ITO, New Delhi V. M/s. Arizona Venutres Pvt. Ltd., New Delhi

ITA 1428/DEL/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8297 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL GULATI
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Search and seizure; Source of fund; Additional evidence; Tangible material; Accommodation entries; Onus to prove; Retraction
• Section: 143(3); 142(1); 133(6); 143(1); 205; 195; 251; 143(2); 191; 192; 139(1); 64; 43; 48; 73; 72; 13; 22; 131; 132; 144; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.AS. NO.1428/DEL/2016 ASSESSMENT YEAR 2012-13 ITO, WARD-3(2), NEW DELHI. V. M/S. ARIZONA VENTURES PVT. LTD., FLAT NO.211, 2 ND FLOOR, HEMKUNT CHAMBER, 89, NEHRU PLACE, NEW DELHI. TAN/PAN: AADCD6391B (APPELLANT) (RESPONDENT) ITA NO.1429/DEL/2016 ASSESSMENT YEAR 2012-13 ITO, WARD-3(2), NEW DELHI. V. M/S. ARIZONA GLOBAL SERVICES PVT. LTD., FLAT NO.211, 2 ND FLOOR, HEMKUNT CHAMBER, 89, NEHRU PLACE, NEW DELHI. TAN/PAN: AADCD7117M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL GULATI, CIT-DR RESPONDENT BY: SHRI RAKESH JOSHI, CA DATE OF HEARING: 15 03 2021 DATE OF PRONOUNCEMENT: 26 03 2021 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST SEPARATE IMPUGNED ORDER OF EVEN DATE, 29.01 .2016 PASSED BY LD. CIT(A)-I, NEW DELHI FOR THE QUANTUM O F I.T.AS.1428 & 1429/D/2016 2 ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEA R 2012- 13. IN BOTH THE APPEALS, THE ISSUES RAISED ARE EXAC TLY SAME ARISING OUT OF IDENTICAL SET OF FACTS AND ALSO THE SAME NATURE OF FINDING IS PERMEATING IN BOTH THE APPEALS; HENCE BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THE APPEAL OF M/S. ARIZONA GLOBAL SERVICES PVT. LTD. IS THAT, LD. CIT (A) HAS ERRED ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS. 151,95,00,000/- MADE U/S.68; AND IN THE CASE OF M/S. ARIZONA VENTURES PVT. LTD. SIMILAR GROUND HAS BEEN RAISED FOR DELETING THE ADDITION OF RS.53,55,00,000 /- MADE U/S.68 OF THE ACT. 3. FOR THE SAKE OF CONVENIENCE, THE APPEAL IN THE C ASE OF M/S. ARIZONA GLOBAL SERVICES PVT. LTD. IN ITA NO.1429/DEL/2016 IS BEING TAKEN UP AND AS ADMITTED BY BOTH THE PARTIES, THE FINDINGS GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS IN OTHER APPEAL ALSO. THE FACTS IN BRIEF ARE THAT, M/S. ARIZONA GLOBAL SERVICES PVT. LTD. THE APPELLAN T HAS ITS REGISTERED OFFICE AT FLAT NO. 211, 2ND FLOOR, HEMKU NT CHAMBERS, 89, NEHRU PLACE, NEW DELHI-110019. IT WAS ORIGINALLY KNOWN AS M/S DIGIVIVE CONTENT SERVICES P VT. LTD. AND SUBSEQUENTLY ITS NAME WAS OFFICIALLY CHANGED. I N THE YEAR OF ITS INCORPORATION, I.E., DURING 2010-11, IT WAS IN EXISTENCE FOR ABOUT 1 MONTHS. DURING THIS PERIOD, NO BUSINES S WAS CONDUCTED AND THERE WAS NOT MUCH INCOME OR RECEIPTS . AS PER I.T.AS.1428 & 1429/D/2016 3 THE MEMORANDUM OF ASSOCIATION, THE ASSESSEE COMPANY WAS TO CARRY ON THE BUSINESS OF SERVICE PROVIDERS, OPER ATORS, AGENTS, RENTERS, HIRERS AND DISTRIBUTORS OF CABLE T ELEVISION NETWORK, IN THE LINE OF TELECOM AND COMMUNICATION A ND TO ACT AS BUSINESS CONSULTANTS, GIVE ADVICE, TO ENGAGE IN DISSEMINATION OF INFORMATION IN ALL ASPECTS OF BUSI NESS ORGANIZATION AND INDUSTRY. IN THE YEAR UNDER CONSID ERATION, THE PROPOSED BUSINESS WAS STILL TO TAKE OFF. THE CO MPANY HAD SOME RECEIPTS FROM ADVISORY SERVICES SHOWN IN THE A CCOUNTS AS REVENUE FROM OPERATIONS. IT ALSO HAD INTEREST INCOME, WHICH HAS BEEN OFFERED TO TAX UNDER THE HEAD INCOM E FROM OTHER SOURCES THE ASSESSEE HAS BEEN FILING ITS RET URNS OF INCOME REGULARLY WITH THE INCOME TAX OFFICER, COM. WARD 3(2), NEW DELHI IN THE CIT, DELHI-I, NEW DELHI CHAR GE UNDER PAN AADCD7117M. FOR THE A.Y. 2012-13, INCOME TAX R ETURN HAD BEEN E-FILED BY THE APPELLANT ON 29.09.2012 U/S 139(1) OF THE I.T. ACT, 1961 DECLARING INCOME OF RS. (-) 28,1 1,844/-. THE SAME WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT BY THE INCOME TAX DEPARTMENT. SUBSEQUENTLY, THE CASE WAS P ICKED UP FOR SCRUTINY AND ACCORDINGLY, SCRUTINY PROCEEDIN GS U/S 143(3) WAS INITIATED BY THE AO FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION BY ISSUING NOTICE U/S 143(2) OF THE A CT. AFTER COMPLETION THEREOF, LD. AO HAS COMPLETED ASSESSMENT AT AN INCOME OF RS. 151,66,88,156/- U/S 143(3) OF THE ACT VIDE ORDER 31.03.2015. IN THE SAID ASSESSMENT, LD. AO HA S MADE ADDITION OF RS. 151,95,00,000/- U/S 68 OF THE ACT, AS UNEXPLAINED CASH CREDIT HOLDING THAT THE INVESTMENT MADE BY I.T.AS.1428 & 1429/D/2016 4 DIFFERENT CORPORATE CONCERNS IN OFCDS (OPTIONALLY F ULLY CONVERTIBLE DEBENTURES) ISSUED BY THE ASSESSEE COMP ANY HAVE NOT BEEN SATISFACTORILY EXPLAINED. 4. AS NOTED BY THE ASSESSING OFFICER, DURING THE YE AR, THE ASSESSEE-COMPANY HAS RECEIVED 0% OFCDS AMOUNTING TO RS.151,95,00,000/- FROM THE FOLLOWING PARTIES:- SR. NO. NAME OF PARTY PAN NAME OF ADDRESSES AMOUNT OF RS. 1 BHARAT VISION INFRA LTD AADCB9419N 4TH FLOOR, ROOM NO 409, 8 CAMAC STREET KOLKATA WEST BENGAL- 700017 5,30,00,000 2 GANAPTI ADVISORY PVT LTD AACCG8928N 4TH FLOOR, ROOM NO 409, SHANTI NIKETAN BUILDING, 8 CAMAC STREET KOLKATA WEST BENGAL-700017 5,20,00,000 3 OM VINCOM PVT. LTD AABCO0241K 53A, 4TH FLOOR, MIRZA GHALIB STREET KOLKATA, WEST BENGAL- 700016. 1,50,00,000 4 RITESH CONSTRUCTION PVT. LTD AADCR6226K 53A, 4TH FLOOR, MIRZA GHALIB STREET KOLKATA, WEST BENGAL- 700016. 1,50,00,000 5 RUPAK TRADING PVT. LTD AABCR2787D 62, RADHA BAZAR STREET, 3RD FLOOR ROOM NO 29, CALCUTTA, WEST BENGAL- 700001. 7,50,00,000 6 SCAN INFRASTRUCTURE LTD AACCB3214C P-27, PRINCEP STREET, 3RD FLOOR, KOLKATA, WEST BENGAL- 700072 1,50,00,000 7 SWARNAPUSHPA VANIYA PVT. LTD AAJCS0597G MAA PAHARI ESTATES PVT LTD, 4 SYNAGOGUE ST, KOLKATA, WEST BENGAL- 700001. 3,50,00,000 I.T.AS.1428 & 1429/D/2016 5 8 UNISYS SOFTWARES AND HOLDING INDUSTRIES LTD AABCC1191Q 75C PARK STREET, BASEMENT, KOLKATA, WEST BENGAL- 700016 3,00,00,000 9 WALTARE INVESTMENT PVT LTD AAACW2314A ROOM NO 29, 3RD FLOOR, 63 RADHA BAZAR STREET CHINA BAZAR KOLKATA, BENGAL-700001 3,70,00,000 10 KOA INVESTMENT LTD AACCK8539K 5/5761, 1ST FLOORL, GALI NO- 2, DEV NAGAR KAROL BAGH DELHI-5 6,75,00,000 11 GLOBAL INFRATECH & FINANCE LTD (FORMELY ASIANLAK CAPITAL AND FIANANCE LTD) AABCA4255H T2-3RD FLOOR SINDUR, PANTHEON PLAZA 346, PANTHEON ROAD, EGMORE, CHENNAI, TAMILNADU- 600008 8,00,00,000 12 COMET HODLING LTD AABCAC0351 J ROOM NO BA, HASTINGS CHAMBER, 7CKIRAN SANKAR ROY ROAD, HIGH COURT, KOLKATA WEST BENGAL- 700001 1,00,00,000 13 EVERSIGHT TRADECOMM PVT LTD AAACE7667 E 7TH FLOOR ROOM NO 11 & 12, SHANTINIKETAN, 8 CAMAL STREET, KOLKATA, WEST BENGAL-700017 6,00,00,000 14 AGGRESSIVE EXPORTS INDUSTRIES PVT. LTD AAACA5741 P 11/6 B 2ND FLOOR, SHANTI CHAMBER, PUSA ROAD, NEW DELHI-110005. 4,50,00,000 15 SHAIL INVESTMENTS PVT LTD AAJCS6419B 13/34 WEA FOURTH FLOOR MAIN ARYA SAMAJ ROAD, KAROL BAGH , NEW DELHI- 110005. 90,25,00,000 I.T.AS.1428 & 1429/D/2016 6 16 ARIZONA VENTURES PVT LTD (FORMERLY DIGIVIVE VENTURE PVT. LTD) AADCD6391B FLAT NO 211 SECOUND FLOOR, HEMKUNT CHAMBERS, 89 NEHRU PLACE, NEW DELHI- 110019. 2,75,00,00 0 5. LD. ASSESSING OFFICER IN HIS ORDER HAS DISCUSSED IN DETAIL ABOUT HOW THE ASSESSEE HAS BEEN UNCOOPERATIVE DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. ON THE ISSUE OF R ECEIVING OF OFCDS FROM THE AFORESAID PARTIES, ASSESSING OFFICER HAS ISSUED VARIOUS QUESTIONNAIRES WHICH AS PER THE ASSE SSING OFFICER WERE NOT PROPERLY RESPONDED THOUGH ASSESSEE HAD SUBMITTED THE REQUISITE INFORMATION. ON SAMPLE BASI S, THE ASSESSING OFFICER ISSUED NOTICES U/S.131 TO SOME OF THE INVESTOR COMPANIES, NAMELY, M/S. SHAIL INVESTMENTS PVT. LTD. AND M/S. KOA INVESTMENTS LTD. HOWEVER, NO COMPLIANC E WAS MADE BY THESE PARTIES. HE ALSO OBSERVED THAT ONCE T HE NOTICES/SUMMONS WAS NOT COMPLIED WITH, THE INCOME T AX INSPECTOR WAS DEPUTED TO SERVE THE SUMMONS AND TO C ONDUCT CERTAIN INQUIRY AND SUBMIT HIS REPORT. IN CASE OF K OA INVESTMENTS LTD., HE OBSERVED THAT NOTICES COULD NO T BE SERVED BECAUSE ADDRESS GIVEN IS OF A SMALL HALWAI S HOP. REGARDING M/S. SHAIL INVESTMENTS PVT. LTD., THE NOT ICE WAS SERVED ON THE GIVEN ADDRESS, HOWEVER, THE INCOME TA X INSPECTOR HAS MENTIONED THAT THERE WAS NO NAME PLATE/SIGNBOARD OF THE COMPANY AND ONLY AN OFFICE B OY AND GUARD WAS PRESENT. LATER ON, ON INQUIRY, IT WAS FOU ND THAT IT WAS AN OFFICE OF MR. TARUN GOYAL WHO WAS AN ESTABLI SHED I.T.AS.1428 & 1429/D/2016 7 ENTRY OPERATOR. FURTHER, SOME OF THE INVESTORS WE RE FROM KOLKATA AND INFORMATION WAS RECEIVED FROM THE INCOM E TAX DEPARTMENT THAT THE ONLY ACTIVITIES CARRIED OUT BY THESE PARTIES WAS TO PROVIDE ACCOMMODATION ENTRIES. HE RE QUIRED THE ASSESSEE TO PRODUCE THE DIRECTORS OF ALL THE PA RTIES WHO HAVE INVESTED IN OFCDS AND ALL THE DIRECTORS SHOULD BRING DOCUMENTARY EVIDENCES REGARDING THEIR IDENTITY AND APPOINTMENT AS DIRECTOR, COMPLETE BOOKS OF ACCOUNTS , COPY OF COMPANYS RETURNS AND INDIVIDUAL RETURN OF INCOME F ROM ASSESSMENT YEAR 2011-12 TO 2013-14, BANK STATEMENTS FOR FINANCIAL YEARS 2010-11 TO 2012-13, CHEQUE BOOKLETS AND MINUTES OF MEETING OF BOARD OF DIRECTORS. HE OBSERV ED THAT AGAIN NO COMPLIANCE TO THIS NOTICE WAS MADE. THE AS SESSEE NEVER PRODUCED THE DIRECTORS OF THE COMPANIES EVEN THOSE BASED AT DELHI. FINALLY ON 25.03.2015, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO COMPLY WITH ALL THE CONTENTS HE HAS ASKED FOR. ONE OF THE IMPORTANT THING WHICH WAS MENTIONED IN HIS SHOW CAUSE NOTICE WAS THE FACT OF SEARCH AND SEIZURE OPERATION U/S.132 CONDUCTED AT THE OFFI CE PREMISES OF SHRI TARUN GOYAL BY THE INVESTIGATION W ING WAY BACK ON 15.09.2008, DURING THE COURSE OF WHICH, IT WAS FOUND AND ESTABLISHED THAT SHRI TARUN GOYAL WAS ENGAGED I N THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH TO A LARGE NUMBER OF BENEFICIARIES THROUGH NUMEROUS DUMMY COMPANIES FLOATED AND CONTROLLED BY HIM. HE HAS ALS O EXPLAINED THE MODUS OPERANDI OF BOGUS COMPANIES AS DISCUSSED IN THE REPORT THAT HOW THEY WERE NOT CARR YING OUT I.T.AS.1428 & 1429/D/2016 8 ANY GENUINE ACTIVITY. HE ALSO REFERRED TO THE STATE MENT ON OATH OF THE EMPLOYEES OF SHRI TARUN GOYAL RECORDED ON 15.09.2008 WHEREIN THEY HAVE STATED THAT THEY WERE SIGNING VARIOUS DOCUMENTS RELATED TO MANY COMPANIES AT HIS BEHEST. THE STATEMENTS OF AUDITORS OF SHRI TARUN GOYAL WERE ALSO RECORDED WHO HAVE CONFIRMED THAT THEY HAD NO KNOWLE DGE ABOUT THE DIRECTORS OF THE COMPANIES AND ALL THE AU DITS WERE DONE AT THE INSTRUCTIONS OF SHRI TARUN GOYAL. FROM THESE BACKGROUNDS, HE MADE HIS OBSERVATION IN THE SHOW CA USE NOTICE IN THE FOLLOWING MANNER: 4. THE ABOVE CONCLUSIVELY PROVES THAT THE AMOUNTS RECEIVED IN THE FORM OF OFCD FROM M/S. SHAIL INVEST MENTS PVT. LTD. IS NOTHING BUT YOUR OWN MONEY WHICH HAS BEEN T AKEN BACK THROUGH CHEQUES FROM THE ENTRY OPERATOR COMP ANIES THROUGH ACCOMMODATION ENTRY. 5. SINCE NOBODY APPEARED IN RESPONSE TO THE SUMMON S, YOU WERE GIVEN AN OPPORTUNITY TO PRODUCE THE DIRECT ORS FOR PERSONAL DEPOSITION, BUT, YOU FAILED TO DO SO. 6. AS REGARDS THE PARTIES AT KOLKATA ENQUIRIES CON DUCTED, IN THE CASE OF 2 PARTIES, HAVE REVEALED THAT THE PA RTIES CONCERNED BELONG TO AN ENTRY OPERATOR GROUP MANAGED AND CONTROLLED BY THE PUROHIT FAMILY. DURING THE COURSE OF SEARCH & SEIZURE OPERATION U/S 132 OF THE ACT THE STATEMENT OF SH. JAGDISH PRASAD PUROHIT (CONTROLLER OF 246 ENTRY OPE RATOR COMPANIES) WAS RECORDED ON 21/01/2015. SH. ANIL KUM AR PUROHIT IS THE SON OF SH. JAGDISH PRASAD PUROHIT. I T HAS BEEN ADMITTED BY SH. J. P. PUROHIT THAT SH. ANIL KUMAR P UROHIT WAS I.T.AS.1428 & 1429/D/2016 9 ONE OF THE MANY DUMMY DIRECTORS IN HIS NUMEROUS COM PANIES INCLUDING M/S. SCAN INFRASTRUCTURES LTD. (THE COMPA NY WHICH HAS PAID RS. 1,50,00,000/- FOR OFCD SUBSCRIPTION TO THE ASSESSEE COMPANY). IT WAS STATED THAT SH. ANIL KUMA R PUROHIT WAS A DUMMY DIRECTOR IN AT LEAST 49 COMPANIES OF HI S GROUP. SH. J. P. PUROHIT CATEGORICALLY ADMITTED THAT ALL T HE COMPANIES WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES ON LY AND DID NOTHING ELSE. THE CASH RECEIVED FROM THE ENTRY SEEKER / BENEFICIARY WAS DEPOSITED IN ACCOUNT OF ONE COMPANY AND ROUTED THROUGH MULTIPLE COMPANIES WITHIN THE GROUP FOR LAYERING OF THE FUNDS AND ULTIMATELY THE FUNDS WERE PARKED IN THE BANK ACCOUNTS OF THE ENTRY SEEKER' / BENEFICIA RY. IN UNISYS SOFTWARE & HOLDING INDUSTRIES LIMITED (THE C OMPANY WHICH HAS PAID RS. 3,00,00,000/- FOR OFCD SUBSCRIPT ION TO THE ASSESSEE COMPANY) SH. J. P. PUROHIT HIMSELF IS A DIRECTOR. FURTHER, YOU YOURSELF HAVE FAILED TO PRODUCE THE DI RECTORS OF THE COMPANIES WHOSE ADDRESSES ARE AT KOLKATA. NOT E VEN IN A SINGLE CASE YOU HAVE BEEN ABLE TO CAUSE THEIR PRODU CTION. 7. DUE OPPORTUNITY WAS GIVEN TO YOU, VIDE SUMMONS U/S. 131 DATED 20/03/15, TO PRODUCE ALL THE PARTIES FROM WHO M OFCDS HAD BEEN CLAIMED TO HAVE BEEN RECEIVED BUT YOU HAVE FAILED TO DO SO. NOT EVEN A SINGLE PERSON CONCERNED WAS PRODU CED BEFORE ME BY YOU. THEREFORE, THIS ALSO IS FURTHER A DDITIONAL REASON WHICH CONCLUSIVELY PROVES THAT THE INVESTMEN TS MADE BY THESE PARTIES IS NOT GENUINE, YOU ARE NOT IN A P OSITION TO FURNISH REQUISITE EVIDENCE AND IT IS YOUR OWN UNACC OUNTED CASH WHICH HAS BEEN TAKEN BACK THROUGH CHEQUES FROM THE ENTRY OPERATOR GROUP. I.T.AS.1428 & 1429/D/2016 10 8. IN THE LIGHT OF ABOVE, AFTER ENQUIRIES CONDUCTE D ON RANDOM BASIS IN 4 CASES, THE SOURCE OF THE FUNDS, GENUINEN ESS OF THE TRANSACTIONS AND ALSO THE CREDITWORTHINESS OF THE P ARTIES CONCERNED IS NOT PROVED IN YOUR BOOKS / ACCOUNTS. 9. IT HAS ALREADY HELD THAT YOU THAT YOU DELIBERAT ELY DELAYED SUBMISSION OF INFORMATION WITH A VIEW TO PREVENT CO MPLETE INVESTIGATIONS IN ALL THE CASES / PARTIES FROM WHOM YOU RECEIVED THE AMOUNTS CLAIMED BY YOU TO BE OFCD SUBS CRIPTION. 10. TO SUM UP YOU HAVE FAILED TO ESTABLISH YOUR CL AIMS AND THE EXPLANATION WITH REGARD TO THE AMOUNTS CRED ITED IN YOUR ACCOUNTS IS SEEN TO BE FALSE AND NOT SATISFACT ORY. THEREFORE, PROVISIONS OF SECTION 68 OF THE ACT CLEA RLY APPLY IN YOUR CASE. THEREFORE, PLEASE SHOW CAUSE WHY THE ENT IRE AMOUNT OF RS.151,95,00,000/- SHOULD NOT BE ADDED U/ S.68 OF THE INCOME TAX ACT 1961. 6. FURTHER IN THE CASES WHERE OFCD SUBSCRIBERS WERE BASED IN KOLKATA, ASSESSING OFFICER OBSERVED THAT D EPARTMENT HAS GATHERED INQUIRY ON SAMPLE BASIS BY THE INVESTI GATION WING THAT TWO OF THE COMPANIES, M/S. SCAN INDUSTRIE S LTD. AND M/S. UNISYS SOFTWARE HOLDINGS LTD. WHO HAD SUBS CRIBED FOR THE OFCDS ISSUED BY THE ASSESSEE COMPANY WERE IDENTIFIED AS ENTRY OPERATOR COMPANIES, BECAUSE THE Y BELONG TO MR. JAGDISH PRASAD PUROHIT. HE HAS ALSO REFERRED TO SUBMISSION U/S.132(4) OF MR. JAGDISH PRASAD PUROHIT WHOSE STATEMENT HAS ALSO BEEN MADE PART OF THE ASSESSMENT ORDER AS ANNEXURE-B; AND ALSO THE STATEMENT OF SHRI TARUN GOEL WHICH IS ALSO PART OF HIS ORDER AS ANNEXURE C. THER EAFTER, I.T.AS.1428 & 1429/D/2016 11 ASSESSING OFFICER HAS TRIED TO REBUT THE CONTENTION OF THE ASSESSEE WHICH HAS BEEN RAISED VIDE LETTER DATED 16 .03.2015 AND 26.03.2015. BY AND LARGE HIS OBSERVATION AND FI NDING HAS BEEN THAT, ALL THESE ARE PART OF ACCOMMODATION ENTR Y DONE THROUGH ENTRY OPERATOR RUN BY SHRI TARUN GOEL OR SH RI JAGDISH PRASAD PUROHIT. 7. IN SUMS AND SUBSTANCE, OBSERVATIONS AND FINDI NGS OF THE ASSESSING OFFICER ARE THAT; FIRSTLY, THESE COMPANIES DO NOT HAVE ANY APPRECIABL E LIQUIDITY OR SURPLUS FUNDS OF THEIR OWN. THEIR BANK STATEMENT SHOWS PATTERN OF ACCOMMODATION ENTRIES, ETC; SECONDLY, IN SO FAR AS THE ASSESSEES CONTENTION TH AT THE AMOUNT RECEIVED AS OFCD SUBSCRIPTION HAS ALREADY BE EN REBUTTED/REFUNDED IN THE LATER YEAR. HE HAS REJECTE D THE SAME AFTER OBSERVING AND HOLDING AS UNDER: EVEN THOUGH IT WAS CLAIMED THAT THE AMOUNTS HAD BEE N REFUNDED BACK, YET, IT WAS NEVER EXPLAINED AS TO WHETHER THE SOURCE OF FUNDS WAS FROM THE SAME COMPANIES TO WHICH THE FUND S HAD BEEN GIVEN OR WHETHER THE SOURCE WAS FROM SOME OTHE R THIRD PARTIES. IT CANNOT BE ENTIRELY RULED OUT THAT ANOTH ER SET OF FRESH ENTRIES WERE TAKEN FOR MAKING ARRANGEMENT OF FUNDS TO PAY BACK THE OFCD SUBSCRIPTION AMOUNTS. HERE, ANOTHER VERY I MPORTANT POINT WHICH COMMANDS A GREAT DEGREE OF IMPORTANCE I S THAT THE TERMS AND CONDITIONS GOVERNING THE ISSUE OF OFCDS W ERE VERY MUCH ADVERSE TO THE SUBSCRIBERS. THE AGREEMENT IN T HIS REGARD WAS SEEN TO BE TOTALLY LOPSIDED AND COMPLETELY IN F AVOUR OF THE ASSESSEE COMPANY. THE TERMS AND CONDITIONS ON WHICH THESE OFCD SUBSCRIPTIONS WERE MADE BY THE SUBSCRIBING PAR TIES I.T.AS.1428 & 1429/D/2016 12 CONCERNED, IN BRIEF, ARE AS DESCRIBED BELOW. (A) CONVERSION: THE OFCDS WOULD BE REDEEMABLE AFTER 10 YEARS AT PAR IF THE CONVERSION OPTION IS NOT EXERCI SED. (B) USAGE OF FUNDS: THE AMOUNT RECEIVED WOULD BE A T EXCLUSIVE DISPOSAL OF THE COMPANY AND MAY BE UTLILI ZED BY THE COMPANY FOR ANY PURPOSE IN THE MANNER DEEMED FIT. T HE OFCD HOLDER SHALL HAVE NOT RIGHT TO CLAIM OR QUESTION AN YTHING IN THIS REGARD. IN THIS REGARD IT IS IMPORTANT TO KEEP IN MIND THAT EVEN THE HON'BLE DELHI HIGH COURT HAS HELD, IN NUMEROUS DECISIONS, O NE OF THEM BEING NOVA PROMOTERS (2012) 342 ITR 169 (DEL.) AND ANOTHER BEING C.IT VS. FOCUS EXPORTS PVT. LTD. IN ITA 12. ON PAGE 9 OF ITA 218/2012 IT HAS BEEN STATED THAT WHAT IS APPARENT B E CONSIDERED REAL UNTIL IT CAN BE SHOWN THAT THERE ARE REASONS T O BELIEVE : THE APPARENT IS NOT REAL. PROOF IS REQUIRED AND THE ASS ESSING AUTHORITIES ARE REJECTED TO PUT BLINKERS WHILE LOOKING AT DOCUM ENTS BEFORE THEM. THE TERMS EDITIONS WERE SEEN TO BE VERY UN-FAVOURAB LE TO THE OFCD SUBSCRIBERS. THIS WAS ONE VERY IMPORTANT ASPECT WHI CH REQUIRED EXPLANATION AND THE EXPLANATION COULD HAVE BEEN PRO VIDED BY ONLY THE DIRECTORS OF THE INVESTOR COMPANIES. THE ASSESS EE BLOCKED ALL ROADS IN THIS DIRECTION BY FAILING TO PRODUCE THE S AID DIRECTORS. IT IS ALSO AMUSING TO NOTE THAT THE AR OF THE ASSESSEE SA YS THAT IT HAS THING TO DO WITH EITHER SH. J. P. PUROHIT OR SH. TA RUN GOEL WHEN IN FACT THE TRUTH IS THAT SH. TARUN GOEL AND SH. J. P. PUROHIT ARE THEMSELVES THE DIRECTORS IN THOSE VERY COMPANIES WH ICH HAVE PAID CRORES OF RUPEES TO THE ASSESSEE COMPANY. IF THE DI RECTORS OF THE ASSESSEE COMPANIES DO NOT EVEN KNOW THE DIRECTORS O F THE OFCD SUBSCRIBING COMPANIES THEN HOW DID THIS MONEY COME INTO THE ACCOUNTS OF THE ASSESSEE COMPANY. WITH WHOM WERE NE GOTIATIONS HELD? THE FACT IS THAT NO NEGOTIATIONS WERE HELD BE CAUSE THE I.T.AS.1428 & 1429/D/2016 13 PROCEDURE ADOPTED WAS TO SIMPLY TAKE ACCOMMODATION ENTRIES BY DELIVERING CASH TO SOME OTHER GROUP COMPANY OF THES E ENTRY OPERATOR COMPANIES AND TAKING CHEQUES FROM THE ACCO UNT OF SOME OTHER GROUP COMPANY. ANOTHER IMPORTANT ASPECT WHICH NEEDS TO BE HIGHLIGH TED HERE IS REGARDING THE DIRECTION IN WHICH THE REFUND AMOUNTS WERE GOING. IT WAS SEEN FROM PERUSAL OF THE RELEVANT PAGES OF THE RELEVANT BANK STATEMENTS THAT THE AMOUNTS FROM THE BANK ACCOUNT O F THE ASSESSEE COMPANY HAVE BEEN TRANSFERRED TO THE ACCOU NT OF M/S SHAIL INVESTMENTS PVT. LTD. AND FURTHER THESE HAVE FLOWED INTO THE BANK ACCOUNT OF M/S DHARTRIMA URJA PVT. LTD. FROM W HICH THEY HAVE FURTHER FLOWED INTO THE BANK ACCOUNT OF M/S MAGNIFI CO MINERALS PVT. LTD. ALL THESE COMPANIES HAVE ONE COMMON ADDRESS WH ICH IS 75, KHIRKI VILLAGE, NEW DELHI. IN FACT, AT THIS ADDRESS , AFTER LOCAL ENQUIRIES IT WAS FOUND THAT MANY NUMBER OF COMPANIE S WERE FUNCTIONING FROM THIS ADDRESS (75, KHIRKI VILLAGE). NAMES OF SOME OF THE OTHER COMPANIES ARE M/S WORLD WINDOWS IMPEX PVT . LTD., M/S ALSTRONG INTERNATIONAL, M/S ASPUM TRADING, M/S ALUB OND ENTERPRISES, M/S WORLD WINDOWS UJALA, M/S MANGALAM APARTMENTS PVT. LTD. ETC. THEREFORE, IN THE END RES ULT, THE FUNDS HAVE REMAINED IN THE CHAIN / LOOP OF THE ENTRY OPER ATOR GROUP ITSELF. THESE ARE SO MANY REASONS TO HOLD THAT IT MAKES NO DIFFERENCE IF THE AMOUNTS P-*- BEEN RETURNED BACK. THE ASSESSEE H AS TAKEN THE PLEA THAT THE MONEY WAS RETURNED BACK AND HENCE THE NET EFFECT IS ZERO AND HENCE NO INCOME CAN BE ADDED IS NOT TENABL E AT ALL. AR OF THE ASSESSEE VIDE LETTER DATED 26/03/15 VIDE PARA N O. 4 SUBMITTED THUS -'AS FAR AS ASSESSEE IS CONCERNED, WE MAY VOUC HSAFE THAT THE TRANSACTION UNDERTAKEN WITH THEM BY THE ASSESSEE CO MPANY WERE PURE AND SIMPLE BUSINESS TRANSACTIONS AND THESE WER E NOT ANY ACCOMMODATION ENTRIES. FURTHERMORE, ENTIRE LOAN AMO UNT OBTAINED I.T.AS.1428 & 1429/D/2016 14 FROM THE PARTIES CONCERNED THROUGH OFCDS HAS SINCE BEEN PAID BACK THROUGH THE BANKING CHANNEL. THE FACT OF REPAY MENT NEGATES THE DEPARTMENTS ALLEGATION OF ACCOMMODATION ENTRY. THEREFORE, THERE IS NO JUSTIFICATION FOR REVOKING THE PROVISIO NS OF SECTION 68 OF THE ACT ON THE PART OF LD. AO.' THIS REASONING GIVE N BY AR OF THE ASSESSEE IS FAULTY. IF UNEXPLAINED AND UNACCOUNTED SUMS ARE FOUND CREDITED IN THE BOOKS OF ACCOUNTS AND THE SAM E ARE UTILISED FOR SOME PURPOSE AND THEN THE ACCOUNT IS SQUARED UP , THE ACT OF SQUARING UP THE ACCOUNT HAS NO IMPACT ON THE TAXABILITY/ASSESSMENT OF SUCH UNEXPLAINED AND UNACC OUNTED SUMS AS INCOME. THE ONLY POINT TO BE SEEN IS UNACCOUNTED INCOME HAS BEEN DETECTED IN THE ACCOUNTS AND THAT INCOME IS CL EARLY ASSESSABLE TO TAX. REPAYMENT OF THE SAME WOULD NOT GIVE A CLEAN CHIT TO THE ASSESSEE BI WHAT HAS BEEN DETECTED IS U NACCOUNTED INCOME WHICH HAS BEEN EARNS WHICH HAS BEEN TAKEN IN TO ACCOUNTS IN A DIFFERENT FORM SO AS TO AVOID TAX. FURTHER, IF THAT UNACCOUNTED INCOME HAS BEEN REPAID THROUGH SAME CHANNELS WOULD NOT MEAN ANYTHING SIGNIFICANT. REPAYMENT OF UNACCOUNTED INCO ME EXONERATE THE ASSESSEE FROM LIABILITY TO BE TAXED ON THAT UNA CCOUNTED INCOME. THIRDLY, HE HAS TAKEN THE ADVERSE INFERENCE OF NON PRODUCING OF DIRECTORS AND HAS REJECTED THE ASSESSEES CONTEN TION THAT THE TIME ALLOWED FOR PRODUCING THE DIRECTORS WERE V ERY SHORT BECAUSE THE NOTICE U/S.142(1) WAS ISSUED ON 05.01.2 015 ITSELF AND THERE WAS LONG PERIOD OF ALMOST THREE MO NTHS. 7. REGARDING OBJECTION OF THE ASSESSEE THAT THE ASS ESSING OFFICER HAS TO PROVE THAT THE ASSESSEE COMPANY WAS DOING SOME BUSINESS AND EARNING UNACCOUNTED INCOME IN CAS H AND THEN ROUTING THAT UNACCOUNTED INCOME THROUGH ENTRY I.T.AS.1428 & 1429/D/2016 15 OPERATORS, OR ELSE, IT IS MERE PRESUMPTION. IN THI S REGARD, HE HELD THAT THE ASSESSEE NEVER ANSWERED AS TO WHAT EX ACT BUSINESS WAS DONE BY THE ASSESSEE COMPANY FROM INCE PTION. IN VIEW OF THESE FACTS AND INFORMATION OF ENTRY OPE RATORS, THERE IS A PRESUMPTION IN TERMS OF SECTION 132(4A). FURTHER, SINCE ASSESSEE NEVER ACTUALLY DID ANY BUSINESS THEN HOW IT WAS POSSIBLE THAT UNKNOWN ENTITY WILL PUT THEIR OWN HARD MONEY INTO HANDS OF THE ASSESSEE COMPANY FOR NO RET URN AT ALL. LASTLY, HE HELD THAT THE PROOF SUBMITTED BY TH E ASSESSEE CANNOT BE CONSIDERED SATISFACTORY AND ADEQUATE. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH C OURT IN THE CASE OF CIT VS. M/S. FOCUS EXPORTS PVT. LTD. IN ITA NO.218/2001; (2) NOVA PROMOTERS AND FINLEASE PVT. L TD. (3) CIT VS. NR PORTFOLIO PVT. LTD. 206 (2014) DLT 9 7 , AND OTHER DECISIONS. AFTER DISCUSSING ALL THOSE JUDGMENT S, HE FINALLY MADE THE ADDITION AFTER OBSERVING AND HOLDI NG AS UNDER: 10. THE TERMS AND CONDITIONS GOVERNING THE ISSUE OF OFCDS WERE VERY MUCH ADVERSE TO THE SUBSCRIBERS. THE AGREEMENT IN THIS REGARD WAS SEEN TO BE TOTALLY LOPSIDED. THE TERMS A ND CONDITIONS, IN BRIEF, WERE AS DESCRIBED BELOW (A). CONVERSION : THE OFCDS WOULD BE REDEEMABLE AFT ER 10 YEARS AT PAR IF THE CONVERSION OPTION IS NOT EXERCISED. (B) USAGE OF FUNDS; THE AMOUNT RECEIVED WOULD BE AT EXCLUSIVE DISPOSAL OF THE COMPANY AND MAY BE UTLILIZED BY THE COMPANY FOR ANY PURPOSE IN THE MANNER DEEMED FIT. THE OFCD HOLD ER SHALL HAVE NOT RIGHT TO CLAIM OR QUESTION ANYTHING IN THI S REGARD. I.T.AS.1428 & 1429/D/2016 16 UNDER NORMAL CIRCUMSTANCES NOBODY WOULD AGREE TO SU CH ADVERSE CONDITIONS PRESCRIBED FOR INVESTING. THE ASSESSEE C OMPANY NEVER EXPLAINED EVEN DURING ASSESSMENT PROCEEDINGS AS TO HOW THE OFCD HOLDERS WOULD BENEFIT FROM SUBSCRIBING TO THE OFCDS. THERE WAS NO PROJECT TO BE UNDERTAKEN BY THE ASSESSEE COM PANY AND THERE WAS NO INFORMATION ON THE PROJECTED PROFITABI LITY OF THE COMPANY IN FUTURE YEARS. THEREFORE, THERE CANNOT BE ANY VALID REASON TO HOLD THAT THE OFCD SUBSCRIPTION WAS GENUI NE AND THE INVESTORS WERE GENUINE. IN VIEW OF ABOVE DISCUSSION S IT IS HELD THAT THE AMOUNTS RECEIVED IN THE BANK ACCOUNTS OF T HE ASSESSEE COMPANY AND CLAIMED TO BE OF CAPITAL NATURE (CLAIME D AS OFCD SUBSCRIPTIONS) ARE NOT OF THE NATURE THAT THESE ARE CLAIMED TO BE. THE IMPLAUSIBLE TERMS OF AGREEMENT REGARDING THE OF CDS- 0% INTEREST RATE, REDEEMABLE AT PAR AFTER 10 YEARS, ET C COUPLED WITH THE FOLLOWING: FINDINGS OF THE DEPARTMENT REGARDING MR. TARUN GOYA L AND THE CASES AT KOLKATA, SELECTED ON RANDOM BASIS FAILURE OF THE AR TO PRODUCE THE DIRECTORS OF THE A SSESSEE COMPANY FOR PERSONAL DEPOSITION FAILURE OF THE AR TO PRODUCE THE DIRECTORS OF THE C OMPANIES THAT HAD BEEN CLAIMED TO HAVE GIVEN THE OFCDS FAILURE OF THE ASSESSEE TO PROVE THE IDENTITY, GENU INENESS AND CREDITWORTHINESS IN RESPECT OF THE OFCDS RECEIV ED PROVES BEYOND DOUBT THAT THE ASSESSEE COMPANY HAS, THROUGH USE OF COLOURABLE DEVICE, BROUGHT IN ITS BOOKS, ITS OWN UNACCOUNTED MONEY FROM 'ENTRY OPERATORS,' IN THE GA RB OF OFCDS AND HENCE THESE RECEIPTS ARE HIT BY PROVISIONS OF S ECTION 68 OF THE ACT. THE EXPLANATION PROVIDED ABOUT THE NATURE OF T HESE SUMS IS NOT FOUND TO BE SATISFACTORY. THEREFORE, THIS SUM I S LIABLE TO BE I.T.AS.1428 & 1429/D/2016 17 ADDED U/S 68 OF THE INCOME TAX ACT, 1961 AND IS BEI NG ADDED BACK TO THE INCOME OF THE ASSESSEE. ADDITION : RS. 151,95,00,000/- 8. BEFORE THE LD. CIT (A), THE ASSESSEE HAS MADE A VERY ELABORATE SUBMISSION, IN SUMS AND SUBSTANCE CAN BE SUMMARIZED IN THE FOLLOWING MANNER: THE ONUS DISCHARGED BY THE ASSESSEE TO SUBSTANTIATE THE OFCDS SUBSCRIBED BY THE INVESTORS BY FILING FOLLOWI NG EVIDENCES BEFORE THE ASSESSING OFFICER: I) COMPLETE NAMES AND ADDRESSES OF THE SUBSCRIBERS, NUMBER OF 0% OFCD SUBSCRIBED AND THE AMOUNT OF LOAN OUTSTANDING AS ON 31.03.2012 OF EACH PARTY. (II) THEIR PERMANENT ACCOUNT NOS. (III) PHOTOCOPIES OF THE ACKNOWLEDGEMENT PORTION OF THEIR ITRS TO ESTABLISH THAT ALL PARTIES WERE REGULARLY ASSESSED TO INCOME TAX. (IV) WRITTEN CONFIRMATION CERTIFICATES FROM THE RES PECTIVE PARTIES. (V) COPY OF THEIR BANK ACCOUNTS FOR THE RELEVANT PE RIOD TO ESTABLISH THE AVAILABILITY OF FUNDS WITH THE SAID P ARTIES. (VI) CONFIRMATORY CERTIFICATES OF RECEIVING BACK TH E LOAN AMOUNT AS OBTAINED FROM EACH PARTY, AFTER REDEMPTIO N OF THE OFCDS. (VI) COPY OF RELEVANT PORTION OF OUR BANK ACCOUNT STATEMENT, HIGHLIGHTING THEREIN THE RELEVANT TRANSA CTION OF REPAYMENT TO THE RESPECTIVE PARTIES AFTER REDEMPTIO N OF THE OFCDS I.T.AS.1428 & 1429/D/2016 18 (VII) COPY OF THE LEDGER ACCOUNTS OF THE INVESTORS, AS IN THE BOOKS OF ACCOUNT OF THE APPELLANT ASSESSEE SHOWING THE REFUND OF LOANS. THE ASSESSING OFFICER HAS RELIED UPON THE INVESTIGA TION REPORT WHEREIN THERE WAS REFERENCE OF STATEMENT OF SHRI TARUN GOYAL WHICH WAS RECORDED IN THE YEAR 2008 AND THE SATEMENT OF SHRI JAGDISH PRASAD PUROHIT U/S.132(4) ON 21.01.2015. IN SO FAR AS THE STATEMENT OF SHRI TARU N GOYAL IS CONCERNED, THE ASSESSEE SUBMITTED THAT THE SAME WERE RECORDED AROUND SEVEN YEARS BACK WHICH CANNOT HAVE ANY EVIDENTIARY VALUE FOR THE TRANSACTION UNDE R TAKEN FOR ASSESSMENT YEAR 2012-13. ASSESSING OFFICE R HAS MADE ADDITIONS WITHOUT MAKING INQUIRY ON HIS OWN IN THIS REGARD AND SIMPLY RELYING UPON THE INQUIRIES CONDUC TED BY THE INVESTIGATION WING WAY BACK IN THE YEAR 2008, W HEN THE ASSESSEE COMPANY WAS NOT IN EXISTENCE. ANOTHER IMPORTANT THING WHICH WAS POINTED OUT THAT EVEN IN THE STATEMENT OF SHRI TARUN GOYAL HE HAS NOT MENTIONED THE NAME OF ANY COMPANY FROM WHICH ASSESSEE COMPANY HAS UNDERTAKEN TRANSACTION WAS USED BY HIM FOR PROVIDIN G THE ENTRIES AND THERE IS NO WHISPER ABOUT THE COMPANIES FROM WHOM ASSESSEE HAD TRANSACTIONS IN THE YEAR 2011-12. SHRI TARUN GOYAL HAS ALSO ADMITTED THAT THERE ARE V ARIOUS COMPANIES FROM WHICH GENUINE BUSINESS WAS CARRIED O UT. REGARDING THE STATEMENT OF SHRI JAGDISH PRASAD PURO HIT, IT WAS POINTED OUT THAT HE HAS NEVER SAID THAT ANY ACCOMMODATION ENTRY WAS PROVIDED TO THE APPELLANT I.T.AS.1428 & 1429/D/2016 19 COMPANY AND THE ONLY NAME MENTIONED OF THE BENEFICIARY OF THE ACCOMMODATION ENTRY WAS M/S. VARAHA INFRA LTD. AND NOWHERE THE NAME OF THE APPELLANT COMPANY APPEARED. ALL 16 SUBSCRIBERS WHO HAD SUBSCRIBED FOR OFCDS HAV E NOW BEEN REDEEMED AND THE SUBSCRIBER HAD ACCORDINGL Y BEEN REBUTTED THEIR LOANS AND THERE IS NOTHING DUE TO THEM AS ON DATE AND THE ACCOUNT STANDS FULLY SETTLE D NOWHERE THERE IS AN IOTA OF EVIDENCE THAT REPAYMENT HAS COME PART TO THE ASSESSEE COMPANY IN SOME HIDDEN WA Y EVEN ASSESSING OFFICER WHO HAS TRIED TO EXAMINE THE TRAIL OF MONEY COULD NOT FOUND THAT THE AMOUNT OF REPAYME NT DOES NOT FINALLY LISTED WITH THE SUBSCRIBERS. SIMPLY BASED ON INQUIRY OF FOUR CASES ON SAMPLE BAS IS ASSESSING OFFICER HAS APPLIED HIS FINDING OF SIXTEE N CASES INCLUDING IN THE NAME OF M/S. ARISON VENTURES PVT. LTD. A SUBSIDIARY CONCERN OF THE ASSESSEE-COMP ANY. ANOTHER IMPORTANT FACT WHICH WAS POINTED OUT THAT T HE INQUIRIES CONDUCTED IN THE CASE OF KOA INVESTMENT L TD., DESPITE THE CORRECT ADDRESS BEING MENTIONED IN THE ASSESSMENT ORDER AND GIVEN TO THE ASSESSING OFFICER , THE INCOME TAX INSPECTOR HAD CONDUCTED AN INQUIRY ON A WRONG ADDRESS, I.E., INSTEAD OF 5/5761, 1 ST FLOOR, GALI NO.2, DEV NAGAR, KAROL BAGH, DELHI-5, THE ITI HAS G ONE TO OTHER ADDRESS AT 5/5791. THUS, INQUIRY ITSELF WA S CONDUCTED AT A WRONG ADDRESS. AND IN THE CASE OF M/ S. I.T.AS.1428 & 1429/D/2016 20 SHAIL INVESTMENT PVT. LTD. EVEN, AS PER THE AO, THE NOTICE REMAIN UNCOMPLIED WITH THAT ITSELF DOESNT L EAD TO ANY ADVERSE INFERENCE CAN BE DRAWN. REGARDING INVESTIGATION REPORT FROM KOLKATA, NAMELY , SCAN INFRASTRUCTURES LTD., M/S. UNISYS SOFTWARE & HOLDING INDUSTRIES LIMITED IDENTIFIED AS ENTRY OPER ATORS, IT WAS POINTED OUT THAT ASSESSING OFFICER NEVER CONFRONTED THE REPORT OR ANY OF THE ABOVE REFERRED INFORMATION TO THE ASSESSEE AND HOW THE INQUIRY WAS CONDUCTED ON SAMPLE BASIS ONLY IN CASE OF TWO COMPANIES. THEREAFTER VARIOUS JUDGMENTS HAVE BEEN RELIED UPON A ND REBUTTING EACH AND EVERY FINDING AND OBSERVATION OF THE ASSESSING OFFICER WHICH HAS BEEN DEALT AND INCORPOR ATED IN DETAIL IN THE IMPUGNED APPELLATE ORDER. 9. ANOTHER IMPORTANT FACT WHICH WAS POINTED OUT THA T, IN FACT THE TIME PROVIDED BY THE ASSESSING OFFICER WAS TOO SHORT BECAUSE THE INFERENCE WHICH ASSESSING OFFICER HAS T RIED TO DRAW WAS CONFRONTED ONLY IN THE LAST FEW DAYS, AND THEREFORE, THE ASSESSEE FILED A PETITION OF ADMISSION OF ADDIT IONAL EVIDENCE UNDER RULE 46A WHICH HAS BEEN INCORPORATED IN THE APPELLATE ORDER AS UNDER: A) BALANCE CONFIRMATION FROM THE OFCD HOLDERS CONFIRMING THE REPAYMENT OF AMOUNT MADE TO THEM AND SHOWING NIL BALANCE AFTER MAKING PAYMENT TO THEM. I.T.AS.1428 & 1429/D/2016 21 B) COPY OF BANK ACCOUNT STATEMENT OF THE APPELLANT COMPANY SHOWING THE REPAYMENT OF THE AMOUNTS MADE T O THE RESPECTIVE OFCD HOLDERS. C) COPY OF BANK ACCOUNT STATEMENTS OF ALL THE COMPANIES, WHICH INVESTED IN OFCDS FLOATED BY THE APPELLANT COMPANY SHOWING RECEIPT BACK OF THE RESPE CTIVE AMOUNTS IN THEIR BANK ACCOUNTS. D) COPIES OF ACKNOWLEDGEMENT PORTION OF THE INCOME TAX RETURNS OF THE INVESTING COMPANIES IN PROOF OF THEI R BEING INCOME TAX ASSESSEES. 10. THE ADDITIONAL EVIDENCES AND ASSESSEES EXPLANA TION AND SUBMISSION WERE FORWARDED TO THE ASSESSING OFFICER TO SUBMIT HIS REMAND REPORT AND TO CONDUCT THE INQUIRIES AND VERIFICATION. IN RESPONSE, THE ASSESSING OFFICER HA D FILED HIS REMAND REPORT WHICH READS AS UNDER:- 1. KINDLY REFER TO YOUR LETTER F.NO. CIT(A)-I/2015 -16/275 DATED 13.10.2015 ON THE ABOVE SUBJECT. THE POINT WISE REP ORT IS AS UNDER: AS FAR AS THE ADMISSION OF ADDITIONAL EVIDENCE, IT MAY BE NOTED THAT RULE 46A OF THE INCOME TAX RULES, 1962 PRESCRI BES CERTAIN CONDITIONS SUBJECT TO THE FULFILLMENT OF WHICH ADDI TIONAL EVIDENCE CAN BE PERMITTED WHICH ARE GIVEN AS UNDER:- (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADM IT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPO N TO PRODUCE BY THE ASSESSING OFFICER; OR I.T.AS.1428 & 1429/D/2016 22 (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIEN T CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER BY EVID ENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO TH E APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. THE PLEA OF THE ASSESSEE FOR ACCEPTANCE OF ADDITION AL EVIDENCE WAS THAT THEY COULD NOT FILED COPY OF BANK STATEMEN T OF ALL THE COMPANIES, WHICH INVESTED IN OFCDS FLOATED BY THE A SSESSEE COMPANY SHOWING RECEIPT BACK OF THE RESPECTIVE AMOU NTS IN THEIR BANK ACCOUNTS, IN RESPECT OF ALL THE INVESTORS. IN THIS REGARD IT IS SUBMITTED THAT THE ASSESSEE COMPANY WAS ALLOWED SUF FICIENT OPPORTUNITY DURING ASSESSMENT PROCEEDINGS AND IN MY VIEW, THE ADDITIONAL EVIDENCE IS NOT ADMISSIBLE UNDER RULE 46 A OF INCOME TAX RULES, 1962 AS ASSESSEE WAS GIVEN SUFFICIENT OP PORTUNITY AND NONE OF THE SPECIFIC CIRCUMSTANCES UNDER RULE 46A A PPLY TO THE CASE OF THE APPELLANT. WITHOUT PREJUDICE TO THE ABOVE, COMING TO THE MERIT OF THE CASE. 1. THE ASSESSEE COMPANY HAS TAKEN UNSECURED LOANS IN THE FORM OF OFCDS. AFTER MAKING PROPER ENQUIRIES IN RES PECT OF LENDER COMPANIES AT DELHI ADDRESSES AND KOLKATA OFFICES AS MENTIONED IN THE ASSESSMENT ORDER, IT WAS HELD THAT THESE COM PANIES ARE NOT DOING ANY SIGNIFICANT BUSINESS ON THEIR OWN AND ONU S OF PROVING CREDITWORTHINESS HAS NOT BEEN COMPLIED. FURTHER, IT IS SUBMITTED THAT YOUR KINDSELF HAS ASKED FOR CARRYING OUT NECES SARY VERIFICATION OF THE DOCUMENTS FILED BY THE ASSESSEE AT THE APPELLATE STAGE AND TO SUBMIT THE REPORT THEREON. 2. IN THIS REGARD, IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS SUBMITTED BEFORE YOUR KINDSELF CONFIRM ATIONS I.T.AS.1428 & 1429/D/2016 23 FROM DIFFERENT PARTIES, COPY OF ITS BANK ACCOUNT AN D ALSO THOSE OF THE PARTIES CONCERNED AND EVIDENCE RELATIN G TO THEIR BEING INCOME -TAX ASSESSES. IN ORDER TO CROSS -VERIFY THE SAME, NOTICE U/S 133(6) OF THE I.T. ACT, 1961 WERE ISSUED TO ALL THE PARTIES CONCERNED ASKING THEM TO CONFIRM TH E POSITION AS ALSO TO COMMENT US TO WHETHER THE DOCUM ENT SUBMITTED BY THE ASSESSEE ARE GENUINELY SUPPLIED BY THEM TO THE ASSESSEE OR NOT. THE REPLIES FROM ALL THE PA RTIES HAVE SINCE BEEN RECEIVED AND THEY HAVE CONFIRMED THAT TH EY HAD UNDERTAKEN THE TRANSACTIONS, IN QUESTION, AND HAD A LSO SUPPLIED THE CONFIRMATORY DOCUMENTS TO THE ASSESSEE , ON REQUEST FOR THE SAME. IT IS FURTHER STATED BY THE P ARTIES THAT THE BALANCE TOWARDS THE ASSESSEE IS NIL AS ON DATE . 3. IRRESPECTIVE OF THE ABOVE POSITION, I STILL SUPP ORT THE FINDINGS OF MY PREDECESSOR AS GIVEN IN THE ASSESSME NT ORDER. AS STATED IN THE ASSESSMENT ORDER, ENQUIRIES WERE GOT CONDUCTED ON SAMPLE BASIS AT DELHI IN TWO CASES NAMELY M/S KOA I NVESTMENTS LTD AND M/S SHAIL INVESTMENTS PVT. LTD. THE INSPECT OR WAS SENT WITH SUMMONS U/S 131 TO THE SAID PARTIES. M/S. KOA INVESTMENTS LTD WAS NOT FOUND BY THE INSPECTOR AT THE GIVEN ADD RESS, WHERE A HALWAI SHOP WAS FOUND EXISTING IN PLACE OF THE OFFI CE OF THE SAID PARTY. SIMILARLY, THE OTHER PARTY NAMELY M/S. SHAIL INVESTMENTS PVT. LTD WAS FOUND TO BE SHARING ADDRESS 13/34, WEA , 4TH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI WITH TH E CA SH. TARUN GOYAL, WHO IS A KNOWN ENTRY OPERATOR. SIMILAR LY, ENQUIRIES WERE GOT CONDUCTED IN THE CASES OF THREE PARTIES AT KOLKATA NAMELY M/S WARNER MULTIMEDIA LTD., M/S PRIME CAPITA L MARKET LTD AND M/S UNISYA SOFTWARE & HOLDING INDUSTRIES LT D. THESE ENQUIRIES REVEALED THAT THESE PARTIES BELONGED TO A N ENTRY OPERATOR GROUP OF PUROHIT FAMILY. SH. J.P. PUROHIT OF THE SAID GROUP I.T.AS.1428 & 1429/D/2016 24 ADMITTED IN A STATEMENT RECORDED THAT HE WAS GIVING ACCOMMODATION ENTRIES. IN VIEW OF ABOVE AND ALSO OB SERVING THE PATTERN OF RETURN OF INCOME AND COPY OF BALANCE SHE ET FILED BY THE PARTIES CREDIT WORTHINESS REMAINS DOUBTFUL. FURTHER IT IS ALSO SUBMITTED THAT SECTION 68 OF THE I. T. ACT SPEAKS ABOUT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS .. AND IS IMMATERIAL THAT THE FUNDS HAVE BEEN RETURNED BACK I N FUTURE. 4. CONSIDERING THE ABOVE REPORT, THE CASE MAY KINDL Y BE DECIDED BY YOUR GOOD SELF ON MERITS AND ASSESSMENT ORDER MAY BE UPHOLD. 11. LD. CIT (A) AFTER CONSIDERING THE REMAND REPORT AND ALSO AFTER REQUISITIONING THE CASE RECORDS AND ON EXAMIN ATION OF THE SAME, FOUND THAT EFFECTIVE HEARING IN THE ASSES SEES CASE STARTED ONLY IN THE MONTH OF JANUARY, 2015 AND TILL 20 TH MARCH, 2015, THE ASSESSING OFFICER DID NOT ASK THE PRODUCTION OF THE DIRECTORS OF THE INVESTOR COMPANY AND THE DE TAILS WERE ASKED BY HIM IN THE FINAL SHOW CAUSE NOTICE ISSUED ON 25.03.2015 FOR WHICH ASSESSEE COULD NOT HAVE COLLEC TED THE INFORMATION FROM THE PARTIES DISTANTLY LOCATED WITH IN THE SPAN OF 4 TO 5 DAYS. FURTHER, THE PARTIES FROM WHOM OFCD S WERE RECEIVED WERE PAID BACK IN THE YEARS 2013, 2014 AND 2015, AND THEREFORE, THERE WERE NO REGULAR CONTACT WITH T HOSE PARTIES. THE ASSESSEE HAD FACED GENUINE DIFFICULTIE S IN COLLECTING EVIDENCES FROM INVESTOR PARTIES IN SUCH A SHORT TIME. BASED ON THESE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF SUBSTANTIAL JUSTICE, HE ADMITTED THE ADD ITIONAL EVIDENCES. HE FURTHER OBSERVED IN RESPONSE TO THE Q UERY RAISED BY THE ASSESSING OFFICER THAT THE ASSESSEE C OMPANY I.T.AS.1428 & 1429/D/2016 25 HAD SUBMITTED VARIOUS DOCUMENTS/EVIDENCES LIKE COMP LETE NAMES AND ADDRESS, PAN, NUMBER OF OFCD SUBSCRIBER A ND AMOUNT OF LOAN OUTSTANDING AS ON 31.03.2012, PROOF OF THEIR BEING REGULAR INCOME TAX ASSESSEE, VIZ. COPY OF RET URN OF INCOME, COPY OF BANK STATEMENT, CONFIRMATION CERTIF ICATES OF THE INVESTORS, COPY OF LEDGER ACCOUNT, BALANCE SHEE T, AUDITORS REPORT ETC. IN ORDER TO PROVE THE GENUINENESS OF TH E TRANSACTION THE ASSESSEE HAS ALSO FILED THE EVIDENC ES AT THE APPELLATE STAGE WHICH WERE AS UNDER: A) BALANCE CONFIRMATION FROM THE OFCD HOLDERS CONFIRMING THE REPAYMENT OF AMOUNT MADE TO THEM AND SHOWING NIL BALANCE AFTER MAKING PAYMENT TO THEM. B) COPY OF BANK ACCOUNT STATEMENT OF THE APPELLANT COMPANY SHOWING THE REPAYMENT OF THE AMOUNTS MADE T O THE RESPECTIVE OFCD HOLDERS. C) COPY OF BANK ACCOUNT STATEMENTS OF ALL THE COMPANIES, WHICH INVESTED IN OFCDS FLOATED BY THE A PPELLANT COMPANY SHOWING RECEIPT BACK OF THE RESPECTIVE AMOU NTS IN THEIR BANK ACCOUNTS. D) COPIES OF ACKNOWLEDGEMENT PORTION OF THE INCOME TAX RETURNS OF THE INVESTING COMPANIES IN PROOF OF THEI R BEING INCOME TAX ASSESSEES. 12. THEREAFTER, HE HAS DISCUSSED MERITS OF ADDITION S IN CASE OF EACH AND EVERY PARTY BASED ON THE EVIDENCES AND THE REMAND REPORT OF THE ASSESSING OFFICER WHICH ARE IN CORPORATED AS UNDER:- I.T.AS.1428 & 1429/D/2016 26 BHARAT VISION INFRA LIMITED THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.5,30,00,000/- FROM M/S BHARAT VISION INFRA LTD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.4,99,00,000/- AND RESER VE & SURPLUS TO THE EXTENT OF RS.44,44,00,207/- IN ITS BALANCE S HEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH HDFC BANK, STEPHEN HOUSE, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE A PPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APP LICANT COMPANY ON 27.08.20147 THE INVESTOR COMPANY HAS ALS O SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL R EVENUE OF RS.5,34,312/- HAS BEEN SHOWN AND HAS DECLARED LOSS OF RS.31,743/-. DURING THE COURSE OF REMAND PROCEEDING S, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO SENT ITS COPY OF BANK STATEMENT WHEREBY THE AM OUNT GIVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.5,30,00,0 00/- AND REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPA NY HAS ALSO FILED COPY OF THE APPELLANTS ACCOUNT FROM ITS BOOK S OF ACCOUNTS FROM 01.04.2011 TO 31.03.2015, ITS COPY OF RETURN O F INCOME FILED WITH INCOME TAX DEPARTMENT ALONG WITH COPY OF ITS BALANCE SHEET FOR THE A.Y. 2010-11, 2011-12 AND 2012-13 AND ALONG WITH THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE IN VESTOR I.T.AS.1428 & 1429/D/2016 27 COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE I NVESTOR COMPANY. GANPATI ADVISORY PVT. LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.5,20,00,000/- FROM M/S GANPATI ADVISORY PVT. LTD . THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.6,09,00,000/- AND RESER VE & SURPLUS TO THE EXTENT OF RS.53,85,36,219/- IN ITS BALANCE S HEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH HDFC BANK, STEPHEN HOUSE, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE A PPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APP LICANT COMPANY ON 28.08.2014. THE INVESTOR COMPANY HAS ALS O SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL R EVENUE OF RS.28,000/- HAS BEEN SHOWN AND HAS DECLARED LOSS OF RS.78,519/-. DURING THE COURSE OF REMAND PROCEEDING S, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2015 ALONG WITH ITS COPY O F BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.5,20,00,000/- AND REFUND OF THE SA ME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT A LONG WITH ITS I.T.AS.1428 & 1429/D/2016 28 BALANCE SHEET FOR A.Y. 2010-11, 2011-12 AND 2012-13 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE IN VESTOR COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE I NVESTOR COMPANY. OM VINCOM PVT. LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCD SUBSCRIP TION OF RS.1,50,00,000/- FROM M/S. OM VINCOM PVT. LTD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOM E TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPA NY HAS GOT SHARE CAPITAL OF RS.76,12,500/- AND RESERVE & SURPL US TO THE EXTENT OF RS.12,89,05,543/- IN ITS BALANCE SHEET. T HE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BANK STATEME NT OF THE APPLICANT COMPANY WITH INDUSLND BANK, KOLKATA WHERE IN THE AMOUNT REFUNDED BY THE APPELLANT COMPANY HAS BEEN C REDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 26.06.2013. THE INVESTOR COMPANY HAS ALSO SUBMITTED COPY OF INC OME TAX RETURN WHEREIN TOTAL REVENUE OF RS.88,46,032/- HAS BEEN SHOWN AND HAS DECLARED INCOME OF RS.8,215/-. DURING THE C OURSE OF REMAND PROCEEDINGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I.T. ACT TO THE SAID INVESTOR COMPANY. THE S AID INVESTOR COMPANY FILED ITS REPLY IN RESPONSE TO THE NOTICE U /S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPA NY. THE SAID COMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOOKS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.1,50,00,000/- AND REFUND OF THE SA ME IS I.T.AS.1428 & 1429/D/2016 29 REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT A LONG WITH ITS BALANCE SHEET FOR A.Y. 2012-13, 2013-14 AND 2014-15 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE I NVESTOR COMPANY. RITESH CONSTRUCTION PVT. LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.1,50,00,000/-FROM M/S RITESH CONSTRUCTION PVT. L TD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.50,72,500/- AND RESERVE & SURPLUS TO THE EXTENT OF RS.7,05,13,867/- IN ITS BALANCE SHEET . THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH INDUSLND BA NK, BURRA BAZAR, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE A PPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APP LICANT COMPANY ON 26.06.2013. THE INVESTOR COMPANY HAS ALS O SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL R EVENUE OF RS.40,05,274/- HAS BEEN SHOWN AND HAS DECLARED INCO ME OF RS.8,593/-. DURING THE COURSE OF REMAND PROCEEDINGS , ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF THE I.T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FILED I TS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID COMPANY ALSO F ILED COPY OF APPELLANTS ACCOUNT FROM ITS BOOKS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND 01.04.2013 TO 31.03.2014 AND ITS COPY OF I.T.AS.1428 & 1429/D/2016 30 BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPE LLANT COMPANY AS 0% OFCD OF RS.1,50,00,000/- AND THE REFU ND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FI LED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTME NT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2012-13, 2013-14 AN D 2014-15 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE INVESTOR COMPANY. ALL THESE FACTS ESTABLISH THE IDE NTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S MADE WITH THE INVESTOR COMPANY. RUPAK TRADING PVT. LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.7,50,00,000/- FROM M/S RUPAK TRADING PRIVATE LIM ITED (NOW KNOWN AS ISKCON INFRA ENGINEERING PVT. LTD.). THE A PPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOM E TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPA NY HAS GOT SHARE CAPITAL OF RS.1,70,27,000/- AND RESERVE & SUR PLUS TO THE EXTENT OF RS.14,93,11,552/- IN ITS BALANCE SHEET. T HE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BANK STATEME NT OF THE APPLICANT COMPANY WITH UNITED BANK OF INDIA, NETAJI SUBHASH ROAD, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE AP PELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APP LICANT COMPANY ON 22.01.2014 RS.4,00,00,000/- AND ON 27.06 .2014 RS.3,50,00,000/-, THE INVESTOR COMPANY HAS ALSO SUB MITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL REVENUE OF RS.47,87,22,950/- HAS BEEN SHOWN AND HAS DECLARED L OSS OF RS.4,47,771/-. DURING THE COURSE OF REMAND PROCEEDI NGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE I.T.AS.1428 & 1429/D/2016 31 SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND 01.04.2013 TO 31. 03.2015 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT G IVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.7,50,00,000/- AN D REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2012-13, 2013 -14 AND 2014-15 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF T HE SAME TO THE INVESTOR COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S MADE WITH THE INVESTOR COMPANY. SCAN INFRASTRUCTURE LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS. 1,50,00,000/- FROM M/S SCAN INFRASTRUCTURE PVT. LTD . THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.20,28,99,900/- AND RESE RVE & SURPLUS TO THE EXTENT OF RS.30,37,87,015/- IN ITS B ALANCE SHEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY O F BANK STATEMENT OF THE APPLICANT COMPANY WITH KOTAK MAHIN DRA BANK, DALHOUSIE, KOLKATA WHEREIN THE AMOUNT REFUNDED BY T HE APPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 25.06.2013. THE INVESTOR COMPA NY HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TO TAL REVENUE I.T.AS.1428 & 1429/D/2016 32 OF RS.87,62,650/- HAS BEEN SHOWN AND HAS DECLARED L OSS OF RS.7,20,518/-. DURING THE COURSE OF REMAND PROCEEDI NGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2015 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY A S 0% OFCD OF RS. 1,50,00,000/- AND REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2010-11, 2011-12 AND 2012-13 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE IN VESTOR COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE I NVESTOR COMPANY. SWARNAPUSHPA VANIYA PVT. LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.3,50,00,000/- FROM M/S SWARNAPUSHPA VANIYA PVT. LTD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS. 1,49,56,170/- AND RESE RVE & SURPLUS TO THE EXTENT OF RS.25,92,70,155/- IN ITS BALANCE S HEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH STATE BANK OF BIKANER AND JAIPUR, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE I.T.AS.1428 & 1429/D/2016 33 APPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 27.06.2014. THE INVESTOR COMPA NY HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TO TAL REVENUE OF RS.14,60,13,069/- HAS BEEN SHOWN AND HAS DECLARE D INCOME OF RS.32,769/-. DURING THE COURSE OF REMAND PROCEED INGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY A S 0% OFCD OF RS.3,50,00,000/- IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FIL ED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y . 2012-13 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY. ALL THESE FACTS ESTABLISH THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S MADE WITH THE INVESTOR COMPANY. UNISYS SOFTWARES AND HOLDING INDUSTRIES LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.3,00,00,000/- FROM M/S UNISYS SOFTWARES AND HOLD ING INDUSTRIES LTD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF I TS CLAIM. THE INVESTOR COMPANY HAS GOT SHARE CAPITAL OF RS.23,00, 02,000/- AND RESERVE & SURPLUS TO THE EXTENT OF RS.34,08,84, 000/- IN ITS BALANCE SHEET. THE APPELLANT COMPANY HAS ALSO SUBMI TTED THE COPY OF BANK STATEMENT OF THE APPLICANT COMPANY WIT H KOTAK I.T.AS.1428 & 1429/D/2016 34 MAHINDRA BANK, DALHOUSIE ROAD, KOLKATA WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 22.01.2014. THE INVESTOR COMPANY HAS ALSO SUBMITTED COPY OF INCOME TAX RETUR N WHEREIN TOTAL REVENUE OF RS.201,70,44,000/- HAS BEEN SHOWN AND HAS DECLARED INCOME OF RS.1,01,28,680/-. DURING THE COU RSE OF REMAND PROCEEDINGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I.T. ACT TO THE SAID INVESTOR COMPANY. THE S AID INVESTOR COMPANY FILED ITS REPLY IN RESPONSE TO THE NOTICE U /S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPA NY. THE SAID COMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOOKS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2015 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.3,00,00,000/- AND REFUND OF THE SA ME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT A LONG WITH ITS BALANCE SHEET FOR A.Y. 2010-11, 2011-12 AND 2012-13 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE IN VESTOR COMPANY. IN ITS REPLY DATED 28.10.2015 RECEIVED BY THE AO ON 09.11.2015, THE DIRECTOR OF THE SAID INVESTOR COMPA NY, SHRI JAGDISH PRASAD PUROHIT HAS STATED THAT HIS STATEMEN T WAS RECORDED U/S 132(1) DURING THE COURSE OF SEARCH ON 21.01.2015 AT HIS RESIDENCE AND SURVEY WAS ALSO CARRIED OUT IN THE CASE OF M/S WARNER MULTIMEDIA LTD., M/S PRIME CAPITAL MARKE T LTD. AND M/S UNISYS SOFTWARE AND HOLDING INDUSTRIES PVT. LTD . HE HAS FURTHER STATED THAT DURING THE COURSE OF SEARCH HE WAS FORCED TO SIGN ON A PRE-DRAFTED STATEMENT IN PLACE OF HIS OWN REPLIES. HE HAS ALSO MENTIONED THAT DDIT TOOK OUT A LIST OF COM PANIES AND HE WAS FORCED TO ACCEPT THAT ALL THESE COMPANIES ME NTIONED IN I.T.AS.1428 & 1429/D/2016 35 THIS LIST WERE BELONGING TO HIM. SH. JAGDISH PRASAD PUROHIT HAS ALSO WRITTEN THAT HE HAD ALREADY RETRACTED THE SAID STATEMENT BY SWEARING AN AFFIDAVIT ON 30.01.2015. COPY OF THE SA ID AFFIDAVIT IS ALSO ENCLOSED ALONG WITH THE REPLY FILED IN RESP ONSE TO NOTICE U/S 133(6). SH. JAGDISH PRASAD PUROHIT HAS CONFIRME D THE TRANSACTION WITH THE APPELLANT COMPANY AND HAS MENT IONED THAT THESE TRANSACTIONS HAVE BEEN TAKEN PLACE THROUGH BA NKING CHANNELS. HE HAS ALSO FILED COPY OF THE ASSESSMENT ORDER PASSED BY THE AO IN THE CASE OF INVESTOR COMPANY FO R A.Y. 2012- 13 WHEREIN THE NO ADVERSE VIEW WITH REGARD TO 0% OF CD GIVEN TO THE APPELLANT COMPANY HAS BEEN TAKEN BY THE AO I N THE CASE OF INVESTOR COMPANY. THIS SHOWS THAT THE AO WAS FUL LY SATISFIED WITH THE TRANSACTION OF 0% OFCD WITH THE APPELLANT COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE INVES TOR COMPANY. WALTARE INVESTMENT PVT. LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.3,70,00,000/- FROM M/S WALTARE INVESTMENT PVT. L TD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.2,48,66,700/- AND RESER VE & SURPLUS TO THE EXTENT OF RS.47,20,46,908/- IN ITS BALANCE S HEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH UNITED BANK OF INDIA WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPAN Y HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPA NY ON 11.06.2014 OF RS.2,70,00,000/- AND ON 12.06.2014 OF I.T.AS.1428 & 1429/D/2016 36 RS.1,00,00,000/-. THE INVESTOR COMPANY HAS ALSO SUB MITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL REVENUE OF RS.8,78,485/- HAS BEEN SHOWN AND HAS DECLARED INCOM E OF RS.39,430/-. DURING THE COURSE OF REMAND PROCEEDING S, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND 01.04.2014 TO 31. 03.2015 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT G IVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.3,70,00,000/- AN D REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2014-15 AND T HE CONFIRMATION OF THE AMOUNT PAID AS 0% OF'CDS TO THE APPELLANT COMPANY AND SUBSEQUENT REFUND OF THE SAME TO THE IN VESTOR COMPANY. ALL THESE FACTS ESTABLISH THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE I NVESTOR COMPANY. KOA INVESTMENT LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.6,75,00,000/- FROM M/S KOA INVESTMENT LTD. THE A PPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOM E TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPA NY HAS GOT SHARE CAPITAL OF RS.1,04,44,200/- AND RESERVE & SUR PLUS TO THE EXTENT OF RS.10,37,76,346/- IN ITS BALANCE SHEET. T HE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BANK STATEME NT OF THE I.T.AS.1428 & 1429/D/2016 37 APPLICANT COMPANY WITH AXIS BANK, KAROL BAGH BRANCH , DELHI WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPAN Y HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 31.03.2013 OF RS.1,00,00,000/-, ON 30.03.2016 RS.1,00,00,000/-, ON 30.05.2013 OF RS.1,00,00,000/- , 02.08.2013 OF RS.1,00,00,000/-, ON 14.02.2014 OF RS.1,00,00,000/-, ON 04.06.2014 OF RS.50,00,000/-, ON 09.06.2014 OF RS.50,00,000/-, ON 30.06.2014 OF RS.5 0,00,000/- AND ON 01.07.2014 OF RS.25,00,000/-. THE INVESTOR C OMPANY HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREI N TOTAL REVENUE OF RS.91,506/- HAS BEEN SHOWN AND HAS DECLA RED INCOME OF RS.9,387/-. DURING THE COURSE OF REMAND P ROCEEDINGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY A S 0% OFCD OF RS.6,75,00,000/- AND REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2011-12 AND 2012- 13 AND THE CONFIRM ATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AN D SUBSEQUENT REFUND OF THE SAME TO THE INVESTOR COMPA NY. ALL THESE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE INVES TOR COMPANY. I.T.AS.1428 & 1429/D/2016 38 GLOBAL INFRATECH & FINANCE LTD. (FORMERLY ASIANLAK CAPITAL AND FINANCE LTD.) THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.8,00,00,000/- FROM M/S GLOBAL INFRATECH & FINANC E LTD. (FORMERLY ASIANLAK CAPITAL AND FINANCE LTD. ). THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOM E TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPA NY HAS GOT SHARE CAPITAL OF RS.14,00,53,000/- AND RESERVE & SU RPLUS TO THE EXTENT OF RS.5,36,14,137/- IN ITS BALANCE SHEET. TH E APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BANK STATEME NT OF THE APPLICANT COMPANY WITH HDFC BANK, EGMORE BRANCH, CH ENNAI WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPAN Y HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPA NY ON 22.01.2014 OF RS.8,00,00,000/-. THE INVESTOR COMPAN Y HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL R EVENUE OF RS.1,91,00,416/- HAS BEEN SHOWN AND HAS DECLARED IN COME OF RS.11,38,614/-. DURING THE COURSE OF REMAND PROCEED INGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I .T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANTS ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND 01.04.2014 TO 31. 03.2015 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT G IVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.8,00,00,000/- AN D REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT FOR THE A.Y. 2012-13 TO 2015-16 ALONG WITH ITS BALA NCE SHEET FOR I.T.AS.1428 & 1429/D/2016 39 THE A.Y. 2013-14 AND 2015-16 AND THE CONFIRMATION O F THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AN D SUBSEQUENT REFUND OF THE SAME TO THE INVESTOR COMPA NY. ALL THESE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE INVES TOR COMPANY. COMET HOLDING LTD. THE APPELLANT COMPANY HAS RECEIVED OFCD SUBSCRIPTIO N OF RS.1,00,00,000/- FROM M/S COMET HOLDING LTD. THE AP PELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOM E TAX RETURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPA NY HAS GOT SHARE CAPITAL OF RS.99,92,000/- AND RESERVE & SURPL US TO THE EXTENT OF RS.4,52,75,529/- IN ITS BALANCE SHEET. TH E APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BANK STATEME NT OF THE APPLICANT COMPANY WITH HDFC BANK, STEPHEN HOUSE, KO LKATA WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPAN Y HAS BEEN CREDITED IN THE ACCOUNT OF THE APPLICANT COMPA NY ON 26.06.2013 OF RS.1,00,00,000/-. THE INVESTOR COMPAN Y HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL R EVENUE OF RS.27,46,402/- HAS BEEN SHOWN AND HAS DECLARED LOSS OF RS.4,86,696/-. DURING THE COURSE OF REMAND PROCEEDI NGS, ASSESSING OFFICER ISSUED NOTICE U/S.133(6) OF THE I T ACT TO THE SAID INVESTOR COMPANY. THE SAID INVESTOR COMPANY FI LED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SAID C OMPANY ALSO FILED COPY OF APPELLANT'S ACCOUNT FROM ITS BOO KS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 ITS COPY OF BANK STAT EMENT WHEREBY THE AMOUNT GIVEN TO THE APPELLANT COMPANY A S 0% I.T.AS.1428 & 1429/D/2016 40 OFCD OF RS.1,00,00,000/- IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FIL ED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y . 2010-11, 2011-12 AND 2012-13 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY. ALL THESE FAC TS ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS MADE WITH THE INVESTOR COMPANY. EVERSIGHT TRADECOMM PVT. LTD. THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.6,00,00,000/- FROM M/S EVERSIGHT TRADECOMM PRIVA TE LIMITED. THE APPELLANT COMPANY SUBMITTED THE COPY O F BANK STATEMENT, INCOME TAX RETURN, PAN AND AUDITED FINAN CIAL STATEMENTS OF THE APPLICANT COMPANY IN SUPPORT OF I TS CLAIM. THE INVESTOR COMPANY HAS GOT SHARE CAPITAL OF RS.4,04,4 1,500/- AND RESERVE & SURPLUS TO THE EXTENT OF RS.(-)1,51,82,99 0/- IN ITS BALANCE SHEET. THE APPELLANT COMPANY HAS ALSO SUBMI TTED THE COPY OF BANK STATEMENT OF THE APPLICANT COMPANY WIT H HDFC BANK, STEPHEN HOUSE, KOLKATA WHEREIN THE AMOUNT REF UNDED BY THE APPELLANT COMPANY HAS BEEN CREDITED IN THE ACCO UNT OF THE APPLICANT COMPANY ON 26.06.2014 OF RS.1,00,00,000/- , ON 30.06.2014 OF RS. 1,00,00,000/-, ON 02.07.2014 OF RS.1,00,00,000/-, ON 15.07.2014 OF RS. 1,00,00,000/ -, ON 18.07.2014 OF RS.1,00,00,000/- AND ON 23.07.2014 OF RS. 1,00,00,000/-. THE INVESTOR COMPANY HAS ALSO SUBMIT TED COPY OF INCOME TAX RETURN WHEREIN TOTAL REVENUE OF RS.38,95 ,60,109/- HAS BEEN SHOWN AND HAS DECLARED INCOME OF RS. NIL. DURING THE COURSE OF REMAND PROCEEDINGS, ASSESSING OFFICER ISS UED NOTICE U/S 133(6) OF THE I.T. ACT TO THE SAID INVESTOR COM PANY. THE SAID INVESTOR COMPANY FILED ITS REPLY IN RESPONSE TO THE NOTICE U/S I.T.AS.1428 & 1429/D/2016 41 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPE LLANT COMPANY. THE SAID COMPANY ALSO CONFIRMED THE TRANSA CTIONS IN OFCDS UNDERTAKEN WITH THE APPELLANT COMPANY AND FIL ED ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT REFUNDED BY THE APPELLANT COMPANY OF RS.6,00,00,000/- IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF IN COME FILED WITH INCOME TAX DEPARTMENT ALONG WITH ITS BALANCE SHEET FOR A.Y. 2010-11, 2011-12 AND 2012-13 AND THE CONFIRMATION O F THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AN D SUBSEQUENT REFUND OF THE SAME TO THE INVESTOR COMPA NY. ALL THESE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THE TRANSACTIONS MADE WITH THE INVES TOR COMPANY. AGGRESSIVE EXPORTS INDUSTRIES PVT. LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.4,50,00,000/- FROM AGGRESSIVE EXPORTS INDUSTRIES PVT. LTD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK ST ATEMENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.5,00,100/- AND RESERVE & SURPLUS TO THE EXTENT OF RS.(-) 4,42,19,421/- IN ITS BALANCE S HEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH SARASWAT BA NK, LAJPAT NAGAR, DELHI WHEREIN THE AMOUNT REFUNDED BY THE APP ELLANT COMPANY HAS BEEN CREDITED IN THE ACCOUNT OF THE APP LICANT COMPANY ON 24.12.2014 OF RS.4,50,00,000/-. THE INVE STOR COMPANY HAS ALSO SUBMITTED COPY OF INCOME TAX RETUR N WHEREIN TOTAL REVENUE OF RS.2,00,000/- HAS BEEN SHOWN AND H AS DECLARED LOSS OF RS.2,68,617/-. DURING THE COURSE O F REMAND I.T.AS.1428 & 1429/D/2016 42 PROCEEDINGS, ASSESSING OFFICER ISSUED NOTICE U/S 13 3(6) OF THE I.T. ACT TO THE SAID INVESTOR COMPANY. THE SAID INV ESTOR COMPANY FILED ITS REPLY IN RESPONSE TO THE NOTICE U/S 133(6 ) AND CONFIRMED THE TRANSACTIONS WITH THE APPELLANT COMPANY. THE SA ID COMPANY ALSO FILED THE CONFIRMATION WITH RESPECT TO INVESTM ENT IN OFCDS OUTSTANDING AS ON 01.04.2014 AND ITS REFUND IN F.Y. 2014-15 AND ITS COPY OF BANK STATEMENT WHEREBY THE AMOUNT G IVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.4,50,00,000/- AN D REFUND OF THE SAME IS REFLECTED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RETURN OF INCOME FILED WITH INCOME TAX DEPARTMENT FOR A.Y. 2012-13 TO 2015-16 AND THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY AND SUBSE QUENT REFUND OF THE SAME TO THE INVESTOR COMPANY. ALL THE SE FACTS ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF THE TRANSACTIONS MADE WITH THE INVESTOR COMPANY. SHAIL INVESTMENT PVT. LTD THE APPELLANT COMPANY HAS RECEIVED 0% OFCDS OF RS.90,25,00,000/- FROM M/S. SHAIL INVESTMENT PVT. L TD. THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEM ENT, INCOME TAX RETURN, PAN AND AUDITED FINANCIAL STATEM ENTS OF THE APPLICANT COMPANY IN SUPPORT OF ITS CLAIM. THE INVE STOR COMPANY HAS GOT SHARE CAPITAL OF RS.1,22,71,030/- AND RESER VE & SURPLUS TO THE EXTENT OF RS.396,14,41,514/- IN ITS BALANCE SHEET. THE APPELLANT COMPANY HAS ALSO SUBMITTED THE COPY OF BA NK STATEMENT OF THE APPLICANT COMPANY WITH AXIS BANK W HEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPANY HAS BEEN C REDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 24.11.2012 OF RS.2,50,00,000/-, ON 19.12.2012 OF RS.2,50,00,000/- , ON 02.01.2013 OF RS.2,50,00,000/-, ON 03.01.2013 OF I.T.AS.1428 & 1429/D/2016 43 RS.2,50,00,000/-, ON 09.10.2013 OF RS.5,00,00,000/- ON 10.01.2013 OF RS.5,00,00,000/- ON 14.01.2013 RS.5,00,00,000/-, ON 15.01.2013 OF RS.2,50,00,000/- , ON 15.01.2013 OF RS.2,50,00,000/-, ON 18.01.2013 OF RS.2,50,00,000/-, ON 18.01.2013 OF RS.2,50,00,000/- , ON 24.01.2013 OF RS.5,00,00,000/-, ON 30.01.2013 OF RS.4,00,00,000/-, ON 14.03.2013 OF RS.2,50,00,000/- , ON 22.03.2013 OF RS.5,00,00,000/-, ON 30.03.2013 OF RS.5,00,00,000/-, ON 23.03.2013 OF RS.5,00,00,000/- , ON 03.04.2013 OF RS.2,00,00,000/-, ON 30.05.2013 OF RS.3,00,00,000/-, ON 26.06.2013 OF RS.3,00,00,000/- , ON 17.07.2013 OF RS.2,25,00,000/-, ON 18.07.2013 OF RS.2,00,00,000/-, ON 29.07.2013 OF RS.1,00,00,000/- , ON 08.08.2013 OF RS.1,00,00,000/-, 21.11.2013 OF RS.3,00,00,000/-, ON 04.06.2014 OF RS.1,00,00,000/- , ON 05.06.2014 OF RS.1,00,00,000/-, ON 10.06.2014 OF RS.1,00,00,000/-, ON 15.07.2014 OF RS.1,00,00,000/- , ON 28.08.2014 OF RS.1,00,00,000/-, ON 17.09.2014 OF RS.50,00,000/-, ON 18.09.2014 OF RS.50,00,000/-, ON 22.09.2014 OF RS.1,00,00,000/-, ON 07.11.2014 OF RS.1,00,00,000/-, ON 10.11.2014 OF RS.25,00,000/-, ON 12.11.2014 OF RS.1,00,00,000/-, ON 20.11.2014 OF RS.50,00,000/-, ON 21.11.2014 OF RS.50,00,000/-, ON 24.11.2014 OF RS.50,00,000/-, ON 25.11.2014OF RS.50 ,00,000/- AND ON 25.11.2014 OF RS.25,00,000/-. THE INVESTOR C OMPANY HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREI N TOTAL REVENUE OF RS.65,31,90,369/- HAS BEEN SHOWN AND HAS DECLARED IN COURSE OF REMAND PROCEEDINGS, ASSESSING OFFICER ISSUED NOTICE U/S 133(6) OF THE I.T. ACT TO THE SAID INVESTOR COM PANY. THE SAID INVESTOR COMPANY FILED ITS REPLY IN RESPONSE TO THE NOTICE U/S I.T.AS.1428 & 1429/D/2016 44 133(6) AND CONFIRMED THE TRANSACTIONS WITH THE APPE LLANT COMPANY. THE SAID COMPANY ALSO FILED COPY OF APPELL ANT'S ACCOUNT FROM ITS BOOKS OF ACCOUNTS FROM 01.04.2011 TO 31.03.2012 AND ITS COPY OF BANK STATEMENT WHEREBY T HE AMOUNT GIVEN TO THE APPELLANT COMPANY AS 0% OFCD OF RS.90,25,00,000/- AND REFUND OF THE SAME IS REFLECT ED. THE INVESTOR COMPANY HAS ALSO FILED ITS COPY OF THE RET URN OF INCOME FILED WITH INCOME TAX DEPARTMENT FOR A.Y. 2012-13 A LONG WITH THE CONFIRMATION OF THE AMOUNT PAID AS 0% OFCDS TO THE APPELLANT COMPANY. ALL THESE FACTS ESTABLISH THE ID ENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S MADE WITH THE INVESTOR COMPANY. ARIZONA VENTURES PVT. LTD. (FORMERLY PIGIVIVE VENTURE PVT. LTD). THE APPELLANT COMPANY HAS RECEIVED OFCD SUBSCRIPTIO N OF RS.2,75,00,000/- FROM M/S ARIZONA VENTURES PVT. LTD .(FORMERLY KNOWN AS DIGIVIVE VENTURE PVT. LTD.). THE APPELLANT COMPANY SUBMITTED THE COPY OF BANK STATEMENT, INCOME TAX RE TURN, PAN AND AUDITED FINANCIAL STATEMENTS OF THE APPLICANT C OMPANY IN SUPPORT OF ITS CLAIM. THE INVESTOR COMPANY HAS GOT SHARE CAPITAL OF RS.1,00,000/- AND RESERVE & SURPLUS TO THE EXTEN T OF RS.(-) 27,01,106/- IN ITS BALANCE SHEET. THE APPELLANT COM PANY HAS ALSO SUBMITTED THE COPY OF BANK STATEMENT OF THE AP PLICANT COMPANY WITH HDFC BANK, NEHRU PLACE, DELHI WHEREIN THE AMOUNT REFUNDED BY THE APPELLANT COMPANY HAS BEEN C REDITED IN THE ACCOUNT OF THE APPLICANT COMPANY ON 08.11.2014 OF RS.2,25,00,000/- AND 12.11.2014 OF RS.50,00,000/-. THE INVESTOR COMPANY HAS ALSO SUBMITTED COPY OF INCOME TAX RETURN WHEREIN TOTAL REVENUE OF RS.3,24,701/- HAS BEEN SHO WN AND HAS I.T.AS.1428 & 1429/D/2016 45 DECLARED LOSS OF RS.27,01,106/-. THE ABOVE NAMED CO MPANY IS ASSESSED WITH THE SAME AO AND ALL FACTS ARE REFLECT ED IN THE BALANCE SHEET OF THE INVESTOR COMPANY. ALL THESE FA CTS ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS MADE WITH THE INVESTOR COMPANY. 13. REGARDING THE REFERENCE OF SEARCH AND SEIZURE C ONDUCTED IN THE CASE OF SHRI TARUN GOYAL AND ALSO SHRI JAGDI SH PRASAD PUROHIT, THE SAME HAS BEEN DEALT BY THE LD. CIT (A) IN THE FOLLOWING MANNER: THE AO HAS REFERRED TO THE SEARCH & SEIZURE OPERATI ONS CONDUCTED ON ONE SH. TARUN GOYAL TO HOLD THAT THE COMPANIES S HARING ADDRESS WITH HIM AT DELHI MUST BE UNDER HIS CONTROL AND THA T IT MIGHT HAVE GIVEN AN ACCOMMODATION ENTRY DURING THE RELEVANT PE RIOD TO THE APPELLANT COMPANY AS THE SAID PERSON WAS FOUND TO B E INVOLVED IN THE BUSINESS OF GIVING ACCOMMODATION ENTRIES IN THE SEARCH CONDUCTED BY THE DEPARTMENT ON HIM. BY ALL MEANS IT IS A FAR- FETCHED CONCEPTION. THE MONEY RECEIVED FROM THE INV ESTOR COMPANIES HAVE BEEN RECEIVED THROUGH BANKING CHANNE LS AND REFUNDED BACK TO THEM AND SAME HAVE BEEN CREDITED I N THEIR RESPECTIVE BANK ACCOUNTS. COPY OF SUCH BANK ACCOUNT S HAS BEEN FILED BY THE RESPECTIVE INVESTORS BEFORE THE AO AS WELL AS BEFORE ME DURING THE COURSE OF REMAND PROCEEDINGS. THESE EVID ENCES ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF THE TRANSACTIONS. THE AR OF THE APPELLANT HAS ALSO RELI ED UPON DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. FIVE VIS ION PROMOTERS (P) LTD. 65 TAXMAN .COM 71 (DELHI) WHEREIN THE COURT HA S HELD THAT 'WHETHER MERE FACT THAT SOME OF INVESTORS HAVE A CO MMON ADDRESS IS A VALID BASIS TO DOUBT THEIR IDENTITY OR GENUINE NESS - HELD NO THE RATIO OF THIS JUDGMENT HAS GIVEN HEREUNDER: - I.T.AS.1428 & 1429/D/2016 46 'SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CRED IT (SHARE APPLICATION MONEY) - ASSESSMENT YEARS 2007-08 TO 20 09-10 - WHETHER MERE FACT THAT SOME OF INVESTORS HAVE A COM MON ADDRESS IS A VALID BASIS TO DOUBT THEIR IDENTITY OR GENUINENESS - HELD, NO - WHETHER FACT THAT SHARES OF ASSESSEE WER E SUBSEQUENTLY SOLD AT A REDUCED PRICE IS GERMANE TO QUESTION OF GENUINENESS OF INVESTMENT IN SHARE CAPITAL OF ASSES SEE - HELD, NO - ASSESSEE WAS PART OF SVP GROUP OF COMPANIES WHICH WERE ENGAGED IN BUSINESS OF CONSTRUCTION AND SALE OF RES IDENTIAL AND COMMERCIAL COMPLEXES - DURING SEARCH AT SVP GROUP OF COMPANIES, SAID COMPANIES WERE FOUND TO HAVE RECEIV ED SHARE CAPITAL FROM SEVERAL COMPANIES - ACCORDING TO REVEN UE, SAID COMPANIES WERE CHARGING 'ON- MONEY ON SALE OF FLATS , SHOPS, ETC., WHICH WAS NOT ACCOUNTED FOR IN THEIR REGULAR BOOKS OF ACCOUNT AND WAS ROUTED BACK INTO GROUP COMPANIES IN FORM OF SHARE APPLICATION MONEY UNSECURE LOANS, ETC THROUGH CONDU IT CHANNELS - ON THAT BASIS, ADDITION UNDER SECTION 68 WAS MADE IN CASE OF ASSESSEE-COMPANY IN RESPECT OF SHARE APPLICATION MO NEY RECEIVED BY IT - WHETHER ALLEGATION OF REVENUE THAT ASSESSEE BEING A DEVELOPER WAS CHARGING ON MONEY IN CASH WOU LD NOT APPLY TO ASSESSEE INASMUCH AS IT WAS INVOLVED IN CO NSTRUCTION OF SHOPPING MALL AND ITS BUSINESS HAD NOT COMMENCED YE T - HELD, YES - WHETHER SINCE TRIBUNAL, ON A VERY DETAILED EX AMINATION, WAS SATISFIED THAT SHAREHOLDER COMPANIES NOT ONLY E XISTED, BUT THAT ASSESSEE HAD DISCHARGED PRIMARY ONUS OF PROVIN G THEIR CREDITWORTHINESS AND GENUINENESS, ADDITION MADE BY ASSESSING OFFICER WAS TO BE DELETED - HELD, YES [PARAS 38 TO 43] [IN FAVOUR OF ASSESSEE] FURTHER, THE AO HAS REFERRED TO THE STATEMENT OF SH . J.P. PUROHIT OF KOLKATA RECORDED BY THE INVESTIGATION WING, KOLKATA DURING SEARCH I.T.AS.1428 & 1429/D/2016 47 ACTION ON HIM, I HAVE PERUSED THE STATEMENT OF SH. PUROHIT. HE HAS ACKNOWLEDGED IN HIS STATEMENT THAT HE IS IN THE BUS INESS OF GIVING ACCOMMODATION ENTRIES APART FROM BEING IN THE PROFE SSION OF TAX CONSULTANCY. HOWEVER, SUBSEQUENT TO THE SEARCH INQU IRES WERE MADE BY THE AO OF THE APPELLANT COMPANY BY SENDING LETTER U/S 133(6) OF THE IT ACT WHEREIN HE HAS SENT REPLY TO T HE AO ALONG WITH THE COPY OF THE AFFIDAVIT FILED BY HIM ON 30.01.201 5 AND COPY OF THE ASSESSMENT ORDERS PASSED BY THE RESPECTIVE AO IN TH E CASE OF M/S WARNER MULTIMEDIA LTD., M/S PRIME CAPITAL MARKET LT D. AND M/S UNISYS SOFTWARE AND HOLDING INDUSTRIES PVT. LTD. IN ITS REPLY DATED 28.10.2015 RECEIVED BY THE AO ON 09.11.2015, THE DI RECTOR OF THE SAID INVESTOR COMPANY, SHRI JAGDISH PRASAD PUROHIT HAS STATED THAT HIS STATEMENT WAS RECORDED U/S 132(1) DURING T HE COURSE OF SEARCH ON 21.01.2015 AT HIS RESIDENCE AND SURVEY WA S ALSO CARRIED OUT IN THE CASE OF M/S WARNER MULTIMEDIA LTD., M/S PRIME CAPITAL MARKET LTD. AND M/S UNISYS SOFTWARE AND HOLDING IND USTRIES PVT. LTD. HE HAS FURTHER STATED THAT DURING THE COURSE O F SEARCH HE WAS FORCED TO SIGN ON A PRE-DRAFTED STATEMENT IN PLACE OF HIS OWN REPLIES. HE HAS ALSO MENTIONED THAT DDIT TOOK OUT A LIST OF COMPANIES AND HE WAS FORCED TO ACCEPT THAT ALL THES E COMPANIES MENTIONED IN THIS LIST WERE BELONGING TO HIM. SH. J AGDISH PRASAD PUROHIT HAS ALSO WRITTEN THAT HE HAD ALREADY RETRAC TED THE SAID STATEMENT BY SWEARING AN AFFIDAVIT ON 30.01.2015. C OPY OF THE AFFIDAVIT IS ALSO ENCLOSED ALONG WITH THE REPLY FIL ED IN RESPONSE TO NOTICE U/S 133(6). SH. JAGDISH PRASAD PUROHIT HAS C ONFIRMED THE TRANSACTION WITH THE APPELLANT COMPANY AND HAS MENT IONED THAT THESE TRANSACTIONS HAVE BEEN TAKEN PLACE THROUGH BA NKING CHANNELS. HE HAS ALSO FILED COPY OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN THE CASE OF M/S. WARNER MULTIMEDIA LTD., M/S. PRIME CAPITAL MARKET LTD. AND M/S UNISYS SOFTWARE A ND HOLDING INDUSTRIES PVT. LTD. A.Y. 2012-13 WHEREIN N O ADVERSE VIEW I.T.AS.1428 & 1429/D/2016 48 WITH REGARD TO 0% OFCD GIVEN TO THE APPELLANT COMPA NY HAS BEEN TAKEN BY THE AO IN THE CASE OF ABOVE MENTIONED THRE E INVESTOR COMPANY. THIS SHOWS THAT THE AO WAS FULLY SATISFIED WITH THE TRANSACTION OF 0% OFCD WITH THE APPELLANT COMPANY. IT IS ALSO SEEN THAT IN THE STATEMENT MADE DURING THE SEARCH, SHRI PUROHIT HAS NAMED CERTAIN CONCERNS TO WHICH HE HAS PROVIDED ACC OMMODATION ENTRIES AGAINST COMMISSION. HOWEVER, HE HAS NOT NAM ED THE APPELLANT COMPANY AS TO HAVE OBTAINED ANY ACCOMMODA TION ENTRY FROM THE COMPANY WHEREIN SH. JAGDISH PRASAD PUROHIT IS DIRECTOR. IN THESE CASES, THE MONEY HAS BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES AND SAME HAS BEEN REFUNDED BACK TO TH E SAID COMPANIES BY WAY OF ACCOUNT PAYEE CHEQUES AND HAVE BEEN CREDITED IN THEIR RESPECTIVE BANK ACCOUNTS. COPIES OF SUCH BANK ACCOUNTS HAVE BEEN FILED BY THE RESPECTIVE COMPANIE S BEFORE AO AS WELL AS BEFORE ME DURING THE COURSE OF REMAND PROCE EDINGS. THE FINANCIAL STATEMENT OF THE THREE COMPANIES WHEREIN SH. J.P. PUROHIT IS DIRECTOR HAVE BEEN ANALYZED HERE-IN-ABOVE AND IT IS SEEN THAT THOSE COMPANIES HAVE SUFFICIENT SHARE CAPITAL AS WE LL AS RESERVES AND SURPLUSES TO INVEST IN THE 0% OFCD OFFERED BY T HE APPELLANT COMPANY. IT IS ALSO SEEN THAT ASSESSING OFFICER HAS NOT BROUGHT ANY INFORMATION ON RECORD WHICH CAN PROVE OTHERWISE THA T APPELLANT HAS TAKEN ACCOMMODATION ENTRY IN LIEU OF THE CASH GIVEN BY THE APPELLANT COMPANY. SIMPLY ON THE BASIS OF STATEMENT WITH REFERENCE TO SOME OTHER COMPANY IT CANNOT BE PRESUM ED THAT APPELLANT HAS ALSO TAKEN ACCOMMODATION ENTRY FROM T HE SAID COMPANY. FURTHER, THE AMOUNT RECEIVED FROM THE SAID COMPANY AS 0% OFCD HAS BEEN REFUNDED BACK IN SUBSEQUENT YEARS AND SUCH AMOUNT HAS BEEN CREDITED IN THE ACCOUNT OF THE SAID APPLICANT COMPANY. THEREFORE, THE AO WAS NOT JUSTIFIED IN DRAWING ADVE RSE INFERENCE I.T.AS.1428 & 1429/D/2016 49 WITH REFERENCE TO OFCDS AND TREATING THE SAME AS UN EXPLAINED INCOME OF THE APPELLANT COMPANY U/S 68 OF THE I.T. ACT. IN VIEW OF THE DETAILS FILED ABOVE BY THE APPELLANT BEFORE THE AO AS WELL AS BEFORE ME, THE SOURCE OF THE FUNDS INVESTED IN THE OFCDS OF THE APPELLANT COMPANY BY THE ABOVE NAMED COMPANIES HAS BEEN FOUND TO BE EXPLAINED. ALL THE INVESTOR COMPANIES F ROM WHOM OFCDS SUBSCRIPTION HAS BEEN RECEIVED AND THE COMPAN IES FROM WHOM FUNDS HAVE BEEN RECEIVED BY THOSE INVESTOR COM PANIES ARE DULY ASSESSED TO TAX. IT IS SEEN THAT NAME OF THE A PPELLANT COMPANY IS APPEARING IN THE BALANCE SHEET OF THE ABOVE NAME D COMPANIES AS INVESTEE COMPANY. IN VIEW OF THE DOCUMENTS FILED BY THE ABOVE NAMED INVESTOR COMPANIES BEFORE AO AND BY THE AR OF THE APPELLANT AT THE TIME OF ASSESSMENT PROCEEDINGS AND IN THE REMAND PROCEEDINGS AND COPY THEREOF FILED BEFORE ME, THE I DENTITY, SOURCE, CREDITWORTHINESS OF THE INVESTOR COMPANIES AND GENU INENESS OF THE TRANSACTIONS HAVE BEEN ESTABLISHED. I FIND THAT THE AO HAS NOT BEEN ABLE TO BRING ON RE CORD ANY EVIDENCE TO NEGATE THE GENUINENESS OF THE TRANSACTION DONE B Y THE APPELLANT AND THE APPLICANT OF 0% OFCD. THEREFORE, THE ADDITI ON CANNOT BE SUSTAINED ONLY ON SUSPICION AND SURMISES. CONSIDERI NG THE FACT THAT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF ALL THE APPLICANTS OF 0% OFCD IS DULY ESTABLISHED, THE ADDI TION MADE BY THE AO CANNOT BE UPHELD AND HENCE THE AO IS DIRECTE D TO DELETE THE ADDITION OF RS. 151,95,00,000/- MADE ON ACCOUNT OF 0% OFCD SUBSCRIPTION U/S. 68 OF THE I.T. ACT. SUBMISSION OF CIT DR 14. BEFORE US, THE LD. CIT-DR, MR. GULATI FIRST OF ALL DREW OUR ATTENTION TO THE VARIOUS OBSERVATIONS AND FINDINGS OF THE I.T.AS.1428 & 1429/D/2016 50 ASSESSING OFFICER AS HAS BEEN INCORPORATED IN THE A SSESSMENT ORDER AS WELL AS IN HIS SHOW CAUSE NOTICE AND THE M ANNER IN WHICH ASSESSING OFFICER HAS GIVEN HIS REBUTTAL ON E ACH AND EVERY EXPLANATION GIVEN BY THE ASSESSEE. HE HAS SUM MARIZED THE OBSERVATIONS OF THE ASSESSING OFFICER IN BOTH T HE CASES AS UNDER: AO COULD NOT ASCERTAIN THE EXACT NATURE OF BUSINESS RUN BY THE ASSESSEE. WITH NO BUSINESS BACKGROUND, THE ASSESSEE COULD COLLECT HUGE AMOUNT AS OFCD FROM NUMBER OF COMPANIES. QUESTIONNAIRE ISSUED ON 15/10/2013 WHICH GOT RES PONDED BY 16/02/2015 (AFTER A GAP OF 16 MONTHS). AO RECORDED THE DELAY TACTICS OF THE ASSESSEE IN THE ASSESSMENT ORDER (RE FER PARA 4.1) AO ISSUED ANOTHER QUESTIONNAIRE DATED 20/11/2014 (ARIZONA VENTURES) DATED 05/01/2015 (ARIZONA GLOBAL) WHICH G OT RESPONDED PARTLY ON 16/02/2015. HANSRAJ JAIN, DIRECTOR OF COMPANY WAS ASKED TO B E PRODUCED BY THE AO ON 05/01/2015. HOWEVER, NO COMPLIANCE WAS MA DE IN THIS REGARD TILL 30/03/2015.(REFER 2.1 IN THE CASE OF ARIZONA GLOBAL SERVICES PVT. LT D.- NOTICE UNDER SECTION 131 OF THE ACT WAS ISSUED T O M/S SHAIL INVESTMENTS PVT. LTD. AND TO M/S KOA INVESTMENTS LT D. INSPECTOR WAS DEPUTED TO GET THE SUMMONS SERVED. INSPECTOR RE PORTED THAT NO SUCH COMPANY WAS THERE AT THE GIVEN ADDRESS AND SOME OTHER SHOP/OFFICE WAS BEING RUN FROM THE GIVEN ADDRESS. N O COMPLIANCE TO SUMMONS, (REFER PARA 5) AO OBSERVED THAT AT THE GIVEN ADDRESS OF THE OFF ICE OF SHAIL INVESTMENTS, OFFICE OF MR. TARUN GOYAL ACCOMMODATIO N ENTRY I.T.AS.1428 & 1429/D/2016 51 PROVIDER WAS BEING RUN. SEARCH & SEIZURE ACTION HAD ALREADY TAKEN PLACE AT THE PREMISES OF TARUN GOYAL ON 15/09 /2008 IN THIS REGARD. STATEMENT OF TARUN GOYAL IS PART OF THE AO ORDER. (IMPORTANT TO NOTE-DELHI HIGH COURT DECIDED THE CAS E OF NDR PROMOTERS AFTER TAKING NOTE OF MODUS OPERANDII OF M R. TARUN GOYAL, ENTRY PROVIDER) AS REGARDS TWO KOLKATA BASED COMPANIES (SCAN INF RASTRUCTURE LTD, UNISYS SOFTWARE & HOLDING INDUSTRIES LIMITED), THE AO OBSERVED BASED ON INFORMATION FROM INCOME TAX DEPAR TMENT INVESTIGATION AT KOLKATA THAT THE AFORESAID COMPANI ES WERE MANAGED BY MR. J.P.PUROHIT, ACCOMMODATION ENTRY PRO VIDER. SEARCH AND SEIZURE ACTION HAD TAKEN PLACE IN THE CA SE OF J P PUROHIT ON 21/01/2015. THE AO TOOK NOTE OF THE FACT THAT M. J P PUROHIT WAS DIRECTOR OF THE AFORESAID COMPANIES. ST ATEMENT OF J P PUROHIT IS PART OF THE AO ORDER. 2.2 IN THE CASE OF ARIZONA VENTURES PVT. LTD. AS REGARDS KOLKATA BASED COMPANIES (WARNER MULTI MEDIA LTD., PRIME CAPITAL MARKET LTD, UNISYS SOFTWARE & HOLDING INDUSTRIES LIMITED), THE AO OBSERVED BASED ON INFORMATION FROM INCOME TAX DEPARTMENT INVESTIGATION AT KOLKATA THAT THE AFORES AID COMPANIES WERE MANAGED BY MR. J.P.PUROHIT, ACCOMMODATION ENTR Y PROVIDER. SEARCH AND SEIZURE ACTION HAD TAKEN PLACE IN THE CA SE OF J P PUROHIT ON 21/01/2015. THE AO TOOK NOTE OF THE FACT THAT M. J P PUROHIT WAS DIRECTOR OF THE AFORESAID COMPANIES. ST ATEMENT OF J P PUROHIT IS PART OF THE AO ORDER. THE AO RECORDED THAT THE INVESTIGATION WING FIND INGS WERE DULY COMMUNICATED TO THE ASSESSEE (REFER PARA 6) AT PARA 7, THE AO REBUTTED THE PLEA OF THE ASSES SEE AS TO A) HOW STATEMENT RECORDED IN 2008 CAN BE RELIED UPON I.T.AS.1428 & 1429/D/2016 52 B) THE AMOUNTS RECEIVED AS OFCD SUBSCRIPTIONS HAVE ALREADY BEEN REPAID/REFUNDED IN LATER YEARS (REFER PARA 7.2 ) O C) TIME FOR PRODUCING THE DIRECTORS WAS SHORT (REFER PARA 7.3) THE AO OBSERVED THAT HOW THE ASSESSEE COMPANY CO ULD GET FUNDS FROM THE INVESTOR COMPANIES IF IT WAS IGNORAN T OF MR. PUROHIT AND MR. TARUN GOYAL. THE AO NOTED THAT REPAYMENT OF UNACCOUNTED INCOM E CANNOT EXONERATE THE ASSESSEE FROM LIABILITY TO BE TAXED O N THAT UNACCOUNTED INCOME (R EFER PARA 7.2) 15. THEREAFTER, HE RELIED UPON VARIOUS JUDGMENTS WHI CH WERE ELABORATED BY HIM IN THE FOLLOWING MANNER: 3. AT THE OUTSET, IT MAY BE RELEVANT TO TAKE NOTE OF HON'BLE SC DECISION IN THE CASE OF NRA IRON & STEEL PVT. LTD. (13 TAXMANN.COM 48) (DIARY NO(S). 41307/2019] IN CA NO.2463/2019). 4. HON'BLE SUPREME COURT (SUPRA) COMMENTED AT PARA 14 OF THE ORDER THAT 'THE PRACTICE OF CONVERSION OF UN- ACCOUNTED MONEY THROUGH THE CLOAK OF SHARE CAPITAL/PREMIUM MUST BE SUBJECTED TO CAREFUL SCRUTI NY. THIS WOULD BE PARTICULARLY SO IN THE CASE OF PRIVAT E PLACEMENT OF SHARES, WHERE A HIGHER ONUS IS REQUIRE D TO BE PLACED ON THE ASSESSEE SINCE THE INFORMATION IS WIT HIN THE PERSONAL KNOWLEDGE OF THE ASSESSEE. THE ASSESSEE IS UNDER A LEGAL OBLIGATION TO PROVE THE RECEIPT OF SHARE CAPITAL/PREMIUM TO THE SATISFACTION OF THE AO, FAIL URE OF I.T.AS.1428 & 1429/D/2016 53 WHICH, WOULD JUSTIFY ADDITION OF THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE.' 5. FURTHER, HON'BLE SC (SUPRA) HELD THAT THE ONUS OF THE ASSESSEE DOES NOT STAND DISCHARGED MERELY BECAUSE O F FILING OF ALL THE PRIMARY EVIDENCE. FURTHER, IT IS HELD THAT ITRS WITH MEAGRE INCOME DOES NOT JUSTIFY CREDITWORTH INESS TO INVEST HUGE SUMS OF MONEY. 6. HON'BLE SC (SUPRA) OBSERVED THAT 'IF THE ENQUIR IES AND INVESTIGATIONS REVEAL THAT THE IDENTITY OF THE CREDITORS TO BE DUBIOUS OR DOUBTFUL, OR LACK CREDIT-WORTHINES S, THEN THE GENUINENESS OF THE TRANSACTION WOULD NOT BE ESTABLISHED. IN SUCH A CASE, THE ASSESSEE WOULD NOT HAVE DISCHARGED THE PRIMARY ONUS CONTEMPLATED BY SECTION 68 OF THE ACT.' 7. IN THE CASE OF NOVA PROMOTERS & FINLEASE PVT. LT D. (ITA NO.342 OF 2011) AS DECIDED BY HON'BLE DELHI HI GH COURT, THE MATTER HAS BEEN DECIDED IN FAVOUR OF REV ENUE DESPITE THE FACT OF RETRACTION OF STATEMENT OF ENTR Y PROVIDER. IT MAY RELEVANT TO TAKE NOTE OF IMPORTANT OBSERVATI ONS IN THIS DECISION. PARA 22-BOTH RAJESH JASSAL AND MUKESH GUPTA, IN IDENTICALLY WORDED AFFIDAVITS PROCEED TO STATE THAT IN THEIR EARLIER STATEMENTS THEY HAVE STATED THAT THE ABOVE COMPANIES ISSUED CHEQUES TO VARIOUS COMPANIES OR EN TITIES AND IN TURN RECEIVED BACK CASH FROM THEM AND THUS T HE TRANSACTIONS WERE NOT GENUINE AND BONAFIDE TRANSACT IONS, THAT THE STATEMENTS AS ABOVE WERE GOT RECORDED FROM THEM I.T.AS.1428 & 1429/D/2016 54 UNDER PRESSURE AND COERCION AND ABSOLUTELY AGAINST THEIR WISHES AND THAT SUCH TRANSACTIONS INCLUDING THE TRANSACTIONS OF GIVING CHEQUES TO THE ASSESSCE COMP ANY (NOVA PROMOTERS AND FINLEASE PVT. LTD.) WERE ABSOLU TELY GENUINE AND BONAFIDE TRANSACTIONS WHEREIN NO CASH H AD BEEN RECEIVED FROM ASSESSEE COMPANY IN EXCHANGE OF CHEUQES ISSUED TO THEM. IT HAS BEEN STATED IN THE A FFIDAVITS THAT THE CHEQUES WERE ISSUED TO THE ASSESSCC COMPAN Y FOR SHARE APPLICATION MONEY FOR ALLOTMENT OF SHARES AND SUBSEQUENTLY SHARES WERE ALSO ISSUED PARA 25-AFFIDAVIT CAN BE REJECTED IF THERE IS E NOUGH MATERIAL ON RECORD TO NEGATE THE CLAIM OF GENUINENE SS OF THE TRANSACTIONS. PARA 30-MATERIAL WAS GATHERED BY THE INVESTIG ATION WING AND MADE AVAILABLE TO THE ASSESSING OFFICER, W HO IN TURN HAD MADE IT AVAILABLE TO THE ASSESSEE. NOTHING HAS BEEN SAID BY THE TRIBUNAL ABOUT THE SAID MATERIAL. THUS, THE TRIBUNAL, WITH RESPECT, SEEMS TO HAVE IGNORED R ELEVANT MATERIAL. PARA 31- THE TRIBUNAL ALSO ERRED IN LAW IN HO LDING THAT THE ASSESSING OFFICER OUGHT TO HAVE PROVED THA T THE MONIES EMANATED FROM THE COFFERS OF THE ASSESSEE- COMPANY AND CAME BACK AS SHARE CAPITAL. ...IT PLACE S NO DUTY UPON HIM TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. IN THIS REGARD, THE COURT RELIED UPON DECISION OF THE APEX COURT IN THE CASE OF A. GOVINDARAJULU MUDALIAR V CIT, (1958) 34 ITR 807. I.T.AS.1428 & 1429/D/2016 55 8. IN THE CASE OF NDR PROMOTERS PRIVATE LIMITED (IT A 49/2018), FOLLOWING JUDICIAL PRINCIPLES AND FACTUAL POSITIONS HAVE BEEN FOLLOWED WHILE DECIDING THE MAT TER;- PRINCIPLE OF HUMAN PROBABILITIES- IN THE NORMAL COU RSE OF CONDUCT, NO ONE WILL MAKE INVESTMENT OF SUCH HUG E AMOUNTS WITHOUT BEING CONCERNED ABOUT THE RETURN AN D SAFETY OF SUCH INVESTMENT FAILURE TO PRODUCE DIRECTORS- THE COURT LAID EMPHAS IS ON THE ASPECT OF FAILURE ON THE PART OF THE ASSESSE E TO PRODUCE DIRECTORS DESPITE OF FILING THEIR CONFIRMAT IONS. FINANCIAL STRENGTH OF THE ASSESSEE COMPANY- THE COURT NOTICED THAT THE RESPONDENT- ASSESSEE DID NOT HAVE ANY BUSINESS INCOME IN THE RELEVANT YEAR(S) AND HAD NOT INCURRED ANY EXPENDITURE IN THE RELEVANT YEAR. CERTIFICATE OF INCORPORATION, PAN NUMBER ETC. ARE RELEVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE T HEIR LIMITATION WHEN THERE IS EVIDENCE AND MATERIAL TO S HOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NOT A GENUINE INVESTOR. WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIA L AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION M ONEY. THE THREE REQUIREMENTS (IDENTIFICATION OF THE CREDITORS/SHAREHOLDER, CREDITWORTHINESS OF CREDITORS/SHAREHOLDER AND GENUINENESS OF THE TRANSA CTION) I.T.AS.1428 & 1429/D/2016 56 HAVE TO BE TESTED NOT SUPERFICIALLY BUT IN DEPTH HA VING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. THE COURT TOOK NOTE OF THE FACT THAT THE TRIBUNAL FAILED TO TAKE INTO CONSIDERATION THE EVIDENCE AND MATERIA L AS FOUND DURING THE COURSE OF SEARCH OF TARUN GOYAL REGARDING THE FACT OF PROVIDING ACCOMMODATION ENTRI ES TO BENEFICIARIES. 9. IT IS RELEVANT TO TAKE NOTE OF THE FACTS IN THE CASE OF FIVE VISION PROMOTERS PRIVATE LIMITED (ITA 234/2015 -AS DECIDED BY HON'BLE DELHI HIGH COURT) WHERE THE COUR T DECIDED THE CASE IN FAVOUR OF THE ASSESSEE ONLY ON THE GROUND THAT THE DIRECTOR OF THE INVESTOR COMPANIES APPEARED BEFORE THE AO AND ACCEPTED THE FACT OF INVESTMENT BY PRODUCING THEIR BOOKS OF ACCOUNTS, (R EFER PARA 40 OF THE ORDER). 10. IT MAY BE IMPORTANT TO TAKE NOTE OF DEC ISION OF HON'BLE ITAT IN THE CASE OF APJ CONSTRUCTION PVT. L TD. (ITA NO. 722/DEL/2015 DATED 31/12/2019 (AY 2005-06) WHER E THE ITAT LISTED OUT SET OF QUESTIONS BASED ON VARIO US DECISIONS INCLUDING PCIT VS. NRA IRON AND STEEL (P) LTD AND NR PORTFOLIO PRIVATE LIMITED AND HELD THAT '....UNLESS AND UNTIL SATISFACTORY ANSWERS ARE OBTA INED TO THESE QUESTIONS, IT WOULD BE DIFFICULT TO REACH A POSITIVE CONCLUSION AS TO THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSAC TION. I.T.AS.1428 & 1429/D/2016 57 MERELY BECAUSE THE ASSESSEE WAS SUCCESSFUL IN COMPL ETING THE PAPERWORK VERY METICULOUSLY OR BRINGING INTO EX ISTENCE CERTAIN DOCUMENTS, THE STATUTORY OBLIGATION OF THE AUTHORITIES DOES NOT GET ABSOLVED MERELY BECAUSE TH E ASSESSEE PRODUCED CERTAIN DOCUMENTS. IT IS INCUMBEN T ON THE AUTHORITIES TO VERIFY THE GENUINENESS OF SUCH DOCUMENTS ALSO IN THE LIGHT OF THE ATTENDING CIRCUMSTANCES. 11. THE QUESTIONS AS LISTED OUT BY HON'BLE ITAT ARE DISCUSSED AS UNDER WITH REFERENCE TO THE CASE IN HA ND:- WHETHER THE TWO PARTIES ARE RELATED OR KNOWN T O EACH OTHER, OR MODE BY WHICH PARTIES APPROACHED EAC H OTHER? ANSWER:- INVESTOR AND RECIPIENT ENTITIES ARE NOT KN OWN TO EACH OTHER EXCEPT FOR ONE SISTER CONCERN ARIZONA VE NTURES PRIVATE LIMITED MAKING INVESTMENT WITH ARIZONA GLOB AL SERVICES PRIVATE LTD. WHETHER THE TRANSACTION IS ENTERED INTO THROUGH WRITTEN DOCUMENTATION TO PROTECT INVESTMENT? ANSWER;- NO SUCH DOCUMENTATION IS THERE TO PROTECT INVESTMENT. ON THE OTHER HAND, THE AO OBSERVED CERT AIN ADVERSARIAL TERMS AND CONDITIONS OF OFCD (OPTIONALL Y FULLY CONVERTIBLE DEBENTURES) WHICH INCLUDED REDEMP TION AFTER 10 YEARS AT PAR IN CASE CONVERSION OPTION IS NOT EXERCISED AND NO RIGHT TO CLAIM OR QUESTION ANYTHIN G WITH REGARD TO THE USAGE OF FUNDS. I.T.AS.1428 & 1429/D/2016 58 WHETHER THE INVESTOR WAS AN ANGEL INVESTOR? ANSWER; NO WHAT IS THE QUANTUM OF MONEY INVESTED? ANSWER: RANGING FROM RS. 50 LAKHS PER ENTITY TO RS . 21.25 CRORE PER ENTITY-IN CASE OF ARIZONA VENTURES (OVERALL INVESTMENT-RS. 53.55 CRORE) AND RANGING FROM RS. 1 CRORE PER ENTITY TO RS. 90.25 CRORE PER ENTITY-IN CASE OF ARIZONA GLOBAL SERVICES (OVERALL INVESTMCNT-RS. 151.95 CROR E). HOW THE PARTY BELIEVED THE CREDIT-WORTHINESS OF THE RECIPIENT? ANSWER; BEING PRIVATE PLACEMENT, THE INVESTOR WOUL D INVEST WITH AN INTENT TO GAIN. HOWEVER, THE ASSESSE E DID NOT SPECIFY AS TO HOW THE INVESTOR WAS CONVINCED AB OUT THE RETURN ON SUCH A HUGE INVESTMENT. WHAT IS THE OBJECT AND PURPOSE OF PAYMENT/INVESTMENT? ANSWER; THE ASSESSEE DID NOT POINT OUT ANY DETAILS IN THIS REGARD AS IT IS IN PRIVATE KNOWLEDGE OF THE AS SESSEE COMPANY. WHETHER THE SHARE APPLICANT IS IN EXISTENCE AND AN INDEPENDENT ENTITY? ANSWER;- THE SHARE APPLICANT IS A SHELL COMPANY WI TH NO OPERATIONAL INCOME. IT IS THE GROUP COMPANY FLOA TED BY ENTRY PROVIDER. I.T.AS.1428 & 1429/D/2016 59 HOW THE FINANCIAL CAPACITY OF THE SHARE APPLICAN T TO INVEST FUNDS IS PROVED?' ANSWER;- THE ASSESSEE SUBMITTED ITR, BANK ACCOUNT AND PAN NUMBER. HOW THE SOURCE OF FUNDS FROM WHICH THE HIGH SHARE PR EMIUM WAS INVESTED IS DEALT WITH BY THE ASSESSEE? ANSWER:- IT IS A CASE OF OFCD (OPTIONALLY FULLY CON VERTIBLE DEBENTURES) AND THE SOURCE OF HUGE FUNDS IS LAYERED ONE TO ROUTE IT THROUGH NETWORK OF ACCOMMODATION ENTRY PROVIDER . WHY THE INVESTOR COMPANIES HAD APPLIED FOR SHARES OF THE ASSESSEE COMPANY AT A HIGH PREMIUM? ANSWER: IT IS A CASE OF OFCD (OPTIONALLY FULLY CONVE RTIBLE DEBENTURES). IN CASE THE FIELD ENQUIRY CONDUCTED BY THE AO REVEAL ED THAT THE INVESTOR COMPANIES WERE FOUND TO BE NON-EXISTENT, AND THE ONUS TO ESTABLISH THE IDENTITY OF THE INVESTOR COMPANIES , WAS NOT DISCHARGED BY THE ASSESSEE? ANSWER:- THE ASSCSSEE FAILED TO PRODUCE THE DIRECTORS OF THE INVESTING COMPANIES. THE AO ALSO MADE ENQUIRY ON SAM PLE BASIS IN CASE OF TWO DELHI BASED ENTITIES AND FOUND T O BE NON- EXISTENT. AS REGARDS KOLKATA BASED COMPANIES, THE SAME WERE FOUND TO BE PARI OF COMPANIES MANAGED BY ENTRY PROVID ER. WHETHER THE ASSESSEE DISCHARGED THEIR LEGAL OBLIGATI ON TO PROVE THE RECEIPT OF SHARE CAPITAL/PREMI M TO THE SATIS FACTION OF THE AO? ANSWER;- THE AO WAS NOT SATISFIED AS THE DIRECTORS OF THE INVESTING COMPANIES WERE NEITHER PRODUCED AT THE ASSESS MENT I.T.AS.1428 & 1429/D/2016 60 STAGE NOR AT THE APPELLATE STAGE. THE ENTRY OPERATORS DID STATE T HE MODUS OPERANDII WHICH WAS RETRACTED AFTER A LONG G AP. WHETHER THE ASSESSEE DISCHARGED THE ONUS TO ESTABLIS H THE CREDIT WORTHINESS OF THE INVESTOR COMPANIES? ANSWER;- EXCEPT FOR FILING ITR, THE ASSESSEE DID NOT ESTABLISH CREDIT WORTHINESS OF THE INVESTOR COMPANIES. DID THE ASSESSCC DO ANYTHING MORE THAN MERE MENTION OF THE INCOME TAX FILE NUMBER OF AN INVESTOR TO DISCHARGE THE ONUS UNDER SECTION 68 OF THE ACT? ANSWER;- NO 12. IT MAY ALSO BE RELEVANT TO TAKE NOTE OF DECISION O F HON'BLE DELHI HIGH COURT IN THE CASE OF BIKRAM SINGH (ITA 55/ 2017) ON THE ISSUE OF ACCOMMODATION ENTRY IN THE FORM OF UNSECU RED LOANS WHEREIN IT IS OBSERVED THAT '...THIS DEVICE OF LO AN ENTRIES CONTINUES TO PLAGUE THE LEGITIMATE ECONOMY OF OUR COUNTRY . AS SEEN FROM THE FACTS NARRATED ABOVE, THE TRANSACTIONS HERE IN CLEARLY DO NOT INSPIRE CONFIDENCE AS BEING GENUINE A ND ARE SHROUDED IN MYSTERY, AS TO WHY THE SO-CALLED CREDITORS WOULD LEND SUCH HUGE UNSECURED, INTEREST FREE LOANS - THAT TOO WITHOUT ANY AGREEMENT...' 13. IN VIEW OF THE ABOVE FACTS OF THE CASE AND JURISP RUDENCE ON THE ISSUE OF CASH CREDITS, THERE IS NO DOUBT THAT THE FA CTS OF THE PRESENT CASE DO NOT INSPIRE CONFIDENCE AS BEING GENUI NE AND ARE CLOUDED WITH DOUBT. IT IS PRAYED THAT THE ORDER OF THE AO MAY BE UPHELD. I.T.AS.1428 & 1429/D/2016 61 SUBMISSIONS ON BEHALF OF THE ASSESSEE 16. BEFORE US, LD. COUNSEL FOR THE ASSESSEE, MR. RA KESH JOSHI SUBMITTED THAT TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS AS WELL AS GENU INENESS OF THE TRANSACTION THE ASSESSEE HAD FILED FOLLOWING EV IDENCES BEFORE THE ASSESSING OFFICER;- ( I) COMPLETE NAMES AND ADDRESSES OF THE SUBSCRIBERS, NUMBER OF 0% OFCD SUBSCRIBED AND THE AMOUNT OF LOAN OUTSTANDING AS ON 31.03.2012 OF EACH PARTY. (II) THEIR PERMANENT ACCOUNT NOS. (III) PHOTOCOPIES OF THE ACKNOWLEDGEMENT PORTION O F THEIR ITRS TO ESTABLISH THAT ALL PARTIES WERE REGULARLY A SSESSED TO INCOME TAX. (IV) WRITTEN CONFIRMATION CERTIFICATES FROM THE RE SPECTIVE PARTIES. (V) COPY OF THEIR BANK ACCOUNTS FOR THE RELEVANT P ERIOD TO ESTABLISH THE AVAILABILITY OF FUNDS WITH THE SAID P ARTIES. (VI) CONFIRMATORY CERTIFICATES OF RECEIVING BACK T HE LOAN AMOUNT, AS OBTAINED FROM EACH PARTY, AFTER REDEMPTI ON OF THE OFCDS. (VII) COPY OF RELEVANT PORTION OF OUR BANK ACCOUNT STATEMENT, HIGHLIGHTING THEREIN THE RELEVANT TRANSA CTION OF REPAYMENT TO THE RESPECTIVE PARTIES AFTER REDEMPTIO N OF THE OFCDS. (VIII) COPY OF THE LEDGER ACCOUNTS OF THE INVESTOR S, AS IN THE BOOKS OF ACCOUNT OF THE APPELLANT ASSESSEE SHOWING THE REFUND OF LOANS . I.T.AS.1428 & 1429/D/2016 62 THE COPIES OF THESE DOCUMENTS WAS ALSO SHOWN AND RE FERRED TO AS HAS BEEN PLACED IN THE PAPER BOOK FROM PAGES 88 TO 600. THEREAFTER, HE SUBMITTED THAT ASSESSING OFFICER HAS REJECTED THESE EVIDENCES WITHOUT ASSIGNING ANY REASON AND HA S HELD TO BE BOGUS MOSTLY BASED ON CONJECTURES AND SURMISES. 17. HE HAS SUBMITTED THE POINT-WISE REBUTTAL OF ASSESSING OFFICERS OBSERVATIONS AND FINDINGS IN THE FOLLOWIN G MANNER: S NO PAGE/PARA # OF AO ORDER AO OBSERVATION ASSESSSEE REPLY 1 PAGE 3 PARA 4 & 4.1 AO STATED THAT THERE WAS NO CO-OPERATION FROM THE ASSESSEE DURING THE ASSESSMENT PROCEEDING IN SUBMITTING DETAILS IN COMPLIANCE TO NOTICES ISSUED U/S 142(1) AND NOT PRODUCED DIRECTORS OF THE ASSESSEE COMPANY AS DESIRED WE SUBMIT THAT FIRST NOTICE U/S 142(1) WAS ISSUED ON 15/10/2013 SEEKING PRELIMINARY DETAILS I.E. INCOME TAX RETURN (ITR), BALANCE SHEET, DETAILS OF DIRECTORS AND SHAREHOLDERS ETC. IN RESPONSE TO THIS NOTICE BASIC DETAILS I.E. ITR, BALANCE SHEET & COMPUTATION FILED ON 24/10/2013, WHICH ALSO COVERS OTHER DETAILS LIKE DIRECTORS, SHAREHOLDER ETC. IN THE RETURN. THEREAFTER SECOND NOTICE WAS ISSUED ON 05/01/2015, ALMOST AFTER 15 MONTHS ASKING FOR VARIOUS DETAILS 63 NUMBERS, IN THE SPECIFIC FORMAT. THESE DETAILS WERE FILED ON 16/02/2015. THEREAFTER THE AO ISSUED SUMMON U/S 131 DATED 20/03/2015 TO PRODUCE DIRECTORS OF THE SUBSCRIBING COMPANIES ON 24/03/2015, WHICH WAS SERVED TO WATCHMAN ON LATE EVENING OF 21/03/2015 I.E. SATURDAY. I.T.AS.1428 & 1429/D/2016 63 SO EFFECTIVEL Y THE NOTICE WAS RECEIVED BY THE ASSESSEE ON 23/03/2015 AND REPLIED ON 24/03/2015. FINAL SHOW- CAUSE NOTICE DATED 25/03/2015 WAS ISSUED WHICH WAS REPLIED ON 27/03/2015. SO THERE IS NO NON-CO- OPERATION FROM THE ASSESSEES SIDE. SIMILARLY, THE ALLEGATION OF NON- ATTENDANCE AND ADOPTING DELAYING TACTICS ETC. HAS NO SUBSTANCE. HAD THERE BEEN ANY DELAYING TACTICS OR INTENTIONAL SKIPPING OF HEARING ON THE ASSESSEES PART, THE AO MUST HAVE INITIATED PENALTY PROCEEDINGS U/S 271(1)(B) OF THE I.T. ACT, 1961 AND SHOULD HAVE COMPLETED THE ASSESSMENT U/S 144 OF THE ACT RATHER THAN SECTION 143(3) OF THE I.T. ACT, 1961. NOT ONLY THERE IS NO PENALTY NOTICE ISSUED U/S 271(1)(B) IN OUR CASE, THERE IS NO ADVERSE COMMENT AGAINST THE ASSESSEE ON THE ORDER SHEET OF THE ASSESSMENT PROCEEDINGS WITH REGARD TO ANY LAPSES. 2 PAGE 6 PARA 4.2 AO STATED THAT VIDE NOTICE DATED 05/01/2015 POINT NO. 63, ASSESSEE WAS ASKED TO PRODUCE DIRECTORS OF THE THE CONTENTION OF THE AO IS WRONG. IN THIS NOTICE VIDE POINT NO. 62 & 63, AO STATED AS UNDER: - 62. WHO WAS THE INDIVIDUAL WHO SIGNED THE CHEQUE DATED 26/06/2011 AND 25/08/2011 FOR RS. 10 CRORE AND RS. 5 CRORE RESPECTIVELY FOR GIVING DONATION TO BAHUJAN PRERNA TRUST. 63. CAN YOU PRODUCE BEFORE ME IN I.T.AS.1428 & 1429/D/2016 64 COMPANY, BUT NOT PRODUCED. PERSON, FOR EXAMINATI ON ON OATH ( ON THE DATE AND TIME TO BE DECIDED AS PER MUTUAL CONVENIENCE) THE INDIVIDUAL MENTIONED IN POINT NO. 62 ABOVE. FROM THE ABOVE POINTS IT IS CLEAR THAT THE AO HAS NOT AT ALL ASKED TO PRODUCE DIRECTORS IN THE ABOVE QUESTIONNAIRE. HE SIMPLY ASKED WHETHER IT IS POSSIBLE. NOW IN SUMMON DATED 20/03/2015 WHICH WAS EFFECTIVELY SERVED ON 23/03/2015, IT WAS FIRST TIME ASKED TO PRODUCE DIRECTORS ON 24/03/2015. IT IS NOT POSSIBLE FOR ASSESSEE TO CO-ORDINATE WITH THE VARIOUS PARTIES AND PRODUCE THEM BEFORE AO. THE APPLICANT HAS PROVIDED ENTIRE DETAILS OF THESE PARTIES IN RESPONSE TO JAN 2015 NOTICE, HOWEVER AO HAS NOT TAKEN ANY ACTION FROM HIS END AND AT THE LAST MOMENT OF PASSING ORDER HE ASKED FOR THE SAME. THEREFORE, THERE IS NO DEFAULT ON THE PART OF ASSESSEE TO COMPLY WITH THE REQUIREMENT. FURTHER, IT WAS AVERRED BY DELHI HIGH COURT IN THE CASE OF CIT V. VICTOR ELECTRODES LTD. [2012] 20 TAXMANN.COM 680 (DELHI ) THAT NON- PRODUCTION OF PARTIES CANNOT BE A GROUND FOR MAKING ADDITION, WHEN ASSESSEE HAS PRODUCED CORROBORATIVE EVIDENCE IN SUPPORT OF ITS CLAIM. 3 PAGE 7 AO STATED THAT AS STATED ABOVE THE SUMMON WAS I.T.AS.1428 & 1429/D/2016 65 PARA 5 SUMMON U/S 131 WAS ISSUED BUT NOT COMPLIED WITH BY THE ASSESSEE. EFFECTIVELY SERVED ONLY ON 23/03/2015 AND THE SAME WAS DULY REPLIED ON 24/03/2015(REFER PAGE 601 OF PAPER BOOK -VOL. II). THE ASSESSEE REQUESTED FOR SOMETIME AS IT WAS NOT POSSIBLE TO PRODUCE PARTIES WITHIN SUCH A SHORT NOTICE. 4 PAGE 8 - 10. AO DISCUSSED INSPECTOR REPORT ON THESE PAGES AND ALLEGED THAT ONE OF THE PARTY ADDRESS IS OF TARUN GOYAL OFFICE ADDRESS. ON PAGE 9, AO STATED THAT IN CASE OF KOA INVESTMENT LTD. THE INSPECTOR VISITED THE ADDRESS 5/5791, 1ST FLOOR, GALI NO. 2, DEV NAGAR, KAROL BAGH, NEW DELHI AND FOUND THAT IT WAS A SMALL HALWAI SHOP. IN THIS REGARD WE SUBMIT THAT THE ASSESSEE HAS SUBMITTED ADDRESS OF THE PARTY, COPY OF WHICH AVAILABLE ON PAGE 317 AND THE ADDRESS READ AS 5/5761, 1ST FLOOR, GALI NO. 2, DEV NAGAR, KAROL BAGH, NEW DELHI- 11005. WHEN THE ASSESSEE IS PROVING AN ADDRESS BY THE INSPECTOR VISITS AT SOME OTHER ADDRESS, IT IS NOT THE FAULT OF ASSESSEE. THEREFORE, NO COGNIZANCE CAN BE TAKEN OF SUCH REPORT. THE INSPECTORS ENQUIRY AT DELHI PROVES NOTHING CONCLUSIVELY. MOREOVER, THE INSPECTORS REPORT, AS SUCH, WAS NEVER CONFRONTED TO THE ASSESSEE . HENCE, IT CANNOT LEGALLY BE USED AGAINST THE ASSESSEE. AO ALSO DISCUSSED THAT SAIL INVESTMENT CO IS HAVING ADDRESS OF TARUN GOYAL WHO WAS AN ENTRY OPERATOR AS PER 2008 I.T.AS.1428 & 1429/D/2016 66 INVESTIGATION REPORT. WE SUBMIT THAT NOTICE SENT BY AO ON THE GIVEN ADDRESS WAS DULY SERVED UPON THE PARTY, HOWEVER REPLY NOT RECEIVED DUE TO LACK OF TIME. HOWEVER, IN REMAND PROCEEDING ALL PARTIES INCLUDING THIS PARTY DULY SUBMITTED ALL THE DESIRED DETAILS TO THE AO. FURTHER AO HAS NOT DONE ANY INVESTIGATION ION THE CASE EXCEPT RELYING UPON INVESTIGATION WING REPORT OF 2008. AS FOR DIFFERENT STATEMENTS OF SHRI TARUN GOYAL, CA RECORDED AROUND 7 YEARS BACK, IT IS HUMBLY STATED THAT THESE STATEMENTS HAVE PRACTICALLY ZERO EVIDENTIARY VALUE AS ON DATE, SO FAR AS THE IMPUGNED ISSUE IS CONCERNED. WHAT SH. TARUN GOYAL, CA WAS DOING IN THE DISTANT PAST HAS NOTHING TO DO WITH THE TRANSACTIONS ENTERED INTO BY THE APPELLANT ASSESSEE IN THE YEAR 2011- 12.AO FAILED TO POINT OUT WHETHER TARUN GOYAL NAMED THIS PARTY IN HIS STATEMENT AND HOW THE SAME IS RELATED TO HIM EXCEPT COMMON ADDRESS. FURTHER AO RELIED UPON REPORT OF INVESTIGATION WING DATED 31/03/2009 WHICH IS ALSO PART OF ASSESSMENT ORDER AS ANNEXURE D IN THIS REPORT IT IS CLEARLY STATED THAT THE REPORT RELATES TO A Y 2004-05 TO 2009- 10 FOR THE BENEFICIARIES LISTED THEREIN. SO THIS REPORT NO WAY CONNECTED WITH THE ASSESSEE AT ALL. THEREFORE, MERELY A I.T.AS.1428 & 1429/D/2016 67 COMMON ADDRESS CAN NOT BE REASON TO DOUBT A TRANSACTION WITHOUT ANY TANGIBLE MATERIAL TO PROVE OTHERWISE. MOREOVER, IN NO STATEMENT, SH. TARUN GOYAL, CA HAS MENTIONED THE NAME OF ANY COMPANY AS TO BE USED BY HIM FOR PROVIDING OF ENTRIES, WITH WHICH THE APPELLANT HAD TRANSACTIONS IN SUBSEQUENT PERIOD I.E. IN 2011-12. NONETHELESS, SH. TARUN GOYAL, CA, IN HIS STATEMENT DATED 15.09.2008 (RECORDED BY SH. SAROJ KUMAR DUBEY, THE THEN DDIT(INV.), UNIT-11, NEW DELHI) STATED THAT SOME OF THE COMPANIES (WITH WHICH HE WAS ASSOCIATED) WERE DOING GENUINE BUSINESS.WHILE REPLYING TO A QUESTION ON VARIOUS CHEQUE BOOKS FOUND FROM HIS OFFICE, HE STATED AT PAGE 4 OF THIS STATEMENT THAT I CONFIRM THAT SOME OF THE BANK ACCOUNTS MENTIONED IN THE ANNEXURE-2 BELONG TO THE COMPANIES AND THEIR ASSOCIATED PERSONS DOING NORMAL AND GENUINE TRANSACTIONS. SO, SHRI TARUN GOYAL, CA HAS STATED IN HIS STATEMENT THAT A NUMBER OF COMPANIES HE WAS ASSOCIATED WITH WERE DOING GENUINE BUSINESS. THEREFORE, IT IS NOT REASONABLE ON THE PART OF THE ASSESSING OFFICER TO HAVE DECIDED THE ISSUE ON THE BASIS OF OLD STATEMENTS OF SHRI TARUN GOYAL, CA. LD. AO HAS I.T.AS.1428 & 1429/D/2016 68 BROUGHT NO MATERIAL ON RECORD TO ESTABLISH THAT HE IS STILL CONTINUING WITH THIS NEFARIOUS BUSINESS OF ACCOMMODATION ENTRY PROVIDING. 5 PAGE 12 PARA 6 AO DISCUSSED ABOUT TWO KOLKATA PARTY I.E. SAN INFRASTRUCTURE LTD AND UNISYS SOFTWARE & HOLDING IND. LTD. AND STATED THAT THESE COMPANIES PERTAINS TO JAGDISH PUROHIT WHO IS ALSO AN ENTRY OPERATOR. LD AO RELIED UPON THE STATEMENT OF JAGDISH PUROHIT DATED 21/01/2015 WHEREIN HE HAS ADMITTED THAT HE IS CONTROLLING FEW COMPANIES WHICH ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. IN THIS REGARD WE SUBMIT THAT IN REPLY TO Q NO. 23, HE PROVIDED LIST OF COMPANIES WHO ARE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. NAME OF THESE TWO COMPANIES ARE NOT APPEARING IN SUCH LIST GIVEN BY SHRI JAGDISH PUROHIT, COPY OF STATEMENT IS ENCLOSED HEREWITH FOR YOUR HONOURS KIND PERUSAL. FURTHER IN QUESTION NO. 25 IT WAS SPECIFICALLY ASKED THAT MR JAGDISH PUROHIT IS ALSO CONTROLLING FEW OTHER COMPANIES, WHICH INCLUDES THESE TWO COMPANIES, AND M/S VARAH INFRA LTD. RAISED CAPITAL THROUGH THESE COMPANIES ALSO, WHETHER THIS TRANSACTION IS ALSO AN ACCOMMODATION TRANSACTION. IN REPLY TO THIS QUESTION MR PUROHIT CATEGORICALLY STATED THAT THESE COMPANIES HAVE SUBSCRIBED TO CAPITAL OF OTHER COMPANIES OUT OF THEIR OWN CAPITAL WHICH WAS RAISED THROUGH PUBLIC ISSUE/ PRIVATE PLACEMENT & MERGER WITH OTHER COMPANIES THROUGH HIGH COURT I.T.AS.1428 & 1429/D/2016 69 ORDER. COPY OF HIS STATEMENT AS PROVIDED BY AO ALONGWITH ASSESSMENT ORDER IS ENCLOSED HEREWITH. THE AO FAILED TO CONSIDER THIS VITAL INFORMATION IN THIS STATEMENT AND DIRECTLY JUMPED TO THE CONCLUSION THAT ALL COMPANIES CONTROLLED BY MR. PUROHIT AND A SHAM TRANSACTION. MR. PUROHIT NOWHERE STATED IN HIS STATEMENT THAT THE ASSESSEE COMPANIES IS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION TRANSACTIONS. 18. LD. COUNSEL FURTHER POINTED OUT THAT IN SUBSEQUEN T PAGES AO DEALT WITH REPLY FILED BY THE ASSESSEE COMPANY IN RESP ONSE TO SHOW CAUSE NOTICE WHEREIN HE REITERATED SAME PLEA. HE ALS O INVESTIGATED BANK TRANSACTION WITH VARIOUS PARTIES AT THE TIME OF RE PAYMENT OF OFCD HOLDERS AND AFTER THOROUGH INVESTIGATION. LD. AO HAS HIMSELF CERTIFIED IN THE ASSESSMENT ORDER, AFTER CONDU CTING DUE ENQUIRY AND EXAMINING THE TRAIL OF MONEY, THAT AMOUNT O F REPAYMENT FINALLY RESTED WITH THE SUBSCRIBERS (TO WHOM HE REFERS AS ENTRY OPERATOR GROUP). HE STATES AT PAGE 15 OF THE ASSESSMENT ORDER IN ITS SECOND PARA, IN CONCLUDING LINES THERE FORE, IN THE END RESULT, THE FUNDS HAVE REMAINED IN THE CHAIN/LOOP OF TH E ENTRY OPERATOR GROUP ITSELF. THE RELEVANT QUESTION HERE ARIS ES- WHEN THE FUNDS OBTAINED THROUGH OFCDS DID NOT REMAIN IN THE POS SESSION OF THE APPELLANT AND HAVE BEEN PAID TO THE PARTIES FROM WHERE THESE ORIGINATED (AND FINALLY REST WITH THEM AS PER THE FINDING OF THE AO), THEN HOW CAN THE APPELLANT BE CALLED A BENE FICIARY OF ACCOMMODATION ENTRY. I.T.AS.1428 & 1429/D/2016 70 19. FURTHER REGARDING GRANTING SUFFICIENT TIME TO PRODUCE PARTIES ON PAGE 17 OF THE AO ORDER (UNDERLINED PARA) HE STATED AS UNDER: THEREFORE, BECAUSE THE DIRECTORS OF THE ASSESSEE CO MPANY THEMSELVES DID NOT APPEAR FOR PERSONAL DEPOSITION I T CAN DEFINITELY BE HELD THAT EVEN IF AR OF THE ASSESSEE COMPANY HAS BEEN REQUESTED ONE YEAR BACK TO PRODUCE THE DIRECTORS OF SUBSCRIBER COMPANIES THEN TOO, AR WOULD NEVER HAVE BEEN PRODUC ED THOSE DIRECTORS BECAUSE OF MANY REASONS. THE ABOVE ATTITUDE OF THE AO SHOWS THAT THE ENTIRE BASIS O F THE AO IS ON PRESUMPTIONS AND SURMISES. HE HIMSELF ASSUMING THAT AR WOULD HAVE NEVER BEEN PRODUCED THESE PARTIES FOR MANY REASONS. THIS IS NOTHING BUT DENIAL OF OPPORTUNITY OF BEING HE ARD TO THE ASSESSEE ON THE BASIS OF OWN PRESUMPTIONS AND ASSUMPTI ONS. IN THE EARLIER PARA IT IS CLEARLY DEMONSTRATED THAT AO HAD NEVER ASKED ASSESSEE TO PRODUCE ITS DIRECTORS BEFORE 20/03/2015. 20. THE AO HAS ALSO RELIED ON THE STATEMENT OF SHRI JAGDISH PRASHAD PUROHIT RECORDED BY THE SEARCH & SEIZURE PART Y OF THE INCOME TAX DEPARTMENT ON 21.01.2015. ON PERUSAL OF TH IS STATEMENT, IT MAY BE OBSERVED THAT SH. JAGDISH PRASHAD H AS NEVER SAID THAT ANY ACCOMMODATION ENTRIES WERE PROVIDED TO THE APPELLANT COMPANY. IN THE STATEMENT, ONLY NAME MENTION ED OF THE BENEFICIARY OF ACCOMMODATION ENTRIES IS M/S VARAHA INFRA LTD. THE NAME OF THE APPELLANT COMPANY FIGURES NOWHERE. AS PER LD. AO, SINCE SH. TARUN GOYAL, CA AND SH. J.P PUROHIT OF KOLKATA ARE TAINTED PERSONS IN THE EYES OF THE INCOME TAX DEPARTMEN T, IT IS CONFIRMED THAT ANY COMPANY, WITH WHICH THEIR NAME IS ASSOCIATED IN ONE WAY OR THE OTHER, MUST BE INDULGING IN GIVING ACCOMMODATION ENTRIES. LD. COUNSEL POINTED OUT THAT THI S VIEW IS I.T.AS.1428 & 1429/D/2016 71 NOT REASONABLE AND NOT SUFFICIENT ENOUGH TO HOLD THE A SSESSEE GUILTY OF TAKING ACCOMMODATION ENTRIES. FURTHER, IT IS WORTH NOTING THAT NEITHER OF THE ABOVE-SAID TWO PERSONS HAS DIRECTLY ACCUSED THE ASSESSEE COMPANY AS BENEFICIARY OF ANY ACCOMMODATIO N ENTRY. FURTHER, LD. AO HAS SIMPLY ENCLOSED PHOTOCOPIES OF THE STATEMENTS OF SH. TARUN GOYAL, CA AND SH. J.P PUROHIT WITH THE A SSESSMENT ORDER ONLY. THESE STATEMENTS, AS SUCH WERE NEVER CONFR ONTED TO THE ASSESSEE EXCEPT FOR REFERRING THEM IN HIS LETTER DATED 25.03.2015 MARKED LAST & FINAL OPPORTUNITY. LEGALLY SPEAKING, HE SHOULD HAVE SUPPLIED COPIES OF THESE STATEMENTS TO THE ASSESSEE AND SOUGHT ITS COMMENTS. HE CANNOT LEGALLY RELY UPON ANY A DVERSE MATERIAL IN HIS POSSESSION WITHOUT CONFRONTING THE SA ME TO THE ASSESSEE. 21. LD. COUNSEL RELIED UPON THE CASE OF CIT-1, JAIPUR V. A.L. LALPURIA CONSTRUCTION (P) LTD. (2013) 32 TAXMANN.CO M 384 (RAJASTHAN), WHEREIN THE HONBLE HIGH COURT HELD THAT ORAL STATEMENT OF A THIRD PARTY RECORDED BY SEARCH AUTHO RITIES, WHICH WAS NEVER PLACED TO BE CONFRONTED BY ASSESSEE AND N O DOCUMENTARY EVIDENCE WAS SUPPLIED TO THE ASSESSEE, COULD NOT BE CONSIDERED IN MAKING ADDITION ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRIES. HE SUBMITTED THAT NEITHER COPIES OF STATEMENTS NOR ANY OTH ER ADVERSE MATERIAL WERE EVER SUPPLIED TO THE ASSESSEE F OR ITS COMMENTS/EXPLANATION. THESE WERE ONLY MADE ENCLOSURE/ANNEXURE OF THE ASSESSMENT ORDER TO RENDER S UPPORT TO THE SAME. 22. SIMILARLY, IN CASE OF CIT V. ASHWANI GUPTA(20 10) 191 TAXMAN 51 (DELHI), WHEREIN, IT WAS HELD BY HONBLE D ELHI HIGH COURT THAT ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATU RAL I.T.AS.1428 & 1429/D/2016 72 JUSTICE INASMUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR IS CROSS-EXAMINATION OF THE PERSON, ON WHOSE ST ATEMENT THE ASSESSING OFFICER RELIES UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPORTUNITY AND, CONSEQ UENTLY, WOULD BE FATAL TO THE PROCEEDINGS. FOLLOWING APPROACH ADO PTED BY US IN SMC SHARE BROKERS LTD.S CASE (SUPRA), WE SEE NO RE ASON TO INTERFERE WITH THE IMPUGNED ORDER. NO SUBSTANTIAL Q UESTION OF LAW ARISES FOR OUR CONSIDERATION. 23. THUS, HE SUBMITTED THAT ON THE BASIS OF INVESTIGA TION WINGS OLD REPORT ON SH. TARUN GOYAL, CA, THE STATEMENTS OF THE LATTER AND A GENERAL STATEMENT OF SHRI J. P. PUROHIT, LD. AO IS NO T LEGALLY CORRECT TO THE HOLD THE ENTIRE SUM OF LOAN OBTAINED FROM 16 PARTIES AS ACCOMMODATION ENTRY. SUCH AN ACTION IS TOTALLY UNW ARRANTED AND HIGHLY UNJUSTIFIED. AGAIN ON PAGE 19 PARA 9 AO R ELIED UPON THE DECISION OF CIT V. FOCUS EXPORTS PVT. LTD. ITA 218/ 2012(DELHI). IN THIS REGARD HE SUBMITTED THAT THE RATIO OF THE CITED CA SE DOES NOT APPLY TO THE INSTANT CASE SINCE THE FACTS AND CIRCUMSTANCE S ARE QUITE DIFFERENT AS DETAILED HEREIN BELOW: (I) IN THE CITED CASE, THE ASSESSEE DID NOT COOPERATE WITH THE AO AND FILED UTTERLY INCOMPLETE DETAILS AND CONSEQUEN TLY, THE ASSESSMENT IN THE SAID CASE WAS COMPLETED EX-PARTE U /S 144 OF THE I.T. ACT. HONBLE COURT NOTED THAT THE ASSESSEE FILED SOME DETAILS BUT THEY WERE NOT EXHAUSTIVE/COMPLETE. AS AGA INST THIS, IN THE CASE OF THE APPELLANT, FULL DETAILS WERE FILED. MOREOVER, THE AO WAS REQUESTED IN WRITING TO KINDLY POINT OUT IF ANY SPECIFIC DETAIL REMAINS TO BE FILED SO THAT THE SAME MAY ALSO BE FILED. (II) IN THE CITED CASE, HONBLE COURT NOTED THAT THE ASS ESSEE DID NOT FURNISH COMPLETE DETAILS AND PARTICULARS AND V IRTUALLY I.T.AS.1428 & 1429/D/2016 73 ABSCONDED DURING THE COURSE OF REASSESSMENT PROCEED INGS, RESULTING IN A BEST JUDGMENT ASSESSMENT. AS AGAINST THIS, THE APPELLANT DOES NOT REMEMBER EVER SKIPPING ANY HEARING ON ANY DATE. THE PROCEEDINGS WERE REGULA RLY ATTENDED. EVEN THE ADJOURNMENTS WERE MOSTLY GIVEN BY THE AO ON H IS OWN ACCORD ASKING FOR COMPLETE DETAILS IN ONE GO, REFUSI NG TO ACCEPT THE DETAILS FROM THE ASSESSEE IN PIECEMEAL. CONSEQUENTLY, ASSESSMENT IN THE CASE OF THE APPELLANT COMPANY WAS COMPLETED U/ S 143(3) OF THE I.T. ACT, 1961. III. IN THE CITED CASE, THE ASSESSEE FAILED TO FILE REQUISITE DETAILS AND EVIDENCE WITH REGARD TO THE CASH CREDITS RECEIVED I N THE FORM OF SHARE APPLICATIONS. HONBLE COURT POINTED OUT THAT TH E AO HAD CALLED FOR EXHAUSTIVE DETAILS BUT THE ASSESSEE DID NOT F ILE DETAILS OF AMOUNTS RECEIVED ON ACCOUNT OF SHARE PREMIUM ALON G WITH THE DETAILS OF SHARE CAPITAL, AND THE ADDRESS AND PAN N UMBERS WERE NOT PROVIDED FOR ALL PARTIES. SOME OTHER DETAILS W ERE FILED CONSISTING OF SOME SHORT NOTES AND A LIST WITHOUT PAN NUM BERS AND ADDRESSES OF THE INVESTORS. AS AGAINST THIS, THE APPELLANT FILED ALL THE NECESSARY DETAILS AND EVIDENCE WITH REGARD TO THE IMPUGNED ISSUE OF OFCDS S UBSCRIPTION FROM ALL THE 16 PARTIES, AS DETAILED IN PARA ABOVE, S UCH AS COMPLETE NAMES & ADDRESSES AND PAN NUMBERS OF THE SUBSCRIBERS , PHOTOCOPY OF ACKNOWLEDGMENT PORTION OF THEIR RESPECTIVE ITRS, CONFIRMATION CERTIFICATES/LEDGER ACCOUNT CONFIRMATIONS D ULY SIGNED BY THE SUBSCRIBERS, PHOTOCOPIES OF BANK ACCOUNTS/BA NK STATEMENTS OF THE SUBSCRIBERS, EVIDENCE OF REFUND BACK OF THE LOAN IN THE FORM OF CONFIRMATION CERTIFICATES/ACCOUNT CONFI RMATIONS AND COPIES OF BANK ACCOUNTS ETC. SIMILARLY, HE CITED OTHE R DECISIONS ALSO BUT RATIO OF THESE DECISIONS ALSO NOT APPLICABLE O N FACTS OF THIS I.T.AS.1428 & 1429/D/2016 74 CASE. SO, THE FINDINGS OF THE CITED CASE CANNOT BE APP LIED TO THE INSTANT CASE SINCE THE FACTS OF THE CITED CASE ARE CLEAR LY DISTINGUISHABLE. 24. FINALLY, ON PAGE 28 PARA 10 ASSESSING OFFICE R STATED THAT TERMS OF ISSUE OF OFCD WERE VERY MUCH ADVERSE TO THE SUBSCRIBER. AT THE OUTSET WE SUBMIT THAT THESE ARE THE ISSUE OF COMM ERCIAL UNDERSTANDING BETWEEN TWO OR MORE INDEPENDENT PARTIES. THEREFORE, DEPARTMENT CAN NOT INTERFERE BETWEEN THESE CO MMERCIAL TRANSACTIONS. IN THIS REGARD RELIANCE IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. B. DALMI A CEMENT LTD. (245 ITR 377) (DELHI). SECONDLY, THE TERMS WHICH ARE STATED TO BE ADVERSE TO THE INTEREST OF SUBSCRIBER ARE AS UNDER:- A. CONVERSION : THE OFCDS WOULD BE REDEEMABLE AFTER 10 YEARS AT PAR IF THE CONVERSION OPTION IS NOT EXERCISED. B. USE OF FUNDS: THE AMOUNT RECEIVED WOULD BE AT EXCL USIVE DISPOSAL OF THE COMPANY AND MAY BE UTILIZED BY THE CO MPANY FOR ANY PURPOSE IN THE MANNER DEEMED FIT. THE OFCD HOLDER S SHALL HAVE NO RIGHT TO CLAIM OR QUESTION ANYTHING IN THIS REGA RD. IN THE OPINION OF AO THE ABOVE TERMS ARE ADVERSE TO S UBSCRIBER BUT IF WE LOOK IT AT COMMERCIAL ANGLE THERE IS NO SUCH ADVERSITY IN THESE TERMS. THE DEBENTURES ARE FULLY CONVERTIBLE T O SHARES AND IF ANY PARTY NOT WILLING TO CONVERT IT THEY CAN TA KE THEIR PRINCIPAL AMOUNT. WHERE IS THE QUESTION OF ANY ADVERS ITY IN THIS TERM. FURTHER REGARDING USE OF FUNDS ALSO IF THE ASSE SSEE COMPANY DO NOT PUT SUCH CONDITION EACH AND EVERY DEBEN TURE HOLDER WILL DISTURB DAY TO DAY FUNCTIONING OF THE COM PANY. IT IS NOT THEIR JOB TO RUN THE BUSINESS. THEREFORE, THE ALL EGATION OF AO IS WITHOUT ANY BASIS AND SUPPORT. I.T.AS.1428 & 1429/D/2016 75 25. FURTHER, IN THE APPELLATE STAGE WHEN LD CIT ( A) APPEAL CALLED FOR REMAND REPORT, AO HAS NOT GIVEN ANY OPPOR TUNITY TO THE ASSESSEE TO PRODUCE PARTIES. HE SEND NOTICE U/S 133(6 ) TO ALL THE PARTIES AND ALL SUCH PARTIES DULY RESPONDED TO THE AO A ND FILED DESIRED DETAILS. THEREAFTER NO INVESTIGATION DONE BY THE AO AND SUBMITTED HIS REPORT TO THE LD CIT (A). THIS CLEARLY PRO VES THAT THE AO WAS SATISFIED WITH THE DETAILS SUBMITTED BEFORE HIM BY THE ASSESSEE AS WELL AS BY THE RESPECTIVE PARTIES. IT IS W ORTHWHILE TO NOTE THAT OUT OF VARIOUS PARTIES ONE OF THE SUBSCRIBER I S ARIZONA VENTURES PVT. LTD. WHO IS ALSO ASSESSED BY THE SAME AO AND SIMILAR ADDITIONS WERE MADE BY THE AO IN THIS COMPANY AND IT IS ALSO ONE OF THE RESPONDENT BEFORE THE HONBLE BENCH. T HIS SHOWS THAT IN OTHER CASES THE AO HAS NOT APPLIED HIS MIND AT AL L. 26. LD CIT(A) AFTER CONSIDERING FACTS OF THE CASE AND REMAND REPORT RECEIVED FROM THE AO, VERIFIED CREDENTIALS OF E ACH AND EVERY SUBSCRIBER AND HELD THAT THE ASSESSEE COMPANY HAS EXPL AINED IDENTITY, GENUINENESS AND CREDITWORTHINESS OF EACH AN D EVERY PARTY. FURTHER, LD CIT (A) BASED ON ASSESSMENT RECOR DS ALSO GONE THROUGH STATEMENT OF TARUN GOYAL AND JAGDISH PUROHIT. HE ALSO TAKEN NOTE OF THE FACT THAT THERE IS NO REFERENCE OF ASSE SSEE COMPANY NAME IN THE STATEMENT AND SHRI JAGDISH PUROH IT RETRACTED HIS STATEMENT. AFTER CONSIDERING ALL THE FACTS AND VARIOUS JUDICIAL PRONOUNCEMENT, LD CIT(A) DELETED THE ENTIRE A DDITION. 27. HE ALSO RELIED UPON THE FOLLOWING JUDGMENTS. -(2010) 194 TAXMAN 43 (DELHI)/(2011) 330 ITR 298 (D ELHI) IN THE CASE OF CIT VS. DWARKADHISH P. LTD. IT WAS HELD BY HONBLE DELHI HIGH COURT THAT IN ANY MATTER, THE ONUS OF PROOF IS NOT STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS, I.T.AS.1428 & 1429/D/2016 76 THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSEE, Y ET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY E ITHER FURNISHING THEIR PAN NUMBERS OR INCOME-TAX ASSESSME NT NUMBERS AND SHOWS THE GENUINENESS OF THE TRANSACTIO N BY SHOWING MONEY IN HIS BOOKS OF ACCOUNT EITHER BY ACC OUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE . JUST BECAUSE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT TH E ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE RIGHT TO INVOK E SECTION 68 . ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS RE VENUE, WHICH HAS ALL THE POWERS AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS A SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE T HE SOURCE OF SOURCE. (PARA 8) - (2014) 52 TAXMANN.COM 23(DELHI) CIT-XI V. RAMA KRIS HNA JEWELLERS. IN THIS CASE, VARIOUS ADDITIONS WERE MADE UNDER SEC TION 68 FOR RELEVANT YEARS AS CONFIRMATIONS, BANK ACCOUNT STATE MENTS, INCOME TAX RETURNS OF PERSONS WHO HAD GIVEN UNSECURED LOAN S AND CASH CREDITS TO THE ASSESSEE WERE NOT BROUGHT ON RECORD- THE ASSESSEE BEFORE COMMISSIONER (APPEALS) HAD FILED SEVERAL DET AILS INCLUDING THEIR PAN, BANK STATEMENTS AND INCOME TAX RETURNS- COMMISSIONER (APPEALS) DELETED ADDITIONS BEING BASED ON NO MATE RIAL- WHETHER THERE WAS NO REASON TO INTERFERE WITH THE SAID FIND ING- HELD, YES [PARA 23] - [2014] 49 TAXMANN.COM 13 (DELHI) CIT V. NIPUN AUTO (P) LTD. HONBLE DELHI HIGH COURT AVERRED IN THIS CASE THAT WHERE IDENTITY OF SHARE APPLICANTS HAD BEEN ESTABLISHED A ND THEIR BANK ACCOUNTS, IT RETURNS AND BALANCE SHEET IN ADDI TION TO CONFIRMATION LETTERS WERE PRODUCED, ADDITION UNDER SECTION 68 WAS TO BE DELETED. I.T.AS.1428 & 1429/D/2016 77 - CIT VS. DIVINE LEASING AND FINANCE LTD. [2008] 299 ITR 0268(DELHI) IT WAS HELD BY HONBLE DELHI HIGH COURT THAT IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRI BER ARE FURNISHED TO THE DEPARTMENT ALONG WITH THE COPY OF THE SHARE HOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ET C., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATI ON BY THE ASSESSEE IN THE CASE OF THE APPELLANT, A NUMBER OF DOCUMENTS , AS ENUMERATED IN THE EARLIER PARAGRAPHS WERE FURNISHED TO AO, WHICH CONSTITUTE ACCEPTABLE PROOF. - [2008] 307 ITR 0334( DELHI) CIT V. VALUE CAPITAL S ERVICES P. LTD. IN THIS CASE, HONBLE DELHI HIGH COURT, RELYING ON THE DECISIONS IN THE CASE OF CIT V. STELLAR INVESTMENT LTD. (1991) 1 92 ITR 0287 (DELHI) AND CIT V. SOPHIA FINANCE LTD.[1994] 205 IT R 0098 (DEL) HELD THAT: IT IS QUITE OBVIOUS THAT IT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CREDIT WORTHINESS OF STRANGERS. IF THE REVENUE HAS ANY DOUBT WITH REGARD TO THEIR ABILITY TO MAKE THE INVESTMENT , THEIR RETURNS MAY BE REOPENED BY THE DEPARTMENT. IN ANY CASE, WHAT IS CLINCHING IS THE ADDITIONAL BU RDEN ON THE REVENUE. IT MUST SHOW THAT EVEN IF THE APPLICANT DO ES NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE B Y THE APPLICANT ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOM E OF THE ASSESSEE. THIS HAS NOT BEEN DONE IN SO FAR AS THE P RESENT CASE IS CONCERNED AND THAT HAS BEEN NOTED BY THE TRIBUNAL A LSO UNDER THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT TH E TRIBUNAL HAS NOT COMMITTED ANY ERROR IN DELETING THE ADDITION I.T.AS.1428 & 1429/D/2016 78 - [2013] 30 TAXMANN.COM 328 (DELHI) CIT V. GANGESHWAR I METAL (P) LTD. IT WAS HELD BY HONBLE DELHI HIGH COURT THAT WHERE THE ASSESSEE IN SUPPORT OF TRANSACTION OF RECEIPT OF SHARE APPLI CATION MONEY BROUGHT ON RECORD VARIOUS DOCUMENTS SUCH AS NAMES A ND ADDRESSES OF SHARE APPLICANTS, THEIR CONFIRMATORY L ETTERS, COPIES OF BANK STATEMENTS ETC., SAID TRANSACTION WAS TO BE RE GARDED AS GENUINE AND, CONSEQUENTLY, NO ADDITION COULD BE MAD E IN RESPECT OF SAME UNDER SECTION 68. - [2012] 19 TAXMANN.COM 26 (DELHI) CIT-II V. KAMDHENU STEEL & ALLOYS LTD. HONBLE DELHI HIGH COURT HELD IN THIS CASE THAT ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WOULD PRIMA FACIE DISCHARGE BURDEN OF THE ASSESSEE IN PROVING IDENTITY OF SHARE HOLDERS, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF SHAREHOLDER, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT IS CREATED EVIDENCE, REVENUE IS SUPPOSED TO MAKE THOROUGH INVESTIGATION BEFORE IT COULD NAIL ASSESSEE AND FAS TEN ASSESSEEWITH LIABILITY UNDER SECTIONS 68 AND 69. WHERE ASSESSEE HAD GIVEN PARTICULARS OF REGISTRATION OF INVESTING/APPLICANT COMPANIES; CONFIRMATION FROM SHARE APPLICANTS; BANK ACCOUNT DE TAILS; AND HAD SHOWN PAYMENT THROUGH ACCOUNT PAYEE CHEQUES, ETC., IT COULD BE SAID THAT ASSESSEE HAD DISCHARGED ITS INITIAL ONUS AND JUST BECAUSE SOME OF CREDITORS/SHARE APPLICANTS COULD NOT BE FOU ND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE REVENUE A RIGHT TO INVOKE SECTION 68 WITHOUT ANY ADDITIONAL MATERIAL TO SUPPORT SUCH A M OVE. - CIT V. M/S VISHAL HOLDING & CAPITAL (P) LTD. ITA 10 31/2010 (DELHI) I.T.AS.1428 & 1429/D/2016 79 IN THIS CASE, IT WAS HELD BY HONBLE DELHI HIGH COURT THAT IN OUR OPINION, THE AO HAS SIMPLY ACTED ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE D ETAILS FURNISHED BY THE ASSESSEE . THE ASSESSEE HAS ALSO PRODUCED BEST POSSIBLE EVIDENCE TO SUPPORT ITS CLAIM. CONSEQUENTL Y, THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. IN THE CASE OF THE APPELLANT AS WELL, LD. AO HAS SI MPLY ACTED ON THE REPORT OF THE INVESTIGATION WING AND CONDUCTED NO M EANINGFUL ENQUIRY AT HIS LEVEL. SO, THERE WAS NO CASE FOR MAK ING THE ADDITION. - CIT V. STELLER INVESTMENT LTD. [2001] 251 ITR 263/1 15 TAXMAN 99(SC) IN THIS CASE, HONBLE SUPREME COURT AFFIRMED THE VI EW OF DELHI HIGH COURT IN THE CASE OF CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287/59 TAXMAN 568, THAT READS AS UNDER: IT IS EVIDENT THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, NEVERTHEL ESS, UNDER NO CIRCUMSTANCES, CAN THE AMOUNT OF SHARE CAPITAL BE R EGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SOME BOGUS SHAREHOLDERS IN WHOSE NAMES SHARES HAD BEEN I SSUED AND THE MONEY MAY HAVE BEEN PROVIDED BY SOME OTHER PERS ONS. IF THE ASSESSMENT OF THE PERSONS WHO ARE ALLEGED TO HAVE R EALLY ADVANCED THE MONEY IS SOUGHT TO BE REOPENED, THAT W OULD HAVE MADE SOME SENSE BUT WE FAIL TO UNDERSTAND AS TO HOW THIS AMOUNT OF INCREASED SHARE CAPITAL CAN BE ASSESSED IN THE H ANDS OF THE COMPANY ITSELF. THE ABOVE-CITED CASE RELATES TO CASH CREDIT ON ACCO UNT OF SUBSCRIPTION TO SHARES WHEREAS THE ASSESSEES CASE IS THAT ````````````OF LOAN BY WAY OF SUBSCRIPTION TO OFCDS . THE NATURE OF BOTH THE RECEIPTS IS SIMILAR AS MONEY IS RECEIVED I N BOTH CASES FROM I.T.AS.1428 & 1429/D/2016 80 THE SUBSCRIBERS. HENCE, THE RATIO OF THE ABOVE CASE IS QUITE APPLICABLE TO THE INSTANT CASE. -[2002] 256 ITR 795(SC) CIT V. GUJARAT HEAVY CHEMIC ALS LTD. HONBLE SUPREME COURT EXPRESSED ITS OPINION IN THIS CASE THAT IN CASE WHERE THE SHARE APPLICANTS WERE TO BE CONSIDER ED GENUINE, THE RIGHT COURSE FOR THE ASSESSING OFFICER IS TO IDENTI FY THE REAL PERSON TO WHOM THE MONEY BELONGS AND ASSESS HIM TO TAX INSTEA D OF ASSESSING THE COMPANY AND AS SUCH THERE WAS NO JUST IFICATION FOR ASSESSING THE COMPANY. - (2014) 43 TAXMANN.COM 395 (GUJARAT) CIT-1 V. DHARAM DEV FINANCE (P) LTD. THE FOLLOWING QUESTIONS WERE HELD IN FAVOUR OF THE ASSESSEE: VARIOUS ADDITIONS WERE MADE TO THE ASSESSEES INCOM E ON ACCOUNT OF CASH CREDITS- IT WAS FOUND THAT IN RESPECT OF SA ID CREDITS, THE ASSESSEE HAD FILED PAN OF CREDITORS, THEIR CONFIRMA TIONS AND THEIR BANK STATEMENTS, WHICH ESTABLISHED THEIR CREDIT WOR THINESS. MOREOVER, THE TRANSACTIONS WERE MADE THROUGH BANKIN G CHANNELS. WHETHER ANY ADDITION COULD NOT BE MADE TO ASSESSEE S INCOME U/S 68- HELD YES (PARA 5). WHETHER IN THE ABSENCE OF ANY CONTRARY MATERIAL, AN Y ADDITION SHOULD NOT BE MADE TO THE ASSESSEES INCOME- HELD Y ES (PARA 9). - (2014) 42 TAXMANN.COM 473 (GUJARAT) CIT-1 VS. APEX THERM PACKAGING (P) LTD. IT WAS HELD THAT WHERE NAME, ADDRESS, PAN, COPY OF I.T. RETURNS, BALANCE SHEET, P&L A/C OF ALL CREDITORS/LE NDERS AS WELL AS THEIR CONFIRMATION HAD BEEN FURNISHED, THE AO COULD NOT MAKE ADDITION ON ACCOUNT OF UNSECURED LOAN AND INTEREST THEREON . I.T.AS.1428 & 1429/D/2016 81 - (2013) 37 TAXMANN.COM 340 (ALLAHABAD) CIT-1, LKO V. LUCKNOW PROPERTY MANAGEMENT GROUP IT WAS HELD BY HONBLE HIGH COURT THAT ADDITION AS CASH CREDIT WAS NOT SUSTAINABLE WHERE ASSESSEE-DEVELOPER RECEIV ED AMOUNTS FROM ALLOTTEES, WHO WERE REGULARLY ASSESSED TO TAX. - (2014) 41 TAXMANN.COM 550 (GUJARAT) CIT-1 VS. SHAIL ESH KUMAR RASIKLAL MEHTA HONBLE GUJARAT HIGH COURT AVERRED THAT WHERE TRANSACTIONS WERE ROUTED THROUGH BANK AND THE ASSESSEE HAD EXPLA INED THE SOURCE OF INCOME, ADDITIONS U/S 68 COULD NOT BE MAD E. IN THE CASE OF CIT V. JITENDRA DOLEPATBHAI SHAH (2014) 41 TAXMANN.COM 523 (GUJARAT ), HONBLE HIGH COURT AVERRED THAT THE SOURCE OF CREDIT HAS BEEN EXPLAINED BY THE ASS ESSEE WITH DOCUMENTARY EVIDENCE AND THE DOCUMENTS WERE NOT FOU ND FALSE. ON PERUSAL OF THE IMPUGNED ORDER OF THE CIT(APPEALS), WE ARE CONVINCED THAT ON DOUBTS AND SUSPICION, THE AO HAS TREATED SHORT TERM CAPITAL GAIN . AS UNEXPLAINED CREDIT .. ON THE BASIS OF DOUBTS AND SUSPICION, THE CASH CREDITS CAN NOT BE HELD AS UNEXPLAINED. SIMILARLY, IN THE CASE OF MOD CREATIONS PVT. LTD. V. ITO( DELHI HIGH COURT) , IT WAS HELD THAT THE ASSESSEE HAD DISCHARGED ITS 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 W OULD HAVE HAD TO DISCHARGE THE ONUS WHICH HAD SHIFTED ON TO IT. A BALD ASSERTION BY THE ASSESSING OFFICER THAT THE CREDITS WERE A CIRCU LAR ROUTE ADOPTED BY THE ASSESSEE TO PLOUGH BACK ITS OWN UNDI SCLOSED INCOME INTO ITS ACCOUNTS, COULD BE OF NO AVAIL . THE REVENUE WAS REQUIRED TO PROVE THIS ALLEGATION. AN ALLEGATIO N BY ITSELF WHICH I.T.AS.1428 & 1429/D/2016 82 IS BASED ON ASSUMPTION WILL NOT PASS MUSTER IN LAW. THE REVENUE WOULD BE REQUIRED TO BRIDGE THE GAP BETWEEN THE SUS PICIONS AND PROOF IN ORDER TO BRING HOME THIS ALLEGATION. RELIANCE IS ALSO PLACED ON THE FOLLOWING CASE LAWS : (I) [2014] 45 TAXMANN.COM 473 (RAJASTHAN) CIT, JAIPUR-I I V. MORANIAUTOMOTIVES (P) LTD. (II) [2014] 44 TAXMANN.COM 460 (RAJASTHAN) CIT, CENTRAL, JAIPUR V. SUPERTECH DIAMOND TOOLS (P) LTD. (III) [2015 58 TAXMANN.COM 226 (MADRAS) CIT V. MARK HOSPI TAL (P) LTD. (IV) [2014] 52 TAXMANN.COM 23 (DELHI) CIT-XI V. RAMA KRI SHNA JEWELLERS. (V) [2015] 54 TAXMANN.COM 75 (ALLAHABAD) CIT, CENTRAL, KANPUR V. ANURAG AGARWAL (VI) [2014] 51 TAXMAN.COM 205 (GUJARAT) CIT, AHMEDABAD-I V V. SACHITEL COMMUNICATIONS (P) LTD. (VII) CIT V. LOVELY EXPORTS (P) LTD. [2008] 216 CTR (SC} 195 28. IN THE CASE OF M/S. ARISON VENTURES PVT. LTD. I N ITA NO.1428/DEL/2016, HE SUBMITTED THAT THOUGH FACTS AR E EXACTLY SIMILAR HOWEVER OUT OF TOTAL ADDITION MADE BY THE ASSESSING OFFICER OF RS.53,55,00,000/-, THE AMOUNT OF RS.26,75,00,000/- WAS RECEIVED IN THE EARLIER YEARS AND OFCD WAS ALLOTTED IN ASSESSMENT YEAR 2011-12, THERE FORE AMOUNT OF RS.26,75,00,000/- COULD NOT HAVE BEEN MAD E IN THIS YEAR. 29. FURTHER ANOTHER IMPORTANT ASPECT IN THIS CASE I S THAT, THERE IS NO TRANSACTION WITH SAIL INVESTMENT PVT. L TD. CLAIMED BY ASSESSING OFFICER AS TARUN GOYAL COMPANY. FURTHE R, AS FAR I.T.AS.1428 & 1429/D/2016 83 AS COMPANIES OF JAGDISH PUROHIT ARE CONCERN IN THIS CASE ALSO NONE OF THE SUBSCRIBED COMPANIES WERE TERMED AS ACCOMMODATION ENTRY PROVIDER COMPANY IN BY JAGDISH PUROHIT IN HIS STATEMENT. DECISION 30. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDING GIVEN IN THE ASSESSMENT ORDER, APP ELLATE ORDER AS WELL AS MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARING. WE HAVE ALREADY DISCUSSED THE FACTS IN DET AIL AS WELL AS THE ARGUMENTS RAISED BY THE PARTIES. THE ONLY IS SUE INVOLVED IS ADDITION MADE U/S.68 FOR THE ASSESSMENT YEAR 2012-13 ON ACCOUNT OF ASSESSEE HAVING RECEIVED 0% O FCDS FROM VARIOUS PARTIES. THE ADVERSE INFERENCE DRAWN B Y THE ASSESSING OFFICER FOR MAKING THE ADDITIONS HAVE BEE N DISCUSSED HEREIN IN DETAIL, HOWEVER IN A SUCCINCT M ANNER IS REASONS FOR REJECTING THE ASSESSEES EXPLANATION IN MAKING THE ADDITION ARE AS UNDER: NATURE OF ASSESSEES BUSINESS COULD NOT BE ASCERTAIN AND WAS NOT EXPLAINED BEFORE HIM. THE ASSESSEE HAS BEEN NON COOPERATIVE THROUGHOUT THE ASSESSMENT PROCEEDINGS AND DESPITE ASKING THE ASSESSE E TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANY THE ASSES SEE WAS UNABLE TO PRODUCE ANY OF THE DIRECTORS OR AUTHORI ZED REPRESENTATIVE OF THE COMPANY. IN THE CASE OF TWO PARTIES, I.E., M/S. SHAIL INVESTMEN TS PVT. LTD. AND M/S. KOA INVESTMENTS NOTICES SENT TO THE DIRECTORS WERE NOT COMPLIED WITH AND WHEN INCOME TAX INSPECTOR WAS I.T.AS.1428 & 1429/D/2016 84 DEPUTED TO SERVE THE SUMMONS AND THE SAME COULD NOT BE SERVED BECAUSE AT THE GIVEN ADDRESS NOBODY WAS FOUND OR NO BOARD WAS THERE ON THE ADDRESS. THE ABOVE TWO COMPANIES, I.E., M/S. SHAIL INVESTMENT AND M/S. KOA INVESTMENT LTD. WHERE THE COMPANY CONTROLLED AN D OPERATED BY SHRI TARUN GOYAL, WHO IS AN ESTABLISHED ENTRY OPERATOR WHICH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION U/S.132 WAY BACK ON 15.09.2008. SI MILARLY, THE TWO COMPANIES, NAMELY, M/S. SCAN INFRASTRUCTURE LTD . AND M/S. UNISYS SOFTWARE AND HOLDING INDUSTRIES LTD. WHICH ARE KOLKATA BASED COMPANY WAS MANAGED AND CONTROLLED BY SHRI JAGDISH PRASAD PUROHIT WHO WAS ALSO FOUND TO BE ENTRY OPERATOR IN THE SEARCH CONDUCTED ON HIM ON 21.01.2015 WHEREIN HE HAS ADMITTED THAT HE IS CONTROLLING FEW COMPA NIES WHICH ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. HE HAS ALSO REFERRED TO FINDING OF THE INVESTIGATION WI NG OF KOLKATA REGARDING MR. JAGDISH PRASAD PUROHIT WHO HAS ALSO ENCLOSED THE STATEMENT OF SHRI JAGDISH PRASAD PUROHIT I N THE ASSESSMENT ORDER. THE REPAYMENT OF OFCD DOES NOT EXONERATE THE ASSESSEE FROM LIABILITY TO BE TAXED ON UNACCOUNTED INCOME. 31. THE ASSESSEE COMPANY WAS IN EXISTENCE FOR ABOUT ONLY ONE AND A HALF MONTHS DURING THE RELEVANT PERIOD AN D NOT MUCH BUSINESS WAS CONDUCTED, HOWEVER, AS PER THE MEMORANDUM OF ASSOCIATION THE ASSESSEE COMPANY WAS FORMED TO CARRY ON THE BUSINESS AS SERVICE PROVIDER/OPERATORS, AGENTS, LENDERS, HIRER AND DIST RIBUTORS OF CABLE TELEVISION NETWORK IN THE LINE OF TELECOM AND I.T.AS.1428 & 1429/D/2016 85 COMMUNICATION AND ALSO TO ACT AS BUSINESS CONSULTAN T. ADMITTEDLY THE COMPANY HAD MEAGER RECEIPTS FROM ADV ISORY SERVICES AND SOME INTEREST INCOME. ON THE ISSUE OF RECEIVING OF OFCDS FROM VARIOUS THE ASSESSING OFFICER HAS REQ UIRED THE ASSESSEE TO FURNISH THE RELEVANT EVIDENCES AND DOCU MENTS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE INVESTOR COMPANIES AND ALSO THE GENUINENESS OF THE TRANSACTI ON. IN RESPONSE, THE ASSESSEE HAD FILED FOLLOWING EVIDENCE S:- (I) COMPLETE NAMES AND ADDRESSES OF THE SUBSCRIBERS, NUMBER OF 0% OFCD SUBSCRIBED AND THE AMOUNT OF LOAN OUTSTANDING AS ON 31.03.2012 OF EACH PARTY. (II) THEIR PERMANENT ACCOUNT NOS. (III) PHOTOCOPIES OF THE ACKNOWLEDGEMENT PORTION O F THEIR ITRS TO ESTABLISH THAT ALL PARTIES WERE REGULARLY A SSESSED TO INCOME TAX. (IV) WRITTEN CONFIRMATION CERTIFICATES FROM THE RE SPECTIVE PARTIES (V) COPY OF THEIR BANK ACCOUNTS FOR THE RELEVANT P ERIOD TO ESTABLISH THE AVAILABILITY OF FUNDS WITH THE SAID P ARTIES. (VI) CONFIRMATORY CERTIFICATES OF RECEIVING BACK T HE LOAN AMOUNT, AS OBTAINED FROM EACH PARTY, AFTER REDEMPTI ON OF THE OFCDS. (VII) COPY OF RELEVANT PORTION OF BANK ACCOUNT STA TEMENT, HIGHLIGHTING THEREIN THE RELEVANT TRANSACTION OF RE PAYMENT TO THE RESPECTIVE PARTIES AFTER REDEMPTION OF THE O FCDS I.T.AS.1428 & 1429/D/2016 86 (VIII) COPY OF THE LEDGER ACCOUNTS OF THE INVESTOR S, AS IN THE BOOKS OF ACCOUNT OF THE APPELLANT ASSESSEE SHOWING THE REFUND OF LOANS . 32. NOWHERE THESE EVIDENCES OR DOCUMENTS HAVE BEEN REBUTTED BY ASSESSING OFFICER OR ANY SPECIFIC MATER IAL HAS BEEN BROUGHT ON RECORD TO ALLAY THE VERACITY OF THE SE DOCUMENTS. 33. IN SO FAR AS THE ASSESSING OFFICERS ALLEGATION THAT THE ASSESSEE WAS NON COOPERATIVE, ALREADY IT HAS BEEN E XPLAINED BY THE ASSESSEE BEFORE THE LD. CIT (A) AS WELL AS B EFORE US THAT, IN THE FIRST NOTICE U/S. 142(1) ISSUED ON 15.10.201 3 SEEKING PRELIMINARY DETAILS, THE ASSESSEE HAD FILED THEIR R EQUISITE DETAILS, WHICH WERE, INCOME TAX RETURN, BALANCE-SHE ET, COMPUTATION AND DETAILS OF DIRECTORS OF SHAREHOLDER S. THEREAFTER, 2 ND NOTICE WAS ISSUED ON 15.01.2015 WHICH WAS ALMOST AFTER 15 MONTHS FROM THE DATE OF FIRST NOTIC E, WHEREIN 63 POINTS WERE LISTED, WHICH TOO WAS COMPLIED WITH BY THE ASSESSEE ON 16.02.2015. IT WAS FOR THE FIRST TIME T HAT AT THE FAG END OF THE LIMITATION OF PASSING OF THE ORDER T HAT THE ASSESSING OFFICER ISSUED SUMMONS U/S.131 ON 20.03.2 015 TO PRODUCE THE DIRECTORS OF THE SUBSCRIBER COMPANIES O N 24.3.2015 AND SAID SUMMONS WAS SERVED ON THE LATE E VENING OF 21 ST MARCH, 2015 WHICH WAS A SATURDAY AND IN RESPONSE ASSESSEE HAS REPLIED ON 24.03.2015 THAT TIME ALLOWE D WAS TOO SHORT. THE ASSESSING OFFICER IMMEDIATELY THEREAFTER ISSUED A FINAL SHOW CAUSE NOTICE ON 25.03.2015 WHICH AGAIN W AS I.T.AS.1428 & 1429/D/2016 87 RESPONDED ON 27.03.2015. UNDER THESE ADMITTED FACTS , WHICH HAVE BEEN DULY NOTED BY THE LD. CIT (A) WHICH IS AL SO EVIDENT FROM THE RECORDS, THERE CANNOT BE ANY ALLEGATION OF NON CO- OPERATION BY THE ASSESSEE OR FAILURE TO PRODUCE THE DIRECTORS. IF THE ASSESSING OFFICER WAS REALLY DESIRED TO EXAM INE THE DIRECTORS, THEN HE WOULD HAVE GIVEN SUFFICIENT TIME TO THE ASSESSEE SPECIFICALLY WHEN MOST OF THE DIRECTORS AR E BASED OUT STATION. LD. DR BEFORE US HAS POINTED OUT THAT IN N OTICE DATED 05.01.2015 ASSESSEE WAS ASKED TO PRODUCE THE DIRECT ORS HOWEVER FROM THE CONTENT OF THE SAID NOTICE SPECIFI CALLY VIDE POINTS NO.62 AND 63, ASSESSING OFFICER HAD ASKED TH E FOLLOWING:- 62. WHO WAS THE INDIVIDUAL WHO SIGNED THE CHEQUE D ATED 26.06.2011 AND 25.08.2011 FOR RS.10 CRORE AND RS.5 CRORE RESPECTIVELY FOR GIVING DONATION TO BAHUJAN PRERNA TRUST. 63. CAN YOU PRODUCE BEFORE ME IN PERSON, FOR EXAMIN ATION ON OATH (ON THE DATE AND TIME TO BE DECIDED AS PER MUTUAL CONVENIENCE) THE INDIVIDUAL MENTIONED IN POINT NO.6 2 ABOVE. THOUGH, HE MAY HAVE ASKED THE ASSESSEE BUT THE TENO R OF THE QUESTION SHOWS THAT HE JUST WANTS TO ASCERTAIN, WHET HER IT WOULD BE POSSIBLE FOR THE ASSESSEE TO PRODUCE THE P ERSON WHO HAS SIGNED THE CHEQUE DATED 26.06.2011 AND 25.08.2011 FO R RS.10 CRORE AND RS.5 CRORE RESPECTIVELY FOR GIVING D ONATION TO BAHUJAN PRERNA TRUST . IT WAS FOR THE FIRST TIME THAT HE INSISTED TO PRODUCE THE DIRECTORS ON THE SUMMONS DATED 20.03 .2015 SERVED ON 21.03.2015 TO BE PRODUCED ON 24.03.2015. IN SUCH I.T.AS.1428 & 1429/D/2016 88 A SHORT TIME, OSTENSIBLY IT CAN BE IMPOSSIBLE FOR A NYONE TO RESPOND TO SUCH SUMMON. 34. NOW IN SO FAR AS INCOME TAX INSPECTORS REPOR T THAT ADDRESS OF KOA INVESTMENT WAS A SMALL HALWAI SHOP, IT HAS ALREADY BEEN CLARIFIED THAT THE INCOME TAX INSPECTO R HAS GONE ON THE WRONG ADDRESS, AND THEREFORE, THIS REPORT OF THE INCOME TAX INSPECTOR CANNOT BE TAKEN INTO COGNIZANCE. ANOT HER POINT RAISED BY THE LD. COUNSEL IS THAT THE INCOME TAX IN SPECTORS REPORT WAS NEVER CONFRONTED TO THE ASSESSEE AND IF THERE WAS ANY SUCH ADVERSE REPORT REGARDING WRONG ADDRESS OR PARTIES NOT AVAILABLE, AT LEAST ASSESSEE SHOULD HAVE BEEN C ONFRONTED TO CLARIFY OR TO PROVIDE THE CORRECT ADDRESS. 35. ANOTHER VERY IMPORTANT FACT IS THAT, WHEN LD . CIT (A) IN THE REMAND PROCEEDINGS ASKED THE ASSESSING OFFICER TO CARRY OUT NECESSARY INQUIRY, THEN ALSO, ASSESSING OFFICER DID NOT ASK THE ASSESSEE TO PRODUCE THE DIRECTORS, ALBEIT HAS SENT NOTICES U/S. 133(6) TO THESE COMPANIES WHO HAD DULY RESPOND ED TO AND HAD GIVEN ALL THE NECESSARY DETAILS AND CONFIRM ATION ALONG WITH DOCUMENTARY EVIDENCES SUBSTANTIATING THE CASE OF THE ASSESSEE. IN SUCH REMAND REPORT ALSO NO ADVERSE INFERENCE HAS BEEN DRAWN WHICH FACT HAS ALREADY BEEN NOTED BY THE LD. CIT (A) AND HAS DEALT WITH SAME WHILE DELETING THE ADDITION IN THE CASE OF EACH AND EVERY SUBSCRIBER/INVESTOR COMP ANY. HENCE, NON PRODUCTION OF DIRECTORS ON THE FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE ADVERSELY VIEWE D AND CANNOT BE THE SOLE REASON FOR SUSTAINING THE ADDITI ON. I.T.AS.1428 & 1429/D/2016 89 36. COMING TO THE ASSESSING OFFICERS OBSERVATION REGARDING STATEMENT OF SHRI TARUN GOYAL AND THE INV ESTIGATION CARRIED OUT IN HIS CASE IN THE YEAR 2008. FIRST OF ALL, DIFFERENT STATEMENTS OF SHRI TARUN GOYAL WHICH HAS BEEN REFER RED TO BY THE ASSESSING OFFICER IS MORE THAN SEVEN YEAR BACK AND THEN WITHOUT THERE BEING ANY SPECIFIC INFORMATION GIVEN BY HIM REGARDING ASSESSEE THAT IT WAS ONE OF THE BENEFICIA RIES, THEN SUCH A STATEMENT PRACTICALLY HOLDS NO EVIDENTIARY V ALUE AND WHAT HE DID IN THE DISTANT PAST HAS NOTHING TO DO W ITH THE TRANSACTION ENTERED BY THE ASSESSEE COMPANY IN THE ASSESSMENT YEAR 2012-13. THERE IS NO IOTA OF REFERE NCE BY THE ASSESSING OFFICER, WHETHER SHRI TARUN GOYAL NAMED A NY OF THE PARTIES WITH WHOM ASSESSEE HAD UNDERTAKEN A TRA NSACTION IN HIS STATEMENT AND HOW THE SAME IS RELATED TO HIM EXCEPT THE COMMON ADDRESS EVEN IN THE REPORT OF THE INVEST IGATION WING DATED 31.03.2009 ANNEXED IN HIS ASSESSMENT ORD ER. THE REPORT ALSO RELATES TO ASSESSMENT YEARS 2004-05 TO 2009-10, WHEREIN LIST OF BENEFICIARIES ARE CONTAINED AND IN SUCH LIST, NOWHERE THERE IS A MENTION AND WHISPER ABOUT THE AS SESSEE COMPANY. IN HIS STATEMENT, SHRI TARUN GOYAL HAS MEN TIONED THE NAME OF CERTAIN COMPANY WHO WERE PROVIDING ACCOMMODATION ENTRIES IN THE EARLIER YEARS. HOWEVER , AT THE SAME TIME, IN HIS ANOTHER STATEMENT HE HAS STATED T HAT SOME OF HIS COMPANIES WERE DOING THE GENUINE BUSINESS AN D IT AS A MATTER OF RECORD THAT ALL THE STATEMENTS WERE LATER ON RETRACTED WHEREIN HE HAS SAID THAT HE WAS PROVIDING I.T.AS.1428 & 1429/D/2016 90 ACCOMMODATION ENTRIES THROUGH OF SOME OF THE COMPAN IES AND IN MAJORITY COMPANIES HE WAS DOING GENUINE BUSINESS . UNDER THESE CIRCUMSTANCES, THIS FACTUM OF INVESTIGATION R EPORT IN THE CASE OF SHRI TARUN GOYAL WHICH RELATES FOR MUCH EAR LIER YEARS CANNOT BE CONCLUSIVE MATERIAL TO HOLD THAT EITHER S HRI TARUN GOYAL WAS STILL CONTINUING WITH HIS NEFARIOUS BUSIN ESS OF ACCOMMODATION ENTRY OR ASSESSEE WAS BENEFICIARY OF ANY ACCOMMODATION ENTRY IN THIS YEAR. 37. NOW COMING TO THE STATEMENT OF SHRI JAGDISH PRASAD PUROHIT DATED 21.01.2015, WHEREIN HE HAS ADMITTED T HAT HE IS CONTROLLING FEW COMPANIES WHICH WERE ENGAGED IN PRO VIDING ACCOMMODATION ENTRY. FROM A BARE PERUSAL OF THE STA TEMENT SPECIFICALLY QUESTION NO.23, HE HAS PROVIDED THE LI ST OF THE COMPANIES WHICH WERE ENGAGED IN PROVIDING ACCOMMODA TION ENTRIES. THE NAME OF THE TWO COMPANIES, NAMELY, M/S . SCAN INFRASTRUCTURES LTD. AND M/S. UNISYS SOFTWARE AND H OLDING INDUSTRIES LTD. HAS NOT BEEN MENTIONED AT ALL. FURT HER, IN QUESTION NO.25, HE HAS CATEGORICALLY STATED THAT SO ME OF HIS COMPANIES CONTROLLED BY HIM HAS RAISED THE CAPITAL IN GENUINE MANNER AND HAS SUBSCRIBED CAPITAL OF OTHER COMPANIE S OUT OF THEIR OWN CAPITAL WHICH WAS RAISED THROUGH PUBLIC I SSUE OR BY PRIVATE PLACEMENT OR EITHER MERGER WITH OTHER COMPA NIES THROUGH HIGH COURT ORDERS. THE RELIANCE PLACED BY T HE ASSESSING OFFICER IN HIS STATEMENT TO DRAW THE ADVE RSE INFERENCE IS NOT CORRECT, BECAUSE ASSESSING OFFICER HAS JUST JUMPED TO THE CONCLUSION THAT, SINCE THESE COMPANIES ARE CONTROLLED BY SHRI JAGIDSH PRASAD PUROHIT, THEREFOR E, IT HAS TO I.T.AS.1428 & 1429/D/2016 91 BE SHAM TRANSACTION OR BOGUS. AT LEAST THERE SHOULD HAVE BEEN SOME REFERENCE THAT THE ASSESSEE COMPANY WAS O NE OF THE BENEFICIARIES OF THE ACCOMMODATION TRANSACTION OR WAS FIGURING IN THE LIST OF THE COMPANIES THROUGH WHICH HE HAS BEEN PROVIDED ACCOMMODATION ENTRIES. WITHOUT ANY SU CH MATERIAL INFORMATION FROM HIS STATEMENT OR INVESTIG ATION REPORT QUA THE ASSESSEE, ALL THE REFERENCE MADE BY THE ASSESSING OFFICER HAS NO LEGS TO STAND SO AS TO WAR RANT ANY ADVERSE INFERENCE WHILE EXAMINING THE CREDIT ENTRIE S IN THE CASE OF THE ASSESSEE COMPANY. 38. THE ASSESSING OFFICER HAS ALSO REFERRED THE INVESTIGATION OF BANK TRANSACTION WITH VARIOUS PART IES AT THE TIME OF REPAYMENT OF OFCD HOLDERS AND CAME TO THE CONCLUSION THAT THE AMOUNT OF REPAYMENT FINALLY VES TED WITH THE SUBSCRIBERS. IF THE FUND OBTAINED THROUGH OFCD HAVE BEEN REFUNDED BACK WHICH IS AN ADMITTED FACT AND DI D NOT REMAIN IN THE POSSESSION OF THE ASSESSEE COMPANY AN D THEN HOW THE REFUNDED AMOUNT HAS BEEN UTILISED BY THE SU BSCRIBER COMPANIES IS NONE OF BURDEN OF THE ASSESSEE, UNLESS THESE PARTIES HAVE CONFIRMED OTHERWISE AND FROM WHERE THE FUNDS HAVE ORIGINATED. HOW THE ASSESSEE CAN BE HELD TO BE NEFICIARY OF ACCOMMODATION ENTRY UNTIL AND UNLESS THERE IS SO ME INFORMATION OR STATEMENT OR MATERIAL THAT FOR THE P ERIOD THE ASSESSEE HAD TAKEN OFCDS WAS THROUGH UNACCOUNTED MO NEY WHICH WAS INTRODUCED IN THE BOOKS AND LATER ON IT H AS REPAID BACK WHICH IS ALSO DULY REFLECTED IN THE BOOKS OF A CCOUNT AND I.T.AS.1428 & 1429/D/2016 92 HAS RECEIVED A CASH BACK FROM THESE ENTITIES. IT IS MERELY PRESUMPTION DRAWN BY THE ASSESSING OFFICER BASED ON CERTAIN FACTS AND CIRCUMSTANCES WHICH WERE COMPLETELY EXTRA NEOUS TO THE CASE OF THE ASSESSEE. 39. FURTHER AS STATED ABOVE, IF THE ASSESSEE COULD NOT PRODUCE THE DIRECTORS DURING THE ASSESSMENT PROCEED INGS IN RESPONSE TO THE SUMMONS ISSUED BY THE ASSESSING OFF ICER DUE TO LACK OF TIME, THEN WHAT PREVENTED THE ASSESSING OFFICER TO ASK THE ASSESSEE TO PRODUCE THE DIRECTORS DURING TH E COURSE OF REMAND REPORT WHEN AMPLE OPPORTUNITY WAS GIVEN B Y THE CIT (A) TO HIM. THE INQUIRY DURING THE COURSE OF RE MAND PROCEEDINGS CONDUCTED BY ASSESSING OFFICER IN FACT EXONERATES THE ASSESSEE, BECAUSE ASSESSING OFFICER HAS SENT NO TICES U/S.133(6) TO EACH OF THE PARTIES AND IN RESPONSE T O WHICH THE REPLIES FROM ALL THE PARTIES HAVE BEEN RECEIVED AND THEY HAVE CONFIRMED THAT THEY HAD UNDERTAKEN THE TRANSACTIONS WITH THE ASSESSEE COMPANY AND THEY WERE ALSO SUPPLIED CONFIR MATORY DOCUMENTS TO THE ASSESSEE AND FINALLY THE BALANCE T OWARDS THE ASSESSEE WAS NIL AS ON DATE THIS FACT HAS BEE N NOTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT ONLY. 40. LD. CIT(A) HAVE DEALT WITH EACH AND EVERY PARTY IN DETAIL WHICH WE HAVE ALREADY INCORPORATED ABOVE AND ON PERUSAL OF THE SAME, WE FIND THAT ,FIRSTLY HE HAS T AKEN NOTE OF ALL THE EVIDENTIARY DOCUMENTS, I.E., COPY OF THE BA NK STATEMENT OF THE ASSESSEE COMPANY AS WELL AS THE SU BSCRIBER; THE FACTUM OF REFUND OF OFCD; FACTUM OF ASSESSING O FFICER I.T.AS.1428 & 1429/D/2016 93 ISSUED NOTICE U/S.133(6), WHEREIN THE PARTIES HAVE DULY CONFIRMED THE TRANSACTION WITH DOCUMENTARY EVIDENCE S WHICH WAS ALSO REFLECTED IN THE BANK STATEMENT AND BALANC E SHEETS, THEIR INCOME TAX RETURN AND THE AUDITED FINANCIAL S TATEMENT WHEREIN EACH AND EVERY THING HAS BEEN REFLECTED. TH EREAFTER, HE HAS ALSO DEALT WITH DATE WISE ENTRIES IN MOST OF THE COMPANIES SPECIFICALLY IN THE CASE OF M/S. SHAIL IN VESTMENT PVT. LTD. TO REACH TO THE CONCLUSION THAT THE ONUS CAST UPON THE ASSESSEE WAS DULY DISCHARGED. HE HAS ALSO DEALT IN DETAIL WITH THE STATEMENT OF SHRI JAGDISH PRASAD PUROHIT A ND ALSO SHRI TARUN GOYAL WHICH FINDING WE HAVE ALREADY CORR OBORATED IN THE FOREGOING PARAGRAPHS. AFTER CONSIDERING THE ENTIRE GAMUT OF FACT AND MATERIAL AVAILABLE ON RECORD, WE DO NOT FIND ANY REASON TO TINKER WITH THE FINDINGS OF THE LD. C IT (A) WHICH IS BASED ON FACTS AND MATERIAL ON RECORD, THE REMAN D REPORT OF THE ASSESSING OFFICER AND PROPER REBUTTAL OF THE AS SESSING OFFICERS OBSERVATION AND THE FINDING AND ACCORDING LY THE SAME IS CONFIRMED. 41. IN SO FAR AS THE JUDGMENTS RELIED UPON BY THE L D. CIT- DR, SPECIFICALLY IN THE CASE OF NRA IRON & STEEL PV T. LTD., THE HONBLE APEX COURT HAD OPINED THAT IN CASE OF PRIVA TE PLACEMENT OF SHARES, WHERE A HIGHER ONUS IS REQUIRE D TO BE PLACED ON ITS AND LEGAL OBLIGATION OF THE ASSESSEE TO PROVE THE RECEIPT OF SHARE CAPITAL TO THE SATISFACTION OF THE ASSESSING OFFICER. THE ONUS CANNOT BE DISCHARGED MERELY BY FI LING OF PRIMARY EVIDENCE. HERE IN THIS CASE AS STATED ABOVE NOT ONLY I.T.AS.1428 & 1429/D/2016 94 THE PRIMARY EVIDENCE BUT ALSO IN THE INQUIRIES CARR IED OUT BY THE ASSESSING OFFICER QUA THE INVESTOR SPECIFICALLY IN THE REMAND PROCEEDINGS WHEREIN THEY HAVE DULY CONFIRMED THE TRANSACTION WITH THE DOCUMENTARY EVIDENCES ALONG WI TH THEIR BALANCE SHEET AND INCOME TAX RECORDS FROM WHERE THE Y HAVE BEEN DULY SHOWN AND PROVED THAT THEY HAVE SUBSCRIBE D TO THE OFCDS WITH THEIR SOURCE DISCLOSED IN THEIR BALANCE SHEET DULY SUPPORTED BY THEIR BANK STATEMENT. THOUGH THESE COM PANIES MAY HAVE A MEAGER INCOME BUT IF THEY HAVE SUFFICIEN T FUNDS IN THE FORM OF CAPITAL AND SURPLUS DULY DISCLOSED IN T HE AUDITED STATEMENT AND ALSO TO THE INCOME TAX DEPARTMENT, TH EN IT CANNOT BE HELD THAT THEY DID NOT HAVE ANY CREDITWOR THINESS. IN THE CASE OF NRA IRON & STEEL PVT. LTD. THE INVES TIGATION/ INQUIRY IS ACTUALLY FOUND THAT THE CREDITORS WERE D UBIOUS AND LACK CREDITWORTHINESS. SIMILARLY, IN THE CASE OF NO VA PROMOTERS & FINLEASE PVT. LTD. (SUPRA) THERE WAS A CATEGORICAL STATEMENT OF THE ENTRY PROVIDERS THAT THEY HAVE ISS UED CHEQUES AND IN TURN RECEIVED CASH BACK FROM THEM WH ICH ITSELF GOES TO PROVE THAT ENTIRE TRANSACTIONS WERE NOT GENUINE. IN THE CASE OF NDR PROMOTERS PVT. LTD. (SUPRA) ALSO , THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME . IN THAT CASE INQUIRY AND INVESTIGATION WAS CARRIED OUT BY THE ASSESSING OFFICER, WHEREIN THE EVIDENCES FILED BY T HE ASSESSEE HAD LOST ITS CREDIBILITY DUE TO MATERIAL BROUGHT ON RECORD AND WERE FOUND TO BE PAPER COMPANIES. THUS, ON THE FACT S AND CIRCUMSTANCES OF THE CASE WHICH HAS BEEN DISCUSSED IN DETAIL I.T.AS.1428 & 1429/D/2016 95 IN THE FOREGOING PARAGRAPH THE PRINCIPLE AND RATIO DECENDI IN THESE CASES ARE NOT APPLICABLE. APART FROM THAT, TH E LD. ASSESSING OFFICER HAS HEAVILY RELIED UPON THE DECIS ION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. FOC US EXPORT WHICH THE LD. COUNSEL HAD ALREADY REBUTTED AND GIVE N A COUNTER AS TO WHY THE JUDGMENT IS NOT APPLICABLE ON THE FACTS AND THE SAME REASONING IS ALSO ADOPTED BY US. 42. THOUGH CATENA OF JUDGMENTS HAVE BEEN CITED BY THE LD. COUNSEL AND IN SUPPORT OF HIS CONTENTION AND HOW TH EY ARE APPLICABLE ON THE FACTS OF THE CASE, THE SAME ARE N OT BEING DISCUSSED BECAUSE THE CASE IS BEING DECIDED ON THE FACTS AND MATERIAL BROUGHT ON RECORD AND THE FINDINGS OF THE LD. CIT (A) HAS BEEN CONFIRMED BY US AFTER ANALYZING EACH AND E VERY MATERIAL AND ALSO THE REASONING GIVEN BY THE ASSESS ING OFFICER. ACCORDINGLY, THE ADDITION MADE BY THE ASSE SSING OFFICER IS DELETED AND ORDER OF THE LD. CIT (A) IS CONFIRMED. 43. IN THE CASE OF M/S. ARIZON VENTURES PVT. LTD., OUR FINDING GIVEN THEREIN WILL APPLY MUTATIS MUTANDIS AS ADMITTEDLY SIMILAR FACTS AND ISSUES ARE INVOLVED; A ND MOREOVER IN THIS CASE OUT OF TOTAL ADDITION OF RS.53,55,00,000/-, THE AMOUNT OF RS.26,75,00,000/- COULD NOT BE ADDED IN THIS YEAR BECAUSE OFCDS WERE RECEIV ED IN THE EARLIER YEARS AND WERE ALSO ALLOTTED IN ASSESSMENT YEAR ASSESSMENT YEAR 2011-12 AND NOT IN ASSESSMENT YEAR 2012- 13. REST OF THE FACTS REMAINS THE SAME, AND THEREFO RE, OUR I.T.AS.1428 & 1429/D/2016 96 FINDINGS GIVEN IN THE ABOVE APPEAL, THE APPEAL OF T HE REVENUE IN THIS YEAR ALSO DISMISSED. 44. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MARCH, 2021. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH MARCH, 2021 PKK: