INCOME TAX OFFICER, WARD-1, BEAWAR V. M/S SHEPHALI HOTELS & RESORTS PVT. LTD., BEAWAR

ITA 1224/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3507 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MEHLA J
• Assessee Lawyers: PRAKUL KHURANA CA DHK
• Keywords: Bogus Share capital; Search and seizure; Opportunity of cross examination; Reasonable cause; Accommodation entries; Onus to prove; Retraction; Reason to believe; Reassessment proceedings
• Section: 142(1); 133(6); 192; 72; 13; 22; 147; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1224/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE ITO WARD- 1 BEAWAR CUKE VS. M/S. SHEPHALI HOTELS & RESORTS PVT. LTD 14-A, ASHIRWAD BHAWAN CHAMPA NAGAR, BEAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAMCS 9146 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.K. MEHLA, JCIT-DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI PRAKUL KHURANA, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 21/02/2020 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 05 /03/2020 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 01-08-2018 FOR THE ASSESSMENT YEAR 2010-11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A), AJMER HAS ERRED IN:- 1. DELETING ADDITION OF RS. 21,5,00,000/- MADE ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY RECEIVED ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 2 FROM VARIOUS PAPER COMPANIES FOR WHICH SPECIFIC INFORMATION AS RECEIVED FROM THE INVESTIGATION WING . 1(A) NOT APPRECIATING THE FACT THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THESE ARE PAPER COMPANIES LEADS TO THE CONCLUSION / DESTINATI ON, AS THE INFORMATION CALLED FOR U/S 133(6) OF THE I. T. ACT, 1961 AT THE KNOWN ADDRESSES OF THESE COMPANIES RETURNED BACK UNSERVED WITH REMARKS NOT KNOWN. 1(B) NOT APPRECIATING THE FACT THAT THE IDENTITY & CREDITWORTHINESS OF THESE PAPER COMPANIES AND GENUINENESS OF THE TRANSACTION IS NOT PROVED IN ABSENCE OF ANY REPLY RECEIVED FROM THESE COMPANIES ON THE INFORMATION CALLED U/S 133(6) BY THE AO. 2. NOT APPRECIATING THE FINDING OF THE AO THAT ASSESSEE COMPANY ISSUED SHARES AT PAR TO SHRUTI AGARWAL, KANIKA AGARWAL AND KAPIL AGARWAL WHEREAS SHARES TO THE PAPER COMPANIES WERE ISSUED AT PREMIU M OF RS. 490/- PER SHARE WITHOUT ANY JUSTIFICATION. 3. DELETING ADDITION OF RS. 2,15,00,000/- ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY RECEIVED FROM VARIOUS PAPER COMPANIES DISREGARDING THE DECISION RENDERED BY THE HON'BLE JURISDICTIONA HIGH COURT OF RAJASTHAN IN THE CASE OF RAMESHWAR LAL MAL I VS CIT [2012] 256 ITR 536 (RAJ) WHILE PLACING RELIANCE ON UNCONNECTED CASE ANDMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRAL EXCISE. 2.1 THE ASSESSEE IS A COMPANY AND ENGAGED IN THE BU SINESS OF HOTELS & RESORTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30-03-2013 DECLARING TOTAL INCOME OF RS. 88,350/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 3 THE AO ISSUED NOTICE U/S 142(1) OF THE ACT ALONGWIT H QUESTIONNAIRE CALLING FOR INFORMATION / DETAILS / DOCUMENTS FROM THE ASSESSEE REGARDING THE SHARE APPLICATIONS RECEIVED BY THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED REQUISITE DETAILS AS WELL AS CONFIRMATIONS OF THE INVESTORS TO WHOM SHARES WERE ALLOTTED BY THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE HAS ISSUED 1.00 LAC SHARES OF FACE VALUE OF RS. 10/- AT PAR TO EACH OF THE PROMOTERS OF THE ASSESSEE COMPANY NAMELY MS.SHRUTI AGARWAL, MS.KANIKA AGARWAL AND SHRI KAPIL AGARWAL WHEREAS OT HER SHARES WERE ISSUED TO OUTSIDE ENTITIES OF PERSONS AT A PREMIUM OF RS. 490/- PER SHARE. AFTER INITIAL DETAILS FILED BY THE ASSESSEE, THE AO THEN REFERRED TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, M UMBAI REGARDING THE SEARCH AND SEIZURE ACTION AND STATEMENT OF SHRI PRA VEEN KUMAR JAIN RECORDED ON 1-10-2013 AND AGAIN ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE FILED ALL THE D ETAILS WHICH INCLUDES BANK STATEMENTS OF SHARE APPLICANTS, RESOLUTION PAS SED BY THE ASSESSEE COMPANY, ALLOTMENT OF SHARES ETC. THE AO DID NOT AC CEPT THE EXPLANATION OF THE ASSESSEE AS WELL AS THE DOCUMENTS FILED BY T HE ASSESSEE IN SUPPORT OF THE GENUINENESS OF THE SHARE CAPITAL RECEIVED FR OM THE COMPANIES OTHER THAN THE PROMOTERS. THE AO FINALLY DISALLOWED THE C LAIM OF SHARE CAPITAL ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 4 RECEIVED FROM THREE COMPANIES NAMELY M/S. DUKE BUSI NESS PRIVATE LTD. , NAKSHATRA PVT. LTD. AND OLIVE OVERSEAS PVT. LTD AND TREATED THE SAME AS BOGUS ENTRIES RECEIVED BY THE ASSESSEE. CONSEQUENTL Y, THE AO MADE AN ADDITION OF RS. 2.15 CRORES U/S 68 OF THE I.T. ACT, 1961. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT( A) AND SUBMITTED THE DETAILED SUBMISSIONS GIVING THE REFERENCE TO VARIOU S DOCUMENTARY EVIDENCES AS WELL AS JUDGEMENTS ON THE ISSUE. THE L D. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO ON THE GROUND THAT THE AO HAS MADE THE ADDITION RELYING ON THE STATEMENT OF SHRI PRAVEEN K UMAR JAIN RECORDED DURING THE COURSE OF SEARCH AND SEIZURE ACTION WHIC H WAS SUBSEQUENTLY RETRACTED BY SHRI PRAVEEN KUMAR JAIN. THEREFORE, TH E ADDITION IS MADE SOLELY ON THE BASIS OF STATEMENT OF THIRD PARTY REC ORDED BEHIND THE BACK OF THE ASSESSEE WHICH CANNOT BE CONSIDERED AS A VALID EVIDENCE WITHOUT GIVING THE OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THE LD. CIT(A) HAS ALSO GIVEN THE REFERENCE OF VARIOUS DOCU MENTS FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM WHICH INCLUDES CON FIRMATIONS OF INVESTMENT MADE BY THESE COMPANIES, COPY OF SHARE A PPLICATION FORMS, BANK STATEMENTS OF THE SHARE APPLICANTS SHOWING REM ITTANCES OF THE AMOUNT, COPY OF BOARD RESOLUTION OF THE SHARE APPLI CANT AUTHORIZING THEIR ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 5 DIRECTORS TO MAKE THE INVESTMENT, COPY OF INCOME TA X RETURNS OF SHARE APPLICANT COMPANIES AND COPY OF ALLOTMENT LETTER IS SUED BY THE ASSESSEE TO EACH SHARE APPLICANTS. AGGRIEVED BY THE IMPUGNED OR DER OF THE LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL. 2.2 BEFORE US, THE LD. DR SUBMITTED THAT THE AO HA S GIVEN A FINDING THAT THESE COMPANIES ARE CONTROLLED AND MANAGED BY SHRI PRAVEEN KUMAR JAIN, GROUP AND SHRI PRAVEEN KUMAR JAIN IN HIS STAT EMENT RECORDED BY THE INVESTIGATION WING, MUMBAI HAS ADMITTED HIS INDULGE NCE IN PROVIDING THE BOGUS ACCOMMODATION ENTRIES INCLUDING THE SHARE APP LICATION MONEY. THE LD. DR FURTHER CONTENDED THAT FINANCIAL POSITION OF THE ASSESSEE COMPANY AS ON THE DATE OF ISSUE OF SHARES DID NOT CARRY SUC H A HUGE PREMIUM OF RS. 490/- PER SHARE. THE LD. DR THUS CONTENDED THAT ON ONE HAND THE ASSESSEE ISSUED THE SHARES AT PAR TO THE PROMOTERS WHEREAS A T THE SAME TIME THE SHARE WERE ISSUED TO THESE THREE COMPANIES AT A PR EMIUM OF RS. 490/- PER SHARE. THE LD. DR FURTHER CONTENDED THAT NEITHER TH E ASSESSEE'S FINANCIAL CONDITIONS SUPPORT THE PREMIUM OF SUCH A HUGE AMOU NT NOR THE APPLICANT COMPANIES ARE HAVING ANY REAL BUSINESS TO SUPPORT T HEIR CREDITWORTHINESS. THE AO ISSUED NOTICE U/S 133(6) WHICH WAS RECEIVED BACK UNSRVED WITH THE REMARKS NOT KNOWN. THIS CLEARLY SHOWS THAT THESE COMPANIES ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 6 WERE NOT IN EXISTENCE BUT ONLY PAPER COMPANIES. THE LD. DR RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT RETRACTION OF S HRI PRAVEEN KUMAR JAIN CANNOT BE ACCEPTED AS IT WAS MADE WITHOUT GIVING S UPPORTING MATERIAL THAT RETRACTION IS CORRECT STATEMENT AND EARLIER S TATEMENT WAS NOT A CORRECT STATEMENT. THE LD. DR FURTHER CONTENDED THAT LD. CI T(A) HAS HELD THAT THE STATEMENT CANNOT BE RELIED ON WITHOUT GIVING OPPORT UNITY OF CROSS EXAMINATION TO THE ASSESSEE DISREGARDING THE DECISI ON OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMESHWAR LAL MALI VS CIT , 256 ITR 536 (RAJ). 2.3 ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SU BMITTED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS CASTED U/S 68 OF THE ACT BY PRODUCING ALL THE DOCUMENTARY EVIDENCES WHICH PROVES THE IDENTITY OF THE SHARE APPLICANT COMPANIES, CREDITWORTHINESS OF THE COMPAN IES AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. THE LD.AR FURTHER CONTENDED THAT ASSESSEE FURNISHED THE CONFIRMATIONS FROM THESE COM PANIES ALONGWITH RESOLUTION AUTHORIZING THE DIRECTORS TO INVEST IN T HE SHARES OF THE ASSESSEE COMPANY. FURTHER THE INCOME TAX RETURNS OF ALL THES E COMPANIES WERE PRODUCED WHICH PROVES THE IDENTITY AND EXISTENCE OF THESE COMPANIES. AS REGARDS THE GENUINENESS OF THE TRANSACTIONS, THE AS SESSEE PRODUCED ALL THE ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 7 DOCUMENTARY EVIDENCES OF ALLOTMENT OF SHARES WHICH INCLUDES SHARE APPLICATIONS, RESOLUTION COPY, ALLOTMENT OF SHARES, RECEIPT OF SHARE APPLICATION MONEY THROUGH BANKING CHANNEL, FINANCIA L STATEMENTS OF THESE COMPANIES SHOWING THE CREDITWORTHINESS. THUS THE ON US STANDS DISCHARGED WHEN THE ASSESSEE PRODUCED ALL THE RELEVANT DOCUMEN TARY EVIDENCES INCLUDING THE CONFIRMATION FROM THESE SHARE APPLICA NTS. THE LD.AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAS IS SUED THE SHARES AT A PREMIUM OF RS. 490/- PER SHARE TO SIX COMPANIES OU T OF WHICH THE AO HAD DOUBTED THE SHARE APPLICATION MONEY RECEIVED FR OM THREE COMPANIES ONLY AND SHARE APPLICATION MONEY RECEIVED FROM OTHE R THREE COMPANIES WERE ACCEPTED BY THE AO AS GENUINE. ONCE THE SHARE APPLICATION MONEY RECEIVED FROM OTHER THREE COMPANIES IS ACCEPTED BY THE AO THEN THE SAME CANNOT BE DISPUTED IN RESPECT OF OTHER THREE COMPAN IES WHEN THERE IS NO DIFFERENCE IN THE PRICE AT WHICH THE SHARES WERE IS SUED TO THESE SIX COMPANIES. THE LD.AR OF THE ASSESSEE THUS SUBMITTED THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY ITAT JODHPUR BENCH IN THE CA SE OF ITO VS DIVYA FINLEASE PVT.LTD VIDE ORDER DATED 24-01-2019 IN ITA NO.424/JODH/2016 FOR THE ASSESSMENT YEAR 2012-13 AND POINTED OUT THA T THESE THREE SHARE APPLICANT COMPANIES WHICH INVESTED IN THE SHARES OF THE ASSESSEE ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 8 COMPANY WERE ALSO THE SHARE APPLICANTS IN THE CASE OF DIVYA FINLEASE PVT.LTD. THE TRIBUNAL HAS GIVEN THE FINDINGS REGARD ING THE GENUINENESS OF THE TRANSACTIONS OF SHARE APPLICATION MONEY AND ALL OTMENT OF SHARES TO THESE THREE COMPANIES. THEREFORE, THIS ISSUE IS COV ERED BY THE DECISION OF ITAT JODHPUR BENCH IN THE CASE OF DIVYA FINLEASE PV T.LTD. (SUPRA). THE LD.AR OF THE ASSESSEE RELIED ON THE DECISION OF HON 'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF PR. CIT (1), INDORE VS CH AIN HOUSE INTERNATIONAL PVT. LTD (2018( 98 TAXMANN.COM 47 (M. P.) AND SUBMITTED THAT HON'BLE HIGH COURT HAS DISCUSSED THIS ISSUED E XHAUSTIVELY AND HELD THAT ISSUING THE SHARES AT A PREMIUM WAS A COMMERCI AL DECISION AND PREROGATIVE OF THE DIRECTORS OF A COMPANY TO DECID E THE PREMIUM AMOUNT. IT IS THE WISDOM OF THE SHAREHOLDERS WHETHE R THEY WANT TO SUBSCRIBE THE SHARES AT SUCH A PREMIUM OR NOT. THE REVENUE SHOULD NOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMAN OR IN THE POSITION OF BOARD OF DIRECTORS TO ASSUME ROLE OF AS CERTAINING HOW MUCH IS A REASONABLE PREMIUM HAVING REGARD TO THE CIRCUMSTA NCES OF CASE. THE LD.AR OF THE ASSESSEE RELIED ON THE JUDGMENT OF HON 'BLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSHIKA CONSULTANTS (P) LTD. (2015) 62 TAXMANN.COM 192 (DEL). THE LD.AR OF THE ASSESSEE TH EN REFEREED TO THE ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 9 DECISION OF THIS TRIBUNAL DATED 24-04-2018 IN THE C ASE OF SHIVALIK KINEMA PVT. LTD VS DCIT (ITA NO.400/JP/2016 FOR THE ASSESS MENT YEAR 20101- 11) AND SUBMITTED THAT THE ADDITION MADE BY THE AO ON THE GROUND OF ACCOMMODATION ENTRIES ALLEGEDLY MADE FROM SHRI PRAV EEN KUMAR JAIN GROUP WAS DELETED BY THIS TRIBUNAL. SIMILARLY IN TH E CASE OF CHOICE BUILDESTATE VS ITO, THIS TRIBUNAL VIDE ORDER DATED 28-03-2018 IN ITA NO. 431/JP/2016 HAS AGAIN CONSIDERED AND DECIDED THIS I SSUE. THUS THE LD.AR OF THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE HA S DISCHARGED ITS ONUS BY PRODUCING ALL THE DOCUMENTARY EVIDENCES THEN IN THE ABSENCE OF ANY CONTRARY MATERIAL, THE ADDITION MADE BY THE AO IS N OT JUSTIFIED AND THE SAME MAY BE DELETED. THE LD.AR OF THE ASSESSEE SUPP ORTED THE ORDER OF THE LD. CIT(A). 2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS ISS UED THE SHARES TO PROMOTERS AS WELL AS OTHER PERSONS. THE DETAILS OF THE PERSONS ARE AS UNDER:- 1. SHRUTI AGARWAL 2. KANKIA AGARWAL 3. KAPIL AGARWAL 4. ANKIT AGARWAL 5. M/S. DUKE BUSINESS PVT. LTD. 6. M/S. STOCK BROKING PVT.LTD. ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 10 7. M/S. GUPTESHWAR FINLEASE PVT.LTD. 8. M/S. NAKSHATRA BUSINESS PVT. LTD. 9. M/S. ASSHAVARA SHARES & SECURITIES PVT. LTD. 10. M/S. OLIVE OVERSEAS PVT. LTD. THIS FACTUAL POSITION HAS NOT BEEN DISPUTED BY THE AO RATHER IT IS PRODUCED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS ISSUED THE SHARES TO 10 PERSONS INCLUDING 04 PROMOTERS WHO ARE INDIVIDUAL AND REMAINING 06 ARE COMPANIES. OUT OF THESE 06 COMPANI ES TO WHOM SHARES WERE ISSUED AT PREMIUM OF RS. 490/- PER SHARE, THE AO QUESTIONED THE GENUINENESS OF THE TRANSACTIONS IN RESPECT OF 03 C OMPANIES NAMELY (1) M/S. DUKE BUSINESS PVT. LTD (2) M/S. NAKSHATRA BUSI NESS PVT. LTD AND (3) M/S. OLIVE OVERSEAS PVT. LTD. THE REASON FOR DO UBTING THESE TRANSACTIONS OF SHARE CAPITAL RECEIVED FROM THESE 0 3 COMPANIES WAS THAT THESE ENTITIES ARE CONTROLLED BY SHRI PRAVEEN KUMAR JAIN WHO WAS FOUND TO BE A BOGUS ENTRY PROVIDER. THE AO HAS MADE THE R EFERENCE TO THE INFORMATION RECEIVED FROM INVESTIGATION WING, MUMBA I WHEREIN THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN WAS RECORDED. EXCEPT THE SAID STATEMENT OF SHRI PRAVEEN KUMAR JAIN, NO OTHER MATE RIAL OR RECORD WAS FOUND WITH THE AO TO SHOW THAT THE TRANSACTION OF S HARE APPLICATIONS AND ALLOTMENT OF SHARES TO THESE 03 COMPANIES ARE BOGUS , THOUGH THE AO HAS STATED IN HIS ASSESSMENT ORDER THAT THESE 03 COMPAN IES WERE ASKED TO ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 11 FURNISH THE INFORMATION BY ISSUING NOTICE U/S 133(6 ) OF THE ACT. HOWEVER, THE AO HAS NOT GIVEN DETAILS AS TO WHEN SUCH NOTICE WAS ISSUED. ONLY A PASSING REFERENCE HAS BEEN MADE IN RESPECT OF THE N OTICE ISSUED U/S 133(6) OF THE ACT. WITHOUT GOING INTO THE CONTROVERSY OF I SSUANCE OF NOTICE U/S 133(6) OF THE ACT, WE NOTE THAT THE AO HAS ALLEGEDL Y CALLED FOR THE INFORMATION IN THE SAID LETTER/NOTICE ISSUED U/S 13 3(6) AS UNDER:- 1. COPY OF LEDGER A/C OF M/S. SHEFALI HOTELS & RE SORTS PVT. LTD FOR THE F.Y. 2011-12 RELEVANT TO A.Y. 2012 -13 AS APPEARING IN YOUR BOOKS OF ACCOUNTS. 2. COPY OF INCOME TAX RETURN FILED BY YOU FOR THE A .Y. 2012-13 ALONGWITH COPY OF BALANCE SHEET. 3. COPY OF YOUR BANK STATEMENT FOR THE F.Y. 2011-12 . THUS IT IS CLEAR THAT THE AO CALLED FOR THE INFORMA TION FROM THESE COMPANIES WHICH INCLUDE THE COPY OF LEDGER ACCOUNT, COPY OF INCOME TAX RETURNS FILED FOR THE ASSESSMENT YEAR 2012-13 ALONG WITH COPY OF BALANCE SHEET AND COPY OF BANK STATEMENT FOR THE F.Y. 2011- 12. IT IS PERTINENT TO NOTE THAT ALL THESE DOCUMENTS WERE OTHERWISE FILED BY THE ASSESSEE BEFORE THE AO ALONGWITH CONFIRMATIONS OF THESE INVESTOR CO MPANIES. THUS THE REQUISITE INFORMATION WAS ALREADY PRODUCED BEFORE T HE AO, HOWEVER, THE ALLEGED LETTER/ NOTICE U/S 133(6) WAS RECEIVED BACK UNSERVED. THE ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 12 INFORMATION FILED BY THE ASSESSEE AS REQUIRED BY TH E AO IS INCOMPLIANCE OF THE SAID LETTER/NOTICE. MOREOVER, THE AO HAS NOT GIVEN THE FINDING ABOUT THE GENUINENESS OF THESE DOCUMENTS FILED BY T HE ASSESSEE WHICH MEANS THAT THE AO HAS NOT FOUND ANY DEFECT IN THE D OCUMENTS FILED BY THE ASSESSEE. THE ASSESSEE HAS CLEARLY FILED ALL THE DO CUMENTS WHICH INCLUDE SHARE APPLICATION MONEY, RESOLUTION OF SHARE APPLIC ANT COMPANIES WHEREBY THE DIRECTORS WERE AUTHORIZED TO MAKE INVES TMENT IN THE SHARES OF THE ASSESSEE COMPANY, BANK STATEMENTS SHOWING PA YMENT THROUGH BANKING CHANNEL AND RETURN OF INCOME FILED BY THOSE COMPANIES. ONCE THESE DOCUMENTS WERE FILED THEN THE IDENTITY OF THE SHARE APPLICANT COMPANIES STAND PROVED. THE ASSESSEE ALSO PRODUCED THE BANK STATEMENTS AND THE AO HAS NOT EVEN POINTED OUT THAT THE FUNDS TRANSFERRED FROM THE BANK ACCOUNT OF THESE COMPANIES ARE ACTUAL MONEY OF THE ASSESSEE ROUTED THROUGH THESE COMPANIES. THEREFORE, THE CREDITWORTH INESS AND GENUINENESS OF THE TRANSACTIONS IS ALSO PROVED BY P RODUCING ALL THESE DOCUMENTARY EVIDENCES. FURTHER OUT OF 06 COMPANIES TO WHOM THE SHARES WERE ISSUED AT A PREMIUM OF RS. 490/- PER SHARE, TH E AO HAS ACCEPTED THE TRANSACTION OF RECEIPT OF SHARE PREMIUM FROM REMAIN ING 03 COMPANIES WHICH ITSELF DEMOLISHES THE CASE OF THE AO THAT THE ASSESSEE COMPANY ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 13 DOES NOT CARRY THE WORTH OF SUCH A PREMIUM OF RS. 4 90/- PER SHARE. ONCE THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS BY FIL ING THE DOCUMENTARY EVIDENCES, PROVING THE IDENTITY AND CREDITWORTHINES S OF THESE COMPANIES AS WELL AS TRANSACTIONS THEN THE BURDEN IS SHIFTED ON THE AO TO BRING THE MATERIAL ON RECORD TO CONTROVERT THE DOCUMENTARY EV IDENCES FILED BY THE ASSESSEE. IN THE ABSENCE OF ANY SUCH MATERIAL BROUG HT ON RECORD BY THE AO TO DISPROVE OR CONTROVERT THE DOCUMENTARY EVIDEN CES FILED BY THE ASSESSEE, THE MERE STATEMENT OF SHRI PRAVEEN KUMAR JAIN, RECORDED BY INVESTIGATION WING, MUMBAI AND THAT TOO WAS SUBSEQU ENTLY RETRACTED CANNOT BE A BASIS FOR MAKING THE ADDITION BY TREATI NG THE TRANSACTION AS BOGUS ACCOMMODATION ENTRY. THE REVENUE HAS NOT DISP UTED THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE WHICH H AVE BEEN MENTIONED BY THE LD. CIT(A) IN PARA 4.5 AS UNDER:- 4.5 THE APPELLANT HAS FURNISHED, IN RESPECT OF EA CH SHARE APPLICANT FOLLOWING DOCUMENTARY EVIDENCES TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PERSONS FROM W HOM THE APPELLANT HAS RECEIVED SHARE APPLICATION MONEY AND GENUINENESS OF THE TRANSACTIONS:- ` A. CONFIRMATION OF THE DIRECTORS OF THE APPLICANT COMPANIES CONFIRMING THE INVESTMENT MADE BY THEIR COMPANIES INTO THE EQUITY SHARES OF THE APPELLANT I N THE A.Y. 2012-13 ALONGWITH RELEVANT DETAILS. ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 14 B. COPY OF SHARE APPLICATION FORM DULY SIGNED BY T HE APPLICANT COMPANIES RECEIVED BY THE APPELLANT IN TH E A.Y. 2012-13 ALONGWITH THEIR COVERING LETTER. C. COPY OF THE RELEVANT PERIOD OF THE BANK STATEME NT OF THE APPELLANT COMPANIES SHOWING THE AMOUNT OF CHEQUE/RTGS REMITTED TO THE APPELLANT TOWARDS SHARE APPLICATION MONEY. D. COPY OF THE BOARD RESOLUTION OF THE APPLICANT COMPANIES AUTHORIZING SPECIFIC DIRECTOR OF EACH OF SUCH APPLICANT COMPANY TO MAKE AN INVESTMENT INTO THE EQ UITY SHARES OF THE APPELLANT OF THE SPECIFIC AMOUNT IN T HE A.Y. 2012-13. E. COPY OF INCOME TAX RETURN ACKNOWLEDGEMENT OF EA CH OF THE APPELLANT COMPANIES. F. COPY OF SHARE ALLOTMENT LETTER ISSUED BY THE AP PELLANT TO EACH OF SUCH APPLICANT COMPANIES. THUS ALL THESE DOCUMENTARY EVIDENCES FILED BY THE A SSESSEE CLEARLY DISCHARGES THE ONUS CASTED ON THE ASSESSEE COMPANY AND THEREFORE, IN THE ABSENCE OF ANY CONTRARY MATERIAL OR FINDINGS TO POI NT OUT ANY DEFECT IN THESE DOCUMENTARY EVIDENCES, THE ADDITION MADE BY T HE AO IS NOT JUSTIFIED. THE ITAT JODHPUR BENCH IN THE CASE OF I TO VS DIVYA FINLEASE PVT. LTD (SUPRA) HAS CONSIDERED THE ISSUE AT A PREM IUM OF RS. 490/- PER SHARE TO ALL THESE 06 NON-PROMOTER COMPANIES WHICH INCLUDES 03 COMPANIES FOR WHICH THE AO HAS MADE THE ADDITION IN THE CASE OF THE ASSESSEE BEFORE US. THE ITAT JODHPUR BENCH IN THE C ASE OF ITO VS DIVYA ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 15 FINLEASE PVT. LTD (SUPRA) AFTER CONSIDERING THE FAC TS AND DOCUMENTARY EVIDENCES AS WELL AS VARIOUS PRECEDENTS HAS HELD IN PARA 9 AS UNDER:- 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEME NTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE O RDERS AS WELL AS CITED BY LD.AR AND LD. DR DURING THE COURSE OF HEARING BEFORE US IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. FROM THE RECORD, WE FOUND THAT ADDITION MADE BY AO ON ACCOUNT OF SHARE APPLICATION WAS DELETED BY CIT(A) AFTER RECORDING A FINDING TO THE EFFECT THAT THE ASSESSEE HAS FURNISHED CONFIRMATIONS OF SHAREHOLDERS CONFIRMING GIVING OF SHARE PREMIUM, FURNISHED BANK STATEMENTS OF THE SHA RE APPLICANTS FROM WHICH THE SHARE APPLICATION MONEY H AS BEEN PAID, FURNISHED THE INCOME TAX RETURNS OF THE SHARE APPLICANTS. THE CIT (A) FURTHER OBSERVED THAT WITH OUT CONTROVERTING THESE DOCUMENTARY EVIDENCES FURNISHED BY THE ASSESSEE, AO HAS MERELY ON SUSPICION TREATED THE SH ARE APPLICATION MONEY AS UNEXPLAINED. THE CIT (A) HAS A LSO FOUND THAT THE STATEMENT ON THE BASIS OF WHICH AO M ADE ADDITION HAVE ALREADY BEEN RETRACTED AND THIS FACT HAS ALREADY BEEN RECORDED BY AO IN HIS ASSESSMENT ORDER. THEREA FTER, CONSIDERING VARIOUS DOCUMENTARY EVIDENCES FILED BEF ORE AO, THE CIT (A) APPLIED PROPOSITION LAID DOWN IN THE V ARIOUS JUDICIAL PRONOUNCEMENTS AS REFERRED IN HIS ORDER TO THE FACTS OF THE CASE AND REACHED TO THE CONCLUSION THAT AO W AS NOT JUSTIFIED IN TREATING THE SHARE APPLICATION MONEY A S UNEXPLAINED. THE DETAILED FINDING SO RECORDED BY CI T (A) ARE AS PER MATERIAL ON RECORD WHICH DO NOT REQUIRE ANY INTERFERENCE ON OUR PART. ACCORDINGLY, WE DO NOT FI ND ANY REASON TO INTERFERE IN THE ORDER OF CIT (A) FOR DEL ETING THE ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY . ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 16 SIMILARLY IN THE CASE OF SHIVALIK KINEMA PVT LTD VS DCIT (SUPRA), ITAT JAIPUR BENCH HAS CONSIDERED THIS ISSUE AT PARAS 18 TO 24 AS UNDER:- 18. IT WAS FURTHER SUBMITTED THAT IN RESPECT OF T HE ABOVE THREE COMPANIES, THE ASSESSEE HAS FURNISHED THE FOLLOWING DOCUMENTS TO ESTABLISH THE IDENTITY, GENUINENESS OF THE TRANSACTION AND THE CR EDITWORTHINESS OF THESE ENTITIES: NAME, ADDRESS AND PAN NO. SHARES APPLIED/ALLOTTED SHARE CAPITAL EVIDENCES PRODUCED BEFORE THE AO M/S ZENITH AUTOMOTIVE P. LTD. 106, PALCO HOUSE, T-10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI-110008 PAN NO. AAACZ0283B 20,000 RS. 10,00,000/- COPY OF SHARE APPLICATION MONEY, CONFIRMATION, BANK STATEMENT, BALANCE SHEET, ROC RETURN. M/S AASHEESH CAP. SERVICES P. LTD. ROYAL PALACE, G-55, LAXMI MARG, VIKAS NAGAR, NEW DELHI- 110092 PAN NO. AAACA6633N 20,000 RS. 10,00,000/- COPY OF SHARE APPLICATION MONEY, CONFIRMATION, BANK STATEMENT BALANCE SHEET, ROC RETURN. M/S ULTIMATE IT SOLUTION U-23, ARVIND NAGAR, GHONDA, DELHI-53, PAN NO. AAACU9005G 20,000 RS. 10,00,000/- COPY OF SHARE APPLICATION MONEY, CONFIRMATION, BANK STATEMENT, BALANCE SHEET, ROC RETURN. FROM THE ABOVE TABLE IT CAN BE NOTED THAT THE ABOVE COMPANIES ARE ASSESSED TO TAX, THEIR PAN NO. IS PROVIDED, THE TRANSACTION IS THROUGH BANKING CHANNEL AND THE SHARES HAS BEEN ALLOTTED TO THEM AS IS EVIDENT FROM FORM 2 RETURN OF ALLOTMENT FILED WITH ROC. FROM THE BALANCE SHEET OF THESE COMPANIES, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION CAN BE PERCEIVED IN AS ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 17 MUCH AS THEY HAVE SUBSTANTIAL SHAREHOLDERS FUNDS AN D THE NAME OF THE ASSESSEE COMPANY IS APPEARING IN THE DETAIL OF INVESTMENT MA DE BY THEM. THUS, THE ASSESSEE HAS DISCHARGED THE ONUS WHICH LAY UPON IT U/S 68. THEREFORE, SOLELY ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIG ATION WING, DELHI, THE SHARE CAPITAL RECEIVED BY THE ASSESSEE FROM THESE COMPANI ES CANNOT BE PRESUMED TO BE ACCOMMODATION ENTRIES. 19. THE AO OBSERVED THAT DIRECTOR OF THE ASSESSEE COMPANY, SH. GHANSHYAM AGARWAL WAS NOT PRODUCED. IN THIS CONNECT ION, IT WAS SUBMITTED THAT THE DIRECTOR HAD UNDERGONE A SURGERY ON 6/01/2 014 AT ESCORTS HOSPITAL AND THE DOCTOR ADVISED HIM TO TAKE REST AND NOT TO TAKE ANY STRESS. THEREFORE, THERE WAS A REASONABLE CAUSE FOR NOT PRODUCING HIM. FURTH ER FINDING OF THE AO THAT SH. GHANSHYAM AGARWAL WAS ATTENDING ALL HIS ROUTINE WORK OR OTHER DIRECTORS COULD HAVE ATTENDED THE OFFICE OR THAT SH. G.L. GUP TA IS RELATIVE OF THE DIRECTOR OF THE ASSESSEE COMPANY IS WITHOUT BASIS MORE PARTI CULARLY WHEN IT WAS SPECIFICALLY MENTIONED TO THE AO THAT THE DIRECTORS ARE NOT AWARE OF G.L. GUPTA. FURTHER, WHEN ASSESSEE HAS FILED ALL THE EVI DENCES TO PROVE THE GENUINENESS OF THE SHARE CAPITAL, NO ADVERSE INFERE NCE IS CALLED FOR SIMPLY BECAUSE THE OTHER DIRECTOR OF THE ASSESSEE COMPANY IS NOT PRODUCED WHEN THEIR PRESENCE WAS NOT REQUIRED BY THE AO. 20. IN SUPPORT, RELIANCE WAS PLACED ON FOLLOWING CA SES:- CIT VS. VACMET PACKAGING (INDIA) PVT. LTD. 367 IT R 0217 (ALL.) (HC) ACIT VS. VIP GROWTH FUND PVT. LTD. 46 CCH 0231 (D EL.) (TRIB.) CIT VS. SUPERTECH DIAMOND TOOLS PVT. LTD. 229 TAX MAN 62 (RAJ.) ITO VS. RAKAM MONEY MATTERS P. LTD. (2014) 41 CCH 0155 (DEL.) (TRIB.) JADAU JEWELLERS & MANUFACTURING (P) LTD. VS. ACIT 45 CCH 0442 (JPR.) (TRIB.) DECISION DT. 14.12.2015 GANGA PROJECTS (P) LTD. AND B.S. TRADERS (P.) LTD . IN ITA NO. 175 & 176/JP/15 AND 179/JP/15 AND CO NO. 15 & 16/JP/15 AN D 19/JP/15 ORDER DATED 22.06.2016 ANCHAL FINTRADE PVT. LTD. VS. ITO IN ITA NO. 131/ JP/16 FOR A.Y. 05- 06. M/S CHOICE BUILDSTATE PRIVATE LIMITED VS ITO IN I TA NO. 431/JP/2016 DATED 28.03.2018 21. IN CASE OF M/S CHOICE BUILDESTATE PRIVATE LIMIT ED VS ITO (SUPRA), WE HAVE RECENTLY EXAMINED AN IDENTICAL MATTER AND W E FIND THAT OUR FINDINGS ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 18 THEREIN APPLIES EQUALLY IN THE INSTANT CASE. THE RE LEVANT FINDINGS ARE REPRODUCED AS UNDER: 10. NOW, COMING TO THE MERITS OF ADDITION OF RS 35 LACS MADE BY THE AO UNDER SECTION 68 OF THE ACT. ON CAREFUL E XAMINATION OF MATERIAL AVAILABLE ON RECORD, WE FIND THAT IT IS A CASE WHERE THE AO HAS RELIED BLINDLY ON INFORMATION SUPPLIED BY THE INVES TIGATION WING MUMBAI WITHOUT CARRYING OUT ANY FURTHER EXAMINATION OF DOCUMENTS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AND INDEPENDENT INVESTIGATION OF THESE INVESTOR COMPANI ES. AS WE HAVE NOTED ABOVE, THE INFORMATION SO RECEIVED FROM THE I NVESTIGATION WING, MUMBAI AND AFTER DUE EXAMINATION THEREOF, THE AO HA S FORMED A PRIMA FACIE VIEW AND A REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND HAS THUS ASSUMED JURISDICTION U/S 14 7 OF THE ACT. AT THE SAME TIME, SUCH A PRIMA FACIE VIEW HAS TO BE FINALI ZED AND A FIRM VIEW HAS TO BE TAKEN ON BASIS OF EXAMINATION OF DOCUMENT S SO BROUGHT ON RECORD AND FURTHER INVESTIGATION TO BE CARRIED OUT BEFORE ANY TAX LIABILITY IS FASTENED ON THE ASSESSEE. IN THE INSTA NT CASE, WE FIND THAT THE ASSESSEE COMPANY HAS SUBMITTED DETAIL DOCUMENTATION IN REGARD TO THESE COMPANIES FROM WHOM A TOTAL AMOUNT OF RS.35 L AKHS WAS RECEIVED NAMELY (I) SHARE APPLICATION FORM (II) COP Y OF BOARD RESOLUTION (III) COPY OF BANK STATEMENTS REFLECTING PAYMENT THROUGH CHEQUE (IV) AUDITED STATEMENT OF ACCOUNTS AND ACKNO WLEDGEMENT OF ITR (V) COPY OF CERTIFICATE OF LNCORPORATION AND CE RTIFICATE OF COMMENCEMENT OF BUSINESS (VI) COPY OF PAN CARD. WHE RE THE ASSESSEE FURNISHES THE DOCUMENTATION AND NECESSARY EXPLANATION, THE AO SHOULD EXAMINE WHETHER THE DOCUMENTS SO SUBMITTE D AND EXPLANATION SO OFFERED ESTABLISHES THE THREE INGRED IENTS I.E. IDENTITY OF THE INVESTOR COMPANY, CREDITWORTHINESS OF INVESTOR COMPANY AND GENUINENESS OF THE TRANSACTION. WHETHER EXPLANATION OF THE ASSESSEE IS RELIABLE OR ACCEPTABLE? IF YES, NO FURTHER ACTION I S REQUIRED AND THE SUM SO CREDITED MAY NOT BE CHARGED TO INCOME TAX. IF TH E EXPLANATION SO OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE OR RELIAB LE, THE AO SHOULD GIVE A DETAILED REASONING IN THE ASSESSMENT ORDER F OR NOT ACCEPTING THE SAME. THE ORDER PASSED BY THE AO SHOULD BE SPEAKING ONE BRINGING ON RECORD ALL THE FACTS, EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF NATURE AND SOURCE OF THE CREDIT IN ITS BOOKS OF ACC OUNTS AND REASONS FOR NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. IN T HE INSTANT CASE, WE FIND THAT THE AO HAS NOT TAKEN ANY EFFORTS TO EXAMI NE THESE DOCUMENTS SO SUBMITTED BY THE ASSESSEE COMPANY DURING THE COU RSE OF ASSESSMENT PROCEEDINGS AND HAS SIMPLY GONE BY HIS PRIMA FACIE VIEW FORMED AT THE TIME OF ASSUMPTION OF JURISDICTION U/S 147 AND SUCH A PRIMA FACIE VIEW WITHOUT FURTHER EXAMINATION/INVESTIGATION CANNOT BE A BASIS FOR FORMING A FINAL VIEW OF MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. IT IS A CASE WHERE THE AO WAS IN RECEIPT O F MATERIAL ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 19 INFORMATION FROM THE INVESTIGATION WING, MUMBAI THA T THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION/INVESTMENT FROM SEVEN COMPANIES WHO ARE NOT DOING GENUINE BUSINESS ACTIVITIES AS DIVULGED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN CASE OF PRAVEEN JAIN GROUP. I N THESE SITUATIONS, THE COURTS HAVE HELD THAT THE ASSESSING OFFICER CAN NOT SIT BACK WITH FOLDED HANDS AND THEN COME FORWARD TO MERELY REJECT THE EXPLANATION SO MADE, WITHOUT CARRYING OUT ANY VERIFICATION OR E NQUIRY INTO THE MATERIAL PLACED BEFORE HIM BY THE ASSESSEE. IF THE ASSESSING OFFICER HARBOURS ANY DOUBTS OF THE LEGITIMACY OF ANY SUBSCR IPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH IN VESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND T REAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. W E THEREFORE AGREE WITH THE CONTENTIONS OF THE LD AR THAT IN ABSENCE O F ANY FALSITY WHICH HAVE BEEN FOUND IN THE DOCUMENTS SO SUBMITTED BY TH E ASSESSEE COMPANY TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE TRANSACTION, THESE DOCUMENTS CANNOT BE SUMMAR ILY REJECTED AS HAS BEEN DONE BY THE AO IN THE INSTANT CASE. FURTHER, W E FIND THAT THERE IS NO ACTION TAKEN BY THE AO IN TERMS OF CALLING INFOR MATION FROM THESE COMPANIES UNDER SECTION 133(6) AND/OR ISSUING SUMMO NS TO DIRECTORS OF THESE COMPANIES UNDER SECTION 131 OF THE ACT. FURTH ER, WHERE THE AO RELIES UPON THE STATEMENT OF THIRD PARTIES (PRAVEEN JAIN AND OTHERS) RECORDED U/S 132(4), WITHOUT GETTING INTO CONTROVER SY WHETHER THE SAID STATEMENT WAS RETRACTED SUBSEQUENTLY, THE FACT REMA INS THAT THE ASSESSEE DESERVES AN OPPORTUNITY TO CROSS EXAMINE SUCH PERSO NS AS HELD BY THE HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER IND USTRIES (SUPRA). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE COMPANY HAS MADE SPECIFIC REQUEST TO THE AO TO ALLOW CROSS EXAMINATION OF THESE PERSONS WHICH HAS HOWEVER NOT BEING PROVIDED TO THE ASSESSEE COMPANY. IN LIGHT OF ABOVE DISCUSSIONS, WE DONT FI ND ANY BASIS FOR MAKING ADDITION UNDER SECTION 68 OF THE ACT. IN THE RESULT, GROUND NO.2 TAKEN BY THE ASSESSEE COMPANY IS ALLOWED. 22. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE HAS REQUESTED THE AO VIDE LETTER DT. 10.12.2013 TO PROVIDE THE COPY OF S TATEMENT OF ALL THE PERSONS OF SH. S.K. JAIN GROUP AND THE INVESTIGATION REPORT AN D OTHER DOCUMENTS SUGGESTING THAT THIS GROUP WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, HOWEVER, THERE IS NOTHING ON RECORD THAT THE SAME H AVE BEEN PROVIDED TO THE ASSESSEE. BEING REASSESSMENT PROCEEDINGS, WHERE THE AO IS CEASED OF CERTAIN INFORMATION AND DOCUMENTS, IT IS INCUMBENT UPON HIM TO CONFRONT THE SAME TO THE ASSESSEE AND ALLOW THE LATTER TO FILE ITS OBJEC TIONS AND REBUTTAL. THE ADDITIONS MADE, MERELY RELYING ON THESE INFORMATION AND DOCUMENTATION, WITHOUT CONFRONTING THE ASSESSEE CANNOT BE ACCEPTED . FURTHER, WHERE THE AO RELIES UPON THE STATEMENT OF THIRD PARTIES, THE FAC T REMAINS THAT THE ASSESSEE ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 20 DESERVES AN OPPORTUNITY TO CROSS EXAMINE SUCH PERSO NS AS HELD BY THE HONBLE SUPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA). 23. FURTHER, WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE COMPANY HAS FILED COPIES OF THE SHARE APPLICATION FORM, RETURN OF ALL OTMENT FILED WITH ROC, COPIES OF THE BANK STATEMENTS, COPIES OF THE FINANC IAL STATEMENTS AND CONFIRMATIONS OF THESE PARTIES. WE ALSO FIND THAT T HE AO HAS ISSUED LETTERS U/S 133(6) TO THESE PARTIES AND HAS ALSO CALLED FOR PER SONAL APPEARANCE OF SH G.L GUPTA AND ONE OF THE DIRECTORS OF THE ASSESSEE COMP ANY. IT IS ALSO A FACT THAT THERE NOTICES HAVE NOT RETURNED BACK UNDELIVERED AN D AT THE SAME TIME, THERE HAS BEEN NO COMPLIANCE. IT IS THEREFORE A CASE WHIC H IS SHADE DIFFERENT THAN THE ONE WE DECIDED SUPRA. AT THE SAME TIME, THE FACT RE MAINS THAT INSPITE OF NON- COMPLIANCE OF THESE NOTICES AND NON-APPEARANCE WHIC H CANNOT BE A SOLE BASIS FOR DISALLOWANCE, THE AO HAS TO GIVE A SPECIFIC FIN DING AND RECORD HIS SATISFACTION REGARDING NON-ACCEPTANCE OF DOCUMENTS SO SUBMITTED BY THE ASSESSEE. WE ARE THEREFORE OF THE VIEW THAT THAT IN ABSENCE OF ANY FALSITY WHICH HAVE BEEN FOUND IN THE DOCUMENTS SO SUBMITTED BY TH E ASSESSEE COMPANY TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENES S OF THE SHARE TRANSACTION AND ANY SATISFACTION TO THAT EFFECT RECORDED BY THE AO, THESE DOCUMENTS CANNOT BE SUMMARILY REJECTED AS HAS BEEN DONE BY THE AO IN THE INSTANT CASE. 24. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DONT FIND ANY BASIS FOR MAKING THE ADDITION UNDER SECTION 68 OF THE ACT. IN THE RESULT, GROUND NO.2 TAKEN BY THE ASSESSEE COMPANY IS ALLOWED. THUS THE ADDITION MADE BY THE AO BASED ON THE STATE MENT OF ALLEGED ENTRY PROVIDER WHICH WAS RECORDED BY THE INVESTIGATION WI NG, MUMBAI WAS NOT FOUND SUSTAINABLE WHEN THE ASSESSEE PRODUCED ALL TH E DOCUMENTARY EVIDENCES TO DISCHARGE ITS ONUS TO PROVE THE TRANSA CTION. THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF PR.CIT VS CHAIN HOUSE INTERNATIONAL (P) LTD (SUPRA) HAS ALSO DISCUSSED TH IS ISSUE IN DETAIL AND OBSERVED IN PARA 52 TO 54 AS UNDER:- ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 21 52. ISSUING THE SHARE AT A PREMIUM WAS A COMMERCIAL DECISION. IT IS THE PREROGATIVE OF THE B OARD OF DIRECTORS OF A COMPANY TO DECIDE THE PREMIUM AMOUNT AND IT IS THE WISDOM OF SHAREHOLDER WHETHER THEY WANT T O SUBSCRIBE THE SHARE AT SUCH A PREMIUM OR NOT. THIS WAS A MUTUAL DECISION BETWEEN BOTH THE COMPANIES. IN DAY TO DAY MARKET, UNLESS AND UNTIL, THE RATES IS FIXED BY ANY GOVT. AUTHORITY OR UNLESS THERE IS ANY RESTRICTION ON THE AMOUNT OF SHARE PREMIUM UNDER ANY LAW, THE PRICE OF THE SHARE S IS DECIDED ON THE MUTUAL UNDERSTANDING OF THE PARTIES CONCERNED. 53. ONCE THE GENUINENESS, CREDITWORTHINESS AND IDENTITY ARE ESTABLISHED, THE REVENUE SHOULD NOT JU STIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMA N OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE R OLE OF ASCERTAINING HOW MUCH IS A REASONABLE PREMIUM HAVIN G REGARD TO THE CIRCUMSTANCES OF THE CASE. 54. THERE IS NO DISPUTE ABOUT THE RECEIPT OF FUNDS THROUGH BANKING CHANNEL NOR THERE IS ANY DISPUTE AB OUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE I NVESTORS AND THEREFORE, THE SAME HAS BEEN ESTABLISHED BY ANY DOUBT AND THERE SHOULD NOT HAVE BEEN ANY QUESTION OR DISP UTE ABOUT PREMIUM PAID BY THE INVESTORS, THEREFORE, UNLESS TH ERE IS A LIMITATION PUT BY THE LAW ON THE AMOUNT OF PREMIUM, THE TRANSACTION SHOULD NOT BE QUESTIONED MERELY BECAUSE THE ASSESSING AUTHORITY THINKS THAT THE INVESTOR COULD HAVE MANAGED BY PAYING A LESSER AMOUNT AS SHARE PREMIUM AS A PRUDENT BUSINESSMAN. THE TEST OF PRUDENCE BY SUBSTI TUTING ITS OWN VIEW IN PLACE OF THE BUSINESSMANS HAS NOT BEEN APPROVED BY THE SUPREME COURT IN THE DECISIONS OF CIT VS WALCHAND & CO. (P) LTD. [1967] 65 ITR 381 AND J.K. WOOLLEN MFG. VS CIT [1969] 72 ITR 612 (SC). ITA NO.1224/JP/2018 ITO, WARD- 1, BEAWAR VS M/S. SHAIFALI HOTELS & RESORTS PVT. LTD., BEAWAR 22 IN VIEW OF THE FACTS, CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AS WELL AS THE DECISIONS CITED (SUPRA), WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A). THUS THE APPEAL O F THE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 /03/2 020. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/03/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1 VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD- 1, BEAWAR 2 IZR;FKHZ@ THE RESPONDENT- M/S. SHEPHALI HOTELS RESORTS PVT,. LTD. BEAWAR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1224/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR