The ACIT, Circle -4, Ahmedabad V. GHCL Ltd., Ahmedabad

ITA 1050/AHD/2005

• Counselvise Citation: 105020514 RSA 2005
• Duration Of Justice: 6 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-12-2011
• Assessment Year: 1990-1991
• Appeal Filed On: 08-04-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARTAR SINGH
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Unexplained investment; Search and seizure; Share purchase agreement; Principle of natural justice; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO.1050/AHD/2005 ASSESSMENT YEAR:1990-91 ACIT, CIRCLE-4, AHMEDABAD / V/S . GHCL LTD., GHCL HOUSE, OPP. PUNJABI HALL, NR. NAVARANGAPURA BUS STAND, NAVRANGPURA, AHMEDABAD PAN NO.AAACG5609C / APPELLANT .. / RESPONDENT APPELLANT BY SHRI KARTAR SINGH, CIT-DR RESPONDENT BY SHRI S.N.SOPARKAR, SR-AR / DATE OF HEARING 14-12-2001 / DATE OF PRONOUNCEMENT 30-12-2001 ! ! ! ! / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F LD. COMMISSIONER OF INCOME-TAX (APPEALS)-VII, AHMEDABAD DATED 28-01-200 5 FOR THE ASSESSMENT YEAR 1990-91. THE REVENUE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITIONS TO THE TUNE OF RS.58,31,310/- MADE BY THE A.O U/S 69A OF THE I.T. ACT ON ACCOUNT OF INVESTMENT IN SHARE CERTIFICATES FOUND IN POSSESSION OF THE ASSESSEE COMPANY DISREGARDING THE FACT THAT THE FAC T THAT THE SOURCE OF SUCH INVESTMENT AND CREDIT WORTHINESS OF M/S. ALANKAR CO MMERCIAL PVT. LTD. AND M/S. LOHNAK INTERNATIONAL PVT. LTD. COULD NOT BE PR OVED BY THE ASSESSEE COMPANY. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION TO THE TUNE OF RS.1,85,00,000/- MADE BY TH E A.O ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SHARES THROUGH BUY BACK A RRANGEMENTS. ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD . CIT(A)BE QUASHED AND THAT OF THE A.O BE RESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS IN THE GROUNDS OF THE REVENUE AR E THAT ASSESSEE WAS GRANTED RELIEF IN BOTH THE GROUNDS IN THE FIRST ROUND AND R EVENUE WENT IN APPEAL BEFORE LD. CIT(A) AGAINST THE SAID ORDER OF LD. CIT(A). THE IT AT DISPOSED OFF THE APPEAL OF THE REVENUE VIDE ITA NO.2419/AHD/1994 DATED 17-04-2003. THE ADDITIONS OF RS.58,31,310/- AND RS.1.85 CRORES WERE SET ASIDE AN D RESTORED BACK TO THE FILE OF LD. CIT(A). WHILE DISPOSING OF THE SAID APPEAL, THE TRI BUNAL ALSO HAS BROUGHT ON RECORD THE FACTS OF THE CASE BRIEFLY AND FOR THE SAKE OF C ONVENIENCE THE SAME ARE REPRODUCED AS UNDER:- SOME IMPORTANT FACTS NOTICED BY US ARE THAT THERE WAS SEARCH AND SEIZURE OPERATIONS U/S.132 OF THE I.T. ACT ON 15.3.1990. TH ERE WAS FINANCE ARRANGEMENT ON THE BASIS OF BUYBACK SHARES BY PRI VATE PROMOTERS. THE PUBLIC ISSUE OPENED ON 18 TH AUGUST, 1987 AND WAS CLOSED ON 31SAT AUGUST, 1987. THE PUBLIC ISSUE WAS UNDER SUBSCRIBED AND THE RE WAS A SHORTFALL OF APPROXIMATELY OF RS.5.94 LACKS FOR WHICH THE PROMOT ERS REQUESTED IDBI TO SUBSCRIBE IN ORDER TO MAKE UP THE SHORTFALL. THE FI NANCIAL INSTITUTION AGREED TO THIS REQUEST OF ASSESSEE COMPANY SUBJECT TO THE CON DITION THAT PRIVATE PROMOTERS BUYBACK THESE ORDER ADDITIONAL SHARES AT AGREED VALUE. THE TOTAL AMOUNT NOTICED BY AO IS RS.2,43,31,310 (58,31,310 + 1,85,00,000). SHARE CERTIFICATES AND BUYBACK REGISTER PERTAINING TO THE ABOVE AMOUNT FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY. THE CONTENTIO N OF THE REVENUE THAT THIS WAS BLACK MONEY WHEREAS THE CONTENTION OF THE ASSESSEE THAT THIS MONEY WAS INVESTED BY PROMOTER COMPANIES. THERE IS NO MAT ERIAL ON RECORD WHICH PROVES THAT SOURCE OF INVESTMENT MADE BY THESE COMP ANIES HAD BEEN PROVED. IT IS AN ADMITTED FACT THAT INVOLVEMENT OF UNEXPLAI NED MONEY IS THERE, WHETHER THIS WAS MONEY OF ASSESSEE COMPANY OR BELONGED TO O THER PERSON IS A DIFFERENT THING. SOME CONTRADICTORY FACTS RECORDED BY REVENUE AUTHORITIES HAVE ALSO BEEN NOTICED BY US. IT HAS BEEN NOTICED ON INQ UIRIES BY THE REVENUE AUTHORITIES THAT GENUINENESS OF TWO PROMOTER COMPAN IES, LOHANAK INTERNATIONAL PVT. LTD. AND ALANKAR COMMERCIAL (P) LTD. HAS NOT BEEN FOUND WHEREAS THE CIT(A) HAS GIVEN HIS FINDING ON THE BAS IS OF SUBMISSION OF ASSESSEE THAT THESE COMPANIES ARE ASSESSED TO TAX. IT WAS THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) THAT BOTH THE COMPAN IES ARE REGULARLY ASSESSED AT CENTRAL CIRCLE, DELHI BUT NEITHER SUCH EXPLANATION WAS GIVEN TO THE AO EVEN ON SPECIFICALLY ASKED BY HIM NOR ANY DO CUMENT OR MATERIAL AVAILABLE ON RECORD ON WHICH BASIS THE CONTENTION O F THE ASSESSEE CAN BE VERIFIED AT THIS STAGE. ANOTHER CONTRADICTORY FACT NOTICED BY US IS THAT THE AO RECORDED HIS FINDING THAT SHARES SEIZED AT THE TIME OF SEARCH WERE FOUND ALONG WITH BLANK TRANSFER FORM OF DEEDS WHEREAS THE CONT ENTION OF THE ASSESSEE IS THAT THERE SHARES WERE FOUND ALONG WITH TRANSFER DE ED DULY EXECUTED BY FINANCIAL INSTITUTIONS IN FAVOUR OF PROMOTER COMPAN IES. THE CONTENTION OF THE ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 3 ASSESSEE WAS NEITHER VERIFIED BY THE AO NOR BY THE CIT(A). THERE IS NO FINDING OF THE CIT(A) BY SPEAKING ORDER ON THE FOLLOWING FA CTS NOTICED BY THE AO' 1. THE PRIVATE PROMOTERS WERE THE COMPANIES OF DAL MIA GROUP OF INDUSTRIES DALMIA DAIRY INDUSTRIES LTD. AND GOLDE N TOBACCO CO. LTD. THE ASSESSEE DID NOT EXPLAIN THE RELATIONSHIP OF AS SESSEE COMPANY WITH WORLD GROWTH & ALTER INVESTMENT (P) LTD. THE A SSESSEE COMPANY DID NOT EVEN STATE THAT THESE TWO COMPANIES WERE AM ONGST THE PROMOTERS. NOR FROM THE DETAILS AVAILABLE ON THE RE CORDS IT IS FOUND THAT THESE COMPANIES ARE THE PRIVATE PROMOTERS OF THE AS SESSEE COMPANY GHC. 2. VIDE NOTICE U/S.142(1), THE ASSESSEE COMPANY WA S REQUIRED TO EXPLAIN THE SOURCE OF INVESTMENT BY THESE COMPANIES IN THE SHARE OF THE GHCL. THE ASSESSEE COMPANY HAD NOT TRIED TO EXP LAIN THE SOURCE OF INVESTMENT OF THESE COMPANIES AND HENCE, TIN THE ABSENCE OF ANY EVIDENCE OR REPLY FROM THE ASSESSEE COMPANY IT CANN OT BE SAID THAT THE INVESTMENT IN SHARES WAS GENUINELY DONE BY THESE TW O COMPANIES. 3.THE GENUINENESS AND CREDIT WORTHINESS OF THESE T WO COMPANIES IN WHOSE NAME IT HAS BEEN STATED THAT THE SHARES HAVE BEEN PURCHASED UNDER BUYBACK ARRANGEMENT IS ALSO UNDER QUESTION. D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COMPANY WAS REQUIRED TO SUBMIT THE P.A. NO. OF THESE COMPANIES AND IT WAS A LSO ASKED TO FURNISH THE COPIES OF ASSESSMENT ORDERS OF THESE CO MPANIES IF THEY HAVE BEEN ASSESSED TO INCOME-TAX. BUT THESE REQUIRE MENTS WERE NOT COMPLIED WITH BY THE ASSESSEE COMPANY AND HENCE, TH E CREDIT WORTHINESS AND GENUINENESS OF THESE TWO COMPANIES H AS NOT BEEN PROVED. 44.FROM THE AFORESAID DISCUSSION WE FIND THAT LD. C IT(A) HAS DELETED THE IMPUGNED ADDITIONS WITHOUT VERIFYING CERTAIN FACTS AND WITHOUT GIVING SPECIFIC AND CLEAR FINDING BY A SPEAKING ORDER. THE ORDER OF THE LD. CIT(A) IS BASED ON INSUFFICIENT MATERIAL. THE LD. CIT(A) HAS CONSIDERE D FRESH EVIDENCE WITHOUT GIVING HEARING TO THE AO, PARTICULARLY ABOUT THE FA CT THAT PROMOTER COMPANIES WERE ASSESSED TO TAX.. THE MATTER IN CONTROVERSY HA S NOT BEEN CONSIDERED PROPERLY AND LAWFULLY BE THE LD. CIT(A). IN THE CAS E UNDER CONSIDERATION THE ADMITTED SITUATION IS THAT THE SOURCE OF AMOUNT INV OLVED OF RS.2,43,31,310/- HAS NOT BEEN PROPERLY EXPLAINED. THEREAFTER THE TRIBUNAL HAD GIVEN THE FOLLOWING FIN DING AT PAGE-35 AND 36 OF THE ORDER WHILE HOLDING THAT THE LD. CIT(A) AFTER CONSI DERING VARIOUS EVIDENCES WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER AND ACC ORDINGLY, SET ASIDE THE ADDITIONS ON BOTH THE ABOVE POINTS WITH THE FOLLOWING REMARKS :- 45. IF WE EXAMINE THE FACTS OF THE CASE UNDER CONS IDERATION WITH ABOVE LEGAL POSITION, WE FIND THAT THE ASSESSEE DID NOT EVEN TR Y TO DISCHARGE ITS ONUS. AS IT IS ALSO EVIDENT FROM THE OBSERVATIONS MADE BY THE A O AT PAGE 19 AND 20 OF HIS ORDER. THE LAW OF EVIDENCE MANDATE THAT IF THE BEST EVIDENCE IS NOT PLACED ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 4 BEFORE THE COURT, AND ADVERSE INFERENCE CAN BE DRAW N AS AGAINST THE PERSON WHO OUGHT TO HAVE PRODUCED. THIS VIEW IS SUPPORTED BY THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KRISHNAVENI AMMAL (1986) 158 ITR 826 . IN VIEW OF THE ABOVE JUDGMENT OF MADRAS HIGH COU RT AND IN VIEW OF THE FOLLOWING JUDGMENT OF THE HONBLE GUJAR AT HIGH COURT AND IN VIEW OF THE FOLLOWING JUDGMENT OF THE HONBLE GUJARAT HI GH COURT, THE ORDER OF THE CIT(A) IS LIABLE TO BE SET ASIDE. THE HONBLE GUJAR AT HIGH COURT IN THE CASE OF CIT V. VALIMOHMED AHMED BHAI (1982) 132 ITR 214 HELD THAT ENDS OF JUSTICE AND FAIR PLAY DEMAND THAT WHEN ASSESSEE PRODUCES AD DITIONAL EVIDENCE, OPPORTUNITY SHOULD BE GIVEN TO THE AO IN REBUTTAL O R OTHERWISE. NO SUCH ORDER COULD HAVE BEEN PASSED BEHIND BACK OF AO IN VIOLATI ON OF THE PRINCIPLES OF NATURAL JUSTICE. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL BEING THE FINAL FACT FINDING BODY IS UNDER OBLIGATI ON TO RECORD CORRECT AND COMPLETE FACTS, BUT THE CIT(A) HAS NOT GIVEN HIS FI NDING ON ALL ISSUES AND FACTS NOTICED BY THE AO. UNDER THE CIRCUMSTANCES AND IN V IEW OF PRINCIPLES OF NATURAL JUSTICE, WE THINK IT PROPER TO SEND BACK TH E MATTER UNDER CONSIDERATION TO THE FILE OF THE CIT(A) TO DECIDE THE ISSUE AFRES H IN ACCORDANCE WITH LAW BY PASSING A SPEAKING ORDER COVERING ALL ISSUES RAISED BY THE AO IN HIS ORDER AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING T O BOTH THE SIDES. 3. BEFORE THE LD. CIT(A) THE ASSESSEE FILED TWO PAP ER BOOKS CONTAINING PAGES 1- 287 AND 288 TO 531, WHICH INCLUDED NEW EVIDENCES WH ICH WERE NOT LED BEFORE THE ASSESSING OFFICER. THE LD. CIT(A) VIDE COMMUNICATIO N LETTER DATED 03-12-2004 COMMUNICATED THE SAID PAPER BOOKS TO GIVE THE COMME NTS WITH REFERENCE TO THE FRESH EVIDENCE NOW SUBMITTED BY THE ASSESSEE UNDER RULE 46A OF INCOME-TAX RULES, 1962. THE ASSESSING OFFICER VIDE HIS REMAND REPORT DATED 28-12-2004 SUBMITTED AS UNDER:- 3. SO FAR AS SUBMISSION OF ADDITIONAL EVIDENCES BY ASSESSEE IS CONCERNED, ASSESSEE DOES NOT FULFILL CONDITION LAID DOWN UNDER SUB RULE 1 OF RULE 46A OF THE I.T. RULES. HOWEVER, THE ADDITIONAL EVIDENCES, EVEN IF ADMITTED, NEEDED TO BE EVALUATED IN LIGHT OF FINDINGS GIVEN IN ASSESSME NT ORDERS, APPELLATE ORDERS MENTIONED IN THE PAPER BOOK AND FROM THE ANGLE OF S UFFICIENCY OF THE EVIDENCES. ALL THE REASONS AND BASIS FOR MAKING THE ADDITION HAVE BEEN SPELT IN DETAIL IN THE ASSESSMENT ORDER, WHICH IS A WELL REASONED, SPEAKING ORDER BASED UPON THE FINDINGS DURING SEARCH OPERATION. YO U ARE, THEREFORE, REQUESTED TO DULY CONSIDER THE REASONS AND MATERIAL FOR MAKING THE ADDITIONS BEFORE PASSING THE ORDER. THE COPY OF THE SAME WAS MADE AVAILABLE TO ASSESSEE S REPRESENTATIVE BUT NO COMMENTS WERE OFFERED SINCE THE ASSESSING OFFICER H AS AGAIN RELIED UPON THE ORIGINAL EVIDENCE WHICH IS PART OF THE ASSESSMENT O RDER. THE LD. CIT(A) OBSERVED THAT SINCE THERE IS NO OBJECTION OR COMMENTS FROM T HE AO THE SAID EVIDENCES ARE ADMITTED FOR CONSIDERATION AND ACCORDINGLY DISPOSED OFF THE APPEAL. THE LD. CIT(A) ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 5 AFTER PERUSING THE SUBMISSIONS AND EVIDENCES FILED IN PAPER BOOK PAGES 1 AND 11 REFERRED HEREINABOVE AND THE DIRECTION OF ITAT APPE LLATE ORDER DATED 17-04-2003 (SUPRA) THE FACTS AVAILABLE ON RECORD DISPOSED OF T HE APPEAL WITH REGARD TO BOTH THE GROUNDS AND ALLOWED BOTH THE GROUNDS OF THE ASSESSE E. 4. AS REGARDS GROUND NO.1 THE FACTS ARE THAT THERE WAS SEARCH IN ASSESSEES PREMISES IN NEW DELHI ON 15-03-1999 AND THERE WAS A SURVEY CONDUCTED AT AHMEDABAD OFFICE AS WELL. DURING THE COURSE OF SEAR CH CERTAIN SHARE CERTIFICATES ALONG WITH TRANSFER FORMS FOR THE SHARES WERE FOUND . THE ASSESSING OFFICER CALLED UPON THE ASSESSEE-COMPANY AS TO WHY THE SAME SHOULD NOT BE TAKEN AS BELONGING TO THE ASSESSEE-COMPANY; WHEREAS THE ASSESSEE-COMPA NY SUBMITTED THAT THE SHARES HAVE BEEN PURCHASED BY ITS PROMOTER COMPANY NAMELY ALANKAR COMMERCIAL PVT. LTD. AND LHONAK INTERNATIONAL PVT. LTD. AND SU BMISSIONS MADE BY THE ASSESSEE- COMPANY IN THIS RESPECT HAVE BEEN DISCUSSED BY THE AO AT PAGE 11 AND 12 OF THE ORDER. THE AO HOWEVER, DID NOT ACCEPT THE ARGUMENTS OF THE ASSESSEE-COMPANY ON THE GROUND THAT M/S. LHONAK INTERNATIONAL PVT. LTD. AND ALANKAR COMMERCIAL PVT. LTD. ARE NOT GENUINE COMPANIES AS PER VARIOUS INQUIRIES CONDUCTED. IT ALSO OBSERVED THAT THE SOURCE OF THEIR FUNDS HAVE ALSO NOT BEEN PROVED . IN ABSENCE OF ANY EVIDENCES SUBMITTED BY THE ASSESSEE-COMPANY, THE AO TREATED T HE ENTIRE MARKET VALUE OF THE SHARES FOUND DURING THE COURSE OF SEARCH ON 15-03-1 990 AS UNEXPLAINED INVESTMENTS/INCOME OF THE ASSESSEE-COMPANY. 5. BEFORE LD. CIT(A) THE ASSESSEE HAD SUBMITTED EVI DENCES IN SUPPORT THAT SHARES CERTIFICATES BELONGED TO M/S. ALANKAR COMMER CIAL PVT. LTD. AND M/S LHONAK INTERNATIONAL PVT. LTD. WHICH ARE GENUINE SEPARATE ENTITIES WHO HAD PURCHASED THE SHARES FOUND DURING THE COURSE OF SEARCH FROM VARIO US FINANCIAL INSTITUTIONS. AS PER THE AGREEMENT BETWEEN THE FINANCIAL INSTITUTIONS, T HE ASSESSEE-COMPANY AND ITS PROMOTES, THERE WAS A BUY-BACK ARRANGEMENT. THIS FA CT WAS ALSO AVAILABLE BEFORE THE ASSESSING OFFICER WHICH HAS BEEN MENTIONED BY T HE AO AT PAGE-10 OF HIS ASSESSMENT ORDER. THE DETAILS CHART WAS SUBMITTED B EFORE LD. CIT(A) AS WELL AS BEFORE THIS BENCH BY THE LD. AR, MR. S.N. SOPARKAR APPEARING FOR THE ASSESSEE WITH REGARD TO NAME OF THE INSTITUTIONS, SHARES CERTIFIC ATES NUMBERS, THE AMOUNT PAID TO THE FINANCIAL INSTITUTIONS FOR THE COMPANIES THAT S AME HAVE BEEN PURCHASED FROM FINANCIAL INSTITUTIONS AND THE PAYMENTS HAVE BEEN M ADE BY THESE COMPANIES FROM ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 6 THEIR BANK ACCOUNTS. THE SAID DETAILS HAVE BEEN REP RODUCED BY THE LD. CIT(A) AT PAGE-10-11 OF HIS ORDER AND ARE ALSO AVAILABLE IN T HE PAPER BOOK SUBMITTED BY THE ASSESSEE. OUR ATTENTION WAS INVITED BY MR. SOPARKAR ON THE COPY OF ACCOUNT OF SBI, SIKKIM IN SUPPORT OF THE PAYMENT MADE BY WAY OF DEM AND DRAFT BY THE SAID COMPANY FOR THE RESPECTIVE PURCHASES OF THE SHARES WHICH HA VE BEEN VERIFIED BY THE LD. CIT(A). THE LD. CIT(A) HAS VERIFIED THE CERTIFICATE FOUND AT THE TIME OF SEARCH AND CO- RELATED SAME WITH THE CERTIFICATE NUMBERS SUBMITTED BY MR. SOPARKAR FOR WHICH PAYMENTS HAVE BEEN MADE BY THE SAID COMPANY TO THE FINANCIAL INSTITUTIONS I.E. ICICI, IFCI & IDBI. 6. THE ARGUMENTS WERE ADVANCED BY LD. CIT-DR, SHRI KARTAR SINGH THAT THERE WAS A BLACK-MONEY INTRODUCED BY THESE ASSESSEE-COMP ANIES OR BY SOME OTHER COMPANY AND THERE IS NO MATERIAL ON RECORD WHICH PR OVES THE SOURCE OF INVESTMENT BY THESE COMPANIES. THE ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION BEFORE THE ASSESSING OFFICER EVEN ON SPECIFICALLY ASKED BY THE AO, NO MATERIAL WAS PLACED BEFORE HIM WITH REGARD TO ASSESSMENT PARTICULARS OF THESE COMPANIES. MR. KARTAR SINGH LD. CIT-DR FURTHER ARGUED THAT AT THE TIME OF SEARCH BLANK TRANSFER DEEDS WERE FOUND ALONG WITH SHARE CERTIFICATES AND THERE IS NO THING ON RECORD THAT THE TRANSFER DEEDS WERE DULY EXECUTED. HE FURTHER ARGUED THAT TH E ASSESSEE DID NOT EXPLAIN THE RELATIONSHIP OF THE ASSESSEE-COMPANY WITH WORLD GRO WTH & ALTER INVESTMENT (P) LTD. HE FURTHER ARGUED THAT IN ANY CASE NO SOURCE OF INV ESTMENT HAD BEEN PROVED BY THE TWO COMPANIES AND THEREFORE GENUINENESS AND CREDITW ORTHINESS OF THESE TWO COMPANIES ARE NOT PROVED. MR. KARTAR SINGH FURTHER PRAYED TO CONFIRM THE ORDER OF ASSESSING OFFICER AND REVERSED THE ORDER OF LD. CIT (A). 7. MR. SOPARKAR LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND, RELIED UPON THE ORDER OF LD. CIT(A) AND ARGUED THAT LD. CIT(A) HAS RIGHTLY FOLLOWED THE DIRECTION OF ITAT IN ITS ORDER IN ITA NO.2419/AHD/1994 (SUPRA) AS IS EVIDENT FROM THE ORDER OF LD. CIT(A) AND ACCORDINGLY HE INVITED OUR ATTENTION TO VARIOUS DOCUMENTS OF THE PAPER BOOKS IN THIS REGARD. 8. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY MR S OPARKAR, SR-ADVOCATE LD. COUNSEL OF THE ASSESSEE THAT LD. CIT(A) HAS FOLLOWE D THE DIRECTIONS OF THE ITAT IN ITS ORDER IN ITA NO.2419/AHD/1994 (SUPRA) THAT M/S ALANKAR COMMERCIAL PVT. LTD AND ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 7 LHONAK INTERNATIONAL PVT. LTD. ARE SEPARATE ENTITIE S WHO HAVE PURCHASED THE SHARES. DURING THE COURSE OF SEARCH FROM THE VARIOUS FINANC IAL INSTITUTIONS AS PER THE AGREEMENT WHICH ARE PLACED ON RECORD BETWEEN FINANC IAL INSTITUTIONS, THE ASSESSEE- COMPANY AND ITS PROMOTERS, THERE WAS A BUY-BACK ARR ANGEMENT WHICH WAS AVAILABLE BEFORE THE ASSESSING OFFICER AND IS EVIDENT AT PAGE 10 OF AO'S ORDER. THE SHARES CERTIFICATES FOUND DURING THE COURSE OF SEARCH HAVE BEEN TALLIED WITH THE DETAILS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE A ND THE PAYMENTS HAVING MADE BY M/S LHONAK INTERNATIONAL PVT. LTD. AND M/S ALANK AR COMMERCIAL PVT. LTD. TO THE SAID FINANCIAL INSTITUTIONS FROM THEIR BANK ACCOUNT IS NOT UNDER DISPUTE AND NO CONTRARY MATERIAL HAS BEEN PLACED ON RECORD BY THE REVENUE IN THIS REGARD. 9. M/S. ALANKAR COMMERCIAL PVT. LTD. IS ASSESSED IN COME-TAX AND COPY OF THE ASSESSMENT PARTICULARS ARE ON RECORD ALONG WITH PAN . THEREFORE NO ADVERSE INFERENCE CAN BE DAWN AGAINST ASSESSEE-COMPANY. 10. AS REGARDS M/S. LHONAK INTERNATIONAL PVT. LTD. THE COMPANY IS REGISTERED IN SIKKIM AND THIS COMPANY HAS ALSO MADE THE PAYMENTS TO THE RESPECTIVE FINANCIAL INSTITUTIONS AND THE SHARES CERTIFICATES HAVE BEEN CO-RELATED WITH THE DETAILS OF THE PANCHNAMA DRAWN DURING THE COURSE OF SEARCH BY THE LD. CIT(A). 11. AS REGARDS OBJECTION OF LD. CIT-DR WITH REGARD TO VARIOUS DETAILS WHICH WERE NOT SUBMITTED BEFORE ASSESSING OFFICER, THE LD. CIT (A) AFTER ADMITTING THE ADDITIONAL EVIDENCES HAVE BEEN SENT TWO VOLUMES PAPER BOOKS TO THE AO FOR TAKING HIS COMMENTS. WHEREAS AO WHO HAS NOT TO COMMENTED UPON THE SAID PAPER BOOKS AND THE ADDITIONAL EVIDENCES. THE AO VIDE REMAND REPORT DATED 28-12-2004 HAS COMMENTED VIDE PARA-3 THAT IF THE ADDITIONAL EVIDEN CES ARE ADMITTED THERE NEEDED TO BE EVALUATE IN THE LIGHT OF FINDINGS GIVEN IN ASSES SMENT ORDER AND APPELLATE ORDER MENTIONED IN THE PAPER BOOK AND FROM THE ANGLE OF T HE SUFFICIENCY OF THE EVIDENCES. THE LD. CIT(A) WITHIN HIS CONCURRENT JURISDICTION A FTER EXAMINING THE ADDITIONAL EVIDENCES IN THE TWO VOLUMES OF PAPER BOOKS AND OTH ER FACTS ON RECORD AND THE DIRECTIONS OF THE ITAT VIDE ITS ORDER IN ITA NO.2419/AHD.1994 (SUPRA) HAS RIGHTLY DELETED THE ADDITION MADE BY ASSESSING OFFICER. WE FIND NO INFIRMITY IN THE ORDER PASSED BY LD. CIT(A) ON THIS ISSUE. THUS, GROUND NO .1 OF THE REVENUE IS DISMISSED. ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 8 12. AS REGARDS GROUND NO.2 DURING THE COURSE OF SEA RCH BUY-BACK REGISTER WAS FOUND ON THE BASIS OF THE SAME, ASSESSING OFFICER N OTED THAT SHARES OF RS.1.85 CRORES HAVE BEEN PURCHASED AS REPORTED IN THE SAID REGISTER I.E. SHARES OF RS.10 LAKH HAVE BEEN PURCHASED IN THE NAME OF M/S. ALTER INVES TMENT AND RS. 1.75 CRORES IN THE NAME OF M/S. WORLD GROWTH FUND LTD. SINCE THE R EGISTER WAS FOUND IN THE PREMISES OF THE ASSESSEE-COMPANY, DURING THE COURSE OF SEARCH. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD WAS THAT THERE WAS BUY- BACK ARRANGEMENT BETWEEN THE ASSESSEE-COMPANY AND THE PROMOTER-COMPANY INCLUDING M/S. ALTER INVESTMENT PVT. LTD. AND M/S. WORLD GROWTH FUND LTD. THE SAID ARRAN GEMENT WAS BASED ON LETTER DATED 31-08-1987. THE AO REJECTED THE SUBMISSION OF THE ASSESSEE I.E. FOR THE REASONS THAT OTHER COMPANIES ARE NOT GENUINE AND TH E TRANSACTIONS ARE NOT PROVED. THE SAID COMPANIES HAS BEEN ESTABLISHED THE SOURCES OF FUNDS FOR THE SAID TRANSACTIONS. ACCORDINGLY, THE AMOUNT OF RS.1.85 CR ORES WAS HELD AS UNEXPLAINED INVESTMENT BY THE ASSESSEE-COMPANY FOR THE PURCHASE OF SAID SHARES. 13. BEFORE LD. CIT(A) VARIOUS EVIDENCES WERE PRODUC ED WHICH AS ADDITIONAL EVIDENCE WERE SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS AND THE AO IN HIS REMAND REPORT DATED 28-12-2004 HAS MENTIONED THAT A SSESSEE-COMPANY DOES NOT FULFILL THE CONDITION LAID DOWN UNDER RULE 46A OF T HE I.T. RULE AS APPEARING AT PAGE-7- 8 OF LD. CIT(A)S ORDER. 14. WE CONCUR WITH THE VIEWS OF LD. CIT(A) WITH REG ARD TO THE SAID COMPANY I.E. M/S. ALTER INVESTMENT PVT. LTD. WHERE THE LD. CIT(A ) USES HIS CONCURRENT JURISDICTION AND HAS FOUND OUT THAT THE SAID COMPANY IS ASSESSED TO TAX AND HAVING PAN WHICH IS ON RECORD. THE COPIES OF BALANCE-SHEET AS AT ON 31 ST MARCH, 1999 IS ON RECORD AND THE SAID INVESTMENT IS REFLECTED IN THE BALANCE-SHE ET. THERE IS NO EVIDENCE BROUGHT ON RECORD BY ASSESSING OFFICER THAT THE SOURCE OF T HE INVESTMENT IS THAT OF ASSESSEE- COMPANY. THE TRANSACTION APPEARING IN THE BUY-BACK REGISTER CAN BE CO-RELATED TO THE INVESTMENT MADE BY THE SAID COMPANIES. 15. AS REGARDS TO M/S. WORLD GROWTH FUND LTD. THIS COMPANY IS ALSO ASSESSED TO TAX FOR THE IMPUGNED YEAR AND IS ALSO HAVING PAN. T HE BALANCE-SHEET OF THE SAID COMPANY IS ALSO ON RECORD AND THE COMPANY HAS SHOWN THE STOCK-IN-TRADE AT RS.17,58,71,000/- FOR PURCHASE OF 1,88,84,000 EQUIT Y SHARES OF M/S. GUJARAT HEAVY ITA NO.1050/AHD/2005 A.Y. 1990-91 ACIT CIR-4, ABD V. GHCL LTD. PAGE 9 CHEMICALS LTD. I.E THE ASSESSEE-COMPANY. THE DIFFER ENCE BETWEEN THE AMOUNT APPEARING IN THE BUY-BACK REGISTER AND THIS FIGURE IS EXPLAINED BY THE ASSESSEES REPRESENTATIVE. COPY OF THE AFFIDAVIT IS ALSO ON RE CORD WHEREBY DIRECTOR OF THE SAID COMPANY, SHRI J.S. RATELA HAS CONFIRMED THE TRANSAC TION BELONGING TO THE SAID COMPANY AND ALSO CONFIRMED THE SHARE WAS BOUGHT FRO M FINANCIAL INSTITUTIONS LIKE IDBI, GIIC AND OTHER FINANCIAL INSTITUTIONS AS PER BY BUY-BACK ARRANGEMENT. THERE IS NO OTHER EVIDENCE BROUGHT ON RECORD BY AO TO PROVE THAT THIS INVESTMENT OF RS.1.75 CRORES HAS BEEN FUNDED BY THE ASSESSEE-COMPANY SO A S TO TREAT THE INCOME OF THE ASSESSEE. THE TRANSACTION APPEARING IN THE BUY-BACK REGISTER AND CAN BE CO-RELATED BY THE TRANSACTIONS APPEARING IN THE BALANCE-SHEET OF THE SAID COMPANY. UNDER THE CIRCUMSTANCES THE FACTS OF THE CASE, WE FIND NO INF IRMITY IN THE ORDER OF LD. CIT(A). THUS, GROUND NO.2 OF REVENUE IS DISMISSED. 16. GROUND NO.3 AND 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 17. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ' ! #$% 30 / 12 /2011 ) * + , THIS ORDER PRONOUNCED IN OPEN COURT ON 30/12/ 2011 . SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) #$%- 30/12/2011 . , DKP* ! ! ! ! //0 //0 //0 //0 1 0 1 0 1 0 1 0 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $$/4 5 / CONCERNED CIT 4. 5- / CIT (A) 5. 08+ ///4, /4, . / DR, ITAT, AHMEDABAD 6. +;< =' / GUARD FILE. BY ORDER/ ! , /TRUE COPY/ >/. $? /4, . ,