M/s Noble Share Trading Pvt. Ltd., Ludhiana V. ITO, Ludhiana

ITA 1117/CHANDI/2008

• Counselvise Citation: 111721514 RSA 2008
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-01-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 30-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Bogus Share capital; Share purchase agreement; Question of law; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 147; 131; 68; 69; 148; 143(3); 133A; 234B; 143(1); 205; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1117/CHD/2008 ASSESSMENT YEAR: 2002-03 M/S NOBLE SHARE TRADING PVT.LTD., VS THE ITO, LUDHIANA WARD VI(1), LUDHIANA PAN NO. AAACN5475D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 17.1.2012 DATE OF PRONOUNCEMENT : 26.3.2012 ORDER PER MEHAR SINGH, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II, LUDHIANA DATED 28.11.2008 RELATING TO AS SESSMENT YEAR 2002-03 PASSED U/S 250(6) OF THE INCOME-TAX ACT,196 1 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ISSUING THE NOTI CE U/S 148 OF THE INCOME TAX ACT, 1961. 2 2. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT PROPER SATISFACTION WAS RECORDED BY HIM BEFORE ISSUING NOT ICE U/S 148 OF THE INCOME TAX ACT, 1961. 3. THAT WITHOUT PREJUDICE TO ABOVE SAID GROUNDS OF APPEAL, THE. WORTHY CIT (APPEALS)-LL, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER THAT THERE WAS NEXUS OF THE REASONS RECORDED AND FI NAL CONCLUSION DRAWN BY HIM. 4. NOTWITHSTANDING THE ABOVE GROUND OF APPEAL, THE WORTHY CIT (A)-II, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 42,00,000/- AGAINST THE AMOUNT AS MENTIONED IN THE REASONS AT RS. 10,00,000/-. 5. THAT NOTWITHSTANDING THE ABOVE SAID FACT, THE WO RTHY CLT(A)-II, LUDHIANA HAS ALSO ERRED IN CONFIRMING TH E ACTION OF THE ASSESSING OFFICER IN MAKING THE ABOVE SAID ADDITION OF RS. 42,00,000/- (BEING THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE) AS INCO ME U/S 69 OF THE INCOME TAX ACT,1961. 6. THAT THE WORTHY CIT(A)-II, LUDHIANA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER THAT SHARE APPLICATION MONEY OF RS. 42,00,000/- RECEIVED BY THE ASSESSEE COMPANY IS FICTITIOUS TRANSACTION AND THE MONEY BELONGS TO THE ASSESSEE. 7. THAT THE WORTHY CLT (A)-II, LUDHIANA HAS NOT APPRECIATED THE FACT THAT ADDITION OF RS. 42,00,000 /- IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE HAS BEEN MADE BY THE ASSESSING OFFICER ON GUEST WORK, IMAGINATION AND WITHOUT ANY MATERIAL ON RECORD AND IS AGAINST THE FACTS AND CIRCUMSTANCES O F THE CASE. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 9. THAT THE WORTHY CIT(A)-II, LUDHIANA HAS ERRED ENDORSING THE VIEW OF THE ASSESSING OFFICER THAT INTEREST U/S 234B IS CHARGEABLE. 3. THE FIRST THREE GROUNDS OF APPEAL REVOLVES AROUN D THE ISSUE OF INVOCATION OF PROVISIONS OF SECTION 147 READ WITH S ECTION 148 OF THE 3 ACT. THE ASSESSEE CONTENDS THAT THE CIT(A), ERRED IN UPHOLDING THE ACTION OF THE AO IN ISSUING NOTICE U/S 148 OF THE A CT BY THE AO. THE CIT(A), FURTHER, ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER, REGARDING ISSUE OF NOTICE U/S 148 OF THE A CT, WITHOUT RECORDING PROPER SA`TISFACTION. THE ASSESSEE, FURTH ER, CONTENDS THAT CIT(A), ERRED IN CONFIRMING THE FINDING OF THE ASSE SSING OFFICER THAT THERE WAS NEXUS BETWEEN THE REASONS RECORDED AND TH E FINAL CONCLUSION DRAWN BY HIM. THE LD. AR, FURTHER, CONTENDED AND ARGUED THAT THE ISSUANCE OF NOTICE U/S 148 OF THE ACT IS CONTRARY T O THE PROVISIONS OF THE RELEVANT STATUTORY PROVISIONS. THE LD. AR PL ACED RELIANCE, ON THE BRIEF SYNOPSIS, SUBMITTED IN THE COURSE OF PRESENT ASSESSMENT PROCEEDINGS. THE SUBMISSION MADE BY HIM, IN THE FO RM OF SYNOPSIS IS REPRODUCED BELOW:- 1. THE ASSESSEE IS A PRIVATE LIMITED COMPANY. 2. THE RETURN IN THIS CASE WAS FILED ON 24.10.2002 AT NIL INCOME AND THE PROCESSING WAS MADE BY THE ASSESSING OFFICER ON 31.03.2004. 3. LATER ON, THE CASE WAS REOPENED BY ISSUANCE OF N OTICE U/S 148, DATED 19.01.7007 AND AGAINST WHICH THE RET URN WAS FILED ON 08.03.2007 AT THE SAME INCOME, COPY PLACED AT PAGES 1 TO 4 OF APB. 4. THE FIRST THREE GROUNDS OF APPEAL RELATE TO THE ACTION OF THE CIT (A) IN CONFIRMING THE ACTION OF THE AO W ITH REGARD TO THE REOPENING OF THE CASE U/S 148. THE AO HAS DI SCUSSED THIS ISSUE FROM PAGE 1 TO 4 AND THE CIT HAS GIVEN H IS FINDING FROM PARA 7 TO PARA 7 .4. 5. REFER TO PAGE 1 TO 3 OF THE ASSESSING OFFICER AN D POINT OUT THE FOLLOWING THINGS: A. NO NAME OF THE ASSESSEE COMPANY UNDER THE LIST OF THE CONCERNS GIVING THE ALLEGED ACCOMMODATION ENTRY EXCEPT MENTIONING THE SAME OF M/S CHINAR AGENCIES PVT LTD., WITHOUT ANY MATERIAL CONFRONTING TO US. 4 B. IT HAS BEEN STATED AT PAGE 3 THAT IN THE STATEME NT GIVEN BY SH. SANJAY RASTOGI, HE HAS GIVEN THE NAME OF M/S NOBLE SHARE TRADING CO. WHICH IS ALLEGED TO HAVE RECEIVED THE AMOUNT IS FACTUALLY INCORRECT, SINCE AS PER COPY OF THE STATEMENT SUPPLIED TO THE ASSESSEE AND PLACED AT PAGE 36 OF THE APB AND RELEVANT PARA 42 TO 44, THERE IS NO NAME OF OUR CONCERN. C. EVEN A LOOK AT THE STATEMENT SHOWS AT PAGE 36 THAT FIRST STATEMENT WAS RECORDED ON 17.04.2003 AND THIS STATEMENT WAS CONTINUED ALSO ON 17.4.2003 PAGE 42. IN BOTH THE STATEMENTS, THERE IS NO REFERENCE TO THE NAME OF OUR COMPANY. THEN AGAIN, IN THE REASONS RECORDED BY THE ASSESSING OFFICER, THERE IS A REFERENCE TO THE SAME STATEMENT AT PAGE-6 OF THE PAPER BOOK. AGAIN REFERENCE IS THERE AT PAGE-2 OF THE ORDER OF AO. THUS, THE WRONG FACTS HAVE BEEN MENTIONED IN THE REASONS. 6. THUS, THERE IS NO NEXUS VIS-I-VIS THE STATEMENT OF SH. SANJAY RASTOGI AND NEITHER IS HE ANY DIRECTOR O R ANY BENEFICIARY IN OUR COMPANY. THUS, THIS OBSERVATION IN THE ASSESSMENT ORDER DESERVES TO BE IGNORED. SINCE IT I S FACTUALLY INCORRECT AND IN THE ASSESSMENT ORDER, MENTIONING T HE NAME OF THE COMPANY AS MENTIONED IN THE BODY OF THE ASSE SSMENT ORDER BY THE ASSESSING OFFICER AND THE CIT (A) IS T HE NOT RELEVANT AND DOES NOT APPEAR TO BE ON THE BASIS OF ANY MATERIAL/ STATEMENT OF SHRI SANJAY RASTOGI. 7 THEN, AGAIN AS REGARDS THE MODUS OPERANDI DISCUSSED AT PAGE-3 OF HIS ORDER WITH REGARD TO TAK ING OF CASH AND THEN ISSUING CHEQUE IS NOT RELEVANT TO THE FACTS OF OUR CASE SINCE SHRI SANJAY RASTOGI DID NOT REFER OU R NAME AND FACTS MENTIONED AT PAGE 3 PARA 2 ARE FACTUALLY INCORRECT. 8. COPY OF THE REASONS PLACED AT PAGE 5 TO 6 AND FOLLOWING OBSERVATIONS ARE IMPORTANT: A. WITH REGARD TO OPENING OF THE BANK ACCOUNT AT DELHI, IT IS ONLY A SUSPICION AND IN THIS REGARD, IT IS SUBMITTED THAT THERE ARE OTHER GROUP COMPANIES OF THE ASSESSEE COMPANY NAMELY M/S SHREYANS INDUSTRIES, WHOSE OFFICE IS LOCATED AT RAJINDRA PALACE, NEW DELHI AND THE COMPANY IS STILL MAINTAINING THE SAME BANK ACCOUNT AS ON THE DATE. 5 B. THEN AGAIN WITH REGARD TO OPENING OF BANK ACCOUNT, IT MAY BE SUBMITTED THAT DURING THAT TIME, NO FACILITY OF CHEQUE PAYABLE AT PAR ON DIFFERENT STATION WAS AVAILABLE AND FOR ANY PAYMENT BY DRAFT, WOULD HAVE RESULTED INTO EXTRA EXPENDITURE AND TIME CONSUMING AND SINCE THE APPLICANT GROUP COMPANY WERE HAVING OFFICE, IT WAS FOUND NECESSARY AND EXPEDIENT TO OPEN A BANK ACCOUNT AT NEW DELHI. 9. WITH REGARD TO THE OBSERVATION OF THE ASSESSING OFFICER THAT THE FRESH CAPITAL OF RS.42 LACS AS INTRODUCED HAVING BEEN UTILIZED FOR EQUITIES IN GROUP COMPANIES IN M/S SHR EYANS INDUSTRIES IS NOT CORRECT SINCE A SUM OF RS.26,80,0 00/- ONLY OUT OF RS.42 LACS STANDS INVESTED IN M/S SHREYANS I NDUSTRIES AND THE BALANCE HAVING BEEN UTILIZED FOR PAYMENT OF OTHER LIABILITIES AND THE ABOVE GROUND CANNOT BE A GROUND FOR REOPENING THE CASE. THE SAME IS BORNE OUT FROM BALA NCE SHEET OF THE COMPANY ALREADY ON RECORD WITH A.O. IN THE ORIGINAL RETURN. 10. AT PAGE 6 OF PAPER BOOK, IT IS VERY CLEAR THAT THE ASSESSING OFFICER ONLY DOUBTS THE ENTRY OF RS.10 LA CS AND NOT THE ENTIRE SUM OF RS.42 LACS AND, THUS, THE REASONS RECORDED DOES NOT HAVE THE NEXUS WITH THE ADDITION AS SOUGHT TO BE MADE. 11. REFERENCE IS MADE TO THE OBJECTIONS AS FILED TO THE ASSESSING OFFICER AT PAGES 7 & 8. 12. THEN AGAIN THE ASSESSING OFFICER DID NOT HAVE A NY INFORMATION WITH REGARD TO THE ENTIRE SHARE CAPITAL IS BORNE OUT FROM THE OBSERVATIONS GIVEN AT PAGE 5 OF HER OR DER. (READ) 13. BESIDES THAT, IT MAY BE STATED THAT FROM THE BA RE PERUSAL OF THE REASONS, IT IS VERY CLEAR THAT THE A O HAS ONLY RELIED UPON THE REPORT OF THE INVESTIGATION WING AN D THERE IS NO INDEPENDENT APPLICATION OF MIND AND ON THIS BASI S, THERE CANNOT BE ANY REOPENING. RELIANCE IS BEING PLACED O N THE FOLLOWING JUDGMENTS:- I) CIT VS SMT. PARRAMJIT KAUR (P&H) (2009) 311 ITR 38. II) SHEO NARAIN JAISWAL & ORS. V ITO & ORS (1989) 176 ITR 352 (HIGH COURT OF PATNA) III) CIT VS. SHIV RATAN SONI (2008) 217.CTR 222 (RAJASTHAN HIGH COURT) 6 IV) ACIT VS RAMESH CHAND SONI (2006) 105 TTJ 262, ITAT, JODHPUR BENCH IV) HINDUSTAN DORR OLIVER LTD. VS DCIT & OTHERS [2008] 305 ITR 282 (BOMBAY). VI) CLT VS (1) ATUL JAIN (2) SMT. VINITA JAIN [2008 ] 299 ITR 383 (DELHI HIGH COURT). 14. THE FINDINGS OF THE CIT (A) ON 148 IS IN PARA 6 ONWARDS. NO FINDING OF CIT(A) THAT SHRI SANJAY RAST OGI NEVER STATED THAT HE HAD ARRANGED ACCOMMODATION ENT RY FOR THE ASSESSEE, AND THUS, THERE IS NO MATERIAL FOR TH E PURPOSE OF ISSUING NOTICE U/S 148 AND THERE IS NO NAME OF T HE CHINAR AGENCIES IN THE STATEMENT OF SHRI SANJAY RASTOGI AS IS EVIDENT FROM PAGE 44 OF THE PAPER BOOK. RELIANCE ON 103 ITR 437. 4. THE LD. DR VEHEMENTLY CONTENDED THAT REOPENING OF THE PRESENT CASE IS WITHIN THE PARAMETERS OF THE PROVIS IONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT. IT WAS, FURTHER, ARGUED BY LD. DR THAT ASSESSING OFFICER HAS APPLIED HIS MIND TO THE FACTS OF THE PRESENT CASE INDEPENDENTLY AND THE FACTS OF THE PRESENT CAS E ARE CLEARLY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT, IN TH E CASE OF ACIT V RAJESH JHAVERI STOCK BROKERS PVT LTD (2007) 291 ITR 500 (SC). IT WAS, FURTHER, ARGUED BY THE LD DR THAT SANJAY RAS TOGI HAS MENTIONED NAMES OF PROMINENT BENEFICIARIES / CONCERNS INVOLVE D IN THE OPERATION OF ARRANGEMENT OF ACCOMMODATION ENTRIES. HE, FURTHE R, REFERRED TO THE REPORT OR INFORMATION SUBMITTED BY THE INVESTIGATIO N WING AND CONTENDED THAT THE SAME IS A VALID SOURCE, FOR THE PURPOSE OF FORMATION OF BELIEF, WITHIN THE MEANING OF SECTION 147 OF THE ACT. 7 5. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE, RELEVANT RECORDS AND ALSO THE WRITTEN SUBMISS IONS FILED BY THE LD ASSESSEE, IN THE FORM OF SYNOPSIS, AND CASE LAWS CI TED THEREIN. 6. THE BRIEF FACTS OF THE CASE AS CULLED OUT FROM T HE RELEVANT RECORDS ARE THAT THE ASSESSEE FILED RETURN OF INCOME, ON 24 .10.2002, DECLARING NIL INCOME. THE SAID RETURN OF INCOME WAS PROCESSE D ON 31.3.2004 U/S 143(1)(A) OF THE ACT. SUBSEQUENTLY, THE ASSESSING O FFICER RECEIVED INFORMATION FROM THE ADDL. CIT (INV.), UNIT VII, NE W DELHI, REGARDING ACCOMMODATION ENTRIES, PROCURED BY THE ASSESSEE COM PANY. ON A PERUSAL OF THE REPORT RECEIVED FROM THE INVESTIGATI ON WING, THE ASSESSING OFFICER RECORDED THE REASONS U/S 148 OF T HE ACT, FOR THE PURPOSE OF INITIATION OF RE-ASSESSMENT PROCEEDINGS. THE REASONS RECORDED BY THE ASSESSING OFFICER U/S 148 OF THE AC T, APPEARS AT PAGE 3 OF THE ASSESSMENT ORDER DATED, 28.12.2007, FOR THE ASSESSMENT YEAR UNDER REFERENCE, WHEREIN THE ASSESSING OFFICER, MAD E AN ADDITION OF RS. 42,00,000/-, IN RESPECT OF SHARE APPLICATION MO NEY RECEIVED BY THE ASSESSEE COMPANY, TREATING SUCH TRANSACTIONS AS ACC OMMODATION ENTRIES. THE REASONS RECORDED BY THE ASSESSING OFFI CER U/S 148 OF THE ACT ARE REPRODUCED HEREUNDER:- 'IN THIS CASE INFORMATION HAS BEEN RECEIVED FROM TH E INCOME OFFICER, WARD 3(3), C.R. BUILDING, NEW DELHI UNDER HIS OFFICE LETTER NO. 314 DATED 01.09.2006 WHICH HAS BEEN FORW ARDED TO THIS OFFICE BY THE COMMISSIONER OF INCOME TAX-ILL, LUDHIANA VIDE HIS OFFICE LETTER DATED 11.09.2006 IN WHICH HE HAS INFORMED THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FRO M M/S. CHINAR AGENCIES PVT. LTD., 2010-VAKIL CHEMBERS. A-1 15, SHAKARPUR, DELHI AS PER DETAILS GIVEN BELOW:- DATE 18/05/2001 CH. NO. 99,4221 RS.7,50,000/- 8 DATE 25/06/2001 CH.NO.994228 RS.2,50,000/- HE HAS FURTHER INFORMED THAT THE ASSESSEE UNDER REF ERENCE IS MAINTAINING BANK ACCOUNT NO.01050050025 WITH STATE BANK OF PATIALA, 8-RAJENDRA PALACE, NEW DELHI. A COPY OF TH E BANK ACCOUNT WITH THE ACCOUNT OPENING FORM HAS ALSO BEEN ANNEXED TO HIS LETTER, AS REFERRED TO ABOVE. THE ASSESSEE COMP ANY HAS ITS REGISTERED OFFICE AT SCO-32, FEROZE GANDHI MARKET, LUDHIANA AND THE ACCOUNT OPENING FORM WAS SIGNED BY SH. D.K. OSWAL, SH.RAJNEESH OSWAL AND S.K. SIKRA AND THEY WERE AUTH ORIZED TO OPERATOR THE BANK ACCOUNT SINGLY/JOINTLY FROM THE PERUSAL OF BANK ACCOUNT IT IS FOUND THAT I T WAS OPENED WITH INITIAL CASH DEPOSIT OF RS.5,000/- ON 3 0,04.2001 AND FIRST DEPOSIT WAS OF RS.7,50,000 /- MADE THROUGH CLEARING ON 21.05.2001 AND OBVIOUSLY IT REPRESENT THE PROCEE D OF C.EQUE NO. 994221 DATED 18.05.2001 ISSUED BY M/S. CHINAR A GENCIES PVT. LTD. AS COMMUNICATED BY THE INCOME TAX OFFICER , NEW DELHI THE SECOND CHEQUE WAS RS.2,50,000/-WAS CREDIT ED TO THIS ACCOUNT ON 27.06.2001. ALMOST THE ENTIRE SHARE CAPI TAL OF THE COMPANY STANDS INVESTED IN THE EQUITY OF A GROUP CO MPANY SHREYANS INDS_LTD. THE ISSUED AND SUBSCRIBED CAPITA L OF THE ASSESSEE AS ON 01.04.2001 COMPRISES OF 200 SHARES ONLY OF RS- L0/- EACH DURING THE YEAR 2001-02 I.E. .RS.4,20,00 0/-SHARES OF 10/-EACH WITHOUT VOTING RIGHTS WERE SUBSCRIBED. IN THIS MANNER FRESH CAPITAL OF RS.42,00,000/- WAS INTRODUCED IN T HE ACCOUNT BOOKS OF THE ASSESSEE DURING THE PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER IT IS OBSERVED FROM THE PERUSAL OF BANK ACC OUNT THAT ENTIRE AMOUNT OF RS.42,00,000/-OBVIOUSLY APPEAR TO HAVE BEEN INVESTED IN THE EQUITY OF SHREYANS INDUS. LTD. BECA USE THE WHOLE IT WAS DEBITED TO THE BANK ACCOUNT BY 26.03.2 002. KEEPING IN VIEW THE NATURE OF THE ASSESSEE'S BUSINE SS ACTIVITIES OF TRADING IN EQUITY SHARES AND THE CONTINGENCY FOR THE ASSESSEE AS SUCH, FOR MAINTAINING AND OPERATING A BANK ACCOUNT AT NEW DELHI. THERE IS NO DOUBT LEFT IN MY MIND THAT THESE ARE ACCOMMODATIONS ENTRIES ONLY. AFTER THIS FUNDS OF RS .42,00,000/- WERE TRANSFERRED FROM THIS BANK ACCOUNT TILL 27.02. 2002, IT BECAME A DORMANT ACCOUNT AND UPTO 26.03,2004 IT WAS NOT OPERATED AT ALL. THE CONCERN IN THE NAME OF M/S. CH INAR AGENCIES PVT. LTD. USED BY SH. SANJAY RASTOGI CA. B Y PROFESSION FOR GIVING BOGUS ENTRIES. A STATEMENT U/ S 131 OF I.T. ACT, 1961 ON 20 TH APRIL,2003 DURING THE POST SURVEY ENQUIRES CONDUCTED AT HIS OFFICE PREMISES AT 210-VAKIL CHAMB ERS, A-115, SHARKARPUR DELHI ON 04.03.2003. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AS DETAILED ABOVE. I AM OF THE CONSIDERED OPINION THAT THE ENTIRE AMOUNT OF RS.42,00,000/- CREDITED TO THE ASSESSEE'S BANK ACCOUNT NO.01050050025 WITH STALE BANK OF PATIALA, NEW 9 DELHI, REPRESENTS THE ASSESSEE'S OWN INCOME FROM UN DISCLOSED SOURCES INTRODUCED THROUGH BOGUS/ACCOMMODATION ENTR IES AND THEREFORE THE ASSESSEE'S INCOME OF RS.42,00,000/-HA S ESCAPED ASSESSMENT.' 7. A BARE PERUSAL OF THE REASONS RECORDED BY THE AS SESSING OFFICER REVEALS THAT CERTAIN INFORMATION AND DETAILS WERE R ECEIVED BY HIM, INDICATING THAT THE ASSESSEE OBTAINED ACCOMMODATION ENTRIES, FORM M/S CHINAR AGENCIES PVT LTD AT 210 VAKIL CHEMBERS , A-115, SHAKARPUR, DELHI. THE DETAILS OF SUCH ENTRIES ARE MENTIONED IN THE REASONS RECORDED U/S 148 OF THE ACT. TO THE REPORT EMANATING FROM THE INVESTIGATION WING WAS ANNEXED A COPY OF BANK ACCOU NT, INCLUDING AN ACCOUNT OPENING FORM. THE BANK ACCOUNT OF THE ASSE SSEE, BEARING ACCOUNT NO. 01050050025 WAS MAINTAINED WITH STATE B ANK OF PATIALA, RAJENDRA PLACE, NEW DELHI. THE ASSESSING OFFICER I NDEPENDENTLY APPLIED HIS MIND, TO THE INFORMATION/DETAILS SUPPLI ED BY THE INVESTIGATION WING, AS IS EVIDENT, FROM HIS OWN ANA LYSIS OF THE SUCH INFORMATION. HE, FURTHER, OBSERVED THAT THE ISSUED AND SUBSCRIBED CAPITAL OF THE ASSESSEE, AS ON 1.4.2001, COMPRISES OF 200 SHARES ONLY, OF RS. 10/- EACH. THE ASSESSING OFFICER, FURTHER, APPRECIATED THE FACTUAL POSITION OF THE CASE AND OBSERVED THAT A FR ESH CAPITAL OF RS. 42 LACS WAS INTRODUCED BY THE ASSESSEE, IN ITS BOOKS O F ACCOUNT, DURING THE ASSESSMENT YEAR IN QUESTION. THE ASSESSING OFFICER , FURTHER, PERUSED THE BANK ACCOUNT AND FOUND THAT THE ENTIRE AMOUNT O F RS. 42,00,000/- HAD BEEN INVESTED, IN EQUITY OF SHREYANS INDUS LTD . ACCORDINGLY, HAVING REGARD TO THE NATURE OF THE ASSESSEES BUSIN ESS ACTIVITIES OF TRADING IN EQUITY SHARES AND THE CONTINGENCIES FOR THE ASSESSEE, AS SUCH, FOR MAINTAINING AND OPERATING A BANK ACCOUNT, AT NE W DELHI, THE AO 10 WAS OF THE CLEAR OPINION THAT THESE ARE ACCOMMODATI ON ENTRIES ONLY. THUS, THE ASSESSING OFFICER HAVING REGARD TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, INVOKED THE PROVISIONS O F SECTION 147 READ WITH SECTION 148 OF THE ACT. 8. IT IS UNDISPUTED FACT THAT THE RETURN FILED BY T HE ASSESSEE COMPANY, ON 24.10.2002, DECLARING NIL INCOME WAS P ROCESSED BY THE ASSESSING OFFICER, ON 31.3.2004. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT, ON 19.1.2007, AND THE ASSESSEE FILED RETURN ON 8.3.2007, IN RESPONSE TO SUCH NOTICE. TH E LD. AR CONTENDED THAT NO NAME OF THE ASSESSEE COMPANY IS M ENTIONED IN THE DEPOSITION MADE BY SANJAY RASTOGI EXCEPT MENTIONING , THE NAME OF M/S CHINAR AGENCIES PVT LTD. HE WAS OF THE OPINION THAT ASSESSING OFFICER SHOULD HAVE CONFRONTED SUCH MATERIAL BEFORE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. 9. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE REL EVANT RECORDS AND FOUND THAT THE AO OBSERVED THAT BOTH SHRI SANJA Y RASTOGI AND SHRI ASHWANI UPPAL, ARE KEY PERSONS BEHIND THE OPERATION OF ACCOMMODATION ENTRIES. THE AO ALSO BROUGHT ON RECOR D, THE MODUS OPERANDI RESORTED TO BY THESE TWO PERSONS, THROUGH VARIOUS ENTITIES AND THROUGH VARIOUS BANK ACCOUNTS. THE LD. AR, FURTH ER, CONTENDED THAT THERE IS NO REFERENCE TO ASSESSEES COMPANY NAME IN THE STATEMENT OF SHRI SANJAY RASTOGI. THE LD. AR WAS OF THE OPINIO N THAT THERE IS NO NEXUS BETWEEN THE MATERIAL ON RECORD AND THE REASON S TO BELIEVE. THE ASSESSEE PLACED RELIANCE, ON THE FOLLOWING DECISION S, TO SUPPORT HIS 11 CONTENTION AGAINST UPHOLDING OF THE INVOCATION OF PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT BY THE CIT(A). I) CIT V SMT. PARAMJIT KAUR (P&H) (SUPRA). IN THIS CASE, THE HON'BLE JURISDICTIONAL HIGH COURT FOUND THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE INFORMATION RECEIVED FROM CENTRAL CIRCLE BEFORE RECORDING HIS OWN SATISF ACTION OF ESCAPED INCOME AND INITIATION OF REASSESSMENT PROCE EDINGS. IN THE PRESENT CASE THE ASSESSING OFFICER, AS DISCUSSE D EARLIER, HAS EXAMINED AND APPRECIATED THE INFORMATION AND DETAIL S RECEIVED FROM THE INVESTIGATION WING, AND INDEPENDENTLY APPL IED HIS MIND TO SUCH INFORMATION AND SUBSEQUENTLY RECORDED THE R EASONS U/S 148 R.W.S. 147 OF THE ACT. THEREFORE, THE FACTS OF THE PRESENT CASE ARE MATERIALLY AND FACTUALLY DIFFERENT AND DIS TINGUISHABLE IN VIEW OF THIS, THE RELIANCE PLACED BY THE ASSESSEE O N THIS CASE LAW IS MISPLACED. II) SHEO NARAIN JAISWAL & ORS V ITO & ORS (SUPRA) THE DECISION OF THE HON'BLE PATNA HIGH COURT HAS BE EN RENDERED IN THE CONTEXT OF OLD PROVISIONS OF SECTION 147 REA D WITH SECTION 148, PRIOR TO AMENDMENT OF SUCH PROVISIONS W.E.F. 1 .4.1989. ON GOING THROUGH THE AMENDMENT W.E.F. 1.4.1989, IT IS EVIDENT THAT PRIOR TO THE DIRECT TAXES LAW AMENDMENT ACT, 1987, REOPENING CAN BE DONE UNDER TWO CONDITIONS AND THE FULFILLMEN T OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION, ON THE ASS ESSING OFFICER FOR THE PURPOSE OF REASSESSMENT. FURTHER, IN THE P OST-AMENDMENT ERA SUCH TWO CONDITIONS ARE GIVEN AS GOBY. NOW, UN DER THE AMENDED PROVISIONS OF SECTION 147 ONLY ONE CONDITIO N I.E. REASONS TO BELIEVE IS REQUIRED TO BE SATISFIED. THE DECISION RELIED UPON BY THE ASSESSEE IS APPLICABLE TO THE FA CT SITUATION WHICH IS NOW COVERED UNDER THE PROVISO TO SECTION 1 47 OF THE ACT. THE PRESENT CASE IS GOVERNED AND COVERED BY TH E MAIN PROVISIONS OF SECTION 147 OF THE ACT AND NOT BY THE PROVISO THERETO, WHICH CONTEMPLATES FAILURE TO DISCLOSE TRU LY FULL AND 12 FULLY THE MATERIAL FACTS, NECESSARY FOR ASSESSMENT. IT IS SETTLED PROPOSITION OF LAW NOW, THAT SUCH STATUTORY CONDITI ON IS INAPPLICABLE, IN THE POST AMENDMENT ERA. FURTHER, IN THE PRESENT CASE, THE ORIGINAL RETURN OF INCOME WAS PROCESSED U /S 143(1) OF THE ACT. THEREFORE, THE ISSUE, IN THE PRESENT ASSE SSEES CASE IS COVERED UNDER THE MAIN PROVISIONS OF SECTION 147 OF THE ACT. ACCORDINGLY, THE DECISION RELIED UPON BY THE ASSESS EE IS INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. III). THE ASSESSEE, FURTHER, PLACED RELIANCE ON TH E DECISION OF THE HINDUSTAN DORR OLIVER LTD V DCIT & OTHERS (SUPR A). IN THIS CASE, THE ASSESSMENT U/S 143(3), FOR THE ASSESSMENT YEAR 1982-83, WAS FRAMED BY THE ASSESSING OFFICER U/S 143(3) OF T HE ACT. THE SAID ASSESSMENT WAS COMPLETED AFTER EXAMINATION OF THE DETAILS FURNISHED BY THE ASSESSEE, VIDE LETTER DATED OCTOBE R 11, 1984, WHICH INCLUDED THE DETAILS OF PURCHASE AND FROM SAI L. THEREFORE, THE HON'BLE BOMBAY HIGH COURT HELD NOTIC E U/S 148 AS INVALID, AS THERE WAS NO EVIDENCE, TO PROVE THE STA TEMENT MADE BY THIRD PARTY. HOWEVER, THE ASSESSING OFFICER HAD ALREADY EXAMINED SUCH TRANSACTION AND COMPLETED THE ASSESSM ENT U/S 143(3) OF THE ACT. IN THE PRESENT CASE, THE ASSES SING OFFICER HAS NOT FORMED ANY OPINION, IN THE SPECIFIC CONTEXT OF THE ISSUE OF ACCOMMODATION ENTRIES, RAISED BY THE AO, IN THE REA SONS RECORDED U/S 148 OF THE ACT. THEREFORE, THE QUESTI ON OF CHANGE OF OPINION DOES NOT ARISE. THE FACTS OF THE PRESENT CASE ARE MATERIALLY DISTINGUISHABLE AND, HENCE, THIS DECISIO N IS NOT APPLICABLE, TO THE FACTS OF THE PRESENT CASE. IV) THE HON'BLE DELHI HIGH COURT IN THE CASE OF CI T V ATUL JAIN & SMT. VINITA JAIN (SUPRA), RELIED UPON BY TH E ASSESSEE PERTAINED TO THE INFORMATION WHICH WAS SCANTY AND V AGUE AND CORRECTNESS OF THE SAME WAS NOT VERIFIED. IN VIEW OF SUCH A FACT- SITUATION, THE HON'BLE HIGH COURT HELD THAT NO REA SONS TO BELIEVE WARRANTING ISSUANCE OF NOTICE EXISTED. IN THE PRESENT 13 CASE, RECORDED REASONS CONTAINS CLEAR DETAILS. THE ASSESSING OFFICER APPRECIATED AND ANALYZED THE SAID INFORMATI ON BY INDEPENDENTLY APPLYING HIS MIND AND SUBSEQUENTLY RE CORDED THE REASONS U/S 148 OF THE ACT. THEREFORE, THERE EXISTE D SUFFICIENT MATERIAL, WHICH LEAD TO FORMATION OF REASONS TO BE LIEVE BY THE ASSESSING OFFICER. IN VIEW OF THIS, THE RELIANCE P LACED BY THE ASSESSEE IS OF NO AID TO THE CASE OF THE PRESENT AS SESSEE. V) THE ASSESSEE PLACED RELIANCE, ON THE DECISION OF THE RAJASTHAN HIGH COURT, IN THE CASE OF CIT V SHIV RAT AN SONI 8 DTR 17. IN THE PRESENT CASE, THE HON'BLE HIGH COUR T FOUND THAT ORDER U/S 132(5) WAS NOT FOUNDED ON ANY SPECIFIC MA TERIAL RELATABLE TO THE RELEVANT ASSESSMENT YEAR AND THUS IT COULD NOT PROVIDE ANY NEXUS AND BASIS FOR FORMATION OF BELIEF THAT THE INCOME OF THE RELEVANT ASSESSMENT YEAR HAD ESCAPED ASSESSMENT. THE HON'BLE HIGH COURT FOUND THAT THE CONCLUSION AR RIVED AT BY THE ASSESSING OFFICER, FOR ISSUE OF NOTICE U/S 148 OF THE ACT IS NOT HIS OWN, BUT IS A BORROWED SATISFACTION, HELD B Y THE ACIT WHILE MAKING THE ORDER UNDER SECTION 132(5). THE B ARE PERUSAL OF THE FACTS OF THE PRESENT CASE CLEARLY REVEALS TH AT THE CASE LAW RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE BEING FACTUALLY AND MATERIALLY DIFFERENT AND DISTINGUISHABLE. IN THE PR ESENT CASE, THE ASSESSING OFFICER HAD HIS OWN SATISFACTION, BASED O N THE APPLICATION OF HIS OWN MIND, TO THE INFORMATION AND DETAILS BEFORE HIM. VI) IN THE CASE RELIED UPON BY THE ASSESSEE I.E. AC IT V RAMESH CHAND SONI (SUPRA), THE ISSUE OF NOTICE U/S 148 WAS FOUNDED ON THE DIRECTION OF JCIT. HOWEVER, IN THE PRESENT CAS E THERE IS NO SUCH DIRECTION AND BASIS EXIST, FOR ISSUANCE OF NOT ICE U/S 148 OF THE ACT BY THE ASSESSING OFFICER. THE ASSESSING OF FICER, AS DISCUSSED EARLIER, HAS DISCREETLY APPLIED HIS MIND TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AN D HELD 14 REASONS TO BELIEVE. ACCORDINGLY, THE SAID DECIS ION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. VII) IT IS, FURTHER, MENTIONED THAT THE ASSESSING OFFICER, IN THE PAPER BOOK HAS GIVEN A LIST OF 10 CASES, BUT HAS F OCUSED TO THE APPLICABILITY OF THE CASE LAWS MENTIONED AT S.NO.1 & 2 NAMELY SHEO NARAIN JAISWAL V ITO (176 ITR 435(PAT.) AND CI T V SHIV RATAN SONI (217 CTR (RAJ) 222. HOWEVER, LD. AR F OR THE ASSESSEE CITED SIX CASES, IN THE WRITTEN SYNOPSIS W HICH HAVE BEEN DEALT WITH, IN THE FOREGOING PARAGRAPHS. 10. THE FACT-SITUATION OF THE PRESENT CASE IS CLEAR LY COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT, IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT LTD (SUPRA), AS CONTENDED BY THE LD. DR. A CAREFUL PERUSAL OF THE DECISION RENDERED BY THE HON'BLE SUP REME COURT, REVEALS THAT THE FOLLOWING PROPOSITIONS OF LAW HAVE BEEN LA ID DOWN THEREIN, WHICH ARE CLEARLY APPLICABLE TO THE FACTS OF THE PR ESENT CASE. (I) THE FIRST PROVISO TO THE NEWLY SUBSTITUTED SECTION 143(1) W.E.F. JUNE 1,1999 EXCEPT AS PROVIDED IN THE PROVIS ION ITSELF, THE ACKNOWLEDGMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION U/S 143(1) OF THE ACT. I T IS SIGNIFICANT THAT SUCH ACKNOWLEDGMENT IS NOT DONE BY ANY ASSESSING OFFICER BUT MOSTLY BY THE MINISTERIAL STAFF. IT CANNOT, THEREFORE, BE SAID THAT AN ASSES SMENT IS DONE BY THEM. NOTHING MORE CAN BE INFERRED FROM TH E DEEMING PROVISIONS OF SECTION 143(1)(A) OF THE ACT. THEREFORE, THERE BEING NO ASSESSMENT U/S 143(1)(A), HENCE, THE QUESTION OF CHANGE OF OPINION DOES NOT A RISE. (II) THOUGH TECHNICALLY THE INTIMATION ISSUED WAS DEEMED TO BE DEMAND NOTICE U/S 156, THAT DID NOT PRECLUDE RIG HT OF THE ASSESSING OFFICER TO PROCEED U/S 143(2): THAT R IGHT IS PRESERVED AND NOT TAKEN AWAY. (III) THE EXPRESSION REASONS TO BELIEVE IN SECTION 147 WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPO SE THAT INCOME HAD ESCAPED ASSESSMENT, HE CAN BE SAID TO HAVE REASONS TO BELIEVE THAT INCOME HAS ESCAPED 15 ASSESSMENT. THE EXPRESSION CAN NOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSIO N. WHAT IS REQUIRED IS REASONS TO BELIEVE BUT NOT TH E ESTABLISHED FACT OF ESCAPEMENT OF INCOME. (IV) AT THIS STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE BELIEF. WHETHER MATERIAL WOULD CONCLUSIVELY PROVE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT STA GE. THIS IS SO BECAUSE THE FORMATION OF THE BELIEF IS W ITHIN THE REALM OF THE SUBJECTIVE SATISFACTION OF THE ASS ESSING OFFICER. (V) THE HON'BLE SUPREME COURT FOLLOWED ITS EARLIER DECISION IN THE CASE OF ITO VS SELECTED DALURBAND COAL CO P LTD [1996] 217 ITR 597 (SC) AND RAYMOND WOOLEN MILLS LTD V ITO; [1999} 236 ITR 34 (SC) LAYING DOWN THE SAME PROPOSITION OF LAW IN THE MATTER, UNDER REFERENCE, IN THE PRESENT CASE. (VI) THE HON'BLE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO LTD V ITO [1991] 191 ITR 662 OBSERVED THAT FOR INITIATION OF ACTION U/S 147(A) ( AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT O F TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THIS STAGE, THE FINAL OUTCOME OF THE PROCEEDINGS IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS REASONS TO BELIEVE BUT NOT THE ESTABL ISHED FACTS AND ESCAPEMENT OF INCOME. (VII) TAXING INCOME ESCAPING ASSESSMENT IN THE CASE OF AN INTIMATION U/S 143(1)(A) OF THE ACT IS COVERED BY T HE MAIN PROVISIONS OF SECTION 147 AS SUBSTITUTED W.E.F . APRIL I, 1989 AND INITIATING REASSESSMENT PROCEEDIN GS IN THE CASE OF INTIMATION WOULD BE COVERED BY THE MAIN PROVISIONS OF SECTION 147 AND NOT THE PROVISO THERE TO. THE ONLY ONE CONDITION HAS TO BE SATISFIED. FAILUR E TO TAKE STEPS, U/S 143(3) WILL NOT RENDER THE ASSESSIN G OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS WHEN INTIMATION U/S 143(1) HAS BEEN ISSUED. 10(I) NOW, WE PROCEED TO EXAMINE, ANALYZE AND CONTEXTUALIZE THE UNDISPUTED AND NEAT FACT SITUATION OF THE PRESENT A PPELLANTS CASE TO THE PROPOSITIONS OF LAW BY THE HON'BLE SUPREME COURT, I N THE CASE OF CIT V 16 RAJESH JHAVERI STOCK BROKERS (P) LTD (SUPRA), WITH A VIEW TO DEMONSTRATING ITS APPLICABILITY, TO THE INSTANT CAS E. 10(II) FIRSTLY, THE RETURN OF INCOME IN THIS CASE WAS PROCESSED U/S 143(1) OF THE ACT. INTIMATION OR ACKNOWLEDGEMENT I SSUED IN SUCH CASES BY THE MINISTERIAL STAFF, IS NOT AN ASSESSMENT ORDE R U/S 143(3) OF THE ACT, WHEREIN THE ASSESSING OFFICER FORMED OPINION, IN RESPECT OF ISSUES, EMERGING FROM THE SAID RETURN OF INCOME FIL ED BY THE PRESENT ASSESSEE. CONSEQUENTLY, IN THE ABSENCE OF FORMATIO N OF OPINION BY THE ASSESSING OFFICER, THE QUESTION OF CHANGE OF OPINIO N DOES NOT ARISE. THE CHANGE OF OPINION, PRESUPPOSES EXISTENCE OF PRI OR OPINION. THEREFORE, THE FACTS OF THE PRESENT CASE CLEARLY SU GGEST NON-EXISTENCE OF THE CHANGE OF OPINION. 10(III) FURTHER, REASONS RECORDED BY THE AO, IN THE PRESENT CASE, U/S 148 OF THE ACT, ARE BASED ON THE RELEVANT AND C REDIBLE FOUNDATIONAL FACTS, HAVING DIRECT BEARING AND LIVE NEXUS, WITH T HE ESCAPEMENT OF INCOME, CHARGEABLE TO TAX, WITHIN THE STATUTORY PUR VIEW OF THE PROVISIONS OF SECTION 147 OF THE ACT. NEEDLESS TO STATE HERE THAT THE FACTS OF THE PRESENT CASE ARE COVERED UNDER THE MAI N STATUTORY PROVISIONS OF SECTION 147 OF THE ACT. THE PROVISO TO SECTION 147 OF THE ACT, CONTEMPLATING FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS, IS NOT APPLICABLE TO THE FACT SITUATION OF THE INSTANT CASE. THE MATERIAL ON RECORD BROUGHT B Y THE ASSESSING OFFICER, FOR INVOCATION OF THE PROVISIONS OF SECTIO N 147 R.W.S. 148 OF THE ACT, IS RELEVANT AND DIRECT IN NATURE BEING TRA NSACTION AND 17 MODUS OPERENDI SPECIFIC. SIMILARLY, KEY OPERATORS NAMELY SHRI SANJAY RASTOGI AND SHRI ASHWANI UPPAL WHO MADE ARRANGEMEN TS FOR SUCH ACCOMMODATION ENTRIES, THOUGH THEIR SPECIFIC ENTITI ES AND BANK ACCOUNTS ARE DIRECT EVIDENCES, ON RECORD, BEFORE TH E ASSESSING OFFICER. SUCH RELEVANT MATERIAL IS SUFFICIENT FOR FORMATION OF REASON-BASED BELIEF, EVEN IN THE ABSENCE OF CLEAR AND DIRECT DEP OSITION MADE BY SHRI SANJAY RASTOGI AND SHRI ASHWANI UPPAL, THE MASTER-M IND BEHIND SUCH OPERATION, WITHIN THE MEANING OF SECTION 147 OF THE ACT. 10(IV) AFTER 1.4.1989, THE POST AMENDED ERA, THE ASSESSING OFFICER HAS WIDE POWERS U/S 147 OF THE ACT AND FOR EXERCISE OF SUCH JURISDICTION, EXISTENCE OF SOLE STATUTORY CONDITIO N - REASON TO BE BELIEVE IS TO BE SATISFIED. IN VIEW OF THE ABOVE DISCUSS IONS, THE STATUTORY PRECONDITIONS STAND DULY SATISFIED, IN TH E PRESENT CASE. THE PROVISIONS OF SECTION 147 OF THE ACT, AS AMENDED W. E..F 1.4.1989, ARE CONTEXTUALLY DIFFERENT AND CUMULATIVE CONDITIONS SP ELT OUT IN CLAUSES (A) AND (B) OF SECTION 147 OF THE ACT, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY STATUTO RY PRE-CONDITION UNDER THE AMENDED PROVISIONS OF SECTION 147 OF THE ACT, FOR ACTION IS THAT THE ASSESSING OFFICER SHOULD HAVE REASONS TO BELIEVE, BASED ON RELEVANT MATERIAL. IN THE PRESENT CASE, SUCH STATUT ORY CONDITIONS, AS PROVIDED UNDER THE CURRENT PROVISIONS OF SECTION 14 7 OF THE ACT, STAND DULY FULFILLED. 10(V) AT THE STAGE OF INITIATION OF RE-ASSESSME NT PROCEEDINGS U/S 147 OF THE ACT, CONCLUSIVE FACTS OF ESCAPEMENT OF INCOM E CHARGEABLE TO TAX, 18 IS NOT STATUTORY CONDITION PRECEDENT BUT THE ASSESS ING OFFICER MUST HAS PRIMA FACIE REASONS TO BELIEVE OF ESCAPEMENT OF S UCH INCOME. IN THE PRESENT CASE, THERE EXISTS RELEVANT MATERIAL ON REC ORD, FOR THE PURPOSE OF FORMATION OF REASON BASED BELIEF, BY THE ASSESSI NG OFFICER, AND THE ASSESSEE FAILED TO REBUT SUCH MATERIAL AT ANY STAGE OF PROCEEDINGS. 10(VI) THE CONDITIONS AND ARGUMENTS ADVANCED IN THE WRITTEN SYNOPSIS, ON THE ISSUE IN QUESTION, ARE BASED ON THE FULCRUM OF MERE IRRELEVANT AND INCORRECT ASSERTIONS, PERTAINING TO THE INTERPR ETATION OF THE PROVISIONS OF SECTION 147 OF THE ACT. IT IS PERTIN ENT TO ADD HERE THAT THERE IS NO STATUTORY REQUIREMENT, TO CONFRONT THE MATERIAL, IN POSSESSION OF THE ASSESSING OFFICER, TO THE ASSESSE E, FOR FORMATION OF REASON TO BELIEVE BEFORE INVOCATION OF THE PROVIS ION OF SECTION 147 R.W.S. 148 OF THE ACT. 10(VII) THE INVESTIGATION WING OF THE DEPARTMENT, M ERELY COMMUNICATED THE INFORMATION, TO THE ASSESSING OFFI CER, FOR NECESSARY ACTION, UNDER THE RELEVANT PROVISIONS OF THE ACT. IT IS THE ASSESSING OFFICER AND THE ASSESSING OFFICER ALONE, WHO APPLIE D HIS MIND INDEPENDENTLY, TO SUCH INFORMATION, IN THE CONTEXT OF THE PROVISIONS OF SECTION 147 OF THE ACT. THEREFORE, COMMUNICATION O F INFORMATION BY THE INVESTIGATION WING AND ITS INTERPRETATION AFTER APPLICATION OF HIS MIND BY THE ASSESSING OFFICER, ARE TWO DIFFERENT AN D DISTINCT ASPECTS. THIS PROPOSITION IS LEGALLY WELL SETTLED. STATUTO RY PROVISIONS CANNOT BE IGNORED AND SUBSTITUTED BY WHAT THE ASSESSEE CON SIDERED AS RELEVANT FOR INVOCATION OF THE PROVISIONS OF SECTION 147 OF THE ACT EVEN THOUGH 19 IT IS PATENTLY IRRELEVANT IN TERMS OF TEXTS OF SECT ION 147 OF THE ACT AND THE JUDICIAL VERDICTS OF SUPREME COURT, DISCUSSED E ARLIER. THE ASSESSING OFFICER HAS RIGHT AND DUTY TO INVOKE THE PROVISION OF SECTION 147, IN SUCH CASES, AS THE REALITY ASPECT CONFIRMS THE ARRANGEMENT ENTRIES. MATERIAL ON RECORD BEFORE ASSESSING OFFICE R, FOR THE PURPOSE OF SECTION 147 OF THE ACT, MUST BE SEEN AND APPRECIATE D, IN THE CONTEXT OF FACT-SITUATION OF EACH CASE. 11. WE DEEM IT PROPER TO REPRODUCE THE RELEVANT PAR T OF THE APPELLATE ORDER, PASSED BY THE CIT(A), IN THE MATTER:- 6. I HAVE CAREFULLY CONSIDERED THE CONTENTION O F THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THOUGH ALL THE MATERIAL FACTS ARE STATED TO HAVE BE EN DISCLOSED IN THE RETURN OF INCOME BY THE APPELLANT, FIRST OF ALL THE FACTS WITH REGARD TO TAKING ACCOMMODATION ENTRI ES BY THE APPELLANT WHICH HAVE BEEN DISCUSSED ABOVE WERE IN T HE PERSONAL KNOWLEDGE OF THE APPELLANT AND THAT THESE FACTS WERE NOT DISCLOSED IN THE RETURN OF INCOME. SECONDLY, TH E ASSESSMENT IN THIS CASE HAS BEEN REOPENED BY ISSUIN G NOTICE U/S 148 DATED 19.1.2007. THE APPELLANT EVEN FILED R ETURN IN RESPONSE TO THIS NOTICE OF 28.3.2007. THE ASSESSMEN T YEAR INVOLVED IN THIS CASE IS 2002-03. THEREFORE, AS PER THE PROVISIONS OF SECTION 147 OF THE ACT NOTICE U/S 148 COULD BE ISSUED BEFORE 31.3.2007 I.E. BEFORE FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR EVEN IF SOME INCOME IS FOU ND TO HAVE ESCAPED ASSESSMENT NOT BECAUSE OF THE APPELLAN T NOT DISCLOSING THE MATERIAL FACTS IN THE RETURN OF INCO ME. SO, EVEN IF WITHOUT PREJUDICE TO THE ABOVE IT IS TAKEN THAT THE APPELLANT HAD DISCLOSED ALL MATERIAL FACTS IN THE I NCOME TAX RETURN, THE A.O. COULD VERY WELL ISSUE NOTICE U/S 1 48 BEFORE 31.3.2007. 7. WITH REGARD TO THE CONTENTION THAT SHRI SANJAY R ASTOGI IS NOT THE DIRECTOR OF M/S CHINAR AGENCIES PVT. LTD . IT IS TO BE NOTED THAT THE A.O. HAS DULY BROUGHT OUT IN THE REASONS RECORDED AND WHICH HAVE BEEN REPRODUCED IN THE ASSE SSMENT ORDER THAT THE ADDRESS OF THIS COMPANY HAS BEEN GIV EN AS 210, VAKIL CHAMBERS, A-115, SHAKARPUR, DELHI, WHICH IS T HE ADDRESS OF SHRI SANJAY RASTOGI ONLY. THEREFORE, JUS T BECAUSE SHRI SANJAY RASTOGI IS NOT THE DIRECTOR OF THIS COM PANY, THE INFERENCE DRAWN BY THE A.O. FOR ISSUING NOTICE U/S 148 ON THE BASIS OF OTHER FACTS BROUGHT ON RECORD CANNOT BE SA ID TO BE UNJUSTIFIED. 20 7.1 IN THE WRITTEN SUBMISSIONS IT IS FURTHER SUBMIT TED THAT NO REASONABLE OPPORTUNITY TO CROSS EXAMINE SHRI SAN JAY RASTOGI WAS PROVIDED TO THE APPELLANT. HOWEVER, THI S IS RELEVANT FOR DECIDING THE ISSUE OF ADDITION ON MERI T AND IN MY OPINION, IT IS NOT RELEVANT FOR DECIDING THE ISSUE OF WHETHER IN THE FACTS & CIRCUMSTANCES OBTAINING IN THIS CASE NO TICE U/S 148 COULD BE VALIDLY ISSUED OR NOT. THEREFORE, THIS ASPECT IS NOT RELEVANT AS FAR AS THE GROUNDS OF APPEAL PERTAI NING TO ISSUANCE OF NOTICE U/S 148 ARE CONCERNED. THIS ARGU MENT IS, THEREFORE, NOT ENTERTAINED. 7.2 IT IS ALSO BEING CONTENDED THAT NO PROPER SAT ISFACTION HAD BEEN RECORDED BY THE A.O. BEFORE ISSUING NOTICE U/S 148 OF THE ACT. HOWEVER, THE A.O. HAS REPRODUCED IN THE ASSESSMENT ORDER THE REASONS RECORDED FOR ISSUING T HE NOTICE. IN THE FACE OF THE DETAILED REASONS GIVEN BY THE A. O. AS ABOVE, IT CANNOT BE SAID THAT NO SATISFACTION WAS R ECORDED BY THE A.O. BEFORE ISSUING THIS NOTICE. 7.3 NEXT THE LD. COUNSEL HAS CONTENDED IN THE WRITT EN SUBMISSIONS THAT AS PER THE INFORMATION RECEIVED BY THE A.O. ONLY REFERENCE TO M/S CHINAR AGENCIES PVT. LTD. HAS BEEN MADE AND THAT THERE WAS NO REFERENCE WITH RESPECT TO COMPANIES/INDIVIDUALS/HUFS WHO HAVE CONTRIBUTED THE REMAINING SHARE CAPITAL OF RS.32 LAC. IT IS ARGUE D ON THE BASIS OF RATIO OF VARIOUS DECISIONS MENTIONED IN TH E WRITTEN SUBMISSIONS THAT THE REOPENING IS PERMISSIBLE ONLY QUA ITEMS OF UNDER ASSESSMENT AND THAT THE FINALITY ON OTHER ISS UES REMAINS UNDISTURBED. HOWEVER, THIS ASPECT IS ALSO NOT RELEV ANT FOR THE PURPOSES OF DECIDING THE ISSUE OF NOTICE U/S 148 IN THIS CASE. THIS MIGHT BE RELEVANT FOR DECIDING THE ISSUE ON ME RIT OF ADDITION. SO LONG THE INFORMATION IN RESPECT OF ACC OMMODATION ENTRIES RECEIVED FROM M/S CHINAR AGENCIES PVT. LTD. WAS ON RECORD THE A.O. DID HAVE MATERIAL TO PRIMA-FACIE CO ME TO HAVE REASON TO BELIEVE THAT INCOME ESCAPED ASSESSMENT IN THIS CASE. 7.4 IN VIEW OF THE ABOVE DISCUSSIONS ISSUANCE OF NOTICE U/S 148 IN THE FACTS & CIRCUMSTANCES OF APPELLANT'S CASE FO R THE ASSESSMENT YEAR 2002-03 IS HELD TO BE FULLY VALID A ND JUSTIFIED. THESE GROUNDS OF APPEAL ARE, THEREFORE, DISMISSED. 12. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSSI ON, THESE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. TH E FINDINGS OF THE CIT(A) ARE UPHELD. 21 13. NOW, WE TURN TO CONSIDER THE ISSUE ON MERIT. I N THE COURSE OF PRESENT APPELLATE PROCEEDINGS BEFORE THE BENCH, THE LD. DR FILED WRITTEN SUBMISSIONS AND THE RELEVANT PART OF THE SA ME IS REPRODUCED HEREWITH:- 15. ON MERIT WITH REGARD TO GROUND NO.4, IT IS SUB MITTED THAT, THE ASSESSING OFFICER HAS ONLY INFORMATION WI TH REGARD TO THE ENTRY OF RS.10 LACS AND, THEREFORE, WITHOUT THERE BEING ANY VALID INFORMATION WITH REGARD TO SHARE CONTRIBU TION MADE BY OTHER COMPANIES, THE ADDITION OF THE OTHER AMOUN T WAS NOT CALLED FOR AND RELIANCE ON THE JUDGMENT IN THE CASE OF SMT. RANJIT KAUR (CHD. BENCH) AND SH. AMRINDER SINGH ( P &H). 16. THE FINDING OF THE CIT (A) ON MERITS IS AT PARA 10 AND OUR SUBMISSIONS IN THIS REGARD ARE AS UNDER: I). SH. SANJAY RASTOGI NEVER NAMED OUR COMPANY WHI CH WE HAVE EARLIER HIGHLIGHTED AND THE FINDING OF THE CIT (A) IN PARA 10 IS ITSELF DEVOID OF ANY VALID REASONING. II). THEN AGAIN, THERE HAD BEEN A WRITTEN REQUEST FROM THE CHINAR AGENCY FOR THE ALLOTMENT OF SHARE AS PER EVIDENCE PLACED AT PAGES 13 TO 20 OF APB AND ALLOTM ENT EVIDENCES AT PAGES 21 TO 30. REPLY FILED TO AO GIVI NG DETAILS AT PAGES 9 TO 12 AND ALSO PAGES 31 TO 34. W E ALSO ASKED FOR CROSS EXAMINATION AS PER PAGE 31, 35 OF THE PAPER BOOK. III). THERE IS NO NAME OF OUR COMPANY IN THE STATE MENT AND THE AO HAS GIVEN WRONG FACTS BECAUSE IN THE STATEME NT, THERE IS NO NAME OF THE COMPANY GIVEN. IV). AS REGARDS THE INFORMATION U/S 133 (6), IT WA S ONLY STATED THAT PARTY HAS LEFT AND NOTHING ADVERSE THIN G HAS BEEN CONVEYED. 'LEFT' DOES NOT MEAN BOGUS, SPECIALL Y WHEN ALL THE PARTIES ARE ASSESSED TO TAX. V). EVEN ASSESSMENT ORDER OF THE COMPANIES PROVE B EYOND ANY DOUBT THAT THESE ARE GENUINE COMPANIES. VI). AS REGARDS ONE SIGNATORY I.E. SH. ASHWANI UPP AL, IT DOES NOT AFFECT THE IDENTITY. IT IS ONLY A DOUBT AN D THE DOUBT OR SUSPICION, HOWSOEVER, STRONG, IT MAY BE, CANNOT TAKE THE SHAPE OF EVIDENCE. 22 VII). IT IS NOT A MATTER OF TECHNICALITY, BUT WITH OUT ANY REASON OR WITHOUT ANY MATERIAL ON RECORD, THE ADDIT ION CANNOT BE MADE. VIII). THE JUDGMENT OF CALCUTTA HIGH COURT IS NOT APPLICABLE OR THE JUDGMENT OF SUMITI DYAL WITH REGARD TO HUMAN PROBABILITY WHEN THERE IS A DOCUMENTARY EVIDENCE ON RECORD COUPLED WITH THE LATER ASSESSMENT ORDERS OF SUCH COMPANIES PROVE THE CASE ON MERITS. IX). AS REGARDS THE CONFIRMATION OF THE PARTIES AS PER FACTS MENTIONED IN PARA-10 IN THE ORDER OF CIT (APPEAL), WHEN WE HAVE PROVIDED THE AUDITED BALANCE SHEET, WHERE SUCH INVESTMENT BY THE COMPANY HAS BEEN REFLECTED AND NO DOUBT SHOULD BE LEFT ABOUT THE IDE NTITY AND GENUINENESS OF TRANSACTION AND WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT U/S 143 (3) AND THE PART IES ARE BEING ASSESSED TO TAX. X). REGARDING THREE INGREDIENTS, IDENTITY, CAPACIT Y AND GENUINENESS OF TRANSACTION, THE FINDING OF THE CIT (APPEAL) IN PARA 10.2 IS EVIDENTLY INCORRECT. XI). THE FINDING OF THE CIT IN PARA-11 THAT IT WAS APPELLANT'S OWN MONEY IS AGAIN DEVOID OF ANY VALID REASONING, SINCE NO MATERIAL HAS BEEN BROUGHT ON RECORD. RELIANCE IS BEING PLACED ON THE JUDGMENT OF DELHI HIGH COURT AS REPORTED IN 307 ITR 334 THAT TH E BURDEN IS ON THE DEPARTMENT TO PROVE THAT THE SUBSCRIBER ACTUALLY CONTRIBUTED THE MONEY FROM THE COFFERS OF THE ASSESSEE. XII). THE FINDING OF THE CIT IN PARA 11.1 REGARDIN G THE INTERPRETATION OF THE JUDGMENT OF SUPREME COURT IN DIVINE LEASING AND FINANCE IS TOTALLY UNCALLED FOR AND NOT RELIABLE. XIII). BESIDES THAT RELIANCE IS BEING PLACED ON VA RIOUS JUDGMENTS AS PER PAPER BOOK SEPARATELY BEING SUBMIT TED AND WITH PARTICULAR REFERENCE TO THE JUDGMENT AT SE RIAL NO. XXVIII. XIV). UNDER THE SIMILAR FACTS, WHERE THE SAME PERSO N I.E. SH. SANJAY RASTOGI WAS INVOLVED AND THE TRIBUNAL HAD DELETED AND ADDITION AND WHICH HAVE BEEN CONFIRMED BY THE HON'BLE DELHI HIGH COURT. 23 XV). BESIDES THAT REFERENCE MAY BE MADE TO PAGE-2 OF THE ORDER OF AO WHERE THE NAME OF COMPANY GIVING BOGUS ENTRIES HAVE BEEN LISTED AT SERIAL NO. X I.E HALL M ARK HEALTH CARE SYSTEM, BUT SINCE THERE WAS NO NAME OF THIS COMPANY IN THE STATEMENT OF SH. SANJAY RASTOGI AS I N OUR CASE, THERE IS NAME OF CHINAR AGENCY AT S. NO. ILL, BUT NO NAME MENTIONED BY SH. SANJAY RASTOGI IN HIS STATEMENT, AND THEREFORE, FOLLOWING THE ABOVE SAID CASE, THE ADDITION IS NOT LIABLE TO BE MADE. THE JUDGMENT IS PLACED AT PAGES 91 TO 92 OF THE JUDGMENT SET. 17. THEN AGAIN RELIANCE IS BEING PLACED IN THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT (CENTRAL)-LL, D ELHI VS. SAMIR BIO-TECH (PVT.) LTD .IN ITA NO. 415/2008 AND WHEREIN IT HAS BEEN HELD THAT WHERE THE IDENTITY OF THE SUBSCRIBER IS NOT IN DOUBT, TRANSFER IS THROUGH NORMAL BANKING CHANNEL, THEN ADDITION OF SHARE APPLICATION MONEY IS NOT WARRANTED AND JUDGMENT OF DIVINE LEASING & FINANCE LTD. OF SUPREM E COURT HAS BEEN FILED. 18. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE RE PLY WAS FILED AT PAGE 9 AND REFERS TO PAGE 10 GIVING PA N NUMBER OF THE PARTIES CONCERNED. 19. THE TREATMENT OF AMOUNT OF RS.10 LACS IN THE BOOKS OF ACCOUNTS OF THE COMPANY AS SHARE CAPITAL. REFER TO PAGE 11, WHICH SHOWS THE ALLOTMENT OF SHARES. REFER TO PAGE 12 ALONG WITH PAGES 13 TO 20 WITH REGARD TO TH E APPLICATIONS FOR ALLOTMENT OF SHARES BY THE RESPECT IVE PARTIES AND, THUS, ALL THE PARTIES HAVING CONFIRMED THE CONTENTION. 1 20. REFERENCE TO BE MADE TO PAGE 21 TO 30 FOR SOME COPI ES OF THE ALLOTMENT OF SHARES ALONG WITH COPIES OF SHA RE CERTIFICATES. 21. REFERENCE TO PAGE 31 TO 32 I.E. THE LETTER, DATED 2.12.2007 WITH RESPECT TO PARA 2 (A TO E). 22. REFERENCE TO PAGE 33 TO 34 AND BACK SIDE OF PAGE 34 . 23. REQUEST FOR CROSS EXAMINATION AT PAGE 35 AND ALSO A T PAGE 31. (RELIANCE ON JUDGMENTS IN THE PAPER BOOK). 24. COPY OF THE SUBMISSIONS FILED BEFORE THE CIT (A) PLACED AT PAGES 46 TO 48 ON VARIOUS ISSUES (HIGHLIGHT). 25. COPY OF THE ANOTHER SUBMISSIONS FILED BEFORE THE CI T 24 (A) PLACED AT PAGES 49 TO 50 WITH SPECIAL REFERENCE TO PARA 3 AND4 I.E. THE BALANCE SHEET OF THE COMPANY THAT THEY HAVE ACKNOWLEDGED THE INVESTMENT AS MADE WITH THE APPLICANT. 26. BALANCE SHEET OF M/S CHINAR AGENCY IS PLACED AT PAG ES 51 TO 62 AND THE RELEVANT PAGE IS AT PAGE 58 AND CO PY OF THE ASSESSMENT ORDER OF M/S CHINAR INDUSTRIES U/ S 143 (3) IS PLACED AT PAGES 63 TO 66 WHEREIN THE INVESTMENT HAS BEEN ACCEPTED BY THE DEPARTMENT. THUS, THE DEPARTMENT HAVING COMPUT ED THE INVESTMENT IN THEIR HANDS ,IT IS NOW TOO LATE T O SAY THAT IT WAS AN ACCOMMODATION ENTRY. 27. SIMILARLY FOR THE OTHER COMPANY MOUNT SHIVALIK, THE BALANCE SHEET IS THERE FROM PAGES 67 TO 71 AND RELEVANT PAGE IS 70 WHERE SUCH INVESTMENT HAS BEEN REFLECTED AND COPY OF ASSESSMENT ORDER IS THERE AT PAGES 72TO 77 OF THE APB. 28. THUS, FROM THE ABOVE, IT IS PROVED BEYOND ANY DOUBT THAT THE INVESTMENT AS MADE BY THE COMPANY HAS BEEN ACCEPTED IN THEIR HANDS. 29. THAT THE ONUS WHICH WAS PLACED ON THE ASSESSEE STOO D DISCHARGED AND IT IS NOW LEFT TO THE DEPARTMENT THA T WHY THE BONAFIDE EXPLANATION BE NOT ACCEPTED. RELIA NCE IS BEING PLACED ON THE JUDGMENT OF SUPREME COURT AS ; REPORTED IN 159 ITR 78 IN THE CASE OF CIT V. ORISSA CEMENT CORPN. AND RELIANCE IS AGAIN PLACED ON THE JUDGMENT AS REPORTED IN 205 ITR 98 IN THE CASE OF S OFIA FINANCE, THAT THE BURDEN ON THE ASSESSEE STOOD DISCHARGED. 30. THEN AGAIN, IT IS A CASE OF INVESTMENT IN SHARE CAP ITAL AND NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY AS PER CASE LAWS IN A SEPARATE PAPER BOOK. 14. LD. 'DR' REFERRED TO PAGE 5 & 7 OF THE ASSESSME NT ORDER FOR THE PURPOSE OF SHOWING THAT THE RELEVANT ENTRIES RELATE D TO SANJAY RASTOGI AND ASHWANI UPPAL. LD. 'DR' ALSO REFERRED TO THE E NQUIRIES MADE BY THE AO, BY WAY OF ISSUING LETTER AND DEPUTING INSPE CTOR FOR THE PURPOSE OF ASCERTAINING THE WHEREABOUTS OF THE ENTITIES AND INDIVIDUALS WHO 25 CONTRIBUTED TO THE SHARE CAPITAL OF THE ASSESSEE CO MPANY. LD. 'DR' FURTHER ARGUED THAT NONE OF THE CASE LAWS RELIED UP ON BY THE ASSESSEE ARE APPLICABLE TO THE PRESENT CASE, AS THE SAME WER E RENDERED IN DIFFERENT SET OF FACTS AND CIRCUMSTANCES. LD. 'DR' ALSO DISTINGUISHED THE REGIME IN PRIVATE LIMITED AS WELL AS PUBLIC LIM ITED COMPANY. 15. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE APPELLATE ORDER PASSED BY THE CIT(A). A CAREFUL PERUSAL OF T HE ASSESSMENT ORDER REVEALS THAT FINDINGS OF THE AO ARE BASED ON CIRCUM STANTIAL EVIDENCE, HAVING REGARD TO THE SIMILAR ADDRESS OF ENTITIES AN D INDIVIDUAL/HUF, WHO CONTRIBUTED TO THE SHARE CAPITAL OF THE ASSESSE E COMPANY. THE LD. 'DR' ALSO REFERRED TO THE MODUS-OPERENDI AS WELL AS STATEMENT OF SHRI SANJAY RASTOGI. IN THE ASSESSMENT ORDER, AT PAGE 4 , THE AO HAS FURNISHED A CHART OF TAXABLE ENTITIES, WHO CONTRIBU TED TO THE SHARE CAPITAL OF THE ASSESSEE. A REFERENCE IS MADE TO TH E PAPER BOOK PAGE 10, WHICH CONTAINS SIMILAR CHART AND THE SAME IS RE PRODUCED HEREUNDER: DETAIL OF INCREASE IN SHARE CAPITAL-CLASS-II S..NAME & ADDRESS OF CHQ. DATE NO. OF PAID UP CERT. DIST.NO. PAN SHAREHOLDER NO. SHARES VALUE( RS.) NO. 1. MOUNT SHIVALIK SECFIN P.LTD 986238 50000 500000 EQ(II)0000001 306,VAKIL CHAMBERS A-115. 14.2.2002 EQ(II)01 TO AABCM40 28L SHAAKARPUR,VIKAS MARG, EQ(II)0100000 DELHI. 986226 18.5.2001 50000 5000000 2.MR.ASHWANI UPPAL 859650 50000 5 000000 EQ(II)0000001 J-2/6,KRISHNA NAGAR 24.2.2002 EQ((() 02 TO AAAPU2305A DELHI-51. EQ(II)0200000 359644 5000 5000000 25.6.2001 3.MOD LABORATORIES P.LTD. 338823 70000 7000000 EQ(II)0250001 B-14/S-1,DILSHAD GARDEN 7.2.2002 EQ((()03 TO AAACM9047Q DELHI-95. EQ(II)0 320000 4.MR.ASHWANI UPPAL 526127 50000 5 000000 EQ(II)0200001 J-2/6,KRISHNA NAGAR 25.6.2001 EQ((() 05 TO AAAHA1678Q 26 . DELHI-51 EQ(II)0250000 5.CHINAR AGENCIES(P)LTD. 994221 7500 0 750000 EQ(II)0320001 A-212,IIND FLOOR, 18.5.2001 EQ(II)04 TO AAACC0348Q SHAKARPUR, DELHI-92 994228 25000 2500000. EQ(II)0420000 25.6.2001 TOTAL : 420000 4200000 16. ON THE BASIS OF SIMILAR ADDRESS, AS IS EVIDENT FROM THE PERUSAL OF THE ABOVE CHART, AS ALSO PROVIDED IN THE ASSESSMENT ORDER AS WELL AS ORDER OF THE LD. CIT(A), AO CONSTRUED THAT THESE EN TITIES BELONG TO SHRI SANJAY RASTOGI AND ASHWANI UPPAL. A PERUSAL OF THE CHART REVEALS THAT SHRI ASHWANI UPPAL HAS CONTRIBUTED TOWARDS SHARE CA PITAL OF THE ASSESSEE COMPANY AS IN THE CAPACITY OF INDIVIDUAL A ND ALSO AS HUF. LD. 'AO' ISSUED CERTAIN LETTERS TO SUCH ENTITLES, W HICH WERE RECEIVED BACK WITH THE POSTAL REMARKS LEFT. SUBSEQUENTLY, INSPECTOR WAS DEPUTED TO MAKE CERTAIN ENQUIRIES REGARDING WHEREAB OUTS OF SUCH ENTITLES AND INDIVIDUAL, AND, HE REPORTED THAT NO W HEREABOUTS OF SUCH PERSONS AND COMPANIES WERE AVAILABLE AT THE GIVEN A DDRESS. ACCORDINGLY, THE AO OBSERVED THAT SUCH ENTITIES ARE NOT GENUINE COMPANIES AND NOT DOING ANY BUSINESS. IT IS PERTIN ENT TO MENTION HERE THAT REVENUE INVESTIGATION WING OF THE REVENUE COND UCTED SURVEY U/S 133A OF THE ACT AND FURNISHED RELEVANT INFORMATION TO THE AO. HOWEVER, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT, BY OBSERVING THAT THE SHARE APPLICATION MONEY 27 BELONGS TO THE APPELLANT ASSESSEE AND THE COMPANIES WERE USED AS A CONDUIT TO RE-ROUTE THE MONEY BACK TO ITS BOOKS OF ACCOUNT, IN THE GARB OF MONEY. THE AO IS OF THE OPINION THAT THE SHARE APPLICATION MONEY BELONG TO THE ASSESSEE COMPANY, WHICH WAS INTRODUCE D IN ITS BOOKS OF ACCOUNT IN THE SHAPE OF SHARE CAPITAL CONTRIBUTION BY VARIOUS COMPANIES AND INDIVIDUALS. 17. THE AO, AT PAGE 7 RECORDED THE EVIDENCES FILED BY THE ASSESSEE, WHICH ARE AS UNDER : A. DETAIL OF INCREASE IN SHARE CAPITAL RS.42 LACS, IS ENCLOSED AS ANNEXURE-A. B. PHOTOCOPIES OF CHEQUES VIDE WHICH THE SHARE APPL ICATION MONEY WAS RECEIVED FROM RESPECTIVE SHAREHOLDERS, AR E ENCLOSED AS ANNEXURE-B. C. PHOTOCOPY OF SHARE APPLICATION MONEY RECEIVED FR OM THE CONCERNED PERSONS AS ANNEXURE-C. D. PHOTOCOPIES OF THE COVERING LETTER ALONGWITH THE SHARE CERTIFICATES ISSUED TO THE SUBSCRIBER TO THE CAPITA L AS PER ANNEXURE-D. E. PHOTOCOPY OF RETURN OF ALLOTMENT AS FILED IN FOR M NO.2, WITH REGISTRAR OF COMPANIES. 18. SIMILARLY, THE AO RECORDED THE SUBMISSIONS FILE D BY THE ASSESSEE ON 26.12.2007, WHICH ARE REPRODUCED HEREUNDER : THAT SHRI SANJAY RASTOGI IN THE ABOVESAID STATEMEN T HAVE NEITHER MENTIONED THE NAME OF OUR COMPANY NOR HAVE ADMITTED ANY FACT REGARDING ANY ACCOMMODATION ENTRI ES TO M/S NOBLE SHARE TRADING PVT.LTD. NONE OF THE COMPAN IES IN WHICH SHRI SANJAY RASTOGI OR HIS FAMILY MEMBERS HAV E BEEN DIRECTOR, HAD ANY TRANSACTION WITH M/S NOBLE SHARE TRADING 28 PVT.LTD. THEREFORE, THE REASONS RECORDED BY YOUR GO ODSELF WITH RESPECT TO THE BOGUS ENTRIES MADE BY SHRI SANJ AY RASTOGI AS PER HIS STATEMENT DATED 20 TH APRIL,2003, DO NOT HOLD ANY GROUND SINCE THERE IS NO ADMISSION IN THIS REGARD BY SHRI SANJAY RASTOGI FOR GIVING ANY ENTRIES FROM M/S CHINAR AGENCIES PVT.LTD. TO OUR COMPANY I.E. M/S NOBLE SHA RE TRADING PVT.LTD. 19. THE AO ALSO MENTIONED THAT ALL THE CHEQUES HAVI NG DIFFERENT BANK ACCOUNTS, HAVE BEEN SIGNED BY ONLY ONE PERSON I.E. SHRI ASHWANI UPPAL AND CONCLUDED THAT THE CONTENTION OF THE ASSE SSEE THAT SHRI SANJAY RASTOGI HAS NO CONCERN, IS WRONG AND NOT ACC EPTABLE. THE AO ALSO OBSERVED THAT STATEMENT OF SANJAY RASTOGI IS O F VITAL IN NATURE AND CANNOT BE DISMISSED ON TECHNICAL GROUNDS. IN THE UL TIMATE ANALYSIS, THE AO, BY PLACING RELIANCE ON THE FOLLOWING DECISIONS MADE THE ADDITIONS, TREATING THE SAME AS INVESTMENT OF THE ASSESSEE U/S 68 OF THE ACT, WITH THE FINDING THAT THE MONEY BELONGED TO THE ASSESSEE COMPANY : 1. MC DOWELL & CO. LTD. V CTO, 154 ITR 148 (S.C) 2. SNIL SIDDARATHBAI V CIT (1985) 156 ITR 509 (S.C) 3. SHANKAR INDUSTRIES V CIT 114 ITR 689 4. SUMATI DAYAL V CIT 214 ITR 801 (S.C) 5. CIT V DURGA PARSHAD MORE (1971) 82 ITR 540 (S.C) 6. CIT V R.S.RATHORE 212 ITR 390 (RAJ) 20. THE CASE LAWS RELIED UPON BY THE ASSESSEE, CONSIDER ED THE CIRCUMSTANTIAL EVIDENCE AND PROBABILITY OF HUMAN CO NDUCT, AS ONE OF THE FACTORS FOR ARRIVING AT CONCLUSIONS AND FINDING S. 29 21. THE LD. AR SUBMITTED THAT SHARE APPLICATION MONEY WAS RECEIVED FROM DIFFERENT ENTITIES THROUGH ACCOUNT P AYEE CHEQUES FROM THEIR RESPECTIVE BANK ACCOUNTS. THESE CHEQUES WERE ISSUED FROM RESPECTIVE BANK ACCOUNTS OF THE SHARE CAPITAL CONTR IBUTORS. THE ASSESSEE M/S NOBLE SHARE TRADING PVT LTD MAINTAINS ITS BANK ACCOUNT WITH STATE BANK OF INDIA, PUSA ROAD, NEW DELHI AND VARIOUS CHE QUES AMOUNTING TO RS. 42 LAKHS RECEIVED, ON ACCOUNT OF SHARE APPLI CATION MONEY FROM DIFFERENT PARTIES, FROM THEIR RESPECTIVE BANK ACCOU NTS, HAD BEEN DEPOSITED IN THIS BANK ACCOUNT. IT WAS, FURTHER, CO NTENDED THAT THERE WAS NO TRANSFER OF FUNDS RATHER ACCOUNT PAYEE CHEQU ES FROM RESPECTIVE PARTIES WERE RECEIVED. IT WAS, FURTHER, ARGUED BY THE LD. AR THAT THE ASSESSMENT OF M/S CHINAR AGENCIES PVT. LTD, FOR TH E ASSESSMENT YEAR 2002-03, WAS FRAMED, ON 24.3.2005, U/S 143(3) OF T HE ACT (REFERRED TO PAGE 63 OF THE PAPER BOOK). SIMILARLY, THE ASSESSM ENT OF MOUNT SHIVALIK SECFIN PVT LTD, FOR THE ASSESSMENT YEAR 20 02-03, WAS FRAMED ON 30.3.2005 U/S 143 OF THE ACT (REFERRED TO PAGE 7 2 OF THE PAPER BOOK). IT WAS, FURTHER, ARGUED BY THE LD. AR THA T THE SHARE HOLDERS APPLIED FOR ALLOTMENT OF SHARES AND ACCORDINGLY SHA RES WERE ALLOTTED BY THEM AND THE REQUIRED RETURN OF ALLOTMENT WAS FILED WITH THE REGISTRAR OF COMPANIES, JALANDHAR. IT WAS ALSO STATED THAT AS THESE SHARES ARE STILL HELD IN THE NAMES OF ITS RESPECTIVE ENTITIES AS PER RECORD. THE INDIVIDUAL / HUF AND ENTITIES, TO WHOM THE SHARE S WERE ALLOTTED ARE 30 EXISTING WITH PAN NUMBERS. FURTHER, AFTER, RECEIPT OF SHARE APPLICATION MONEY, BY CHEQUE / DRAFTS SHARE WERE AL LOTTED WITH DISTINCTIVE NUMBERS OF SUCH SHARES. THE LD. AR FU RTHER STATED THAT SHRI SANJAY RASTOGI, NEVER INDICATED IN HIS STATEME NT THE NAME OF THE ASSESSEE APPELLANT, FOR SUCH ACCOMMODATION ENTIRE. THE LD. AR WAS OF THE VIEW THAT ALL THE SHARE HOLDERS ARE IN EXIST ENCE AND THE FINDINGS OF THE CIT(A), ARE CONTRARY TO THE FACTUAL POSITION OF THE CASE. A PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE ORDE R PASSED BY THE CIT(A), REVEALS THAT THE ISSUE OF RECEIPT OF SHARE APPLICATION MONEY, IN QUESTION, HAS BEEN DECIDED HAVING REGARD TO THE ENT IRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, AS ALSO THE STATEMENT OF SHRI SANJAY RASTOGI, BEING VITAL IN NATURE AND HENCE THE STATEMENT OF SH RI SANJAY RASTOGI CANNOT BE IGNORED ON MERE TECHNICALITIES. THE DECI SION OF THE HON'BLE APEX COURT, IN THE CASE OF SUMATI DAYALL V CIT (SUP RA), CIT VS DURGA PARSHAD MORE (SUPRA) HAVE BEEN CITED BY THE AUTHORI TIES BELOW TO SUBSTANTIATE THEIR FINDINGS. THE LD. CIT(A), HAS RE FERRED TO VARIOUS DECISIONS CITED BY THE ASSESSEE SUCH AS CIT V ELEC TRO POLYCHEM LTD, CIT V STELLAR INVESTMENT LTD, CIT V DIVINE LEASING AND FINANCE LTD AND LOVELY EXPORTS. THE CIT(A), UPHELD THE ADD ITION MADE BY THE ASSESSING OFFICER, ON THE GROUND THA T ASSESSEE APPELLANT FAILED TO PROVE THE GENUINENESS OF TRANSACTIONS. THE 31 AR CONTENDED THAT SHRI SANJAY RASTOGI NEVER DEPOS ED IN HIS STATEMENT THE NAME OF THE ASSESSEE APPELLANT NOR AD MITTED ANY FACT REGARDING ANY ACCOMMODATION ENTRIES TO M/S NOBLE SH ARE TRADING PVT LTD, LUDHIANA. 22. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING D ECISIONS TO SUPPORT ITS CONTENTIONS : 1. CIT V STELLER INVESTMENT LTD. 192 ITR 287 (S.C) 2. CIT V LOVELY EXPORTS (P) LTD. 216 CTR (S.C) 195 3. CIT V DIVINE LEASING & FINANCE LTD. (SU PREME COURT ORDER DATED 21.1.2008) 4. CIT V GLOCOM IMPEX (P) LTD. 205 CTR (DEL ) 571 5. CIT V ELECTRO POLYCHEM LTD. 294 I TR 661 (MAD) 6. CIT V GULATI INDUSTRIAL FABRICATION P. L TD 217 CTR 494(DEL) 7. CIT ORISSA V ORISSA CORPORATION LTD [1986] 159 I TR 78 (SC) 8. CIT V SOPHIA FINANCE LTD {1994] 205 ITR 98 (DEL) (FULL BENCH) 9. CIT V VALUE CAPITAL SERVICE P. LTD [2008] 307 IT R 334 (DELHI) 23. THE RATIO OF EACH DECISION RELIED UPON BY THE A PPELLANT IS REPRODUCED HEREWITH, WITH A FEW TO APPRECIATING THE SAME. 1. CIT V STELLAR INVESTMENT LTD [1991) 192 ITR 287 COMPANY--SUBSCRIBED CAPITAL--INCREASE--ASSESSING O FFICER ACCEPTING INCREASE--ORDER SET ASIDE BY COMMISSIONER IN REVISION 32 TO MAKE DETAILED INVESTIGATION REGARDING GENUINENES S OF SUBSCRIBERS TO SHARE CAPITAL AS THERE WAS A DEVICE OF DEVICE OF CONVERTING BLACK MONEY BY ISSUING SHARES WITH THE H ELP OF FORMATION OF AN INVESTMENT COMPANY--APPEAL TO APPEL LATE TRIBUNAL-TRIBUNAL RESTORING ASSESSING OFFICER'S ORD ER--INCREASED CAPITAL NOT ASSESSABLE IN HANDS OF COMPANY--NO QUES TION OF LAW ARISES--INCOME-TAX ACT, 1961, S. 256(2). THE SUBSCRIBED CAPITAL OF THE RESPONDENT-COMPANY HA D BEEN INCREASED AND THE INCOME-TAX OFFICER ACCEPTED THE I NCREASE AND ASSESSED THE COMPANY. THE COMMISSIONER, IN REVISION , SET ASIDE THE ORDER OF ASSESSMENT, BEING OF THE VIEW THAT THE RE HAD BEEN A DEVICE OF CONVERTING BLACK MONEY INTO WHITE BY ISSU ING SHARES WITH THE HELP OF FORMATION OF AN INVESTMENT COMPANY , AND THAT THE ASSESSING OFFICER DID NOT MAKE ANY ENQUIRIES WI TH REGARD TO THE GENUINENESS OF THE SUBSCRIBERS TO THE SHARE CAP ITAL. ON APPEAL, THE APPELLATE TRIBUNAL REVERSED THE DECISIO N OF THE COMMISSIONER: HELD, THAT, EVEN IF IT BE ASSUMED THAT THE SUBSCRIB ERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, UNDER NO CIRCUMSTANCES COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE COMPANY. NO QUESTION OF L AW AROSE OUT OF THE TRIBUNALS ORDER . 2. CIT V LOVELY EXPORTS (P) LTD. 216 CTR (S.C) 195 INCOME-CASH CREDIT-SHARE APPLICATION MONEY-IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN TH EIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. 33 CONCLUSION : IF THE SHARE APPLICATION MONEY IS RECE IVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. 3. CIT V DIVINE LEASING & FINANCE LTD. (SUPREME COU RT ORDER DATED 21.1.2008) CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDI SCLOSED INCOME UNDER SECTION 68 OF INCOME-TAX ACT,1961 ? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIM PLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, W HOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS F REE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY W ITH THE IMPUGNED JUDGMENT. 4. CIT V GLOCOM IMPEX (P) LTD. 205 CTR (DEL) 571 INCOME-CASH CREDIT-SHARE APPLICATION MONEY-ASSESSE E RECEIVED SHARE APPLICATION MONEY OF RS.15 LACS FROM SMT. K WHO IS FOUND TO BE CREDITWORTHY-HER BANK STATEMENTS WERE PRODUCED BEFORE THE AO WHICH CLEARLY SHOWS THAT SHE HAD THE REQUISITE AMOUNT FOR INVESTMENT WHICH SHE RECEIVED FROM MC- ONCE THAT WAS ESTABLISHED, REVENUE COULD NOT GO FUR THER TO FIND OUT WHETHER MC WAS ALSO GENUINE AND CREDITWORT HY-NO ADDITION COULD BE MADE UNDER S.68. 5. CIT V ELECTRO POLYCHEM LTD. 294 ITR 661 ( MAD) CASH CREDITS-SHARE APPLICATION MONEY-EVEN IF SUBSCRIBERS TO INCREASED CAPITAL NOT GENUINE, SHARE CAPITAL CAN NOT BE 34 REGARDED AS UNDISCLOSED INCOME OF ASSESSEE-INCOME-T AX ACT,1961, S.68. THE ASSESSEE FILED ITS RETURNS FOR THE ASSESSMENT YEARS 1998-99 AND 1999-2000. THE AO MADE ADDITIONS IN RES PECT OF THE SHARE APPLICATION MONEY UNDER SECTION 68 OF THE INCOME-TAX ACT,1961, ON THE FINDING THAT THE ASSESS EE HAD BROUGHT THE UNDISCLOASED INCOME BY WAY OF SHARE APPLICATIONS IN FICTITIOUS NAMES AND PASSED ORDERS ACCORDINGLY. ON APPEAL BY THE ASSESSEE, THE COMMISS IONER (APPEALS) DELETED THE ADDITION MADE BY THE AO FOR T HE ASSESSMENT YEAR 1998-99 AND UPHELD THE ADDITION MAD E FOR THE ASSESSMENT YEAR 1999-2000. ON FURTHER APPEALS BY THE ASSESSEE AND THE REVENUE, THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENU E. ON APPEALS : HELD, DISMISSING THE APPEALS, THAT EVEN IF IT WAS ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE UNDER NO CIRCUMSTANCES COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE CO MPANY. 6. CIT V GULATI INDUSTRIAL FABRICATION P LTD 2 17 CTR 494 (DEL). THE ASSESSEE DEMANDED THE REASONS FOR RE-OPENING TH E ASSESSMENT AND THOSE WERE ALSO SUPPLIED TO IT. THE REASONS REFERRED TO A STATEMENT MADE BY ONE MR.SANJAY RASTO GI TO THE EFFECT THAT THE ASSESSEE HAD TAKEN ACCOMMODATION EN TRIES TO THE EXTENT OF RS.5 LAKHS FROM A FRONT COMPANY OF MR.SAN JAY RASTOGI, THAT IS M/S HALLMARK HEALTHCARE LTD. THE ASSESSEE R EQUIRED THE AO TO SUPPLY IT A COPY OF THE STATEMENT WHEREIN THE NAME OF M/S HALLMARK HEALTHCARE LTD. AND THE ASSESSEE APPEAR. BY LETTER DT. 14 TH FEB.,2005, THE AO SUPPLIED THE STATEMENT GIVEN BY MR.SANJAY RASTOGI. THIS CONTAINED QUESTION NO.14 AN D THE ANSWER GIVEN BY MR.RASTOGI THERETO. 35 4. IN PARA 11 OF THE IMPUGNED ORDER, THE TRIBUNAL OBSE RVES THAT IT EXAMINED THE STATEMENT AND FOUND THAT MR.SANJAY RAS TOGI HAD NOWHERE STATED THAT THE LOAN GRANTED IN THE NAME OF M/S HALLMARK HEALTHCARE LTD. WAS BOGUS. IT IS ALSO NOTE D THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CROSS-EXAM INE MR.SANJAY RASTOGI. WE HAVE ALSO GONE THROUGH THE INFORMATION SUPPLIED TO THE ASSESSEE IN THE FORM OF THE QUESTION POSED TO MR.RA STOGI AND HIS ANSWER THERETO. AS RIGHTLY OBSERVED BY THE TRIBUNA L, THERE IS NO MENTION IN THIS STATEMENT ABOUT M/S HALLMARK HEALTH CARE LTD. OR ABOUT THE ASSESSEE. IF THERE WAS ANY OTHER STATEMEN T GIVEN BY MR.SANJAY RASTOGI OR ANY OTHER INFORMATION WAS AVAI LABLE WITH THE AO, THAT CERTAINLY WAS NOT DISCLOSED TO THE ASS ESSEE. ON THE MATERIAL THAT WAS DISCLOSED TO THE ASSESSEE, IT IS NOT POSSIBLE TO INFER THAT THE ASSESSEE HAD TAKEN AN ACCOMMODATION ENTRY FROM M/S HALLMARK HEALTHCARE LTD. 7. CIT, ORISSA V ORISSA CORPORATION. LTD [1986] 159 ITR 78 (SC) REFERENCE--QUESTION OF LAW OR FACT--CASH CREDITS-- ASSESSEE PRODUCING LETTERS OF CONFIRMATION AND DISCHARGED HU NDIS AND GIVING PARTICULARS OF CREDITORS--CREDITORS-ASSESSEE S WHOSE INDEX NUMBERS WERE WITH THE DEPARTMENT--NOTICES ISSUED TO CREDITORS FOR APPEARANCE RETURNED WITH ENDORSEMENT 'LEFT'--NO FURTHER ATTEMPT MADE TO EXAMINE SOURCE OF CREDITS--TRIBUNAL 'S FINDING THAT ASSESSEE HAD DISCHARGED ONUS--BASED ON EVIDENC E--NO QUESTION OF LAW ARISES--INCOME-TAX ACT, 1961, SS. 6 8, 131, 256. 8. CIT V SOPHIA FINANCE LTD.[1994] 205 ITR 98 (DEL) (FULL BENCH) UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961, THE INCOME-TAX OFFICER HAS JURISDICTION TO MAKE ENQUIRIES WITH REG ARD TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND IT IS IMMATERIAL AS TO WHETHER THE AMOUNT SO 36 CREDITED IS GIVEN THE COLOUR OF A LOAN OR A SUM REP RESENTING SALE PROCEEDS OR EVEN RECEIPT OF SHARE APPLICATION MONEY . THE USE OF THE WORDS 'ANY SUM FOUND CREDITED IN THE BOOKS' IN SECTION 68 INDICATES THAT THE SECTION IS VERY WIDELY WORDED AN D THE INCOME- TAX OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE TRUE NATURE AND SOURCE OF A SUM CREDITED IN THE ACC OUNT BOOKS EVEN IF IT IS CREDITED AS RECEIPT OF SHARE APPLICAT ION MONEY. THE MERE FACT THAT THE (ASSESSEE) COMPANY CHOOSES TO SH OW THE RECEIPT OF THE MONEY AS CAPITAL DOES NOT PRECLUDE T HE INCOME-TAX OFFICER FROM GOING INTO THE QUESTION WHETHER THIS I S ACTUALLY SO. WHERE, THEREFORE, AN ASSESSEE-COMPANY REPRESENTS TH AT IT HAD ISSUED SHARES ON THE RECEIPT OF SHARE APPLICATION M ONEY THEN THE AMOUNT SO RECEIVED WOULD BE CREDITED IN THE BOOKS O F ACCOUNT OF THE COMPANY. THE INCOME-TAX OFFICER WOULD BE ENTITL ED, AND IT WOULD INDEED BE HIS DUTY, TO ENQUIRE WHETHER THE AL LEGED SHAREHOLDERS DO IN FACT EXIST OR NOT. IF THE SHAREH OLDERS EXIST THEN, POSSIBLY, NO FURTHER ENQUIRY NEED BE MADE. BU T IF THE INCOME-TAX OFFICER FINDS THAT THE ALLEGED SHAREHOLD ERS DO NOT EXIST THEN, IN EFFECT, IT WOULD MEAN THAT THERE IS NO VALID ISSUANCE OF SHARE CAPITAL. SHARES CANNOT BE ISSUED IN THE NA ME OF NON- EXISTING PERSONS. THE USE OF THE WORDS 'MAY BE CHAR GED' IN SECTION 68 CLEARLY INDICATES THAT THE INCOME-TAX OF FICER WOULD THEN HAVE THE JURISDICTION, IF THE FACTS SO WARRANT , TO TREAT SUCH A CREDIT TO BE THE INCOME OF THE ASSESSEE. IF THE SHAREHOLDERS ARE IDENTIFIED AND IT IS ESTABL ISHED THAT THEY HAVE INVESTED MONEY IN THE PURCHASE OF SHARES, THEN THE AMOUNT RECEIVED BY THE COMPANY WOULD BE REGARDED AS A CAPI TAL RECEIPT AND TO THAT EXTENT THE OBSERVATIONS IN CIT V. STELL AR INVESTMENT LTD. [1991] 192 ITR 287 (DELHI), ARE CORRECT; BUT T HE OBSERVATIONS IN THAT CASE TO THE EFFECT THAT EVEN I F THE SUBSCRIBERS TO THE CAPITAL WERE NOT GENUINE 'UNDER NO CIRCUMSTA NCE COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE [COMPANY]' ARE NOT. 37 WHERE THE COMMISSIONER HAD HELD IN REVISION THAT AN ASSESSMENT HAD BEEN MADE ON A COMPANY BY THE INCOME-TAX OFFICE R WITHOUT MAKING NECESSARY AND APPROPRIATE ENQUIRIES WITH REG ARD TO THE SHARE CAPITAL RAISED BY THE COMPANY AND TO THAT EXT ENT THE ORDER PASSED BY THE INCOME-TAX OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, BUT THE APPELLATE TRIBUNAL, ON APPEAL, REVERSED THE ORDER OF THE COMMISSIONER HOLD ING THAT THE INCOME-TAX OFFICER HAD MADE SUCH ENQUIRY AS HE COUL D DO UNDER THE CIRCUMSTANCES AND THAT FURTHER PROBE WOULD BE U SELESS BECAUSE THE COMPANY COULD NOT GIVE ANY FURTHER INFO RMATION: HELD, THAT THE QUESTION OF LAW WHETHER THE TRIBUNAL WAS RIGHT IN SETTING ASIDE THE ORDER IN REVISION OF THE COMMISSI ONER AND HOLDING THAT THE ASSESSMENT ORDER COULD NOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE REVENUE AROSE OUT O F THE APPELLATE ORDER OF THE TRIBUNAL. CIT V. BIJU PATNAIK [1986] 160 ITR 674 (SC) AND S.P . GRAMOPHONE CO. V. CIT [1986] 158 ITR 313 (SC) APPLI ED. 9. CIT V VALUE CAPITAL SERVICES P. LTD [2008] 307 I TR 334 (DELHI) CASH CREDITS SHARE APPLICATION MONEY DEPARTMEN T MUST SHOW THAT INVESTMENT MADE BY SUBSCRIBERS ACTUALLY E MANATED FROM COFFERS OF ASSESSEE TO BE TREATED AS UNDISCLOS ED INCOME OF ASSESSEE INCOME TAX ACT, 1961, S.68 IN RESPECT OF AMOUNTS SHOWN AS RECEIVED BY THE ASSE SSEE TOWARDS SHARE APPLICATION MONEY FROM 33 PERSONS, THE ASSESS ING OFFICER REQUIRED THE ASSESSEE TO PRODUCE ALL THESE PERSONS. WHILE ACCEPTING THE EXPLANATION AND THE STATEMENTS GIVEN BY THREE PERSONS THE ASSESSING OFFICER FOUND THAT THE RESPON SE FROM THE OTHERS WAS EITHER NOT AVAILABLE OR WAS INADEQUATE A ND ADDED AN AMOUNT OF RS. 46 LAKHS PERTAINING TO 30 PERSONS TO THE INCOME OF 38 THE ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE DECISION OF THE ASSESSING OFFICER. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AND DELETED THE ADDITIONS. ON FURTHER APPEAL : HELD, DISMISSING THE APPEAL, THAT THE ADDITIONAL BU RDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLI CANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTME NT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSE SSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME O F THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. 24. HAVING REGARD TO THE ABOVE DETAILED LEGAL AND F ACTUAL DISCUSSIONS AND CONSIDERING THE DECISIONS RELIED UPON BY BOTH T HE REVENUE, AND THE ASSESSEE-APPELLANT, WE FIND THAT IT IS A CASE OF PR OFESSIONAL ENTRY PROVIDER AND, HENCE, THE TRANSACTIONS IN QUESTION D O NOT APPEAR TO BE GENUINE, AS HELD BY THE ASSESSING OFFICER AS ALSO T HE CIT(A). THEREFORE, CUMULATIVE SATISFACTION OF THE INGREDIEN TS OF SECTION 68 OF THE ACT REMAINS UNSATISFIED. 25. IN VIEW OF THE ABOVE, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF MARCH, 2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH MARCH, 2012 39 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR