ACIT, Circle-16(3), Hyderabad V. M/s.Pennar Aqua Exports Pvt.Ltd, Hyderabad

ITA 1846/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66606 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1994-1995
• Appeal Filed On: 27-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: S RAMA RAO
• Keywords: Unexplained cash credit; Income from undisclosed sources; Question of law; Assessment record; Capital receipt
• Section: 143(3); 131; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1846/HYD/2011 ASSESSMENT YEAR 1994-95 THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-16(3), HYDERABAD VS. M/S. PENNAR AQUA EXPORTS PVT. LTD., HYDERABAD PAN: AABCP3821G APPELLANT RESPONDENT APPELLANT BY: SMT. VIDISHA KALRA RESPONDENT BY: SRI S. RAMA RAO DATE OF HEARING: 27 . 11 .2012 DATE OF PRONOUNCEMENT: 20.12.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-V, HYDERABAD DATED 23.8.2011 FOR ASSE SSMENT YEAR 1994-95. 2. THE GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL IS W ITH REGARD TO DELETION OF ADDITION AT RS. 38.4 LAKHS MA DE ON ACCOUNT OF INTRODUCTION OF SHARE CAPITAL MADE U/S. 68 OF TH E INCOME-TAX ACT, 1961. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND RECEIVED SHARE CAPITAL OF RS. 38.4 LAKH S. THE ASSESSING OFFICER ORIGINALLY PASSED THE ASSESSMENT ORDER ON 31.12.2008 U/S. 143(3) R.W.S. 254 OF THE ACT. BEFO RE THIS, THE ORDER WAS PASSED U/S. 143(3) R.W.S. 147 OF THE ACT ON 30.3.2000. THE CIT(A) SET ASIDE THE ORDER OF THE A SSESSING OFFICER AND REMITTED THE ISSUE BACK TO THE ASSESSIN G OFFICER FOR FRESH CONSIDERATION. THE ORDER U/S. 143(3) R.W.S. 250 OF THE ACT ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 2 WAS PASSED ON 28.3.2002, ONCE AGAIN TREATING THE AM OUNT OF RS. 38.4 LAKHS RECEIVED AS SHARE CAPITAL FROM 23 PERSON S AS UNEXPLAINED CREDIT. 4. THEREAFTER, VIDE HIS ORDER NO. 630/ITO. 2(1)/CIT(A) -III/02- 03 DATED 30.12.2001, THE CIT(A)-III, HYDERABAD PART LY ALLOWED THE APPEAL. OUT OF THE AFOREMENTIONED ADDITION, RS . 17,00,000/- WAS ALLOWED IN VIEW OF THE EVIDENCE SUB MITTED BUT BALANCE OF RS. 21,40,000/- WAS NOT ALLOWED. FINALL Y, THE ASSESSEE APPEALED TO THE ITAT, HYDERABAD AND IN THE IR ORDER IN ITA NO. 256/HYD/03 DATED 8.6.2007, THE APPEAL WAS S ET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TIONS TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. THE ASSES SING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) R.W.S. 254 OF THE ACT BY DETERMINING THE TOTAL INCOME AT RS. 38,40,000/-. O N FURTHER APPEAL TO THE CIT(A), THE CIT(A) ALLOWED APPEAL OF THE ASSESSEE AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR SUBMITTED THAT MOST OF THE INVESTORS ARE PETTY AGRICULTURISTS OWNING 3 TO 5 ACRES OF LAND. THEIR INCOME WOULD BE IN THE RANGE OF RS. 40,000 TO 70,000 PER A NNUM AND IT IS UNBELIEVABLE, AFTER MEETING THEIR HOUSEHOLD EXPE NSES, THEY ARE NOT IN A POSITION TO INVEST SUCH A HUGE AMOUNT IN ASSESSEE FIRM. HE SUBMITTED THAT OTHER THAN FILING AFFIDAVI TS FROM 11 PERSONS THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE AGRICULTURAL HOLDINGS AS STATED IN THE AFFID AVITS. ACCORDING TO THE DR THESE INVESTORS HAVE NO CAPACIT Y TO INVEST IN THE ASSESSEE COMPANY. FURTHER, HE SUBMITTED THA T ON ENQUIRY IT WAS STATED BY THEM THAT THEY HAVE NOT IN VESTED AN AMOUNT AND THEY WERE IGNORANT OF EXISTENCE OF ASSES SEE- COMPANY. ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 3 6. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT TH E ASSESSEE DURING THE PERIOD HAS NOT COMMENCED ITS BU SINESS. IT IS IN THE INCEPTION STAGE. BEING SO, IT CANNOT BE SAID THAT THE COMPANY THE COMPANY EARNED SUCH INCOME FROM ANY SOU RCE. HE RELIED ON THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF CIT V. BHARAT ENGINEERING & CONSTRUCTION CO. (83 IT R 187) WHEREIN HELD THAT UNEXPLAINED CASH CREDIT ENTRIES I N THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE COULD NOT BE I TS INCOME. THE AR SUBMITTED THAT THE ASSESSEE HAS FURNISHED AL L INFORMATIONS LIKE SHARE APPLICATION, AFFIDAVITS AND DETAILS OF THEIR HOLDINGS TO THE LOWER AUTHORITIES AND AFTER C ONSIDERING THESE, THE CIT(A) SATISFIED WAS AND DELETED THE ADD ITION. CONTRARY TO THE EVIDENCE FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOT BROUGHT ON RECORD ANYTHING TO SHOW THAT THE CLAIM OF INVESTMENTS BY THESE PARTIES IS INCORR ECT. THE ASSESSING OFFICER WITHOUT BRINGING ANY ADVERSE MATE RIAL AGAINST THE DOCUMENTS FILED BY THE ASSESSEE, IT CANNOT BE T REATED AS UNEXPLAINED CREDIT U/S. 68 IF THE ACT. HE RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT V. LO VELY EXPORTS PVT. LTD. (216 CTR 195) (SC). HE ALSO RELI ED ON THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT V. STELLAR INVESTMENTS (192 ITR 287) WHEREIN HELD THAT WITH RE GARD TO SHARE CAPITAL IS CONCERNED IT WOULD BE ENOUGH IF TH E ASSESSEE FILED THE CONFIRMATION LETTERS. HE ALSO RELIED ON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF CIT V. SMT. P.K. NOORJ EHAN (237 ITR 570) WHEREIN THE APEX COURT HELD THAT WHEN THER E IS NO SOURCE OF INCOME TO THE ASSESSEE COMPANY, THERE IS NO POSSIBILITY OF DERIVING UNDISCLOSED OR UNACCOUNTED INCOME. FINALLY, HE RELIED ON THE ORDER OF THE CIT(A) AND V ARIOUS CASE LAW MENTIONED THEREIN. ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 4 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THIS CASE THE CIT(A) DELETED THE ADD ITION ON THE REASON THAT THE COMPANY IS IN INCEPTION STAGE AND I T WOULD NOT HAVE EARNED THIS AMOUNT OF INCOME FROM UNEXPLAINED SOURCES. HE RELIED ON THE JUDGEMENT IN THE CASE OF BHARAT EN GINEERING & CONSTRUCTION CO. (SUPRA). IN OUR OPINION,, THE REA SONS ADVANCED BY THE CIT(A) FOR DELETION OF THE ADDITION MADE U/S . 68 ARE NOT CORRECT. THE DECISION IN THE CASE OF CIT V. BHARAT ENGINEERING & CONSTRUCTION CO. (83 ITR 187) (SC) ON WHICH RELIANC E WAS PLACED BY THE CIT(A) IS A CASE UNDER INDIAN INCOME-TAX ACT , 1922. IT WAS HELD IN THAT CASE THAT A LARGE AMOUNT OF CASH A PPEARING ON THE VERY FIRST DAY OF THE ACCOUNTING YEAR WAS NOT A SSESSABLE IN THAT YEAR AS IT WAS NOT POSSIBLE FOR THE ASSESSEE T O MAKE SUCH A HUGE INCOME ON THE VERY SAME DAY ON WHICH THE ASSES SEE STARTED ITS BUSINESS FOR THAT YEAR. WHEREAS, U/S. 68 OF THE INCOME-TAX ACT,1961, EVEN IN A CASE WHERE AN AMOUNT IS CREDITED ON THE VERY FIRST DAY OF THE ACCOUNTING YE AR AND THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT ACCEPTED BY THE ASSESSING OFFICER, SUCH AMOUNT MAY BE ASSESSED AS I NCOME OF THE ASSESSEE FOR THE ACCOUNTING YEAR FOR WHICH THE BOOKS ARE MAINTAINED. BEING SO, WE ARE NOT INCLINED TO APPRE CIATE THE FINDING GIVEN BY THE CIT(A) IN PARA 5.4 OF HIS ORDE R. IN THE CASE OF VBC FERTILISERS PVT. LTD. V. DCIT IN ITA NO. 451 /HYD/97 DATED 9.7.2003 THE TRIBUNAL HELD AS FOLLOWS: '6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT WELL SETTLE D THAT A DECISION OF A COURT IS AN AUTHORITY FOR WHAT IS ACTUALLY DECIDES AND NOT FOR WHAT LOGICALLY FOLLOWS FROM IT. IN THE CASE OF STELLER INVESTMENTS (SUPRA ), THE HONBLE SUPREME COURT AFFIRMED THE JUDGEMENT OF HONBLE DELHI HIGH COURT REPORTED IN 192 ITR 287. THE TEXT OF THE HONBLE SUPREME COURT'S JUDGEMENT READS AS UNDER: 'WE HAVE READ THE QUESTION WHICH THE HIGH COURT ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 5 ANSWERED AGAINST THE REVENUE. WE ARE IN AGREEMENT WITH THE HIGH COURT PLAINLY THE TRIBUNAL CAME TO A CONCLUSION ON FACTS AND NO INTERFERENCE IS CALLED F OR. THE APPEAL IS DISMISSED. NO ORDER AS TO COSTS' (EMPHASIS SUPPLIED) A PLAIN READING OF THE DECISION OF HONBLE HIGH COU RT SHOWS THAT THE ASSESSING OFFICER HAS NOT CARRIED OU T INVESTIGATIONS WITH REGARD TO THE GENUINENESS AND CREDITWORTHINESS OF THE SHAREHOLDERS AND HENCE THE REVISIONAL AUTHORITY INVOKED THE PROVISIONS OF SECT ION 263 TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER . THE TRIBUNAL REVERSED THE DECISION OF THE COMMISSIONER OF INCOME-TAX FOR CERTAIN REASONS WHICH ARE NOT EXTRACTED EITHER BY DELHI HIGH COURT OR BY THE HONBLE SUPREME COURT. THE HONBLE DELHI HIGH COURT OBSERVED AS UNDER: 'THE TRIBUNE! REVERSED THIS DECISION FOR REASONS WHICH WE NEED NOT GO INTO' THE COURT RECORDED ITS OWN REASONS AND FINALLY HELD THAT NO QUESTION OF LAW ARISED AND ACCORDINGLY REJECTED THE REFERENCE. THE HONBLE SUPREME COURT HELD THAT THE TRIBUNAL CAME TO THE CONCLUSION ON FA CTS AND HENCE NO INTERFERENCE IS CALLED FOR. THE ORDER OF THE HONBLE DELHI HIGH COURT WAS AFFIRMED MAINLY ON ACCOUNT OF THE FACT THAT THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL WERE BASED ON THE FACTS. HOWEVER, WHAT WERE THE FACTS WHICH WEIGHED IN THE MIND OF THE APPELLATE RIB TO COME TO THE CONCLUSION WERE NO T MENTIONED EITHER BY THE DELHI HIGH COURT OR BY THE HONBLE SUPREME COURT. SUFFICE TO SAY THAT THE SUPREME COURT DISMISSED THE CIVIL APPEAL OF THE REVENUE ON THE GROUND THAT NO QUESTION OF LAW ARISE S BECAUSE THE CONCLUSIONS WERE BASED ON FACTS. THUS, IT CANNOT BE SAID THAT THE HONBLE SUPREME COURT HA S DECIDED THE LEGAL ISSUE AS TO WHETHER SECTION 68 IS APPLICABLE IN RESPECT OF CAPITAL CONTRIBUTIONS. IT IS INTERESTING TO NOTICE THAT THE DECISION OF HONBLE DELHI HIGH COURT (SUPRA) WAS EXPLAINED BY THE FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (205 ITR 98) AND OBSERVED AT PAGE 105 AS UNDER: 'IN THE CASE OF STELLAR INVESTMENTS LTD. (1991) 192 ITR 287 (DELHI), THE INCOME-TAX OFFICER HAD ACCEPTED THE INCREASED SUBSCRIBED SHARE CAPITAL. ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 6 SECTION 68 OF THE ACT WAS NOT REFERRED TO AND THE OBSERVATIONS IN THE SAID JUDGEMENT CANNOT MEAN THAT THE INCOME-TAX OFFICER CANNOT OR SHOULD NOT GO INTO THE QUESTION AS TO WHETHER THE ALLEGED SHAREHOLDERS ACTUALLY EXISTED OR NOT. IF THE SHAREHOLDERS ARE IDENTIFIED AND IT IS ESTABLISHED T HAT THEY HAVE INVESTED MONEY IN THE PURCHASE OF SHARES THEN THE AMOUNT RECEIVED BY THE COMPANY WOULD BE REGARDED AS A CAPITAL RECEIPT AND TO THAT EXTENT TH E OBSERVATIONS IN THE CASE OF STELLAR INVESTMENTS LTD . (1991) 192 ITR 287 (DELHI) ARE CORRECT BUT IF, ON T HE OTHER HAND, THE ASSESSEE OFFERS NO EXPLANATION AT A LL OR THE EXPLANATION OFFERED IS NOT SATISFACTORY THEN , THE PROVISIONS OF SECTION 68 MAY BE INVOKED. IN THE LATTER CASE SECTION 68, BEING A SUBSTANTIVE SECTION , EMPOWERS THE INCOME-TAX OFFICER TO TREAT SUCH A SUM AS INCOME OF THE ASSESSEE WHICH IS LIABLE TO BE TAXED IN THE PREVIOUS YEAR IN WHICH THE ENTRY IS MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE.' THE DISTINGUISHING FEATURES BROUGHT OUT BY THE FULL BENCH OF HONBLE DELHI HIGH COURT WERE NOT CONSIDERED BY THE HONBLE SUPREME COURT PRESUMABLY ON ACCOUNT OF THE FACT THAT THE CIVIL APPEAL WAS DISMISSED MAINLY ON THE GROUND THAT IT I S A QUESTION OF FACT AND THERE IS NO NEED FOR THEIR LORDSHIPS TO GO INTO THE LEGAL ISSUE. 7. UNDER THE CIRCUMSTANCES, WE ARE OF THE CONSIDERE D OPINION THAT EVEN AFTER THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF STELLAR INVESTMENTS LT D. (SUPRA) THE BURDEN OF PROVING THE EXISTENCE OF SHAREHOLDERS IS STILL UPON THE ASSESSEE AND IN THE INSTANT CASE, THE ASSESSEE FAILED TO DISCHARGE ITS BURDEN.' 8. THE DECISION OF THE HONBLE DELHI HIGH COURT IN TH E CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (299 ITR 268) P ER SE REPRODUCED HEREIN BELOW: 'I. T. A. NO. 953 OF 2006 THE INCOME-TAX APPELLATE TRIBUNAL HAS DISMISSED THE REVENUE'S APPEAL AND THUS THERE ARE CONCURRENT FINDINGS PERTAINING TO THE FACTUAL MATRIX. THE FOLLOWING PARAGRAPH FROM THE IMPUGNED DECISION ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 7 ADEQUATELY ENCAPSULATES THE NECESSARY DETAILS: 'THUS, THE QUESTION IS WHETHER IN THE PRESENT CASE, THE ASSESSING OFFICER HAD MATERIAL TO CONCLUDE THAT THE SHARE APPLICANTS IN QUESTIONS DID NOT EXIST. IT IS SEEN THAT THE ASSESSEE-COMPANY HAS FURNISHED THE NECESSARY DETAILS SUCH AS PERMANENT ACCOUNT NUMBER/INCOME-TAX WARD NO. / RATION CARD OF THE SHARE APPLICANTS AND SOME OF THEM ARE ASSESSED TO TAX. THE SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH BANKING CHANNEL. IN SOME CASE, THE CONFIRMATIONS/AFFIDAVITS OF SHARE APPLICANTS CONTAINING THE ABOVE DETAIL WERE ALSO FILED. IT IS SEEN THAT THE ASSESSING OFFICER DID NOT CARRY OUT ANY INQUIRY INTO THE INCOME-TAX RECORD OF THE PERSONS WHO HAVE GIVEN THE PERMANENT ACCOUNT NUMBER/WARD NUMBER IN ORDER TO ASCERTAIN THE NON-EXISTENCE OF THE SHARE APPLICANTS IN QUESTION. THE ASSESSING OFFICER HAS NEITHER CONTROVERTED NOR DISAPPROVED THE MATERIAL FILED BY THE ASSESSEE. IN THE CASE OF CIT V. MAKHNI AND TYAGI P. LTD. REPORTE D IN [2004] 267 ITR 433 (DELHI), THE JURISDICTIONAL HIGH COURT HAS HELD THAT WHEN THE DOCUMENTARY EVIDENCE WAS PLACED ON RECORD TO PROVE THE IDENTITY OF ALL THE SHAREHOLDERS INCLUDING THEIR PERMANENT ACCOUNT NUMBER/GIR NUMBERS AND FILING OF OTHER DOCUMENTARY EVIDENCE IN THE FORM OF RATION CARD, ETC. WHICH HAD NEITHER BEEN CONTROVERTED NOR DISAPPROVED BY THE ASSESSING OFFICER NO INTERFERENCE WAS CALLED FOR. THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION. THE ASSESSING OFFICER PROCEEDED TO MAKE THE IMPUGNED ADDITION ON THE GROUND THAT IN SOME CASE SOME SUMMONS ISSUED WERE RETURNED UNSERVED AND IN SOME CASE SUMMON THOUGH SERVED BUT THERE WAS NO COMPLIANCE. IN THIS CONNECTION, IT MAY BE MENTIONED THAT IN THE CASE OF CIT V. ORISSA CORPORATION P. LTD. [1986]159 ITR 78 (SC), THE HON'BLE COURT HAS HELD THAT WHEN THE ASSESSEE BORROWS THE LOAN AND IF AN ASSESSEE GIVES NAMES AND ADDRESSES OF THE CREDITORS. WHO ARE ASSESSED TO TAX AND FULL PARTICULARS IS FURNISHED THEN THE ASSESSEE HAS DISCHARGED THE DUTY. IF THE REVENUE MERELY ISSUES SUMMONS UNDER SECTION 131 AND DOES NOT PURSUE THE MATTER FURTHER, THE ASSESSEE DOES NOT BECOME RESPONSIBLE FOR THE SAME EVEN IF THE CREDITORS DO NOT APPEAR. ADDITION CANNOT BE MADE UNDER SECTION 68.' ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 8 NO QUESTION OF LAW, FAR LESS ANY SUBSTANTIAL QUESTI ON OF LAW ARISES FOR OUR CONSIDERATION. WE MAY, HOWEVER, BRIEFLY REFLECT UPON A SUBMISSION MADE BY LEARNED COUNSEL FOR THE RESPONDENT TO THE EFFECT TH AT THE ASSESSEE HAD, BY ITS LETTER DATED MARCH 8, 1999 , REQUESTED THE ASSESSING OFFICER TO EXAMINE THE ASSESSMENT RECORDS OF THE SHARE APPLICANTS WHOSE GIR NUMBERS HAD BEEN SUPPLIED. IT IS NOT CONTROVERTED THAT ACTION WAS NOT TAKEN BY THE ASSESSING OFFICER, BUT IT HAS JUSTIFIABLY BEEN CONTENDED THAT THIS INACTION WAS DUE TO PAUCITY OF TIME LEFT AT THAT STAGE SINCE THE ASSESSMENT HAD TO BE FRAMED BY MARCH 31, 1999. IT HAS BEEN POINTED OUT THAT SEVERAL ADJOURNMENTS HAD BEEN GRANTED BY THE ASSESSMENT OFFICER ON THE ASKING OF THE ASSESSEE. THE TIMING OF THE ASSESSEE'S SAID LETTER IS MOST SUSPECT. GENERALLY SPEAKING, IT IS INCUMBENT ON TH E ASSESSING OFFICER TO MANAGE HIS SCHEDULE, WHILE GRANTING ADJOURNMENTS, IN SUCH A MANNER THAT HE DOES NOT RUN OUT OF TIME FOR DISCHARGING THE DUTIES CAST ON HIM BY THE STATUTE. IN THE PRESENT CASE, TH E DETAILS HAD BEEN FURNISHED TO THE ASSESSING OFFICER MUCH BEFORE MARCH, 1999, BUT HE FAILED TO REACT TO THE SHIFTING OF THE BURDEN TO INVESTIGATE INTO THE CREDITWORTHINESS OF THE SHARE APPLICANTS. THEREFORE , THE APPEAL IS DISMISSED.' FROM PERUSAL OF THE ABOVE DECISION AGAIN IT IS NOTI CED THAT THE HON'BLE HIGH COURT HAS ALLOWED THE APPEAL ON THE GROUND THAT THE ASSESSING OFFICER DID NOT CARRY OUT ANY INQUIRY INTO THE INCOME-TAX RECORD OF THE PERSONS WHO HAVE GIVEN THE PERMANENT ACCOUNT NUMBER/WARD NUMBER IN ORDER TO ASCERTAIN THE NON- EXISTENCE OF THE SHARE APPLICANTS IN QUESTION. THE ASSESSING OFFICER HAS NEITHER CONTROVERTED NOR DISAPPROVED THE MATERIAL FILED BY THE ASSESSEE. HOWEVER, THE FACTS AS MENTIONED EARLIER IN THE INSTANT CASE ARE DIFFERENT AS THE ASSESSING OFFICER HAS ISSUED SUMMONS WHICH RETURNED UNSERVED WITH THE REMARKS 'NO SUCH PERSON IN THE ABOVE ADDRESS'. THE APPELLANT HAS ALSO FAILED TO PRODUCE THESE PERSONS. SOME OF THE SHAREHOLDERS ARE APPARENTLY ENTRY PROVIDERS TO THE RECIPIENT AS WAS STATED BY THEM BEFORE THE INVESTIGATION WING. THUS IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS NOT CARRIED OUT ENQUIRIES EXCEPT ISSUING SUMMONS. THUS AGAIN THE FACTS OF THE PRESENT CASE ARE DIFFERENT.' ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 9 9. COMING TO THE FACTS OF THE PRESENT CASE IT IS NOT A STRAIGHT CASE OF APPLICABILITY OF THE DECISIONS OF VARIOUS C OURTS ON WHICH THE ASSESSEE/CIT(A) RELIED ON. THE FACTS ARE DIFFE RENT AND, THEREFORE, THE CASE HAS TO BE DEALT WITH DIFFERENTL Y. IT IS TRUE THAT THE ASSESSING OFFICER IS NOT ABLE TO ESTABLISH THAT THE ENTIRE AMOUNT RECEIVED AS SHARE SUBSCRIPTION IS THE OWN MO NEY OF THE ASSESSEE COMPANY. BUT HE HAS REACHED A DEAD END/EN QUIRY AND THE BURDEN HAS SHIFTED ON TO THE ASSESSEE. IF WE SEE THE FACTS OF THE CASE IN THE LIGHT OF THE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. (SUPR A), THEN IT WILL BE NOTICED THAT THE ASSESSEE HAS GIVEN THE IDENTITY OF THE SUBSCRIBERS BUT GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE TRANSACTION IS NOT ESTABLIS HED. BEING SO, IN OUR OPINION, THE DELETION OF ADDITION BY THE CIT (A) IS NOT JUSTIFIED. 10. IN OUR OPINION, IN SPITE OF OPPORTUNITIES GIVEN, TH E ASSESSEE HAVING FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE PARTIES, THE ADDITION IS TO BE SUSTAINED. WE PLACE RELIANCE ON THE JUDGEMENT OF DELHI HIGH CO URT FULL BENCH IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (2 04 ITR 98) AND ALSO ON THE ORDER OF THE DELHI BENCH IN THE CAS E OF EKTA AGRO-INDUSTRIES LTD. V. ITO (8 DTR 239) (DELHI). A CCORDINGLY, THE ORDER OF THE CIT(A) IS REVERSED AND THAT OF THE ASS ESSING OFFICER IS RESTORED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2012. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH DECEMBER, 2012 TPRAO ITA NO. 1846/HYD/2011 M/S. PENNAR AQUA EXPORTS PVT. LTD. =========================== 10 COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE - 16(3), 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-4. 2. M/S. PENNAR AQUA EXPORTS PVT. LTD., PLOT NO. 171, 3 RD FLOOR, ROAD NO. 8, DHANALAXMI COLONY, MAHENDRA HILL S, EAST MAREDPALLY, HYDERABAD. 3. THE COMMISSIONER OF INCOME - TAX (APPEALS) - V, HYDERABAD. 4. THE COMMISSIONER OF INCOME - TAX - IV, HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD.