ITO 5(1)(1), MUMBAI V. ANGEL PIPES AND TUBES P. LTD, MUMBAI

ITA 1424/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7969 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Bogus Share capital; Share purchase agreement; Principle of natural justice; Source of fund; Wrong claim; Accommodation entries; Onus to prove
• Section: 133(6); 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIVEK VARMA, JM ./ I.T.A. NO. 405/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) ANGEL PIPES AND TUBES PVT. LTD. 110/112, 1 ST FLOOR, KUMBHARWADA, MUMBAI-400 020 / VS. INCOME TAX OFFICER-5(1)(1), 5 TH FLOOR, INCOME TAX OFFICE, M. K. ROAD, MUMBAI-400 001 ./! ./PAN/GIR NO. AAFCA 9203 P ( '# $% / ASSESSEE ) : ( / REVENUE ) & ./ I.T.A. NO. 1424/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER-5(1)(1), 5 TH FLOOR, INCOME TAX OFFICE, M. K. ROAD, MUMBAI-400 001 / VS. ANGEL PIPES AND TUBES PVT. LTD. 110/112, 1 ST FLOOR, KUMBHARWADA, MUMBAI-400 020 ./! ./PAN/GIR NO. AAFCA 9203 P ( / REVENUE ) : ( '# $% / ASSESSEE ) '# $% & ' / ASSESSEE BY : SHRI PRAMOD KUMAR PARIDA & ' / REVENUE BY : SHRI S. J. SINGH ( ' ) & % * / DATE OF HEARING : 13.05.2014 +,- & % * / DATE OF PRONOUNCEMENT : 13.08.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS A SET OF TWO APPEALS, I.E., BY THE ASSESSEE AND THE REVENUE FOR THE ASSESSMENT YEAR (A.Y.) 2008-09, ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME 2 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. TAX (APPEALS)-9, MUMBAI (CIT(A) FOR SHORT) DATED 05.12.2011, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143 (3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) VIDE ORDER DATED 23.12.2010. THE APPEALS RAISING COMMON ISSUES, WERE TAKEN UP FOR HEARING TOGETHER AND ARE BEING DISPOSE D OF LIKEWISE FOR THE SAKE OF CONVENIENCE. THE BACKGROUND FACTS 2. WE SHALL BEGIN BY RECOUNTING THE BACKGROUND FACT S OF THE CASE, BEING RELEVANT. THE ASSESSEE-COMPANY, INCORPORATED AS MANDARIKA PROTEIN S LIMITED ON 25/07/1995, IS A MANUFACTURER AND DEALER IN FERROUS AND NON-FERROUS METALS, WITH AN AUTHORIZED CAPITAL OF RS.50 LACS (AS PER ITS BALANCE SHEET AS ON 31/03/20 08). IT WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED TO HAVE RAISED CAPI TAL OF RS.616.925 LACS DURING THE RELEVANT YEAR, INCLUDING SHARE PREMIUM OF RS.517.50 LACS, I.E., AT OVER 520% OF THE NOMINAL VALUE. NOTICES UNDER SECTION 133 (6), ISSUE D TO 21 COMPANIES WHO HAD SUBSCRIBED TO THE SHARE CAPITAL AS PER DETAILS FURN ISHED BY THE ASSESSEE, YIELDED RESPONSE FROM ONLY ONE COMPANY, M/S. OM PROCUREMENT & PROJEC TS LTD., WHICH HAD MADE INVESTMENT OF RS. 20 LACS, IN THE FORM OF BANK STAT EMENT AND ACKNOWLEDGEMENT OF ITS RETURN OF INCOME FOR THE RELEVANT YEAR. COPY OF SHA RE CERTIFICATE(S), FINAL ACCOUNTS AND THE COMPUTATION OF INCOME, ALSO CALLED FOR, WERE NOT FU RNISHED. ONE, SH. GIRISH CHAND YADAV, INTRODUCED AS DIRECTOR OF THE SIX COMPANIES, REPRESENTATION FROM WHOM WAS SOUGHT BY THE ASSESSING OFFICER (AO), WAS PRODUCED BY THE ASSESSEE ON 07/12/2010 , AND HIS STATEMENT RECORDED U/S. 131 OF THE ACT IN THE P RESENCE OF THE ASSESSEES REPRESENTATIVE, SHRI NISHANT S. MEHTA, C.A. HE, THEREIN, AVERRED TO BE IN THE BUSINESS OF DALALI (BROKING SERVICES) IN TEXTILES FABRICS; TO HAVE INVESTED RS. 1 LAC EACH IN ACQUIRING THE SAID COMPANIES, WHOSE ADDRESS WAS AT H-157, DR. BABA SAH EB AMBEDKAR NAGAR, S.M. ROAD, KOKARI AGAR, SION KOLIWADA, MUMBAI 400 037, AND THA T HE WOULD FURNISH THE ADDRESS PROOF LATER. HE STATED HIS EDUCATIONAL QUALIFICATIO N AS MATRIC AND, FURTHER, OF NOT BEING AN ASSESSEE ON THE RECORDS OF THE DEPARTMENT. HE ALSO DENIED BEING A DIRECTOR OF ONE OF THE SAID SIX COMPANIES, I.E., M/S. VIEW MERCANTILE P. L TD. A PERUSAL OF HIS BALANCE SHEET, 3 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. HOWEVER, DID NOT EXHIBIT ANY LOANS, WHICH WERE STAT ED BY HIM TO BE THE PRINCIPAL SOURCE OF CAPITAL INVESTED BY HIM IN THE SAID COMPANIES (P AGES 2-5 OF THE ASSESSMENT ORDER). GIRISHCHAND YADAV WAS ALSO PRODUCED ON 16/12/2010, WHEREAT HE STATED HIMSELF TO BE A DIRECTOR ALSO OF VIEW MERCANTILE (P.) LTD. FURTHER, THE DETAILS CALLED FOR ON 20/12/2010 WERE NOT PROVIDED, EVEN AS THE ASSESSEE SOUGHT A CO PY OF THE STATEMENT RECORDED ON 07/12/2010 VIDE LETTER DATED 23/12/2010, THE DATE O F THE ASSESSMENT ORDER. THE ASSESSEE, IN THE OPINION OF THE AO, HAD NOT AT ALL PROVED, MU CH LESS SATISFACTORILY, THE IMPUGNED CREDITS, ON THE PARAMETERS OF GENUINENESS, CAPACITY AND IDENTITY, E VEN FAILING TO ADDUCE THE CORRECT ADDRESSES OF THE INVESTING COMPANIES. A CCORDINGLY, HE DEEMED THE ENTIRE CAPITAL RAISED AS UNEXPLAINED CREDIT AND BROUGHT TH E SAME TO TAX AS INCOME U/S. 68 OF THE ACT, RELYING ON THE DECISIONS IN VELJI DEORAJ & CO. V. CIT [1968] 68 ITR 708 (BOM) AND A.D. JAYAVEERAPANDIA NADAR V. CIT [1964] 54 ITR 401 (MAD.) (PAGES 6-7 OF THE ASSESSMENT ORDER). IN APPEAL, THE ASSESSEE FURNISHING ADDITIONAL EVIDE NCES, A REMAND REPORT WAS CALLED FROM THE AO, THE RELEVANT PART OF WHICH (DATED 28/0 9/2011) IS REPRODUCED IN THE IMPUGNED ORDER (PAGES 6-11). IT STANDS EXPLAINED TH EREBY AS TO WHY THE REVENUE HAD CHOSEN TO CONCENTRATE ON THOSE SIX COMPANIES; THE S AME HAVING BEEN SUBJECT TO INVESTIGATION BY THE INVESTIGATING WING OF THE DEPA RTMENT, CONSEQUENT TO A SEARCH & SEIZURE ACTION U/S. 132 IN THE CASE OF KSL INDUSTRI ES LTD. AND REWARD REAL ESTATE CO. LTD. (FORMING PART OF KSL GROUP OF COMPANIES), WHO WERE, AMONG OTHERS, ALLEGED TO HAVE TAKEN BOGUS PURCHASE BILLS FROM THOSE SIX COMPANIES , AND WERE THUS INVOLVED IN BOGUS BILLING RACKET. THE ASSESSEE-COMPANY WAS A BENEFICI ARY OF SUCH BOGUS BILLING AND THE REVENUE SUSPECTED THE INCOME GENERATED ON ACCOUNT O F SUCH BOGUS CLAIMS (OF PURCHASES) TO HAVE BEEN INTRODUCED IN THE FORM OF SHARE CAPITA L. FURTHER ON, THE DETAILS OF THE INVESTIGATION AS CARRIED OUT BY THE AO DURING THE A SSESSMENT PROCEEDINGS WERE ALSO SPELT OUT, WHEREBY THE ADDRESSES FURNISHED WERE EITHER FO UND NON-EXISTING OR AS BEING ONLY A TRANSIT CAMP, WITH NO COMPANY EXISTING. ONLY ONE AD DRESS, OF OM PROCUREMENT & PROJECTS LTD., WAS FOUND TO BE OF THE RELEVANT INVE STOR, THOUGH EVEN IN THAT CASE THE NAME- BOARD AT THE ENTRANCE WAS OF ONE, SH. DILIP S. MEHT A, A CHARTERED ACCOUNTANT AND A 4 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. DIRECTOR IN THE SAID COMPANY, WHO WAS THE PERSON BE HIND FLOATING SUCH BOGUS COMPANIES AND INVOLVED IN THE RACKET OF BOGUS BILLING AND PRO VIDING ACCOMMODATION ENTRIES. THIRDLY, THE BANK DETAILS OF THE INVESTORS REVEALED DEPOSIT ON ONE DAY AND ITS WITHDRAWAL ON THE SAME OR THE FOLLOWING DAY BY WAY OF SHARE SU BSCRIPTION, CLEARLY IMPUGNING THE GENUINENESS OF THE INVESTMENT. THEN, AGAIN, A REFER ENCE WAS MADE TO THE RECALCITRANT CONDUCT OF THE ASSESSEE DURING THE COURSE OF THE AS SESSMENT PROCEEDINGS. THE ADDITION, IT WAS SUBMITTED, WAS BASED ON DEFINITE MATERIALS, AND IT STOOD PROVED BEYOND DOUBT THAT IT WAS THE ASSESSEES OWN UNACCOUNTED MONEY INTRODUCED AS SHARE CAPITAL AND, ACCORDINGLY, THE ASSESSEES CLAIM, MADE WITH REFERENCE TO THE AD DITIONAL EVIDENCES, SOUGHT TO BE REJECTED. THE LEARNED CIT(A), AFTER RECORDING THE RELEVANT PA RT OF THE REMAND REPORT DATED 28/09/2011, AS WELL AS THE ASSESSEES SUBMISSIONS I N REPLY, NOTED THAT SHRI DILIP S MEHTA, SHRI MAHAVIR DUGAL, MS. SANGEETA J. SAWANT AND SHRI GIRISH CHAND YADAV, HAD CONSISTENTLY ADMITTED BEFORE THE JURISDICTIONAL ASS ESSING OFFICERS AND THE INVESTIGATING WING OF THE REVENUE TO HAVE BEEN INVOLVED IN ISSUIN G BOGUS BILLING AND BOGUS SHARE APPLICATIONS. THE ASSESSEE HAD CLEARLY FAILED TO ES TABLISH THE GENUINENESS OF THE IMPUGNED CREDITS. THE LAW IN THE MATTER WAS CLEAR, AND TOWAR D WHICH HE RELIED ON THE DECISIONS IN CASE OF YASH PAL GOEL V. CIT [2009] 181 TAXMAN 175 (P&H); BLOWEL AUTO P. LTD. V. ASST. CIT [2009] 177 TAXMAN 261 (P&H); B. DESRAJ V. CIT [2008] 171 TAXMAN 481 (KER); AND CIT V. RUBY TRADERS & EXPORTERS [2004] 134 TAXMAN 29 (CAL). ACCORDINGLY, HE CONFIRMED THE ADDITION UNDER SECTION 68 IN PRINCIPL E, THOUGH ALLOWED RELIEF TO THE ASSESSEE TO THE EXTENT OF RS.41.925 LACS, BEING OLD CREDITS, INASMUCH AS SECTION 68 IS APPLICABLE ONLY TO CREDITS MADE IN THE ASSESSEES BOOKS OF ACC OUNT DURING THE RELEVANT YEAR. AGGRIEVED, BOTH THE ASSESSEE AND REVENUE ARE IN APP EAL. THE RESPECTIVE CASES 3. BEFORE US, THE ASSESSEES PRINCIPAL CASE, MADE W ITH REFERENCE TO ITS ADDITIONAL GROUND 1(A), WAS OF DENIAL OF NATURAL JUSTICE. THE LD. CIT(A) HAD RELIED ON THE STATEMENTS RECORDED BEHIND ITS BACK, I.E., WITHOUT CONFRONTING THE SAME TO THE ASSESSEE. RELIANCE IN 5 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. THIS REGARD WAS MADE TO THE CASE OF KISHANCHAND CHELLARAM VS. CIT [1980] 125 ITR 713 (SC). THE REVENUES CASE, ON THE OTHER HAND, WAS TH AT THE LD. CIT(A), IN DOING SO, HAD ONLY CONFIRMED AND BUTTRESSED THE FINDINGS OF THE A O, WHO HAD CLEARLY, AND IN UNAMBIGUOUS TERMS, STATED HIS DISSATISFACTION, AS W ELL AS REASONS THEREFOR, WITH THE ASSESSEES EXPALANATION QUA THE IMPUGNED CREDITS. THE AOS NON-SATISFACTION HA S NOWHERE BEING CHALLENGED BY THE ASSESSEE, WHICH COU LD ONLY BE ON FACTS. WHERE, THEN, WAS THE NECESSITY OF FURNISHING THE SAID STATEMENTS TO THE ASSESSEE. RELIANCE WAS ALSO PLACED ON THE DECISION IN CASE OF MAJOR METALS LTD ., 19 TAXMANN.COM 176 (BOM), WHICH WAS ALSO A CASE OF ISSUE OF SHARES AT A PREMIUM, WH ICH WAS FOUND BY THE HONBLE COURT AS COMPLETELY UNJUSTIFIED AND, THUS, UNEXPLAINED IN TH E FACTS AND CIRCUMSTANCES OF CASE. THE DECISION IN CASE OF NOVA PROMOTERS & FINLEASE P. LTD . 18 TAXMANN.COM 217 (DEL) WAS PRESSED TO MEET THE ASSESSEES RELIANCE ON THE DECI SION OF CASE OF CIT VS. LOVELY EXPORTS P. LTD . [2008] 216 CTR (SC) 195. QUA ITS APPEAL, THE REVENUES CONTENTION WAS THAT THE DELETION HAD BEEN DIRECTED BY LD. CIT(A) WITHOUT AL LOWING AN OPPORTUNITY TO THE AO. FINDINGS 4. WE HAVE HEARD THE PARTIES, AND PERUSED MATERIAL ON RECORD. 4.1 THE ASSESSEE BEFORE US HAS NOT IN ANY MANNER RE PUDIATED THE FINDINGS OF THE AO AS PER THE ASSESSMENT ORDER, AND THE REMAND REPORT CAL LED FOR BY THE FIRST APPELLATE AUTHORITY, BEING IN FACT ONLY A STATEMENT AND DILATION OF THE BASIS OF HIS NON SATISFACTION PER THE ASSESSMENT ORDER. THERE HAS BEEN NO RELIANCE BY THE AO ON THE STATEMENTS OF THE SEVERAL PERSONS RECORDED BY THE INVESTIGATING AUTHORITIES O F THE DEPARTMENT AND THE JURISDICTIONAL ASSESSING OFFICERS, IN ARRIVING AT HIS NON SATISFAC TION WITH THE ASSESSEES EXPLANATION AS TO THE NATURE AND SOURCE OF THE IMPUGNED CREDITS UNDER SECTION 68. THE MATTER IS PURELY FACTUAL IN-AS-MUCH AS THE SAID NON-SATISFACTION IS TO BE BASED ON MATERIALS AND EVIDENCES LED BY THE ASSESSEE . THE ONUS WOULD FALL ON THE REVENUE ONLY WHERE THE A SSESSEE DISCHARGES THE INITIAL ONUS ON IT, SO THAT THE REVE NUE, WHERE IT SEEKS TO REPUDIATE THE SAME, WOULD HAVE TO LEAD EVIDENCE/S, DULY CONFRONTI NG THE SAME TO THE ASSESSEE. THE SOLE PURVIEW OF AN APPELLATE AUTHORITY, INCLUDING THE FI RST APPELLATE AUTHORITY, AS ONE SUCH, 6 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. THEREFORE, WHERE APPEALED AGAINST, IS THE VALIDITY OR OTHERWISE OF THE SAID NON-SATISFACTION OF THE AO, AND WHICH WOULD BE THE DECIDING FACTOR O F THE APPEAL. IN THE PRESENT CASE, THERE HAS BEEN COMPLETE NON-DI SCHARGE BY THE ASSESSEE OF THE BURDEN OF PROOF ON IT. WHAT IS THE BASIS OF THE PREMIUM CHARGED ON THE SHA RE CAPITAL; THE ASSESSEE IN FACT RETURNING A LOSS OF RS. 38 LACS ? WHAT IS THE SOURCE OF THE SHARE CAPITAL SUBSCRIBED TO BY THE SIX INVESTING COMPANIES ? THE PERSON PRODUCED, SH. GIRISH CHAND YADAV, WAS NOT EVEN SURE WHETHER HE IS A DIRECTOR O F ONE OF THOSE COMPANIES OR NOT. HE COULD NOT STATE THEIR BUSINESSES, MUCH LESS WHY HIS COMPANIES CHOSE TO INVEST IN THE ASSESSEE-COMPANY, A LOSS MAKING COMPANY. THIS IS PA RTICULARLY SO AS THE ASSESSEE- COMPANY IS A PRIVATE LIMITED COMPANY AND, THEREFORE , ITS SHARES HAVE EXTREMELY LIMITED TRANSFERABILITY, SO THAT THE INVESTMENT IS, FOR ALL INTENTS AND PURPOSES, ILLIQUID. WHAT IS THE SOURCE OF FUNDS, I.E., ACCUMULATED SURPLUSES OR FUR THER CAPITAL RAISED BY THEM, EITHER AS EQUITY OR DEBT. THE SHARES ARE SUBSCRIBED TO IN PRI VATE PLACEMENT, AND THEREFORE NOT IN RESPONSE TO A PUBLIC OFFERING. WHAT, THEN, FORMS TH E CONNECTING LINK BETWEEN THE ASSESSEE AND THE INVESTING COMPANIES; THE SHARE SUBSCRIPTION , BEING RISK CAPITAL, IN A PRIVATE COMPANY BEING GENERALLY LIMITED TO FRIENDS AND RELA TIVES OF THE DIRECTORS OF THE INVESTEE- COMPANY. THESE QUESTIONS, EVEN OTHERWISE RELEVANT, ASSUME CRITICAL SIGNIFICANCE IN VIEW OF THE REVENUE CLARIFYING A LINK BY WAY OF THE ASSE SSEE BEING ONE OF THE BENEFICIARIES OF BOGUS BILLING/ACCOMMODATION ENTRIES RACKET BEING RU N BY THE PERSONS CONTROLLING THESE COMPANIES, AS ALSO FOUND ON FIELD ENQUIRY DURING TH E COURSE OF ASSESSMENT PROCEEDINGS AT ITS GIVEN ADDRESS, I.E., OF OM PROCUREMENT & PROJEC TS LTD., THE ONLY COMPANY WHICH RESPONDED TO SECTION 133(6) NOTICE. AND, FURTHER, I T (ASSESSEE) SPECIFYING NO REASON FOR THE INVESTMENT, AND THAT TOO AT A HUGE, INEXPLICABLE PR EMIUM, WHICH IS ESSENTIALLY AN ECONOMIC DECISION, SO THAT IT OUGHT TO BE AND OSTEN SIBLY GUIDED BY ECONOMIC REASON/S. WHY, ELSE, ONE MAY ASK, WOULD ONE RISK INVESTING HI S CAPITAL IN ANOTHER COMPANY ? IN FACT, THERE IS NO CLARITY WHATSOEVER ON THE ANTECEDENTS O F THE INVESTING COMPANIES, WITH AS MUCH AS THEIR ADDRESSES BEING UNABLE TO BE CORRECTE D STATED, AS IT TURNS OUT, BY THE ASSESSEE. THE AOS FINDINGS IN THE MATTER ARE EXPLI CIT AND ROUNDLY STATED PER THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT, AND BASED ON FIELD ENQUIRIES AT THE 7 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. ADDRESSES FURNISHED BY THE ASSESSEE, WHICH ARE ONLY AS SPECIFIED IN FORM 2 (RETURN OF ALLOTMENT) SUBMITTED BY IT WITH THE REGISTRAR OF CO MPANIES. WHY, FOR INSTANCE, ARE THE ADDRESSES OF THE SIX COMPANIES, AS CLARIFIED BY GIR ISH CHAND YADAV, DIFFERENT FROM THAT FURNISHED EARLIER BY THE ASSESSEE? THE ASSESSEE DOE S NOT EXPLAIN THE REASON FOR THE DIFFERENCE OR FURNISH PROOF IN RESPECT OF RESTATED ADDRESS, WHICH, AS IT TRANSPIRES, IS ONLY THE RESIDENCE OF GIRISH CHAND YADAV. A CONSPIRACY A ND CONFABULATION IS IMMANENT; THE PERSON PRODUCED, SH. GIRISH CHAND, A MAN OF NO MEAN S, MUCH LESS A MAN OF BUSINESS, BEING ONLY A FRONT MAN. IT IS NOT OPEN FOR THE ASSE SSEE TO SAY THAT IT IS NOT AWARE OF ADDRESSES OR THE WHEREABOUTS OF THE PARTIES OR THEY ARE NOT KNOWN TO IT, EVEN AS EXPLAINED BY HONLE COURT IN MAJOR METALS LTD . (SUPRA). GIRISH CHAND YADAV, AS POINTED BY LD. DR BEFORE US, IS ONLY THE ASSESSEES WITNESS, SO THAT NOTHING TURNS ON THE AO REFUSING THE ASSESSEES REQUEST, MADE ON THE DATE OF PASSING OF THE ASSESSMENT ORDER ITSELF, FOR A COPY OF HIS STATEMENT U/S.131. EVEN SO, THE ASSESSEE BEI NG IN APPEAL, WHAT WE WONDER PREVENTED IT FROM OBTAINING A COPY THEREOF SUBSEQUE NTLY. FURTHER, THE RELIANCE ON HIS STATEMENT IS ONLY TO THE EXTENT WHAT STANDS STATED IN ITS RESPECT IN THE ASSESSMENT ORDER ITSELF, SO THAT THE ASSESSEE COULD, WHERE SO DESIRE D, DISPUTE THE SAME ON FACTS, OF COURSE WITH MATERIALS. EVEN WITH REGARD TO THE CREDITOR-SUBSCRIBERS OTHER THAN THE SIX COMPANIES QUA WHICH REPRESENTATION WAS SOUGHT BY THE REVENUE FRO M THE ASSESSEE, FOR THE REASON, AS IT BECOMES CLEAR, THAT THEY WERE SUBJECT TO INVESTI GATION CONSEQUENT TO A SEARCH ACTION BY THE REVENUE, NO MATERIALS EXCEPT, AS IT APPEARS, CO NFIRMATIONS AND SHARE CERTIFICATES, HAVE BEEN FURNISHED BY THE ASSESSEE, WHICH RATHER CONFIR M THE FACTUM OF THE CREDIT AND NOT OF IT BEING GENUINE. THE ISSUE IS NOT OF PRESENTATION OF DOCUMENTARY EVIDENCES, BUT OF THE TRUTH THEREOF. IF NOT SO CONSIDERED, THE CREDIT ENTRIES A S APPEARING IN THE ASSESSEES BOOKS OF ACCOUNT WOULD ITSELF BE REGARDED AS FINAL. IT IS, G IVEN THE PRESCRIPTION OF S. 68, WHICH IS A RULE OF EVIDENCE, STATUTORILY MANDATED, THE TRUTH O F THOSE DOCUMENTS OR OF THE SAME AS REPRESENTING GENUINE TRANSACTIONS, THAT IS TO BE ES TABLISHED. BUT FOR S. 68, THE PRINCIPLE THAT WHAT IS APPARENT IS REAL WOULD OBTAIN, SO THAT THE ONUS TO DISPROVE IT WITH EVIDENCES - WOULD BE ON THE PERSON ALLEGING IT AS NOT SO, I.E., THE REVENUE. THE ONUS ON THE ASSESSEE IT OF COURSE CANNOT BE REQUIRED TO PROVE A NEGATIVE , WOULD THUS DEPEND ON THE FACTS AND 8 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. CIRCUMSTANCES OF THE CASE, AND BECOMES ACCENTUATED IN THE WAKE OF THOSE AS OBTAINING IN THE INSTANT CASE, SOUGHT TO BE EMPHASIZED PER THE Q UESTIONS, DEEMED PERTINENT, AS POSED HEREINBEFORE, EQUALLY APPLICABLE FOR THOSE COMPANIE S. THE REVENUE, ITS NEEDS TO BE APPRECIATED, IS NOT RE QUIRED TO, IN INVOKING SEC.68, DISPROVE A CREDIT, AS IT APPEARS TO HAVE EMBARKED U PON IN THE PRESENT CASE, AND IT IS SUFFICIENT IF IT CAN EXHIBIT A BASIS FOR ITS NON-SA TISFACTION WITH THE ASSESSEES EXPLANATION INASMUCH AS THE SAID DISCRETION IS TO BE EXERCISED JUDICIALLY. AS SUCH, EVEN DE HORS THE SEVERAL STATEMENTS RELIED UPON BY LD. CIT(A), THE A OS NON-SATISFACTION HAS NOT BEEN IMPUGNED BY THE ASSESSEE IN ANY MANNER. WE ARE, THU S, IN PRINCIPLE IN COMPLETE AGREEMENT WITH THE REVENUES CASE. 4.2 SO, HOWEVER, THE LD. CIT(A) HAVING RELIED ON TH OSE STATEMENTS AS A MATTER OF FACT, TO WHAT EXTENT HIS ENDORSEMENT OF THE AOS FINDINGS HAS BEEN GUIDED BY HIS RELIANCE ON THOSE STATEMENTS CANNOT BE DETERMINED OR SEGREGATED BY ANY PROCESS KNOWN TO OR HAVING THE SANCTION OF LAW, BEING A RESULT OF HIS OWN SATI SFACTION, BASED ON OBJECTIVE MATERIALS. FOR EXAMPLE, THAT THE ADDRESS STATED BY GIRISH CHAN D YADAV, LOCATED IN A JHUGGI JOPADI AREA, WAS HIS RESIDENCE IS CLARIFIED BY HIS STATEME NT DATED 09/01/2009 AND THE STATEMENT U/S. 131 OF SANGEETA J. SAWANT. SIMILARLY, SH. DILI P MEHTA, WHOSE PREMISES WAS THE OFFICE ADDRESS OF OM PROCUREMENT AND PROJECTS LTD., IS INVOLVED IN BOGUS BILLING AND THE COMPANIES STAND FLOATED BY HIM AND ARE ONLY PAPER C OMPANIES, AND THAT SHRI.GIRISH CHAND YADAV WAS IN FACT HIS EMPLOYEE, IS BORNE OUT BY HIS STATEMENT DATED 23/12/2008. THE SAID STATEMENTS ARE RELEVANT MATERIAL. IN FACT, THE RELIANCE BY THE REVENUE, WHICH MAY HAVE EXCEEDED ITS BRIEF, THEREON IS NOT INCORRECT I NASMUCH AS IT IS IN POSSESSION OF INCRIMINATING MATERIALS HAVING A DIRECT BEARING ON THE SUBJECT MATTER OF THE ASSESSMENT. THE SEARCH AT THE KSL GROUP AND THE FINDINGS THEREI N INFORM AND PERMEATE ITS CASE, AS, FOR INSTANCE, THE AO STATING OF THE LINK BETWEEN THE AS SESSEE AND THE BOGUS BILLING BEING ENGAGED IN BY THE CREDITOR COMPANIES. THE LD. CIT(A ), AS A FIRST APPELLATE AUTHORITY, HAS CO-TERMINUS POWERS UNDER THE LAW (REFER: CIT V . KANPUR COAL SYNDICATE [1964] 53 ITR 225 (SC)), SO THAT HIS RELIANCE THEREON CANNOT BE I MPUGNED ON THAT SCORE, BEING ONLY IN 9 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. FURTHERANCE OF THE REVENUES CASE, AND TOWARD ARRIV ING AT THE TRUTH OF THE MATTER. REFERENCE IN THIS CONTEXT MAY ALSO BE MADE TO THE D ECISIONS IN THE CASE OF NOVA PROMOTERS & FINLEASE P. LTD . (SUPRA) AS WELL AS OTHERS BY THE HONBLE DELHI HI GH COURT SUBSEQUENT THERETO, ALSO SPECIFIED AND CONSIDERED B Y THE TRIBUNAL IN LUMINANT INVESTMENTS (P.) LTD. V. DY. CIT (IN ITA NO. 3925/MUM(A)/2009 DATED 06/11/2013), TO WHICH AGAIN REFERENCE IS MADE. WE, ACCORDINGLY, CONSIDER IT PROPER THAT THE SAID M ATERIAL BE CONSIDERED AS A PART OF THE RECORD. THE RELIANCE BY THE REVENUE THEREON HAS NECESSARILY TO BE SUBJECT TO THE ASSESSEE BEING ALLOWED DUE OPPORTUNITY TO EXPLAIN I TS CASE WITH REFERENCE THERETO. THE FINAL SATISFACTION OR NON-SATISFACTION, AS THE CASE MAY BE, BY THE REVENUE, THE ONUS TO LEAD SATISFACTION BEING ON THE ASSESSEE, HAS TO BE WITH REFERENCE TO PROVEN FACTS. WHY, TOWARD THIS, EVEN THE ASSESSEE ARGUES, PER ITS ADDITIONAL GROUND 1(C), THAT THE ADDITION U/S. 68 IS TO BE MADE ON THE BASIS OF FACTS, AS DETERMINED, AND N OT ON THE BASIS OF STATEMENTS. IT, HOWEVER, DOES NOT LIE IN THE ASSESSEES MOUTH TO CO NTEND THAT THE REVENUE IS NOT ENTITLED TO RELY ON THOSE STATEMENTS INASMUCH AS THERE CAN B E NO PRESUMPTION THAT THEY ARE NOT TRUE OR REPRESENT UNTRUTH, UNLESS AND TO THE EXTENT RETR ACTED. WHERE AND TO THE EXTENT THEY PURPORT TO CLARIFY AND ELUCIDATE FACTS, THERE IS NO REASON THAT THE REVENUE CANNOT RELY ON THE SAME. THE ARGUMENT IS EVEN INCONSISTENT WITH TH E ASSESSEES CASE OF THE REVENUE HAVING RELIED ON THE SAME WITHOUT CONFRONTING THE R ELEVANT MATERIALS TO THE ASSESSEE, THE ONUS TO CONTRADICT WHICH THOUGH WOULD BE ON THE ASS ESSEE. THE QUESTION IS ESSENTIALLY OF THE DISCHARGE OF THE ONUS TOWARD PROVING FACTS, BAS ED ON POSITIVE MATERIALS, SO THAT IT IS ONLY PROPER AND IN ORDER THAT EITHER PARTY FURNISHE S TO THE OTHER ALL THE MATERIAL IT RELIES UPON THE ASSESSEE TOWARD ESTABLISHING THE FACTS Q UA THE GENUINENESS OF THE CREDITS; THE REVENUE IN REPUDIATING THE SAME; THE ASSESSEE, AGAI N, IN REBUTTING THE SAME, SO ON AND SO FORTH, SO THAT A FINAL DECISION IS TAKEN UPON CONSI DERATION OF THE EMERGING FACTUAL MATRIX. THE LD. DR BEFORE US ALSO RELIED ON THE DECISION IN CASE OF MAJOR METALS LTD . (SUPRA), BESIDES DRAWING ON CERTAIN FACTS, VIZ, THE ASSESSEE HAVING ALLOTTED SHARES SUBSCRIBED TO WITHOUT PREMIUM; OF THE SHARE ALLOTMENTS BEING NOT PRESUMABLY BACKED BY RESOLUTIONS INASMUCH AS SHARES ARE ALLOTTED ON REGU LAR BASIS, I.E., AS WHEN THE MONEY IS 10 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. RECEIVED, AND WHICH IS NEITHER NORMATIVE NOR PRACTI CAL; OF A MISMATCH BETWEEN AUTHORIZED SHARE CAPITAL ON RECORD AND THAT SUBSCRIBED TO - TH E LATTER BEING HIGHER. THESE ARE RELEVANT AND INASMUCH AS THEY EMANATE FROM THE MATERIAL ON R ECORD, WE CONSIDER THEIR CONSIDERATION AS ONLY APPROPRIATE IN LAW, WHICH WAS PLEADED BY HIM ALLUDING TO THE DECISION IN THE CASE OF HUKUM CHAND MILLS LTD ., 63 ITR 232 (SC) AND GILBERT AND BARKER MFG. CO . 111 ITR 529 (BOM). THE CONTENTIONS BY THE LD. DR IN THE MATTER STAND REDUCED IN WRITING, AND PLACED ON RECORD, WITH A COPY TO TH E ASSESSEE. THE REVENUE SHALL ALSO BE AT LIBERTY TO RELY THEREON. DECISION 5. THE MATTER IS ACCORDINGLY RESTORED BACK TO THE F ILE OF THE LD. CIT(A), WHO SHALL ADJUDICATE THE SAME IN ACCORDANCE WITH LAW PER A SP EAKING ORDER AFTER ALLOWING BOTH THE PARTIES BEFORE HIM TO STATE THEIR CASE WITH REFEREN CE TO ALL THE MATERIALS BEING RELIED UPON BY EITHER SIDE. HE SHALL DO SO QUA EACH CREDIT. IT IS PERTINENT TO STATE THAT THE ASS ESSEE HAS MADE NO CASE EITHER BEFORE US OR BEFORE THE LOWER A UTHORITIES IN RESPECT OF THE SHARE SUBSCRIPTIONS BY OTHER THAN THE SIX COMPANIES ALLEG EDLY INVOLVED IN BOGUS BILLING, EVEN AS THE ADDITION UNDER REFERENCE IS FOR THE ENTIRE SUM CREDITED. THE LD. CIT(A) SHALL, IN DECIDING THE MATTER, BE GUIDED BY OUR OBSERVATIONS, WHICH THOUGH CANNOT BE REGARDED AS CONCLUSIVE, BEING MADE ON THE BASIS OF THE EXISTING MATERIAL ON RECORD. HE SHALL ALSO DECIDE THE SUBJECT MATTER OF THE REVENUES APPEAL; THE LD. DR CONTENDING OF LACK OF OPPORTUNITY AS WELL AS OF THEIR BEING A QUALITATIVE CHANGE IN THE CREDIT BROUGHT FORWARD FROM THE EARLIER YEAR, REFERRING TO THE DECISION IN THE CASE OF MAJOR METALS LTD . (SUPRA), WHERE LOAN/S RECEIVED IN AN EARLIER YEAR STOOD CONV ERTED TO SHARE CAPITAL DURING THE RELEVANT YEAR, INASMUCH AS THE SAME MAY HAVE A BEAR ING ON THE OTHERWISE TRITE LAW THAT IT IS ONLY THE AMOUNT CREDITED IN THE BOOKS OF ACCOUNT THAT CAN FORM THE BASIS OF ASSESSMENT U/S. 68, SO THAT THE SUMS CREDITED IN THE BOOKS PRI OR TO THE CURRENT YEAR ARE EXCLUDED. WE DECIDED ACCORDINGLY. 11 ITA NOS. 405 & 1424/MUM/2012 (A.Y. 2008-09) ANGEL PIPES AND TUBES PVT. LTD. 6. IN THE RESULT, BOTH THE ASSESSEES AND THE REVEN UES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 13, 20 14 SD/- SD/- (VIVEK VARMA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( /) MUMBAI; 0' DATED : 13.08.2014 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. 1 / THE APPELLANT 2. 23 1 / THE RESPONDENT 3. ( 4% ( ) / THE CIT(A) 4. ( 4% / CIT - CONCERNED 5. 7 8 2%'9# , * 9#- , ( /) / DR, ITAT, MUMBAI 6. 8 : ; ) / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ( /) / ITAT, MUMBAI