ITO, Jaipur V. LAND MARK DILSAY P LTD, Jaipur

ITA 177/JPR/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6107 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 23-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Unexplained cash credit; Bogus Share capital; Search and seizure; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Question of law; Third party statement; Accommodation entries; Onus to prove; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 153A; 133(6); 147; 131; 148; 132

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 177/JP/2015 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD-2(2), JAIPUR. CUKE VS. M/S LAND MARK DEALERS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACL 2002 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 17/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 177/JP/2015) FU/KZKJ.K O'KZ @ ASSESSMENT YEAR 2005-06 M/S LAND MARK DEALERS (P) LTD., 411, 3 RD FLOOR, SHALIMAR COMPLEX, CHURCH ROAD, M.I. ROAD, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD-2(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: AAACL 2002 N IZR;K{KSID @ OBJECTOR IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SMT. SEEMA MEENA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/06/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 08/06/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THE APPEAL BY REVENUE AND CROSS OBJECTION BY ASSESS EE ARISE FROM THE ORDER DATED 30/12/2014 OF LD. CIT (A)-I, JAIPUR PERTAINING TO THE A.Y. 2005-06. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 2 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 29/10/ 2005 DECLARING A LOSS OF RS. 38,565/- WITH ITO, WARD 6(1), JAIPUR. A LONGWITH THE RETURN, THE ASSESSEE FILED FINANCIAL STATEMENTS INCLUDING T HE DETAILS OF THE SHARE CAPITAL. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 30/12/2005. NOTICE U/S 1 48 OF THE ACT WAS ISSUED ON 29/03/2012 BY THE ITO, WARD 4(3), NEW DELHI ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. DURIN G THE YEAR, THE ASSESSEE HAS RAISED SHARE CAPITAL OF RS. 51,60,000/ - (16000 EQUITY SHARES OF RS. 10 EACH AND 50000 EQUITY SHARES OF RS. 100 E ACH) FROM VARIOUS COMPANIES. THE ASSESSING OFFICER HAS CONSIDERED RS. 50.00 LACS SHARE CAPITAL RECEIVED FROM THESE COMPANIES AS UNEXPLAINE D AND MADE THE ADDITION. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO AFTER C ONSIDERING THE FACTS AND SUBMISSIONS OF THE CASE, DELETED THE ADDITION B Y HOLDING AS UNDER: 3.3.2 THE CASE WAS RE-OPENED ON 29/03/2012 ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING DELHI, WITH REGARD TO SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. ASSESSEE HAS FILED ITS OB JECTION FOR RE-OPENING OF ASSESSMENT ON 20.02.2013 BUT AO WAS UNCONVINCED WIT H THAT AND REJECTED THE SAME. DURING THE REASSESSMENT PROCEEDING, ASSES SEE PROVIDED ALL PRIMA FACIE DETAILS SUCH AS NAME WITH COMPLETE ADDRESS, P AN, CONFIRMATION, BANK STATEMENT, SHARE APPLICATION FROM & ALLOTMENT ETC. IT IS ALSO A FACT THAT OUT OF 7 LETTERS SENT BY SPEED POST EXCEPT IN CASE OF M/S SUMA FINANCE AND PVT. LTD., ALL WERE SERVED. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 3 ASSESSEE VIDE LETTER DATED 05.03.2013 HAS REQUESTE D AO TO PROVIDE AN OPPORTUNITY TO CROSS-EXAMINE SH. ASEEM GUPTA AND OT HER DIRECTORS OF THESE BENEFICIARY COMPANIES. HOWEVER, THE SAME WAS NOT OF FERED BY THE AO. IN VIEW OF THESE FACTS, THE REFERENCE TO THE STATEMENTS MAD E BY SOME OF THE PERSONS RELATED WITH THE SAID INVESTING COMPANIES IS OF NO EFFECT/USE BECAUSE SUCH STATEMENTS COULD NOT HAVE BEEN UTILIZED AGAINST THE ASSESSEE-COMPANY WITHOUT PROVIDING AN OPPORTUNITY OF CROSS-EXAMINATI ON, WHICH WAS NOT AFFORDED BY THE AO IN THIS CASE. IT IS ALSO FOUND T HAT THE AO COULD NOT BRING OUT ANY MATERIAL TO DISAPPROVE THE GENUINENESS OF CONFI RMATIONS ALONG WITH OTHER PRIMA FACIE DETAILS FILED BY THE ASSESSEE. THEREFOR E, THE DECISION GIVEN BY THE HON'BLE SUPREME COURT, IN THE CASE OF CIT V. LOVELY EXPORTS (P.) LTD. [2008] 216 CTR 195, WILL APPLY HERE AND ADDITION MADE BY T HE AO IS UNCALLED FOR. 3.3.3. BURDEN OF PROOF IS NOT STATIC. ONCE THE ASSE SSEE HAS PROVIDED RELEVANT EVIDENCES THEN THE BURDEN SHIFTS ON THE AO TO DISAP PROVE THEIR GENUINENESS WITH NEW FACTS. HOWEVER ON THE BASIS OF DOCUMENTARY EVIDENCES SUCH AS (I) PANS OF ALL SEVEN (7) CONCERN S WHO HAVE SUBSCRIBED TO THE SHARE CAPITAL (II) BANK STATEMENT S (III) CHEQUE DETAILS (IV) CONFIRMATIONS RECEIVED FROM SHARE HOLDERS (V) COPY OF ROC RETURN FILED AND (VI) SHARE ALLOTMENT DETAILS , IT CAN BE CONCLUDED THAT ASSESSEE HAD BEEN ABLE TO PROVE ITS CASE AND THAT AO COULD N OT SHIFT THE BURDEN BACK ON TO THE ASSESSEE WITHOUT PRODUCING ANY TANGI BLE MATERIAL TO DOUBT THE VERACITY OF DOCUMENTS FURNISHED BY THE AS SESSEE. THEREFORE, ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS BURDEN TO E STABLISH THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS AS REGAR DS THE TRANSACTIONS CONCERNING THE ALLOTMENT OF SHARES. FROM ROC RETURN , IT IS ALSO SEEN THAT ONCE SHARE ALLOTMENT IS DONE, WHOLE PROCESS OF SHARE CAPITAL SUBSCRIPTION STARTING FROM SHARE CAPITAL APPLICATIO N RECEIVED FROM AFOREMENTIONED SEVEN (7) CONCERNS, HAS REACHED ITS FINALITY. EVEN IN VIEW OF THESE DOCUMENTARY FACTUAL EVIDENCES, AO WAS NOT ABLE TO PROVE HIS CONTENTION THAT ASSESSEES OWN MONEY WAS PLOUGH ED BACK IN FORM ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 4 OF SHARE CAPITAL RECEIVED FROM THESE SEVEN (07) CON CERNS WHOSE REFERENCES WERE FOUND IN THE SEARCH & SEIZURE REPOR T OF SK JAIN GROUP. THE IMMEDIATE SOURCE IN THE BANK ACCOUNT OF THE SHA REHOLDERS IS THROUGH TRANSFER, NOT BY CASH. APART FROM THESE FACTS, ASSESSEE HAS ALSO RELIED U PON RATIO OF FOLLOWING DECISIONS WHICH ARE DIRECTLY IN ITS FAVOUR: AMBRESHWAR GRIH NIRMAN SAMITI 84 ITD 139 STARPTEX INDIA P LTD 84 ITD 320 T.S VENKETATION 74 ITD 298 AMARJIT SINGH BAKSHI (HUF) 263 ITR 75 SMC SHARE BROKER LTD 159 TAXMAN 306 JAFFERALI K RATTONSEY 53 SOT 220 NIPUAN AUTO P LTD 89 DTR 342 KAMDHENU STEEL & ALLOYS LTD AND OTHERS 68 DTR 38 DOLPHINE MARBLES (P) LTD 57 DTR 58 DADHIMATI SYNTEX P LTD 259/JODH/2013 DT 31/7/13. H ONBLE ITAT JODHPUR BENCH BHARTI SYNTEX LTD 52 DTR 73 ( HONBLE ITAT JAIPUR BENCH) 3.3.4 FURTHER, I ALSO FIND THAT THE ESTABLISHED LEG AL POSITION ON THE SUBJECT UNDER CONSIDERATION AS ADOPTED IN A LARGE NUMBER OF CASE LAWS IS AS FOLLOWS:- (I) AS HELD IN THE CASE OF R.B. MITTAL V. CIT 246 ITR 283 (AP) IN AN ENQUIRY U/S 68 OF THE ACT, THE RULE OF AUDI ALTERAM PARTERM HAS TO BE OBSERVED AND THE ASSESSEE MUST BE GIVEN A FAIR AND REASONABL E HEARING TO DISCHARGE THE BURDEN CAST ON HIM U/S 68 OF THE ACT. (II) JURISDICTIONAL ITAT BENCH JAIPUR IN CASE OF BH ARTI SYNTEX LTD 52 DTR 73 HAS HELD INTER ALIA AS UNDER: .. HELD THAT CERTIFICATE OF INCORPORATION OF INVESTOR COMPA NIES WAS PLACED ON RECORD. IT MEANS THAT THEY WERE REGIS TERED COMPANIES UNDER THE COMPANIES ACT. PANS OF ALL THE THREE PARTIES HA D BEEN GIVEN AND SURPRISINGLY NO ENQUIRY HAD BEEN MADE BY THE DEPART MENT FROM ITS OWN DEPARTMENT WHETHER THE PANS ALLOTTED TO THESE PARTI ES WERE CORRECT OR NOT ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 5 OR THESE COMPANIES WERE ASSESSED TO TAX OR NOT. THE ASSESSEE-COMPANY HAD FILED COPY OF ITS BALANCE SHEET ALSO SHOWING TH E SHARES OF THE ASSESSEE- COMPANY IN THEIR BOOKS OF ACCOUNT ON SAID ASSETS. Y EAR-WISE THESE SHARES HAD BEEN SHOWN IN THEIR BALANCE SHEET AND THEY HAD STATED THAT THEY WERE REGULARLY ASSESSED TO TAX. COPY OF CONFIRMATION ALO NG WITH AFFIDAVIT AND SHARE CERTIFICATES ISSUED WERE ALSO PLACED ON RECOR D. THEREFORE, BY MERELY SAYING THAT THESE PARTIES WERE NOT TRACEABLE AND TR EATING THE SHARE APPLICATION MONEY AS UNEXPLAINED MONEY UNDER SECTIO N 68 WAS NOT CORRECT. THE ASSESSEE HAD FILED NECESSARY DETAILS F OR THE PURPOSE OF PROVING THAT IT HAD RECEIVED ACTUAL SHARE APPLICATION MONEY AND THE SHARES HAD BEEN ALLOTTED. SHARES HAD BEEN ALLOTTED TO THE RESP ECTIVE COMPANIES. THE ASSESSEE-COMPANY WAS SHOWING THE SHAREHOLDERS IN IT S BALANCE SHEET AND THESE COMPANIES WERE ALSO SHOWING THE ASSETS IN THE IR BALANCE SHEET IN THE SHAPE OF SHARES IN THE ASSESSEE-COMPANY. ALL THESE COMPANIES WERE ASSESSED TO TAX AND, THEREFORE, THE ADDITION SUSTAI NED BY THE COMMISSIONER (APPEALS) WAS NOT JUSTIFIED.(ST RESS SUPPLIED) FURTHER, ITAT JODHPUR BENCH IN CASE OF DADHIMATI SY NTEX P LTD 259/JODH/2013 DT 31/7/13 HAS ALSO ENDORSED THIS VIEW. (III) IT IS ALSO SETTLED LAW THAT IT IS MANDATORY F OR THE AO TO CONFRONT THE ASSESSEE WITH ANY MATERIAL COLLECTED BY THE AO AT T HE BACK OF THE ASSESSEE, AND IN CASE OF STATEMENT OF THIRD PARTY R ECORDED AT THE BACK OF THE ASSESSEE, OPPORTUNITY OF CROSS EXAMINATION H AS TO BE OFFERED TO THE ASSESSEE, FAILING WHICH THE SAID MATERIAL/STATE MENT ETC. WILL BE RENDERED ON UNRELIABLE AND ADDITIONS MADE ON THE BA SIS OF SUCH MATERIAL/STATEMENT ETC. SHALL BE RENDERED ILLEGAL. IT IS FACT THAT AO DID NOT PROVIDE ANY OPPORTUNITY TO CROSS- EXAMINE ANY O F THE PERSONS NAMELY, SH. S K JAIN OR SH. V K JAIN OR SH. ASSEM K UMAR GUPTA OR SH. RAJESH AGRAWAL WHOSE STATEMENTS HAVE REFERRED / REL IED IN THE ASSESSMENT ORDER. REFERENCE IN THIS REGARD CAN BE M ADE TO THE DECISIONS IN THE CASE OF R.B. SHREERAM DURGA PRASAD 176 ITR 169 (SC), 125 ITR 713 (SC), JINDAL VEGETABLE (ORDER OF HON'BLE DELHI HIGH COURT IN ITA NO. 428 OF 2007, 174 TAXMANN 440 (RAJ.) AND LAX MAN BHAI PATEL (ORDER OF HON'BLE GUJARAT HIGH COURT DATED 22/07/20 08 IN ITR NO. 41/1997). ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 6 ADMITTEDLY, THESE STATEMENTS WERE NOT RECORDED BY THE AO BUT WERE RECORDED BY THE INVESTIGATION WING DELHI AT THE BAC K OF THE ASSESSEE. AO HAS EVEN NOT REFERRED TO THE RELEVANT PORTION OF SUCH STATEMENT SO AS TO ESTABLISH THE COLLUSIVE ARRANGEMENT THE ASSES SEE COMPANY HAD WITH THESE PERSONS. (IV) FURTHER, IN THE CASE OF N.P. GARODIA (ORDER DATED13/01/2009 OF HON'BLE P & H HIGH COURT IN ITA NO. 808 OF 2008) AND IN THE CASE OF BRIJ PAL SHARMA (ORDER DATED 17.02.2009 IN ITA NO. 685 OF 20 08 OF HON'BLE P & H HIGH COURT) IT WAS HELD THAT WHERE THE ASSESSEE P ROVIDES IDENTITY AND DETAILS PERTAINING TO THE LENDERS/CREDITORS BUT IS UNABLE TO PRODUCE THEM AND REQUESTS THE AO TO ISSUE SUMMONS U/S 131 O F THE ACT FOR THEIR ATTENDANCE, IT IS THE DUTY OF THE AO TO ISSUE SUCH SUMMONS, FAILING WHICH THE ADDITION WOULD GET DELETED. IT IS ALSO HE LD IN CIT V. ORISSA CORPORATION PVT. LTD. 158 ITR 78 (SC) AND ANIS AHMED 297 ITR 441 (SC) THAT MERE NON-PRODUCTION OF THE LENDER/SHAREHOLDER CANNOT BE A GROUND FOR MAKING ADDITION U/S 68 OF THE ACT. (V) SIMILARLY AS HELD IN THE CASE OF CIT V. METACHEM INDUSTRIES (2000) 245 ITR 160 (MP) WHERE A CREDIT IS SHOWN TO HAVE COME F ROM A PERSON OTHER THAN THE ASSESSEE, THERE IS NO FURTHER RESPONSIBILI TY OF THE ASSESSEE TO SHOW THAT IT HAS COME FROM ACCOUNTED SOURCE OF THE LENDER, AS LONG AS THE FACT THAT HE HAD MADE THE ADVANCE AND WAS CAPAB LE OF MAKING THE ADVANCE ARE ESTABLISHED. IT WAS HELD BY THE HON'BLE MADRAS HIGH COURT IN HASTIMAL (S) V. CIT (1963) 49 ITR 273 THAT AFTER A LAPSE OF DECADE, THE ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CAL LED UPON TO EXPLAIN NOT MERELY THE ORIGIN AND SOURCE OF A CAPITAL CONTR IBUTION, BUT ALSO THE ORIGIN OF ORIGIN AND SOURCE OF THE SOURCE. (VI) FURTHER, I FIND THAT THE HONBLE APEX COURT IN CIT V LOVELY EXPORTS (P) LTD. (2008) 216 CTR 195 HAS HELD THAT THE EVEN IF THE SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT COMPANY IS FROM ALL EGED BOGUS ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 7 SHAREHOLDER, WHOSE IDENTITY IS PRODUCED BY THE APPE LLANT COMPANY, THE REVENUE CAN ALWAYS PROCEED AGAINST SUCH SHAREHOLDER S AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENT. SIMILAR DECISIO N IS ALSO TAKEN IN THE CASE OF CIT V. STELLER INVESTMENT LTD. (1991) 192 I TR 287 (DEL.), (2000) 251 ITR 287 (SC), CIT V. SOPHIA FINANCE LTD. 205 ITR 98 (DEL.)(FB), CIT V. DIVINE LEASING & FINANCE LTD. ( SLP NO. CC 375/2008 ARISING OUT OF ITA NO. 53/2005 OF THE HIGH COURT OF DELHI), CIT (KOLKA TA) V. M/S SHIPRA RETAILERS (P) LTD. SLP NO. CC 451/2008 ARISING OUT OF ITA NO. 576/200 4 OF THE HIGH COURT OF CALCUTTA), CIT V. PONDY METAL & ROLLING MILLS (P) LTD. (SLP NO. CC 12860/2007 ARISING OUT OF ITA NO. 788/2006 OF THE HIGH COURT OF DELHI) AND CIT V. GENERAL EXPORTS LTD. (SLP NO. 21349/2007 ARISING OUT OF ITA NO. 880/2006 OF THE HIGH COURT O F DELHI). FOLLOWING THE AFORESAID DECISION OF THE APEX COURT IN CIT V. LOVELY EXPORTS (P) LTD. (SUPRA), THE HON'BLE BOMBAY HIGH COURT IN THE RECEN T JUDGMENT IN THE CASE OF CIT V CREATIVE WORLD TELIFILMS LTD. (ORDER DATED 12.10.2009 IN ITA(L) NO. 2182 OF 2009) HAS HELD INTER ALIA AS UND ER: 'THE QUESTION SOUGHT TO BE RAISED IN THE APPEAL WAS ALSO RAISED BEFORE THE TRIBUNAL AND THE TRIBUNAL WAS PLEASED TO FOLLOW THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD . REPORTED IN (2008) 216 CTR 195 (SC) WHEREIN THE APEX COURT OBSERVED THAT IF TH E SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSIN G OFFICER, THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF N ECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAS GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDERS, THEIR PANIGIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE ASSESSING OFFICER TO MAKE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE ASSES SING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WAS ULTIMATELY RETURNE D BACK WITH AN ENDORSEMENT 'NOT TENABLE'. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN C ARD, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SH AREHOLDERS SINCE ALL THE RELEVANT MATERIAL DETAILS AND PARTICULARS WERE GIVE N BY THE ASSESSEE TO THE ASSESSING OFFICER. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED. NO SUBSTANTIAL QUESTION OF LAW I S INVOLVED IN THE APPEAL. IN THE RESULT, THE APPEAL IS DISMISSED IN LIMINNI W ITH NO ORDER AS TO COSTS. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 8 SIMILAR DECISION HAS ALSO BEEN TAKEN BY THE HON'BL E CHHATTISGATH HIGH COURT IN ACIT V VENKATESHWAR ISPAT PVT. LTD. (2009) 319 ITR 393. (VII) FURTHER, THE HON'BLE DELHI HIGH COURT RELYING ON THE JUDGMENT OF THE APEX COURT IN LOVELY EXPORTS PVT. LTD. (SUPRA) HAS DISMISSED THE DEPARTMENTS APPEALS IN LIMINE VIDE ITS RECENT ORDERS IN THE CASE OF CIT V. DWARKADHISH INVESTMENT PVT. LTD. AND DWARKDHISH CAPITAL PVT. LTD (ITA NOS. 911/2010 AND 913/2010 ORDER DATED 02/08/2 010, CIT VS. GREEN TECH TOWER BUILDERS PVT. LTD. (ITA NO. 1113/2 010 ORDER DATED 12.08.2010) AND CIT V. ULTRATECH FINANCE & INVESTME NT LTD. (ITA NO. 1122/2010 ORDER DATED 12.08.2010). IN THE CASE OF D WARKADHISH INVESTMENT PVT. LTD. AND DWARAKDHISH CAPITAL PVT. L TD. ( SUPRA) THE HON'BLE DELHI HIGH COURT VIDE ITS COMMON ORDER DATE D 02.08.2010 HAS INTER ALIA OBSERVED AS UNDER: '7. CONSEQUENTLY, THE DOCTRINE OF MERGER WOULD APPL Y AND THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA ) WOULD COVER THE FIELD WITH REGARD TO INTERPRETATION OF SECTION 68 OF ACT, 1961. 8. IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATI C ONE. THOUGH IN SECTION 68 PROCEEDINGS, THE INITIAL BURDEN OF PROOF LIES ON TH E ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS/SHARE APPLICAN TS BY EITHER FURNISHING THEIR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AN D SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MO DE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS, COULD NOT BE FOUND AT THE ADDRESS GIVEN . IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NO T LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE AS SESSEE NEED NOT TO PROVE THE SOURCE OF SOURCE'. .. 10. WE ARE ALSO INFORMED THAT A SPECIAL LEAVE PET ITION AGAINST THE AFORESAID DIVISION BENCH JUDGMENT IN THE CASE OF TH E RESPONDENT- ASSESSEE HAS BEEN DISMISSED BY THE SUPREME COURT. ACCORDINGL Y, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESE NT CASES AS THE MATTER IS FULLY COVERED BY THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 9 LTD. (SUPRA) AS WELL AS THE DIVISION BENCH JUDGMENT OF THIS COURT IN THE CASE OF THE RESPONDENT-ASSESSEE ITSELF. 11. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE PRE SENT APPEALS AMOUNT TO RELITIGATION. THE SUPREME COURT IN KK MODI VS. KN. MODI AND ORS., (1998) 3 SCC 573 HAS HELD, 'IT IS AN ABUSE OF THE PROCESS OF THE COURT AND CONTRARY TO JUSTICE AND PUBLIC POLICY FOR A PARTY TO RELITIG ATE THE SAME ISSUE WHICH HAS ALREADY BEEN TRIED AND DECIDED EARLIER AGAINST HIM. THE RE-AGITATION MAY OR MAY NOT BE BARRED AS RES JUDICATA. BUT IF TH E SAME ISSUE IS SOUGHT TO BE RE AGITATED, IT ALSO AMOUNTS TO AN ABUSE OF T HE PROCESS OF THE COURT . 12. THOUGH WE WERE INITIALLY INCLINED TO IMPOSE C OSTS YET WE ARE OF THE OPINION THAT ENDS OF JUSTICE WOULD BE MET BY GIVING A DIRECTION TO THE REVENUE TO BE MORE CAREFUL BEFORE FILING APPEALS IN A ROUTINE MANNER. IN OUR VIEW, APPEAL SHOULD NOT BE FILED IN MATTERS WHE RE EITHER NO QUESTION OF LAW ARISES OR THE ISSUE OF LAW IS A SETTLED ONE. WE GIVE THIS DIRECTION BECAUSE THE JUDICIAL CAPITAL IN TERMS OF MANPOWER AND RESOURCES IS EXTREMELY LIMITED. 13. REGISTRY IS DIRECTED TO COMMUNICATE COPIES OF THIS ORDER TO ALL THE CHIEF COMMISSIONERS OF INCOME TAX IN DELHI FOR NECESSARY ACTION. WITH THE AFORESAID DIRECTION, THE PRESENT APPEALS ARE DISMIS SED IN LIMINE BUT WITHOUT ANY ORDER AS TO COSTS. ' (VIII) IN THE CASE OF CIT VS. FAIR FINVEST LTD . ITA NO. 232/2012 DATED 22-11- 2012, HONBLE DELHI HIGH COURT HAS HELD AS UNDER:- 6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE CIT(APPEALS) WOULD REVEAL THAT TH E ASSESSEE HAS FILED DOCUMENTS INCLUDING CERTIFIED COPIES ISSUED BY THE REGISTRAR OF COMPANIES IN RELATION TO THE SHARE APPLICATION, AFFIDAVITS OF THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY TH E APPLICANT FOR COMPANYS SHARES, CERTIFICATES BY AUDITORS ETC. UNF ORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND TH E STATEMENT OF MR. MAHESH GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST T HAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLICANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN TH E ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORT HY OR LACKED CREDIBILITY ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 10 THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF MR. M AHESH GARG THAT THE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTI ON OF SECTION 68. 7. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIR CUMSTANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPO RTS (SUPRA). 8. THE DECISION IN THIS CASE IS BASED ON THE PEC ULIAR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASSESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATION MONIES, IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJECT IT ON TENABLE GROUNDS. IN CASE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES, SOME M EANINGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE ASSESSEE AND THE ALLEGED HAWALA OPERATORS; SUCH A LINK WAS SHOWN TO BE PRESENT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) RELIE D UPON BY THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THA T IN ALL CASES OF SHARE CAPITAL ADDED UNDER SECTION 68, THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL IS ACCORDINGLY D ISMISSED. (IX) RECENTLY, IN THE CASE OF ITO WARD (2) NEW DELHI VS. M/S RAKAM MONEY MATTERS P LTD ITA NO. 2821/DEL/2011 DATED 16/10/201 4, THE HONBLE ITAT BENCH DELHI HAS DELETED THE ENTIRE ADDITION MA DE ON ACCOUNT OF SHARE APPLICATION MONEY BY THE ASSESSEE U/S 68 OF T HE ACT, RELEVANT EXTRACT OF WHICH ARE REPRODUCED AS UNDER:- . 16. IN THE PRESENT CASE, AS NOTED ABOVE, THE AO HA S NOT BEEN ABLE TO BRING ON RECORD ANY VALID MATERIAL OR EVIDENCE TO DISCREDIT THE EVIDENCES AND THE EXPLANATION GIVEN BY THE ASSESSEE COMPANY. THE ONLY EVIDENCE WHICH HAS BEEN REFERRED BY THE AO IS STATEMENT OF THIRD PARTIES RE CORDED BY THE INVESTIGATION WING. ADMITTEDLY THESE STATEMENTS WERE NOT RECORDED BY THE AO BUT WERE RECORDED BY THE INVESTIGATION WING AT THE BACK OF T HE ASSESSEE. THE AO HAS NOT EVEN REFERRED TO THE RELEVANT PORTION OF SUCH S TATEMENT SO AS TO ESTABLISH THE COLLUSIVE ARRANGEMENT THE ASSESSEE COMPANY HAD WITH THESE PERSONS. 17. ACCORDINGLY WE ARE OF THE VIEW THAT THE CIT(A ) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 18. IN THE RESULT, THE APPEAL OF THE REVENUE STAN DS DISMISSED.. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 11 3.3.5 FURTHER, IN VIEW OF THE DECISIONS OF THE JUR ISDICTIONAL HIGH COURT IN BARKHA SYNTHETICS LTD. VS ASSTT. CIT (2005) 197 XTR (RAJ) 432 & CIT VS AKJ GRANITES P LTD. 301 ITR 298, WHERE THE SHARE AP PLICATIONS ARE RECEIVED FROM DIFFERENT PLACES ACCOMPANIES WITH SHA RE APPLICATION MONEY, NO PRESUMPTION CAN BE DRAWN THAT THE SAME BE LONG TO THE ASSESSEE; AND THE APPLICATION MONEYS CANNOT BE ASSE SSED IN ASSESSEES HANDS AS ITS UNDISCLOSED INCOME UNLESS SOME NEXUS I S ESTABLISHED THAT SHARE APPLICATION MONEY FOR AUGMENTING THE INVESTME NT IN BUSINESS HAS FLOWN FROM THE ASSESSEES OWN MONEY. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS DISCUSSE D AND ALSO RATIO OF THE ABOVE DECISION IN FAVOUR OF THE APPELLANT AS DISCUS SED IN ABOVE PARAS, THE ADDITION OF RS. 50,00,000/- MADE U/S 68 OF THE ACT CANNOT BE JUSTIFIED, HENCE DELETED. ASSESSEE GETS A RELIEF OF RS. 50,00,000/-. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY TAKING FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND IN LAW THE LD. CIT(APPEAL)-I, JAIPUR HAS ERRED IN:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS. 50,00,000/- MADE U/S 68 ON ACCOUNT OF UNEXPLAINED C ASH CREDITS IN THE FORM OF SHARE CAPITAL ISSUED BY THE ASSESSEE . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT ASSESS EE HAS DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTITY, C REDITWORTHINESS AND GENUINENESS AS REGARDS THE TRANSACTIONS CONCERN ING THE ALLOTMENT OF SHARES IGNORING THE FACTS THAT CONTRAR Y EVIDENCES IN THE FORM OF CASH PAID AND CHEQUES RECEIVED WERE FOU ND AND SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS IN T HE SKJ GROUP. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AS SESSEE WAS NOT ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 12 CONFRONTED WITH THE EVIDENCES COLLECTED AND IGNORIN G THE FACT THAT NECESSARY EVIDENCES AND DETAILS IN THE FORM OF STATEMENTS RECORDS DURING THE COURSE OF SEARCH OPERATION AS WE LL AS COPIES OF BANK ACCOUNTS AND RELATED DOCUMENTS WERE PROVIDED T O THE ASSESSEE. 4. THE APPELLANT CRAVES THE INDULGENCE TO MODIFY, A LTER, ADD AND AMEND ANY OTHER GROUND OF APPEAL. 5. THUS, ONLY ISSUE INVOLVED IN THE REVENUES APPEAL IS AGAINST DELETING THE ADDITION OF RS. 50.00 LACS MADE BY THE ASSESSIN G OFFICER U/S 68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AS UNEXPLAIN ED CASH CREDIT IN THE FORM OF SHARE CAPITAL ISSUED BY THE ASSESSEE. THE LD . CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSE SSEE HAS DISCHARGED ITS ONUS BY ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS WITH REGARD TO THE TRANSACTIONS FOR ALLOTMENT OF SHARES. 6. WHILE PLEADING ON BEHALF OF THE REVENUE WITH REGA RD TO THE GROUNDS RAISED IN THE REVENUES APPEAL, THE LD DR HAS RELIE D ON THE ORDERS OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE H AS NOT DISCHARGED THE ONUS, THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. SHE SUBMITTED THAT THE ASSESSING OFFICER HAS ISSUED INQUIRY LETTERS TO THE ADDRESSES PROVIDED BY THE ASSESSEE AND THESE LETTER S WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES IN RESPECT OF FO UR COMPANIES WHO HAS INVESTED IN THE SHARES. NON-SERVICE OF THE LETTERS WAS COMMUNICATED TO THE ASSESSEE AND ASKED TO PROVIDE CORRECT ADDRESSES . THE ASSESSEE ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 13 PROVIDED ADDRESSES OF THREE COMPANIES BUT NOT PROVI DED THE ADDRESS IN RESPECT OF ONE COMPANY NAMELY M/S FASHION TECH INDIA LTD.. THEREAFTER SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THESE COMP ANIES FOR NECESSARY VERIFICATION AND PERSONAL APPEARANCE OF T HE DIRECTORS OF THE COMPANY. SUMMONS IN RESPECT OF ONE COMPANY M/S SUMA FINANCE & INVESTMENT LTD. WERE RECEIVED BACK UNSERVED FROM THE POST AUTHORITIES WITH THE REMARKS NO SUCH FIRM AT SUCH ADDRESS. SHR I ASEEM KUMAR GUPTA, C.A. HAS CONFESSED IN HIS STATEMENT DATED 24 /11/2011 AND 25/11/2011 THAT HE WAS ENGAGED IN PROVIDING ACCOMMOD ATION ENTRIES THROUGH NUMBER OF ENTITIES CONTROLLED/MANAGED BY HI M AND M/S SUMA FINANCE & INVESTMENT LTD. WAS ONE OF THEM. LD DR ALS O SUBMITTED THAT IN THE CASE OF M/S FLARE FINANCE (INDIA) LTD., THERE WA S NO COMPLIANCE OF SUMMONS. IN THE CASE OF M/S SAM PORTFOLIO (P) LTD., THERE WAS NO RESPONSE TO THE INQUIRY LETTER U/S 133(6) OF THE AC T. IN THE CASE OF M/S FASHION TECH INDIA LTD., SUMMONS WERE ISSUED BUT NO O NE WAS RECEIVED. THE DIRECTOR OF THE COMPANY WAS NOT PRODUCED AND THE ASSESSING OFFICER HAS HELD THAT IDENTITY, CREDITWORTHINESS AND GENUINE NESS IS NOT ESTABLISHED IN ABSENCE OF SATISFACTORY EVIDENCE. IN THE CASE OF M/S MEHUL FINVEST PVT. LTD., THE LD DR HAS SUBMITTED THAT THE AUDITOR SHRI SUDIPTO MUKHERJEE IN THE STATEMENT RECORDED U/S 131 OF THE ACT HAS STATE D THAT BALANCE SHEET WAS NOT SIGNED BY HIM. IN THE CASE OF M/S SMARTEST C ORPORATE SERVICES ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 14 PVT. LTD. AND M/S SHUSHREE SECURITIES PVT. LTD., TH E EXPLANATION WAS NOT SATISFACTORY AND IT LACKS CREDITWORTHINESS AND GENUI NENESS. HENCE THE ADDITION MADE U/S 68 OF THE ACT MADE BY THE ASSESSI NG OFFICER MAY BE CONFIRMED AND ORDER OF LD. CIT(A) MAY BE QUAHSED. 7. ON THE OTHER HAND, ON THIS ISSUE, THE LD AR OF T HE ASSESSEE HAS SUBMITTED AS UNDER: 1. DURING THE YEAR, ASSESSEE RAISED SHARE CAPITAL O F RS.51,60,000/- (16000 EQUITY SHARES OF RS.10 EACH AND 50,000 EQUITY SHARES OF RS .100 EACH) FROM VARIOUS PARTIES. IN THE COURSE OF REASSESSMENT PROCEEDINGS, ASSESSEE VIDE LETTER DATED 26.02.2013 (PB 34) FILED THE CONFIRMATION, COPY OF SHARE APPLICATION MONEY AND THE BANK STATEMENT OF THESE PARTIES. AGAIN VIDE LET TER DATED 05.03.2013 (PB 35- 36) ASSESSEE PRODUCED REGISTER OF SHAREHOLDERS, MINUTE BOOKS AND THE DATE OF ALLOTMENT OF SHARES AND PARTICULARS OF SHARES ALLOT TED. 2. THE AO, THEREAFTER, ISSUED LETTER U/S 133(6) ON 21.02.2013 TO ALL THE ABOVE SEVEN PARTIES SEEKING FURTHER INFORMATION AS MENTIO NED AT PG 9, PARA 17 OF THE ASSESSMENT ORDER. THE FATE OF THE SUMMONS ISSUED AN D THE REASONS FOR WHICH THE AO CONSIDERED THE SHARE CAPITAL RECEIVED FROM T HESE COMPANIES AS UNEXPLAINED IS TABULATED AS UNDER:- S.NO NAME, ADDRESS AND PAN OF THE COMPANY AMOUNT INVESTED (RS.) SUMMONS SERVED REASONS FOR MAKING ADDITION 1. M/S SUMA FINANCE AND INVESTMENTS LTD. DA-4 VIKAS MARG, SHAKARPUR, DELHI-110092 PAN: AAACS03039P 10,00,000 NO - SUMMONS RETURNED UNSERVED WITH REMARK THAT NO SUCH FIRM AT SUCH ADDRESS. - SH. ASEEM KUMAR GUPTA IN HIS STATEMENT HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH THIS COMPANY. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. 2. M/S FLARE FINANCE (INDIA) LTD. 4346/4C, ANSHARI ROAD, 5,00,000 YES - NO COMPLIANCE OF SUMMON ISSUED. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 15 DARYA GANJ, NEW DELHI-110002 PAN: AAACF2044G 3. M/S SAM PORTFOLIO PVT. LTD. WP-501,3 RD FLOOR, SHIV MARKET, WAZIRPUR, ASHOK VIHAR DELHI-110052 PAN: AAHCS6810N 5,00,000 YES - NO COMPLIANCE TO ENQUIRY LETTER. - SH. ASEEM KUMAR GUPTA IN HIS STATEMENT HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH THIS COMPANY. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. 4. M/S FASHION TECH INDIA LTD. RZ-433, GALI NO. 13A, TUGLAKABAD EXTN., NEW DELHI PAN: AAACF0332R 10,00,000 YES - NO COMPLIANCE OF SUMMON ISSUED. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. 5. M/S SMARTEST CORPORATE SERVICES PVT. LTD. 117, HANS BHAWAN, 1,BAHADURSHAH ZAFAR MARG, NEW DELHI-110002 PAN: AABCS6568B 5,00,000 YES - IN RESPONSE TO SUMMONS COPY OF ASSESSMENT ORDER FOR AY 05-06 AND SOME OTHER DOCUMENTS SUBMITTED BUT THIS CO IS USED BY S.K. JAIN FOR PROVIDING ACCOMMODATION ENTRIES AS PER THE FACTS ON RECORD. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. 6. M/S SHUSHREE SECURITIES PVT. LTD.2D,DDA MIG FLATS, GULABI BAGH, DELHI- 110007PAN: AAHCS6808G 5,00,000 YES - IN RESPONSE TO SUMMONS BALANCE SHEET FILED BUT IT DID NOT FURNISH THE SCHEDULE-4 OF THE BALANCE SHEET WHICH SHOWS INVESTMENT OF RS.2,30,55,569/- TO VERIFY WHETHER IT HAS INVESTED IN SHARE CAPITAL OF THE ASSESSEE OR NOT. - SH. ASEEM KUMAR GUPTA, DIRECTOR IN HIS STATEMENT DATED 24.11.2011 HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH THIS COMPANY. - ASSESSEE HAS NOT PRODUCED THE DIRECTOR. 7. M/S MEHUL FINVEST (P) LTD.401, XV/3198, GALI NO. 1, SANGATARSHAN, PAHAR GANJ, NEW DELHI- 110055 PAN: AAACM8175H 10,00,000 YES - IN RESPONSE TO SUMMONS AUDITED ACCOUNTS SIGNED BY AUDITOR SH. SUDIPTO MUKHERJEE SUBMITTED BUT IN HIS STATEMENT HE STATED THAT HE HAS NOT EXAMINED OR SIGNED THE FINANCIAL STATEMENTS OF THIS CO. FOR THE FY 04-05 AND THESE ARE FORGED DOCUMENTS. - SH. NARESH GUPTA, PRESENT DIRECTOR OF THE CO. WHO APPEARED BEFORE AO ON 25.03.2013 STATED THAT HE DOES NOT RECOGNIZE THE SIGNATURE OF THE PERSON WHO HAD SIGNED THE LETTER DATED 27.02.2013 FILED IN ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 16 RESPONSE TO NOTICE U/S 133(6) AND THE SAID LETTER WAS ISSUED WITHOUT HIS KNOWLEDGE. 3. THE LD. CIT(A) DELETED THE ADDITION AS PER HIS F INDINGS GIVEN AT PAGE 14-25 OF THE ORDER. SUBMISSION:- 1. THE AO HAS TREATED THE SHARE CAPITAL AMOUNT RECEIVE D FROM PARTIES AT S. NO. 1 TO 4 ABOVE AS UNEXPLAINED ONLY FOR THE REASON THAT ASSESSEE DID NOT PRODUCED THE DIRECTORS OF THESE COMPANIES AND THAT IN CASE O F PARTIES AT S. NO. 1 AND 3, SH. ASEEM KUMAR GUPTA IN HIS STATEMENT DATED 24.11. 2011 AND 25.11.2011 HAS STATED THAT HE WAS ENGAGED IN PROVIDING ACCOMMODATI ON ENTRIES THROUGH THESE COMPANIES. IT MAY BE NOTED THAT IN RESPECT OF THESE COMPANIES ASSESSEE HAS FILED THE SHARE APPLICATION FORM, CONFIRMATION AND THE BANK STATEMENT (PB 44- 55). THE SUMMONS ON THESE COMPANIES HAS BEEN SERVED EXCEPT IN CASE OF SUMA FINANCE AND INVESTMENT LTD. IT MAY BE NOTED THAT TH IS A LIMITED COMPANY AND ADDRESS OF THE CO IS DA-4,VIKAS MARG, SHAKARPUR, DE LHI-92 AS AVAILABLE ON THE SITE OF MINISTRY OF CORPORATE AFFAIRS. THUS, ASSESS EE HAS DISCHARGED HIS PRIMARY BURDEN OF PROVING THE IDENTITY OF THE SHARE APPLICA NT, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. I N RESPECT OF PRODUCING THE DIRECTORS OF THE CO., ASSESSEE VIDE LETTER DATED 25 .03.2013 (PB 41) HAS SPECIFICALLY REQUESTED THE AO TO UTILISE HIS POWER UNDER THE ACT TO ENFORCE THE ATTENDANCE OF THESE DIRECTORS. FURTHER, THE STATEME NT OF SH. ASEEM KUMAR GUPTA WHO IS ALLEGED TO HAVE STATED TO PROVIDE ACCO MMODATION ENTRY THROUGH THESE COMPANIES WAS NOT PROVIDED NOR AN OPPORTUNITY TO CROSS EXAMINE HIM WAS GIVEN IN SPITE OF THE SPECIFIC REQUEST OF THE A SSESSEE VIDE LETTER DATED 05.03.2013 (PB 35-36).IN FACT, THE AO WITHOUT PROVI DING ANY OPPORTUNITY TO CROSS EXAMINE SH. ASSEM GUPTA/S.K. JAIN HAS MADE TH E ADDITION WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND ILLEGA L & BAD IN LAW. EVEN FROM THE ASSESSMENT ORDER IT IS NOT DISCERNIBLE THAT ANY OF THESE PERSONS HAD STATED THAT INVESTMENT MADE BY THESE COMPANIES IN THE SHARE CAP ITAL OF THE ASSESSEE IS ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 17 BOGUS/ ACCOMMODATION ENTRIES. THEREFORE, THE ADDITI ON MADE BY THE AO AT THE THRESHOLD IS LIABLE TO BE QUASHED. RELIANCE IN THIS CONNECTION IS PLACED ON SUPREME COURT DECISION DATED 02.09.2015 IN CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE 127 DTR 0241 WHEREIN IT WAS HELD THAT DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES WHOS E STATEMENTS WERE MADE THE SOLE BASIS OF THE ASSESSMENT IS A SERIOUS FLAW RENDERING THE ORDER A NULLITY IN AS MUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLE S OF NATURAL JUSTICE. THEREFORE, ADDITION OF RS. 30 LACS MADE IN RESPECT OF 4 PARTIES ABOVE IS RIGHTLY DELETED BY CIT(A). 2. IN CASE OF SMARTEST CORPORATIVE SERVICES PVT. LT D., AO HIMSELF HAS MENTIONED THAT PARTY HAS SUBMITTED THE ASSESSMENT ORDER U/S 1 43(3) FOR AY 05-06 AND SOME OTHER DOCUMENTS. THE AO INSPITE OF THE REQUEST OF THE ASSESSEE HAS NOT ISSUED SUMMON TO THE DIRECTOR OF THIS COMPANY FOR H IS PERSONAL PRESENCE. THE EXTRACT OF THE SEIZED DOCUMENT FROM THE PREMISES OF SH. S.K JAIN NOWHERE SUGGESTS THAT THIS COMPANY HAS GIVEN ANY ACCOMMODAT ION ENTRY TO THE ASSESSEE. NO OPPORTUNITY WAS GIVEN TO CROSS EXAMINE SH. S.K JAIN. THUS, WHEN THIS COMPANY HAS ACCEPTED OF MAKING INVESTMENT IN T HE SHARE CAPITAL OF THE ASSESSEE IN RESPONSE TO NOTICE ISSUED BY THE AO AND COPY OF BANK ACCOUNT, CONFIRMATION AND THE SHARE APPLICATION FORM IS FURN ISHED BY THE ASSESSEE (PB 56-58), THE ADDITION OF RS.5 LACS MADE BY ASSESSING OFFICER IS RIGHTLY DELETED BY CIT(A). 