ITO, Ward - 1(2), Kolkata, Kolkata V. M/s. India Form Centre Pvt. Ltd., Kolkata

ITA 1985/KOL/2010

• Counselvise Citation: 198523514 RSA 2010
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2010
• Court: TRIBUNAL
• Department Lawyers: BASUDEB HAZRA
• Assessee Lawyers: SUBASH AGARWAL
• Keywords: Unexplained cash credit; Unexplained investment; Onus to prove

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , KO LKATA [ . . . . . .. . , ,, , . .. . ! ! ! !. .. . , , , , '# ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI C.D. RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO. 1985 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2006-07 INCOME-TAX OFFICER, WARD-1(2), KOLKATA. M/S.INDIA FORM CENTRE PVT. LTD. KOLKATA. (PAN-AABCI4726R) (+, / APPELLANT ) - % - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 '/ FOR THE APPELLANT: / SRI BASUDEB HAZRA /0+, 1 2 ' / FOR THE RESPONDENT: / SRI SUBASH AGARWAL. '3 / ORDER ( . . . . . .. . ), (B.R.MITTAL), JUDICIAL MEMBER : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSME NT YEAR 2006-07 AGAINST THE ORDER OF LD. C.I.T.(A)-I, KOLKATA DATED 12/08/2010. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS AGAINST LD. C.I.T.(A)S ACTION IN DELETIN G THE ADDITION OF ` 25,00,000/- MADE BY THE A.O. U/S. 68 OF THE ACT. THE GROUNDS RAISED IN THIS REGARD READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-I, KOLKATA ERRED IN DELETING THE ADDITION OF RS.25,00,000/- MADE ON ACC OUNT OF UNPROVED CASH CREDIT U/S. 68 OF THE I.T. ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A)- I, KOLKATA, WAS NOT JUSTIFIED IN ALLOWING RELIEF TO THE ASSESSEE IG NORING THE FACT THAT SHARE CAPITAL/ APPLICATION MONEY RECEIVED BY THE ASSESSEE HAS ORIG INATED FROM THE UNACCOUNTED CASH DEPOSIT ACCOUNTS IN THE NAMES OF PERSONS WHO W ERE FOUND NOT TRACEABLE. 2. THE FACTS, IN BRIEF, RELATING TO THE ABOVE ISSU E ARE THAT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE ASSES SEE-COMPANY CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY OF ` 25,00,000/- AGAINST ISSUE OF 2,50,000 SHARES @ RS.10/- PER SHARE FROM THE FOLLOWING PARTIES THROUG H BANKING CHANNEL, THE DETAILS OF WHICH ARE AS UNDER :- 2 SL. NAME & ADDRESS PAN N O. SHARES RATE PER AMOUNT RECEIVED NO . OF SHARE APPLICANTS APPLIED FOR SHARE( ` ) WITH APPLICATION ( ` ) 1. SIGNET MERCHANDISE (P) LTD. AADCS7277F 50000 10 5,00,000 71, RAJ KR. MUKHERJEE ROAD, KOLKATA-700 035. 2. NOVOFLEX CABLE CARE SYSTEM AAACN9315J 50000 10 5,00,000 P.LTD.71, 52, WESTON STREET, KOLKATA-700 012. 3. MAHESHWARI MERCHANTS (P) LTD. AABCB6860C 50000 10 5,00,000 32, EZRA STREET, KOLKATA-700001 4. STARDOX VINIMAY (P) LTD. AAECS0352C 100000 10 10,00,000 P.LTD.71, 52, WESTON STREET, ______ ________ KOLKATA-700 012. 250000 25,00,000 ALL THE SHARE APPLICANTS ARE ASSESSED TO INCOME-TAX AND THE TRANSACTIONS WERE THROUGH BANKING CHANNELS. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE A.O. ISSUED NOTICES U/S. 131 OF THE ACT TO ALL THE ABOVE SHARE APPLICAN TS AND AS STATED BY THE A.O., IN RESPONSE TO THOSE NOTICES, THE ABOVE SHARE APPLICAN TS EITHER DID NOT RESPOND OR NOTICE RETURNED UNSERVED WITH THE POSTAL REMARK NOT KNOWN . THE A.O. THEREAFTER ISSUED NOTICE DATED 24/12/2008 ON THE ASSESSEE REQUIRING IT TO EX PLAIN THE RECEIPT OF SHARE APPLICATION MONEY FROM THE AFORESAID PARTIES AND AS TO WHY SUCH RECEIPT OF ` 25,00,000/- SHOULD NOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF TH E ACT IN THE HANDS OF THE ASSESSEE. IN REPLY, THE ASSESSEE FILED A WRITTEN EXPLANATION STA TING THAT THE SHAREHOLDERS HAVE NOT RECEIVED ANY NOTICE U/S. 131 OF THE ACT, EXCEPT M/S . STARDOX VINIMAY (P) LTD., WHO HAS ALREADY APPEARED BEFORE THE A.O. ON 23/12/2008. TH E ASSESSEE FURNISHED NECESSARY PAPERS FROM THE OTHER SHAREHOLDERS IN SUPPORT OF TH EIR MAKING APPLICATION FOR SHARES INCLUDING THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS AND STATED THAT THE SHARE APPLICANTS WERE GENUINE. THE A.O., HOWEVER, H ELD THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS ACTUALLY THE UND ISCLOSED CASH OF THE ASSESSEE WHICH CIRCULATED THROUGH VARIOUS LAYERS AND FINALLY RETUR NED TO THE ASSESSEE-COMPANY IN THE FORM OF SHARE CAPITAL/APPLICATION. HE, THEREFORE, TREATED THE ENTIRE AMOUNT OF SHARE APPLICATION MONEY OF ` 25,00,000/- AS ASSESSEES UNDISCLOSED MONEY AND ADD ED THE SAME TO ITS TOTAL INCOME U/S. 68 OF THE ACT. 3 3. THE ASSESSEE CAME IN APPEAL BEFORE THE LD. C.I. T.(A) AND REPUDIATED THE OBSERVATIONS OF THE A.O. BY FILING SEVERAL EVIDENCE S IN SUPPORT OF RECEIPT OF SHARE APPLICATION MONEY AND ALSO RELYING UPON SEVERAL JUD ICIAL PRONOUNCEMENTS IN SUPPORT THEREOF. THE SUBMISSIONS OF THE ASSESSEE AND CASE L AWS RELIED UPON ARE MENTIONED ON PAGES 5 TO 8 OF THE APPELLATE ORDER. THE ASSESSEE, THEREFORE, SUBMITTED TO DELETE THE ENTIRE ADDITION MADE BY THE A.O. THE LD. C.I.T.(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REASONING GIVEN BY THE A.O. AS ALS O MATERIAL PLACED BEFORE HIM DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED AND WEIGHED BOTH THE ARGUMENTS OF THE LD. AR AS WELL AS THAT OF THE A.O. BY FURNISHING DETAILS OF SHARE CAPITAL RA ISED DURING THE YEAR ALONG WITH THE ANNUAL ACCOUNTS, RELEVANT BANK STATEMENT, ACKNOWLED GEMENTS OF FILING OF INCOME TAX RETURN OF THE INVESTING PARTIES THE APPELLANT H AD PRIMARILY DISCHARGED THE ONUS ON IT. FURTHER, IN VIEW OF THE COURT CASES QUOTED BY THE LD. A/R, THE SHARE CAPITAL RAISED BY THE APPELLANT CANNOT BE TREATED ON THE BA SIS OF THE A.O.S ORDER, AS THE UNDISCLOSED MONEY OF THE ASSESSEE U/S 68 OF THE INC OME TAX ACT, 1961. RELIANCE IS PLACED ON M/S OFFSHORE FINVEST LTD. VS. ITO I.T.A.NO. 1272/KOL/2009, I.T.A.T. B BENCH, KOLKATA ORDER DA TED 09-04-2010. IN THIS CASE THE TRIBUNAL HAD ALLOWED THE APPEAL BY RELYING ON T HE DECISION OF THE APEX COURT IN CIT VS. LOVELY EXPORTS (P) LTD. 216 CTR 195 (SC). IN CONCLUSION AND IN THE LIGHT OF THE ABOVE ETC. THE APPEAL GOES IN FAVOUR OF THE APPELLANT AND IS TREATED AS ALLOWED. HENCE THIS APPEAL BY THE DEPARTMENT. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE A.O. HE SUBMITTED THAT THE LD. C. I.T.(A) ERRED IN DELETING THE ADDITION OF ` 25,00,000/- MADE ON ACCOUNT OF UNPROVED CASH CREDIT U/S. 68 OF THE ACT. HE FURTHER SUBMITTED THAT THE LD. C.I.T.(A) WHILE DELETING THE ADDITION HAS IGNORED THE FACT THAT THE SHARE CAPITAL/APPLICATION MONEY RECEIVED BY THE ASS ESSEE HAS ORIGINATED FROM THE UNACCOUNTED CASH DEPOSIT ACCOUNTS IN THE NAMES OF P ERSONS WHO WERE FOUND NOT TRACEABLE AND SUCH MONEY AFTER CIRCULATION THROUGH VARIOUS LAYERS FINALLY RETURNED BACK TO THE ASSESSEE IN THE FORM OF SHARE CAPITAL/APPLIC ATION MONEY. EVEN THE ASSESSEE WAS UNABLE TO PRODUCE THE PERSONS CLAIMED TO HAVE MADE INVESTMENTS WITH THE ASSESSEE IN THE FORM OF SHARE APPLICATION MONEY FOR EXAMINATION IN SPITE OF SEVERAL OPPORTUNITIES PROVIDED TO IT. HE FURTHER POINTED OUT THAT MOST OF THE SHARE APPLICANTS EXIST WITH NO REAL BUSINESS ACTIVITY AND THESE COMPANIES WERE USED ONL Y FOR CIRCULATION OF ASSESSEES 4 UNACCOUNTED MONEY. HE, THEREFORE, SUBMITTED THAT T HE ORDER OF THE LD. C.I.T.(A) DELETING THE ADDITION OF ` 25,00,000/- SHOULD BE REVERSED AND THAT OF A.O. BE RESTORED. 5. THE ASSESSEES LD. A.R., ON THE OTHER HAND, REL IED ON THE ORDER OF LD. C.I.T.(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. A PAPER BOOK HAS ALSO BEEN FILED CONTAINING THE FOLLOWING DOCUMENTS, WHICH WERE AS W ELL FILED BEFORE THE AUTHORITIES BELOW :- NATURE OF DOCUMENTS PAGE NO. (A) COPY OF E-RETURN ACKNOWLEDGEMENT & FINAL ACCO UNTS FOR - 1 TO 6 A.Y. 2006-07 OF THE ASSESSEE (B) COPY OF LIST OF SHARE APPLICANTS WITH DETAIL S - 7 (C) COPY OF BANK STATEMENT FOR THE PERIOD 20/2/20 06 TO - 8 27/6/2006 OF THE ASSESSEE WITH VIJAYA BANK. (D) COPIES OF I.T. RETURN ACKNOWLEDGEMENTS, PAN CARDS, BANK STATEMENTS ETC. OF THE SHARE APPLICANTS - I) M/S. SIGNET MERCHANDISE (P) LTD. - 9 TO 20 II) M/S. NOVOFLEX CABLE CARE SYSTEMS LTD. - 21 TO 33 III) M/S. MAHESHWARI MERCHANTS (P) LTD. - 34 TO 43 IV) M/S. STARDOX VINIMAY (P) LTD. - 44 TO 5 3 (E) COPIES OF SHARE ALLOTMENT LETTERS WITH DISTIN CTIVE NOS. - 54 TO 57 (F) COPY OF FORM NO.2 (RETURN OF ALLOTMENT) SUBM ITTED TO - 58 TO 60 ROC INTIMATING ALLOTMENT OF SHARES & DETAILS OF SHARE APPLICANTS. THE LD. A/R FURTHER SUBMITTED THAT THE ASSESSEE FUR NISHED NECESSARY PAPERS BEFORE THE A.O. IN RELATION TO RECEIPT OF SHARE APPLICATION MO NEY FROM THE SHARE APPLICANTS BY DISCHARGING ITS ONUS WHICH WILL PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS. FURTHER, THE ASSESSEE CANNOT BE R EQUIRED TO ENQUIRE FROM THE SHARE APPLICANTS ABOUT THE SOURCES OF MONEY FOR INVESTMEN TS MADE TOWARDS SHARE APPLICATION. ALL THE PROCEDURES BEFORE LAUNCHING SHARE APPLICATI ON HAVE BEEN DULY COMPLIED WITH BY THE ASSESSEE AND IN SUCH CIRCUMSTANCES, TREATMENT O F SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM SHARE APPLICANTS AS ASSESSEES UNDISCLOSED CASH PURELY ON SURMISE AND CONJECTURE WAS ARBITRARY AND BAD IN LAW. RELYIN G ON THE FOLLOWING DECISIONS OF HONBLE APEX COURT AS WELL AS COORDINATE BENCHES OF I.T.A.T., KOLKATA, COPIES OF WHICH HAVE BEEN FILED BEFORE US, THE LD. A/R STATED THAT IDENTICAL ISSUE WAS CONSIDERED IN 5 THOSE CASES AND THE TRIBUNAL DELETED THE ADDITION M ADE ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY :- CIT VS. LOVELY EXPORTS (P) LTD. [216 CTR 195 (SC )] ITO VS. DIPAJYOTI (P) LTD. [ITA NO. 1277/KOL/2008 , ORDER DATED 28/1/2009] OFFSHORE FINVEST LTD. VS. ITO [ITA NO.1272/KOL/2 009, ORDER DATED 9/4/2010] ITO VS. ROSEBERRY MERCANTILE (P) LTD. [ITA NO.21 19/KOL/09, ORDER DT.18/5/10] ITO VS. SANCHETI PROJECTS P. LTD. [ITA NO. 179/K OL/2010, ORDER DATED 26/11/10] HE, THEREFORE, SUBMITTED THAT THE LD. C.I.T.(A) HAS RIGHTLY DELETED THE ADDITION OF ` 25,00,000/-, WHICH SHOULD BE UPHELD. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE-COMPANY DURING THE Y EAR UNDER APPEAL RAISED ITS SHARE CAPITAL BY WAY OF RECEIVING SHARE APPLICATION MONEY AGAINST 2,50,000 SHARES AGGREGATING TO ` 25 LAKHS FROM FOUR PARTIES, DETAILS OF WHICH ARE GI VEN HEREINABOVE. HOWEVER, WHILE PASSING THE ASSESSMENT ORDER, THE A. O. TREATED THE SHARE APPLICATION MONEY OF ` 25,00,000/- RECEIVED FROM THE SAID PARTIES AS UNEXP LAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. THE A.O. DISBELIEVED THE SAI D INTRODUCTION OF CAPITAL ON THE PREMISE THAT THE SHARE CAPITAL/APPLICATION MONEY RE CEIVED BY THE ASSESSEE-COMPANY WAS ACTUALLY THE UNDISCLOSED CASH OF THE ASSESSEE WHICH CIRCULATED THROUGH VARIOUS LAYERS AND FINALLY RETURNED BACK TO THE HAND OF THE ASSESS EE-COMPANY IN THE FORM OF SHARE CAPITAL/APPLICATION. FURTHER, NONE OF THE ACCOUNTS HOLDER OF CASH DEPOSITS ACCOUNTS WAS TRACEABLE AT THE ADDRESS MENTIONED IN THE BANK ACCO UNT. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE A.O. AND ALSO PERUSED THE DOCUMENT S FILED IN THE PAPER BOOK. THERE IS NO DISPUTE THAT ALL THE SHARE APPLICANT-COMPANIES A RE ASSESSED TO TAX AND THEIR PAN AND ACKNOWLEDGEMENT OF I.T. RETURN ALONG WITH THEIR AUD ITED BALANCE SHEET, P/L ACCOUNT BANK STATEMENT SHOWING TRANSACTION ETC. WERE MADE A VAILABLE TO THE A.O. THE ASSESSEE ALSO FILED DETAILS OF INVENTORIES AS AT 31/3/2006 O F THE SHARE APPLICANTS AND IT IS EVIDENT FROM SUCH INVENTORIES THAT THE SHARE APPLICANTS HAV E ALSO PURCHASED SHARES OF SEVERAL OTHER COMPANIES IN THE ASSESSMENT YEAR UNDER CONSID ERATION. THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY IT. IN ORDER TO DISCH ARGE THIS BURDEN, THE ASSESSEE IS 6 REQUIRED TO PROVE (I) THE IDENTITY OF THE SHARE-HOL DER, (II) THE GENUINENESS OF THE TRANSACTION, AND (C) THE CREDITWORTHINESS OF THE SH AREHOLDERS. IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDUAL, SOME DOCUMEN TS WILL HAVE TO BE FILED OR THE SHAREHOLDER WILL HAVE TO BE PRODUCED BEFORE THE A.O . TO PROVE HIS IDENTITY. IF THE CREDITOR/SUBSCRIBER IS A COMPANY, THEN THE DETAILS IN THE FORM OF REGISTERED ADDRESS OR PAN IDENTITY, ETC., CAN BE FURNISHED. WHEN THE MONE Y IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE C HANNELS, THE GENUINENESS OF THE TRANSACTION WOULD BE PROVED. OTHER DOCUMENTS SHOWIN G THE GENUINENESS OF THE TRANSACTION COULD BE COPIES OF THE SHARE ALLOTMENT ADVICE, INTIMATION TO ROC IN PRESCRIBED RETURN FORM, ETC. SO FAR AS THE PRESENT CASE BEFORE US IS CONCERNED, AS DISCUSSED ABOVE, ALL THESE DOCUMENTS WERE FURNISHED BEFORE THE LOWER AUTHORITIES AND ALSO FILED IN THE PAPER BOOK. CONSIDERING THE ABOVE , IN OUR OPINION, THE EXISTENCE/ IDENTITY OF THESE SHARE APPLICANT COMPANIES AND THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. 6.1. AS FAR AS THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE SHARE APPLICANT/ SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PROD UCING THE BANK STATEMENT OF SUCH SUBSCRIBERS SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. ONCE IT IS PROVED BY DOCUMENT S, THE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. T HEREAFTER, IT IS FOR THE A.O. TO SCRUTINIZE THE SAME AND IN CASE HE NURTURES ANY DOU BT ABOUT THE VERACITY OF THESE DOCUMENTS, TO PROBE THE MATTER FURTHER. WE OBSERVE THAT ALTHOUGH THE A.O. HAS DOUBTED CIRCULATION OF ASSESSEES UNDISCLOSED MONEY THROUGH VARIOUS LAYERS WHICH FINALLY RETURNED TO THE ASSESSEE, BUT NO COGENT MATERIAL EX CEPT SUSPICION COULD BE BROUGHT ON RECORD AND HE ALSO COULD NOT POINT OUT ANY DISCREPA NCY BETWEEN ISSUE OF CHEQUES AGAINST SHARE APPLICATIONS AND REMITTANCE THEREOF THROUGH H IS BANK ACCOUNT. TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE ASPECTS, THERE HAVE TO BE SOME COGENT REASONS AND MATERIALS FOR THE A.O. AND HE CANNOT GO INTO THE REALM OF SUSPICION. IN THE PAPER BOOK, THE ASSESSEE HAS FILED COPIES OF BANK S TATEMENTS OF EACH OF THE SHARE APPLICANTS. ON PERUSAL OF THE SAME, WE OBSERVE THA T IN THE CASE OF M/S. SIGNET MERCHANDISE PVT. LTD., BEFORE DEBITING ITS ACCOUNT BY ` 5 LAKHS ON 21/3/2006 AGAINST CHEQUE PAYMENT TO THE ASSESSEE-COMPANY, THERE WAS A CREDIT BALANCE OF ` 16,85,678/- IN 7 ITS BANK ACCOUNT. IN THE CASE OF SHARE APPLICANT M/ S. NOVOFLEX CABLE CARE SYSTEMS LTD., ITS BANK BALANCE BEFORE PAYMENT OF SHARE APPLICATIO N MONEY OF ` 5 LAKHS ON 18/3/2006 WAS ` 24,78,944.04. SIMILARLY, THE CREDIT BALANCE IN THE BANK ACCOUNT OF M/S. MAHESHWARI MERCHANTS PVT. LTD. BEFORE PAYMENT OF SH ARE APPLICATION MONEY OF ` 5 LAKHS ON 18/3/2006 WAS ` 5,37,534/- AND IN THE CASE OF M/S. STARDOX VINIMAY PVT. LTD., THE CREDIT BALANCE IN ITS BANK ACCOUNT BEFORE PAYME NTS OF ` 5 LAKHS EACH ON 29 TH & 30 TH MARCH, 2006, TOTALLING TO ` 10 LAKHS, WAS ` 10,67,019.57. ON THE FACE OF THE ABOVE DOCUMENTARY EVIDENCES, IN OUR CONSIDERED OPINION, T HE CREDITWORTHINESS OR FINANCIAL STRENGTH OF EACH OF THE SHARE APPLICANTS COULD NOT BE SUSPECTED; MORE SO WHEN THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE. EVEN THE BANK STATEMENTS REVEALED THAT THE ASSESSEE HAD RECEIVED CHEQUES FROM THE SHARE AP PLICANTS. FURTHER, THE RECEIPT OF SHARE APPLICATION MONEY HAS BEEN DULY RECORDED IN T HE BOOKS OF THE ASSESSEE-COMPANY AND THE PAYMENT OF SHARE APPLICATION MONEY WAS ALSO DULY RECORDED IN THE AUDITED ACCOUNTS OF EACH OF THE SHARE APPLICANTS. CONSIDER ING THE ABOVE EVIDENCE ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NO T ONLY PROVED THE IDENTITY OF SHARE APPLICANTS BUT HAS ALSO ESTABLISHED THE CREDITWORTH INESS OF SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS. THEREFORE, WHEN AL L THE INGREDIENTS CONTAINED IN SEC. 68 OF THE ACT ARE FULFILLED, THERE IS HARDLY ANY SCOPE TO INVOKE THAT SECTION ALLEGING INTRODUCTION OF UNEXPLAINED FUND BY WAY OF SHARE AP PLICATION, MORE SO WHEN NO EVIDENCE COULD BE BROUGHT ON RECORD BY THE DEPARTME NT TO THE CONTRARY. IN THIS CONNECTION, WE FEEL IT PERTINENT TO REPRODUCE THE O BSERVATION OF THEIR LORDSHIPS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. OAS IS HOSPITALITIES P. LTD. [(2011) 333 ITR 119 (DEL)] AS UNDER :- HELD, DISMISSING THE APPEAL, THAT THE ADDITION WAS RIGHTLY DELETED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL. REQUISITE DOCUMENTS WERE FURNISHED SHOWING THE EXISTENCE OF THE SHAREHOLDERS FROM ACCO UNTS AND EVEN THEIR INCOME-TAX DETAILS. FROM BANK ACCOUNTS OF THESE SHAREHOLDERS, IT WAS FOUND THAT THEY HAD DEPOSITED CERTAIN CASH AND THE SOURCE THEREOF WAS Q UESTIONABLE. THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER PROBE WHICH HE FAI LED TO DO. MOREOVER, THE REMEDY WITH THE DEPARTMENT LAY IN REOPENING THE CAS E OF THE INVESTORS AND THE ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSE SSEE. 6.2. IN THIS CONNECTION, WE MAY REFER SOME OTHER J UDICIAL PRONOUNCEMENTS TO HOLD THAT THE ASSESSEES CASE IS NOT A FIT CASE WHERE PROVISI ONS OF SEC. 68 OF THE ACT CAN BE 8 ATTRACTED. THE HONBLE RAJASTHAN HIGH COURT HAS HEL D IN THE CASE OF BARKHA SYNTHETICS LTD. VS. ACIT [2005] 197 CTR 432 (RAJ.) THAT THE PR INCIPLE RELATING TO BURDEN OF PROOF CONCERNING ASSESSEE IS THAT WHETHER THE MATTER CONC ERNS THE MONEY RECEIPTS BY WAY OF SHARE APPLICATION FROM INVESTORS, THROUGH BANKING C HANNELS, ASSESSEE HAS TO PROVE EXISTENCE OF PERSONS IN WHOSE NAME THE SHARE APPLIC ATION IS RECEIVED. ONCE THE EXISTENCE OF INVESTOR IS PROVED, IT IS NO FURTHER B URDEN OF THE ASSESSEE TO PROVE WHETHER THAT PERSON ITSELF HAS INVESTED THE SAID MONEY OR S OME PERSON MADE INVESTMENT IN THE NAME OF THAT PERSON. THE BURDEN THEN SHIFTS ON REVE NUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM ASSESSEE-COMPANY ITSELF. IN THE CASE BEFORE US, DEPARTMENT DOUBTS INTRODUCTION OF SHARE CAPITAL BY THE SHARE APPLICAN TS WHEN IT IS STATED BY THE A.O. THAT THE SHARE CAPITAL/APPLICATION MONEY RECEIVED BY TH E ASSESSEE COMPANY IS ACTUALLY THE UNDISCLOSED CASH OF THE ASSESSEE COMPANY WHICH CIRC ULATED THROUGH VARIOUS LAYERS AND FINALLY RETURNED BACK TO THE HAND OF THE ASSESSEE C OMPANY IN THE FORM OF SHARE CAPITAL/APPLICATION. HOWEVER, NO EVIDENCE IS BROUG HT ON RECORD BY THE DEPARTMENT THAT THE SHARE APPLICATION MONEY HAS BEEN BROUGHT IN THE NAME OF THE SHARE APPLICANTS BY THE ASSESSEE-COMPANY AND THE ASSESSEE-COMPANY WAS THE U LTIMATE BENEFICIARY OF THE SHARE APPLICATION MONEY RECEIVED FROM DIFFERENT COMPANIES AND THE MONEY TRAIL LED TO THE CASH DEPOSIT OF THE ASSESSEE, WHICH WAS ROUTED BACK THRO UGH INTERMEDIARIES. HONBLE APEX COURT IN THE CASE OF CIT VS. DAULAT RANT RAWATMULI [87 ITR 349 (SC)] HAS HELD THAT ONUS TO PROVE THAT THE APPARENT IS NOT THE REAL IS ON THE PERSON WHO CLAIMS IT TO BE SO. THEREFORE, THE ONUS IS ON THE DEPARTMENT TO PROVE T HAT THE SHARE APPLICATION MONEY SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE-COM PANY BY THE ABOVE NAMED SHARE APPLICANTS IS NOT THE MONEY OF THE SHARE APPLICANTS BUT OF THE ASSESSEE-COMPANY, IS ON THE DEPARTMENT. HOWEVER, THE DEPARTMENT HAS NOT BRO UGHT ANY MATERIAL ON RECORD TO ESTABLISH THE SAME. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE A.O. DOUBTED THE GENUINENESS OF THE SHARE APPLICATION MO NEY ON SURMISES AND CONJECTURE AND HAS NOT BROUGHT ANY COGENT MATERIAL ON RECORD TO ES TABLISH HIS SUCH DOUBT THAT THE ASSESSEES OWN UNACCOUNTED MONEY CAME BACK TO IT BY WAY OF FAKE INTRODUCTION OF SHARE CAPITAL. 6.3. THIRD MEMBER DECISION OF I.T.A.T., JODHPUR BEN CH IN THE CASE OF POLYMERS (P) LTD. VS. DCIT [111 TTJ 112] HAS HELD THAT IN RESPEC T OF SHARE APPLICATION MONEY, 9 ASSESSEE-COMPANY HAS TO PROVE EXISTENCE OF PERSONS IN WHOSE NAME SHARE APPLICATION IS RECEIVED. NO BURDEN IS CAST ON THE ASSESSEE TO PROV E WHETHER THAT PERSON HIMSELF HAS INVESTED OR SOME OTHER PERSON HAS MADE INVESTMENT I N HIS NAME. THE BURDEN TO PROVE THAT THE MONEY DID NOT BELONG TO HIM BUT TO SOME BO DY ELSE IS ON THE REVENUE. IT WAS FURTHER HELD THAT IF ANY OF THE SHAREHOLDERS IS FOU ND TO HAVE MADE UNEXPLAINED INVESTMENT, THEN ADDITION OF SUCH INVESTMENT IS REQ UIRED TO BE MADE IN THE HANDS OF THE SHAREHOLDERS AND NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, IT WAS HELD THAT THE A.O. WAS NOT JUSTIFIED IN TREATING THE INVESTMENT M ADE BY THE SEVERAL SHAREHOLDERS IN THE ASSESSEE-COMPANY AS BOGUS AND TO MAKE ADDITION U/S. 68 OF THE ACT. 6.4. THE HONBLE APEX COURT HAS CONSIDERED THE SIM ILAR ISSUE IN THE CASE OF CIT VS. M/S. LOVELY EXPORTS (P) LTD. (SUPRA) AND HELD AS UNDER :- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISC LOSED INCOME UNDER S. 68 OF I.T. ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL L EAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEI VED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GI VEN TO THE A.O., THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMP UGNED JUDGMENT. IN THE CASE UNDER CONSIDERATION BEFORE US, AS STATE D ABOVE, THE ASSESSEE HAS FURNISHED THE DETAILS OF SHAREHOLDERS WITH COMPLETE ADDRESS AND P AN. IN RESPONSE TO NOTICE U/S. 131, AS STATED ABOVE, ONE OF THE SHARE HOLDERS APPEARED IN ONE OCCASION AND OTHER NOTICES RETURNED UNSERVED. HOWEVER, WE OBSERVE THAT THE TRA NSACTIONS ARE DULY RECORDED IN THE AUDITED BOOKS OF ACCOUNTS OF BOTH THE ASSESSEE-COMP ANY AS WELL AS AFORESAID SHARE- APPLICANT COMPANIES, WHO PURCHASED SHARES OF THE AS SESSEE-COMPANY. THEREFORE, NO ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT IS W ARRANTED IN THE CASE OF THE ASSESSEE ON THE GIVEN FACTS AND CIRCUMSTANCES AS DISCUSSED A BOVE. IN VIEW OF THE ABOVE, IN OUR CONSIDERED OPINION, THE ACTION OF THE A.O. IS CONTR ARY TO THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. M/S. LOVELY EXPORTS (P ) LTD. (SUPRA). 6.5. THE LD. A/R ALSO CITED SEVERAL OTHER DECISION S OF COORDINATE BENCH OF I.T.A.T., KOLKATA, COPIES OF WHICH ARE PLACED ON RECORD AND T HESE DECISIONS, ON THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE, IN OUR OPINIO N, ARE ALSO APPLICABLE TO THE CASE OF THE ASSESSEE. 10 6.6. IN VIEW OF ABOVE FACTS AND RESPECTFULLY FOLLO WING THE DECISIONS CITED SUPRA, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO INFIRMI TY IN THE ORDER OF THE LD. C.I.T.(A) IN DELETING THE ADDITION ` 25,00,000/- MADE BY THE A.O. U/S. 68 OF THE ACT. HENCE, WE UPHOLD HIS ORDER AND REJECT THE GROUNDS OF APPEAL T AKEN BY THE DEPARTMENT. 7. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. 4 '3 #5' 6 5% 7 48 THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON 12.08 .2011. SD/- SD/- ( . .. . ! ! ! !. .. . ) '# ( . . . . . .. . ) (C.D.RAO) , ACCOUNTANT MEMBER (B.R.MITTAL) , JUDICIAL MEMBER ( (( (!# !# !# !#) )) ) DATE: 12-08-2011 '3 1 /9 :'9';- COPY OF THE ORDER FORWARDED TO: 1. +, / THE APPELLANT : I.T.O., WARD-1(2), KOLKATA. 2 /0+, / THE RESPONDENT : M/S. INDIA FORM CENTRE PVT. LTD., 2, INDIA EXCHANGE PLACE, R/NO. 12, 2 ND FLOOR, KOLKATA-700 001. 3. 3% () : THE CIT(A)-I, KOLKATA. 4. 3%/ THE CIT, KOL- 5 ?7 /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . 09 // TRUE COPY, '3%5/ BY ORDER, (DKP) @ A / DY/ASSTT. REGISTRAR .