ITO, CHENNAI V. United Capital Partners (India) P Ltd., CHENNAI

ITA 1549/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9659 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Share purchase agreement; Accommodation entries
• Section: 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO. 1058/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 M/S UNITED CAPITAL PARTNERS (INDIA) PRIVATE LIMITED, K 27-6, GOLDEN WINDSOR, 1 ST AVENUE, ANNA NAGAR EAST, CHENNAI - 600 102. PAN : AAACU 9457 G V. THE INCOME TAX OFFICER, COMPANY CIRCLE III(1), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) ./ ITA NO. 1549/MDS/2014 ( )( / ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, COMPANY WARD - III(1), CHENNAI - 600 034. V. M/S UNITED CAPITAL PARTNERS (INDIA) PRIVATE LIMITED, K 27-6, GOLDEN WINDSOR, 1 ST AVENUE, ANNA NAGAR EAST, CHENNAI - 600 102. (+,/ APPELLANT) (-.+,/ RESPONDENT) (/0 1 2 /ASSESSEE BY : SHRI S. SRIDHAR, ADVOCATE 3 1 2 /REVENUE BY : SHRI A.B. KOLI, JCIT 4 1 0% / DATE OF HEARING : 30.03.2016 5') 1 0% / DATE OF PRONOUNCEMENT : 13.04.2016 2 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE ASSESSEE AND THE REVENUE HAVE FILED APP EALS AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2009-10. THEREFO RE, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE FIRST ISSUE ARISES FOR CONSIDERATION IS WI TH REGARD TO DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, DURING THE YEAR UNDER CONSIDERATION, THE A SSESSEE PAID A SUM OF ` 6,70,000/- TO ONE M/S MENON HOLDINGS TOWARDS CONSUL TANCY CHARGES AND ANOTHER SUM OF ` 52,060/- TOWARDS AUDIT FEES. THE ASSESSEE HAS NOT DEDUCTED TAX. ACCORDING TO THE L D. COUNSEL, THE ASSESSEE HAS ALREADY PAID THE AMOUNT, THEREFORE, IN VIEW OF THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN MERIL YN SHIPPING AND TRANSPORTS V. ADDL.CIT (136 ITD 23), THERE CANNOT B E ANY DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. 3 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 3. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH IN MERILYN SHIPPING AND TRANSPORTS (SUPRA) WAS CONSIDE RED BY THE CALCUTTA HIGH COURT AND GUJARAT HIGH COURT AND IT W AS HELD THAT THE DECISION OF THE SPECIAL BENCH IN MERILYN SHIPPING A ND TRANSPORTS (SUPRA) IS NO LONGER A GOOD LAW. THEREFORE, THE CI T(APPEALS) BY FOLLOWING THE JUDGMENT OF CALCUTTA HIGH COURT IN CI T V. CRESENT EXPORT SYNDICATE (216 TAXMAN 258) AND GUJARAT HIGH COURT IN CIT V. SIKANDARKHAN N. TUNVAR (2013) 357 ITR 312, CONFI RMED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. UNDER THE SCHEME OF INCOME-TAX ACT, THE TAX HAS TO BE DEDUCTE D AT THE TIME OF PAYMENT OR WHILE GIVING CREDIT IN THE BOOKS OF ACCO UNT. IN THIS CASE, ADMITTEDLY, THE ASSESSEE HAS PAID THE AMOUNT WITHOU T DEDUCTING THE TAX. SINCE THE ASSESSEE ADMITTEDLY FAILED TO DEDUC T TAX AT THE TIME OF PAYMENT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MAD E BY THE ASSESSING OFFICER. 4 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 5. WE HAVE CAREFULLY GONE THROUGH THE DECISION OF S PECIAL BENCH OF THIS TRIBUNAL IN MERILYN SHIPPING AND TRAN SPORTS (SUPRA). WE FIND THAT THE CALCUTTA HIGH COURT IN CRESENT EXP ORT SYNDICATE (SUPRA) EXAMINED THE CORRECTNESS OF THE DECISION OF THE SPECIAL BENCH AND FOUND THAT THE DECISION OF THE SPECIAL BE NCH IS NO LONGER A GOOD LAW. A SIMILAR VIEW WAS TAKEN BY THE GUJARA T HIGH COURT IN SIKANDARKHAN N. TUNVAR (SUPRA). THE COCHIN BENCH O F THIS TRIBUNAL HAD AN OCCASION TO EXAMINE AN IDENTICAL ISSUE IN SH RI THOMAS GEORGE MUTHOOT V. ACIT IN I.T.A. NO. 63 & 64/COCH/2 014 DATED 28.08.2014, AND OBSERVED AS FOLLOWS:- 11. THE NEXT CONTENTION OF THE ASSESSEE IS THAT THE HAS ALREADY PAID THE AMOUNT, PROVISIONS OF SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPECT OF AMOUNT WHICH REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. THE LD. REPRESENTATIVE PLACED HIS RELIANCE ON THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN MERILYN SHIPPING AND TRAN SPORT V. ADDL.CIT (2012) 70 DTR 81 AND ALSO THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN CIT VS M/S VECTOR SHIPPING SERVICES (P) LTD. I.T.A. NO. 122 OF 2013 JUDGMENT DATED 09-0 7-2013 AND SUBMITTED THAT THE SLP FILED BY THE REVENUE IN THE APEX COURT AGAINST THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN M/S VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) IS DISMISSED BY THE APEX COURT. IT IS WELL SETTLED PRINCIPLES OF LAW THAT T HE LAW LAID DOWN BY THE APEX COURT IS BINDING ON ALL COURTS AND AUTH ORITIES INCLUDING THIS TRIBUNAL UNDER ARTICLE 141 OF THE CO NSTITUTION OF INDIA. IT IS ALSO EQUALLY SETTLED PRINCIPLE THAT A DISMISSAL OF SLP WITHOUT ANY DISCUSSION IS NOT THE LAW DECLARED BY T HE APEX COURT. THE APEX COURT THOUGHT IT FIT THAT IT WAS N OT A FIT CASE TO BE ADMITTED FOR CONSIDERATION. THEREFORE, WHILE DI SMISSING THE SLP, THE APEX COURT DID NOT DECLARE ANY LAW. HENCE , WE CANNOT SAY THAT THE APEX COURT HAS DECLARED THE LAW DECLARING THAT SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPEC T OF THE 5 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 AMOUNTS REMAINS TO BE PAYABLE AT THE LAST DAY OF TH E FINANCIAL YEAR. 12. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMEN T OF THE ALLAHABAD HIGH COURT IN CIT VS M/S VECTOR SHIPPING SERVICES (P) LTD (SUPRA), COPY OF WHICH IS FILED BY THE ASSE SSEE. THE ALLAHABAD HIGH COURT, AFTER REPRODUCING THE RELEVAN T PARAGRAPH FROM THE ORDER OF CIT(A) AND REFERRING TO THE DECIS ION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN MERILYIN SHIPPING & TRANSPORTS (SUPRA) FOUND THAT THE TRIBUNAL HAS NOT COMMITTED A N ERROR. IT IS OBVIOUS THAT THERE IS NO DISCUSSION ABOUT THE CORRE CTNESS OR OTHERWISE OF THE DECISION RENDERED BY THE SPECIAL B ENCH OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA). HOWEVER, WE FIND THAT THE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIKANDARKHAN N TUNVAR ITA NOS 905 OF 2012, 709 & 71 0 OF 2012, 333 OF 2013, 832 OF 2012, 857 OF 2012, 894 OF 2012, 928 OF 2012, 12 OF 2013, 51 OF 2013, 58 OF 2013 AND 218 OF 2013 JUDGMENT DATED 02-05-2013 CONSIDERED THE DECISION O F THE SPECIAL BENCH OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA) AND SPECIFICALLY DISAGREED WITH THE PRINCIP LES LAID DOWN BY THE SPECIAL OF THIS TRIBUNAL IN MERILYN SHIPPING & TRANSPORTS (SUPRA). THE CALCUTTA HIGH COURT ALSO IN THE CASE O F CRESCENT EXPORTS SYNDICATE & ANOTHER IN ITAT 20 OF 2013 AND GA 190 OF 2013 JUDGMENT DATED 03-04-2013 CONSIDERED ELABORATE LY THE JUDGMENT OF THE SPECIAL BENCH OF THIS TRIBUNAL IN M ERILYN SHIPPING & TRANSPORTS (SUPRA) AND FOUND THAT THE DE CISION RENDERED BY THE SPECIAL BENCH OF THIS TRIBUNAL IS N OT THE CORRECT LAW. IT IS WELL SETTLED PRINCIPLES OF LAW THAT WHEN DIFFERENT HIGH COURTS EXPRESSED DIFFERENT OPINIONS ON A POINT OF L AW, THEN, NORMALLY, THE BENEFIT OF DOUBT UNDER THE TAXATION L AW WOULD GO TO THE ASSESSEE. IT IS ALSO EQUALLY SETTLED PRINCIP LES OF LAW THAT THE JUDGMENT WHICH DISCUSSES THE POINT IN ISSUE ELA BORATELY AND GIVES AN ELABORATE REASONING HAS TO BE PREFERRED WH EN COMPARED TO THE JUDGMENT WHICH HAS NO REASONING AND DISCUSSION. ADMITTEDLY, THE CALCUTTA HIGH COURT AND GUJARAT HIGH COURT HAVE DISCUSSED THE ISSUE ELABORATELY AND THE SPECIFIC REASONING HAS ALSO BEEN RECORDED AS TO WHY THE SPECIAL BENCH IS NOT CORRECT. THEREFORE, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE JUDGMENTS OF THE CALCUT TA HIGH COURT CRESCENT EXPORTS SYNDICATE & ANOTHER (SUPRA) AND GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA) HAVE TO BE PREFERRED WHEN COMPARED TO THE ALLAHABAD HIGH CO URT IN M/S VECTOR SHIPPING SERVICES (P) LTD (SUPRA). 13. FOR THE PURPOSE OF CONVENIENCE WE REPRODUCING BELOW THE OBSERVATIONS MADE BY THE CALCUTTA HIGH COURT IN CRE SCENT 6 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 EXPORTS SYNDICATE & ANOTHER (SUPRA) AND GUJARAT HIG H COURT IN SIKANDARKHAN N TUNVAR (SUPRA): CALCUTTA HIGH COURT IN CRESCENT EXPORTS SYNDICATE & ANOTHER (SUPRA) BEFORE DEALING WITH THE SUBMISSIONS OF THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES IN BOTH THE APPEALS WE HAVE TO EXAMINE THE CORRECTNESS OF THE MAJORITY VIEWS IN THE CASE OF MERILYN SHIPPING. WE ALREADY HAVE QUOTED EXTENSIVELY BOTH THE MAJORITY AND THE MINORITY VIEWS EXPRESSED IN THE AF ORESAID CASE. THE MAIN THRUST OF THE MAJORITY VIEW IS BASED ON THE FACT THAT THE LEGISLATURE HAS REPLACED THE EXPRESS ION AMOUNTS CREDITED OR PAID WITH THE EXPRESSION PAY ABLE IN THE FINAL ENACTMENT. COMPARISON BETWEEN THE PRE-AMENDMENT AND POST AMENDMENT LAW IS PERMISSIBLE FOR THE PURPOSE O F ASCERTAINING THE MISCHIEF SOUGHT TO BE REMEDIED OR THE OBJECT SOUGHT TO BE ACHIEVED BY AN AMENDMENT. THIS IS PRECISELY WHAT WAS DONE BY THE APEX COURT IN THE CA SE OF CIT VS. KELVINATOR REPORTED IN 2010(2) SCC 723. BUT THE SAME COMPARISON BETWEEN THE DRAFT AND THE ENACTED L AW IS NOT PERMISSIBLE. NOR CAN THE DRAFT OR THE BILL B E USED FOR THE PURPOSE OF REGULATING THE MEANING AND PURPORT O F THE ENACTED LAW. IT IS THE FINALLY ENACTED LAW WHICH IS THE WILL OF THE LEGISLATURE. THE LEARNED TRIBUNAL FELL INTO AN ERROR IN NOT REALIZING THIS ASPECT OF THE MATTER. THE LEARNED TRIBUNAL HELD THAT WHERE LANGUAGE IS CLEAR THE INTENTION OF THE LEGISLATURE IS TO BE GATHERED FROM THE LANGUAGE USED. HAVING HELD SO, IT WAS NOT OPEN TO SEEK TO INTERPRET THE SECTION ON THE BASIS OF AN Y COMPARISON BETWEEN THE DRAFT AND THE SECTION ACTUAL LY ENACTED NOR WAS IT OPEN TO SPECULATE AS TO THE EFFE CT OF THE SO-CALLED REPRESENTATIONS MADE BY THE PROFESSIONAL BODIES. THE LEARNED TRIBUNAL HELD THAT SECTION 40(A)(IA) OF THE ACT CREATES A LEGAL FICTION BY VIRTUE OF WHI CH EVEN THE GENUINE AND ADMISSIBLE EXPENSES CLAIMED BY AN ASSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION: IF THE ASSESSEE DOES NOT DEDUCT TDS ON SUCH EXPENSES ARE DISALLOWED. HAVING HELD SO WAS IT OPEN TO THE TRIBUNAL TO SEE K TO JUSTIFY THAT THIS FICTION CANNOT BE EXTENDED AN Y FURTHER AND, THEREFORE, CANNOT BE INVOKED BY ASSESSING OFFI CER TO DISALLOW THE GENUINE AND REASONABLE EXPENDITURE ON THE AMOUNTS OF EXPENDITURE ALREADY PAID? DOES THIS NOT 7 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 AMOUNT TO DELIBERATELY READING SOMETHING IN THE LAW WHICH IS NOT THERE? WE, AS SUCH, HAVE NO DOUBT IN OUR MIN D THAT THE LEARNED TRIBUNAL REALIZED THE MEANING AND PURPO RT OF SECTION 40(A)(IA) CORRECTLY WHEN IT HELD THAT IN CA SE OF OMISSION TO DEDUCT TAX EVEN THE GENUINE AND ADMISSI BLE EXPENSES ARE TO BE DISALLOWED. BUT THEY SOUGHT TO R EMOVE THE RIGOUR OF THE LAW BY HOLDING THAT THE DISALLOWA NCE SHALL BE RESTRICTED TO THE MONEY WHICH IS YET TO BE PAID. WHAT THE TRIBUNAL BY MAJORITY DID WAS TO SUPPLY THE CASU S OMISSUS WHICH WAS NOT PERMISSIBLE AND COULD ONLY HA VE BEEN DONE BY THE SUPREME COURT IN AN APPROPRIATE CA SE. REFERENCE IN THIS REGARD MAY BE MADE TO THE JUDGMEN T IN THE CASE OF BHUWALKA STEEL INDUSTRIES VS. BOMBAY IR ON & STEEL LABOUR BOARD REPORTED IN 2010(2) SCC 273. UNPROTECTED WORKER WAS FINALLY DEFINED IN SECTION 2(11) OF THE MATHADI ACT AS FOLLOWS:- UNPROTECTED WORKER MEANS A MANUAL WORKER WHO IS ENGAGED OR TO BE ENGAGED IN ANY SCHEDULED EMPLOYMENT. THE CONTENTION RAISED WITH REFERENCE T O WHAT WAS THERE IN THE BILL WAS REJECTED BY THE SUPR EME COURT BY HOLDING AS FOLLOWS: IT MUST, AT THIS JUNC TURE, BE NOTED THAT IN SPITE OF SECTION 2(11), WHICH INCLUDE D THE WORDS BUT FOR THE PROVISIONS OF THIS ACT IS NOT AD EQUATELY PROTECTED BY LEGISLATION FOR WELFARE AND BENEFITS O F THE LABOUR FORCE IN THE STATE, THESE PRECISE WORDS WER E REMOVED BY THE LEGISLATURE AND THE DEFINITION WAS M ADE LIMITED AS IT HAS BEEN FINALLY LEGISLATED UPON. IT IS TO BE NOTED THAT WHEN THE BILL CAME TO BE PASSED AND RECE IVED THE ASSENT OF THE VICE-PRESIDENT ON 05-06-1969 AND WAS FIRST PUBLISHED IN THE MAHARASHTRA GOVERNMENT GAZET TE EXTRAORDINARY, PART IV ON 13-06-1969, THE AFOREMENT IONED WORDS WERE OMITTED. THEREFORE, T HIS WOULD BE A CLE AR POINTER TO THE LEGISLATIVE INTENT THAT THE LEGISLAT URE BEING CONSCIOUS OF THE FACT AND BEING ARMED WITH ALL THE COMMITTEE REPORTS AND ALSO BEING ARMED WITH THE FAC TUAL DATA, DELIBERATELY AVOIDED THOSE WORDS. WHAT THE APPELLANTS ARE ASKING WAS TO READ IN THAT DEFINITIO N, THESE PRECISE WORDS, WHICH WERE CONSCIOUSLY AND DELIBERAT ELY OMITTED FROM THE DEFINITION. THAT WOULD AMOUNT TO SUPPLYING THE CASUS OMISSUS AND WE DO NOT THINK THA T IT IS POSSIBLE, PARTICULARLY, IN THIS CASE. THE LAW OF SU PPLYING THE CASUS OMISSUS BY THE COURTS IS EXTREMELY CLEAR AND SETTLED THAT THOUGH THIS COURT MAY SUPPLY THE CASUS OMISSUS , IT WOULD BE IN THE RAREST OF THE RATE CASE AND THUS SU PPLYING OF THIS CASUS OMISSUS WOULD BE EXTREMELY NECESSARY DUE TO THE INADVERTENT OMISSION ON THE PART OF THE LEGI SLATURE. BUT, THAT IS CERTAINLY NOT THE CASE HERE. 8 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 WE SHALL NOW ENDEAVOUR TO SHOW THAT NO OTHER INTERPRETATION IS POSSIBLE. THE KEY WORDS USED IN SECTION 40(A)(IA), ACCORDING TO US, ARE ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B. IF THE QUESTION IS WHICH EX PENSES ARE SOUGHT TO BE DISALLOWED? THE ANSWER IS BOUND T O BE THOSE EXPENSES ON WHICH TAX IS DEDUCTIBLE AT SOURC E UNDER CHAPTER XVII-B. ONCE THIS IS REALIZED NOTHING TURNS ON THE BASIS OF THE FACT THAT THE LEGISLATURE USED THE WORD PAYABLE AND NOT PAID OR CREDITED. UNLESS ANY AM OUNT IS PAYABLE, IT CAN NEITHER BE PAID NOR CREDITED. IF N AMOUNT HAS NEITHER BEEN PAID NOR CREDITED, THERE CAN BE NO OCCASION FOR CLAIMING ANY DEDUCTION. THE LANGUAGE USED IN THE DRAFT WAS UNCLEAR AND SUSCEPTIBLE TO GIVING MORE THAN ONE MEANING. BY LOO KING AT THE DRAFT IT COULD BE SAID THAT THE LEGISLATURE WANTED TO TREAT THE PAYMENTS MADE OR CREDITED IN FAVOUR OF A CONTRACTOR OF SUBCONTRACTOR DIFFERENTLY THAN THE PA YMENTS ON ACCOUNT OF INTEREST, COMMISSION OR BROKERAGE, FE ES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S BECAUSE THE WORDS MOUNTS CREDITED OR PAID WERE US ED ONLY IN RELATION TO A CONTRACTOR OF SUB-CONTRACTOR. THIS DIFFERENTIAL TREATMENT WAS NOT INTENDED. THEREFORE, THE LEGISLATURE PROVIDED THAT THE AMOUNTS, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER XVII-B PAYABLE ON ACCOUN T OF INTEREST, COMMISSION OR BROKERAGE, RENT, ROYALTY, F EES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICE S OR TO A CONTRACTOR OF SUB-CONTRACTOR SHALL NOT BE DEDUCTED IN COM PUTTING THE INCOME OF AN ASSESSEE IN CASE HE HAS NO T DEDUCTED, OR AFTER DEDUCTION HAS NOT PAID WITHIN TH E SPECIFIED TIME. THE LANGUAGE USED BY THE LEGISLATUR E IN THE FINALLY ENACTED LAW IS CLEAR AND UNAMBIGUOUS WHEREA S THE LANGUAGE USED IN THE BILL WAS AMBIGUOUS. A FEW WORDS ARE NOW NECESSARY TO DEAL WITH THE SUBMISSION OF MR. BAGCHI AND MS. ROYCHOWDHURI. THER E CAN BE NO DENIAL THAT THE PROVISION IN QUESTION IS HARSH. BUT THAT IS NO GROUND TO READ THE SAME IN A MANNER WHICH WAS NOT INTENDED BY THE LEGISLATURE. THIS IS OUR AN SWER TO THE SUBMISSION OF MR. BAGCHI. THE SUBMISSION OF MR. ROYCHOWDHURI THAT THE SECOND PROVISO SOUGHT TO BECO ME EFFECTIVE FROM 1ST APRIL, 2013 SHOULD BE HELD TO HA VE ALREADY BECOME OPERATIVE PRIOR TO THE APPOINTED DAT E CANNOT ALSO BE ACCEDED TO FOR THE SAME REASON INDIC ATED ABOVE. THE LAW WAS DELIBERATELY MADE HARSH TO SECUR E COMPLIANCE OF THE PROVISIONS REQUIRING DEDUCTIONS O F TAX AT SOURCE. IT IS NOT THE CASE OF AN INADVERTENT ERROR. FOR THE REASONS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE MAJORITY VIEWS EXPRESSED IN THE CA SE OF 9 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 MERILYN SHIPPING & TRANSPORTS ARE NOT ACCEPTABLE. T HE SUBMISSIONS ADVANCED BY LEARNED ADVOCATES HAVE ALRE ADY BEEN DEALT WITH AND REJECTED. GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR(SUPRA ) 23. DESPITE THIS NARROW INTERPRETATION OF SECTION 40(A)(IA), THE QUESTION STILL SURVIVES IF THE TRIBUNAL IN CASE OF M/S MERILYN SHIPPING & TRANSPORS VS. ACIT (SUPRA) WAS ACCURATE IN ITS OPINION. IN THIS CONTEXT, WE WOULD LIKE TO EXAMINE TWO ASPECTS. FIRSTLY, WHAT WOULD BE THE COR RECT INTERPRETATION OF THE SAID PROVISION. SECONDLY, WHE THER OUR SUCH UNDERSTANDING OF THE LANGUAGE USED BY THE LEGISLATURE SHOULD WAVER ON THE PREMISE THAT AS PROPOUNDED BY THE TRIBUNAL, THIS WAS A CASE OF CONS CIOUS OMISSION ON THE PART OF THE PARLIAMENT. BOTH THESE ASPECTS WE WOULD ADDRESS ONE AFTER ANOTHER. IF ONE LOOKS CL OSELY TO THE PROVISION, IN QUESTION, ADVERSE CONSEQUENCES OF NOT BEING ABLE TO CLAIM DEDUCTION ON CERTAIN PAYMENTS IRRESPECTIVE OF THE PROVISIONS CONTAINED IN SECTION S 30 TO 38 OF THE ACT WOULD FLOW IF THE FOLLOWING REQUIREME NTS ARE SATISFIED:- (A) THERE IS INTEREST, COMMISSION OR BROKERAGE, REN T, ROYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR BEING RESIDENT FOR CAR RYING OUT ANY WORK. (B) THESE AMOUNTS ARE SUCH ON WHICH TAX IS DEDUCTIB LE AT SOURCE UNDER XVIII-B. (C) SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTI ON HAS NOT BEEN PAID ON OR BEFORE DUE DATE SPECIFIED IN SU B- SECTION (1) OF SECTION 39. FOR THE PURPOSE OF CURRENT DISCUSSION REFERENCE T O THE PROVISO IS NOT NECESSARY. 24. WHAT THIS SUB-SECTION, THEREFORE, REQUIRES IS T HAT THERE SHOULD BE AN AMOUNT PAYABLE IN THE NATURE DESCRIBED ABOVE, WHICH IS SUCH ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B BUT SUCH TAX HAS NOT BEEN DEDU CTED OR IF DEDUCTED NOT PAID BEFORE THE DUE DATE. THIS P ROVISION NOWHERE REQUIRES THAT THE AMOUNT WHICH IS PAYABLE M UST REMAIN SO PAYABLE THROUGHOUT DURING THE YEAR. TO RE ITERATE THE PROVISION HAS CERTAIN STRICT AND STRINGENT REQU IREMENTS BEFORE THE UNPLEASANT CONSEQUENCES ENVISAGED THEREI N CAN BE APPLIED. WE ARE PREPARED TO AND WE ARE DUTY BOUND TO INTERPRET SUCH REQUIREMENTS STRICTLY. SUCH REQUIREMENTS, HOWEVER, CANNOT BE ENLARGED BY ANY ADDITION OR SUBTRACTION OF WORDS NOT USED BY THE 10 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 LEGISLATURE. THE TERM USED IS INTEREST, COMMISSION, BROKERAGE ETC. IS PAYABLE TO A RESIDENT OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB-CONTRACTOR FOR CARRY ING OUT ANY WORK. THE LANGUAGE USED IS NOT THAT SUCH AMOUNT MUST CONTINUE TO REMAIN PAYABLE TILL THE END OF THE ACCOUNTING YEAR. ANY SUCH INTERPRETATION WOULD REQU IRE READING WORDS WHICH THE LEGISLATURE HAS NOT USED. N O SUCH INTERPRETATION WOULD EVEN OTHERWISE BE JUSTIFIED BE CAUSE IN OUR OPINION, THE LEGISLATURE COULD NOT HAVE INTENDE D TO BRING ABOUT ANY SUCH DISTINCTION NOR THE LANGUAGE U SED IN THE SECTION BRINGS ABOUT ANY SUCH MEANING. IF THE INTERPRETATION S ADVANCED BY THE ASSESSEES IS ACCEP TED, IT WOULD LEAD TO A SITUATION WHERE THE ASSESSEE THOUGH WAS REQUIRED TO DEDUCT THE TAX AT SOURCE BUT NO SUCH DE DUCTION WAS MADE OR MORE FLAGRANTLY DEDUCTION THOUGH MADE I S NOT PAID TO THE GOVERNMENT, WOULD ESCAPE THE CONSEQUENCE ONLY BECAUSE THE AMOUNT WAS ALREADY PAI D OVER BEFORE THE END OF THE YEAR IN CONTRAST TO ANOT HER ASSESSEE WHO WOULD OTHERWISE BE IN SIMILAR SITUATIO N BUT IN WHOSE CASE THE AMOUNT REMAINED PAYABLE TILL THE END OF THE YEAR. WE SIMPLY DO NOT SEE ANY LOGIC WHY THE LEGISLATURE WOULD HAVE DESIRED TO BRING ABOUT SUCH IRRECONCILABLE AND DIVERSE CONSEQUENCES. WE HASTEN TO ADD THAT THIS IS NOT THE PRIME BASIS ON WHICH WE HA VE ADOPTED THE INTERPRETATION WHICH WE HAVE GIVEN. IF THE LANGUAGE USED BY THE PARLIAMENT CONVEYED SUCH A MEANING, WE WOULD NOT HAVE HESITATED IN ADOPTING SU CH AN INTERPRETATION. WE ONLY HIGHLIGHT THT WE WOULD NOT READILY ACCEPT THAT THE LEGISLATURE DESIRED TO BRING ABOUT AN INCONGRUOUS AND SEEMINGLY IRRECONCILABLE CONSEQUENC ES. THE DECISION OF HE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX, GUJARAT VS. ASHOKBHAI CHIMANBHAI (SUPRA), WOULD NO6T ALTER THIS SITUATION . THE SAID DECISION, OF COURSE, RECOGNIZES THE CONCEPT OF ASCERTAINING THE PROFIT AND LOSS FROM THE BUSINESS OR PROFESSION WITH REFERENCE TO A CERTAIN PERIOD I.E. THE ACCOUNTING YEAR. IN THIS CONTEXT, LAST DATE OF SUCH ACCOUNTING PERIOD WOULD ASSUME CONSIDERABLE SIGNIFICANCE. HOWEVER, THIS DECISION NOWHERE INDICA TES THAT THE EVENTS WHICH TAKE PLACE DURING THE ACCOUNT ING PERIOD SHOULD BE IGNORED AND THE ASCERTAINMENT OF F ULFILLING A CERTAIN CONDITION PROVIDED UNDER THE STATUTE MUST BE JUDGED WITH REFERENCE TO LAST DATE OF THE ACCOUNTIN G PERIOD. PARTICULARLY, IN THE CONTEXT OF REQUIREMENTS F SECT ION 40(A)(IA) OF THE ACT, WE SEE NO WARRANT IN THE SAID DECISION OF THE SUPREME COURT TO APPLY THE TEST OF PAYABILIT Y ONLY AS ON 31ST MARCH OF THE YEAR UNDER CONSIDERATION. MERE LY BECAUSE, ACCOUNTS ARE CLOSED ON THAT DATE AND THE 11 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 COMPUTATION OF PROFIT AND LOSS IS TO BE JUDGED WITH REFERENCE TO SUCH DATE, DOES NOT MEAN THAT WHETHER AN AMOUNT IS PAYABLE OR NOT MUST BE ASCERTAINED ON THE STRENGTH OF THE POSITION EMERGING ON 31T MARCH. 25. THIS BRINGS US TO THE SECOND ASPECT OF THIS DIS CUSSION, NAMELY, WHETHER THIS IS A CASE OF CONSCIOUS OMISSIO N AND THEREFORE, THE LEGISLATURE MUST BE SEEN TO HAVE DELIBERATELY BROUGHT ABOUT A CERTAIN SITUATION WHIC H DOES NOT REQUIRE ANY FURTHER INTERPRETATION. THIS IS THE FUNDAMENTAL ARGUMENT OF THE TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRANSPORTS VS. ACIT (SUPRA) TO A DOPT A PARTICULAR VIEW. 26. WHILE INTERPRETING A STATUTORY PROVISION THE CO URTS HAVE OFTEN APPLIED HYDENS RULE OR THE MISCHIEF RUL E AND ASCERTAINED WHAT WAS THE POSITION BEFORE THE AMENDM ENT, WHAT THE AMENDMENT SOUGHT TO REMEDY AND WHAT WAS TH E EFFECT OF THE CHANGES. 27 TO 36.. 37. IN OUR OPINION, THE TRIBUNAL COMMITTED AN ERROR IN APPLYING THE PRINCIPLE OF CONSCIOUS OMISSION IN THE PRESENT CASE. FIRSTLY, AS ALREADY OBSERVED, WE HAVE SERIOUS DOUBT WHETHER SUCH PRINCIPLE CAN BE APPLIED BY COMPARING THE DRAFT PRESENTED IN PARLIAMENT AND ULTIMATE LEGISLAT ION WHICH MAY BE PASSED. SECONDLY, THE STATUTORY PROVIS IONS IS AMPLY CLEAR. 38. IN THE RESULT, W ARE OF THE OPINION THAT SECTIO N 40(A)(IA) WOULD COVER NOT ONLY TO THE AMOUNTS WHICH ARE PAYAB LE AS ON 20 ITA NO. 63&64M 83-85&7-72/COCH/2014 31ST MARCH OF A PARTICULAR YEAR BUT ALSO WHICH ARE PAYAB LE AT ANY TIME DURING THE YEAR. OF COURSE, AS LONG AS THE OTHER REQUIREMENT OF THE SAID PROVISION EXIST. IN THAT CO NTEXT, IN OUR OPINION THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF M/S MERILYN SHIPPING & TRAN SPORTS VS ACIT (SUPRA), DOES NOT LAY DOWN CORRECT LAW. 14. BY FOLLOWING THE JUDGMENTS OF THE CALCUTTA HIG H COURT IN CRESCENT EXPORT SYNDICATE (SUPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF M/S MERILYN SHIPPING & TRANSPORTS (SUPRA) AND THE JUDGMENT OF T HE ALLAHABAD HIGH COURT IN VECTOR SHIPPING SERVICES (P) LTD (SUPRA) A RE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION WHEREAS T HE JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDICATE (S UPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. RESPECTFULLY F OLLOWING THE JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EXPORT SYNDI CATE (SUPRA) AND THE GUJARAT HIGH COURT IN SIKANDARKHAN N TUNVAR (SU PRA), WE DO NOT 12 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 SEE ANY INFIRMITY IN THE ORDERS OF THE LOWER AUTHOR ITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE CONFIRMED. THIS DECISION OF COCHIN BENCH OF THIS TRIBUNAL WAS CONFIRMED BY THE KERALA HIGH COURT BY JUDGMENT DATED 3 RD JULY, 2015 IN SHRI GEORGE MUTHOOT V. CIT IN ITA.NO.278 OF 2014 AS FOL LOWS:- 17. ANOTHER CONTENTION THAT WAS PRESSED INTO SERVICE WAS THAT THE APPELLANTS HAD ALREADY PAID THE AMOUNT AND THER EFORE, THE PROVISIONS OF SECTION 40(A)(IA), APPLICABLE ONLY IN R ESPECT OF THE AMOUNT WHICH REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR, IS NOT ATTRACTED. THEREFORE, ACCORDING TO TH E APPELLANTS, DISALLOWANCE CANNOT BE SUSTAINED. THIS CONTENTION WAS SOUGHT TO BE SUBSTANTIATED BY RELYING ON THE JUDGMENT OF THE ALL AHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX V. VECTOR SHIPPI NG SERVICES (P) [(2013) 357 ITR 642 (ALL)]. PRIMARILY, THIS CONTENTION SHOULD BE ANSWERED WITH REFERENCE TO THE LANGUAGE USED IN THE STATUTORY PROVISION. SECTION 40(A)(IA) MAKES IT CLEAR THAT THE CONSEQUENCE OF DISALLOWANCE IS ATTRACTED WHEN AN INDIVIDUAL, WHO I S LIABLE TO DEDUCT TAX ON ANY INTEREST PAYABLE TO A RESIDENT ON WHICH T AX IS DEDUCTIBLE AT SOURCE, COMMITS DEFAULT. THE LANGUAGE OF THE SE CTION DOES NOT WARRANT AN INTERPRETATION THAT IT IS ATTRACTED ONLY IF THE INTEREST REMAINS PAYABLE ON THE LAST DAY OF THE FINANCIAL YE AR. IF THIS CONTENTION IS TO BE ACCEPTED, THIS COURT WILL HAVE TO ALTER THE LANGUAGE OF SECTION 40(A)(IA) AND SUCH AN INTERPRETAT ION IS NOT PERMISSIBLE. THIS VIEW THAT WE HAVE TAKEN IS SUPPO RTED BY JUDGMENTS OF THE CALCUTTA HIGH COURT IN CRESCENT EX PORTS SYNDICATE AND ANOTHER [ITAT 20 OF 2013] AND THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. SIKANDADARKHAN N. TUNVAR [ITA NOS.905 OF 2012 & CONNECTE D CASES], WHICH HAVE BEEN RELIED ON BY THE TRIBUNAL. 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THEREFORE, THIS TRI BUNAL DO NOT FIND 13 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 7. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO THE ADDITION OF ` 169,00,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT. 8. SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE , SUBMITTED THAT THE ASSESSING OFFICER HAS MADE AN ADDITION OF ` 3,00,00,000/- UNDER SECTION 68 OF THE ACT. THE CIT(APPEALS), BY CONSIDERING THE FACTS OF THE CASE AND REMAND REPORT FILED BY THE AS SESSING OFFICER, CONFIRMED THE ADDITION TO THE EXTENT OF ` 169,00,000/-. HOWEVER, HE DELETED THE BALANCE AMOUNT. THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF THE CIT(APPEALS) WHEREIN PART OF THE A MOUNT WAS DELETED BY THE COMMISSIONER. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS RECEIVED A SUM OF ` 2.79 CRORES FROM NINE COMPANIES TOWARDS APPLICATION MONEY FOR ALLOTMENT OF SHARES. THE SHARES WERE ISSUED AT PREMIUM OF ` 990/- AND THE FACE VALUE WAS ` 10/-. THE LD.COUNSEL FURTHER SUBMITTED THAT THE RELATIONS HIP AMONG THE INVESTOR COMPANIES WAS STRAINED, THEREFORE, THE REL EVANT MATERIAL COULD NOT BE FURNISHED BEFORE THE AUTHORITIES BELOW . ACCORDING TO THE LD. COUNSEL, THE SHARE APPLICATION MONEY OF THE INVESTORS WAS 14 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 TRANSFERRED TO CAPITAL RESERVE ACCOUNT. REFERRING TO THE ASSESSMENT ORDER, WHICH WAS EXTRACTED BY THE CIT(APPEALS) AT P AGES 13 AND 14 OF HIS ORDER, THE LD.COUNSEL SUBMITTED THAT THE ASS ESSING OFFICER HAS NOT FOUND THE DEFICIENCY IN THE AFFIDAVIT FILED BY THE ASSESSEE. THE SO-CALLED NINE COMPANIES WERE VERY MUCH IN EXIS TENCE AND THE ASSESSING OFFICER HAS SENT THE NOTICE TO DIFFERENT ADDRESS. THE CLAIM OF THE ASSESSEE WAS THAT THE LETTERS ADDRESSE D TO NINE COMPANIES WERE RETURNED UNDELIVERED BECAUSE THE SAM E WERE ADDRESSED TO INCORRECT ADDRESS. THE COMMISSIONER F OUND THAT THERE WAS A GLARING CONTRADICTION BETWEEN THE CLAIM OF THE ASSESSEE AND THE EVIDENCE AVAILABLE ON RECORD FOR RECEIPT OF SHARE APPLICATION MONEY. ACCORDING TO THE LD. COUNSEL, ALL THE COMPA NIES ARE IN EXISTENCE AND PAYMENTS WERE MADE THROUGH BANKING CH ANNEL, THEREFORE, THE OBSERVATION OF THE ASSESSING OFFICER THAT THE COMPANIES WERE NOT IN EXISTENCE AND ACCOMMODATION E NTRIES WERE MADE IS NOT JUSTIFIED. ACCORDING TO THE LD. COUNSE L, THE ENTIRE ADDITION OF ` 3,00,00,000/- OUGHT TO HAVE BEEN DELETED BY THE CIT(APPEALS). THEREFORE, THE CIT(APPEALS) IS NOT J USTIFIED IN CONFIRMING THE ADDITION TO THE EXTENT OF ` 169,00,000/-. 15 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 9. ON THE CONTRARY, SH. A.B. KOLI, THE LD. DEPARTME NTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO SUPPORT THE SHARE APPLICATION MONEY SAI D TO BE RECEIVED TO THE EXTENT OF ` 3,00,00,000/-. EVEN COPIES OF THE FORMS OF SHARE APPLICATION MONEY WERE NOT FILED. THE FACE VALUE O F SHARE MONEY WAS ` 10/- AND THE ASSESSEE CLAIMS THAT THE SAME WAS ALLO TTED AT ` 990/- PER SHARE. THE TRANSACTION CLEARLY ESTABLISH ES THE DUBIOUS NATURE. EVEN THE COMPANIES SAID TO HAVE INVESTED T HE FUNDS ARE NOT TRACEABLE AND NOT IN EXISTENCE. THEREFORE, ACCORDI NG TO THE LD. D.R., THE ASSESSING OFFICER FOUND THAT THE INVESTME NT OF ` 3,00,00,000/- IN THE NAME OF SHARE APPLICATION MONE Y IS NOTHING BUT UNDISCLOSED INCOME OF THE ASSESSEE. REFERRING TO THE BANK STATEMENT FILED BY THE ASSESSEE, COPY OF WHICH IS A VAILABLE IN THE PAPER-BOOK, THE LD. D.R. POINTED OUT THAT THE MONEY WAS DEPOSITED AND IMMEDIATELY TRANSFERRED TO OTHER COMPANIES. TH EREFORE, IT IS NOTHING BUT PROVIDING ACCOMMODATION ENTRY. ACCORDI NG TO THE LD. D.R., THE ASSESSEE IS NOT DOING ANY BUSINESS OTHER THAN PROVIDING ACCOMMODATION ENTRIES TO OTHER COMPANIES. 10. SH. A.B. KOLI, THE LD. DEPARTMENTAL REPRESENTAT IVE FURTHER SUBMITTED THAT EVEN THE MINUTES OF THE BOARD MEETIN GS WERE NOT 16 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 FURNISHED BEFORE THE AUTHORITIES BELOW OR BEFORE TH IS TRIBUNAL. COPIES OF THE SHARE PURCHASE AGREEMENT ENTERED INTO WITH PRIVATE PARTIES WERE NOT FILED BEFORE THE AUTHORITIES BELOW OR BEFORE THIS TRIBUNAL. THE LD. D.R. FURTHER SUBMITTED THAT ONE SHRI AJAY SHARMA WAS THE AUTHORIZED SIGNATORY FOR THREE COMPANIES, N AMELY, M/S FIRST CHOICE BUILDWELL P. LTD., M/S GOOD MORNING BUILDWEL L PVT. LTD. AND M/S ARMAAN INFOWAYS PVT. LTD. SIMILARLY, ONE SHRI ANIL KUMAR AGARWAL WAS THE AUTHORIZED SIGNATORY FOR M/S TRIPUR ARI ENTERPRISES PVT. LTD., M/S ANKEY ASSOCIATES PVT. LTD. AND M/S I NTELECOM LTD. THEREFORE, ALL THE AUTHORIZED SIGNATORIES ARE THE C OMMON PERSONS. IN THE ABSENCE OF SUBSTANTIAL EVIDENCE TO SUPPORT T HE CLAIM OF SHARE APPLICATION MONEY, THE ASSESSING OFFICER HAS RIGHTL Y FOUND THAT THE ASSESSEE HAS INTRODUCED ITS OWN FUNDS, HENCE, THE A MOUNTS ARE TO BE TREATED AS UNEXPLAINED CREDIT IN THE HANDS OF TH E ASSESSEE. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE PARTLY. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) OUGHT TO HAVE CON FIRMED THE ENTIRE ADDITION OF ` 3,00,00,000/-. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE 17 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 CLAIMS THAT NINE COMPANIES INVESTED IN THE SHARES O F THE ASSESSEE. THE FACE VALUE OF SHARE WAS ` 10/-. THE ASSESSEE HAS OFFERED THE SAME AT ` 990/-. THE ASSESSEE CLAIMS THAT THE SHARE APPLICAT ION MONEY WAS FORFEITURED AND IT WAS TREATED AS CAPITAL RESERVE. IT IS CLEAR FROM THE ORDERS OF THE AUTHORITIES BELOW THAT NO SHARES WERE ISSUED TO ANYONE. THE ASSESSING OFFICER ADDRESSED LETTERS TO THE COMPANIES SAID TO HAVE INVESTED IN THE SHARE APPLIC ATION. HOWEVER, THE SAME WERE RETURNED UNSERVED. THE ASSESSEE NOW CLAIMS THAT THE ASSESSING OFFICER HAS SENT THE LETTERS TO INCOR RECT ADDRESS. ON PERUSAL OF THE BANK STATEMENT, IT APPEARS THAT THE MONIES WERE DEPOSITED AND THE SAME WERE TRANSFERRED OR WITHDRAW N WITHIN A SHORT SPAN OF TIME. THE ASSESSING OFFICER, HOWEVER , FOUND THAT THE MONEY WITHDRAWN WAS USED FOR PURCHASE OF FIXED ASSE T BEING RESIDENTIAL PLOT IN THE NAME OF THE DIRECTORS AND A CAR WAS ALSO PURCHASED IN THE NAME OF THE SPOUSE OF THE DIRECTOR . THE ASSESSING OFFICER FURTHER FOUND THAT A SUM OF ` 38,00,000/- WAS ADVANCED TO ANOTHER GROUP OF COMPANY, NAMELY, M/S J OLIE FASHIONS INDIA PVT. LTD. AS SHARE APPLICATION MONEY. THEREF ORE, IT IS OBVIOUS THAT THE MONEY DEPOSITED IN THE BANK ACCOUNT WAS US ED FOR THE PERSONAL EXPENDITURE OF THE DIRECTORS. 18 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 12. WE FIND THAT THE CIT(APPEALS) FOUND THAT THERE WAS A CONTRADICTION BETWEEN THE CLAIM OF THE ASSESSEE AND THE EVIDENCE AVAILABLE WITH REGARD TO SHARE APPLICATION MONEY RE CEIVED. REFERRING TO THE MONEY RECEIVED FROM M/S INTELECOM LTD., THE ASSESSEE CLAIMS THAT A SUM OF ` 21,00,000/- SAID TO HAVE RECEIVED. HOWEVER, THE AFFIDAVIT SHOWS A RECEIPT OF ` 25,00,000/-. FROM THE ORDER OF THE CIT(APPEALS), IT APPEARS THAT THE GOVE RNMENT WEBSITE OF THE DEPARTMENT OF CORPORATE AFFAIRS SHOWS A DIFF ERENT ADDRESS THAN THE ONE TO WHICH THE LETTERS WERE SENT BY THE ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE LETTERS HAVE TO BE SENT TO THE ADDRESS MENTIONED IN THE GOV ERNMENT WEBSITE OF DEPARTMENT OF CORPORATE AFFAIRS TO FIND OUT THE EXISTENCE OR OTHERWISE OF THE NINE COMPANIES WHO SAID TO HAVE INVESTED IN THE SHARES OF THE ASSESSEE-COMPANY. SINCE THE ASSESSEE SPECIFICALLY CLAIMS THAT THE LETTERS WERE NOT SENT TO THE CORREC T ADDRESS OF THE INVESTORS, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT GIVING ONE MORE OPPORTUNITY TO THE ASSESSING OFFICER TO SEND T HE LETTERS TO CORRECT ADDRESS OF NINE COMPANIES MAY NOT PREJUDICE THE INTEREST OF THE REVENUE. THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT GIVING SUCH AN OPPORTUNITY WOULD DEFINITELY PROMOTE THE CA USE OF JUSTICE. BEFORE CONCLUDING THAT THE TRANSACTIONS ARE BOGUS O R DUBIOUS IN 19 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 NATURE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXISTENCE OF THE SO-CALLED NINE COMPANIES NEED TO BE ASCERTAI NED. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW AR E SET ASIDE AND THE ISSUE OF ADDITION OF ` 3,00,00,000/- MADE UNDER SECTION 68 OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING O FFICER. THE ASSESSING OFFICER SHALL ISSUE NOTICE TO THE NINE CO MPANIES IN THE ADDRESS MENTIONED IN THE WEBSITE OF DEPARTMENT OF C ORPORATE AFFAIRS. IT IS OPEN TO THE ASSESSEE TO FURNISH COR RECT ADDRESS OF NINE COMPANIES SO AS TO ENABLE THE ASSESSING OFFICER TO ISSUE LETTERS / SHOW CAUSE NOTICE WITH REGARD TO INVESTMENT MADE IN THE ASSESSEE- COMPANY. THE ASSESSING OFFICER, AFTER CALLING UPON THE SO-CALLED NINE COMPANIES TO EXPLAIN THE INVESTMENT SAID TO HA VE MADE IN THE ASSESSEE-COMPANY IN SHARES, SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 20 I.T.A. NO.1058/MDS/14 I.T.A. NO.1549/MDS/14 ORDER PRONOUNCED ON 13 TH APRIL, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 13 TH APRIL, 2016. KRI. 1 -089 :9)0 /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. 4 ;0 () /CIT(A)-III, CHENNAI-34 4. 4 ;0 /CIT, CHENNAI-III, CHENNAI-34 5. 9< -0 /DR 6. =( > /GF.