DCIT CEN CIR 40, MUMBAI V. SAIMANGAL INVESTRADE LTD, MUMBAI

ITA 2068/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1785 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P DANIEL
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Principle of natural justice; Opportunity of cross examination; Source of fund; Additional evidence; Question of law; Difference of opinion
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2068/M/2013 ASSESSMENT YEAR: 2007-08 DCIT, CENT. CIR.-40, ROOM NO.653, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. SAIMANGAL INVESTRADE LTD., RADHA BHAVAN, 121, NAGINDAS MASTER ROAD, MUMBAI 400 023 PAN: AABCS 4255R (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : 1) SHRI RAJIV KHANDELWAL, A.R. & 2) SHRI NEELKANTH KHANDELWAL, A.R. REVENUE BY : DR. P. DANIEL, D.R. DATE OF HEARING : 29.09.2015 DATE OF PRONOUNCEMENT : 31.12.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 26.12.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2007-08. 2. THE REVENUE IN THIS APPEAL HAS AGITATED THE ACTI ON OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.50 LAKHS MADE BY THE AS SESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) UNDER SECTION 68 OF THE ACT ON ACCOUNT OF BOGUS SHARE APPLICATION MONEY. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAD REPAID CERTAIN LOAN AMOUNTS TO M/S. MADHAVPURA MERCANTILE CO-OPERATIVE BANK LTD. CERTA IN INVESTIGATIONS WERE DONE BY THE DEPARTMENT TO VERIFY THE SOURCE OF FUND S WHICH WERE UTILIZED FOR ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 2 REPAYMENT OF THE LOAN AMOUNT. DURING THE COURSE OF SUCH INVESTIGATION CERTAIN STATEMENTS OF THE SOME OF THE DIRECTORS OF THE COMP ANIES WERE RECORDED WHO HAD INVESTED MONEY IN THE ASSESSEE COMPANY IN THE P REFERENCE SHARES. THE SAID DIRECTORS IN THEIR STATEMENTS STATED THAT THEY HAD RECEIVED CASH AND ISSUED CHEQUE FOR PREFERENCE SHARE APPLICATION TO THE ASSE SSEE COMPANY. ON THE BASIS OF THAT SAID STATEMENTS, THE AO MADE THE IMPUGNED A DDITIONS. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED APPE AL BEFORE THE LD. CIT(A). 4. THE LD. CIT(A) NOTED THAT SIMILAR TYPE OF ADDITI ONS WERE MADE IN THE ASSESSEES GROUP COMPANIES NAMELY GIBS COMPUTERS LT D. FOR A.Y. 2005-06 AND 2006-07, CHAT COMPUTERS LTD. AND NETSCAPE SOFTW ARE LTD. AND THE MATTER WAS TRAVELLED TO THE TRIBUNAL. THE TRIBUNAL HAVING NOTED THE FACTS AND CIRCUMSTANCES OF THE CASE HAS DELETED THE ADDITIONS SO MADE BY THE AO UNDER SECTION 68 OF THE ACT OBSERVING THAT THE ENTIRE SHARE APPLICATION MONEY WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE/DRAFT AND THA T THE SHARE APPLICATION MONEY WAS FOUND IN THE BANK ACCOUNT OF THE INVESTIN G COMPANIES AND FURTHER THAT THE STATEMENTS RECORDED DURING THE COURSE OF I NVESTIGATION WITHOUT ANY CORROBORATIVE EVIDENCE HAD NO EVIDENTIARY VALUE. T HE LD. CIT(A) THEREFORE RELYING UPON THE DECISION OF THE TRIBUNAL IN THE CA SE OF GIBS COMPUTERS LTD. & OTHERS VIDE ORDER DATED 25.01.12 DELETED THE ADDITI ONS SO MADE BY THE AO. BEING AGGRIEVED BY THE ABOVE ACTION OF THE LD. CIT( A), THE REVENUE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. THE LD. D.R. HAS RELIED UPON THE FINDINGS OF THE AO WHEREAS THE LD. A.R. OF THE ASSESSEE HAS RELIED UPON THE FINDINGS O F THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE L D. A.R. OF THE ASSESSEE HAS STATED THAT ALL THE EVIDENCES RELATING TO THE T RANSACTION IN QUESTION WERE FURNISHED BY THE ASSESSEE. THE DETAILS OF THE AMOU NT RECEIVED, SHARE APPLICATION FORMS, RESOLUTION, MEMORANDUM OF ASSOCI ATION, ACKNOWLEDGEMENT ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 3 OF RETURNS OF INCOME, ANNUAL ACCOUNTS, NET WORTH, B ALANCE SHEET, BANK STATEMENTS AS WELL AS CONFIRMATIONS OF VARIOUS SHAR EHOLDERS OR THE PERSONS MAKING THE SHARE APPLICATION TO WHOM SHARES WERE YE T TO BE ALLOTTED WERE FURNISHED. HE HAS FURTHER RELIED UPON THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR IMMEDIATE EARLIER ASSESSME NT YEAR 2006-07 WHEREIN THE TRIBUNAL VIDE ORDER DATED 20.12.13 PASSED IN IT A NO.3924/M/09 IN THE IDENTICAL FACT AND CIRCUMSTANCES HAS DELETED THE AD DITIONS. THE RELEVANT FINDINGS OF THE TRIBUNAL FOR THE SAKE OF CONVENIENC E ARE REPRODUCED AS UNDER: 4. THE ADDITION MADE BY THE AO U/S 68 TREATING THE AMOUNT RECEIVED ON ALLOTMENT OF PREFERENCE SHARES AS UNEXPLAINED CASH CREDIT WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A). IT WAS SUBM ITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT IT HAD FURNISHED ALL THE RELEVANT DETAILS WITH REGARD TO SHARE APPLICATION MONEY RECEIVED FROM THE CONCERNED APPLICANTS WHICH WERE SUFFICIENT TO ESTABLISH THEIR IDENTITY AND CREDITWO RTHINESS AS WELL AS GENUINENESS OF THE RELEVANT TRANSACTIONS. IT WAS SUBMITTED THAT TH E AO HOWEVER IGNORED THIS EVIDENCE AND MADE THE ADDITION U/S 68 TREATING THE AMOUNT OF PREFERENCE SHARE CAPITAL AS UNEXPLAINED CASH CREDIT RELYING ON THE S TATEMENT OF THE DIRECTORS OF THE INVESTING COMPANIES WITHOUT GIVING COPIES OF THE SA ID STATEMENT TO THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE SAID STATEMENTS EVEN OT HERWISE COULD NOT BE RELIED UPON AS THERE WAS HUGE SIMILARITY THEREIN DESPITE T HE FACT THAT DIFFERENT DIRECTORS WERE EXAMINED AT DIFFERENT TIMES. IT WAS CONTENDED THAT THIS FACT ALONE WAS SUFFICIENT TO ESTABLISH THAT THE SAID STATEMENTS WE RE KEPT READY BY THE DEPARTMENT AND ONLY THE SIGNATURES OF THE CONCERNED DIRECTORS WERE OBTAINED. IT WAS ALSO SUBMITTED THAT NO INDEPENDENTLY ENQUIRY WAS MADE BY THE AO AND ADDITION U/S 68 WAS MADE SOLELY RELYING ON THE REPORT OF THE ADIT, KOLKATA. IT WAS CONTENDED THAT EVEN THE OPPORTUNITY OF CROSS EXAMINATION OF THE SH ARE APPLICANTS WAS NOT AFFORDED TO THE ASSESSEE. THE LD. CIT(A) DID NOT FIND MERIT IN THESE SUBMISSIONS MADE BY THE ASSESSEE AND CONFIRMED THE ADDITION MADE BY THE AO U/S 68 MAINLY FOLLOWING HIS APPELLATE ORDER PASSED IN THE CASE M/S CHAT COMPUTE R PVT. LTD, ANOTHER GROUP CONCERN WHEREIN A SIMILAR ISSUE WAS DECIDED BY HIM AGAINST THE ASSESSEE INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES . AGGRIEVED BY TH E ORDER OF THE LD. CIT(A) CONFIRMING THE ADDITION MADE BY THE AO U/S 68, THE ASSESSEE HAS RAISED THIS ISSUE IN THE PRESENT APPEAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ADDITIO N MADE BY THE AO U/S 68 WAS CONFIRMED BY THE LD.CIT(A) RELYING ON HIS APPELLATE ORDER PASSED IN THE CASE OF M/S CHAT COMPUTERS PVT. LTD. INVOLVING A SIMILAR ISSUE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ORDER PASSED BY THE LD. CIT(A ) IN THE CASE OF CHAT COMPUTERS PVT. LTD. WAS ALSO THE SUBJECT MATTER OF APPEAL BEF ORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 22/07/2011PASSED IN ITA NO.385 9/MUM2009 HAS REVERSED THE SAME AND DELETED THE SIMILAR ADDITION MADE BY THE A O U/S 68 AND CONFIRMED BY THE LD.CIT(A). A COPY OF THE SAID ORDER IS PLACED ON RE CORD BEFORE US AND PERUSAL OF SAME SHOWS THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACT S AND CIRCUMSTANCES HAS BEEN ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 4 DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE V IDE PARAGRAPH NO. 6 TO 15 OF ITS ORDER WHICH ARE REPRODUCED HERE UNDER:- 6. IT IS EVIDENT FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT CONDUCTED ANY INDEPENDENT ENQUIRY DURING THE ASSESS MENT PROCEEDINGS; BUT SIMPLY RELIED UPON THE REPORT OF THE ADIT(INV), UNIT 1, KOLKATA AS WELL AS THE STATEMENTS OF THE DIRECTORS OF VARIOUS KOLKATA BASED COMPANIES, WHO HAVE PAID THE APPLICATION MONEY. THE SAID INVESTIGA TION BY THE ADIT(INV) UNIT 1, KOLKATA WAS NOT CARRIED OUT DURING THE ASSE SSMENT PROCEEDINGS; THEREFORE, THE SAID INVESTIGATION WAS NEITHER THE I NQUIRY CARRIED OUT DURING THE ASSESSMENT PROCEEDINGS NOR PART OF THE ASSESSME NT PROCEEDINGS. IT IS CLEAR THAT THE SCRUTINY ASSESSMENT COMMENCED AFTER ABOUT ONE YEAR FROM THE ALLEGED INVESTIGATION WAS OVER. THE ASSESSING O FFICER HAS HEAVILY RELIED UPON THE INVESTIGATION REPORT AND PROCEEDINGS AND S PECIFICALLY ON THE POINT THAT THE ASSESSEE WAS GIVEN OPPORTUNITY TO CROSS EX AMINE THE DIRECTORS OF THE INVESTING COMPANIES, WHO PAID THE APPLICATION M ONEY AND FURTHER, THE ASSESSEE WAS ALSO ASKED BY THE ASSESSING OFFICER TO PRODUCE THE DIRECTORS, WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATION UNIT 1, KOLKATA FOR CROSS EXAMINATION OF THEM. 6.1 IN PARA 4.5 AND 4.6, THE ASSESSING OFFICER HAS RECORDED THE REASONS FOR FORMING THE VIEW THAT THE ASSESSEE WAS GIVEN SEVERA L OPPORTUNITIES TO CROSS EXAMINE THE DIRECTORS OF THE INVESTING COMPANIES AS UNDER: '4.5 AS PER THE STATEMENTS OF THE DIRECTORS OF VARI OUS KOLKATA BASED COMPANIES AND THE OTHER PERSONS, IT IS CLEAR THAT T HE ASSESSEE HAD GIVEN CASH TO SO CALLED COMPANIES WHICH IN TURN ISS UED BACK TO ASSESSEE CHEQUES/DEMAND DRAFT OF EQUIVALENT AMOUNT. THIS FAC T WAS STATED ON OATH BY THE DIRECTORS OF THE SAID COMPANIES. HOWEVE R, DIRECTOR OF THE ASSESSEE SHRI KIRITI KUMAR N PAREKH DENIED TO HAVE PAID ANY CASH TO THESE PARTIES IN HIS STATEMENT BEFORE ADIT(INV) UNI T IX(2), MUMBAI. IN HIS STATEMENT HE STATED HIS INTENTION TO CROSS E XAMINE THE AFORESAID DIRECTORS TO PROVE HIS STAND. DDIT(INV) U NIT 1(2) KOLKATA HAS GIVEN SEVERAL OPPORTUNITIES TO THE ASSESSEE TO CROS S EXAMINE THE AFORESAID DIRECTORS AT ITS KOLKATA OFFICE. IN SPITE OF REPEATED OPPORTUNITIES GIVEN TO THE ASSESSEE, THE SAID CROSS EXAMINATION COULD NOT TAKE PLACE AS THE ASSESSEE SOUGHT ADJOURNMENT E VERY TIME. THEREAFTER, THE ASSESSEE STATED THAT 'HE WOULD EXER CISE HIS RIGHT OF CROSS EXAMINE AT THE TIME OF ASSESSMENT. 4.6 A LETTER DATED 16.9.2008 WAS ISSUED BY THIS OFF ICE TO THE MANAGING DIRECTOR OF THE COMPANY GIVING HIM OPPORTU NITY TO CROSS EXAMINE THE SHARE4 APPLICANTS AND WAS ASKED TO FILE CONFIRMATION OF THE SAID SHARE APPLICANTS ON 30TH SEPT, 2008. HOWEV ER, NO ONE APPEARED ON 30TH SEPT 200. IT IS PERTINENT TO MENTI ON HERE THAT ASSESSEE WAS GIVEN SEVERAL OPPORTUNITIES BY THE DDI T(INV) UNIT I(2) KOLKATA TO CROSS EXAMINE THE SAID DIRECTORS OF KOLK ATA BASED COMPANIES TO PROVE THE GENUINENESS OF HIS STAND WHI CH HE HAS RECORDED TO THE ADIT(INV), UNIT IX(2) MUMBAI. BUT, INSTEAD, ASSESSEE HAS SOUGHT ADJOURNMENT EVERY TIME AND THEREAFTER, S TATED THAT HE ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 5 WILL EXERCISE HIS RIGHT OF CROSS EXAMINATION AT THE TIME OF ASSESSMENT. THIS CLEARLY SHOWS THE INTENTION OF THE ASSESSEE TO STALL THE TIME. MOREOVER, THE ONUS OF PROVING GENUINENESS OF THE TR ANSACTION LIES ON THE ASSESSEE, WHICH THE ASSESSEE HAS TRIED TO SHIFT ON THE ASSESSING OFFICER'S SHOULDER. 6.2 SINCE THE INVESTIGATION PROCEEDINGS WERE NOT PA RT OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE AND EVEN THE INVESTIGATION 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, K OLKATA IS PRELIMINARY INVESTIGATION ONLY TO VERIFY THE SUSPIC ION OF ANY CONCEALMENT OF INCOME. THE ASSESSING OFFICER, DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO PRODUC E THE SAID DIRECTORS FOR CROSS EXAMINATION. 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 DIRECTOR S TO BE PRESENT IN THE OFFICE OF THE ASSESSING OFFICER FOR THE PURP OSE OF CROSS EXAMINATION BY THE ASSESSEE; BUT ON THE CONTRARY, T HE ASSESSEE WAS ASKED TO PRODUCE THESE DIRECTORS FOR CROSS EXAMINAT ION PURPOSE. THIS IS A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS FOR AVAILING OPPORTUNITY OF CROSS EXAMINATION. THE ASSESSING OFF ICER RELIED UPON THE STATEMENT OF THE DIRECTORS OF THE INVESTING COM PANY RECORDED DURING THE INVESTIGATION PROCEEDINGS BY THE ADIT(IN V) UNIT 1, KOLKATA. INSTEAD OF ENSURING THE PRESENCE OF THESE PERSONS F OR GIVING OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE, THE A SSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THEM, WHICH IN OUR CO NSIDERED OPINION IS AN ABSOLUTE UNJUST AND OPPOSITE TO THE R ULE OF LAW AND WHAT PROCEDURE DEMANDS. THEREFORE, THERE IS A TOTAL DENIAL OF OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PE RSONS, 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 THOSE INVESTING COMPANIES THEN THE ONUS IS ON THE REVENUE TO PROVE THAT THE APPLICATION MONEY RECEIVED BY THE ASSESSEE IS A SSESSE'S OWN MONEY ROUTED THROUGH THOSE APPLICANTS COMPANIES. TH ERE IS NO EVIDENCE OR MATERIAL BROUGHT ON RECORD BY THE ASSES SING OFFICER, EXCEPT THE UN-CROSS EXAMINED STATEMENTS OF THE THIR D PARTY, TO SHOW ANY MOVEMENT OF CASH ROUTED BACK TO THE ASSESSEE IN FORM OF APPLICATION MONEY IN THE ALLEGED ALLOTMENT OF CUMUL ATIVE PREFERENTIAL SHARES. RATHER, IT IS UNDISPUTED FACT THAT THE APPLICATION MONEY WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE/BAN K DRAFT GIVEN BY THE INVESTING COMPANIES FROM THEIR RESPECT IVE BANK ACCOUNT. IT IS ALSO AN ACCEPTED FACT THAT SOURCE OF THE APPLICATION MONEY WAS FOUND IN THE BANK ACCOUNT OF THE INVESTIN G COMPANIES DEPOSITED THROUGH ACCOUNT PAYEE CHEQUES; THEREFORE, NO CASH TRANSACTION WAS FOUND BY THE ASSESSING OFFICER IN T HE BANK ACCOUNT OF THE INVESTING COMPANIES. ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 6 6.4 THE ASSESSING OFFICER DOUBTED THE MOVEMENT OF C ASH FROM THE ASSESSEE AS BEING PASSING THROUGH VARIOUS LEVELS AN D REACHED TO THE ASSESSEE COMPANY. HOWEVER, NO FINDING HAS BEEN GIVE N TO THE EFFECT AS TO HOW THE ALLEGED CASH/MONEY OF THE ASSESSEE CO MPANY ROUTED THROUGH VARIOUS LEVELS FINALLY REACHED TO THE ASSESSEE. NOT AN IOTA OF EVIDENCE OR MATERIA L HAS BEEN BROUGHT ON RECORD TO SHOW EVEN, PRIMA FACIE THAT TH E SAID AMOUNT REPRESENTING APPLICATION MONEY MOVED FROM THE ASSES SEE AND REACHED TO THE ASSESSEE. RATHER, DOCUMENTARY EVIDEN CE ON RECORD EXHIBITS DIFFERENT FACTS I.E. AS PER BOOKS OF ACCOU NT 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 COMPANY TO THE ASSE SSEE 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 A CCOUNT PAYEE CHEQUES/BANK DRAFT, UNDISPUTED GIVEN BY THE PARTIES . EVEN, THE SOURCE OF THE APPLICATION MONEY WAS FOUND IN THE BA NK ACCOUNT OF THE INVESTING COMPANIES NOT BY ANY CASH DEPOSIT; BU T THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE, WHEN ALL THE DOCU MENTARY EVIDENCE CONTRADICTS THE STATEMENTS OF THE DIRECTOR S RECORDED BY THE INVESTIGATION UNIT OF THE DEPARTMENT THEN SUCH STAT EMENTS ALONE CANNOT BE TAKEN AS THE BASIS MUCH LESS A GOOD OR PR OPER BASIS FOR ANY ADDITION. 6.5 IT IS SETTLED PROPOSITION OF LAW THAT THE STATE MENT RECORDED DURING THE COURSE OF INVESTIGATION WITHOUT CORROBOR ATIVE EVIDENCE HAS NO EVIDENTIARY VALUE. IT IS PERTINENT TO MENTIO N THAT THE STATEMENTS RECORDED IN THIS CASE ARE NOT UNDER SEAR CH OR SURVEY OR ASSESSMENT PROCEEDINGS THEREFORE THE SAME CANNOT BE USED AGAINST THE ASSESSE WITHOUT FOLLOWING THE DUE PROCESS OF CO RROBORATION AND CROSS EXAMINATION. EVEN OTHERWISE, THE STATEMENT WI THOUT CROSS EXAMINATION AND CORROBORATIVE EVIDENCE CANNOT BE US ED 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 APPEAR S THAT ALL THE STATEMENTS ARE PREPARED BY THE DEPARTMENT IN AN IDE NTICAL FASHION AND MANNER BEFORE THOSE WERE GOT SIGNED ON DIFFEREN T DATES. IT IS APPARENT THAT CERTAIN IDENTICAL MISTAKES ARE APPEAR ING IN THOSE STATEMENTS ALLEGEDLY RECORDED ON DIFFERENT DATES. FOR EXAMPLE QUESTIONNO.4:- DOES YOU COMPANY HAS TRANSACTION WIT H THE FOLLOWING COMPANIES? IF SO, GIVE DETAILS AND NATURE OF SUCH T RANSACTION: THIS MISTAKE 'DOES YOU' IS APPEARING IN QUESTION NO . 4, OF ALL THE STATEMENTS, WHICH SHOWS THAT QUESTIONNAIRE WAS ALRE ADY PREPARED AND ANSWERS WERE ALREADY WRITTEN IN THE SAME MANNER AS IT IS EVIDENT FROM THE ANSWER TO QUESTION NO.6 AS UNDER: ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 7 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 STATEMENT GAS BEEN GIVEN BY ME WITHOUT THE USE OF A NY 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 W ERE RECORDED BY THE INVESTIGATION TEAM OF ADIT(INV) UNIT 1, KOLKATA AND NOT DURING THE PROCEEDINGS BEFORE ANY COURT OF LAW;THEREFORE, ALL THESE FACTS SUGGEST AND INDICATE TO BELIEVE THAT THE SAME ARE N OT RECORDED AS A VERBATIM OF WHAT THE CONCERNED PERSON STATED; BUT O BTAINED BY THE DEPARTMENT IN A MECHANICAL MANNER. HOWEVER, WITHOUT GOING INTO VALIDITY OF THE STATEMENTS WHEN ALL OTHER RECORDS, MATERIAL AND DOCUMENTARY EVIDENCES CONTRADICT AND NULLIFY THE ST ATEMENTS THEN THE RELIANCE PLACED BY THE ASSESSING OFFICER ON SUC H 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 FI NDING OF THE TRIBUNAL IN PARA 2 AS UNDER:'2. THE TRIBUNAL HAS CO NFIRMED THE ORDER PASSED BY THE CIT(A) WHICH HELD THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER TO BE INVALID AND HAD DELETED THE SAME. THE CIT(A) HAD CLEARLY HELD THAT THE ASSESSING OFFICER HAD PAS SED THE ASSESSMENT ORDER IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS HE HAD NEITHER PROVIDED COPIES OF THE SEIZE D MATERIAL TO THE ASSESSEE NOR HAD HE ALLOWED THE ASSESSEE TO CROSS- EXAMINE ONE MR. MANOJ AGGARWAL ON THE BASIS OF WHOSE STATEMENT THE SAID ADDITION WAS MADE. THE CIT(A) ALSO HELD THAT THE ENTIRE ADDI TION DESERVED TO BE DELETED, PARTICULARLY SO, BECAUSE THE TRANSACTIO NS ALSO STOOD DULY REFLECTED IN HIS REGULAR RETURNS.' 7.1 THE HON'BLE HIGH COURT HAS HELD THAT ONCE THERE IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BY NOT PROVIDING SEIZ ED MATERIAL TO THE ASSESSEE AS WELL AS CROSS EXAMINATION OF THE PERSON S ON WHOSE STATEMENTS, THE ASSESSING OFFICER RELIED UPON, AMOU NTS 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 CORRECTLY UNDERSTOOD THE LAW AND APPLIED IT TO THE FACTS OF THE CASE. ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATU RAL JUSTICE IN AS MUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSES SEE 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 F ATAL TO THE PROCEEDINGS. FOLLOWING THE APPROACH ADOPTED BY US I N SMC SHARE BROKERS LTD. (SUPRA), WE SEE NO REASON TO INTERFERE WITH THE ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 8 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 CO NSIDERING ALL THE RELEVANT DECISIONS ON THE ISSUE INCLUDING THE DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS P LTD ( SUPRA), DECISION OF THE FULL BENCH OF THE HON'BLE DELHI HIGH COURT IN T HE CASE OF SOPHIA FINANCE LTD REPORTED IN 205 ITR 98 (DEL)(FB) AND TH E DECISION IN THE CASE OF DIVINE LEASING & FINANCE LTD (SUPRA) HAS OB SERVED IN PARAS 11 TO 16 AS UNDER: 'IT IS CLEAR FROM THE ABOVE THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SH ARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. IN ORDER TO DISCHAR GE 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 BE FILED OR THE SAID SHAREHO LDER WILL HAVE TO BE PRODUCED BEFORE THE ASSESSING OFFICER TO PROVE H IS IDENTITY. IF THE CREDITOR/SUBSCRIBER IS A COMPANY, THEN THE DETAILS IN THE FORM OF REGISTERED ADDRESS OR PAN IDENTITY, ETC., CAN BE FU RNISHED. 13. THE GENUINENESS OF THE TRANSACTION IS TO BE DEM ONSTRATED BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MO NEY FROM THE SAID SHAREHOLDER AND IT CAME FROM THE COFFERS OF THAT VE RY SHAREHOLDER. THE DIVISION BENCH HELD THAT WHEN THE MONEY IS RECE IVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKING OR OTHER INDISPU TABLE CHANNELS, THE GENUINENESS OF TRANSACTION WOULD BE PROVED. OTH ER DOCUMENTS SHOWING THE GENUINENESS OF TRANSACTION COULD BE COP IES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHA RE TRANSFER REGISTER, ETC. 14 AS FAR AS CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVE D BY PRODUCING THE BANK STATEMENT OF THE CREDITOR/SUBSCRIBER SHOWI NG THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. THIS JUDGMENT FURTHER HOLDS THAT ONC E THESE DOCUMENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SAT ISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT I S FOR THE ASSESSING OFFICER TO SCRUTINIZE THE SAME AND IN CASE HE NURTU RES ANY DOUBT ABOUT THE VERACITY OF THESE DOCUMENTS TO PROBE THE MATTER FURTHER. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE AFORESAID ASPECTS, THERE HAVE TO BE SOME COGENT REASONS AND MATERIALS FOR THE ASSESSING OFFICER AND HE CANNOT G O INTO THE REALM OF SUSPICION. ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 9 15. AT THIS STAGE, WE WOULD LIKE TO REFER TO THE JU DGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V. CREATIVE WO RLD TELEFILMS LTD. (IN I. T. A. NO. 2182 OF 2009 DECIDED ON OCTOBER 12 , 2009) [2011] 333 ITR 100. THE RELEVANT PORTION OF THIS ORDER IS REPR ODUCED BELOW: 'IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE A SSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THEIR PA/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME O F THE BANK. IT WAS EXPECTED ON THE PART OF THE ASSESSING OFFICER T O MAKE PROPER INVESTIGATION AND REACH THE SHAREHOLDERS. THE ASSES SING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATEL Y RETURNED BACK WITH AN ENDORSEMENT `NOT TRACEABLE'. IN OUR CO NSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKE RS SO AS TO REACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MATERIAL DE TAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE ASSES SING OFFICER. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIB UNAL CANNOT BE FAULTED. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE APPEAL. IN THE RESULT, THE APPEAL IS DISMISSED IN LIMINE WITH NO ORDER AS TO COSTS.' (EMPHASIS SUPPLIED) 16. THE COURT THUS CLEARLY HELD THAT ONCE DOCUMENTS LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS WE RE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICER AN D IT IS ON HIM TO REACH THE SHAREHOLDERS AND THE ASSESSING OFFICER CA NNOT BURDEN THE ASSESSEE MERELY ON THE GROUND THAT SUMMONS ISSUES T O THE INVESTORS WERE RETURNED BACK WITH THE ENDORSEMENT 'NOT TRACEA BLE'. THE SAME VIEW IS TAKEN BY THE KARNATAKA HIGH COURT IN M ADHURI INVESTMENTS PVT. LTD. V. ASST. CIT (IN I. T. A. NO. 110 OF 2004, DECIDED ON FEBRUARY 18, 2006). IN THIS CASE ALSO, SOME OF T HE SHARE APPLICANTS DID NOT APPEAR AND NOTICES SENT TO THEM WERE RETURN ED WITH REMARKS 'WITH NO SUCH PERSON'. ADDITION WAS MADE ON THAT BA SIS WHICH WAS TURNED DOWN BY THE HIGH COURT IN THE FOLLOWING WORD S : ' 6. HAVING HEARD THE LEARNED COUNSEL FOR THE PARTI ES, WE NOTICE THAT WHENEVER A COMPANY INVITES APPLICATIONS FOR ALLOTME NT OF SHARES FROM DIFFERENT APPLICANTS, THERE IS NO PROCEDURE CO NTEMPLATED TO FIND OUT THE GENUINENESS OF THE ADDRESS OR THE GENU INENESS OF THE APPLICANTS BEFORE ALLOTTING THE SHARES. IF FOR ANY REASON THE ADDRESS GIVEN IN THE APPLICATION WER E TO BE INCORRECT OR FOR ANY REASON IF THE SAID APPLICANTS HAVE CHANG ED THEIR RESIDENCE OR THE NOTICES SENT BY THE ASSESSING OFFICER HAVE N OT 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 ONLY RELYING UPO N THE STATEMENT OF SRI ANIL RAJ MEHTA, A CHARTERED ACCOUNTANT.' 8.1 THE HON'BL HIGH COURT FURTHER DISCUSSED THE ISS UE IN PARAS 20 TO 24 AS UNDER: ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 10 ' 20 THE OBSERVATIONS OF THE SUPREME COURT IN THE C ASE OF LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST.) 5 (SC) GO TO S UGGEST THAT THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE INDIVID UAL ASSESSMENTS IN THE CASE OF ALLEGED BOGUS SHAREHOLDERS IN ACCORD ANCE WITH LAW AND, THUS, NOT REMEDILESS. IT IS, THUS, FOR THE ASS ESSING OFFICER TO MAKE FURTHER INQUIRIES WITH REGARD TO THE STATUS OF THESE PARTIES TO BRING ON RECORD ANY ADVERSE FINDINGS REGARDING THEI R CREDITWORTHINESS. THIS WOULD BE MORE SO WHERE THE A SSESSEE IS A PUBLIC LIMITED COMPANY AND HAS ISSUED THE SHARE CAP ITAL TO THE PUBLIC AT LARGE, AS IN SUCH CASES THE COMPANY CANNOT BE EX PECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AND THE FIN ANCIAL WORTH OF THE SUBSCRIBERS. FURTHER THE INITIAL BURDEN ON THE ASSE SSEE WOULD BE SOMEWHAT HEAVY IN CASE THE ASSESSEE IS A PRIVATE LI MITED COMPANY WHERE THE SHAREHOLDERS ARE FAMILY FRIENDS/CLOSE ACQ UAINTANCES, ETC. IT IS BECAUSE OF THE REASON THAT IN SUCH CIRCUMSTAN CE, THE ASSESSEE CANNOT FEIGN IGNORANCE ABOUT THE STATUS OF THESE PA RTIES. 21. WE MAY ALSO USEFULLY REFER TO THE JUDGMENT OF T HE SUPREME COURT IN THE CASE OF CIT V. P. MOHANAKALA [2007] 29 1 ITR 278. IN THAT CASE, THE ASSESSEE HAD RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENT S ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUN TS OF THE ASSESSEES BY NEGOTIATIONS THROUGH BANK IN INDIA. TH E EVIDENCE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE CO MPENSATION FROM THE ASSESSEES. THE ASSESSING OFFICER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, AS THEIR INCOME APPLYING SECTION 68 OF THE ACT. THE ASSESSEE DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE NOT OF THE NATURE OF INCOME. THE COMMISSIONER OF IN COME-TAX (APPEALS) CONFIRMED THE ASSESSMENT. ON FURTHER APPE AL, THERE WAS A DIFFERENCE OF OPINION BETWEEN THE TWO MEMBERS OF TH E APPELLATE TRIBUNAL AND THE MATTER WAS REFERRED TO THE VICE PR ESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCLUSIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX (APPEALS). ON AP PEAL, THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED I TS OWN FINDINGS AND CAME TO THE CONCLUSION THAT THE REASONS ASSIGNE D BY THE TRIBUNAL WERE IN THE REALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TOTHE SUPREME COURT, THE COURT WHILE REVERSI NG THE DECISION OF THE HIGH COURT HELD THAT THE FINDINGS OF THE ASS ESSING OFFICER, COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURE S AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION AS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT. WHILE D OING SO, THE LEGAL POSITION CONTAINED IN SECTION 68 OF THE ACT WAS EXP LAINED BY THE SUPREME COURT BY ASSESSING THAT A BARE READING OF S ECTION 68 OF THE ACT SUGGESTS THAT (I) THERE HAS TO BE CREDIT OF AMO UNTS IN THE BOOKS ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 11 MAINTAINED BY THE ASSESSEE ; (II) SUCH CREDIT HAS T O BE A SUM OF MONEY DURING THE PREVIOUS YEAR ; AND (III) EITHER ( A) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH CREDITS FOUND IN THE BOOKS, OR (B) THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISF ACTORY. IT IS ONLY THEN THAT THE SUM SO CREDITED MAY BE CHARGED TOINCOME-TA X AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE E XPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS RE GARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY THE ASSES SEE. THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPTING THE EXPL ANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUM STANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL O N RECORD. APPLICATION OF 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 THE BOOKS IS NOT SATISFACTORY THERE IS, PRIMA FACIE, EVIDENCE AGAINS T 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 NATURE. THE BURD EN IS ON THE ASSESSEE TO TAKE THE PLEA THAT EVEN IF THE EXPLANAT ION IS NOT ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCE S AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS BEING TREATED AS A RECEIPT OF INCOME NATURE. 22. WE WOULD LIKE TO REFER TO ANOTHER JUDGMENT OF T HE DIVISION BENCH OF THIS COURT IN THE CASE OFCIT V. VALUE CAPITAL SE RVICES P. LTD. [2008] 307 ITR 334. THE COURT IN THAT CASE HELD THAT THE A DDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF SHARE AP PLICANTS DID NOT HAVE THE MEANS TO MAKE INVESTMENT, THE INVESTMENT M ADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSE SSEE. IN THE ABSENCE OF SUCH FINDINGS, ADDITION COULD NOT BE MAD E IN THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 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 CAPITAL OF THE RESPONDENT-COMPANY ACCEPTED BY THE I NCOME-TAX OFFICER AND REJECTED BY THE COMMISSIONER OF INCOME- TAX ON THE GROUND THAT A DETAILED INVESTIGATION WAS REQUIRED R EGARDING THE GENUINENESS OF SUBSCRIBERS TO SHARE CAPITAL, AS THE RE WAS A DEVICE OF CONVERTING BLACK MONEY BY ISSUING SHARES WITH THE H ELP OF FORMATION OF AN INVESTMENT WHICH WAS REVERSED BY THE TRIBUNAL , THIS COURT HELD THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, UNDER NO CIRCUMSTANCES TH E AMOUNT OF SHARE CAPITAL COULD BE REGARDED AS UNDISCLOSED INCO ME OF THE ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 12 COMPANY. THIS VIEW WAS CONFIRMED BY THE APEX COURT IN CIT V. STELLER INVESTMENT 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 AFO RESAID PRINCIPLES. I. T. A. NO. 2093 OF 2010 AND I. T. A. NO. 2095 OF 2010' 9 IT IS CLEAR FROM THE DECISION OF THE HON'BLE DELH I 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 I NCOME OF THE INVESTING COMPANIES, THEIR BANK ACCOUNTS STATEMENTS FOR THE RELEVANT PERIOD; THEN EVEN THE PARTIES WERE NOT PRO DUCED IN SPITE OF THE SPECIFIC DIRECTIONS OF THE ASSESSING OFFICER, T HE ADDITION COULD NOT BE SUSTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING THE PAN, BALANCE SHEET, COPY OF THE ACKNO WLEDGEMENT COPY OF RETURN OF THE APPLICANTS ETC. 10 IN THE CASE IN HAND, THERE IS NO DISPUTE ABOUT T HE IDENTITY OF THE APPLICANT COMPANIES, WHO HAD PAID THE APPLICATION M ONEY AND THE SOURCE OF THE APPLICATION MONEY WAS ALSO FOUND IN T HE RESPECTIVE BANK ACCOUNTS 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 OFFICER UNDER INFLUENCE D OF THE REPORT OF THE INVESTIGATION WING WITHOUT GIVING OPPORTUNITY T O THE ASSESSEE FOR CROSS EXAMINATION OF THE PERSONS, IS NOT SUSTAINABL E. 11 THE ASSESSING OFFICER HAS RAISED SOME DOUBTS AND SUSPICION ABOUT THE MOVEMENT OF THE MONEY THROUGH VARIOUS LEVELS BU T COULD NOT ESTABLISH ANY DIRECT OR INDIRECT LINK OF THE SAID O UTWARD MOVEMENT FROM THE ASSESSEE AND THEN AGAIN RECEIVED BY THE AS SESSEE IN THE FORM OF APPLICATION MONEY. EVEN THE REVENUE HAS FAI LED 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 OAS IS 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 SUMMARIZE D THE DISCUSSION AS UNDER: '9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE NECESSA RY DETAILS WERE FILED BY THE ASSESSEE WITH THE ASSESSING OFFIC ER 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 C OMPANIES AND NECESSARY EVIDENCE HAS ALSO BEEN PLACED ON RECO RD IN THE PAPER BOOK WHICH FOUND PLACE AT PAGES 23 AND 24 OF THE PAPER BOOK. THE ASSESSEE ALSO HAD PLACED ON RECORD THE ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 13 EVIDENCE AS WELL AS COPY OF INCOME-TAX RETURNS OF T HE SHARE APPLICANTS. KEEPING IN VIEW ALL THESE EVIDENCE IT C ANNOT BE HELD THAT THE ASSESSEE DID NOT ESTABLISH THE IDENTI TY OF THE SHARE APPLICANTS. IF IT IS SO, THEN THE LAW AS PRON OUNCED BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. LOVELY EXPORTS P. LTD. [2009] 319 ITR (ST.) 5 IS CLEAR THAT IF THE SH ARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLE GED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASS ESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW , BUT THE SAME CANNOT BE REGARDED AS UNDISCLOSED INCOME OF TH E ASSESSEE. IN THIS VIEW OF THE SITUATION, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) VIDE WHICH ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY HAS BEEN DELETED.' 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 TRIBUN AL. REQUISITE DOCUMENTS WERE FURNISHED SHOWING THE EXIS TENCE OF THE SHAREHOLDERS FROM BANK ACCOUNTS AND EVEN THE IR INCOME-TAX DETAILS. FROM BANK ACCOUNTS OF THESE SHA REHOLDER, IT WAS FOUND THAT THEY HAD DEPOSED CERTAIN CASH AND SOURCE THEREOF WAS QUESTIONABLE. THE ASSESSING OFFICER SHO ULD HAVE MADE FURTHER PROBE WHICH HE FAILED TO DO. MOREOVER, THE REMEDY OF THE DEPARTMENT LIES IN REOPENING THE CASE OF THESE INVESTORS AND THE ADDITION CANNOT BE MADE IN THE HA NDS OF THE ASSESSEE.' THUS IN VIEW OF THE ABOVE OBSERVATION OF HON'BLE HI GH COURT WHEN REQUITE DOCUMENT WERE PRODUCED AND AVAILABLE W ITH THE AO TO ESTABLISH THAT NO CASH WAS DEPOSITED IN T HE BANK ACCOUNTS OF THE INVESTING COMPANIES THEN WITHOUT FU RTHER PROBE TO PROVE CONTRARY THE ADDITION IN THE HAND OF THE ASSESSEE CANNOT BE MADE. 13 THERE IS NO QUARREL ON THE ASPECT THAT SO FAR AS IT IS POSSIBLE THE CONSISTENCY OF THE VIEW HAS TO BE MAIN TAINED; HOWEVER, IN THE CASE OF THE ASSESSEE, THE TRIBUNAL, FOR THE AY 2005-06 HAS NOT FORMED ANY OPINION OR GIVEN ANY FIN DING ON THIS ISSUE; BUT REMANDED THE SAME TO THE FILE OF TH E ASSESSING OFFICER FOR FRESH ADJUDICATION. 13.1 BEFORE US, THE LD AR OF THE ASSESSEE HAS FORCI BLY URGED THAT IN VIEW OF THE DECISION OF THE HON'BLE DELHI H IGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA) AS WE LL AS THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF RAJEH BABUBHAI DAMANIA (SUPRA), THE ISSUE MAY BE DE CIDED ON MERITS ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 14 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 P ARTIES BEFORE US WHICH REQUIRES EXAMINATION OR INVESTIGATI ON TO VERIFY THE CORRECTNESS OF THE NEW FACTS FIRST TIME BROUGHT BEFORE US. THE CASE OF THE REVENUE IS THAT THE CASH MOVED FROM THE ASSESSEE ROUTED THOUGH VARIOUS LEVELAND TH EN REACHED TO THE ASSESSEE IN THE FORM OF SHARE APPLIC ATION MONEY. THE STAND OF THE REVENUE IS NOT IN CONSONANC E WITH THE STATEMENTS OF THE DIRECTORS OF THE INVESTING CO MPANIES WHICH IS THE BASIS OF THE INVESTIGATION REPORT AS W ELL AS ADDITION BY THE AO. IN THEIR STATEMENTS THE DIRECTO RS STATED TO HAVE RECEIVED CASH FROM ASSESSEE FOR INVESTING I N THE PREFERENTIAL SHARE OF THE ASSESSEE COMPANY, WHEREAS , THIS FACT WAS NOT FOUND TO BE CORRECT FROM THE RECORD AN D THE REVENUE ALSO TOOK A STAND THAT THE CASH WAS NOT DIR ECTLY GIVEN TO THE INVESTING COMPANIES BUT ROUTED THROUGH VARIO US LEVELS. WHEN IT WAS FOUND BY THE INVESTIGATING UNIT AS WELL AS RECORDED BY THE AO THAT THE FUND IN THE BANK ACCOUN T OF THE INVESTING COMPANIES WAS DEPOSITED THROUGH A/C PAYEE CHEQUES THAN IT IS APPARENT THAT THE STATEMENTS OF THE DIRECTORS ARE IN TOTAL CONTRADICTION OF THE FACTS E MERGED FROM THE RECORD AS WELL AS STAND OF THE REVENUE. HENCE T HE SAID STATEMENTS DO NOT SUPPORT THE CASE OF THE REVENUE A ND THE RELIANCE PLACE BY THE AO ON SUCH STATEMENTS IS HIGH LY MISPLACED AND IMPROPER. WHEN THE STAND OF THE REVEN UE IS IN TOTAL CONTRACTION OF THE MATERIAL ON RECORD THEN TH EN IN VIEW OF THE LATEST DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF OASIS HOSPITALITIES P LTD (SUPRA), WE ARE O F THE CONSIDERED OPINION THAT THE ISSUE CAN BE DECIDED ON MERIT AND NEED NOT TO BE REMAND TO THE RECORD OF THE AO B ECAUSE AT THE TIME OF THE ORDER FOR THE AY 2005-06, THE CO ORDINATE BENCH OF THE TRIBUNAL WAS NOT HAVING THE BENEFIT OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CAS E CITED SUPRA. FURTHER IN VIEW OF THE DECISION OF HON'BLE G UJRAT HIGH COURT IN CASE OF RAJEH BABUBHAI DAMANIA (SUPRA), WE SEE NO REASON FOR GIVING THE A.O. ANY FURTHER INNINGS TO F ILL UP THE LACUNAS OR LAPSES IN THE ASSESSMENT WHICH WOULD CAU SE A GREAT INJUSTICE TO THE ASSESSEE. 15. IN VIEW OF THE ABOVE DISCUSSION AND THE FACTS A ND CIRCUMSTANCES OF THE CASE, THE SHARE APPLICATION MO NEY CANNOT BE TREATED AS INCOME OF THE ASSESSEE COMPANY UNTIL AND UNLESS IT IS PROVED BEYOND DOUBT THAT THE ASSES SEE'S OWN MONEY HAS COME BACK THROUGH SOME CLOSELY RELATED APPLICANT. ONCE THE IDENTITY OF THE APPLICANT IS DI SCLOSED AND FOUND AS CORRECT THEN, EVEN IF THE SAID TRANSACTION IS SUSPECTED BY THE REVENUE AUTHORITIES, THE SAME CANN OT BE TREATED AS INCOME OF THE ASSESSEE COMPANY WHICH IS A PUBLIC LIMITED COMPANY. ACCORDINGLY, WE DELETE THE ADDITIO N MADE ITA NO.2068/M/2013 M/S. SAIMANGAL INVESTRADE LTD. 15 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 ASSESSM ENT YEAR AND THEREFORE, WOULD NOT AFFECT THE RESPECTIVE RIGH TS OF THE PARTIES FOR THE OTHER ASSESSMENT YEARS. 6. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WEL L AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO THAT OF CHAT COMPUT ERS PVT. LTD. (SUPRA), WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL PASSE D IN THAT CASE AND DELETE THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD .CIT(A) ON ACCOUNT OF AMOUNT RECEIVED ON ALLOTMENT OF PREFERENCE SHARE U/ S 68. GROUND NO.1 OF THE ASSESSEE'S APPEAL IS ACCORDINGLY ALLOWED. 7. SINCE THE FACTS AND ISSUES INVOLVED IN THE PRESE NT APPEAL ARE IDENTICAL AND THE NATURE OF TRANSACTIONS AND THE BASIS OF IMP UGNED ADDITIONS IS ALSO SAME FOR THE YEAR UNDER CONSIDERATION, HENCE RESPECTFULL Y FOLLOWING THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR A. Y. 2006-07, THE IMPUGNED ADDITIONS ARE HEREBY ORDERED TO BE DELETED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2015. SD/- SD/- (N.K. BILLAIYA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.12.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.