENTITIES IN AY 2010 - 11. THE DETAILS OF THE SAME ARE AS UNDER: - SI. NO. PARTICULAR AMOUNT (RS.) 1 GOOD HOPE VYAPAAR PVT. LTD. 16,91,00,000.00 2 JAGNATH COMMODITIES 2,40,00,000.00 3 KOMAL TIE UP PVT. LTD 3,80,00,000.00 4 OMKARA AGENCIES PVT. LTD. 4,60,00,000.00 TOTAL RS.27,71,00,000/ - FROM THE PERUSAL OF RECORDS, IT IS SEEN THAT ALL THESE COMPANIES ARE KOLKATA BASED COMPANIES AND FOUND PAPER SHELL COMPANIES. IN RESPECT OF THESE COMPANIES, THE INSPECTOR OF THIS OFFICE WAS CONDUCTED INQUIRES/INVESTIGATION IN RESPECT OF ASSESSMENTS MADE OF GROUP COMPANIES EARLIER AND THE ADDRESS GIVEN WERE NOT FOUND CORRECT. THE INVESTIGATION WING ALSO CONDUCTED ENQUIRES/ INVESTIGATION IN RESPECT OF THESE COMPANIES AND IT HAS GIVEN ADVERSE FINDING IN RESPECT OF THESE COMPANIES/IDENTITIE S. THE ABOVE MENTIONED COMPANIES INTRODUCED HUGE SHARE CAPITAL AND SHARE PREMIUM IN THE GROUP COMPANIES OF ACB NAMELY M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. AND M/S SINDHU HOLDINGS LTD. ETC. FURTHER, FROM THE PERUSAL OF DOCUMENTS, IT IS AGAIN SEEN THAT THE IDENTITY, CREDITWORTHINESS IS DOUBTFUL AS HAS ALREADY HELD BY MY PREDECESSOR IN HIS ASSESSMENT ORDERS IN THE CASE OF M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. AND M/S SINDHU HOLDINGS LTD FOR AY 2009 - 10 & AY 2010 - 11 AND CONCLUDED THAT GENUINENESS OF THE TRANSACTION IN RESPECT OF THE ABOVE MENTIONED COMPANIES WERE NOT PROVED. THUS, IT IS ONCE AGAIN REQUESTED TO EXPLAIN THE SAME, OTHERWISE ADVERSE VIEW WILL BE TAKEN. THE ASSESSEE VIDE ITS REPLY DATED 26.11.2015 HAS FURNISHED THE FOLLOWING REPLY: THE ASSE SSEE HAS ALREADY FURNISHED YEAR WISE COPIES OF ACCOUNTS OF ALL PARTIES INCLUDING THESE SIX PARTIES FROM WHOM THESE UNSECURED LOANS WERE RECEIVED DURING THE BLOCK PERIOD. ALL THESE TRANSACTIONAL PARTIES ARE DULY APPEARING IN ASSESSES BOOKS OF ACCOUNTS. AS P ER THE ASSESSEE'S BOOKS OF ACCOUNTS ON 17.06.2010, THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 24 FOLLOWING BALANCES ARE APPEARING REGARDING THESE SIX PARTIES. PARTY BALANCE AS PER BOOKS AS ON 17.06.2010 GOODHOPE VYAPAAR PVT LTD 16 R 91,00,000/ - JAGGANNATH COMMODITIES PVT LTD 15,20,00,000/ - KOMAL TIE UP PVT LTD 2,40,00,000/ - OMKARA AGENCIES PVT LTD 3,80,00,000/ - SINDHU HOLDINGS LTD 4,71,35,856/ - SINDHU TRADE LINKS LTD 9,92,82,021/ - IN RESPECT OF ABOVE PARTIES, THE ASSESSEE HAS FURNISHED THE FOLLOWING PARTICULARS: A. NAME, ADDRESS & IDENTITY OF THE PARTY B \ PAN DETAILS C. COPY OFLTR D. COPY OF BANK STATEMENT E. CONFIRMATION IT WILL BE APPARENT FROM ABOVE, THAT, THE ABOVE REFERRED TRANSACTIONS ARE NOT UNACCOUNTED TRANSACTIONS AND ENTIRE EVIDENCE AS REQUIRED U/S 69 OF THE ACT HAS BEEN FURNISHED . THE ASSESSEE HAS THEREFORE, DULY DISCHARGED HIS BURDEN OF PROOF CAST UPON HIM UNDER THE ACT. YOUR GOODSELF HAS MENTIONED AMOUNT THE UNSECURED LOAN TAKEN BY THE ASSESSEE FROM THE FOLLOWING ENTITIES IN THE AY 2010 - 11 PARTY BALANCE AS PER QUESTIONNAIRE BALA NCE AS PER BOOKS ON 31.03.2010 GOODHOPE VYAPAAR PVT LTD 16,91,00,000/ - 16,91,00,000/ - JAGGANNATH COMMODITIES PVT LTD 2,40,00,000/ - 15,20,00,000/ - KOMAL TIE UP PVT LTD 3,80,00,000/ - 2,40,00,000/ - OMKARA AGENCIES PVT LTD 4,60,00,000/ - 3,80,00,000/ - THE PARTICULARS OF COMPANIES FROM WHOM UNSECURED LOAN ARE PURPORTEDLY REFLECTED IS INCORRECT AS THE AMOUNTS REFLECTED AGAINST EACH COMPANY HAVE BEEN JUMBLED ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 25 YOU HAVE FURTHER MENTIONED THAT, ALL THESE COMPANIES ARE KOLKATA BASED COMPANIES AND YOU HAVE ALLEG ED THAT, THESE COMPANIES WERE FOUND TO BE PAPER SHELL COMPANIES. YOU HAVE ALSO MENTIONED ABOUT ALLEGED ENQUIRIES HAVING BEEN CONDUCTED BY THE INSPECTOR OF YOUR OFFICE IN RESPECT OF ASSESSMENT MADE IN GROUP COMPANIES NAMELY GARUDA IMAGING & DIAGNOSTICS PVT LTD AND SINDHU HOLDINGS LTD. YOU HAVE ALLEGED THAT THE IDENTITY/ CREDIT WORTHINESS HAS ALREADY BEEN HELD AS DOUBTFUL BY YOUR PREDECESSOR IN HIS ASSESSMENT ORDER IN THE CASE OF M/S GARUDA IMAGING & DIAGNOSTICS PVT LTD AND SINDHU HOLDINGS LTD, AND IT HAS BEE N CONCLUDED THAT GENUINENESS IN RESPECT OF ABOVE MENTIONED COMPANIES WERE NOT PROVED. IN THIS CONNECTION, WE WISH TO DRAW YOUR KIND ATTENTION BY PRODUCING EXTRACT OF RELEVANT SUBMISSIONS AS 'ANNEXURE: - 16'. FURTHER, THE RELEVANT DOCUMENTS FILED IN THE CASE OF ABOVE REFERRED GROUP COMPANIES ARE AS UNDER A. NAME, ADDRESS & IDENTITY OF THE PARTY B. PAN DETAILS C. COPY OF TTR D. COPY OF BANK STATEMENT E. CONFIRMATION IN VIEW OF THE FACT THAT, THE ASSESSEE HAD SUBMITTED THE ABOVE MENTIONED DOCUMENTS & IN VIE W OF EXPLANATIONS OFFERED WITH RESPONSE TO THE ENQUIRIES CONDUCTED BY THE INSPECTOR OF THIS OFFICE & IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS OF THE APEX COURT AS WELL AS THE JURISDICTIONAL HIGH COURT, THE ASSESSEE HAS MORE THAN DISCHARGED HIS ONUS CAST UPO N HIM U/S 68 OF THE IT ACT, 1961. IT IS THEREFORE REQUESTED, THAT, NO ADVERSE VIEW SHOULD BE TAKEN W.R.T THESE COMPANIES. THUS, FROM THE ABOVE IT IS SEEN THAT THE ASSESSEE HAS NOT FURNISHED ANY CLEAR CUT REPLY IN RESPECT OF THE NON EXISTENCE OF THE ALLEGED LOGIN GIVERS/SHARE APPLICATION MONEY PROVIDERS AT THE ADDRESSES MENTIONED AND MERELY SUBMITTED THAT THEY ARE AGAIN FURNISHING THE VARIOUS DETAILS LIKE NAME, ADDRESS, PAN, COPY OF ITR ETC. OF THOSE PERSONS WHICH APPEARS TO BE AN AFTERTHOUGHT AND COV ER UP WHEN THE DEPARTMENT HAS FOUND OUT THE TRUTH ABOUT THE NON EXISTENCE OF SUCH COMPANIES FROM PHYSICAL ENQUIRIES. THUS, FROM THE ABOVE IT ABSOLUTELY CLEAR THAT THE ASSESSEE FAILED TO DISCHARGE BASIS ONUS/BURDEN OF PROVING THE IDENTITY OF THE PERSON FRO M WHOM HUGE UNSECURED LOAN/SHARE APPLICATION MONEY WAS RECEIVED. CREDITWORTHINESS, OF THE VARIOUS PERSONS FROM WHOM UNSECURED LOAN/SHARE APPLICATION MONEY RECEIVED THOUGH THE ASSESSEE FAILED TO PROVE THE IDENTITY, AS STATED - ABOVE, IT HAS FURNISHED SOME DO CUMENTS IN RESPECT OF THE COMPANIES FROM WHOM UNSECURED LOANS WERE RECEIVED. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 26 HOWEVER, A VERY STRIKING FEATURE WHICH COMES OUT FROM THE PERUSAL OF THE COPIES OF THE RETURN OF INCOME OF THESE COMPANIES IS THAT THOUGH THESE COMPANIES HAVE GIVEN HUGE AMOUNTS A S UNSECURED LOANS, BUT ALMOST ALL OF THEM HAVE SHOWN LESS INCOME IN THEIR ROI AS AGAINST THE LOAN ADVANCED/SHARE APPLICATION MONEY THE INCOME SHOWN BY VARIOUS COMPANIES / ENTITIES IN THEIR ROI FOR THE AY 2013 - 14 IS GIVEN BELOW: NAME OF THE LENDER PAN AY R ETURNED INCOME TIMELY MERCHANT PVT LTD. FLAT - 103, AGARPARA NORTH STATION ROAD, KOLKATA, WEST BENGAL - 109 AADCT9293L 2013 - 14 0 PRIMELINE SALES PVT LTD FLAT - 195, BLOCK - J, NEW ALIPORE, KOLKATA, WEST BENGAL - 53 AAGCP1342R 2013 - 14 0 DAISY REALTORS PVT. LTD. 9/12 LAI BAZAAR STREET, B - BLOCK KOLKATA AADCD6894K 2013 - 14 RETURN NOT SUBMITTED PRADHI DEALER 161/1, MG ROAD 1 ST , BURRA BAZAAR, KOLKATA AAGCP1423K 2013 - 14 2,22,300/ - THUS, FROM THE ABOVE, IT IS VERY DIFFICULT TO UNDERSTAND HOW THE COMPANIES WHICH HAVE VERY SMALL INCOME CAN GIVE HUGE AMOUNTS AS LOAN TO SOME OTHER PERSONS. ON PERUSAL OF THE REPLIES OF THE SHARE APPLICANTS/LOAN GIVERS, IT REVEALS THAT THEY WERE NOT FINANCIALLY SOUND TO INVEST SUCH HUGE AMOUNTS IN THE ASSESSEE COMPANY. THE BANK STATEMENT, W HEREVER AVAILABLE, SPEAKS THAT FOR ONE DEBIT ENTRY, THERE WAS CREDIT ENTRY OF MORE OR LESS IDENTICAL AMOUNT AND ALL THE TRANSACTIONS HAD UNDERGONE WITHIN THE SAME DAY OR WITHIN THE NEXT DAY. THE BALANCES REMAINING IN THE ACCOUNT ARE FOUND TO BE NOMINAL. ON PERUSAL OF THE COPIES OF ACCOUNTS OF THE SHARE APPLICANTS, IT HAS BEEN FOUND THAT HUGE AMOUNT WAS CLAIMED TO HAVE INVESTED IN THE UNQUOTED SHARES. IT IS THEREFORE, EVIDENT THAT THE SHARE APPLICANTS/LOAN GIVERS LACK CREDITWORTHINESS TO ADVANCE SUCH HUGE LO ANS WORTH SEVERAL CRORES. FURTHER, IT APPEARS THAT THE ASSESSEE DELIBERATELY AND WITH MALA FIDE INTENTION, DID NOT FURNISH THE BANK STATEMENT OF THE VARIOUS PERSONS FOR THE ENTIRE YEAR AND CONCEALED THE FACTS BECAUSE IT DID NOT WANT THE DEPARTMENT TO ASCERTAIN THE SOURCES FROM WHICH THE FUNDS HAVE BEEN RECEIVED BY THE VARIOUS LOAN GIVERS AND IT APPEARS THAT THE SOURCES OF THESE FUNDS ARE ASSESSEES UNDISCLOSED INCOME ONLY WHICH ARE ROUTED AS LOANS FROM VARIOUS COMPANIES / ENTITIES. GENUINENESS OF THE T RANSACTIONS: GENUINENESS OF THE TRANSACTION VIDE ITS REPLY DATED 26.11.2015, THE ASSESSEE HAS STATED THAT AS THEY HAVE SUBMITTED CONFIRMATIONS, BALANCE SHEET, I. T. ACKNOWLEDGEMENT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 27 AND BANK STATEMENT , THEY HAVE ESTABLISHED THE GENUINENESS OF THE TRANSACT IONS. HOWEVER, IT IS NOW WELL SETTLED LAW, THAT BY MERE FURNISHING OF CONFIRMATION OF THE A/CS OR THE BALANCE SHEET ETC., THE GENUINENESS OF THE TRANSACTIONS CANNOT BE ESTABLISHED. ALSO THE STAND OF THE ASSESSEE IS, THAT, THE UNSECURED LOANS RECEIVED BY TH E COMPANY SHOULD BE ACCEPTED BECAUSE THESE ARE RECEIVED BY CHEQUES AND THROUGH BANKING CHANNEL AND ALSO THE TDS HAS BEEN DEDUCTED ON THE SAME. BUT THEN MERE RECEIPT OF CERTAIN MONEY BY CHEQUE OR THROUGH BANKING CHANNELS CANNOT BE THE CONCLUSIVE FACTOR FOR DETERMINING THE GENUINENESS OF ANY TRANSACTIONS AND THE ONUS / BURDEN IS ON THE ASSESSEE TO FIRST PROVE THE IDENTITY AND THE CREDITWORTHINESS OF THE PERSONS FROM WHOM SUCH LOANS WERE RECEIVED. THUS, THE CONFIRMATION OF A/CS OR THE USE OF BANKING CHANNELS F OR ANY RECEIPT / PAYMENT CANNOT PROVIDE LEGITIMACY TO SUCH RECEIPT / PAYMENT UNLESS & UNTIL THE CREDITWORTHINESS OF THE PERSONS WHO LENDS THAT MONEY IS PROVED. THUS, THE PAYMENT / RECEIPT THOUGH BANKING CHANNELS CANNOT BE SEEN / LOOKED INTO IN ISOLATION AN D IT HAS TO BE EXAMINED IN CONTEXT WITH THE CREDITWORTHINESS OF THE PERSONS FROM WHOM SUCH MONEY WAS RECEIVED. THUS, THE ASSESSEES CONTENTION THAT PAYMENTS HAVE BEEN RECEIVED THROUGH BANKING CHANNELS IS REJECTED BECAUSE OF THE ABOVE FINDINGS. FURTHER, IT IS PERTINENT TO MENTION THAT THE INVESTIGATION WING HAS ALSO CONDUCTED ITS INVESTIGATION/ENQUIRIES INTO THE RECEIPT OF ALLEGED SHARE CAPITAL FROM THE KOLKATA BASED COMPANIES AND THEY HAVE FOUND THAT MOST OF THE KOLKATA BASED COMPANIES ARE INVOLVED IN GIVIN G UNSECURED LOAN/SHARE CAPITAL IN THE PRESENT CASE WERE ALSO INVOLVED IN GIVING/CONTRIBUTING HUGE SHARE CAPITAL TO OTHER COMPANIES OF THE GROUP OF THEASSESSEES GROUP AND ALSO TO OTHER ASSESSEES. ALSO THE INVESTIGATION WING FROM THEIR ENQUIRY GATHERED THAT THESE COMPANIES HAVE GOT MONEY FROM ANOTHER SET OF KOLKATA BASED COMPANIES WHOSE BUSINESS ACTIVITIES ARE SUSPICIOUS AND SEEMS TO BE ROUTED 'THROUGH ENTRY OPERATORS. FURTHER, IT IS ALSO NOT OUT OF PLACE TO MENTION THAT MY PREDECESSOR HAS COMPLETED THE ASSE SSMENT OF GARUDA IMAGING8S DIAGNOSTIC PVT. LTD I.E. ONE OF THE ASSESSEE GROUP COMPANY FOR AY 2010 - 11 WHERE THE FACTS OF THE CASE WERE ALMOST SAME I.E. GARUDA IMAGING& DIAGNOSTIC PVT. LTD HAD TAKEN SHARE APPLICATION MONEY OF RS. 10.74 CRS. FROM THE FOUR KOL KATA BASED COMPANIES, THE DETAILS OF THE SAME ARE UNDER: - . 1. M/S OMKARA AGENCY PVT. LTD. RS.5,97,00,000/ - 2. M/S KOMAL TIE - UP PVT. LTD. RS. 1,60,00,000/ - 3. M/S GOOD HOPE VYAPAR LTD. RS.2,80,00,000/ - 4. M/S JAGANNATH COMMODITIES PVT. LTD RS. 37.00.000/ - RS. 10,74,00,000/ - AFTER CONDUCTING EXHAUSTIVE AND EXTENSIVE ENQUIRIES, IT HAS BEEN HELD BY MY PREDECESSOR THAT ALL THESE FOUR COMPANIES ARE BASICALLY PAPERS SHELL COMPANIES WHICH ARE NOT DOING ANY BUSINESS AND AS THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION CONDUCTED BY THESE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 28 COMPANIES HAVE NOT BEEN PROVED, THE ENTIRE 'SHARE CAPITAL OF RS. 10.74 CRS. RECEIVED THROUGH THE ABOVE NOTED FOUR ENTITIES (AS ARE INVOLVED IN THE PRESENT CASE ALSO) HAVE BEEN TREATED AS UNEXPLAINED CASH CR EDIT AND THE ADDITION WAS MADE U/S 68 OF I.T. ACT, 1961. TO SUMMARIZE, I HAVE AGAIN GONE THROUGH THE CASE RECORDS, SUBMISSION OF THE ASSESSEE AND THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN RESPECT OF THE LOAN GIVERS/SHARE APPLICATION MONEY CONTRIBUTORS AND IT IS CONCLUDED THAT THE SAME HAS NOT BEEN FOUND SATISFACTORY IN VIEW OF THE ABOVE DISCUSSION AS WELL AS THE REASONS MENTIONED BELOW: 1. IN RESPECT OF KOLKATA BASED COMPANIES, THE INVESTIGATION DIRECTORATE CATEGORICALLY MENTIONED THAT THESE COMPANIES HAVE INVESTED IN THE ASSESSEES GROUP IN THE FORM OF SHARE CAPITAL, WHEREAS THE BUSINESS ACTIVITIES AND CREDITWORTHINESS OF THESE KOLKATA BASED COMPANIES ARE SUSPICIOUS. 2. DURING THE COURSE OF INVESTIGATION/ENQUIRY CONDUCTED BY THE INSPECTOR OF THIS OFFICE A T THE GIVEN ADDRESSES OF THESE COMPANIES IN THE CASE OF M/S GARUDA IMAGING & DIAGNOSTICS PVT. LTD. IT WAS FOUND THAT SUCH ADDRESSES OF THE SAID SHARE APPLICANT ENTITIES WERE NOT INEXISTENCE OR NOT OPERATIONAL AND NO SUCH BUSINESS ACTIVITY WAS CARRIED OUT I N THESE PREMISES. ON THAT BASIS OF ENQUIRY ADDITIONS WERE MADE IN THE GROUP COMPANIES OF THE ASSESSEE NAMELY M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. AND M/S SINDHU HOLDINGS LTD FOR AY 2009 - 10 & AY 2010 - 11. 3. ON A CLOSE EXAMINATION OF BANK STATEMENTS FI LED BY THE INVESTORS/LENDERS, IT IS OBSERVED THAT THERE WAS A HIGH VALUE TRANSACTIONS, I.E. A SUBSTANTIAL AMOUNT WERE DEPOSITED 'INTO BANK ACCOUNT THROUGH TRANSFER BEFORE THE SHARE APPLICATION MONEY WAS PAID TO THE ASSESSEE COMPANY. FROM THESE BANK STATEME NTS IT IS ALSO OBSERVED THAT THESE COMPANIES SUBSCRIBED SHARE APPLICATION MONEY TO M/S SHYAM INDUS POWER SOLUTIONS PVT. LTD. AND M/S GARUDA IMAGING & DIAGNOSTIC PVT. LTD. THEREFORE, THE MODUS OPERANDI IN BOTH CASES IS SIMILAR IN RESPECT OF SHARE APPLICATIO N MONEY. 4. THESE INVESTORS/LENDERS WERE ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES AND BANK ACCOUNTS FORMED ONLY FOR ROUTING THE ENTRIES THROUGH BANKING CHANNEL. IN THESE BANK ACCOUNTS IT APPEARS THAT NO OTHER BUSINESS TRANSACTIONS WERE M ADE EXCEPTED PROVIDING THESE ENTRIES. 5. THESE BANK ACCOUNTS CLEARLY INDICATE THAT NO BUSINESS ACTIVITIES / TRANSACTIONS WERE MADE IN THESE PAPER SHELL COMPANIES. MERELY ON THE BASIS OF FILING THE DETAILS OF PAN, CONFIRMATION LETTERS AND BANK STATEMENTS, IT DOESNT PROVE THE GENUINENESS OF THE TRANSACTION. 6. FROM THE BEGINNING THE ASSESSEE COMPANYS INTENTION IS NOT CLEAR AS IT TOOK LOAN AT THE INITIAL STAGE AND SUBSEQUENTLY CONVERTED THIS MONEY INTO SHARE APPLICATION MONEY THROUGH JOURNAL ENTRIES WHICH CLEARLY INDICATES THAT THESE TRANSACTIONS ARE NOT GENUINE. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 29 7. THE ASSESSEES COMPANY ALSO FAILED TO SUBMIT THE DOCUMENTARY EVIDENCES IN RESPECT OF SHARE ALLOTMENT MADE TO THESE COMPANIES IN ITS REPLY FILED ON 09.03.2015 (I.E. ANNEXURE IN REPLY TO POINT N O. 20), WHICH CLEARLY INDICATES THESE TRANSACTIONS ARE SHAM AND WERE MADE ONLY FOR THE ROUTING THE ACCOMMODATION ENTRIES OF INVESTORS/LENDERS. THUS, THE ASSESSEE COMPANY FAILED TO DISCHARGE ITS BASIC ONUS/BURDEN CAST U/S 68 IN RESPECT OF PROVING IDENTITY, CREDITWORTHINESS OF THE LOAN GIVER/SHARE APPLICATION MONEY CONTRIBUTOR AND GENUINENESS OF THE. TRANSACTION. THEREFORE, THESE COMPANIES ARE PAPERS SHELL COMPANIES AND CREATED ONLY FOR PROVIDING ACCOMMODATION ENTRIES TO THE INVESTORS/LENDERS. FURTHER, THE P RESENT CASE IS COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. [1995] 82 TAXMAN 31 (CAL), WHEREIN, THE HONTFIE HIGH COURT HAS HELD AS UNDER : 6. IT IS FOR THE ASSESSEE TO PROVE THE IDENTITY O F THE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. IN OUR VIEW, ON THE FACTS OF THIS CASE, THE TRIBUNAL DID NOT TAKE INTO ACCOUNT ALL THESE INGREDIENTS WHICH HAVE TO BE SATISFIED BY THE ASSESSEE. MERE FURNISHING OF THE PARTICU LARS IS NOT ENOUGH. THE ENQUIRY OF THE ITO REVEALED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FILE AND, ACCORDINGLY, THE FIRST INGREDIENT AS TO THE IDENTITY OF THE CREDITORS HAD NOT BEEN ESTABLISHED. IF THE IDENTITY OF THE CREDITORS H AD NOT BEEN ESTABLISHED, CONSEQUENTLY . THE QUESTION OF ESTABLISHMENT OF THE GENUINENESS OF THE TRANSACTIONS OR THE CREDITWORTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. THE TRIBUNAL DID NOT APPLY ITS MIND TO THE FACTS OF THIS PARTICULAR CASE AND PROCEEDED ON THE FOOTING THAT SINCE THE TRANSACTIONS WERE THROUGH THE BANK ACCOUNT, ACCORDINGLY, IT IS TO BE PRESUMED THAT THE TRANSACTIONS WERE GENUINE. IT WAS NOT FOR THE ITO TO FIND OUT BY MAKING INVESTIGATION FROM THE BANK ACCOUNTS UNLESS THE ASSESSEE PROVED THE IDENTITY OF THE CREDITORS AND THEIR CREDITWORTHINESS. MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT MAKE A NON - GENUINE TRANSACTION GENUINE. IN THAT VIEW OF THE MATTER, THE QUESTION BEFORE US IS ANSWERED IN THE NEGATIVE AND IN FAVOUR OF THE REVENUE. ALSO THE SIMILAR VIEW WAS TAKEN BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. KORLEY TRADING COMPANY LTD. (1998) 232 ITR 820, WHEREIN, THE HIGH COURT HELD THAT THE CREDITORS SHOULD BE IDENTIFIED, THERE SHOULD BE CREDITWO RTHINESS AND GENUINENESS OF TRANSACTIONS. THE FURNISHING OF INCOME TAX FILE NUMBER IS NOT ENOUGH TO PROVE THE GENUINENESS OF CASH CREDIT. ALSO THE HONBLE CALCUTTA HIGH COURT IN SHANKAR INDUSTRIES VS. CIT [1978] 114 ITR 689 (CAL), WHILE DECIDING ON THE SIM ILAR ISSUE HAS HELD AS UNDER : WE WOULD LIKE TO OBSERVE THAT THE LAW ON THIS POINT IS NOW WELL SETTLED. IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 30 FACIE THE TRANSACTION WHICH RESULTS IN A CASH CREDIT IN HIS BOOKS OF ACCOUNT. SUCH PROOF INCLUDES PROOF OF THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE MONEY AND, LASTLY, THE GENUINENESS OF THE TRANSACTION. THESE THINGS MUST BE PROVED PRIMA FACIE BY THE ASSESSEE AND ONLY AFTER THE ASSESSEE HAS ADDUCED EI/IDENCE TO ESTABLISH PRIM A FACIE THE AFORESAID, THE ONUS SHIFTS ON THE DEPARTMENT. IN THE INSTANT CASE, IT SEEMS THAT THE ASSESSEE ESTABLISHED ONLY THE IDENTITY OF THE CREDITOR AND NOTHING MORE. SIMILAR VIEW WAS ALSO EXPRESSED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF UNIT ED COMMERCIAL & INDUSTRIAL COMPANY PVT. LTD. [1991] 56 TAXMAN 304 (CAL). THE RELEVANT EXTRACT OF THE HON'BLE HIGH COURT DECISION IS REPRODUCED BELOW : 6. IN OUR VIEW, THE ASSESSEE FAILED TO DISCHARGE THE PRIMARY ONUS WHICH LAY ON IT TO PROVE THE NATURE AN D SOURCE OF THE CREDITS. IT WAS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FADE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THESE THINGS ARE PROVED BY THE ASSE SSEE PRIMA FACIE AND ONLY AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FACTS, THE ONUS SHIFTS ON TO THE DEPARTMENT. IT IS NOT ENOUGH TO ESTABLISH THE IDENTITY OF THE CREDITORS. MERE PRODUCTION OF THE CONFIRMATION LETTERS BEFORE THE IT O WOULD NOT BY ITSELF PROVE THAT THE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN CREDITORS OR THAT THEY HAVE CREDITWORTHINESS. THE ASSESSEE TRIED TO EXPLAIN THAT THE RECEIPTS AND PAYMENTS OF THE ALLEGED HUNDI LOANS HAVE BEEN MADE BY CHEQUES. BUT, IN THE ABSEN CE OF THE BOOKS OF ACCOUNT AND OTHER EVIDENCE OF THE PARTIES CONCERNED, IT WAS NOT POSSIBLE TO VERIFY THE REAL NATURE OF THE ALLEGED TRANSACTIONS EVEN THOUGH THEY WERE MADE BY CHEQUES. THE TRIBUNAL MISDIRECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE G ENUINE SIMPLY BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQUES. THE ITO HAS FOUND THAT THE PARTIES ACCOMMODATED BY HANDING OVER THE CASH TO THE HUNDI BANKERS AND ACCOUNT PAYEE CHEQUES WERE ISSUED AGAINST THE SAME BY THEM. ON THE DUE DATE FOR THE DISCH ARGE OF THE HUNDIS, THE PARTY ISSUED ACCOUNT PAYEE CHEQUES. THESE WERE CREDITED IN THE BANK ACCOUNT AND AFTER THE PROCEEDS WERE CLEARED, CASH WAS WITHDRAWN FROM THE BANK AND PAID TO THE PARTIES. THE TRANSACTIONS MADE BY CHEQUES, THEREFORE, LOST THEIR USUAL IMPORTANCE AND THE GENUINENESS OF THE LOANS CANNOT BE ACCEPTED MERELY BECAUSE CHEQUES WERE EXCHANGED BETWEEN THE PARTIES. THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE ALLEGED LENDERS AND THAT THOSE LENDERS ACTUALLY HAD ANY FUNDS OF THEIR O WN OUT OF WHICH LOANSCOULD HAVE BEEN ADVANCED TO THE ASSESSEE. IF THE ALLEGED LENDERS WERE GENUINE HUNDI BANKERS, THEY WOULD NOT HAVE CLOSED DOWN THEIR OFFICE OR WOULD NOT HAVE REFUSED TO PRODUCE THEIR COMPLETE BOOKS OF ACCOUNT FOR SCRUTINY AND VERIFICATI ON. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMITTED THAT LOANS OBTAINED FROM THESE BANKERS AGAINST HUNDIS ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 31 WERE NOT GENUINE AND THAT SUCH HUNDI LOANS REALLY REPRESENTED THEIR OWN CONCEALED INCOME. FURTHER, THE HONBLE SUPREME COURT IN THE CASES OF SUMATI DAYA L VS. CIT AND CIT VS. P. MOHANKALA HAS ALSO HELD THAT U/S.68 OF THE I. T. ACT, 1961, IF THE ASSESSEE FAILS TO EXPLAIN THE NATURE AND SOURCE OF THE AMOUNT CREDITED IN ITS BOOKS, THEN THE RECEIPT CAN BE HELD IN THE NATURE OF INCOME OF THE ASSESSEE. THE RELEV ANT EXTRACTS OF THE HONBLE SUPREME COURTS DECISION ARE FURNISHED BELOW : ' I) COMMISSIONER OF INCOME - TAX VS. P. MOHANAKALA [2007] 161 TAXMAN 169 (SC) : 19. LT IS TRUE THAT EVEN AFTER REJECTING THE EXPLANATION GIVEN BY THE ASSESSEES IF FOUND UNACCEPTABLE , THE CRUCIAL ASPECT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT SHOULD BE INFERRED THE SUMS CREDITED IN THE BOOKS OF THE ASSESSEES CONSTITUTED INCOME OF THE PREVIOUS YEAR MUST RECEIVE THE CONSIDERATION OF THE AUTHORITIES PROVIDED THE ASSESSEES R EBUT THE EVIDENCE AND THE INFERENCE DRAWN TO REJECT THE EXPLANATION OFFERED AS UNSATISFACTORY. WE ARE REQUIRED TO NOTICE THAT SECTION 68 OF THE ACT ITSELF PROMDES, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEES FOR ANY PREVIOUS YEAR THE SAM E MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEES OF THE PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEES ABOUT THE NATURE AND SOURCE OF SUCH SUMS FOUND CREDITED IN THE BOOKS OF THE ASSESSEES IS IN THE OPINION OF THE ASSESSING OFFICER NOT SATISFACTORY. SUCH OPINION FOUND ITSELF CONSTITUTES A PRIMA FACIE EVIDENCE AGAINST THE ASSESSEES, VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEES BY HOLDING THAT IT WAS A RECEI PT OF AN INCOME NATURE. IN THE CASE IN HAND THE AUTHORITIES CONCURRENTLY FOUND THE EXPLANATION OFFERED BY THE ASSESSEES UNACCEPTABLE. II) SUMATI DAYAL VS. CIT [1995] 80 TAXMAN 89 (SC) BUT, IN VIEW OF SECTION 68 OF THE ACT, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE. VIZ.. THE RECEINT OF MONEU. AND IF HE FAILS TO REBUT, THE SAID EVIDENCE BEING UNREBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME N ATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE THE DEPARTMENT CANNOT, HOWEVER, ACT UNREASONABLY - SREELEKHA BANERJEE'S CASE (SUPRA) AT P. 120. (PARA - 4) BESIDES THE ABOVE JUDGMENTS, RELIANCE IS ALSO PLACED ON THE FOLLOWING LATEST DECISIONS OF THE HON'BLE HIGH COURTS / HONBLE ITAT IN WHICH THE HONBLE COURTS HAVE DECIDED IN FAVOUR OF THE REVENUE ON SIMILAR FACTS : ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 32 A. HIGH COURT OF GUJARAT IN THE CASE OF MANOJ KUMAR SARAF VS. ITO, OSD - II [2014] 45 TAXMANN.COM 63 (GUJARAT), B. HIGH COURT OF GUJARAT IN THE CASE OF UMESH KRISHNANI VS. ITO [2013] 35 TAXMANN.COM 598 (GUJARAT), C. HIGH COURT OF DELHI IN THE CASE OF CIT - VI VS. T. S. KISHAN & CO. LTD. [2014] 50 TAXMANN.COM 368 (DELHI), D. HIGH COURT OF DELHI IN THE CASE OF CIT VS. EMPIRE BUILTECH (P.) LT D. [2014] 366 ITR 110 (DELHI), E. HIGH COURT OF DELHI IN THE CASE OF CIT VS. YOUTH CONSTRUCTION (P.) LTD. [2014] 44 TAXMANN.COM 364 (DELHI), F. ITAT AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS. ITO, WARD - 1, ALIGARH [2012] 25 TAXMANN.COM 220 (AGRA), THUS, THE ABOVE DISCUSSIONS CONCLUSIVELY PROVED THAT THE' ASSESSEE HAS FAILED TO DISCHARGE THE BASIC ONUS / BURDEN CAST UPON IT BY THE PROVISIONS OF SEC.68 OF THE I. T. ACT TO PROVE THE IDENTITY AND CAPACITY OF THE CREDITORS AND ALSO THE GENUINENESS OF THE TRANSACTIONS AND ACCORDINGLY, THE AMOUNT OF RS.229200000/ - (I.E. THE SUM CREDITED IN ITS BOOKS I.E. RS. 97500000/ - AS UNSECURED LOANS AND AMOUNT OF RS. 131700000/ - AS SHARE APPLICATION MONEY), IS TREATED AS INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE IN COME TAX ACT, 1961, 1961. ADDITION: RS.229200000/ - ) THE AMOUNT ADDED AT RS.2292000/ - (RS. 97500000/ - )+ RS. 131700000/ - ) AMOUNTS TO CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER SECTION 271(L)(C) AND HENCE PENALTY PROCEEDINGS U/S 271(L)(C) ARE BEING INITIATED SEPARATELY. INTEREST PAYMENTS ON FRESH UNSECURED LOANS OF RS. 1005974/ - 7. FROM THE PERUSAL OF THE ASSESSEES DETAILS OF UNSECURED LOANS, IT IS SEEN THAT THE ASSESSEE HAS PAID THE FOLLOWING INTEREST (FROM THE CONFIRMATION S FILED) ON FRESH UNSECURED LOANS OF RS.48,90,986/ - RAISED DURING THE FINANCIAL YEAR 2012 - 13 (AS DISCUSSED IN DETAIL IN ISSUE NO.6). THE DETAILS OF INTEREST PAYMENTS ARE GIVEN BELOW : SR. NO. NAME OF THE PARTY AMOUNT RECEIVED AS UNSECURED LOAN INTEREST I WELLBUILD MARKETINGS PVT. LTD. 3,00,00,000/ - ~ 2 CONCRETE CREDIT LTD. 55,00,000/ - 119947 3 EAGLE DEAL TRADE PVT. LTD. 40,00,000/ - 90208 . 4 JAGDHATRI COMMODITIES PVT. LTD. 1,75,00,000/ - - 5 KAILASH PATI VINCOM PVT. LTD. 70,00,000/ - 154788 6 OSCAR RETAILERS LTD. 75,00,000/ - 168125 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 33 7 VIDKAN SALES AGENCIES 75,00,000/ - 163110 8 WINNER COMMOSALES PUT. LTD 60,00,000/ - 133594 9 JUBILEE VINCOM PVT. LTD. 75,00,000/ - 167880 10 KHETAN TRACON PVT. LTD. 50,00,000/ - 8322 9,75,00,000 1005974 FURTHER, AS THE ABOVE INTEREST PAYMENTS ARE BOOKED / PAID ON ACCOUNT OF UNSECURED LOANS OF RS. 10,05,974/ - , RAISED DURING THE FY 2011 - 12 AND AS THESE LOANS HAVE BEEN PROVED BOGUS BEYOND DOUBT, THE ASSESSEES UNDISCLOSED INCOME U/S.68 OF THE I. T. ACT, 1961, BECAUSE OF THE ASSESSEES FAILURE TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE PAYERS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, AS THE LOANS HAVE BEEN PROVED BOGUS, THE INTEREST PAYMENTS OF RS. 10,05,974/ - ON SUCH LOANS HAS ALSO TO BE TREATED AS BOGUS EXPENDITURE BOOKED BY THE ASSESSEE IN ITS P & L A/C AND DISALLOWED. , (ADDITION: RS. 10,05,974/ - ) THUS, IN THE LIGHT OF THE ABOVE DISCUSSIONS ON THE EARLIER PAGES, REGARDING ISSUES NO. 7, PENALTY PROCEEDINGS U/S 271 (1) (C) OF THE I T ACT, 1961 I S INITIATED SEPARATELY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL AS CONCEALMENT OF INCOME. ISSUED PENALTY NOTICE U/S 274 / 271 (1) (C) OF THE I T ACT, 1961. UNEXPLAINED CASH CREDIT FROM NON KOLKATA BASED COMPANIES 9. APART FROM THE KOLKATA BASED COMPANIES, IT IS FURTHER NOTICED THAT THE ASSESSEE COMPANY HAS RAISED UNSECURED LOANS FROM SEVERAL OTHER COMPANIES WHOSE DETAILS ARE GIVEN BELOW: SI NO. PARTY PAN RETURNED INCOME AMOUNT OF LOAN/ICD TAKEN 1 ARYA MARKETING PVT. LTD. AAICA7684A 11440 40,000,000.00 2 MANISHA TRADES AAUFM0068Q 0 2000000.00 3 RAGHAV POWER & STEEL (P) LTD. AACCR9394K 0 5,000,000.00 4 RAGHAV TRADE AANFR6166K 0 2,000,000.00 5 YUGANTAR POWER & STEEL PVT. LTD. AAACY2290H 0 11,000,000.00 6 SHIV COAL BENEFICIATION & POWER PVT. LTD. AAPCS7010N 0 3,50,00,000.0 0 7 SPACE BUILDWELL (I) PTD. LTD. AAKCS9083Q 2,00,600 / - 3,00,00,000.0 0 8 ADITYA TRADECOM AABCA4013F 0 3,00,00,000.0 155,000,000.0 0 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 34 THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS IN RESPECT OF UNSECURED LOANS. HOWEVER, IT IS SEEN THAT THE ASSESSEE HAVE NOT FURNISHED COMPLETE DETAILS MAINLY BANK STATEMENT OF THE CREDITORS AND ALSO THE SOURCES OF THE FUNDS WHICH HAVE BEEN GIVEN TO THE ASSESSEE AS UNSECURED LOANS. HOWEVER, CONFIRMATION LETTERS AND RETURN OF INCOME HAVE BEEN SUBMITTED IN MOST OF THE CASES AND BANK STATEMENT FOR A RELEVANT PERIOD HAS ALSO BEEN PROVIDED TO THE DEPARTMENT FROM THE PERUSAL OF THE RETURN OF INCOME FILED BY THE VARIOUS PERSONS, IT IS SEEN THAT MOST OF THE ENTITIES WHICH HAVE GIVEN L OANS TO THE ASSESSEE COMPANY HAVE SHOWN VERY LESS INCOME AND ITS RAISES QUESTION THAT HOW CAN A PERSONS/ENTITY WITH NOMINAL INCOME CAN ADVANCE LOANS OF HUGE MAGNITUDE TO SOME OTHER PERSON. FURTHER, FROM THE PERUSAL OF THE BANK STATEMENTS (WHEREVER SUBMITTE D) IT IS SEEN THAT WHENEVER THE AMOUNT IS ADVANCED TO THE ASSESSEE COMPANY IDENTICAL AMOUNTS HAVE BEEN DEPOSITED IN THEIR ACCOUNTS EITHER O N THE SAME DAY OR ONE DAY PRIOR TO TRANSACTIONS WHICH IN A WAY CLEARLY POINTS OUT TOWARDS CIRCULATION OF SUCH MONEY THROUGH THE INVESTORS / CREDITORS ACCOUNT BECAUSE INVARIABLY VERY SMALL ACCOUNTS ARE SHOWN AS CLOSING BALANCE N THE ACCOUNTS. THESE CIRCUITOUS TRANSACTIONS ARE NOTHING BUT PROVIDING OF ENTRIES TO THE ASSESSEE COMPANY IN THE FORM OF UNSECURED LOANS. ALL THE SE BANK STATEMENTS AND RETURN OF INCOME OF THE ENTITIES INVOLVING CIRCULATION OF MONEY RAISED HUGE DOUBTS ABOUT THE CREDITWORTHINESS OF THESE ENTITIES AND CERTAINLY THESE COMPANIES DO NOT APPEAR TO HAVE FINANCIAL BACKING /RESOURCES TO ADVANCE HUGE LOAN TO THE ASSESSEE COMPANY. AS THIS ISSUE, HAS BEEN DISCUSSED IN DETAIL IN THE ABOVE NOTED PARAGRAPHS WHEN THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION OF KOLKATA BASED COMPANIES WAS DISCUSSED, ACCORDINGLY IN ORDER TO AVOID REPETITION AND FOR THE SAKE OF BREVITY, THE SAME ARE NOT DISCUSSED AGAIN. THUS, THE ABOVE DISCUSSIONS CONCLUSIVELY PROVE THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE BASIC ONUS / BURDEN CAST UPON IT BY THE PROVISIONS OF SEC.68 OF THE I. T. ACT TO PROVE THE IDENTITY AND CAPACITY OF THE CREDITORS AND ALSO THE GENUINENESS OF THE TRANSACTIONS AND ACCORDINGLY, THE AMOUNT OF RS. 15,50,00,000/ - , IS TREATED AS INCOME FROM UNDISCLOSED SOURCES U/S.68 OF THE I. T. ACT, 1961. (ADDITION: RS. 15,50,00,000/ - ) THE AMOUNT ADDED AT RS. 15,50,00,000/ - AMOUNTS TO CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME AS PER SECTION 271(L)(C) AND HENCE PENALTY PROCEEDINGS U/S 271(L)(C) ARE BEING INITIATED SEPARATELY. INTEREST PAYMENTS ON FRESH UNSECURED LOANS OF RS.7.22.730/ - (NON.KOLKATA BA SED COMPANY) : 10. FROM THE PERUSAL OF THE ASSESSEES DETAILS OF UNSECURED LOANS, IT IS SEEN THAT THE ASSESSEE HAS PAID THE FOLLOWING INTEREST ON FRESH UNSECURED LOANS OF RS.7,22,730/ - RAISED DURING THE FINANCIAL YEAR 2011 - 12 (AS DISCUSSED IN DETAIL IN ISS UE NO,9). THE DETAILS OF INTEREST PAYMENTS ARE GIVEN BELOW : ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 35 SI. NO. NAME OF THE PARTY AMOUNT RECEIVED AS UNSECURED LOAN INTEREST 1 SPACE BUILDWELL (I) PTD. LTD. 3,00,00,000.00 14,535/ - . 2 ADITYA TRADECOM 3,00,00,000.00 7,08,195/ - 7,22,730/ - FURTHER, AS THE ABOVE INTEREST PAYMENTS ARE BOOKED / PAID - ON ACCOUNT OF UNSECURED LOANS OF RS.7,22,730/ - , RAISED DURING THE FY 2011 - 12 AND AS THESE LOANS HAVE BEEN PROVED BOGUS BEYOND DOUBT, THE ASSESSEES UNDISCLOSED INCOME U/S.68 OF THE I. T. ACT, 1961, BECAUSE OF THE ASSESSEES FAILURE TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE PAYERS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, AS THE LOANS HAVE BEEN PROVED BOGUS, THE INTEREST PAYMENTS OF RS.7,22,730/ - ON SUCH LOANS HAS ALSO TO BE T REATED AS BOGUS EXPENDITURE BOOKED BY THE ASSESSEE IN ITS P & L A/C AND DISALLOWED. (ADDITION: RS.7,22,730/ - ) 18. THE ASSESSEE CARRIED THE MATTER BEFORE LD CIT (A) WHO DELETED THE ADDITION VIDE HER ORDER AS UNDER: - FINDINGS 19. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, VARIOUS QUESTIONNAIRES ISSUED BY THE AO AND SUBMISSIONS MADE BY THE APPELLANTS IN RESPONSE THERETO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAVE ALSO EXAMINED THE ASSESSMENT RECORD THAT WAS REQUISITIONED BY ME FOR A DJUDICATING THIS MATTER. THE CASE LAWS RELIED UPON BY THE AO AND THE APPELLANT HAVE BEEN EXAMINED AND CONSIDERED. (I) THE PREMISE ON WHICH THIS CASE HAS BEEN MADE OUT BY THE AO IS THAT THE GROUP IN GENERAL AND THE APPELLANT IN PARTICULAR HAS BEEN INDULGING IN SUPPRESSION/ UNDER REPORTING OF INCOME. SUCH UNACCOUNTED INCOME HAS BEEN ROUTED BACK INTO THE COMPANIES THROUGH T HE MEDIUM OF SOME KOLKOTA BASED COMPANIES IN THE GARB OF SHARE APPLICATION MONEY OR SHARE CAPITAL AT VERY HIGH PREMIUMS. (II) THE ALLEGATION OF THE AO REGARDING SUPPRESSION/ UNDER REPORTING OF PROFITS REMAINS UNSUBSTANTIATED IN THE CASE OF THE APPELLANT. IN ALL THE SEVEN YEARS THAT THE AO HAS ASSESSED DURING THE POST SEARCH PERIOD, HE HAS NOT MADE ANY ADDITION ON ACCOUNT OF SUPPRESSION/ UNDER REPORTING OF INCOME/ PROFITS. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 36 REGARDING THE ALLEGATION OF ISSUING SHARES AT VERY HIGH PREMIUMS TO THESE COMPANIES, IT IS CLEAR FROM THE RECORDS THAT NO SHARES HAD BEEN ISSUED TO THESE COMPANIES TILL AY 2013 - 14 ALBEIT, THE APPELLANT HAD TAKEN UNSECURED LOANS AND SHARE APPLICATION MONEY FROM THESE COMPANIES. MOREOVER, AS ARGUED BY THE LD ARS, THE AO IS NOT CLEAR ABOUT TH E NATURE OF THESE CREDITS. AT TIMES THE AO REFERS TO THESE CREDITS AS SHARE APPLICATION MONEY WHILE ON OTHER OCCASIONS THE AO REFERS TO THEM AS UNSECURED LOANS. THE LD ARS HAVE ALSO POINTED OUT THAT THE AO HAD CALLED FOR DIFFERENT REQUIREMENTS TO BE FILED FOR UNSECURED LOANS AND SHARE APPLICATION MONEY VIDE AOS LETTER DATED 15.10.2015. (III) THE AO HAS RELIED UPON THE OBSERVATION OF HONBLE SUPREME COURT IN THE CASE OF [2007] 161 TAXMAN 169 (SC), COMMISSIONER OF INCOME - TAX VS. P. MOHANAKALA WITH REGARD TO NATURE AND SCOPE OF SEC. 68. THE APPELLANT HAS THEREFORE CLEARLY DISTINGUISHED THE CITED CASE FROM APPELLANTS CASE. (IV) REGARDING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OF CALCUTTA IN THE CASE OF SHANKAR INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAL), WHILE DISCUSSING THE UNRCPORTED DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF KNITTING MACHINERIES SYNDICATE (INDIA) PRIVATE LTD. VS COMMISSIONER OF INCOME - TAX, DATED THE 6TH SEPTEMBER, 1972, THE ARS HAVE RIGHTLY ARGUED THAT HONBLE KO LKOTA HIGH COURT IS NOT THE JURISDICTIONAL HIGH COURT AND THAT THE JURISDICTIONAL HIGH COURT IS THE HONBLE DELHI HIGH COURT. THE ARS HAVE ALREADY DISTINGUISHED THE CITED CASE FROM THE APPELLANTS CASE ON FACTS. (V) I HAVE EXAMINED THE ASSESSMENT RECORD AN D THE SUBMISSIONS MADE BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS. THE INFORMATION CALLED FOR HAD BEEN DULY FURNISHED BY THE APPELLANT VIDE THEIR ARS LETTERS DATED 09/03/2015, 13/03/2015, 20/03/2015, 21/08/2015, 21/10/2015, 2 6/10/2015, 28/10/2015, 02/11/2015, 26/11/2015 AND 30/11/2015. (VI) THE INFORMATION CALLED FOR VIDE AOS LETTER DATED 23.11.2015 WAS NOT RELEVANT FOR MAKING THIS ADDITION AS EXPLAINED BY THE APPELLANTS SUBMISSIONS/REPLY THERETO. (VII) THE AO HAD ERRONEOU SLY REFERRED TO THE UNSECURED LOANS FROM FOUR COMPANIES IN AY 2009 - 10 WHEREAS THESE TRANSACTIONS PERTAINED TO AY 2010 - 11. (VIII) AS REGARDS UNSECURED LOANS RECEIVED FROM FOUR COMPANIES NAMELY OMKARA AGENCY PVT. LTD., KOMAL TIE - UP ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 37 PVT. LTD., GOOD HOPE VYA PAR LTD. AND JAGANNATH COMMODITIES, I HAVE ALREADY HELD THAT THEY HAD DISCHARGED THEIR INITIAL ONUS U/S 68 OF THE ACT. IT HAS ALREADY BEEN HELD BY ME IN MY APPELLATE ORDERS PASSED IN APPELLANTS CASE FOR ASST YEAR 2009 - 10 AND 2010 - 11 AND IN APPELLANTS GRO UP CONCERNS CASES NAMELY GARUDA IMAGINING AND DIAGNOSTICS CENTER AND SINDHU HOLDINGS LIMITED FOR ASST YEAR 2009 - 10 AND 2010 - 11. (IX) THE APPELLANT HAS POINTED OUT THAT THE AO HAD NOT CONFRONTED THE APPELLANT WITH THE INSPECTORS REPORT THROUGH SHOW CAUSE D ATED 15/02/2015 AS CLAIMED BY THE AO. IT IS EVIDENT FROM THE PERUSAL OF THE SAID LETTER THAT THE APPELLANT WAS NOT GIVEN A COPY OF THE INSPECTORS REPORT. AS ALREADY HELD IN APPELLANTS CASE FOR A.Y. 2009 - 10 AND 2010 - 11, IT IS EVIDENT FROM A PERUSAL OF APPE LLANTS SUBMISSIONS, THE INSPECTORS REPORT AND THE ASSESSMENT RECORD THAT NO ADVERSE INFERENCE CAN BE DRAWN MERELY ON THE BASIS OF SAID INSPECTORS REPORT. (X) THE APPELLANT HAD FURNISHED VARIOUS DETAILS LIKE NAME, ADDRESS, PAN, BANK STATEMENT, COPY OF I TR AND CONFIRMATION OF THE AFORESAID COMPANIES. THESE DOCUMENTS WERE SUFFICIENT TO PROVE THE IDENTITY OF THE INVESTOR. (XI) THE APPELLANT HAS SUBMITTED THAT IT IS MERELY A PRESUMPTION OF THE AO THAT A COMPANY MUST SHOW VERY HIGH INCOME IN THEIR ROI AS AG AINST THE SHARE APPLICATION MONEY. THE COMPANIES CAN ALSO INVEST OUT OF THEIR SHARE CAPITAL OR OUT OF THEIR BORROWINGS. IT IS THEREFORE NOT NECESSARY FOR A COMPANY TO SHOW VERY HIGH INCOME IN ITS ROI. EVEN A LOSS MAKING COMPANY CAN MAKE INVESTMENTS. THE S UBMISSIONS OF THE APPELLANT ARE TRUE. (XII) THE INVESTORS ARE CORPORATE ENTITIES. THEY ARE MAINTAINING PROPER BOOKS OF ACCOUNTS. THESE BOOKS OF ACCOUNTS ARE SUBJECTED TO STATUTORY AUDIT BY INDEPENDENT AUDITORS. THE AUDITED BALANCE SHEET & PROFIT AND LOSS ACCOUNTS ARE DULY FILED WITH INCOME TAX DEPARTMENT AND REGISTRAR OF COMPANIES AND ARE AVAILABLE IN PUBLIC DOMAIN. THERE IS NO ALLEGATION THAT CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTORS COMPANIES ON DATES IMMEDIATELY PRECEDING THE DATES ON WHI CH INVESTMENT WAS MADE IN THE APPELLANT COMPANY. A PERUSAL OF BANK STATEMENTS OF INVESTORS COMPANIES REVEAL THAT THE SOURCE OF SOURCE WAS ALSO EXPLAINED AND WAS THROUGH BANKING TRANSACTION. THE APPELLANT HAS EXPLAINED THAT IT IS NOT NECESSARY FOR ANY INVESTOR TO MAINTAIN VERY HIGH BANK BALANCE. IN THE CASE OF ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 38 COMPANIES, THEY ARE REQUIRED TO MAINTAIN CURRENT ACCOUNTS THAT YIELD NO INTEREST, IT WILL THEREFORE BE IMPRUDENT FOR ANY COMPANY TO KEEP LARGE BALANCES IN THEIR BANK ACCOUNTS. THE INVESTOR HAD CO NFIRMED THE TRANSACTION AND FURNISHED THE ENTIRE CORROBORATORY. THE APPELLANT HAD THEREFORE FULLY DISCHARGE THE INITIAL OWNERS CAST UPON ON HIM U/S 68 OF THE ACT. (XIII) THE APPELLANT HAS SUBMITTED AS UNDER: THE APPELLANT TAKES STRONG EXCEPTION TO THE LA NGUAGE USED BY THE AO AND THE INSINUATION MADE BY THE AO. FIRSTLY, IT IS NOT THE /APPELLANTS BANK STATEMENT OF THE APPELLANT BUT IT IS THE BANK STATEMENTS OF THE INVESTOR COMPANY. THE INVESTOR COMPANY HAS THE PREROGATIVE OF THE INVESTOR COMPANY TO GIVE ONL Y THE RELEVANT PORTION OF THE BANK STATEMENT. THE AO SHOULD REMEMBER THAT HE IS ASSESSING THE CASE OF THE APPELLANT AND NOT THE INVESTOR COMPANY. AOS IMPUTING MALA FIDE INTENTION UPON THE APPELLANT IS THEREFORE HIGHLY REGRETTABLE. IT IS ALSO A PRESUMPTION OF THE AO THAT SOURCES OF THESE FUNDS WERE APPELLANTS UNDISCLOSED INCOME WHICH WERE ROUTED AS SHARE APPLICATION MONEY FROM VARIOUS COMPANIES. HE HAS NOT GIVEN ANY BASIS FOR MAKING SUCH PRESUMPTION. THE APPELLANT IS CORRECT IN STATING THAT THE BANK STATE MENT BELONGS TO THE INVESTOR WHO IS WELL WITHIN HIS RIGHTS TO GIVE COPY OF ONLY THE RELEVANT PORTION OF THE BANK STATEMENT. THE AO IS CONDUCTING THE ASSESSMENT OF THE APPELLANT AND NOT OF THE INVESTOR COMPANY. (XIV) AS REGARDS UNSECURED LOANS RECEIVED FRO M FOUR COMPANIES NAMELY OMKARA AGENCY PVT. LTD., KOMAL TIE - UP PVT. LTD., GOOD HOPE VYAPAR LTD. AND JAGANNATH COMMODITIES, I HAVE ALREADY HELD THAT THEY HAD DISCHARGED THEIR INITIAL ONUS U/S 68 OF THE ACT. IT HAS ALREADY BEEN HELD BY ME IN MY APPELLATE ORDE RS PASSED IN APPELLANTS CASE FOR ASST YEAR 2009 - 10 AND 2010 - 11 AND IN APPELLANTS GROUP CONCERNS CASES NAMELY GARUDA IMAGINING AND DIAGNOSTICS CENTER AND SINDHU HOLDINGS LIMITED FOR ASST YEAR 2009 - 10 AND 2010 - 11. (XV) THE AO HAS TRIED TO SUMMARIZE THE REASONS AND FINDINGS ON ACCOUNT OF WHICH HE HAD MADE THE ADDITION. ALL THE REASONS HAVE ALREADY BEEN DEALT WITH BY THE APPELLANT IN THEIR WRITTEN SUBMISSION AND BY ME IN THE APPELLATE ORDER. (XVI) (1) THE AO HAD HELD THAT THE PRESENT CASE IS COVERED BY TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 39 CIT VS. PRECISION FINANCE PVT. LTD.[1995]82 - TAXMANN31(CAL). THE LD ARS HAVE DEMONSTRATED THAT THE FACTS OF THE RELIED UPON CASE ARE DIFFERENT FROM THE PRESENT CASE. THE AO ALSO PLACED RELIANCE ON FOLLOWING CASES: CIT VS. KORLEY TRADING CO. LTD. [1998]232 ITR 820 HONBLE CALCUTTA HIGH COURT IN SHANKAR INDUSTRIES LTD. VS. CIT [1978] 114 ITR 689 (CAL) HONBLE CALCUTTA HIGH COURT IN THE CASE OF UNITED COMMERCIAL AND INDUSTRIAL CO. PVT. LTD. [1991] 5 6 TAXMANN 304 (CAL) THE HONBLE SUPREME COURT IN THE CASES OF SUMATIDAYAL VS. CIT AND CIT VS. P. MOHALKALA THE LD ARS HAVE FULLY EXPLAINED AS TO HOW AND WHY THE RELIED UPON CASES ARE NEITHER RELEVANT NOR APPLICABLE IN THE CASE OF APPELLANT. XVI)(2) THE AO HAD ALSO PLACED RELIANCE ON FOLLOWING CASES. THE APPELLANT HAS DISTINGUISHED EACH CASE. THE EXCERPTS FROM APPELLANTS SUBMISSIONS ARE AS UNDER: (A) HIGH COURT OF GUJARAT IN THE CASE OF MANOJ KUMAR SARAF VS. ITO, OSD - II [2014] 45 TAXMANN.COM 63(GUJARAT), I N THE CITED CASE, DESPITE OF BEING SPECIFICALLY ASKED BY THE AO, THE ASSESSEE FAILED TO SUBMIT ACCOUNT CONFIRMATION, COPY OF ACKNOWLEDGMENT OF ITR AND THE BANK STATEMENTS OF THE SAID CREDITORS. HOWEVER, IN THE CASE UNDER APPEAL, THE APPELLANT HAD ALREADY S UBMITTED ACCOUNT CONFIRMATION, COPY OF ACKNOWLEDGMENT OF ITR AND THE BANK STATEMENTS OF THE SAID CREDITORS. THUS, IN THE CASE UNDER APPEAL, THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW. THE CITED CASE IS THERE FORE DISTINGUISHED FROM THE CASE UNDER APPEAL ON BARE FACTS. (B) HIGH COURT OF GUJARAT IN THE CASE OF UMESHKRISHNANI VS. ITO [2013] 35 TAXMANN.COM598 (GUJARAT), IN THE CITED CASE, HUGE AMOUNT OF CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS 1 OR 2 DAYS BEFORE THE DATE ON WHICH CHEQUES WERE ISSUED TO THE ASSESSEE. MOREOVER, THE CREDITORS DID NOT MAINTAIN ANY BOOKS OF ACCOUNTS. THIS MADE THE CREDITWORTHINESS OF THE CREDITORS PRIMA - FACIE SUSPECT IN THE EYES OF THE REVENUE. IN THE CASE UNDER APPEAL, NO CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE CREDITORS BEFORE THE DATE ON WHICH CHEQUES WERE ISSUED TO THE ASSESSEE. THE DEPOSITS IN THE CREDITORS BANK ACCOUNTS WERE BY BANK TRANSFERS AND THE SOURCES FROM ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 40 WHERE SUCH TRANSFERS WERE RECEIVED WE RE ALSO EXPLAINED. MOREOVER, THE CREDITORS WERE CORPORATE ENTITIES AND HAD MAINTAINED PROPER BOOKS OF ACCOUNTS THAT WERE ALSO SUBJECTED TO STATUTORY AUDIT AND THEIR BALANCE SHEETS AND P&L A/C WERE DULY FILED WITH THEIR RETURN OF INCOME. THUS, IN THE CASE U NDER APPEAL, THE CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW AND THERE CAN BE NO PREPONDERANCE OF PROBABILITIES THAT THESE LOANS WERE IN FACT ACCOMMODATION ENTRIES. IN THE CITED CASE, THE ASSESSEE HAD ALSO RECEIVED GIFTS FROM THE SAME SET OF PERSONS FROM WHOM LOANS WERE RECEIVED. SUCH PERSONS HAD GIFTED ALMOST ENTIRE AMOUNT OF EARNING TO THE ASSESSEE WHICH SEEMED HIGHLY IMPROBABLE. IN THE CASE UNDER APPEAL, THERE IS NO SUCH COMPLICATION OR CONTRADICTION. IN THE CITED CASE, THE AMOUNTS WERE BORROWED AT EXTREMELY HIGH RATE OF INTEREST BY THE ASSESSEE. THIS TOO MADE THE GENUINENESS OF THE CREDITORS PRIMA - FACIE SUSPECT IN THE EYES OF THE REVENUE. IN THE CASE UNDER APPEAL, NO SUCH FINDING HAS BEEN GIVEN BY THE AO. THUS, IN THE CASE UNDER APPEAL, THE GENUINENESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW. SINCE THE FACTS OF THE CITED CASE ARE ENTIRELY DISTINGUISHED FROM THOSE THE APPELLANTS CASE AND SINCE THE CITED CASE DOES NOT PERTAIN TO THE APPELLANTS JURISDICTION IT IS RESPECTFULLY SUBMITTED THAT NO RELIANCE SHOULD BE PLACED ON THIS CASE. (C) HIGH COURT OF DELHI IN THE CASE OF CIT - VI VS. T.S. KISHAN& CO. LTD. [2014] 50 TAXMANN.COM 368 (DELHI), IN THE CITED CASE, IT IS SEEN THE ASSESSEE COULD NOT PRODUCE THE PAN NU MBER, ADDRESS AND CONFIRMATION OF CREDITORS. HOWEVER, IN THE CASE UNDER APPEAL, THE APPELLANT HAD ALREADY SUBMITTED PAN NUMBER, ADDRESS, ACCOUNT CONFIRMATION, COPY OF ACKNOWLEDGMENT OF ITR AND THE BANK STATEMENTS OF THE SAID CREDITORS. THUS, IN THE CASE UN DER APPEAL, THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW. THE CITED CASE IS THEREFORE DISTINGUISHED FROM THE CASE UNDER APPEAL ON BARE FACTS. (D) HIGH COURT OF DELHI IN THE CASE OF CIT VS. EMPIRE BULLTECH (P .) LTD. [2014] 366 ITR 110 (DELHI), IN THE CITED CASE, THE ASSESSEE DID NOT EVEN SUBMIT THE CONFIRMATION FROM THE INVESTOR. THE ASSESSEE HAD MERELY DISCLOSED THE ADDRESS OR IDENTITY OF THE INDIVIDUAL INVESTORS CONCERNS. HOWEVER, IN THE CASE UNDER APPEAL, THE APPELLANT HAD ALREADY SUBMITTED PAN NUMBER, ADDRESS, ACCOUNT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 41 CONFIRMATION, COPY OF ACKNOWLEDGMENT OF ITR AND THE BANK STATEMENTS OF THE SAID CREDITORS. IN THE CITED CASE, A FINDING HAS BEEN RECORDED REGARDING THE ISSUANCE OF SHARES AT 1000% SHARE PREM IUM AND THE FACT THAT THE INVESTOR COMPANY HAD COME INTO EXISTENCE VERY SHORTLY BEFORE THE DATE OF MAKING THE INVESTMENT. HOWEVER, NO SUCH FINDING HAS BEEN GIVEN IN THE CASE OF INSTANT APPEAL. THUS, IN THE CASE UNDER APPEAL, THE IDENTITY AND CREDITWORTHINE SS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW. THE CITED CASE IS THEREFORE DISTINGUISHED FROM THE CASE UNDER APPEAL ON BARE FACTS. (E) HIGH COURT OF DELHI IN THE CASE OF CIT VS. YOUTH CONSTRUCTIONS (P.) LTD. [2014] 44 TAXMANN.COM 364 (DELH I), THE FACTS OF THE CASE UNDER APPEAL ARE ENTIRELY DIFFERENT. FIRSTLY, THE CASE UNDER APPEAL WAS NOT REOPENED U/S 148 OF THE ACT. SECONDLY, IN THE CITED CASE THERE WAS A DEFINITE FINDING OF THE INVESTIGATION WING STATING THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES FROM THE THREE COMPANIES. SUCH INFORMATION WAS BASED ON AN ADMISSION MADE BY THE DIRECTOR OF INVESTOR COMPANY WHO ADMITTED TO HAVE PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE. IN THE CASE UNDER APPEAL THERE IS NEITHER SUCH ADMISSIO N NOR ANY SUCH CATEGORICAL FINDING. THIRDLY, IN THE CITED CASE THE SHARE APPLICANTS HAD ESTABLISHED THEIR IDENTITY BY MERELY FILING CONFIRMATION LETTERS AND COPIES OF THEIR INCOME TAX RETURNS. IN THE CASE UNDER APPEAL, THE APPELLANT HAD ALSO FILED THE COPI ES OF ITRS AND COPIES OF BANK STATEMENTS OF THE INVESTORS. THUS, THE INSTANT CASE IS ON A MUCH BETTER FOOTING THAN THE CITED CASE. LASTLY, IN THE CITED CASE THE AO HAD CALLED UPON THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES BUT THE ASSE SSEE FAILED TO DO SO. IN THE CASE UNDER APPEAL, NO SUCH DIRECTIONS WERE ISSUED BY THE AO. MOREOVER, THE NOTICES ISSUED U/S 131 OR 133(6) WERE COMPLIED WITH AND THE REQUISITE WAS FURNISHED. THE CITED CASE IS THEREFORE DISTINGUISHED FROM THE CASE UNDER APPEA L ON BARE FACTS. THUS, IN THE CASE UNDER APPEAL, THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW. (F) ITAT AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS. ITO, WARD - 1, ALIGARH [2012] 25 TAXMANN.COM 220(AGRA) I N THE CASE UNDER APPEAL, NO DIRECTION WAS ISSUED BY THE AO TO PRODUCE THE INVESTOR COMPANIES OR THEIR DIRECTORS. MOREOVER, THE CREDITORS WERE CORPORATE ENTITIES AND HAD ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 42 MAINTAINED PROPER BOOKS OF ACCOUNTS THAT WERE ALSO SUBJECTED TO STATUTORY AUDIT AND THE IR BALANCE SHEETS AND P&L A/C WERE DULY FILED WITH THEIR RETURN OF INCOME. THUS, IN THE CASE UNDER APPEAL, THE CREDITWORTHINESS OF THE CREDITORS WAS FULLY ESTABLISHED IN THE EYES OF LAW AND THERE CAN BE NO PREPONDERANCE OF PROBABILITIES THAT THESE LOANS WE RE IN FACT ACCOMMODATION ENTRIES. SINCE THE FACTS OF THE CITED CASE ARE ENTIRELY DISTINGUISHED FROM THOSE THE APPELLANTS CASE AND SINCE THE CITED CASE DOES NOT PERTAIN TO THE APPELLANTS JURISDICTION IT IS RESPECTFULLY SUBMITTED THAT NO RELIANCE SHOULD BE P LACED ON THIS CASE. AS IN EARLIER YEARS, THE APPELLANT HAS RELIED UPON CASE LAWS IN SUPPORT OF APPELLANTS CLAIM: - A. IN THE CASE OF KAMDHENU STEEL & ALLOYS LIMITED V. CIT [2012] 19 TAXMANN.COM 26, (DELHI), IT WAS HELD THAT, IN CONCLUSION, ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WOULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT IS 'CREATED' EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE OF THE NATURE INDICATED ABOVE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE ASSESSEE WITH A LIABILITY UNDER SECTIONS 68 AND 69 II. THE APPELLANT ALSO SUBMITS THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. REAL TIME MARKETING (P) LTD. REPORTED IN 306 ITR 55 AND CIT VS. VALUE CAPITAL SERVICES LTD. REPORTED IN 307 ITR 334 HAS HELD THAT BURDEN IS ON THE ASSESSING OFFICER TO SHOW THAT MONEY RECEIVED ORIGIN ATED FROM THE COFFERS OF THE ASSESSEE COMPANY. ALSO GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS REPORTED IN 256 ITR 360 FOLLOWING THE JUDGMENT OF APEX COURT IN THE CASE OF ORISSA CORPORATION REPORTED IN 159 ITR 78 HAS HELD THAT, BURDEN U/S 6 8 STANDS DISCHARGED BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THE COMPLETE ADDRESS AND, PERMANENT ACCOUNT NUMBERS, WHICH HAS BEEN DULY COMPLIED BY THE ASSESSEE. IT HAS BEEN HELD IN THE AFORESAID JUDGMENT AS UNDER: THUS IT IS CLEAR THAT THE ASSESS EE HAD DISCHARGED THE INITIAL ONUS WHICH LAYS ON IT TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBER/PERMANENT ACCOUNTS NUMBER AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE. IT HAS ALSO PROVED THE CAPACITY OF THE CREDIOTRS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 43 CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCO UNT BUT NOT THE SOURCE OF THE SOURCE AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD. VS. CIT [1963] 49 ITR 723. THE GENUINENESS OF THE TRANSACTION IS PROVED BY THE FACT THAT THE PAYMENT TO THE ASSESSEE AS WELL S REPAYMENT OF THE LOA N BY THE ASSESSE TO THE DEPOSITORS IS MADE BY ACCOUNT PAYEE CHEQUES AND THE INTEREST IS ALSO PAID BY THE ASSESSEE TO THE CREDITORS BY ACCOUNT PAYEE CHEQUES. MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER CANNOT BE AGROUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON - GENUINE IN VIEW OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF ORISSA CORPORATION [1986[ 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE FURNISHES NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN SHIFTS TO THE DEPARTMENT TO ESTABLISH THAT REVENUES CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO P URSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON - COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THIS CASE OF SIX CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER, THEY HAVE ADMITTED HAVING ADVANCED LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH AMOUNT DEPOSITED BY THOSE CREDITORS IN THE IR BANK ACCOUNTS, THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69 SIMILAR VIEWS WERE TAKEN IN MANY OT HER CASES. FEW OF THEM ARE AS FOLLOWING: - ANANT SHELTERS (P) LTD V. INCOME TAX OFFICER 9(1), ITAT, [2012] 20 TAXMANN.COM 153 (MUM.) DWARKADHISH INVESTMENT (P.) LTD V. CIT - IV, HIGH COURT, [2010] 194 TAXMAN 43 (DELHI) III. IN THE CASE OF LOVELY EXPORTS PRIVA TE LIMITED V. CIT [2008] 216 CTR 195 SC, IT WAS HELD THAT, IF SHARE APPLICATION MONEY IS RECEIVED BY ASSESSEE - COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO ASSESSING OFFICER, THEN DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 44 THIS AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF ASSESSEE - COMPANY. A. IT IS FURTHER SUBMITTED THAT, HONBLE SUPREME COURT IN THE CASE OF CIT VS. STELLAR INVESTMENT LTD. REPORTED IN 251 ITR 263 HAS ALSO UPHELD THE VIEW TAKEN BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. STELLAR INVESTMENT LTD. REPORTED IN 192 ITR 287 THAT, IN CASE OF A COMPANY, EVEN IF THE SUBSCRIBER TO THE SHARE CAPITAL ARE NOT GENUINE THEN TOO, IT WOULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. B. IT IS SUBMITTED THAT THE AFORESAID JUDGMENTS OF THE APEX COURT HAS BEEN ALSO FOLLOWED IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD. REPORTED IN 356 ITR 65 (MP) WHEREIN THE HONBLE COURT HAS HELD AS UNDER: IT IS NOT THE CASE OF ANU OF THE PARTIES THAT M/S ALLIANCE INDUSTRIES LIMITED, SHARIAH IS A BOGUS COMPANY OR A NON - EXISTENT COMPANY AND THE AMOUNT WHICH WAS SUBSCRIBED BY THE SAID COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MO NEY OF THE RESPONDENT ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF INVESTOR WHO HAD PROMDED THE SHARE SUBSCRIPTION AND IT WAS ESTABLISHED THAT THE TRANSACTION WAS GENUINE THOUGH AS PER CONTENTION OF THE RESPONDENT THE CREDITW ORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED. IN THE PRESENT CASE, IN THE LIGHT OF THE JUDGMENT OF LOVELY EXPORTS (P.) LTD.'S (SUPRA) WE HAVE TO SEE ONLY IN RESPECT OF THE ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR. THE DELHI HIGH COURT ALSO IN DIVINE LEASING & FINANCE LTD. 'S CASE (SUPRA), CONSIDERING THE SIMILAR QUESTION HELD THAT THE ASSESSEE COMPANY HAVING RECEIVED SUBSCRIPTIONS TO THE PUBLIC/RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. THE SIMIL AR VIEW HAS BEEN TAKEN BY THE OTHER HIGH COURTS. AS THE APEX COURT HAS CONSIDERED THE LAW IN LOVELY EXPORTS (P.) LTD.'S CASE (SUPRA) AND IN VIEW OF LAW LAID DOWN BY THE APEX COURT, WE FIND THAT THE SUBSTANTIAL QUESTIONS FRAMED IN THESE APPEALS DO NOT ARISE FOR OUR CONSIDERATION. ACCORDINGLY, ALL THESE APPEALS ARE DISMISSED WITH NO ORDER AS TO COSTS. IN FACT, SIMILAR VIEW HAS ALSO BEEN EXPRESSED IN THE FOLLOWING CASES: I) 350 ITR 220 (ALL) CIT VS. JAY DEE SECURITIES AND FINANCE LTD. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 45 II) 350 ITR 222 (ALL) C IT VS. MISRA PRESERVERS (P) LTD. II) 361 ITR 220 (DEL) CIT VS. KAMDHENU STEEL AND ALLOYS LTD. IV) 320 ITR 619 BHAV SHAKTI STEEL MINES (P) LTD. VS. CIT V) ITA NO. 1497/2010, 1518/2010 (DEL) CIT VS. DERBY OVERSEAS (P) LTD. VI) ITA NO. 904/2010 (DEL) CIT VS. DHAWAN JEWELLERS (P) LTD. VII) 329 ITR 110 (DEL) SARTHAK SECURITIES CO. P. LTD. VS. ITO VIII) 205 ITR 98 (DEL) CIT VS. SOPHIA FINANCE LTD. WHERE, THEREFORE, AN ASSESSEE - COMPANY REPRESENTS THAT IT HAD ISSUED SHARES ON THE RECEIPT OF SHARE APPLICATION MONEY THEN THE AMOUNT SO RECEIVED WOULD BE CREDITED IN THE BOOKS OF ACCOUNT OF THE COMPANY. THE INCOME TAX OFFICER WOULD BE ENTITLED, AND IT WOULD INDEED BE HIS DUTU TO ENQUIRE WHETHER THE ALLEGED SHAREHOLDERS DO IN FACT EXIST OR NOT. IF THE SHAREHOLDERS E XIST THEN, POSSIBLY, NO FURTHER ENQUIRY NEED BE MADE. BUT IF THE INCOME TAX OFFICER FINDS THAT THE ALLEGED SHAREHOLDERS DO NOT EXIST THEN, IN EFFECT, IT WOULD MEAN THAT THERE IS NO VALID ISSUANCE OF SHARE CAPITAL. SHARES CANNOT BE ISSUED IN THE NAME OF NON - EXISTING PERSONS. THE USE OF THE WORDS MAY BE CHARGED IN SECTION 68 CLEARLY INDICATES THAT THE INCOME TAX OFFICER WOULD THEN HAVE THE JURISDICTION, IF THE FACTS SO WARRANT, TO TREAT SUCH A CREDIT TO BE THE INCOME OF THE ASSESSEE SEE PP. 104E - H, 105A, B) . IF THE SHAREHOLDERS ARE IDENTIFIED AND IT IS ESTABLISHED THAT THEY HAVE INVESTED MONEY IN THE PURCHASE OF SHARES, THEN THE AMOUNT RECEIVED BY THE COMPANY WOULD BE REGARDED AS A CAPITAL RECEIPT AND TO THAT EXTENT THE OBSERVATIONS, IN CIT VS. STELLAR INVES TMENT LTD. [1991] 192 ITR 287 (DELHI), ARE CORRECT; BUT THE OBSERVATIONS IN THAT CASE TO THE EFFECT THAT EVEN IF THE SUBSCRIBERS TO THE CAPITAL WERE NOT GENUINE UNDER NO CIRCUMSTANCE COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF T HE [COMPANY] ARE NOT (SEE P. 105E,F) BE) 361 ITR 195 (DEL) CIT VS. NIPUAN AUTO (P) LTD FURTHER, THE ADDITIONS MADE BY THE LD. AO WITH THE ASSUMPTION OF UNEXPLAINED HIGH CREDITS IN THE BANK OF SHARE APPLICANTS, IS NOT CORRECT. AS PER SECTION 68 OF THE IN COME TAX ACT, (COPY ENCLOSED AS ANNEXURE: - 3) ASSESSEE NEEDS TO PROVE THE SOURCE OF CREDIT IN HIS BOOKS OF ACCOUNTS AND NOT IN OTHERS BOOKS OF ACCOUNTS SO LONG AS, SUFFICIENT & RELEVANT EVIDENCE OF THE CREDITORS/ SHARE APPLICANTS IS PROVIDED. THE AMENDME NT IN 68 THE INCOME TAX ACT, 1961 WAS BROUGHT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 46 W.E.F. AY 2013 - 14, WHERE THE CREDITS OF CREDITORS ARE ALSO REQUIRED TO BE ANALYSED. INVOKING HE AMENDMENT WITH RETROSPECTIVE EFFECT BY THE LD. AO IS NOT PERMISSIBLE IN LAW. I HAVE FULLY CONSIDERED THE CASE LA WS, LEGAL POSITION, AOS CONTENTIONS AND SUBMISSIONS OF THE APPELLANT. SECTION 68 CASTS THE INITIAL ONUS ON THE ASSESSEE TO ESTABLISH THE IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR AND TO PROVE THE GENUINENESS OF THE TRANSACTION. IN THE INSTANT CASE IT IS OBSERVED THAT THE APPELLANT HAS DISCHARGED THE INITIAL ONUS BY FURNISHING THE NAME, ADDRESS, PAN, COPY OF ITR, COPY OF BANK STATEMENT AND CONFIRMATION FROM THE INVESTOR/CREDITOR. THE INSPECTORS REPORT CANNOT BE RELIED UPON AS THE INSPECTOR HAD NOT CON DUCTED THE ENQUIRY IN THE APPELLANTS CASE AND EVEN OTHERWISE THESE COMPANIES WERE NOT APPEARING IN THE LIST OF COMPANIES THAT HAD BEEN ENQUIRED INTO. THERE CAN BE NO REASON TO DOUBT THE EXISTENCE OR IDENTITY OF THESE COMPANIES SINCE THESE HAD MERGED INTO PARAM MITRA HOLDINGS PVT LTD VIDE ORDER DATED 09/ 11/2010 PASSED BY THE HONBLE HIGH COURT DELHI. THE AMOUNT OF INVESTMENTS FROM THESE COMPANIES HAD COME THROUGH ACCOUNT PAYEE CHEQUES/ BANK TRANSFERS. THE SAME HAD NOT COME THROUGH CASH. AS PER THE ADMISSIO N OF THE AO, NO CASH WAS DEPOSITED IN THE INVESTOR COMPANYS BANK ACCOUNT ON DATES IMMEDIATELY PROCEEDINGS THE DATES ON THE SAID CHEQUES WERE ISSUED. THE STATUTORY REQUIREMENTS U/S 68 TILL A.Y. 2012 - 13 WAS THAT THE ASSESSEE WAS DUTY BOUND TO EXPLAIN THE S OURCE. FROM A.Y. 2013 - 14 THE SCOPE OF SEC.68 WAS WIDENED AND THE APPELLANT WAS MADE LIABLE TO EXPLAIN THE SOURCES SOURCE. IN THE YEAR UNDER APPEAL THE ASSESSEE HAD NOT ONLY EXPLAINED THE SOURCE BUT HAD ALSO EXPLAINED THE SOURCES SOURCE. THE CASE LAWS RE LIED UPON BY THE AO ARE NOT RELEVANT, ARE DISTINGUISHED ON FACTS AND CANNOT FORM THE BASIS FOR MAKING THIS ADDITION. EACH CASE HAS BEEN DEALT WITH, DISTINGUISHED AND PROVED TO BE NOT RELEVANT. THE AOS CONTENTION OF FOLLOWING THE DECISIONS OF HIS PREDECES SOR IN THE CASE OF GARUDA IMAGINING & DIAGNOSTICS CENTRE AND SINDHU HOLDINGS LIMITED IS NOT TENABLE. I HAD EXAMINED AND PASSED THE APPELLATE ORDER ON THE CASE OF GARUDA IMAGINING 8S DIAGNOSTICS CENTRE AND SINDHU HOLDINGS LIMITED AND HAD DELETED THE ADDITIO N U/S 68 THAT WAS MADE IN RESPECT OF THE AMOUNTS RECEIVED FROM THESE FOUR COMPANIES. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 47 THE SO CALLED ANOMALY POINTED OUT BY THE AO IN THE ADDRESS OF THE THREE COMPANIES NAMELY AMANAT AGENCIES PVT LTD, SKIPPER VINMAY PVT LTD AND OASIS COMMOTRADE PVT LTD FROM WHOM SHARE APPLICATION MONEY OF RS. 13,17,00,000/ - HAD COME IN A.Y. 2012 - 13 HAS BEEN FULLY RECONCILED AND EXPLAINED WITH THE SUPPORT OF FORM NO. 18 DULY FILED BY THE SAID INVESTOR COMPANIES BEFORE THE REGISTRAR OF COMPANIES. THE AO HAD NOT APPRECIATED THE FACTS AND WITHOUT VERIFYING THE RECORDS FROM THE REGISTRAR OF COMPANIES HE HAD REACHED THE CONCLUSION THAT THESE COMPANIES WERE EITHER NOT AVAILABLE AT THEIR OFFICIAL ADDRESSES OR WERE HAVING MULTIPLE OFFICE ADDRESSES. THE INVESTORS ARE CORPORATE ENTITIES. THEY ARE MAINTAINING PROPER BOOKS OF ACCOUNTS. THESE BOOKS OF ACCOUNTS ARE SUBJECTED TO STATUTORY AUDIT BY INDEPENDENT AUDITORS. THE AUDITED BALANCE SHEET 8S PROFIT AND LOSS ACCOUNTS ARE DULY FILED WITH INCOME TAX DEPARTMENT AND REGISTRAR OF COMPANIES AND ARE AVAILABLE IN PUBLIC DOMAIN. THERE IS NO ALLEGATION THAT CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTORS COMPANIES ON DATES IMMEDIATELY PRECEDING THE DATES ON WHICH INVESTMENT WAS MADE IN THE APPELLANT COMPANY. A PERUSAL OF BANK STATEMENTS OF INVESTORS COMPANIES REVEAL THAT THE SOURCE OF SOURCE WAS ALSO EXPLAINED AND WAS THROUGH BANKING TRANSACTION. THE APPELLANT HAS EXPLAINED THAT IT IS NOT NECESSARY FOR ANY INVESTOR TO MAINTAIN VERY HIGH BANK BALANCE. IN THE CASE OF COMPANIES, THEY ARE REQUIRED TO MAINTAIN CURRENT ACCOUNTS THAT YIELD NO INTEREST, IT WILL THEREFORE BE IMPRUDENT FOR ANY COMPANY TO KEEP LARGE BALANCES IN THEIR BANK ACCOUNTS. THE INVESTOR HAD CONFIRMED THE TRANSACTION AND FURNISHED THE ENTIRE CORROBORATORY. THE APPELLANT HA D THEREFORE FULLY DISCHARGE THE INITIAL OWNERS CAST UPON ON HIM U/S 68 OF THE ACT. FOLLOWING MY OWN DECISIONS IN THE CASE OF GARUDA IMAGINING & DIAGNOSTICS CENTRE AND SINDHU HOLDINGS LIMITED AND RESPECTFULLY FOLLOWING THE JUDICIAL PRONOUNCEMENTS OF THE APE X COURT IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED V. CIT [2008] 216 CTR 195 SC AND CIT VS. STELLAR INVESTMENT LTD. REPORTED IN 251 ITR 263 AND BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KAMDHENU STEEL 8S ALLOYS LIMITED V. CIT [2012] 19 TAXMANN.COM 26, (DELHI) THE ADDITION OF RS.22,92,00,000/ - AND RS.6,15,00,000/ - MADE U/S 68 OF THE I T ACT IN ASSESSMENT YEARS 2012 - 138S 2013 - 14 RESPECTIVELY IS HEREBY DELETED. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 48 THIS GROUND OF APPEAL IS THEREFORE ALLOWED AND THE ADDITION OF RS.22,92,00,000/ - AND RS.6,1 5,00,000/ - IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY IS HEREBY DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 19. LD. CIT DR RELYING ON THE FINDINGS OF THE LD AO, SUBMITTED THAT IN RESPECT OF KOLKATA BASED COMPANIES THE INVESTIGATION DIRECTORATE HAS CATEGORICALLY MENTIONED THAT THESE COMPANIES HAVE INVESTED IN THE ASSESS EE GROUP IN THE FORM OF SHARES CAPITAL WHERE THE BUSINESS ACTIVITIES AND CREDITWORTHINESS OF THESE KOLKATA BASED COMPANIES ARE SUSPICIOUS. SHE FURTHER REFERRED TO THE ENQUIRY CONDUCTED BY THE INSPECTOR OF AO WHICH SHOWS THAT AT THE GIVEN ADDRESS THESE COMPANIES DO NOT EXIST OR NOT OPERATIONAL , NO SUCH BUSINESS ACTIVITY WAS CARRIED OUT IN THESE PREMISES. SHE FURTHER STATED THAT THE ASSESSES S CONTENTION CANNOT BE ACCEPTED THAT TH ESE COMPANIES WERE MERGED WITH PARAM MITRA HOLDINGS PRIVATE LIMITED AND HENCE IDENTITIES OF THESE COMPANIES, CREDITWORTHINESS AND GENUINE AS OF THE TRANSACTIONS WAS PROV ED . SHE FURTHER RELIED ON THE VARIOUS REASONS GIVEN BY THE LD. ASSESSING OFFICER FOR MAKING THE ABOVE ADDITION. SHE FURTHER STATED THAT ADDRESS OF INVESTOR COMPANIES IN SHARE APPLICATION IN BANK ACCOUNTS A S WELL AS THE PERMANENT ACCOUNT NUMBER SHOWS AN OTHER ADDRESS OF THESE COMPANIES AT KOLKATA WHERE AS THE ASSESSEE IS SHOWING ADDRESS OF NEW DELHI. SHE FURTHER RELIED ON THE VARIOUS DECISIONS CITED BY THE LD. ASSESSING OFFICER AND STATED THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS NOT PRO VED BY THE ASSESSEE. IN THE END, SHE RELIED UPON THE SEVERAL DECISIONS OF VARIOUS COURTS AS UNDER: - I. C IT VERSUS NOVA PROMOTERS AND FINANCE PRIVATE LIMITED 342 ITR 169 ( DEL) II. SHANKAR INDUSTRIES VERSUS CIT 114 ITR 689. III. INDEPENDEN T MEDIA PRIVATE LIMITED 210 T AXMAN 14 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 49 IV. C IT VERSUS FOCUS EXPORTS PRIVATE LIMITED ITA NO. 218/2012 (DELHI) V. N R PORTFOLIO PRIVATE LIMITED 264 CTR 258 VI. CIT VERSUS DIVINE LEASING 299 ITR 268 (DELHI) 20. SHE FURTHER STATED THAT MANNER OF PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT AND THIS CANNOT MAKE BOGUS TRANSACTION AS GENUINE ONE . SHE RELIED ON THE DECISION OF C IT VS. PRECISION FINANCE PRIVATE LIMITED 208 ITR 465. S HE FURTHER RELIED UPON THE SEVERAL DECISIONS OF THE VARIOUS COURTS, WHICH SPEAKS THAT SECTION 68 IS APPLICABLE EVEN TO THE SHARE APPLICATION MONEY. HER ARGUMENT WAS THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IS NOT ESTABLISHED MERELY BY FILING BANK ACCOUNT DETAILS. FOR THIS, SHE RELIED ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN GAYATHRI ASSOCIATES VERSUS IT O 41 TAXMANN.COM 52 6. S HE ALSO HEAVILY RELIED ON THE DECISION OF NAVODAYA CASTLES PRIVATE LIMITED VERSUS CIT (367 ITR 306) (DELHI). A WRITTEN SUBMISSIO N MADE ON THIS ASPECT OF THE VARIOUS JUDICIAL PRECEDENT IS AS UNDER: - IT IS WELL SETTLED LAW THAT ONUS OF PROVING CREDITS IN ITS BOOK OF ACCOUNTS LIES SQUARELY ON THE ASSESSEE AND SUCH PROOF CONSISTS OF PROVING THE IDENTITY OF THE SUBSCRIBER OR CREDITOR, CAPACITY OF SUCH CREDITOR OR SUBSCRIBER TO MAKE PAYMENT AND ALSO PROVE THE GENUINENESS OF THE TRANSACTION. IT IS ONLY WHEN THE ASSESSEE DISCHARGES THIS PRIMARY ONUS, THAT ONUS SHIFTS TO THE DEPARTMENT. MERELY ESTABLISHING THE IDENTITY OF THE CREDITOR IS N OT SUFFICIENT. THIS IS THE RATIO LAID OUT NUMEROUS DECISIONS INCLUDING SHANKAR INDUSTRIES VS. CIT (1978) 114 ITR 689(CAL);. THE MANNER OF PAYMENT BY THE ACCOUNT PAYEE CHEQUE IS ALSO NOT SACROSANCT AND THIS CANNOT MAKE A BOGUS TRANSACTION AS GENUINE ONE [(C IT VS. PRECISIONS FINANCE PVT. LTD. (208 ITR 465, 470,471 (CAL). CF. NIZAM WOOL AGENCY VS. CIT, (1992) 193 ITR 318, 320 (ALL)). THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME - TAX V. NOVA PROMOTERS AND FINLESS (P) LTD. REPORTED IN [2012 ] 342 ITR 169 HAS HELD THAT THE FINDING THAT THE SHARE APPLICATION MONIES HAD ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 50 COME THROUGH ACCOUNT PAYEE CHEQUES WAS, AT BEST, NEUTRAL. IT FURTHER OBSERVED THAT THE OF THE REGISTRAR OF COMPANIES WAS AGAIN A NEUTRAL FACT AND THAT THESE COMPANIES WERE COMPLY ING WITH SUCH FORMALITIES DID NOT ADD ANY CREDIBILITY OR EVIDENTIARY VALUE. IT HELD THAT IN ANY CASE, IT DID NOT IPSO FACTO PROVE THAT THE TRANSACTIONS WERE GENUINE. IN