3. IN CASE OF SUSHREE SECURITIES PVT. LTD., THE CO HAS FURNISHED THE BALANCE SHEET WHICH SHOWS INVESTMENT OF RS.2,30,55,569/-. ONLY BE CAUSE SCHEDULE 4 TO THE BALANCE SHEET IS NOT FURNISHED BY THE COMPANY, THE INVESTMENT MADE BY IT IN THE SHARE CAPITAL OF THE ASSESSEE CANNOT BE CONSIDE RED AS UNEXPLAINED. THE COMPANY VIDE LETTER DATED 27.02.2013 (PB 65)HAS ACC EPTED THAT IT HAD MADE INVESTMENT OF RS.5 LACS IN THE SHARE CAPITAL OF THE ASSESSEE IN FY 04-05. IN RESPECT OF PRODUCING THE DIRECTORS OF THE CO., ASSE SSEE VIDE LETTER DATED 25.03.2013 (PB 41) HAS SPECIFICALLY REQUESTED THE A O TO UTILISE HIS POWER UNDER ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 18 THE ACT TO ENFORCE THE ATTENDANCE OF THE DIRECTOR. FURTHER, THE ASSESSEE HAS ALSO FILED THE SHARE APPLICATION FORM, CONFIRMATION AND THE BANK STATEMENT OF THIS COMPANY (PB 59-61). THUS, THE ADDITION OF RS.5 LACS MADE BY ASSESSING OFFICER IS RIGHTLY DELETED BY CIT(A). 4. IN RESPECT OF MEHUL FINVEST PVT. LTD. ASSESSEE H AS SUBMITTED CONFIRMATION, BANK STATEMENT AND SHARE APPLICATION FORM (PB 62-64 ). IN RESPONSE TO NOTICE ISSUED BY THE AO THE AUDITED ACCOUNTS WERE FURNISHE D (PB 66-81). FURTHER, SH. NARESH GUPTA PRESENT DIRECTOR APPEARED BEFORE THE A O AND HIS STATEMENT WERE RECORDED. NOTHING ADVERSE WAS FOUND IN SUCH ST ATEMENT. ONLY ON THE BASIS OF STATEMENT OF SH. SUDIPTO MUKHERJEE (PB 82- 83) WHO STATED THAT HIS SIGNATURE ON THE BALANCE SHEET IS FORGED CANNOT BE A REASON TO TREAT THE AMOUNT INVESTED BY THE CO. IN THE SHARE CAPITAL OF THE ASSESSEE AS UNEXPLAINED PARTICULARLY WHEN SUCH INVESTMENT IS VERIFIABLE FRO M ITS BANK ACCOUNT, NO OPPORTUNITY WAS GIVEN TO CROSS EXAMINE SH. SUDIPTO MUKHERJEE AND ASSESSEE VIDE ITS LETTER DATED 20.03.2013(PB37-40) HAS EXPLA INED THAT HOW HIS STATEMENT IS NOT WORTHY OF RELIANCE. THUS, THE ADDITION OF RS .10 LACS MADE BY AO IS RIGHTLY DELETED BY CIT(A). 5. APART FROM THE DECISIONS ALREADY SUBMITTED BEFOR E THE CIT(A), RELIANCE IS FURTHER PLACED ON FOLLOWING CASES:- CIT VS. VACMET PACKAGING (INDIA) PVT. LTD. 367 ITR 0217 (ALL.) (HC) DECISION DATED 11.02.2014 FACTS OF THE CASE A SURVEY U/S 133A WAS CARRIED OUT AND IT WAS ALLEG ED BY THE REVENUE THAT A CHARTERED ACCOUNTANT BY THE NAME OF ASEEM KUMAR GUP TA WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS BENEFICI ARIES UNDER THE GUISE OF SHARE APPLICATION MONEY. SUMMONS WAS ISSUED TO ASEEM KUMA R GUPTA AND HE WAS CONFRONTED WITH THE NOTINGS CONTAINED IN A BLACK DI ARY WHICH HAD BEEN IMPOUNDED DURING THE COURSE OF SURVEY. AO IN THE ASSESSMENT U /S 153A, MADE AN ADDITION OF AN AMOUNT WHICH WAS RECEIVED BY ASSESSEE AS SHARE APPL ICATION MONEY FROM M/S KMC PORTFOLIO PVT. LTD. ON THE GROUND THAT AMOUNT WAS ONLY A MOVEMENT OF MONEY BELONGING TO THE ASSESSEE THROUGH VARIOUS CHANNELS IN A COLOURABLE MANNER. CIT(A) DELETED THE ADDITION BY HOLDING THAT AO HAD ERRED I N RELYING UPON THE CONTENTS OF ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 19 THE BLACK DIARY, AS IT CONSISTED OF ENTRIES WHICH R ELATED TO AY 2005-06 AND NOT TO CURRENT AY 2007-08. FURTHER, DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE AO HAD ISSUED NOTICE U/S 133(6) INTER ALIA TO M/S KMC PORTFOLIO PVT. LTD. AS WELL AS TO ANOTHER COMPANY IN RESPONSE WHERETO BOTH THE COMPAN IES HAD CONFIRMED INVESTMENTS MADE BY THEM AND FILED SHARE RECEIPT CO NFIRMATION, BANK STATEMENTS OF THE RELEVANT PERIOD, ACKNOWLEDGMENTS OF THE INCOME TAX RETURNS AND BALANCE SHEET. TRIBUNAL WHILE SUSTAINING THE VIEW OF THE CIT(A) OB SERVED THAT ASSESSEE HAD FILED DOCUMENTARY EVIDENCE TO PROVE GENUINENESS OF SHARE APPLICATION MONEY CONSISTING OF (I) SHARE APPLICATION FORMS; (II) COPIES OF BANK ACCOUNTS OF SHARE APPLICANTS; (III) COPIES OF INCOME TAX RETURNS OF SHARE ALLOTTEES; (I V) BALANCE SHEETS; AND (V) COPIES OF SHARE ALLOTMENT CERTIFICATES AND OF BOARD'S RESOLUT ION OF THE SHARE APPLICANTS. IDENTITY OF APPLICANTS WAS ESTABLISHED BY PRODUCTIO N OF COPIES OF PAN CARDS AND REGISTRATION CERTIFICATE WITH THE REGISTRAR OF COMP ANIES. FINANCIAL CAPACITY WAS ALSO PROVED BY FILING OF COPIES OF THE BANK ACCOUNTS FRO M WHERE THE SHARE APPLICATION MONEY WAS TRANSFERRED THROUGH BANKING CHANNELS TO T HE ASSESSEE. THE GENUINENESS OF THE TRANSACTION HAD BEEN ESTABLISHED BY FILING O F THE DOCUMENTS AND IN VIEW OF THE CONFIRMATION BY BOTH THE COMPANIES OF THE RESPE CTIVE TRANSACTION. ON THIS BASIS, THE TRIBUNAL HELD THAT THE ASSESSEE HAD DISCHARGED THE ONUS PLACED UPON HIM BY SEC. 68. FINDINGS OF THE CASE THE ASSESSEE UNDOUBTEDLY HAD TO DISCHARGE THE ONUS OF ESTABLISHING THE IDENTITY AND CREDIT WORTHINESS OF THE APPLICANT COMPANIES AN D THE GENUINENESS OF THE TRANSACTION. IN THIS REGARD, BOTH THE CIT(A) AND TH E TRIBUNAL HAD NOTED THAT THE ASSESSEE HAD ESTABLISHED ALL THE THREE ASPECTS BY P RODUCING, DURING THE COURSE OF THE ASSESSMENT, NECESSARY DOCUMENTARY MATERIAL SUCH AS THE SHARE APPLICATION FORMS, COPIES OF BANK ACCOUNTS, INCOME TAX RETURNS AND BALANCE SHEETS. THE VIEW WHICH WAS TAKEN BY THE CIT(A) AND WHICH WAS SUSTAIN ED BY THE TRIBUNAL WOULD THUS HAVE TO BE REGARDED AS BEING, AT LEAST, A POSSIBLE VIEW TO TAKE IN THE CIRCUMSTANCES OF THE CASE. IT MAY BE NOTED THAT IN ASSESSEES CASE ALSO, THE A DDITION IS MADE WITH REFERENCE TO THE SURVEY/SEARCH CARRIED OUT IN CASE OF SH. ASS EM KUMAR GUPTA AND OTHERS. THEREFORE, IN VIEW OF THE ABOVE DECISION, WHICH IS DIRECTLY APPLICABLE IN THE ASSESSEES CASE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. ACIT VS. VIP GROWTH FUND PVT. LTD. 46 CCH 0231 (DEL .) (TRIB.) DECISION DATED 04.03.2016 FACTS OF THE CASE IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCO ME DECLARING CERTAIN INCOME. SCRUTINY ASSESSMENT U/S 143(3) WAS MADE ON 28.02.2006. IN TH E COURSE OF THE SAID PROCEEDINGS, THE DETAILS OF SHARE APPLICATION MONEY/SHARE CAPITA L WERE FURNISHED. THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPA RTMENT, THAT THE COMPANIES / PERSONS WHICH CONTRIBUTED TOWARDS SHARE APPLICATION MONEY / SHARE CAPITAL WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN VIE W OF THE SPECIFIC INFORMATION, THE ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 20 AO INITIATED ACTION U/S 148 AND COMPLETED THE ASSES SMENT DISBELIEVING A PART OF SHARE APPLICATION MONEY/SHARE CAPITAL OF RS. 40,00,000/- . FINDINGS OF THE CASE THE HONBLE ITAT AFFIRMED THE FINDINGS OF THE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING THAT NOTHING ADVERSE WAS FOUND IN THE DETAI LS OF SHARE APPLICATION MONEY/SHARE CAPITAL FURNISHED BY THE ASSESSEE IN TH E COURSE OF ASSESSMENT PROCEEDINGS. THE AO HAS NOT VERIFIED THE DETAILS FU RNISHED BY THE ASSESSEE AND I.T. RECORDS OF THE SHAREHOLDERS/INVESTING COMPANIES. TH E ASSESSEE HAS DISCHARGED ITS BURDEN OF PROVIDING BASIC DETAILS WHICH WERE REQUIR ED FOR VERIFICATION TO FULFILL THE CONDITIONS VIZ. IDENTITY OF THE CREDITOR, CREDIT WO RTHINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTION. THE ASSESSEE HAS PROVID ED NECESSARY DETAILS INCLUDING THE WARD/CIRCLE WHERE THE SHARE APPLICANTS/ INVESTING C OMPANIES WERE ASSESSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. ALL THE AMO UNTS WERE RECEIVED, THROUGH BANKING CHANNELS BY WAY OF CHEQUES ISSUED IN FAVOUR OF THE APPELLANT COMPANY TOWARDS SHARE APPLICATION MONEY. THE SHARES WERE AL LOTTED AS PER THE DOCUMENTS FURNISHED BEFORE ROC. THE ASSESSEE HAS PRODUCED POS SIBLE/BEST EVIDENCE TO SUPPORT ITS CLAIM. THE AO HAS SIMPLY ACTED ON THE INFORMATION R ECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE COMPANY AND ALSO NOT PLACING BEFORE THE ASSESSEE THE INFORMATION AND FIN DINGS OF THE INVESTIGATION WING VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. IF THE RE IS ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE INVESTING COMPANIES, THE RE IS A CASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHAREHOLDERS/INVESTING COMPANIES. THE ASSESSEE CANNOT BE PENALIZED FOR THE MISTAKES/FAULTS COMMITTED BY T HE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT AND B ANK ACCOUNTS MAINTAINED BY THE ASSESSEE. CIT VS. SUPERTECH DIAMOND TOOLS PVT. LTD. 229 TAXMA N 62 (RAJ.) (HC) AO MADE ADDITION U/S 68 ON ACCOUNT OF AMOUNT RECEIV ED FOR SHARE CAPITAL, ITS PREMIUM AND AMOUNT PAID AS COMMISSION FOR ARRANGING IT ON BASIS OF STATEMENT MADE BY THIRD PARTIES WHO WERE RELATED TO PURCHASING COM PANIES STATING THAT THESE COMPANIES WERE ENGAGED IN PROVIDING ACCOMMODATION E NTRIES IN LIEU OF COMMISSION. IT WAS HELD THAT THE SAID THIRD PARTY STATEMENT WAS MA DE BEHIND BACK OF ASSESSEE AND NO OPPORTUNITY OF BEING HEARD OR CROSS-EXAMINING TH IRD PARTIES WAS PROVIDED TO ASSESSEE. FURTHER, AO COULD NOT BRING ANY MATERIAL TO DISAPPROVE GENUINENESS OF CONFIRMATION AND AFFIDAVITS FILED BY ASSESSEE. ALL TRANSACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES. ALL THESE COMPANIES HAD PAN NUMBERS, WERE REGULARLY ASSESSED TO TAX, WERE REGISTERED UNDER COMPANIES ACT AND FORM NO.2 F OR ALLOTMENT WAS ALSO FILED. THEREFORE, APPELLATE AUTHORITIES HAVE RIGHTLY DELET ED THE ADDITION. ITO VS. RAKAM MONEY MATTERS P. LTD. (2014) 41 CCH 0 155 (DEL.) (TRIB.) DECISION DATED 16.10.2014 ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 21 IN THIS CASE, RETURN OF INCOME WAS SUBMITTED DECLAR ING CERTAIN INCOME. THE CASE WAS REOPENED U/S 148 OF THE IT ACT, 1961 ON THE BASIS O F INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS RECEIVED ACCOM MODATION ENTRIES BY WAY OF SHARE APPLICATION MONEY FROM CERTAIN COMPANIES. THE AO RE QUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF THE SHARE APPLICATION MONEY RECE IVED BY IT. IN RESPONSE TO SAME, THE ASSESSEE FILED DETAILS IN THE FORM OF SHARE APP LICATION FORM, PAN, AFFIDAVIT OF THE DIRECTORS OF SHAREHOLDER COMPANIES, CONFIRMATION, B ANK STATEMENT ETC. THE AO, HOWEVER, HELD THAT AS ASSESSEE HAS NOT PRODUCED THE DIRECTOR OF THE COMPANIES FROM WHOM THE SHARE APPLICATION MONEY HAS BEEN RECEIVED, IT HAS FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE SHARE APPLICAT ION AND ACCORDINGLY MADE ADDITION U/S 68 OF THE IT ACT, 1961. THE LD. CIT(A) OBSERVED THAT ASSESSEE COMPANY HAS FILED ALL THE NECESSARY DETAILS WHICH INCLUDE COPIES OF SHARE APPLICATION FORM, COPIES OF BANK STATEMENTS, COPIES OF INCOME TAX RETURNS, COPIES OF PAN CARDS, BALANCE SHEET, COPY OF CERTIFICATE OF INCORPORATION AND MEMORANDUM OF ARTI CLES OF ASSOCIATION OF THE COMPANIES, THAT THE STATUS OF THESE COMPANIES IS A CTIVE ON THE ROC WEBSITE AND THAT THE OPPORTUNITY OF CROSS EXAMINATION WAS NOT PROVID ED TO THE APPELLANT IN RESPECT OF THE ALLEGATION OF THE INVESTIGATION WING. THUS, ON THE BASIS OF THE ABOVE FACTS AND BY RELYING UPON THE VARIOUS JUDGMENTS, THE LD. CIT(A) HELD THAT ASSESSEE HAS DISCHARGED ITS ONUS AND ACCORDINGLY DELETED THE ADDITION. THE HONBLE ITAT HELD AS UNDER:- 13. WE HAVE HEARD BOTH THE PARTIES. THE ONLY ISSUE HERE IS THE ADDITION OF RS.60 LACS MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CREDIT ON ACCOUNT OF THE SHARE APPLICATION MONEY. ON GOING THROUGH THE FACTS OF TH E CASE, WE NOTICE THAT ASSESSEE HAS FILED THE RELEVANT DETAILS WHICH IT COULD HAVE FILE D IN SUPPORT OF ITS CONTENTION OF HAVING RECEIVED THE SHARE APPLICATION MONEY FROM EACH OF T HESE SHAREHOLDER COMPANIES. 14. THE ASSESSING OFFICER HAS ISSUED SUMMONS TO TH E DIRECTORS OF THESE SHAREHOLDER COMPANIES. IN RESPONSE THERE TO, THE DIRECTORS HAVE NOT ATTENDED. ASSESSING OFFICER HAS NOT CONDUCTED ANY FURTHER INQUIRY FOR NON-ATTENDANC E OF THE PERSONS. NON-ATTENDANCE ON ISSUING SUMMONS ITSELF CANNOT BE A GROUND FOR RE JECTING ALL THE RELEVANT DOCUMENTS FURNISHED BY THE ASSESSEE COMPANY. SUMMONS ISSUED B Y ASSESSING OFFICER HAVE NOT BEEN RECEIVED BACK AS UNSERVED. THEREFORE, IT CANNO T BE SAID THAT THESE COMPANIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESSES. THE D OCUMENTS FILED WITH THE REGISTRAR OF COMPANIES SHOW THAT THESE COMPANIES WERE ACTIVE DUR ING THE RELEVANT PERIOD. ASSESSING OFFICER HAS NOT VERIFIED ANY OF THE RELEV ANT DOCUMENTS SUBMITTED BY ASSESSING OFFICER FOR DISCHARGING ONUS U/S 68 OF TH E ACT. WE ALSO NOTE THAT THE ASSESSING OFFICER HAS NOT REFERRED NOR DISCUSSED AB OUT THE SO-CALLED ALLEGED STATEMENT OF ENTRY PROVIDERS AGAINST THE ASSESSEE COMPANY. IT IS ALSO NOT KNOWN WHETHER ASSESSEES NAME FIGURED IN THAT STATEMENT. THE CONT ENTION OF THE ASSESSEE HAS BEEN REJECTED WITHOUT EXAMINATION AND VERIFICATION OF TH E DOCUMENTS SUBMITTED BY THE ASSESSEE. THE INFORMATION RECEIVED BY HIM FROM THE INVESTIGATION DEPARTMENT HAS BEEN MADE THE BASIS OF ADDITION WITHOUT ANY FURTHER INVE STIGATION IN THIS REGARD. EVEN THE PROCESS OF EXAMINATION OF THE DIRECTORS BY ISSUE OF SUMMONS HAS NOT BEEN TAKEN TO THE LOGICAL END AS AFTER THE FAILURE OF THE DIRECTORS T O ATTEND IN RESPONSE TO THE SUMMONS ISSUED TO THEM NO FURTHER STEPS WERE TAKEN. THE ASS ESSING OFFICER COULD HAVE DONE CROSS VERIFICATION ABOUT THE STATUS OF THESE COMPAN IES WITH THE RESPECTIVE ASSESSING OFFICER OF THESE SHAREHOLDER COMPANIES. 16. IN THE PRESENT CASE, AS NOTED ABOVE, THE AO HA S NOT BEEN ABLE TO BRING ON RECORD ANY VALID MATERIAL OR EVIDENCE TO DISCREDIT THE EVI DENCES AND THE EXPLANATION GIVEN BY ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 22 THE ASSESSEE COMPANY. THE ONLY EVIDENCE WHICH HAS B EEN REFERRED BY THE AO IS STATEMENT OF THIRD PARTIES RECORDED BY THE INVESTIG ATION WING. ADMITTEDLY THESE STATEMENTS WERE NOT RECORDED BY THE AO BUT WERE REC ORDED BY THE INVESTIGATION WING AT THE BACK OF THE ASSESSEE. THE AO HAS NOT EVEN RE FERRED TO THE RELEVANT PORTION OF SUCH STATEMENT SO AS TO ESTABLISH THE COLLUSIVE ARR ANGEMENT THE ASSESSEE COMPANY HAD WITH THESE PERSONS. 17. ACCORDINGLY WE ARE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. JADAU JEWELLERS & MANUFACTURING (P) LTD. VS. ACIT 4 5 CCH 0442 (JPR.) (TRIB.) DECISION DATED 14.12.2015 ASSESSEE WAS ENGAGED IN BUSINESS OF TRADING AND MAN UFACTURING OF JEWELLERYSEARCH AND SEIZURE OPERATION WAS CARRIED BY DEPARTMENT U/S 132 AND SURVEY U/S 133A WAS MADE ON MEMBERS OF X OF WHICH ASSESSEE WAS ON E OF MEMBERSAO ISSUED NOTICE U/S 153A AND ASSESSEE WAS ASKED TO FILE TRUE AND CORRECT RETURN OF INCOME AS PRESCRIBED UNDER R 12 OF THE INCOME TAX RULES, 1962 IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A NO DISCLOSED INCOME PER TAINING TO RELEVANT YEAR WAS DECLARED BY ASSESSEEAO OBSERVED THAT DURING YEAR U NDER CONSIDERATION, ASSESSEE SHOWED TOTAL TURNOVER OF RS. 2.05 CRORES ON WHICH A SSESSEE RETURNED A NET LOSS OF RS. 13,29,220AO OBSERVED THAT ASSESSEE HAD OBTAINED SH ARE CAPITAL AND SHARE APPLICATION MONEY FROM VARIOUS COMPANIESAO HELD TH AT AMOUNT RECEIVED FROM STATED COMPANIES IN FORM OF SHARE CAPITAL WAS ONLY ACCOMMODATION ENTRIES AND GENUINENESS OF SHARE CAPITAL RECEIVED BY ASSESSEE C OMPANY COULD NOT BE ACCEPTED AO PASSED ORDER U/S 153 AND MADE ADDITION OF RS. 6 0,00,000 ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL RECEIVED BY ASSESSEE COMP ANY FROM FOLLOWING PERSONS CIT(A) UPHELD ADDITION MADE BY AOHELD, AO COULD IS SUE NOTICE U/S 143(2)IN ASSESSEES CASE, SEARCH WAS CONDUCTED ON 06/5/2010 AND AO ISSUED NOTICE ON 16/09/2011 U/S 153A READ WITH S 143(2)DURING COURS E OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND THEREFORE, NO NOTICE COULD BE ISSUED U/S 153A READ WITH S 143(3) BECAUSE NO PROCEEDING WAS PENDING BEFORE AO WHICH ABATED FOR ISSUE OF NOTICE ON DATE OF INITIATION OF SEARCHTHUS, ON TEC HNICAL GROUND, ORDER PASSED U/S 153A READ WITH S 143(3) WAS HELD VOID AB INITIOFUR THER ASSESSEE BEFORE AO HAD PRODUCED COPY OF SHARE APPLICATION, CONFIRMATION OF CASH CREDITORS, COPY OF PAN, COPY OF BOARD RESOLUTION, COPY OF DIRECTORS REPORT, AUD ITORS REPORT, COPY OF BALANCE SHEET, COPY OF P&L ACCOUNT, COPY OF BANK ACCOUNT TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF CASH CREDITORSAO MADE ADDITION ON BASIS OF INVESTIGATION CONDUCTED BY ITO, BUT AO DID NOT CLARIFY WHAT INQUI RY HAD BEEN CONDUCTED AND WHAT EVIDENCES COLLECTED WHICH HAD GONE AGAINST ASSESSE EALSO ALTHOUGH NOTICE U/S 131 WAS ISSUED BY ITO, INVESTIGATION WERE SERVED IN CAS E OF X AND Y BUT COMPLIANCE COULD NOT BE MADE ON GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVECOPY OF INQUIRY HAD NOT BEEN PROVIDED BY AO TO ASSESSEE AND INVESTI GATION OFFICER HAD NOT DEPUTED INSPECTOR TO ENQUIRE WHEREABOUTS OF COMPANYTHUS OR DER OF CIT(A) WAS REVERSED ASSESSEES APPEAL ALLOWED ON TECHNICAL GROUND AS WE LL AS ON MERIT. GANGA PROJECTS (P) LTD. AND B.S. TRADERS (P.) LTD. IN ITA NO. 175 & 176/JP/15 AND 179/JP/15 AND CO NO. 15 & 16/JP/15 AND 19/JP/15 ORD ER DATED 22.06.2016 (REFERRED ABOVE) ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 23 HONBLE ITAT, JAIPUR BENCH IN THE SIMILAR FACTS OF THE CASE INVOLVING THE SAME COMPANIES HAVE DELETED THE ADDITION. ANCHAL FINTRADE PVT. LTD. VS. ITO IN ITA NO. 131/JP /16 FOR A.Y. 05-06 IN THIS CASE ALSO, WHERE ADDITION OF RS. 5 LACS WAS MADE ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING, NEW DELHI THAT AS SESSEE WAS ONE OF THE BENEFICIARY OF THE ACCOMMODATION ENTRY PROVIDED BY S.K. JAIN GR OUP, THE HONBLE ITAT AFTER ELABORATE DISCUSSION ON PAGE 12-17 OF THE ORDER AFT ER CONSIDERING THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. SUPERT ECH DIAMOND TOLLS PVT. LTD. 229 TAXMAN 460 AND THE DECISION OF ALLAHABAD HIGH COURT IN CASE OF CIT VS. VACMET PACKAGING INDIA PVT. LTD. 367 ITR 217 DELETED THE A DDITION CONFIRMED BY CIT(A). IN VIEW OF ABOVE, THE LD. CIT(A) HAS RIGHTLY DELETE D THE ADDITION AND THUS THE GROUNDS OF THE DEPARTMENT BE DISMISSED. THE LD. AR HAS ALSO RELIED ON THE RECENT DECISION OF THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF ITO VS M/S ALOK FINTRADE (P) LTD. IN ITA NO. 180/JP/2015 ORDER DATED 14/5/2018 AND IN THE CASE O F M/S CHOICE BUILDSTATE PVT. LTD. VS ITO IN ITA NO. 431/JP/2016 ORDER DATED 28/3/2018. 8. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSING OFF ICER HAS TREATED THE SHARE CAPITAL RECEIVED FROM M/S SUMA FINANCE AND IN VESTMENT LTD. RS. 10.00 LACS, M/S FLARE FINANCE (INDIA) LTD. RS. 5,00 ,000/-, M/S SAM PORTFOLIO PVT. LTD. RS. 5,00,000/-, AND M/S FASHION TECH INDIA LTD. RS. 10,00,000/- AS UNEXPLAINED FOR THE REASON THAT THE ASSESSEE DID NOT PRODUCE THE DIRECTORS OF THESE COMPANIES. REGARDING THE DIRECTORS OF M/S SUMA FINANCE AND INVESTMENT LTD. AND M/S SAM PORTFO LIO PVT. LTD., SHRI ASEEM KUMAR GUPTA GAVE STATEMENT WHEREIN HE HAS ADMI TTED FOR ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 24 PROVIDING ACCOMMODATION ENTRIES. IN RESPECT OF THES E COMPANIES, THE ASSESSEE HAS FILED SHARE APPLICATION FORM, CONFIRMA TIONS AND BANK STATEMENTS. THESE DETAILS ARE PLACED AT PAGE NOS. 45 TO 55 OF THE PAPER BOOK. SUMMONS ON THESE COMPANIES WERE SERVED EXCEPT M/S SUMA FINANCE & INVESTMENT LTD. M/S SUMA FINANCE & INVEST MENT LTD. ADDRESS IS DA-4, VIKAS MARG, SHAKARPUR, DELHI-92 WAS AVAILAB LE ON THE SITE OF MINISTRY OF CORPORATE AFFAIRS BUT NO ENQUIRY WAS MAD E FROM THIS ADDRESS. BY FILING NUMBER OF IDENTITY OF THESE SHARE APPLICA NTS AND THE ASSESSEE HAS SPECIFICALLY REQUESTED THE ASSESSING OFFICER TO ENFORCE THE ATTENDANCE OF DIRECTOR OF THESE COMPANIES. THE ASSESSEE HAS PRI MA FACIE DISCHARGED THE ONUS ON IT. FURTHER THE STATEMENT OF SHRI ASEEM KUMAR GUPTA WAS NOT PROVIDED TO THE ASSESSEE AND NO OPPORTUNITY TO CROS S EXAMINE WAS ALSO GIVEN IN SPITE OF THE SPECIFIC REQUEST OF THE ASSES SEE. THUS, NOT PROVIDING THE OPPORTUNITY TO CROSS EXAMINE, THERE IS A VIOLAT ION OF PRINCIPLES OF NATURE JUSTICE. THE HON'BLE SUPREME COURT IN THE CAS E OF ANDAMAN TIMBER INDUSTRIES VS. CCE (SUPRA) HAS CLEARLY HELD T HAT DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE WIT NESSES WHOSE STATEMENTS WERE MADE THE SOLE BASIS OF THE ASSESSMEN T IS A SERIOUS FLAW RENDERING THE ORDER A NULLITY. SIMILARLY IN THE CAS E OF SMARTEST CORPORATIVE SERVICES PVT. LTD., NO OPPORTUNITY TO CROSS EXAMINE WAS PROVIDED TO THE ASSESSEE. THE COMPANY HAS ACCEPTED THE FACT REGARDIN G MAKING ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 25 INVESTMENT IN THE SHARE CAPITAL OF THE ASSESSEE AND COPY OF BANK ACCOUNT, CONFIRMATION AND SHARE APPLICATION FORM WERE FURNISH ED BY THE ASSESSEE. IN THE CASE OF SUSHREE SECURITIES PVT. LTD., THE CO MPANY WAS FURNISHED BALANCE SHEET, WHICH SHOWS INVESTMENT OF RS. 2,30,5 5,569/-. ONLY SCHEDULE-4 WAS NOT FURNISHED. THE COMPANY IN ITS LETT ER DATED 27/2/2013 HAS ACCEPTED THAT IT HAS MADE INVESTMENT OF RS. 5.0 0 LACS IN THE SHARES OF ASSESSEE COMPANY IN THE F.Y. 2004-05. THE ASSESSEE R EQUESTED THE ASSESSING OFFICER TO ENFORCE THE ATTENDANCE OF THE DIRECTOR OF THE COMPANY AND COMPLIANCE OF THE SUMMONS. THE ASSESSING OFFICER HAS NOT CARRIED INVESTIGATION TO ITS LOGICAL END. THE ASSESS EE HAS SUBMITTED SHARE APPLICATION FORM, CONFIRMATION AND BANK STATEMENT O F THIS COMPANY ALSO. IN THE CASE OF MEHUL FINVEST PVT. LTD., THE ASSESSE E HAS SUBMITTED CONFIRMATION, BANK STATEMENT AND SHARE APPLICATION FORM. AUDITED ACCOUNTS WERE FURNISHED IN RESPONSE TO THE NOTICE IS SUED BY THE ASSESSING OFFICER. SHRI NARESH GUPTA, DIRECTOR OF THE COMPANY APPEARED BEFORE THE ASSESSING OFFICER AND NO ADVERSE WAS FOUND IN HIS ST ATEMENT. ONLY ON THE BASIS OF STATEMENT OF SHRI SUDIPTO MUKHERJEE, WHO ST ATED THAT HIS SIGNATURE IS NOT ON THE BALANCE SHEET, CANNOT BE A REASON TO TREAT THE AMOUNT INVESTED IN THE SHARE OF CAPITAL OF ASSESSEE AS UNEXPLAINED PARTICULARLY WHEN SUCH INVESTMENT WAS VERIFIABLE FROM ITS BANK ACCOUNT. FURTHER, NO OPPORTUNITY WAS GRANTED TO CROSS EXAMINE SHRI SUDIPTO ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 26 MEKHERJEE. THE HONBLE ALLAHABAD HIGH COURT IN THE C ASE OF CIT VS. VACMET PACKAGING (INDIA) PVT. LTD. (SUPRA) HAS HELD AS UNDER: THE ASSESSEE UNDOUBTEDLY HAD TO DISCHARGE THE ONU S OF ESTABLISHING THE IDENTITY AND CREDIT WORTHINESS OF THE APPLICANT COMPANIES AN D THE GENUINENESS OF THE TRANSACTION. IN THIS REGARD, BOTH THE CIT(A) AND TH E TRIBUNAL HAD NOTED THAT THE ASSESSEE HAD ESTABLISHED ALL THE THREE ASPECTS BY P RODUCING, DURING THE COURSE OF THE ASSESSMENT, NECESSARY DOCUMENTARY MATERIAL SUCH AS THE SHARE APPLICATION FORMS, COPIES OF BANK ACCOUNTS, INCOME TAX RETURNS AND BALANCE SHEETS. THE VIEW WHICH WAS TAKEN BY THE CIT(A) AND WHICH WAS SUSTAIN ED BY THE TRIBUNAL WOULD THUS HAVE TO BE REGARDED AS BEING, AT LEAST, A POSSIBLE VIEW TO TAKE IN THE CIRCUMSTANCES OF THE CASE. SIMILARLY IN THE CASE OF ACIT VS. VIP GROWTH FUND PVT . LTD. (SUPRA), THE ITAT, DELHI BENCH HAS HELD AS UNDER: FACTS OF THE CASE IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCO ME DECLARING CERTAIN INCOME. SCRUTINY ASSESSMENT U/S 143(3) WAS MADE ON 28.02.2006. IN TH E COURSE OF THE SAID PROCEEDINGS, THE DETAILS OF SHARE APPLICATION MONEY/SHARE CAPITA L WERE FURNISHED. THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPA RTMENT, THAT THE COMPANIES / PERSONS WHICH CONTRIBUTED TOWARDS SHARE APPLICATION MONEY / SHARE CAPITAL WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN VIE W OF THE SPECIFIC INFORMATION, THE AO INITIATED ACTION U/S 148 AND COMPLETED THE ASSES SMENT DISBELIEVING A PART OF SHARE APPLICATION MONEY/SHARE CAPITAL OF RS. 40,00,000/- . FINDINGS OF THE CASE THE HONBLE ITAT AFFIRMED THE FINDINGS OF THE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING THAT NOTHING ADVERSE WAS FOUND IN THE DETAI LS OF SHARE APPLICATION MONEY/SHARE CAPITAL FURNISHED BY THE ASSESSEE IN TH E COURSE OF ASSESSMENT PROCEEDINGS. THE AO HAS NOT VERIFIED THE DETAILS FU RNISHED BY THE ASSESSEE AND I.T. RECORDS OF THE SHAREHOLDERS/INVESTING COMPANIES. TH E ASSESSEE HAS DISCHARGED ITS BURDEN OF PROVIDING BASIC DETAILS WHICH WERE REQUIR ED FOR VERIFICATION TO FULFILL THE CONDITIONS VIZ. IDENTITY OF THE CREDITOR, CREDIT WO RTHINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTION. THE ASSESSEE HAS PROVID ED NECESSARY DETAILS INCLUDING THE WARD/CIRCLE WHERE THE SHARE APPLICANTS/ INVESTING C OMPANIES WERE ASSESSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. ALL THE AMO UNTS WERE RECEIVED, THROUGH BANKING CHANNELS BY WAY OF CHEQUES ISSUED IN FAVOUR OF THE APPELLANT COMPANY TOWARDS SHARE APPLICATION MONEY. THE SHARES WERE AL LOTTED AS PER THE DOCUMENTS FURNISHED BEFORE ROC. THE ASSESSEE HAS PRODUCED POS SIBLE/BEST EVIDENCE TO SUPPORT ITS ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 27 CLAIM. THE AO HAS SIMPLY ACTED ON THE INFORMATION R ECEIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE COMPANY AND ALSO NOT PLACING BEFORE THE ASSESSEE THE INFORMATION AND FIN DINGS OF THE INVESTIGATION WING VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. IF THE RE IS ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE INVESTING COMPANIES, THE RE IS A CASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHAREHOLDERS/INVESTING COMPANIES. THE ASSESSEE CANNOT BE PENALIZED FOR THE MISTAKES/FAULTS COMMITTED BY T HE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT AND B ANK ACCOUNTS MAINTAINED BY THE ASSESSEE. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SUPERTECH DIAMOND TOOLS PVT. LTD. (SUPRA) HAS HELD AS UNDER: AO MADE ADDITION U/S 68 ON ACCOUNT OF AMOUNT RECE IVED FOR SHARE CAPITAL, ITS PREMIUM AND AMOUNT PAID AS COMMISSION FOR ARRANGING IT ON BASIS OF STATEMENT MADE BY THIRD PARTIES WHO WERE RELATED TO PURCHASING COM PANIES STATING THAT THESE COMPANIES WERE ENGAGED IN PROVIDING ACCOMMODATION E NTRIES IN LIEU OF COMMISSION. IT WAS HELD THAT THE SAID THIRD PARTY STATEMENT WAS MA DE BEHIND BACK OF ASSESSEE AND NO OPPORTUNITY OF BEING HEARD OR CROSS-EXAMINING TH IRD PARTIES WAS PROVIDED TO ASSESSEE. FURTHER, AO COULD NOT BRING ANY MATERIAL TO DISAPPROVE GENUINENESS OF CONFIRMATION AND AFFIDAVITS FILED BY ASSESSEE. ALL TRANSACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES. ALL THESE COMPANIES HAD PAN NUMBERS, WERE REGULARLY ASSESSED TO TAX, WERE REGISTERED UNDER COMPANIES ACT AND FORM NO.2 F OR ALLOTMENT WAS ALSO FILED. THEREFORE, APPELLATE AUTHORITIES HAVE RIGHTLY DELET ED THE ADDITION. THE ITAT, DELHI BENCH IN THE CASE OF ITO VS. RAKAM MON EY MATTERS P. LTD. (SUPRA) HAS HELD AS UNDER: IN THIS CASE, RETURN OF INCOME WAS SUBMITTED DECL ARING CERTAIN INCOME. THE CASE WAS REOPENED U/S 148 OF THE IT ACT, 1961 ON THE BASIS O F INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS RECEIVED ACCOM MODATION ENTRIES BY WAY OF SHARE APPLICATION MONEY FROM CERTAIN COMPANIES. THE AO RE QUIRED THE ASSESSEE TO PROVE THE GENUINENESS OF THE SHARE APPLICATION MONEY RECE IVED BY IT. IN RESPONSE TO SAME, THE ASSESSEE FILED DETAILS IN THE FORM OF SHARE APP LICATION FORM, PAN, AFFIDAVIT OF THE DIRECTORS OF SHAREHOLDER COMPANIES, CONFIRMATION, B ANK STATEMENT ETC. THE AO, HOWEVER, HELD THAT AS ASSESSEE HAS NOT PRODUCED THE DIRECTOR OF THE COMPANIES FROM WHOM THE SHARE APPLICATION MONEY HAS BEEN RECEIVED, IT HAS FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE SHARE APPLICAT ION AND ACCORDINGLY MADE ADDITION U/S 68 OF THE IT ACT, 1961. THE LD. CIT(A) OBSERVED THAT ASSESSEE COMPANY HAS FILED ALL THE NECESSARY DETAILS WHICH INCLUDE COPIES OF SHARE APPLICATION FORM, COPIES OF BANK STATEMENTS, COPIES OF INCOME TAX RETURNS, COPIES OF PAN CARDS, BALANCE SHEET, COPY OF CERTIFICATE OF INCORPORATION AND MEMORANDUM OF ARTI CLES OF ASSOCIATION OF THE COMPANIES, THAT THE STATUS OF THESE COMPANIES IS A CTIVE ON THE ROC WEBSITE AND THAT THE OPPORTUNITY OF CROSS EXAMINATION WAS NOT PROVID ED TO THE APPELLANT IN RESPECT OF THE ALLEGATION OF THE INVESTIGATION WING. THUS, ON THE BASIS OF THE ABOVE FACTS AND BY ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 28 RELYING UPON THE VARIOUS JUDGMENTS, THE LD. CIT(A) HELD THAT ASSESSEE HAS DISCHARGED ITS ONUS AND ACCORDINGLY DELETED THE ADDITION. THE HONBLE ITAT HELD AS UNDER:- 13. WE HAVE HEARD BOTH THE PARTIES. THE ONLY ISSUE HERE IS THE ADDITION OF RS.60 LACS MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CREDIT ON ACCOUNT OF THE SHARE APPLICATION MONEY. ON GOING THROUGH THE FACTS OF TH E CASE, WE NOTICE THAT ASSESSEE HAS FILED THE RELEVANT DETAILS WHICH IT COULD HAVE FILE D IN SUPPORT OF ITS CONTENTION OF HAVING RECEIVED THE SHARE APPLICATION MONEY FROM EACH OF T HESE SHAREHOLDER COMPANIES. 14. THE ASSESSING OFFICER HAS ISSUED SUMMONS TO TH E DIRECTORS OF THESE SHAREHOLDER COMPANIES. IN RESPONSE THERE TO, THE DIRECTORS HAVE NOT ATTENDED. ASSESSING OFFICER HAS NOT CONDUCTED ANY FURTHER INQUIRY FOR NON-ATTENDANC E OF THE PERSONS. NON-ATTENDANCE ON ISSUING SUMMONS ITSELF CANNOT BE A GROUND FOR RE JECTING ALL THE RELEVANT DOCUMENTS FURNISHED BY THE ASSESSEE COMPANY. SUMMONS ISSUED B Y ASSESSING OFFICER HAVE NOT BEEN RECEIVED BACK AS UNSERVED. THEREFORE, IT CANNO T BE SAID THAT THESE COMPANIES WERE NOT IN EXISTENCE AT THE GIVEN ADDRESSES. THE D OCUMENTS FILED WITH THE REGISTRAR OF COMPANIES SHOW THAT THESE COMPANIES WERE ACTIVE DUR ING THE RELEVANT PERIOD. ASSESSING OFFICER HAS NOT VERIFIED ANY OF THE RELEV ANT DOCUMENTS SUBMITTED BY ASSESSING OFFICER FOR DISCHARGING ONUS U/S 68 OF TH E ACT. WE ALSO NOTE THAT THE ASSESSING OFFICER HAS NOT REFERRED NOR DISCUSSED AB OUT THE SO-CALLED ALLEGED STATEMENT OF ENTRY PROVIDERS AGAINST THE ASSESSEE COMPANY. IT IS ALSO NOT KNOWN WHETHER ASSESSEES NAME FIGURED IN THAT STATEMENT. THE CONT ENTION OF THE ASSESSEE HAS BEEN REJECTED WITHOUT EXAMINATION AND VERIFICATION OF TH E DOCUMENTS SUBMITTED BY THE ASSESSEE. THE INFORMATION RECEIVED BY HIM FROM THE INVESTIGATION DEPARTMENT HAS BEEN MADE THE BASIS OF ADDITION WITHOUT ANY FURTHER INVE STIGATION IN THIS REGARD. EVEN THE PROCESS OF EXAMINATION OF THE DIRECTORS BY ISSUE OF SUMMONS HAS NOT BEEN TAKEN TO THE LOGICAL END AS AFTER THE FAILURE OF THE DIRECTORS T O ATTEND IN RESPONSE TO THE SUMMONS ISSUED TO THEM NO FURTHER STEPS WERE TAKEN. THE ASS ESSING OFFICER COULD HAVE DONE CROSS VERIFICATION ABOUT THE STATUS OF THESE COMPAN IES WITH THE RESPECTIVE ASSESSING OFFICER OF THESE SHAREHOLDER COMPANIES. 16. IN THE PRESENT CASE, AS NOTED ABOVE, THE AO HA S NOT BEEN ABLE TO BRING ON RECORD ANY VALID MATERIAL OR EVIDENCE TO DISCREDIT THE EVI DENCES AND THE EXPLANATION GIVEN BY THE ASSESSEE COMPANY. THE ONLY EVIDENCE WHICH HAS B EEN REFERRED BY THE AO IS STATEMENT OF THIRD PARTIES RECORDED BY THE INVESTIG ATION WING. ADMITTEDLY THESE STATEMENTS WERE NOT RECORDED BY THE AO BUT WERE REC ORDED BY THE INVESTIGATION WING AT THE BACK OF THE ASSESSEE. THE AO HAS NOT EVEN RE FERRED TO THE RELEVANT PORTION OF SUCH STATEMENT SO AS TO ESTABLISH THE COLLUSIVE ARR ANGEMENT THE ASSESSEE COMPANY HAD WITH THESE PERSONS. 17. ACCORDINGLY WE ARE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. THE COORDONATE BENCH OF ITAT, JAIPUR BENCH IN THE CAS E OF JADAU JEWELLERS & MANUFACTURING (P) LTD. VS. ACIT (SUPRA) H AS HELD AS UNDER: ASSESSEE WAS ENGAGED IN BUSINESS OF TRADING AND M ANUFACTURING OF JEWELLERYSEARCH AND SEIZURE OPERATION WAS CARRIED BY DEPARTMENT U/S 132 AND SURVEY U/S 133A WAS ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 29 MADE ON MEMBERS OF X OF WHICH ASSESSEE WAS ON E OF MEMBERSAO ISSUED NOTICE U/S 153A AND ASSESSEE WAS ASKED TO FILE TRUE AND CORRECT RETURN OF INCOME AS PRESCRIBED UNDER R 12 OF THE INCOME TAX RULES, 1962 IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A NO DISCLOSED INCOME PER TAINING TO RELEVANT YEAR WAS DECLARED BY ASSESSEEAO OBSERVED THAT DURING YEAR U NDER CONSIDERATION, ASSESSEE SHOWED TOTAL TURNOVER OF RS. 2.05 CRORES ON WHICH A SSESSEE RETURNED A NET LOSS OF RS. 13,29,220AO OBSERVED THAT ASSESSEE HAD OBTAINED SH ARE CAPITAL AND SHARE APPLICATION MONEY FROM VARIOUS COMPANIESAO HELD TH AT AMOUNT RECEIVED FROM STATED COMPANIES IN FORM OF SHARE CAPITAL WAS ONLY ACCOMMODATION ENTRIES AND GENUINENESS OF SHARE CAPITAL RECEIVED BY ASSESSEE C OMPANY COULD NOT BE ACCEPTED AO PASSED ORDER U/S 153 AND MADE ADDITION OF RS. 6 0,00,000 ON ACCOUNT OF ALLEGED UNEXPLAINED SHARE CAPITAL RECEIVED BY ASSESSEE COMP ANY FROM FOLLOWING PERSONS CIT(A) UPHELD ADDITION MADE BY AOHELD, AO COULD IS SUE NOTICE U/S 143(2)IN ASSESSEES CASE, SEARCH WAS CONDUCTED ON 06/5/2010 AND AO ISSUED NOTICE ON 16/09/2011 U/S 153A READ WITH S 143(2)DURING COURS E OF SEARCH, NO INCRIMINATING DOCUMENTS WERE FOUND THEREFORE, NO NOTICE COULD BE ISSUED U/S 153A READ WITH S 143(3) BECAUSE NO PROCEEDING WAS PENDING BEFORE AO WHICH ABATED FOR ISSUE OF NOTICE ON DATE OF INITIATION OF SEARCHTHUS, ON TEC HNICAL GROUND, ORDER PASSED U/S 153A READ WITH S 143(3) WAS HELD VOID AB INITIOFUR THER ASSESSEE BEFORE AO HAD PRODUCED COPY OF SHARE APPLICATION, CONFIRMATION OF CASH CREDITORS, COPY OF PAN, COPY OF BOARD RESOLUTION, COPY OF DIRECTORS REPORT, AUD ITORS REPORT, COPY OF BALANCE SHEET, COPY OF P&L ACCOUNT, COPY OF BANK ACCOUNT TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF CASH CREDITORSAO MADE ADDITION ON BASIS OF INVESTIGATION CONDUCTED BY ITO, BUT AO DID NOT CLARIFY WHAT INQUI RY HAD BEEN CONDUCTED AND WHAT EVIDENCES COLLECTED WHICH HAD GONE AGAINST ASSESSE EALSO ALTHOUGH NOTICE U/S 131 WAS ISSUED BY ITO, INVESTIGATION WERE SERVED IN CAS E OF X AND Y BUT COMPLIANCE COULD NOT BE MADE ON GIVEN DATE BECAUSE CONCERNED OFFICER WAS ON LEAVECOPY OF INQUIRY HAD NOT BEEN PROVIDED BY AO TO ASSESSEE AND INVESTI GATION OFFICER HAD NOT DEPUTED INSPECTOR TO ENQUIRE WHEREABOUTS OF COMPANYTHUS OR DER OF CIT(A) WAS REVERSED ASSESSEES APPEAL ALLOWED ON TECHNICAL GROUND AS WE LL AS ON MERIT. SIMILAR VIEW HAS ALSO BEEN AFFIRMED BY THE ITAT, JAIP UR BENCH IN ITS ORDER DATED 22/06/2016 IN THE CASE OF GANGA PROJECTS (P) LTD. AND B.S. TRADERS (P) LTD. (SUPRA) AND ANCHAL FINTRADE PVT. LTD. VS I TO (SUPRA). THE COORDINATE BENCH OF ITAT, JAIPUR IN THE CASE OF ITO VS. M/S ALOK FINTRAE (P) LTD. VIDE ORDER DATED 14/05/2018 HAS DECIDED AS UNDER: 20. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE FIND THAT A SI MILAR ISSUE HAS COME UP BEFORE THIS BENCH IN THE CASE OF M/S CHOICE BUILDST ATE PVT. LTD. VS ITO (SUPRA) WHEREIN WE HAVE HELD AS UNDER: 10. NOW, COMING TO THE MERITS OF ADDITION OF RS 35 LACS MADE BY THE AO UNDER SECTION 68 OF THE ACT. ON CAREFUL EXAMINATION OF MA TERIAL AVAILABLE ON RECORD, ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 30 WE FIND THAT IT IS A CASE WHERE THE AO HAS RELIED BLINDLY ON INFORMATION SUPPLIED BY THE INVESTIGATION WING MUMBAI WITHOUT CARRYING OUT ANY FURTHER EXAMINATION OF DOCUMENTS SUBMITTED DU RING THE COURSE OF ASSESSMENT PROCEEDINGS AND INDEPENDENT INVESTIGATION OF THESE INVESTOR COMPANIES. AS WE HAVE NOTED ABOVE, THE INFORMATION SO RECEIVED FROM THE INVESTIGATION WING, MUMBAI AND AFTER DUE EXAMINATION THEREOF, THE AO HA S FORMED A PRIMA FACIE VIEW AND A REASON TO BELIEVE THAT THE INCOME HAS ES CAPED ASSESSMENT AND HAS THUS ASSUMED JURISDICTION U/S 147 OF THE ACT. AT TH E SAME TIME, SUCH A PRIMA FACIE VIEW HAS TO BE FINALIZED AND A FIRM VIEW HAS TO BE TAKEN ON BASIS OF EXAMINATION OF DOCUMENTS SO BROUGHT ON RECORD AND F URTHER INVESTIGATION TO BE CARRIED OUT BEFORE ANY TAX LIABILITY IS FASTENED ON THE ASSESSEE. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE COMPANY HAS SUBMITT ED DETAIL DOCUMENTATION IN REGARD TO THESE COMPANIES FROM WHOM A TOTAL AMOUNT OF RS.35 LAKHS WAS RECEIVED NAMELY (I) SHARE APPLICATION FORM (II) COP Y OF BOARD RESOLUTION (III) COPY OF BANK STATEMENTS REFLECTING PAYMENT THROUGH CHEQUE (IV) AUDITED STATEMENT OF ACCOUNTS AND ACKNOWLEDGEMENT OF ITR (V ) COPY OF CERTIFICATE OF INCORPORATION AND CERTIFICATE OF COMMENCEMENT OF BU SINESS (VI) COPY OF PAN CARD. WHERE THE ASSESSEE FURNISHES THE DOCUMENTATIO N AND NECESSARY EXPLANATION, THE AO SHOULD EXAMINE WHETHER THE DOCU MENTS SO SUBMITTED AND EXPLANATION SO OFFERED ESTABLISHES THE THREE INGRED IENTS I.E. IDENTITY OF THE INVESTOR COMPANY, CREDITWORTHINESS OF INVESTOR COMP ANY AND GENUINENESS OF THE TRANSACTION. WHETHER EXPLANATION OF THE ASSESSE E IS RELIABLE OR ACCEPTABLE? IF YES, NO FURTHER ACTION IS REQUIRED AND THE SUM S O CREDITED MAY NOT BE CHARGED TO INCOME TAX. IF THE EXPLANATION SO OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE OR RELIABLE, THE AO SHOULD GIVE A DETAILED REASONING I N THE ASSESSMENT ORDER FOR NOT ACCEPTING THE SAME. THE ORDER PASSED BY THE AO SHOULD BE SPEAKING ONE BRINGING ON RECORD ALL THE FACTS, EXPLANATION FURNI SHED BY THE ASSESSEE IN RESPECT OF NATURE AND SOURCE OF THE CREDIT IN ITS BOOKS OF ACCOUNTS AND REASONS FOR NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. IN THE I NSTANT CASE, WE FIND THAT THE AO HAS NOT TAKEN ANY EFFORTS TO EXAMINE THESE DOCUM ENTS SO SUBMITTED BY THE ASSESSEE COMPANY DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AND HAS SIMPLY GONE BY HIS PRIMA FACIE VIEW FORMED AT THE TIME OF ASSUMPTION OF JURISDICTION U/S 147 AND SUCH A PRIMA FACIE VIEW WITHOUT FURTHER EXAMINATION/INVESTIGATION CANNOT BE A BASIS FOR FORMING A FINAL VIEW OF MAKIN G THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. IT IS A CASE WHERE THE AO WAS IN RECEIPT OF MATERIAL INFORMATION FROM THE INVESTIGATION WING, MUMBAI THA T THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION/INVESTMENT FROM SEVEN COMPANIES WHO ARE NOT DOING GENUINE BUSINESS ACTIVITIES AS DIVULGED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN CASE OF PRAVEEN JAIN GROUP. IN THESE SITUATIONS, THE COURTS HAVE HELD THAT THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS AND THEN COME FOR WARD TO MERELY REJECT THE EXPLANATION SO MADE, WITHOUT CARRYING OUT ANY VERIF ICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM BY THE ASSESSEE. IF THE ASSESSING OFFICER HARBOURS ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 31 ANY DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY- BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OB DURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. WE THEREFORE AGREE WITH THE CONTENTIONS OF THE ID AR THAT IN ABSENCE OF ANY FALSITY WHICH HAVE BEEN FOUND IN THE DOCUMENTS SO SUBMITTED BY TH E ASSESSEE COMPANY TO PROVE THE IDENTITY, CREDITWORTH INESS AND GENUINENESS OF THE SHARE TRANSACTION, THESE DOCUMENTS CANNOT BE SU MMARILY REJECTED AS HAS BEEN DONE BY THE AO IN THE INSTANT CASE. FURTHER, W E FIND THAT THERE IS NO ACTION TAKEN BY THE AO IN TERMS OF CALLING INFORMATION FRO M THESE COMPANIES UNDER SECTION 133(6) AND/OR ISSUING SUMMONS TO DIRECTORS OF THESE COMPANIES UNDER SECTION 131 OF THE ACT. FURTHER, WHERE THE AO RELIE S UPON THE STATEMENT OF THIRD PARTIES (PRAVEEN JAIN AND OTHERS) RECORDED U/S 132(4), WITHOUT GETTING INTO CONTROVERSY WHETHER THE SAID STATEMENT WAS RETRACTED SUBSEQUENTLY, THE FACT REMAINS THAT THE ASSESSEE DESERVES AN OPPORTUNITY T O CROSS EXAMINE SUCH PERSONS AS HELD BY THE HON'BLE SUPREME COURT IN CAS E OF ANDAMAN TIMBER INDUSTRIES (SUPRA). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY HAS MADE SPECIFIC REQUEST TO THE AO TO ALLO W CROSS EXAMINATION OF THESE PERSONS WHICH HAS HOWEVER NOT BEING PROVIDED TO THE ASSESSEE COMPANY. IN LIGHT OF ABOVE DISCUSSIONS, WE DON'T FIND ANY BA SIS FOR MAKING ADDITION UNDER SECTION 68 OF THE ACT. IN THE RESULT, GROUND NO.2 T AKEN BY THE ASSESSEE COMPANY IS ALLOWED. 21. IN THE INSTANT CASE, WE FIND THAT THE ASSESSING OFFICER HAS RELIED SOLELY ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING DE LHI WITHOUT CARRYING OUT ANY FURTHER EXAMINATION OF DOCUMENTS SUBMITTED DURI NG THE COURSE OF REASSESSMENT PROCEEDINGS AND WITHOUT CARRYING ANY I NDEPENDENT INVESTIGATION OF THESE COMPANIES. THE INFORMATION SO RECEIVED FROM THE INVESTIGATION WING DELHI IS SUFFICIENT TO FORM A PR IMA FACIE VIEW AND ACQUIRING JURISDICTION UNDER SECTION 147 OF THE ACT. HOWEVER , SUCH A PRIMA FACIE VIEW HAS TO BE FINALIZED AND A FIRM VIEW HAS TO BE TAKEN ON BASIS OF EXAMINATION OF DOCUMENTS SO BROUGHT ON RECORD AND FURTHER INVESTIG ATION TO BE CARRIED OUT BEFORE ANY TAX LIABILITY IS FASTENED ON THE ASSESSE E. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE COMPANY HAS SUBMITTED DOCUMENTATI ON IN RESPECT OF THESE COMPANIES FROM WHOM A TOTAL AMOUNT OF RS. 46 LAKHS WAS RECEIVED NAMELY SHARE APPLICATION FORM, RETURN OF ALLOTMENT FILED W ITH REGISTRAR OF COMPANIES EVIDENCING ALLOTMENT OF SHARES, COPY OF BANK STATEM ENTS REFLECTING PAYMENT THROUGH CHEQUE, CONFIRMATION OF THESE COMPANIES OF HAVING INVESTED IN THE ASSESSEE COMPANY AND OF THE FACT THAT THERE ARE ASS ESSED TO TAX AND HAVE BEEN ALLOTTED PAN NUMBER. WE FIND THAT THE AO HAS NOT TAKEN ANY EFFORTS TO EXAMINE THESE DOCUMENTS SO SUBMITTED BY THE ASSESSE E COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS SIMPLY GON E BY HIS PRIMA FACIE ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 32 VIEW FORMED AT THE TIME OF ASSUMPTION OF JURISDICTI ON U/S 147 AND SUCH A PRIMA FACIE VIEW WITHOUT FURTHER EXAMINATION/INVEST IGATION CANNOT BE A BASIS FOR FORMING A FINAL VIEW FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. FURTHER, WE NOTE THAT IN RESPECT OF THREE COMPANIES FROM WHOM RS 20 LACS HAS BEEN RECEIVED AS SHARE CAPITAL, THE ADD ITION HAS BEEN MADE BY THE AO WITHOUT EVEN ASKING THE ASSESSEE TO SUBMIT THE D ESIRED INFORMATION DURING THE REASSESSMENT PROCEEDINGS WHICH CANNOT BE ACCEPTED AT FIRST PLACE. IT IS THUS A CASE WHERE THE AO WAS IN RECEIPT OF MA TERIAL INFORMATION FROM THE INVESTIGATION WING, DELHI THAT THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION/ INVESTMENT FROM TWO COMPANIES AS DIVULGED DURING THE COURSE OF SEARCH A ND SEIZURE OPERATIONS IN CASE OF S K JAIN GROUP. IN THESE SITUATIONS, THE CO URTS HAVE HELD THAT THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS AND THEN COME FORWARD TO MERELY REJECT THE EXPLANATION SO MADE, WITHOUT CARR YING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM BY T HE ASSESSEE. IF THE ASSESSING OFFICER HARBOURS ANY DOUBTS OF THE LEGITI MACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THORO UGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE S UBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. WE ARE THEREFORE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE FINDINGS OF THE LD CIT(A) TH AT IN ABSENCE OF ANY FALSITY WHICH HAVE BEEN FOUND IN THE DOCUMENTS SO SUBMITTED BY THE ASSESSEE COMPANY TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE TRANSACTION AND ANY SATISFACTION TO THAT EFFECT REC ORDED BY THE AO, THESE DOCUMENTS CANNOT BE SUMMARILY REJECTED AS HAS BEEN DONE BY THE AO IN THE INSTANT CASE. FURTHER, WE FIND THAT THERE IS NO AC TION TAKEN BY THE AO IN TERMS OF CALLING INFORMATION FROM THESE COMPANIES UNDER S ECTION 133(6) AND/OR ISSUING SUMMONS TO DIRECTORS OF THESE COMPANIES UND ER SECTION 131 OF THE ACT. 22. FURTHER, BEING THE REASSESSMENT PROCEEDINGS, WH ERE THE AO IS CEASED OF CERTAIN INFORMATION AND DOCUMENTS, IT IS INCUMBENT UPON HIM TO CONFRONT THE SAME TO THE ASSESSEE AND ALLOW THE LATTER TO FILE I TS OBJECTIONS AND REBUTTAL. THE ADDITIONS MADE, MERELY RELYING ON THESE INFORMA TION AND DOCUMENTATION, WITHOUT CONFRONTING THE ASSESSEE CANNOT BE ACCEPTED . BESIDES FURNISHING THE REASONS FOR REOPENING THE ASSESSMENT TO THE ASSESSE E COMPANY, THERE IS NOTHING ON RECORD THAT SUCH INFORMATION/DOCUMENTATI ON WAS CONFRONTED TO THE ASSESSEE. FURTHER, THE AO HAS RELIED UPON THE S TATEMENT OF THIRD PARTIES NAMELY, SHRI S.K. JAIN, SHRI V.K. JAIN, SHRI ASSEM KUMAR GUPTA AND SHRI RAJESH AGARWAL, THE ASSESSEE AGAIN DESERVES AN OPPORTUNITY TO CROSS EXAMINE SUCH ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 33 PERSONS AS HELD BY THE HON'BLE SUPREME COURT IN CAS E OF ANDAMAN TIMBER INDUSTRIES (SUPRA). 23. FURTHER, HONBLE RAJASTHAN HIGH COURT IN CASE O F AKJ GRANITES (P) (LTD) (SUPRA), IN CONTEXT OF ADDITION OF SHARE APPLICATION MONEY U NDER SECTION 68, HAS HELD AS UNDER: SO FAR AS QUESTION NO. 1 IS CONCERNED, IT IS STATE D BY LEARNED COUNSEL FOR THE APPELLANT THAT THE ISSUE EMBEDDED IN THE SAID QUEST ION HAS ALREADY BEEN DECIDED BY THIS COURT AND GOVERNED BY THE RATIO LAID DOWN I N SHREE BARKHA SYNTHETICS LTD. V. ASST. CIT [2005] 197 CTR 432 ; [2006] 283 ITR 377 . IT HAS BEEN POINTED OUT THAT SHARE APPLICATIONS ARE MADE BY A NUMBER OF PERSONS, MAY BE IN THEIR OWN NAMES OR BENAMI, BUT THE FACT THAT SHARE APPLICATIONS REC EIVED FROM DIFFERENT PLACES ACCOMPANIED BY SHARE APPLICATION MONEY, NO PRESUMPT ION CAN BE DRAWN THAT THE SAME BELONGS TO THE ASSESSEE AND CANNOT BE ASSESSED IN HIS HANDS AS HIS UNDISCLOSED INCOME UNLESS SOME NEXUS IS ESTABLISHED THAT THE SHARE APPLICATION MONEY FOR AUGMENTING THE INVESTMENT IN BUSINESS HAS FLOWED FROM THE ASSESSEE'S OWN MONEY. IN COMING TO THIS CONCLUSION, THE COURT RELIED ON CTT V. STELLAR INVESTMENT LTD. [1991] 192 ITR 287 (DELHI) WHICH HAS SINCE BEEN AFFIRMED BY THE SUPREME COURT IN CIT V. STELLER INVESTMENT LTD. [2001] 251 ITR 263 . IN VIEW THEREOF, THIS QUESTION NEED NOT BE DECIDED AGAIN. 24. IN THE INSTANT CASE, NO SUCH NEXUS HAS BEEN EST ABLISHED BY THE REVENUE AND THE SUSPICION HOWEVER STRONG CANNOT BE BASIS FOR MA KING THE ADDITION. THEREFORE, NO PRESUMPTION CAN BE DRAWN WITHOUT ESTA BLISHING THE NECESSARY NEXUS THAT SHARE APPLICATION MONEY RECEIVED IS ASSE SSEES OWN UNDISCLOSED MONEY. 25. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DON'T FIND ANY BASIS FOR MAKING ADDITI ON UNDER SECTION 68 OF THE ACT AND THE FINDINGS OF THE LD CIT(A) ARE HEREBY CO NFIRMED. IN THE RESULT, GROUNDS TAKEN BY THE REVENUE ARE HEREBY DISMISSED. THE ITAT, JAIPUR BENCH IN THE CASE OF M/S CHOICE BUIL DSTATE PVT. LTD. VS. ITO IN ITA NO. 431/JP/2016 ORDER DATED 28/03/2018 HA S HELD AS UNDER 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE LEGAL AUTHORITIES RELIED UPON BY BOTH THE PARTIES. ON PERUSAL OF THE REASONS RECORDED BEFORE ISSUANCE OF NOTICE UNDER SECTION 148, IT IS STATED THEREIN THAT ON THE BASIS OF INFORMATION BROUGHT ON RECORD, THE ASSESSEE COMPANY HAS TAKEN ACCOMMODATION ENTRIES OF RS 35 LACS IN THE ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 34 NATURE OF BOGUS INVESTMENTS/SHARE APPLICATION FROM SEVEN COMPANIES WHOSE COMPLETE DETAILS IN TERMS OF NAME, ADDRESS, DATE OF PAYMENT, AMOUNT OF INVESTMENT, BANK ACCOUNT AND THE BRANCH THROUGH WHI CH THE PAYMENT HAS BEEN MADE WERE STATED THEREIN THE REASONS. IT WAS F URTHER STATED IN THE REASONS THAT THESE COMPANIES ARE INDULGED IN PROVID ING ACCOMMODATION ENTRIES IN LIEU OF CASH OBTAINED FROM THE BENEFICIA RIES AND NOT DOING ANY GENUINE BUSINESS ACTIVITY AS DIVULGED DURING THE CO URSE OF SEARCH AND SEIZURE PROCEEDINGS IN CASE OF PRAVEEN JAIN GROUP, MUMBAI. IT WAS FURTHER STATED IN THE REASONS SO RECORDED THAT THE ASSESSEE COMPANY I S A BENEFICIARY WHO HAS TAKEN THE ACCOMMODATION ENTRIES IN THE NATURE OF BO GUS INVESTMENT/SHARE APPLICATION AND THE INVESTOR COMPANIES ARE NOT CARR YING ON ANY GENUINE BUSINESS ACTIVITIES AND WAS PROVIDING ACCOMMODATION ENTRIES IN LIEU OF CASH OBTAINED FROM THE BENEFICIARIES. IN VIEW OF THE SAM E, IT WAS HELD BY THE AO THAT HE HAS REASONS TO BELIEVE THAT INCOME TO THE E XTENT OF RS 35 LACS HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE ACT. IN OUR CONSIDERED OPINION, IN THE INSTANT CASE WHERE THE R ETURN FILED BY THE ASSESSEE WAS NOT SUBJECTED TO SCRUTINY ASSESSMENT AND THE EN TRIES ARE AVAILABLE IN THE CASE OF THE ASSESSEE FROM THE COMPANIES WHICH WERE NAMED BY SHRI PRAVEEN JAIN TO PROVIDING ACCOMMODATION ENTRIES AND THE AMO UNTS RECORDED IN THE ASSESSEE'S FINANCIAL STATEMENTS ARE ALSO THE SAME A S DISCLOSED BY SHRI PRAVEEN JAIN, THE BELIEF FORMED BY THE AO AFTER DUE EXAMINA TION OF THE MATERIAL ON RECORD THAT THE INCOME OF THE ASSESSEE CHARGEABLE T O TAX DURING THE RELEVANT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT CANNOT BE SA ID TO BE ARBITRARY OR IRRATIONAL AND IT CANNOT BE SAID THAT THERE EXISTS NO RATIONAL AND INTELLIGIBLE NEXUS BETWEEN THE REASONS AND THE BELIEF. IT IS TRU E THAT THE REASONS RECORDED OR THE MATERIAL AVAILABLE ON RECORD MUST HAVE NEXUS TO THE SUBJECTIVE OPINION FORMED BY THE AO REGARDING THE ESCAPEMENT OF THE IN COME BUT THEN, WHILE RECORDING THE REASONS FOR BELIEF FORMED, THE AO IS NOT REQUIRED TO FINALLY ASCERTAIN THE FACTUM OF ESCAPEMENT OF THE TAX AND I T IS SUFFICIENT THAT THE AO HAD CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT. IT IS ALSO WELL SETTLED THE SUFFICIENCY AND ADEQUACY OF THE REASONS WHICH HAVE LED TO FORMATION OF A BELIEF BY THE ASSE SSING OFFICER THAT THE INCOME HAS ESCAPED THE ASSESSMENT CANNOT BE EXAMINE D FOR THE PURPOSES OF DETERMINING THE ASSUMPTION OF JURISDICTION BY THE A O U/S 147 OF THE ACT. THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF SINGATURE HOTELS (P) LTD (SUPRA) IS DISTINGUISHABLE ON FACTS AS IN THAT CASE , THE COURT OBSERVED THAT THE INFORMATION AND THE REASONS ARE EXTREMELY SCANTY AN D VAGUE AND THERE IS NO REFERENCE TO ANY DOCUMENT OR STATEMENT EXCEPT CERTA IN ANNEXURE WHICH CANNOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT P RIMA FACIE SHOWS OR ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 35 ESTABLISHES ESCAPEMENT OF INCOME. SIMILARLY, OTHER DECISIONS QUOTED BY THE ID AR WHICH ARE RENDERED BY THE COORDINATE BENCHES IN CASE OF M/S TRN ENERGY PVT LTD AND M/S SUPERLINE CONSTRUCTION P LTD WERE R ENDERED IN PECULIAR FACTS AND CIRCUMSTANCES IN THOSE CASES AND ARE THUS DISTI NGUISHABLE ON FACTS. THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF RAJ AT EXPORTS INDIA (SUPRA) AMONG OTHERS RELIED UPON BY THE ID DR SUPPORTS THE CASE OF THE REVENUE. IN VIEW OF THE SAME, WE ARE OF THE CONSIDERED VIEW THA T THERE IS NO ILLEGALITY IN ACTION OF THE AO IN ASSUMING JURISDICTION UNDER SEC TION 147 IN THE INSTANT CASE. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEE'S APPEA L IS HEREBY DISMISSED. 10. NOW, COMING TO THE MERITS OF ADDITION OF RS 35 LACS MADE BY THE AO UNDER SECTION 68 OF THE ACT. ON CAREFUL EXAMINATION OF MA TERIAL AVAILABLE ON RECORD, WE FIND THAT IT IS A CASE WHERE THE AO HAS RELIED B LINDLY ON INFORMATION SUPPLIED BY THE INVESTIGATION WING MUMBAI WITHOUT C ARRYING OUT ANY FURTHER EXAMINATION OF DOCUMENTS SUBMITTED DURING THE COURS E OF ASSESSMENT PROCEEDINGS AND INDEPENDENT INVESTIGATION OF THESE INVESTOR COMPANIES. AS WE HAVE NOTED ABOVE, THE INFORMATION SO RECEIVED FROM THE INVESTIGATION WING, MUMBAI AND AFTER DUE EXAMINATION THEREOF, THE AO HA S FORMED A PRIMA FACIE VIEW AND A REASON TO BELIEVE THAT THE INCOME HAS ES CAPED ASSESSMENT AND HAS THUS ASSUMED JURISDICTION U/S 147 OF THE ACT. AT TH E SAME TIME, SUCH A PRIMA FACIE VIEW HAS TO BE FINALIZED AND A FIRM VIEW HAS TO BE TAKEN ON BASIS OF EXAMINATION OF DOCUMENTS SO BROUGHT ON RECORD AND F URTHER INVESTIGATION TO BE CARRIED OUT BEFORE ANY TAX LIABILITY IS FASTENED ON THE ASSESSEE. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE COMPANY HAS SUBMITTED DETAIL DOCUMENTATION IN REGARD TO THESE COMPANIES FROM WHO M A TOTAL AMOUNT OF RS.35 LAKHS WAS RECEIVED NAMELY (I) SHARE APPLICATI ON FORM (II) COPY OF BOARD RESOLUTION (III) COPY OF BANK STATEMENTS REFLECTING PAYMENT THROUGH CHEQUE (IV) AUDITED STATEMENT OF ACCOUNTS AND ACKNOWLEDGEM ENT OF ITR (V) COPY OF CERTIFICATE OF INCORPORATION AND CERTIFICATE OF COM MENCEMENT OF BUSINESS (VI) COPY OF PAN CARD. WHERE THE ASSESSEE FURNISHES THE DOCUMENTATION AND NECESSARY EXPLANATION, THE AO SHOULD EXAMINE WHETHE R THE DOCUMENTS SO SUBMITTED AND EXPLANATION SO OFFERED ESTABLISHES TH E THREE INGREDIENTS I.E. IDENTITY OF THE INVESTOR COMPANY, CREDITWORTHINESS OF INVESTOR COMPANY AND GENUINENESS OF THE TRANSACTION. WHETHER EXPLANATION OF THE ASSESSEE IS RELIABLE OR ACCEPTABLE? IF YES, NO FURTHER ACTION I S REQUIRED AND THE SUM SO CREDITED MAY NOT BE CHARGED TO INCOME TAX. IF THE E XPLANATION SO OFFERED BY THE ASSESSEE IS NOT ACCEPTABLE OR RELIABLE, THE AO SHOULD GIVE A DETAILED REASONING IN THE ASSESSMENT ORDER FOR NOT ACCEPTING THE SAME. THE ORDER PASSED BY THE AO SHOULD BE SPEAKING ONE BRINGING ON RECORD ALL THE FACTS, EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF NATURE AND SOURCE OF THE ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 36 CREDIT IN ITS BOOKS OF ACCOUNTS AND REASONS FOR NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. IN THE INSTANT CASE, WE FIND THAT THE AO HAS NOT TAKEN ANY EFFORTS TO EXAMINE THESE DOCUMENTS SO SUBMITTED BY THE ASSE SSEE COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS SIMPLY GONE BY HIS PRIMA FACIE VIEW FORMED AT THE TIME OF ASSUMPTION OF JURISDICTI ON U/S 147 AND SUCH A PRIMA FACIE VIEW WITHOUT FURTHER EXAMINATION/INVEST IGATION CANNOT BE A BASIS FOR FORMING A FINAL VIEW OF MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. IT IS A CASE WHERE THE AO WAS IN RECEIPT O F MATERIAL INFORMATION FROM THE INVESTIGATION WING, MUMBAI THAT THE ASSESS EE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION/ INVESTMENT FROM SEVEN COMPANIES WHO ARE NOT DOING GENUINE BUSINESS ACTIVI TIES AS DIVULGED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN CASE OF PRAVEEN JAIN GROUP. IN THESE SITUATIONS, THE COURTS HAVE HELD THAT THE ASS ESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS AND THEN COME FORWARD TO MER ELY REJECT THE EXPLANATION SO MADE, WITHOUT CARRYING OUT ANY VERIF ICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM BY THE ASSESSEE. IF THE ASSESSING OFFICER HARBOURS ANY DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY- BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OB DURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. WE THEREFORE AGREE WITH THE CONTENTIONS OF THE ID AR THAT IN ABSENCE OF ANY FALSITY WHICH HAVE BEEN FOUND IN THE DOCUMENTS SO SUBMITTED BY THE ASSESSEE COMPANY TO PROVE THE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THE SHARE TRANSACTION, THESE DOCUMEN TS CANNOT BE SUMMARILY REJECTED AS HAS BEEN DONE BY THE AO IN THE INSTANT CASE. FURTHER, WE FIND THAT THERE IS NO ACTION TAKEN BY THE AO IN TERMS OF CALL ING INFORMATION FROM THESE COMPANIES UNDER SECTION 133(6) AND/OR ISSUING SUMMO NS TO DIRECTORS OF THESE COMPANIES UNDER SECTION 131 OF THE ACT. FURTHER, WH ERE THE AO RELIES UPON THE STATEMENT OF THIRD PARTIES (PRAVEEN JAIN AND OTHERS ) RECORDED U/S 132(4), WITHOUT GETTING INTO CONTROVERSY WHETHER THE SAID S TATEMENT WAS RETRACTED SUBSEQUENTLY, THE FACT REMAINS THAT THE ASSESSEE DE SERVES AN OPPORTUNITY TO CROSS EXAMINE SUCH PERSONS AS HELD BY THE HON'BLE S UPREME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA). DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY HAS MADE SPECIFIC REQUEST TO THE AO TO ALLOW CROSS EXAMINATION OF THESE PERSONS WHICH HAS HOWEVER NOT BEING PROVIDED TO THE ASSESSEE COMPANY. IN LIGHT OF ABOVE DISCUSSIONS, WE DON'T FIND ANY BASIS FOR MAKING ADDITION UNDER SECTION 68 OF T HE ACT. IN THE RESULT, GROUND NO.2 TAKEN BY THE ASSESSEE COMPANY IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ITA 177/JP/2015 & C.O. 17/JP/2015_ ITO VS M/S LAND MARK DEALERS (P) LTD. 37 THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DISMISS THE APPEAL OF THE REVENUE. 9. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE ON MERIT, THEREFORE, THE C.O. FILED BY THE ASSESSEE BECOMES A CADEMIC AND THE SAME IS HEREBY DISMISSED. 10. IN THE RESULT, BOTH, APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/06/2018. SD/- SD/- FOT; IKY JKO HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08 TH JUNE, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD-2(2), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S LAND MARK DEALERS (P) LTD., JAIP UR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 177/JP/2015 & C.O. 17/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR