Deem Roll Tech Limited, Ahmedabad V. The DCIT, Circle- 1(1)(2), Ahmedabad

ITA 1856/AHD/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0927 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 16-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: PF JAIN
• Keywords: Unexplained cash credit; Question of law; Accommodation entries; Set aside
• Section: 271(1)(c); 142(1); 133(6); 143(2); 43; 13; 131; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ITA NO.1856/AHD/2019 / ASSTT. YEAR 2012 - 13 DEEM ROLL - TECH LIMITED, C/3/301 - ANUSHRUTI APARTMENT , OPP. NEW YORK TOWER, NR. JAIN MANDIR, S.G. HIGHWAY, THALTEJ, AHMEDABAD - 380054. PAN : AABCD9176A VS D.C.I.T, CIRCLE - 1(1)(2), AHMEDABAD. (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SH R I P .F. JAIN , A.R REVENUE BY : SHRI L.P. JAIN , SR.D .R / DATE OF HEARING : 04 / 12/2020 / DATE OF PRONOUNCEMENT: 11 / 12/2020 / O R D E R PER WASEEM AHMED , ACCOUNTANT MEMBER : THE ASSESSEE BY WAY OF MISCELLANEOUS APPLICATION DATED 07/11/2020 IS SEEKING FOR EARLY FIXATION OF THE CASE FOR HEARING OUT - OF - TURN . 2. THE LD. AR BEFORE US SUBMITTED THAT THE IMPUGNED APPEAL IS ARISING AGAINST THE PENALTY ORDER FRAMED U/S 271(1)(C) OF THE ACT WHICH WAS SUBSEQUENTLY CONFIRMED BY THE ''LD.CIT (A)'' . T HE LD.AR FURTHER SUBMITTED THAT THE QUANTUM ADDITION WITH RESPECT TO WHICH THE PENALTY U/S.271(1)(C) OF THE ACT WAS LEVIED HAS ALREADY BEEN DELETED BY THIS TRIBUNAL IN ITA NO. 961/AHD/2016 VI DE ORDER DATED 26/10/2020. ITA NO.1856/AHD/2019 A.Y . 2012 - 13 2 ACCORDINGLY , THE LD. AR BEFORE US SUBMITTED THAT THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. 2.1 THUS THE ASSESSEE PLEA DED BEFORE US TO FIX THE CASE FOR EARLY HEARING OUT OF TURN . 2.2 THE LD. AR FURTHER CONT ENDED THAT AS THE ISSUE INVOLVE D IN THE PRESENT CASE IS IN FAVOUR OF THE ASSESSEE , THE MATTER CAN BE HEARD ON MERIT TODAY ONLY . 3. ON THE OTHER HAND THE LD. DR DID NOT RAISE ANY OBJECTION IF THE MATTER IS HEARD ON MERIT OUT OF THE TURN. 4. WE HAVE HEARD THE RIVAL CONTENTION S OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. CONSIDERING THE FACT THAT THE ISSUE INVOLVE IN THE IMPUGNED APPEAL IS SIMPLE & COVERED , WE DECIDED TO PROCEED WITH THE MATTER ON MERIT AFTER ALLOWING THE EARLY PETITION FILED BY THE ASSESSEE . COMING TO THE ITA NO.1856/AHD/2019 FOR A.Y. 2012 - 13. THE ISSUE RAISED BY THE ASSESSEE IS THAT THE ''LD.CIT (A)'' ERRED IN CONFIRMING T HE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT FOR RS. 22,71,150/ - ONLY. 5. A T T HE OUTSET WE NOTE THAT THE QUANTUM ADDITION WITH RESPECT TO WHICH THE PENALTY WAS LEVIED BY THE AO AND SUBSEQUENTLY CONFIRMED BY THE ''LD.CIT (A)'' HAS BEEN DELETED BY THIS TRIBUNAL IN ITA NO. 961/AHD/2016 FOR THE ASSESSMENT YEAR 2012 - 13 VIDE ORDER DATED 2 6/10/2020. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: ITA NO.1856/AHD/2019 A.Y . 2012 - 13 3 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE DISPUTE IN THE INSTANT CASE RELATES TO THE SHARE CAPITAL RECEIVED BY THE AS SESSEE IN THE YEAR UNDER CONSIDERATION FROM CERTAIN PARTIES AMOUNTING TO RS. 70,00,000/ - WHICH WAS TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. THE INITIAL ONUS IS UPON THE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MISCH IEF OF SECTION 68 OF THE ACT. THESE ARE: (I) IDENTITY OF THE INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. 15. THE DEPARTMENTS EXERCISE STARTS ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, BY THE ASSESSEE AND THE DEPARTMENT IS REQUIRED TO INVESTIGATE INTO THE FACTS PRESENTED BY THE ASSESSEE.AS PER THE STATUTORY PROVISION OF SECTION 68 OF THE ACT AND JURISPRUDENCE OF THE HON'BLE COURT, IT IS CLEAR THAT PRIMARILY THE ONUS IS ON THE ASS ESSEE TO DISCHARGE THAT THE CREDIT RECEIVED BY IT IS FROM THE SOURCES WHOSE IDENTITY CAN BE PROVED, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITOR IS PROVED BY DOCUMENTARY EVIDENCE. IF THE ASSESSEE PRESENTS ALL THESE DETAILS DU RING THE ASSESSMENT PROCEEDING BEFORE THE AO, THE RESPONSIBILITY SHIFTS TO THE AO TO PROVE IT WRONG. IF AO ACCEPTS SUCH EVIDENCES WITHOUT PROVING IT WRONG, IT CAN BE SAID THAT ASSESSEE HAS DISCHARGED HIS ONUS. IF AO PRESENTS SOME CONTRARY EVIDENCES, THE RE SPONSIBILITY AGAIN SHIFTS UPON THE ASSESSEE TO REBUT SUCH CONTRARY EVIDENCES. 15.1 ADMITTEDLY, IN THE CASE ON HAND, THE ASSESSEE HAS DISCHARGED ITS ONUS BY FURNISHING THE NECESSARY DETAILS SUCH AS COPY OF PAN, DRIVING LICENSE, ITR, CONFIRMATION OF THE PAR TIES ETC. IN SUPPORT OF IDENTITY OF THE PARTIES. THESE DETAILS OF THE PARTIES ARE AVAILABLE ON PAGES 11 TO 79 OF THE PAPER BOOK. SIMILARLY, THERE IS ALSO NO DISPUTE TO THE FACT THAT ALL THE TRANSACTIONS WERE CARRIED OUT THROUGH THE BANKING CHANNEL. WHAT IS THE INFERENCE THAT FLOWS FROM A CUMULATIVE CONSIDERATION OF ALL THE AFORESAID CONTENDING FACTSIS THAT THE ASSESSEE HAS DISCHARGED ITS ONUS IMPOSED UNDER SECTION 68 OF THE ACT. THE DETAILS FILED BY THE ASSESSEE WAS NOT CROSS VERIFIED BY THE REVENUE FROM TH E RESPECTIVE PARTIES DESPITE HAVING THE NECESSARY DETAILS IN ITS POSSESSION. THUS, WE ARE OF THE VIEW, REVENUE CANNOT GO TO HOLD THE ADDITION UNDER SECTION 68 OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CHANAKYA DEVELOPERS REPORTED IN 43 TAXMANN.COM 91 WHEREIN IT WAS HELD AS UNDER: 9. WE ARE IN COMPLETE AGREEMENT WITH CIT (A) AND THE TRIBUNAL BOTH, WHO HAVE CONCURRENTLY HELD THAT THE ONUS WHICH WAS REQUIRED TO BE DISCHARGED ON THE PART OF THE ASSESSEE RESPONDENT WAS DULY DONE. NOT ONLY THE IDENTITY OF THE PERSONS CONCERNED BUT ALSO THE PAN NUMBERS WERE BEFORE THE ASSESSING OFFICER. IN THE EVENT OF ANY FURTHER INQUIRY, IT WAS OPEN TO TH E ASSESSING OFFICER TO MAKE INQUIRY UNDER SECTION 133(6) OF THE ACT. ON ITS CHOOSING NOT TO EXERCISE SUCH POWERS, IT WAS ERRONEOUS ON THE PART OF THE ASSESSING OFFICER TO MAKE ADDITION OF A SUM OF RS. 23,00,000/ - , DESPITE SUCH COGENT EVIDENCES HAVING BEEN PUT - FORTH BY THE ASSESSEE. BOTH THE AUTHORITIES HAVE CONCURRENTLY HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AND MOREOVER, THE ENTIRE ISSUE IS ESSENTIALLY IN THE REALM OF FACTS. NO QUESTION OF LAW, THEREFORE, ARISES AND HENCE THIS ISSUE DESERVES NO FURTHER C ONSIDERATION. 15.2 IN CIT V. ORISSA CORP. (P.) LTD. [1986] 159 ITR 78/25 TAXMAN 80 (SC) , THE SUPREME COURT HELD THAT WHERE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRES SES OF THE ALLEGED CREDITORS AND IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME - TAX ASSESSEE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER AND DID N OT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT - WORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. IT WAS FURTHER HELD THAT THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITORS AND IN T HOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHINGFURTHER. THE FINDINGS AND CONCLUSION OF THE TRIBUNAL WERE UPHELD THAT THE ASSESSEE HAD DISCHARGED THE BURDEN THAT LAY ON HIM. ITA NO.1856/AHD/2019 A.Y . 2012 - 13 4 15.3 IN DEPUTY CIT V. ROHINI BUILDERS [2002] 256 ITR 360/[2003] 127 TAXMAN 523 (GUJ.) , THE HIGH COURT RELYING ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE MATTER OF ORISSA CORP. (P.) LTD. (SUPRA) HELD THAT THE ASSESSEE HAD DISCHARGED T HE INITIAL ONUS WHICH LAYS ON IT IN TERMS OF SECTION 68 OF THE ACT BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNTS NUMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE AND HAS AL SO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. IT WAS HELD THAT MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDITORS COULD NOT BE SERVE D OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GROUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON - GENUINE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON - COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE. 16. FROM THE ABOVE IT IS INFERRED THAT THE PRINCIPLE , WHICH IS MADE APPLICABLE TO ADDITION UNDER SECTION 68 OF THE ACT IS THAT THE INITIAL ONUS IN ON THE ASSESSEE TO DISCHARGE BY PRODUCING THE EVIDENCE WHICH IS REQUIRED OF HIM AND ONCE THE ASSESSEE PRODUCES THE EVIDENCE WHICH IS IN HIS POWER AND POSSESSION AND WHICH EVIDENCE PRIMA FACIE PROVES THE - (I) IDENTITY OF THE CREDITOR; (II) THE CAPACITY/CREDITWORTHINESS OF THE CREDITOR TO ADVANCE THE MONEY; AND (III) THE GENUINENESS OF THE TRANSACTION, THE ONUS SHIFTS TO THE ASSESSING OFFICER TO MAKE FURTHER INQUIR IES. THE ASSESSING OFFICER CANNOT PERFUNCTORILY REJECT THE EVIDENCE PRODUCED AND HAS TO STATE COGENT REASONS FOR SUCH REJECTION. 17. ADMITTEDLY, THE ASSESSEE FILED PART OF THE DOCUMENTS DURING ASSESSMENT PROCEEDINGS AND PART OF THE DOCUMENTS DURING APPEL LATE PROCEEDINGS IN SUPPORT OF SHARE CAPITAL RECEIVED BY IT IN THE YEAR UNDER CONSIDERATION. BUT UNDISPUTEDLY, NEITHER THE AO NOR THE LEARNEDCIT(A) CARRIED OUT ANY VERIFICATION FROM THE RESPECTIVE PARTIES DESPITE HAVING ALL THE NECESSARY DETAILS IN THEIR P OSSESSION. THE QUESTION ARISES WHETHER THE MATTER NEEDS TO BE SET ASIDE TO THE AO FOR FRESH VERIFICATION AND ADJUDICATION, AS REQUESTED BY THE LEARNED DR FOR THE REVENUE, AS THE ASSESSEE HAS FILED THE NECESSARY DOCUMENTS BEFORE THE LEARNED CIT(A). TO OUR M IND, THE ASSESSEE CANNOT BE PENALIZED FOR THE INACTION OF THE REVENUE. 18. THE LEARNED CIT (A) POSSESSES COTERMINOUS POWER WITH THAT OF THE INCOME TAX OFFICER. THE LEARNED CIT (A) CAN DO WHAT THE INCOME TAX OFFICER CAN DO AND ALSO DIRECT AO TO DO WHAT HE /SHE FAILED TO DO. THUS, THE LEARNED CIT - A NEITHER CALLED ANY REMAND REPORT FROM THE AO ON THE ADDITIONAL DOCUMENTS FILED BY THE ASSESSEE NOR CONDUCTED ANY ENQUIRY ON SUCH ADDITIONAL DOCUMENTS BUT REJECTED THE SAME WITHOUT POINTING OUT ANY DEFECT THEREIN. AS SUCH, THE LEARNED CIT (A) AND THE AO ASSUMED THAT THE INCOME DECLARED BY THE SHAREHOLDERS IN THEIR RESPECTIVE RETURNS IS NOT COMMENSURATE TO THE INVESTMENTS MADE BY THEM IN THE ASSESSEE COMPANY. APPARENTLY, THE INFERENCE OF THE AUTHORITIES BELOW APPEARS TO BE CORRECT, BUT TO OUR MIND THAT IS NOT SUFFICIENT TO HOLD THAT THE PARTIES DO NOT HAVE SUFFICIENT CREDITWORTHINESS FOR MAKING SUCH INVESTMENTS IN THE ASSESSEE COMPANY. AS SUCH, IT IS A MATTER OF VERIFICATION WHICH HAS NOT BEEN DONE. 19. WE ALSO NOTE THAT THE ITAT IN THE OWN CASE OF THE ASSESSEE INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES IN ITA NO. 3619/AHD/2015 FOR THE ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 1 ST MARCH 2018 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 8. A PERUSAL OF THE SECTION WOULD INDICATE THAT BASICALLY THIS SECTION CONTEMPLATES THREE CONDITIONS REQUIRED TO BE FULFILLED BY AN ASSESSEE. IN OTHER WORDS, THE ASSESSEE IS REQUIRED TO GIVE EXPLANATION WHICH WILL EXHIBIT NA TURE OF TRANSACTION AND ALSO EXPLAIN THE SOURCE OF SUCH CREDIT. THE EXPLANATION SHOULD BE TO THE SATISFACTION OF THE AO. IN ORDER TO GIVE SUCH TYPE OF ITA NO.1856/AHD/2019 A.Y . 2012 - 13 5 EXPLANATION WHICH COULD SATISFY THE AO, THE ASSESSEE SHOULD FULFILL THREE INGREDIENTS VIZ. (A) IDENTITY O F THE SHARE APPLICANTS, (B) GENUINENESS OF THE TRANSACTION, AND (C) CREDIT - WORTHINESS OF SHARE APPLICANTS. AS FAR AS CONSTRUCTION OF SECTION 68 AND TO UNDERSTAND ITS MEANING IS CONCERNED, THERE IS NO MUCH DIFFICULTY. DIFFICULTY ARISES WHEN WE APPLY THE CON DITIONS FORMULATED IN THIS SECTION ON THE GIVEN FACTS AND CIRCUMSTANCES. IN OTHER WORDS, IT HAS BEEN PROPOUNDED IN VARIOUS DECISIONS THAT SECTION 68 CONTEMPLATES THAT THERE SHOULD BE A CREDIT OF AMOUNTS IN THE BOOKS OF AN ASSESSEE MAINTAINED BY THE ASSESSE E, (B) SUCH AMOUNT HAS TO BE A SUM RECEIVED DURING THE PREVIOUS YEAR, (C) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS, OR (D) THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE ASSESSI NG OFFICER, SATISFACTORY. THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. NOVADAYA CASTLES (P.) LTD. 367 ITR 306 HAS CONSIDERED A LARGE NUMBER OF DECISIONS INCLUDING THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD [1971] 82 ITR 540 (SC). ACCORDING TO THE HON BLE DELHI HIGH COURT BASICALLY THERE ARE TWO SETS OF JUDGMENTS. IN ONE SET OF CASE, THE ASSESSEE PRODUCED NECESSARY DOCUMENTS/EVIDENCE TO SHOW AND ESTABLISH IDENTITY OF THE SHARE - HOLDER AND BANK ACCOUNT FROM WHICH PAYMENT WA S MADE. THE FACT THAT PAYMENT WAS RECEIVED THROUGH BANK CHANNELS, FILED NECESSARY AFFIDAVIT OF THE SHAREHOLDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER COMPANY. BUT THEREAFTER NO FURTHER INQUIRY WAS MADE BY THE AO. THE SECOND SET OF CASES ARE THOSE WHERE THERE WAS EVIDENCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS ONLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD MADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHARE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERRED T O THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. 9. LET US TAKE INTO CONSIDERATION OBSERVATIONS MADE BY THE HON BLE DELHI HIGH COURT IN THE CASE OF SOFTLINE CREATIONS P.LTD. (SUPRA) WHILE T AKING NOTE OF JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. FAIR FINVEST LTD., 357 ITR 146 (DELHI). HON BLE DELHI HIGH COURT MADE FOLLOWING OBSERVATIONS: .. THIS COURT HAS CONSIDERED THE CONCURRENT ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) AS WELL AS THE INCOME - TAX APPELLATE TRIBUNAL. BOTH THESE AUTHORITIES PRIMARILY WENT BY THE FACT THAT THE ASSESSEE HAD PROVIDED SUFFICIENT INDICATION BY WAY OF PERMANENT ACCOUNT NUMBERS, TO HIGHLIGHT THE IDENTITY OF THE SHARE APPLICANTS, AS WELL A S PRODUCED THE AFFIDAVITS OF THE DIRECTORS. FURTHERMORE, THE BANK DETAILS OF THE SHARE APPLICANTS TOO HAD BEEN PROVIDED. IN THE CIRCUMSTANCES, IT WAS HELD THAT THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE SHARE APPLICANTS, THE GENUINENESS OF TRANSACTIO NS AND THEIR CREDITWORTHINESS; THE ASSESSING OFFICER CHOSE TO PROCEED NO FURTHER BUT MERELY ADDED THE AMOUNTS BECAUSE OF THE ABSENCE OF THE DIRECTORS TO PHYSICALLY PRESENT THEMSELVES BEFORE HIM. THE INCOME - TAX APPELLATE TRIBUNAL HAS RELIED UPON A DECISI ON OF THIS COURT IN CIT V. FAIR FINVEST LTD. [2013] 357 ITR 146 (DELHI), WHERE IN SOMEWHAT SIMILAR CIRCUMSTANCES, IT WAS STATED AS FOLLOWS (PAGE 152) 'THIS COURT HAS CONSIDERED THE SUBMISSIONS OF THE PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIO NER OF INCOME - TAX (APPEALS) WOULD REVEAL THAT THE 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 REGISTRAR OF COMPANIES B Y SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPANY'S SHARES, CERTIFICATES BY AUDITORS ETC. UNFORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND THE STATEMENT OF MR. MAHESH GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL ITA NO.1856/AHD/2019 A.Y . 2012 - 13 6 CONCLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST THAT 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 THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CREDIBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY REPORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF MR. MAHESH GARG THAT THE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OF SECTION 68. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCUMSTANCES, 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 EXPORTS (SUPRA) 10. WE ALSO DEEM IT APPROPRIATE TO TAKE NOTE OF SOME OF O BSERVATIONS OF THE HON BLE DELHI HIGH COURT FROM THE DECISION OF FAIR FINVEST LTD. (SUPRA). THE HON BLE COURT HAS NOTICED PROPOSITION LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD., 329 ITR 271 (DELHI) REGARDING NON - PRODUCTION OF SHARE APPLICANTS BEFORE THE AO. THE FOLLOWING OBSERVATIONS ARE WORTH TO NOTE IN THIS CONNECTION THE OBSERVATION OF THE JURISDICTIONAL HIGH COURT IN CASE OF DWARKADHISH INVESTMENT (SUPRA) ARE QUITE RELEVANT WHERE THE COURT HAS OBSERVED THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. FURTHER IN T HE CASE OF CIT VS. VICTOR ELECTRODES LTD. 329 ITR 271 IT HAS BEEN HELD THAT THERE IS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLICANT COMPANIES BEFORE THE A.O. THE REFORE FAILURE ON PART OF THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE SHARE APPLICANT COMPANIES COULD NOT BY ITSELF HAVE JUSTIFIED THE ADDITIONS MADE BY THE AO PARTICULARLY WHEN THE SEVEN SHARE APPLICANT COMPANIES THROUGH THEIR PRESENT DIRECTORS HAVE NOW AGAIN FILED FRESH AFFIDAVITS CONFIRMING THE APPLICATION AND ALLOTMENT OF SHARES WITH RESPECT TO THE TOTAL AMOUNT OF RS.45 LACS. IT IS OBSERVED THAT NO ATTEMPT WAS MADE BY THE AO TO SUMMON THE DIRECTORS OF THE SHARE APPLICANT COMPANIES. MOREOVER, IT IS SETT LED LAW THAT THE ASSESSEE NEED NOT PROVE THE 'SOURCE OF SOURCE'. ACCORDINGLY IT WAS INCUMBENT UPON THE DEPARTMENT TO HAVE ENFORCED ATTENDANCE OF SHRI MAHESH GARG OR THE ERSTWHILE DIRECTORS OF THE SHARE APPLICANT COMPANIES AND CONFRONTED THEM WITH THE EVIDE NCES & AFFIDAVITS RELIED UPON BY THE APPELLANT AND THEREUPON GIVEN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THESE APPLICANTS. 11. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FACTS OF THE PRESENT CASE. A NOTICE UNDER SECTION 143(2) PROVIDING AN OPP ORTUNITY TO MAKE SUBMISSION IN SUPPORT OF RETURN OF INCOME WAS SERVED UPON THE ASSESSEE ON 28.9.2012. THEREAFTER QUESTIONNAIRE UNDER SECTION 142(1) WAS ISSUED ON 26.12.2012. THE AO HAS PASSED ASSESSMENT ORDER ON 21.2.104. HE EXPECTED THE ASSESSEE TO PRODUC E DEPOSITORS ON 14.2.2014 JUST IN A FEW DAYS BEFORE FINALIZATION OF THE ASSESSMENT ORDER. THE HON BLE DELHI HIGH COURT IN ALL THESE CASES HAVE PROPOUNDED THAT IF THE ASSESSEE HAS DISCHARGED PRIMARY ONUS BY SUBMITTING CONFIRMATION, BANK STATEMENTS, COPIES O F INCOME - TAX RETURNS, PAN DATA THEN IT WOULD BE CONSTRUED THAT THE ASSESSEE HAS DISCHARGED PRIMARY ONUS PUT UPON IT BY VIRTUE OF SECTION 68. IT IS THE AO WHO HAS TO CARRY OUT INVESTIGATION AND DEMONSTRATE THAT THESE MATERIALS ARE NOT SUFFICIENT FOR DISCHAR GING THE ONUS CAST UPON ASSESSEE BY SECTION 68. NO SUCH STEPS HAVE BEEN TAKEN BY THE AO. HE SIMPLY ASSUMED THAT SINCE THE ASSESSEE WAS DIRECTED TO PRODUCE APPLICANTS AND IT FAILED TO PRODUCE, THEREFORE, EVERYTHING IS TO BE CONSTRUED AS MANIPULATED. THE HON BLE DELHI HIGH COURT DID NOT APPROVE SUCH STEPS AT END OF THE ASSESSEE. WE ALSO MAKE REFERENCE TO THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOEL SONS GOLDEN ESTATE PVT. LTD., RENDERED ITA NO.1856/AHD/2019 A.Y . 2012 - 13 7 IN TAX APPEAL NO.212 OF 2012 DATED 11.4.2012. IT IS ALSO PERTINENT TO OBSERVE THAT SHARE APPLICANTS IN THE PRESENT CASE ARE INDIVIDUALS FROM SURROUNDING AREAS. THEY ARE NOT SHELL - COMPANIES FROM KOLKATTA, WHO ARE INDULGED IN PROVIDING ACCOMMODATION ENTRIES. TAKING INTO CONSIDERATION ALL THESE FACTS, W E ARE OF THE VIEW THAT THE AO FAILED TO CARRY OUT ANY INQUIRY FOR FALSIFYING EVIDENCE SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS EXPLANATION. THEREFORE, WE ALLOW THIS GROUND OF APPEAL AND DELETE THE ADDITION OF RS.35,00,000/ - . 19.1 IN VIEW OF THE ABOVE, WE ARE NOT IMPRESSED WITH THE FINDING OF THE AUTHORITIES BELOW. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE LEARNED CIT (A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 20. THE SECOND ISSUE RAISED BY THE ASSESSEE IN GROUND NOS. 7 & 8 IS EITHER CONSEQUENTIAL OR GENERAL IN NATURE. THEREFORE, WE DISMISS THE SAME AS INFRUCTUOUS. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 6. ADMITTEDLY THE QUESTION OF PENALTY U/ S.271(1)(C) OF THE ACT ARISES WITH RESPECT TO THE ADDITION MADE DURING THE ASSESSMENT PROCEEDING. IN THE CASE ON HAN D THE QUANTUM ADDITION MADE U/S 68 OF THE ACT FOR RS.70 LACS HAD BEEN DELETED BY US IN THE QUANTUM ORDER AS DISCUSSED ABOVE . A CCORDINGLY WE ARE OF THE VIEW THAT THE PENALTY U/S.271(1)(C)OF THE ACT IS NOT SUSTAINABLE . T HUS THE PENALTY LEVIED BY THE AO IS HERE BY DELETED. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 11 / 12 / 2020 AT AHMEDABAD. SD/ - ( RAJPAL YADAV ) VICE PRESIDENT SD/ - ( WASEEM AHMED ) ACCOUNTANT MEMBER (TRUE COPY) AHMEDABAD; DATED 11 / 12 / 2020 MANISH