M/s Technico Metals Pvt, Ltd, Ludhiana V. DCIT, C-1, Ludhiana

ITA 1348/CHANDI/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4305 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Share purchase agreement; Source of fund; Accommodation entries; Onus to prove
• Section: 131; 68; 143(3); 115JB; 143(1); 205

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1348/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S TECHNICO METALS PVT.LTD., E-137, PHASE IV, FOCAL POINT, LUDHIANA THE DCIT, CIRCLE-1, LUDHIANA ./PAN NO: AACCT8885H / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. ASHWANI KUMAR, CA ' ! / REVENUE BY : SH. ASHISH GUPTA, CIT DR # $ % /DATE OF HEARING : 31.01.2019 &'() % / DATE OF PRONOUNCEMENT : 15.02.2019 (* / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 09.08.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS )-2, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- I) THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, LUDH IANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUS TIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE LD. ASSESSING OFFICER IN MAKING AN ADDITION OF RS. 75,00,000/- RECEIVED BY THE APPE LLANT COMPANY AS SHARE CAPITAL / SHARE PREMIUM BY RESORT TO PROVISIO NS OF SECTION 68 OF THE INCOME TAX ACT, 1961 . II) THAT THE LD. CIT(A) WAS NOT JUSTIFIED TO HOLD THAT THE APPELLANT COMPANY HAD NOT DISCHARGED ITS ONUS WITH RESPECT TO JUSTIFICATION ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 2 OF CREDIT AMOUNTING TO RS. 75,00,000/- RECEIVED AS SHARE APPLICATION / SHARE PREMIUM MONEY. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF TRADING OF STEE L AND STEEL SERVICE CENTRE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION ON 25.09.2012 DECLARING THEREIN NIL INCOME WHICH WAS STATED TO BE PROCESSED UNDER SECTION 143(1) OF THE ACT AT THE RETURNED INCOME. S UBSEQUENTLY, THE CASE OF THE ASSESSEE COMPANY WAS SELECTED FOR SCRUTINY BY I SSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD NOTICED THAT THE ASSESSEE COMPANY HAS SHOWN IN THE BALANCE SHEET FOR THE PERIOD ENDING 31.03.2012, THE INCREASE IN SECURITIES PREMIUM RESERVE FROM RS. 1,51,12,500/- T O RS.2,24,25,000/- AS COMPARED TO LAST YEAR. IT WAS NOTICED BY THE ASSESS ING OFFICER THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATIO N HAD ISSUED 18750 SHARES TO TWO COMPANIES AT A PREMIUM OF RS.390/- HA VING FACE VALUE OF RS.10/- AND RECEIVED AN AMOUNT OF RS.75,00,000/- BY WAY OF SHARE CAPITAL AND SHARE PREMIUM. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE COMPANY TO PRO VE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IN THE CASE OF THE COMPANIES WHO HAVE SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY AT A HUGE PREMIUM OF RS.390/- PER SHARE. I N RESPONSE TO THIS, THE ASSESSEE COMPANY SUPPLIED REQUISITE INFORMATION WIT H REGARD TO THE COMPANIES WHO SUBSCRIBED TO THE SHARE CAPITAL OF TH E ASSESSEE COMPANY. AFTER GOING THROUGH THE INFORMATION AS SUPPLIED BY THE ASSESSEE COMPANY DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R ISSUED COMMISSION UNDER SECTION 131(L)(D) OF THE ACT TO THE DDIT (LNV .), UNIT-L (L), KOLKATA VIDE LETTER DATED 16.02.2015 FOR DETERMINING THE ID ENTITY, CREDITWORTHINESS ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 3 AND GENUINENESS OF TRANSACTION IN THE CASE OF TWO C OMPANIES BASED AT KOLKATA WHO SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY. IN RESPONSE TO THE COMMISSION ISSUED BY THE ASSESSING OFFICER, THE DDIT(INV.), UNIT-L (L), KOLKATA VIDE HIS OFFICE LET TER DATED 10.03.2015 INFORMED THE ASSESSING OFFICER THAT ON ENQUIRY MADE BY HIM THROUGH HIS INSPECTOR, THE COMPANIES NAMELY M/S LAWA MARKETING PVT. LIMITED AND M/S PANSY DEALER PVT. LIMITED COULD NOT BE LOCATED AT THEIR RESPECTIVE ADDRESSES. AFTER RECEIPT OF THE REPORT OF THE DDIT( INV.), UNIT-L(L), KOLKATA, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE COMPANY AND ASKED IT AS TO WHY NOT THE INVESTMENT IN SHARE CAPITAL CORRESPONDING TO THESE SHAREHOLDER COMPANIES NAMELY M/S LAWA MARKETI NG PVT. LIMITED AND M/S PANSY DEALER PVT. LIMITED BE DISALLOWED AND ADD ED BACK TO THE INCOME OF THE ASSESSEE COMPANY UNDER SECTION 68 OF THE ACT . IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE COMPANY FILED ITS R EPLY VIDE LETTER DATED 23.03.2015 STATING THEREIN THAT THE ASSESSEE COMPAN Y HAS ALREADY PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T RANSACTION IN THE CASE OF SHAREHOLDER COMPANIES NAMELY M/S LAWA MARKETING PVT . LIMITED AND M/S PANSY DEALER PVT. LIMITED BY PRODUCING THE NECESSAR Y DOCUMENTS IN THE FORM OF COPIES OF RETURN, COPY OF BANK STATEMENTS, COPY OF SHARE APPLICATION FORMS, COPY OF SHARE TRANSFER FORMS, CO PY OF PAN CARD ETC. HOWEVER, THE ASSESSING OFFICER DID NOT GET SATISFIE D WITH THE DETAILS FURNISHED BY THE ASSESSEE. HE OBSERVED THAT THE AS SESSEE COMPANY HAD FAILED TO PRODUCE THE DIRECTORS OF M/S LAWA MARKETI NG PVT. LIMITED AND M/S PANSY DEALER PVT. LIMITED TO ASCERTAIN THE CORR ECT FACTS. THE ASSESSING OFFICER, THEREFORE, MADE AN ADDITION OF RS.75,00,00 0/- TO THE RETURNED INCOME OF THE ASSESSEE COMPANY BY INVOKING PROVISIO NS OF SECTION 68 OF ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 4 THE ACT BY TREATING SHARE CAPITAL/SHARE PREMIUM REC EIVED BY THE ASSESSEE COMPANY AS ITS OWN INCOME FROM UNDISCLOSED SOURCES ON THE GROUND THAT THE ASSESSEE COMPANY COULD NOT ESTABLISH THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IN THE CASE OF SHARE HOL DER COMPANIES NAMELY M/S LAWA MARKETING PVT. LIMITED AND M/S PANSY DEALE R PVT. LIMITED. THE ASSESSMENT IN THIS CASE WAS ULTIMATELY COMPLETED BY THE ASSESSING OFFICER VIDE ORDER UNDER SECTION 143(3) OF THE ACT DATED 27 .03.2015 AT AN ASSESSED INCOME OF RS. NIL BEING A LOSS CASE. 4. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HA S MADE THE FOLLOWING SUBMISSIONS:- THIS IS WITH REFERENCE TO AN APPEAL FILED BY M/S T ECHNICO METALS PVT. LTD. (HEREIN AFTER REFERRED TO AS THE APPELLANT) AGAINST THE ORDER U /S 143(3) OF THE INCOME-TAX ACT, 1961 FOR THE ABOVE CAPTIONED ASSESSMENT YEAR. BRIEF FACTS THE APPELLANT, A PRIVATE LIMITED COMPANY, IS ENGAGE D IN THE BUSINESS OF TRADING OF STEEL, AND, ALSO RUNS A SERVICE STEEL CENTRE. FOR THE PREV IOUS YEAR, RELEVANT TO ASSESSMENT YEAR 2012-13, THE YEAR UNDER CONSIDERATION, THE APPELLAN T FILED ITS RETURN OF INCOME ON 25.09.2012 DECLARING NIL INCOME. HOWEVER, THE TAXAB LE PROFIT SHOWN BY THE APPELLANT U/S 115JB OF THE INCOME-TAX ACT, 1961 WAS RS. 1,06, 902/-. THE RETURN WAS ALSO PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 ON 17.06.2013. THE CASE OF THE APPELLANT WAS TAKEN UP FOR SCRUTINY , AND, THE SAME WAS ASSESSED VIDE ORDER DATED 27.03.2015 U/S 143(3) OF THE INCOME-TAX ACT, 1961. AGGRIEVED BY THE ORDER DATED 27.03.2015, THE APPELL ANT PREFERRED AN APPEAL BEFORE YOUR HONOR. THE APPELLANT SEEKS TO PLACE ON RECORD, ITS PRELIMI NARY LEGAL ASSERTIONS, CHALLENGING THE LEGITIMACY OF THE ADDITION AFFECTED IN THE ASSESSME NT ORDER, AS UNDER: THAT THE ASSESSMENT ORDER IS AGAINST LAW AND FACTS ON THE FILE IN, AS MUCH AS, THE LD. ASSESSING OFFICER WAS NOT JUSTIFIED TO ARBITRARILY DISALLOW A SUM OF RS. 75,00,000/- RECEIVED BY THE APPELLANT AS SHARE CAPITAL/ SHARE P REMIUM BY RESORT TO PROVISIONS OF SECTION 68. DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERA TION, THE APPELLANT HAD ISSUED 18750 EQUITY SHARES OF RS. 10/- EACH ON A SHARE PREMIUM O F RS. 390/- PER SHARE, THE DETAILS OF WHICH ARE AS FOLLOWS: SR. NO. NAME OF THE SHAREHOLDER COMPLETE POSTAL ADDRESS NO. OF EQUITY SHARES ALLOTTED AMOUNT OF SHARE CAPITAL (RS.) AMOUNT OF SHARE PREMIUM (RS.) 1. LAWA MARKETING PVT. LTD. 51/4, STRAND ROAD, KOLKATA- 700007 6250 62500 2437500 ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 5 2. PANSY DEALER PVT. LTD. 2/1 MADHO KESHTO ROAD, SETH LANE, KOLKATA- 700007 12500 125000 4875000 TOTAL 187500 7312500 THE LD. ASSESSING OFFICER ALLEGED THAT THE COMPANIES, WHO, HAVE INVESTED IN THE SHARE CAPITAL OF M/S TECHNICO METALS (P.) LTD. WERE ENTRY OPERATORS. ACCORDINGLY, THE LD. ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 68 OF THE INCOME -TAX ACT, 1961, AND , MADE AN ADDITION OF RS. 75,00,000/- RECEIVED BY T HE APPELLANT OWING TO SHARE CAPITAL AND SHARE PREMIUM FROM M/S LAWA MARKETING ( P.) LTD. AND M/S PANSY DEALER (P.) LTD. RESPECTIVELY. HOWEVER, THE APPELLANT HAS PLACED ON RECORD FULL AND COMPLETE DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPANIES. FURTHER , GENUINENESS OF TRANSACTIONS WAS FURTHER PROVED FROM THE FACT THAT, THE SHARE APPLICATION MONEY AND SHARE PREMIUM HAVE BEEN CREDITED TO THE BANK ACCOUNT OF THE APPELLANT THROUGH PROPER BANKING CHANNELS. EVEN THE LETTERS OF CONFIRMATIONS FROM THE COMPANIES , ELUCIDATING, THE INVESTMENT IN THE EQUITY SHARES OF THE APPELLANT WERE ALSO FILED. THE LD. ASSESSING OFFICER , ABRUPTLY, BRUSHED ASIDE THE MATERIAL AND NECESSARY EVIDENCE ON RECORD , WHICH, PLAINLY AND SELF-EVIDENTLY CULLED OUT THE FACT THAT, THE TRANSACTIONS BETWEEN THE INVESTOR COMPANIES AND THE APPELLANT ARE NORMAL AND GENUINE BUSINESS TRANSACTIONS. NO MATERIAL HAS BEEN PLACED ON RECORD BY THE LD. ASSESSING OFFICER TO CONTRADICT THE VERACITY OF THE DOCUMENTS FURNISHED BY THE APPELLANT. THE LD. ASSESSING OFFICER, FURTHER , CONTENTED THAT THE SUBMISSIONS OF CONFIRMATIONS D ID NOT PROVE GENUINENESS OF THE TRANSACTIONS. THE LD. ASSESSING OFFICER DID NOT CARRY OUT ANY ENQUIRY INTO THE INCOME TAX RECORDS OF THE INVE STOR COMPANIES, IN ORDER TO ASCERTAIN, WHETHER, THEY WERE IN EXISTENCE OR NOT. EVEN , THE COMMISSION U/S 131(1)(D) WAS ISSUED BY THE LD . ASSESSING OFFICER TO THE DEPUTY DIRECTOR OF INCOME TAX(INVESTIGATION), UNIT I(I), KOLKATA, AND , IN TURN, THE LD. DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION) ISSUE D SUMMONS TO THE INVESTOR COMPANIES. IN RESPONSE TO THOSE SUMMONS, THE INVEST OR COMPANIES SUBMITTED INFORMATION WITH RESPECT TO DETAILS OF INVESTMENTS MADE IN THE SHARES OF THE APPELLANT DURING THE FINANCIAL YEAR 2011-12 RELEVANT TO ASSES SMENT YEAR. COPIES OF APPLICATION FORMS MADE FOR THE ALLOTMENT OF SHARES, DETAILS OF BANK ACCOUNTS FROM WHERE THE AMOUNTS WERE INVESTED, COPIES OF THE ANNUAL ACCOUNTS FOR F. Y. 2010-11 TO F.Y. 2012-13 AND COPIES OF INCOME-TAX RETURNS FOR THREE ASSESSMENT YEARS I.E. A.Y. 2010-11, A.Y. 2011-12 AND A.Y. 2012-13 RESPECTIVELY, WERE , ALSO DULY SUBMITTED BY THE INVESTOR COMPANIES BEFORE THE LD. DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION). THE LD. ASSESSING OFFICER , FURTHER, ALLEGED THAT WHY SUCH CONCERNS I.E. M/S LAWA MARKETING (P.) LTD., AND M/S PANSY DEALER (P.) LTD. WOULD MAKE AN INVESTMENT IN THE SHARES OF M/S TECHNICO METALS (P.) LTD. (THE APPELL ANT) OF SUCH A HUGE AMOUNT I.E. AT RS. 400/- PER SHARE (INCLUDING PREMIUM OF RS. 390/- PER SHARE) FOR EARNING NOTHING, SINCE, NO DIVIDEND WAS DECLARED OR PAID BY THE APPELLANT TO I TS SHAREHOLDERS IN ANY YEAR. IT IS, THUS, RESPECTFULLY SUBMITTED THAT THE PROMOTERS OF THE COMPANY HAVE SOME FUTURE BUSINESS PLANS FOR THE COMPANY. IN ORDER TO ACCOMPL ISH THOSE PLANS, A NEED FOR ISSUE OF SHARES ARISES. ACCORDINGLY , A FAIR VALUATION OF SHARES WAS BEING ARRIVED AT, AND, THE SHARES WERE TO BE ISSUED AT RS. 400/- PER EQUITY SHARE (IN CLUDING A PREMIUM OF RS. 390/- PER EQUITY SHARE). M/S LAWA MARKETING (P.) LTD. AND M/S PANSY DEALER (P.) LTD. RESPECTIVELY, ACCORDING TO ITS MEMORANDUM AND ARTICLES OF ASSOCIA TION, HAD APPLIED FOR ALLOTMENT OF EQUITY SHARES. THE APPELLANT ISSUED EQUITY SHARES AT A PREMIUM, AND , MOREOVER, THE ISSUE OF EQUITY SHARES AT A PREMIUM WAS IN ACCORDANCE WIT H THE GUIDELINES LAID DOWN BY THE INDIAN COMPANIES ACT. ANY PRIVATE LIMITED COMPANY C AN ISSUE SHARES AT WHATSOEVER PREMIUM, ACCORDING TO ITS NECESSITY. THEREFORE, IN THE INSTANT CASE, THE LINE OF ARGUMENT BY THE LD. ASSESSING OFFICER DID NOT HOLD GOOD THAT , NO APPARENT JUSTIFICATION EXISTED FOR SUBSCRIPTION OF SHARES AT A PREMIUM OF RS. 390/- PE R EQUITY SHARE. MOREOVER , A PRIVATE LIMITED COMPANY MAY DECLARE A DIVIDEND OR NOT, AND , WHEN A PRIVATE LIMITED COMPANY HAS SPECIFIC FUTURE PLANS, IT MAY REFRAIN FROM DECLARAT ION OF THE DIVIDEND. THUS , IT COULD NOT BE SAID THAT, M/S LAWA MARKETING (P.) LTD. AND M/S PANSY D EALER (P.) LTD. HAVE GOT NO ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 6 INCOME OUT OF AN INVESTMENT IN SHARES, BECAUSE, M/S LAWA MARKETING (P.) LTD. AND M/S PANSY DEALER (P.) LTD., WOULD, HAVE ACTED PRUDENTLY IN TERMS OF RISKS AND REWARDS , BEFORE MAKING AN INVESTMENT IN THE APPELLANT AT A P REMIUM OF RS. 390/- PER SHARE. MOREOVER, THE LD. ASSESSING OFFICER, ALSO , ALLEGED THAT, IF THE DIRECTORS OF INVESTORS COMPANIES ARE NOT PRODUCED BEFORE HIM, THE NATURAL COROLLARY WOULD BE THAT, THE REAL POSITION IS NOT THE SAME AS EMERGES FROM PAPERS AND DOCUMENTS FURNISHED BY THE APPELLANT. HOWEVER , THE APPELLANT SUBMITTED ITS REPLY VIDE A LETTER, THE RELEVANT EXTRACT OF WHICH, IS, ALSO REPRODUCED IN THE BODY OF THE ASSES SMENT ORDER DATED 27.03.2015 AT PAGE 14 PARA 4.4.1, AS UNDER: INSPITE OF THE BEST EFFORTS MADE BY THE ASSESSEE C OMPANY, NONE OF THE SUBSCRIBER IS AGREED TO BE PERSONALLY PRESENT BEFORE YOUR HONO R, SINCE, ALL THESE ARE STAYING IN KOLKATA OR OTHER PLACES WHICH ARE FAR FROM LUDHI ANA. THE ASSESSEE COMPANY HAS ALREADY SUBMITTED CONFIRMATIONS GIVING THEIR FU LL ADDRESSES. YOUR HONOR IS REQUESTED TO KINDLY SUMMON THESE PARTIES BY USING Y OUR GOOD OFFICE. THE ASSESSEE COMPANY IS READY TO MAKE PAYMENT OF DIET MONEY FOR THE SAME. HOWEVER, THE LD. ASSESSING OFFICER DID NOT CONSIDER THE AFORESAID REPLY FILED BY THE APPELLANT. EVEN, THE APPELLANT , FURTHER, SAID THAT THE DIET MONEY , IF REQUIRED AND ORDERED BY THE LD. ASSESSING OFFICER, WOULD ALSO BE PAID . THE LD. ASSESSING OFFICER DID NOT TAKE ANY SUCH ACTION. THE APPELLANT MADE ITS KEEN EFFORTS, IN ORDER TO ESTABLISH THE FACT, THA T THE TRANSACTIONS BETWEEN THE INVESTOR COMPANIES A ND THE APPELLANT WERE GENUINE AND BONAFIDE. IN ALL FAIRNESS AND TO PROVIDE NATURAL JU STICE TO THE APPELLANT, IT WOULD HAVE BEEN APPROPRIATE, IF THE LD. ASSESSING OFFICER ASSISTED THE APPELLANT BEFORE FASTENING ANY LIABILITY ON THE APPELLANT. THE LD. ASSESSING OFFICER , DURING THE COURSE OF ASSESSMENT PROCEEDINGS, DESI RED TO FILE PROOF/EVIDENCE IN RESPECT OF IDENTITY, CREDITWORTHINESS AND GENUI NENESS OF ENTITIES, FROM , WHOM, THE AMOUNT OF RS. 75,00,000/- FOR EQUITY SHAR ES WAS RECEIVED BY THE APPELLANT. THE APPELLANT HAD PROVIDED THE FOLLOWING DOCUMENTS REGARDING THE TWO INVESTOR COMPANIES, AS UNDER: PARTICULARS M/S LAWA MARKETING (P.) LTD. M/S PANSY DEALER (P.) LTD. COPY OF SHARE CERTIFICATE ENCLOSED ENCLOSED COPY OF INDIAN INCOME TAX RETURN ACKNOWLEDGEMENT ENCLOSED ENCLOSED APPLICATION FORM FOR EQUITY SHARES ENCLOSED ENCLOSED COPY OF CONFIRMATIONS ENCLOSED ENCLOSED COPY OF RESOLUTION/MINUTES PASSED AT THE MEETING OF THE BOARD OF DIRECTORS ENCLOSED COPY OF BANK ACCOUNT STATEMENT ENCLOSED ENCLOSED COPIES OF MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION ENCLOSED ENCLOSED COPY OF BALANCE SHEET ENCLOSED ENCLOSED THE ABOVE DOCUMENTS PROFOUNDLY, AUTHORITATIVELY AND CONCLUSIVELY ESTABL ISHED THE IDENTITY, CREDITWORTHINESS AND THE SOURCE OF TRANSA CTIONS CONCERNING SHARE CAPITAL AND SHARE PREMIUM. THE ENTIRE SHARE CAPITAL AND SHARE P REMIUM HAD BEEN RECEIVED BY THE APPELLANT THROUGH NORMAL BANKING CHANNELS. THUS, NO CAUSE EXISTS AS TO RECOURSE TO THE PROVISIONS O F SECTION 68, IN, AS MUCH AS , THE ONUS ON THE APPELLANT VIS--VIS THE GENUINENESS OF THE TRANSACTIONS AND CREDIT WORTHINESS OF THE INVESTOR COMPANIES HAS BEEN EFFECTIVELY AND COMPLETELY DISCHARGED. A MERE PERUSAL OF THE SAID DOCUMENTS FILED BEFORE THE LD. ASSESSING OFFICER WOULD REVEAL THAT THE ONUS ON THE APPELLANT WITH REGARD TO THE D UTIES ENJOINED UPON IT REGARDING RECEIPT ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 7 OF THE AMOUNT OF RS. 75,00,000/- HAVE BEEN FULFILLE D AND DISCHARGED AND, THEREFORE, IT COULD NOT BE SAID THAT, THERE WAS A FAILURE TO ESTABLISH THE IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF A TRANSACTION REGARDING THE SHARE CA PITAL AND SHARE PREMIUM. THE ACTION OF THE LD. ASSESSING OFFICER AND THE ARG UMENTS ADVANCED BY THE LD. ASSESSING OFFICER ASKING THE APPELLANT TO PROVE SOURCE OF SOU RCE OF DEPOSIT OF THE AMOUNT OF RS. 75,00,000/-, WHICH, WAS NOT ONLY AGAINST THE SPIRIT , BUT, ALSO LETTER OF THE PROVISIONS RELATING TO ESTABLISHMENT OF THE IDENTITY OF CASH C REDITORS EMBODIED IN THE INCOME-TAX ACT, 1961. THE COPIOUS, EXHAUSTIVE BUT, AT THE SAME TIME, AIML ESS EXERCISE HAD BEEN CARRIED OUT BY THE LD. ASSESSING OFFICER ASKING THE APPELLANT TO FURNISH DOCUMENTS AND OFFER EXPLANATIONS IN RESPECT OF THE INVESTOR C OMPANIES, OVER, WHOM THE APPELLANT NEITHER HAD, NOR, IS EXPECTED TO HAVE ANY CONTROL, PHYSICAL OR MORAL OR EVEN NOTIONAL . THE APPELLANT COULD NOT BE ASKED TO PROVE THE SOU RCE OF MONEY OF THE INVESTOR COMPANIES , AND, COULD NOT BE HELD LIABLE OR PENALIZED FOR AN Y ALLEGED SHORTCOMING THEREIN. MOREOVER , INDEPENDENT INVESTIGATIONS, OVER, WHICH THE APPEL LANT DID NOT HAVE ANY CONTROL, COULD NOT, BE USED TO FOR M ANY CONCLUSION, ADVERSE OR OTHERWISE, IN RESPECT OF THE APPELLANT. AS SUCH , THE SAID ADDITION WAS, NEITHER, WARRANTED, NOR, JUSTIFIED AND SUSTAINABLE ON THE FACTS OF THE CASE. THE ABOVE ARGUMENTS CAN BE FURTHER BUTTRESSED AND R EINFORCED BY AN ANALYSIS OF THE RELEVANT LEGAL PROVISIONS AND LEGAL PRONOUNCEMENTS ON THE ISSUE. BEFORE PROCEEDING FURTHER WITH THE MATTER, IT, WOULD, BE WORTHWHILE TO REPRODUCE THE PROVISIONS OF SECTION 68 OF THE INCOME-TAX ACT, 1961, WHICH READ AS FOLLOWS : - WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF, OR, THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. FROM THE PERUSAL OF THE ABOVE, THE SECTION ENJOINS UPON THE ASSESSEE , THE DUTY, TO ADEQUATELY, SATISFACTORILY AND SUBSTANTIVELY EXPLAI N THE SOURCE OF ANY CASH CREDIT IN HIS BOOKS OF ACCOUNT ONLY. TO PUT IT DIFFERENTLY , THE ASSESSEES BURDEN OF PROOF WOULD STAND DISCHARGED IF, HE, CAN PROVE THE NATURE AND SOURCE OF THE CASH CREDIT RECEIVED AND THUS, HIS ONUS OF BURDEN, COULD NOT, BE EXTENDED TO PROVE THE SOURCE OF THE PROOF WITH A VIEW TO ARRIVE AT THE ULTIMATE SOURCE OF FUNDS. IF THE NATURE AND SOURCE OF THE INVESTOR IS ESTABLISHED , NO FURTHER ONUS OF PROOF CAN BE ENJOINED UPON IT. IN THE INSTANT CASE , NO CASE CAN BE MADE TO DOUBT THE GENUINENESS, EXISTENCE OR IDENTITY OF THE INVESTORS AND, AS SUCH, NO CASE FOR THE INVOCATION OF SECTION 68 CAN BE MADE OUT. IN THIS CONNECTION , RELIANCE IS PLACED ON THE FOLLOWING RELEVANT JUDG EMENTS OF VARIOUS COURTS OF LAW, WHEREIN, IT HAS BEEN HELD , THAT, NO ADDITION UNDER SECTION 68 BASED ON AN ATTEMPT TO CONSIDER THE SOURCE OF THE SOURCE OF DEP OSIT COULD BE SUSTAINED: I. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF NEMI CHAND KOTHARI V. [2003] 264 ITR 254 (GAUHATI) HAS HELD AS UNDER: ON A CAREFUL READING OF SECTION 106 OF THE INDIAN E VIDENCE ACT, IT IS NOTICED THAT WHAT IS THE SOURCE FROM WHERE AN ASSESSEE HAS OBTAI NED THE LOAN CAN BE SAFELY HELD TO BE A FACT-SITUATION, WHICH IS ACTUALLY WITH IN THE SPECIAL KNOWLEDGE OF THE ASSESSEE, HENCE, IT IS THE BURDEN OF THE ASSESSEE T O SHOW THE SOURCE(S) FROM WHERE HE HAS RECEIVED THE LOANS. ONCE THE ASSESSEE DISCLOSES THE SOURCE(S) FROM WHER E HE HAS RECEIVED THE LOANS, HIS BURDEN UNDER SECTION 106 STANDS DISCHARGED AND THE ONUS THEN SHIFTS TO THE ASSESSING OFFICER TO SH OW, IF HE WANTS TO TREAT THE LOANS AS AN INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURC ES, THAT THE TRANSACTION(S) BETWEEN THE ASSESSEE AND THE CREDITOR IS/ARE NOT GE NUINE OR THAT THE CREDITOR HAS UNDER SECTION 68 OF INCOME-TAX ACT CREDITORS CREDITWORTHY- NESS HAS TO BE JUDGED VIS- A-VIS TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN ASSESSEE AND CRED ITOR, AND IT IS NOT BUSINESS OF ASSESSEE TO FIND OUT SOURCE OF MONEY OF HIS CREDITOR OR GENUINENESS OF TRANSACTIONS, WHICH TOOK PLACE BETWEEN CREDITOR AND SUB-CREDITOR AND/OR CREDITWORTHINESS OF SUB-CREDITORS FOR THESE ASPECTS MAY NOT BE WITHIN SPECIAL KNOWLEDGE OF ASSESSEE. ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 8 NO CREDITWORTHINESS AND/OR THAT THE MONEY, WHICH HA S BEEN RECEIVED BY THE ASSESSEE IN THE FORM OF LOANS, ACTUALLY BELONGS TO THE ASSESSEE HIMSELF. WHILE SECTION 106 OF THE INDIAN EVIDENCE ACT LIMITS THE ONUS OF THE ASSESSEE TO EXTENT TO HIS PROVING THE SOURCE FROM WHERE HE HAS RECEIVED THE CASH CREDIT, SECTION 68 GIVES AMPLE FREEDOM TO THE ASSESSING OFF ICER TO MAKE INQUIRY NOT ONLY INTO THE SOURCE(S) OF THE CREDITOR, BUT ALSO OF HIS (CREDITORS) SUB-CREDITORS AND PROVE, AS A RESULT OF SUCH INQUIRY, THAT THE MONEY RECEIVED BY THE ASSESSEE, IN THE FORM OF LOAN FROM THE CREDITOR, THOUGH ROUTED THROU GH THE SUB-CREDITORS, ACTUALLY BELONGS TO, OR WAS OF, THE ASSESSEE HIMSELF. IN OTH ER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE ASSESSING OFFICER TO ENQUIRE INT O THE SOURCE/SOURCES FROM WHERE THE CREDITOR HAS RECEIVED THE MONEY, SECTION 106 MA KES THE ASSESSEE LIABLE TO DISCLOSE ONLY THE SOURCE(S) FROM WHERE HE HAS HIMSE LF RECEIVED THE CREDIT AND IT IS NOT THE DUTY OF THE ASSESSEE TO SHOW THE SOURCE(S) OF HIS CREDITOR NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINES S OF THE SOURCE(S) OF THE SUB- CREDITORS. IF SECTION 106 AND SECTION 68 ARE TO STA ND TOGETHER, WHICH THEY MUST, THEN THE INTERPRETATION OF SECTION 68 HAS TO BE IN SUCH A WAY THAT IT DOES NOT MAKE SECTION 106 REDUNDANT. HENCE, THE HARMONIOUS CONSTR UCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE INCOME-TAX ACT W ILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSE SSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDI TWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR MUST REMAIN CONFIN ED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDI TOR. WHAT FOLLOWS, AS A COROLLARY, IS THAT IT IS NOT THE BURDEN OF THE ASSE SSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS BETWEEN HIS CREDITOR AND SUB-CREDI TORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB-CREDITOR HAD THE CRE DITWORTHINESS TO ADVANCE THE CASH CREDIT TO THE CREDITOR FROM WHOM THE CASH CRED IT HAS BEEN, EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THEREFORE, FURTHER LO GICALLY FOLLOWS THAT THE CREDITORS CREDITWORTHINESS HAS TO BE JUDGED, VIS-A-VIS, THE T RANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR, AND IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CRE DITOR OR OF THE GENUINENESS OF THE TRANSACTION, WHICH TOOK PLACE BETWEEN THE CREDI TOR AND SUB-CREDITOR AND/OR CREDITWORTHINESS OF THE SUB-CREDITORS, FOR, THESE A SPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. SINCE, IT IS NOT THE BUSINESS OF THE ASSESSEE TO FI ND OUT THE SOURCE(S) FROM WHERE THE CREDITOR HAS ACCUMULATED THE AMOUNT, WHICH HE H AS ADVANCED IN THE FORM OF LOAN TO THE ASSESSEE, SECTION 68 CANNOT BE READ TO SHOW THAT IN THE CASE OF FAILURE OF THE SUB-CREDITORS TO PROVE THEIR CREDITW ORTHINESS, THE AMOUNT ADVANCED AS LOAN TO THE ASSESSEE BY THE CREDITOR SH ALL HAVE TO BE TREATED, AS A COROLLARY, AS THE INCOME FROM UNDISCLOSED SOURCE OF THE ASSESSEE HIMSELF . II. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DCIT V. ROHINI BUILDERS [2002] 256 ITR 360 (GUJARAT) HAS LAID DOWN AS UNDER: THE ASSESSEE WAS NOT EXPECTED TO PROVE GENUINENESS OF CASH DEPOSITED IN BANK ACCOUNTS OF CREDITORS, BECAUSE UNDER LAW, ASSESSEE CAN BE ASKED TO PROVE SOURCE OF CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT SOURCE O F SOURCE. MERELY BECAUSE SUMMONS ISSUED TO SOME OF CREDITORS COULD NOT BE SE RVED OR THEY FAILED TO APPEAR BEFORE ASSESSING OFFICER, COULD NOT BE GROUND TO TR EAT THOSE CREDITS AS NON- GENUINE. ALSO, THE HONBLE SUPREME COURT IN THE CASE OF M/S LOVELY EXPORTS (P.) LIMITED V. COMMISSIONER OF INCOME-TAX (2008) 216 CTR 195(SC ) HAS ALSO LAID DOWN AS UNDER: IF SHARE APPLICATION MONEY IS RECEIVED BY ASSESSEE -COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO ASSESSING OF FICER, THEN DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSME NTS IN ACCORDANCE WITH LAW BUT THIS AMOUNT OF SHARE MONEY CANNOT BE REGARDED A S UNDISCLOSED INCOME UNDER SECTION 68 OF ASSESSEE-COMPANY. ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 9 THE DECISION RENDERED IN THE SAID CASE HAS CLEARLY AND PLAINLY SPELLED OUT THAT THE REVENUE IS FREE TO PROCEED TO REOPEN THEIR INDI VIDUAL ASSESSMENTS OF THE ALLEGED BOGUS SHAREHOLDERS, FROM WHOM, THE SHARE AP PLICATION MONEY IS RECEIVED BY THE APPELLANT, AND, THE AMOUNT RECEIVED COULD NO T BE CONSIDERED AS UNDISCLOSED INCOME UNDER SECTION 68 OF ASSESSEE-COM PANY. THUS , APPLYING THE SAID RATIO IN THE LIGHT OF FACTS OF CA SE OF THE APPELLANT , THE LD. ASSESSING OFFICER COULD PROCEED TO REOPEN THE A SSESSMENT OF THE INVESTOR COMPANIES, AND, SECTION 68 COULD NOT BE INVOKED IN THE CASE OF THE APPELLANT, SINCE , THE ONUS ON THE PART OF THE APPELLANT HAS BEEN EFFECTIVELY AND COMPLETELY DISCHARGED. III. THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF INCOME TAX OFFICER V. LABH CHAND BOHRA [2008] 219 CTR 571 (RAJASTHAN) HAS UPHELD THAT: THE JUDGMENT OF CIT V. DAULAT RAM RAWAT MULL [1973] 87 ITR 349 (SC) IS THE AUTHORITY FOR THE PROPOSITION THAT THE ASSESSEE CANNOT BE REQUIRED TO PROVE THE SOURCE OF THE SOURCE . IT WAS PRECISELY HELD IN DAULAT RAM RAWAT MULLS CASE (SUPRA) THAT THE FACT THAT LENDER HAS NOT BEEN ABLE TO GIV E SATISFACTORY EXPLANATION REGARDING THE SOURCE OF THE FUND LENT B Y HIM, WOULD NOT BE DECISIVE, EVEN OF THE MATTER, AS TO WHETHER THE LENDER WAS TH E OWNER OF THAT SUM, EVEN THOUGH THE EXPLANATION FURNISHED BY HIM REGARDING T HAT SOURCE OF MONEY IS FOUND TO BE NOT CORRECT. FROM THE SIMPLE FACT , THAT THE EXPLANATION REGARDING SOURCE OF MONEY FURNISHED BY THE LENDER WHOSE MONEY IS LYING DEPOSITED, HAS BEEN FOUND TO BE FALSE, IT WOULD BE A REMOTE AND FAR-FETCHED CONC LUSION TO HOLD THAT THE MONEY BELONGS TO THE ASSESSEE AND THAT HE WOULD, IN SUCH A CASE, HAVE ANY DIRECT NEXUS BETWEEN THE FACTS AND CONCLUSIONS FOUND THEREFROM. FURTHER , IN CIT V. KISHORILAL SANTOSHILAL [1995] 216 ITR 9 , THE RAJASTHAN HIGH COURT OBSERVED THAT IN ORDER TO DETERMINE WHETHER ANY ADDITION IS TO BE MADE UND ER SECTION 68 OR NOT, THE FOLLOWING SIX CONDITIONS ARE REQUIRED TO BE CONSIDE RED: THAT THERE IS NO DISTINCTION BETWEEN THE CASH CREDI T ENTRY EXISTING IN THE BOOKS OF THE FIRM WHETHER IT IS OF A PARTNER OR OF A THIR D PARTY; THAT THE BURDEN TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS HAVE TO BE ON THE ASSESSEE; IF THE CASH CREDIT IS NOT SATISFACTORILY EXPLAINED, THE ITO WOULD BE JUSTIFIED TO TREAT IT AS INCOME FROM UNDISCLOSED SOURCES; THE FIRM HAS TO ESTABLISH THAT THE AMOUNT WAS ACTUA LLY GIVEN BY THE LENDER; THE GENUINENESS AND REGULARITY IN THE MAINTENANCE O F THE ACCOUNT HAVE TO BE TAKEN INTO CONSIDERATION BY THE TAXING AUTHORITIES; AND IF THE EXPLANATION IS NOT SUPPORTED BY ANY DOCUMENT ARY OR OTHER EVIDENCES, THEN THE DEEMING FICTION CREATED BY SECTION 68 CAN BE INVOKED. [PARA 7] IN THE INSTANT CASE, THE FIRST REQUIREMENT WAS NOT RELEVANT. SO FAR AS THE SECOND REQUIREMENT WAS CONCERNED, THERE WAS NO DOUB T ABOUT INITIAL BURDEN BEING ON THE ASSESSEE. SO FAR AS THE THIRD REQUIREM ENT WAS CONCERNED, OBVIOUSLY IF THE EXPLANATION WAS NOT SATISFACTORY, THEN IT WAS TO BE ADDED. THEN FOURTH REQUIREMENT WAS THAT THE FIRM HAD TO ES TABLISH THAT THE AMOUNT WAS ACTUALLY GIVEN BY THE LENDER. FIFTH REQUIREMENT WAS ABOUT GENUINENESS AND REGULARITY IN MAINTENANCE OF THE ACCOUNTS OBVIO USLY OF THE ASSESSEE, AND IT WAS NOT THE FINDING THAT THE ACCOUNTS WERE NOT R EGULARLY MAINTAINED. THEN SIXTH REQUIREMENT WAS THAT IF THE EXPLANATION WAS N OT SUPPORTED BY ANY DOCUMENTARY OR OTHER EVIDENCES, THEN THE DEEMING FI CTION CREATED BY SECTION 68 COULD BE INVOKED. IN THE INSTANT CASE, THAT REQU IREMENT WAS VERY MUCH THERE IN EXISTENCE IN ASMUCH AS THE AMOUNTS HAD BEE N ADVANCED BY ACCOUNT PAYEE CHEQUES THROUGH THE BANK AND WERE DULY SUPPOR TED BY DOCUMENTARY EVIDENCES AS WELL AS THE EVIDENCES OF THE TWO LENDE RS, AND THAT SATISFIED THE SECOND REQUIREMENT ALSO ABOUT THE DISCHARGE OF BURD EN ON THE PART OF THE ASSESSEE TO PROVE IDENTITY AND GENUINENESS OF THE T RANSACTION. SO FAR AS CAPACITY OF THE LENDER WAS CONCERNED, ON THE FACE O F THE JUDGMENT OF THE SUPREME COURT IN CIT V. DAULAT RAM RAWAT MULL [1973 ] 87 ITR 349 AND ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 10 OTHER JUDGMENTS, CAPACITY OF THE LENDER TO ADVANCE MONEY TO THE ASSESSEE WAS NOT A MATTER WHICH WOULD REQUIRE THE ASSESSEE TO ES TABLISH, AS THAT WOULD AMOUNT TO CALLING UPON HIM TO ESTABLISH THE SOURCE OF THE SOURCE. IN VIEW OF THE ABOVE, THE APPEAL WAS TO BE ALLOWED AND ADDITIO NS WITH RESPECT TO THE ENTRIES OF VK AND DS MADE TO THE INCOME OF THE ASSE SSEE WERE TO BE DELETED. THE FINDINGS, LEGAL PROPOSITION AND CONCLUSIONS OF THE SAID CASES, APPLY WITH EQUAL FORCE IN THE INSTANT CASE, GIVEN THE LINE OF REASON ING, FACTS AND OBSERVATIONS MADE BY THE LD. ASSESSING OFFICER. FURTHER, YOUR HONORS KIND ATTENTION IS ALSO INVITE D TO THE FOLLOWING JUDGEMENTS, WHEREIN, IT HAS BEEN HELD THAT , IN A CASE, WHERE THE APPELLANT SATISFACTORILY PRO VES THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTI ONS, NO ADDITION UNDER SECTION 68 IS CALLED FOR: I. THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT V. SHAILESH KUMAR RASIKLAL MEHTA [2014] 41 TAXMANN.COM 550 (GUJARAT) HAS LAID DOWN AS UNDER: THE ASSESSING OFFICER MADE ADDITIONS ON ACCOUNT OF UNE XPLAINED CASH CREDIT IN HANDS OF ASSESSEE. IT WAS FOUND THAT ALL TRANSACTIO NS WERE ROUTED THROUGH BANKING CHANNELS AND ASSESSEE HAD DULY EXPLAINED SO URCE OF INCOME. THUS, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING SAM E AS UNDISCLOSED INCOME AND IN MAKING ADDITION UNDER SECTION 68 . II. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF INCOME TAX OFFICER V. MOD CREATIONS (P.) LTD. [2013] 354 ITR 282 (DELHI) HAS UPHELD THAT: THE TRIBUNAL HAS ADOPTED AN ERRONEOUS APPROACH ON THE ASPECTS OF GENUINENESS OF THE TRANSACTIONS IN ISSUE AND THE CREDITWORTHINE SS OF THE PERSONS/CREDITORS WHO LENT MONEY TO THE ASSESSEE. THE FIRST ASPECT, I.E., IDENTITY OF THE CREDITORS WAS ESTABLISHED BEFORE ANY OF THE AUTHORITIES BELOW. IT WILL HAVE TO BE KEPT IN MIND THAT SECTION 68 ONLY SETS UP A PRESUMPTION AGAINST THE ASSESSEE WHENEVER UNEXPLAINED CREDITS ARE FOUND IN THE BOOKS OF ACCOU NT OF THE ASSESSEE. IT CANNOT BUT BE GAINSAID THAT THE PRESUMPTION IS REBUTTABLE. IN REFUTING THE PRESUMPTION RAISED, THE INITIAL BURDEN IS ON THE ASSESSEE. THIS BURDEN, WHICH IS PLACED ON THE ASSESSEE, SHIFTS AS SOON AS THE ASSESSEE ESTABLISHE S THE AUTHENTICITY OF TRANSACTIONS AS EXECUTED BETWEEN THE ASSESSEE AND I TS CREDITORS. IT IS NO PART OF THE ASSESSEES BURDEN TO PROVE EITHER THE GENUINENE SS OF THE TRANSACTIONS EXECUTED BETWEEN THE CREDITORS AND THE SUB-CREDITOR S NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SUB-C REDITORS. IN THE LIGHT OF THE ABOVE PRINCIPLE, ONE SHOULD EXA MINE AS TO WHAT THE AUTHORITIES BELOW FOUND VIS-A-VIS THE GENUINENESS OF THE TRANSA CTIONS AND THE CREDITWORTHINESS OF THEIR CREDITORS. THE FACT THAT THERE WAS SUFFICIENT BALANCE AVAILABL E WITH THE CREDITORS WHEN CHEQUES HAVE BEEN ISSUED TO THE ASSESSEE-COMPANY WA S ESTABLISHED. IT WAS ALSO ESTABLISHED THAT THE FUNDS AVAILABLE AT THE RELEVANT POINT IN TIME WERE NOT INFUSED INTO THE BANK ACCOUNTS OF THE CRED ITORS BY WAY OF CASH BUT WERE, IN FACT, CREDITED TO THEIR ACCOUNT AGAIN BY W AY OF CHEQUES LARGELY ON ACCOUNT OF COMMISSIONS RECEIVED BY THEM SAVE AND EX CEPT TWO TRANSACTIONS OF RS. 1 LAKH EACH RECEIVED BY TWO CREDITORS FROM VERI FIABLE DONORS. THE BANK ACCOUNTS AS WELL AS RETURNS FILED BY THE C REDITORS WHO WERE ASSESSABLE TO TAX ALONG WITH THEIR PANS WERE ALSO A VAILABLE WITH THE ASSESSING OFFICER. THE ASSESSEE IN TURN HAD RECEIVED THE MONIES BY WAY OF CHEQUES IN RESPECT OF WHICH CREDITS WERE MADE IN ITS BOOKS OF ACCOUNT. THE CREDITORS HAD ALSO PLACED ON RECORD RECEIPTS OF COMMISSION AS WELL AS THE GIFT DEEDS IN RESPECT OF GIFTS MADE TO THE DONO RS. THE IDENTITY AND ADDRESSES OF SUB-CREDITORS WAS ALS O AVAILABLE. ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 11 WITH THIS MATERIAL ON RECORD AS FAR AS THE ASSESSEE WAS CONCERNED, IT HAD DISCHARGED INITIAL ONUS PLACED ON IT. IN THE EVENT, THE REVENUE STILL HAD A DOUBT WITH REGARD TO THE GENUINENESS OF THE TRANSACTIONS IN ISSUE OR AS REGARDS THE CREDITWORTHINESS OF THE CREDITORS, IT WOULD HAVE HA D TO DISCHARGE THE ONUS WHICH HAD SHIFTED ON TO IT. A BALD ASSERTION BY THE ASSES SING OFFICER THAT THE CREDITS WERE A CIRCULAR ROUTE ADOPTED BY THE ASSESSEE TO PL OUGH BACK ITS OWN UNDISCLOSED INCOME INTO ITS ACCOUNTS, CAN BE OF NO AVAIL. THE R EVENUE WAS REQUIRED TO PROVE THIS ALLEGATION. AN ALLEGATION, BY ITSELF, WHICH IS BASED ON ASSUMPTION WILL NOT PASS MUSTER IN LAW. THE REVENUE WOULD BE REQUIRED T O BRIDGE THE GAP BETWEEN THE SUSPICIONS AND PROOF IN ORDER TO BRING HOME THIS AL LEGATION. THE TRIBUNAL, WITHOUT ADVERTING TO THE AFOREMENTIONED PRINCIPLE, LAID STRESS ON THE FACT THAT DESPITE OPPORTUNITIES, THE ASSESSEE AND/OR THE CRED ITORS HAD NOT PROVED THE GENUINENESS OF THE TRANSACTION. BASED ON THIS, THE TRIBUNAL CONSTRUED THE INTENTIONS OF THE ASSESSEE AS BEING MALA FIDE. THE TRIBUNAL OUGHT TO HAVE ANALYZED THE MATERIAL RATHER THAN BE BURDENED BY TH E FACT THAT SOME OF THE CREDITORS HAD CHOSEN NOT TO MAKE A PERSONAL APPEARA NCE BEFORE THE ASSESSING OFFICER. IF THE ASSESSING OFFICER HAD ANY DOUBT ABO UT THE MATERIAL PLACED ON RECORD, WHICH WAS LARGELY BANK STATEMENTS OF THE CR EDITORS AND THEIR INCOME-TAX RETURNS, IT COULD GATHER THE NECESSARY INFORMATION FROM THE SOURCES TO WHICH THE SAID INFORMATION WAS ATTRIBUTABLE TO. NO SUCH EXERC ISE HAD BEEN CONDUCTED BY THE ASSESSING OFFICER. IN ANY EVENT WHAT BOTH THE ASSES SING OFFICER AND THE TRIBUNAL LOST TRACK OF WAS THAT THEY WERE DEALING WITH THE A SSESSMENT OF THE COMPANY, I.E., THE RECIPIENT OF THE LOAN AND NOT THAT OF ITS DIREC TORS AND SHAREHOLDERS OR THAT OF THE SUB-CREDITORS. IF HAD ANY DOUBTS WITH REGARD TO THEIR CREDITWORTHINESS, THE REVENUE COULD ALWAYS BRING IT TO TAX IN THE HANDS O F THE CREDITORS AND/OR SUB- CREDITORS. SO FAR AS NON-APPEARANCE OF THE SUB-CREDITORS TO WH OM THE NOTICES HAVE BEEN ISSUED UNDER SECTION 131 BY THE ASSESSING OFFICER I S CONCERNED, NOTICES HAD BEEN ISSUED TO THE SUB-CREDITORS ON 24-2-2005. THE ASSES SING OFFICER, WITHOUT GIVING SUFFICIENT TIME FOR THE SERVICES TO BE EFFECTED ON THE SAID NOTICES, WITHIN A PERIOD OF FOUR DAYS PROCEEDED TO FRAME THE ASSESSMENT ORDE R. AS A MATTER OF FACT, THE ASSESSING OFFICER, QUITE CURIOUSLY, HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE SAID NOTICEES HAVE PREFERRED NOT TO REPLY TO THE SU MMONS ISSUED TO THEM. THERE IS NO OBSERVATION WHATSOEVER AS TO THE DATE ON WHICH T HE SAID NOTICES WERE DISPATCHED AND THEREAFTER SERVED ON THE SAID NOTICE ES. IT IS NOT UNCOMMON THAT NOTICE ISSUED BY THE REVENUE GETS DISPATCHED MUCH L ATER THAN THE DATE MENTIONED ON THE NOTICE AND AS A MATTER OF FACT GET SERVED ON THE NOTICEE EITHER ON THE DATE OF APPEARANCE OR THEREAFTER. THE AFORESAID CIRCUMST ANCES SHOW THAT THE ASSESSING OFFICER FRAMED THE ASSESSMENT IN HASTE. I F THE ASSESSING OFFICER WAS GENUINELY INTERESTED IN ESTABLISHING THE ALLEGATION S MADE IN THE ASSESSMENT ORDER, WHICH IS, THAT THE ASSESSEE HAD ROUTED ITS OWN MONE Y THROUGH THE DEVICE OF CREDITORS AND SUB-CREDITORS, IT OUGHT TO HAVE GIVEN SUFFICIENT TIME TO THE SAID NOTICEES TO PRODUCE RELEVANT MATERIAL BEFORE HIM. T HESE ARE ASPECTS WHICH THE TRIBUNAL DID NOT EXAMINE. FURTHER, THE COURT DIRECTED THE COUNSEL FOR PARTIES TO INFORM THE COURT AS TO WHETHER THE FIVE DIRECTORS, WHO HAD GIVEN LOAN TO T HE COMPANY, HAD SHOWN CASH DEPOSITED IN THEIR BANK ACCOUNTS IN THEIR RESPECTIV E INCOME-TAX RETURN IN THE RELEVANT YEAR AND HOW THE SAME WAS ASSESSED. IN RE SPONSE TO THE ABOVE, THE ASSESSEE FILED A SET OF DOCUMENTS ON 11-11-2009 WHI CH INCLUDED THE COPIES OF RETURNS, STATEMENTS OF INCOME, BALANCE SHEET, PROFI T AND LOSS ACCOUNT AND BANK STATEMENTS OF THE DIRECTOR. SIMILAR DOCUMENTS, EXCE PT THE BANK STATEMENT OF OTHER FOUR CREDITORS, WERE ALSO FILED. NONE OF THESE DOCU MENTS WERE PUT IN ISSUE BY THE REVENUE. FOR THE AFOREMENTIONED REASONS, THE JUDGMENT OF THE TRIBUNAL OUGHT TO BE REVERSED AND THAT OF THE COMMISSIONER (APPEALS) WAS TO BE SUSTAINED'. III. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT V. SHIV DHOOTI PEARLS & INVESTMENT LTD. [2015] 64 TAXMANN.COM 329 (DELHI) HAS LAID AS UNDER: IN TERMS OF SECTION 68, ASSESSEE IS LIABLE TO DISCL OSE ONLY SOURCE(S) FROM WHERE HE HAS HIMSELF RECEIVED CREDIT AND IT IS NOT BURDEN OF ASSESSEE TO SHOW SOURCE(S) OF HIS CREDITOR NOR IS IT BURDEN OF ASSESSEE TO PRO VE CREDITWORTHINESS OF SOURCE(S) OF SUB-CREDITORS. ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 12 IV. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT V. REAL TIME MARKETING (P.) LTD. [2008] 306 ITR 35 (DELHI) HAS UPHELD AS UNDER: ASSESSEE-COMPANY TOOK SOME UNSECURED LOAN FROM ACL AND ALSO FILED CONFIRMATION THEREOF - ASSESSING OFFICER ASKED ASSE SSEE TO FILE A COPY OF INCOME- TAX RETURN OF ACL ALONG WITH ITS AUDITED PROFIT AND LOSS ACCOUNT, BALANCE SHEET AND COPY OF BANK STATEMENT FOR RELEVANT PERIOD. ASS ESSEE FURNISHED ALL DOCUMENTS ASKED FOR. HOWEVER, THE ASSESSING OFFICER, TREATED THE SAME AS UNEXPLAINED CASH CREDITS UNDER SECTION 68. ON APPEAL, COMMISSIONER ( APPEALS) HELD THAT ASSESSEE HAD DISCHARGED ITS BURDEN OF PROVING IDENTITY, CAPA CITY AND GENUINENESS OF TRANSACTION AND IN THOSE CIRCUMSTANCES, ADDITION MA DE BY ASSESSING OFFICER WAS NOT JUSTIFIED. AN APPEAL PREFERRED THERE AGAINST BY REVENUE WAS DISMISSED BY TRIBUNAL. SINCE THERE WAS NO MATERIAL WITH ASSESSIN G OFFICER TO COME TO CONCLUSION REGARDING ANY INGENUINENESS OR FICTITIOU S IDENTITY OF ENTRIES OR NON- CAPACITY OF LENDER, ADDITION WAS RIGHTLY DELETED . EVEN, THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT V. RAMNEET SINGH [(2008)] 306 ITR 267 (P & H)] HAS LAID DOWN AS UNDER: WHERE ASSESSEE HAD PRODUCED SUFFICIENT DOCUMENTS TO SHOW THAT LOAN SHOWN IN NAME OF TWO COMPANIES HAD BEEN RECEIVED FROM THOSE PARTIES, ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED LOANS WAS RIGHTLY DELETED BY TRIBUNAL. TO CONCLUDE, IT MAY BE SAID, THAT, ON THE BASIS OF THE FACTS DISCUSSED AND THE RATIO OF THE JUDGEMENTS MADE IT CLEAR THAT , IF THE CASH CREDITORS WERE IDENTIFIED, AND, IT WA S ESTABLISHED THAT THEY HAD LENT MONEY TO THE APPELLA NT, NO RECOURSE COULD BE MADE TO THE PROVISIONS OF SECTION 68. ALL THE REQUISITE PARTICULARS WERE PROVIDED TO ESTABLISH THE IDENTITY OF THE CASH CREDITORS IN THE SHAPE OF CONF IRMATIONS, ITRS AND BANK STATEMENTS TO THE LD. ASSESSING OFFICER. THE VARIOUS ARGUMENTS ADVANCED BY THE LD. ASSESSING OFFICER DID NOT FIND ANY MERIT, IN, AS MUCH AS, THE SAME AMOUNTED TO ASKING THE APP ELLANT TO FURNISH THE SOURCE OF THE SOURCE OF DEPOSIT, WHICH, WAS AGAINST THE SPIRIT AND LETTER OF SECTION 68, AS, IT WOULD BE SELF-EVIDENTLY CLEAR AN D UNDERSTOOD FROM THE PLETHORA OF RELEVANT JUDGEMENTS CITED ABOVE. THE ONUS ENJOINED UPON THE APPELLANT AS PER THE PRO VISIONS OF SECTION 68 STANDS NOT ONLY ADEQUATELY BUT, ALSO, COMPLETELY SATISFIED . THE DOUBT EXPRESSED BY THE LD. ASSESSING OFFICER WITH REGARD TO THE SOURCES OF THE INCOME OF THE CR EDITORS, IS BEYOND THE SCOPE AND AMBIT OF SECTION 68 , CONSIDERING THAT, THE SOURCE OF THE SOURCE CANNOT BE QUESTIONED BY THE LD. ASSESSING OFFICER. THE LD. ASSESSING OFFICER PERUSED THE BANK STATEMENTS OF THE INVESTOR COMPAN IES FOR THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION , AND, OBSERVED THAT THESE INVESTOR COMPANIES ARE ENTRY OPERATORS. THEY DO NOT HAVE MUC H BUSINESS OF THEIR OWN. THE LD. ASSESSING OFFICER , FURTHER, OBSERVED THAT ALL THE MONIES APPEARING I N THE BANK ACCOUNT OF INVESTOR COMPANIES ORIGINATED FROM SOME OTHER ACCOU NTS DOWN THE LINE. HOWEVER, THE PERUSAL OF THE BANK STATEMENTS DID NOT DRAW SUCH AN INFERENCE. THE LD. ASSESSING OFFICER DID NOT PLACE ANY APPROPRIATE INTERPRETATION, BUT, SUCH INTERPRETATION WAS NEVER BEING MADE. THE LD. ASSESSING OFFICERS ABOVE REVELATIONS WERE BASED MERELY ON GUESS-WORK, SURMISES AND CONJECTURES. FURTHER, FROM THE CLOSE SCRUTINY OF THE ABOVE BANK STATEMENTS , IT WOULD BE OBSERVED THAT, THERE WERE FREQUENT TR ANSACTIONS IN THE BANK ACCOUNTS OF THE INVESTOR COMPANIES, WHEREBY, REGULA R AMOUNTS WERE BEING DEPOSITED AND WITHDRAWALS MADE. THIS SHOWS THAT THE INVESTOR FIRM S ARE HAVING REGULAR BUSINESS. INFACT, THERE IS NO EVIDENCE OF ANY CASH HAVING BEEN DEPOSITED BY THE APPELLANT IN THE BANK ACCOUNT OF THE INVESTOR COMPANIES. THE TRANSAC TION BETWEEN THE INVESTOR COMPANIES AND THE APPELLANT WAS ROUTED THROUGH BANKING CHANNE LS, AND , THE APPELLANT HAD DULY EXPLAINED SOURCE OF INCOME. EVEN, THE JUDGEMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. SUMATI DAYAL 214 ITR 801 RELIED UPON BY THE LD. ASSESSING OFFICE R ARE CLEARLY DISTINGUISHABLE IN THE FACTS OF THE CASE OF THE APPELLANT . THE MAIN DISTINGUISHING POINT WAS THAT, IN THE CASE OF SUMAT I DAYAL, THE ASSESSEE , HERSELF, FILED A SWORN STATEMENT TO EFFECT THAT , SHE STARTED GOING FOR RACES ONLY TOWARDS END OF Y EAR 1969 AND HAD NO EXPERIENCE IN RACES, BUT , SHE PURCHASED JACKPOT TICKETS ON COMBINATION WORKED OUT BY HER ON BASIS OF ADVICE GIVEN BY HER H USBAND, WHEREAS, IN THE INSTANT CASE , ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 13 THE APPELLANT DID NOT FILE ANY SUCH STATEMENT, ON T HE BASIS OF WHICH, THE MATTER IN QUESTION HAD TO BE CONSIDERED IN LIGHT OF HUMAN PROBABILITIE S. FROM THE ABOVE, IT COULD BE UNDOUBTEDLY , AND, UNQUESTIONABLY ESTABLISHED THAT THE FACTS IN THE CASE OF THE APPELLANT WERE VERY MUCH DIFFERENT FROM THE FACTS OF THE CASE OF SUMATI DAYAL . THEREFORE , THE JUDGEMENT IN THE CASE OF SUMATI DAYAL RELIED PLACED UPON BY THE LD. ASSESSING OFFICER, WOULD , NOT BE APPLICABLE IN THE CASE OF THE APPELLANT. AS SUCH, THE ADDITION OF RS. 75,00,000/- MADE BY THE LD. ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME-TAX ACT, 1961, ARE , NEITHER WARRANTED NOR SUSTAINABLE, KEEPING IN VIEW, BOTH THE FACTUAL AS W ELL AS THE LEGAL POSITION OUTLINED ABOVE. THUS, THE ASSESSMENT ORDER DATED 27.03.2015 IS CONT RARY TO LAW AND FACTS. FURTHERMORE, THERE ARE ALSO OTHER LEGAL PRONOUNCEME NTS BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH, ON THE VERY MUCH SIMILAR ISSUE RAISED IN THE CASE OF M/S A.P. REFINERY PVT. LTD., M/S KISCO CASTINGS (P.) LTD. AND M/S MANDI ALLOYS (P.) LTD. TO CONCLUDE, IT MAY BE SAID, THAT, ON THE BASIS OF THE FACTS DISCUSSED AND THE RATIO OF THE JUDGEMENTS MADE IT CLEAR THAT , IF THE CASH CREDITORS WERE IDENTIFIED, AND, IT WA S ESTABLISHED THAT THEY HAD LENT MONEY TO THE APPELLA NT, NO RECOURSE COULD BE MADE TO THE PROVISIONS OF SECTION 68. ALL THE REQUISITE PARTICULARS WERE PROVIDED TO ESTABLISH THE IDENTITY OF THE CASH CREDITORS IN THE SHAPE OF CONF IRMATIONS, ITRS AND BANK STATEMENTS TO THE LD. ASSESSING OFFICER. THE VARIOUS ARGUMENTS ADVANCED BY THE LD. ASSESSING OFFICER DID NOT FIND ANY MERIT, IN, AS MUCH AS, THE SAME AMOUNTED TO ASKING THE APP ELLANT TO FURNISH THE SOURCE OF THE SOURCE OF DEPOSIT, WHICH, WAS AGAINST THE SPIRIT AND LETTER OF SECTION 68, AS , IT WOULD BE SELF-EVIDENTLY CLEAR AND UNDERSTOOD F ROM THE PLETHORA OF RELEVANT JUDGEMENTS CITED ABOVE. HOPE YOUR HONOR WILL FIND THE ABOVE POSITION IN ORD ER, AND, SHALL PROCEED TO ADJUDICATE THE APPEAL ACCORDINGLY. 5. HOWEVER, THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE OBSERVING AS UNDER;- 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASS ESSING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER WHILE MAKING THE IMPUGNED ADDITION. I HAVE ALSO CONSIDERED WRITTEN SUBMISSION S FILED BY THE ASSESSEE COMPANY THROUGH ITS LEARNED AR VIDE LETTER 25.11.2016 ON THE ISSUE UNDER REFERENCE. I HAVE FURTHER CONSIDERED VA RIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE LEARNED AR OF THE ASSESSEE AS WELL AS OTHER MATERIAL PLACED BY HIM ON RECORD. ON CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER, IT HAS BEEN NOTICED THAT THE ASSE SSING OFFICER HAS MADE THE IMPUGNED ADDITION AS THE ASSESSEE COMPANY COULD NOT ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T RANSACTION IN THE CASE OF M/S LAWA MARKETING PVT. LIMITED AND M/S PAN SY DEALER PVT. LIMITED FROM WHOM SHARE CAPITAL/SHARE PREMIUM HAS B EEN STATED TO BE RECEIVED BY THE ASSESSEE COMPANY. ON THE OTHER HAND , THE LEARNED AR OF THE ASSESSEE COMPANY HAS SUBMITTED THAT THE ASSE SSEE COMPANY HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF TRANSACTION IN THE CASE OF SHARE HOL DER COMPANIES BY PRODUCING THE COPY OF INCOME TAX RETURNS FILED BY T HESE COMPANIES, THEIR BANK STATEMENTS, SHARE APPLICATION FORMS, SHARE TRA NSFER CERTIFICATES, COPY OF ARTICLES AND MEMORANDUM OF ASSOCIATION, COP Y OF PAN CARD ETC. IT HAS ALSO BEEN SUBMITTED THAT THE SHARE HOLDER CO MPANIES HAVE ALSO REPLIED TO SUMMONS ISSUED BY THE DDIT(INV.), UNIT - 1(1), KOLKATA BY WAY OF A LETTER AND THEY HAVE ALSO EXPLAINED THE SO URCE OF ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 14 INVESTMENTS. THE LEARNED AR OF THE ASSESSEE COMPANY HAS ALSO ENCLOSED COPIES OF LETTERS ADDRESSED BY THESE SHARE HOLDER COMPANIES TO DDIT (LNV.), UNIT-L (1),KOLKATA. ON CAREFUL CONS IDERATION OF THE RIVAL CONTENTIONS, I AM ALSO OF THE OPINION THAT TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IN THE CASE OF THE SHAREHOLDER COMPANIES NAMELY M/S LAWA MARKETING PVT . LIMITED AND M/S PANSY DEALER PVT. LIMITED HAS NOT BEEN ESTABLIS HED BY THE ASSESSEE COMPANY BY PRODUCING THE DIRECTORS OF THESE COMPANI ES. THE INQUIRIES CONDUCTED BY THE DEPARTMENT CLEARLY ESTABLISH THAT THE SHAREHOLDER COMPANIES DO NOT EXIST AT THEIR RESPECTIVE ADDRESSE S AND ARE BELIEVED TO BE PAPER COMPANIES AND ARE IN FACT CREATED JUST TO PROVIDE ACCOMMODATION ENTRIES TO THE NEEDY PERSONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AR OF THE ASSES SEE WAS SPECIFICALLY ASKED TO PRODUCE THE DIRECTORS OF ABOVE MENTIONED I NVESTOR COMPANIES BUT HE FAILED TO PRODUCE THEM INSPITE OF REPEATED O PPORTUNITIES. IT HAS BEEN NOTICED THE ASSESSING OFFICER FROM THE DETAILS FILED BY THE LEARNED AR OF THE ASSESSEE COMPANY THAT THE INVESTOR COMPANIES ARE DECLARING VERY NOMINAL INCOME IN THEIR RETURN OF IN COME AND FURTHER NOTICED THAT BEFORE ISSUE OF CHEQUE TO ASSESSEE COM PANY HUGE AMOUNTS ARE BEING TRANSFERRED IN ITS ACCOUNTS THROU GH RTGS WHICH REMAINED UNVERIFIED. UNDER THESE CIRCUMSTANCES, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT IT COULD NOT BE SAID THAT THE CREDITWORTHINESS OF THESE INVESTOR COMPANIES WAS PR OVED. THE MATERIAL AND THE RECORDS IN THIS CASE SHOW THAT THE INVESTOR COMPANIES DO NOT EXIST AT THE GIVEN ADDRESS. IT HAS ALSO BEEN NOTICE D THAT EVEN THOUGH THE INVESTOR COMPANIES COULD NOT BE LOCATED AT THE GIVEN ADDRESS BY THE DDIT(INV.), UNIT-L(L), KOLKATA BUT THE ASSESSEE COM PANY WAS IN A POSITION TO OBTAIN DOCUMENTS FROM THESE COMPANIES INCLUDING THE LETTERS STATED TO BE SENT BY THESE COMPANIES TO THE DDIT(LNV.), UNIT-L(L), KOLKATA IN RESPONSE TO SUMMONS ISSUED BY HIM. THIS FACT CLEARLY SHOW THAT THE ASSESSEE COMPANY IS DELIBERATELY AND CONSC IOUSLY AVOIDING TO PRODUCE DIRECTORS OF SHARE HOLDER COMPANIES UNDER C ONSIDERATION. WHILE THERE CAN BE NO DOUBT THAT IN THE CASE OF LOV ELY EXPORTS, THE COURT INDICATED THE RULE OF 'SHIFTING ONUS' I.E. TH E RESPONSIBILITY OF THE REVENUE TO PROVE THAT SECTION 68 OF THE ACT COULD B E INVOKED ONCE THE BASIC BURDEN STOOD DISCHARGED BY FURNISHING RELEVAN T AND MATERIAL PARTICULARS, AT THE SAME TIME, THAT JUDGMENT CANNOT BE SAID TO LIMIT THE INFERENCES THAT CAN BE LOGICALLY AND LEGITIMATELY D RAWN BY THE REVENUE IN THE NATURAL COURSE OF ASSESSMENT PROCEEDINGS. TH E INFORMATION THAT ASSESSEE FURNISHES IN MY OPINION WOULD HAVE TO BE C REDIBLE AND AT THE SAME TIME VERIFIABLE. IN THIS CASE, THE INVESTOR CO MPANIES COULD NOT BE LOCATED AT THE GIVEN ADDRESS DURING THE COURSE OF E NQUIRIES CONDUCTED BY THE DEPARTMENT. IN THE BACKDROP OF THIS CIRCUMST ANCE, THE ASSESSEE COMPANY'S ABILITY TO SECURE DOCUMENTS SUCH AS INCOM E TAX RETURNS OF THE INVESTOR COMPANIES AS WELL AS THEIR BANK ACCOUN T PARTICULARS WOULD ITSELF GIVE RISE TO A CIRCUMSTANCE WHICH THE ASSESS ING OFFICER IN THIS CASE PROCEEDED TO DRAW INFERENCES FROM. HAVING REGARD T O THE TOTALITY OF THE FACTS, I.E., THAT THE ASSESSEE COMPANY IS SHOWING L OSSES IN ITS RETURNS BEING FILED BY IT WITH THE DEPARTMENT AND STILL SOU GHT TO INFUSE SHARE CAPITAL AT A HUGE PREMIUM OF RS.390/- PER SHARE AND WAS ABLE TO ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 15 GARNER A COLOSSAL AMOUNT OF RS.75,00,000/-, I AM OF THE OPINION THAT THE ASSESSING OFFICER HAS CORRECT1Y INVOKED PROVISIONS OF SECTION 68 OF THE ACT IN THIS CASE. THE ENQUIRIES MADE BY THE ASSESSING O FFICER REVEAL THAT THE INVESTOR COMPANIES HAD SUBSTANTIAL MEANS AND COULD NOT REASONABLY BE SAID TO POSSESS MEANS TO MAKE INVESTMENT THAT THEY DID IN PURCHASING SHARES OF THE ASSESSEE COMPANY. THE HONOURABLE DELH I HIGH COURT IN THE CASE OF CIT VS. M/S N.R. PORTFOLIO (P) LIMITED [ITA NO. 1018 & 1019 OF 2011] HAS HELD THAT WHEN ASSESSEE DOES NOT PRODU CE EVIDENCE OR TRIES TO AVOID APPEARANCE BEFORE ASSESSING OFFICER, IT NE CESSARILY CREATES DIFFICULTIES AND PREVENTS ASCERTAINMENT OF TRUE AND CORRECT FACTS AS ASSESSING OFFICER IS DENIED ADVANTAGE OF CONTENTION OR FACTUAL ASSERTION. IT HAS ALSO BEEN HELD THAT THE COURT OR TRIBUNAL SH OULD BE CONVINCED ABOUT THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IT HAS FURTHER BEEN HELD THAT THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE CORRECT FACTS ARE WITHIN PERSONAL KNOWLEDGE OF THE ASSESSEE. IT HAS AGAIN BEEN HELD T HAT MERE PRODUCTION OF INCORPORATION DETAILS, PAN NOS. OR RETURNS MAY N OT BE SUFFICIENT WHEN SURROUNDING AND ATTENDING FACTS PREDICATE COVE R UP. THE ASSESSEE COMPANY ALSO FAILED TO PRODUCE DIRECTORS OF THE INV ESTOR COMPANIES WHO HAD INVESTED IN SHARES OF THE ASSESSEE COMPANY AND SHOW THAT THESE COMPANIES WERE COMPLETELY UNRELATED TO THE ASSESSEE COMPANY AND AS SUCH THE ENTRIES TAKEN BY THE ASSESSEE COMPANY BY W AY OF SHARE CAPITAL/SHARE PREMIUM ARE MERELY ACCOMMODATION ENTR IES. AS THE ASSESSEE HAD NOT DISCHARGED ONUS SATISFACTORILY, TH E ASSESSING OFFICER CORRECTLY INVOKED PROVISIONS OF SECTION 68 OF THE A CT IN THIS CASE. IN SUPPORT OF MY ABOVE MENTIONED CONTENTIONS, RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- (I). CIT VS. ULTRA MODERN EXPORTS (P) LIMITE D(DELHI) (2012) 83CCH 0126 DEL HC (II). TULIP ENGINEERING (P) LIMITED VS. ITO ( 2015) 92 CCH 0060 DEL HC (III). CIT VS. MAF ACADEMY (P) LIMITED (2014) 3 61 ITR 0285 (DELHI) (IV). CIT VS. NR PORTFOLIO (P) LIMITED [ITA NO. 1018 & 1019 OF 2011, DATE OF DECISION 22.11.2013] (V). CIT VS. NOVA PROMOTERS AND FINLEASE LIMITE D (DEL.) (2012) 342 ITR 169 (DELHI) (VI). CIT VS. NIPUN BUILDERS & DEVELOPERS (P) LI MITED (2013) 350 ITR 407 (DELHI) (VII). PR.CIT VS. MATCHMESS GLASS SERVICES (P) LI MITED (2016) 380 ITR 0370 (DELHI) (VIII). CIT VS. SOPHIA FINANCE (P) LIMITED (1994) 205 ITR 98 (DELHI) (IX). CIT VS. FIVE VISION PROMOTERS (P) LIMITED [DELHI] [ITA NO. 234/2015; 27.11.2015] (X). AZZEM INVESTMENT (P) LIMITED VS. CIT (2012 ) 252 CTR 0217 (DELHI) (XI) CIT VS. TARIKA PROPERTIES INVESTMENT (P) LI MITED (2013) 86 CCH 0368 DELHC (XII). ONASSIS AXLES (P) LIMITED VS, CIT (2014) 8 8 CCH 0085 DELHI HC ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 16 (XIII). CIT VS, TARIKA PROPERTIES INVESTMENT (P) L IMITED (2013) 86 CCH 0175 DEL HC (XIV). CIT VS. TITAN SECURITIES LIMITED (2013) 357 ITR 0184 (DEL.) (XV). CIT VS. GOLD LEAF CAPITAL CORPORATION LIMITE D (2013) 353 ITR 0163 (DEL). I AM ALSO OF THE OPINION THAT THE JUDICIAL PRONOUNC EMENTS RELIED UPON BY THE LEARNED AR OF THE ASSESSEE HAVE DISTINGUISHA BLE FACTS FROM THE FACTS OF THE CASE OF THE ASSESSEE COMPANY. I AM FUR THER OF THE OPINION THAT MERELY BY PROVIDING CERTAIN DOCUMENTS WHICH AL SO REMAINED UNVERIFIABLE AS DONE BY THE ASSESSEE COMPANY IN THI S CASE WILL NOT PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IN THE CASE OF SHARE HOLDER COMPANIES AS HELD IN VARIOUS C OURT DECISIONS AS REFERRED TO ABOVE. I AM AGAIN OF THE OPINION THAT T HE DECISIONS OF THE HONOURABLE APEX COURT IN THE CASE M/S LOVELY EXPORT S IS ALSO NOT APPLICABLE HERE AS MANY OF THE DECISIONS RELIED UPO N BY ME AND THE ASSESSING OFFICER HAVE BEEN DELIVERED AFTER CONSIDE RING THE DECISION OF THE HONOURABLE APEX COURT. UNDER SUCH CIRCUMSTANCES , THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.75,00 ,000/- IN THIS CASE BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT BY TREATING SHARE CAPITAL/SHARE PREMIUM RECEIVED BY THE ASSESSEE COMP ANY FROM M/S LAWA MARKETING PVT. LIMITED AND M/S PANSY DEALER PVT. LI MITED AS ITS OWN INCOME FROM UNDISCLOSED SOURCES ON THE GROUND THAT THE ASSESSEE COMPANY COULD NOT PROVE THE IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF TRANSACTION IN THE CASE OF THESE COM PANIES FROM WHOM SHARE CAPITAL/SHARE PREMIUM HAS BEEN STATED TO BE R ECEIVED BY THE ASSESSEE COMPANY CANNOT BE SAID TO BE UNJUSTIFIED. 5.3 IN VIEW OF THE ABOVE STATED FACTS AND IN THE CI RCUMSTANCES OF THE CASE, I AM OF THE OPINION THAT THE ASSESSING OFFICE R IS FULLY JUSTIFIED IN MAKING AN ADDITION OF RS.75,00,000/- IN THIS CASE B Y INVOKING PROVISIONS OF SECTION 68 OF THE ACT BY TREATING SHA RE CAPITAL/SHARE PREMIUM RECEIVED BY THE ASSESSEE COMPANY FROM M/S L AWA MARKETING PVT. LIMITED AND M/S PANSY DEALER PVT. LIMITED AS I TS OWN INCOME FROM UNDISCLOSED SOURCES. THE ADDITION OF RS. 75,00 ,000/- MADE BY THE ASSESSING OFFICER IN THIS CASE BY INVOKING PROV ISIONS OF SECTION 68 OF THE ACT IS, THEREFORE, UPHELD. IN THE RESULT, TH E GROUND NO.1 OF THE APPEAL TAKEN BY THE ASSESSEE COMPANY IS DISMISSED. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE COMPA NY IS DISMISSED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD . THE ISSUE IN THIS APPEAL RELATE TO THE AMOUNT OF SHARE PREMIUM RECEIVED FROM TWO COMPANIES NAMELY (I) M/S LAWA MAR KETING (P.) LTD. AND; (II) M/S PANSY DEALER (P.) LTD. THE LOWER AU THORITIES HAVE DOUBTED THE RECEIPT OF PREMIUM BY THE ASSESSEE COMPANY FROM THE AFORESAID TWO ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 17 COMPANIES AND HAVE HELD THAT THE SAID AMOUNT IN FAC T WAS OWN MONEY OF THE ASSESSEE ROUTED INTO THE ASSESSEE COMPANY THROU GH AFORESAID ALLEGED SHELL COMPANIES. THE MAIN CONTENTION OF THE LD. COU NSEL FOR THE ASSESSEE HAS BEEN THAT THE ASSESSEE HAS FURNISHED ALL THE RE QUISITE DOCUMENTS / EXPLANATION OF EVIDENCES WHICH THE ASSESSEE WAS SUP POSED TO FURNISH SO AS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE I NVESTOR, GENUINENESS OF THE TRANSACTIONS. THAT, HOWEVER, THE ASSESSING OFFI CER OVERLOOKED THE COGENT AND CONVINCING EVIDENCES FURNISHED BY THE AS SESSEE AND HAS DRAWN A PRESUMPTION, WHICH IS NOT BASED ON TRUE FACTS, TH AT THE AFORESAID SHARE PREMIUM RECEIVED BY THE ASSESSEE WAS UNEAXPALINED I NCOME OF THE ASSESSEE. THAT THE LD. COUNSEL FOR THE ASSESSEE HA S BROUGHT OUR ATTENTION TO VOLUMINOUS EVIDENCES PLACED ON THE FILE SUCH AS COP IES OF PAN NUMBERS OF THE INVESTORS AND DETAILS OF BANK ACCOUNTS, COPIES OF ANNUAL ACCOUNTS FOR FINANCIAL YEARS 2010-11 TO 2012-13, COPIES OF INCOM E TAX RETURNS ETC. AS WELL AS COPIES OF THE CONFIRMATION LETTERS FROM THE INVESTORS. 7. ON THE OTHER HAND, LD. DR HAS STRONGLY PLACED RE LIANCE ON THE OBSERVATIONS MADE BY LOWER AUTHORITIES THAT THE AFO RESAID INVESTOR COMPANIES WERE BASED AT KOLTAKA AND THAT THE DY. DI RECTIOR INCOME TAX (INVESTIGATION) KOLKATA WAS REQUESTED TO MAKE INVES TIGATION ABOUT THE AFORESAID TWO COMPANIES WHO IN TURN REPORTED THAT A N INSPECTOR WAS SENT TO THE ADDRESS OF THE COMPANIES, HOWEVER, THE SAID COM PANIES COULD NOT BE LOCATED BY HIM. THE LD. DR HAS, THEREFORE, SUBMITTE D THAT THESE COMPANIES WERE NON-EXISTENT COMPANIES AND, HENCE, THE ENTIRE TRANSACTION WAS A BOGUS TRANSACTION. ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 18 8. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES. IT IS NOTICED FROM THE RECORD THAT TH E ASSESSEE COMPANY TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE INVE STOR COMPANIES AND GENUINENESS OF THE TRANSACTIONS HAS FURNISHED THE F OLLOWING DOCUMENTS IN RELATION TO THE INVESTOR COMPANY. (A) M/S LAWA MARKETING (P) LTD. A) COPY OF APPLICATION FORM FOR EQUITY SHARES B) COPY OF STATEMENT OF BANK ACCOUNT OF TRANSACTIONS E FFECTED ON 20.03.2012 C) COPY OF PERMANENT ACCOUNTS-LUMBER D) COPY OF INCOME-TAX RETURN ACKNOWLEDGEMENT OF A.Y. 2 011-12 E) COPY OF BLANK SHARE TRANSFER FORM G) COPY OF CERTIFICATE OF INCORPORATION F) COPY OF MEMORANDUM AND ARTICLES OF ASSOCIATION G) COPY OF LETTER (ALONG WITH ENCLOSED COPIES) TO THE DEPUTY DIRECTOR OF INCOME-TAX, DDIT(LNV.), UNIT-(I)L, KOLKATA; WHER EIN INFORMATION WAS FURNISHED U/S 131 OF THE INCOME-TAX ACT, 1961 I N THE CASE OF M/S TECHNICO METALS (P.) LTD. FOR A.Y. 2012-13: (I) COPY OF FORM OF APPLICATION FOR EQUITY SHARES (II) COPY OF BANK STATEMENT OF YES BANK FROM 0 1.03.2012 TO 31.03.2012 EVIDENCING THE FACT THAT M/S LAWA MARKET ING (P.) LTD. HAD PAID A SHARE APPLICATION MONEY OF RS. 25,00,000/- THROUG H RTGS DATED 20.03.2012. THE SAME WAS SOURCED OUT OF SALE OF SHA RES FOR RS. 32,00,000/- TO M/S ABILITY DEALMARK (P.) LTD. ON 20.03.2012. (III) COPY OF INCOME-TAX RETURN ACKNOWLEDGEMENT OF A.Y. 2012-13 (III) COPY OF DIRECTORS REPORT, AUDITORS REPORT A ND BALANCE SHEET OF M/S LAWA MARKETING (P) LTD. AS AT 31.03.2012 ALONG WITH A SCHEDULE OF DETAILS OF INVESTMENTS. H) COPY OF CONFIRMATION G) COPY OF SHARE CERTIFICATE (B) M/S PANSY DEALER (P) LTD. A ) COPY OF SUMMONS ISSUED TO M'S PANSY DEALER PVT. LTD . U/S 131 OF THE INCOME-TAX ACT. 1961 BY THE DEPUTY DIRECTOR OF INCOME-TAX (INVESTIGATION), UNIT 1(1), KOLKATA B) COPY OF APPLICATION FORMS FOR EQUITY SHARES C) COPY OF INCOME-TAX RETURN ACKNOWLEDGEMENT OF A. Y. 2011-12 D) COPY OF LETTER (ALONG WITH ENCLOSED COPIES) TO THE DEPUTY DIRECTOR OF INCOME-TAX, DDIT(INV.). UNIT-(L)L. KOLKATA; WHER EIN INFORMATION WAS FURNISHED U/S 131 OF THE INCOME-TAX ACT. 1961 IN THE CASE OF M/S TECHNICO METALS (P.) LTD. FOR A.Y. 2012-13: (I) COPY OF FORM OF APPLICATION FOR EQUITY SHARES (II) COPY OF BANK STATEMENT OF INDUSIND BANK FROM 1 9.03.2012 TO 31.03.2012 EVIDENCING THE FACT THAT M/S PANSY DE ALER (P.) LTD. HAD PAID A SHARE APPLICATION MONEY OF RS. 25,0 0,000/- THROUGH RTGS DATED 21.03.2012. (III) COPY OF INCOME-TAX RETURN ACKNOWLEDGEMENT OF A.Y. 2012-13 ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 19 (III) COPY OF DIRECTOR'S REPORT, AUDITOR'S REPORT A ND BALANCE SHEET OF M/S PANSY DEALER (P.) LTD. AS AT 31.03.2012 ALON G WITH A SCHEDULE OF DETAILS OF INVESTMENTS. E) COPY OF CONFIRMATION F) COPY OF EXTRACT OF MINUTES OF BOARD MEETING OF M/S PANSY DEALER (P.) LTD. G) COPY OF SHARE CERTIFICATE 9. A PERUSAL OF THE ABOVE REVEALS THAT THE ASSESSEE HAD FURNISHED THE RELEVANT DOCUMENTS TO PROVE THE IDENTITY, CREDITWOR THINESS OF THE INVESTORS AS WELL AS GENUINENESS OF THE TRANSACTIONS. HOWEVER , THE ASSESSING OFFICER HARPED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANY BEFORE HIM, IN REPLY, TO WHICH THE ASSESSEE SUBMITT ED AS UNDER:- INSPITE OF THE BEST EFFORTS MADE BY THE ASSESSEE COMPANY, NONE OF THE SUBSCRIBER IS AGREED TO BE PERSONALLY PRESENT BEFORE YOUR HONOR, SINCE, ALL THESE ARE STAYING IN KOLKATA OR OTHER PLACES WHICH ARE FAR FROM LUDHIANA. THE ASSESSEE COMPANY HAS ALREADY SUBMITTED CONFIRMATIONS GIVING THEIR FULL ADDRESSES. YOUR HONOR IS REQUESTED TO KINDLY SUMMON THESE PARTIES BY USING YOUR GOOD OFFICE. THE ASSESSEE COMPANY IS READY TO MAKE PAYMENT OF DIET MONEY FOR THE SAME. 10. THE LD. COUNSEL IN THIS RESPECT HAS ALSO RELIED ON THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. JALAN HARD COKE LTD.,[2018] 95 TAXMANN.COM 330(RAJASTHAN), WHEREIN , IN SOMEWHAT IDENTICAL FACTS, THE ASSESSEE EXPRESSED ITS INABIL ITY TO PRODUCE THE SHARE APPLICANTS, THE HON'BLE HIGH COURT HELD THAT ADDITI ONS WERE NOT WARRANTED OBSERVING THAT THE COMPANY CANNOT ASSESS FOR THE I NCOME TAX TO FIND OUT THE PERSONS WHO HAS APPLIED AS SHAREHOLDER. THE SAI D DECISION OF THE HON'BLE RAJASTHAN HIGH COURT HAS BEEN AFFIRMED BY T HE HON'BLE SUPREME COURT BY WAY OF DISMISSAL OF SLP FILED AGAINST THE SAID ORDER REPORTED IN CIT VS. JALAN HARD COKE LTD., [2018] 95 TAXMANN.C OM 331 (SC). THE LD. COUNSEL HAS ALSO BROUGHT OUR ATTENTION TO PARA 6.1 OF THE DECISION OF ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 20 HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS . JALAN HARD COKE LTD. WHEREIN, THE HON'BLE HIGH COURT CONSIDERING THE ENTIRE DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. AR L INFRATECH LTD., [2017] 88 TAXMAN.COM 469 HAS APPROVED THE OBSERVATI ON OF THE TRIBUNAL THAT THE ALLEGED REPORT OF THE INSPECTOR OF THE DEP ARTMENT WHO HAS STATED TO HAVE VISITED AT THE GIVEN ADDRESS OF THE SHARE APPL ICANT WAS NEVER PUT OR CONFRONTED TO THE ASSESSEE AND, HENCE, THE RELIANCE CANNOT BE PLACED ON THE SAID REPORT. 11. IN THIS CASE, THE SHARE APPLICATION MONEY ALONG WITH PREMIUM WAS RECEIVED THROUGH BANKING CHANNEL. THE DETAILS OF TH E BANK ACCOUNT OF THE INVESTOR HAVE BEEN DULY SUPPLIED. EVEN THE SOURCE O F FUNDS OF THE INVESTOR IS ALSO EXPLAINED. THE INCOME TAX RETURNS OF THE IN VESTOR ARE ALSO FURNISHED. THE INVESTOR COMPANIES HAVE BEEN DULY REGISTERED UN DER THE INDIAN COMPANIES ACT AND THERE IS NO EVIDENCE ON FILE THAT THEIR REGISTRATION HAS BEEN CANCELLED OR THAT THE INVESTOR COMPANIES HAVE BEEN DECLARED AS NON- EXISTENT OR SHELL COMPANIES. IN RESPONSE TO SUMMONS ISSUED BY THE DDIT (INV), KOLKATA, INVESTOR COMPANIES DULY FILED ALL T HE DETAILS AND DULY CONFIRMED THAT THEY HAD INVESTED IN THE SHARES OF T HE ASSESSEE COMPANY. THE ONLY REASON FOR WHICH THE AFORESAID INVESTMENT HAS BEEN DISBELIEVED BY THE ASSESSING OFFICER IS ON THE GROUND THAT THE INSPECTOR OF THE INCOME TAX AT KOLKATA HAD REPORTED THAT THE AFORESAID COMP ANIES COULD NOT BE TRACED OUT AT THE GIVEN ADDRESS. HOWEVER, WE FIND F ROM THE RECORD THAT THE ASSESSEE COMPANY HAS FURNISHED THE BANK DETAILS OF THE INVESTOR COMPANIES. THE ADDRESS ON THE EXISTENCE OF THE SAID COMPANIES COULD HAVE BEEN VERIFIED FROM THE ACCOUNT OPENING FORMS ETC. IT IS IN THE COMMON KNOWLEDGE THAT THE ACCOUNTS ARE OPENED IN THE BANK THROUGH INTRODUCERS ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 21 WHO APPROVE THAT THE ACCOUNT HOLDER IS KNOWN TO HIM / HER AND IS GENUINE. ENQUIRIES COULD HAVE BEEN MADE FROM THE SAID INTROD UCERS ALSO. APART FROM THAT, THE COMPANIES HAVE BEEN DULY REGISTERED AT TH E GIVEN ADDRESS AND DULY AUDITED BY THE AUDITORS. THE ASSESSEE HAD ALSO PRO DUCED ON THE FILE THE REPORT OF THE AUDITORS IN THE CASE OF BOTH THE INVE STOR COMPANIES WHO HAVE AUDITED THE ACCOUNTS OF THE AFORESAID FIRMS. IF THE RE WAS ANY DOUBT ABOUT THE EXISTENCE OF SUCH COMPANIES, THE CONCERNED AUDI TORS, CA OF THE RESPECTIVE COMPANIES COULD HAVE BEEN ENQUIRED / INV ESTIGATED. IT HAS BEEN EXPLAINED THAT THE M/S LAWA MARKETING (P.) LTD. HAD PAID SHARE APPLICATION MONEY OF RS. 25 LACS THROUGH RTGS AND THE SAME WAS SOURCED OUT OF THE SALE OF SHARES FOR RS. 32 LACS TO M/S ABILITY DEALM ARK (P.) LTD.). SIMILARLY, THE SOURCE OF FUNDS IN THE CASE OF M/S PANSY DEALER (P.) LTD. HAS BEEN EXPLAINED THAT THE SAME WERE SOURCED BY SA LE OF SHARES OF M/S MALCOM MARKETING PVT. LTD. THERE IS VOLUMINOUS RE CORD PLACED ON THE FILE SUCH AS SHARE APPLICATION FORMS, SHARE CERTIFI CATES, BANK ACCOUNTS STATEMENTS, CONFIRMATION FROM THE INVESTORS, CERTIF ICATE OF INCORPORATION OF THE SAID COMPANIES, DIRECTORS REPORT, AUDITORS REPO RT AND BALANCE SHEETS ETC. SO FAR AS THE QUESTION AS TO WHY THE SAID INVESTMEN T COMPANY WOULD INVESTIGATE THE ASSESSEE COMPANY, THAT IN OUR VIEW, IS THE INTERNAL / MARKET DECISION OF THE SAID INVESTOR COMPANY AND THAT CANN OT BE A BASIS FOR HOLDING THAT THE SAID INVESTOR IS BOGUS. SO FAR AS THE OBSERVATION THAT THE INVESTOR COMPANIES WERE RUNNING INTO LOSSES, THE LD . COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS DEMONSTRATED FROM THE BALANCE SHEET, THAT AS ON THE DATE OF INVESTMENT, THE SAID COMPANIES WERE HAVING HUGE SURPLUSES, WHICH WERE SUFFICIENT TO MAKE THE AFORESAID INVESTM ENT. UNDER THE CIRCUMSTANCES, THE SOLE REPORT OF THE INSPECTOR THA T HE COULD NOT TRACE THE ITA NO. 1348/CHD/2017- M/S TECHNICO METALS PVT.LTD., LUDHIANA 22 COMPANIES, WHICH HAS BEEN SUBMITTED IN THE BACK OF THE ASSESSEE WITHOUT ANY OPPORTUNITY TO THE ASSESSEE TO CONFRONT THE SAM E, IS NOT SUFFICIENT TO HOLD THAT THE AFORESAID TRANSACTIONS WERE BOGUS. M OREOVER, THERE IS NO EVIDENCE ON THE FILE THAT THE AMOUNTS INVESTED BY T HE AFORESAID COMPANIES WAS THE OWN MONEY OF THE ASSESSEE. 12. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATI ON ON THE PART OF THE LOWER AUTHORITIES IN MAKING THE IMPUGNED ADDITIONS. THE SAME ARE ACCORDINGLY SET ASIDE/DELETED. THE APPEAL OF THE ASSESSEE IS THEREFORE, ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.2.2019. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 15. 02.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR