DCIT CEN CIR 40, MUMBAI V. GIBS COMPUTERS LTD, MUMBAI

ITA 2066/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3675 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SASMITA MISRA
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Principle of natural justice; Opportunity of cross examination; Additional evidence; Question of law; Accommodation entries; Onus to prove
• Section: 131; 68; 69; 132

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI G BENCH . . , , BEFORE S/SH. B.R. BASKARAN,ACCOUNTANT MEMBER & SANDEEP GOSAIN,JUDICIAL MEMBER /.ITA NO.2066/MUM/2013, /ASSESSMENT YEAR-2007-08 /.ITA NO. 2071/MUM/2013, /ASSESSMENT YEAR- 2008-09 DCIT-CENTRAL CIRCLE-40 ROOM NO.653, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-20. VS M/S.GIBS COMPUTERS LTD. RADHA BHAVAN, 121 NAGINDAS MASTER ROAD MUMBAI-400 023. PAN: AABCG 0096 L ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : S/SHRI RAJIV KHANDELWAL AND NEELKANTH KHANDELWAL / REVENUE BY : MS. SASMITA MISRA--CIT-DR, / DATE OF HEARING : 10.02.2016 / DATE OF PRONOUNCEMENT : 04.03.2016 ORDER . . / PER B.R. BASKARAN, AM - THE REVENUE HAS FILED THESE TWO APPEALS CHALLENGING THE ORDERS PASSED BY LD CIT(A)-36, MUMBAI FOR ASSESSMENT YEARS 2007-0 8 AND 2008-09. SINCE ISSUE URGED IN BOTH THE APPEALS IS IDENTICAL IN NAT URE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF L D CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO U/S 68 OF THE ACT. ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 2 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE HEREIN IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF I NVESTMENTS IN SECURITIES. DURING THE YEARS UNDER CONSIDERATION, THE ASSESSEE HAD RAISED CAPITAL BY WAY OF ALLOTMENT OF PREFERENCE SHARE CAPITAL AND ALSO T HROUGH RECEIPT OF SHARE APPLICATION MONEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED ALL THE DETAILS RELATING TO THE SHARE APPLICATION MONEY AS WELL AS PREFERENCE SHARE CAPITAL., I.E., ACCORDING TO THE ASSESSEE, IT HAS DISCHARGED THE INITIAL BURDEN PLACED UPON IT U/S 68 OF THE ACT. IT APPEARS THAT THE REVENUE HAS CONDUCTED INVESTIGATION IN THE HAND S OF SOME OF THE COMPANIES FROM WHOM THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY AS WELL AS THE PREFERENCE SHARE CAPITAL. IT APPEARS T HAT THE DIRECTORS OF THOSE COMPANIES HAD DEPOSED THAT THEY WERE PROVIDING ONLY ACCOMMODATION ENTRIES ONLY. BASED ON THOSE STATEMENTS, THE AO ASSESSED T HE CASH CREDITS IN THE HANDS OF THE ASSESSEE IN BOTH THE YEARS. THE LD CI T(A), HOWEVER, DELETED THE ADDITION ON THE BASIS OF ORDERS PASSED BY THE TRIBU NAL IN THE HANDS OF THE SISTER CONCERNS OF THE ASSESSEE, VIZ.,M/S CHAT COMP UTERS LTD (ITA NO.3859/MUM/2009 DATED 22-07-2011) AND M/S NETSCAPE SOFTWARE LTD (ITA NO.3852/MUM/2009 DATED 19-10-2011) AND ALSO THE DEC ISION RENDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE RELATING TO AY 2005-06 & 2006-07 PASSED IN ITA NO.1715 AND 3858/MUM/2009. AGGRIEVED, THE R EVENUE HAS FILED THESE APPEALS BEFORE US. 4. WE HAVE GONE THROUGH THE ORDERS PASSED BY LD CIT(A) ON THE ISSUE DISPUTED BEFORE US. FOR THE SAKE OF CONVENIENCE, W E EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY LD CIT(A) FOR THE ASSESSMENT YEAR 2007-08:- GROUND NO.3 IS AGAINST MAKING ADDITION OF RS.5,61 ,00,000/- AND A SUM OF RS.17,50,00,000/-, BEING AMOUNT RECEIVED ON ACCOUNT OF PREFERENCE CAPITAL ON THE GROUND THAT THE. SAME REPRESENTED APPELLANT'S OWN UNACCOUNTED INCOME AND WAS THEREFORE UNEXPLAINED CASH CREDIT U/S.68 O F THE I.T.ACT. LD. A.O. HAS DEALT WITH THIS ISSUE IN GREAT DETAIL AND HAS RELI ED ON THE STATEMENT OF ONE SHRI KISHAN KUMAR VERMA, RESIDENT OF HOWRAH. LD. A.O. HA S ALSO ADVERTED TO THE FACT THAT DIRECTOR OF THE APPELLANT COMPANY, SHRI KAUSHIK: CHHOTA LAL SHAH ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 3 DENIED TO HAVE PAID ANY CASH TO ANY OF THE COMPANIE S. FURTHER, THE LD. A.O. HAS MADE A REFERENCE TO THE OPPORTUNITY GIVEN TO TH E APPELLANT TO CROSS EXAMINE THE SHARE APPLICANTS ON 13.12.2010 AND 21.1 2.2010 RESPECTIVELY. IN THIS CONNECTION, IT IS ALSO PERTINENT TO MENTION T HAT THE APPELLANT VIDE ITS LETTER DATED, 12.12.2010 HAD STATED THE FOLLOWING BEFORE THE A.O. IT IN THIS CONNECTION, WE WOULD LIKE TO INFORM YOU THAT WE HAVE FILED ALL THE RELEVANT DOCUMENTS RECEIVED ON APPLICATION, AND THEREAFTER, AS REQUIRED BY YOU, TO PROVE THE GENUINENESS OF THE TRANSACTIONS - PLEASE REFER OUR LETTER DATED 2 ND DEC. 2010. IN YOUR AFORESAID LETTER YOU HAVE REQUIRED US TO CROSS EXA MINE THE PARTIES WITHOUT CALLING THEM THAT IS, YOU HAVE REQUIRED US TO PRODUCE THE PARTIES, H OWEVER, AS INDICATED EARLIER AND AS YOU ARE AWARE THE COMPANIES ARE BASED IN KOLKATA AND H ENCE, WE CANNOT INSIST THEM TO TRAVEL TO MUMBAI FOR CROSS. EXAMINATION. MOREOVER, THEY A RE YOUR WITNESS AND HENCE, YOU ARE REQUIRED TO PRODUCE THEM FOR CROSS EXAMINATION. FU RTHER, YOU ARE VESTED WITH POWERS UNDER SECTION 131 TO ISSUE THEM SUMMONS AND PRODUCE THEM FOR CROSS EXAMINATION. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. A.R. HAS MADE A DETAILED SUBMISSION IN THE FORM OF 5 SPIRAL BOUND P APER BOOKS WHICH ACCORDING TO THE LD. A.R. WERE AVAILABLE BEFORE THE LD. A.O. AS WELL. THESE PAPER BOOKS BASICALLY CONTAIN THE DETAILS OF AMOUNT RECEIVED, SHARE APPLICATION FORMS, RESOLUTION, MEMORANDUM OF ASSOCIATION, ACKNOWLEDGE MENT OF RETURNS OF INCOME, ANNUAL ACCOUNTS, NET WORTH, BALANCE SHEET, BANK STATEMENTS AS WELL AS CONFIRMATIONS OF VARIOUS SHARE HOLDERS OR THE PE RSONS MAKING SHARE APPLICATION TO WHOM SHARES WERE YET TO BE ALLOTTED. IT HAS FURTHER BEEN STATED BY THE LD. A.R. THAT THE ISSUE OF SHARE APPLICATION MONEY BEING TAXED BY THE LD.A.O. AND W HICH WERE RECEIVED FROM SEVERAL KOLKATA BASED COMPANIES WAS ALSO A SUBJECT MATTER OF APPEAL BEFORE HON'BLE ITAT, MMNBAI IN APPELLANT'S OWN CASE FOR A .Y.2005-06 & 2006-07 AS WELL AS IN TWO OTHER RELATED CASES VIZ. CHAT COMPUT ERS LTD. AND NETSCAPE SOFTWARE LTD. IN ITA NOS. 1715 AND 3858/M/09 DATED 25.01.2012 , ITA NO.3859/M/09 DATED 27.7.2011 AND ITA NO.3852/M/09 D ATED 19.10.2011 RESPECTIVELY. IT HAS BEEN STATED THAT UNDER SIMILA R CIRCUMSTANCES WHERE STATEMENTS OF VARIOUS INDIVIDUALS WERE RECORDED BY THE INVESTIGATION WING AT KOLKATA AND WHERE NO OPPORTUNITY WAS GIVEN TO THE APPEELLANTS TO CROSS EXAMINE THE SHARE APPLICANTS DURING THE COURSE OF A SSESSMENT PROCEEDINGS, HON'BLE ITAT DELETED THE ADDITIONS MADE U/S.68 OF T HE LT. ACT ON THE GROUND THAT THE ENTIRE SHARE APPLICATION MONEY WERE RECEIV ED THROUGH ACCOUNT PAYEE CHEQUE/DRAFT AND THE SHARE APPLICATION MONEY WAS F OUND IN THE BANK ACCOUNT OF THE INVESTING COMPANIES THROUGH ACCOUNT PAYEE C HEQUES AND NOT THROUGH ANY CASH TRANSACTION. HON'BLE ITAT FURTHER HELD THA T STATEMENTS RECORDED DURING THE COURSE OF INVESTIGATION BY THE INVESTIGA TION WING, KOLKATA WITHOUT ANY CORROBORATIVE EVIDENCE HAD NO EVIDENTIARY VALUE . IT MAY BE PERTINENT TO ADVERT TO THE DECISION OF THE HON'BLE ITAT IN THE A PPELLANT'S OWN CASE FOR A.Y.2005-06 & 2006-07 WHERE HON'BLE ITAT. MUMBAI VI DE ORDER DATED 25.01.2012, INTER ALIA, HELD/NOTED AS UNDER:- .. 14. IT IS TO BE NOTED THAT IT IS NOT THE CASE OF A NY ADDITIONAL EVIDENCE OR FRESH MATERIAL PRODUCED BY ANY OF THE PARTIES BEFORE US WHICH REQ UIRES EXAMINATION OR INVESTIGATION TO VERIFY THE CORRECTNESS OF THE NEW FACTS FIRST T IME BROUGHT BEFORE US. THE CASE OF THE REVENUE IS THAT THE CASH MOVED FROM THE ASSESSEE RO UTED THOUGH VARIOUS. LEVEL AND ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 4 THEN REACHED TO THE ASSESSEE IN THE FORM OF SHARE A PPLICATION MONEY. THE STAND OF THE REVENUE IS NOT IN CONSONANCE WITH THE STATEMENT S OF THE DIRECTORS OF THE INVESTING COMPANIES WHICH IS THE BASIS OF THE INVESTIGATION REPORT AS WELL AS ADDITION BY THE AO. IN THEIR STATEMENTS THE DIRECTORS STATED TO HAVE R ECEIVED CASH FROM ASSESSEE FOR INVESTING IN THE PREFERENTIAL SHARE OF THE ASSESSE E COMPANY, WHEREAS, THIS FACT WAS NOT FOUND TO BE CORRECT FROM THE RECORD AND THE REV ENUE ALSO TOOK A STAND THAT THE CASH WAS NOT DIRECTLY GIVEN TO THE INVESTING COMPAN IES BUT ROUTED THROUGH VARIOUS LEVELS. WHEN IT WAS FOUND BY THE INVESTIGATING UNIT AS WELL AS RECORDED BY THE AO THAT THE FUND IN THE BANK ACCOUNT OF THE INVESTING COMP ANIES WAS DEPOSITED THROUGH A/ C PAYEE CHEQUES THAN IT IS APPARENT THAT THE STATEME NTS OF THE DIRECTORS ARE IN TOTAL CONTRADICTION OF THE FACTS EMERGED FROM THE RECORD AS WELL AS STAND OF THE REVENUE. HENCE THE SAID STATEMENTS DO NOT SUPPORT THE CASE O F THE REVENUE AND THE RELIANCE PLACE BY THE AO ON SUCH STATEMENTS IS HIGHLY MISPLA CED AND IMPROPER. WHEN THE STAND OF THE REVENUE IS IN TOTAL CONTRACTION OF THE MATERIAL ON RECORD THEN IN VIEW OF THE LATEST DECISION OF THE HON'BLE DELHI HIGH COUR T IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE CAN BE DECIDED ON MERIT AND NEED NOT TO BE REMAND TO THE RECORD OF THE AO BECAUSE AT THE TIME OF THE ORDER FOR THE AY 2005-06, THE COORDINATE BENCH OF THE TRI BUNAL WAS NOT HAVING THE BENEFIT OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE CITED SUPRA. FURTHER IN VIEW OF THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CA SE OF RAJEH BABUBHAI DAMANIA (SUPRA), WE SEE NO REASON FOR GIVING THE A.O. ANY F URTHER INNINGS TO FILL UP THE LACUNAS OR LAPSES IN THE ASSESSMENT WHICH WOULD CAUSE A GR EAT INJUSTICE TO THE ASSESSEE. 15. IN VIEW OF THE ABOVE DISCUSSION AND THE FACTS A ND CIRCUMSTANCES OF THE CASE, THE SHARE APPLICATION MONEY CANNOT BE TREATED AS INCOM E OF THE ASSESSEE COMPANY UNTIL AND UNLESS IT IS PROVED BEYOND DOUBT THAT THE ASSE SSEE'S OWN MONEY HAS COME BACK THROUGH SOME CLOSELY RELATED APPLICANT. ONCE THE ID ENTITY OF THE APPLICANT. IS DISCLOSED AND FOUND AS CORRECT THEN, EVEN IF THE SAID TRANSAC TION IS SUSPECTED BY THE REVENUE AUTHORITIES, THE SAME CANNOT BE TREATED AS INCOME O F THE ASSESSEE COMPANY WHICH IS A PUBLIC LIMITED COMPANY. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) ON THIS ACCOUN T. HOWEVER, WE MAY CLARIFY THAT OUR FINDINGS ON THE ISSUE ARE BASED ON PARTICULAR FACTS OF THIS ASSESSMENT YEAR AND THEREFORE, WOULD NOT AFFECT THE RESPECTIVE RIGHTS O F THE PARTIES FOR THE OTHER ASSESSMENT YEARS. ' 10. IN THE CASE OF NETSCAPE SOFTWARE LTD.(SUPRA), T HE CO-ORDINATE BENCH HAS HELD AS UNDER:- '14. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE S UBMISSIONS. AT THE OUTSET IT WILL BE USEFUL TO TAKE A LOOK AT THE LAW WHEN THERE ARE CA SH CREDITS IN THE BOOKS OF A COMPANY BY WAY OF INCREASED SHARE CAPITAL. THE APP LICABLE PROVISION OF LAW IN THIS REGARD IS SEC. 68 OF THE ACT, WHICH PROVIDES THAT W HERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOU S YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE INCOME-TAX OFFICER; SAT ISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME. OF THE ASS ESSEE OF THAT PREVIOUS YEAR. IN A VERY RECENT DECISION OF THE HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS. OASIS HOSPITALITIES PVT.LTD. 333 ITR 119 (DELHI), THE HON 'BLE DELHI HIGH COURT AFTER CONSIDERING SEVERAL DECISIONS REFERRED TO BY THE LE ARNED D.R. IN HIS ARGUMENTS BEFORE US, SUMMED UP THE APPROACH IN CASES WHERE CASH CRE DITS IN THE BOOKS OF COMPANY BY WAY OF INCREASE IN SHARE CAPITAL IS FOUND: 'THE IN ITIAL BURDEN IS UPON THE ASSESSEE TO ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 5 EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICA TION MONEY RECEIVED BY THE ASSESSEE. IN ORDER TO DISCHARGE THIS BURDEN, THE AS SESSEE IS REQUIRED TO PROVE (I) THE IDENTITY OF THE SHARE-HOLDER, (II) THE GENUINENESS OF THE TRANSACTION, AND (C) THE CREDITWORTHINESS OF THE SHAREHOLDERS. IN CASE THE I NVESTOR/SHAREHOLDER IS AN INDIVIDUAL, SOME DOCUMENTS WILL HAVE TO BE FILED OR THE SHAREH OLDER WILL HAVE TO BE PRODUCED BEFORE THE ASSESSING OFFICER 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 MONEY IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS, THE GENUINE NESS OF THE TRANSACTION WOULD BE PROVED. OTHER DOCUMENTS SHOWING THE GENUINENESS OF THE TRANSACTION COULD BE COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FA RMS, SHARE TRANSFER REGISTER, ETC. AS FAR AS THE CREDITWORTHINESS OR FINANCIAL STRENGTH O F THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PRODUCING THE BANK STATEMENT OF THE CREDITORS/SUBSCRIBERS SHOWING THAT IT HAD SUFFICIEN T BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. ONCE THESE DOCU MENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSESSING OFFICER TO SCRUTINISE THE SAME AND IN CAS E HE NURTURES ANY DOUBT ABOUT THE VERACITY OF THESE DOCUMENTS, TO PROBE THE MATTER FU RTHER. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE ASPECTS, THERE HAVE TO BE SOME COGENT REASONS AND MATERIALS FOR THE ASSESSING OFFICER AN D HE CANNOT GO INTO THE REALM OF SUSPICION. ' 15. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CI T VS. CREATIVE WORLD TELEFILMS US. 333 ITR 100 (BOM) OBSERVED THAT IF THE SHARE APPLIC ATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. THE HON'BLE COURT FURTHER OBSERVED THAT IF THE ASSESSEE HAD GIVEN THE DETAILS OF NAMES AND ADDRESSES OF THE SHAREHOLDERS, THEIR PAN / GIR NUMBERS AND HAD ALSO GIVEN THE CHEQ UE NUMBERS, NAME OF THE BANKERS. THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SHARE-HOLDERS. THE HON'BLE COURT FOLLOWED THE DECISION OF THE HON' HLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD. [2009J 319 ITR (ST.) 5 (SC). 16. IN THE CASE OF LOVELY EXPORTS (SUPRA), THE HON' BLE SUPREME COURT DISMISSED SLP AGAINST THE DECISION OF THE HON'BLE DELHI HIGH COU RT BY THE REVENUE AGAINST THE JUDGMENT OF THE HON 'BLE DELHI HIGH COURT IN THE C ASE OF CIT VS. DIVINE LEASING & FINANCE LTD. 299 ITR 268(DEL) BY OBSERVING AS FOLL OWS: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S. 68 OF IT ACT, 19611 WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HEN CE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. SUBJECT TO THE ABOVE, SPECIAL LE AVE PETITION IS DISMISSED. ' 17. IN THE CASE OF DIVINE LEASING (SUPRA), THE HON 'BLE DELHI HIGH COURT SUMMED UP THE APPROACH IN CASES WHERE CASH CREDITS IN THE BO OKS OF COMPANY BY WAY OF INCREASE IN SHARE CAPITAL IS FOUND AS FOLLOWS: 'IN THE CASE OF A COMPANY THE FOLLOWING ARE THE PR OPOSITIONS OF LAW UNDER SECTION 68. THE ASSESSEE HAS TO PRIMA FADE PROVE (1) THE IDENT ITY OF THE CREDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHE R IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS ; (3) THE C REDITWORTHINESS OR FINANCIAL STRENGTH ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 6 OF THE CREDITOR/SUBSCRIBER; (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS' REGISTER, SHARE APPLICATION FORMS, SH ARE TRANSFER REGISTER, ETC., IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANAT ION BY THE ASSESSEE ; (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN AD VERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPOND T O ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/ SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE AS SESSEE; AND (7) THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIGATE THE CREDITWORT HINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. IN THE CASE OF A PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPE CTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WOR TH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATU TORY SHARE APPLICATION DOCUMENTS. A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF SECTIONS 68 AND 69 OF THE INCOME-TAX ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE; IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION, HE IS EMPOWERED, TO CARRY OUT THOROUG H INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR IL LEGAL DEALINGS, HE CANNOT ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. ' ............................................... ............ .. 21. THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIV INE LEASING (SUPRA) HAS LAID DOWN THAT IF THE ASSESSEE SATISFIES PRIMA FADE THE THRE E INGREDIENTS AS SET OUT ABOVE THEN WHAT THE AO HAS TO DO. THE HONBLE COURT HAS HELD THAT THE ONUS THEREUPON SHIFTS TO THE AO AND HE HAS TO SHOW THAT 'THE MONEY IN QUEST ION IS THAT OF THE ASSESSEE. . .. . .. . 22. WE SHALL NOW SEE WHAT IS THE EVIDENCE GATHERED BY THE AO AGAINST THE ASSESSEE. IT HAS ALSO TO BE MENTIONED THAT THE DIRECTOR OF T HE ASSESSEE WAS EXAMINED BY THE AO AND IN HIS EXAMINATION HE DENIED HAVING GIVEN C ASH TO THE COMPANIES WHICH MADE APPLICATION FOR ALLOTMENT OF SHARES OF THE ASSESSEE . THE COPY OF THE STATEMENT OF THE DIRECTOR IS AT PAGE-38 TO 387 OF THE PAPER BOOK. TH E OTHER FACTS WITH REGARD TO THE EVIDENCE GATHERED BY THE ASSESSEE ARE IN THE CASE O F THE ASSESSEE ARE IDENTICAL TO THE CASE OF CHAT COMPUTERS LTD. (SUPRA) AND THE TRIBUN AL HAS ALREADY ANALYSED THE EVIDENCE GATHERED BY THE AO AGAINST THE ASSESSEE A ND HAS HELD AS FOLLOWS: '6. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT T HE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY DURING THE ASSES SMENT PROCEEDINGS; BUT SIMPLY RELIED UPON THE REPORT OF THE ADIT (INV.)UNIT 1. K OLKATA AS WELL AS THE STATEMENTS OF THE DIRECTORS OF VARIOUS KOLKATA BASED COMPANIES, WHO HAVE PAID THE APPLICATION MONEY. THE SAID INVESTIGATION BY THE ADIT(INV) UNIT 1, KOLKATA WAS NOT CARRIED OUT DURING THE ASSESSMENT PROCEEDINGS; THEREFORE, THE S AID INVESTIGATION WAS NEITHER THE INQUIRY CARRIED OUT DURING THE ASSESSMENT PROCEEDIN GS NOR PART OF THE ASSESSMENT PROCEEDINGS. IT IS CLEAR THAT THE SCRUTINY ASSESSME NT COMMENCED AFTER ABOUT ONE YEAR FROM THE ALLEGED INVESTIGATION WAS OVER. THE ASSES SING OFFICER HAS HEAVILY RELIED UPON THE INVESTIGATION REPORT AND PROCEEDINGS AND SPECI FICALLY ON THE POINT THAT THE ASSESSEE WAS GIVEN OPPORTUNITY TO CROSS EXAMINE TH E DIRECTORS OF THE INVESTING COMPANIES, WHO PAID THE APPLICATION MONEY AND FURTH ER, THE ASSESSEE WAS ALSO ASKED ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 7 BY THE ASSESSING OFFICER TO PRODUCE THE DIRECTORS, WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION UNIT 1, KOLKATA FOR CROSS EXAMIN ATION OF THEM. 6.1 6.2 SINCE THE INVESTIGATION PROCEEDINGS WERE NOT PA RT OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE AND EVEN THE INVESTIGA TION WAS NOT EITHER U/S 132 OR U/S 133 OF THE I T ACT. IT SEEMS THAT INVESTIGATION BY THE ADIT(INV) UNIT 1, KOLKATA IS PRELIMINARY INVESTIGATION ONLY TO VERIFY THE SUSPI CION OF ANY CONCEALMENT OF INCOME. THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS FOR CROSS EX AMINATION. IT IS EVIDENT FROM THE LETTER OF THE ASSESSING OFFICER DATED 01.10.2008 AS WELL AS DATED 16.9.2008 THAT THE ASSESSING OFFICER DID NOT SUMMON THESE DIRECTORS T O BE PRESENT IN THE OFFICE OF THE ASSESSING OFFICER FOR THE PURPOSE OF CROSS EXAMINA TION BY THE ASSESSEE; BUT ON THE CONTRARY, THE ASSESSEE WAS ASKED TO PRODUCE THESE DIRECTORS FOR CROSS EXAMINATION PURPOSE. THIS IS A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE WHEN THE' ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS FOR AVAILING OPPORTUNITY OF CROSS EXAMINATION. THE ASSESSING OFFICER RELIED UPON THE STATEMENT OF THE DIRECTORS OF THE INVESTING COMPANY RECORDED DURING THE INVESTIGATION PROCEEDINGS BY THE ADIT(INV) UNIT 1, KOLKATA. INSTEAD OF ENSURING THE PRESENCE OF THESE PERSONS FOR GIVING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THEM, WHICH IN OUR CONSIDERED O PINION IS AN ABSOLUTE UNJUST AND OPPOSITE TO THE RULE OF LAW AND WHAT PROCEDURE DEMA NDS. THEREFORE, THERE IS A TOTAL DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS EXAM INE THE PERSONS, WHOSE STATEMENTS ARE USED AGAINST THE ASSESSEE. 6.3 FURTHER, WHEN THE DIRECTOR OF THE ASSESSEE CATE GORICALLY DENIED, DURING THE INVESTIGATION, THE ALLEGATION OF GIVING CASH TO T HOSE INVESTING COMPANIES THEN THE ONUS IS ON THE REVENUE TO PROVE THAT THE APPLICATI ON MONEY RECEIVED BY THE ASSESSEE IS ASSESSES OWN MONEY ROUTED THROUGH THOSE APPLIC ANTS COMPANIES. THERE IS NO EVIDENCE OR MATERIAL BROUGHT ON RECORD BY THE ASSES SING OFFICER, EXCEPT THE UNCROSS EXAMINED STATEMENTS OF THE THIRD PARTY, TO SHOW ANY MOVEMENT OF CASH ROUTED BACK TO THE ASSESSEE IN FORM OF APPLICATION MONEY IN THE AL LEGED ALLOTMENT OF CUMULATIVE PREFERENTIAL SHARES .. RATHER, IT IS UNDISPUTED FA CT THAT THE APPLICATION MONEY WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE/BANK DRAFT G IVEN BY THE INVESTING COMPANIES FROM THEIR RESPECTIVE BANK ACCOUNT. IT IS ALSO AN ACCEPTED FACT THAT SOURCE OF THE APPLICATION MONEY WAS FOUND IN THE BANK ACCOUNT OF THE INVESTING COMPANIES DEPOSITED THROUGH ACCOUNT PAYEE CHEQUES, THEREFORE , NO CASH TRANSACTION WAS FOUND BY THE ASSESSING OFFICER IN THE BANK ACCOUNT OF THE INVESTING COMPANIES. 6.4 THE ASSESSING OFFICER DOUBTED THE MOVEMENT OF C ASH FROM THE ASSESSEE AS BEING PASSING THROUGH VARIOUS LEVELS AND REACHED TO THE A SSESSEE COMPANY. HOWEVER, NO FINDING HAS BEEN GIVEN TO THE EFFECT AS TO HOW THE ALLEGED CASH/MONEY OF THE ASSESSEE COMPANY ROUTED THROUGH VARIOUS LEVELS FINA LLY REACHED TO THE ASSESSEE. NOT AN IOTA OF EVIDENCE OR MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW EVEN, PRIMA FADE THAT THE SAID AMOUNT REPRESENTING APPLICATION MONEY MOVED FROM THE ASSESSEE AND REACHED TO THE ASSESSEE. RATHER, DOCUMENTARY EVIDE NCE ON RECORD EXHIBITS DIFFERENT FACTS I.E. AS PER BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THOSE OF INVESTING COMPANIES TOGETHER WITH THE RETURN OF INCOME, BOARD RESOLUTION GO TO PROVE THAT THE SAID APPLICATION MONEY WAS PAID BY THE INVESTING CO MPANY TO THE ASSESSEE AGAINST ALLOTMENTS OF THE PREFERENTIAL SHARES. THE INVESTIN G COMPANIES HAVE SHOWN THE SAID AMOUNT AS INVESTMENT IN THEIR BOOKS OF ACCOUNT. THE MONEY ROUTED THROUGH BANKING CHANNELS AND THROUGH ACCOUNT PAYEE CHEQUES/BANK DR AFT, UNDISPUTED GIVEN BY THE PARTIES. EVEN, THE SOURCE OF THE APPLICATION MONEY WAS FOUND IN THE BANK ACCOUNT OF THE INVESTING COMPANIES NOT BY ANY CASH DEPOSIT; B UT THROUGH ACCOUNT PAYEE ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 8 CHEQUES. THEREFORE, WHEN AL1 THE DOCUMENTARY EVIDEN CE CONTRADICTS THE STATEMENTS OF THE DIRECTORS RECORDED BY THE INVESTIGATION UNIT OF THE DEPARTMENT THEN SUCH STATEMENTS ALONE CANNOT BE TAKEN AS THE BASIS MUCH LESS A GOOD OR PROPER BASIS FOR ANY ADDITION. 6.5 IT IS SETTLED PROPOSITION OF LAW THAT THE STATE MENT RECORDED DURING THE COURSE OF INVESTIGATION WITHOUT CORROBORATIVE EVIDENCE HAS NO EVIDENTIARY VALUE. IT IS PERTINENT TO MENTION THAT THE STATEMENTS RECORDED IN THIS CASE A RE NOT UNDER SEARCH OR SURVEY OR ASSESSMENT PROCEEDINGS THEREFORE THE SAME CANNOT BE USED AGAINST THE ASSESSEE WITHOUT FOLLOWING THE DUE PROCESS OF CORROBORATION AND CROSS EXAMINATION. EVEN OTHERWISE, THE STATEMENT WITHOUT CROSS EXAMINATION AND CORROBORATIVE EVIDENCE CANNOT BE USED AGAINST THE ASSESSEE. 6.6 AS POINTED OUT BY THE LD AR OF THE ASSESSEE THE CREDIBILITY OF THE STATEMENTS IS ALSO NOT FREE FROM DOUBT AS IT APPEARS THAT ALL THE STA TEMENTS ARE PREPARED BY THE DEPARTMENT IN AN IDENTICAL FASHION AND MANNER BEFO RE THOSE WERE GOT SIGNED ON. DIFFERENT DATES. IT IS APPARENT THAT CERTAIN IDENTI CAL MISTAKES ARE APPEARING IN THOSE STATEMENTS ALLEGEDLY RECORDED ON DIFFERENT DATES. FOR EXAMPLES- QUESTIONNO.4:- DOES YOU COMPANY HAS TRANSACTION WIT H THE FOLLOWING COMPANIES? IF SO, GIVE DETAILS AND NATURE OF SUCH TRANSACTION: T HIS MISTAKE 'DOES YOU' IS APPEARING IN QUESTION NO. 4, OF ALL THE STATEMENTS, WHICH SH OWS THAT QUESTIONNAIRE WAS ALREADY PREPARED AND ANSWERS WERE ALREADY WRITTEN IN THE SAME MANNER AS IT IS EVIDENT FROM THE ANSWER TO QUESTION NO.6 AS UNDER: QUESTION NO. 6 DO YOU HAVE TO SAY ANYTHING ELSE? ANS: I HAVE GONE THROUGH THE ABOVE STATEMENT AND TH E SAME HAS BEEN RECORDED CORRECTLY AND WITHOUT ANY FABRICATION. THE ABOVE ST ATEMENT GAS BEEN GIVEN BY ME WITHOUT THE USE OF ANY FORCE, COERCION OR THREAT. THE MISTAKE IN THE ANSWER NO. 6 IS ALSO IDENTICAL I N ALL THE STATEMENTS RECORDED ON DIFFERENT DATES. SINCE THE STATEMENTS WERE RECORDE D BY THE INVESTIGATION TEAM OF ADIT(INV) UNIT 1, KOLKATA AND NOT DURING THE PROCE EDINGS BEFORE ANY COURT OF LAW; THEREFORE, ALL THESE FACTS SUGGEST AND INDICATE TO BELIEVE THAT THE SAME ARE NOT RECORDED AS A VERBATIM OF WHAT THE CONCERNED PERSON STATED; BUT OBTAINED BY THE DEPARTMENT IN A MECHANICAL MANNER. HOWEVER, WITHOUT GOING INTO VALIDITY OF THE STATEMENTS WHEN ALL OTHER RECORDS, MATERIAL AND DO CUMENTARY EVIDENCES CONTRADICT AND NULLIFY THE STATEMENTS THEN THE RELIANCE PLACE D BY THE ASSESSING OFFICER ON SUCH STATEMENT IS HIGHLY UNJUSTIFIED AND IMPROPER. 7. EVEN OTHERWISE, IN THE CASE OF THE ASHWANI GUPTA (SUPRA), THE HON'BLE DELHI HIGH COURT HAS TAKEN A NOTE OF THE FINDING OF THE TRIBU NAL IN PARA 2 AS UNDER: '2. THE TRIBUNAL HAS CONFIRMED THE ORDER PASSED BY THE CIT(A) WHICH HELD THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER TO BE INVAL ID AND HAD DELETED THE SAME. THE CIT(A) HAD CLEARLY HELD THAT THE ASSESSING OFFICER HAD PASSED THE ASSESSMENT ORDER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN A S MUCH AS HE HAD NEITHER PROVIDED COPIES OF THE SEIZED MATERIAL TO THE ASSESSEE NOR H AD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE ONE MR. MANOJ AGGARWAL ON THE BASIS O F WHOSE STATEMENT THE SAID ADDITION WAS MADE. THE CIT(A) ALSO HELD THAT THE E NTIRE ADDITION DESERVED TO BE ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 9 DELETED, PARTICULARLY SO, BECAUSE THE TRANSACTIONS ALSO STOOD DULY REFLECTED IN HIS REGULAR RETURNS. ' 7. 1 THE HON'BLE HIGH COURT HAS HELD THAT ONCE THER E IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY NOT PROVIDING SEIZED MATERIAL T O THE ASSESSEE AS WELL AS CROSS EXAMINATION OF THE PERSONS ON WHOSE STATEMENTS, TH E ASSESSING OFFICER RELIED UPON, AMOUNTS TO DENIAL OF OPPORTUNITY AND WOULD BE FATAL TO THE PROCEEDINGS. THE HON'BLE DELHI HIGH COURT HAS OBSERVED IN PARA 7 AS UNDER: '7. IN VIEW OF THE FOREGOING CIRCUMSTANCES, WE FEEL THAT NO INTERFERENCE WITH THE IMPUGNED ORDER IS CALLED FOR. THE TRIBUNAL HAS CORR ECTLY UNDERSTOOD THE LAW AND APPLIED IT TO THE FACTS OF THE CASE. ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS SEIZED MATERIAL IS NOT PROVID ED TO AN ASSESSEE NOR IS CROSS- EXAMINATION OF THE PERSON ON WHOSE STATEMENT THE AS SESSING OFFICER RELIES UPON, GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPORTUNITY AND, CONSEQUENTLY, WOULD BE FATAL TO THE PROCEEDINGS. F OLLOWING THE APPROACH ADOPTED BY US IN SMC SHARE BROKERS LTD. (SUPRA), WE SEE NO REA SON TO INTERFERE WITH THE IMPUGNED ORDER. NO SUBSTANTIAL QUESTION OF LAW ARIS ES FOR OUR CONSIDERATION. ' 8 SIMILARLY, IN THE LATEST DECISION, THE HON'BLE DE LHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA), AFTER CONSIDERING ALL THE RELEVANT DECISIONS ON THE ISSUE INCLUDING THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF LOVELY EXPORTS P LTD (SUPRA), DECISION OF THE FULL BENCH OF THE HON' BLE DELHI HIGH COURT IN THE CASE OF SOPHIA FINANCE LTD REPORTED IN 205ITR98 (DEL)(FB) A ND THE DECISION IN THE CASE OF DIVINE LEASING & FINANCE LTD (SUPRA) HAS OBSERVED I N PARAS 11 TO 16 AS UNDER: ' IT IS CLEAR FROM THE ABOVE THAT THE INITIAL BURD EN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY R ECEIVED BY THE ASSESSEE. IN ORDER TO DISCHARGE THIS BURDEN, THE ASSESSEE IS REQUIRED TO PROVE: (A) THE IDENTITY OF SHAREHOLDER ; (B) THE GENUINENESS OF TRANSACTION; AND (C) THE CREDITWORTHINESS OF SHAREHOLDERS. 12 IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDU AL, SOME DOCUMENTS WILL HAVE TO BEFILED OR THE SAID SHAREHOLDER WILL HAVE TO BE PR ODUCED BEFORE THE ASSESSING OFFICER 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. 13 THE GENUINENESS OF THE TRANSACTION IS TO BE DEMO NSTRATED BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MONEY FROM THE - S AID SHAREHOLDER AND IT CAME FROM THE COFFERS OF THAT VERY SHAREHOLDER. THE DIVISION BENCH HELD THAT WHEN THE MONEY IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANK ING OR OTHER INDISPUTABLE CHANNELS, THE GENUINENESS OF TRANSACTION WOULD BE PROVED. OTHER DOCUMENTS SHOWING THE GENUINENESS OF TRANSACTION COULD BE COPIES OF T HE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER, ETC. 14 AS FAR AS CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PRODUCING THE BAN K STATEMENT OF THE ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 10 CREDITOR/SUBSCRIBER SHOWING THAT IT HAD SUFFICIENT- BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. THIS JUDGMENT FU RTHER HOLDS THAT ONCE THESE DOCUMENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SAT ISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSESSING OFFICER TO SCRUTINIZE THE SAME AND IN CASE HE NURTURES ANY DOUBT ABOUT THE VERACITY OF T HESE DOCUMENTS TO PROBE THE MATTER FURTHER. HOWEVER, TO DISCREDIT THE DOCUMENT S PRODUCED BY THE ASSESSEE ON THE AFORESAID ASPECTS, THERE HAVE TO BE SOME COGENT RE ASONS AND MATERIALS FOR THE ASSESSING OFFICER AND HE CANNOT GO INTO THE REALM OF SUSPICION. 15 AT THIS STAGE, WE WOULD LIKE TO REFER TO THE JUD GMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. CREATIVE WORLD TELEFILMS LTD. ( IN L T. A. NO. 2182 OF 2009 DECIDED ON OCTOBER 12,2009) [2011J 333 ITR 100. THE RELEVA NT PORTION OF THIS ORDER IS REPRODUCED BELOW: 'IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THEIR PA/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE ASSESSING OFFICE R TO MAKE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE ASSESSING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN ENDORS EMENT 'NOT TRACEABLE'. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HA VE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANK ERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MATERIAL DETAILS AND PARTICU LARS WERE GIVEN 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 IS INVOL VED IN THE APPEAL. IN THE RESULT, THE APPEAL IS DISMISSED IN LIMINE WITH NO ORDER AS TO C OSTS. ' (EMPHASIS SUPPLIED) 16 THE COURT THUS CLEARLY HELD THAT ONCE DOCUMENTS LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS WERE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICER AND IT IS ON HIM TO REACH THE SH AREHOLDERS AND THE ASSESSING OFFICER CANNOT BURDEN THE ASSESSEE MERELY ON THE GROUND TH AT SUMMONS ISSUES TO THE INVESTORS WERE RETURNED BACK WITH THE ENDORSEMENT ' NOT TRACEABLE'. THE SAME VIEW IS TAKEN BY THE KARNATAKA HIGH COURT IN MADHURI INVEST MENTS PVT. LTD. V. ASST. CIT (IN I T. A. NO. 110 OF 2004, DECIDED ON FEBRUARY 18, 2006 ). IN THIS CASE ALSO, SOME OF THE SHARE APPLICANTS DID NOT APPEAR AND NOTICES SENT T O THEM WERE RETURNED WITH REMARKS 'WITH NO SUCH PERSON'. ADDITION WAS MADE ON THAT B ASIS. WHICH WAS TURNED DOWN BY THE HIGH COURT IN THE FOLLOWING WORDS: ' 6. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTIES, WE NOTICE THAT WHENEVER A COMPANY INVITES APPLICATIONS FOR ALLOTMENT OF SHARES FROM DIFFERENT APPLICANTS, THERE IS NO PROCE DURE CONTEMPLATED TO FIND OUT THE GENUINENESS OF THE ADDRESS OR THE GENUINENESS OF TH E APPLICANTS BEFORE ALLOTTING THE SNARES. IF FOR ANY REASON THE ADDRESS GIVEN IN THE APPLICATION WERE TO BE INCORRECT OR FOR ANY REASON IF THE SAID APPLICANTS HAVE CHANGED THEIR RESIDENCE OR THE NOTICES SENT BY THE ASSESSING OFFICER HAVE NOT BEEN RECEIVED BY SUCH APPLICANTS, THE ASSESSEE- COMPANY CANNOT BE BLAMED. THEREFORE, WE ARE OF THE VIEW THAT THE TRIBUNAL WAS NOT JUSTIFIED IN ALLOWING THE APPEAL OF THE REVENUE ONL Y RELYING UPON THE STATEMENT OF SRI ANIL RAJ MEHTA, A CHARTERED ACCOUNTANT. ' 8.1 THE HON 'BLE HIGH COURT FURTHER DISCUSSED THE I SSUE IN PARAS 20 TO 24 AS UNDER: ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 11 ' 20 THE OBSERVATIONS OF THE SUPREME COURT IN THE C ASE OF LOVELY EXPORTS P. LTD. [2009J 319 ITR (ST.) 5 (SC) GO TO SUGGEST THAT THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS IN THE CASE OF A LLEGED BOGUS SHAREHOLDERS IN ACCORDANCE WITH LAW AND, THUS, NOT REMEDILESS. IT I S, THUS, FOR THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES WITH REGARD TO THE STATUS OF THESE PARTIES TO BRING ON RECORD ANY ADVERSE FINDINGS REGARDING THEIR CREDITWORTHINE SS. THIS WOULD BE MORE SO WHERE THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND HAS I SSUED THE SHARE CAPITAL TO THE PUBLIC AT LARGE, AS IN SUCH CASES THE COMPANY CANN OT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AND THE FINANCIAL WORTH OF THE SUBSCRIBERS. FURTHER THE INITIAL BURDEN ON THE ASSESSEE WOULD BE SOMEWHAT HE AVY IN CASE THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHERE THE SHAREHOLDERS ARE FAMILY FRIENDS/CLOSE ACQUAINTANCES, ETC. IT IS BECAUSE OF THE REASON TH AT IN SUCH CIRCUMSTANCE, THE ASSESSEE CANNOT FEIGN IGNORANCE ABOUT THE STATUS OF THESE PARTIES. 21 WE MAY ALSO USEFULLY REFER TO THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT Y. P. MOHANAKALA /[2007] 291 ITR 278. IN THAT CASE, THE ASSESSEE HAD RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CREDITED T O THE RESPECTIVE ACCOUNTS OF THE ASSESSEES BY NEGOTIATIONS THROUGH BANK IN INDIA . . . . . . . .. . . . . . . . .. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE LE GAL POSITION CONTAINED IN SECTION 68 OF THE ACT WAS EXPLAINED B Y THE SUPREME COURT BY ASSESSING THAT A BARE READING OF SECTION 68 OF THE ACT SUGGE STS THAT (IJ THERE HAS TO BE CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE; (I I) SUCH CREDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR; AND (III) EITHER (A ) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDITS FOUND I N THE BOOKS, OR (B) THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE ASSE SSING OFFICER, IS NOT SATISFACTORY. IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHARGE D TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE EXPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER, R EASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN T HE BOOKS MAINTAINED BY THE ASSESSEE. THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQ UIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCU MSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON. RECORD. APPLICATION O F MIND IS THE SINE QUA NON FOR FORMING THE OPINION. IN CASES WHERE THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN TH E BOOKS IS NOT SATISFACTORY THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME, AND, IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME NAT URE. THE BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NO T ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS BEING TREATED AS A RECEIPT OF INCOME NAT URE. 22. WE WOULD LIKE TO REFER TO ANOTHER JUDGMENT OF T HE DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. VALUE CAPITAL SERVICES P. LTD. [2008] 307 ITR 334. THE COURT IN THAT CASE HELD THAT THE ADDITIONAL BURDEN WAS ON THE DE PARTMENT TO SHOW THAT EVEN IF SHARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE IN VESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE A SSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THE ABSENCE OF SUCH FINDINGS, ADDITION COULD NOT BE MADE IN THE INCOME OF THE AS SESSEE UNDER SECTION 68 OF THE ACT. ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 12 23. IT IS ALSO OF RELEVANCE TO POINT OUT THAT IN CI T V. STELLAR INVESTMENT LTD. [1991] 192 ITR 287 (DELHI) WHERE THE INCREASE IN SUBSCRIBED C APITAL OF THE RESPONDENT-COMPANY ACCEPTED BY THE INCOME-TAX OFFICER AND REJECTED BY THE COMMISSIONER OF INCOME-TAX ON THE GROUND THAT A DETAILED INVESTIGATION WAS RE QUIRED REGARDING THE GENUINENESS OF SUBSCRIBERS TO SHARE CAPITAL, AS THERE WAS A DEVICE OF CONVERTING BLACK MONEY BY ISSUING SHARES WITH THE HELP OF FORMATION OF AN INV ESTMENT WHICH WAS REVERSED BY THE TRIBUNAL, THIS COURT HELD THAT EVEN IF IT BE ASSUME D THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, UNDER NO CIRCUMSTANCES THE AMOUNT OF SHARE CAPITAL COULD BE REGARDED AS UNDISCLOSED INC OME OF THE COMPANY. THIS VIEW WAS CONFIRMED BY THE APEX COURT IN CIT V. STELLER INVES TMENT LTD. [2001] 251 ITR 263. 24. HAVING TAKEN NOTE OF THE LEGAL POSITION IN DETA IL, WE NOW PROCEED TO DECIDE EACH APPEAL ON THE APPLICATION OF THE AFORESAID PRINCIP LES. I T. A. NO. 2093 OF 2010 AND I T. A. NO. 2095/2010' 9. IT IS CLEAR FROM THE DECISION OF THE HON 'BLE DE LHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA) THAT ONCE THE ASSESSEE FILED COPY OF PAN, ACKNOWLEDGEMENT COY OF THE RETURN OF INCOME OF THE INVESTING COMPANIES, THEIR BANK ACCOUNTS STATEMENTS FOR THE RELEVANT PERIOD; THEN E VEN THE PARTIES WERE NOT PRODUCED IN SPITE OF THE SPECIFIC DIRECTIONS OF THE ASSESSIN G OFFICER, THE ADDITION COULD NOT BE SUSTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING THE PAN, BALANCE SHEET, COPY OF THE ACKNOWLEDGEMENT COPY OF RETURN OF THE APPLICANTS ETC. 10. IN THE CASE IN HAND, THERE IS NO DISPUTE ABOUT THE IDENTITY OF THE APPLICANT COMPANIES, WHO HAD PAID THE APPLICATION MONEY AND THE SOURCE OF THE APPLICATION MONEY WAS ALSO FOUND IN THE RESPECTIVE BANK ACCOUN TS OF THE INVESTING COMPANIES AND THERE WAS NO TRACE OF CASH DEPOSIT IN THE BANK ACCOUNTS OF THE INVESTING COMPANIES, THEN, THE ACTION OF THE ASSESSING OFFICE R UNDER INFLUENCED OF THE REPORT OF THE INVESTIGATION WING WITHOUT GIVING OPPORTUNITY T O THE ASSESSEE FOR CROSS EXAMINATION OF THE PERSONS, IS NOT SUSTAINABLE. 11. THE ASSESSING OFFICER HAS RAISED SOME DOUBTS AN D SUSPICION ABOUT THE MOVEMENT OF THE MONEY THROUGH VARIOUS LEVELS BUT COULD NOT ESTABLISH ANY DIRECT OR INDIRECT LINK OF THE SAID OUTWARD MOVEMENT FROM THE ASSESSEE AND THEN AGAIN RECEIVED BY THE ASSESSEE IN THE FORM OF APPLICATION MONEY. EVEN TH E REVENUE HAS FAILED TO BRING ANYTHING ON RECORD TO SHOW MOVEMENT OF THE ALLEGED CASH FROM THE ASSESSEE 12. THE HON 'BLE DELHI HIGH COURT, IN THE CASE OF O ASIS HOSPITALITIES P LTD SUPRA) IN PARA 33 AND 34 HAS OBSERVED AS UNDER: '33 THE TRIBUNAL WHILE CONFIRMING THE AFORESAID VIE W OF THE COMMISSIONER OF INCOME- TAX (APPEALS) HAS SUMMARIZED THE DISCUSSION AS UND ER: '9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE NECESSARY DETAILS WERE FILED BY THE ASSESSEE WITH THE ASSESSING OFFICER TO SHOW THE IDENTITY OF THE PERSON WHO HAD APPLIED FOR THE SHARES. THE SHARES ALSO BEEN ALLOTTED TO RESPECTIVE PERSONS IN RESPECT OF WHICH INTIMATION WAS GIVEN TO THE REGISTRAR OF COMPANIES AND NECESSARY EVIDENCE H AS ALSO BEEN PLACED ON RECORD IN THE PAPER BOOK WHICH FOUND PLACE AT PAGES 23 AND 24 OF THE PAPER BOOK. THE ASSESSEE ALSO HAD PLACED ON RECORD THE EVIDENCE AS WELL AS COPY OF INCOME-TAX RETURNS OF THE SHARE APPLICANTS. KEEPING IN VIEW A LL THESE EVIDENCE IT CANNOT BE HELD ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 13 THAT THE ASSESSEE DID NOT ESTABLISH THE IDENTITY OF THE SHARE APPLICANTS. IF IT IS SO, THEFT THE LAW AS PRONOUNCED BY THE HON 'BLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST.) 5 IS CLEAR THA T IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGU S SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMEN T IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT THE SAME CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IN THIS VIEW OF THE SITUATION, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APP EALS) VIDE WHICH ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY HAS BEEN DELE TED. ' 34. HAVING REGARD TO THE DECISIONS NOTED ABOVE, WE ARE OF THE VIEW THAT THE ADDITION WAS RIGHTLY DELETED BY THE COMMISSIONER OF INCOME- TAX (APPEALS) AND THE TRIBUNAL. REQUISITE DOCUMENTS WERE FURNISHED SHOWING THE EXI STENCE OF THE SHAREHOLDERS FROM BANK ACCOUNTS AND EVEN THEIR INCOME- TAX DETAILS. F ROM BANK ACCOUNTS OF THESE SHAREHOLDERS, IT WAS FOUND THAT THEY HAD DEPOSED CE RTAIN CASH AND SOURCE THEREOF WAS QUESTIONABLE. THE ASSESSING' OFFICER SHOULD HAV E MADE FURTHER PROBE WHICH HE FAILED TO DO. MOREOVER, THE REMEDY OF THE DEPARTME NT LIES IN REOPENING THE CASE OF THESE INVESTORS AND THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. THUS IN VIEW OF THE ABOVE OBSERVATION OF HON 'BLE H IGH COURT WHEN REQUITE DOCUMENT WERE PRODUCED AND AVAILABLE WITH THE AO TO ESTABLI SH THAT NO CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTING COMPANIES THEN WITHOUT 'FURTHER PROBE TO PROVE CONTRARY THE ADDITION IN THE HAND OF THE ASSESSE CA NNOT BE MADE. 13. AS REGARDS THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR AY 2005-06, IT IS EVIDENT THAT THE COORDI NATE BENCH OF THE TRIBUNAL WAS ALSO OF THE VIEW THAT THE ASSESSING OFFICER DID NOT FUL LY ESTABLISH HIS CASE THAT THE MONEY HAS BEEN RECEIVED BY THE INVESTING COMPANIES FROM THE ASSESSEE COMPANY. . . . 13.1 BEFORE US, THE ID AR OF THE ASSESSEE HAS FORC IBLY URGED THAT IN VIEW OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CA SE OF OASIS HOSPITALITIES P LTD (SUPRA) AS WELL AS THE DECISION OF THE HON 'BLE GU JARAT HIGH COURT IN THE CASE OF RAJEH BABUBHAI DAMANIA (SUPRA), THE ISSUE MAY BE DECIDED ON MERITS ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. 14. IT IS TO BE NOTED THAT IT IS NOT THE CASE OF AN Y ADDITIONAL EVIDENCE OR FRESH MATERIAL PRODUCED BY ANY OF THE PARTIES BEFORE -US WHICH RE QUIRES EXAMINATION OR INVESTIGATION TO VERIFY THE CORRECTNESS OF THE NEW FACTS FIRST T IME BROUGHT BEFORE US. THE CASE OF THE REVENUE IS THAT THE CASH MOVED FROM THE ASSESSE RO UTED THOUGH VARIOUS LEVEL AND THEN REACHED TO THE ASSESSE IN THE FORM OF SHARE AP PLICATION MONEY. THE STAND OF THE REVENUE IS NOT IN CONSONANCE WITH THE STATEMENTS OF THE DIRECTORS OF THE INVESTING COMPANIES WHICH IS THE BASIS OF THE INVESTIGATION R EPORT AS WELL AS ADDITION BY THE AO. IN THEIR STATEMENTS THE DIRECTORS STATED TO HAVE R ECEIVED CASH FROM ASSESSE FOR INVESTING IN THE PREFERENTIAL SHARE OF THE ASSESSE COMPANY, WHEREAS, THIS FACT WAS NOT FOUND TO BE CORRECT FROM THE RECORD AND THE REVENU E ALSO TOOK A STAND THAT THE CASH WAS NOT DIRECTLY GIVEN TO THE INVESTING COMPANIES BUT ROUTED THROUGH VARIOUS LEVELS. ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 14 WHEN IT WAS FOUND BY THE INVESTIGATING UNIT AS WELL AS RECORDED BY THE AO THAT THE FUND IN THE BANK ACCOUNT OF THE INVESTING COMPANIES WAS DEPOSITED THROUGH A/C PAYEE CHEQUES THAN IT IS APPARENT THAT THE STATEMEN TS OF THE DIRECTORS ARE IN TOTAL CONTRADICTION OF THE FACTS EMERGED FROM THE RECORD AS WELL AS STAND OF THE REVENUE. HENCE THE SAID STATEMENTS DO NOT SUPPORT THE CASE OF THE REVENUE AND THE RELIANCE PLACE BY THE AO ON SUCH STATEMENTS IS HIGHLY MISPL ACED AND IMPROPER. WHEN THE STAND OF THE REVENUE IS IN TOTAL CONTRACTION OF TH E MATERIAL ON RECORD THEN IN VIEW OF THE LATEST DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA), WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE CAN BE DECIDED ON MERIT AND NEED NOT TO BE REMAND TO THE RECORD OF THE AD B ECAUSE AT THE TIME OF THE ORDER FOR THE AY 2005-06, THE COORDINATE BENCH OF THE TRI BUNAL WAS NOT HAVING THE BENEFIT OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN TH E CASE CITED SUPRA. FURTHER IN VIEW OF THE DECISION OF HON 'BLE GUJARAT HIGH COURT IN CAS E OF RAJEH BABUBHAI DAMANIA (SUPRA), WE SEE NO REASON FOR GIVING THE A.O. ANY FURTHER INNINGS TO FILL UP THE LACUNAS OR LAPSES IN THE ASSESSMENT WHICH WOULD CAUSE A GR EAT INJUSTICE TO THE ASSESSE; 15. IN 'VIEW OF THE ABOVE DISCUSSION AND THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SHARE APPLICATION MONEY CANNOT BE TREATED AS INCOM E OF THE ASSESSEE COMPANY UNTIL AND UNLESS IT IS PROVED BEYOND DOUBT THAT- THE ASS ESSE'S OWN MONEY HAS COME BACK THROUGH SOME CLOSELY RELATED APPLICANT. ONCE THE I DENTITY OF THE APPLICANT IS DISCLOSED AND FOUND AS CORRECT THEN, EVEN IF THE SAID TRANSA CTION IS SUSPECTED BY THE REVENUE AUTHORITIES, THE SAME CANNOT BE TREATED AS INCOME O F THE ASSESSEE COMPANY WHICH IS A PUBLIC LIMITED COMPANY. ACCORDINGLY, WE DELETE TH E ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) ON THIS ACCOUNT . HOWEVER, WE MAY CLARIFY THAT OUR FINDINGS ON THE ISSUE ARE BASED ON PARTICULAR FACTS OF THIS ASSESSMENT YEAR AND THEREFORE, WOULD NOT AFFECT THE RESPECTIVE RIGHTS OF THE PARTIES FOR THE OTHER ASSESSMENT YEARS. ' 23. THE ABOVE OBSERVATIONS OF THE TRIBUNAL IN OUR V IEW ARE SQUARELY APPLICABLE TO THE CASE OF THE ASSESSEE ALSO AS THE STATEMENT OF THE DIRECTORS OF THE COMPANIES WHO APPLIED FOR SHARES WERE ALSO SIMILAR IN THE CASE O F THE ASSESSEE AS WELL AS THE CASE OF CHAT COMPUTERS (SUPRA). THE ORDER OF THE AD AS WEL L AS THAT OF THE CIT(A) IN BOTH THE CASES ARE VERBATIM THE SAME. 24. APART FROM THE ABOVE, WE ALSO FIND THAT THE ASS ESSEE HAS FILED BEFORE THE REGISTRAR OF COMPANIES RETURN OF ALLOTMENT IN RESPECT OF THE SHARES WHICH WERE ALLOTTED TO THE APPLICANTS AND THE SAME HAS BEEN TAKEN ON FILE BY THE REGISTRAR OF COMPANIES. PERUSAL OF THE SAME REVEALS THAT THE SHARES ALLOTTE D TO THE VARIOUS COMPANIES TOTALING RS.27,61,50,000/- HAS BEEN DULY SHOWN AS SHARES ALL OTTED IN THOSE RETURNS. THE OBJECTIONS RAISED BY THE LEARNED D.R. BEFORE US AT BEST COULD RAISE DOUBTS ABOUT THE SATISFACTION OF THE THREE CONDITIONS FOR ACCEPTING CREDIT ENTRY IN THE BOOKS OF ACCOUNTS. THOSE OBJECTIONS CANNOT BE THE BASIS TO HOLD THAT THE ASSESSEE HAS NOT SATISFACTORILY EXPLAINED CREDIT ENTRY IN ITS BOOKS OF ACCOUNTS. TH E INVESTIGATION REFERRED TO BY THE AD IN THE ORDER OF ASSESSMENT, AS WE HAVE ALREADY SEEN HAS BEEN HELD BY THE TRIBUNAL IN THE CASE OF CHAT COMPUTERS (SUPRA) TO BE INSUFFICIE NT TO HOLD THAT THE CREDITS IN QUESTION WERE UNEXPLAINED. WE ARE THEREFORE OF THE VIEW THAT THE ADDITION OF RS. 27,61,50,000/ BEING THE SHARE CAPITAL RECEIVED BY THE ASSESSEE DURING THE PREVIOUS YEAR FOR WHICH ALLOTMENT OF SHARES WERE MADE AND T HE SHARE APPLICATION MONEY RECEIVED PENDING ALLOTMENT OF RS.6,42,00,000/- CANN OT BE TREATED AS UNEXPLAINED AND THE ADDITION MADE IN THIS REGARD IS DIRECTED TO BE DELETED. ' ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 15 11. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICA L TO THAT OF THE CASES DECIDED BY THE TRIBUNAL (SUPRA), RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE ADDITIONS MADE BY THE AO U/ S 68 OF THE ACT IN BOTH THE YEARS UNDER CONSIDERATION . .. .. . . . . .. . . . . .. . .. . .. . .. .. .. . . . .. . . . . . . . . . . . .. . . . .. . . . . '(EMPHASIS SUPPLIED) FROM THE FACTS EMANATING IN THIS YEAR, IT IS EVIDEN T THAT THE LD.A.O'S CASE IS ON A MUCH WEAKER FOOTING AS HE HAS RELIED ON THE STATEME NT OF ONE KISHAN KUMAR VERMA DT.13.10.2006 WHEREAS THE SHARE APPLICATION MONEY R ECEIVED DURING THE IMPUGNED ASSESSMENT YEAR WERE AFTER THAT DATE. THE STATEMENT RELIED UPON IS NOT AT ALL RELEVANT AS IT IS NOT IN RESPECT OF COMPANIES REGARDING WHI CH ADDITIONS WERE MADE IN THIS YEAR. NEVERTHELESS, AS THE OTHER FACTS OF THE CASE IN CUR RENT YEAR ARE IDENTICAL TO THE FACTS IN APPELLANT'S OWN CASE DECIDED BY THE HON'BLE ITAT, M UMBAI AS WELL AS IN TWO OTHER GROUP CASES VIZ. CHAT COMPUTERS LTD. AND M/S. NETS CAPE SOFTWARE LTD. REFERRED TO EARLIER,RESPECTFULLY FOLLOWING THE DECISION OF HON BLE ITAT THIS GROUND OF APPEAL IS ALLOWED. 5. WE NOTICE THAT THE CO-ORDINATE BENCHES OF T HE TRIBUNAL ARE CONSISTENTLY TAKING THE VIEW THAT THE ASSESSING OFFICER HAS NOT DISPROVED THE DOCUMENTS FURNISHED BY THE ASSESSEE TO DISCHARGE THE INITIAL BURDEN PLACED UPON IT U/S 68 OF THE ACT. SINCE THE FACTS AND CIRCUMSTANCES AVAI LABLE IN THE PRESENT CASE ARE IDENTICAL WITH THE CASES DECIDED BY THE CO-ORDI NATE BENCHES OF THE TRIBUNAL AND SINCE THE LD CIT(A) HAS FOLLOWED THE D ECISIONS RENDERED BY THE TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDERS PASSED BY THE LD CIT(A) ON THE ISSUE AGITATED BEFORE US IN THE TW O YEARS UNDER CONSIDERATION. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A). 6. IN THE RESULT, THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2016 04 , 2016 SD/- SD/- ( / SANDEEP GOSAIN ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 04.03.2016 . . . JV.SR.PS. ITA NO.2066 & 2071/M/13-GIBS COMPUTERS 16 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / ; 5. DR A BENCH, ITAT, MUMBAI / ! ' , G , . . . 6. GUARD FILE/ #$ ! ! //TRUE COPY// / BY ORDER, DY./ASST. REGISTRAR , /ITAT, MUMBAI.