THE CASE OF INDEPENDENT MEDIA (P.) LTD 210 TAXMAN 14 (DELHI)(2012) THAT CAME UP BEFORE THE HON'BLE HIGH COURT, DELHI. WE ARE UNABLE TO UPHOLD THE VIEW OF THE TRIBUNAL THAT IT IS INCUMBENT UPON THE ASSESSING OFFICER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TO ESTABLISH WITH THE HELP OF MATERIAL ON RECORD THAT THE SHARE MONIES HAD COME OR EMANATED FORM THE ASSESSEE'S COFFERS. SECTION 68 OF THE ACT CASTS NO SUCH BURDEN UPON THE ASSESSING OFFICER. THIS ASPECT HAS BEEN CONSIDERED MORE THAN 50 YEARS BACK BY THE SUPREME COURT IN THE CASE OF A GOVINDARAJULA MUDALIAR V. CIT [1958] 34 ITR 807 WHERE PRECISELY THE SAME ARGUMENT WAS ADVANCED BEFORE THE SUPREME COURT ON BEHALF OF ASSESSEE. THE ARGUMENT WAS REJECTED BY THE COURT.' IN THE CASE OF COMMISSIONER OF INCOME TAX - IV, NEW DELHI VS. FOCUS EXPORTS PVT. LTD. ITA NO.218/2012 [HC - DELHI] ORDER DATE D 16TH SEPTEMBER, 2014, IT WAS POINTED OUT AS UNDER: 'WHY AND FOR WHAT REASONS, A SHARE PREMIUM WOULD BE PAYABLE IN A CASE LIKE THIS, IS BEYOND COMPREHENSION. IT IS HIGHLY IMPLAUSIBLE THAT SOME UNKNOWN PERSONS WOULD INVEST THEIR MONEY, WITHOUT ADEQUATE PROTECTION AND ENSURING APPROPRIATE RETURNS, IN A COMPANY WHICH DID NOT HAVE A PROVEN, REPUTABLE AND A RELIABLE RECORD. ANY AND EVERY REASONABLE MAN IS NORMALLY EXPECTED TO PRACTICE DUE DILIGENCE WHILE INVESTING HIS HARD - EARNED MONEY, LET ALONE PURCHASE SH ARES OF AN UNKNOWN COMPANY. IT IS NOT A CASE WHERE ANGEL INVESTORS HAD INVESTED UPON BEING SATISFIED ABOUT THE INNOVATIVENESS AND ENTREPRENEURIAL SKILLS OF THE MANAGEMENT. NR PORTFOLIO PVT. LTD., 206(2014) DLT 97, IT WAS OBSERVED BY THE HON'BLE HIGH COURT AS UNDER: 'WE ARE CONSCIOUS OF THE DOCTRINE OF 'SOURCE OF SOURCE' OR 'ORIGIN OF ORIGIN' AND ALSO POSSIBLE DIFFICULTY WHICH AN ASSESSEE MAY BE FACED WITH WHEN ASKED TO ESTABLISH ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 51 UNIMPEACHABLE CREDITWORTHINESS OF THE SHARE SUBSCRIBERS.' CIT VS. DIVINE LEASIN G 299 ITR 268 DELHI - 'PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHAPE OF A COMPANY MUST BE FIRMLY EXORCISED BY THE REVENUE.' WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREV IOUS YEAR IT MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE FOR THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. SUMATI DAYAL VS CIT (SC ) 214 ITR 801 VASANTIBAI IM. SHAH VS CIT (BOM) 213 ITR 805 SREELEKHA BANERJEE & ORS. VS CIT (SC) 49 ITR 112 THERE IS AMPLE AUTHORITY FOR THE POSITION THAT WHERE AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF CERTAIN AMOUNT OF CASH RECEI VED DURING THE ACCOUNTING YEAR, THE INCOME TAX OFFICER IS ENTITLED TO DRAW THE INTERFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. GOVINDARAJULU MUDALIAR 34 ITR 807 (SC) SEC. 68 DOES NOT CONFINE TO CASH ENTRIES IN BOOKS. V.I.S.P. (P) LTD. VS CIT (MP) 265 ITR 202 SEC. 68 APPLICABLE EVEN TO SHARE APPLICATION MONEY. CIT VS SOPHIA FINANCE LTD. (DEL) 205 ITR 98 CIT VS ACTIVE TRADERS P. LTD. (CAL) 214 ITR 583 CIT VS. NIVEDAN VANIJYYA LTD (CAL) 263 ITR 623 CIT VS BHAGWATI JEWELS LTD. (DEL) 201 ITR 461 C IT VS PRATEEK FINANCE & INVESTMENT CO. LTD. (DEL) 215 ITR 272 CREDITS IN THE NAME OF THIRD PARTIES - ASSESSEE MUST PROVE IDENTITY OF CREDITS. SHANKAR INDUSTRIES VS CIT (CAL) 114 ITR 689 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 52 NANAK CHANDRA LAXMAN DAS VS CIT (CAL) 140 ITR 151 HARI CHAND VIRENDER PAUL VS CIT (P8IH) 140 ITR 148 CIT VS BIJU PATNAIK (SC) 160 ITR 674 ITO VS SKYJET AVIATION (P) LTD. (ITAT, AHD - TM) 71 ITD 95 CIT VS PRECISION FINANCE P LTD. (CAL) 208 ITR 465 ORIENTAL WIRE INDUSTRIES (P) LTD. VS CIT (CAL) 131 ITR 688 MERE FILING OF INCOME TAX FILE NUMBER NOT ENOUGH TO PROVE GENUINENESS OF CASH CREDIT. CIT VS KORLAY TRADING CO. LTD. (CAL) 232 ITR 820 CASH CREDIT CAN BE ASSESSED EVEN IF TRANSACTION IS THROUGH CHEQUES. CIT VS PRECISION FINANCE P. LTD. (CAL) 208 ITR 645 K.C.N. CHANDRASEKHAR VS ACIT (ITAT, BANG) 66 TTJ 355 CIT VS UNITED COMMERCIAL & INDUSTRIAL CO. (P) LTD. (CAL) 187 ITR 596 IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IS NOT ESTABLISHED MERELY BY FILING BANK ACCOUNT DETAILS. GAYATHRI ASSOCIATES VS. INCOME - TAX OFFICER , HYDERABAD MERELY BECAUSE THE COMPANIES WERE REGISTERED WITH ROC, WERE FILING RETURN OF INCOME, HAVING PANS/BANK ACCOUNTS, SHARE APPLICATION FORMS WERE SUBMITTED BUT THE SAME DID NOT ESTABLISH THEIR IDENTITY AS THESE COMPANIES MIGHT HAVE BEEN EXISTING ON PAPERS OR IN REAL SENSE AT THE TIME OF REGISTRATION BUT WERE SPECIFICALLY FOUND TO BE NON - EXISTENT. FURTHER, ASSESSEE EVEN FAILED TO PRODUCE THE DIRECTOR OR EMPLOYEES OF THESE SHARE APPLICANTS AND, THUS, ADDITION UNDER SEC.68 MADE IN THE HANDS OF ASSESSEE WAS SUSTAINABLE AGRAWAL COAL CORPN. (P.) LTD. VS. ASSTT. CIT 63 DTR 201 (INDORE BENCH OF ITAT) ASSESSEE'S DUTY TO ESTABLISH THE SOURCE OF THE FUNDS DOES NOT CEASE BY MERELY FURNISHING THE NAMES, ADDRESSES AND PAN PARTICULARS, OR RELYING ON ENTRIES IN THE R EGISTRAR OF COMPANIES WEBSITE. THE COMPANY IS ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 53 USUALLY A PRIVATE ONE AND THE SHARE APPLICANTS ARE KNOWN TO IT SINCE THE SHARES ARE ISSUED ON PRIVATE PLACEMENT BASIS. CIT VS N.R. PORTFOLIOS PVT. LTD. IN ITA NOS. 134/2012 DOCTRINE OF 'SOURCE OF SOURCE' OR 'OR IGIN OF ORIGIN' CANNOT BE APPLIED UNIVERSALLY, WITHOUT REFERENCE TO THE FACTUAL MATRIX AND FACTS OF EACH CASE. COMMISSIONER OF INCOME TAX VS NR PORTFOLIO PVT. LTD., 206 (2014) DLT 97. COMMISSIONER OF INCOME TAX VS INDEPENDENT MEDIA (P) LTD. 210 TAXMANN 14( DELHI)(2012). NAVODAVA CASTLE PVT LTD VS CIT (2015 - TIQL - 314 - SC - IT) (COPY ENCLOSED) WHERE HON'BLE SUPREME COURT HELD THAT MERELY BECAUSE THE ASSESSEE HAS BEEN ABLE TO SHOW THAT THE SHAREHOLDER COMPANIES WERE DULY INCORPORATED AND THEIR IDENTITY & GENUINENESS STANDS ESTABLISHED, THERE WERE DEPOSITS OF CASH IN THE BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUE OR PAY ORDERS, THE SAME WOULD RAISE SUSPICION AND ADDITION CAN BE MADE ON SUCH ACCOUNT CIT VS NAVODAVA CASTLE PVT LTD T20141 367 ITR 306 (DEL) (COPY E NCLOSED) WHERE HON'BLE DELHI HIGH COURT ACCEPTEDTHAT SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE DIRECTORS AND THE PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THAT AS PER THE INFORMATION AND DETAILS COLLECTED BY THE ASSESSING OFFICER FRO M THE CONCERNED BANK, THE ASSESSING OFFICER HAD OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDENTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACTIONS. RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT T2016 - TIOL - 2Q7 - SC - IT1 (SUPRE ME COURT) (COPY ENCLOSED) WHERE HON'BLE SUPREME COURT DISMISSED SLP UPHOLDING THAT IT IS OPEN TO THE REVENUE DEPARTMENT TO MAKE ADDITION ON ACCOUNT OF ALLEGED SHARE CAPITAL U/S 68, WHERE THE ASSESSEE COMPANY HAS FAILED TO SHOW GENUINENESS OF ITS SHAREHOLDE RS. TAXMANN.COM 292, 214 TAXMAN 429. 350 ITR 407. CIT VS NIPUN BUILDERS & DEVELOPERS (P.) LTD (30 256 CTR 34) (COPY ENCLOSED) ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 54 WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE ASSESSEE FAILED TO PROVE IDENTITY AND CAPACITY OF SUBSCRIBER COMPANIES TO PAY SHAR E APPLICATION MONEY, AMOUNT SO RECEIVED WAS LIABLE TO BE TAXED UNDER SECTION 68. CIT VS NOVA PROMOTERS & FINLEASE (P) LTD (18 TAXMANN.COM 217. 206 TAXMAN 207. 342 ITR 169. 252 CTR 187) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT AMOUNT RECEIVE D BY ASSESSEE FROM ACCOMMODATION ENTRY PROVIDERS IN GARB OF SHARE APPLICATION MONEY, WAS TO BE ADDED TO ITS TAXABLE INCOME UNDER SECTION 68. CIT VS ULTRA MODERN EXPORTS (P.) LTD (40 TAXMANN.COM 458. 220 TAXMAN 165) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE IN ORDER TO ASCERTAIN GENUINENESS OF ASSESSEE'S CLAIM RELATING TO RECEIPT OF SHARE APPLICATION MONEY, ASSESSING OFFICER SENT NOTICES TO SHARE APPLICANTS WHICH RETURNED UNSERVED, HOWEVER, ASSESSEE STILL MANAGED TO SECURE DOCUMENTS SUCH AS THEIR INCOME TAX RETURNS AS WELL AS BANK ACCOUNT PARTICULARS, IN SUCH CIRCUMSTANCES, ASSESSING OFFICER WAS JUSTIFIED IN DRAWING ADVERSE INFERENCE AND ADDING AMOUNT IN QUESTION TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68. CIT VS FROSTAIR (P.) LTD (26 TAXMANN.COM 11. 210 TAXMAN 221) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE DETAILS FURNISHED BY ASSESSEE ABOUT SHARE APPLICANTS WERE INCORRECT, ADDITION UNDER SECTION 68 WAS PROPER CIT VS N R PORTFOLIO PVT LTD T20131 29 TAXMANN.COM 291 (PELHN/R20131 214 TAXMAN 408 (DELHI)/R20131 263 CTR 456 (DELHI) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT IF AO DOUBTS THE DOCUMENTS PRODUCED BY ASSESSEE, THE ONUS SHIFTS ON ASSESSEE TO FURTHER SUBSTANTIATE THE FACTS OR PRODUCE THE SHARE APP LICANT IN PROCEEDING. CIT VS EMPIRE BUILTECH (P.) LTD (366 ITR 110) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT U/S 68 IT IS NOT SUFFICIENT FOR ASSESSEE TO MERELY DISCLOSE ADDRESS AND ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 55 IDENTITIES OF SHAREHOLDERS; IT HAS TO SHOW GENUINENESS OF S UCH INDIVIDUALS OR ENTITIES. (DELHI)/F20151 228 TAXMAN 88) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE IN RESPECT OF SHARE APPLICATION MONEY, ASSESSEE FAILED TO PROVIDE COMPLETE ADDRESS AND PAN OF CERTAIN SHARE APPLICANTS WHEREAS IN CASE OF SOME OF SHARE APPLICANTS, THERE WERE TRANSACTIONS OF DEPOSITS AND IMMEDIATE WITHDRAWALS OF MONEY FROM BANK, IMPUGNED ADDITION MADE UNDER SECTION 68 WAS TO BE CONFIRMED. OM LOGISTICS IN ITA 4301/PEL/2014 FOR A.Y 2001 - 02 CIT VS FOCUS EXPORTS (P.) LTD (51 TAXMANN.COM 46 THE ABOVE SUBMISSIONS AND JUDGEMENTS MAY KINDLY BE CONSIDERED WHILE ADJUDICATING THE CASE OF THE REVENUE. WITHOUT PREJUDICE TO THE ARGUMENTS TAKEN ABOVE IT IS SUBMITTED AS UNDER: [A] THE PROVISIONS OF SECTION 153A ARE CLEAR AND DO NOT MANDA TE REQUIREMENT OF INCRIMINATING DOCUMENTS FOR PURPOSE OF FINALIZING ASSESSMENT OR REASSESSMENT UNDER SECTION 153A. 153A UNAMBIGUOUSLY STATES THAT 153(1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 A ND SECTION 153, IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY 2003, THE ASSESSING OFFICER SHALL CIT VS FOCUS EXPORTS ( P.) LTD (51 TAXMANN.COM 46 (DELHI)/R20151 228 TAXMAN 88) (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE IN RESPECT OF SHARE APPLICATION MONEY, ASSESSEE FAILED TO PROVIDE COMPLETE ADDRESS AND PAN OF CERTAIN SHARE APPLICANTS WHEREAS IN CASE O F SOME OF SHARE APPLICANTS, THERE WERE TRANSACTIONS OF DEPOSITS AND IMMEDIATE WITHDRAWALS OF MONEY FROM BANK, IMPUGNED ADDITION MADE UNDER SECTION 68 WAS TO BE CONFIRMED. OM LOGISTICS IN ITA 4301/PEL/2014 FOR A.Y 2001 - 02 THE ABOVE SUBMISSIONS AND JUDGEMENT S MAY KINDLY BE CONSIDERED WHILE ADJUDICATING THE CASE OF THE REVENUE. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 56 21. IN THE END, SHE SUBMITTED THAT FOR DETAILED INQUIRY IN THE WHOLE ISSUE OF ADDITION IS TO BE MADE AND THEREFORE THE MATTER MAY BE SET ASIDE TO THE FILE OF THE LD AO. 22. C OUNTERING THE CLA IM OF THE LD. CIT DR THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED A DETAILED ARGUMENT WITH RESPECT TO THE ABOVE GROUND AS WELL AS THE GROUNDS FOR AY 2009 - 10 , 2010 - 11 AND 2012 - 13 AND 2013 - 14 , WHICH ARE AS UNDER: - SUBMISSION OF THE RESPONDENT ASSESSEE: - A PERUSAL OF THE GROUNDS OF APPEALS OF THE DEPARTMENTAL APPEAL, THE CROSS OBJECTIONS FILED BY THE RESPONDENT ASSESSE AND FRESH GROUNDS OF CROSS OBJECTIONS RAISED BY THE RESPONDENT ASSESSE BRINGS OUT THAT THE ENTIRE CASE CAN BE DISCUSSED UNDER THE FOLLOWING THREE HEADS: - A. ADDITION UNDER SECTION 68 OF THE UNSECURED LOANS AND CONSEQUENT INTEREST PAYMENT B. DISALLOWANCE UNDER SECTION 14A . ' C. ISSUE OF VAT PENALTY THE LEGAL GROUNDS OF CROSS OBJECTIONS RAISED BY THE RESPONDENT ASSESSE ARISE IN PURSUANCE TO THE AFORE - SAID ADDITIONS. HENCE A COLLECTIVE SUBMISSION IS BEING MADE UNDER THE AFORE - SAID THREE ADDITIONS MADE BY THE DEPARTMENT. UNDER EACH HEAD, THE RESPONDENT ASSESSE HAS DISCUSSED BOTH THE LEGAL ASPECT TO THE CASE [AS RAISED BY THE ADDIT IONAL GROUNDS OF CROSS OBJECTIONS] AND MERITS [AS CONTESTED BY THE DEPARTMENT IN ITS APPEAL AND JUSTIFIED BY THE RESPONDENT ASSESSE IN ITS CROSS OBJECTIONS FILED. FURTHER SINCE THE QUANTIFICATION OF THE AMOUNT FOR EACH OF THE ASSESSMENT YEARS HAS ALREADY B EEN BROUGHT OUT EARLIER IN THE CHART MADE, THE SAME IS NOT REPEATED UNDER EACH HEAD FOR SAKE OF BREVITY. EACH OF THE THREE HEADS ARE NOW DISCUSSED HERE - UNDER: - ADDITION OF CASH CREDIT UNDER SECTION 68 THE FACTS PERTAINING TO THE SAID SHARE CAPITAL AND PREM IUM ARE AS UNDER: - AY 2012 - 13 THE RESPONDENT ASSESSEE HAD RECEIVED THE FOLLOWING AMOUNTS AS UNSECURED LOANS FROM CERTAIN KOLKATA BASED COMPANIES: - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 57 NAME AMOUNT WELLBUILDMARKETINGS PVT LTD 3,00,00,000/ - CONCRETE CREDIT LTD 55,00,000/ - EAGLE DEAL TRADE PVT LTD 40,00,000/ - JAGDHATRI COMMODITIES PVT LTD 1,75,00,000/ - KAILASHPATIVINCOM PVT LTD 70,00,000/ - OSCAR RETAILERS LTD 75,00,000/ - VIDHAN SALES AGENCIES PVT LTD 75,00,000/ - WINNER COMMOSALES PVT LTD 60,00,000/ - JUBILEE VINCOM PVT LTD 75,00,000/ - KHETANTRACON PVT LTD 50,00,000/ - TOTAL 9,75,00,0007 - FURTHER DURING AY 2012 - 13, THE FOLLOWING AMOUNT WAS ALSO RECEIVED AS SHARE APPLICATION MONEY: - NAME AMOUNT AMANAT AGENCIES PVT LTD 4,40,00,000/ - SKIPPER VINIMAY PVT LTD 3,22,00,000/ - OASIS COMMOTRADE PVT LTD 5,55,00,000 TOTAL 13,17,00,0007 - BOTH THE AFORE - SAID AMOUNTS WERE TREATED AS CASH CREDIT AND ADDED IN THE HANDS OF THE RESPONDENT ASSESSE AY 2013 - 14 THE RESPONDENT ASSESSE HAD RECEIVED THE FOLLOWING AMOUNTS AS UNSECURED LOANS FROM CERTAIN KOLKATA BASED COMPANIES: - NAME AMOUNT TIMELY MERCHANT PVT LTD 2,50,00,000/ - PRIMELINE SALES PVT LID 2,50,00,000/ - DAISY REALTORS PVT LTD 45,00,000/ - PRADHI DEALER 70,00,000/ - TOTAL 6,15,00,000/ - THE AFORE - SAID AMOUNTS WERE TREATED AS CASH CREDITS AND ADDED. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 58 FURTHER THE FOLLOWING AMOUNTS RECEIVED AS UNSECURED LOANS FROM NON - KOLKATA BASED COMPANIES WERE ALSO ADDED AS CASH CREDITS: - AY 2012 - 13 NAME AMOUNT ARYA MARKETING PVT LTD 4,00,00,000/ - MANISHA TRADERS 20,00,000/ - RAGHAV POWER & STEEL (P) LTD 50,00,000/ - RAGHAV TRADE 20,00,000/ - YUGANTAR POWER & STEEL PVT LTD 1,10,00,000/ - SHIV COAL BENFICIATION& POWER PVT LTD 3,50,00,000/ - SPACE BUILDWELL (I) PVT LTD 3,00,00,000/ - ADITYA TRADECOM 3,00,00,000 TOTAL 15,50,00,000 AY 2013 - 14 NAME AMOUNT ARYA MARKETING PVT LTD 30,00,000/ - THE AFORE - SAID AMOUNTS WERE ALSO ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 THE REASONS FOR DISALLOWANCES OF THE AFORE - SAID AMOUNTS AND THE REPLY OF THE RESPONDENT - ASSESSEE ARE DEALT WITH IN SUBSEQUENT PARAGRAPHS. HOWEVER AT THIS JUNCTURE IT IS IMPORTANT TO KNOW THAT THE SAID UNSECURED LOANS FOR AY 2009 - 10 & 2010 - 11 WERE ALREADY EXAMINED BY THE DEPARTMENT AND ACCEPTED VIDE THEIR ORDERS UNDER SECTION 143(3) OF THE ACT. DISCUSSION ON MERITS WITHOUT PREJUDICE TO THE ABOVE, THE UNDER - SIGNED WOULD ALSO LIKE TO DISCUSS THE CASE ON MERITS AS UNDER: - THE DISCUSSION ON MERIT IS DONE UNDER TWO HEADS AS UNDER: - A. AY 2009 - 10 & 2010 - 11 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 59 B. AY 2012 - 13 & 2013 - 14 THE DISCUSSION IS DONE AS ABOVE, SINCE THERE IS ONE COMMON CIT(A) ORDER FOR THE FIRST TWO ASSESSMENT YEARS I.E., AY 2009 - 10 & 2010 - 11 AND AGAIN ONE COMMON CIT(A) ORDER FOR AY 2012 - 13 & 2013 - 14. HENCE TO ADDRESS EACH AND EVERY ISSUE THE DISCUSSION IS DONE UNDER THE AFORE - SAID TWO HEADS : - AY 2009 - 10 & 2010 - 11 A.Y.2009 - 10 : RS.4,50,00,000/ - & : GRDS 2,3 & 4 OF DEPARTMENTAL APPEAL : GRDS 2 & 3 OF ASSESSEES CROSS OBJECTION A.Y.2010 - 11 : RS.33,81,00,000/ - : GRDS 2,3 & 4 OF DEPARTMENTAL APPEAL :GRDS 2 & 3 OF ASSESSEES CROSS OBJECTION AS ALREADY BROUGHT OUT IN EARLIER PARAGRAPHS THE RESPONDENT ASSESSE HAD RECEIVED THE FOLLOWING AMOUNTS AS UNSECURED LOANS FROM CERTAIN KO LKATA BASED COMPANIES: - NAME AY 2009 - 10 AY 2010 - 11 OMKARA AGENCIES PVT LTD 3,00,00,000/ - 80,00,000/ - KOMAL TIE UP PVT LTD 1,50,00,000/ - 90,00,000/ - GOOD HOPE VYAPAAR PVT LTD 16,91,00,000/ - JAGANNATH COMMODITIES PVT LTD 15,20,00,000/ - TOTAL 4,50,00,0007 - 33,81,00,000/ - THE AFORE - SAID AMOUNTS WERE TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 AND ADDED IN THE HANDS OF THE RESPONDENT ASSESSE. THE REASONS FOR MAKING THE SAID ADDITIONS AND THE REPLY OF THE RESPONDENT ASSESSE ARE DEALT WITH IN LATER PARAGRAPHS. THE AFORE - SAID AMOUNTS WERE ALSO ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 THE REASONS GIVEN BY THE LD AO FOR MAKING THE ADDITIONS ON ACCOUNT OF UNSECURED LOANS RECE IVED FROM THE SAID PARTIES [AS DETAILED ABOVE] ARE AS UNDER: - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 60 ALL THESE FOUR COMPANIES WERE ALSO INVESTORS IN GARUDA IMAGING & DIAGNOSTICS PVT LTD., AND SINDHU HOLDINGS PVT LTD. ALL THESE FOUR COMPANIES WERE ALSO ALLEGED TO HAVE BEEN NOT FOUND AT THEIR ORI GINAL ADDRESS IN THE INSPECTORS REPORT. ALL THESE FOUR COMPANIES WERE SEEN TO BE NOT VISITED UPON AND DO NOT FIND MENTIONED IN THE INSPECTORS REPORT. ALL THESE FOUR COMPANIES HAD MERGED IN PARAMITRA HOLDINGS PVT LTD., VIDE ORDER OF DELHI HIGH COURT DATED 0 9.11.2010. IN AY 2009 - 10 THE AMOUNTS WERE RECEIVED THROUGH CHEQUES WHEREAS IN AY 2010 - 11 THE AMOUNTS WERE RECEIVED AS TRANSFER THROUGH JOURNAL ENTRIES . THE GROUP HAS ROUTED ITS UNACCOUNTED MONEY EARNED FROM UPPRESSION/ UNDERREPORTING OF PROFITS INTO THE BUSINESS IN THE FORM OF SHARE APPLICATION MONEY ISSUED AT HIGH PREMIUM THROUGH VARIOUS KOLKATA BASED COMPANIES. SOME NOTINGS WERE FOUND IN THE COURSE OF SEARCH IN THE FORM OF DOCUMENTS AND HARD DISCS CASE LAWS RELIED UPON THE BY THE LD AO. IN REGARDS TO THE ABOVE THE UNDER - SIGNED WOULD LIKE TO SUBMIT AS UNDER: - IN THE FIRST PLACE ATTENTION IS SOUGHT TO THE EVIDENCES PLACED ON RECORD BY THE RESPONDENT ASSESSE BEFORE THE LOWER AUTHORITIES TO PROVE THE IDENTITY, CREDIT - WORTHINESS AND GENUINENESS OF THE TRANS ACTIONS. THESE WERE AS UNDER: - NAME AND ADDRESS OF THE SUBSCRIBER CONFIRMATIONS FROM PARTIES INDICATING THE PAN AND WARD/CIRCLE OF THE LOAN CREDITOR. PAN & INCOME TAX JURISDICTIONAL DETAILS BANK STATEMENTS IN THIS REGARD, ATTENTION IS SOUGHT TO THE DECISI ON OF THE LDCIT(A) FOR AY 2007 - 08 TO 2010 - 11 PAGE 97 WHEREIN HE HAS HELD THAT SECTION 68 CASTS THE INITIAL ONUS ON THE ASSESSE TO ESTABLISH THE IDENTITY AND CREDIT - WORTHINESS OF THE INVESTOR AND TO PROVE THE GENUI NENESS OF THE TRANSACTION. IN THE INSTANT C ASE IT IS OBSERVED THAT THE APPELLANT HAS DISCHARGED THE INITIAL ONUS BY FURNISHING THE NAME, ADDRESS, PAN, COPY OF ITR, COPY OF BANK STATEMENT AND CONFIRMATION FROM THE INVESTOR/CREDITOR THE ALLEGATION OF THE DEPARTMENT THAT THE GROUP HAS ROUTED ITS UNAC COUNTED MONEY EARNED FROM SUPPRESSION/UNDERREPORTING OF PROFITS INTO THE BUSINESS IN THE FORM OF SHARE APPLICATION MONEY ISSUED AT HIGH ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 61 PREMIUM THROUGH VARIOUS KOLKATA BASED COMPANIES IS NOT SUPPORTED BY ANY MATERIAL UNEARTHED IN THE COURSE OF SEARCH. NO E VIDENCE OF SUPPRESSION OF PROFIT HAS EVER BEEN DETECTED. IN THIS REGARD ATTENTION IS SOUGHT TO PAGE 81 OF THE DECISION OF THE LD CIT(A) FOR AY 2007 - 08 TO 2010 - 11 WHEREIN HE HAS HELD THAT THE ALLEGATION OF THE AO REGARDING SUPPRESSION/UNDER REPORTING OF PR OFITS REMAINS UNSUBSTANTIATED IN THE CASE OF THE APPELLANT. IN ALL THE SEVEN YEARS THAT THE AO HAS ASSESSED DURING THE POST SEARCH PERIOD, HE HAS NOT MADE ANY ADDITION ON ACCOUNT OF SUPPRESSION/UNDER REPORTING OF INCOME/PROFITS. AS REGARDS SEIZED DATA HAV ING NOTINGS PERTAINING TO THE SAID LOANS IT WAS ALREADY SUBMITTED BEFORE THE LOWER AUTHORITIES THAT OUT OF NINE TRANSACTIONS, FIVE PERTAINED TO GROUP CONCERNS WHO ARE ALSO ASSESSED WITH THE SAME AO. MOREOVER THE SAID DETAILS MERELY PERTAIN TO SHARE APPLICA TION, ICD AND LOANS RECEIVED. HENCE NO REASON TO MAKE ADDITION UNDER SECTION 68. FURTHER THE ALLEGATION THAT SIMILAR ADDITIONS HAVE BEEN MADE IN CASE OF GARUDA IMAGING, IT NEEDS TO BE BROUGHT TO THE ATTENTION OF YOUR HONOURS THAT THE SIMILAR ADDITION MADE THERE IS ALSO A SUBJECT MATTER OF APPEAL BEFORE YOUR HONOURS. THE SUBMISSION MADE IN THE SAID CASE ALSO APPLIES TO THE ASSESSE. IT HAS ALREADY BEEN BROUGHT OUT IN THE SAID SUBMISSION THAT: - A. THE ALLEGATION THAT THE SAID COMPANIES WERE NOT FOUND AT THEIR ADDRESSES BY THE INSPECTOR DEPUTED IS INCORRECT IN AS MUCH AS, AS APPARENT FROM THE REPORT OF THE INSPECTOR FURNISHED TO M/S GARUDA VIDE AOS LETTER DATED 04.03.2015, THE INSPECTOR HAD VISITED THE FOLLOWING COMPANIES: - GALORE SUPPLIERS PVT LTD ELGIN SALES PROMOTION PVT LTD SIMPRO VANIJYA PVT LTD ECHOLAC VINIMAY PVT LTD LEANDER MANUFACTURERS AND CREDIT PVT LTD HENCE THE INSPECTOR HAD NOT VISITED THE PREMISES OF THE AFORE - SAID FOUR COMPANIES. B. MOREOVER THE SAID COMPANIES HAD MADE INVESTMENTS IN FY 2008 - 09 WHILE THE ALLEGED ENQUIRY WAS BEING CONDUCTED IN 2015. THE RESPONDENT ASSESSE HAD ALREADY INFORMED THE ADI IN RESPONSE TO SUMMONS U/S 131 DATED 05.07.2012 THAT THESE TWO COMPANIES HAD MERGED WITH ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 62 PARAMITRA HOLDINGS PVT LTD., PURSU ANT TO AN ORDER DATED 09.11.2010 PASSED BY THE HONBLE HIGH COURT OF DELHI. IN FACT DURING THE COURSE OF ENQUIRY CONDUCTED UPON THE SAID TWO COMPANIES, THE SUMMONS WERE SERVED WITH NOTICES U/S 131 IN THE NAME OF THE POST - MERGER ENTITY I.E., PARAMITRA HOLDI NGS PVT LTD AND PARAMITRA HAD DULY COMPLIED BY GIVING THE PAN, CONFIRMATIONS, BANK STATEMENTS, COPIES OF P/L A/C AND BALANCE SHEETS TO THE INVESTIGATION WING AS WELL AS THE AO. FURTHER THE FACT THAT THE SAID COMPANIES HAD MERGED WITH PARAMITRA HOLDINGS PVT LTD., IS A MATTER OF KNOWLEDGE OF PUBLIC DOMAIN ON GOVERNMENT PORTALS LIKE MCA. C. AS REGARDS THE ALLEGATION THAT THE SAID COMPANIES HAD NO INCOME OR LESS INCOME IT WAS SUBMITTED THAT THERE IS NO RULE THAT LOANS CAN BE MADE FROM EARNINGS ONLY. THE SAID C OMPANIES HAD ENOUGH CAPITAL TO ADVANCE THE SAID FUNDS. D. AS REGARDS THE FACT THAT THERE WERE DEBITS JUST BEFORE CREDITS IN THE BANK ACCOUNTS OF THE SAID COMPANIES IT WAS EXPLAINED THAT IT IS THE DECISION OF THE COMPANIES WHETHER OR NOT TO KEEP THE SAID A MOUNTS IN CURRENT ACCOUNT. FURTHER THERE WERE NO CASH DEPOSITS IN THE SAID ACCOUNTS. IN CASE OF M/S GARUDA IMAGING AFTER HEARING THE AFORE - SAID ARGUMENTS THE LDCIT(A) DROPPED THE ADDITIONS MADE. AGGRIEVED BY THE SAID ORDER, THE DEPARTMENT HAS FILED AN APPEAL BEFORE HONBLE ITAT. CASE LAWS RELIED UPON BY THE ASSESSING OFFICER THE LD AO WHILE MAKING HIS ASSESSMENT ORDER HAD RELIED UPON SEVERAL CASE LAWS. THE RESPONDENT ASSESSE WHILE MAKING HIS SUBMISSION HAD DISTINGUISHED EACH OF THE SAID CASE LAW. THE SA ME IS DEALT WITH BY THE LDCIT(A) ON PAGES 57 - 76, 82 - 84 AND 91 - 97 OF HIS ORDER FOR AY 2007 - 08 TO 2010 - 11. ATTENTION IS SOUGHT TO THE FINDING OF THE LDCIT(A) ON PAGE 98 OF HIS ORDER WHEREIN HE HAS STATED THAT THE CASE LAWS RELIED UPON BY THE AO ARE NOT RELE VANT, ARE DISTINGUISHED ON FACTS AND CANNOT FORM THE BASIS OF THIS ADDITION. EACH CASE HAS BEEN DEALT WITH, DISTINGUISHED AND PROVED NOT TO BE RELEVANT. FOR SAKE OF BREVITY THE ENTIRE DISCUSSION IS NOT REPRODUCED HERE. SUFFICE IT IS TO SAY THAT THE LD CI T(A) HAVING GONE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 63 THROUGH EACH CASE LAW RELIED UPON BY THE ASSESSING OFFICER AND HAVING READ THE POINTS OF DISTINCTION BROUGHT OUT BY THE ASSESSE WAS SATISFIED THAT THE AR WAS ABLE TO DISTINGUISH EACH AND EVERY CASE. FURTHER IN REGARDS TO AY 2010 - 11 THE FIN DING OF THE LD AO, THAT THE AMOUNT WAS RECEIVED AS JOURNAL ENTRIES/TRANSFER ENTRIES IS UNFOUNDED AS THE RESPONDENT ASSESSE HAD SUBMITTED THE FOLLOWING DETAILS WITH THE INVESTIGATION WING DURING THE COURSE OF POST SEARCH ENQUIRIES IN 2012 AND WITH THE AO DU RING THE ASSESSMENT PROCEEDINGS: A. NAME AND ADDRESS OF THE SUBSCRIBER B. PAN AND INCOME TAX DETAILS C. AMOUNT RECEIVED D. DATE OF RECEIPT ALONG WITH MODE OF RECEIPT E. CONFIRMATIONS HENCE THE SAID AMOUNTS WERE ORIGINALLY RECEIVED AS CHEQUES AND LATER TRANSFERRED FROM ONE HEAD TO ANOTHER BY MEANS OF TRANSFER ENTRIES. IN VIEW OF THE AFORE - SAID DISCUSSION IT IS MOST HUMBLY REQUESTED THAT THE ADDITIONS MADE MAY KINDLY BE DROPPED. AY 2012 - 13 & 2013 - 14 A.Y.2012 - 13 : RS.22,92,00,000/ - & : GRDS 2,3,4,&6 OF DEP ARTMENTAL APPEAL : RS. 15,50,00,000/ - :GRDS 3 & 4 OF ASSESSEES CROSS OBJECTION A.Y.2013 - 14 : RS.6,15,00,000/ - :GRDS 2,3,4,6 & 7 OF DEPARTMENTAL APPEAL RS.30,00,000/ - :GRDS 3 & 4 OF ASSESSEES CROSS OBJECTION AS ALREADY BROUGHT OUT IN EARLIER PARAGRAPHS THE RESPONDENT ASSESSEE HAD RECEIVED THE FOLLOWING AMOUNTS AS UNSECURED LOANS FROM CERTAIN KOLKATA BASED COMPANIES: - NAME AMOUNT WELLBUILDMARKETINGS PVT LTD 3,00,00,000/ - CONCRETE CREDIT LTD 55,00,000/ - EAGLE DEAL TRADE PVT LTD 40,00,000/ - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 64 JAGDHATRI COMMODITIES PVT LTD 1,75,00,000/ - KAILASHPATIVINCOM PVT LTD 70,00,000/ - OSCAR RETAILERS LTD 75,00,000/ - VIDHAN SALES AGENCIES PVT LTD 75,00,000/ - WINNER COMMOSALES PVT LTD 60,00,000/ - JUBILEE VINCOM PVT LTD 75,00,000/ - KHETANTRACON PVT LTD 50,00,000/ - TOTAL 9,75,00,0007 - FURTHER DURING AY 2012 - 13, THE FOLLOWING AMOUNT WAS ALSO RECEIVED AS SHARE APPLICATION MONEY: - NAME AMOUNT AMANAT AGENCIES PVT LTD 4,40,00,000/ - SKIPPER VINIMAY PVT LTD 3,22,00,000/ - OASIS COMMOTRADE PVT LTD 5,55,00,000 TOTAL 13,17,00,0007 - BOTH THE AFORE - SAID AMOUNTS WERE TREATED AS CASH CREDIT AND ADDED IN THE HANDS OF THE RESPONDENT ASSESSE AY 2013 - 14 THE RESPONDENT ASSESSE HAD RECEIVED THE FOLLOWING AMOUNTS AS UNSECURED LOANS FROM CERTAIN KOLKATA BASED COMPANIES : - NAME AMOUNT TIMELY MERCHANT PVT LTD 2,50,00,000/ - PRIMELINE SALES PVT LTD 2,50,00,000/ - DAISY REALTORS PVT LTD 45,00,000/ - PRADHI DEALER 70,00,000/ - TOTAL 6,15,00,000/ - THE AFORE - SAID AMOUNTS WERE TREATED AS CASH CREDITS AND ADDED. FURTHER THE FOLLOWING AMOUNTS RECEIVED AS UNSECURED LOANS FROM NON - KOLKATA BASED COMPANIES WERE ALSO ADDED AS CASH CREDITS: - ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 65 ARYA MARKETING PVT LTD 4,00,00,000/ - MANISHA TRADERS 20,00,000/ - RAGHAV POWER & STEEL (P) LTD 50,00,000/ - RAGHAV TRADE 20,00,000/ - YUGANTAR POWER & STEEL PVT LTD 1,10,00,000/ - SHIV COAL BENFICIATION& POWER PVT LTD 3,50,00,000/ - SPACE BUILDWELL (I) PVT LTD 3,00,00,000/ - ADITYA TRADECOM 3,00,00,000 TOTAL 15,50,00,000 NAME AMOUNT ARYA MARKETING PVT LTD 30,00,000/ - THE AFORE - SAID AMOUNTS WERE ALSO ADDED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. THE REASONS GIVEN BY THE LD AO TO MAKE THE SAID ADDITIONS AND OUR REBUTTAL THERETO ARE DISCUSSED HERE - UNDER: - THE REASONS FOR MAKING ADDITIONS O F UNSECURED LOANS ARE SAME AS AY 2009 - 10 & 2010 - 11. AS REGARDS SHARE CAPITAL, THE RESPONDENT ASSESSE HAS SHOWN THEIR ADDRESSES AS 129, TRANSPORT CENTRE, PUNJABI BAGH, NEW DELHI WHICH IS ALSO THE ADDRESS OF VARIOUS GROUP COMPANIES OF THE RESPONDENT - ASSESSEE. HOWEVER THE BANK STATEMENT SHOWS THE ADDRESS AS 14, WESTON STREET, KOLKATA, WEST BENGAL - 12. THEIR PAN ALSO BORE KOLKATA BASED ADDRESSES AS UNDER: - NAME OF THE PARTY PAN JURISDICTION ADDRESS AMANAT AGENCIES PVT LTD AAGCA4515M ITO, WARD - 6(3), KOLKATA 4 TH FLOOR R.NO. 109 5/1 CLIVE ROW KOLKATA ........... SKIPPER VINIMAY PVT LTD AAMS1544G ITO, WARD - 1(3), KOLKATA 7/1 A, GRANT LANE, KOLKATA OASIS COMMOTRADE PVT LTD AABCO0636Q ITO, WARD - 1(2), KOLKATA 14, WESTON STREET, KOLKATA ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 66 HENCE THE RESPONDENT ASSESSE HAS WRONGLY SHOWN DELHI ADDRESS WHEN THE SAID COMPANIES ARE KOLKATA BASED. THEREFORE THE SAID COMPANIES MUST HAVE BEEN ACQUIRED BY THE ASSESSE GROUP, THE DETAILS OF WHICH ARE NOT DISCLOSED WITH THE DEPARTMENT. FURTHER THE SAID COMPANIES WERE NOT FOUND AT THE SAID KOLKATA ADDRESSES. FURTHER THE COMPANIES SHOWING TO HAVE ADVANCED UNSECURED LOANS DID NOT HAVE MUCH INCOME. THE BANK STATEMENTS SHOW THAT FOR EACH DEBIT ENTRY THERE WAS A CREDIT ENTRY OF MORE OR LESS IDENTICAL AMOUNT WITHIN THE SAME OR NEXT DAY. THE BALANCES IN THE ACCOUNTS WERE NOMINAL. IN REGARDS TO THE ABOVE IT HAS ALREADY BEEN SUBMITTED AS UNDER: - THE INVESTORS ARE CORPORATE ENTITIES. THEY ARE MAINTAINING PROPER BOOKS OF ACCOUNTS. THESE BOOKS OF ACCOUNTS ARE SUBJECTED TO STA TUTORY AUDIT BY INDEPENDENT AUDITORS. THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNTS ARE DULY FILED WITH INCOME TAX DEPARTMENT AND REGISTRAR OF COMPANIES AND ARE AVAILABLE IN PUBLIC DOMAIN. THERE IS NO ALLEGATION THAT CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTOR COMPANIES ON DATES IMMEDIATELY PRECEDING THE DATES ON WHICH INVESTMENT WAS MADE IN THE SAID COMPANIES. SINCE THE REASONS FOR MAKING ADDITIONS ARE SAME AS EARLIER YEARS THE SAME ARGUMENTS APPLIES TO THESE YEARS ALSO. FOR SAKE OF BREVITY THE SAME ARE NOT REPEATED HERE. AS REGARDS THE COMPANIES PROVIDING SHARE APPLICATION THE SAID ADDRESSES IN THE PAN AND BANK STATEMENT ARE OLD ADDRESSES. THE ENQUIRY WAS BEING CONDUCTED IN MARCH 2015. THE SAID COMPANIES HAD SINCE SHIFTED TO DELHI FW .E.F 25.06.2012, 30.06.2012 <6 30.06.2012] AND THE NECESSARY FORMALITIES OF THE ROC WERE DULY COMPLIED IN THIS REGARD. THIS NEW ADDRESS IS ALSO AVAILABLE ON MCA PORTAL AND HENCE THE SAME IS IN PUBLIC DOMAIN. HENCE THE RESPONDENT - ASSESSEE WHEN CALLED UPON T O FURNISH THE ADDRESSES OF THE SAID COMPANIES, FURNISHED THE PRESENT ADDRESSES. SINCE THE SAID COMPANIES HAD SHIFTED TO DELHI OBVIOUSLY THE INSPECTOR COULD NOT FIND THEM AT THE KOLKATA ADDRESSES. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 67 AS REGARDS THE ISSUE OF BANK STATEMENTS, THE SAME IS ALREADY DEALT WITH IN EARLIER ASSESSMENT YEARS [DISCUSSED SUPRA] AND FOR THE SAKE OF BREVITY IS NOT REPEATED HERE. FOLLOWING ITS DECISION FOR EARLIER YEARS, THE ADDITIONS MADE IN ASST YEARS 2012 - 13 & 2013 - 14 WERE ALSO DELETED. AS REGARDS UNSECURED LOANS FROM NON - KOLKATA BASED COMPANIES, THE FINDINGS AND REASONS GIVEN BY THE LD AO FOR MAKING THE SAID ADDITIONS BEING IDENTICAL AS ALSO ADMITTED BY THE AO IN HIS ORDER, THE ARGUMENTS OF THE RESPONDENT ASSESSE ARE ALSO SAME. FOR SAKE OF BREVITY THE SAME ARE NOT REPEATED HERE. INFACT, THE LD. CIT(A) FOLLOWING HIS ORDER FOR KOLKATA BASED COMPANIES, DELETED THE SAID ADDITIONS. THE ABOVE DISCUSSION CLEARLY BRINGS OUT THAT THE ADDITIONS UNDER SECTION 68 BEING WRONGLY MADE ON ASSUMPTIONS AND PRESUMPTIONS NEEDS TO BE DROPPED. D ISALLOWANCE IN RESPECT OF INTEREST A.Y.2010 - 11 :RS. 1,99,52,894/ - :GRD 5 OF DEPARTMENTAL APPEAL : GRD 4 OF ASSESSEES CROSS OBJECTION A.Y.2012 - 13 : RS. 10 ,05,974/ - & : GRDS 5,7 & 8 OF DEPARTMENTAL APPEAL RS. 7,22,730/ - : GRD 5 OF ASSESSEES CROSS OBJECTION A.Y.2013 - 14 : RS.48,90,986/ - : GRD 5 OF DEPARTMENTAL APPEAL : GRD 5 OF ASSESSEES CROSS OBJECTION THE SAID DISALLOWANCE WAS A CONSEQUENTIAL TO ALLEGED BOGUS LOANS [AS DISCUSSED ABOVE]. THE AO MADE THIS DISALLOWANCE BECAUSE THE INTEREST WAS PAID ON THE UNSECURED LOANS THAT WERE HELD TO BE BOGUS AND WERE TREATED AS UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT. THE SAID LOANS, BEING GENUINE, AS APPARENT FROM AFORE - SAID DISCUSSION, THE QUESTION OF THIS DISALLOWANCE DOES NOT ARISE. 23. H E FURTHER SUBMITTED A PAPER BOOK WHEREIN DETAILS OF ALL THE COMPANIES SUCH AS THEIR CONFIRMATION, PHOTOCOPIES OF INCOME TAX RETURNS AND BANK STATEMENTS , BALANCE SHEETS ETC WERE FURNISHED . HE FURTHER REFERRED TO LETTER DATED 9/3/2015 SUBMITTED BEFORE THE ASSESSING OFFICER CONTAINING THE DOCUMENTARY EVIDENCE AS TO SUBSTANTIATE THE UNSECURED LOAN RECEIVED DURING THE YEAR AND WITH RESPECT TO THE SHARE APPLICATION MONEY, HE SUBMITTED TH AT COMPLETE DETAILS WITH RESPECT TO THE CONFIRMATION, INCOME TAX RETURN AND BANK ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 68 STATEMENTS OF THE ABOVE P ARTIES. HE FURTHER STATED THAT V IDE LETTER DATED 9/3/ 2015 FURTHER DETAILS WERE SUBMITTED. HE FURTHER STATED THAT HONBLE DELHI HIGH COURT V IDE ORDER DATED 17/12/2013 WHERE ALL THE 3 COMPANIES FROM WHOM THE SHARE APPLICATION MONEY HAS BEEN RECEIVED MERGED WITH PARAM MITRA INVESTMENT HOLDINGS PRIVATE LIMITED . HE SUBMITTED THAT AT THE TIME OF MERGER ALL THESE COMPANIES WERE FOUND IN EXISTENCE, THEIR CREDITWORTHINESS AND GENUINENESS OF THE ABOUT TRANSACTION IS PROVED A S THE HONBLE HIGH COURT HAS APPROVED THE MERGER OF THESE 3 COMPANIES AND EXCHANGE RATIO HAS BEEN DECIDED , HE ALSO REFERRED TO ASSETS OF THOSE COMPANIES. HE FURTHER SUBMITTED THAT DURING THE MERGER THE INCOME TAX DEPARTMENT ALSO GIVES ITS OBJECTION IF ANY. NO SUCH OBJECTION FROM ROC ABOUT EXISTENCE OF THESE COMPANIES AS WELL AS OFFICIAL LIQUIDATOR WAS RECEIVED EVEN REMOTELY SUGGESTING THAT THESE COMPANIES DO NOT EXIST OR ARE IN GENUINE. HE FURTHER SUBMITTED THAT NONE OF THESE COMPANIES IS ALSO APPEARING IN THE LIST OF SHELL COMPANIES. IN VIEW OF THIS, HE SUBMITTED THAT WHEN HONBLE HIGH COURT HAS HELD THAT THESE COMPANIES ARE IN EXISTENCE , A S THEY HAVE BEEN MERGED WITH ANOTHER COMPANY , THEIR IDENTITY CANNOT BE DISPUTED. HE FURTHER SUBMITTE D THAT THE MERGER ORDER ALSO SPEAKS ABOUT THE ASSETS AND LIABILITIES BEING TAKEN OVER OF THESE COMPANIES BY THE PARAM MITRA INVESTMENT HOLDINGS LIMITED . THEREFORE, THE CREDITWORTHINESS OF THESE PARTIES ALSO CANNOT BE DISPUTED. WITH RESPECT TO THE CHANGE IN THE REGISTERED ADDRESS OF THESE COMPANIES , HE FURTHER SUBMITTED FORM NO. 18 FILED UNDER THE COMPANIES ACT WITH THE REGISTRAR OF COMPANIES . HE FURTHER STATED THAT AS HONOURABLE DELHI HIGH COURT HAS PASSED AN ORDER OF MERGER IT CANNOT BE STATED THAT THESE C OMPANIES DO NOT EXIST AT THE GIVEN ADDRESS OF DELHI . HE FURTHER SUBMITTED THAT MERELY BECAUSE THE BANK ACCOUNTS WERE SHOWING CALCUTTA ADDRESS OF THESE COMPANIES WHICH IS IN FACT PRIOR TO THE MERGER , IT CANNOT BE USED AGAINST THE ASSESSEE FOR MAKING THE HUG E ADDITION . HE FURTHER REFERRED TO THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 69 SEVERAL LETTER ADDRESSED TO THE ASSESSING OFFICER WHICH ARE PLACED AT PAGE NO. 192 218 OF THE PAPER BOOK SUBMITTED WHERE IN ASSESSEE HAS ESTABLISHED THE IDENTITY , CREDIT WORTHINESS OF THESE INVESTORS/ LENDERS AND ALSO THE GENUINENESS OF THE TRANSACTION OF LOAN AS WELL AS THE SHARE APPLICATION MONEY. 24. HE FURTHER REFERRED TO PAGE NO. 219 OF HIS PAPER BOOK WHEREIN THE DETAILED INSPECTORS REPORT IS GIVEN. HE SUBMITTED THAT WHOLE ADDITION HAS BEEN MADE BY THE LD AO BASED ON ONE INSPECTORS REPORT WHICH IS NOT AT ALL CORRECT REPORT. HE FIRSTLY SUBMITTED THAT INSPECTORS REPORT IS PERTAINING I N CASE OF M/S GARUDA IMAGING PRIVATE LIMITED AND NOT IN CASE OF THE ASSESSEE. HE FURTHER SUBMITTED THAT V IDE COLUMN NUMBER 4 O F INSPECTOR REPORTS REFERS TO EXAMINATION OF THE COMPANIES NAMELY, (1) GALORE SUPPLIERS PRIVATE LIMITED, (2) ELGIN SALES PROMOTION PRIVATE LIMITED , (3) SIMPRO VANIJYA PR IVATE LIMITED , (4) ECHOLAC VINIMAY PRIVATE LTD AND (5) OLEANDER MANUFACTUR ERS & CREDIT PRIVATE LIMITED . HE THEREFORE SUBMITTED THAT THE COMPANIES WHICH ARE BEEN ENQUIRED BY THE INSPECTOR ARE NOT AT ALL RELATED WITH THE IMPUGNED ASSESSMENT YEARS ISSUE. HE THEREFORE SUBMITTED THAT INSPECTORS REPORT RELIED UPON BY THE LD. AO IS WITHOUT APPLICATION OF MIND. HE FURTHER SUBMITTED THAT DDIT , ( INVESTIGATION ) ISSUED NOTICE UNDER SECTION 131 TO PAR A M MITRA HOLDINGS PRIVATE LIMITED THAT COMPANY REPLIED BY PROVIDING ALL THE INFORMATION. IN THE END, HE SUBMITTED THAT LD. AO HAS MADE THE WHOLE ADDITION WITHOUT VERIFYING THE PLETHORA OF DETAILS GIVEN BY THE ASSESSEE TO HIM AND WITHOUT LOOKING AT THE CORRECT FACTS PRODUCED BEFORE HIM. HE SUBMITTED THAT THE LD. AO HAS STATED THAT THERE IS A REPORT OF THE INVESTIGATION WING. HOWEVER, NO SUCH REPORT WAS GIVEN TO THE ASSESSEE TO COUNTER IT. HE FURTHER STATED THAT NO INFORMATION FROM THAT PARTICULAR REPORT WITH THE RESPECT TO THE ASSESSEE OR WITH RESPECT TO THE INVESTOR COMPANIES HAVE BEEN GIVEN TO THE ASSESSE OR MENTIONED IN ANY OF THE QUERY LETTERS. EVEN OTHERWISE, NO REFERENCE HAS BEEN MADE BY THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 70 ASSESSING OFFICER OF ANY PART OF ANY SUCH REPORT IN HIS ASSESSMENT ORDER ALSO. THEREFORE, THE LD. AO HAS RELIED UPON THE REPORT OF THE INVESTIGATION WING WHERE ASS ESSEE OR THE INVESTOR / LENDER COMPANY OR THE LENDER COMPANIES HAVE BEEN IMPLICATED AT ALL. HE FURTHER SERIOUSLY OBJECTED TO THE FACT THAT LD AO HAS MADE ADDITION ONLY BASED ON THE GEOGRAPHIC LOCATION OF THE INVESTOR COMPANIES WITHOUT ANY BASIS. HE FURTHER SUBMITTED THAT LD AO THOUGH HAS NOT MENTIONED ANY LOCATION OF OTHER COMPANIES FOR ADDITION OF RS 15.50 CRORES, BUT HAS A LSO MADE THE ADDITION. THEREFORE, THE ACTION OF THE L D AO IN CLASSIFYING THE INVESTORS BASED ON THE GEOGRAPHIC LOCATION WITHOUT ANY BASIS WAS NOT CORRECT. HE SUBMITTED THAT ME RELY BECAUSE THE COMPANIES ARE REGISTERED IN A PARTICULAR JURISDICTION, THE LD. AO HAS BELIEVED THAT TRANSACTIONS OF THE ASSESSEE AR E NOT GENUINE. HE REFERRED TO THE VARIOUS DETAILS GIVEN BY HIM OF THE VARIOUS LENDER COMPANIES AS WELL AS THE INVESTOR COMPANIES PLACED AT PAGE NO. 50 247 OF THE PAPER BOOK TO SHOW THAT ASSESSEE HAS GIVEN COMPLETE DETAILS TO THE LD. ASSESSING OFFICER AND THE LD. AO HAS NOT CARED TO EVEN VERIFY THE ABOVE DETAILS . HE SUBMITTED THAT NO INQUIRY LETTERS UNDER SECTION 133 (6) AS WELL AS SUMMONS UNDER SECTION 131 OF THE INCOME TAX WERE ISSUED TO ANY OF THE INVESTORS/ LENDERS. WITH RESPECT TO THE SOURCE OF THE F UNDS , HE SUBMITTED THAT ALL THESE COMPANIES ARE HAVING HUGE AVAILABILITY OF FUNDS IN THEIR ACCOUNTS AND MERELY BECAUSE IN SOME OF THE CASES WHERE INCOME IS LOW, IT CANNOT BE SAID THAT THERE DID NOT HAVE THE SOURCES OF THE FUNDS AND THEY ARE NOT CREDIT WORT HY . HE REFERRED TO THE BANK ACCOUNT OF THE INVESTOR/ LENDER COMPANIES WHERE IN THE ACCOUNTS ARE NORMAL AND NO CASH ARE DEPOSITED. HE FURTHER REFERRED TO THE BALANCE SHEET OF SOME OF THE COMPANIES WHERE THE HUGE SHAREHOLDERS FUNDS WAS SHOWN, WHICH IS MUCH MORE THAN THE INVESTMENT AND LOAN GIVEN TO THE ASSESSEE. HE SUBMITTED THAT WHOLE ADDITION HAS BEEN MADE BY THE LD. AO ON CONJECTURES, SURMISES AND GUESSWORK. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 71 25. HE FURTHER SUBMITTED THAT ALL THESE COMPANIES WERE ALSO LENDERS IN THE ASSESSEE COMPANY IN AY 2009 - 10 AND 2010 - 11 WHERE THE LD AO AFTER DETAILED EXAMINATION U/S 143(3) OF THE ACT HAS ACCEPTED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THESE INVESTOR / LENDER COMPANIES. THEREFORE, NOW THE ASSESSING OFFICER WITHOUT ANY RHYMES AND REASONS CANNOT SAY THAT THEY DO NOT EXIST AT ALL. 26. IN THE END, HE RELIED UPON THE PLETHORA O F JUDICIAL PRECEDENTS AND THE LAST ONE BEING THE DECISION OF THE HONBLE DELHI HIGH COURT IN ITA NO. 169/2017 I N CASE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX 5 VS. LAXMAN INDUSTRIAL RESOURCES LTD DATED 14/3/2017. HE PARTICULARLY REFERRED TO PAGE NO. 8 OF THE DECISION WHEREIN IT HAS BEEN HELD THAT WHEN ASSESSEE HAS PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY TRANSACTIONS WERE GENU INE OR NOT. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS BUT THEY HAVE PROVIDED THEIR PARTICULARS, PERMANENT ACCOUNT NUMBER DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY THROUGH BANKS, BANK STATEMENTS, CHEQUE NUMBER IN QUESTIONS AND THE BALANCE SHEETS. THE MASTER DATA OF THAT COMPANY WITH THE REGISTRAR OF COMPANY ALSO SHOWS THE SAME PARTICULARS. HE FURTHER STATED THAT IN THE PRESENT CASE ALSO AS HELD BY HONBLE DELHI HIGH COURT THE LD. ASSESSING OFFICER HAS STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND REST CONTENDED BY PLACING RELIANCE MERELY ON THE REPORT OF INSPECTOR WHICH IS ERRONEOUS . HE FURTHER STATED THAT THOUGH IN THE CASE BEFORE THE HONBLE DELHI HIGH COURT IT WAS A CASE OF THE REPORT OF THE INVESTIGATION WING WHEREAS IN THE CASE OF THE ASSESSEE NO SUCH REPORT HAS BEEN RELIED UPON BY THE LD. ASSESSING OFFICER BUT MERELY STATED THA T DIRECTOR (I NVESTIGATION ) HAS HELD THAT CALCUTTA COMPANIES ARE BOGUS. THEREFORE, HE STATED THAT WHEN THE ASSESSING OFFICER HAS FAILED TO DO ANY EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE , ASSESSEE DISCHARGES THE COMPLETE ONUS CAST UPON UNDER SEC TION 68 OF THE INCOME TAX ACT , ADDITION COULD NOT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 72 BE MADE. HE FURTHER REFERRED TO THE DECISION OF THE COORDINATE BENCH IN CASE OF H ASRHWARDAHAN GEMS PRIVATE LIMITED VERSUS ITO IN ITA NO. 1070/KOL/2010 DATED 3/2/2016 WHEREIN ON IDENTICAL FACTS AND CIRCUMSTA NCES OF THE CASE, THE ADDITION UNDER SECTION 68 WAS DELETED. HE FURTHER REFERRED TO THE DECISION OF COORDINATE BENCH KOLKATA IN CASE OF ITO VERSUS ROSEBERRY MERCANTILE PRIVATE LIMITED 211 1/ KOL /2009 WHEREIN ON IDENTICAL FACTS AND CIRCUMSTANCES THE ADDITION IS DELETED. HE FURTHER SUBMITTED THAT THE CASE OF THE ASSESSEE IS THAT THERE IS NO ALLEGATION THAT ASSESSEE HAS TAKEN MONEY FROM ALL THESE COMPANIES AS AN ACCOMMODATION ENTRY AND FURTHER NONE OF THE COMPANIES WHO HAVE INVESTED MONEY IN THE ASSESSEE IS SHOW N TO BE INVOLVED IN ACCOMMODATION ENTRIES BUSINESS . IN THE END HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VERSUS ORISSA CORPORATION PRIVATE LIMITED 159 ITR 78. HE REFERRED TO PARA NO. 13 OF THE ORDER AND SUBMITTED THAT ASSESSEE HAD GIVEN THE NAMES, ADDRESS, DETAILS OF THE INCOME TAX ASSESSMENT AND IN THE PRESENT CASE, THE AO HAS NOT ISSUED ANY SUMMONS OR ENQUIRY LETTER TO THOSE ASSESSEE, AS EVEN NOT ENQUIRED CORRECTLY, RELIED UPON THE WRONG NAME IN INSPECTORS REPORT, OVERLOOKED THE DECISION OF THE HONBLE HIGH COURT OF MERGER OF THOSE COMPANIES. HE ALSO REFERRED TO PARA NO 34 OF THE DECISION OF HONOURABLE DELHI HIGH COURT WHICH IS RELIED UP ON BY THE REVENUE , IN CASE OF NOVA PROMOTERS LIMITED RELIED UP ON BY THE REVENUE TO SAY THAT WHEN THE ASSESSEE SUBMITS THE COMPLETE DETAILS THEN, IN ABSENCE OF ANY INQUIRY BY THE LD AO PROVING THE DETAILS SUBMITTED BY THE ASSESSEE AS FALSE, NO ADDITION CAN BE MADE U/S 68 OF THE ACT. HE FURTHER STATED THAT THE LD. ASSESSING OFFICER HAS FAILED TO VERIFY THE DETAILS SUBMITTED THEN ASSESSEE COULD NOT HAVE DONE ANYTHING FURTHER. IN VIEW OF THIS, HE SUBMITTED THAT ADDITION DELETED BY THE LD. AS CIT (A) MAY BE UPHELD. 27. ON THE ISSUE OF ARGUMENTS OF THE LD CIT DR TO SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD AO , HE VEHEMENTLY OBJECTED TO THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 73 SAME. HE SUBMITTED THAT IDENTICAL REQUEST WAS MADE BY REVENUE IN SIMILAR CIRCUMSTANCES IN CASE BEFORE HONORABLE DELHI HIGH COURT IN LAXMAN INDUSTR IAL RESOURCES (SUPRA ) . HE SUBMITTED THAT IT WAS REJECTED BY THE HON'BLE HIGH COURT. HE SUBMITTED THAT DECISIONS BINDS THE COORDINATE BENCH AND IT CANNOT BE SET ASIDE AS LD AO HAS NOT DONE ANY INVESTIGATION IN THE CASE. 28. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. APPARENTLY, ASSESSEE IS A COMPANY, WHICH HAS TAKEN UNSECURED LOANS FROM SEVERAL COMPANIES DURING THE AY 2012 - 13 AND 2013 - 14 AND SHARE APPLICATION MONEY FOR BOTH THE YEARS. THE LIMITED ISSUES OPEN BEFORE US IS THAT WHETHER THE ACCEPTANCE OF ABOVE LOANS AND SHARE APPLICATION MONEY BY THE ASSESSEE COMPANY IS CHARGEABLE TO TAX UNDER SECTION 68 OF THE INCOME TAX ACT OR NOT IN THE HANDS OF THE ASSESSEE. BOTH THE PARTIES HAVE RELIED HEAVILY ON SEVERAL JUDICIAL PRECEDENTS IN FAVOUR AND AGAINST THE ISSUE . HOWEVER, BOTH THE PARTIES RELIED UPON ONE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VERSUS NOVA PROMOTERS AND FINLEASE PRIVATE LIMITED (342 ITR 169) (DELHI) TO ADVANCE THEIR ARGUM ENTS. WE ARE ALSO CONVINCED THAT ABOVE DECISION OF THE HONBLE HIGH COURT HAS LAID DOWN CERTAIN PARAMETERS WITHIN WHICH THE CASE OF THE ASSESSEE IS REQUIRED TO BE TESTED. THE HONBLE DELHI HIGH COURT IN THE ABOVE DECISION HAS HELD AFTER CONSIDERING THE DEC ISION OF THE HONBLE SUPREME COURT IN CASE OF CIT V. LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST.) 5 (SC) ; [2008] 216 CTR (SC) 195 AS WELL AS DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT V. (1) DIVIN E LEASING AND FINANCE LIMITED (2) GENERAL EXPORTS AND CREDITS LTD. AND (3) LOVELY EXPORTS P. LTD. [2008] 299 ITR 268 (DELHI) AT PAGE NO. 193 IN PARA NO. 33 ONWARDS , AS UNDER: - 33. SINCE STRONG RELIANCE WAS PLACED BY THE ASSESSEE ON THE ORDER OF THE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST.) 5 (SC) ; [2008] 216 CTR (SC) 195 IT WOULD BE NECESS ARY TO ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 74 EXAMINE THE FACTS OF THAT CASE AND THE RATIO LAID DOWN THEREIN IN ORDER TO DECIDE THE APPLICABILITY OF THAT CASE TO THE ONE BEFORE US. IT WOULD ALSO BE NECESSARY TO EXAMINE THE STRING OF DECISIONS OF THIS COURT ON THE QUESTION OF APPLICABILITY OF SE CTION 68 OF THE ACT TO MONIES RECEIVED AS SHARE CAPITAL. 34. THE FACTS OF CIT V. LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST) 5 (SC) HAVE BEEN SET OUT IN THE JUDGMENT OF THIS COURT IN THAT CASE, REPORTED AS CIT V. (1) DIVINE LEASING AND FINANCE LIMITED (2) G ENERAL EXPORTS AND CREDITS LTD. AND (3) LOVELY EXPORTS P. LTD. [2008] 299 ITR 268 (DELHI). IN THAT CASE, THE SHARE CAPITAL SUBSCRIPTION WAS RECEIVED THROUGH BANKING CHANNELS AND COMPLETE RECORDS WERE MAINTAINED B Y DIVINE LEASING AND FINANCE LTD. THE ASSESSING OFFICER ISSUED SUMMONS UNDER SECTION 131 AND THEREAFTER IMPOUNDED THE SHAREHOLDERS' REGISTER, SHARE APPLICATION FORMS AND SHARE TRANSFER REGISTER. IT WAS CONTENDED BY THE ASSESSEE IN THAT CASE THAT BECAUSE OF THE ACTION OF THE ASSESSING OFFICER, IT WAS NOT ABLE TO FURNISH ANY DETAILS ABOUT THE SHARE SUBSCRIBERS. THE TRIBUNAL FOUND THAT THE ALLOTMENT OF SHARES WAS MADE AS PER THE RELEVANT RULES OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956, AS WELL AS THOS E OF THE DELHI STOCK EXCHANGE. NO EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO INDICATE THAT THE SHAREHOLDERS WERE EITHER BENAMIDARS OF THE ASSESSEE - COMPANY OR FICTITIOUS OR THAT THE SHARE APPLICATION MONIES WERE THE UNACCOUNTED INCOME O F THE ASSESSEE - COMPANY. THE TRIBUNAL ACCORDINGLY HELD THAT THE ONUS THAT LAY ON THE ASSESSEE UNDER SECTION 68 STOOD DISCHARGED. 35. IN RESPECT OF THE OTHER ASSESSEE, NAMELY, GENERAL EXPORTS AND CREDITS LTD., THE MONIES WERE RECEIVED BY THE SAID COMPANY ON ISSUE OF RIGHTS SHARES TO FIVE COMPANIES PURSUANT TO THE RENUNCIATION OF RIGHTS BY SEVERAL INDIVIDUAL SHAREHOLDERS. A SEARCH HAD BEEN CONDUCTED ON THE PREMISES OF THE ASSESSEE, BUT THOSE RENUNCIATION FORMS WERE NOT FOUND WITH THE ASSESSEE. AS IN THE CASE O F DIVINE LEASING AND FINANCE LTD. [2008] 299 ITR 268 (DELHI), THE FIVE COMPANIES WERE REGISTERED IN SIKKIM AT THE SAME ADDRESS. THEY ALL FILED REPLIES TO THE DEPARTMENT ASKING FOR FURTHER TIME TO PROVIDE THE DETA ILS OF THEIR INVESTMENTS. THEY HAD ALSO FILED RETURNS OF INCOME UNDER THE SIKKIM TAXATION MANUAL AND HAD SUBSCRIBED TO THE SHARES THROUGH BANKING CHANNELS. MOREOVER, THE INVESTIGATIONS CARRIED ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 75 OUT INTO THOSE COMPANIES BY THE INCOME - TAX DEPARTMENT AT CALCUT TA AND THE ADVERSE FINDINGS THEREIN HAD BEEN STRUCK DOWN AS BEING WITHOUT JURISDICTION IN APPEALS FILED BY THOSE COMPANIES AND, THEREFORE, THE ASSESSING OFFICER HAVING JURISDICTION OVER GENERAL EXPORTS AND CREDITS LTD. IN BULANDSHAHAR COULD NOT RELY UPON T HEM. IN THESE CIRCUMSTANCES, THE TRIBUNAL HAD DELETED THE ADDITION MADE UNDER SECTION 68 ON THE GROUND THAT THE IDENTITY OF THE SHAREHOLDERS HAD BEEN PROVED. THIS COURT DID NOT APPROVE OF THE GROUND ON WHICH THE TRIBUNAL HAD CANCELLED THE ADDITION AND OBSE RVED THAT THE JUDGMENT OF THE FULL BENCH OF THIS COURT IN SOPHIA FINANCE LTD. [1994] 205 ITR 98 (DELHI) [FB] COULD NOT BE UNDERSTOOD TO HAVE ENUNCIATED THAT ONCE THE IDENTITY OF THE SHAREHOLDERS IS PROVED THERE C AN BE NO ADDITION IN THE HANDS OF THE COMPANY WHICH RECEIVED THE SHARE MONIES. THE COURT, HOWEVER, REFUSED TO ATTACH ANY IMPORTANCE TO THE VIOLATION OF THE PROVISIONS OF THE COMPANIES ACT, 1956, IN THE MATTER OF RENUNCIATION OF THE RIGHT TO SUBSCRIBE TO TH E SHARES AND HELD THAT IT WAS A MATTER OF CONCERN ONLY OF THE APPROPRIATE AUTHORITY UNDER THAT ACT. ACCORDINGLY, THE ULTIMATE DECISION OF THE TRIBUNAL CANCELLING THE ADDITION WAS UPHELD. 36. THE FACTS OF LOVELY EXPORTS P. LTD., AS NOTED BY THIS COURT, ARE THESE. THE ASSESSEE - COMPANY IN THAT CASE HAD FURNISHED THE NECESSARY DETAILS SUCH AS PAN NO./INCOME - TAX WARD NO./RATION CARD OF THE SHARE APPLICANTS AND SOME OF THEM WERE ASSESSED TO TAX. THE MONIES WERE RECEIVED THROUGH BANKING CHANNELS. IN SOME CASE, AFF IDAVITS/CONFIRMATIONS OF THE SHARE APPLICANTS CONTAINING THE ABOVE INFORMATION WERE FILED. THE ASSESSING OFFICER DID NOT CARRY OUT ANY INQUIRY INTO THE INCOME - TAX RECORDS OF THE PERSONS WHO HAD GIVEN THEIR FILE NUMBERS IN ORDER TO ASCERTAIN WHETHER THEY WE RE EXISTENT OR NOT. HE NEITHER CONTROVERTED NOR DISAPPROVED THE MATERIAL FILED BY THE ASSESSEE. FURTHER, THE ASSESSEE HAD SPECIFICALLY INVITED THE ASSESSING OFFICER TO CARRY OUT AN ENQUIRY AND EXAMINE THE ASSESSMENT RECORDS OF THE SHARE APPLICANTS WHOSE IN COME - TAX FILE NUMBERS WERE GIVEN. THOUGH THE ASSESSING OFFICER HAD SUFFICIENT TIME TO CARRY OUT THE EXAMINATION, HE DID NOT DO SO, BUT PUT FORTH AN EXCUSE THAT THE ASSESSEE WAS TAKING SEVERAL ADJOURNMENTS. THIS COURT OBSERVED THAT IT IS FOR THE ASSESSING O FFICER TO MANAGE HIS SCHEDULE AND HE SHOULD HAVE ENSURED THAT BECAUSE OF THE ADJOURNMENTS HE DID NOT RUN OUT OF ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 76 TIME FOR DISCHARGING THE DUTIES CAST ON HIM BY LAW. IT WAS HELD THAT WHEN DETAILS WERE FURNISHED BY THE ASSESSEE, THE BURDEN SHIFTED TO THE ASSE SSING OFFICER TO INVESTIGATE INTO THE CREDITWORTHINESS OF THE SHARE APPLICANTS WHICH HE WAS UNABLE TO DISCHARGE. THUS, THE ORDER OF THE TRIBUNAL DELETING THE ADDITION WAS HELD NOT GIVING RISE TO ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUESTION OF LA W. 37. IT IS NOT ONLY RELEVANT TO NOTE THE ABOVE FACTS, WHICH DISTINGUISH THOSE THREE CASES (SUPRA) FROM THE CASE BEFORE US, BUT IT IS ALSO RELEVANT TO NOTE THE FOLLOWING OBSERVATIONS MADE BY THIS COURT IN THE ABOVE THREE CASES (PAGE 280 OF 299 ITR) : 'THE RE CANNOT BE TWO OPINIONS ON THE ASPECT THAT THE PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST BE FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHERE THE PREPONDER ANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND COMPLEXITY OF THE ASSESSED IT SHOULD NOT BE HARASSED BY THE REVENUE'S INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF A PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATUTORY SHARE APPLICATION DOCUM ENTS. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WOULD NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF SECTIONS 68 AND 69 OF THE INCOME - TAX ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE AS SESSEE; IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY BOUND, TO CARRYOUT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY A DHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY.' WE MAY ALSO NOTE THAT A REFERENCE WAS MADE BY THIS COURT TO SEVERAL AUTHORITIES, INCLUDING AT LEAST SEVEN JUDGMENTS OF THIS COURT ON THE QUESTION OF APPLICA BILITY OF SECTION 68 TO SHARE APPLICATION MONIES, AND THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 77 POSITION WAS PITHILY SUMMED UP AS FOLLOWS AT PAGE 282 (OF 299 ITR) : 'IN THIS ANALYSIS, A DISTILLATION OF T HE PRECEDENTS YIELDS THE FOLLOW ING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE INCOME - TAX ACT. THE ASSESSED HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITOR/SUBSCRIBER ; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS ; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER ; (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGIS TER, ETC., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE ; (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND TO ITS NOTICES ; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESSEE ; AND (7) THE A SSESSING OFFICER IS DUTY - BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/ SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION.' 38. THE JUDGMENT OF THIS COURT IN THE ABOVE THREE CASES WAS CARRIED IN APPEAL TO THE SUP REME COURT BY THE REVENUE WHICH FILED S. L. P. NO. 11993 OF 2007. THE PETITION FOR LEAVE TO APPEAL WAS DISMISSED BY THE SUPREME COURT OBSERVING AS BELOW : 'DELAY CONDONED. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961 ? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSES SEE - COM PANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN T HE DEPARTMENT, IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. SUBJECT TO THE ABOVE, SPECIAL LEAVE PETITION IS DISMISSED.' ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 78 39. THE RATIO OF A DECISION IS TO BE UNDERS TOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME - TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATI ON FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER, ETC., ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SECTION 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIA L SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE - MEDITATED PLAN A SMOKESCREEN CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRAC TED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SECTION 68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLA CED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 79 40. THE CASE OF CIT V. ORISSA CORPORATION [1986] 159 ITR 78 (SC) EXEMPLIFIES THE CATEGORY OF CASES WHERE NO ACTION IS TAKEN BY THE ASSESSING OFFICER TO VERIFY OR CONDUCT AN ENQUIRY INTO THE PARTICULARS ABOUT THE CREDITORS FURNISHED BY THE ASSESSEE, INCLUDING THEIR INCOME - TAX FILE NUMBERS. IN THE SAME CATEGORY FALL CASES DECIDED BY THIS COURT IN CIT V. DOLPHIN CANPACK [2006] 283 ITR 190 (DELHI), CIT V. MAKHNI AND TYAGI P. LTD. [2004] 267 ITR 433 (DELHI), CIT V. ANTARTICA INVESTME NT P. LTD. [2003] 262 ITR 493 (DELHI) AND CIT V. ACHAL INVESTMENT LTD. [2004] 268 ITR 211 (DELHI). TO PUT IT SIMPLY, IN THES E CASES THE DECISION WAS BASED ON THE FUNDAMENTAL RULE OF LAW THAT EVIDENCE OR MATERIAL ADDUCED BY THE ASSESSEE CANNOT BE THROWN OUT WITHOUT ANY ENQUIRY. THE RATIO DOES NOT EXTEND BEYOND THAT. THE BOUNDARIES OF THE RATIO CANNOT BE, AND SHOULD NOT BE, WIDEN ED TO INCLUDE THEREIN CASES WHERE THERE EXISTS MATERIAL TO IMPLICATE THE ASSESSEE IN A COLLUSIVE ARRANGEMENT WITH PERSONS WHO ARE SELF - CONFESSED 'ACCOMMODATION ENTRY PROVIDERS . 29. ON CAREFUL CONSIDERATION OF THE ABOVE DECISION OF THE HONBLE DELHI HIGH COUR T , ILLUSTRATIVELY BUT NOT EXHAUSTIVELY , FOLLOWING FIVE SITUATIONS COMES TO OUR MIND WITH RESPECT TO THE TAXATION OF SHARE CAPITAL AND UNSECURED LOAN UNDER SECTION 68 OF THE INCOME TAX ACT IN CASE OF COMPANIES, WHICH ARE AS UNDER: - A. IN CASE OF PUBLIC COMPANIES I. IF PUBLIC ISSUE IS FLOATED WHICH IS GOVERNED BY THE PROVISIONS OF SEBI ACT, OR II. IF DEPOSITS ARE ACCEPTED FROM PUBLIC AS PER ACCEPTANCE OF DEPOSIT RULES AND DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHES BEFORE THE LD. ASSESS ING OFFICER DETAILS OF THE SHAREHOLDERS, SUCH AS THE NAME, ADDRESS, BANK ACCOUNT NUMBER WITH THE DETAILS OF THE BANK AND BRANCH OF THE BANK, PERMANENT ACCOUNT NUMBER, AND THE ASSESSEE HAS DISCHARGED ITS PRIMARY O NUS CAST ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 80 UNDER SECTION 68 OF THE INCOME TAX ACT. IN SUCH A SITUATION , NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY GENERALLY. OTHER LOAN TRANSACTIONS IN CASE OF COMPANIES WOULD BE DEALT WITH SEPARATELY AS IN CASE OF A PRIVATE COMPANY. B. HOWEVER, IN CASE OF A PUBLIC COMPANY , IF THE ISS UES OF SHARES OR LOANS ARE TAKEN UNDER THE PRIVATE PLACEMENT ROUTE THEN THE CRITERIA OF DISCHARGING THE O NUS DOES NOT DIFFER AND WOULD BE SAME, AS IT IS APPLICABLE TO A PRIVATE LIMITED COMPANY. C. IN CASE OF A PRIVATE LIMITED COMPANY , IF THE SHARES ARE ISSUED OR LOANS ARE OBTAINED , THEN THE ONUS IS ON THE ASSESSEE COMPANY TO FURNISH THE I. NAMES OF THE SHAREHOLDERS, II. TH EIR COMPLETE ADDRESS, III. PERMANENT ACCOUNT NUMBER, IV. COPIES OF THE BANK ACCOUNT OF THE INVESTORS WHERE FROM THE SHARE APPLICATION MONEY FOR LOANS HAS BEEN ADVANCED BY THEM TO THE ASSESSEE, V. THEIR INCOME TAX DETAILS SUCH AS RETURN OF INCOME AND LATEST ASSESSMENT ORDERS AND BALANCE SHEETS ETC . IN SUCH CASES, IF THERE IS NO OTHER ADVERSE MATERIAL WITH THE ASSESSING OFFICER, THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS. IF IN SUCH A SITUATION THE AO ACCEPTS THE SUBMISSIO N OF THE ASSESSEE OR DOES NOT MAKE ANY FURTHER ENQUIRY ON THESE DETAILS , THEN ADDITION UNDER SECTION 68 CANNOT BE MADE. THE ABOVE PRINCIPLES ARE CULLED OUT FROM THE VARIOUS DECISIONS OF HONBLE HIGH COURTS . D. IN CASE OF A PRIVATE LIMITED COMPANY IF THE ASSESSEE FURNISHES ALL THE DETAILS AS MENTIONED IN ABOVE PARA AND THE ASSESSING OFFICER MAKES ANY ENQUIRY ON THE SUBMISSION OF THE ABO VE DETAILS , THEN IN SUCH CASE, THE ASSESSING OFFICER SHOULD GIVE AN OPPORTUNITY TO THE ASSESSEE CONFRONTING THE MATERIALS OR ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 81 FINDINGS OF HIS ENQUIRY. IN SUCH CASES, THE ONUS ONCE AGAIN SHIFTS TO THE ASSESSEE WHO MUST , TO AVOID THE ADDITION UNDER SECTION 68 OF THE ACT, SATISFY THE ASSES SING OFFICER ABOUT THE IDENTITY, CREDITWORTHINESS, AND GENUINENESS OF THE TRANSACTION OF SHARE APPLICATION OR LOAN MEETING THE RESULTS OF INQUIRY OF THE LD AO . IF THE ASSESSEE FAILS TO DO SO TO THE SATISFACTION OF THE ASSESSING OFFICER, IT MAY RESULT INTO ADDITION UNDER SECTION 68 OF THE ACT. E. IN CASE OF A PRIVATE LIMITED COMPANY , IF THERE IS ANY EVIDENCE AVAILABLE BEFORE THE ASSESSING OFFICER THAT ASSESSEE HAS OBTAINED SUCH LOAN OR SHARE CAPITAL FROM FICTITIOUS PERSONS , OR FROM ACCOMMODATION ENTRY PROVIDE RS, OR LENDERS/ DEPOSITORS HAVE CONFESSED ABOUT IN GENUINETY OF SUCH LOANS GIVEN BY THEM BEFORE INVESTIGATION WING OR OTHER INCOME TAX AUTHORITIES UNDER ANY PROCEEDINGS, T HEN IN SUCH CASES, EVEN IF THE ASSESSEE PROVIDES ALL THE DETAILS OF THE SHARE APPLIC ANTS OR LENDERS, MOSTLY I N SUCH CASE S , THE ADDITION U/S 68 IS JUSTIFIED. THE CLAIM OF THE ASSESSEE OF ASKING FOR CROSS - EXAMINATION OF SUCH ENTRY PROVIDERS IN CERTAIN CASES ALSO FAILS AS HELD IN THE CASE OF CIT VERSUS NOVA PROMOTERS AND FINLEASE PRIVATE LIMITED ( SUPRA). 30. ON THE BASIS OF ABOVE PREMISES, THE FACTS OF THE CASE BEFORE US IS REQUIRED TO BE TESTED THAT WHETHER THE SHARE APPLICATION MONEY AND LOANS OBTAINED BY THE ASSESSEE FROM VARIOUS COMPANIES IS CHARGEABLE TO TAX U/S 68 OF THE ACT. 31. ADMITTEDLY, ASSESSEE HAS NOT OBTAINED THE LOANS AS WELL AS THE SHARE APPLICATION MONEY IN ANY PUBLIC ISSUE BUT IT IS PRIVATELY PLACED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT IS NOT CONTROVERTED THAT ASSESSEE HAS SUBMITTED FOLLOWING DETAILS BEFORE THE ASSESSING OFFICER WITH RESPECT TO LOAN AND THE SHARE APPLICATION MONEY. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 82 A. NAME AND ADDRESS OF SHARE APPLICANTS AND LENDERS B. PERMANENT ACCOUNT NUMBERS OF THE PARTIES C. CONFIRMATION OF THE PARTIES WITH RESPECT TO ABOVE TRANSACTIONS D. PHOTOCOPY OF BANK ACCOUNTS OF THE PARTIES FROM WHICH THE AMOUNT OF SHARE APPLICATION MONEY AND LOANS HAVE BEEN PAID TO THE ASSESSEE E. PHOTOCOPY OF INCOME TAX RETURN OF THE SHARE APPLICANT AND LENDERS F. BALANCE SHEET OF THE DEPOSITORS AND SHAREHOLDERS 32. VIDE LETTER DATED 21.10.2015 THE ASSESSEE ALSO SUBMITTED THAT ABOVE COMPANIES ARE NOT PAPER COMPANIES AND ARE DOING BUSINESS RESPECTIVELY. IT WAS FURTHER SUBMITTED THAT THERE IS NOT A SINGLE INVESTOR COMPANY WHOSE IDENTITY, CREDITWORTHINESS AND GENUINENESS REMAINS TO BE ESTABLISHED. THE ASSESSEE FURTHER SUBMITTED THAT IF THE AO NEEDS ANY FURTHER INFORMATION THEN, AO MIGHT ASK BY GUIDING THE ASSESSEE ABOUT THE PARTY AND NATURE OF INFORMATION REQUIRED BY HIM WITH RESPECT TO ANY OF SUCH COMPANIES . REGARDING TH E SOURCE OF INVESTMENT IN SHARE CAPITAL , THE ASSESSEE ALSO SUBMITTED VIDE LETTER DATED 28.10.2015 ABOUT THE INVESTMENT OF ABOVE COMPANIES THAT SECTION 68 AMENDED W.E.F. AY 2013 - 14 REQUIRES ASSESSEE COMPANY TO PROVE SOURCE OF INVESTMENT MADE BY THE INVESTO RS WITH SUPP ORTING EVIDENCE TO THE SATISFACT ION OF THE LD ASSESSING OFFICER. DESPITE THAT ASSESSEE SUBMITTED THE COMPLETE DETAILS SHOWING THE BANK ACCOUNT OF THE INVESTORS. VIDE LETTER DATED 02.11.2015 ASSESSEE FURTHER SUBMITTED COPY OF THE BANK STATEMENT OF THE INVESTORS ALONG WITH THE DETAILS REGARDING THE SOURCE OF THE FUNDS OF THE INVESTOR . FURTHER, VIDE LETTER DATED 26.11.2015 ASSESSEE SUBMITTED THE YEAR WISE DETAILS APPEARING IN THE BOOKS OF ACCOUNT OF ALL THE LENDERS AND ALSO FURNISHED RECONCILIATION OF THE SAME WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE AS AT 17.06.2010 AND 31.03.2010. F URTHER, BY THAT LETTER IT IS MENTIONED BY THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 83 ASSESSEE THAT LD AO HAS MENTIONED ALL THE COMPANIES ARE KOLKATA BASED COMPANIES AND ARE SHELL COMPANIES IS INCORRECT . IT WAS FURTHER SUBMITTED THAT ENQUIRY HAS NOT BEEN MADE IN THE CASE OF ASSESSEE COMPANY THRO UGH INSPECTOR. FURTHER, THE EXPLANATION WITH RESPECT TO THE ENQUIRY OF THE INSPECTOR IN CASE OF OTHER GROUP COMPANIES WAS ALSO SUBMITTED TO BE NOT RELEVANT, AS THE IMPUGNED COMPANIES ARE NOT MENTIONED THERE. VIDE LETTER DATED 27.11.2015 THE ASSESSEE HAS OB JECTED TO THE ACTION OF THE LD ASSESSING OFFICER STATING THAT AO HAD POINTED OUT BASED ON THE ALLEGED FINDINGS OF AN INSPECTORS REPORT OBTAINED BY THE PREDECESSOR OF THE AO CERTAIN ADDITIONS WERE MADE IN OTHER COMPANIES AND THEREFORE, IN THE PRESENT CASE ALSO SIMILAR ADDITIONS WOULD BE MADE. ASSESSEE OBJECTED TO THE SAME AND SUBMITTED THAT SUCH ADDITIONS MADE WERE ALREADY DELETED IN THE CASE OF GROUP CONCERN AND ORDER OF THE LD CIT ( A) WAS PLACED BEFORE LD. AO. FURTHER LETTER DATED 20.03.2015 WAS SUBMITTED TO THE AO IN CASE OF ANOTHER SISTER COMPANY WHERE THE AO OF THE ASSESSEE IS ALSO THE SAME GIVING DETAILS OF CROSS VERIFIED DATA FROM THE M CA WEBSITE AS THE ENQUIRY IS BEING MADE AFTER TWO YEARS. IT WAS FURTHER STATED THAT NOTICES U/S 131 OR 133(6) MAY BE ISSUED TO THESE PARTIES IF THE AO HAS ANY DOUBT. 33. BASED ON ABOVE INFORMATION SUBMITTED IT IS NECESSARY TO EXAMINE THAT WHAT ENQUIRY AND INFORMATION LD AO GATHERED USING HIS POWER GRANTED TO HIM AS PER INCOME TAX ACT. THE LD ASSESSING OFFICER STATED THAT A. REPORT OF THE INVESTIGATION WING WAS THE M AIN REASON FOR MAKING ADDITION THAT THE ASSESSEE GROUP HAS BEEN ALLEGED TO BE ROUTED ITS UNACCOUNTED MONEY BY SU PPRESSING THE PROFIT BY WAY OF BRINGING IT BACK AS SHARE APPLICATION MONEY AT A HIGH PREMIUM THROUGH VARIOUS KOLKATA BASED COMPANIES. FURTHER, ENQUIRY CONDUCTED BY THE INVESTIGATION WING IT IS PROVED THAT ASSESSEE COMPANY HAS RECEIVED MONEY THROUGH VARIOUS KOLKATA BASED COMPANIES. FURTHER, DETAILS IN RESPECT OF SHARE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 84 APPLICATION MONEY AND UNSECURED LOAN RECEIVED FROM THE VARIOUS KOLKATA BASED COMPANIES WERE RETRIEVED FROM THE SEIZED DOCUMENTS DURING THE SEARCH AND SEIZURE OPERATION. HOWEVER, THE LD ASSESSING OFFICER HAS NOT SHOWN ANY REPORT OF INVESTIGATION WING WITH RESPECT TO T HESE TEN COMPANIES FROM WHICH ASSESSEE HAS RECEIVED UNSECURED LOAN OF RS. 9.75 CRORES OR OTHER THREE COMPANIES FROM WHOM THE ASSESSEE HAS TAKEN SHARE APPLICATION MONEY . FURTHER, MORE FROM ANY OF THE REPORT OF THE INVESTIGATION WING ALSO , THE LD AO DID NOT SHOW US THAT ASSESSEE IS ENGAGED IN EARNING UNACCOUNTED INCOME AND ROUTED IT THROUGH SUCH UNSECURED LOANS AND SHARE APPLICATION MONEY. HOWEVER, LD AO HAS MADE ALL EGATION BUT IT WERE NOT SUBSTANTIATED WITH ANY MENTION OF SUCH REPORTS QUA THE ASSESSEE COMPANY OR THE INVESTOR LENDER COMPANIES. NO SUCH EVIDENCES WERE PLACED BEFORE US DURING THE HEARING ALSO DESPITE QUERY. EVEN THE FTTR CORRESPONDENCES SUBMITTED DID NOT ALSO SHOW ANY SUCH EVIDENCES. NATURALLY, EVEN OTHERWISE THE INVESTOR AND LENDER COMPANIES ARE NOT FOREIGN COMPANIES THEREFORE EVEN OTHERWISE IT DOES NOT APPLY IN THE FACTS BEFORE US. B. LD AO ALSO REFERRED TO SEIZED MATERIAL FOR MAKING ADDITION. FROM T HE SEIZED DOCUMENTS , WHICH WERE PROVIDED TO US IN A PEN DRIVE, BOOKS OF THE ASSESSEE COMPANY ITSELF AS WELL AS THE LEDGER ACCOUNT OF INVESTORS COMPANY WERE FOUND . THESE ARE THE REGULAR BOOKS OF THE ASSESSEE COMPANY. THEREFORE, NEITHER LD AO MENTIONED ANY SEIZED MATERIAL IN HIS ASSESSMENT ORDER WITH RESPECT TO THE ABOVE TRANSACTION, WHICH SHOWS THAT THE ENTRIES OF LOAN AS WELL AS SHARE CAPITAL ARE NOT GENUINE, NOR NO SUCH MATERIAL WAS PRODUCED BY BEFORE US. THEREFORE, THE RELIANCE ON SEIZED MATERIAL BY LD AO FOR MAKING THIS ADDITION IS BASELESS. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 85 C. NONE OF THE QUERY LETTERS BY THE DL AO , WHEREIN THE NAMES OF THE THESE COMPANIES APPEARED OR SHOWN AS SHELL COMPANIES OR , ENTRY OPERATOR COMPANIES ETC WERE SHOWN TO US WHICH SUGGESTS THAT THE ASSESSEE HAS OBTA INED ACCOMMODATION ENTRIES. THERE WERE NO STATEMENTS OR INQUIRIES AVAILABLE BEFORE US ABOUT THE DIRECTORS OF THE COMPANIES OF LOAN OR SHARE APPLICANTS. FURTHER, NO EVIDENCES WERE LAID IN ASSESSMENT ORDERS OR BEFORE US TO SHOW THAT THESE COMPANIES ARE SHELL COMPANIES OR ARE BOGUS COMPANIES. D. WITH RESPECT TO THE THREE COMPANIES FROM WHOM THE SHARE APPLICATION MONEY OF RS. 13.17 CRORES WAS RECEIVED THE ASSESSEE HAS STATED THAT ON THE ADDRESS OF THE INVESTOR WHICH IS STATED TO BE 129, TR AN SPORT CENTRE, PUNJABI BAGH, NEW DELHI, WHICH IS ALSO THE ADDRESS OF VARIOUS GROUP COMPANIES OF THE ASSESSEE. HOWEVER, IN THE BANK ACCOUNT THE ADDRESS WERE SHOWN TO BE OF KOLKATA AND THE PAN DATA BASE ALSO SHOWS THE ADDRESS OF THE KOLKATA. THEREFORE, THE LD ASSESSING OFFICER NOTED THAT IT APPEARS TO HIM THAT ASSESSEE HAS WRONGLY SHOWN THEIR DELHI ADDRESS BUT IN FACT, THESE COMPANIES ARE KOLKATA COMPANIES. M/S. AMANAT AGENCIES PVT. LTD, SKIPPER VINAMAY PVT. LTD, AND OASIS COMOTRADE PVT. LTD ARE THE THREE COMPANIES OF WHICH THE LD AO HAS DISPUTED THAT THEY ARE KOLKATA BASED COMPANIES AND THEREFORE, THESE ARE BOGUS. IT IS IMPORTANT TO NOTE THAT ABOVE THREE COMPANIES WERE BEFORE THE HON'BLE DELHI HIGH COURT IN CASE OF A MERGER OF OTHER COMPANIES INCLUDING THESE THREE COMPANIES INTO ANOTHER COMPANY NAMELY PARAM MITRA INVESTMENT PVT. LTD. ACCORDING TO THE PETITION NO . 343/2013 CONNECTED WITH COMPANY APPLICATION NO 77/2013 U/S 391 AND 394 OF TH E COMPANIES ACT 1956 ON WHICH HON'BLE DELHI HIGH COURT HAS PASSED ORDER DATED 17.11.2013 WHERE THE SCHEME OF AMALGAMATION OF ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 86 SEVERAL COMPANIES WHICH ALSO INCLUDES THREE COMPANIES ARE MENTIONED. HON'BLE DELHI HIGH COURT VIDE PARA NO. 2 ALSO STATES THAT REGI STERED OFFICE OF THE PETITIONER COMPANIES INCLUDING THESE THREE COMPANIES ARE BASED IN DELHI. FURTHER THE BALANCE SHEET OF ALL THESE COMPANIES FOR MARCH 2012, MARCH 2013 WERE ALSO PLACED ON RECORD. VIDE PARA NO. 7 THE EXCHANGE RATIO WAS ALSO DECIDED AND AP PROVED WHEREIN, AMANAT AGENCIES PVT. LTD WAS TO BE RECEIVING 367544 SHARES, SKIPPER VINAMAY PVT. LTD 848106 SHARES AND OASIS COMOTRADE PVT. LTD 903010 SHARES IN THE PARAM MITRA INVESTMENT PVT. LTD. BEFORE THE HONBLE HIGH COURT, THE REGISTRAR OF THE COMPANIES IN TERMS OF SECTION 394 OF THE COMPANIES ACT AS WELL AS THE OFFICIAL LIQUIDATOR ALSO FILED THEIR OBJECTIONS BUT NONE OF THE OBJECTIONS WERE ON THE EXISTENCE OF THOSE COMPANIES OR FINANCIAL DATA RELATED TO THEM . THE OFFICIAL LIQUIDATOR ALSO DID NOT COMMENT ANYTHING ADVERSE ABOUT THESE COMPANIES. THE ADVERTISEMENT WAS ALSO GIVEN IN NATIONAL NEWSPAPER. NO PERSON INCLUDING THE INCOME TAX DEPARTMENT FURNISHED ANY ADVERSE INFORMATION TO THE OFFICIAL LIQUIDATOR AND THE REGISTRAR OF COMPANIES ABOUT THE AMALGAMATION. FURTHER, IN PARA NO. 3.2, 3.3 AND 3.4 OF THE COMPANY PETITION THE COMPLETE DETAILS WITH RESPECT TO THE COMPANIES WERE FURNISHED. IT WAS ALSO NOTED THEREIN, THAT IN CASE OF OASIS COMOTRADE PVT LTD THE REGISTERED OFFICE WAS CHANGED FROM KOLKATA TO NEW DELHI ON 01.10.2012, IN CASE OF SKIPPER VIN I MAY PVT. LTD SUCH CHANGE WAS ALSO ON 01.10.2012 WHEREAS, IN CASE OF AMANAT AGENCIES PVT. LTD SUCH CHANGE TOOK PLACE ON 05.07.2012. FURTHER, THE NET WORTH OF THIS COMPANY WAS ASCERTAIN ED THROUGH REPORT OF THE VALUER MENTIONED IN PARA NO. 13 OF THE PETITION AND BASED ON WHICH THE SHARES WERE ISSUED TO THE THREE COMPANIES OF PARAMMITRA INVESTMENT PVT. LTD. FURTHERMORE, THE SCHEDULE OF PROPERTIES ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 87 OF THE OASIS COMOTRADE PVT. LTD AS AT 31.12 .2013 SHOWS THAT RS. 17.25 CRORES, IN CASE OF VINIMAY PVT. LTD RS. 16.31 CRORES AND IN CASE OF AMANAT AGENCIES PVT. LTD RS. 8 CRORES. THEREFORE, IN MERGER PROCEEDINGS, THE REGIONAL DIRECTOR AND OFFICIAL LIQUIDATOR AND THE INCOME TAX DEPT HAS NOT FILED ANY OBJECTION ABOUT THE MERGER OF THESE COMPANIES . FURTHER WHERE THEIR NET WORTH IS CERTIFIED BY AN INDEPENDENT VALUER AND APPROVED BY THE HON'BLE HIGH COURT . HENCE, IT CANNOT BE SAID THAT THE ABOVE COMPANIES ARE MERELY PAPER COMPANIES AS ALLEGED BY THE LD ASSESSING OFFICER. MORE SO, THE LD ASSESSING OFFICER HAS NOT PRODUCED ANY REPORT OR ANY EVIDENCE TO REMOTELY SHOW THAT THE COMPANIES WHO HAVE INVESTED AS SHARE APPLICA TION ARE BOGUS. IN VIEW OF THIS WHERE THE HON'BLE HIGH COURT HAS EXAMINED THE EXISTENCE AND CREDITWORTHINESS OF THESE COMPANIES AND IN ABSENCE OF ANY ADVERSE MATERIAL , THERE IS NOTHING AVAILABLE ON RECORD BEFORE US TO SHOW THAT TRANSACTION IS NOT GENUINE . E. INSPECTORS REPORT WAS ALSO RELIED HEAVILY BY THE DL AO. WITH RESPECT TO THE COMPANIES WHERE THE LOAN OF RS. 9.75 CRORE WAS OBTAINED FROM 10 COMPANIES UNDOUBTEDLY THEY ARE BASED IN KOLKATA AS PER THE INFORMATION GIVEN BY THE ASSESSEE AS WELL AS THE PAN DA TA SHOWN BY THESE ABOVE COMPANIES. IN ALL THE ABOVE COMPANIES WITH RESPECT TO THE DETAILS AVAILABLE WITH THE ASSESSEE WERE FURNISHED BEFORE THE LD ASSESSING OFFICER. HOWEVER, WITH RESPECT TO THE IDENTITY THE LD ASSESSING OFFICER STATED THAT THEY DO NOT EXI ST AT THE ABOVE ADDRESS. AT PAGE NO. 15 AND 16 OF THE ASSESSMENT ORDER , THE LD AO HAS MENTIONED REFERENCE TO INSPECTORS REPORT WHERE IN EXTRACTS OF FIVE COMPANIES SHOWS THAT PREMISES ARE CLOSED OR ADDRESS IS NOT AVAILABLE. TO SHOW THIS THE NAME OF THE COM PANIES ARE MENTIONED M/S. GOODHOPE VYAPAAR LTD, JAGGANATH COMMODITIES PVT. LTD, M/S. KOMAL TYRE PVT. LTD, M/S. OMKARA ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 88 AGENCIES PVT. LTD AND M/S. SKIPPER VINIMAY PVT. LTD. WE HAVE ALSO PERUSED THE LIST OF THE COMPANIES WHICH ARE MENTIONED AT PAGE NO. 8 OF T HE ASSESSMENT ORDER WHERE 10 COMPANIES ARE NAMED FROM WHOM THE ASSESSEE HAS TAKEN UNSECURED LOAN. TO OUR UTTER SURPRISE , IN THE INSPECTORS REPORT NONE OF THE COMPANIES FOR WHICH ADDITION IS MADE FIND S ANY PLACE IN SUCH REPORT . THEREFORE, THERE IS NO I NSPECTORS REPORT AVAILABLE WITH THE ASSESSING OFFICER WITH RESPECT TO THE COMPANY FROM WHOM ASSESSEE HAS TAKEN LOAN DURING THE YEAR. FURTHER, THE ONLY COMPANY WITH WHICH THE ASSESSEE HAS MADE ANY TRANSACTION IS SKIPPER VINIMAY LTD FROM ASSESSEE HAS OBTAIN ED SHARE APPLICATION MONEY OF RS. 3.23 CRORES DURING THE YEAR WHICH HAS BEEN PART OF MERGER AS PER THE ORDER OF THE HIGH COURT THEREFORE, NATURALLY AS THE REGISTERED OFFICE OF THIS COMPANY TRANSFERRED TO DELHI ON 01.10.2012 NATURALLY THE ABOVE COMPANY DID NOT EXIST AT KOLKATA ADDRESS AND MERGED WITH ANOTHER COMPANY. IN VIEW OF THIS, THE LD ASSESSING OFFICER DID NOT HAVE ANY INSPECTORS REPORT WITH RESPECT TO ABOVE LENDER COMPANIES. F. LESSER - RETURNED INCOME OF THE LENDER COMPANIES WAS ALSO ONE OF THE REASONS FOR MAKING ADDITION OF LOANS. THE LD ASSESSING OFFICER HAS STATED THAT ALL THESE 10 COMPANIES HAVE LESSER - RETURNED INCOME TO PROVE THE CREDITWORTHINESS OF THOSE COMPANIES. IT IS CORRECT THAT THESE COMPANIES HAVE RETURNED THE LESSER INCOME THEN AMOU NT ADVANCED BY THEM. HOWEVER, IT IS ALSO IMPORTANT TO NOTE THAT THESE COMPANIES FILED THEIR RETURN OF INCOME WITH THE INCOME TAX DEPARTMENT AND REGULARLY ASSESSED TO INCOME TAX ACT. HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. VRINDA VAN FARM PVT. LTD ITA N O.71/ 2015 DATED 12.08.2015 (DELHI ) HAS HELD THAT MERELY THE LOW INCOME REFLECTED IN THE RETURN OF INCOME CANNOT BE THE BASIS FOR MAKING THE ADDITION . IT WAS HELD THAT WHERE THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 89 ASSESSEE HAS PROVIDED THE COMPLETE DETAILS OF THE PERMANENT ACCOUNT NO., CONFIR MATIONS, BANK STATEMENT, BALANCE SHEETS, AND PROFIT AND LOSS ACCOUNT OF THOSE COMPANIES. THEREFORE, THE ABOVE GROUND FOR MAKING THE ADDITION BY THE LD ASSESSING OFFICER IN ABSENCE OF ANY INQUIRY CANNOT BE MADE. THE ASSESSING OFFICER HAS NOT AT ALL LOOKED INTO THE ANNUAL ACCOUNTS OF THOSE COMPANIES AND THEIR NET W ORTH . G. THE LD ASSESSING OFFICER HAS FURTHER STATED THAT ASSESSEE HAS NOT FURNISHED THE BANK STATEMENT FOR THE ENTIRE YEAR OF THE COMPANIES. IT IS CORRECT THAT ASSESSEE HAS FURNISHED BANK STATEMENT FOR A PARTICULAR PERIOD WHERE THE LOANS HAVE BEEN TAKEN BY THE ASSESSEE. HOWEVER, ASSESS EE HAS SUBMITTED THE BANK STATEMENTS OF SUFFICIENTLY EARLIER AS WELL SUBSEQUENT PERIOD OF LOANS. , HOWEVER, THE ASSESSEE HAS CONSISTENTLY ASKED THE LD AO FOR ANY FURTHER DETAILS REQUIRED TO SATISFY HIM BUT NO SUCH QUERY WAS RAISED OR ASSESSEE WAS ASKED TO SUBMIT IT . LD AO ALSO DID NOT SEEK SUCH STATEMENT U/S 133 (6) FROM THE BANKERS. H. MERELY BECAUSE IN THE BANK STATEMENT THERE ARE HIGH VALUE TRANSACTIONS WHERE SUBSTANTIAL AMOUNT ARE DEPOSITED THROUGH TRANSFERS BEFORE THE SHARE APPLICATION MONEY DEPOSITED WI TH THE ASSESSEE MAY BE THE FIRST TRIGGER OF THE INVESTIGATION. HOWEVER, IT CANNOT BE MADE BASIS FOR MAKING THE ADDITION. ADMITTEDLY, THE TRANSACTIONS ARE NOT IN CASH. ON OUR EXAMINATION OF BANK STATEMENT, WE COULD NOT FIND HUGE CASH DEPOSITS IN THOSE BAN K ACCOUNTS AT ANY TIME FOR WHICH THE BANK STATEMENTS ARE LAID BEFORE US. I. THE ALLEGATION OF THE LD ASSESSING OFFICER THAT THE INVESTORS AND LENDERS WERE ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES AND BANK ACCOUNTS WERE OPENED ONLY FOR ROUTI NG TRANSACTION THROUGH BANKING CHANNEL. THE LD AO HAS NOT PUT BEFORE ANY EVIDENCE TO SHOW THAT THESE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 90 COMPANIES ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. IN ABSENCE OF ANY EVIDENCE, IT BECOMES A WILD GUESS ONLY. IN FACT THE MERGER OF THE INVESTOR COM PANIES IN PARAM MITRA INVESTMENTS LIMITED WHERE THOSE COMPANIES HAVE SUBMITTED THE REQUISITE DETAILS BEFORE HON. HIGH COURT, BEFORE THE INVESTIGATION WING IN RESPONSE TO QUE RIES WHICH HAVE BEEN ACCEPTED, THERE IS NO OBJECTION BY ANY OF THE REGULATO RS. J. FURTHER, THE LD AO HAS STATED THAT ALL THESE COMPANIES ARE SHELL COMPANIES. HOWEVER, NO SUCH NOTIFICATION OR THE LIST OF THE SHELL COMPANIES WAS SHOWN TO US WHERE THESE COMPANIES HAVE BEEN NAMED. THERE IS NO EVIDENCE AVAILABLE WITH THE ASSESSING OFFIC ER TO SHOW THAT THE COMPANIES ARE BOGUS OR SHELL COMPANIES. K. HOWEVER , WE FULLY AGREE WITH THE LD ASSESSING OFFICER AND LD DR ON THE POINT THAT MERELY BECAUSE THE TRANSACTIONS ARE CARRIED THROUGH BANKING CHANNEL THEY CANNOT BE CONSIDERED AS GENUINE FOR THAT REASON ONLY. THERE CANNOT BE ANY QUARREL ON THIS ISSUE AS HON'BLE DELHI HIGH COURT IN NOVA PROMOTERS HAS ALREADY HELD SO. IN FACT, ACCOMMODATION ENTRIES ARE CARRIED OUT THROUGH BANKING CHANNEL ONLY. L. NO STATEMENT OF THE DIRECTORS OF THE COMPANY OR THE INV ESTOR AND LENDERS COMPANIES WAS RECORDED BY THE LD AO OR INVESTIGATION WING. DESPITE SPECIFIC REQUEST BY THE ASSESSEE, NO SUMMONS U/S 131 OR INQUIRY LETTERS U/S 133 (6) WERE ISSUED BY THE LD AO TO THE ABOVE COMPANIES . M. FURTHER, THE LD ASSESSING OFFICER HAS MADE DISTINCTION BETWEEN THE COMPANIES REGISTERED IN A PARTICULAR JURISDICTION OF THE COUNTRY I.E. KOLKATA COMPARED WITH COMPANIES REGISTERED IN ANOTHER JURISDICTION. TO SAY BLUNTLY THAT THE AO LAID THE PARAMETERS THAT THE CO MPANIES REGISTERED IN KOLKATA REGION WILL HAVE DIFFERENT PARAMETERS OF TESTING THEIR IDENTITY, CREDITWORTHINESS, AND GENUINENESS OF THE TRANSACTION. WE DO ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 91 NOT AGREE WITH THE CLASSIFICATION MADE BY THE LD ASSESSING OFFICER MERELY BASED ON THE COMPANIES REGI STERED IN A PARTICULAR GEOGRAPHICAL LOCATION. OUR VIEW IS THAT EACH LENDER OR INVESTOR NEEDS TO BE TESTED ON ITS OWN FACTS AND CIRCUMSTANCES AS FAR AS TESTING THE CRITERIA OF IDENTITY, CREDITWORTHINESS, AND GENUINENESS OF THE TRANSACTION AS LAID DOWN U/S 6 8 OF THE ACT IS CONSIDERED. THE LD ASSESSING OFFICER HAS ALSO THOUGH CLASSIFYING THE ADDITION U/S 68 IN TWO BUCKETS; I. E. IN KOLKATA BASED COMPANIES; II. NON - KOLKATA BASED COMPANIES BUT HAS NOT CARRIED OUT ANY INQUIRY WITH RESPECT TO BOTH THE BUCKETS. N. THE LD AUTHORISED REPRESENTATIVE HAS MADE THE WRITTEN SUBMISSION AND HAS ALSO ARGUED THAT THE LD ASSESSING OFFICER IN ASSESSEES OWN CASE HAS ACCEPTED THE TRANSACTION WITH ABOVE COMPANIES IN ASSESSMENT YEAR 2009 - 10 AND AY 2010 - 11 OF LOAN ON THE SUBMISSION OF SIMILAR DETAILS. HE ALSO STATED THAT THE ADDITION IS MADE WITH RESPECT TO THOSE COMPANIES ONLY IN THIS YEAR. TO SHOW ITS CASE , LD AR STATED THAT ALL THESE COMPANIES HAVE OPENING BALANCES IN THEIR LEDGER ACCOUNTS IN THE BOOKS OF THE ASSESSEE. THE INTERE ST HAS ALSO BEEN PAID ON THE OPENING BALANCES; HOWEVER, IT IS ADDED FOR THIS YEAR BUT ALLOWED IN EARLIER YEARS. THERE IS NO ACTION FROM THE LD AO TO TREAT THIS COMPANIES AS BOGUS IN EARLIER YEARS IS MADE. THE ABOVE FACTS REMAIN UNCONTROVERTED BY REVENUE. IF IN THE PAST YEAR THE SAME COMPANIES HAVE BEEN ACCEPTED AS EXISTING AND CREDITWORTHY AND IN ABSENCE OF ANY CHANGE IN THE FACTS AND CIRCUMSTANCES WHICH HAVE NOT BEEN DEMONSTRATED BY THE LD ASSESSING OFFICER, SUCH SHIFTING STANDS DO NOT SUPPORT THE CASE O F THE REVENUE. O. MERE RELIANCE ON SEVERAL DECIDED CASE DOES NOT HELP THE CASE OF THE REVENUE UNLESS THE FACTS ARE ALSO MATCHED WITH THOSE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 92 DECISIONS OR INVESTIGATION AND INQUIRY IS CARRIED OUT IN SIMILAR FASHIONS. THERE IS NO INQUIRY MADE BY THE LD AO IN THIS CASE. 34. FROM THE ABOVE DISCUSSION , IT IS APPARENT THAT ON FURNISHING OF INFORMATION BY THE ASSESSEE OF ALL THESE COMPANIES , FROM WHOM THE ASSESSEE HAS TAKEN UNSECURED LOAN AS WELL AS SHARE APPLICATION MONEY , THE LD ASSESSING OFFICER HAS NOT AT ALL CARRIED OUT ANY INVESTIGATION TO SHOW THAT A. THOSE COMPANIES DO NOT EXIST BUT ARE PAPER COMPANY, B. THEY ARE NOT HAVING WORTH OF INVESTING IN THE COMPANY AND THE TRANSACTION LACKS GENUINITY DESPITE HAVING THEIR INCOME TAX DETAILS AND ANNUAL ACCOUNTS . C. D ESPITE SPECIFIC REQUEST, NO DETAILS ARE CALLED FOR EITHER FROM THE ASSESSEE OR FORM THE INVESTOR / LENDER COMPANIES OR FROM BANKERS. D. DESPITE SPECIFIC REQUEST BY ASSESSEE, NO SUMMONS U/S 131 OR INQUIRE LETTER U/S 133 (6) OF THE ACT WERE ISSUED. E. NO INSPECTO R REPORT WITH RESPECT TO THE INVESTOR/ LENDER COMPANY WAS OBTAINED OR AVAILABLE WITH AO . F. INVESTIGATION WING REPORT WAS NOT MENTIONED OR SHOWN ABOUT THE ASSESSEE 35. IN FACT, LD ASSESSING OFFICER SHOULD HAVE EITHER OBTAIN ED THE COMPLETE DETAILS FROM THE MCA WEBSITE OR SHOULD HAVE ISSUED 133(6) QUERY LETTER TO THE REGISTRAR OF COMPANIES FOR OBTAINING THE ANNUAL REPORTS, ANNUAL RETURNS UNDER THE COMPANIES ACT AND SHARE HOLDERS & DIRECTORS DETAILS SINCE BEGINNING OF THOSE COM PANIES. HE SHOULD HAVE FURTHER OBTAINED THE DIN (DIRECTORS IDENTIFICATION NO) OF THE DIRECTORS OF THE COMPANIES WHICH IS LINKED WITH THE PERMANENT ACCOUNT NO OR ANY IDENTIFICATION DETAILS OF THE DIRECTORS. THE DETAILS FROM BANKERS SHOULD ALSO HAVE BEEN OBTAINED WITH RESPECT TO THE UNUSUAL TRANSACTIONS IN THE ACCOUNT OF THE INVESTORS AS PER F & U IND WING AS LD AO HAS ALLEGED THAT THE INVESTORS ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 93 HAVE HIGH VALUE TRANSACTIONS. THE DIRECTORS , PERSONS OPERATING THE ACCOUNTS OF THOSE COMPANIES SHOULD H AVE BEEN EXAMINED BY VAST POWERS WITH THE ASSESSING OFFICER UNDER THE INCOME TAX ACT AS WELL AS UNDER THE OTHER ACTS. THE LD AO SHOULD HAVE ALSO INTIMATED AND COORDINATED WITH THE ASSESSING OFFICER OF THOSE COMPANIES ABOUT THE BUSINESS ACTIVITY OR THEIR AS SESSMENT HISTORY. THE SIMILAR INFORMATION SHOULD HAVE BEEN OBTAINED FROM THE BANKERS OF THE COMPANY WITH RESPECT TO THE BENEFICIARIES, THE ACCOUNT OPERATING INSTRUCTIONS, AND AUTHORITIES OF THOSE ACCOUNTS ALONG WITH COPIES OF THE BANK ACCOUNT OF THESE PART IES SINCE THE DATE OF OPENING OF ACCOUNTS. THE DETAILS FROM BANKERS SHOULD ALSO HAVE BEEN OBTAINED WITH RESPECT TO THE UNUSUAL TRANSACTIONS IN THE ACCOUNT OF THE INVESTORS AS PER F & U IND WING AS LD AO HAS ALLEGED THAT THE INVESTORS HAVE HIGH V ALUE TRANSACTIONS. THE ABOVE INFORMATION SO COLLECTED AND ON EXAMINATION OF DIRECTOR OR MAJOR SHAREHOLDER OF THE INVESTOR / LENDERS COMPANY, THE LD ASSESSING OFFICER SHOULD HAVE FORMED HIS OPINION ABOUT THE EXISTENCE OF THOSE COMPANIES AND MOTIVE BEHIND SU CH COMPANIES. AFTER FRAMING THE PRIMA FACIE OPINION, HE MUST EXERCISE VAST POWERS AVAILABLE WITH HIM UNDER THE INCOME TAX ACT WITH THE ASSESSING OFFICER OF THOSE COMPANIES TO INVESTIGATE THE CORRECT FACTS THEN SHOULD HAVE PLACED BEFORE THE ASSESSEE TO REBU T IT. STRANGELY, NONE OF THE ABOVE EXERCISE HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER. THE INSPECTORS REPORT RELIED UPON THE BY THE LD AO WAS NOT RELATED TO THE COMPANIES WHO HAVE INVESTED MONEY IN THE COMPANY LOAN OR SHARE CAPITAL. EVEN THOUGH SU CH INFORMATION NOT OBTAINED/ COLLECTED DURING THE ASSESSMENT PROCEEDINGS, EVEN SUCH INFORMATION COULD ALSO HAVE BEEN COLLECTED IN SUBSEQUENT PROCEEDINGS OF PENALTY ETC AND PLACED BEFORE EITHER THE CIT (A) OR COORDINATE BENCH AS ADDITIONAL EVIDENCES. EVEN T HAT IS NOT BEING DONE. EVEN OTHERWISE, IT IS NOT FOR US TO SAY THAT WHAT OPTIONS ARE AVAILABLE WITH THE LD AO AND IN WHAT MANNER AND UP TO WHAT EXTENT HE MUST DO THE INVESTIGATION AND ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 94 INQUIRY, BUT WE ARE OF THE VIEW THAT HE IS BESTOWED UP ON WITH IMMENSE POWER UNDER THE INCOME TAX ACT AS WELL AS OTHER ACTS. NONE OF THEM HAS BEEN LOOKED AT LEAVE ASIDE THE EXERCISE OF SUCH POWERS. IN SUCH CIRCUMSTANCES, IT IS APPARENT THAT LD AO DOES NOT HAVE ANY EVIDENCE TO ALLEGE THAT SHARE APPLICATION MONEY AS WELL AS SUCH LOANS TAKEN BY THE ASSESSEE IS BOGUS . H ENCE, WE ARE OF THE VIEW THAT ASSESSEE HAS DISCHARGED INITIAL ONUS CAST UP ON HIM U /S 68 OF THE ACT WITH RESPECT TO LOAN AS WELL AS SHARE APPLICATION MONEY. 36. THE LD CIT DR RELIED UPON PLETHORA OF DECISIONS TO SUPPORT THE CASE OF THE REVENUE, BUT IN ABSENCE OF ANY EVIDENCE COLLECTED BY THE LD AO, THEY DO NOT ADVANCE THE CASE OF THE REVENUE , STILL, WE DEAL WITH THEM AS UNDER: - A) LD. CIT DR HEAVILY RELIED UP ON THE DECISION OF HONBLE DELHI HIGH COURT IN CI T VS. NIPUN BUILDERS LTD 350 ITR 407 ( DELHI ) WHEREIN ADDITION UNDER SECTION 68 WAS MADE WITH RESPECT TO THE SHARE CAPITAL RECEIVED FROM SEVERAL COMPANIES. THE ASSESSING OFFICER ISSUED SUMMONS TO THE SUBSCRIBER COMPANIES WHICH WERE RETURNED UNSERVED WIT H REMARK THAT NO SUCH COMPANY EXIST. THE INSPECTORS WERE ALSO SENT FOR VERIFICATION OF THE ADDRESS OF THE ABOVE COMPANIES WHO ALSO CONFIRMED THE SAME. MOREOVER, THE ASSESSEE FAILED TO PRODUCE PRINCIPAL OFFICERS OF THE SUBSCRIBERS OF THE COMPANY WHO COULD E XPLAIN THE SOURCE OF SUCH SHARES OF THE SUBSCRIPTION IN THAT CIRCUMSTANCES THE ADDITION WAS CONFIRMED. IN THE PRESENT CASE THERE IS NO ENQUIRY MADE BY THE LD . ASSESSING OFFICER BY ISSUE SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT OR ISSUING ENQUIRY LE TTER UNDER SECTION 133 (6) OF THE INCOME TAX ACT . IN VIEW OF THIS, THE RELIANCE ON THIS DECISION DOES NOT HELP THE CASE OF THE REVENUE. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 95 B) THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VERSUS NOVA PROMOTERS AND FINLEASE PRIVATE LIMITED 342 ITR 169 RELIED UPON BY THE LD. ASSESSING OFFICER , LD CIT DR AS WELL AS BY THE ASSESSEE. WE HAVE ALREADY DECIDED THE ISSUE IN THE PRESENT APPEAL RELYING ON THE PARA NO. 34 - 39 OF THAT PARTICULAR DECISION . IN THAT PARTICULAR CASE BEFORE THE HONBLE DELHI HIGH CO URT, THERE WAS A LETTER FROM THE DIRECTOR OF INCOME TAX (INVESTIGATION), WHICH FURNISHED DETAILED INFORMATION REGARDING ENTRY OPERATORS AND ACCOMMODATION PROVIDERS. ACCORDING TO THAT LETTER , THE LD. AO NOTED THAT THERE WERE 16 ENTRY OPERATORS WHO HAD GIVEN ACCOMMODATION ENTRIES TO SEVERAL PERSONS OF WHICH THE ASSESSEE WAS ALSO ONE OF THEM. THE LD. ASSESSING OFFICER ALSO ISSUED SUMMONS TWO PERSONS AND THE AO ALSO ISSUED SUMMONS TO SOME OTHER COMPANIES. THERE WAS NO RESPONSE TO THOSE SUMMONS, WHICH WERE SERVE D AND MANY OF THEM HAD BEEN RETURNED UNSERVED. THE LD. ASSESSING OFFICER FURTHER SENT AN INSPECTOR WHO REPORTED THAT NO SUCH PERSON OR COMPANY WAS AVAILABLE OR EXISTING AT THE ADDRESS TO WHICH SUMMONS WERE ISSUED. IN THAT PARTICULAR CASE , THE LD. ASSESSING OFFICER ASKED ASSESSEE TO PRODUCE THE PERSONS AND COMPANIES FROM WHOM IT HAD RECEIVED SHARE APPLICATION MONEY WHICH WAS ALSO NOT COMPLIED WITH BY THE ASSESSEE. IN TH ESE FACTS AND CIRCUMSTANCES THE ADDITION UNDER SECTION 68 WAS CONFIRMED. HOWEVER, IN THE PRESENT CASE THERE IS NO STATEMENT OF ANY OF THE PERSONS WHO HAVE STATED THAT THE ENTRIES OF LOAN AND SHARE APPLICATION MONEY TAKEN BY THE ASSESSEE ARE BOGUS. THERE DOES NOT EXIST ANY ENQUIRY MADE BY THE LD. ASSESSING OFFICER BY ISSUE OF S UMMONS UNDER SECTION 131 OF THE INCOME TAX ACT, EITHER TO THE ASSESSEE OR TO THE ANY OF THE DIRECTORS OF THOSE COMPANIES. THE LD. ASSESSING OFFICER HAS ALSO SENT THE INSPECTOR WHO WENT TO EXAMINE SOME OTHER COMPANIES ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 96 BUT NOT THE COMPANIES FROM WHICH THE AS SESSEE HAS TAKEN UNSECURED LOAN OR HAS RECEIVED SHARE APPLICATION MONEY. NO DIRECTION HAS ALSO BEEN GIVEN TO THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE COMPANIES FOR EXAMINATION. THE CASE BEFORE US IS COMPLETE LACK OF ANY ENQUIRY BY THE ASSESSING OFFICER . FURTHER, IN THAT DECISION ITSELF HONBLE DELHI HIGH COURT HAS HELD THAT IF THE ASSESSEE FURNISHES THE REQUISITE INFORMATION AVAILABLE WITH HIM AND ASSESSING OFFICER DOES NOT MAKE ANY ENQUIRY ON SUCH INFORMATION, THEN IN SUCH CASES NO ADDITION U/S 68 CAN BE MADE. C) THE NEXT DECISION RELIED UPON BY THE LD. CIT DR IS OF NR PORTFOLIO PVT. LTD VS. CIT 29 TAXMANN.COM 2 11 (DELHI) WHERE IN CASE OF A PRIVATE LTD COMPANY WHERE SPECIFIC SUMMONS WERE ISSUED TO THE SHAREHOLDERS OF THE COMPANY WHO DID NOT ATTEND INVESTI GATION PROCEEDINGS BEFORE THE LD. ASSESSING OFFICER AND THE NOTICES WERE RECEIVED UNSERVED. THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE DUTIES OF ASSESSEE IN CASE OF RECEIPT OF CASH FROM INVESTOR WHEN THE ASSESSEE SUBMITS THE COMPLETE DETAILS WITH RESPE CT TO THOSE INVESTORS THEN ONUS ARE DISCHARGED. IT WAS FURTHER HELD THAT IF ON VERIFICATION OR DURING THE PROCEEDINGS THE AO CANNOT CONTACT THE SHARE APPLICANTS OR INFORMATION BECOMES UNVERIFIABLE OR THERE ARE FURTHER DOUBTS THEN ONUS SHIFTS BACK TO THE AS SESSEE AT THAT STAGE ASSESSEE FALTERS THEN, THE CONSEQUENCE WOULD BE AN ADDITION U/S 68 OF THE ACT. IN FACT, IN THE PRESENT CASE NO ENQUIRY HAS BEEN CONDUCTED BY THE ASSESSING OFFICER WITH RESPECT TO THE ABOVE SUM OF LOAN AS WELL AS INVESTMENT BY THE COMPA NIES IN SHARE APPLICATION MONEY. D) IN THE CASE OF CIT VS. EMPIRE BUILDER PRIVATE LIMITED 43 TAXMANN.COM 269 (DELHI), WHICH WAS RELIED UPON BY THE LD. CIT DR THE FACT SHOWING THAT THE SUMMONS OR THE ENQUIRY ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 97 LETTERS WERE ISSUED UNDER SECTION 133 (6) TO THE INV ESTORS . THE INVESTOR DID NOT RESPOND TO THE NOTICE AND CONFIRMATION WAS ALSO NOT SUBMITTED. IN THAT PARTICULAR CASE ALSO THE ADDITION IS REQUIRED TO BE MADE ONLY IN CASE OF INVESTOR WHOSE PARTICULARS COULD NOT BE VERIFIED AND WHO DID NOT RESPOND TO NOTICES . IN THE PRESENT CASE NO SUCH INFORMATION WAS COLLECTED BY THE ASSESSING OFFICER AND NO SUCH ENQUIRY LETTERS WERE SENT. E) THE NEXT DECISION RELIED UPON IS CIT VS. FOCUS EXPORTS PVT. LTD 228 TAXMANN 88 (DEL) WHEREIN, THE ADDITIONS WERE UPHELD EVEN THE ADDRESS AND PAN NO WERE NOT PROVIDED AND IN SOME OF THE DEPOSITORS THERE IS IMMEDIATE WITHDRAWAL OF MONEY WAS FOUND. IN THAT PARTICULAR THE HON'BLE HIGH COURT DREW OBVIOUS INFERENCE THAT THE ASSESSEE HAD INTENTIONALLY TRIED TO BLOCK AND OBSTRUCT INQUIRIES KNOWING THE NATURE OF THE TRANSACTIONS. IN THAT PARTICULAR CASE SUMMONS WERE ALSO ISSUED WHICH REMAIN UNCOMPLIED WITH. THE PRESENT CASE IS COMPLETE LACK OF INQUIRY/ INVESTIGATION ON THE INVESTMENT MADE. F) THE NEXT DECISION RELIED UPON WAS IN CASE OF CIT VS. MAF ACA DEMY PVT. LTD WHERE THE ASSESSEE A PRIVATE LIMITED COMPANY SOLD SHARES AT A HUGE PREMIUM TO AN UNRELATED PARTY AND PURCHASED BACK AT LESS THAN FACE VALUE WHERE IT WAS HELD THAT EVEN DESPITE PRODUCTION OF DETAILS SUCH AS PAN NO AND INCOME TAX RETURNS MAY NO T BE SUFFICIENT TO CROSS THE THRESHOLD OF SATISFACTION U/S 68 OF THE ACT AND ADDITION CAN BE MADE ON THE BASIS OF SURROUNDING CIRCUMSTANCES. IN THAT PARTICULAR DECISION IN PARA NO. 8 MODUS OPERANDI ADOPTED BY THE ENTRY OPERATOR WAS ALSO NOTED. HOWEVER, IN THE PRESENT CASE THERE IS NO ALLEGATIO N OF ANY ENTRY OPERATOR INVOLVED AS WELL AS THE SHARES ARE NOT AT ALL ALLOTTED DURING THE YEAR BUT REMAINED SHARE APPLICATION MONEY ONLY. THEREFORE, THE FACTS OF THE ABOVE CASE ARE DIFFERENT. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 98 G) THE LD. CIT DR FURTHER RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN CASE OF NOVADAYA CASTLES PRIVATE LIMITED VS. CIT, 56 TAXMANN.COM 18 (SC) WHEREIN THE SPECIAL LEAVE PETITION FILED BY THE ASSESSEE AGAINST THE DECISION OF THE HONBLE DELHI HIGH COURT REPORTED IN 367 ITR 306 HAS BEEN DISMISSED. IN THAT PARTICULAR DECISION THE FACTS WERE THAT SUMMONS WERE ISSUED TO THE ALLEGED SHAREHOLDERS AND THEY WERE REQUIRED TO PERSONALLY COME AND DEPOSE. THE SUMMONS REMAINED UNSERVED THEREFORE, THE ASSESSEE WAS ASKED TO PRODUCE THE SHARE HOLDER. FURTHER, HUGE CASH DE POSITS WERE ALSO DEPOSITED REGULARLY IN THE ACCOUNTS OF THE SHARE HOLDERS AND THEN CHEQUES WERE ISSUED TO THE ASSESSEE. THE ASSESSEE ALSO EXPRESSED ITS INABILITY TO PRODUCE THE SHARE HOLDERS STATING THAT THEY WERE NOT SHARE HOLDERS LATER ON. THERE WAS ALSO AN ALLEGATION THAT THE COMPANY WAS UNDER THE CONTROL ONE MR. MAHESH GARG WHO WAS AN ENTRY OPERATOR. IN THOSE CIRCUMSTANCES THE ADDITION WERE MADE. IN THE PRESENT CASE BEFORE US NEITHER SUMMONS WERE ISSUED NOR WAS ASSESSEE ASKED TO PRODUCE ANYBODY. THERE W AS NO ALLEGATION ABOUT ANY ENTRY OPERATOR ALSO. THEREFORE, RELIANCE ON THE DECISION OF HON'BLE DELHI HIGH COURT IS MISPLACED. 37. FURTHER, THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. LAXMAN INDUSTRIAL RESOURCES ITA NO. 169/2017 DATED 14.03.2017 AFTER DISCUSSING THE SEVERAL DECISIONS OF THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHEN ASSESSEE HAS PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY TRANSACTIONS ARE GENUINE. THAT WAS NOT THE CASE WHERE THE SHARE APPLICANT HAVE MEREL Y PROVIDED THE CONFIRMATION BUT HAVE ALSO PROVIDED THEIR ASSESSMENT PARTICULARS, MODE OF PAYMENT, BANK STATEMENT SHOWING CHEQUE NO AND TRANSFER OF FUNDS TO THE ASSESSEE AS WELL AS COPIES OF THE BALANCE SHEET ETC. THEREFORE, THE HON'BLE HIGH COURT NOTED THA T THE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 99 AO HAS STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS REST CONTENDED BY PLACING MERELY RELIANCE ON THE REPORT OF INVESTIGATION WING WHICH HON'BLE HIGH COURT REMARKED AS SPECTACULAR DISREGARD TO AN AOS DUTIES WHICH REVENUE SEEKS TO INFLICT UPO N THE ASSESSEE. SIMILARLY IN THE CASE BEFORE US EVEN THERE IS NO REPORT OF INVESTIGATION WING AND ASSESSEE HAS FURNISHED COMPLETE INFORMATION AS COULD HAVE BEEN SUBMITTED BY IT THE LD ASSESSING OFFICER HAS FAILED TO CONDUCT ANY SCRUTINY OF SUCH DOCUMENTS O R FURTHER INQUIRY FROM EXTERNAL SOURCE IN ANY MANNER, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. WE ALSO DRAW SUPPORT FROM ANOTHER DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF PR. CIT - 7 VS. ORIENTAL INTERNATIONAL COMPANY PVT. LTD ITA N O. 9/2018 DATED 08/01/2018 WHEREIN, THE HIGH COURT HAS HELD THAT IF THE AO WERE TO CONDUCT HIS TASK DILIGENTLY HE OUGHT TO HAVE AT LEAST SOUGHT THE MATERIAL BY WAY OF INQUIRY TO DISCERN THE FACT ABOUT THE SOURCE OF THE MONEY. IN THE ABSENCE OF ANY SUCH INQ UIRY THE HON'BLE COURT WAS OF OPINION THAT THE FINDINGS HOLDING THAT ASSESSEE HAD NOT DISCHARGED THE ONUS PLACED UPON IT BY LAW CANNOT BE CONSIDERED UNREASONABLE. THUS, HON'BLE HIGH COURT STRESSED THE NEED THAT AO MUST HAVE MADE DEFINITE INQUIRIES ON THE I NFORMA TION SUBMITTED BY THE ASSESSEE TO SUSTAIN THE ADDITION U/S 68 OF THE ACT. 38. WE COME TO THE REQUEST OF THE LD CIT DR WHO VEHEMENTLY TRIED TO SALVAGE THE CASE OF REVENUE TO SET ASIDE THE MATTER BACK TO THE FILE OF THE LD AO. THE LD AR VEHEMENTLY OBJECTED CITING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN LAXMAN INDUSTRIAL RESOURCES (SUPRA ) WHERE IDENTICAL REQUEST WAS MADE. HON HIGH COURT DEALT WITH AS UNDER : - IT IS ARGUED BY THE REVENUE THAT THE ITAT SHOULD HAVE TAKEN APPROPRIATE STEPS AND REMITTED THE MATTER, NOT MERELY CONFIRMING THE CIT(A)S OPINION SINCE THE INVESTIGATION WINGS REPORT CONFIRMED UNEQUIVOCALLY THAT THE ASSESSEE WAS BENEFICIARY TO BOGUS TRANSACTIONS WHEREBY THE GENUINENESS OF ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 100 IDENTITY OF THE SHAREHOLDERS, THE GENUINENESS A ND IDENTITY OF THE SHARE APPLICANTS AND THE GENUINENESS OF TRANSACTIONS WAS SUSPECT . THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIONS AUTHORIZING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS THEIR MASTER DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND RESTED CONTENT BY PLACING RELIANCE MERELY ON A REPORT OF THE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREGARD TO AN AOS DUTIES IN THE REMAND PROCEEDINGS WHIC H THE REVENUE SEEKS TO INFLICT UPON THE ASSESSEE IN THIS CASE. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. [ UNDERLINE SUPPLIED BY US] 39. WE HAVE GIVEN OUR CAREFUL THOUGHT TO THE REQUEST OF THE LD DR. WE HAVE ALSO COMPARED FACTS OF THE CASE OF THE ASSESSEE WITH THE FACTS OF THE CASE BEFORE THE HON'BLE DELHI HIGH COURT. WE FOUND THAT IN THE CASE BEFORE THE HON'BLE DELHI HIGH COURT THERE WAS A REPORT OF INVESTIGATION WING AGAINST THE ASSESSEE WHICH SHOWED THAT ASSESSEE IN THAT CASE WAS BENEFICIARY OF BOGUS TRANSACTIONS WHERE THE GENUINENESS OF THE IDENTITY OF THE SHARE HOLDERS AND SHARE APPLICANTS WAS SUSPECT. IN THE IMPUGNED CASE BEFORE US, TH ERE IS NO SUCH REPORT OR SUCH ALLEGATION BASED ON ANY MATERIAL PLACED BEFORE ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 101 US. THEREFORE, ACCORDING TO US THE CASE OF THE ASSESSEE IS ON FAR HIGHER PEDESTAL THAN THE CASE BEFORE THE HON'BLE DELHI HIGH COURT. IN VIEW OF THIS, WE REJECT THE CONTENTIONS OF THE LD CIT DR. 40. FOR THE IDENTICAL FACTS AND CIRCUMSTANCES THE COORDINATE BENCH HAS DEALT WITH THE PLETHORA OF JUDICIAL PRECEDENTS OF VARIOUS HIGH COURTS AND COORDINATE BENCHES HAVE BEEN DISCUSSED AND DEALT WITH IN ITA NO. 453/DEL/2016 DATED 01.01.2018 THER EFORE, WE DO NOT FIND IT NECESSARY TO DEAL WITH ALL THE JUDICIAL PRECEDENTS RAISED BEFORE US. ACCORDINGLY, WE HAVE DEALT WITH THE JUDICIAL PRECEDENTS, WHICH HAVE MATERIAL BEARING ON OUR DECISION. HOWEVER, ALL THE DECISIONS CITED BEFORE US WERE PERUSED CARE FULLY WITH RESPECT TO OUR DECISION IN THIS CASE. 41. THE CASE OF THE ASSESSEE IN ITS FAVOUR IS ALSO COVERED BY SEVERAL OTHER JUDICIAL PRECEDENTS SUBMITTED BEFORE US AS UNDER : - SR NO TITLE REFERENCE 1 CIT V GAGANDEEP INFRASTRUCTURE PRIVATE LIMITED I TA NO 1613/2014 DATED 20/3/2017 394 ITR 680(BOM) 2 PR CIT V LAXMAN INDUSTRIAL RESOURCES LIMITED ITA NO 169/2017 DATED 14/3/2017 ( DEL) 3 PR CIT V DHANLAXMI EQUIPMEMTS LIMITED ITA NO 189/2016 DATED 23/10/2017 (RAJ) 4 PR CIT V A R LEASING P LIMITED ITA NO 361/2012 DATED 3/7/2017 (DEL) 5 PR CIT V JATIN INVESTMENTS P LIMITED ITA NO 43 & 44/2016 18/1/2017 ( DEL) 6 PR CIT V ORIENTAL INTERNATIONAL CO LIMITED ITA NO 9/2018 8/1/2018 (DEL) 7 PR CIT V HI TECH RESIDENCY P IAT NO 628/2016 ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 102 LIMITED 7/7/2017 (DEL) 8 PR CIT V INETRARCH ESTATAE P LIMITED ITA NO 258/2016 14/11/2017 ( RAJ) 42. AS IN THE PRESENT CASE THE ASSESSEE HAS GIVEN COMPLETE DETAILS WITH RESPECT TO THE ADDITION OF RS. 22,92,00, 000/ - AND THE LD AO HAS FAILED TO MAKE ANY INQUIRY WE CONFIRM THE FINDING OF THE LD CIT(A) IN DELETING THE ABOVE ADDITION. CONSEQUENTLY GR O UND NO. 2, 3, AND 4 OF THE APPEAL FOR AY 2012 - 13 ARE DISMISSED. 43. THE GROUND NO. 5 OF THE APPEAL IS WITH RESPECT TO DI SALLOWANCE OF INTEREST WITH RESPECT TO LOANS AS DISCUSSED IN GROUND NO. 2 TO 4 OF THE APPEAL OF THE ASSESSEE. AS WE HAVE CONFIRMED THE FINDING OF THE LD CIT ( A) IN DELETING THE ADDITION U/S 68 OF THE ACT, CONSEQUENTLY WE ALSO CONFIRM HER FINDING IN DELETIN G THE DISALLOWANCE OF INTEREST ON THE ABOVE LOANS. CONSEQUENTLY, GROUND NO. 5 OF THE APPEAL IS DISMISSED. 44. GROUND NO. 6 OF THE APPEAL IS WITH RESPECT TO THE ADDITION OF RS. 15.50 CRORES WITH RESPECT TO THE LOAN TAKEN BY THE COMPANY FROM 8 PRIVATE LIMITED C OMPANIES WHERE THE ASSESSEE HAS FURNISHED THEIR NAME, ADDRESS, THEIR BANK STATEMENTS, AND THEIR RETURN OF INCOME AND CONFIRMATION LETTER. HOWEVER, THE LD ASSESSING OFFICER HAS MADE THE ADDITION ONLY STATING THAT THESE COMPANIES HAVE LOW RETURNED INCOME AND FURTHER, THEY ARE NON - KOLKATA COMPANIES. THE LD CIT(A) DELETED THE ADDITION FOR THE SAME REASON AS WERE GIVEN BY HER BY DELETING THE ADDITION OF RS. 22.92 CRORES WITH RESPECT TO KOLKATA COMPANIES AS DISCUSSED BY US WHILE DECIDING GROUND NO. 2 TO 5 OF THIS APPEAL. BOTH THE PARTIES ADMITTED BEFORE US THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE ISSUE COVERED IN GROUND NO. 2 TO 5 OF THE APPEAL OF THE REVENUE EXCEPT THE FACT THAT COMPANIES COVERED IN GROUND NO. 2 TO 5 WERE ALLEGED BY THE LD AO AS KOLKATA COMPANIES, AND COMPANIES FOR WHICH THE ADDITION IS ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 103 MADE IN THIS GROUND ARE TITLED AS NON - KOLKATA COMPANIES. THEY FURTHER SUBMITTED THAT THEIR ARGUMENTS ARE SAME AS THEY WERE FOR GROUND NO. 2 TO 5 OF THE APPEAL. 45. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD ASSESSING OFFICER HAS MADE ADDITION WITH RESPECT TO LOAN TAKEN BY THE ASSESSEE COMPANY FROM EIGHT DIFFERENT PRIVATE COMPANIES. DURING THE COURSE OF A SSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED ALL THOSE DETAILS AS THEY HAVE BEEN SUBMITTED IN CASE OF ALLEGED COMPANIES IN GROUND NO. 2 TO 5 OF THE ABOVE APPEAL. THE LD AO MADE THE ADDITION U/S 68 OF THE INCOME TAX ACT WITHOUT MAKING ANY INQUIRY ABOUT THE LENDER COMPANIES. THE LD CIT (A) IN HER ORDER HELD AS UNDER : - FINDINGS 21. AS IN THE CASE OF GROUND NO.7 AND 5 IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY, THESE GROUNDS ALSO RELATE TO UNSECURED LOANS. THE AO HAS CONSIDERED THESE UNSECURED LOANS ALSO AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THE FINDINGS AND REASONS FOR MAKING THE ADDITIONS ARE IDENTICAL. THE AO HAS ALSO STATED IN THE ORDER THAT HE IS RELYING UPON THE SAME REASONS. THE SUBMISSIONS OF THE APPELLANT ARE ALSO ON SIMILAR GROUNDS. THE ONLY DIFFERENCE IS THAT THE UNSECURED LOANS IN GROUND NO.7 AND 5 IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY HAD BEEN RECEIVED FROM KOLKATA BASED COMPANIES WHEREAS THE UNSECURED LOANS IN THIS GROUND HAVE BEEN RECEIVED FROM NON KOLKATA BASED COMPANIES. KEEPING IN VIEW THE ABOVE CIRCUMSTANCES, WITH A VIEW TO AVOID DUPLICATION, IN THE INTEREST OF BREVITY AND RECONFIRMING THE REASONS AND MY VIEW TAKEN IN RESPECT OF GROUND NO.7 AND 5 IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY, IT IS HELD THAT THE AMOUNTS OF UNSECURED LOA NS OF RS. 15,50,00,000/ - AND RS.30,00,000/ - IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY CANNOT BE CONSIDERED AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. THE ADDITION OF RS. 15,50,00,000/ - AND ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 104 RS.30,00,000/ - IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY IS HEREB Y DELETED. THIS GROUND OF APPEAL IS THEREFORE ALLOWED AND THE ADDITION OF RS. 15,50,00,000/ - AND RS.30,00,000/ - IN A.Y. 2012 - 13 AND 2013 - 14 RESPECTIVELY IS HEREBY DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 46. WE HAVE GIVEN OUR DETAILED REASONS WHEREIN, ADD ITION U/S 68 CANNOT BE MADE WHERE DESPITE COMPLETE INFORMATION SUBMITTED BY THE ASSESSEE COMPANY NO INQUIRY HAVE BEEN MADE BY THE LD AO . FOR THE SIMILAR REASONS WE CONFIRM THE FINDINGS OF THE LD CIT ( A) IN DELETING THE ABOVE ADDITION OF RS. 15.50 CRORES. C ONSEQUENTLY, GROUND NO. 6 OF THE APPEAL OF THE REVENUE IS DISMISSED. 47. GROUND NO. 7 IS WITH RESPECT TO INTEREST DISALLOWANCE ON THE ADDITION CONSIDERED IN LOAN AS DISCUSSED IN GROUND NO. 6. AS WE HAVE CONFIRMED THE FINDING OF THE LD CIT(A) IN GROUND NO. 6 D ELETING THE ADDITION U /S 68 OF THE ACT WE ALSO CONFIRM HER FINDING WITH RESPECT TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 722730/ - . CONSEQUENTLY , GROUND NO. 7 OF THE APPEAL OF THE REVENUE IS DISMISSED. 48. GROUND NO. 8 OF THE APPEAL OF THE REVENUE IS DUPLICATE OF GROUND NO. 5 OF THE PRESENT APPEAL AND HENCE, IT IS DISMISSED. 49. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. CO NO. 249/DEL/2016 AY 2012 - 13 50. NOW WE COME TO THE CROSS OBJECTION OF THE ASSESSEE IN CO NO. 249/DEL/2016 WHICH IS SUPPORTIV E IN NATURE WITH RESPECT TO GROUND NO. 1 TO 5 AS THEY SUPPORT THE FINDING OF THE LD CIT(A). AS WE HAVE UPHELD THE ORDER OF THE LD CIT ( A) TO THAT EXTENT WE ALLOW GROUND NO. 1 TO 5 OF THE CROSS OBJECTION. 51. GROUND NO. 6 OF THE CROSS OBJECTION IS WITH RESPECT TO THE FACT THAT NO INCRIMINATING MATERIAL WAS DISCOVERED PURSUANT TO SEARCH HENCE, ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 105 NO ADDITION IS WARRANTED. NO ARGUMENTS WERE ADVANCED BEFORE US AND THEREFORE IT IS DISMISSED. 52. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. 53. IN THE RE SULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2012 - 13 IN ITA NO. 3223/DEL/2016 IS DISMISSED AND CO NO. 249/DEL/2016 OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 3224/DEL/2016 CO NO. 250/DEL/2016 ASSESSMENT YEAR 2013 - 14 54. THE GROUND NO. 1 OF THE APPEAL IS WITH RESPECT TO DISALLOWANCE OF RS. 579232/ - MADE BY THE LD ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, WHICH WAS DELETED BY THE LD CIT ( A), THEREFORE, REVENUE IS IN APPEAL BEFORE US. 55. ADMITTEDLY, BEFORE US THE FACTS OF THE CASE ARE SIMILAR TO ASSESSMENT YEAR 2012 - 13 WHERE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. THEREFORE, FOR THE REASONS GIVEN BY US IN OUR ORDER FOR AY 2012 - 13 DELETING THE SIMILAR DISALLOWANCE WE ALSO CONFIRM THE FINDING OF THE LD CIT ( A). IN TH E RESULT , GROUND NO. 1 OF THE APPEAL IS DISMISSED. 56. GROUND NO. 2 IS WITH RESPECT TO THE ADDITION OF RS. 6.15 CRORES BEING LOAN TAKEN BY THE ASSESSEE FROM 4 COMPANIES FOR WHICH THE ASSESSEE HAS SUBMITTED THE CONFIRMATION, COPY OF THE BANK ACCOUNTS, INCOME T AX RETURN ETC HOWEVER, THE LD ASSESSING OFFICER HAS MADE THE ADDITION FOR THE REASON THAT THESE ARE KOLKATA BASED COMPANIES AND HAVE LOW INCOME. THE LD CIT ( A) DELETED THE ABOVE ADDITION AS ASSESSEE HAS FURNISHED THE COMPLETE DETAILS BUT THE LD ASSESSING O FFICER DID NOT CARRY OUT ANY INQUIRY. THE REVENUE IS IN APPEAL ON THIS ISSUE BEFORE US. SIMILARLY, VIDE GROUND NO. 5 THE INTEREST PAID TO SUCH COMPANIES WAS ALSO DISALLOWED BY THE LD ASSESSING OFFICER BUT DELETED BY THE LD CIT ( A). ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 106 57. BOTH THE PARTIES BEFORE US SUBMITTED THAT THEIR ARGUMENTS ARE SIMILAR TO THEIR SUBMISSIONS MADE IN GROUND NO. 2 TO 5 OF THE APPEAL OF THE REVENUE IN CASE OF THIS ASSESSEE FOR ASSESSMENT YEAR 2012 - 13. IT WAS FURTHER STATED THAT REASONS GIVEN BY THE AO FOR MAKING ADDITION AND BY T HE LD CIT ( A) FOR DELETING THE ADDITION ARE IDENTICAL. THEY FURTHER STATED THAT EXCEPT THE NAME OF THE LENDERS AND THE AMOUNT INVOLVED THERE IS NO DIFFERENCE IN THE FACTS OF THE CASE. 58. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDE RS OF THE LOWER AUTHORITIES. THE FACTS OF THE CASE, REASONS FOR MAKING AN ADDITION AND DELETING THE SAME AS WELL AS THE ARGUMENTS OF THE PARTIES ARE ALSO SAME, WE ALSO FOR THE REASONS GIVEN IN GROUND NO. 2 TO 5 OF THE APPEAL OF THE REVENUE IN CASE OF THE A SSESSEE FOR AY 2012 - 13, CONFIRMED THE FINDING OF THE LD CIT ( A) IN DELETING THE ABOVE ADDITION. CONSEQUENTLY, WE ALSO CONFIRM HER FINDING IN DELETING THE DISALLOWANCE OF INTEREST OF RS. 4890986/ - . CONSEQUENTLY, GR O UND NO. 2 TO 5 OF THE APPEAL ARE DISMISSED . 59. GROUND NO. 6 OF THE APPEAL RELATES TO ADDITION OF RS. 90 LACS MADE BY THE LD ASSESSING OFFICER ON ACCOUNT OF THE ABOVE RECEIVED FROM A COMPANY TITLED AS NON - KOLKATA BASED COMPANY WAS ADDED U/S 68 OF THE INCOME TAX ACT DESPITE ASSESSEE FURNISHING THE NAM E, ADDRESS, CONFIRMATION, BANK STATEMENT, BALANCE SHEETS AND INCOME TAX RETURNS OF THE DEPOSITOR. FOR MAKING THE ADDITION THE ONLY REASON GIVEN BY THE LD ASSESSING OFFICER IS LOW INCOME OF THE ASSESSEE. NO INQUIRY WAS CARRIED OUT BY THE ASSESSING OFFICER D ESPITE HAVING THE BALANCE SHEETS ETC. ON APPEAL, LD CIT ( A) DELETED THE ABOVE ADDITION FOR THE REASONS GIVEN BY HER FOR DELETING THE ADDITION ON SIMILAR COUNTS IN ASSESSMENT YEAR 2012 - 13. THE REVENUE HAS CHALLENGED SUCH DELETION VIDE GROUND NO. 6 AND 7 OF THE APPEAL. 60. BOTH THE PARTIES CONFIRM THAT THE FACTS, THE REASONS FOR MAKING ADDITION AND DELETING THE SAME FOR THIS YEAR ARE SIMILAR TO THE FACTS FOR ASSESSMENT YEAR 2012 - 13. THEY FURTHER STATED THAT THEIR ARGUMENTS ARE ALSO SAME. ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 107 61. WE HAVE CAREFULLY CONSI DERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT EXCEPT THE CHANGE OF THE NAME OF THE LENDER, AND AMOUNT INVOLVED THERE IS NO CHANGE IN THE FACTS OF THE CASE. AS ON THE SIMILAR CIRCUMSTANCES, WE HAVE CONFIRMED THE F INDING OF THE LD CIT ( A) IN DELETING THE ADDITION MADE BY THE LD ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT WHERE THE ASSESSEE HAS PROVIDED THE COMPLETE DETAILS BUT HE AO HAS NOT CARRIED OUT ANY INQUIRY OR INVESTIGATION. THEREF O RE, FOR THE SAME REASONS WE CONFIRM THE FINDING OF THE LD CIT ( A) IN DELETING THE ADDITION OF RS. 30 LACS U/S 68 OF THE ACT WITH RESPECT TO NON KOLKATA COMPANIES. IN THE RESULT GROUNDS, NO. 6 AND 7 OF THE APPEAL OF THE REVENUE ARE DISMISSED. 62. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. CO NO. 250/DEL/2016 AY 2013 - 14 63. NOW WE COME TO THE CROSS OBJECTION OF THE ASSESSEE IN CO NO. 250/DEL/2016 WHICH IS SUPPORTIVE IN NATURE WITH RESPECT TO GROUND NO. 1 TO 5 AS THEY SUPPORT THE FINDING OF THE LD CIT(A). A S WE HAVE UPHELD THE ORDER OF THE LD CIT ( A) TO THAT EXTENT WE ALLOW GROUND NO. 1 TO 5 OF THE CROSS OBJECTION. 64. IN THE RESULT, CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 65. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2013 - 14 IN ITA NO. 3224/DEL /2016 IS DISMISSED AND CO NO. 250/DEL/2016 OF THE ASSESSEE IS ALLOWED. 66. ORDER PRONOUNCED IN THE OPEN COURT ON 2 9 / 01 / 2018 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 9 / 01 / 2018 A K KEOT ACIT VS. M/S.SHYAM INDUS POWER SOLUTIONS PVT. LTD, ITA NO. 3223 & 3224 /DEL/2016 & CO NO. 249 & 250 /DEL/2016 (ASSESSMENT YEAR: 2012 - 13 AND 2013 - 14 ) PAGE | 108 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI