M/s. Plastograph India Pvt. Ltd., New Delhi V. ACIT, New Delhi

CO 301/DEL/2012

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4075 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD KR BINDAL
• Assessee Lawyers: MRS NANDITA KANCHAN
• Keywords: Bogus Share capital; Income from undisclosed sources; Search and seizure; Opportunity of being heard; Accommodation entries; Set aside
• Section: 205; 208; 68; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER I.T.A .NO.-3556/DE L/2012 (ASSESSMENT YEAR-2005-06) ACIT, CENTRAL CIRCLE-5, ROOM NO.361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI-110055. (APPELLANT) VS M/S PLASTOGRAPH INDIA PVT.LTD., 23/5, SHAKTI NAGAR, DELHI-110007. PAN-AAACP7194F (RESPONDENT) C.O.NO.301/DEL/2 012 (IN I.T.A .NO.-3556/DEL/2012) (ASSESSMENT YEAR-2005-06) M/S PLASTOGRAPH INDIA PVT.LTD., 23/5, SHAKTI NAGAR, DELHI-110007. PAN-AAACP7194F (APPELLANT) VS ACIT, CENTRAL CIRCLE-5, ROOM NO.361, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI-110055. (RESPONDENT) A SSESSEE BY MRS. NANDITA KANCHAN, CIT DR R EVENUE BY SH. VINOD KR. BINDAL, CA ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 30.04.2012 OF CIT(A) -XXXI, NEW DELHI PERTAINING TO 2005 06 ASSESSMENT YEAR ON THE FOLLOWING GROUN DS:- DATE OF HEARING 09.06.2016 DATE OF PRONOUNCEMENT 27.07.2016 I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 2 OF 11 1. THE ORDER OF LD. CIT(A) IS NOT CORRECT IN L AW AND FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50,00,000/ - MADE BY THE ASSESSING OFFICER U/S 68 OF I.T.ACT, 1961 ON ACCOUN T OF UNEXPLAINED SHARE CAPITAL WITHOUT APPRECIATING THE FACT THAT TH E ASSESSEE FAILED TO PROVE THE GENUINENESS OF TRANSACTION AS WELL AS THE IDENTITY AND CREDITWORTHINESS OF THE PERSON WHO CONTRIBUTED THE SHARE CAPITAL. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 1.1. THE ASSESSEE HAS ALSO FILED C.O. ON THE FOLLOWING G ROUNDS:- 1. THE ADDITIONS IN THE IMPUGNED ASSESSMENT ORDER PASSED U/S 153 ARE BAD IN LAW AND ON FACTS BECAUSE A) THE ADDITIONS WERE NOT BASED ON ANY BOOKS OF AC COUNT OR OTHER MATERIAL NOT PRODUCED IN THE COURSE OF ORIGINAL ASS ESSMENT BUT WHICH COULD ALLEGED TO HAVE BEEN FOUND IN THE COURSE OF S EARCH OR AN UNDISCLOSED INCOME OR PROPERTY DISCOVERED THEREIN B) AS THE ASSESSMENT PROCEEDINGS WERE NOT ABATED BUT WERE ALREADY COMPLETED. THUS ALL THE ADDITIONS SO MADE IN THE ASSESSMENT OR DER SHOULD BE DELETED FOLLOWING THE SPECIAL BENCH DECISION DATED 6/7/12 IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. IN APPEALS NO. I TA/5018- 5022/M/10. 2. THE APPELLANT CRAVES THE LEAVE TO ADD, SUBSTITUT E, MODIFY, DELETE OR AMEND ALL OR ANY GROUND OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 2. THE RELEVANT FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT IN RAJ DARBAR GROUP OF CASES ON 31.07.2008 WHEREIN CERTAIN DOCUMENTS BELON GING TO THE ASSESSEE COMPANY WERE ALSO SEIZED FROM THE RESIDENCE OF SH. RAJENDRA AGGARWAL, DIRECTOR OF THE ASSESSEES COMPANY. ACCORDINGLY PR OCEEDINGS UNDER SECTION 153C OF THE INCOME TAX ACT WAS INITIATED IN THE CAS E OF THE ASSESSEE BY ISSUING A NOTICE UNDER SECTION 153C DATED 21.07.2010. IN RE SPONSE THERETO THE ASSESSEE FILED ITS RETURN ON 11.08.2010 DECLARING AN INCOME OF RS.10,19,010/-. IN THE SCRUTINY ASSESSMENT, IT WAS NOTICED THAT THE ASSESSEE HAD ALLOTTED I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 3 OF 11 10,000 SHARES OF RS.100/- EACH TO THE FOLLOWING COM PANIES AT A PREMIUM OF RS.400 PER SHARE:- SL.NO. NAME OF THE PARTY NO. OF SHARES AMOUNT RECEI VED IN (RS.) 1. M/S GEEFCEE FINANCE LIMITED 5000 25,00,000 2. M/S HUNT COMMERCIAL P.LTD. 1000 5,00,000/- 3. M/S RELIANCE POLYCREATE P.LTD. 3000 15,00,000/- 4. M/S VIV SUN PROPERTIES 1000 5,00,000/- 2.1. THE ASSESSEE WAS REQUIRED TO PROVE THE GENUINE NESS OF THE TRANSACTIONS BY FILING EVIDENCES IN RESPECT OF SHARE APPLICATION MONEY RECEIVED DURING THE YEAR. IN RESPONSE THERETO THE ASSESSEE FILED SHARED ALLOTMENT FORM AS FILED BEFORE THE ROC. NO OTHER DOCUMENT SUCH AS CONFIRMAT IONS, COPIES OF SHARE APPLICATION FORM, INCOME TAX RETURN ACKNOWLEDGEMENT , BANK ACCOUNT COPIES ETC. WERE FILED. IN VIEW OF THE FACT THAT DURING T HE SEARCH OPERATION AT THE RESIDENCE 23/5, SHAKTI NAGAR. DELHI, OF SH. RAJENDR A AGGRAWAL, DIRECTOR OF THE ASSESSEE COMPANY, DOCUMENTS RELATING TO BUY BACK OF SHARES OF M/S KIWI FOOD INDIA PVT. LIMITED AND M/S RITE PAC INDIA PVT. LIM ITED. WERE FOUND AND SEIZED AS ANN. A-L TO A-5 WHEREIN THE DOCUMENTS FOR THE TR ANSFER AND BUY BACK OF SHARES OF THESE COMPANIES WERE LYING BLANK. THESE W ERE CONFRONTED DURING THE POST SEARCH PROCEEDINGS TO SH. RAJENDRA AGGRAWAL. IN RESPONSE THERETO SH. RAJENDRA AGARWAL AS PER RECORD VIDE LETTER DATED 12 .9.2008, ADDRESSED TO THE DY. DIRECTOR OF INCOME TAX (INV), UNIT-II(L), NEW D ELHI STATED THAT HE BOUGHT BACK SHARES BACK FROM THESE COMPANIES BY PAYING CAS H AMOUNT OVER AND ABOVE THE VALUE RECORDED IN HIS BOOKS OF ACCOUNTS L EADING TO THE SURRENDER OF I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 4 OF 11 RS.45,00,000/- AS HIS PERSONAL UNDISCLOSED INCOME F OR THE A.Y. 2009-10. THE AO CONCLUDED THAT THESE FACTS CLEARLY SHOWED THAT T HE GROUP IS INVOLVED IN INTRODUCING UNACCOUNTED INCOME IN THE GARB OF SHARE CAPITAL IN THEIR COMPANIES. 2.2. ACCORDINGLY, RELYING UPON SREELEKHA BANERJEE V S CIT 49 ITR 112 (SC); M/S SOPHIA FINANCE LTD. 205 ITR 98 (DELHI); KAMAL K ISHORE VS CIT [2003] 131 TAXMAN 155 (RAJ.); CIT VS DIVINE LEASING & FINACE L TD. [2007] 158 TAXMAN 440 (DEL.); C.KANT & CO. V CIT [1980] 126 ITR 63 (C AL.); AND CIT VS PRECISION FINANCE PVT.LTD. 208 ITR 465 (CAL.) ADDITION OF RS. 50 LAKH WAS MADE HOLDING THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS AS CASTE UPON IT BY SECTION 68 OF THE ACT AS IT HAD FAILED DESPITE OPPORTUNITY TO FILE ANY SUPPORTING DOCUMENT. 3. AGGRIEVED, THE ASSESSEE CAME IN APPEAL BEFORE TH E FIRST APPELLANT AUTHORITY. IN SUPPORT OF ITS CLAIM IT WAS SUBMITTE D THAT ON 23.12.2010 THE ASSESSEE HAD FILED COPIES OF SHARE APPLICATION FORM ALONG WITH ITR AND BANK ACCOUNT COPIES ETC. AND THERE WAS NO PROVISION UNDE R THE ACT TO ASK FOR BALANCE SHEET OF A SHAREHOLDER. IN THE FACE OF THESE EVIDEN CES HAVING BEEN PLACED ON RECORD WHERE THE RELEVANT DETAILS OF THE INVESTORS BY WAY OF THEIR PANS WHO WERE BEING ASSESSED IN NEW DELHI THE ASSESSING OFFI CERS CONCLUSION WAS ASSAILED. THE ASSESSEE OBJECTED THAT THE ASSESSING OFFICER COULD VERY WELL HAVE MADE DIRECT ENQUIRIES FROM THE ASSESSING OFFICERS O F THOSE PERSONS OR BY DEPUTING INSPECTOR OR BY CALLING FOR INFORMATION DI RECTLY FROM THEIR BANKS ETC. THE ARGUMENT WAS ALSO RAISED THAT THE CAPITAL AND O WN FUNDS AVAILABLE TO THESE I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 5 OF 11 INVESTORS/COMPANIES WERE MUCH MORE THAN THE INVESTM ENTS MADE BY EACH OF THEM THUS THEIR CREDITWORTHINESS STOOD PROVED. FURT HER, THE AMOUNTS HAVING BEEN RECEIVED THROUGH BANKING CHANNELS, IT WAS SUBM ITTED PROVED THE GENUINENESS OF THE TRANSACTIONS. MOREOVER SINCE AL L OF THESE WERE INCORPORATED BODIES OR INDIVIDUALS, THEIR IDENTITY WAS ALSO STAT ED TO BE PROVED BEYOND DOUBT. APART FROM THESE FACTS IT WAS SUBMITTED NOTHING MOR E WAS AVAILABLE WITH THE ASSESSEE AS AT THE TIME OF RECEIVING SHARE APPLICAT ION MONEY OR ALLOTMENT NO OTHER INFORMATION IS REQUIRED TO BE GIVEN BY A SHAR EHOLDER EITHER UNDER THE PROVISIONS OF THE INCOME TAX ACT NOR UNDER THE PROV ISIONS OF THE COMPANIES ACT, 1956. IT WAS ARGUED THAT COMPANY IS UNDER NO OBLIGATION TO ASK A SHAREHOLDER AS TO WHERE FROM HE HAS GOT THE MONEY T O INVEST NOR IS THE SHAREHOLDER OBLIGED TO GIVE SUCH INFORMATION TO THE COMPANY. THE SHAREHOLDERS HAVING BEEN DULY IDENTIFIED IT WAS ARG UED COULD NOT BE REGARDED AS FICTITIOUS PERSONS. ACCORDINGLY, NO ADVERSE ACT ION CAN BE TAKEN BY THE GOVERNMENT AGAINST THEM. RELIANCE WAS ALSO PLACED O N LATEST INFORMATION/DOCUMENTS MADE AVAILABLE VIDE LETTER DA TED 29.12.2011 CONSISTING OF INFORMATION DOWNLOADED FROM THE PORTAL OF MINIST RY OF CORPORATE AFFAIRS. CONSIDERING THESE FACTS AND ARGUMENTS, THE CIT(A) D ELETED THE ADDITION HOLDING AS UNDER:- 6. DETERMINATION: THE FIRST AND SECOND GROUNDS OF THE APPEAL ARE ABOU T THE ADDITION OF SHARE CAPITAL INVESTMENT MADE U/S 68 OF THE ACT AND ARE DISPOSED OFF TOGETHER. THE APPELLANT HAS FILED INFORMATION AS MENTIONED HE REIN TO SUPPORT ITS CLAIM OF THE SHARE CAPITAL INVESTMENT AS REQUIRED U /S 68 OF THE ACT. THE AMOUNTS WERE RECEIVED BY THE APPELLANT UNDISPUT EDLY THROUGH THE I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 6 OF 11 ACCOUNT PAYEE CHEQUES. IT IS ALSO NOT THE CASE OF, THE ASSESSING OFFICER THAT THE SEARCH IN THE YEAR 2008 AFTER THE ABOVE IN VESTMENT IN SHARE CAPITAL AT THE PREMISES OF THE APPELLANT YIELDED AN Y EVIDENCE TO SHOW THAT THE APPELLANT GAVE ANY CASH OR ALLOWED ANY OTH ER BENEFIT TO THE SAID INVESTORS OR ANYBODY ELSE AGAINST THE SAID INV ESTMENTS. NOTHING IS APPARENT FROM ASSESSMENT ORDER THAT ANY ADVERSE MATERIAL EXISTS IN THE ASSESSMENT FOLDER FOR THE RELEVANT PERIOD. IT I S NOT THE CASE WHERE ANY PERSON CLAIMED BEFORE THE REVENUE THAT THE IMPU GNED SHARE CAPITAL IS NOTHING BUT BOGUS INTRODUCTION BY WAY OF ACCOMMODATION ENTRIES. IN THE IMPUGNED APPEAL THE ISSUE IS SQUARE LY COVERED BY THE EARLIER JUDGMENTS IN THE CASE OF LOVELY EXPORTS PVT . LTD., DIVINE LEASING AND FINANCE LTD. (SUPRA) ETC CITED IN THE A BOVE PRECEDING PARAGRAPHS AS NONE OF THE REASONS TO GIVE RULING I N FAVOUR OF THE DEPARTMENT BY THE COURT EXI HERE. FURTHER ON PERU SAL OF THE INFORMATION DOWN LOADED FROM THE OFFICIAL WEBSITE O F THE MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA, WHICH IS IN PUBLIC DOMAIN, IT IS NOTICED ABOUT THE INVESTOR COMPANIES THAT THEIR REG ULAR INFORMATIONS I.E. P&L A/C AND BALANCE SHEETS ARE AVAILABLE ON TH E PORTAL OF THE MCA AND THE SAME SHOWS NOT ONLY THEIR CREDITWORTHINESS TO MAKE INVESTMENT IN THE EQUITY CAPITAL OF THE APPELLANT C OMPANY AT THE RELEVANT TIME BUT ALSO REFLECTS THAT THEY ARE REGUL AR IN THEIR BUSINESS ACTIVITIES ON YEAR TO' YEAR BASIS AND THERE HAS BEE N INCREASE IN THEIR OWN FUNDS EVER SINCE THEY MADE INVESTMENT IN THE AP PELLANT COMPANY. ALL THESE COMPANIES HAVE MADE SUBSTANTIAL INVESTMEN TS IN THE EQUITY SHARE CAPITAL OF THE LISTED AS WELL UNLISTED SCRIPS AND SOME OF THEM ARE BLUE CHIP COMPANIES. IT IS NOT THE CASE WHERE THE E QUITY WAS INVESTED IN THE APPELLANT COMPANY ONLY BY THE INVESTOR COMPA NIES BUT THOSE HAVE BEEN MADE IN SEVERAL OTHER COMPANIES AS A PART OF THEIR REGULAR INVESTMENT BUSINESS. THE OWN AVAILABLE FUNDS OF THE SE INVESTORS COMPANIES WERE SUFFICIENTLY LARGE AND MUCH MORE THA N THE INVESTMENTS MADE BY THEM IN THE APPELLANT COMPANY. THERE IS NO FINDINGS ON RECORD FROM THE ASSESSING OFFICER THAT THESE INVESTORS ARE NOT REGULAR IN FILING THEIR INCOME TAX RETURNS DESP ITE THAT THE INCOME TAX ASSESSMENT PARTICULARS OF THESE INVESTORS WERE ON HIS RECORD. THEREFORE, THEIR EXISTENCE ARE ESTABLISHED. BESIDES , THEY HAD ENOUGH RESOURCES TO MAKE THE IMPUGNED INVESTMENTS IN THE R ELEVANT PERIOD. THE GENUINENESS OF THE TRANSACTION HAS ALSO NOT BEE N FOUND CONTRARY TO THE AUDITED BOOKS OF ACCOUNT BY THE ASSESSING OF FICER. IN ABSENCE OF ANY MATERIAL CONTRARY TO THE INFORMAT ION ON RECORD, THE ACTION OF THE ASSESSING OFFICER BASED ON SURMISES A ND CONJECTURE WHILE MAKING ADDITION U/S 68 OF THE ACT IN RESPECT OF SHA RE CAPITAL RECEIVED CANNOT BE SUSTAINED. THUS THE ADDITION OF RS. 50,00 ,000/- IS DELETED. THE APPEAL IS ALLOWED. 4. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEF ORE THE ITAT. I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 7 OF 11 5. THE LD. SR. DR RELYING UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE ONUS PLACED UPON THE ASSESSEE HAS NOT BEEN DISC HARGED AS HAVING FILED INSUFFICIENT DOCUMENTS BEFORE THE AO, THE CLAIM CAN NOT BE SAID TO HAVE BEEN EXPLAINED. THE RELIEF GRANTED BY THE CIT(A) GIVING GENERAL SWEEPING CONCLUSIONS WITHOUT REFERRING TO SPECIFIC EVIDENCES AND FACTS, IT WAS ARGUED CANNOT BE SAID TO BE A FACTUAL FINDING WARRANTING RELIEF. 6. THE LD. AR FILED A COPY OF THE ORDER OF THE ITAT DATED 13.04.2016 IN ITA NO. 3053/DEL/2012 AND 2611/DEL/2013 AND OTHERS IN T HE CASE OF M/S RITE PACK INDUSTRIES PRIVATE LTD VS DCIT. RELYING UPON PARA 6 OF THE SAID ORDER, IT WAS SUBMITTED THAT ON IDENTICAL FACTS AND CIRCUMSTA NCES THE ITAT HAD RESTORED THE ISSUE BACK TO THE ASSESSING OFFICER TO PASS A S PEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPP ORTUNITY OF BEING HEARD. IN THE FACTS OF THE PRESENT CASE IT WAS HIS SUBMISSION THAT FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KABU L CHAWLA, THE C.O. FILED MAY BE ALLOWED. THE FOLLOWING CHART WAS RELIED UPON:- PARTICULARS DATE ORIGINAL RETURN FILED U/S 139 28/10/05 TIME LIMIT PRESCRIBED FOR SERVICE OF NOTICE U/S 143 (2) 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FILED 31/10/06 TIME LIMIT PRESCRIBED U/S 153 FOR COMPLETION OF ASS ESSMENT 21 MONTHS FROM THE END OF THE ASSESSMENT YEAR CONCE RNED 31/12/07 DATE OF SEARCH 31/07/08 DATE OF RECORDING OF SATISFACTION U/S 153C 21/07/10 I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 8 OF 11 6.1. ACCORDINGLY IT WAS HIS PRAYER THAT THE ASSESSM ENT FOR THE AY 2005-06 WAS NOT ABATED [AND DEEMED TO BE COMPLETED U/S 143( 1)] AS ON THE DATE OF RECORDING SATISFACTION. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THOUGH THE ASSESSEE AS PER THE CHART HAS CLAIMED THAT ORIGINAL RETURN U/S 139 HAD BEEN FILED ON 28.10.200 5 AND SUPPORTED ITS CLAIM BY FILING A PHOTOCOPY OF RETURN OF INCOME. HOWEVER , SINCE THE CLAIM IS BEING RAISED FOR THE FIRST TIME, THE FACTS RELATABLE TO I T HAVE NOT BEEN VERIFIED BY ANYONE. ACCORDINGLY IN THE CIRCUMSTANCES, WE DEEM IT APPROPRIATE TO SET ASIDE THE JURISDICTIONAL ISSUE BACK TO THE AO TO VERIFY W HETHER THE DOCUMENTS IN SUPPORT OF ITS CLAIM STRIKE AT THE VERY FOUNDATION OF THE DEPARTMENTAL ACTION OR NOT. IN THE EVENTUALITY, THE ASSESSEE DOES NOT SU CCEED ON THE JURISDICTIONAL ISSUE ADDRESSING THE DEPARTMENTAL APPEAL, WE DEEM I T APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER FOLLOWING THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN ITA NO.3053/DEL/2016 & OTHERS IN THE CASE OF M/S RITE P ACK INDUSTRIES PVT.LTD. VS DCIT. WE FURTHER FIND THAT WHEREAS THE AO CATEGORI CALLY HOLDS THAT APART FROM THE SHARE ALLOTMENT FORM NOTHING ELSE WAS FILED BY THE ASSESSEE DESPITE OPPORTUNITY. THE CIT(A) HAS ACCEPTED THE ARGUMENT THAT PAN, ITRS AND COPIES OF BANK ACCOUNTS ETC. WERE FILED ON 23.12.2010 BEFO RE THE AO. APART FROM THE OBVIOUS CONTRADICTION IN THE TWO ORDERS, IT IS EVEN OTHERWISE SEEN THAT THE AO U/S 153C/143(3) IS DATED 30.12.2010 AND IF THE PRES UMPTION OF DOCUMENTS HAVING BEEN FILED ON 23.12.2010 IS ACCEPTED EVEN IN SUCH AN EVENTUALITY ADMITTEDLY THERE WAS NO TIME AVAILABLE TO THE AO TO CARRY OUT NECESSARY ENQUIRY I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 9 OF 11 THROUGH THE INSPECTOR OR FOR CALLING FOR THE CONCER NED AOS OR CORROBORATE THE COPIES OF BANK ACCOUNTS WITH THE BANKERS ETC. OF TH ESE PARTIES. FURTHER, THE FRESH EVIDENCE PRESUMABLY TAKEN INTO CONSIDERATION FROM THE PUBLIC DOMAIN AND RELIED UPON HAS NOT DISCUSSED THE SPECIFICS OF THE EVIDENCES AND THE FACTS LEADING TO GENERAL OBSERVATIONS THAT THERE WERE SUF FICIENT FUNDS AVAILABLE WITH THE PARTIES HAVE NOT BEEN BROUGHT OUT IN THE ORDER. THE CORRECTNESS OF THESE CONCLUSIONS IN THE ABSENCE OF DISCUSSION ON FACTS I S NOT POSSIBLE. WE FURTHER FIND THAT THE FACILE ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE THAT THE LAW REQUIRES ONLY A COMPANY TO SATISFY ITSELF AT THE TI ME OF SHARE ALLOTMENT WITH ONLY LIMITED INFORMATION IS NOT OF MUCH HELP AS THE ASSESSEE COMPANY IS NOT A PUBLIC LISTED COMPANY WHOSE ACTIVITY, BUSINESS CAPA BILITY, ACHIEVEMENTS AND POTENTIAL ETC. RELATED INFORMATION IS EASILY AVAIL ABLE IN THE PUBLIC DOMAIN. THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHOSE FUNCTIO NING CAPABILITY STRENGTHS ETC. WOULD BE KNOWN ONLY TO ITS CLOSE KNIT CIRCLE O F FRIENDS AND DIRECTORS AND PROMOTERS WHO WOULD BE PRIVY TO THIS INFORMATION. THE PRIVATE LTD. COMPANY AND SUCH KNOWN CONCERNS KNOWN TO THE SAID COMPANY W OULD OPERATE ON INTERNAL INFORMATION AVAILABLE TO THEM AND IT IS GE NERALLY NOT EASILY AVAILABLE IN THE PUBLIC DOMAIN. THUS NECESSARILY THE SHAREHOLDE RS ARE LIMITED TO PERSONS OR CONCERNS MANAGED BY THE CLOSE KNIT CIRCLE OF FAMILY AND FRIENDS OF THE ASSESSEE. ACCORDINGLY THE BENEFIT OF ARMS LENGTH DISTANCE B ETWEEN A SHAREHOLDER OF A PUBLIC LTD. COMPANY WITH THE COMPANY CANNOT BE CLAI MED BY A SHAREHOLDER IN A PRIVATE LTD. COMPANY AS THE SHAREHOLDERS NECESSA RILY WOULD BE COMPANIES/ENTITIES MANAGED AND CONTROLLED BY FRIEND S, RELATIVES, BUSINESS I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 10 OF 11 PARTNERS ETC. OF THE PRIVATE LTD. COMPANY THE FACT THAT BOGUS TRANSACTIONS HAVE BEEN ACCEPTED BY DIRECTOR, SH. RAJENDRA AGARWA L IN 2009-10 AY AND A SURRENDER HAS BEEN MADE OF RS.45 LAKHS IS SUFFICIEN T EVIDENCE FOR THE REVENUE TO CONCLUDE THAT SUCH BEHAVIOR FOR DIRECTOR WAS A N ORM AND NOT AN ABERRATION. ACCORDINGLY THE COMPANY HAVING BEEN GIVEN AN OPPORT UNITY TO PROVE THAT THE TRANSACTIONS WERE GENUINE THE ONUS IN THE PECULIAR FACTS AND CIRCUMSTANCES CANNOT BE SAID TO BE DISCHARGED BY PLACING INSUFFIC IENT EVIDENCES. THE EVIDENCES NOW ON RECORD STATED TO BE FILED ALL ALON G A POSITION DISPUTED BY THE REVENUE AND NEGATED BY THE AO NEEDS TO BE RECONCILE D AND THE EVIDENCES RELIED UPON NEED TO BE ADDRESSED. WE NOTE THAT THE FINDING OF FACT THAT RELEVANT DOCUMENTS WERE NOT FILED BEFORE THE AO HAS NOT BEEN ASSAILED BY THE ASSESSEE BY WAY OF ANY AFFIDAVIT BEFORE THE CIT(A) OR BEFORE US THAT FACTS ARE INCORRECTLY RECORDED. THE IMPUGNED ORDER IN VIEW OF THESE OBVIO US SHORTCOMINGS IS SET ASIDE AND THE MATTER IS RESTORED TO THE AO FOR FRES H DETERMINATION. THE AO ACCORDINGLY IS DIRECTED TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW ON THE JURISDICTIONAL ASPECT FIRST AND THEREAFTER IF NEED BE ON MERITS AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND C.O . OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH OF JULY 2016. SD/- SD/- (O. P. KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* I.T.A .NO.-3556/DEL/2012 & C.O.NO.301/DEL/2012 PAGE 11 OF 11 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI