Umiya Pipes Pvt. Ltd., Ahmedabad V. The ACIT, Circle-8, Ahmedabad

ITA 1679/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8458 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-06-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 29-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D P GUPTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Gift; Business income; Depreciation; Income from undisclosed sources; Additional evidence; Onus to prove; Revenue expenditure
• Section: 143(3); 142(1); 68; 145; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO. 1679/AHD/2014 / A.Y. 2002-03 UMIYA PIPES PVT. LTD., C/O. SHRI CHANDRAKANT PATEL (M.D.), 602, CHANDRALOK TOWER, NR. SHAHIBAUG DAFNALA, SHAHIBAUG, AHMEDABAD PAN : AAACU 3549 D VS ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-8, AHMEDABAD / (APPELLANT) / (RESPONDENT) BY ASSESSEE : SHRI S.N. SOPARKAR, AR BY REVENUE : SHRI D.P. GUPTA, CIT-DR / DATE OF HEARING : 05/09/2017 /DATE OF PRONOUNCEMENT: 12/09/2017 / O R D E R PER BENCH :- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002-03 ARISES AGAINST THE CIT(A)-XXI, AHMEDABADS ORDER DATED 18.03.2014 IN CASE NO.CIT(A)-XXI/136/13-14, UPHOLDING ASSESSING OFFICE RS ACTION ADDING NET PROFIT AND SHARE PREMIUM SUM UNDER SECTI ON 68 AMOUNTING TO RS.79,85,090/- AND RS.5,31,00,000/-; RESPECTIVEL Y IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME-TAX A CT, 1961; IN SHORT THE ACT. 2. WE COME TO THE FORMER ISSUE OF NET PROFIT ADDIT ION AMOUNTING TO RS.79,85,090/-. CASE FILE REVEALS THE INSTANT LIS TO BE SECOND ROUND OF PROCEEDINGS BETWEEN THE PARTIES BEFORE THIS TRIBUNA L. THIS ASSESSEE IS A ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 2 - PRIVATE LIMITED COMPANY MANUFACTURING PVC PIPES. I T FILED RETURN ON 31.03.2003 STATING LOSS OF RS.60,56,640/-. ITS TUR NOVER IN THE IMPUGNED ASSESSMENT YEAR WAS OF RS.33,48,51,667/- WITH OTHER INCOME OF RS.49,37,686/- STATING NET PROFIT OF RS.95,17,392/- AS COMPARED TO THE CORRESPONDING FIGURES IN PRECEDING ASSESSMENT YEAR OF RS.25,13,43,604 /-, RS.31,36,669/- AND RS.1,25,79,237/-; RESPECTIVELY. THE ASSESSING OFFICER THEN NOTICED THE ABOVE NET PROFIT TO HAVE COME DOWN FROM 4.94% TO 2.35% IN THE TWO ASSESSMENT YEARS. HE ISSUED VARIO US NOTICES UNDER SECTION 142(1) OF THE ACT IN SCRUTINY SEEKING REASO NS THEREOF. THE ASSESSEE FILED ITS REPLY. IT PLEADED THEREIN THAT ITS IN-CHARGE PERSON SHRI CHANDRAKANT PATEL HAD GONE OUT SINCE 11-12 MONTHS. IT THEREFORE EXPRESSED ITS INABILITY TO PRODUCE ALL OF ITS BOOKS AS ITS CREDITORS M/S. GSFC, J&K BANK AND IDBI HAD GOT ITS FACTORY PREMISE S SEALED. THIS MADE THE ASSESSING AUTHORITY TO REJECT ITS BOOKS UN DER SECTION 145 OF THE ACT. HE THEREAFTER ADOPTED NP RATE OF 4.94% IN BES T JUDGMENT ASSESSMENT FRAMED UNDER SECTION 144 OF THE ACT MAKI NG THE IMPUGNED ADDITION OF RS.79,85,090/- IN HIS ORDER DATED 02.03 .2005. THE CIT(A) CONFIRMED THE SAME IN FIRST ROUND LOWER APPELLATE O RDER DATED 14.09.2005. HE CONCLUDED THEREIN THAT THE ASSESSEE HAD NOT PRODUCED ANY OF ITS RELEVANT VOUCHERS IN ORDER TO GET THE EX PENDITURE IN QUESTION VERIFIED FROM THE FIELD AUTHORITIES. 3. THE ASSESSEE FILED ITA NO.2253/AHD/2005 BEFORE T HIS TRIBUNAL. THE CO-ORDINATE BENCH REMITTED THE SAID FIRST ROUND LITIGATION BACK TO THE ASSESSING OFFICER IN ITS ORDER DATED 12.06.2009 READING AS UNDER:- 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD . IN THE INSTANT CASE, THE ASSESSING OFFICER COMPLETED THE ASSESSMEN T U/S. 144 OF THE INCOME TAX ACT, 1961 DUE TO FAILURE OF THE ASSESSEE TO FURNISH THE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 3 - REQUIRED DETAILS. THE ASSESSEE EXPLAINED BEFORE TH E ASSESSING OFFICER THAT ALL ITS BOOKS OF ACCOUNT AND VOUCHERS, ETC. WERE KE PT IN THE FACTORY PREMISES WHICH WAS SEALED BY THE BANK AND, THEREFOR E, REQUESTED FOR KEEPING THE ASSESSMENT PROCEEDINGS IN ABEYANCE TILL THE RELEASE OF THE BOOKS OF ACCOUNT. HOWEVER, THE ASSESSING OFFICER CO MPLETED THE ASSESSMENT BECAUSE OF THE TIME LIMIT AVAILABLE IN T HE STATUE WAS GOING TO BE BARRED FOR PASSING THE ORDER. IN THE ASSESSMENT SO MADE, THE ASSESSING OFFICER MADE ADDITION BY ESTIMATING NET P ROFIT AT THE RATE 4.94% WHICH WAS THE RATE OF NET PROFIT ACCEPTED IN THE CASE OF THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR. ON APPEAL, THE LD. CIT(APPEALS) CONFIRMED THE ABOVE ADDITION. BEFORE US, THE LD. A UTHORIZED REPRESENTATIVE OF THE ASSESSEE EXPLAINED THAT NO DE FECT IN THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS FOUND BY THE REVENUE AND, THEREFORE, THE ESTIMATION OF PROFIT IN SUCH CIRCUMSTANCES WAS NOT JUSTIFIED. HE ALSO SUBMITTED THAT AS THE RE LEVANT BOOKS ARE NOW RELEASED THE SAME CAN BE PRODUCED BEFORE THE DEPART MENT FOR THEIR VERIFICATION. IN THE CIRCUMSTANCES IN OUR CONSIDER ED OPINION, IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THE MATTER BA CK TO THE FILE OF THE ASSESSING OFFICER FOR REFRAMING THE ASSESSMENT AFTE R PROPER VERIFICATION AS PER LAW. WE, THEREFORE, SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSIN G OFFICER. THE ASSESSING OFFICER SHALL ALLOW REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE, BEFORE REFRAMING THE ASSESSMENT AS PER LAW. 17. THE ASSESSEE ALSO TAKEN A GROUND OF APPEAL AGA INST ADDITION MADE OF RS.5.31 CRORES UNDER SECTION 68 OF THE INCOME-TAX A CT, 1961 IN RESPECT OF SHARE PREMIUM MONEY FOR WANT OF DETAILS. THE OTHER OBJECTION WHICH WAS RAISED BY THE ASSESSEE BEING THAT THE LD. CIT(A ) HAVING REFUSED ADDITIONAL GROUNDS OF APPEAL WHICH WERE IN RESPECT OF ALLOWANCE OF DEDUCTION FOR DEFERRED REVENUE EXPENDITURE OF RS.18 ,37,270/- WHICH WAS DEBITED IN THE BALANCE-SHEET AND THE CLAIM FOR DEDU CTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961. WE FIND THAT THE ADDITION OF RS.5.31 CRORES WAS MADE FOR WANT OF DETAILS WHICH THE ASSES SEE COULD NOT FURNISH BEFORE THE ASSESSING OFFICER FOR REASONS BEYOND HIS CONTROL. IN THE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE LD. C IT(APPEALS) WAS NOT JUSTIFIED IN NOT ADMITTING THE FRESH EVIDENCE FILED BY THE ASSESSEE BY FOLLOWING RULE 46A. HOWEVER, AS WE HAVE SET ASIDE THE ISSUE REGARDING DETERMINATION OF BUSINESS INCOME TO THE FILE OF THE ASSESSING OFFICER, WE ALSO SET ASIDE THE ISSUE TO THE FILE OF ASSESSING O FFICER. SIMILARLY, IN RESPECT OF DISALLOWANCE FOR DEFERRED REVENUE EXPEND ITURE AND EXEMPTION CLAIMED UNDER SECTION 80IA OF THE INCOME TAX ACT, 1 961, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE ISSUE TO THE FILE OF THE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 4 - ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECT ED TO REFRAME THE ASSESSMENT ON ALL THE ABOVE ISSUES IN ACCORDANCE WI TH LAW, AFTER PROPER VERIFICATION AND AFTER ALLOWING SUFFICIENT OPPORTUN ITY OF HEARING TO THE ASSESSEE. ALL THE ABOVE STATED GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 4. THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL PROC EEDINGS. HE APPEARS TO HAVE ISSUED SECTION 143(2) NOTICES DATED 02.09.2009, 29.06.2010, 06.07.2010 AND 28.07.2010 TO ASSESSEE. SHRI PATEL (SUPRA) APPEARS THIS TIME ON 01.11.2010. THE ASSESSING OFF ICER THEN ISSUED SECTION 144 NOTICE DATED 19.11.2010. THE ASSESSEE REPLIED THE SAME ON 25.11.2010 PLEADING THEREIN THAT LEARNED. CITY CIVI L COURT, AHMEDABAD HAD SEALED ITS PREMISES IN ITS ORDER DATED 22.08.20 07. ALL OF ITS BOOKS WERE CLAIMED TO BE LYING IN THE SAID SEALED PREMISE S. THE ASSESSING OFFICER THEREFORE REITERATED HIS EARLIER ADDITION I N SECOND ROUND OF ASSESSMENT AS WELL FINALIZED ON 07.12.2010. 5. THE ASSESSEE INSTITUTED ITS LATTER LOWER APPEAL ON 19.01.2011. IT FILED THE FOLLOWING DOCUMENTS BEFORE THE CIT(A) IN COURSE OF THE IMPUGNED LOWER APPELLATE PROCEEDINGS IN SECOND ROUN D : SR. NO. DATE PARTICULARS FILED BEFORE AUTHORITY ANNEXURE 1 07-10-11 SUBMISSION BEFORE CIT(A) ALONGWITH FOLLOWING ENCLOSURES: 2 02-03-05 ASSESSMENT ORDER PASSED U/S. 143(3 ) 'A' 3 14-09-05 ORDER PASSED BY CIT(A) 'B' 4 12-06-09 ORDER PASSED BY I.T.A.T. 'C' 5 04-05-09 PAPER BOOK FILED BEFORE I.T.A.T. CIT(A) & ITAT 'D' 27-08-05 SUBMISSION BEFORE CIT(A) ALONGWITH FOLLOWING ENCLOSURES 02-09-02 ACCOUNTS 31-03-03 RETURN OF INCOME 19-05-05 POSSESSION CERTIFICATE ISSUED BY GUJARAT STATE FINANCIAL CORPORATION - DETAILS OF SHARE PREMIUM RECEIVED 6 25 - 11 - 10 SUBMISSION BEFORE THE L D. A.O. A.O. 'E' ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 5 - 6. THE CIT(A) SOUGHT FOR A REMAND REPORT. THE ASSE SSING OFFICER FILED ITS FIRST REMAND REPORT ON 02.01.2012 REJECTI NG ASSESSEES VARIOUS PLEAS EXPLAINING ITS NET PROFIT RATE OF 2.59% IN TH E IMPUGNED ASSESSMENT YEAR AS COMPARED TO THAT AT THE RATE 4.94% IN PRECE DING ASSESSMENT YEAR AS FOLLOWS:- 1. IN THE PAPER BOOK HE CONTENDS THAT BOOK SHOULD NOT HAVE BEEN REJECTED BECAUSE THE ASSESSEE WAS IN A PECULIAR CON DITION AS THE COMPANY'S PREMISES WERE SEALED. THE ASSESSEE FURTHE R CONTENDS THAT THE REASON FOR FALL IN N/P WAS DUE TO INCREASED INTERES T COST AND CLAIM OF DEPRECIATION. 2. THE ASSESSEE'S PREMISES WERE SEALED VIDE ORDER D ATED 22/08/07 WHEREAS THE ORIGINAL ASSESSMENT ORDER WAS PASSED ON 02/03/0 5 THEREFORE THE CONTENTION THAT ASSESSEE WAS IN A PECULIAR CONDITI ON AS THE COMPANY'S PREMISES WERE SEALED' IS NOT CORRECT AND CANNOT BE ACCEDED TO. 3. AS REGARDS FALL IN N/P ASSESSEE ACCEPTS THAT IT IS DUE TO INCREASED INTEREST COST AND CLAIM OF DEPRECIATION. (A) INCREASED INTEREST COST THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT - THE AMOUNT BORROWED HAS BEEN USED FOR THE PURPOS E OF BUSINESS - THE INCREASE IN INTEREST EXPENDITURE WAS JUSTIFIE D AND AS PER THE PROVISIONS OF THE ACT. THE EXPENDITURE ON INTEREST TO OTHERS INCREASED FROM NIL IN AY 2001- 02 TO RS. 78.13 LACS IN A.Y. 2002-03. THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE TO JUSTIFY THE SAID EXPENDITURE. FURTHERMO RE THE SALES OF THE ASSESSEE HAS INCREASED BY APPROX. 33% OVER THE PREV IOUS YEAR WHEREAS THE INTEREST EXPENSE HAS INCREASED BY 200%. THUS TH ERE IS ABNORMAL INCREASE IN EXPENSES AND IN VIEW OF THE ABOVE THE A O HAS CORRECTLY AND JUDICIOUSLY MADE THE ADDITION ON THE BASIS OF N/P I NSTEAD OF DISALLOWING THE ENTIRE CLAIM OF INTEREST. (B) CLAIM OF DEPRECIATION DURING THE RELEVANT AY THE ASSESSEE HAS MADE HUGE I NVESTMENT IN FIXED ASSTS AND CLAIMED DEPRECIATION FOR FULL YEAR ON THE SAME. HOWEVER DURING THE ASSESSMENT PROCEEDINGS AND SET ASIDE PROCEEDING S THE ASSESSEE HAS NOT ESTABLISHED THE SOURCE OF INVESTMENT IN FIXED ASSET S AND ALSO NOT ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 6 - ESTABLISHED WHETHER THE ASSETS WERE PUT TO USE DURI NG THE YEAR OR NOT. THE ASSESSEE HAS ALSO NOT ESTABLISHED WHETHER THE I NTEREST UPTO THE DATE OF PUT TO USE ( IF THE ASSETS WERE PURCHASED FROM BORR OWED FUNDS) HAS BEEN CAPITALIZED OR NOT. IN VIEW OF THE ABOVE THE CLAIM OF THE ASSESSEE IS NOT JUSTIFIED AND THE AO HAS CORRECTLY AND JUDICIOUSLY MADE THE ADDITION ON THE BASIS OF N/P INSTEAD OF DISALLOWING THE ENTIRE CLAIM OF DEPRECIATION. 7. THE ASSESSING OFFICER THEREAFTER SUBMITTED TWO M ORE REMAND REPORTS DATED 27.03.2012 AND 07.08.2012. THIS LATT ER REPORT FORMS PART OF THE PAPER-BOOK PAGES 149 151. HE AGAIN QUOTED AS SESSEES FAILURE IN PRODUCING NECESSARY BILLS/VOUCHERS OF FIXED ASSETS AS WELL AS UTILIZATION OF INTEREST BEARING FUNDS IN PURCHASES THEREOF. 8. WE NOW ADVERT TO CIT(A)S LOWER APPELLATE ORDER UNDER CHALLENGE. HE OBSERVES THEREIN THAT VARIOUS NOTICE S HAD BEEN ISSUED TO THE ASSESSEE REGARDING ITS APPEAL HEARING ON 08.10. 2013, 21.10.2013, 13.11.2013, 28.11.2013, 02.01.2014, 09.01.2014 AND 21.03.2014. HIS ORDER UNDER CHALLENGE READS THAT NEITHER THE ASSESSEE NOR ITS AUTHORIZED REPRESENTATIVE PUT IN APPEARANCE TO REBUT REMAND FI NDINGS REITERATING THE IMPUGNED ADDITIONS. THE CIT(A) THEREFORE AFFIRM S THE IMPUGNED ADDITION ONCE AGAIN. THIS LEAVES THE ASSESSEE AGGR IEVED. 9. MR. S.N. SOPARKAR IS THE LEARNED AUTHORIZED REPR ESENTATIVE APPEARING AT ASSESSEES BEHEST. HE PLEADS FIRST OF ALL THAT THE ASSESSEE COULD NOT FILE ITS NECESSARY BOOKS IN THE INSTANT S ECOND ROUND AS WELL AS THE LEARNED CITY CIVIL COURT HAD SEALED ASSESSEES PREMISES. THIS FIRST PLEA GOES AGAINST THE RECORD AS LEARNED CO-ORDINATE BENCH IN EARLIER ROUND OF LITIGATION (SUPRA) HAD DULY OBSERVED THAT RELEVANT BOOKS OF ACCOUNTS STOOD RELEASED BY THAT TIME, I.E. WELL BEF ORE 12.06.2009. THERE IS HARDLY ANY QUARREL THAT SAID CLINCHING OBSERVATI ON HAS ATTAINED ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 7 - FINALITY. THE ASSESSEE NEVER MADE ANY ATTEMPT TO GE T THE SAME MODIFIED IN ANY MANNER WHATSOEVER. IT RATHER CHOSE TO ADOPT TOTAL NON- COOPERATION IN CONSEQUENTIAL ROUND OF ASSESSMENT. IT CLAIMED BEFORE THE ASSESSING OFFICER THAT LEARNED CITY CIVIL COURT HAD SEALED ITS FACTORY PREMISES VIDE ORDER DATED 22.08.2007 DESPITE THE FA CT THAT LEARNED CO- ORDINATE BENCH HAD JUST MADE THE ABOVE CONTRARY OBS ERVATION. THERE IS NO MATERIAL IN THE INSTANT CASE FILE INDICATING AS TO HOW AND IN WHAT CIRCUMSTANCES THE ASSESSEE HAS COME TO BE IN POSSES SION OF THE IMPUGNED ADDITIONAL EVIDENCE (SUPRA) CLAIMING INTER EST EXPENDITURE AND DEPRECATION IN THE IMPUGNED ASSESSMENT YEAR FOR THE FIRST TIME OVER AND ABOVE ITS CORRESPONDING EXPENDITURE IN PREVIOUS ASSESSMENT YEAR. WE REPEAT THAT WE ARE IN SECOND CONSEQUENTIAL ROUND OF PROCEEDINGS. THIS TRIBUNAL HAD ALREADY ACCEPTED ASSESSEES PLEA OF AVAILABILITY OF RECORD. IT FAILS TO JUSTIFY ITS TOTAL NON-COOPERAT ION IN ASSESSING OFFICERS CONSEQUENTIAL PROCEEDING RESULTING IN SECOND EX-PAR TE ASSESSMENT AS WELL. ITS FORM 35 FILED BEFORE THE LOWER APPELLATE AUTHORITY DOES NOT EXPLAIN ITS NON-COOPERATION IN VARIOUS GROUNDS PLEA DED THEREIN. WE THUS REJECT THE INSTANT FIRST ARGUMENT. 10. THE ASSESSEES NEXT CONTENTION REFERS TO MERIT OF THE ISSUE. IT TAKES US TO PAGE(S) 135-137 (ITS LETTER DATED 07.10.2012) ADDRESSED TO THE CIT(A) TABULATING VARIOUS ITEMS OF SALE, RAW MATERI ALS CONSUMED, PURCHASES, MANUFACTURING EXPENSES, SELLING, ADMINIS TRATIVE AND OTHER EXPENSES FOLLOWED BY INTEREST AND DEPRECIATION AS U NDER:- PARTICULARS AMOUNT FOR ACCT. YEAR 2001-02 AMOUNT FOR ACCT. YEAR 2000-01 SALES 334,851,676 251,343,604 RAW MATERIAL CONSUMPTION & PURCHASES OF FINISHED GOODS 314,706,967 243,415,167 ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 8 - MANUFACTURING EXPENSES 9,093,575 5,957,066 SELLING, ADMINISTRATIVE & OTHER EXPENSES 2,158,998 1,554,478 INTEREST 12,950.103 4,332,087 DEPRECIATION 5,626,817 2,262,716 PROFIT/LOSS (BEFORE TAX) 9,517,392 12,579,237 11. THE ASSESSEE ACCORDINGLY SEEKS TO REITERATE ITS CASE THAT THE NP IN QUESTION IN PREVIOUS AS WELL AS THE IMPUGNED ASSESS MENT YEAR IS AT THE RATE OF 6.72% AND 6.71% INDICATING A VERY MINOR FRA CTION OF DIFFERENCE. IT ATTRIBUTES THE SAME TO ITS INTEREST EXPENDITURE TO SECURED LOANS AS ON 31.03.2002 OF RS.1453.22 LACS OBTAINED FROM VARIOUS FINANCIAL INSTITUTIONS/BANKS FOR BUSINESS PURPOSES THEREBY IN CREASING ITS BLOCK OF FIXED ASSETS FROM RS.636.71 LACS TO RS.1184.31 LACS DURING THE RELEVANT PREVIOUS YEAR INDICATING ADDITION OF RS.562.52 LACS FOLLOWED BY ITS DEPRECATION CLAIM AS ACCEPTED IN ASSESSMENT ORDER. THE ASSESSEE THEN STATES HIS FIGURES OF SECURED LOAN IN PRECEDING ASS ESSMENT YEAR TO BE MUCH LESS INVOLVING A SUM OF RS.823.53 LACS. IT AL SO REFERS TO PAPER-BOOK PAGES 1-39 IN THIS REGARD. ITS BALANCE-SHEET IS AT PAGES 1-2 REVEALING FIXED ASSET FIGURES OF RS.118,431,143/- AS ON 31.03 .2002. THIS FOLLOWS ITS P&L ACCOUNTS INDICATING INTEREST OUTGO OF RS.12,950 ,103/- AT PAGE 3. PAGES 4-5 ARE ITS SCHEDULES ANNEXED TO AND FORMING PART OF ACCOUNTS. WE HOWEVER FIND THAT THERE IS NO EVIDENCE AVAILABLE IN ALL THE ABOVE STATED MATERIAL; ITEM-WISE INDICATING BILLS AND VOUCHERS O F RELEVANT FIXED ASSET PURCHASES. NOR DOES THE ENTIRE ABOVE EVIDENCE HIGH LIGHT THE CRUCIAL NEXUS BETWEEN ASSESSEES SO-CALLED SECURED LOANS TO HAVE BEEN ACTUALLY UTILIZED IN PURCHASE OF THE ABOVE FIXED ASSETS ONLY . WE WISH TO REPEAT THAT WE ARE IN SECOND ROUND OF PROCEEDINGS. MUCH W ATER HAS FLOWN DOWN THE BRIDGE SINCE THE IMPUGNED ASSESSMENT YEAR 2002-03. THERE IS ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 9 - NO POSSIBILITY FOR THE LOWER AUTHORITIES TO VERIFY THIS CRUCIAL FACT AT THE INSTANT BELATED STAGE WHICH HAS INVOLVED TWO ASSESS MENT ORDERS, THREE REMAND REPORTS AND TWO CIT(A)S ORDER ALONG WITH TH IS TRIBUNALS REMAND ORDER. WE THEREFORE SEE NO REASON TO ACCEPT ASSESSEES INSTANT PLEA ON MERIT AS WELL SEEKING TO DELETE THE IMPUGNE D NET PROFIT ADDITION OF RS.79,85,090/-. 12. NEXT COMES ASSESSEES CHALLENGE TO THE CIT(A)S ORDER THAT HIS FINDINGS ADJUDICATING THE INSTANT ISSUE DO NOT SHOW A DETAILED DISCUSSION AS FOLLOWS:- 6. GROUND OF APPEAL NO.2 IS AGAINST ADDITION OF RS .79,85,090/-BY ESTIMATING THE PROFIT AS PER THE PREVIOUS YEAR. THE APPELLANT HAS NOT PRODUCED BOOKS OF ACCOUNTS IN SUPPORT OF THE PROFIT S SHOWN IN THE RETURN OF INCOME BEFORE THE AO OR DURING THE COURSE OF APP ELLATE PROCEEDINGS, DESPITE THE SUBMISSION MADE BEFORE THE HON'BLE ITAT THAT RELEVANT BOOKS ARE NOW WITH THE ASSESSEE AND SAME CAN BE PRODUCED BEFORE THE DEPARTMENT FOR VERIFICATION. IN VIEW OF THE NON PRO DUCTION OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS, THE PROFIT ESTIMATED BY THE AO AND CONFIRMED BY THE LEARNED CIT(A)-XIV, AHMEDABAD VIDE HIS ORDER DATED 14.09.2005 IS CONFIRMED. 13. WE DO NOT FIND ANY SUBSTANCE IN ASSESSEES INST ANT TECHNICAL ARGUMENT AS WELL. WE FIND THAT IT IS SEEKING TO RE AD THE CIT(A)S ABOVE EXTRACTED OBSERVATION IN ISOLATION. IT IS EVIDENT T HAT THE CIT(A)S RELEVANT PORTION COMES AFTER A DETAILED EXTRACT OF THE THIRD REMAND REPORT (SUPRA) WHICH HAS ALREADY GONE UNREBUTTED FR OM ASSESSEES SIDE DESPITE THE FACT THAT THE INSTANT CASE INVOLVES 8 TH INNINGS IN ALL (SUPRA). WE ACCORDINGLY ARE OF THE VIEW THAT ASSESSEES INST ANT TECHNICAL PLEA DOES NOT FORM A SUFFICIENT REASON TO CONDONE ITS OW N FAILURE IN FILING THE REQUISITE DETAILS. WE THEREFORE AFFIRM BOTH THE LO WER AUTHORITIES ACTION ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 10 - ADDING THE IMPUGNED NET PROFIT AMOUNT OF RS.79,85,0 90/- IN ASSESSEES HANDS. THIS FORMER ISSUE ACCORDINGLY STANDS DECIDE D IN REVENUES FAVOUR. 14. WE NOW ADVERT TO THE LATTER ISSUE OF SHARE PREM IUM ADDITION OF RS.5,31,00,000/- MADE IN BOTH THE LOWER PROCEEDINGS UNDER SECTION 68 OF THE ACT. THE ASSESSING OFFICERS FORMER ASSESSME NT ORDER ADDED THE SAID SUM AS THE ASSESSEE HAD NOT FILED EVEN A LIST OF THE CORRESPONDING PREMIUM PAYING PARTIES. HE THEREFORE TREATED THE I MPUGNED SUM AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE AS SESSEE THEREAFTER CHOSE TO FILE A CHART INDICATING NAMES OF ITS SHARE PREMIUM PARTIES WITH DATES AND PAN PARTICULARS AND PHOTOCOPIES OF CONFIR MATION IN SOME OF THE CASES. THE CIT(A) REJECTED THE SAID ADDITIONAL EVIDENCE. HE FURTHER OBSERVED THAT THE ASSESSEES BALANCE-SHEET ON THE O NE HAND HAD STATED RECEIPT OF THESE AMOUNTS BETWEEN 01.04.2001 TO 31.0 3.2002 WHEREAS ITS CHART IN ADDITIONAL EVIDENCE REVEALED THE RELEVANT DATES BETWEEN FEBRUARY TO MARCH 2001 TO THE CONTRARY. HE THEREFO RE CONFIRMED THE IMPUGNED ADDITION. IT HAS ALREADY COME ON RECORD T HAT THIS TRIBUNALS EARLIER ORDER (SUPRA) SENT BACK THE CASE TO THE ASS ESSING OFFICER. THE ASSESSEE ADMITTEDLY TO CHOSE TO ADOPT NON-COOPERATI ON IN SECOND ROUND OF ASSESSMENT AS WELL. IT RATHER RAISED A TOTAL FA LSE PLEA THAT ITS RELEVANT BOOKS WERE NOT AVAILABLE IN VIEW OF LEARNED CITY CI VIL COURTS ORDER SEALING ITS PREMISES (SUPRA). THE ASSESSING OFFICER THEREFORE REITERATED THE IMPUGNED ADDITION IN HIS CONSEQUENTIAL ASSESSME NT ORDER. 15 WE PROCEED FURTHER TO NOTICE THAT THE ASSESSEE F ILED ITS ADDITIONAL EVIDENCE/SUBMISSIONS IN SECOND ROUND OF LOWER APPEL LATE PROCEEDINGS IN THE NATURE OF SHARE PREMIUM APPLICANTS NAME, CH EQUE NO., BANKS ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 11 - BRANCH, DATE, AMOUNT AND PAN ETC. ON 07.10.2011. T HE ASSESSING OFFICERS FIRST REMAND REPORT (SUPRA) REJECTED THE SAID EXPLANATION ON THE GROUND THAT IT HAD FAILED TO IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE 13 SHARE PREMIUM PAYING PARTIES IN QUESTION. THE ASSESSEE WOULD FILE ITS REJOINDER THERETO ON 10.01.2012 THAT AN AMOUNT OF RS.3,20,30,000/- STOOD RECEIVED WELL BEFORE 31.03.2 001. THE ASSESSING OFFICERS SECOND REMAND REPORT DATED 27.03.2012 AND THE FINAL ONE DATED 08.08.2012 (SUPRA) DID NOT ACCEPT THE SAME. HE OBS ERVED IN HIS LAST REMAND REPORT THAT THE ASSESSEE HAS FILED A SUMMARY OF SHARE PREMIUM ACCOUNT ALONG WITH PHOTOCOPY OF CONFIRMATION FROM S HRI CHANDRAVADAN M. PATEL, UNITY PIPES PVT LTD., SHRI K.N. PATEL AND SHRI MANILAL M. PATEL INSTEAD OF FILING ORIGINAL CONFIRMATION ALONG WITH BANK STATEMENTS AND OTHER DETAILS. THE CIT(A) THEREAFTER CONFIRMED TH E IMPUGNED ADDITION IN PARA 7 OF HIS LOWER APPELLATE ORDER UNDER CHALLE NGE. 16. THE ASSESSEE PLEADS IN THE COURSE OF HEARING TO HAVE FILED ALL NECESSARY DETAILS PROVING IDENTITY, CAPACITY, GENUI NENESS AND CREDITWORTHINESS OF ITS SHARE PREMIUM PAYING PARTIE S. IT REFERS TO PAGE 89 OF THE PAPER-BOOK ANNEXURE-6 COMPRISING OF THE F OLLOWING 13 SHARE PREMIUM PAYING PARTIES AS UNDER:- DETAILS OF SHARE AMOUNT AND SHARE PREMIUM A/C. AN NEXURE-6 NAME OF SHARE HOLDERS TOTAL AMT SHARE CAPITAL SHARE PREMIUM ANKUS H FINSTOCK LTD 3500000 350000 3150000 ANKUSH OVERSEAS LTD 1500000 150000 1350000 AN KUSH HOLDINGS LTD 4000000 400000 3600000 DANVIDHYA IMPEX LTD 8000000 800000 7200000 DANVIDHYA FINANCIAL INVESTMENT CONSULTANT SERVICES LTD 3000000 300000 2700000 ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 12 - FRONTLINE BIOSYSTEMS LTD 2000000 200000 1800000 KUTCHH GUJARAT FINSTOCK LTD 2000000 200000 1800000 SHANKHESHWAR METALS PVT LTD 1000000 100000 900000 SHALIBHADRA STEEL PVT LTD 1000000 100000 900000 CHANDRAVADAN M. PATEL 6500000 650000 5850000 UNITY PIPES PVT LTD 20000000 2000000 18000000 KAMLABEN M. PATEL 1500000 150000 1350000 MANILAL A PATEL 5000000 500000 4500000 TOTAL RS. -- > 59000000 5900000 53100000 17. THE ASSESSEE THEREAFTER REFERS TO PAPER-BOOK PA GES 90 ONWARDS COMPRISING OF SHARE APPLICATIONS INDICATING IT TO H AVE RECEIVED SHARE PREMIUM OF RS.90/- PER SHARE FROM THE ABOVE PARTIES THROUGH BANKING CHANNEL FOLLOWED BY THEIR PAN DETAILS AND CONFIRMAT IONS. THE ASSESSEES CASE THEREFORE IS THE LOWER AUTHORITIES OUGHT NOT TO HAVE MADE THE IMPUGNED ADDITION IN ITS HANDS. CASE LAW CIT VS PRAGATI CO- OPERATIVE BANK LTD (2005) 278 ITR 178 (GUJ) AND MUR LIDHAR LAHORIMAL VS. CIT (2006) 280 ITR 512 (GUJ) IS QUOTED IN SUPPO RT. 18. LEARNED DEPARTMENTAL REPRESENTATIVE DRAWS STRON G SUPPORT FROM BOTH THE LOWER AUTHORITIES ACTION MAKING THE IMPUG NED ADDITION. HE POINTS OUT THAT SOME OF THE ABOVE SHARE PREMIUM PAY ING PARTIES DID NOT EVEN HAVE PAN CARDS. ONE OF SUCH PARTY M/S. FRONTL INE BIOSYSTEMS LTDS APPLICATION(S) FORM PART OF THE PAPER-BOOK PA GES 102-104 INDICATING ABSENCE OF PAN CARD. SAME IS THE CASE W ITH M/S. KUTCHH GUJARAT FINSTOCK LTD (PAGES 107). THE REVENUE FURT HER HIGHLIGHTS THAT ONE OF THE SAID APPLICANTS CLAIMED TO HAVE APPLIED FOR PAN ONLY IN 2005 WHEREAS WE ARE DEALING WITH ASSESSMENT YEAR 2002-03 . IT THEREAFTER ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 13 - SUBMITS THAT THE ASSESSEE HAS NOT FILED EVEN ORIGIN AL CONFIRMATION IN CASE OF A SINGLE PARTY INSPITE OF THE FACT THAT THE INSTANT ISSUE HAS SEEN 8 INNINGS TILL DATE. IT IS ACCORDINGLY ARGUED THAT A SSESSEES MERE ASSERTION OF HAVING FILED PAN DETAILS, LIST OF SHARE PREMIUM PAYING PARTIES THROUGH BANKING CHANNEL DOES NOT FORM SUFFICIENT EV IDENCE TO DISCHARGE ITS ONUS MUCH LESS BURDEN FOR THE PURPOSE OF DELETI NG THE IMPUGNED ADDITION UNDER SECTION 68 OF THE ACT. CASE LAW SUMA TI DAYAL VS. CIT (1995) 214 ITR 801 (SC), CIT VS. DURGAPRASAD MORE ( 1971) 82 ITR 540 (SC), CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. PV T. LTD (1991) 187 ITR 596 (CAL) AND CIT VS. PRECISION FINANCE PVT LTD (1994) 208 ITR 465 (CAL) IS RELIED UPON IN SEEKING US TO UPHOLD THE IM PUGNED ADDITION. 19. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO A BOVE RIVAL SUBMISSION. RELEVANT FINDINGS PERUSED. THERE IS N O DISPUTE THAT ASSESSEE HAS RECEIVED SHARE PREMIUM AT THE RATE OF RS.90 PER SHARE IN CASE OF FACE VALUE OF RS.10/- EACH. WE REITERATE F IRST OF ALL THAT THERE IS NO EXPLANATION MUCH LESS A JUSTIFIABLE ONE IN SUPPO RT OF ITS NON- COOPERATION ADOPTED IN SECOND ROUND OF ASSESSMENT B EFORE THE ASSESSING OFFICER TAKEN UP IN FURTHERANCE TO THIS T RIBUNALS DIRECTIONS. THE ASSESSEE ADMITTEDLY DID NOT UNDERTAKE EVEN A SI NGLE STEP TO PROVE IDENTITY, CAPACITY AND GENUINENESS/CREDITWORTHINESS OF ITS 13 SHARE PREMIUM PAYING APPLICANTS. WE REPEAT THAT THIS IS NOT THE ASSESSEES CASE OF HAVING NOT BEING AFFORDED ADEQUATE OPPORTUN ITY OF HEARING IN THE INSTANT CONSEQUENTIAL PROCEEDINGS. THE SAME F ACTUAL POSITION CONTINUED IN THE THREE REMAND PROCEEDINGS AS WELL W HEREIN IT WOULD FILE ONLY PHOTOCOPY OF THE CONFIRMATIONS IN SOME OF THE CASES. ALL THE ABOVE 13 PARTIES SEEM TO BE BASED IN AHMEDABAD ONLY . THE ASSESSEE STILL COULD NOT PRODUCE EVEN ONE OF THE 13 PARTIES IN QUESTION. WE NOTICE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 14 - FROM THE CASE RECORD THAT ALL THE ABOVE PHOTOCOPY C ONFIRMATIONS ARE DATED 01.09.2005 I.E. WELL BEFORE THIS TRIBUNALS R EMAND DIRECTION DATED 12.06.2009. RATHER THE SAME IS WELL BEFORE THE CIT( A)S FORMER ORDER DATED 14.09.2005 (SUPRA). ALL THIS REFLECTS ASSESS EES LACK OF EXPLANATION DESPITE GETTING ITS MATTER REMANDED BACK TO THE ASS ESSING OFFICER. WE FURTHER OBSERVE THAT THE ASSESSEES ACT AND CONDUCT IN NOT BEING ABLE TO FILE EVEN A SINGLE ORIGINAL CONFIRMATION AND ITS SU BSEQUENT ACTION IN SUBMITTING ALL 4 PHOTOCOPIES OF THE SAME DATE INDIC ATES A VERY SERIOUS GENUINENESS ISSUE. WE OBSERVE THEREFORE THAT THE A SSESSEE HAS NOT MADE ANY EFFORT IN DISCHARGING ITS INITIAL ONUS SO AS TO SATISFY THE BASIC FACTORS OF IDENTITY, CAPACITY, GENUINENESS AND CREDITWORTHI NESS OF THE 13 PARTIES IN QUESTION WHO HAVE PAID IT A VERY HEFTY SHARE PRE MIUM OF RS.90/- PER SHARE IN QUESTION. WE FIND IN THIS FACTUAL BACKDRO P THAT ALL THE ABOVE EVIDENCE IS NOT SUFFICIENT TO DELETE THE IMPUGNED A DDITION. WE OBSERVE IN LIGHT OF HONBLE CALCUTTA HIGH COURTS DECISIONS (SUPRA) THAT SUCH AN ONUS DOES NOT GET DISCHARGED BY MERE FILING OF CONF IRMATION LETTER OR BY RECEIVING THE AMOUNT IN QUESTION THROUGH BANKING CH ANNEL OR BY FILING PAN PARTICULARS. 20. WE NOW ADVERT TO ASSESSEES CASE LAW. FORMER J UDICIAL PRECEDENT OF PRAGATI CO-OPERATIVE BANK (SUPRA) DOES NOT SEEM TO APPLY IN FACTS OF THE INSTANT CASE AS THE ASSESSEE THEREIN WAS A CO-O PERATIVE BANK ALREADY GOVERNED UNDER THE BANKING REGULATIONS ACT, 1949 DU LY MAINTAINING ALL REQUISITE DETAILS OF ITS CUSTOMERS DEPOSITING THE M ONEY IN QUESTION. SO IS THE POSITION REGARDING ASSESSEES LATTER DECISIO N IN MURALIDHAR LAHORIMALS CASE (SUPRA) WHEREIN THE ISSUE IN QUEST ION WAS A GIFT INSTANCE. THE DONOR HAD DULY SUPPORTED THE SAID AS SESSEES CASE BEFORE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 15 - THE ASSESSING OFFICER. WE REPEAT THAT THIS IS NOT THE CASE BEFORE US WHEREIN THE ASSESSEE HAS NOT FILED EVEN A CONFIRMAT ION IN CASE OF A SINGLE PARTY. WE THEREFORE CONCLUDE THAT HONBLE A PEX COURTS TWO DECISIONS IN SUMATI DAYAL AND DURGAPRASAD MORE (SUP RA) PROPOUNDING GENUINENESS THEORY ON THE TOUCHSTONE OF HUMAN PROBA BILITY SQUARELY APPLIES IN FACTS OF THE INSTANT CASE AS THE ASSESSE ES ENTIRE EVIDENCE HAS NOT BEEN ABLE TO SATISFY ANY OF THE ABOVE FOUR BENC HMARKS. 21. WE FURTHER DEEM IT APPROPRIATE TO EMPHASIS SIGN IFICANCE OF THE ABOVE GENUINENESS ASPECT IN SUCH KIND OF CASES INVI TING SECTION 68 ADDITION. THERE IS NO QUARREL THAT THE ASSESSEE HAS RECEIVED THE IMPUGNED SHARE PREMIUM @ RS.90/- PER SHARE HAVING V ALUE OF RS.10 EACH. IT IS THEREFORE ASSESSEES ONUS TO PROVE GENU INENESS THEREOF TO THE HILT. AS AGAINST THIS, IT ADMITTEDLY HAS NOT BEEN ABLE TO EVEN PRIMA FACIE DEMONSTRATE THE ABOVE INTRINSIC VALUE OF SHARES TO BE AT PAR WITH THE IMPUGNED SHARE PREMIUM CHARGED AS FOLLOWED BY PRODU CING COGENT MATERIAL ON RECORD TO SHOW THE CRUCIAL NEXUS BETWEE N THE PREMIUM IN QUESTION VIS--VIS ITS IN BUILT POTENTIAL BEING THE SUBSCRIBING COMPANY JUSTIFYING THE EXORBITANT PREMIUM IN DISPUTE CLAIME D TO HAVE BEEN RECEIVED IN ITS OWN RIGHT. THIS CLINCHING ONUS HAS REMAINED UNDISCHARGED DESPITE A NUMBER OF INNINGS AFFORDED T O THE ASSESSEE. WE BEAR IN MIND THAT THERE CAN BE NO STRAIGHT JACKET F ORMULA FOR DETERMINING SHARE PREMIUM WHICH DEPENDS UPON CURREN T STRENGTH AND FUTURE POTENTIAL OF AN ENTERPRISE. THE ASSESSEES A CT AND CONDUCT HEREIN IN HAVING RECEIVED SUCH A HIGH SHARE PREMIUM PURPOR TEDLY TOWARDS SHARE CAPITAL AND PREMIUM IN SHOWING CONTINUING INA BILITY TO FURNISH THE REQUISITE INFORMATION CITING SUBSEQUENT FINANCI AL DIFFICULTIES LEADING ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 16 - TO ITS PREMISES BEING SEIZED THEREFORE DOES NOT INS PIRE CONFIDENCE. THE ABOVE EXPLANATION SUPPORTING NON-PRODUCTION OF EVID ENCE DESPITE TRIBUNALS CLEAR CUT OBSERVATIONS IS HIGHLY UNPALPA BLE AND IMPROBABLE. WE FIND THAT AN SMC BENCH RECENT DECISION IN PAWA NKUMAR M. SANGHVI VS. ITO ITA 2447/AHD/2016 DECIDED ON 17.05. 2017 VERY WELL EMPHASIS SIGNIFICANCE OF GENUINENESS WITH REFERENCE TO SECTION 68 ADDITION AS UNDER:- ..I AM NOT INCLINED TO BELIEVE THAT THESE ARE GEN UINE BUSINESS TRANSACTIONS. AS I DO SO, I AM REMINDED OF HON'BLE SUPREME COURT'S OBSERVATION, IN THE CASE OF CIT VS DURGA PRASAD MOR E [(1971) 82 ITR 540 (SC)], TO THE EFFECT THAT 'SCIENCE HAS NOT YET INVENTED ANY INSTRUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILI TIES'. SIMILARLY, IN A LATER DECISION IN THE CASE OF SUMATI DAYAL VS CIT [ (1995) 214 ITR 801 (SC)], HON'BLE SUPREME COURT REJECTED THE THEORY TH AT IT IS FOR ALLEGER TO PROVE THAT THE APPARENT AND NOT REAL, AND OBSERVED THAT, 'THIS, IN OUR OPINION, IS A SUPERFICIAL APPROACH TO THE PROBLEM. THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. ... ........SIMILARLY THE OBSERVATION......... THAT IF IT IS ALLEGED THAT THE SE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS, IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO, IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUC H PURCHASE WOULD BE RARELY AVAILABLE..............IN OUR OPINION, THE M AJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELL ANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RE SPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREASONABLY'. I WILL BE SUPERFICIAL IN MY APPROACH IN CASE I DONOT EXAMINE THE CLAIM OF THE A SSESSEE ON THE BASIS OF DOCUMENTS AND AFFIDAVITS FILED BY THE ASSESSEE AND OVERLOOK CLEAR THE UNUSUAL PATTERN IN THE DOCUMENTS FILED BY THE ASSES SEE AND PRETEND TO BE OBLIVIOUS OF THE GROUND REALITIES. AS HON'BLE SUPRE ME COURT HAS ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 17 - OBSERVED, IN THE CASE OF DURGA PRASAD MORE (SUPRA), '.....IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHO WN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REA L PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THO SE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS I N DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECI TALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVADE TAX IS TO HAVE SOME REC ITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBI NG WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS'. AS A FINAL FACT FINDING AUTHORITY , THIS TRIBUNAL CANNOT BE SUPERFICIAL IN ITS ASSESSMENT OF GENUINENESS OF A TRANSACTION, AND THIS CALL IS TO BE TAKEN NOT ONLY IN THE LIGHT OF THE FA CE VALUE OF THE DOCUMENTS SIGHTED BEFORE THE TRIBUNAL BUT ALSO IN THE LIGHT O F ALL THE SURROUNDING CIRCUMSTANCES, PREPONDERANCE OF HUMAN PROBABILITIES AND GROUND REALTIES. GENUINENESS IS A MATTER OF PERCEPTION BUT ESSENTIALLY A CALL ON GENUINENESS OF A TRANSACTION IS TO BE TAKEN IN THE LIGHT OF WELL SETTLED LEGAL PRINCIPLES. THERE MAY BE DIFFERENCE IN SUBJEC TIVE PERCEPTION ON SUCH ISSUES, ON THE SAME SET OF FACTS, BUT THAT CANNOT B E A REASON ENOUGH FOR THE FACT FINDING AUTHORITIES TO AVOID TAKING SUBJEC TIVE CALLS ON THESE ASPECTS, AND REMAIN CONFINED TO THE FINDINGS ON THE BASIS OF IRREFUTABLE EVIDENCES. HON'BLE SUPREME COURT HAS, IN THE CASE O F DURGA PRASAD MORE (SUPRA), OBSERVED THAT 'HUMAN MINDS MAY DIFFER AS TO THE RELIABILITY OF A PIECE OF EVIDENCE BUT IN THAT SPHE RE THE DECISION OF THE FINAL FACT FINDING AUTHORITY IS MADE CONCLUSIVE BY LAW'. THIS FAITH IN THE TRIBUNAL BY HON'BLE COURTS ABOVE MAKES THE JOB OF T HE TRIBUNAL EVEN MORE ONEROUS AND DEMANDING AND, IN MY CONSIDERED VI EW, IT DOES REQUIRE THE TRIBUNAL TO TAKE A HOLISTIC VIEW OF THE MATTER, IN THE LIGHT OF SURROUNDING CIRCUMSTANCES, PREPONDERANCE OF PROBABI LITIES AND GROUND REALITIES, RATHER THAN BEING SWAYED BY THE NOT SO C ONVINCING, BUT APPARENTLY IN ORDER, DOCUMENTS AND EXAMINING THEM, IN A PEDANTIC MANNER, WITH THE BLINKERS ON. I MAY ALSO ADD THAT T HE PHENOMENON OF SHELL ENTITIES BEING SUBJECTED TO DEEP SCRUTINY BY TAX AND ENFORCEMENT OFFICIALS IS RATHER RECENT, AND THAT, TILL RECENTLY , LITTLE WAS KNOWN, OUTSIDE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 18 - THE UNDERBELLY OF FINANCIAL WORLD, ABOUT MODUS OPER ENDI OF SHELL ENTITIES. THERE WERE, THEREFORE, NOT MANY QUESTIONS RAISED AB OUT GENUINENESS OF TRANSACTIONS IN RESPECT OF SHELL ENTITIES. THAT IS NOT THE CASE ANY LONGER. JUST BECAUSE THESE ISSUES WERE NOT RAISED IN THE PA ST DOES NOT MEAN THAT THESE ISSUES CANNOT BE RAISED NOW AS WELL, AND, TO THAT EXTENT, THE EARLIER JUDICIAL PRECEDENTS CANNOT HAVE BLANKET APPLICATION IN THE CURRENT SITUATION AS WELL. AS HON'BLE SUPREME COURT HAS OBS ERVED IN THE CASE IN MUMBAI KAMGAR SABHA V. ABDULBAHI FAIZULLABHAI AI R 1976 SC 1455 'IT IS TRITE, GOING BY ANGLOPHONIC PRINCIPLES THAT A RULING OF A SUPERIOR COURT IS BINDING LAW. IT IS NOT OF SCRIPTURAL SANCT ITY BUT OF RATIO-WISE LUMINOSITY WITHIN THE EDIFICE OF FACTS WHERE THE JU DICIAL LAMP PLAYS THE LEGAL FLAME. BEYOND THOSE WALLS AND DE HORS THE MIL IEU WE CANNOT IMPART ETERNAL VERNAL VALUE TO THE DECISIONS, EXALTING THE PRECEDENTS INTO A PRISON HOUSE OF BIGOTRY, REGARDLESS OF THE VARYING CIRCUMSTANCES AND MYRIAD DEVELOPMENTS. REALISM DICTATES THAT A JUDGME NT HAS TO BE READ, SUBJECT TO THE FACTS DIRECTLY PRESENTED FOR CONSIDE RATION AND NOT AFFECTING THE MATTERS WHICH MAY LURK IN THE DARK'. GENUINENES S OF TRANSACTIONS THUS CANNOT BE DECIDED ON THE BASIS OF INFERENCES D RAWN FROM THE JUDICIAL PRECEDENTS IN THE CASES IN WHICH GENUINENESS DID CO ME UP FOR EXAMINATION IN A VERY LIMITED PERSPECTIVE AND IN TH E TIMES WHEN SHELL ENTITIES WERE VIRTUALLY NON-EXISTENT. AS THE THINGS STAND NOW, GENUINENESS OF TRANSACTIONS IS TO BE EXAMINED IN TH E LIGHT OF THE PREVAILING GROUND REALITIES, AND THAT IS PRECISELY WHAT I HAVE DONE. IN MY CONSIDERED VIEW, AND FOR THE DETAILED ANALYSIS SET OUT EARLIER IN THIS ORDER, THE ALLEGED LOAN TRANSACTIONS OF THE ASSESSEE CANNO T BE HELD TO BE GENUINE ON THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CAS E. AS THE GENUINENESS OF TRANSACTIONS STANDS REJECTED, IT IS NOT REALLY N ECESSARY TO DEAL WITH OTHER ASPECTS OF THE MATTER. WE ACCORDINGLY EXPRESS OUR RESPECTFUL AGREEMENT WI TH THE ABOVE REASONING HEREIN AS WELL TO CONCLUDE THAT THE ASSES SEE HAS MISERABLY FAILED IN PROVING GENUINENESS OF ITS SHARE PREMIUM IN QUESTION. 22. THE ASSESSEE FURTHER CONTENDS THAT IT HAD RECEI VED A PART OF THE ABOVE SHARE PREMIUM IN PRECEDING ASSESSMENT YEAR AN D NOT IN THE ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 19 - IMPUGNED ASSESSMENT YEAR SO AS TO BE ADDED UNDER SE CTION 68 OF THE ACT. WE FIND NO SUBSTANCE IN THE INSTANT PLEA AS WE LL. THERE IS NO MATERIAL ON RECORD REVEALING THE ASSESSEE TO HAVE P ROVED GENUINENESS OF THE IMPUGNED SUMS EVEN IN PRECEDING ASSESSMENT YEAR . OR THAT THE ASSESSING AUTHORITY HAD EVER CONDUCTED ANY INQUIRY IN THIS REGARD. WE THEREFORE ARE OF THE OPINION THAT THE INSTANT PLEA WITHOUT ANY OTHER SUBSTANTIVE EVIDENCE PROVING GENUINENESS DOES NOT I NSPIRE ACCEPTANCE ON MERE TECHNICAL REASONS. WE FURTHER QUOTE SECTIO N 153(6) CLAUSES (I) & (II) READ WITH EXPLANATION 2 THERETO TO CONCLUDE TH AT EVEN IF WE HOLD THAT A PART OF THE IMPUGNED SUM HAD BEEN RECEIVED I N PRECEDING ASSESSMENT YEAR, THE SAME WOULD VISIT CONSEQUENTIAL INTEREST DEMAND ONLY. WE THEREFORE REJECT THE INSTANT ARGUMENT AS WELL. 23. THE ASSESSEES NEXT ARGUMENT TAKES US TO THE CI T(A)S ORDER IN PARA 7. ITS CASE IS THAT THE SAME ARE TOTALLY NON- SPEAKING. IT HOWEVER FAILS TO DISPUTE THAT THE CIT(A) OPERATIVE FINDINGS ALREADY EXTRACT ASSESSING OFFICERS THIRD REMAND REPORT (SUPRA). W E HAVE ALREADY REJECTED THE VERY CONTENTION WHILST ADJUDICATING TH E FORMER ISSUE IN PRECEDING PARAGRAPHS. WE ADOPT THE SAME REASONING HEREIN AS WELL TO DECLINE THE ASSESSEES INSTANT ARGUMENT. 24. THE ASSESSEE LASTLY CONTENDS THAT THE ASSESSING OFFICER OR THE CIT(A) HAVE NOWHERE ADMITTED OR DISCUSSED ITS ADDIT IONAL EVIDENCE AS PER THIS TRIBUNALS REMAND DIRECTIONS. WE SEE NO M ERIT IN THE INSTANT TECHNICAL PLEA AS WELL. WE HAVE ALREADY OBSERVED T HAT THE ASSESSEE NEVER CO-OPERATED IN SECOND ROUND ASSESSMENT. IT H AS COME ON RECORD THAT THE ASSESSING OFFICER FRAMED THE IMPUGNED CONS EQUENTIAL ASSESSMENT AFTER ISSUING SECTION 144 NOTICE (SUPRA) . BE THAT AS IT MAY, ITA NO. 1679/AHD/2014 UMIYA PIPES PVT LTD VS. ACIT A.Y : 2002-03 - 20 - THE CIT(A) HAS AFFORDED IT SUFFICIENT OPPORTUNITIES IN SEEKING THREE REMAND REPORTS ON MERITS IN VIEW OF ALL MATERIAL SU BMITTED IN ADDITIONAL EVIDENCE. WE HAVE ALREADY DISCUSSED THE ISSUE AT L ENGTH IN CONCLUDING THAT THE ASSESSEES ALL EVIDENCE NOWHERE DISCHARGES ITS ONUS IN PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE I MPUGNED SHARE PREMIUM AMOUNT OF RS.5,31,00,000/- ADDED UNDER SECT ION 68 OF THE ACT. THE ASSESSEE FAILS IN ITS INSTANT LATTER SUBSTANTIV E GROUND AS WELL. 25. THIS ASSESSEES APPEAL IS ACCORDINGLY DISMISSED . ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER , 201 7 AT AHMEDABAD SD/- SD/- (PRADIP KUMAR KEDIA) (S.S. GODAR A) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD, DATED 12/09/2017 *BT ! '! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' $ / CONCERNED CIT 4. $ ( ) / THE CIT(A) 5. ' **' , ' , / DR, ITAT, AHMEDABAD 6. / / GUARD FILE. / BY ORDER, TRUE COPY / (DY./ASSTT.REGISTRAR) ' (, / ITAT, AHMEDABAD