ITO, New Delhi V. Neelkanth Travels (P) Ltd., New Delhi

ITA 179/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4470 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of cross examination; Accommodation entries; Onus to prove
• Section: 131; 144; 68

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 179/DEL/2016 (ASSESSMENT YEAR: 2006 - 07 ) ITO, WARD - 18(1), NEW DELHI VS. NEELKANTH TRAVELS (P) LTD, 302, VARHMAN PLAZA, CD BLOCK, PITAMPURA, NEW DELHI PAN: AABCN4907B (APPELLANT) (RESPONDENT) REVENUE BY : MS. RINKU SINGH, SR. DR ASSESSEE BY: NONE DATE OF HEARING 14/01 / 201 9 DATE OF PRONOUNCEMENT 1 8 / 0 2 / 2019 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - 42, NEW DELHI DATED 26.10.2015 FOR THE ASSESSMENT YEAR 2006 - 07.THE REVENUE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ( THE AO) AMOUNTING TO RS.84,50,000 / - U/S 68 OF THE INCOME TAX ACT (THE ACT) BY IGNORING THE FACT THAT NOTICES ISSUED TO DEPOSITORS WERE EITHER RETURNED BACK UNSERVED OR REMAINED UNCOMPLIED WITH AND THE ASSESSEE COULD NOT ESTABLISH THE GENUINENESS OF THE SOURCE OF APPLICATION MONEY RECEIVED BY IT BEFORE THE AO, CIT(A) AND ITAT DURING FIRST ROUND OF APPEAL AND SUBSEQUENTLY BEFORE AO IN COMPLIANCE TO DIRECTIONS OF ITAT AND WITHOUT CONSIDERING RATIO DICIDENDI OF HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. GOLD LEAF CAPITAL CORPORATION LTD. (201 3)353 ITR 163 (DEL)? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE THE LD.CIT (A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/S 68 OF THE ACT BY RULING THAT THE ASSESSEE WAS NOT AFFORDED OPPORTUNITY TO PROVE THE GENUINENESS OF CREDITS IN ASSESSEE'S ACCOUNT EVEN WHEN THE ASSESSEE HAD NOT PROVED CREDITWORTHINESS OF DEPOSITO R IN FIRST ROUND OF APPEAL BEFORE CIT(A), ITAT AND SUBSEQUENTLY BEFORE THE AO IN COMPLIANCE TO THE DIRECTION OF THE ITAT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/ S 68 OF PAGE | 2 THE ACT BY IGNORING THE FACT THAT SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE ASSESSEE DURING FIRST ROUND OF APPEAL AND SUBSEQUENTLY FOR PROVING THE GENUINENESS OF THE SOURCE OF SHARE APPLICATION MONEY WHICH IT DID NOT AVAIL? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/S 68 OF THE ACT WITHOUT CONSIDERING RATIO DICIDENDI LAID DOWN BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. N.R.PORTFOLIO PVT.LTD. (2014) 2 ITR - 0L68, CIT VS. YOUTH CONSTRUCTION PVT.LTD (2013) 357 ITR 197 (DELHI), CIT VS. NIPUN BUILDERS & DEVELOPERS PVT.LTD. (2013) 350 ITR 407 (DELHI) AND BON SALES PVT.LTD. VS. CIT (2014) 366 ITR 44 (DELHI)? 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO BY NOT FOLLOWING THE RATIO DICIDENDI LAID DOWN BY THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. JAN SAMPARK ADVERTISING [ITA NO.525/2014 DATED 11 - 03 - 2015] 6. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO AMOUNTING TO RS.2,11,250/ - ON ACCOUNT OF PAYMENT FROM UNDISCLOSED SOURCES? 7. THAT THE ORDER OF THE CIT(A) IS ERRONEO US AND IS NOT TENABLE ON FACTS AND IN LAW. 2 . THE ASSESSEE A COMPANY, FILED ITS RETURN OF INCOME ON 31/10/20 06 DECLARING AN INCOME OF INR 1 6500/ ASSESSMENT UNDER SECTION 143 (3) OF THE ACT WAS PASSED ON 30 /12/2008 AT THE INCOME OF INR 8 677750/ . IN THE AS SESSMENT PROCEEDINGS ITSELF THE ASSESSEE WAS FOUND TO HA VE RECEIVED A SUM OF INR 8 450000/ FROM 12 COMPANIES SHARE APPLICATION MONEY WHICH WAS FOUND TO BE IN THE NATURE OF ACCOMMODATION ENTRIES AND THE CONSEQUENT ADDITION U/S 68 OF THE INCOME TAX ACT WAS MADE AS NEITHER THE ASSESSEE NOR THE ALLEGED SHARE APPLICANTS FURNISHED ANY EVIDENCE IN SUPPORT OF THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND THE GENUINENESS OF THE TRANSACTIONS. THE LEARNED AO FURTHER ADDED A SUM OF INR 211250 A S THE COMMISSION P AID TO THE ENTRY OPERATORS. AGAINST THE ORDER OF THE LEARNED AO , ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT APPEAL WHO DELETED THE ADDITION. THE REVENUE AGGRIEVED WITH THE ORDER OF THE LEARNED CIT A PREFERRED AN APPEAL BEFORE INCOME TAX APPEL LATE TRIBUNAL WHO SET ASIDE THE ORDER OF THE LEARNED CIT APPEAL STATING THAT ASSESSEE HAS FAILED TO PROVE EVEN THE IDENTITY OF THE SHAREHOLDERS AND FURTHER AS LD AO HAS ALSO RELIED UP ON THE STATEMENT OF ACCOMMODATION ENTRY PROVIDERS WHO WERE NOT C ROSS EXAMINED , IT RESTORE D THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING THE PAGE | 3 MATTER AFRESH AFTER GIVING DUE OPPORTUNITY OF CROSS - EXAMINATION OF THOSE PERSONS TO ASSESSEE. 3 . BASED ON THIS , LD AO MADE THE FRESH ASSESSMENT , WHERE ASSESSEE DID N OT PRODUCE ANY FURTHER DETAILS AND EVEN THE LETTERS/ SUMMONS ISSUED TO THE ALLEGED SHAREHOLDERS WERE EITHER NOT SERVED AND IF SERVED, NOBODY COMPLIED WITH IT. LEARNED AO GRANTED AN OPPORTUNITY OF PRODUCING SHAREHOLDERS AS PER THE ADDRESS GIVEN TO THE AO , THE NOTICES WERE ISSUED TO THE SEVERAL PARTIES WHO NEITHER COMPLIED WITH THE NOTICES OR IT REMAINED NOT SERVED. THE ASSESSEE WAS ALSO ONCE AGAIN GIVEN AN OPPORTUNITY TO PRODUCE THE SHARE HOLDERS BEFORE THE AO TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION SINCE THE ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION LIES WITH THE ASSESSEE. ASSESSEE WAS ALSO ASKED TO GIVE THE CURRENT ADDRESS OF ALL THE PARTIES AND TO GIVE THE COMPLETE DETAILS REGARDING THE PRESENT STATUS OF THE SAID APPLICANT COMPANIES HOWEVER NO REPLY WAS FURNISHED. IN VIEW OF THIS FINAL OPPORTUNITY WAS ALSO GIVEN BY THE ASSESSING OFFICER BUT NONE COMPLIED ON BEHALF OF THE ASSESSEE. THEREFORE THE LEARNED ASSESSING OFFICER NOTED THAT THE IDENTITY OF THE DEPOSITORS/SHARE APPLICANT COMPANIES WAS NOT PROVED BY THE ASSESSEE. 4 . REGARDING OPPORTUNITY TO CR OSS EXAMINE THE ACCOMMODATION ENTRY PROVIDERS , IT IS APPARENT FROM PARA NUMBER 6.6 OF THE ORDER OF THE LEARNED CIT APPEAL THAT ASSESSING OFFICER ISSUED RESPECTIVE SUMMONS TO THOSE PARTIES TO APPEAR HOWEVER THEY DID NOT, AND THEREFORE THE OPPORTUNITY OF CROSS EXAMINATION OF THOSE PERSONS TO THE ASSESSEE ADMITTEDLY FAILED. 5 . IN VIEW OF THIS THE LEARNED AO MAINTAIN ED THE ORIGINAL ADDITION MADE OF INR 8450000/ CONSEQUENT ADDITION OF THE COMMISSION AT THE RATE OF 2.5% OF THE ACCOMMODATION ENTRY AMOUNTING TO INR 211250/ WAS ALSO MADE. THE ASSESSMENT U/S 144 READ WITH SECTION 254 OF THE INCOME TAX ACT WAS PASSED ON 15/11/2011 DETERMINING THE TOTAL INCOME OF THE ASSESSEE OF INR 8 677750/ . 6 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT A. THE LEARNED CIT A PASSED AN ORDER DATED 26/10/2015 . THE LEARNED CIT A IN PARA NUMBER 6.7 STATED THAT THE MATTER HAS BEEN SET ASIDE BY THE COORDINATE BENCH ARE PRIMARILY ON THE TWO ISSUE S (1) TO EXAMINE THEIR IDENTITY GENUINENESS AND PAGE | 4 CREDITWORTHINESS OF THE SHAR E APPLICANTS AND (2) TO GRANT AN ASSESSEE AN OPPORTUNITY OF CROSS EXAMINATION OF THE ACCOMMODATION ENTRY PROVIDERS. WITH RESPECT TO THE 1 ST ISSUE THE LEARNED CIT A NOTED THAT THE APPELLANT HAS FILED DETAILS IN SUPPORT OF THE LATEST ADDRESSES, PERMANENT ACCOUNT NUMBER, CONFIRMATION AND AFFIDAVITS, REGISTRAR OF COMPANIES CERTIFICATES IN SUPPORT OF THE SHARE APPLICATION MONEY RECEIVED FROM 15 PARTIES. HOWEVER THE ASSESSING OFFICER CARRIED OUT INDEPENDENT INQUIRIES BY ISSUING NOTICES U/S 133 (6) AND BY PU TTING THE INSPECTOR WHERE THESE PARTIES WERE NOT FOUND AT GIVEN ADDRESS OR DID NOT COMPLY IN RESPONSE TO THE NOTICES . THEREFORE HE HELD THAT UNDER THE CIRCUMSTANCES , THE IDENTITY OF THIS PARTIES COULD NOT BE PROVED. HE HELD THAT ON FILING OF THESE DETAILS BY THE ASSESSEE , NO ADVERSE OBSERVATION ON ANY COGENT GROUND COULD BE MADE BY THE LEARNED ASSESSING OFFICER. EVEN OTHERWISE ON THE 2 ND GROUND HE HELD THAT THE OPPORTUNITY OF THE CROSS - EXAMINATION OF ACCOMMODATION ENTRY PROVIDERS WAS ALSO NOT GRAN TED TO THE ASSESSEE AS THOSE PERSONS DID NOT APPEAR BEFORE THE ASSESSING OFFICER AT THE APPOINTED TIME DESPITE ISSUING SUMMONS TO THEM. HE THEREFORE HELD THAT SUCH STATEMENTS ITSELF CANNOT BE USED AS AN ADVERSE EVIDENCE AGAINST THE APPELLANT. IN VIEW OF THIS HE DELETED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. THEREFORE REVENUE AGGRIEVED WITH THE ORDER OF THE LEARNED CIT A HAS PREFERRED AN APPEAL BEFORE US. 7 . THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE VEHEMENTLY STATED THAT THE COORDINATE B ENCH SET ASIDE THE ISSUE BACK TO THE FILE OF THE LEARNED AO WAS ON 2 COUNTS. THE 1 ST COUNT WAS THAT THE ASSESSEE WAS SUPPOSED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AS WELL AS THE GENUINENESS OF THE TRANSACTION. THE 2 ND COUNT WAS THAT THE LEARNED AO IS DIRECTED TO GRANT OPPORTUNITY OF CROSS EXAMINATION OF THOSE PERSONS WHO ARE ACCOMMODATION ENTRY PROVIDER. SHE STATED THAT THOUGH ON THE 2 ND COUNT THE LEARNE D ASSESSING OFFICER HAS MADE ALL THE EFFORT S TO SEEK THE PRESE NCE OF THOSE ACCOMMODATION ENTRY PROVIDERS , HOWEVER , DESPITE ISSUING THE SUMMONS TO THEM THEY DID NOT APPEAR FOR CROSS - EXAMINATION. SHE RELIED ON THE DECISION OF THE HONOURABLE SUPREME COURT IN PEBBLE INVESTMENT AND FINANCE LTD VS ITO 2017 TIOL 238 SUPREME COURT IT. SHE SUBMITTED THAT THE DELAY IN THE SEEKING OF THE CROSS - EXAMINATION IS ON ACCOUNT OF THE ASSESSEE AND THEREFORE SOLELY ON THIS GROUND THE ADDITION CANNOT BE DELETED. SHE FURTHER PAGE | 5 STATED THAT THE ASSESSEE RELIED UPON THE DECISION OF THE HONOURABLE SUPREME COURT IN CASE OF ANDAMAN TIMBERS BEFORE THE LEARNED CIT A WHEREIN THE CROSS - EXAMINATION WHEN NOT GRANTED, THE ADDITION WAS DELETED, AS THE SOLE EVIDENCE BASED ON WHICH THE ADDITION WAS MADE WAS THE STATEMENT OF THE OTHER PARTIES. SHE FURTHER STATED THAT THAT ADMISSION BY ANOTHER PERSON SHOULD BE VIEWED FROM DIFFERENT ANGLE THEN THE ADMISSION MADE BY AN ACCOMMODATION ENTRY PROVIDER. SHE SUBMITTED THAT IN THE PRESENT CASE THE ADDITION HAS NOT BEEN MADE SOLELY ON THE BASIS OF THE STA TEMENT OF THE ACCOMMODATION ENTRY PROVIDER. ON SECOND COUNT , SHE SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE 3 INGREDIENTS OF SECTION 68 OF THE INCOME TAX ACT AND THEREFORE THE ADDITION HAS BEEN MADE. SHE SUBMITTED THAT EVEN THE IDENTITY OF TH E SHARE APPLICANT COMPANIES WERE NOT PROVED BY THE ASSESSEE AS ASSESSEE IS NOT AWARE ABOUT THE PRESENT ADDRESS. MOST OF THE NOTICES SENT TO THEM EITHER REMAINED UNSERVED OR REMAIN UNCOMPLIED WITH. SHE SUBMITTED THAT THE ASSESSEE IS A PRIVATE LIMITED COMP ANY AND IF HE DOES NOT KNOW THE ADDRESS OF ITS SHARE HOLDERS WHO INVESTED SUCH A HUGE MONEY ITSELF SPEAKS LOUDER THAN THE DOCUMENTS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED ASSESSING OFFICER OR CIT APPEAL. SHE SUBMITTED THAT DESPITE REPEATED OPPORT UNITIES GRANTED BY THE ASSESSING OFFICER FOR THE PRODUCTION OF THE DIRECTORS OF THE COMPANY, ASSESSEE MISERABLY FAILED TO PRODUCE THEM BEFORE THE ASSESSING OFFICER. SHE THEREFORE RELIED UPON THE HOST OF THE DECISION OF THE VARIOUS COURTS INCLUDING THE JUR ISDICTIONAL HIGH COURT IN CASE OF CIT VS NOVA PROMOTERS AND FINLEASE PRIVATE LIMITED 340 ITR 169 AND SUBMITTED THAT THAT ASSESSEE IS MERELY A SMALL COMPANY FILING THE RETURN OF INCOME OF INR 1 6500 HAS RECEIVED HUGE SHARE CAPITAL OF INR 8 450000/ - AND SUR PRISINGLY THE ASSESSEE DOES NOT KNOW EVEN THE CORRECT ADDRESS OF THE SHAREHOLDERS AND ALSO NOT PRODUCE THEM FOR EXAMINATION BY THE ASSESSING OFFICER ITSELF PROVES THAT THE ISSUE OF SHARE CAPITAL TO THESE 12 COMPANIES IS ACCOMMODATION ENTRY. SHE ALSO SUBM ITTED THAT AT ONE PLACE THE LD CIT (A) HIMSELF HAS STATED THAT ASSESSEE FAILED TO PROVE THE IDENTITY OF THE SHAREHOLDERS AND IN LAT PARAGRAPH WHILE DELETING THE ADDITION, HE DOES NOT GIVE ANY FINDING THAT WHETHER THE THREE BASIC INGREDIENT OF SECTION 6 8 ARE INDEPENDENTLY PROVED OR NOT . THEREFORE, SHE SUBMITTED THAT THE LEARNED CIT A HAS GROSSLY ERRED IN DELETING THE ABOVE ADDITION. PAGE | 6 8 . DESPITE NOTICE TO THE ASSESSEE, NONE APPEARED. EVEN ON THE EARLIER OCCASION ALSO WHEN THE MATTER WAS LISTED BEFORE THE COORDINATE BENCH NONE APPEARED. A S PER THE PROCEEDINGS DATED 14/11/2018 , NOTICE TO THE ASSESSEE WAS SENT BY THE REGISTERED POST. ON PERUSAL OF THE NOTICE ISSUED , WE FIND THAT IT HAS BEEN POSTED AT THE CORRECT ADDRESS. EARLIER ALSO THE NOTICE FIXIN G THE DATE OF HEARING ON 14/11/2018 , WAS ALSO POSTED BY THE REGISTERED POST AT THE CORRECT ADDRESS, NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE IT IS APPARENT THAT DESPITE SENDING NOTICE TO THE ASSESSEE BY THE REGISTERED POST AT THE ADDRESS GIVE N IN THE APPEAL MEMO AS WELL AS RECORDED IN THE ORDER OF THE LEARNED CIT A , NOBODY APPEARED TO REPRESENT THE CASE OF THE ASSESSEE. IN VIEW OF THIS WE DO NOT HAVE ANY OTHER ALTERNATIVE BUT TO DECIDE THE ISSUE ON THE MERITS OF THE CASE AS PER THE FACTS A VAILABLE ON RECORD. 9 . IN THE PRESENT CASE IT IS APPARENT THAT THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM 12 COMPANIES RANGING FROM INR 250,000 TO INR 14,000,000. THE ASSESSEE PRODUCED THE DETAILS ABOUT THIS COMPANY SUCH AS THE COPY OF THE BOARD RESOLUTION AUTHORISING THE INVESTMENT IN THE ASSESSEE COMPANY, COPY OF MEMORANDUM OF ASSOCIATION, COPY OF THE DETAILS OF MASTER DATA FROM THE REGISTRAR OF COMPANIES WEBSITE EVIDENCING THE CURRENT REGISTERED OFFICE OF THE COMPANY AND THE STATUS OF THE ANNUAL FILING OF THE RETURN UNDER THE COMPANIES ACT , PRINT OUT OF THE PERMANENT ACCOUNT NUMBER DETAILS FROM INCOME TAX WEBSITE, COPY OF INCOME TAX RETURN ET CETERA. ON SUBMISS ION OF THESE DETAILS THE LEARNED ASSESSING OFFICER CARRIED OUT THE ENQUIRY BY SENDING THE LETTERS TO THIS COMPANY UNDER SECTION 133 (6) OF THE ACT . THE MOST OF THE NOTICES WERE NOT SERVED AT THE PRESENT ADDRESS STATED BY THE ASSESSEE OF THE SHARE APPLICA NT AND SOME OF THE NOTICES SERVED BUT THERE WAS NO COMPLIANCE. DURING THE COURSE OF REMAND PROCEEDINGS AS MENTIONED IN PARA NUMBER 6.5 OF THE ORDER OF THE LEARNED CIT A, AT THE DIRECTION OF THE 1 ST APPELLATE AUTHORITY THE AO WAS DIRECTED TO ISSUE SUMMON S TO THESE SHARE APPLICANTS AT THE NEW ADDRESS AND TO DEPUTE INSPECTOR TO ENQUIRE ABOUT THE EXISTENCE OF THESE APPLICANTS AT THE NEW ADDRESS. THE LEARNED ASSESSING OFFICER ISSUED SUMMONS TO THESE PARTIES U/S 131 OF THE INCOME TAX ACT , THEY REMAINED UN SERVED A S NO SUCH COMPANY WAS EXISTING AT THE GIVEN ADDRESS. FURTHER THE INSPECTOR OF THE AO WAS ALSO DE PUTED WHO SUBMITTED A REPORT THAT NO SUCH COMPANY OR PERSONS WERE PAGE | 7 EXISTING AT THE GIVEN ADDRESS ES. ADMITTEDLY FOR THE CROSS - EXAMINATION OF MR MAHESH GARG AND OTHER PARTIES, SUMMONS WERE ISSUED TO THEM HOWEVER, THOSE PARTIES DID NOT APPEAR AT THE APPOINTED TIME AND THEREFORE AFTER MAKING ALL THE EFFORTS BY THE ASSESSING OFFICER THEY COULD NOT BE CROSS - EXAMINED BY THE ASSESSEE. HOWEVER IN THE PRESENT C ASE THE ISSUE BEFORE US IS WHETHER ON BOTH THE COUNTS THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER HAS BEEN CORRECTLY DELETED BY THE LEARNED CIT A. IN THE PRESENT CASE WHEN THE ASSESSEE COMPANY HAS RECEIVED INR 8450000/ AS SHARE APPLICATION FROM 12 DIFFERENT PRIVATE LIMITED COMPANIES WHERE ASSESSEE ITSELF IS EARNING A MEAGRE INCOME OF INR 1 6500/ , WHEREIN THE SUMMONS WERE ISSUED TO THE COMPANIES THEY WERE NOT FOUND THAT THE ADDRESS GIVEN BY THE ASSESSEE, THE REPORT OF THE INSPECTOR WHO WAS DE PUTE D TO ENQUIRE ALSO REPORTED THAT NO SUCH COMPANIES EXISTED AT THE GIVEN ADDRESS , IT SUFFICIENTLY PROVES THAT SUCH COMPANY DID NOT EXIST IN REALITY BUT ONLY ON PAPER. COUPLED WITH THE FACT THAT THESE COMPANIES ARE OPERATED BY SRI MAHESH GARG AND OTHER PER SONS ASSOCIATED WITH HIM CLEARLY SHOWS THAT THERE IS NO CREDITWORTHINESS OF THE PARTIES WHO HAVE DEPOSITED SUCH HUGE SUM WITH THE ASSESSEE. IT CANNOT BE SAID THAT AFTER THE ASSESSEE PRODUCED CERTAIN PAPER EVIDENCES BEFORE THE ASSESSING OFFICER , HE DID N OT MAKE ANY ENQUIRY. THE AO ISSUED LETTERS UNDER SECTION 133 (6) OF THE ACT WHICH COULD NOT BE SERVED, THE ASSESSING OFFICER ISSUED SUMMONS TO THE COMPANIES WHICH COULD NOT BE SERVED, THE ASSESSING OFFICER DEPUTED HIS INSPECTOR WHO GAVE A REPORT THAT NO S UCH COMPANIES EXIST, IT PROVES THAT THE ASSESSEE HAS FAILED TO SHOW THAT THESE COMPANIES EXIST IN THE REAL WORLD AND THEY ARE CREDIT WORTHY OF DEPOSITING SUCH A HUGE SUM WITH THE ASSESSEE WHICH IS EARNING A MEAGRE INCOME AND THE WHOLE TRANSACTION OF PLACIN G SHARES OF THE ASSESSEE COMPANY WITH THOSE COMPANIES IS GENUINE. APPARENTLY , IT IS THE DUTY OF THE ASSESSEE TO FIRST DISCHARGE ITS OWN ONUS CAST U/S 68 OF THE ACT , WHICH ASSESSEE IS NOT FULFILLING AT THE FIRST INSTANCE . THE LEARNED CIT A HAS HEL D THAT MERELY PRODUCING THE PERMANENT ACCOUNT NUMBER , CERTIFICATE OF THE REGISTRAR OF COMPANIES, BANK STATEMENT, COPY OF THE BOARD RESOLUTION, AND COPY OF ITR OF THE SHARE APPLICANT COMPANY ARE ENOUGH TO DISCHARGE THE ONUS CAST UPON THE ASSESSEE. ACCORD ING TO US THEY ARE NOT. THE COMPANIES EXIST AS ARTIFICIAL JURIDICAL PERSON BUT THEY ACT THROUGH ITS DIRECTORS. PAGE | 8 THEREFORE UNLESS THOSE DIRECTORS ARE PRODUCED BEFORE THE ASSESSING OFFICER THE IDENTITY OF SUCH COMPANIES CANNOT BE ESTABLISHED. FURTHER THE PERMANENT ACCOUNT NUMBER, CERTIFICATE OF REGISTRAR OF COMPANIES AND COPY OF THE BOARD RESOLUTION AS WELL AS THE BANK STATEMENT OF THE SHARE APPLICANT WOULD ALL BE IN ORDER IN CASE OF SUCH TRANSACTIONS, WHICH ARE DEVOID OF ANY GENUINENESS, THEREFORE THEY C ANNOT BE RELIED UPON TO SHOW THAT ASSESSEE HAS SHOWN THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. EVEN IN THE ORDER OF THE LD CIT (A) , THERE IS NO WHISPER THAT ASSESSEE HAS DISCHARGED ITS INITIAL ONUS AT THE FIRST STAGE AND W HEN IT WAS THROWN BACK BY THE AO AFTER MAKING INQUIRY. FURTHER THE LD CIT - A HAS ALSO NOT GIVEN CLEAR FINDING THAT THE TRANSACTION ENTERED IN TO BY THE ASSESSEE OF INVITING SHARE APPLICATION FROM THESE 12 COMPANIES ARE GENUINE. 10 . FURTHER WITH RESPECT TO THE CROSS - EXAMINATION, IF THE STATEMENT OF 3 RD PARTIES WERE USED AGAINST THE ASSESSEE AND THOSE STATEMENTS ARE THE ONLY EVIDENCES BASED ON WHICH THE ADDITION HAS BEEN MADE, THEN IT IS MANDATORY FOR THE LEARNED ASSESSING OFFICER TO GRANT THE CROSS EXAMINATI ON OF THOSE PERSONS BEFORE MAKING THE ADDITION. THIS WAS THE 2 ND MANDATE OF THE DECISION OF THE COORDINATE BENCH BY SETTING ASIDE THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER. THE LEARNED ASSESSING OFFICER HAS MADE THE ATTEMPT BY ISSUING SUMMONS TO THOSE PARTIES BUT THEY DID NOT APPEAR. ADMITTEDLY THEREFORE THOSE PERSONS COULD NOT BE EXAMINED IN CROSS EXAMINATION BY THE ASSESSEE. 11 . HOWEVER IN THE PRESENT CASE THE ASSESSEE HAS FAILED ON THE 1 ST GROUND ITSELF TO PROVE THE IDENTITY, CREDITWORT HINESS AND GENUINENESS OF THE TRANSACTIONS OF SHARE APPLICATION MONEY RECEIVED FROM 12 COMPANIES AND THEREFORE THE LEARNED CIT A WAS NOT CORRECT IN DELETING THE ADDITION HOLDING THAT ASSESSEE HAS PROVED THE IDENTITY. WITH RESPECT TO THE CROSS - EXAMINATIO N THE LEARNED CIT APPEAL IS CORRECT IN HOLDING THAT WHEN THE AO COULD NOT PROVIDE CROSS EXAMINATION OF SUCH PERSONS SUCH STATEMENT IN ITSELF CANNOT BE USED IN ADVERSE EVIDENCE AGAINST THE APPELLANT. THEREFORE THE FACTUAL MATRIX NOW ARISES THAT WHETHER THE ADDITION CAN BE DELETED ON THE EVIDENCES PRODUCED BY THE ASSESSEE WHICH WAS FOUND BY THE LEARNED ASSESSING OFFICER THAT THE SHAREHOLDERS DOES NOT EXIST. FURTHER THE SUMMONS ISSUED TO THEM ALSO RESULT TO SHOW THAT THEY DO NOT EXIST AT THE GIVEN ADDRESS, T HE DOCUMENTARY PAGE | 9 EVIDENCES PRODUCED BEFORE THE LEARNED CIT APPEAL AND ASSESSING OFFICER WERE FOUND TO BE MERE PAPER EVIDENCES AND IN REALITY THOSE COMPANIES DID NOT EXIST AT ALL. IN VIEW OF THIS WE SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LEARNED C IT A TO EXAMINE THAT WHETHER THESE COMPANIES EXIST IN REALITY OR NOT. WE ALSO DIRECT THE LEARNED CIT A TO EXAMINE HIMSELF OR THROUGH THE LEARNED ASSESSING OFFICER , DIRECTORS OF THE COMPANIES WHO HAVE INVESTED MONEY OF SUCH A HIGH MAGNITUDE TO ASCERTA IN THE CREDITWORTHINESS OF THOSE PARTIES AND GENUINENESS OF THE TRANSACTIONS. ASSESSEE IS DIRECTED TO PRODUCE THE DIRECTORS OF THOSE COMPANIES BEFORE THE ASSESSING OFFICER OR THE LEARNED CIT APPEAL ON THE DATES GIVEN . IF ON VERIFICATION OF SUCH DETAILS , ON EXAMINATION OF THE DIRECTORS OF THE SHARE APPLICANT COMPANY, IF THE LEARNED CIT APPEAL REACHES A CONCLUSION THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IS ESTABLISHED, THEN THE LEARNED ASSESSING OFFICER MAY BE DIRECTED TO G IVE A FRESH OPPORTUNITY OF CROSS EXAMINATION OF THE ACCOMMODATION EN TRY PROVIDERS TO THE ASSESSEE. IF THEN CROSS EXAMINATION OF THOSE PERSONS ARE NOT POSSIBLE, THEN ONLY THE ADDITION CAN BE DELETED. IN VIEW OF THIS , ALL THE GROUNDS OF APPEAL OF THE LEAR NED AO I S SET ASIDE BACK TO THE FILE OF THE LEARNED CIT A WITH ABOVE DIRECTION. 12 . IN THE RESULT APPEAL FILED BY THE LEARNED AO IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 / 0 2 / 2019 . - SD/ - - SD/ - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 / 0 2 / 2019 COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI