ITO, New Delhi V. M/s. Prakash Colour (P) Ltd., New Delhi

ITA 1176/DEL/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6476 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 27-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: VED JAIN ADV SH ASHISH CHADHA; P SRIVASTAVA CAS
• Keywords: Reopening of assessment; Bogus Share capital; Income from undisclosed sources; Share purchase agreement; Principle of natural justice; Period of limitation; Additional evidence; Reasonable cause; Corroborative evidences; Accommodation entries; Assessment record; Onus to prove; Time period of passing order
• Section: 143(3); 147; 131; 68; 69; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA PILLAI , JM ITA NO. 1176/DEL/2011 : ASSTT. YEAR : 2007 - 0 8 INCOME TAX OFFICER, WARD - 14(3), NEW DELHI VS M/S PRAKASH COLOUR (P) LTD., 15A, 2 ND FLOOR, SRI NAGAR COLONY, NEAR BHARAT NAGAR, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A ACP5463B ASSESSEE BY : SH. VED JAIN, ADV. , SH. ASHISH CHADHA & P. SRIVASTAVA, CAS REVENUE BY : SH. F. R. MEENA , SR. DR DATE OF HEARING : 29 .09 .201 6 DATE OF PRONOUNCEMENT : 16 . 12 .201 6 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 01.12.2010 OF LD. CIT(A) - XVII , NEW DEL HI . 2. THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READ S AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,10,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ACCOMMO DATION ENTRY RECEIVED, AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 29.10.2007 DECLARING AN INCOME OF ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 2 RS.10,93,632/ - WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD INCREASED ITS SHARE CAPITAL FROM RS.97.14 LAKHS TO RS.159.14 LAKHS AND ALSO RECE IVED FRESH SHARE PREMIUM AMOUNTING TO RS.93,00,000/ - . THE AO ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCE AND ALSO IDENTIFY THE PARTIES AND PROVE THEIR GENUINENESS AND CREDITWORTHINESS. THE ASSESSEE FURNISHED THE VARIOU S DETAILS. HOWEVER, THE AO AGAIN INFORMED THE ASSESSEE VIDE LETTER DATED 26.11.2009 AS UNDER: ''INFORMATION HAS BEEN RECEIVED FROM DIT (INV) NEW DELHI THAT YOU HAVE RECEIVED ACCOMMODATION ENTRIES FROM THE COMPANIES WHICH ARE CONTROLLED BY MR . TARUN GOE L 13 /34 WEA, KAROL BAGH, NEW DELHI I.E. M/S CAM PRI FISCAL SERVICES (P) LTD. (RS 20.00 LACS). CORPORATE FINL EASE (P) LTD.. (RS 20.00 LACS) SADGURU FINMAN (P) LTD (RS 20.00 LACS). M/S TAURAS I RON & STEEL CO (P) LTD., (RS 20.00 LACS) AND M/S TEJASVI INVESTMENTS ( P) LTD., (RS. 30.00 LACS) DURING THE PERIOD UNDER CONSIDERATION. IT IS PROPOSED TO ADD THE BOGUS ACCOMMODATION ENTRIES R ECEIVED BY YOU AMOUNTING TO RS. 1,10,00,000/ - TO THE INCOME DECLARED BY YOU AS YOUR INCOME FROM UNDISCLOSED SOURCES.' 4. THE ASSESSEE VI DE LETTER DATED 09.12.2009 ASKED FOR THE CERTIFIED COPY OF STATEMENT OF MR. TARUN GOYAL RECORDED BY THE ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 3 INVESTIGATION WING OF THE INCOME TAX DEPARTMENT AND THAT MR. TARUN GOYAL MAY BE RECALLED FOR CROSS - EXAMINATION BY THE ASSESSEE. THE AO INFORMED THE ASSE SSEE VIDE LETTER DATED 14.12.2009 THAT MR. TARUN GOYAL HAS ADMITTED IN HIS STATEMENT THAT HE WAS AN ENTRY PROVIDER AND HIS EMPLOYEES OWN THE NAME OF THE COMPANY FROM WHOM THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES. IT WAS ALSO INFORMED THAT SINCE THE STATEMENT OF MR. TARUN GOYAL WAS GIVEN TO THE ASSESSEE NOW THE ONUS LIES ON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM WITH REGARD TO THE ACCOMMODATION ENTRIES RECEIVED DURING THE YEAR. THE AO DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE AND MADE THE A DDITION OF RS.1,10,00,000/ - BY OBSERVING AS UNDER: KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE THE ASSESSEE COULD NOT PROVE THE GENUINENESS , CREDITWORTHINESS AND IDENTITY OF THE ACCOMMODATION ENTRIES RECEIVED BY IT FROM M/S CAMPRI FISCAL SERVICES (P) LTD., (RS 20.00 LACS), CORPORATE FINLEASE (P) LTD., (RS 20.00 LACS), SADGURU FINMAN (P) LTD (RS 20.00 LACS), M/S TA URAS IRON & STEEL CO (P) LTD., (RS 20.00 LACS) AND M/S TEJASVI INVESTMENTS (P) LTD., (R S. 30.00 LACS) TOTALING TO RS 1,10,00, 000/ - . AS PER STATEMENT RECORDED OF MR . TARUN GOYAL BY THE DIT (INV), NEW DELHI, U/S 132 OF THE ACT DU RING THE SEARCH OPERATION ON 15. 9.2009 HE HAS ADMITTED TO BE AN ENTRY PROVIDER AND RUNNING THE ABOVE COMPANIES EITHER IN HIS OWN NAME OR IN THE NAME OF HIS EMPLOYEES FROM THE ADDRESS 13/34 WEA, KAROL BAGH, NEW DEIHI - 110 005. MR . TARUN GO YAL HAS ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 4 TAKEN THE NAME OF FEW COMPANIES AND IT WAS STATED THAT NAME OF OTHER COMPANIES WILL BE INFORMED LATER ON THE BANK ACCOUNT OF THESE COMPANIES WERE EXAMINED AND THE ASSESSEE COMPANY IS ALSO ONE OF THE COMPANY TO WHOM ENTRY WAS PROVIDED BY THESE COMPANIES. THE ASSESSEE ALSO COULD NOT SUBSTANTIATE ITS CLAIM WITH SUPPORTING DOCUMENTARY EVIDENCE IN SUPPORT OF THE CONTENTIONS RAISED BY HIM AND DID NOT FILE THE REM AINING DETAILS ON 22.12.2009, WHICH IS THE DATE ON WHICH THE HEARING WAS LAST FIXED. THE ONUS ALWAYS LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS, WHICH THE ASSESSEE HAS FAILED TO DISCHARGE IN THE PRESENT CASE . THE STATEMENT RECORDED O F MR . TARUN GOYAL WAS ALSO PROVIDED TO THE ASSES SEE. THE ASSESSEE EVEN COULD NOT PRODUCE COMPLETE BOOKS OF ACCOUNTS THOUGH SPECIFICALLY ASKED FOR IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AMOUNT RECEIVED FROM THESE COMPANIES TOTALING TO RS. 1 ,10,00,000/ - IS ADDED TO THE INCOME DECLARED BY THE ASSESSEE AS ITS INCOME FROM UNDISCLOSED SOURCES, WHICH IS INTRODUCED IN THE NAME OF THESE COMPANIES TO GIVE THE COLOUR OF GENUINENESS, I AM SATISFIED THAT THE ASSESSEE HAS DELIBERATELY AND WILLFULLY FURNI SHED INACCURATE PARTICULARS OF ITS INCOME AND IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C). 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FILED AN APPLICATION UNDER RULE 46A OF THE INCOME TAX RULES, 1962 FOR ADMISSION OF ADDITIONAL EVIDENCE S ON THE GROUND THAT THE SAME COULD NOT BE FURNISHED/SUBMITTED BEFORE THE AO AS THESE DOCUMENTS WERE ACCEPTED FROM THE PARTIES OR PERSONS WHO HAD DIRECTLY SENT TO THE AO THROUGH SPEED ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 5 POST/REGISTERED POST ON 23.12.2009, ONE DAY BEFORE TH E DATE OF THE ASSESSMENT ORDER. IT WAS FURTHER SUBMITTED THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD REQUESTED THE AO ON 18.12.2009 FOR TIME TO SUBMIT THOSE PAPERS/DOCUMENTS WHICH WAS DENIED BY HIM. THE RELEVANT PORTION OF THE APPLICATION FURNIS HED BY THE ASSESSEE UNDER RULE 46A OF THE INCOME TAX RULES, 1962 , INCORPORATED IN THE IMPUGNED ORDER READS AS UNDER: 'THE COUNSEL OF THE APPELLANT COMPANY HAS ALREADY REQUESTED TO THE AO FOR CROSS VERIFICATION/EXAMINATION OF THESE FIVE SUBSCRIBERS TOGETHE R WITH MR. TARUN GOEL, STATED TO BE THE ENTRY OPERATOR FOR THESE COMPANIES BUT THE SAID REQUEST WAS NOT ACCEDED TO BY HIM. MOREOVER, THIS ADVERSE INFORMATION/MATERIAL COLLECTED ON THE BACK OF US WAS PROVIDED/CONFRONTED AT THE FIRST WEEK OF DECEMBER, 2009, JUST A MONTH BEFORE THE LIMITATION PERIOD EXPIRES FOR FRAMING THE ASSESSMENT. IN SPITE OF INSUFFICIENT TIME PROVIDED, WE HAVE BEEN ABLE TO COLLECT THIS MATERIAL AND SUBMITTED BEFORE THE AO BEFORE THE LAST DATE OF FRAMING THE ASSESSMENT WHICH HAS NOT BEEN C ONSIDERED BY HIM AND PASSED THE ASSESSMENT ORDER EVEN WITHOUT WAITING FOR THESE PAPERS/DOCUMENTS. THESE DOCUMENTS CONTAIN THE RECONFIRMATION OF THE INVESTMENT MADE BY THE FOLLOWING PARTIES IN THE SHARE CAPITAL OF THE APPELLANT COMPANY DURING THE YEAR UNDER CONSIDERATION AND ALSO AFFIRMED ON OATH THAT THE ORIGINAL PAPERS/DOCUMENTS WITH THE CONFIRMATION SUBMITTED ARE STILL HOLD GOOD AND NOTHING WAS MISSTATED OR CONCEALED TOGETHER WITH DENIAL OF THE CHARGES MADE BY THE INVESTIGATION WING: ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 6 (A) CAMPRI FISCAL SER VICES (P) LTD. (B) CORPORATE FINLEASE (P) LTD. (C) SADGURU FINMAN (P) LTD. (D) TAURUS IRON & STEEL CO. (P) LTD. (E) TAJASVI INVESTMENT (P) LTD. MR. TARUN GOEL, THE SO - CALLED ARRANGER FOR FRESH SHARE CAPITAL, HAVE ALSO FURNISHED AN AFFIDAVIT DECLARING ON O ATH THAT THE ALLEGATION MADE BY THE INCOME - TAX AUTHORITIES ARE WRONG, BASELESS AND INCORRECT AND ALSO DENIED ALL THE CHARGES MADE AGAINST HIM WITH RESPECT TO THESE COMPANIES WITH OTHER RELEVANT MATERIAL/EVIDENCE. THE PHOTOCOPY OF ALL THE AFFIDAVITS ARE ENC LOSED HEREWITH FOR YOUR HONOR'S PERUSAL AND KIND CONSIDERATION WITH THE REQUEST TO ADMIT THE SAME AS AN ADDITIONAL EVIDENCES AT THIS STAGE, BEING VITAL AND IMPORTANT MATERIAL IN THE MATTER OF PRESENT APPEAL AND FOR RENDERING THE JUSTICE. THE COPIES OF LET TERS WRITTEN TO THE AO FROM TIME TO TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF OUR CONTENTION ARE ENCLOSED HEREWITH FOR YOUR HONOR'S READY REFERENCE AND PERUSAL. IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CASE MENTIONED ABOVE, THE APP ELLANT COMPANY WAS PREVENTED BY REASONABLE/SUFFICIENT CAUSE FROM NON - FURNISHING THESE PAPERS/DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND, AS SUCH, IT IS HUMBLY PRAYED THAT THESE MAY BE ADMITTED AS AN ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME - TAX RULES AND OBLIGE.' 6. THE ASSESSEE ALSO SUBMITTED COPY OF SHARE APPLICATION FORM S FURNISHED BY THE SHARE APPLICANTS AND COPIES OF THE ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 7 ALLOTMENT OF THE SHARES, FORM NO. 20B, AUDITED BALANCE SHEET S OF THE SHARE APPLICANT COMPANIES, CONFIRMATION L ETTER S , REGISTER OF THE SHARE HOLDERS, BANK STATEMENTS FROM WHICH THE CHEQUES WERE ISSUED, SHARE CERTIFICATES, NOTICE S , ACKNOWLEDGEMENT OF THE ITRS. THE AFORESAID DOCUMENTS FURNISHED BY THE ASSESSEE ALONGWITH APPLICATION UNDER RULE 46A OF THE INCOME TAX RU LES, 1962 WERE FORWARDED BY THE LD. CIT(A) TO THE AO FOR HIS REMAND REPORT. THE AO IN HIS REMAND REPORT DATED 02.11.2010 HAD REITERATED THE SAME VIEW WHICH WAS TAKEN IN THE ASSESSMENT ORDER AND STATED AS UNDER: ' '2.1. IN THIS CASE, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING, NEW DELHI / CONTAINING DETAILS OF THE AMOUNTS TAKEN BY THE BENEFICIARIES FROM THE ENTRY OPERATORS ALONGWITH OTHER DETAILS REGARDING MODUS OPERAND) OF THE BENEFICIARIES AND THE ENTRY OPERATORS. THE ASSESSEE COMPANY WAS ONE OF T HE BENEFICIARIES, WHO HAD RECEIVED BOGUS ENTRIES FROM THE FOLLOWING COMPANIES WHICH ARE CONTROL BY MR. TARUN GOEL, 13/34, WEA, KAMI BAGH, NEW DELHI: (A) CAMPRI FISCAL SERVICES (P) LTD. RS. 20,00,000/ - (B) CORPORATE FINLEASE (P) LTD. RS. 20,00 ,000/ - (C) SADGURU FINMAN (P) LTD. RS. 20,00,000/ - (D) TAURUS IRON & STEEL CO. (P) LTD. RS. 20,00,000/ - (E) TAJASVI INVESTMENT (P) LTD. RS. 30,00,000/ - TOTAL RS.1,10,00,000/ - 2.2. IN VIEW OF THE FACTS STATED ABOVE, THE CASE WAS REOPENED AFTER RECORDING OF SATISFACTION NOTE IN THIS CASE FOR THE A.Y. 2007 - 08 AND NOTICE U/S 148 OF THE ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 8 ACT WAS ISSUED AND SERVED ON THE ASSESSEE COMPANY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE, DURING THE YEAR, HAS INCREASED ITS SHARE CAPITAL FROM RS.97.14 LACS TO RS.159.14 LACS AND ALSO RECEIVED FRESH SHARE PREM IUM AMOUNTING TO RS.93,00,000/ - AND THE ASSESSES WAS ASKED TO SUBSTANTIATE THIS CLAIM WITH SUPPORTING DOCUMENTARY EV IDENCE AND ALSO IDENTIFY THE ABOVE MENTIONED PARTIES AND PROVE THEIR GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS. 2.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS REQUESTED TO PROVIDE CERTIFIED COPY OF THE STATEMENT OF MR. TARUN GOEL RECORDED BY THE INVESTIGATION WING. HENCE, A COPY OF WHICH WAS PROVIDED TO THE ASSESSEE. FURTHER, THE ASSESSEE HAS A/SO REQUESTED THAT AN OPPORTUNITY MAY BE GIVEN TO IT FOR CROSS - EXAMINATION WITH MR. TARUN GOEL. IN THIS REGARD, THE ASSESSEE WAS INFOR MED THAT MR. TARUN GOEL HAD ALREADY ADMITTED IN HIS STATEMENT RECORDED ON OATH THAT HE IS AN ENTRY PROVIDER AND HIS EMPLOYEES OWN THE NAME OF THE COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRIES AND A COPY OF THE STATEMENT OF MR. TARUN G OEL HAD ALREADY PROVIDED WHEREIN HE HAD ADMITTED THE SAME. IN THESE FACTS AND CIRCUMSTANCES, THE ASSESSEE WAS ALLOWED AN OPPORTUNITY STATING THAT NOW THE ONUS LIES ON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM WITH REGARD TO ACCOMMODATION ENTRIES RECEIVED FROM THE ABOVE MENTIONED COMPANIES BUT THE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM AND RELIED ON THE VARIOUS JUDGEMENTS. SINCE THE FACTS OF THE CASE ARE NOT IDENTICAL WITH THE FACTS OF THE CASE RELIED UPON BY THE ASSESSEE. ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 9 2.4. THE ASSESSEE WAS ALSO ALLOWED FURTHER OPPORTUNITY ON 22.12.2009 TO SUBSTANTIATE ITS CLAIM BUT ON THE SAID DATE NO COMPLIANCE WAS MADE AND EVEN THE COMPLETE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED THOUGH SPECIFICALLY ASKED FOR THE SAME FOR THE SAME FOR THE REASONS BEST KNOWN TO IT. SINC E THE CASE WAS TIME BARRING, THE ASSESSMENT, IN THIS CASE WAS COMPLETED ON 24.12.2009 THEREBY MAKING AN ADDITION OF RS.1,10,00,000/ - AS ITS INCOME FROM UNDISCLOSED SOURCES. 3. NOW DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE YOUR GOODSELF THE ASSESSE E HAS FURNISHED MORE OR L ESS THE SIMILAR REPLY AND FACTS WHICH WERE STATED BY IT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, AS PER DIRECTIONS OF YOUR GOODSELF, THE ASSESSEE WAS ALLOWED AN OPPORTUNITY TO EXPLAIN IN WRITING THAT HOW THE FACTS OF T HE CASE RELIED UPON BY IT IS SIMILAR TO YOUR CASE. IN REPLY, THE ASSESSEE HAS FURNISHED ITS REPLY VIDE LETTER DATED 17.08.2010. 4. THE REPLY OF THE ASSESSEE VIDE LETTER DATED 17.08.2010 IS BEING SENT HEREWITH FOR YOUR KIND PERUSAL. 7. THE LD. CIT(A) REP RODUCED THE REPLY DATED 17.08.2010 OF THE ASSESSEE REFERRED TO BY THE AO , IN PARA 2.3 OF THE IMPUGNED ORDER WHICH IS NOT REPRODUCED HEREIN, FOR THE COST OF REPETITION. THE LD. CIT(A) FORWARDED THE REMAND REPORT OF THE AO TO THE ASSESSEE FOR ITS COMMENTS. I N RESPONSE , THE ASSESSEE STATED AS UNDER: ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 10 THE APPELLANT COMPANY HAS SUBMITTED A PETITION UNDER RULE 46A OF THE IT RULES FOR ADMISSION OF ADDITIONAL EVIDENCES IN THE ABOVE MATTER BEFORE YOUR HONOUR. THE PETITION CONTAINS DETAILED REASONS FOR NOT FURNISHIN G THE ADDITIONAL EVIDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO TO THE FACT THAT THE SAME WAS RECEIVED BY THE APPELLANT COMPANY AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS FROM THE THIRD PARTY(S) WHERE THE APPELLANT COMPANY HAVE NO CONTR OL OVER THEM. HOWEVER, SUBMITTED THE SAME BEFORE THE AO AFTER RECEIPT FROM THEM AS SUCH, THE APPELLANT COMPANY WAS PREVENTED BY THE REASONABLE/SUFFICIENT CAUSE FOR NOT FURNISHING THE SAID DOCUMENTS/PAPERS BEFORE CONCLUSION OF THE ASSESSMENT PROCEEDINGS. TH EREFORE, IT IS REQUESTED TO ADMIT THE SAME AT THIS STAGE FOR THE SAKE OF JUSTICE AND FAIR PLAY. YOUR HONOUR HAS FORWARDED THIS PETITION ALONGWITH THE ENCLOSURES TO THE AO, WARD - 14(3), NEW DELHI FOR THE REMAND REPORT AND COMMENTS. THE COPY OF THE REMAND R EPORT DATED 02.11.2010 HAS BEEN PROVIDED TO US FOR COUNTER REPLY/COMMENTS AND SUBMISSION. IN THIS CONTEXT, WE HAVE TO STATE AND SUBMIT AS UNDER FOR YOUR HONOUR'S KIND CONSIDERATIONS: 1. WITH RESPECT TO PARA 2.1, THE SAME IS REPLETION OF THE FACTS AVAILABLE O N ASSESSMENT RECORDS AND BRIEF FACTS OF THE CASE. HENCE, NO COMMENTS SUBMITTED BEING BASIS FOR THE REOPENING OF ASSESSMENT AS PER AO'S ASSESSMENT FILE. 2. WITH RESPECT TO PARA 2.2 OF THE SAID REMAND REPORT, IT IS SUBMITTED THAT THE PRESENT ASSESSMENT WAS FI RST ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 11 TIME COMPLETED BY THE AO, WARD - 14(3), NEW DELHI, U/S 143(3) OF THE ACT ON 24.12.2009 WHICH IS SUBJECT MATTER OF PRESENT APPEAL AND IT IS NOT A CASE WHERE THE ASSESSMENT HAS BEEN REOPENED U/S 147 OF THE ACT. THEREFORE, THE OBSERVATION MADE BY THE AO IN THIS PARA IS FACTUALLY INCORRECT AND WRONG WITH RESPECT TO THE REOPENING OF THE ASSESSMENT, SUBJECT MATTER OF APPEAL. 3. WITH RESPECT TO PARA 2.3, IT IS SUBMITTED THAT THE COPY OF THE STATEMENT OF SHRI TARUN GOEL WAS FIRST TIME PROVIDED TO US ON 11.12.2009 BY THE THEN AO, WHICH WAS NOT RELEVANT AND NEXUS TO THE ALLEGATION, HENCE, THEREAFTER COPY OF ANOTHER STATEMENT WAS PROVIDED ON OR ABOUT 16.12.2009. THE COPY OF THIS STATEMENT WAS PROVIDED AT THE FAG END OF THE COMPLETION OF THE ASSESSMENT PROCEEDINGS, BEI NG THE MATTER (ASSESSMENT) BARRED BY TIME ON 31 ST DECEMBER, 2009. FURTHER, SHRI TARUN GOEL HAS ALREADY SUBMITTED AN AFFIDAVIT DENYING ALL THE CHARGES MADE BY THE AO AND CONFIRMED THAT THE EQUITY SHARES PURCHASED BY THE COMPANIES (WHERE HE IS A DIRECTOR) WE RE GENUINE AND THE ALLEGATION MADE BY THE DEPARTMENT IS UNTRUE AND ALSO DENIED ALL THE CHARGES MADE AGAINST HIM BY THE IT DEPARTMENT. NOT ONLY THIS, THE COUNSEL OF THE APPELLANT COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALSO REQUESTED FOR CONFRON TATION OF THE ADVERSE MATERIAL COLLECTED ON THE BACK OF THE APPELLANT COMPANY AND USED FOR THE PURPOSE OF REASSESSMENT, SUBJECT MATTER OF PRESENT APPEAL, TOGETHER WITH CROSS EXAMINATION OF SHRI TARUN GOEL AND OTHER DIRECTOR OF THE INVEST COMPANY WHO HAD AL LEGEDLY MADE A STATEMENT AGAINST THE APPELLANT COMPANY BUT THE AO HAS NOT ACCEDED TO THIS ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 12 REQUEST AND ON THE CONTRARY, TRIED TO SHIN THE ONUS ON US WITH THE PLEADINGS THAT IT IS THE DUTY OF THE APPELLANT COMPANY TO PRODUCE THE SAME FOR VERIFICATION BEING T HEIR SHAREHOLDERS. IT IS A SETTLED PREPOSITION OF LAW THAT THE REVENUE AUTHORITY RELIED ON ANY WITNESS(ES)/EVIDENCE(S) ARE LEGALLY LIABLE TO PRODUCE FOR CROSS VERIFICATION/EXAMINATION TO MEET WITH THE PRINCIPLE OF NATURAL LAW OF JUSTICE AND FAIR PLAY. IT M AY BE FURTHER SUBMITTED THAT THE AO HAS NOT ISSUED SUMMONS U/S 131 OF THE ACT AS REQUESTED BY THE APPELLANT COMPANY ON 18.12.2009 DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AS SUCH THE BURDEN OF ONUS REMAINED LIES WITH THE AO. THE CASE LAWS RELIED UPO N BY US FULLY SUPPORTS OUR ABOVE CONTENTION AND THEREFORE, THE OBSERVATION AND COMMENTS MADE BY THE AO IS TOTALLY OUT OF CONTEXT, UNJUSTIFIED AND WITHOUT ANY SUBSTANCE. IN THIS REGARD, PLEASE REFER TO OUR REPLY DATED 11.12.2009 AND 18.12.2009 SUBMITTED BEF ORE THE AO WITH CITATION/HEAD NOTES OF THE CASE LAWS RELIED UPON IN THE MATTER, COPY THEREOF SUBMITTED AT PAPER BOOK AT PAGE NO(S). 54 - 56 (LETTER DT. 1 1.12.2009) AND 57 - 61 (LETTER DT. 18.12.2009) RESPECTIVELY AND FOR THE SAKE OF BREVITY, THE SAME ARE NOT B EING REITERATED HERE AGAIN WITH THE REQUEST TO CONSIDER THE SAME IN THIS MATTER. FURTHER, COPY OF AFFIDAVIT SUBMITTED BY SHRI TARUN GOEL (FILED WITH PETITION U/S 46) ALSO CONFIRM AND CERTIFY THE ABOVE FACTS AND AS SUCH, OBSERVATION AND COMMENTS IN THIS PA RA BY THE LD. AO IS FACTUALLY WRONG, OUT CONTEXT, WITHOUT ANY COGENT GROUND/MATERIAL AND WITHOUT ANY SUBSTANCE. THE JUDGEMENTS REFERRED AND RELIED UPON BY US IN THIS SUBMISSION AS WELL AS IN OUR VARIOUS LETTER(S) ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 13 REPLY'(S) ARE FULLY COVERED THE FACTS OF TH IS CASE AND BE FOLLOWED BEING IDENTICAL AND SIMILAR TO THE FACTS OF THE PRESENT CASE. 4. WITH RESPECT TO PARA 2.4, IT IS SUBMITTED THAT THE OBSERVATION MADE BY THE AO IS NOT AS PER THE ORDER SHEET MAINTAINED AND WE REQUEST YOUR HONOUR TO SUMMON THE ASSESSMEN T RECORDS SO THAT THE FACTS MAY BE GOT VERIFIED. IT MAY BE FURTHER SUBMITTED THAT WE HAVE PRODUCED COMPLETE BOOKS OF ACCOUNTS AND APPEARED ON ALL THE DATES OF HEARING AND IN CASE OF INABILITY TO APPEAR AT ANY TIME, WE HAVE VERBALLY INFORMED TO HIM BUT THER E WAS NO NON - COMPLIANCE AT OUR END. THESE FACTS CAN BE ASCERTAINED FROM THE ASSESSMENT RECORDS ALSO. WITH RESPECT TO THIS PARA, IT IS FURTHER SUBMITTED THAT IN THE PRE - LAST PARA OF OUR LETTER DT.18.12.2009 ADDRESSED TO THE AO, WE HAD CATEGORICALLY REQUESTE D FOR FURTHER TIME TO FILE THE RE CONFIRMATION FROM ALL THE COMPANIES BUT HE HAD DENIED AND NOT ACCEDED TO OUR REQUEST PARTICULARLY WHEN 12 DAYS WERE LEFT TO FRAME & FINALIZE THE ASSESSMENT. THUS, HE (AO) COULD VERY WELL PROVIDE US TIME OF ATLEAST ONE WEAK , WHEREAS ALL THESE CONFIRMATION IN THE SHAPE OF AN AFFIDAVIT WAS SENT THOROUGH SPEED POST ON 23.12.2009 TO THE THEN AO (EVIDENCES FILED WITH THE PETITION U/S 46A BEFORE YOUR HONOUR) BUT HE HAS PURPORTEDLY NOT CONSIDERED THESE PAPERS/DOCUMENTS AND COMPLETE D THE REASSESSMENT AFTER MAKING THE ADDITIONS, ITSELF PROVES AND ESTABLISH THAT HE HAS NOT PROVIDED PROPER/SUFFICIENT OPPORTUNITY TO THE ASSESSES COMPANY AND HIS ACTION TANTAMOUNTS TO AGAINST THE PRINCIPLE OF NATURAL JUSTICE. AS SUCH, THE APPELLANT COMPANY WAS PREVENTED BY REASONABLE/SUFFICIENT ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 14 CAUSE FROM NOT FURNISHING THESE DOCUMENTS BEFORE COMPLETION OF THE ASSESSMENT PROCEEDINGS. FURTHER, IT IS SUBMITTED THAT RECORDS/BOOKS OF ACCOUNTS REQUIRED BY THE AO ARE BEING PRODUCED BEFORE HIM AS AND WHEN DESIRED BY HIM AND AS SUCH, WE DENY THIS CHARGE MADE BY THE AO. HE COULD HAVE ISSUED SHOW CAUSE IN CASE OF NON - COMPLIANCE/DEFY OF HIS ORDER/REQUEST BUT NO SUCH ACTION, HES BEEN TAKEN BY THE AO GOING TO PROVE THAT HIS COMMENTS AT PARA 2.4 IS FACTUATFY INCORRECT AN &YTITHOUT ANY SUBSTANCE. 5. WITH RESPECT TO YOUR PARA 3, WE HAD SUBMITTED A DETAILED REPLY TO THE AO ON 17.08.2010 IN RESPONSE TO HIS LETTER DT. 10.08.2010 AND SUBSEQUENT HEARING AS PER ORDER SHEET, COPY WHEREOF IS ENCLOSED HEREWITH FOR YOUR PERUSAL AND CONS IDERATION WITH THE REQUEST TO CONSIDER THE SAME HERE IN RESPECT TO ALL THE PARAS OF HIS REMAND REPORT INCLUDING PARA 3 ALSO. WE HAVE PRODUCED SHRI TARUN GOEL ON 20.10.2010 BEFORE HIM BUT HE HAS NOT RECORDED HIS STATEMENT, AND SIMPLY MADE GENERAL ENQUIRY F ROM HIM WITH THE ASSURANCE THAT HE WILL CALL HIM LATER ON. THUS, WE HAVE COMPLIED WITH HIS REQUESTS AND FULFILLED HIS REQUIREMENTS ALTHOUGH WE ARE NOT LEGALLY BOUND BY LAW. THE CASE LAWS CITED AND RELIED UPON IN THIS LETTER (DT. 17.08.2010) MAY ALSO BE CON SIDERED AND FOLLOWED, BEING IDENTICAL AND SQUARELY APPLIED TO THE FACTS OF THE PRESENT CASE. IT MAY BE SUBMITTED THAT SHRI TARUN GOEL IS READY TO APPEAR AGAIN IF DESIRED BY THE AUTHORITIES, WHICH MAY KINDLY BE NOTED. ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 15 IN VIEW OF OUR ABOVE SUBMISSIONS TOGETH ER WITH PAPERS/DOCUMENTS/CASE - LAWS RELIED UPON, IT IS HUMBLY PRAYED THAT ADDITIONAL EVIDENCES SUBMITTED AT THIS STAGE MAY KINDLY BE ADMITTED AS THE APPELLANT COMPANY WAS PREVENTED BY SUFFICIENT/REASONABLE CAUSE. 8. THE LD. CIT(A) AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE AO AND THE REJOINDER TO THE REMAND REPORT BY THE ASSESSEE , DELETED THE IMPUGNED ADDITION BY OBSERVING IN PARA 2.5 OF THE IMPUGNED ORDER AS UNDER: (I) I FIND THAT THE APPELLANT RECEIVED SHARE APPLICATION MONEY FROM THE FOLLOWING COMPANIES AND ALLOTTED THE SHARES TO THEM. IN SUPPORT, CERTAIN SUPPORTING EVIDENCES WERE ALSO FURNISHED. THE DETAIL OF SHARE CAPITAL AND EVIDENCES FURNISHED ARE AS UNDER - (A) CAMPRI FISCAL SERVICES (P) LTD. RS. 20,00,000/ - (B) COR PORATE FINLEASE (P) LTD. RS. 20,00,000/ - (C) SADGURU FINMAN (P) LTD. RS. 20,00,000/ - (D) TAURUS IRON & STEEL CO. (P) LTD. RS. 20,00,000/ - (E) TAJASVI INVESTMENT (P) LTD. RS. 30,00,000/ - TOTAL RS.1,10,00,000/ - S. NO. NAME ADDRESS AMOUNT MODE OF PAYMENT EVIDENCES FURNISHED BY THE APPELLANT 1. M/S CAMPRI FISCAL SERVICES (P) LTD. 13/34, WEA, 4 TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI - 110005. 20,00,000/ - RS.20,00,000/ - VIDE CHEQUE 856671, DATED 11.09.2006 HDFC BANK LTD; 79, OLD RAJINDRA NAGAR, NEW DELHI - 1 10060. 1. MASTER DATA AS PER ROC RECORDS. 2. NOTICE OF AGM FOR THE AY 2007 - 08. 3. COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE A LLOTTED. 4. A SET OF AUDITED FINAL A/C ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 16 OF THE CO., FOR THE AY 2007 - 08, COPY OF BALANCE SHEET REFLECTING THE INVESTMENT IN THE APPELLANT COMPANY. 5. COPY OF ACKNOWLEDGEMENT OF THE ITR FILED PAN - AACCC - 1903B IN WARD - 3(2), NEW DELHI. 6. COPY OF THE AFFIDAVIT FROM THE DIRECTOR OF THE COMPANY REGARDING THE INVESTMENT IN THE APPELLANT COMPANY. 2. M/S CORPORATE FINLEASE (P) LTD. 13/34, WEA, 4 TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI - 110005 20,00,000/ - RS.20,00,000/ - VIDE CHEQUE NO. 149491 DATED 03.10.2006 DRAWN ON ABN AMRO BANK, HANSALAYA, BARAKHAMBA ROAD, NEW DELHI 1. MASTER DATA AS PER ROC RECORDS. 2. NOTICE OF AGM FOR THE AY 2 007 - 08. 3. COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE ALLOTTED 4. A SET OF AUDITED FINAL A/C OF THE CO., FOR THE AY 2007 - 08, COPY OF BALANCE SHEET REFLECTING THE INVESTMENT IN THE APPELLANT COMPANY. 5. COPY OF ACKNOWLEDGEMENT OF THE ITR FILED PAN - AABCC - 9597N IN WARD - 3(4), NEW DELHI. 6. COPY OF THE AFFIDAVIT FROM THE ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 17 DIRECTOR OF THE COMPANY REGARDING THE INVESTMENT IN THE APPELLANT COMPANY. 3. M/S SADGURU FINMAN (P) LTD. 13/34, WEA, 4 TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI - 110005 20,00,000/ - RS.20,00,000/ - VIDE CHEQUE NO. 512798 DATED 10.10.2006 DRAWN ON ABN AMRO BANK, HANSALAYA, BARAKHAMBA ROAD, NEW DELHI 1. MASTER DATA AS PER ROC RECORDS. 2. NOTICE OF AGM FOR THE AY 2007 - 08. 3. COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE ALLOTTED 4. A SET OF AUDITED FINAL A/C OF THE CO., FOR THE AY 2007 - 08, COPY OF BALANCE SHE ET REFLECTING THE INVESTMENT IN THE APPELLANT COMPANY. 5. COPY OF ACKNOWLEDGEMENT OF THE ITR FILED PAN - AABCS - 4800J IN WARD - 7 ( 2 ), NEW DELHI. 6. COPY OF THE AFFIDAVIT FROM THE DIRECTOR OF THE COMPANY R EGARDING THE INVESTMENT IN THE APPELLANT COMPANY. 4. M/S TAURUS IRON & STEEL CO. (P) LTD. 13/34, WEA, 4 TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI - 110005 20,00,000/ - RS.20,00,000/ - VIDE CHEQUE NO. 1577808 DATE D 18.09.2006 DRAWN ON ABN AMRO BANK, HANSALAYA, BARAKHAMBA ROAD, NEW DELHI 1. MASTER DATA AS PER ROC RECORDS. 2. NOTICE OF AGM FOR THE AY 2007 - 08. 3. COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE ALLOTTED ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 18 4. A SET OF AUDIT ED FINAL A/C OF THE CO., FOR THE AY 2007 - 08, COPY OF BALANCE SHEET REFLECTING THE INVESTMENT IN THE APPELLANT COMPANY. 5. PAN - AABCT - 7170N IN WARD - 16(1), NEW DELHI. 6. COPY OF THE AFFIDAVIT FROM THE DIRECTOR OF THE COMPANY REGARDING THE INVESTMENT IN THE APPELLANT COMPANY. 5. M/S TAJASVI INVESTMENT (P) LTD. Q - 308, SOUTH CITY, GURGAON, HARYANA 3 0,00,000/ - RS.3 0,00,000/ - VIDE CHEQUE NO. 000138 DATED 13.09 .2006 FOR RS.20,00,000/ - AND VIDE C HEQUE NO. 000352 DATED 16.03.2007 FOR 10,00,000/ - , BOTH DRAWN ON KOTAK MAHINDRA BANK LTD., OLD RAJINDRA NAGAR, NEW DELHI 1. MASTER DATA AS PER ROC RECORDS. 2. NOTICE OF AGM FOR THE AY 2007 - 08. 3. COPY OF BANK STATEMENT, COPY OF SHARE CERTIFICATE ALLOTTED 4. A SET OF AUDITED FINAL A/C OF THE CO., FOR THE AY 2007 - 08, COPY OF BALANCE SHEET REFLECTING THE INVESTMENT IN THE APPELLANT COMPANY. 5. COPY OF ACKNOWLEDGEMENT OF THE ITR FILED PAN - AABCT - 3249G IN WARD - 1 , HISAR. 6. COPY OF THE AFFIDAVIT FROM THE DIRECTOR OF THE COMPANY REGARDING ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 19 THE INVESTMENT IN THE APPELLANT COMPANY. (II) ON GOING THROUGH THE CASE LAWS AS RELIED UPON BY ID. AR, I FIND THAT TH E BURDEN OF PROOF WITH REFERENCE TO SHARE CAPITAL, PARTICULARLY SHARE ALLOTTED IN FAVOUR OF COMPANIES ARE LESSER THAN THE ORDINARY CASH CREDIT. IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. 207 CTR 38, THE HON'BLE JURISDICTION AL HIGH COURT OBSERVED AS UNDER : - 'THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT THE PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST BE FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHE RE THE PREPONDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND COMPLEXITY OF THE ASSESSEE IT SHOULD NOT BE HARASSED BY THE REVENUE'S INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAILS PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATUTORY SHARE AP PLICATION DOCUMENTS. IN THE CASE OF PRIVATE PLACEMENT T HE LEGAL REGIME WOULD NOT BE THE SAME. A DELI CATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF SECTION 68 AND 69 OF THE INCOME TAX ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE; IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEG ITIMACY OF ANY SUBSCRIPTION HE I S EMPOWERED, NAY DUTY - BOUND, TO CARRY OUT ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 20 THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANN OT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY.' (III) I FIND THAT ALL THE SHARE APPLICANTS ARE PRIVATE LIMITED COMPANIES, WHICH ARE SEPARATE AND LEGAL ENTITIES. THEY ARE ASSESSED TO TAX BY DIFFERENT AOS. THE SHARE APPLICATION MONEY PASSED THROUGH THE BANKING CHANNELS. THE APPELLANT HAS PROVIDED THE CONFIRMATION LETTERS WITH SUPPORTING EVIDENCE, L IKE COPY OF ACKNOWLEDGMENT OF I .T. RETURN, PAN DETAIL, BANK STATEMENT, AFFIDAVIT OF DIRECTOR OF THE APPLICANT COMPANIES, AUDITED BALANCE SHEET OF THE APPLICANT COMPANIES. EVEN THE AFFIDAVIT FROM MR. TARUN GOEL STATING THAT NO ACCOMMODATION ENTRIES WERE GIVEN OR ARRANGED TO THE APPELLANT COMPANY AS ALLEGED BY THE AO. THE SHARES WERE ALSO ALLOTTED TO A LL APPLICANT COMPANIES. THE NECESSARY EVIDENCES WERE PROVIDED TO THE AO FOR HIS COMMENTS AND EXAMINATION. THE REMAND REPORT OF THE AO HAS BEEN RECEIVED AND NO ADVERSE COMMENTS HAVE BEEN OFFERED BY THE AO WITH REGARD TO THE DOCUMENTS/EVIDENCES FILED. THE AS SESSMENT ORDER WAS PASSED ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. THE AO HAS NOT BROUGHT ANY POSITIVE EVIDENCE ON RECORD TO ESTABLISH THAT THE SHARE APPLICATION MONEY WAS NOT GENUINE. IN VIEW OF THE AFORESAID FACTUAL POSITION, THERE I S NO REASON LEFT FOR ME TO SUSTAIN THE ADDITION MADE THE AO. (IV) CONSIDERING, THE JUDICIAL PRONOUNCEMENTS QUOTED BY THE APPELLANT, I FIND THAT THE COURTS ARE LIBERAL WITH REFERENCE TO SHARE CAPITAL APPLIED BY THE PRIVATE LIMITED COMPANIES THAN THE ORDINA RY CASH CREDITORS. IN ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 21 THE LIGHT OF JUDICIAL PRONOUNCEMENTS, I FIND THAT THE EVIDENCE FURNISHED BY THE APPELLANT IS SUFFICIENT TO PROVE THE SHARE CAPITAL PAID BY THE AFORESAID COMPANIES . AFTER CONSIDERING THE TOTALITY OF ALL THE FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRONOUNCEMENTS MADE BY JURISDICTIONAL DELHI HIGH COURT AND HON'BLE SUPREME COURT, I HOLD THAT THE ADDITION OF RS.1,10,00,000/ - MADE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE. HENCE, THE SAME IS DELETED. THE AO IS FREE, IF HE FEELS IT NECESSA RY TO TAKE THE SUITABLE ACTION ABOUT SHARES SUBSCRIBERS COMPANIES BY INTIMATING THE AO'S OF THOSE COMPANIES REGARDING INVESTMENTS MADE IN THE APPELLANT COMPANY. ACCORDINGLY, GROUND NO. 2, 3 AND 4 ARE ALLOWED. (RELIEF: RS.1,10,00,000 / - ) 9. NOW THE DEPART MENT IS IN APPEAL. THE LD. DR REITERATED THE OBSERVATIONS OF THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER DATED 24.12.2009. IT WAS FURTHER SUBMITTED THAT SINCE MR. TARUN GOYAL WAS NOT PRODUCED FOR CROSS - EXAMINATION OF HIS STATEMENT, THE MATTER CAN BE RESTORED TO THE AO. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: RAM RATAN VS CIT (1983) 142 ITR 618 (ALL.) CIT VS SOPHIA FINANCE LTD.(1994) 205 ITR 98 (DELHI) CIT VS ACTIVE TRADERS (P.) LTD. (1995) 214 ITR 583 (CALCUTTA) CIT VS NIVEDAN VANIJYA NIY OJAN LTD. (2003) 263 ITR 623 (CALCUTTA) ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 22 10. IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT ENTIRE ADDITION WAS MADE BY THE AO ON THE BASIS OF STATEMENT OF S OME MR. TARUN GOYAL , RECORDED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. HOWEVER, IT IS EVIDENT FROM THE STATEMENT OF MR. TARUN GOYAL (COPY OF WHICH IS PLACED AT PAGE NOS. 53 TO 57 OF THE ASSESSEE S PAPER BOOK) THAT HE HAD NOT TAKEN/STATED NAM E OF THE ASSESSEE COMPANY TOWARDS ALLEGATION ON ACCOUNT OF ACCOMMODATION ENTRIES IN THE SHAPE OF SHARE APPLICATION MONEY. IT WAS FURTHER STATED THAT NAME OF THE ALLEGED COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED BOGUS SHARE APPLICATION MONEY , ALSO DID N OT APPEAR IN THE STATEMENT OF MR. TARUN GOYAL. THEREFORE, IN THE ABSENCE OF ANY CATEGORICAL STATEMENT OR DIRECT NEXUS TO THE ADDITION ON ACCOUNT OF ACCOMMODATION ENTRY, THE ADDITION WAS NOT VALID. IT WAS FURTHER SUBMITTED THAT THE AO COMPLETELY DISREGARDED THE SUBMISSION AND DOCUMENTARY EVIDENCE S FILED BY THE ASSESSEE AND HAD RELIED UPON THE STATEMENT AND MATERIAL COLLECTED DURING THE COURSE OF SEARCH CONDUCTED ON MR. TARUN GOYAL WHICH HAD ALSO NOT BEEN CONFRONTED TO THE ASSESSEE AND NO OPPORTUNITY TO CROSS - EXAMINE THE STATEMENT OF MR. TARUN GOYAL RECORDED AT THE BACK OF THE ASSESSEE WAS PROVIDED. ON THE OTHER HAND, THE ASSESSEE FILED THE AFFIDAVIT OF MR. TARUN GOYAL (COPY OF WHICH IS PLACED AT PAGE NOS. 627 TO 629 OF THE ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 23 ASSESSEE S PAPER BOOK) WHEREBY MR. T ARUN GOYAL ADMITTED HAVING INVESTMENT ON ACCOUNT OF SHARE CAPITAL AND DENITED THE ENTIRE ALLEGATION MADE BY THE AO. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE PRODUCED MR. TARUN GOYAL ON 17.08.2010 BEFORE THE AO BUT HE DID NOT RECORD HIS STA TEMENT , IN SUPPORT OF THAT CONTENTION, COPY OF VISITORS PASS IN THE NAME OF MR. TARUN GOYAL ISSUED BY THE PRO INCOME TAX DEPARTMENT, CR BUILDING WAS FURNISHED WHICH IS P LACED AT PAGE NO. 648 OF THE ASSESSEE S PAPER BOOK. THE RELIANCE WAS PLACED ON THE FOLL OWING CASE LAWS: S. P. AGARWALLA ALIAS SUKHDEO PRASAD AGARWALLA VS ITO AND OTHR. (1983) 140 ITR 1010 (CAL.) UNITED ELECTRICAL CO. PVT. LTD. VS CIT (2002) 178 CTR 192 (DEL.) CIT VS VARDHMAN ESTATE LTD. (2007) 165 TAXMANN 473 (DEL.) PR. CIT VS DKB INFRASTRUC TURE PVT. LTD. IN ITA NO. 459/2016 ORDER DATED 27.07.2016 PR. CIT VS UMA SINGAL, BRIJBHUSHAN SINGAL IN ITA NOS. 689 TO 692, 694 & 744 OF 2015 ORDER DATED 05.10.2015 ITO VS M/S SOFTLINE CREATIONS PVT. LTD. IN ITA NO. 744/DEL/2012 ORDER DATED 10.02.2016 PR. C IT VS SOFTLINE CREATIONS PVT. LTD. IN ITA NO. 504/2016 ORDER DATED 31.08.2016 ANDAMAN TIMBER INDUSTRIES VS CCE IN CIVIL APPEAL NO. 4228 OF 2006 DATED 02.09.2015 PRAKASH CHAND NAHATA VS UNION OF INDIA 163 CTR 310 (SC) KISHAN CHAND CHELLARAM VS CIT 125 ITR 7 13 (SC) ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 24 ALOK AGGARWAL VS DCIT (2000) 67 TTJ 109 (DEL.) 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE AO MADE THE IMPUGNED ADDITION ON THE BASIS OF STATEMENT OF MR. TARUN GOYAL, RECOR DED BY THE INVESTIGATION WING BUT T HE OPPORTUNITY TO CROSS - EXAMINE MR. TARUN GOYAL WAS NOT PROVIDED TO THE ASSESSEE. ON THE CONTRARY, THE ASSESSEE FURNISHED AN AFFIDAVIT OBTAINED FROM MR. TARUN GOYAL (COPY O F WHICH IS PLACED AT PAGE NOS. 627 TO 629 OF THE ASSESSEE S PAPER BOOK) WHEREIN MR. TARUN GOYAL ADMITTED HAVING INVESTMENT ON ACCOUNT OF SHARE CAPITAL AND DENIED THE ALLEGATION MADE BY THE AO. THE CONTENTS OF THE SAID AFFIDAVIT ARE NOT REBUTTED BY BRINGING ANY COGENT MATERIAL ON RECORD. IN THE PRESENT CASE, THE ASSESSEE FURNISHED CONFIRMATION LETTER FROM THE INVESTOR S , COPIES OF THEIR PAN AND INCOME TAX RETURNS , COPIES OF SHARE APPLICATION FORMS WITH COMPLETE NAME S AND ADDRESS ES OF THE SHARE APPLICANTS. THE REFORE, THE ASSESSEE DISCHARGED THE ONUS CAST UPON IT. THE ASSESSEE ESTABLISHED THE IDENTITY OF THE SHARE APPLICANT BY FURNISHING COPY OF THEIR PAN AND INCOME TAX RETURNS HAVING NAME S AND ADDRESS ES . THE GENUINENESS OF THE TRANSACTION WAS ES TABLISHED AS THE TRANSACTION ROU TED THROUGH BANKING CHANNEL. MOREOVER, NO EVIDENCE HAD BEEN BROUGHT ON ITA NO. 1176 /DEL /201 1 PRAKASH COLOUR (P) LTD. 25 RECORD BY THE AO TO SUBSTANTIATE THAT THE SHARE APPLICATION MONEY EMANATED FROM THE COFFERS OF THE ASSESSEE, THE SHARE APPLICATION MONEY WAS RE CEIVED THROUGH BANKING CHA NNELS, T HE AO HAD NOT POINTED OUT ANY DEFECT OR ERROR IN THE EVIDENCE S FURNISHED BY THE ASSESSEE. WE, THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT(A) AND AS SUCH DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPAR TMENT. 1 2 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON O UNCED IN THE COURT ON 16 /12 /2016 ) SD/ - SD/ - ( BEENA PILLAI ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 16 /12 /2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR