M/s G. Estate Pvt. Ltd., Karnal V. DCIT, Karnal

ITA 1453/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3164 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 28-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMOL SINHA ADV ASHOK KR JAIN
• Keywords: Unexplained cash credit; Bogus Share capital; Business income; Income from undisclosed sources; Search and seizure; Document seized; Share purchase agreement; Principle of natural justice; Question of law; Corroborative evidences; Accommodation entries; Onus to prove; Retraction; Revised return; Documents seized
• Section: 143(3); 153A; 14A; 131; 68; 132

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH C , NEW DELHI BEFORE : SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1451/DEL./2013 ASSESSMENT YEAR: 2008 - 09 M/S. GALAXY RICE INDUSTRIES PVT. LTD., SONKRA ROAD, TARAORI, KARNAL. PAN AADCG 0531K (APPELLANT) VS. D.C.I.T., CENTRAL CIRCLE, KARNAL. (RESPONDENT) ITA NO. 1452/DEL./2013 ASSESSMENT YEAR: 2009 - 10 M/S. GOEL INTERNATIONAL PVT. LTD., SONKRA ROAD, TARAORI, KARNAL. PAN AACCG7414K) (APPELLANT) VS. D.C.I.T., CENTRAL CIRCLE, KARNAL. (RESPONDENT) ITA NO. 145 3 /DEL./2013 ASSESSMENT YEAR: 200 7 - 08 M/S. G. ESTATE PVT. LTD. C/O GOEL INTERNATIONAL PVT. LTD., SONKRA ROAD, TARAORI, KARNAL. PAN AACCG6264F (APPELLANT) VS. D.C.I.T., CENTRAL CIRCLE, KARNAL. (RESPONDENT) ASSESSEE S BY S/ SHRI AMOL SINHA, ADV ., ASHOK KR JAIN AND ASHU GOEL, C.A. REVENUE BY SMT. SIMRAN BHULLAR, CIT/DR DATE OF HEARING 18.01.2018 DATE OF PRONOUNCEMENT 01.03 .2018 ITA NOS. 1451 TO 1453/DEL./2013 2 ORDER PER L.P. SAHU, A.M.: ALL THE ABOVE THREE APPEALS BY DIFFERENT ASSESSEES ARISE OUT OF SEPARATE ORDERS OF LD. CIT(A) DATED 2 3 .01.2013 FOR THE ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 RESPECTIVELY . 2. AS EMERGED OUT OF THE GROUNDS OF APPEAL S AND ATTENDING FACTS OF THE CASES , WE FIND THAT THE MAJOR ISSUE INVOLVED IN THESE APPEALS IS COMMON BASED ON IDENTICAL FACTS AND CIRCUMSTANCES . THEREFORE, ALL THESE APPEALS OF DIFFERENT ASSESSEES ARE DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE AND BREVITY, W E FIRST TAKE UP THE APPEAL NO. 1452/DEL./2013 OF THE ASSESSEE, GOEL INTERNATIONAL PVT. LTD., KARNAL. 3. IN THIS APPEAL, THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER DATED 23.01.201 3 WHEREIN THE ADDITION OF RS.5.70 LACS ON ACCOUNT OF PURCHASE OF AGRICULT URAL LAND AND ADDITION OF RS.5.30 CRORES ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL U/S. 68 OF THE IT ACT, 1961 MADE BY THE LD. DCIT, CENTRAL CIRCLE, KARNAL VIDE HIS ORDER DATED 28.12.2011 PASSED U/S. 153A OF THE ACT, IS CONFIRMED. THE ASSESSEE HAS RAISED FOL LOWING GROUNDS : 1. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ACTED ARBITRARILY AND ON PRESUMPTIONS BASIS, CONTRARY TO PRINCIPLES OF NATURAL JUSTICE AND PROVISION OF LAW AS SUCH THE ACTION AND FINDINGS BASED THEREON STANDS VITIATED AND ORDER IS BAD IN LAW. ITA NOS. 1451 TO 1453/DEL./2013 3 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.5,70,000 ON ACCOUNT OF EXCESS MONEY PAID TOWARDS PURCHASE OF AGRICULTURE LAND MADE BY LD AO WHICH IS ARBI TRARY, AGAINST PRINCIPLES OF NATURAL JUSTICE AND CONTRARY TO FACTS AND PROVISION OF LAW AND BASED ON SURMISES AND CONJECTURES AND HENCE THE ADDITION SO MADE BY LD. A.O. AND CONFIRMED BY CIT(A) NEEDS TO BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF T HE CASE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS.5,00,41,208 WORKED OUT BY LD AO BY CONFIRMING ADDITION OF RS.5,30,00,000 U/S 68 ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL AFTER GIVING CREDIT OF RS.29,58,792 ON ACCOUNT OF SURPLUS AMOUNT OF SURRENDERED INCOME MADE BY LD AO WHICH IS ARBITRARY, AGAINST PRINCIPLES OF NATURAL JUSTICE AND CONTRARY TO FACTS AND PROVISION OF LAW AND BASED ON SURMISES AND CONJECTURES AND HENCE THE ADDITION SO MADE BY LD. A.O. AND CONFIRME D BY CIT(A) NEEDS TO BE DELETED AND THE CREDIT FOR SURPLUS OF RS.29,58,792 BE ADJUSTED AGAINST ANY OTHER ADDITION. 4. WITHOUT PREJUDICE TO GROUND NO. 1 TO 3, THE LD AO IS NOT JUSTIFIED IN NOT GIVING CREDIT OF SURPLUS AMOUNT OF SURRENDERED INCOME OF RS.2 9,58,792 AGAINST ADDITION OF RS.5,70,000 MADE ON ACCOUNT OF EXCESS MONEY PAID TOWARDS PURCHASE OF AGRICULTURE LAND WHICH IS ARBITRARY, AGAINST PRINCIPLES OF NATURAL JUSTICE AND CONTRARY TO FACTS AND PROVISION OF LAW . 4. GROUND NO. 1 OF APPEAL IS GENERAL IN NATURE AND THEREFORE, THE SAME IS DISMISSED. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN MANUFACTURING, PROCESSING, TRADING AND EXPORT OF RICE AND ITS BYPRODUCTS. ON 07 .07.2009, A SEARCH U/S. 132 OF THE ACT WAS CARRIED OUT ON GA LAXY GRO U P (GOEL FAMILY) AND THE ASSESSEE IS ONE OF THE CONCERNS IN ITA NOS. 1451 TO 1453/DEL./2013 4 THAT GROUP. THEREFORE, NOTICE U/S. 153A OF THE ACT WAS ISSU E D ON 03.03.2010 , AGAINST WHICH THE ASSESSEE FILED ITS RETURN OF INCO ME STATING THAT THE RETURN FILED ON 30.09.2009 AND LATER ON REVISED ON 03.10.2009 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 153A OF THE ACT. 5.1 THE LEARNED ASSESSING OFFICER PERUSED THE RETURN FILED BY THE ASSESSEE ALONG WITH ACCOMPANYI NG DOCUMENTS AND FOUND THAT THE ASSESSEE HAS ISSUED EQUITY SHARES OF RS.5.30 CRORES OF THE FACE VALUE TO 21 COMPANIES FROM WHOM PREMIUM OF RS.4.77 LACS IS CHARGED. THEREFORE, TOTAL SUM RECEIVED FROM THESE COMPANIES WAS RS.5.30 CRORES. THE ASSESSING OFFICER NOTED THAT DURING THE C OUR SE OF SEARCH, MEMORANDUM OF ARTICLES, BANK STATEMENTS, BLANK SHARE TRANSFER FORMS, BLANK SPECIAL POWER OF ATTORNEY, AFFIDAVITS BY THE DIRECTORS OF THOSE COMPANIES, APPLYING FOR EQUITY SHARES OF THE ASSESSEE COMPANY AND BLANK RECE IPTS AGAINST SHARES HELD BY THE COMPANIES SIGNED BY THE DIRECTORS OF THOSE INVESTOR COMPANIES, WERE FOUND FROM THE RESIDENCE OF ONE SHRI VINOD GOEL . THE LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER ALSO ENCLOSED ALL THESE DOCUMENTS WITH RESPECT TO ONE OF THE COMPANIES. SUBSEQUENTLY, HE ENQUIRED FROM THE ASSESSEE ABOUT THESE TRANSACTIONS CONFRONTING THESE EVIDENCES. THE ASSESSEE REPLIED VIDE LETTER DATED 30.08.2011, STATING THAT ALL THESE COMPANIES ARE ASSESSED TO INCOME TAX AND SHARES HAVE BEEN ISSUED TO T HEM. WITH RESPECT ITA NOS. 1451 TO 1453/DEL./2013 5 TO VARIOUS DOCUMENTS, THE ASSESSEE GAVE AN EXPLANATION THAT THE DOCUMENTS FOUND ARE NEITHER INCRIMINATING AND CANNOT BE IMPUTED WITH ANY MOTIVE. IT WAS ALSO STATED THAT THESE ARE THE NORMAL DOCUMENTS AT THE TIME OF ALLOTMENT OF SHARES. TH E ASSESSEE ALSO SUBMITTED COPIES OF BANK STATEMENT S , COPIES OF THE ACCOUNT S OF THE INVESTORS, ADDRESSES OF THE COMPANIES, THEIR PAN, LIST OF DIRECTORS ETC. TO SHOW THAT IDENTITY AND CREDITWORTHINESS OF THE INVESTORS AND THE GENUINENESS OF THE TRANSACTIONS ARE ESTABLISHED. HE FURTHER RELIED UPON SE V ERAL DECISIONS OF HON BLE DELHI HIGH COURT AS WELL AS SUPREME COURT. 5.2 THE ASSESSING OFFICER EXAMINED THE EXPLANATION OF THE ASSESSEE AND STATED THAT THE CORROBORATIVE EVIDENCE FOUND OF THESE COMPANIES ARE SUSPECTED TO BE ACCOMMODATION ENTRIES. HE FURTHER HELD THAT ON PERUSAL OF THE BANK STATEMENT, THERE ARE CREDIT ENTRIES JUST BEFORE THE TRANSFER OF MONEY TO THE ASSESSEE COMPANY. HE FURTHER STATED THAT THE ADDRESSES OF SOME OF THE COMPANIES AS WELL AS THE D IRECTORS OF THE COMPANIES ARE SAME. IT WAS FURTHER STATED THAT SERIAL NUMBER OF STAMP PAPER OF SELLING OF SHARE IS EARLIER THAN THE SERIAL NUMBERS OF PURCHASE OF SHARES. IT WAS FURTHER NOTED BY THE ASSESSING OFFICER THAT ADDRESSES OF SOME OF THE COMPANIES SUBMITTED BY THE ASSESSEE ARE DIFFERENT FROM THE ADDRESSES GIVEN AT THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS. THE INCOME - TAX RETURNS OF THE COMPANIES WHO HAD INVESTED INTO THE ITA NOS. 1451 TO 1453/DEL./2013 6 SHARES DO NOT HAVE ACTUAL TURNOVER. THEREFORE, RELYING ON THE DECISION OF HO N BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 801, THE LD. ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS OF ALL THE CAPITAL INTRODUCING COMPANI ES. HE HELD THAT NO SUCH COMPANIES EXIST IN ACTUAL, BUT ONLY EXIST ON PAPER AND SUCH COMPANIES ARE BOGUS. CONSEQUENTLY, THE ADDITION OF RS.5.30 CRORES WAS MADE. HOWEVER, AS, THERE IS A DISCLOSURE OF RS.7.5 CRORES MADE BY THE ASSESSEE ON ACCOUNT OF PEAK INV ESTMENT IN THE DIARIES AND WHERE THE ACTUAL PEAK IS ONLY RS.7.20 CRORES, HE GAVE THE CREDIT TO THE ASSESSEE OF RS.29.58 LACS AND MADE THE NET ADDITION OF RS.5,00,41,208/ - IN THE HANDS OF THE ASSESSEE. THE MAIN GROUNDS ON WHICH THE ADDITION HAS BEEN MADE IS AS UNDER : 5. PERUSAL OF THE RETURN OF INCOME/ ACCOMPANYING DOCUMENTS AND DOCUMENTS SEIZED REVEAL THAT THE ASSESSEE HAS INTRODUCED THE FOLLOWING PAID UP SHARE CAPITAL FROM THE BELOW MENTIONED COMPANIES DURING THE YEAR UNDER CONSIDERATION: - SR. NO. NAME OF SHARE HOLDER CH. NO. DATE AMOUNT SHARE PREMIUM 1 SHALANI HOLDINGS LTD., 244510 8 - 10 - 2008 2500000 25000 2250000 2 EURO ASIA MERCANTILE! P ) LTD. 33875 8 - 10 - 2008 2500000 25000 2250000 3 AD - FIN CAPITAL SERVICES INDIA ( P ) LTD 248590 14 - 10 - 2008 2700000 27000 2430000 4 MANI MALA DELHI PROPERTIES ( P ) LTD 136964 22 - 10 - 2008 2900000 29000 2610000 ITA NOS. 1451 TO 1453/DEL./2013 7 5 EAGLE INFRATECH ( P ) LTD. 17712 22 - 10 - 2008 2800000 28000 2520000 6 ZENITH AUTOMOTIVE (P)LTD., 98196 22 - 10 - 2008 2200000 22000 1980000 7 HUM TUM MARKETING ( P ) LTD 120259 14 - 10 - 2008 2300000 23000 2070000 8 LOTUS REALCON ( P ) LTD 91487 14 - 10 - 2008 2600000 26000 2340000 9 VICTORIA SOFTWARE ( P ) LTD 120313 14 - 10 - 2008 2400000 24000 2160000 10 VIRGIN CAPITAL SERVICES ( P) LTD., 13935 07 - 10 - 2008 2500000 25000 2250000 11 VIP LEASING & FINANCE ( P ) LTD 128087 07 - 10 - 2008 2500000 25000 2250000 12 SRI AMARNATH FINANCE LTD 265380 22 - 10 - 2008 2100000 21000 1890000 13 VAIRAVI ELECTRICAL ( P } LTD., 420115 16 - 10 - 2008 2500000 25000 2250000 14 ALISHAN COMPLEX (P} LTD., 417500 13 - 10 - 2008 2500000 25000 2250000 15 CRM SYSTEMS ( P ) LTD 419979 16 - 10 - 2008 2500000 25000 2250000 16 MARUBHUMI FINANCE A DEVELOPERS ( P) , LTD. 418140 13 - 10 - 2008 2500000 25000 2250000 17 MAHASHAKTI COMMODITIES P. LTD 420329 13 - 10 - 2008 2500000 25000 2250000 18 APOORVA LEASING FINANCE A INVESTMENT CO LTD., 16526 29 - 10 - 2008 3000000 30000 2700000 ITA NOS. 1451 TO 1453/DEL./2013 8 19 ALISHAN COMPLEX P. LTD 417633 15 - 10 - 2008 2500000 25000 2250000 20 SPARSH HOTEL ( P ) LTD., 418525 13 - 10 - 2008 2500000 25000 2250000 21 SATABADL JUTE ( P } ' LTD ., 418418 15 - 10 - 2008 2500000 25000 7250000 TOTAL 53000000 530000 47700000 5.1 THE PERUSAL OF THE ABOVE DETAILS REVEAL THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM FROM ABOVE COMPANIES. CERTAIN DOCUMENTS WERE FOUND AND SEIZED FROM THE RESIDENCE OF THE ASSESSEE COMPANY ,SH. VINOD GOEL WHICH ARE AS UNDER; SR. NO DESCRIPTION OF THE DOCUMENTS ANNEXURE NO 1. MEMORANDUM AND ARTICLES OF ASSOCIATION ANNEXURE A - 3, A - 6, A - 7, A - 9 7 A - 10, A - 11, A - 12, A - 13 A A - 14 2. BANK STATEMENTS - DO - 3. BLANK SHARE TRANSFER FORMS - DO - 4. BLANK SPECIAL POWER OF ATTORNEYS IN ORIGINAL SIGNED BY THE AUTHORIZED SIGNATORY - DO - 5. AFFIDAVITS BY DIRECTOR OF THE CONCERNED COMPANIES STATING THEREIN THAT THEIR COMPANY HAS APPLIED FOR EQUITY SHARES OF M/S GOEL INTERNATIONAL PVT. LTD - DO - 6 BLANK RECEIPTS AGAINST THE SHARES HELD BY THE COMPANY IN M/S GOEL INTERNATIONAL PVT. LTD, SIGNED BY THE DIRECTOR OF COMPANY. --- DO ---- PHOTOCOPIES OF ANNEXUREA - 3 SHOWING DETAILS OF INCRIMINATING DOCUMENTS AS MENTIONED ABOVE IN THE CASE OF ONE COMPANY WHO HAD INVESTED IN THE SHARES OF THE ASSESSEE COMPANY IS ENCLOSED ALONGWITH THIS ORDER. EXACTLY SIMILAR EVIDENCE IS FOUND IN CASE OF OTHER COMPANIES ALSO WHO HAD MADE INVESTMENT IN THE SHARES OF THE ASSESSEE COMPANY ,WHICH ARE MARKED AS ANNEXURES MENTIONED ABOVE. ITA NOS. 1451 TO 1453/DEL./2013 9 5.2 BASED ON THE DOCUMENTS FOUND ,THE ASSESSEE, VIDE THIS OFFICE QUESTIONNAIRE DATED 16.08.2011 WAS ACCORDINGLY CONFRONTED TO FILE THE REQUISITE INFORMATION. 5.3 IN RESPONSE, THE ASSESSEE VIDE ITS WRITTEN SUBMISSIONS DATED 30.08.2011 HAS S UBMITTED AS UNDER: - 'WITH A VIEW TO AUGMENT RESOURCES AND SEEKING PRIVATE FUNDING FOR THE BUSINESS WHICH IS N ORMAL PROCEDURE AND PRACTICE IN THE TRADE, .SOME FINANCE COMPANIE S WERE APPROACHED. THESE FINANCE COMPANIES OFFERED TO PURCHASE EQUITY SHARES IN THE ASSESSEE COMPANY AS 'PER TERMS AND CONDITIONS AND ALSO THE PREVAILING TRENDS OF THE MARKET. SHARES WERE ISSUED TO THESE COMPANIES AND RETURN OF ALLOTMENT IN RESPECT. OF THE SHARES SO ALLOTTED WAS ALSO . FILED WITH REGISTRAR OF COMPANIES. THE SUMS AGAINST THE SHARES CAPITAL WERE RECEIVED BY THE ASSESSEE COMPANY BY WAY OF CHEQUE. THE TRANSACTION OF ISSUE OF SHARES WAS NORMAL ROUTINE, WITHIN FOUR CORNERS OF LAW AND WAS UNDERTAKEN AS PER PRESCRIPTION OF LAW AND WAS GOVERNED BY PROVISIONS OF COMPANIES ACT. AS A PART OF THE DEAL, IT WAS OFFERED TO THE INVESTING COMPANIES THAT AT THE END OF THE TENURE OF 3 YEARS THE SAME WOULD BE REFUNDED TO THEM AT A PREMIUM OF 2 5% WITH AN OPTION TO REPURCHASE AT ANY TIME. HOWEVER ON ACCOUNT OF CHANGE IN THE BUSINESS PLAN OF THE INVESTORS AND THEIR INABILITY TO RETAIN INVESTMENT, NEGOTIATIONS WERE MADE WITH OUR COMPANY TO REFUND THE AMOUNTS ALREADY INVESTED. THESE INVESTING COMPANIES WERE ASKED TO SUBMIT SPECIFIC DOCUMENTS WHICH INCLUDED A REQUEST FOR PURCHASE OF SHARES, THE SHARE CERTIFICATE IN ORIGINAL, DULY EXECUTED TRANSFER DEED, AND PRE RECEIPTS OF THE SUMS. HOWEVER ON ACCOUNT OF DISAGREEM ENT REGARDING ISSUE RELATING TO AMOUNT TO BE REFUNDED, AND NON SUBMISSION OF ORIGINAL SHARE CERTIFICATES THE DOCUMENTS WERE KEPT PENDING AND THE INVESTORS WERE REQUIRED TO SUBMIT ORIGINAL SHARE CERTIFICATES AS WELL AS PRE RECEIPTS FOR SUMS AGREED BETWEEN BOTH THE PARTIES. THESE DOCUMENTS WERERECEIVED SOME TIME IN THE LAST WEEK OF JUNE, 2009 AND WERE KEPT PENDING FOR THEIR FINAL DISPOSAL AS PER PROVISIONS OF LAW. HOWEVER IN THE MEAN TIME THE SEARCH TOOK PLACE AT THE PREMISES OF THE COMPANIES AND TH ESE DOCUMENTS WERE SEIZED BEFORE THEY COULD ACTUARY BE EXECUTED.' 5.4 THE ASSESSEE VIDE ITS REPLY ALSO FILED COPIES OF BANK STATEMENTS, COPIES OF ACCOUNTS OF THE INVESTORS, COMPLETE ADDRESSES OF THE COMPANIES, THEIR PAN AND LIST OF DIRECTORS AND MASTER DATA AND DETAILS OF SIGNATORIES IN ORDER TO PROVE THE EXISTENCE OF THE COMPANIES WHO HAD INVESTED IN THE ASSESSEE COMPANY M/S GOEL INTERNATIONAL PVT, LTD. AS REGARDS THE ADDRESSES BEING SAME OF SOME OF THE COMPANIES MAKING INVESTMENTS IN THE ASSESSEE COMPANY, THE ASSESSEE VIDE ITS WRITTEN SUBMISSIONS HAS FURTHER CONTENDED AS UNDER; - ITA NOS. 1451 TO 1453/DEL./2013 10 'AS REGARDS YOUR OBSERVATION THAT THE ADDRESSES OF SOME OF THE COMPANIES MAKING INVESTMENTS IN GOEL INTERNATIONAL (P) LTD ARE THE SAME, IT IS STATED THAT HAVING SAM E ADDRESSES OR SAME MANAGEMENT OR SAME PLACE OF FUNCTIONING CANNOT RENDER A PERSON FICTITIOUS. IT IS NOT NECESSARY THAT THE DIFFERENT COMPANIES CAN NOT OPERATE FROM THE SUB OFFICE OF MAIN COMMON OFFICE. ONLY ON THE BASIS OF' SAME ADDRESSES OF THE SO ME COMPANIES IT CAN'T BE CONSTRUED THAT THESE COMPANIES ARE BOGUS. !N SUPPORT OF OUR CONTENTION WE ARE SUBMITTING COPIES OF VARIOUS DOCUMENTS AVAILABLE ON THE WEB SITE OF - MINISTRY OF CORPORATE AFFAIRS AND ALSO WITH THE INCOME TAX DEPARTMENT, EVIDENCING THE GENUINENESS OF THE COMPANIES AND THAT ALL THESE COMPANIES ARE FILING THEIR INCOME TAX YEARS WITH INCOME TAX DEPARTMENT AS WELL AS IN THE OFFICE OF REGISTRAR OF COMPANIES. ALL COMPANIES ARE INDEPENDENT ENTITIES HAVING INDEPENDENT PANS, INDEPENDENT FUNCTION ING AND SEPARATE BANK ACCOUNTS. IT IS SUBMITTED THAT THE RECORD OF THESE COMPANIES CAN BE SUMMONED AND EXAMINED FROM RESPECTIVE INCOME TAX WARDS AS WELL AS FROM THE REGISTRAR OF COMPANIES FOR VERIFYING THE GENUINENESS OF THE COMPANIES. 5.5 IN SUPPORT OF ITS WRITTEN SUBMISSIONS FILED DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE, BESIDES RELYING UPON VARIOUS JUDICIAL PRONOUNCEMENTS, HAS ALSO PLACED RELIANCE UPON THE FOLLOWING JUDGEMENTS IN WHICH IT HAS BEEN ADJUDICATED THAT THE ADDITION ON ACCOUNT OF SHA RE CAPITAL INTRODUCED CAN NOT BE MADE IN THE HANDS OF THE ASSESSEE: - 'COMMISSIONER OF INCOME TAX VS. LOVELY EXPORTS (P) LTD . 216 CTR 195: SUPREME COURT OF INDIA (2008) OASIS HOSP1TALITIE5(P)LTD. COMMISSIONER OF INCOME TAX VS. (201 1) 238 CTR (DEL) 402 : (2011) 333 ITR 119 : (2011) 198 TAXMAN 402 : (2011) 51 DTR 74' 5.6 PERUSAL OF THE REPLY - OF THE ASSESSEE, THE CASE LAWS RELIED UPON, THE DOCUMENTS FILED IN SUPPORT OF ITS CONTENTION AND AIL THE OTHER SUPPORTING DOCUMENTS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS BEEN MADE AND AFTER VERIFICATION OF THE SAME, IT HAS EMERGED THAT THE CONTENTIONS OF THE ASSESSEE HAVE NO FORCE AT ALL OWING TO THE FOLLOWING OBSERVATIONS: - I) THE CORROBORATIVE EVIDENCES SUSPECTED TO BE ACCOMMODATION ENTRIES WERE FOUND AND SEIZED FROM THE PREMISES OF THE ASSESSEE COMPANY, ARE AS PER THE FOLLOWING DETAILS; SR.NO DESCRIPTION OF THE DOCUMENTS ANNEXURE NO. 1. MEMORANDUM AND ARTICL ES OF ASSOCIATION ANNEXURE A - 3 ; A - 6, A - 7, A - 9 3 A - 10, A - 11, A - 12, A - 13 & A - 14 2. BANK STATEMENTS - DO - 3. BLANK SHARE TRANSFER FORMS - DO - 4 BLANK SPECIAL POWER OF ATTORNEYS IN ORIGINAL SIGNED BY THE AUTHORIZED SIGNATORY - DO - ITA NOS. 1451 TO 1453/DEL./2013 11 5. AFFIDAVITS BY DIRECTOR OF THE CONCERNED COMPANIES STATING THEREIN THAT THEIR COMPANY HAS APPLIED FOR EQUITY SHARES OF M/S GOEL INTERNATIONAL PVT. LTD - DO - 6. BLANK' RECEIPTS AGAINST THE SHARES HELD BY THE COMPANY IN M/S GOEL INTERNATIONAL PVT. L TD. SIGNED BY THE DIRECTOR OF COMPANY. - DO - II) THE PERUSAL OF THE BANK STATEMENTS REVEALED THAT BEFORE THE DATE OF TRANSFER OF SHARE APPLICATION MONEY / SHARE PREMIUM , THERE WAS A DEPOSIT / TRANSFER OF ENTRIES IN THESE BANK ACCOUNTS .SUCH TRANSFER ENTRIES ONLY INDICATED THAT THE ASSESSEE FIRM HAD ARRANGED THE ACCOMMODATION ENTRIES. MOREOVER, THE OTHER DOCUMENTS LIKE BLANK SHARE TRANSFER FORM FOUND DURING THE SEARCH FURTHER CORROBORATES TO .THIS FINDING THAT THESE WE RE NOTHING BUT ARRANGEMENT OF ACCOMMODATION ENTRIES IN THE FORM OF SHARE MONEY/ SHARE PREMIUM. III) THE OTHER CORROBORATIVE EVIDENCES SUPPORTING THE ABOVE CONTENTION ARE AS FOLLOWS : . A. COMMON ADDRESSEES OF THE COMPANIES IT IS SEEN FROM THE SEIZED DOCUMENTS THAT ADDRESSES OF SOME OF THE COMPANIES WHICH HAVE INVESTED IN SHARES OF GOEL INTERNATIONAL PVT. LTD. ARE SAME SUCH AS MANI MALA DELHI PROPERTIES PVT. LTD, LOTUS REALCON PVT LT D, AD - FIN CAPITAL (INDIA) FINANCIAL SERVICES AND EAGLE INFRATECH PVT. LTD. WHICH IS 209, BHANOT PLAZA 3, D B GUPTA ROAD, NEW DELHI - 55. SIMILARLY THE ADDRESSES OF VICTORY SOFTWARE PVT LTD AND EURO ASIA PVT LTD ARE SAME WHICH IS 3198/15 4 TH FLOOR GALI NO. 1 SANGATRASHAN, PAHARGANJ NEW DELHI - 55. SIMILARLY ADDRESSES OF ZENITH AUTOMOTIVEPVTLTD AND HUM TURN MKTGPVT LTD HAVE SAME ADDRESSES SUCH AS 106,PALCO HOUSE T - 10, MAIN PATEL ROAD, PATEL NAGAR NEW DELHI. IV) ADDRESSES OF THE DIRECTORS OF SOME OF THE COMPANIES ARE THE SAME V) SERIAL NO. OF SOME OF THE STAMP PAPER OF SELLING SHARES IS SEEN TO BE EARLIER THAN THE SERIAL NO. OF PURCHASE OF SHARES SUCH AS IN CASE OF COMPANIES BASED IN KOLKATA IT IS SEEN FROM THE SEIZED DOCUMENTS THAT THE STAMP PAPER IS DATED 2009 WHEREAS THE CONTENTS OF THE STAMP PAPER SAY THAT THE DOCUMENT BELONGS TO 2008. VI) DETAILS OF THE ABOVE COMPANIES WHICH HAVE INVESTED IN M/S GOEL INTERNATIONAL PVT. LTD. HAVE BEEN CROSS CHECKED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS AND IT IS SEEN THAT IN CASE OF SOME COMPANIES ,THE ADDRESSES MENTIONED ON THE WEBSITE IS DIFFERENT FROM THE ADDRESS MENTIONED IN THE RETURNS/AFFIDAVITS. ALSO IN CASE OF COMPANIES BASED IN KOLKATA , THE EMAIL - IDS OF ALL THE COMPANIES ARE SAME. VI) REGARDING THE PURPOSE OF MAINTENANCE OF BLANK SHARE TRANSFER FORM AT THE RESIDENCE OF THE DIRECTOR OF THE ASSESSEE, THE ASSESSEE HAS STATED THE FOLLOWING: - ITA NOS. 1451 TO 1453/DEL./2013 12 'AS APART OF THE DEAL, IT WAS OFFERED TO THE INV ESTING COMPANIES THAT AT THE END OF THE TENURE OF 3 YEARS THE SAME WOULD BE REFUNDED TO THEM AT A PREMIUM OF 25% WITH AN OPTION TO REPURCHASE AT ANY TIME. HOWEVER ON ACCOUNT OF CHANGE IN THE BUSINESS PLAN OF THE INVESTORS AND THEIR INABILITY TO RETAIN INVE STMENT, NEGOTIATIONS WERE MADE WITH OUR COMPANY TO REFUND THE AMOUNTS ALREADY INVESTED. THESE INVESTING COMPANIES WERE ASKED TO SUBMIT SPECIFIC DOCUMENTS WHICH INCLUDED A REQUEST FOR PURCHASE OF SHARES, THE SHARE CERTIFICATE IN ORIGINAL, DULY EXECUTED TRAN SFER DEED, AND PRE RECEIPTS OF THE SUMS. HOWEVER ON ACCOUNT OF DISAGREEMENT REGARDING ISSUE RELATING TO AMOUNT TO BE REFUNDED, AND NON SUBMISSION OF ORIGINAL SHARE CERTIFICATES THE DOCUMENTS WERE KEPT PENDING AND THE INVESTORS WERE REQUIRED TO SUBMIT ORIGI NAL SHARE . CERTIFICATES AS WELL AS PRE RECEIPTS FOR SUMS AGREED BETWEENBOTH THE PARTIES. THESE DOCUMENTS WERE RECEIVED ,SOME TIME IN THE LAST WEEK OF JUNE, 2009 AND WERE KEPT PENDING FOR THEIR FINAL DISPOSAL AS PER PROVISIONS OF LAW.' THE ABOVE SUBMISSION CANNOT BE ACCEPTED SINCE IF THERE WAS ANY DEAL BETWEEN THE ASSESSEE COMPANY AND COMPANY WHICH INTRODUCE SHARE CAPITAL TO REFUND THE SHARES AFTER THREE YEARS AT A PREMIUM OF 25%, THEN THE ASSESSEE COMPANY SHOULD HAVE PRODUCED ANY DOCUMENTARY EVIDENCE IN TH E SHAPE OF ANY AGREEMENT BETWEEN ASSESSEE AND OTHER COMPANIES. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. SECONDLY, THE SUBMISSIONS OF THE ASSESSEE THAT THERE WAS ALSO DISAGREEMEN T BETWEEN THE ASSESSEE AND OTHER COMPANIES AND THEREFORE, THE BLANK SHARE TRANSFER FORM WERE RETAINED IS ONLY AN AFTERTHOUGHT MADE BY THE ASSESSEE. IF THAT BE THE CASE, THE ASSESSEE SHOULD HAVE STATED THE SAME AT THE TIME OF SEARCH ITSELF IN THE STATEMENT U/S 132(4) OF THE ACT. RATHER, THE ASSESSEE CHOSE TO SURRENDER THE SAME VIDE ITS SURRENDER LETTER DATED 14.07.2009 WHICH WAS ALSO LATER ON RETRACTED BY THE ASSESSEE. VII) IT IS ALSO SEEN FROM THE ITR RETURNS OF THE COMPANIES WHO HAVE INVESTED IN THE SHARES OF THE ASSESSEE COMPANY THAT NONE OF THE COMPANIES HAVE ACTUAL TURNOVER, BUT THEY HAVE INVESTED HUGE AMOUNTS IMPLYING THAT THEY ARE PAPER COMPANIES. VIII) AS DISCUSSED ABOVE ,IT IS SEEN THAT THE ASSESSEE COMPANY HAS INTRODUCED - SHARE CAPITAL/ SHARE PREMIUM AND RELIANCE IS PLACED ON THE APEX COURT DECISION IN CIT V/S DURGA PRASAD MORE 82 ITR 801 IN WHICH THE APEX COURT AND TRIBUNAL SEE THE PREPONDERANCE OF PROBABILITIES WHILE CONSIDERING, THE EVIDENCES FURNISHED BY THE ASSESSEE. IX) THE CASE LAWS RELIED ON BY THE ASSESSEE ARE NOT AT ALL APPLICABLE IN THE EASE OF THE ASSESSEE AS THE QUESTION IN THE INSTANT CASE IS NOT OF ASSESSMENT OF INTRODUCTION OF. SHARE CAPITAL FROM CERTAIN COMPANIES BUT THE QUESTION IS OF CR EDITWORTHINESS OF SHARE CAPITAL. SECONDLY, THE FACTS OF THE CASE OF LOVELY EXPORTS IS DIFFERENT FROM THAT IN THE INSTANT CASE SINCE THE COMPANY LOVELY EXPORTS IS A PUBLIC LIMITED COMPANY AND THE ASSESSEE COMPANY IS A PRIVATE COMPANY . 5.7. KEEPING IN VIEW THE ABOVE FACTS AND THE CIRCUMSTANTIAL EVIDENCE FOUND AT THE TIME OF SEARCH, IT CAN CLEARLY BE HELD THAT THE ASSESSEE HAS USED COLORABLE DEVICE FOR ITA NOS. 1451 TO 1453/DEL./2013 13 INTRODUCING ITS UNACCOUNTED MONEY TO ITS BOOKS OF ACCOUNT THROUGH ENTRY OPERATORS. THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION OF THE CAPITAL INTRODUCING COMPANIES ARE NOT ESTABLISHED BY THE ASSESSEE. NO SUCH COMPANY EXISTS IN ACTUAL. THE SHARE CAPITAL INTRODUCING COMPANIES ONLY EXIST ON PAPERS AND SUCH COMPANIES ARE BOGUS. 5.8 AS REGARD S ASSESSEE'S CONTENTION THAT THE ADDITION ON ACCOUNT OF SHARE CAPITAL CAN NOT BE MADE IN THE HANDS OF THE ASSESSEE, IN A RECENT JUDGEMENT DELIVERED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S POWER DRUGS LTD. VS. CIT & ANOTHER, IT HAS BEEN ADJUDICATED AS UNDER: - 'WHETHER AN ADDITION IS TO BE MADE IN THE HANDS OF THE COMPANY OR INDIVIDUAL ASSESSEE IN SUCH CIRCUMSTANCES DEPENDS UPON THE FACTS OF EACH CASE. THE PRIMARY ONUS LIES UPON THE ASSESSEE TO ESTABLISH THAT THE ASSESSEE IS NOT LIABLE FO R ADDITION U/S 68 OF THE ACT AS THE AMOUNT IN FACT BELONGS TO THE PERSONS WHO HAD APPLIED AND SUBMITTED SHARE APPLICATION MONEY.' BUT, IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS FAILED TO DISCHARGE SUCH ONUS. HENCE, AN AMOUNT OF RS. 5,30,00,000/ - I NTRODUCED BY THE ASSESSEE AS SHARE CAPITAL IS TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE HOWEVER, THE ASSESSEE HAS DISCLOSED RS 7.50 CR ON ACCOUNT OF PEAK INVESTMENT IN DIARIES AS MENTIONED IN PARA NO 4.3 OF THIS ORDER WHEREAS THE ACTUAL PEAK WORKS OUT TO RS 7,20,41,208/ - DUE TO WHICH THERE IS A DIFFERENCE OF RS 29, 58,792/ - . THIS DIFFERENCE IS LIABLE TO BE ADJUSTED FROM THE ABOVE ADDITION OF RS 5.30O WHICH COMES TO RS 5,00,41,208/ - WHICH, IS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. FURTHER, I AM SA TISFIED THAT THE ASSESSEE IS LIABLE FOR PENALTY IN TERMS OF SECTION 271AAA OF THE INCOME - TAX ACT, AND ACCORDINGLY PENALTY PROCEEDINGS ARE BEING INITIATED SEPARATELY. (ADDITION OF RS. 5,00,41,208/ - ) THE ASSESSEE, AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, PREFERRED APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ADDITION HOLDING AS UNDER : 6.2. THE ISSUE HAS BEEN DEALT AT LENGTH AT PARA 5 AND 6 OF THE IMPUGNED ORDER. IT TRANSPIRES THAT DURING THE YEAR ASSESSEE HAD INTRODUCED RS.5,30,00,00 0/ - AS SHARE CAPITAL FROM CERTAIN COMPANIES WHICH WAS EXAMINED WITH CERTAIN DOCUMENTS FOUND AND SEIZED FROM THE RESIDENCE OF THE DIRECTOR SHRI VIJAY GOEL. THE ASSESSEE WAS CONFRONTED VIDE QUESTIONNAIRE DATED 16.08.2011 AND AFTER REJECTING THE CONTENTIONS P UT FORTH, THE AO PROCEEDED TO ADD THE AMOUNT OF RS.5.3 CRORES S UNEXPLAINED INCOME. HOWEVER, AFTER THE DUE BENEFIT OF DISCLOSURE MADE ON ACCOUNT OF PEAK INVESTMENT, AN AMOUNT OF RS.5,00,41,208/ - WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 6.3. I HA VE CAREFULLY CONSIDERED THE ASSESSEE S SUBMISSION AND THE RELIED JUDGMENTS, THE PAPER BOOK AS WELL AS THE IMPUGNED ORDER. I HAVE ALSO GONE THROUGH THE REPORTS IN ITA NOS. 1451 TO 1453/DEL./2013 14 THE REMAND PROCEEDINGS. AT THE VERY OUTSET, FOR THE SAKE OF CLARITY AND EASY REFERENCE THE LIS T OF COMPANIES WHO HAD INVESTED IN THE SHARE OF THE ASSESSEE COMPANY ARE LISTED BELOW : SR. NO. NAME OF THE SHARE HOLDER AMOUNT 1. SHALANI HOLDINGS LTD. 25,00,000/ - 2 EURO ASIA MERCANTILE (P) LTD 25,00,000/ - 3 AD - FIN CAPITAL SERVICES INDIA (P) LTD. 27,00,000/ - 4. MANI MALA DELHI PROPERTIES (P) LTD. 29,00,000/ - 5 EAGLE INFRATECH (P) LTD 28,00,000/ - 6. ZENITH AUTOMOTIVE (P) LTD. 22,00,000/ - 7 HUM TUM MARKETING (P) LTD. 23,00,000/ - 8 LUTUS REALCON (P) LTD. 26,00,000/ - 9. VICTORIA SOFTWARE (P) LTD. 24,00,000/ - 10 VERGIN CAPITAL (P) LTD. 25,00,000/ - 11 VIP LEASING AND FINANCE (P) LTD. 25,00,000/ - 12 SHRI AMARNATH FINANCE (P) LTD. 21,00,000/ - 13 VAIRAVI ELECTRICAL (P) LTD. 25,00,000/ - 14 ALISHAN COMPLEX (P) LTD. 25,00,000/ - 15 CRM SYSTEMS (P) LTD. 25,00,000/ - 16. MARUBHUMI FINANCE AND DEVELOPERS (P) LTD 25,00,000/ - 17 MAHASHAKTI COMMODITIES (P) LTD. 25,00,000/ - 18. APPOORVA LEASING FINANCE AND INVESTMENT (P) LTD. 30,00,000/ - 19. ALISHAN COMPLEX (P) LTD. 25,00,000/ - 20. SPARSH HOTEL (P) LTD. 25,00,000/ - 21 SATABADI JUTE (P) LTD. 25,00,000/ - TOTAL 5,30,00,000/ - 6.3.1 I AM NOW DRAWN TO PARA 5.1 OF THE IMPUGNED ORDER WHEREIN THE AO HAS TABULATED THE DOCUMENTS FOUND AND SEIZED FROM THE RESIDENCE OF THE DIRECTOR SHRI VIJAY GOEL. SR.NO. DESCRIPTION OF THE DOCUMENTS ANNEXURE NO. 1 MEMORANDUM AND ARTICLES OF ASSOCIATION ANNEXURE A - 3, A - 6, A07, A - 9, A - 10, A - 11, A - 12, A - 13 & A - 14 2 BANK STATEMENTS - DO - 3 BANK SHARE TRANSFER FORMS - DO - 4 BLANK SPECIAL POWER OF ATTORNEYS IN ORIGINAL SIGNED BY THE AUTHORIZED SIGNATORY - DO - 5 AFFIDAVITS BY DIRECTOR OF THE CONCERNED COMPANIES STATING THEREIN THAT THEIR COMPANY HAS APPLIED FOR EQUITY SHARES OF M/S. GOEL INTERNATIONAL PVT. LTD. - DO - 6 BLANK RECEIPTS AGAINST THE SHARE HELD BY THE COMPANY IN M/S. GOEL INTERNATIONAL PVT. LTD. SIGNED BY THE DIRECTOR OF COMPANY - DO - ITA NOS. 1451 TO 1453/DEL./2013 15 I ALSO FIND THAT THE ASSESSEE WAS ALSO CONFRONTED WITH THE NATURE OF THE DOCUMENTS. IN REPLY TO WHICH ASSESSEE FILED COPIES OF BANK STATEMENTS, COPIES OF ACCOUNTS OF THE INVESTORS, COMPLETE ADDRESSES OF THE COMPANIES, THEIR PAN AND LIST OF DIRECTORS, MASTER - DATA AND DETAILS OF SIGNATORIES TO PROVE THE EXISTENCE OF THE COMPANIES. ON A FURTHER PERUSAL OF THE VERY CRUCIAL DOCUMENTS SEIZED FROM THE RESIDENTIAL PREMISES OF THE ASSESSEE, IT FURTHER SUGGESTS THAT IN THE BANK STATEMENTS OF THE INVESTING COMPANIES, THERE WERE DEPOSITS/TRANSFER ENTRIES IN THE BANK ACCOUNTS. FURTHER BLANK SHARE TRANSFER FORMS WERE ALSO FOUND AT THE ASSESSEE S PREMISES. THE ADDRESSES OF THE DIRECT ORS OF THE SOME OF THE COMPANIES WERE ALSO THE SAME, APART FROM COMMON ADDRESSES OF THE COMPANIES. SIGNIFICANTLY, THE SERIAL NOS. IN SOME OF THE STAMP PAPERS OF SELLING SHARES WERE OBSERVED TO BE EVEN EARLIER THAN THE PURCHASES BY THE COMPANIES BASED IN KO LKATA. THE STAMP PAPERS WERE DATED 2009 WHEREAS THE CONTENTS OF THE STAMP PAPER WERE OF 2008. THE AO S ATTEMPT TO ASCERTAIN THE ADDRESSES GIVEN BY THE ASSESSEE FROM THE WEBSITE OF THE MINISTRY OF CORPORATE AFFAIRS INDICATED THAT IN CASE OF SOME OF THE COM PANIES, THE ADDRESSES MENTIONED IN THE WEBSITE WERE DIFFERENT FROM THE ADDRESSES MENTIONED IN THE RETURNS/AFFIDAVITS. IN THE CASE OF SOME OF THE COMPANIES BASED IN CALCUTTA, THE E - MAIL ID S WERE ALSO THE SAME. AS AN EXPLANATION TO THE RECOVERY OF BLANK SH ARE TRANSFER FORMS FROM THE RESIDENCE, THE ASSESSEE STATED THAT IT WAS ON ACCOUNT OF NEGOTIATIONS WITH THE PURCHASING COMPANIES. HOWEVER, NO SUCH AGREEMENTS IN WRITING WERE SUBMITTED BEFORE THE AO. I AM AFRAID THAT IN CASE THERE WAS ANY SUCH AGREEMENT(S), THE SAME SHOULD HAVE BEEN FOUND/RECOVERED DURING THE COURSE OF SEARCH OPERATIONS. THERE WAS ALSO NO CLEAR CUT EXPLANATION OFFERED ON THE ISSUE IN THE RECORDED STATEMENT OF THE DIRECTOR U/S. 132(4) OF THE ACT. IN FACT THE ASSESSEE SURRENDERED THE AMOUNT VID E ITS LETTER DATED 14.07.2009. THIS WAS HOWEVER RETRACTED, THE EXPLANATION OF WHICH WAS SUBMITTED TO THE AO ON 30.05.2011. IT IS ALSO OBSERVED THAT THE LETTER OF SURRENDER DATED 14.07.2009 WAS DURING THE COURSE OF SEARCH OPERATION WHICH WAS CONDUCTED ON 0 7.07.2009. IN FACT NO ACCUSATIONS NOR COERCION CAN BE MADE AS THE SURRENDER WAS IN THE FORM OF A LETTER ON 14.07.2009. FURTHERMORE, THE RETRACTMENT WAS MADE BY NOT INCLUDING THE SAME IN THE RETURN FILED, AS ASSESSEE HAD STATED IN ITS LETTER DATED 12.04.201 0 IN RESPONSE TO NOTICE U/S. 153A THAT THE REVISED RETURN FIXED ON 30.10.2009 BE TREATED AS FILED U/S. 153A. FURTHER INDICATION ON THE RETRACTMENT WAS MADE IN ITS SUBMISSION DATED 30.05.2011 ONLY. THUS, IN EFFECT, THE RETRACTMENT MADE AT SUCH A LATER STAGE CANNOT BE GIVEN ANY CREDENCE. IT HAS BEEN HELD IN MANOHARLAL KASTURICHAND VS. ACIT (1997) 57 TTJ (AHD) 639 AND PARAM ANAND BUILDERS (P) LTD. (1996) 56 TTJ (MUMBAI) 21, THAT FOR RETRACTMENT OF STATEMENT, ASSESSEE SHOULD PROVE THREAT OR COERCION. NEITHER AN Y SUCH PROOF HAS BEEN GIVEN NOR CAN THERE BE A THREAT OR COERCION WHEN THE SURRENDER WAS MADE VIDE LETTER FILED VOLUNTARILY BY THE ASSESSEE AFTER 7 DAYS OF THE SEARCH. THE DELAY OF ALMOST TWO YEARS IN THE EXPLANATION THOUGH WITHOUT ANY EVIDENTIARY PROOF, F OR THE RETRACTMENT OF ITA NOS. 1451 TO 1453/DEL./2013 16 STATEMENT FURTHER WEAKENS THE CASE OF THE ASSESSEE IN VIEW OF THE DECISION OF GUWAHATI HIGH COURT IN THE CASE OF M/S. GREENVIEW RESTAURANT VS. ACIT, 263 ITR 169. 5.3 HOWEVER, THE LD. CIT(A) WHILE DISPOSING OF THE APPEAL ALSO SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER, WHICH IS AS UNDER : KINDLY FIND ENCLOSED HEREWITH THE SUBMISSION MADE BY THE ASSESSING OFFICER ON THE ABOVE CITED SUBJECT. IT MAY KINDLY BE NOTED THAT THE ASSESSMENT ORDER IS SILENT ON THE SUMMON ISSUED U/S 131 O F THE I. T. ACT TO THE COMPANIES ON THE ALLEGED SHARE APPLICATION MONEY BECAUSE OF THE FACT THAT THE EVIDENCES GATHERED DURING THE COURSE OF SEARCH IN THE FORM OF ANNEXURE A - 3, A - 6, A - 7, A - 9 TO A - 14 SEIZED DURING THE COURSE OF SEARCH ESTABLISHED THAT THE A SSESSEE COMPANY HAD TAKEN ACCOMMODATION ENTRIES FROM VARIOUS COMPANIES WHOSE DETAILS HAVE BEEN GIVEN IN THE ASSESSMENT ORDER PARA 5.6 ARE REPRODUCED FOR YOUR KIND PERUSAL. ' PERUSAL OF THE REPLY OF THE ASSESSEE, THE CASE LAWS RELIED UPON, THE DOCUMENTS FI LED IN SUPPORT OF ITS CONTENTION AND ALL THE OTHER SUPPORTING DOCUMENTS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS BEEN MADE AND AFTER VERIFICATION OF THE SAME, IT HAS EMERGED THAT THE CONTENTIONS OF THE ASSESSEE HAVE NO FORCE AT ALL OWING TO TH E FOLLOWING OBSERVATIONS: - I) THE CORROBORATIVE EVIDENCES SUSPECTED TO BE ACCOMMODATION ENTRIES WERE FOUND AND SEIZED FROM THE PREMISES OF THE AS SESSEE COMPANY, ARE AS PER THE FOLLOWING DETAILS: SR. NO DESCRIPTION OF THE DOCUMENTS ANNEXURE NO. 1. MEMORANDUM AND ARTICLES OF ASSOCIATION ANNEXURE A - 3, A - 6, A - 7, A - 9, A - 10, A - 11.A - 12.A - 13&A - 14A 2. BANK STATEMENTS - DO - 3. BLANK SHARE TRANSFER FORMS - DO - 4. BLANK SPECIAL POWER OF ATTORNEYS IN ORIGINAL SIGNED BY THE AUTHORIZED SIGNATORY - DO - 5. AFFIDAVITS BY DIRECTOR OF THE CONCERNED COMPANIES STATING THEREIN THAT THEIR COMPANY HAS APPLIED FOR EQUITY SHARES OF M/S GOEL INTERNATIONAL PVT. LTD - DO - 6. BLANK RECEIPTS AGAINST THE SHARES HELD BY THE COMPANY IN M/S GOEL INTERNATIONAL PVT. LTD. SIGNED BY THE DIRECTOR OF COMPANY. - DO - ITA NOS. 1451 TO 1453/DEL./2013 17 II) THE PERUSAL OF THE BANK STATEMENTS REVEALED THAT BEFORE THE DATE OF TRANSFER OF SHARE APPLICATION MONEY / SHARE PREMIUM , THERE WAS A DEPOSIT / TRANSFER OF ENTRIES IN THESE BANK ACCOUNTS .SUCH TRANSFER ENTRIES ONLY INDICATED THAT THE ASSESSEE FIRM HAD ARRANGED THE ACCOMMODATION ENTRIES. MOREOVER, THE OTHER DOCUMENTS LIKE BLANK SHARE TRANSFER FORM FOUND DURING THE SEARCH FURTHER CORROBORATES TO THIS FINDING THAT THESE WERE NOTHING BUT ARRAN GEMENT OF ACCOMMODATION ENTRIES IN THE FORM OF SHARE MONEY/ SHARE PREMIUM. III) THE OTHER CORROBORATIVE EVIDENCES SUPPORTING THE ABOVE CONTENTION ARE AS FOLLOWS : A. COMMON ADDRESSEES OF THE COMPANIES IT IS SEEN FROM THE SEIZED DOCUMENTS THA T ADDRESSES OF SOME OF THE COMPANIES WHICH HAVE INVESTED IN SHARES OF GOEL INTERNATIONAL PVT. LTD. ARE SAME SUCH AS MANI MALA DELHI PROPERTIES PVT. LTD, LOTUS REALCON PVT LTD, AD - FIN CAPITAL (INDIA) FINANCIAL SERVICES AND EAGLE INFRATECH PVT. LTD. WHICH IS 209, BHANOT PLAZA 3, D B GUPTA ROAD, NEW DELHI - 65. SIMILARLY THE ADDRESSES OF VICTORY SOFTWARE PVT LTD AND EURO ASIA PVT LTD ARE SAME WHICH IS 3198/15 4 TH FLOOR GALI NO. 1 SANGATRASHAN, PAHARGANJ NEW DELHI - 55. SIMILARLY ADDRESSES OF ZENITH AUTOMOTIVE PV T. LTD AND HUM TURN MKTG PVT LTD HAVE SAME ADDRESSES SUCH AS 106,PALCO HOUSE T - 10, MAIN PATEL ROAD, PATE) NAGAR NEW DELHI. IV) ADDRESSES OF THE DIRECTORS OF SOME OF THE COMPANIES ARE THE SAME. V) SERIAL NO. OF SOME OF THE STAMP PAPER OF SELL ING SHARES IS SEEN TO BE EARLIER THAN THE SERIAL NO OF PURCHASE OF SHARES SUCH AS IN CASE OF COMPANIES BASED IN KOLKATA IT IS SEEN FROM THE SEIZED DOCUMENTS THAT THE STAMP PAPER IS DATED 2009 WHEREAS THE CONTENTS OF THE STAMP PAPER SAY THAT THE DOCUMENT BE LONGS TO 2008. VI) DETAILS OF THE ABOVE COMPANIES WHICH HAVE INVESTED IN M/S GOEL INTERNATIONAL PVT. LTD. HAVE BEEN CROSS CHECKED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS AND IT IS SEEN THAT IN CASE OF SOME COMPANIES ,THE ADDRESSES MENTION ED ON THE WEBSITE IS DIFFERENT FROM THE ADDRESS MENTIONED IN THE RETURNS/AFFIDAVITS. ALSO IN CASE OF COMPANIES BASED IN KOLKATA , THE EMAIL - IDS OF ALL THE COMPANIES ARE SAME. VI) REGARDING THE PURPOSE OF MAINTENANCE OF BLANK SHARE TRANSFER FORM AT THE RESIDENCE OF THE DIRECTOR OF THE ASSESSEE, THE ASSESSEE HAS STATED THE FOLLOWING: - 'AS A PART OF THE DEAL, IT WAS OFFERED TO THE INVESTING COMPANIES THAT AT THE END OF THE TENURE OF 3 YEARS THE SAME WOULD BE REFUNDED TO THEM AT A PREMIUM OF 25% WITH AN OPTION TO REPURCHASE AT ANY TIME. HOWEVER ON ACCOUNT OF CHANGE IN THE BUSINESS PLAN OF THE INVESTORS AND THEIR INABILITY TO RETAIN INVESTMENT, NEGOTIATIONS WERE MADE WITH OUR COMPANY TO REFUND THE AMOUNTS ALREADY INVESTED. THESE INVESTING COMPANIES WERE A SKED TO SUBMIT SPECIFIC DOCUMENTS WHICH INCLUDED A REQUEST FOR PURCHASE OF SHARES, THE SHARE CERTIFICATE IN ORIGINAL, DULY EXECUTED TRANSFER DEED, AND PRE RECEIPTS OF THE SUMS. HOWEVER ON ACCOUNT OF DISAGREEMENT REGARDING ISSUE RELATING TO AMOUNT TO BE ITA NOS. 1451 TO 1453/DEL./2013 18 REF UNDED, AND NON SUBMISSION OF ORIGINAL SHARE CERTIFICATES THE DOCUMENTS WERE KEPT PENDING AND THE INVESTORS WERE REQUIRED TO SUBMIT ORIGINAL SHARE CERTIFICATES AS WELL AS PRE RECEIPTS FOR SUMS AGREED BETWEEN BOTH THE PARTIES. THESE DOCUMENTS WERE RECEIVED S OME TIME IN THE LAST WEEK OF JUNE, 2009 AND WERE KEPT PENDING FOR THEIR FINAL DISPOSAL AS PER PROVISIONS OF LAW.' THE ABOVE SUBMISSION CANNOT BE ACCEPTED SINCE IF THERE WAS ANY DEAL BETWEEN THE ASSESSEE COMPANY AND COMPANY WHICH INTRODUCES SHARE CAPITAL TO REFUND THE SHARES AFTER THREE YEARS AT A PREMIUM OF 25%, THEN THE ASSESSEE COMPANY SHOULD HAVE PRODUCED ANY DOCUMENTARY EVIDENCE IN THE SHAPE OF ANY AGREEMENT BETWEEN ASSESSEE AND OTHER COMPANIES. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE PRODU CED BY THE ASSESSEE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. SECONDLY, THE SUBMISSIONS OF THE ASSESSEE THAT THERE WAS ALSO DISAGREEMENT BETWEEN THE ASSESSEE AND OTHER COMPANIES AND THEREFORE, THE BLANK SHARE TRANSFER FORM WERE RETAINED ARE ONLY AN AFTERTHOUGHT MADE BY THE ASSESSEE. IF THAT BE THE CASE, THE ASSESSEE SHOULD HAVE STATED THE SAME AT THE TIME OF SEARCH ITSELF IN THE STATEMENT U/S 132(4) OF THE ACT RATHER, THE ASSESSEE CHOSE TO SURRENDER THE SAME VIDE ITS SURRENDER LETTER DATED 14.07.2 009 WHICH WAS ALSO LATER ON RETRACTED BY THE ASSESSEE. VII) IT IS ALSO SEEN FROM THE ITR RETURNS OF THE COMPANIES WHO HAVE INVESTED IN THE SHARES OF THE ASSESSEE COMPANY THAT NONE OF THE COMPANIES HAVE ACTUAL TURNOVER, BUT THEY HAVE INVESTED HUGE AMOUNTS IMPLYING THAT THEY ARE PAPER COMPANIES. VIII) AS DISCUSSED ABOVE , IT IS SEEN THAT THE ASSESSEE COMPANY HAS INTRODUCED SHARE CAPITAL/ SHARE PREMIUM AND RELIANCE IS PLACED ON THE APEX COURT DECISION IN CIT V/S DURGA PRASAD MORE 82 ITR 801 IN W HICH THE APEX COURT AND TRIBUNAL SEE THE PREPONDERANCE OF PROBABILITIES WHILE CONSIDERING THE EVIDENCES FURNISHED BY THE ASSESSEE. IX) THE CASE LAWS RELIED ON BY THE ASSESSEE ARE NOT AT ALL APPLICABLE INTHE CASE OF THE ASSESSEE AS THE QUESTION IN T HE INSTANT CASE IS NOT OF ASSESSMENT OF INTRODUCTION OF SHARE CAPITAL FROM CERTAIN COMPANIES BUT THE QUESTION IS OF CREDITWORTHINESS OF SHARE CAPITAL. SECONDLY, THE FACTS OF THE CASE OF LOVELY EXPORTS IS DIFFERENT FROM THAT IN THE INSTANT CASE SINCE THE CO MPANY LOVELY EXPORTS IS A PUBLIC LIMITED COMPANY AND THE ASSESSEE COMPANY IS A PRIVATE COMPANY'. IT MAY KINDLY BE ALSO NOTED THAT DURING THE COURSE OF THE STATEMENT RECORDED U/S 132(4), SHRI VIJAY GOYAL ONE OF THE DIRECTOR OF THE COMPANY HAD ALREADY SURRE NDERED THE SHARE APPLICATION MONEY BEFORE THE INCOME TAX AUTHORITIES AS HIS OWN MONEY. IN THIS REGARD, PARA 6.2 'HIS STATEMENT RECORDED ON 29,07.2009 MAY KINDLY BE SEEN'. PARA 6.2 AND 6.3 OF THE ASSESSMENT ORDER HAVE REPRODUCED THE STATEMENT OF SHRI VIJAY GOYAL IN THIS REGARD. AS REGARD TO THE STATEMENT GIVEN U/S 132(4) OF THE I.T. ACT, THE AO HAS ALSO RELIED UPON THE VARIOUS JUDGMENTS LIKE I) HIRA LAL MADAN LAL & CO VS. DY. CIT (2005) 96ITD 113, II) V.K. KUNHAMBER VS. CIT (1996) 219ITR 235 (KER.), III) DCIT VS. BHOGILALAMALCHAND 96 ITA NOS. 1451 TO 1453/DEL./2013 19 ITD 344 [AHMADABAD BENCH] AND IV) GREEN VIEW RESTAURANT VS. ACIT 263 ITR 169 [HIGH COURT OF GAUHATI]. THE ASSESSEE HAS FAILED TO PROV IDE ANY SUCH EVIDENCE WHICH SUPPORTS THAT THE STATEMENT U/S 132(4) WAS GIVEN UNDER STRESS / UNDUE PRESSURE OR BY COERCION. FURTHER NO RETRACTION OF THE STATEMENT WAS MADE EITHER BEFORE THE INVESTIGATION WING OR WITH THE ASSESSMENT WING AND HENCE, THE EVIDE NCE IN THE FORM OF STATEMENT U/S 132(4) CAN VERY WELL BE USED AGAINST THE ASSESSEE COMPANY. IT IS ALSO PERTINENT TO NOTE THAT A PERSON MAKING STATEMENT U/S 132(4) STOPS THE OPPOSITE PARTY (I.E. INCOME TAX) FOR MAKING FURTHER INVESTIGATIONS AND HENCE WE BEL IEVE THAT DECLARATION MADE ON ACCOUNT OF ALLEGED APPLICATION MONEY BELONGS TO NONE OTHER THAN OF THE COMPANY OR THE DIRECTORS THEMSELVES WHICH HAVE BEEN INTRODUCED IN THE FORM OF ACCOMMODATION ENTRIES. 5.4 THE ASSESSEE, AGGRIEVED WITH THE ORDER OF LD. CIT (A) HAS PREFERRED APPEAL BEFORE US, CONTESTING THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS ERRONEOUS AS THE ASSESSEE HAS GIVEN COMPLETE DETAILS ABOUT THE TRANSACTIONS SHOWING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. 6. THE ASSESSEE, IN SHORT, VEHEMENTLY ARGUED THAT ALL THE ALLEGATIONS MADE BY THE LOWER AUTHORITIES ARE BASELESS. THE WRITTEN ARGUMENTS OF THE ASSESSEE PLACED BEFORE US ARE AS UNDER : B. REG. GENUINENESS OF SHARE CAPITAL OF RS.5,30,00,000 RAISED. THE APPLICABLE ASSESSMENT YEAR IS A.Y 2009 - 10 AND HENCE THE PROVISION OF SEC 68 PRIOR TO ITS AMENDMENT VIDE FINANCE ACT 2012 W.E.F. 01.04.2013 WILL BE APPLICABLE AS THE AID AMENDMENT IS PROSPECTIVE IN NATURE AS HELD BY HON'BLE MUMBAI HIGH COURT IN THE CASE OF GAGANDEEP INFRASTRUCTURE PVT LTD. (2017) 80 TAXMAN.COM 272 (MUM) (COPY ENCLOSED) . ITA NOS. 1451 TO 1453/DEL./2013 20 I). FOLLOWINGS DOCUMENTS WERE DULY SUBMITTED BEFORE LD AO AS WELL AS LD CIT (A) DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS TO PROVE THE IDENTITY, GE NUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS (PAGE NO. 479 - 856 VOLUME 2 & 3 OF PAPER BOOK) & RESPONSE RECEIVED IN COMPLIANCE OF SUMMON U/S 131: PAGE NO. 870 - 1069 VOLUME 4 OF PAPER BOOK). S.NO. NAME & ADDRESS TO WHOM SUMMONS ISSUED DOCUMENTS SUBMI TTED IN RESPONSE TO SUMMON DIRECTLY TO PROVE IDENTITY, GENUINENESS & CREDITWORTHINESS OF TRANSACTIONS 1 EAGLE INFRATECH PVT. LTD., 209, BHANOT PLAZA, 3, D.B.GUPTA ROAD, NEW DELHI - 110055. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT - COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR 2 EURO ASIA MERCANTILE PVT. LTD.,3198/15, 4 TH FLOOR, GALI NO. 1, SANGATRASHAN, PAHAR GANJ, NEW DELHI - 110055 A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS : - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR 3 APOORVA LEASING FIN. & INVESTMENT CO. LTD., 104 - A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS ITA NOS. 1451 TO 1453/DEL./2013 21 A, SINGLE STOREY, RAMESH NAGAR, NEW DELHI - 110055. - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS CREDITWORTHINESS : - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR - COPY OF ASSESSMENT ORDER U/S 143(1) 4 VIP LEASING & FINANCE PVT. LTD. , C - 4/152, FIRST FLOOR, SECTOR - 6, ROHINI, NEW DELHI - 110085 A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWOR THINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - C OPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF I TR - COPY OF ASSESSMENT ORDER U/S 143(3) 5 HUM TUM MARKETING PVT. LTD., 106, PALCO HOUSE, T - 10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI - 110008. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - C OPY OF BANK STATEMENT COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C ) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 ITA NOS. 1451 TO 1453/DEL./2013 22 SHOWING NET WORTH OF COMPANY. - COPY OF ITR - COPY OF ASSESSMENT ORDER U/S 143(3) 6 MANI MALA DELHI PROMOTERS PVT. LTD., 209, BHANOT PLAZA, 3, D.B.GUPTA ROAD, NEW DELHI - 110055. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET W ORTH OF COMPANY. - COPY OF ITR 7 LOTUS REALCON PVT. LTD., 209, BHANOT PLAZA, 3, D.B. GUPTA ROAD, NEW DELHI - 110055. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYME NT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR - COPY OF ASSESSMENT ORDER U/S 143(3) 8 AD - FIN CAPITAL SERVICES (INDIA) PVT. LTD., 209, BHANOT PLAZA, 3, D.B.GUPTA ROAD, NEW DELHI - 110055. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF ITA NOS. 1451 TO 1453/DEL./2013 23 PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR 9 SHALINI HOLDINGS LTD. , C - 4/152, FIRST FLOOR, SECTOR - 6, ROHINI, NEW DELHI - 110085 A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT - COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR - COPY OF ASSESSMENT ORDER U/S 143(3) 10 ZENITH AUTOMOTIVE PVT. LTD. , 106, PALCO HOUSE, T - 10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI - 110008. A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR 11 VIRGIN CAPITAL SERVICES PVT. LTD., 106, PALCO HOUSE, T - 10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI - 110008. A) IDENTITY: - SUMMON DULY SE RVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT ITA NOS. 1451 TO 1453/DEL./2013 24 - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS : - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR - COPY O F ASSESSMENT ORDER U/S 143(3) 12 SRI AMARNATH FINANCE LTD., 22, RAJENDRA PARK, NEW DELHI - 110060 A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF ITR FOR A.Y.2009 - 10 - COPY OF BANK STATEMENT B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS: - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR 13 VICTORY SOFTWARE PVT. LTD., 3198/15, 4 TH FLOOR, GALI NO. 1, SANGATRASHAN, PAHAR GANJ, NEW DELHI - 110055 A) IDENTITY: - SUMMON DULY SERVED IN SAID ADDRESS - COPY OF I TR FORA.Y.2009 - 10 - COPY OF BANK STATEMENT - COPY OF MEMORANDUM B) GENUINENESS OF TRANSACTIONS: - - BANK STATEMENT SHOWING THAT PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT - CONFIRMATION CONFIRMING THE TRANSACTIONS C) CREDITWORTHINESS : - COPY OF BANK STATEMENT SHOWING SOURCE OF PAYMENT. - NO CASH DEPOSITED IN BANK TO MAKE PAYMENT. - COPY OF AUDITED BALANCE SHEET ON 31.03.2009 SHOWING NET WORTH OF COMPANY. - COPY OF ITR LD A O INDEPENDENTLY VERIFIED THE GE NUINE NE SS OF SHARE CAPITAL RAISED BY ISSUING SUMMON U/S 131 TO SHARE APPLICANT WHICH WERE DULY SERVED AND COMPLIED TO AND THE FACT HAS BEEN ADMITTED BY LD AO IN HIS REMAND REPORT DATED 17.12.2012. ITA NOS. 1451 TO 1453/DEL./2013 25 II). FURTHER, IT IS EVIDENT THAT NO CASH IS DEPOSITED IN ANY OF THE BANK ACCOUNT OF SHARE APPLICANT TO SUBSCRIBE TO SHARE CAPITAL OF THE ASSESSEE COMPANY. III). FURTHER, LD AO FAILS TO PROVE THAT THE ALLEGED SHARE CAPITAL RAISED IS OUT OF THE CASH EMANATING FROM THE COFFER OF THE ASSESSEE COMPANY WHICH IS ONE OF THE BASIC REQUIREMENT FOR MAKING ADDITION U/S 68 AS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334 (DEL) (COPY ENCLOSED) IV). FURTHER, ALL THE SHARE APPLICANT COMPANY HAS SUFFICIENT NET WORTH I.E. SUBSTANTIAL MEANS TO SUBSCRIBE TO THE SHARE CAPITAL OF THE APPELLANT COMPANY (PAGE NO. 1070 - 1072, VOLUME 4 OF PAPER BOOK). IT IS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF GOODVIEW TRADING PVT. LTD. (2017)(77 TAXMANN.COM 204)(DEL) (COPY ENCLOSED) WHEREIN IT IS HELD THAT 'WHERE COMMISSIONER (A) ANALYZING NET WORTH OF SHARE APPLICANT COMPANIES NOTICED THAT T HEY POSSESSED SUBSTANTIAL MEANS TO INVEST IN ASSESSEE INVESTMENT COMPANY, NO ADDITION COULD BE MADE U/S 68'. V). THERE IS NOT AN IOTA OF EVIDENCE WITH LD AO EITHER IN THE FORM OF ANY TANGIBLE EVIDENCE OR STATEMENT OF ANY SHARE APPLICANT OR ANY OTHER PERSO N TO DOUBT THE GENUINENESS OF SHARE CAPITAL RAISED. AS SUCH, THE RATIO OF CASE LAWS RELIED UPON BY LD AO AND LD CIT(A) INCLUDING THE CASE OF NOVA PROMOTERS PVT. LTD. IS NOT APPLICABLE TO THE FACTS OF THE CASE OF APPELLANT. VI). IT IS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF FIVE VISION PROMOTERS PVT. LTD. 380 ITR 289 (DEL){2016) THAT 'MERE FACT THAT SOME OF INVESTORS IN SHARE CAPITAL OF ASSESSEE - COMPANY HAD A COMMON ADDRESS WAS NOT A VALID BASIS TO DOUBT THEIR IDENTITY OR GENUINENESS, NOR FACT THAT S HARES OF ASSESSEE WERE SUBSEQUENTLY SOLD AT A REDUCED PRICE WAS GERMANE TO QUESTION OF GENUINENESS OF INVESTMENT IN SHARE CAPITAL OF ASSESSEE'. RELIANCE IS PLACED ON FOLLOWING CASE LAWS: 1. TRN ENERGY PVT. LTD. (ITA NO. 453/DEL/2016 DATED 01.01.2018 ) (DEL - ITAT) - COPY ENCLOSED HELD WHERE THE ASSESSEE FILED COMPLETE DETAILS TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SHARE CAPITAL RAISED U/S 68 OF THE INCOME TAX ACT'1961 AND THE ID AO DID NOT MAKE ANY FURTHER ENQUIRY THEN THE ASSESSEE DISC HARGE ITS ONUS TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS AND NO ADDITION CAN BE MADE U/S 68. 2. DURGA CHARITABLE SOCIETY (ITA NO. 1448/DEL/2012 DATED 23.10.2017)(DEL - ITAT) - COPY ENCLOSED 3. ADAMINE CONSTRUCTION (P.) LTD. 87 TAXMANN.COM 216 (DEL - ITAT) 4. LOVELY EXPORTS P. LTD. 216 CTR 195 (SC) (2008) 5. KAMDHENU STEEL & ALLOYS 361 ITR 220 (DEL) 6. VRINDAVAN FARMS PVT. LTD. ITA NO. 71 OF 2015 DATED 12.08.2015 (DEL) ITA NOS. 1451 TO 1453/DEL./2013 26 7. LAXMAN INDUSTRIAL RESOURCES PVT. LTD. ITA NO. 169 OF 2017 DATED 14.03.2017 (DEL). 8. PEOPLES GENERAL HOSPITAL 356 ITR 65 (MP) 9. DWARKADISH INVESTMENT PVT. LTD. 330 ITR 298 (DEL). 10. WINSTRAL PETROCHEMICALS P. LTD. 330 ITR 603 (DEL) 11. VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334 (DEL) 12. NC CABLE LTD. 391 ITR 11 (DEL) 13. SOFTLINE CREATION PVT. LTD. 387 ITR 636 (DEL) 14. GANGESHWARI METAL PVT. LTD. 361 ITR 10 (DEL) 6.1 THE LD. AR FURTHER SUBMITTED A DETAILED CHART AT PAPER BOOK PAGE 1070 TO 1072 WHEREIN, IT IS SUBMITTED THAT EACH OF THE COMPANY HAS HUGE SHARE CAPITAL, RESERVES AND SURPLUS AND GENUINE TURNOVER, WHICH ITSELF PROVES THAT ALL THESE COMPANIES ARE NOT PAPER COMPANIES. THE SAID CHART IS REPRODUCED HEREUNDER. HE FURTHER SUBMITTED THAT THE AMOUNT INVESTED WITH THE ASSESSEE IS MUCH LESS THAN THE NET WOR TH OF THE SUBSCRIBING COMPANIES. IT WAS FURTHER STATED THAT EACH OF THESE COMPANIES ARE REGULARLY ASSESSED TO INCOME - TAX, STATING THEIR PAN AND ASSESSMENT WARDS WHERE THEY ARE FILING THEIR RETURN OF INCOME. IN VIEW OF THIS, HE SUBMITTED THAT THE ALLEGATION S MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) ARE MERELY BASED ON CONJECTURES AND SURMISES. DETAILS OF NET WORTH & TURNOVER OF INVESTEE COMPANY AS ON 31.03.2009 & 31.03.2008 (A .Y. 2009 - 10) S. N. NAME & ADDRESS OF SUBSCRIBER ASSESSMENT PAN NO. A S S T T PARTICULARS WARD/CIRC LE AND PLACE OF ASSESSMEN T NET WORTH OF SUBSCRIBER COMPANY AS ON 31.03.2009 NET WORTH OF SUBSCRIBER COMPANY AS ON 31.03.2008 TURNOVER OF SUBSCRIBER COMPANY AS ON 31.03.09 TURNOVER OF SUBSCRIBER COMPANY AS ON 31.03.08 SHARE CAPITAL RESERVES & SURPLUS SHARE CAPITAL RESERVES & SURPLUS TURNOVER TURNOVER 1. M/S. SHALINI HOLDINGS LIMITED, 209, 2 ND FLOOR, 6/41, SUNDER KIRAN, BUILDING, W.E.A. KAROL AAACS0913M 8(1) 127,480,000 1,121,250,000 127,480,000 1,121,250,000 835,612 609,995 ITA NOS. 1451 TO 1453/DEL./2013 27 BAGH, NEW DELHI - 110005 TOTAL 1,248,730,00 0 1,248,730,00 0 835,612 609,995 2 EURO ASIA MERCANTILE PVT. LIMITED, 3198/15, GALI NNO. 1, 4 TH FLOOR, SANGATRASHAN PAHAR GANJ, DELHI - 110005 AABCE7522P 11(2) 48,200,000 432,942,084 48,200,000 432,920,676 559,330 328,250 TOTAL 481,142,084 481,120,676 559,330 328,250 3 AD FIN CAPITAL SERVICES INDIA PVT. LIMITED, 209, BHANOT PLAZA - II, 3 D.B. GUPTA ROAD, PAHAR GANJ, NEW DELHI 110005 AAACA8024H 1(2) 94,895,000 848,070,000 94,895,000 848,070,000 1,317,859 607,663 TOTAL 942,965,000 942,965,000 1,317,859 607,663 4. MANI MALA DELHI PROPERTIES PVT. LTD. 209, BHANOT PLAZA - II, 3 D.B. GUPTA ROAD, PAHAR GANJ, NEW DELHI 110005 AADCM4508J 6(2) 18,900,000 169,208,076 18,900,000 169,200,000 528,755 251,365 TOTAL 188,108,076 188,100,000 528,755 251,365 5. EAGLE INFRATECH PVT. LTD. 209, BHANOT PLAZA - II, 3 D.B. GUPTA, ROAD, PAHAR GANJ, NEW DELHI 110005 AABCE7520R 11(1) 16,500,000 147,615,341 16,500,000 147,609,588 355,826 243,650 TOTAL 164,115,341 164,109,588 355,826 243,650 6 ZENITH AUTOMOTIVE PVT. LTD., 106, PALCO HOUSE, T - 10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI - 110008 AAACZ0283B 18(4) 18,187,000 151,560,000 18,187,000 151,560,000 363,450 307,560 TOTAL 169,747,000 169,747,000 363,450 307,560 7. HUM TUM MARKETING PVT. LTD., 311, 3 RD FLOOR, GOLDEN PLAZA, GURUDWARA ROAD, KAROL BAGH, NEW DELHI - 110005 AABCH6626F 12(1) 19,460,000 174,277,448 19,460,000 174,257,968 528,365 237,780 TOTAL 193,737,448 169,747,000 528,365 237,780 8. LOTUS REALCON PVT. LTD., 209, BHANOT PLAZA - II, 3 D.B. GUPTA, ROAD, NEW DELHI 110005 AABCL3054H 4(4) 17,240,000 154,292,740 17,240,000 154,274,258 573,900 292,065 TOTAL 171,532,740 171,514,258 573,900 292,065 9. VICTORY SOFTWARE PVT. LTD., 3198/15, 4 TH FLOOR, GALI NO. 1, SANGATRASHAN, PARAH GANJ, NEW DELHI 110008 AACCV4613R 17(1) 19,230,000 172,198,439 19,230,000 172,188,620 419,412 249,210 TOTAL 191,428,439 191,418,620 419,412 249,210 10. VIRGIN CAPITAL SERVICES PVT. LTD., T - 10, MAIN PATEL ROAD, PATEL NAGAR, NEW DELHI - 110008 AAACV3093R 17(4) 19,788,120 160,560,000 19,788,120 160,560,000 513,530 300,070 11 . VIP LEASING & FINANCE PVT. LTD. AAACV0475F 17(1) 19,354,900 152,100,000 19,354,900 152,100,000 499,136 319,088 TOTAL 171,454,900 171,454,900 499,136 319,088 12. SRI AMARNATH FINANCE AAACS2837A 9(2) 99,800,000 450,115,085 99,800,000 450,009,280 46,895,819 36,500 ITA NOS. 1451 TO 1453/DEL./2013 28 LIMITED, 22, RAJINDRA PARK, NEW DELHI - 110060 TOTAL 549,915,085 549,809,280 46,895,819 36,500 13. VAIRAVI ELECTRICAL PVT. LIMITED, 28, GRANT LANE, KOLKATA, WEST BENGAL - 700012 AABCV9021C 1(3) 2,050,000 17,567,570 299000161 TOTAL 19,617,570 299000161 14. ALISHAN COMPLEX PVT. LTD. AAFCA2673K 9(1) 10,050,000 89,550,000 27,790 TOTAL 99,600,000 27,790 15. CRM SYSTEMS PVT. LIMITED, 10A, HOSPITAL STREET, KOLKATA, WEST BENGAL - 700072 AACCC4574C 1(4) 12,100,000 108,000,000 387998812 TOTAL 120,100,000 387998812 16 MARUBHUMI FINANCE & DEVELOPERS PVT. LTD., 9 JAGMOHAN MULLICK LONE, KOLKATA - 700007 AACCM2069C 9(1) 5,259,200 9,270,000 658,543 TOTAL 14,529,200 658,543 17. MAHASHAKTI COMMODITIES PVT. LTD., 9 JAGMOHAN MULLICK LONE, KOLKATA - 700007 AACCM2073Q 9(1) 9,761,400 12,744,000 NIL TOTAL 22,505,400 18. APOORVA LEASING FINANCE & INVESTMENT CO. LTD., 104 - A, SINGLE STOREY, RAMESH NAGAR, NEW DELHI - 110005 AABCA0282A 2(1) 99,750,000 48,875,000 394,200 132,150 TOTAL 148,625,000 394,200 132,150 19. SPARSH HOTEL PVT. LTD., 71, CANNING STREET, KOLKATA - 700001 AAICS3418F 5(1) 3,050,000 26,551,728 248,184,881 TOTAL 29,601,728 248,184,881 20. SHATABDI JUTE PVT. LTD. AAJCS1021P 2(4) 20,138,100 180,342,900 32,903 TOTAL 200,481,000 32,903 6.2 HE FURTHER RELIED UPON SEVERAL JUDICIAL PRECEDENTS OF VARIOUS HIGH COURTS AND CO - ORDINATE BENCHES TO SUPPORT HIS CLAIM, AS MENTIONED IN ITS WRITTEN SUBMISSIONS REPRODUCED ABOVE. ITA NOS. 1451 TO 1453/DEL./2013 29 6.3 HE FURTHER STATED THAT COPIES OF THE AUDITED BALANCE SHEETS OF EACH OF THE COMPANIES ARE FURNISHED BEFORE THE LD. ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER COULD NOT POINT OUT ANY ERROR OR INFIRMITY IN THE BALANCE SHEETS OF THOSE COMPANIES TO SUPPORT THE ALLEGATIONS THAT THESE ARE PAPER COMPANIES. HE SUBMITTED THAT IN CASE OF ALL THE COMPANIES, SUMMONS WERE ISSUED TO THEM AND ALL THE COMPANIES WERE FOUND EXISTING AT THE ADDRESSES GIVEN TO THE ASSESSING OFFICER. HE STATED THAT IF THERE WOULD HAVE BEEN ANY DISCREPANCY IN THE ADDRESSES, SUMMONS COULD NOT HAVE BEEN RECEIVE D BY THESE PARTIES. HE FURTHER STATED THAT ALL THE SUMMONS WERE DULY COMPLIED WITH BY THE INVESTOR COMPANIES BY PROVIDING NECESSARY DETAILS, WHICH IS NOT DISPUTED BY THE LOWER AUTHORITIES. 6.4 H E FURTHER STATED THAT THE ASSESSEE HAS SUBMITTED COMPLETE BA NK ACCOUNTS OF THE PARTIES. HOWEVER, THE ASSESSING OFFICER COULD NOT POINT OUT A SINGLE INSTANCE WHEREIN THE CASH IS DEPOSITED IN THE ACCOUNT OF THOSE COMPANIES. 6.5 HE FURTHER STATED THAT MERELY BECAUSE SOME OF THE COMPANIES HAVE SAME ADDRESSES, CANNOT B E THE REASON FOR MAKING THE ADDITION. HE FURTHER STATED ITA NOS. 1451 TO 1453/DEL./2013 30 THAT MERELY BECAUSE THEY HAVE COMMON DIRECTORS ALSO DO NOT GO AGAINST THE ASSESSEE. 6.6 HE FURTHER STATED THAT THE ALLEGATION OF THE ASSESSING OFFICER WITH RESPECT TO THE STAMP PAPER S DO ES NOT DESERV E ANY CREDENCE FOR THE REASON THAT THERE IS NO TRANSACTION OF PURCHASE AND SALE OF SHARES. 6.7 HE FURTHER STATED THAT THE DETAILS OF THE DOCUMENTS FOUND HAVE BEEN EXPLAINED BY THE ASSESSEE THAT AS THE ASSESSEE HAD PROMISED THEM TO INVEST INTO THE SHARES OF THE COMPANY WHICH WOULD BE LATER ON BOUGHT BACK @ 25% HIGHER PREMIUM THAN WHATEVER IS PAID BY THEM , WHICH IS A JUSTIFIABLE REASON. HE SUBMITTED THAT ADMITTEDLY, THE ASSESSEE IS NOT A DIVIDEND PAYING COMPANY AND THEREFORE, THE EXIT ROUTE AVAILABLE TO THE SHARE HOLDERS IS ONLY B U Y BACK BY THE PROMOTERS AT A PREMIUM. IT IS A MATTER OF DIFFERENT CONTEXT THAT SUCH EXERCISE COULD NOT BE CARRIED OUT DUE TO INADEQUATE SURPLUS AVAILABLE WITH THE ASSESSEE COMPANY. BUT IN A WAY, SUCH TRANSACTIONS ARE NEITHER UNUSUA L NOR TAKE COLOUR OF SHAM TRANSACTION S . ITA NOS. 1451 TO 1453/DEL./2013 31 6.8 THE ASSESSING OFFICER HAS NEITHER ALLEGED NOR PROVED THAT THE MONEY INVESTED IN THE SHARE CAPITAL OF THIS COMPANY HAS COME OUT OF THE COFFERS OF THE ASSESSEE. IN THE END, HE SUBMITTED THAT ON THE SUBMISSION OF T HE DETAILS, THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY AND WHATEVER ENQUIRY THE ASSESSING OFFICER HAS MADE HAS BEEN DULY COMPLIED WITH. THE ASSESSEE HAS DISCHARGED ITS INITIAL ONUS OF PROVING IDENTITY & CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTI ONS AND THE SHARE HOLDERS. HE, THEREFORE, SUBMITTED THAT THE ADDITION MADE U/S. 68 DESERVES TO BE DELETED. 7. COUNTERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT/DR VEHEMENTLY SUBMITTED THAT THE ASSESSEE HAS ISSUED SHARE CAPITAL TO THE NON - EXISTENT CO MPANIES WHO ARE PAPER COMPANIES, DO NOT HAVE ANY CREDITWORTHINESS AND ARE MERELY ACCOMMODATION ENTRIES. SHE FURTHER VEHEMENTLY SUBMITTED THAT ALL THE COMPANIES HAVE INVESTED IN SHARES OF ASSESSEE COMPANY WITH AN INTENTION BY THE PROMOTERS TO BUY BACK THOSE SHARES AT SUBSTANTIAL LOWER VALUE AS IT IS HAPPENED IN ALL KOLKATA BASED ACCOMMODATION ENTRIES. SHE FURTHER STATED THAT IT IS NOT NECESSARY THAT ONLY CASH SHOULD HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF THESE COMPANIES, BUT SUCH COMPANIES OPE R ATE IN A MANNER THAT MULTIPLE ACCOUNTS ARE USED TO BRING THEM INTO THE BANK ACCOUNT OF THE ISSUING COMPANY TO GENERATE BANK BALANCE. SHE FURTHER STATED THAT HAVING THE SAME ITA NOS. 1451 TO 1453/DEL./2013 32 ADDRESSES OF THE DEPOSITOR COMPANIES AS WELL AS SIMILAR ADDRESSES OF MANY OF THE DI RECTORS OF THE COMPANIES ALSO SPEAK A LOT. IN THE END, SHE RELIED VERY HEAVILY ON THE ORDER OF THE LD. ASSESSING OFFICER AS WELL AS THE LD. CIT(A) TO STATE THAT THE ASSESSEE HAS FAILED MISERABLY TO PROVE THE IDENTITY, CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS. 8. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ADMITTEDLY, SEARCH TOOK PLACE ON 07.07.2009, WHICH CONCLUDED ON 08.07.2009. ADMITTEDLY, THE ASSESSEE OR ANY OF ITS DIR ECTOR S DID NOT MAKE ANY STATEMENT U/S. 132(4) OF THE IT ACT. ON 07.07.2009, A LETTER WAS ADDRESSED BY SHRI VIJAY GOEL TO THE ADDITIONAL DIRECTOR OF INCOME TAX (INV.), SURRENDERING A SUM OF RS.27 CRORES. FURTHER, ON 14.07.2009, THE ASSESSEE SUBMITTED A LETT ER GIVING BIFURCATION OF THE ABOVE SUM. THE ASSESSEE TIME TO TIME HAS SUBMITTED EVEN DURING THE COURSE OF SEARCH AS WELL AS POST SEARCH ENQUIRIES THAT THE DOCUMENTS SHALL BE EXPLAINED IN DETAIL DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ADMITTEDLY, DURIN G THE YEAR, THE ASSESSEE HAS ISSUED A SHARE CAPITAL OF FACE VALUE OF RS.5.30 CRORES AT A PREMIUM OF RS.4.77 LACS TO 21 COMPANIES. THE SHARE CONSIDERATIONS HAVE BEEN RECEIVED BY CHEQUES IN THE MONTH OF OCTOBER, 2008 FROM THE BANK ACCOUNT OF ALL THESE COMPAN IES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ITA NOS. 1451 TO 1453/DEL./2013 33 SUBMITTED THE CONFIRMATIONS, COPY OF INCOME - TAX RETURNS, COPY OF MEMORANDUM, BANK STATEMENT, COPY OF AUDITED BALANCE SHEETS OF ALL THESE COMPANIES. THE SUMMONS WERE ISSUED TO ALL THE COMPANIES , WHICH WERE DULY RECEIVED AND WERE COMPLIED WITH BY THE INVESTORS. BY SUBMISSION OF THE ABOVE DETAILS, THE ASSESSEE HAS SHOWN THAT THESE COMPANIES ARE IN EXISTENCE, TRANSACTIONS ENTERED INTO WITH THESE COMPANIES ARE GENUINE AND THE SHARE HOLDERS ARE CREDI TWORTHY TO INVEST SUCH SUMS IN THE ASSESSEE COMPANY. 9. HOWEVER, DURING THE COURSE OF SEARCH, THE LD. ASSESSING OFFICER FOUND CERTAIN DOCUMENTS WITH RESPECT TO THESE COMPANIES, WHICH NEED TO BE ANALY Z ED WHETHER THEY PROVE THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS A ACCOMMODATION ENTRY AND THEREFORE, A NON - GENUINE TRANSACTION OR IT IS A GENUINE TRANSACTION. 9.1 THE FIRST DOCUMENT THAT IS FOUND DURING THE COURSE OF SEARCH IS MEMORANDUM OF ARTICLES OF THE INVESTOR COMPANIES. IT IS A MATTER OF COMMON KNOW LEDGE AND IT IS ALSO REQUIREMENT OF THE COMPANIES ACT THAT WHEN A COMPANY INVEST S IN SHARE CAPITAL OF ANOTHER COMPANY, THE INVESTOR COMPANY SHOULD HAVE THE CLAUSE OF AUTHORIZING THAT COMPANY TO INVEST IN ASSESSEE ITA NOS. 1451 TO 1453/DEL./2013 34 COMPANY. IN VIEW OF THIS, IT IS MANDATORY T HAT A SHARE APPLICATION MADE BY THE CORPORATE MUST BE ACCOMPANIED WITH THE MEMORANDUM OF ARTICLES OF THE INVESTOR COMPANY , PROPERLY AUTHORIZED RESOLUTION OF THE INVESTOR COMPANY AS WELL AS OTHER REQUISITE INFORMATION ABOUT THE INVESTOR COMPANY. SUCH DETAIL S ARE NEEDED TO BE VERIFIED BY THE INVESTEE COMPANY BEFORE MAKING ALLOTMENT OF SHARES TO ANOTHER COMPANY . IN VIEW OF THIS, NO INFIRMITY CAN BE FOUND IN FINDING SUCH DOCUMENTS WITH THE ASSESSEE. 9.2 THE SECOND DOCUMENTS WERE THE BANK STATEMENTS OF INVESTOR COMPANIES. SUCH BANK STATEMENTS SHOW THE BANK TRANSACTIONS CARRIED OUT BY THE INVESTOR COMPANIES WITH THE ASSESSEE COMPANY AND FOR THE PURPOSE OF JUSTIFYING THE AMOUNT OF SUM RECEIVED FROM ANY PARTY, THE RESPONSIBILITY FALLS ON THE ASSESSEE. THERE FORE, THE BANK STATEMENTS ARE FOUND FROM THE ASSESSEE. EVEN OTHERWISE, THE ASSESSEE ITSELF HAS SUBMITTED THESE BANK STATEMENTS BEFORE THE ASSESSING OFFICER. IF THE ASSESSING OFFICER WOULD HAVE ANY DOUBT ABOUT THE VERACITY OF THE BANK STATEMENTS, HE SHOULD HAVE ISSUED COMMISSION TO THE BANKERS AND SUM MON S TO THE DIRECTORS OF THESE INVESTOR COMPANIES WHICH HAVE NOT BEEN DONE. THE BANK ACCOUNT S OF THE COMPANIES, THEREFORE, DO NOT LEAD TO ANY INFERENCE THAT THE INVESTMENT MADE BY THESE COMPANIES IS ACCOMMODATIO N ENTRY IN THE HANDS OF THE ASSESSEE. ITA NOS. 1451 TO 1453/DEL./2013 35 9.3 THE NEXT DOCUMENTS ARE AFFIDAVITS OF THE DIRECTORS OF INVESTOR COMPANIES, STATING THAT THEIR COMPANY HAS APPLIED FOR EQUITY SHARES. THIS ITSELF IS A STATEMENT THAT THE INVESTMENT HAS BEEN MADE BY THOSE COMPANIES. THESE AFFIDAVITS WERE NOT FOUND EITHER BOGUS, SWORN BY DIFFERENT PERSONS OTHER THAN THE DIRECTORS OF THE COMPANIES N OR DISCLOSED ANYTHING ELSE OTHER THAN THAT DECLARED IN THE ACCOUNTS OF THE COMPANIES AND THESE AFFIDAVITS ARE, IN FACT, SUPPORTING THE TRAN SACTIONS. IF THE ASSESSING OFFICER HAD ANY DOUBT ON THE AFFIDAVITS, HE SHOULD HAVE EITHER CALLED ON THE PERSONS WHO HAVE SWORN SUCH AFFIDAVITS OR THE NOTARIES WHO HAVE NOTARIZED SUCH AFFIDAVITS. EVEN OTHERWISE, WHAT IS STATED IN THE BOOKS OF INVESTOR COMPA NIES HAS BEEN STATED BY THE DIRECTORS OF THESE COMPANIES ON AFFIDAVIT. WE DO NOT FIND ANY REASON THAT MERELY BECAUSE THE DIRECTORS OF THE DEPOSITOR COMPANIES HAVE PREPARED AFFIDAVIT, IT BECOMES AN ACCOMMODATION ENTRY. MOST OF THE TIMES, TO ESTABLISH CASH C REDITS, EVEN THE REVENUE IS ASKING FOR THE AFFIDAVITS OF THE DEPOSITORS. THEREFORE, ON THE BASIS OF THE AFFIDAVIT S , NO ADVERSE INFERENCE COULD BE DRAWN. 9.4 FURTHERMORE, THREE BLANK DOCUMENTS WERE FOUND WITH RESPECT TO THESE COMPANIES. THESE ARE BLANK SH ARE TRANSFER FORMS, SPECIAL POWER OF ATTORNEY SIGNED BY THE AUTHORIZED SIGNATORIES AND BLANK RECEIPTS AGAINST THE SHARES. ALL ITA NOS. 1451 TO 1453/DEL./2013 36 THESE THREE DOCUMENTS ARE ADMITTEDLY NON - EXECUTED AND DO NOT SHOW ANY TRANSACTIONS. HAD THERE BEEN ANY TRANSACTION RECORDED ON BLA NK SHARE TRANSFER FORMS, RECEIPTS REGARDING ANY MONEY OR TRANSFER IN FAVOUR OF ANY PERSON, IT WOULD HAVE MADE THEM SUSPICIOUS. THE ENTRIES IN THOSE FORMS ARE NOT AT ALL MADE, BUT ARE MERELY B L ANK. THE ASSESSEE HAS GIVEN DETAILED EXPLANATION WHY THEY WERE F O UND AT THE PLACE OF ASSESSEE. THE ASSESSING OFFICER HAS NOT EXAMINED THE SIGNATORIES OF THESE DOCUMENTS TO ARRIVE AT THE TRUE NATURE OF THE TRANSACTIONS. THE ASSESSING OFFICER IS JUST MAKING AN ASSUMPTION THAT THESE ARE THE DOCUMENTS WHICH WOULD HAVE BEEN USED BY THE ASSESSEE FOR TRANSFERRING THOSE SHARES IN THE NAME OF THE PROMOTERS OR THEIR GROUP CONCERNS AT A PRICE WHICH IS FAR LESS THAN THE PRICE OF SHARES ISSUED. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT EITHER SUCH SHARES ARE SUBSEQUENTLY TRAN SFERRED AT LOWER PRICE, OR SUCH SHARES STOOD DISPOSED OF BY THE INVESTOR COMPANIES. IN VIEW OF THIS, THE CASE OF THE REVENUE IS MERELY BASED ON ASSUMPTION AND SURMISES. 10. ACCORDING TO THE PROVISIONS OF SECTION 68 OF THE ACT, ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, IF THE NATURE AND SOURCE OF SUCH SUM IS NOT EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF THE ASSESSING OFFICER THEN SUCH SUM CAN BE AD DED BY THE ASSESSING OFFICER TO THE INCOME OF ITA NOS. 1451 TO 1453/DEL./2013 37 THE ASSESSEE. THEREFORE, PRIMA FACIE, IT PROVIDES THAT IF THE ASSESSEE HAS EXPLAINED THE NATURE AND SOURCE OF SUCH INCOME OR SUCH CREDIT BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER DOES NOT CARRY OUT ADEQUATE VERIFICATION, OR EVEN AFTER VERIFICATION, NOTHING INCRIMINATING FEATURE TURNS OUT, THEN IT DOES NOT THROW THE ONUS BACK ON THE ASSESSEE. IN THE PRESENT CASE, IT WAS THE BOUNDEN DUTY OF THE ASSESSING OFFICER TO HAVE ENQUIRED FROM THE DIRECTORS OF THE INVESTING COMPANIES AS WELL AS FROM THE BANKERS OF THOSE COMPANIES BY ISSUE OF SUMMONS U/S. 131 OF THE IT ACT. THOSE DIRECTORS SHOULD HAVE BEEN EXAMINED TO EXPLAIN ABOUT THEIR NATURE OF INCOME AND SOURCE OF SUCH I NCOME. THEY SHOULD HAVE BEEN FURTHER EN QUIRED ABOUT THE PURPOSE OF MAKING INVESTMENT AND FATE OF THEIR INVESTMENT AS ON TODAY. BUT TO UTTER DISMAY, THE LD. ASSESSING OFFICER HAS SLEPT OVER THE INFORMATION SUBMITTED BY THE ASSESSEE AND MERELY RAISED ASSUMPTIONS AND PRESUMPTIONS. THE ADDITION MAD E BY THE LD. ASSESSING OFFICER HAS BECOME UNSUSTAINABLE IN THE HANDS OF THE ASSESSEE DUE TO LACK OF ENQUIRY OR ANY EFFORTS ON THE PART OF THE AO. IN THIS REGARD, WE ARE ALSO CONSTRAINED TO REFER THE AMENDMENT MADE TO THE PROVISIONS OF SECTION 68 OF THE IT ACT BY FINANCE ACT, 2012 BY INSERTING A PROVISO W.E.F. 01.04.2013 THAT ADDITIONAL BURDEN HAS BEEN CAST ON THE ASSESSEE TO PROVE IN THE SIMILAR CIRCUMSTANCES, IF NO EXPLANATION IS OFFERED BY THE INVESTOR OR SUCH EXPLANATION OFFERED BY THE INVESTOR IS NOT SA TISFACTORY. ITA NOS. 1451 TO 1453/DEL./2013 38 HOWEVER, OUR HANDS ARE TIED, AS THE IMPUGNED ASSESSMENT YEARS BEFORE US ARE ASSESSMENT YEARS 2007 - 08 TO 2009 - 10. IT IS ALSO NOT ARGUED BEFORE US THAT THIS PROVISO IS RETROSPECTIVE IN NATURE. THEREFORE, IT IS APPARENT THAT PRIOR TO ASSESSMENT YE AR 2013 - 14, THE ONUS OF EXPLAINING THE TRANSACTION CANNOT BE EXPANDED IN THE HANDS OF THE ASSESSEE. FURTHER SEVERAL JUDICIAL PRECEDENTS ALSO SUPPORTS THE CASE OF THE ASSESSEE: - I. HONOURABEL DELHI HIGH COURT IN CASE OF [2017] 397 ITR 106PR. COMMISSIONER OF INCOME TAX - 5 VERSUS LAXMAN INDUSTRIAL RESOURCES LTD. ITA 169/2017, C.M. APPL.7385/2017 DATED: - 14 MARCH 2017 HAS HELD THAT THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACT IONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEM ENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIONS AUTHORIZING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANI ES TO THE ASSESSEE AS WELL AS THEIR MASTER ITA NOS. 1451 TO 1453/DEL./2013 39 DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND RESTED CONTENT BY PLACING RELIANCE MERELY ON A REPORT OF THE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREGARD TO AN AO S DUTIES IN THE REMAND PROCEEDINGS WHICH THE REVENUE SEEKS TO INFLICT UPON THE ASSESSEE IN THIS CASE. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS DISMISSED. II. FURTHER HONOURABEL DELHI HIGH COURT HAS OCCASION TO CONSIDER THE IDENTICAL ISSUE IN PRINCIPAL COMMISIONER OF INCOEM TAX V ORINETAL INTERNATIONAL CO LIMITED IN 401 ITR 83 ( DEL) THAT 11. THE ASSESSEE IN THE PRESENT CASE, HAS DISCHARGED ITS ONUS BY PRO DUCING ALL THE DOCUMENTS SHOWING THE GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE SHARE SUBSCRIBER. THE AD HAS NOT PRODUCED ANY THING ON RECORD TO SHOW HOW THE SHARE APPLICATION MONEY WAS TAINTED MONEY OF THE ASSESSEE - COMPANY WHICH WAS ROUTED THROUGH THE SHARE SUBSCRIBER COMPANY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. DIVIN E LEASING AND FINANCE LTD. [2008] 299 ITR 268 (DELHI), OBSERVED THAT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLE GAL DEALINGS, HE CANNOT ADHERE TO HIS SUSPICION AND TREAT THE SUBSCRIBED CAPITAL AS UNDISCLOSED INCOME OF THE COMPANY. IT IS TO BE FURTHER NOTED THAT A MERE DENIAL BY SH. SURESH CHAND GARG WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE TRANSACTION WAS HIT BY SECTION 68 OF THE ACT. WE THEREFORE UPHOLD THE DELETION OF ADDITION WITH R ESPECT TO THE SHARE SUBSCRIBERS, M/S. CREATIVE FINANCIAL SERVICES PVT. LTD.' 8. LEARNED COUNSEL FOR THE REVENUE HIGHLIGHTED THAT THE ASSESSING OFFICER EXAMINED ALL THE MATERIALS IN GREAT DETAIL AND REJECTED THE AFFIDAVIT FURNISHED TO HIM. IT WAS HIGHLIGHTE D THAT THE ASSESSING OFFICER TOOK NOTE OF THE STATEMENT MADE BY THE INDIVIDUAL STYLED AS DIRECTOR, DISOWNING THE INVESTMENT MADE IN THE ASSESSEE - COMPANY BY M/S. CREATIVE FINANCIAL SERVICES PVT. LTD. 9. THIS COURT IS OF THE OPINION THAT THE LONE CIRCUMSTANC E OF A DIRECTOR DISOWNING THE DOCUMENT PER SE COULD NOT HAVE CONSTITUTED A FRESH MATERIAL TO REJECT THE DOCUMENTARY EVIDENCE. IN THIS CASE, THE EXISTENCE OF THE COMPANY AS AN INCOME - TAX ASSESSEE, AND THAT IT HAD FURNISHED AUDITED ACCOUNTS IS NOT IN DISPUTE . FURTHERMORE, ITS BANK DETAILS TOO WERE FURNISHED TO THE ASSESSING OFFICER. IF THE ASSESSING OFFICER WERE TO CONDUCT HIS TASK DILIGENTLY, HE OUGHT TO HAVE AT LEAST SOUGHT THE MATERIAL BY WAY OF BANK STATEMENTS, ETC., TO DISCERN WHETHER IN FACT THE AMOUNTS WERE INFUSED INTO THE SHAREHOLDER'S ACCOUNT IN CASH AT ANY POINT OF TIME OR THAT THE AMOUNT OF RS. 1.3 CRORES IN THE CASE OF M/S. ITA NOS. 1451 TO 1453/DEL./2013 40 CREATIVE FINANCIAL SERVICES PVT. LTD. AND RS. 3.7 CRORES IN THE CASE OF OTHER SHARE APPLICANTS WERE SUCH AS TO BE BEYOND THEIR MEANS. IN THE ABSENCE OF ANY SUCH ENQUIRY, THE COURT IS OF THE OPINION THAT THE FINDINGS HOLDING THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS PLACED UPON IT BY LAW CANNOT BE CONSIDERED UNREASONABLE. NO QUESTION OF LAW ARISES. III. DECISION OF THE HON B LE SUPREME COURT CIT VS LOVELY EXPORTS P.LTD. [2008] 216 CTR 0195 IN WHICH IT WAS HELD AS UNDER : IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. IV. DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS KAMDHENU S TEEL & ALLOYS LTD. & ORS. 361 ITR 0220 (DELHI) IN WHICH IT WAS HELD AS UNDER : ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WOULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTI ON AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT HAS CREATED EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE ITA NOS. 1451 TO 1453/DEL./2013 41 ASSESSEE WITH S UCH A LIABILITY UNDER S.68; AO FAILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHER INVESTIGATION AND THEREFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE. V. JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS VRINDAVAN FARMS P.LTD. ETC. IN ITA NO.71/2015 DATED 12.08.2015 (DELHI) IN WHICH IT WAS HELD AS UNDER : THE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INCOME AS REFLECTED IN THEIR RETURN OF INCOME. IT WAS OBSERVED BY THE IT AT THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF THE VERACITY OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DEPARTMENTAL APPEAL WAS DISMISSED BY THE HON BLE HIGH COURT. VI. DECISION OF HON BLE SUPREME COURT IN THE CASE OF EARTHMETAL ELECTRICAL PVT. LTD., VS. CIT DATED 30TH JULY, 2010 IN SLP.NO.21073 OF 1999, IN WHICH IT WAS HELD AS UNDER : WE HAVE EXAMINED THE POSITION, WE FIND THAT THE SHAREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTITIOUS THEREFORE, THE IMPUGNED ORDER IS S ET ASIDE. ITA NOS. 1451 TO 1453/DEL./2013 42 VII. DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD., 299 ITR 268, IN WHICH IT WAS HELD AS UNDER : NO ADVERSE INFERENCE SHOULD BE DRAWN IF SHAREHOLDERS AILED TO RESPOND TO THE NOTICE BY A.O. VIII. DECISION OF HON BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD., (2013) 356 ITR 65, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEALS, THAT IF THE ASSESSEE HAD RECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR FICTITIO US PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRESENTED THE COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. IT WAS NOBODY'S CASE THAT THE NON - RESIDENT INDIAN COMPANY WAS A BOGUS OR NON - EXISTENT COMPANY OR THAT THE AMOUNT SUBSCRIBED BY THE COMPANY BY W AY OF SHARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AND THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONTENTION WAS THAT THE CREDITWORT HINESS OF THE CREDITOR WAS ITA NOS. 1451 TO 1453/DEL./2013 43 ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS, THE ADDITION WAS RIGHTLY DELETED. CIT V. LOVELY EXPORTS P. LTD. [2009] 319ITR (ST.) 5 (SC) APPLIED. IX. DECISION OF H ON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DWARAKADHISH INVESTMENT P. LTD., (ITA.NO. 911 OF 2010) AND DWARKADHISH CAPITAL P. LTD., (ITA.NO.913 OF 2010) (2011) 330 ITR 298 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 OF THE INCOME TAX ACT, 1961, THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSES YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THEIR PAN NUMBER OR INCOME - TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT TH E ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE 'SOURCE ITA NOS. 1451 TO 1453/DEL./2013 44 OF SOURCE'. THE ASSESSEE - COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR THE ASSESSMENT YEAR 2001 - 02 ON SCRUTINY OF ACCOUNTS, THE ASSESSING OFFICER FOUND AN ADDITION OF RS.71,75,000 IN THE SHARE CAPITAL OF THE ASSESSEE. THE ASSE SSING OFFICER SOUGHT AN EXPLANATION OF THE ASSESSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OFFERED A DETAILED EXPLANATION. HOWEVER, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE APPLICATION MONEY F ROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION OF RS.35,50,000/ - WITH THE AID OF SECTION 68 OF THE ACT, 1961 ON ACCOUNT OF UNEXPLAINED CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE. HOWEVER, IN APPEAL, THE COMMISSIO NER OF INCOME - TAX (APPEALS) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD PROVED THE EXISTENCE OF THE SHAREHOLDERS AND THE GENUINENESS OF THE TRANSACTION. THE INCOME - TAX APPELLATE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME - TAX ( APPEALS) AS IT WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPLICATION MONEY HAD BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEA LS, THAT THE DELETION OF ADDITION WAS JUSTIFIED. ITA NOS. 1451 TO 1453/DEL./2013 45 X. DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. WINSTRAL PETROCHEMICALS P. LTD., 330 ITR 603, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUTED THAT T HE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE - COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BANKING CHANNELS. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSESSING OFFICER. SINCE THE APPLICANT C OMPANIES WERE DULY INCORPORATED, WERE ISSUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH MONEY WAS TRANSFERRED TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES, THEY COULD NOT BE SAID TO BE NON - EXISTENT, EVEN IF THEY, AFTER SUBMITTING THE SHARE APPLICATIONS HAD CHANGED THEIR ADDRESSES OR HAD STOPPED FUNCTIONING. THEREFORE, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE GENUINENESS OF THE TRANSACTIONS HAD BEEN DULY ESTABLISHED BY THE ASSESSEE. XI. DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD., (2008) 307 ITR 334 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : ITA NOS. 1451 TO 1453/DEL./2013 46 DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANTS DID NOT HA VE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. XII. HONOURABLE BOMBAY HIGH COURT IN CASE OF 397 ITR 136 CIT V ORCHIND INVESTENTS LIMITED HAS HELD THAT . WE HAVE CONSIDERED THE SUBMISSIONS. 5. THE ASSESSING OFFICER ADDED RS. 95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME - TAX ACT ONLY ON THE GROUND THAT THE PARTIES TO WHOM THE SHARE CERTIFICATES WERE ISSUED AND WHO HAD PAID THE SHARE MONEY HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE SUMMONS COULD NOT BE SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT TRACED AND IN RESPECT OF SOME OF THE PARTIES WHO HAD APPEARED, IT WAS OBSERVED THAT JUST BEFORE ISSUANCE OF CHEQUES, THE AMOUNT WAS DEPOSITED IN THEIR ACCOUNT. PAGE NO : 0139 6. THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO TH ESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE - SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR ACCOUNTS FOR INVES TING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN THE CASE OF GAGANDEEP INFRASTRUCTURE P . LTD. (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. ITA NOS. 1451 TO 1453/DEL./2013 47 IN VIEW OF THE ABOVE FACTS AND IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS, DISCUSSED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE U/S. 68 IN THE HANDS OF THE ASSESSEE WITH RESPECT TO 21 COMPANIES OF RS.5.30 CRORES CANNOT BE SUSTAINED. 1 1. THE REMAINING ISSUE INVOLVED IN THIS APPEAL IS WITH RESPECT TO ADDITION OF RS.5,70,000/ - ON ACCOUNT OF EXCESS MONEY PAID TOWARDS PURCHASE OF AGRICULTURAL LAND. THE ASSESSING OFFICER HAS TREATED THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE. APART FR OM GROUND NO. 2, CHALLENGING THE ABOVE ADDITION, THE ASSESSEE HAS ALSO TAKEN AN ALTERNATE GROUND NO.4 AGITATING THAT THE LD. AUTHORITIES BELOW ARE NOT JUSTIFIED IN NOT GIVING CREDIT OF SURPLUS AMOUNT OF SURRENDERED INCOME OF RS.29,58,792/ - AGAINST ADDITION OF RS.5,70,000/ - MADE ON ACCOUNT OF EXCESS MONEY PAID TOWARDS PURCHASE OF AGRICULTURE LAND. THE LD. AR OF THE ASSESSEE HAS LAID MUCH EMPHASIS ON THE ALTERNATE GROUND OF APPEAL. THE LD. DR , ON THE OTHER HAND , HAS REITERATED THE FINDINGS REACHED BY LD. AUTH ORITIES BELOW. 12. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE SURRENDERED A SUM OF RS.7,50,00,000/ - ON ACCOUNT OF PEAK INVESTMENT OF DIARIES SEIZED DURING THE COURSE OF SEARCH, WHICH STOOD ACCEPTED BY THE ITA NOS. 1451 TO 1453/DEL./2013 48 REVENUE AUTHORITIES AS BUSINESS INCOME OF ASSESSEE. IT IS ALSO AN ADMITTED FACT THAT THE ACTUAL PEAK AMOUNT WORKED OUT TO RS.7,20,41,208/ - . THEREFORE, THE SURPLUS AMOUNT OF RS.29,58,792/ - , ADMITTEDLY , BEING THE BUSINESS INCOME OF THE ASSESSEE, IN OUR CONSIDERED OPINION, SH OULD BE DEEMED TO BE THE SOURCE OF EXCESS AMOUNT PAID FOR PURCHASE OF AGRICULTURAL LAND AND SHALL TAKE CARE OF IT. HENCE, THERE WAS NO NEED TO MAKE SEPARATE ADDITION ON THIS ACCOUNT. ACCORDINGL Y, THE ADDITION OF RS.5,70,000/ - DESERVES TO BE DELETED. AS A RESULT, THE APPEAL OF THE ASSESSEE IS FOUND FULL OF MERITS AND DESERVES TO BE ALLOWED. 13. IN THE REMAINING TWO APPEALS NOS. 1451 AND 1453/ DEL./2013 OF OTHER ASSESSEES , THE SOLITARY ISSUE INV OLVED IS WITH RESPECT TO ADDITIONS OF RS.3,05,00,000/ - AND RS.35,00,000/ - MADE U/S. 68 OF THE IT ACT ON ACCOUNT OF SHARE CAPITAL SUBSCRIBED BY VARIOUS COMPANIES. THE GROUNDS RAISED IN BOTH THESE APPEALS ARE ALSO COMMON, WHICH READ AS UNDER : GROUNDS IN ITA NO. 1451/DEL./2013: 1. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ACTED ARBITRARILY AND ON PRESUMPTIONS BASIS, CONTRARY TO PRINCIPLES OF NATURAL JUSTICE AND PROVISION OF LAW AS SUCH THE ACTION AND FINDINGS BASED THEREON STANDS VITIATED AND ORDER IS BAD IN LAW. 2. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT HOLDING THAT NOTICE U/S. 153 A ISSUED BY LD AO IS MISCONCEIVED AND ILLEGAL BEING WITHOUT JURISDICTION, CONTRARY TO FACTS AND PROVISION OF LAW AND HENCE THE ASSESSM ENT BASED THEREON MUST BE QUASHED AS ERRONEOUS AND VOID. ITA NOS. 1451 TO 1453/DEL./2013 49 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.3,05,00,000/ - U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIBED BY S EVEN COMPANIES INCORPORATED UNDER THE COMPANIES ACT MADE BY LD AO WHICH IS BASED ON SURMISES AND CONJECTURES, AGAINST PRINCIPLES OF NATURAL JUSTICE AND CONTRARY TO FACTS AND PROVISION OF LAW AND HENCE THE ADDITION SO MADE BY LD. A.O. AND CONFIRMED BY CIT(A ) NEEDS TO BE DELETED. 4. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT HOLDING THAT LD. AO IS NOT JUSTIFIED IN DISTURBING THE COMPLETED ASSESSMENT U/S 143(1) OF THE INCOME TAX ACT'1961 IN THE ABSENCE OF ANY SEIZED MATERIAL PERTAINING TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND MAKING AN ADDITION OF RS.3,05,00,000 WHICH IS CONTRARY TO FACTS AND PROVISION OF LAW AS SUCH THE ACTION OF LD. AO NEED TO BE UNDONE AND THE ADDITION MADE BY HIM NEEDS TO BE DELETED. GROUNDS IN ITA NO. 1453/DEL./2013: 1. THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ACTED ARBITRARILY AND ON PRESUMPTIONS BASIS, CONTRARY TO PRINCIPLES OF NATURAL JUSTICE AND PROVISION OF LAW AS SUCH THE ACTION AND FINDINGS BASED THEREON STANDS VITIATED AND ORDER IS BAD IN LAW. 2. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT HOLDING THAT NOTICE U/S. 153A ISSUED BY LD AO IS MISCONCEIVED AND ILLEGAL BEING WITHOUT JURISDICTION, CONTRARY TO FACTS AND PROVISION OF LAW AND HENCE THE ASSESSME NT BASED THEREON MUST BE QUASHED AS ERRONEOUS AND VOID. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.35,00,000/ - U/S 68 ON ACCOUNT OF SHARE CAPITAL SUBSCRIBED BY ONE COMPANY INCORPORATED UNDER THE COMPANIES ACT MADE BY LD AO WHICH IS BASED ON SURMISES AND CONJECTURES, AGAINST PRINCIPLES OF NATURAL JUSTICE AND CONTRARY TO FACTS AND PROVISION OF LAW AND HENCE THE ADDITION SO MADE BY LD. A.O. AND CONFIRMED BY CIT(A) NEEDS TO BE DELETED. 4. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT HOLDING THAT THE LD. AO IS NOT JUSTIFIED IN DISTURBING THE COMPLETED ASSESSMENT U/S 143(1) OF THE INCOME TAX ACT'1961 IN THE ABSENCE OF ANY ITA NOS. 1451 TO 1453/DEL./2013 50 SEIZED MATERIAL PERTAINING T O THE ASSESSMENT YEAR UNDER CONSIDERATION AND MAKING AN ADDITION OF RS.35,00,000 WHICH IS CONTRARY TO FACTS AND PROVISION OF LAW AS SUCH THE ACTION OF LD. AO NEED TO BE UNDONE AND THE ADDITION MADE BY HIM AND CONFIRMED BY CIT(A) NEEDS TO BE DELETED. 14. SINCE THE ABOVE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE WHILE DISPOSING OF THE APPEAL NO. 1452/DEL./2013 OF THE ASSESSEE , M/S. GOEL INTERNATIONAL PVT. LTD., THE DECISION REACHED BY US IN THAT APPEAL, SHALL EQUALLY APPLY IN THESE TWO APPEALS TOO. ACCORDINGLY, IN VIEW OF OUR FINDING REACHED IN APPEAL NO. 1452/DEL./2013, THESE APPEALS OF ASSESSEES ALSO DESERVE TO BE ALLOWED. 1 5. IN THE RESULT, ALL THE THREE APPEALS OF DIFFERENT ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH, 2018. SD/ - SD/ - ( BHAVNESH SAINI ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01.03. 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BE NCHES, NEW DELHI