M/s Root Invest (P) Ltd., New Delhi V. ITO, New Delhi

ITA 1680/DEL/2013

• Counselvise Citation: 168020114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 11-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M B REDDY
• Keywords: Additional evidence; Question of law; Accommodation entries; Onus to prove
• Section: 234B; 260A; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI G.D. AGR A WAL, HON BLE VICE - PRESIDENT AND SHRI I.C. SUDHIR , HON BLE JUDICIAL MEMBER ITA NO. 1680 /DEL/201 3 ASSESSMENT YEAR: 200 9 - 1 0 ROOT INVEST (P ) LTD., VS. ITO, 2 - SHANTI FARMS, WARD 15(4), CHANDANHOLA, MEHRAULI, NEW DELHI. NEW DELHI. (PAN: AA DCR8026K ) (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M.B. REDDY, CIT(DR) ASS ESSEE BY: S/ SHRI SALIL AGGARWAL & SHAILESH GUPTA, ADV. ORDER PER I.C. SUDHIR : JUDICIAL MEMBER THE ASSESSEE HAS IMPUGNED FIRST APPELLATE ORDER ON THE FOL LOWING GROUNDS : 1. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS.24,02,062 ON ACCOUNT OF FOREIGN TR AVEL AND FOREIGN EXCHANGE PURCHASE. 2. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS.15,50,000 ON A CCOUNT OF CONSULTANCY EXPENSES. 2 3. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING AGGREGATE ADDITION OF RS.12,00,20,500 ON ACCOUNT OF UNSECURED LOAN U/S. 68 OF THE INCOME - TAX ACT, 1961. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LEARNED CIT(APPEALS) IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN MAKING ADDITION OF RS.12,00,20,500 IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF THE LEARNED CIT(APPEALS) IN CONFIRMING THE ACTION OF THE LD.A.O. IN MAKING THE IMPUGNED ADDITIONS/DISALLOWANCE AND FRAMING THE IMPUGNED A SSESSMENT ORDER IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, BEYOND JURISDICTION, AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACTS AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 6. THAT HAVING REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF THE LD. A.O. IN CHARGING INTEREST U/S. 234B AND 234D OF THE INCOME - TAX ACT, 1961. 3 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. GROUND NO.1 : THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS.24.02,062 ON ACCOUNT OF VARIOUS TRAVELS AND VA RIOUS EXCHANGE PURCHASED WHICH HAVE BEEN UPHELD BY THE LEARNED CIT(APPEALS). 4. IN SUPPORT OF THE GROUNDS, THE LEARNED AR SUBMITTED THAT FOREIGN TRAVEL FOR THE BUSINESS PURPOSE WAS UNDERTAKEN BY THE DIRECTORS OF THE ASSESSEE COMPANY, HENCE, THE AUTHORITI ES BELOW WERE NOT JUSTIFIED IN MAKING AND SUSTAINING THE DISALLOWANCE . 5. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ENTIRE FOREIGN TRAVEL WAS UNDERTAKEN BY ITS DIRECTOR COMPANY. THE AS SESSEE HAS FAILED TO ESTABLISH THE PURPOSE OF TRAVELING AND AS TO WHAT WAS THE BUSINESS NECESSITY OF UNDERTAKING THE SAID FOREIGN TRAVEL. THE ASSESSEE DID NOT FILE THE DETAILS OF EXPENSES INCURRED IN FOREIGN CURRENCY NOR WAS IT POSSIBLE THAT THE QUANTUM OF EXPENSES EXACTLY MATCHED WITH THE AMOUNT OF FOREIGN CURRENCY PURCHASED BY THE DIRECTORS BEFORE HIS FOREIGN VISIT. 4 6. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE ASSESSEE HAS NOT BEEN ABLE TO IMPR OVE ITS CASE EVEN BEFORE THE ITAT AS THE ASSESSEE H AS FAILED TO MEET OUT THE OBJECTIONS RAISED BY THE ASSESSING OFFICER TO JUSTIFY THE CLAIMED EXPENSES. WE THUS DO NOT FIND REASONS TO INTERFERE WITH THE FIRST APPELLATE ORDER UPHOLDING THE DISALLOWANCE. THE SAID UPHELD. GROUND NO.1 IS ACCORDINGLY REJECTED. 7. GROUND NO.2 : AS PER THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAD CLAIMED RS.19,78,624 UNDER THE CAPTIONED EXPENSES HEAD OUT OF WHICH RS.15,50,000 WAS CLAIMED TO HAVE BEEN PAID TO THE DIRECTOR SHRI AVRIND KHANNA. THE AUTHORITIES BELOW DID NOT AGREE W ITH THIS CLAIM OF EXPENSES OF RS.15,50,000 ON ACCOUNT OF CONSULTANCY EXPENSES PAID TO ITS DIRECTOR SHRI ARVIND KHANNA ON THE BASIS THAT THE ASSESSEE WAS UNABLE TO ESTABLISH THE TYPE OF SERVICES/RENDERED IN MUNGAR DISTRICT OF BIHAR THAT TOO WITHOUT PUBLICIT Y THERE. THE AUTHORITIES BELOW HAVE NOTED THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE OF ANY SERVICE HAVING BEEN RENDERED BY THE DIRECTOR ON THE BASIS OF WHICH CONSULTANCY CHARGES COULD BE ADMISSIBLE. THEY ALSO OBSERVE THAT THE ASSESSEE HAS FAILED TO ES TABLISH THE BUSINESS EXIGENCIES OF THE EXPENSE CLAIMED. 5 8. IN SUPPORT OF THE GROUND, THE LEARNED AR SUBMITTED THAT AS PER SEC. 314 OF THE COMPANIES ACT, 1956 IF A DIRECTOR IS HOLDING ANY SPACE OF PROFIT IN THE COMPANY, THEN, A SPECIAL RESOLUTION HAS TO B E PASSED IN THE GENERAL MEETING OF THE SHAREHOLDERS OF THE COMPANY BEFORE GIVING ANY FEE TO THE DIRECTOR. THE RESOLUTIONS ARE ALSO REQUIRED TO BE REGISTERED WITH THE OFFICE OF REGISTRAR OF THE COMPANIES. ACCORDINGLY, THE ASSESSEE COMPANY HAD TAKEN DUE PERM ISSION FROM THE SHAREHOLDER BEFORE APPOINTING SHRI ARVIND KHANNA AS CONSULTANT AND THE RESOLUTION WAS REGISTERED WITH THE OFFICE OF THE REGISTRAR OF COMPANIES BY FILING FORM NO. 23. THE ASSESSEE COMPANY HAD ALSO ENTERED AN AGREEMENT FOR CONSULTANT SERVICES WITH SHRI ARVIND KHANNA. AS PER THIS AGREEMENT, SHRI ARVIND KHANNA HAD TO RENDER FOLLOWING SERVICES: I) IDENTIFICATION OF THE NEW BUSINESS PROSPECTUS FOR THE COMPANY; II) LOAN SYNDICATION AND PREPARATION OF PROJECT REPORT FOR LARGE PROJECTS; III) CONSULTANCY IN THE FIELD OF INVESTMENT IN SHARES, THE DEBENTURES AND IMMOVEABLE PROPERTIES. 9. LEARNED AR SUBMITTED THAT COPIES OF THE ABOVE DOCUMENTS I.E. FORM NO.23 FILED WITH THE OFFICE OF THE REGISTRAR OF THE COMPANIES, AGREEMENT FOR CONSULTANCY SERVICES WERE FILED BEFO RE THE AUTHORITIES BELOW ALONG WITH 6 COPIES OF THE BILLS RAISED BY THE ASSESSEE. HE SUBMI TTED THAT SHRI ARVIND KHANNA SUCCESSFULLY OBTAIN ED ORDERS FOR MAKING SURVEY IN BIHAR. HE SUBMITTED FURTHER THAT SIMILAR CLAIM AT RS.36 LACS IN EACH OF THE ASSESSMENT YE ARS 2010 - 11 AND 2011 - 12 HAVE BEEN ALLOWED BY THE REVENUE . 10. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OF ANY SERVICES HAVING BEEN RENDERED BY THE DIRECTOR ON THE BASIS OF WHICH THE CONSULTANCY CHARGES COULD BE ADMISSIBLE. THE ASSESSEE HAS ALSO FAILED TO PROVE THE BUSINESS EXIGENCY OF THE EXPENSES AND THE BUSINESS ACCRUED TO THE COMPANY AS A RESULT OF THE EXPENSES. THE ASSESSEE WAS ALSO UNABLE TO ESTABLISH THE TYPE OF SERVICES RENDERED IN MUNGER DISTRICT OF BIHAR AND THAT TOO WITHOUT VISITING THE PLACE. 11. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THERE IS NO DISPUTE ON CERTAIN MATERIAL FACTS THAT THE ASSESSEE FOR THE PAYMENT OF CONSULTANC Y CHARGES TO SHRI ARVIND KHANNA AGAINST THE SERVICES RENDERED BY HIM, HAD COMPLIED WITH THE PROVISIONS OF SEC. 314 OF THE COMPANIES ACT, 1956 AS THE ASSESSEE HAD TAKEN DUE PERMISSION FROM THE SHAREHOLDER BEFORE APPOINTING SHRI ARVIND KHANNA AS THE CONSULTA NT AND THE RESOLUTION WAS REGISTERED WITH THE OFFICE OF THE REGISTRAR OF THE COMPANY BY FILING FORM NO. 23. THE COPY 7 OF THE AGREEMENT FOR CONSULTANCY SERVICES HAS BEEN MADE AVAILABLE AT PAGE NO. 79 TO 83 OF THE PAPER BOOK WHEREIN AT PAGE NOS. 81 TO 83, TER MS OF THE AGREEMENT HAVE BEEN NARRATED. AS PER THIS, THE CONSULTANT HAD TO PROVIDE CONSULTANCY SERVICES TO THE COMPANY IN THE FIELD OF INVESTMENT IN SHARES, DEBENTURES AND IMMOVEABLE PROPERTIES, MANAGEMENT CONSULTANCY, BUSINESS DEVELOPMENT AND STRA TA GI STI C ALLIANCE, OVERALL BUSINESS DEVELOPMENT AND MARKETING ASSISTANCE TO THE ASSESSEE WHILE USING HIS BEST BUSINESS CAPABILITY. BESIDES IN THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, THE REVENUE HAD ALLOWED SIMILAR CLAIM OF PAYMENT OF CONSULTANCY FEE TO SHRI ARV IND KHANNA. WE, THUS DO NOT FIND ANY REASON WITH THE REVENUE TO DEVIATE FROM ITS STAND TAKEN IN O THE R ASSESSMENT YEARS UNDER SIMILAR FACTS AND CIRCUMSTANCES. THE DISALLOWANCE IN QUESTION IS THUS DIRECTED TO BE DELETED. GROUND NO.2 IS ACCORDINGLY ALLOWED. 12. GROUND NOS. 3 & 4 : THE ISSUE RAISED IN THESE GROUNDS IS VALIDITY OF ADDITION OF RS.12,20,00,500 MADE AND UPHELD BY THE AUTHORITIES BELOW ON ACCOUNT OF UNSECURED LOAN UNDER SEC. 68 OF THE INCOME - TAX ACT, 1961. 13. THE FACTS IN BRIEF ARE THAT DURIN G THE YEAR, THE ASSESSEE HAD RECEIVED RS.7.5 CRORES FROM M/S. NEERGIRI INFRA - STRUCTURE DEVELOPMENT LTD. AND 8 RS.4.5 CRORES FROM M/S. NOVLEES OBLIGE STATE PVT. LTD. IT WAS SUBMITTED THAT BOTH THE ABOVE COMPANIES GAVE THESE AMOUNTS FOR THE PURPOSE OF PURCHASI NG SHARES OF THE ASSESSEE COMPANY. HOWEVER, ASSESSEE COULD NOT FINALIZE THE AMOUNT OF PREMIUM ON THE SHARES AND TREATED THESE AMOUNTS AS UNSECURED LOANS IN THE BALANCE SHEET DRAWN ON 31.3.2009. IN THE SUBSEQUENT FINANCIAL YEAR, ALL THE P ARTIES ARRIVED AT CONSENSUS ON THE FIGURE OF PREMIUM AND SHARES WERE ALSO ALLOTTED TO THEM IN THE SUBSEQUENT FINANCIAL YEARS. THE AUTHORITIES BELOW DID NOT AGREE AND ADDED THE AMOUNT UNDER SEC. 68 OF THE ACT ON ACCOUNT OF UNDISCLOSED INCOME ON THE BASIS THAT ASSESSEE HAS FA ILED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS WHO HAVE ALLEGEDLY MADE THE PAYMENT AND THAT THE ASSESSEE HAS BEEN CHANGING IT STAND ON THE ISSUE OF UNSECURED LOANS. 14. IN SUPPORT OF THE GROUNDS, THE LEARNED AR SUBMITTED TH AT IN SUPPORT OF THE CLAIMED AMOUNT, THE ASSESSEE HAD FURNISHED CONFIRMATION OF THE APPLICANT COMPANIES ALONG WITH THEIR BALANCE SHEET AND INCOME - TAX PARTICULARS TREATING THE AMOUNT GIVEN AS SHARE APPLICATION MONEY WHILE ASSESSEE HAD PRESENTED THESE AMOUNT S AS LOAN RECEIVED AS ON 31.3.2009 FOR THE REASON THAT THE ASSESSEE COULD NOT FINALIZE THE AMOUNT OF PREMIUM ON THE SHARES AND TREATED THESE AMOUNTS AS UNSECURED LOAN IN ITS BALANCE SHEET DRAWN ON 31.3.2009. IN 9 THE SUBSEQUENT FINANCIAL YEAR, ALL THE PARTIE S ARRIVED AT CONSENSUS ON THE FIGURE OF PREMIUM AND SHARES WERE ALSO ALLOTTED TO THEM IN THE SUBSEQUENT FINANCIAL YEAR. THE ASSESSEE HAD FULLY DISCHARGED ITS ONUS UNDER SEC. 68 OF THE INCOME - TAX ACT, 1961 BY IDENTIFYING THE LENDERS, GENUINENESS OF THE TRAN SACTION AND THEIR CREDITWORTHINESS. AS DISCUSSED ABOVE, THE ASSESSEE HAD FILED THEIR CONFIRMATIONS WITH THEIR BALANCE SHEET AND INCOME - TAX PARTICULARS. ALL THE TRANSACTIONS WERE MADE THROUGH BANKING CHANNELS AND IN SUPPORT OF CREDITWORTHINESS OF THE LENDER S, THE ASSESSEE HAD FILED COPIES OF THE INCOME - TAX RETURNS AND BALANCE SHEET OF THE LENDING COMPANY. THE TOTAL OF THE BALANCE SHEET OF NEELGIRI INFRA - STRUCTURE DEVELOPMENT LTD. WAS RS.109.58 CRORES AS ON 31.3.2009 AND RS.26.21 CRORES OF NOBLESSE OBLIGES ES TATES PVT. LTD. AS ON 31.3.2009. 15. THE ADDITIONAL EVIDENCE FILED BEFORE THE LEARNED CIT(APPEALS) TO STRENGTHEN THE GENUINENESS AND ITS CLAIM WERE ALSO SUBJECTED TO REMAND REPORT OF THE ASSESSING OFFICER BUT THE ASSESSING OFFICER DID NOT DOUBT THE GENUI NENESS OF THE DOCUMENTS FILED. THE ASSESSING OFFICER HAD WRITTEN LETTER TO THE ITO, NOBLESSE ON 09.12.2011 AND ITO OF NEELGIRI ON 11.12.2011 WHICH ALSO PROVES THAT BOTH ARE ASSESSED IN DELHI AND ASSESSING OFFICER HAD THEIR PARTICULARS. 10 16. NOTHING ADVERS E HAD BEEN REPORTED TO THE ASSESSING OFFICER EITHER OF NEELGIRI LTD. OR NOBLESSE LTD. IN SUPPORT, T HE LEARNED D R PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1. M/S. EXCELLENT TOWN PLANNERS PVT. LTD. ITA NO. 2046/DEL/2010; 2. M/S. ICS HOTELS PVT. LTD. ITA NO. 2046/DEL/2010; 3. M/S. INDIA TEXFAB MARKETING LTD. ITA NO.1177/DEL/2012; 4. CIT VS. GOEL SONS GOLDEN ESTATES LTD. IN ITA NO. 212/2013 (HON'BLE DELHI HIGH COURT ); 5. CIT VS. GANGESHWARI METALS (P) LTD. 361 ITR 10 (HON'BLE DELHI HIGH COURT): & 6. CIT VS. M/S. SPANK HOTELS LTD. ITA NO. 593/2014 (HON'BLE DELHI HIGH COURT). 17. LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE ASSESSEE HAS KEPT CHANG ING ITS STAND REGARDING THE RECEIPT OF THE AMOUNT. INITIALLY, TH E AMOUNT WAS CLAIMED AS SHARE APPLICATION MONEY AND LATER ON IT WAS STATED THAT THE AMOUNT WAS TREATED AS UNSECURED LOAN. THE ASSESSEE ALSO FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE CLAIMED TRANSACTION. IN THIS REGARD, HE REFERRED ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT IN ABSENCE OF SATISFACTION OF INGREDIENTS OF SEC. 68 OF THE ACT, THE AUTHORITIES 11 BELOW HAVE RIGHTLY ADDED AND UPHELD THE SAME AS UN EXPLAINED AMOUNT UNDER SEC. 68 OF THE ACT. 18 . WE FIND THAT ONE OF THE REASONS FOR DOUBTING THE CLAIMED CREDIT BY THE ASSESSING OFFICER REMAINED THAT THE ASSESSEE WAS KEEPING ON CHANGING ITS STAND ABOUT THE NATURE OF RECEIPT OF THE AMOUNT. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD REMAINED THAT NOBLEESE LTD. HAD PAID THE AMOUNT FOR PURCHASING PROPERTY THROUGH THE ASSESSEE AND SUBSEQUENTLY CONVERTED IT INTO SHARE APPLICATION MONEY FOR WHICH SHARES WERE ALLOTTED IN THE NEXT YEAR. IT WAS EXPLAINED THAT BOTH THE COMPANIES I.E. NEELGIRI INFRA - STRUCTUR E DEV. LTD. AND NOBLEESE OBLIGED ESTATES PVT. LTD. HAD ADVANCED THE AMOUNT FOR PURCHASING SHARES OF THE ASSESSEE COMPANY. THE ASSESSEE, HOWEVER, COULD NOT FINALIZE THE AMOUNT OF PREMIUM ON THE SHARES AND TREATED THESE AMOUNTS AS UNSECURED LOANS IN THE BALA NCE SHEET SHOWN ON 31.3.2009 IN THE SUBSEQUENT FINANCIAL YEAR, ALL THE PARTIES ARRIVED AT CONSENSUS ON THE FIGURE OF PREMIUM AND SHARES WERE ALSO ALLOTTED TO THEM IN THE SUBSEQUENT FINANCIAL YEAR. THE APPLICANT COMPANY HAD GIVEN CONFIRMATION ALSO ALONG WIT H THEIR BALANCE SHEET AND INCOME - TAX PARTICULARS TREATING THE AMOUNT GIVEN AS SHARE APPLICATION MONEY WHILE ASSESSEE HAD PRESENTED THESE AMOUNTS AS LOAN RECEIVED AS ON 31.3.2009. THERE IS NO REASON TO DOUBT THE ABOVE EXPLANATION. 12 IT IS UNDISPUTED FACT THAT DURING THE YEAR, AMOUNT RECEIVED FROM THE ABOVE TWO COMPANIES WERE TREATED BY THE ASSESSEE AS UNSECURED LOAN. THE ISSUE THUS REMAINED AS TO WHETHER THE ASSESSEE WAS ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION IN THE PRESENT CASE. TO ESTABLISH THESE INGREDIENTS, THE ASSESSEE IN THE PRESENT CASE HAD FURNISHED THE AFFIDAVIT DATED 18.9.2012 OF THE NOBLEESE OBLIGE ESTATES PVT. LTD. STATING THEREIN THAT THEY WERE PLANNING TO PURCHASE WITH NEELGIRI INFRA - STRUCTURE DEVEL OPMENT LTD. AN IMMOVEABLE PROPERTY IN FINANCIAL YEAR 2008 - 09 THROUGH THE ASSESSEE AND UNDER THIS BACKGROUND NEELGIRI LTD. PAID RS.7.5 CRORES TO THE ASSESSEE AND RS.4,50,20,500 WAS GIVEN BY NOBLEESE LTD. TO THE ASSESSEE DURING THE YEAR. IT WAS ALSO CONFIRME D IN THE SAID AFFIDAVIT THAT SINCE THE PURPOSE OF THE IMMOVEABLE PROPERTIES DID NOT MATURE AND THE TOTAL AMOUNT OF RS.12,20,00,500 PAID BY THE SAID TWO COMPANIES WAS CONSIDERED AS SHARE APPLICATION MONEY BY BOTH OF THEM WITH THE CONSENT OF THE ASSESSEE. IN THE SAID AFFIDAVIT, IT WAS ALSO CONFIRMED THAT NOBLEESE OBLIGE ESTATE PVT. LTD. HAD PAID RS.7.5 CRORES TO NEELGIRI INFRA - STRUCTURE DURING FINANCIAL YEAR 2008 - 09 AND RIGHTS OF NEELGIRI INFRA - STRUCRURE FOR SHARES, APPLICATION AND ALLOTMENT FROM THE ASSESSEE WERE PURCHASED BY NOBELEESE LTD. SINCE THE SHARES COULD NOT BE ALLOTTED UP TILL 31.3.2009, THE AMOUNT WAS TAKEN TO LOAN AND ADVANCES ACCOUNT. HOWEVER, IT WAS CONFIRMED IN THE SAID AFFIDAVIT THAT 13 THE SHARES WERE ALLOTTED IN THE NEXT YEAR I.E. FINANCIAL YEA R 2009 - 10. THUS, INVESTMENT BY THE SAID TWO COMPANIES (INCLUDING THE PREMIUM AMOUNT) WAS CONFIRMED BY THE ABOVE SAID COMPANIES. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE UNDER SEC. 133(6) DATED 11.10.2001 TO NOBELEESE LTD. WITH RESPECT TO THE AMOUNT GIVEN OF RS.4,50, 20, 500 AND HAD ALSO ASKED TO FILE THE ITR OF ASSESSMENT YEAR 2009 - 10, BANK STATEMENT AND CONFIRMED COPY OF ACCOUNT. ALL THESE DOCUMENTS WERE DULY FILED BY NOBELEESE LTD. DIRECTLY WITH THE ASSESSING OFFICER VIDE LETTE R DATED 17.11.2011. THIS FACT HAS ALSO BEEN CONFIRMED BY NOBELEESE LTD. IN THEIR AFFIDAVIT DATED 18.9.2012. THE ASSESSING OFFICER CHOSE TO IGNORE THESE DOCUMENTS WHILE PASSING THE ORDER. 19. THE ASSESSEE HAD ALSO FILED CONFIRMATION FROM NEELGIRI WITH THE COPIES OF CHEQUE DURING ASSESSMENT PROCEEDINGS VIDE LETTER DATED 28.11.2011, HOWEVER, NO NOTICE UNDER SEC. 133(6) WAS ISSUED TO NEELGIRI. THE ASSESSEE HAD ALSO FILED THE CONFIRMATION OF NEELGIRI WITH BANK DETAILS, PAN, WARD NO. IT WAS SUBMITTED THAT NEEL GIRI LTD. IS A PART OF INDIA BULLS REAL ESTATES GROUP. IT IS THUS CLEAR THAT BOTH THE PARTIES HAVE CONFIRMED THE INVESTMENT AND PREMIUM PAID AND BOTH ARE REGULARLY ASSESSED WITH THE DEPARTMENT. THE ASSESSEE HAS ALSO POINTED OUT AND NOTED BY THE LEARNED CIT (APPEALS) AT 14 PAGE NO. 10 OF THE FIRST APPELLATE ORDER THAT ON INSPECTION OF FILE THE ASSESSEE HAD FOUND THAT THE ASSESSING OFFICER HAD WRITTEN LETTER TO THE ITO OF NOBELEESE LTD. ON 09.12.2011 AND ITO OF NEELGIRI LTD. ON 12.12.2011. THE ASSESSING OFFICER W ROTE TO THEM THAT THESE RESPECTIVE COMPANY HAD MADE INVESTMENT IN THE ASSESSEE AND TOLD THEM TO INF O R M ABOUT IT SO THAT NECESSARY ACTION MAY BE TAKEN. NOTHING ADVERSE HAS BEEN REPORTED TO THE ASSESSING OFFICER BY EITHER OF THE A.OS. OF NEELGIRI LTD. OR NOB ELEESE LTD. IT HAS BEEN STATED BY THE ASSESSEE THAT COPIES OF THESE LETTERS HAVE NOT BEEN PROVIDED TO THE ASSESSEE. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS DOUBTED THE CREDITWO RTHINESS OF THESE TWO PARTIES W ITH THIS OBSERVATION THAT BALANCE SHEET O F THE NEELGIRI INFRASTRUCTURE DEV. LTD. REVEALED THAT IT HAD A VERY THIN CAPITAL BASIS OF NOT MORE THAN RS.20 LACS INCLUDING PAID UP CAPITAL OF RS. 5 LACS. IT HAD UNSECURED LOAN OF AROUND RS. 110 CRORES OUTSTANDING AS ON 31.3.2009 . R EGARDING NOBELEESE OBLI GE ESTATE PVT. LTD., THE ASSESSING OFFICER COMMENTED THAT IT HAD NO CAPITAL OF ITS OWN BUT WAS FINANCED THROUGH UNSECURED AND SECURED LOANS. WE, HOWEVER, FIND THAT THE ASSESSING OFFICER HAD NOT DENIED THE IDENTITY OF THE ABOVE TWO PARTIES. GENUINENESS OF T HE TRANSACTION IS ALSO ESTABLISHED AS THE AMOUNT IN QUESTION HAVE BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES. SO FAR AS CREDITWORTHINESS OF THESE PARTIES ARE CONCERNED, THE ASSESSING OFFICER HIMSELF HAS MENTIONED THAT NEELGIRI 15 LTD. HAD RS.110 CRORES OF LOAN AS ON 31.3.2009 WHICH ITSELF PROVES THE CREDITWORTHINESS OF NEELGIRI TO INVEST RS.7.5 CRORES WITH THE ASSESSEE. NOBELEESE LTD. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER HAD FURNISHED ITS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2009 - 10, B ANK STATEMENT AND CONFIRMED COPY OF ACCOUNT WITH THE A.O. THERE IS NO DISPUTE THAT BOTH THE ABOVE COMPANIES ARE ASSESSED TO TAX. THUS, WE FIND THAT THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS BY FURNISHING ALL THE NECESSARY DOCUMENTS AND INFORMATION TO ES TABLISH IDENTITY, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. 20. HON BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. GOEL SONS GOLDEN ESTATES PVT. LTD. ITA NO. 212/2012 VIDE JUDGMENT DATED 11.04.2012 HAS BEEN PLE ASED TO HELD AS UNDER: 11.04.2012. THE REVENUE BY THIS APPEAL UNDER SECTION 260A OF THE INCOME - TAX ACT, 1961 (?ACT?, FOR SHORT) IMPUGNS THE ORDER DATED 05.08.2011 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (?TRIBUNAL?, FOR SHORT) IN THE CASE OF GOEL ESTAT E SONS PVT. LTD. IN RELATION TO ASSESSMENT YEAR 2006 - 07. 2. LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT THE ORDER PASSED BY THE TRIBUNAL IS PERVERSE AND IN FACT ONE SHRI S.H. MALLICK HAD GIVEN A STATEMENT, WHICH IS REVENUE - PRODUCED IN THE ASSESSMENT ORD ER SAYING 16 THAT HE HAD PROVIDED ACCOMMODATION ENTRIES AND THE SAID STATEMENT CONCLUSIVELY PROVES THAT SHARE MONEY OF 30,00,000/ - ALLEGEDLY RECEIVED BY THE RESPONDENT - ASSESSEE FROM 5 COMPANIES ARE SHAM AND BOGUS TRANSACTIONS. 3. WE HAVE EXAMINED THE SAID C ONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES, THEIR PAN NUMBER, COPY OF BANK STATEMENTS, AFFIDAVITS AND BALANCE SHEET. THEREAFTER THE ASSESSING OFFICER HAD ASKED THE ASSE SSEE TO PRODUCE THE SAID DIRECTORS/PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. THE ASSESSING OFFICER DID NOT CONSEQUENT THERETO CONDUCT ANY INQUIRY AND CLOSED THE PROCEEDINGS. THIS IS A CASE WHERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPECIALLY AFTER THE AFFIDAVIT/CONFIRMATION ALONG WITH THE BANK STATEMENTS ETC. WERE FILED. IN CASE THE ASSESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALL ENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NON - VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS, THE FACTUAL FINDINGS RECORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDER PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES. 21. AGAIN SIMILAR VIEW HAS BEEN EXPRESSED BY THE HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. GANESHWARI METAL (P) LTD. (2013) 30 TAXMANN.COM 320 (DEL.) , W ITH THIS FINDING THAT WHERE ASSESSEE IN SUPPORT OF TRANSACTION OF RECEIPT OF SHARE APPLICATION MONEY BROUGHT ON RECORD 17 VARIOUS DOCUMENTS SUCH AS NAMES AND ADDRESSES OF SHARE APPLICANTS, THEIR CONFIRMATORY LETTERS, COPIES OF BANK STATEMENT ETC., SAID TRANSACTION WAS TO BE RECORDED AS GENUINE AND CONSEQUENTLY NO ADDITION COULD BE MADE IN RESPECT OF SAME UNDER SEC. 68 OF THE INCOME - TAX ACT, 1961. 22. AS DISCUSSED ABOVE IN THE PRESENT CASE BEFORE US, SEVERAL DOCUMENTS WERE BROUGHT ON RECORD SUCH AS NAMES AND ADDRESS OF THE ABOVE SAID TWO PARTIES, THEIR CONFIRMATORY LETTERS AND COPIES OF BANK STATEMENTS ETC., GENUINENESS OF WHICH HAS NOT BEEN REBUTTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER THUS COULD NOT DISCHARGE IT S ONUS TO PROVE THE ABOVE SAID DOCUMENTS AS FALS E WHEN BY FILING THOSE EVIDENCE, THE ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS AND THE ONUS HAD THEN SHIFTED UPON THE ASSESSING OFFICER. WE THUS RESPECTFULLY FOLLOWING THE RATIOS LAID DOWN IN THE ABOVE CITED C ASES OF HON'BLE JURISDICTIONAL DELHI HIGH COURT HOLD THAT THE ASSESSEE HAD BEEN ABLE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION IN THE PRESENT CASE REGARDING THE MONEY RECEIVED FROM THE ABOVE MENTIONED T WO COMPANIES. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD, DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.12,20,00,500 MADE ON ACCOUNT OF UNSECURED LOAN UNDER SEC. 68 OF THE ACT. 18 23. GROUND NOS. 3 AND 4 ARE TH US PARTLY ALLOWED. 24. GROUND NO.5 IS GENERAL IN NATURE AND DOES NOT NEED INDEPENDENT ADJUDICATION. 25. GROUND NO. 6 IS REGARDING CHARGING OF INTEREST UNDER SEC. 234B AND 234D OF THE INCOME - TAX ACT, 1961 WHICH IS CONSEQUENTIAL IN NATURE, HENCE DOES NOT N EED SEPARATE ADJUDICATION. 26. IN THE RESULT, THE APPEAL IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 09 . 0 1 .201 5 SD/ - SD/ - ( G.D. AGR A WAL ) ( I.C. SUDHIR ) VICE - PRESIDENT JUDICIAL MEMBER DATED: 09 / 0 1 /2015 MOHAN LAL COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. CIT(DR) ASSISTANT REGISTR A R