ACIT, Faridabad V. M/s. Arvindo Fabnoplast Pvt. Ltd., Faridabad

ITA 1308/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91024 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Accommodation entries; Onus to prove; Reassessment proceedings
• Section: 131; 68

Judgement Text

ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 ASSTT. COMMISSIONER OF INCOME TAX, VS M/S ARVI NDO FABNOPLAST PVT. LTD., CIRCLE-I, BLOCK I-B, 244, SECTOR-15A, FAR IDABAD. CGO COMPLEX, NH-4, FARIDABAD. (APPELLANT) (RESPOND ENT) APPELLANT BY: SHRI Y. KAKKAR DR RESPONDENT BY: SHRI ALOK KUMAR GUPTA, CA DATE OF HEARING: 25.02.2015 DATE OF PRONOUNCEMENT: 08.05.2015 O R D E R PER C.M. GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN DIRECTED BY THE REVENUE AGAIN ST THE ORDER OF THE CIT, FARIDABAD DATED 27.01.2010 IN APPEAL NO.150/09 -10 FOR AY 2005-06. 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS U NDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETIN G THE ADDITION OF RS.2,50,0000/- MADE BY THE AO ON ACCOUNT OF UNEX PLAINED CREDITS IN THE BOOKS OF ACCOUNT U/S 68 OF THE INCOM E TAX ACT, 1961 ESPECIALLY WHEN THE ASSESSEE HAD COMPLETELY FA ILED TO DISCHARGE ITS ONUS TO PROVE THE IDENTITY OF THE PER SONS, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS GIV ING SHARE APPLICANTS MONEY TO THE ASSESSEE. ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 2 3. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD, INTER ALIA ASSE SSMENT ORDER, IMPUGNED ORDER OF THE CIT(A), ASSESSEES PAPER BOOKS SPREAD OVER 1 64 PAGES AND CITATIONS, JUDGMENTS AND ORDERS RELIED BY BOTH THE PARTIES. L D. DR HAS DRAWN OUR ATTENTION TOWARDS PARA NO. 8 TO 11 OF THE ASSESSMENT ORDER AN D SUBMITTED THAT THE ASSESSEE FAILED TO PRODUCE THE PERSONS WHO HAVE GIVEN CREDIT TO THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION, LEAVE APART T O DISCHARGE ITS ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE SHARE A PPLICATION MONEY PROVIDERS. LD. DR, PLACING RELIANCE ON THE VARIOUS DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI INCLUDING RECENT DECISION IN THE CAS E OF CIT VS MAF ACADEMY P. LTD. (2014) 361 ITR 258 (DELHI), SUBMITTED THAT IN THE CONTEXT OF UNEXPLAINED CASH CREDIT WHEN THE ASSESSEE DOES NOT PRODUCE EVID ENCE OR TRIES TO AVOID APPEARANCE BEFORE THE AO AND THE ASSESSEE DELIBERAT ELY AND INTENTIONALLY FAILS TO PRODUCE RELEVANT EVIDENCE DURING ASSESSMENT PROCEED INGS WITH THE DESIRE TO PREVENT INQUIRY/INVESTIGATION, THEN ADVERSE INFEREN CE SHOULD BE DRAWN AGAINST THE ASSESSEE. LD. DR FURTHER CONTENDED THAT MERE P RODUCTION OF PERMANENT ACCOUNT NUMBER (PAN) OR ASSESSMENT PARTICULARS DOES NOT ESTABLISH THE IDENTITY OF A PERSON WHICH INCLUDES THE PLACE OF WORK, STAFF MEMBERS AND THE FACT THAT SUCH PERSON WAS ACTUALLY CARRYING ON BUSINESS AND F URTHER THE RECOMMENDATION OF THE COMPANY OR INDIVIDUAL IN THE EYES OF PUBLIC. LD. DR ALSO CONTENDED THAT THE PAN CANNOT, BLINDLY AND WITHOUT CONSIDERATION O F SURROUNDING CIRCUMSTANCES, BE TREATED AS SUFFICIENTLY DISCLOSIN G THE IDENTITY OF THE PERSON. ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 3 LD. DR ALSO CONTENDED THAT THE AO AFTER CONSIDERING ENTIRE DETAIL, EVIDENCE AND EXPLANATION OF THE ASSESSEE RIGHTLY HELD THAT THERE WAS NO REAL TRANSACTION AND THE GENUINENESS AND CREDITWORTHINESS OF THE PERSONS GIVING SHARE APPLICATION MONEY TO THE ASSESSEE IS NOT PROVED AND THE ASSESSE E FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE PERSON WHO CLAIMED TO BE THE SHAREHOLDER OF THE ASSESSEE COMPANY. LD. DR POINTED OUT THAT AS PER OPERATIVE PART OF THE IMPUGNED ORDER IN THE LAST LI NE OF PARA 6, THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITHOUT ANY JUSTIFI ED BASIS AND BY WRONGLY HOLDING THAT THE AO HAS NOT DISCHARGED HIS ONUS AT ALL. LD. DR HAS ALSO DRAWN OUR ATTENTION TOWARDS DECISION OF HONBLE DELHI HI GH COURT IN THE CASE OF CIT VS MAF ACADEMY P. LTD. (SUPRA) PARA 29 AT PAGE 24 A ND SUBMITTED THAT THE ONUS TO PROVIDE THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION IS ON THE ASSESSEE AND WHEN THE ASESSEE SUCCEEDS TO DISCHARGE ITS ONUS, THEN ONLY THE ONUS SHIFTS TO THE AO TO DEMOLI SH EXPLANATION, DETAILS AND EVIDENCE OF THE ASSESSEE TO BRING THE CASE FOR MAKI NG ADDITION U/S 68 OF THE ACT BECAUSE THE ASSESSEE ONLY FILED COPIES OF THE BANK STATEMENT, INCOME TAX RETURN AND CONFIRMATION OF THE ALLEGED SHARE APPLICATION M ONEY PROVIDERS BUT THIS WAS NOT SUFFICIENT TO DISCHARGE REQUIRED ONUS OF THE AS SESSEE TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . LD. DR FINALLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING TH AT OF THE AO. ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 4 4. LD. AR SUPPORTING THE IMPUGNED ORDER SUBMITTED T HAT THE AO MADE ADDITIONS WITH PRE-DETERMINED MIND AND SHE HAS THRO WN AWAY ALL RELEVANT EXPLANATION, DETAILS AND EVIDENCE FILED BY THE ASSE SSEE DURING THE ASSESSMENT PROCEEDINGS. LD. AR HAS FURTHER DRAWN OUR ATTENTIO N TOWARDS PAPER BOOK PAGE NO. 157 TO 164 AND SUBMITTED THAT THE ASSESSEE THRO UGH LETTER DATED 29.12.2009 REQUESTED THE AO TO PROVIDE ONE MORE DAY I.E. UP TO 30.12.2009 TO CONCLUDE ITS SUBMISSIONS AND TO SUBMIT REQUIRED INFORMATION AND OTHER DETAILS BUT THE AO PROCEEDED TO MAKE ADDITIONS AND TO FRAME ASSESSMENT ORDER IN A HASTY MANNER AND VIOLATING THE FUNDAMENTAL PRINCIPLE OF NATURAL JUSTICE. LD. AR ALSO POINTED OUT THAT THE ALLEGED SHARE APPLICATION MONEY PROVID ERS ALSO REQUESTED THROUGH THEIR ADVOCATE SHRI DEVENDER SINGH TO PROVIDE INFOR MATION ABOUT THE SHARE APPLICATION MONEY PROVIDERS BUT THE AO DID NOT ALLO W THE SAME. LD. AR ALSO POINTED OUT PAGE NO. 164 OF THE PAPER BOOK AND SUBM ITTED THAT THIS LETTER WAS ALSO SUBMITTED BY THE ALLEGED SHARE APPLICATION MON EY PROVIDERS ON 30.12.2009 BUT THE AO PASSED ASSESSMENT ORDER BY MENTIONING TH E DATE OF 29.12.2009 DENYING OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE ALLEGED SHARE APPLICATION MONEY PROVIDERS. LD. AR HAS FURTHER DRAWN OUR ATTE NTION TOWARDS PAPER BOOK PAGE NO. 51 TO 57, 58 TO 115 AND 116 TO 153 AND SUB MITTED THAT PLETHORA OF JUDGEMENTS SUPPORT THE CASE OF THE ASSESSEE THAT IF THE ASSESSEE HAS SUBMITTED PROOF OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE ALLEGED TRANSACTION IN THE FORM OF COPIES OF INCOME TAX RETURNS, BANK STAT EMENT, AND CONFIRMATION FROM THE SHARE APPLICATION MONEY CONTRIBUTORS, THEN ONUS REQUIRED U/S 68 OF THE ACT ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 5 STANDS DISCHARGED BY THE ASSESSEE AND IF THE AO WIT HOUT MAKING ANY FURTHER INQUIRY OR INVESTIGATION SIMPLY PROCEEDED TO MAKE A DDITION U/S 68 OF THE ACT, THEN SUCH ADDITION IS NOT SUSTAINABLE IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS (P) LTD. (2008) 216 CTR 195 (SC) AS RELIED BY THE CIT(A) WHILE GRANTING RELIEF FOR THE ASSESSEE. 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF BOTH THE SIDES, AT THE VERY OUTSET, WE NOTE THAT ADMITTEDLY THE ASSESSEE F ILED EVIDENCE IN SUPPORT OF ADMISSIBILITY AND SUSTAINABILITY OF SHARE APPLICATI ON MONEY BEFORE THE AO WHICH IS AVAILABLE ON PAGES 11 TO 49 OF THE ASSESSEES PA PER BOOK WHICH CONTAINS COPIES OF THE CONFIRMATION, BANK STATEMENT AND INCO ME TAX RETURN FOR THE RELEVANT AY 2005-06 OF THE ALLEGED SHARE APPLICATIO N MONEY PROVIDERS BUT WHEN THE SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THESE ENTITIES, EITHER SUMMONS COULD NOT BE SERVED THROUGH NOTICE SERVER AS THESE PARTIES WERE NOT AVAILABLE AT THE GIVEN ADDRESS AS PER NOTICE SERVERS REPORT, AN D THE SUMMONS SENT BY POST WERE RETURNED BACK UNSERVED. THEN THE AO ASKED THE ASSESSEE TO FURNISH WHEREABOUTS OF THE SAID PARTIES FROM WHOM THE CREDI T ENTRIES/SHARE APPLICATION MONEY APPEARING IN THE BOOKS OF ACCOUNTS WERE RECEI VED. FROM PARA NO. 6 OF THE ASSESSMENT ORDER, WE NOTE THAT FROM 14.12.2009 TO 2 9.12.2009 REGULARLY THE AO WAS MAKING EFFORTS TO VERIFY AND INVESTIGATE THE AL LEGED SHARE APPLICATION MONEY PROVIDER BUT WITHOUT RESULT AND THE INSPECTOR S REPORT WAS ALSO CALLED ON 24.12.2009 WHICH WAS SUPPLIED TO THE ASSESSEE AND T HE CASE WAS ADJOURNED TO ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 6 29.12.2009. ON 29.12.2009, THE ASSESSEE AGAIN REQU ESTED TO GIVE ONE MORE DAY FOR PROVIDING REQUIRED INFORMATION AND SUBMISSION B UT THE AO DENIED ADJOURNMENT BY HOLDING THAT AS THE ASSESSMENT WAS G ETTING TIME BARRED BY LIMITATION ON 31.12.2009, THE AO COMPLETED ASSESSME NT PROCEEDINGS AND PASSED ASSESSMENT ORDER ON 29.12.2009 ITSELF. FROM THE LE TTER OF THE ADVOCATE OF ALLEGED SHARE APPLICATION MONEY PROVIDER DATED 30.1 2.2009, WE OBSERVE THAT THE ALLEGED ENTRY PROVIDERS ALSO SUBMITTED SOME DETAILS AND DOCUMENTS FOR THE CONSIDERATION OF THE AO BUT THE ASSESSMENT ORDER WA S PASSED ON 29.12.2009. ALTHOUGH WE ARE UNABLE TO SEE FROM RECORD WHICH DET AILS WERE FILED BY THE ALLEGED SHARE APPLICATION MONEY PROVIDER ON 30.12.2 009, THERE WAS AN ATTEMPT TO SUBMIT INFORMATION AND SUBMISSION FROM THE AO ON BEHALF OF THE SHARE APPLICANTS. AT THIS JUNCTURE, WE RESPECTFULLY TAKE GUIDANCE FROM THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS MAF ACADEMY P. LTD. WHEREIN THEIR LORDSHIPS AFTER CONSIDERING THE RATIO OF ALL RELEVANT JUDGMENTS AND ORDERS OF HONBLE SUPREME COURT AND HONBLE HIGH COURT AT PAG E 283-284 IN PARA 25 TO 29 HELD AS UNDER:- 25. WE HAVE IN THE NR PORTFOLIO CASE (SUPRA ) HELD THAT WHEN AN ASSESSEE DOES NOT PRODUCE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE THE ASSESSING OFFICER, IT NECESSA RILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACTS AS THE ASSESSING OFFICER IS DENIED ADVANTAGE OF THE CO NTENTION OR FACTUAL ASSERTION BY THE ASSESSEE BEFORE HIM. IN CA SE AN ASSESSEE DELIBERATELY AND INTENTIONALLY FAILS TO PRODUCE EVI DENCE BEFORE THE ASSESSING OFFICER WITH THE DESIRE TO PREVENT INQUIR Y OR INVESTIGATION, AN ADVERSE INFERENCE SHOULD BE DRAWN. THE SAID CASE , I.E., N.R. ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 7 PORTFOLIO PRIVATE LIMITED (SUPRA ), WAS ALSO ONE OF THE CASES WHERE ACCOMMODATION ENTRIES WERE BEING PROVID ED BY MAHESH GARG GROUP OF ENTRY PROVIDERS AS IN THE PRES ENT CASE . IT HAS BEEN NOTICED IN THAT CASE THAT THE MODUS OPERAN DI USED BY THE ENTRY PROVIDER S FOR PROVIDING ACCOMMODATION ENTRY TO DIFFERENT PERSONS/BENEFICIARIES WAS VERY SIMILAR TO THE ONE I N THE PRESENT CASE. IT HAS BEEN FURTHER NOTICED THAT THE BANK STA TEMENTS OF THE ENTRY OPERATORS SHOWED SUBSTANTIAL DEPOSIT OF CASH IN THE BANK ACCOUNTS AND SUBSEQUENT ISSUANCE OF CHEQUES TO THE BENEFICIARIES. THE ENTRY PROVIDERS WERE NOT CARRYING ON ANY BUSINE SS ACTIVITY BUT THE ONLY ACTIVITY WAS FOR PROVIDING ENTRIES. IT HAS BEEN HELD THAT A PRIVATE LIMITED COMPANY IS A CLOSELY HELD COMPANY H AVING PROXIMA TE RELATIONSHIP BETWEEN PROMOTERS AND SHAREHOLDERS AND USUALLY IN CLOSELY HELD COMPANIES, SHARE CAPITAL SUBSCRIPTION IS FROM FRIENDS, RELATIVES AND NOT FROM UNRELATED/UNKNOWN THIRD PART IES/GENERAL PUBLIC. 26. WE HAVE FURTHER IN N.R.PORTFOLIO PRIVATE LIMITE D (SUPRA ) HELD THAT MERE PRODUCTION OF PAN NUMBER OR ASSESSMENT PARTICULARS DOES NOT ESTABLISH THE IDENTITY OF A PE RSON. THE IDENTIFICATION OF A PERSON INCLUDES THE PLACE OF WO RK, THE STAFF AND THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND FURTHER RE COGNITION OF THE SAID COMPANY/INDIVIDUAL IN THE EYE S OF PUBLIC. WE HAVE FURTHER NOTICED THAT PA N NUMBER S ARE ALLOTTE D ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATIO N OF THE IDENTITY OR ASCERTAINMENT OF THE ACTIVE NATURE OF BUSINESS ACTI VITY. PAN NUMBER IS ALLOTTED AS A FACILITY TO REVENUE TO KEEP TRACK OF TRANSACTIONS. THE PA N NUMBER CANNOT BE BLINDLY AND WITHOUT CONSIDERATION OF SURROUNDING CIRCUMSTANCES TREATED AS SUFFICIENTLY DISCLOSING THE IDENTITY OF THE INDIVIDUAL. 27. REFERRING TO THE VARIOUS JUDGMENTS OF THE SUPRE ME COURT {A. GOVINDARAJU LU MUDALIAR VS CIT (1958) 34 ITR 807 (S C), CIT VS M. GANAPATHI MUDALIAR (1964) 53 ITR 623 (SC) AND CIT VS DEVI PRASAD VISHWANATH PRASAD (1969 (72) ITR 194 (SC)} WE HAVE IN N.R.P ORTFOLIO PRIVATE LIMITED (SUPRA) REJECTED THE CONTENTION THAT THE REVENUE MU ST HAVE EVIDENCE TO SHOW A CIRCULATION OF MONEY FROM THE AS SESSEE TO THIRD ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 8 PARTIES. FOLLOWING CIT VS NOVA PROMOTERS AND FINLEA SE PRIVATE LIMITED CASE (2012) 342 ITR 169 (DELHI) WE HAVE HELD THAT IN VIEW OF THE LINK BETWEEN THE ENTRY PRO VIDERS AND INCRIMINATING EVIDENCE, MERE FILING OF PAN NUMBER, ACKNOWLEDGEMENT OF INCOME TAX RETURNS OF THE ENTRY PROVIDERS, BANK ACCOUNT STATEMENT IS NOT SUFFICIENT TO DISCHAR GE THE ONUS ON THE ASSESSEE. 28. IN THE CASE OF PRIVATE LIMITED COMPANIES, GENER ALLY PERSON KNOWN TO THE DIRECTORS OR SHAREHOLDERS DIRECTLY OR INDIRECTLY BUY OR SUBSCRIBE TO SHARES. THE SHARE SUBSCRIBERS POST INV ESTMENT DO NOT LOSE TOUCH OR BECOME INCOMMUNICADO. IN THE CASE OF PRIVATE LIMITED COMPANIES WHERE NORMALLY THERE IS CLOSE PROXIMITY B ETWEEN THE COMPANY, I.E., THE DIRECTORS AND SHAREHOLDERS AND T HE INVESTORS. THE ASSESSEE CANNOT SIMPLY FURNISH DETAILS AND REMAIN Q UIET EVEN WHEN SUMMONS ISSUED TO THE SHAREHOLDERS UNDER SECTION 13 1 ARE RETURNED UNSERVED AND UNCOMPLIED. IN N.R.P ORTFOLIO PRIVATE LIMITED (SUPRA ) WE HAVE HELD THAT THE ASSESSEE CAN NOT PLEAD AS A GENERAL PREPOSITION THAT THEY HAD RECEIVED SUMMON S AND IT WAS FOR THE ASSESSING OFFICER TO ENFORCE THE CONTENTS O N THE SHARE HOLDERS. 29. WE HAVE FURTHER HELD THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE ONUS TO PROVE THE THREE FACTU M IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE PERSONAL KNOWL EDGE OF THE ASSESSEE. MERE PRODUCTION OF INCORPORATION DETAILS, PAN NUMBERS OR INCOME TAX RETURNS MAY NOT BE SUFFICIENT WHEN SU RROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THE PRODUCTIO N OF INCORPORATION DETAILS, PAN NUMBERS OR INCOME TAX DE TAILS MAY INDICATE TOWARDS COMPLETION OF PAPER WORK OR DOCUME NTATION BUT GENUINENESS, CREDITWORTHINESS AND IDENTITY OF INVES TMENT AND THE INVESTORS ARE DEEPER AND OBTRUSIVE THAN MERE COMPLE TION OF PAPER WORK OR DOCUMENTATION. ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 9 6. IN VIEW OF ABOVE NOTED FACTS AND CIRCUMSTANCES , WE NOTE THAT SINCE THE ASSESSMENT WAS GETTING BARRED ON 31.12.2009, THEREF ORE, THE AO DENIED EVEN ONE DAY ADJOURNMENT TO THE ASSESSEE AND COMPLETED THE A SSESSMENT PROCEEDINGS ON 29.12.2009. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED COPIES OF THE CONFIRMATION, INCOME TAX RETURNS FOR RELEVAN T AY 2005-06 AND BANK STATEMENT PERTAINING TO FINANCIAL YEAR 2004-05 OF T HE ALLEGED SHARE APPLICATION MONEY CONTRIBUTORS WHICH ARE AVAILABLE AT PAGES 11- 26 OF THE ASSESSEES PAPER BOOK. THIS IS A PECULIAR FACT OF THE PRESENT CASE THAT THE ASSESSEE REQUESTED FOR ONE DAY ADJOURNMENT ON 29.12.2009 FOR FILING OF ADD ITIONAL INFORMATION AND SUBMISSIONS REGARDING ALLEGED SHARE APPLICATION MON EY AND THIS REQUEST OF THE ASSESSEE WAS REJECTED BY THE AO. FROM PAPER BOOK P AGE NO. 164, WE ALSO NOTE THAT THERE WAS AN ATTEMPT BY THE ALLEGED SHARE APPL ICATION MONEY CONTRIBUTORS THROUGH THEIR ADVOCATE TO SUBMIT SUPPORTING DOCUMEN TS BUT THE SAME WERE NOT CONSIDERED AS THE ASSESSMENT ORDER WAS PASSED ON 29 .12.2009 ITSELF. FROM CAREFUL READING OF THE IMPUGNED ORDER, WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLU SION:- 6. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD. AR AND PERUSED THE ORDER OF ASSESSMENT. I HAVE ALSO GONE THROUGH THE VARIOUS DOCUMENTS PRODUCED BY THE LD. A R IN THE SHAPE OF THE PAPER BOOK, EXAMINATION OF WHICH CLEAR LY SHOWS THAT DURING THE COURSE OF REASSESSMENT PROCEEDINGS U/S 147, THE APPELLANT THROUGH THE LD. AR HAD PRODUCED ALL T HE DOCUMENTARY EVIDENCES WHICH ESTABLISH THE GENUINENE SS OF THE TRANSACTION OF THE CREDITS OF RECEIPT OF RS. 5 LAKH S FROM THE 5 PERSONS INVOLVED AND THAT THE AO HAS NO MATERIAL ON RECORD TO PROVE THAT ALL THESE CREDITS OF RS. 25 LAKHS WERE M ERE ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 10 ACCOMMODATION ENTRIES AND NOT GENUINE CREDITS IN TH E BOOKS OF ACCOUNT AS PER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, BECAUSE THE APPELLANT HAD PROVED ALSO THE IDEN TITY AN CREDIT-WORTHINESS OF ALL THE PARTIES THROUGH THEIR CONFIRMATIONS AND ACCOUNTS THROUGH THE BANKING CHANNELS WHICH LEF T NO ROOM FOR ANY SHRED OF DOUBT FOR THE GENUINENESS OF THE CREDITS IN THE BOOKS OF THE COMPANY. MOREOVER, AS PER THE LEGAL PO SITION SETTLED BY A CATENA OF JUDICIAL PRONOUNCEMENTS CITE D BY THE LD. AR AS ABOVE, THAT IN THE CASE OF THE COMPANY ONLY T HE IDENTITY OF THE SHARE-HOLDERS IS SUFFICIENT TO BE PROVED AND WHICH THE APPELLANT HAS THROUGH VARIOUS DOCUMENTS ON RECORD P ROVED, FOR EXAMPLE, THE CASES OF STELLER INVESTMENT LTD., SOPHIA FINANCE LTD. AND ACHAL INVESTMENT LTD. (ALL SUPRA). MOREOVER, THE ISSUE REGARDING CASH CREDITS IN THE SHAPE OF SH ARE APPLICATION MONEY IN THE CASE OF A COMPANY HAS BEEN FINALLY CLINCHED RECENTLY BY THE APEX COURT'S DECISION IN T HE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (2008) 216 ITR (SC ) 195 WHEREIN IT HAS BEEN HELD THAT IF THE SHARE APPLICAT ION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHOSE NAMES ARE GIVEN TO THE AD, THEN THE D EPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSES SMENT IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS U NDISCLOSED INCOME OF THE ASSESSEE COMPANY UNDER THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961. IT IS ALSO FURTHER PERTINENT TO CITE THE LD. JURISDICTIONAL TRIBUNAL'S ORDER DATED 03.03.2006 IN ITA NO. 4288/D/2005 ASSESSMENT YEAR 1 997- 98IN THE CASE OF M/S GULATI INDUSTRIAL FABRICATION PVT. LTD. VS. ACIT WHEREIN ON THE IDENTICAL FACTS AND CIRCUMSTANC ES, IT HAS BEEN RULED THAT THE STATEMENT OF A PERSON /PARTY TH AT HE HAD BEEN DOING NAME LENDING BUSINESS IN REGARD TO GIVIN G OF LOANS IS ONLY A GENERAL CONFESSION MADE TO SECURE IMMUNIT IES FOR HIMSELF AND FOR THE MEMBERS OF HIS FAMILY AND SUCH MERE CONFESSIONAL STATEMENT BY A THIRD PARTY WOULD NOT B E SUFFICIENT TO HOLD THAT THE ASSESSEE'S INCOME HAD ESCAPED ASSE SSMENT FOR INVOKING THE PROVISIONS OF SECTION 147/148 OF THE I NCOME TAX ACT, 1961. MOREOVER, AS HAS BEEN DECIDED BY THE VA RIOUS COURTS, WHEN THE REVENUE HAS TAKEN THE RECOURSE TO THE PROVISIONS OF SECTION 147/148 OF THE INCOME TAX ACT , 1961, ITS INTENT AND THE DUTY OF THE REVENUE IS TO ESTABLISH ITS CASE BY BRINGING MATERIAL ON RECORD, AND IN THIS REGARD, AS THE FACTS AND CIRCUMSTANCES FLOAT IN THE INSTANT CASE, THE AO HAS NOT DISCHARGED HIS ONUS AT ALL. KEEPING IN VIEW SUCH D ISCUSSION, ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 11 THE ADDITION OF RS. 25 LAKH MADE U/S 147/143(3) IS UNSUSTAINABLE AND HENCE STANDS DELETED. 7. ON THE BASIS OF FOREGOING DISCUSSION AND OPERATI VE PART OF THE IMPUGNED ORDER, WE HOLD THAT THE AO DENIED OPPORTUNITY TO SU BMIT ADDITIONAL INFORMATION AND SUBMISSIONS FOR THE ASSESSEE TO DISCHARGE REQUI RED ONUS UPON THE ASSESSEE U/S 68 OF THE ACT AND THE ASSESSMENT PROCEEDINGS WE RE COMPLETED, KEEPING IN VIEW THE FACT THAT THE ASSESSMENT WAS GETTING TIME BARRED ON 31.12.2009. DURING FIRST APPELLATE PROCEEDINGS, CIT(A) GRANTED RELIEF FOR THE ASSESSEE BY HOLDING THAT THE DUTY OF THE REVENUE IS TO ESTABLISH ITS CA SE BY BRINGING MATERIAL ON RECORD AND THE AO HAS NOT DISCHARGED HIS ONUS AT ALL. AT THIS STAGE, WE RESPECTFULLY TAKE COGNIZANCE OF THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF MAF ACADEMY P. LTD. WHEREIN IT WAS HELD THAT THE ONUS TO PROVE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE TRANSACTION IS ON THE ASSESSEE AND MERE PRODUCTION OF INCORPORATION DETAI LS, PAN OR INCOME TAX RETURNS MAY NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THEIR LORDSHIPS ALSO MADE IT CLEAR THAT THE PRODUCTION OF INCORPORATION DETAILS, PAN OR INCOME TAX DETAILS MA Y INDICATE TOWARDS COMPLETION OF PAPER WORK OR DOCUMENTATION BUT THE G ENUINENESS, THE CREDITWORTHINESS AND THE IDENTITY OF INVESTMENT AND THE INVESTORS ARE DEEPER AND OBTRUSIVE THAN MERE COMPLETION OF PAPER WORK OR DOC UMENTATION. ON THE BASIS OF FOREGOING DISCUSSION, WE HOLD THAT THE AO DENIED OPPORTUNITY OF BEING HEARD FOR THE ASSESSEE AND THE CIT(A) WRONGLY SHIFTED ONU S ON THE REVENUE AUTHORITIES ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 12 AND MISUNDERSTOOD THE MEANING OF ONUS WITH REGARD T O SECTION 68 OF THE ACT. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE IS SUE OF SHARE APPLICATION MONEY WAS NOT ADJUDICATED BY THE LOWER AUTHORITIES AS PER PROVISIONS OF SECTION 68 OF THE ACT AND AS PER RATIO AND PROPOSITION LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C IT VS MAF ACADEMY P. LTD. (SUPRA). THEREFORE, WE FIND IT JUST AND PROPER TO RESTORE THE ISSUE TO THE FILE OF AO FOR DE NOVO ADJUDICATION ONLY ON THE ISSUE OF AL LEGED SHARE APPLICATION MONEY AFTER AFFORDING DUE OPPORTUNITY OF HEARING FO R THE ASSESSEE AND WITHOUT BEING PREJUDICED WITH THE EARLIER ASSESSMENT AND IM PUGNED ORDER. THE AO IS DIRECTED TO ADJUDICATE THE ISSUE AFRESH IN THE LIGH T OF JUDGMENT OF HONBLE HIGH COURT OF DELHI IN THE CASE OF MAF ACADEMY P. LTD. ( SUPRA) AND THE CASE IS RESTORED TO THE FILE OF AO FOR THIS LIMITED PURPOSE ONLY. ACCORDINGLY, SOLE GROUND OF THE REVENUE IS DEEMED TO BE ALLOWED FOR S TATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 08.05.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN GAR G) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 8 TH MAY, 2015 GS ITA NO.1308/DEL/2010 ASSTT.YEAR: 2005-06 13 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. C.I.T. 5. DR BY ORDER ASSTT. REGISTRAR