ITO, New Delhi V. M/s New Era Infrastructure P. Ltd, Delhi

ITA 2081/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65670 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 24-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: KULDEEP SHARMA
• Keywords: Bogus Share capital; Income from undisclosed sources; Question of law; Accommodation entries; Assessment record; Onus to prove
• Section: 260A; 131; 68

Judgement Text

ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 2081/DEL/2010 ASSESSMENT Y EAR: 2006-07 INCOME TAX OFFICER, VS NEW ERA INF RASTRUCTURE P. LTD., WARD 13(2), 363, AGARWAL CITY PLAZA, C.R. BUILDING, NEAR M2K CINEMA, NEW DELHI. DELHI. (PAN AACCN3878N) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. NEGI, SR.DR RESPONDENT BY: SHRI KULDEEP SHARMA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-XVI, NEW DELHI DATED 03.02.2010 FOR AY 2006-07 BY WHICH THE COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER BY ALLOWING THE APPEAL OF THE ASSESSEE. 2. THE MAIN GROUNDS RAISED IN THIS APPEAL READ AS U NDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION O F ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 2 RS.15,OO,OOO/- MADE ON ACCOUNT OF SHARE APPLICATIO N MONEY U/S 68 OF THE INCOME TAX ACT 1961. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION O F RS.37,5001-MADE ON ACCOUNT OF COMMISSION. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. COMMISSIONER OF INCOME TAX(A) HA S ERRED IN IGNORING THE FACT THAT THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD 216 CTR 199(SC) CANNOT BE EXTENDED TO A SITUATION WHERE A MECHANISM HAS BEEN FORMED TO INTRODUCE UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNTS WITH THE HELP OF ACCOMMODATION ENTRY PROVIDERS, WHICH HAS BEEN EXPOS ED BY DEEP AND DETAILED INVESTIGATION CARRIED OUT BY T HE INVESTIGATION WING OF THE DEPARTMENT. THE LD. CIT(A) FAILED TO APPRECIATE THE FACTS THAT THE ASSESSEE COMPANY FAILED TO PROVE PHYSICAL EXISTENCE OF THE SHARE APPLICANTS. THE ASSESSEE COMPANY RECEIVED AN AMOUNT OF RS.15 ICS AS SHARE APPLICATION MONEY OF R S.7 LACS AND RS. 8 LACS FROM M/S GANGA INFIN PVT LTD & M/S KUBERCO SALES PVT LTD RESPECTIVELY. EXCEPT THE AFFI DAVITS FURNISHED NO OTHER SUPPORTING DOCUMENT HAS BEEN PRODUCED. SUMMONS ISSUED U/S 131 WERE RETURNED UNSERVED. ENQUIRES GOT MADE THROUGH INSPECTOR REVEA LED THAT BOTH THE ABOVE NAMED ENTITIES WERE NOT FOUND T O BE EXISTING. FRESH SUMMONS WERE ISSUED TO THE ABOVE NA MED TWO PARTIES AT LE NEW ADDRESS FURNISHED BY THE AR W HICH AGAIN WENT UNCOMPLIED WITH. THESE FACTS WERE CONFRO NTED TO THE AR OF THE ASSESSEE COMPANY AND ASKED TO PROD UCE THE PRINCIPAL OFFICERS OF LE SAID COMPANIES. NO DIR ECTORS OR PRINCIPAL OFFICERS OF THE HARE APPLICANT COMPANIES WERE PRODUCED. NOT EVEN COPIES OF THE ITRS AND BALANCE S HEETS FOR THE AY 2006-07 BEEN PRODUCED. THEREFORE, AS HEL D BY THE ITAT IN ITS JUDGMENT DATED 31-12-2009 IN ITA NO . 2860/DEL/2009 IN THE CASE OF M/S OMEGA BIOTECH LTD, THE IDENTITY OF THE SHARE APPLICANTS IS NOT PROVED. FIL LING OF CERTAIN DOCUMENTS INDICATING THE MERE PAPER IDENTIT Y OF THE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 3 SHARE APPLICANTS IS MEANINGLESS WHEN THE PHYSICAL EXISTENCE OF THE SHARE APPLICANTS IS NOT PROVED. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE JU DGMENT OF THE SUPREME COURT IN THE CASE OF M/S LOVELY EXPORTS (P) LTD. IS NOT APPLICABLE WHERE SHARE APPLICATION MONE Y IS NOT RECEIVED IN A PUBLIC ISSUE. 3. BRIEFLY STATED THE FACTS OF THE CASE GIVING RISE TO THIS APPEAL ARE THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEES CASE W AS SELECTED FOR SCRUTINY THROUGH CASS AND FIRST NOTICE U/S 143(2) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SERVED ON THE ASSESSEE. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY H AD RECEIVED RS.1,75,67,000 AS SHARE APPLICATION MONEY FROM VARI OUS PARTIES WHICH INCLUDED A SUM OF RS. 15 LAKH RS. 7 LAKH CLAIMED TO HAVE BEEN RECEIVED FROM M/S GANGA INFIN PVT. LTD. AND RS. 8 LAKH FROM M/S KUBERCO SALES PVT. LTD. THE ASSESSING OFFICER ALSO NOTED THAT AFOREMEN TIONED ENTITIES HAVE BEEN SUBJECTED TO CERTAIN INQUIRIES AND INVESTIGATION BY INVESTIGATION WING WHEREIN IT WAS FOUND THAT THEY HAVE NO CREDITWORTHI NESS NOR DO THEY HAVE ANY WORTHWHILE SOURCE OF INCOME. IN FACT, THEY ARE ACCOMMODATION ENTRY OPERATORS WHO PROVIDE FAKE ENTRIES. WHEN THE ASSES SING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE IDENTITY, CREDITWORTHINESS AND CAPABILITY OF THESE SHARE APPLICANTS, THEN THE ASSESSEE FURNISHED AFFID AVITS OF SHRI MAHESH GARG, DIRECTOR OF M/S GANGA INFIN P. LTD. AND ANOTHER AFF IDAVIT OF SHRI ANIL ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 4 KUMAR, DIRECTOR OF M/S KUBERCO SALES PVT. LTD. AS C ONFIRMATION OF THE RESPECTIVE AMOUNTS. IN BOTH THE CONFIRMATIONS, THE DEPONENT DIRECTORS OF THE RESPECTIVE COMPANIES MENTIONED THAT THE AMOUNTS HAV E BEEN GIVEN TO THE ASSESSEE COMPANY AS UNSECURED LOAN . APART FROM THE SAID CONFIRMATION, NO OTHER SUPPORTING DOCUMENT IN SUPPORT OF IDENTITY , CREDITWORTHINESS OF THE PARTY AND GENUINENESS OF THE TRANSACTIONS, IN THE F ORM OF COPIES OF INCOME TAX RETURNS, AUDITED BALANCE SHEETS, BANK STATEMENT AND THE DETAILS OF NATURE OF BUSINESS ACTIVITIES WAS FURNISHED. 4. THE AO ISSUED SUMMONS TO THE ABOVE PARTIES REQUE STING THEM TO APPEAR ON 18.08.2008 ALONG WITH COPIES OF THE INCOM E TAX RETURNS, BOOKS OF ACCOUNTS AND BANK ACCOUNT STATEMENT ETC. FOR AY 200 6-07 BUT THESE SUMMONS/NOTICES COULD NOT BE SERVED. THE ASSESSING OFFICER SENT SUMMONS/NOTICES TO BOTH THE ADDRESSES MENTIONED IN THE CONFIRMATIONS SUBMITTED BY THE ASSESSEE AND ADDRESSES WHICH WERE RECORDED BY THE REGISTRAR OF COMPANIES. THE NOTICE ISSUED TO M/S G ANGA INFIN P. LTD. WAS RECEIVED UNSERVED WITH A POSTAL REMARK, SHOP ALWAY S LOCKED. THE NOTICE ISSUED TO M/S KUBERCO SALES PVT. LTD. WAS RECEIVED BACK WITH A POSTAL REMARK NO SUCH COMPANY AND NOTICE ISSUED TO THE S AME COMPANY ON THE ROHINI ADDRESS AS PER REGISTRAR OF COMPANIES RECORD WAS RECEIVED UNSERVED WITH A POSTAL REMARK LEFT. THE ASSESSING OFFICER ALSO DEPUTED INSPECTOR OF ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 5 THE WARD TO MAKE INQUIRIES AT THE ADDRESSES MENTION ED IN THE CONFIRMATIONS AND THE RECORD OF THE REGISTRAR OF COMPANIES BUT AS PER REPORT OF THE INSPECTOR DATED 22.8.2008, THE ABOVE ENTITIES WERE NOT FOUND TO BE EXISTING AT THE SAID PREMISES AND HE COULD NOT FIND ANY SIGN OF ANY BUSINESS ACTIVITY IN THE FORM OF EMPLOYEES/ASSETS OF BUSINESS OR ANY EVI DENCE TO SHOW GENUINE BUSINESS ACTIVITY BY THE COMPANIES/ENTITIES IN QUES TION. 5. THE ASSESSEE WAS CONFRONTED TO THE ABOVE FACTS A ND PROVIDED THE COPIES OF STATEMENTS OF SHRI MAHESH GARG AND HIS OT HER ASSOCIATES GIVEN BEFORE THE ADDL. DIRECTOR OF INCOME TAX(INVESTIGATI ON) UNIT 1, NEW DELHI. THE ASSESSEES REPRESENTATIVE FURNISHED WRITTEN SUB MISSIONS STATING THAT PRESENTLY BOTH THE PARTIES HAVE SHIFTED TO 104, B.D . CHAMBERS, D.B.GUPTA ROAD, KAROL BAGH, NEW DELHI AND THE ASSESSING OFFIC ER ISSUED NOTICES U/S 131 OF THE ACT REQUIRING THE PERSONAL ATTENDANCE OF THEIR PRINCIPAL OFFICERS ALONG WITH THEIR BOOKS OF ACCOUNTS AND EVIDENCE IN SUPPORT OF THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S BUT THE SAME REMAINED UNCOMPLIED AND NONE ATTENDED THE PROCEEDINGS. HOWEV ER, REPLIES DATED 31.10.2008 WERE RECEIVED ON THE DAK COUNTER OF THE CONCERNED INCOME TAX WARD WHEREIN THE TRANSACTIONS WERE CONFIRMED DESCRI BING THE TRANSACTIONS AS SHARE APPLICATION MONEY . HOWEVER, OUR ABOVE REPLIES WERE NOT ACCOMPANIED BY ANY OTHER SUBSTANTIAL DOCUMENTARY EV IDENCE TO SHOW THE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 6 ACTUAL BUSINESS ACTIVITY BEING CARRIED ON BY THE CO MPANIES AND THEIR CREDITWORTHINESS. 6. THE ASSESSEE COMPANY WAS REQUIRED TO EXPLAIN AS TO WHY THE SAID AMOUNT OF RS. 15 LAKH CLAIMED TO HAVE BEEN RECEIVED FROM THE ABOVE COMPANIES MAY NOT BE TREATED AS UNEXPLAINED U/S 68 OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES . THE ASSESSEE SUBMITTED THE FOLLOWING POINTS IN HIS FAVOUR:- A) THE ASSESSEE COMPANY HAS FILED CONFIRMATIONS. THE SAID SHARE APPLICANTS ARE COMPANIES INCORPORATED UN DER THE COMPANIES ACT. THE ASSESSEE COMPANY HAS DISCHARGED ITS ONUS BY FILING ABOVE DOCUMENTS EVIDE NCING THEIR IDENTITY. B) THE STATEMENTS GIVEN BY THE ABOVE PERSONS ARE V AGUE AND GENERAL IN NATURE AND THESE PERSONS HAVE NOT SPECIFICALLY MENTIONED THE NAME OF THE ASSESSEE COM PANY. THE ASSESSEE MAY BE PROVIDED AN OPPORTUNITY TO CROS S EXAMINE THEM. THE STATEMENTS RELATE TO THEIR ACTIVI TIES IN THE PAST AND NOT TO THE ANY TRANSACTIONS UNDERTAKEN DURING THE YEAR UNDER ASSESSMENT. C) THE PAYMENTS HAVE BEEN RECEIVED THROUGH BANKING CHANNELS AND HAVE ALSO SINCE BEEN REFUNDED ON 23.10.2007 AND 15.11.2007. D) THE ASSESSEE HAVING FURNISHED CONFIRMATIONS FRO M THE CREDITORS, THE ONUS ON IT U/S 68 STANDS DISCHARGED . IT IS NOT FOR THE ASSESSEE TO FIND OUT THE ACTUAL SOURCE OR SOURCES FROM WHERE THE CREDIOR HAS ACCUMULATED THE AMOUNT IN QUESTION.. ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 7 E) THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO CRO SS- EXAMINE THE PERSONS VIZ. SHRI MAHESH GARG HIS ASSOCIATES, MENTIONED ABOVE. 7. AFTER CONSIDERATION OF FACTS AND CIRCUMSTANCES W ITH SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER CONCLUDED THE A SSESSMENT WITH FOLLOWING OBSERVATIONS:- IN THE LIGHT OF THE ABOVE, THE ONUS LAY HEAVILY ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTIONS AND THE TRUE IDENTITY AND CREDITWORTHINESS OF THE A LLEGED SHARE APPLICANTS. RATHER THERE IS POSITIVE EVIDENC E AS DISCUSSED ABOVE SUFFICIENT TO IMPEACH THE CREDITWORTHINESS OF THE ABOVE TWO COMPANIES AND T HE GENUINENESS OF THE TRANSACTIONS. CONSIDERING THE T OTALITY OF THE CIRCUMSTANCES, IT IS OBVIOUS THAT THE TRANS ACTIONS WERE ONLY A CAMOUFLAGE. THE TOTAL AMOUNT OF RS.15,00,000/- ALLEGEDLY RECEIVED FROM THE SAID PAR TIES REPRESENTS THE ASSESSEES OWN ACCOUNTED MONEY WHICH HAS SOUGHT TO BE INTRODUCED INTO ITS BUSINESS IN TH E GARB OF SHARE APPLICATION MONEY. THUS, KEEPING IN VIEW THE TOTALITY OF THE FACTS, THE AMOUNT OF RS.15,00,000/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE COMPANY U/ S 68 OF THE IT ACT. COMMISSION AS DISCUSSED ABOVE, THE SAID AMOUNT OF RS.15,00,000/- IS THE ASSESSEES OWN UNACCOUNTED MO NEY WHICH HAS ONLY BEEN ROUTED THROUGH THE BANK ACCOUNT EXISTING IN THE NAME OF ABOVE-MENTIONED ENTRY OPERA TORS BY PAYING A COMMISSION TO PERSONS WHO ARRANGE THE TRANSACTION. THE COMMISSION PAID IN TRANSACTIONS O F SUCH NATURE GENERALLY VARIES FROM 2 TO 3 PER CENT, CONSI DERING THE COST-BENEFIT ANALYSIS OF THE TRANSACTIONS. TAK ING THE AVERAGE OF THE COMMISSION RATES (2.5%), A SUM OF RS.37,500/- (I.E 2.5% OF RS.15,00,000/-) IS ALSO AD DED TO THE INCOME OF THE ASSESSEE AS THE COMMISSION PAID T O THE ENTRY OPERATORS OUT OF ITS UNDISCLOSED INCOME. ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 8 KEEPING IN VIEW THE FACTS OF THE CASE AS DISCUSSED ABOVE, I AM ALSO SATISFIED THAT THE ASSESSEE HAS CO NCEALED ITS INCOME TO THE EXTENT OF RS.15,37,500/- (RS. 15, 00,000/- PLUS COMMISSION OF RS.37,000/-) WARRANTING INITIATI ON OF PENALTY PROCEEDINGS U/S 271(1)( C) OF THE I.T.ACT, 1961. 8. THE AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE TH E COMMISSIONER OF INCOME TAX(A) WHICH WAS ALLOWED WITH FOLLOWING OBSE RVATIONS:- 3.5 I HAVE CONSIDERED THE SUBMISSIONS MADE BY LEARNED AR OF THE APPELLANT COMPANY. AFTER CAREFUL CONSIDERATION OF ABOVE FACTS, I AM OF THE VIEW THAT IN VIEW OF VARIOUS JUDGMENTS OF JURISDICTIONAL HIGH COURT ' AS WELL AS OF HONBLE SUPREME COURT, NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY (RECEIVED FROM O THER CORPORATE ENTITIES/PARTIES) CAN HE MADE IN THE HAND S OF THE APPELLANT COMPANY. THE ASSESSING OFFICER HAS NO T EFFECTED ANY ENQUIRIES TO BRING OUT ANY FACT WHICH COULD SUGGEST THAT THESE PARTIES HAVE GIVEN ACCOMMODATION ENTRIES TO THE APPELLANT AND THAT THE MONEY RECEIVE D FROM THESE PARTIES IS APPELLANTS OWN UNDISCLOSED INCOME AND ROUTED BACK TO THE APPELLANT COMPANY IN THE GUISE O F SHARE APPLICATION. EVEN APPELLANT HAS NOT BEEN PROV IDED WITH AN OPPORTUNITY TO CROSS-EXAMINE THE SO CALLED ENTRY PROVIDERS. HE HAS SIMPLY RELIED UPON THE INFORMATIO N PROVIDED BY THE INVESTIGATION WING OF THE DEPARTMEN T AND NO CONCRETE EFFORTS ARE MADE TO VERIFY THE FACT S STATED THEREIN. ON THE CONTRARY, IT IS OBSERVED FROM THE ASSESSMENT FOLDER THAT THE ASSESSING OFFICER ISSUED SUMMONS U/S 131 OF THE ACT TO M/S GANGA INFIN PVT. LTD. AND M/S KUBERCO SALES PVT. LTD. IN RESPONSE THERETO , M/S GANGA INFIN PVT. LTD. AND M/S KUBERCO SALES PVT. LT D. WROTE LETTER DATED 24.10.2008 AND DATED 'NIL' RESPE CTIVELY TO THE ASSESSING OFFICER CONFIRMING THE TRANSACTION S ON ACCOUNT OF SHARE APPLICATION MONEY. IN THE CASE OF ADDL. CIT VS. HANUMAN PD. AGGARWAL 151 ITR 151 (PATNA) IT WAS HELD THAT ASSESSEE HAVING FURNISHED THE CORRECT NAME ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 9 AND ADDRESS OF THE CREDITOR, HAVING CONFIRMATORY LE TTER FROM THE CREDITOR AND ALL MATERIALS SHOW PRIMA FACI E NOT ONLY IDENTITY OF THE CREDITOR BUT ALSO THE GENUINEN ESS OF THE TRANSACTION, NO ADVERSE INFERENCE CAN BE DRAWN. REFERENCE CAN ALSO BE MADE TO THE JUDGEMENT OF HON 'BLE APEX COURT IN THE CASE OF STELLER INVESTMENT LTD. ( 200 I) 25] ITR 263 (SC), WHEREIN IT WAS HELD THAT EVEN IF THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL OF ASSES SEE COMPANY WERE NOT GENUINE, THE AMOUNT COULD NOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. THE ABOVE VIEW POINT OF THE HONBLE APEX COURT HAS ALSO BEEN EXPRESSED BY JURISDICTIONAL DEL HI HIGH COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 268 (DEL.), A-ONE HOUSING COMPLEX LT D. VS. ITO 110 ITD 361 (DEL.), CIT VS. VALUE CAPITAL SERVICE PVT. LTD. 307 ITR 334 (DEL.) AND CIT VS. GE NERAL EXPORTS AND CREDITS LTD. (2008) 299 ITR 268 (DEL.). IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (2008) 299 ITR 268 (DEL.). THE DELHI HIGH COURT HELD THAT ONCE THE IDENTIFY OF THE SHARE HOLDER HAS BEEN ESTABLISHED, EVEN IF THERE IS A CASE OF BOGUS SHARE CAPITAL IT CANNOT BE ADDED IN THE HANDS OF THE COMPANY UNLESS ANY ADVERSE EVID ENCE IS ON RECORD. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. (SUPRA) HAS L AID DOWN THE LAW ON THE SUBJECT AS TO WHAT IS THE EXTEN T OF THE BURDEN THAT LIES ON THE ASSESSEE TO PROVE THE CASH CREDIT IN THE SHAPE OF SHARE CAPITAL. THE HON'BLE COURT HE LD THAT 'IF THE RELEVANT DETAILS OF THE ADDRESS OR PAN, IDE NTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPART MENT ALONG WITH THE COPIES OF SHAREHOLDERS REGISTER, SH ARE APPLICATION MONEY FORMS, SHARE TRANSFER REGISTER, E TC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. THE DEPARTMENT WOULD N OT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY B ECAUSE THE CREDITORS / SUBSCRIBERS FAILS OR NEGLECTS TO RE .\POND TO ITS NOTICES. THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSA CTION SET UP BY THE ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT. WITHOUT MORE AGAINST THE ASSESSEE. THE DEPARTMENT FILED AN SLP ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 10 AGAINST THE DECISION OF DELHI HIGH COURT IN THE CAS E OF DIVINE LEASING AND FINANCE LTD. (SUPRA) WHERE THE A PEX COURT, WHILE DISMISSING THE APPEAL FILED BY THE DEPARTMENT HELD AS FOLLOWS:- 'WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FO R THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY I S RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGUS SHAREHOLDERS. WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT, IS FREE TO PROCEED TO RE-OPEN THEIR IND IVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. DELHI HIGH COURT IN THE CASE OF CIT VS. M/S PONDY M ETAL AND ROLLING MILL PVT. LTD. (IT A NO. 788/2006) DATE D 19.02.2007 HAS CONCURRED WITH THE FINDINGS OF THE APPELLATE TRIBUNAL. DELHI BENCH 'F', NEW DELHI THAT ONCE THE IDENTITY OF THE INVESTOR HAS BEEN MANIFEST AND IS PROVED, THE INVESTMENT CANNOT BE SAID TO BE THE UNDISCLOSED INCOME OF THE ASSESSEE. AT BEST, THE AM OUNT COULD BE ADDED IN THE HANDS OF THE INVESTOR BUT IT CERTAINLY COULD NOT BE TREATED AS UNDISCLOSED INCOM E OF THE ASSESSEE. THE APPEAL FILED AGAINST THE SAID DEC ISION WAS DISMISSED BY THE HONBLE SUPREME COURT IN C. C . 12860/2007 DATED 08/01/2008. AS NO ADVERSE/INCRIMINATING MATERIAL HAS BEEN GATHERED BY THE ASSESSING OFFICER DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS HENCE, I DO NOT SEE ANY JUSTIFICATION O N THE PART OF THE ASSESSING OFFICER TO MAKE ANY ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/ S GANGA INFIN P. LTD. AND M/S KUBERCO SALES P. LTD. A S THE APPELLANT HAS DISCHARGED THE INITIAL ONUS OF ESTABL ISHING THE IDENTITY OR THE SUBSCRIBERS AND THE BONAFIDES O F THE TRANSACTIONS. IN VIEW OF OUR AFORESAID DISCUSSION, I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.15.00.000/-MADE U/S 68 OF THE ACT. WITH REGARD TO THE ADDITION OF RS.37.500/- WHICH HA S BEEN MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF COMMISSION OUT OF UNDISCLOSED SOURCES FO R ARRANGING THE ACCOMMODATION ENTRIES FROM THE ABOVE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 11 MENTIONED TWO COMPANIES I.E. M/S GANGA INFIN P. LTD . AND M/S KUBERCO SALES P. LTD., I AGAIN DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.37.5 00/- AS NOWHERE IN THE IMPUGNED ORDER, THE ASSESSING OFFICE R COULD PROVE THAT THE AMOUNT RECEIVED FROM THESE PAR TIES IS AN ACCOMMODATION ENTRY. ADDITION OF RS.15,00,000 /- MADE U/S 68 OF THE ACT HAS BEEN DELETED BY ME IN PR E- PAGES OF THIS ORDER AND HENCE, THERE REMAINS NO JUSTIFICATION FOR MAKING AND SUSTAINING AN ADDITION OF RS.37.500/- ON ACCOUNT OF COMMISSION PAID. BEING OF ACADEMIC INTEREST, THIS GROUND OF APPEAL IS TAKEN A S ALLOWED TO THE APPELLANT. 9. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S IN THE LIGHT OF MATERIAL ON RECORD BEFORE US AND CAREFULLY CONSIDER ED THE SAME. LD. DR SUBMITTED THAT LD. COMMISSIONER OF INCOME TAX(A) FA ILED TO PROPERLY APPRECIATE THE FACTS THAT THE ASSESSEE COMPANY FAIL ED TO PROVE THE PHYSICAL EXISTENCE OF THE ALLEGED SHARE APPLICANT COMPANY. HE FURTHER SUBMITTED THAT AS PER THE ASSESSEE COMPANY, AN AMOUNT OF RS. 15 LA KH IS SHARE APPLICATION MONEY OF RS. 7 LAKH FROM M/S GANGA INFIN P. LTD. AN D RS. 8 LAKH FROM M/S KUBERCO SALES P. LTD. BUT EXCEPT THE AFFIDAVIT OF T HE RESPECTIVE DIRECTORS NAMELY SHRI MAHESH GARG, SHRI ANIL KUMAR, NO OTHER SUPPORTING DOCUMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THE AS SESSING OFFICER HIMSELF SENT NOTICES TO THE ABOVE COMPANIES ON THE ADDRESSE S GIVEN IN THE CONFIRMATION AFFIDAVITS AND ALSO TO THE ADDRESSES A S PER RECORD OF REGISTRAR OF COMPANIES BUT THE SAME COULD NOT BE SERVED. THE LD . DR VEHEMENTLY SUBMITTED THAT WHEN THE ASSESSING OFFICER MADE INQU IRIES THROUGH INSPECTOR ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 12 OF WARD, BOTH THE ABOVE NAMED ENTITIES WERE NOT FOU ND TO BE EXISTING AND WHEN THE ASSESSEE SUBMITTED NEW ADDRESSES OF THE AB OVE COMPANIES, THEN THE NOTICES SENT TO THE NEW ADDRESSES AGAIN REMAINED UN COMPLIED. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER RIGHTLY HELD T HAT THE IDENTITY OF THE SHARE APPLICANTS WAS NOT PROVED, MERELY FILING OF C ONFIRMATION AFFIDAVITS INDICATING PAPER IDENTITY OF THE SHARE APPLICANTS W AS MEANINGLESS WHEN THE PHYSICAL EXISTENCE OF THE SHARE APPLICANT COULD NOT BE PROVED. 10. LD. DR SUPPORTED THE ASSESSMENT ORDER AND SUBMI TTED THAT THE COMMISSIONER OF INCOME TAX(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY U/S 68 O F THE ACT AND ALSO OF ANY ADDITION ON ACCOUNT OF COMMISSION. THE DR SUBM ITTED THAT THE COMMISSIONER OF INCOME TAX(A) WRONGLY EXTENDED THE BENEFIT OF THE RATIO OF THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS LOVELY EXPORTS PVT. LTD. 6 DTR 308 (SC) . THE DR ALSO RELIED ON THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX VS NOVA PROM OTERS & FINLEASE (P) LTD. REPORTED AS (2012) 342 ITR 169 (DELHI) . 11. REPLYING TO THE ABOVE SUBMISSIONS, THE ASSESSEE S REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DISCHARGED ITS ONUS TO ESTABLISH THE IDENTITY/CREDITWORTHINESS OF THE SHARE APPLICANTS A ND THE GENUINENESS OF THE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 13 TRANSACTIONS BUT THE ASSESSING OFFICER MERELY ACTED ON THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT TAKING A HYPER TECHNICAL APPROACH. HE ALSO SUBMITTED THAT THE ASSESSING OFFICER DID NO T PROVIDE AN OPPORTUNITY TO CROSS-EXAMINE THE WITNESSES EXAMINED BY THE INVE STIGATION WING AND WITHOUT PROVIDING AN OPPORTUNITY OF CROSS-EXAMINATI ON. HE RELIED ON THE SUBMISSIONS OF SHRI MAHESH GARG AND HIS ASSOCIATES. HE PLACED HIS RELIANCE ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN ITA NO. 212/2012 DATED 11.4.2012 IN THE CASE OF COMMISS IONER OF INCOME TAX VS GOEL SONS GOLDEN ESTATE PVT. LTD. WHEREIN THEIR LORDSHIPS HELD AS UNDER:- THE REVENUE BY THIS APPEAL UNDER SECTION 260A OF T HE INCOME TAX ACT, 1961 (ACT FOR SHORT) IMPUGNS THE OR DER DATED 05.08.2011 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (TRIBUNAL FOR SHORT) IN THE CASE OF GOEL E STATE SONS PVT. LTD. IN RELATION TO ASSESSMENT YEAR 2006- 07. 2. LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT T HE ORDER PASSED BY THE TRIBUNAL IS PERVERSE AND IN FAC T ONE S.H. MALLICK HAD GIVEN A: STATEMENT, WHICH IS RE- PRODUCED IN THE ASSESSMENT ORDER SAYING THAT HE HAD PROVIDED ACCOMMODATION ENTRIES AND THE SAID STATEME NT CONCLUSIVELY PROVES THAT SHARE MONEY OF 30,00,000/- ALLEGEDLY RECEIVED BY THE RESPONDENT-ASSESSEE FROM 5 COMPANIES ARE SHAM AND BOGUS TRANSACTIONS. 3. WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS HAS FILED CONFIRMATION FROM THE COMPANIES, THEIR PA N NUMBER, COPY OF BANK STATEMENTS, AFFIDAVITS AND BAL ANCE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 14 SHEET. THEREAFTER THE ASSESSING OFFICER HAD ASKED T HE ASSESSEE TO PRODUCE THE SAID DIRECTORS/ PARTIES. AS SESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. THE ASSESS ING OFFICER DID NOT CONSEQUENT THERETO CONDUCT ANY INQU IRY AND CLOSED THE PROCEEDINGS. THIS IS A CASE WHERE TH E ASSESSING OFFICER HAS FAILED TO CONDUCT NECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN D EPTH SPECIALLY AFTER THE AFFIDAVIT/CONFIRMATION ALONG WI TH THE BANK STATEMENTS ETC. WERE FILED. IN CASE THE ASSES SING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVESTIGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NON-VERIFICATION OF THE DETAILS AT TH E TIME OF ASSESSMENT PROCEEDINGS, THE FACTUAL FINDINGS RECORD ED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. T HE IMPUGNED ORDER PASSED CANNOT BE TREATED AND REGARDE D AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANT IAL QUESTION OF LAW ARISES. 12. THE LD. DR PLACED HIS RELIANCE ON THE JUDGMENT OF NOVA PROMOTERS & FINLEASE PVT. LTD. (SUPRA) WHEREIN IT WAS HELD:- 33. THE FACTS OF CIT V LOVELY EXPORTS (P) LTD. (SU PRA) HAVE BEEN SET OUT IN THE JUDGMENT OF THIS COURT IN THAT CASE, REPORTED AS CIT VS (1) DIVINE LEASING & FINANCE LTD . (2) GENERAL EXPORTS AND CREDITS LTD. AND (3) LOVELY EXP ORTS P. LTD. IN (2008) 299 ITR 268. IN THAT CASE, THE SHARE CAPITAL SUBSCRIPTION WAS RECEIVED THROUGH BANKING CHANNELS AND COMPLETE RECORDS WERE MAINTAINED BY DIVINE LEASING & FINANCE LTD. THE ASSESSING OFFICER ISSUED SUMMONS U /S.131 AND THEREAFTER IMPOUNDED THE SHAREHOLDERS' REGISTER , SHARE APPLICATION FORMS AND SHARE TRANSFER REGISTER. IT WAS CONTENDED BY THE ASSESSEE IN THAT CASE THAT BECAUSE OF THE ACTION OF THE ASSESSING OFFICER, IT WAS NOT ABLE TO FURNISH ANY DETAILS ABOUT THE SHARE SUBSCRIBERS. THE TRIBUNAL F OUND THAT ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 15 THE ALLOTMENT OF SHARES WAS MADE AS PER THE RELEVAN T RULES OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 AS WELL AS THOSE OF THE DELHI STOCK EXCHANGE. NO EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO INDIC ATE THAT THE SHAREHOLDERS WERE EITHER BENAMIDARS OF THE ASSE SSEE- COMPANY OR FICTITIOUS OR THAT THE SHARE APPLICATION MONIES WERE THE UNACCOUNTED INCOME OF THE ASSESSEE-COMPANY . THE TRIBUNAL ACCORDINGLY HELD THAT THE ONUS THAT LAY ON THE ASSESSEE UNDER SEC.68 STOOD DISCHARGED. 34. IN RESPECT OF THE OTHER ASSESSEE, NAMELY, GENER AL EXPORTS & CREDITS LTD., THE MONIES WERE RECEIVED BY THE SAID COMPANY ON ISSUE OF RIGHTS SHARES TO FIVE COMPANIES PURSUANT TO THE RENUNCIATION OF RIGHTS BY SEVERAL I NDIVIDUAL SHAREHOLDERS. A SEARCH HAD BEEN CONDUCTED ON THE PR EMISES OF THE ASSESSEE, BUT THOSE RENUNCIATION FORMS WERE NOT FOUND WITH THE ASSESSEE. AS IN THE CASE OF DIVINE LEASING & FINANCE LTD., THE FIVE COMPANIES WERE REGISTERED IN SIKKIM AT THE SAME ADDRESS. THEY ALL FILED REPLIES TO THE DEPARTMENT ASKING FOR FURTHER TIME TO PROVIDE THE DETAILS OF T HEIR INVESTMENTS. THEY HAD ALSO FILED RETURNS OF INCOME UNDER THE SIKKIM TAXATION MANUAL AND HAD SUBSCRIBED TO THE SH ARES THROUGH BANKING CHANNELS. MOREOVER, THE INVESTIGATI ONS CARRIED OUT INTO THOSE COMPANIES BY THE INCOME-TAX DEPARTMENT AT CALCUTTA AND THE ADVERSE FINDINGS THE REIN HAD BEEN STRUCK DOWN AS BEING WITHOUT JURISDICTION IN A PPEALS FILED BY THOSE COMPANIES AND THEREFORE THE ASSESSIN G OFFICER HAVING JURISDICTION OVER GENERAL EXPORTS AND CREDIT S LTD. IN BULANDSHAHAR COULD NOT RELY UPON THEM. IN THESE CIRCUMSTANCES, THE TRIBUNAL HAD DELETED THE ADDITIO N MADE U/S.68 ON THE GROUND THAT THE IDENTITY OF THE SHARE HOLDERS HAD BEEN PROVED. THIS COURT DID NOT APPROVE OF THE GROUND ON WHICH THE TRIBUNAL HAD CANCELLED THE ADDITION AN D OBSERVED THAT THE JUDGMENT OF THE FULL BENCH OF THI S COURT IN SOPHIA FINANCE (1994) 205 ITR 98 (DELHI) COULD NOT BE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 16 UNDERSTOOD TO HAVE ENUNCIATED THAT ONCE THE IDENTIT Y OF THE SHAREHOLDERS IS PROVED THERE CAN BE NO ADDITION IN THE HANDS OF THE COMPANY WHICH RECEIVED THE SHARE MONIES. THE COURT HOWEVER REFUSED TO ATTACH ANY IMPORTANCE TO THE VIO LATION OF THE PROVISIONS OF THE COMPANIES ACT, 1956 IN THE MA TTER OF RENUNCIATION OF THE RIGHT TO SUBSCRIBE TO THE SHARE S AND HELD THAT IT WAS A MATTER OF CONCERN ONLY OF THE APPROPR IATE AUTHORITY UNDER THAT ACT. ACCORDINGLY, THE ULTIMATE DECISION OF THE TRIBUNAL CANCELLING THE ADDITION WAS UPHELD. 35. THE FACTS OF LOVELY EXPORTS P. LTD., AS NOTED B Y THIS COURT, ARE THESE. THE ASSESSEE-COMPANY IN THAT CASE HAD FURNISHED THE NECESSARY DETAILS SUCH AS PAN NO./INC OME TAX WARD NO./RATION CARD OF THE SHARE APPLICANTS AND SO ME OF THEM WERE ASSESSED TO TAX. THE MONIES WERE RECEIVED THROUGH BANKING CHANNELS. IN SOME CASE, AFFIDAVITS/CONFIRMATIONS OF THE SHARE APPLICANTS CO NTAINING THE ABOVE INFORMATION WERE FILED. THE ASSESSING OFF ICER DID NOT CARRY OUT ANY INQUIRY INTO THE INCOME TAX RECOR DS OF THE PERSONS WHO HAD GIVEN THEIR FILE NUMBERS IN ORDER T O ASCERTAIN WHETHER THEY WERE EXISTENT OR NOT. HE NEI THER CONTROVERTED NOR DISAPPROVED THE MATERIAL FILED BY THE ASSESSEE. FURTHER, THE ASSESSEE HAD SPECIFICALLY IN VITED THE ASSESSING OFFICER TO CARRY OUT AN ENQUIRY AND EXAMI NE THE ASSESSMENT RECORDS OF THE SHARE APPLICANTS WHOSE IN COME TAX FILE NUMBERS WERE GIVEN. THOUGH THE ASSESSING O FFICER HAD SUFFICIENT TIME TO CARRY OUT THE EXAMINATION, H E DID NOT DO SO, BUT PUT FORTH AN EXCUSE THAT THE ASSESSEE WA S TAKING SEVERAL ADJOURNMENTS. THIS COURT OBSERVED THAT IT I S FOR THE ASSESSING OFFICER TO MANAGE HIS SCHEDULE AND HE SHO ULD HAVE ENSURED THAT BECAUSE OF THE ADJOURNMENTS HE DI D NOT RUN OUT OF TIME FOR DISCHARGING THE DUTIES CAST ON HIM BY LAW. IT WAS HELD THAT WHEN DETAILS WERE FURNISHED B Y THE ASSESSEE, THE BURDEN SHIFTED TO THE ASSESSING OFFIC ER TO INVESTIGATE INTO THE CREDITWORTHINESS OF THE SHARE APPLICANTS ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 17 WHICH HE WAS UNABLE TO DISCHARGE. THUS, THE ORDER O F THE TRIBUNAL DELETING THE ADDITION WAS HELD NOT GIVING RISE TO ANY QUESTION OF LAW, MUCH LESS ANY SUBSTANTIAL QUES TION OF LAW. 36. IT IS NOT ONLY RELEVANT TO NOTE THE ABOVE FACTS , WHICH DISTINGUISH THOSE THREE CASES (SUPRA) FROM THE CASE BEFORE US, BUT IT IS ALSO RELEVANT TO NOTE THE FOLLOWING O BSERVATIONS MADE BY THIS COURT IN THE ABOVE THREE CASES: 'THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT TH E PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MO NEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST BE FIRMLY EXCORIATE D BY THE REVENUE. EQUALLY, WHERE THE PREPONDERANCE OF EVIDEN CE INDICATES ABSENCE OF CULPABILITY AND COMPLEXITY OF THE ASSESSED IT SHOULD NOT BE HARASSED BY THE REVENUES INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF A PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE AO FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATU TORY SHARE APPLICATION DOCUMENTS. IN THE CASE OF PRIVATE PLACE MENT THE LEGAL REGIME WOULD NOT BE THE SAME. A DELICATE BALA NCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF SECTIO NS 68 AND 69 OF THE IT ACT. THE BURDEN OF PROOF CAN SELDO M BE DISCHARGED TO THE HILT BY THE ASSESSED; IF THE AO H ARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY BOUND, TO CARRYOUT THOROUGH INVESTIGATIONS. BUT IF THE AO FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HI S SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY.' ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 18 WE MAY ALSO NOTE THAT A REFERENCE WAS MADE BY THIS COURT TO SEVERAL AUTHORITIES, INCLUDING AT LEAST SEVEN JUDGM ENTS OF THIS COURT ON THE QUESTION OF APPLICABILITY OF SECT ION 68 TO SHARE APPLICATION MONIES, AND THE POSITION WAS PITH ILY SUMMED UP AS FOLLOWS AT PAGE 282 (OF 299 ITR): 'IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SEC TION 68 OF THE IT ACT. THE ASSESSED HAS TO PRIMA FACIE PROVE ( 1) THE IDENTITY OF THE CREDITOR/SUBSCRIBER; (2) THE GENUIN ENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTE D THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER. (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISH ED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ET C. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSED. (5) THE DEPARTMENT WOU LD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY B ECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS TO RESPON D TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSA CTION SET UP BY THE ASSESSED NOR SHOULD THE AO TAKE SUCH REPU DIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINS T THE ASSESSED. (7) THE ASSESSING OFFICER IS DUTY-BOUND T O INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/SU BSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION.' 37. THE JUDGMENT OF THIS COURT IN THE ABOVE THREE C ASES WAS CARRIED IN APPEAL TO THE SUPREME COURT BY THE REVEN UE WHICH FILED SLP NO.11993/2007. THE PETITION FOR LEA VE TO APPEAL WAS DISMISSED BY THE SUPREME COURT OBSERVING AS BELOW: - ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 19 'DELAY CONDONED. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISC LOSED INCOME UNDER S.68 OF IT ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT I F THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPE N THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENC E, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. SUBJECT TO THE ABOVE, SPECIAL LEAVE PETITION IS DIS MISSED.' 38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADD RESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SH ARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHAR E TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICE R AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INT O THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW T HAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THE N NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UN DER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFR AID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PR ESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MAT ERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF -CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR U NACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AN D THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAI N SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERI AL MADE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 20 AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF I NVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACT IVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSE SSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIP TIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN - A SMOKE SCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOL VEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATI O. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHE RE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHAR GED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ES TABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPL ICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COME FORWARD TO MERELY REJECT T HE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY IN TO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. 39. THE CASE OF ORISSA CORPORATION (1986) 159 ITR EXEMPLIFIES THE CATEGORY OF CASES WHERE NO ACTION I S TAKEN BY THE ASSESSING OFFICER TO VERIFY OR CONDUCT AN ENQUI RY INTO THE PARTICULARS ABOUT THE CREDITORS FURNISHED BY THE AS SESSEE, INCLUDING THEIR INCOME-TAX FILE NUMBERS. IN THE SAM E CATEGORY FALL CASES DECIDED BY THIS COURT IN DOLPHIN CANPACK (2006) 283 ITR 190, CIT V MAKHNI AND TYAGI P. LTD. (2004) 267 ITR 433, CIT V ANTARTICA INVESTMENT P. LTD. (2003) 262 ITR 493 AND CIT V ACHAL INVESTMENT LTD. (2004) 268 ITR 211. TO PUT IT SIMPLY, IN THESE CASES THE DECISION WAS BASED ON TH E FUNDAMENTAL RULE OF LAW THAT EVIDENCE OR MATERIAL A DDUCED BY THE ASSESSEE CANNOT BE THROWN OUT WITHOUT ANY ENQUI RY. THE RATIO DOES NOT EXTEND BEYOND THAT. THE BOUNDARIES O F THE RATIO CANNOT BE, AND SHOULD NOT BE, WIDENED TO INCLUDE TH EREIN CASES WHERE THERE EXISTS MATERIAL TO IMPLICATE THE ASSESSEE IN ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 21 A COLLUSIVE ARRANGEMENT WITH PERSONS WHO ARE SELF-C ONFESSED 'ACCOMMODATION ENTRY PROVIDERS'. 40. REFERENCE WAS ALSO MADE ON BEHALF OF THE ASSESS EE TO THE RECENT JUDGMENT OF A DIVISION BENCH OF THIS COURT I N CIT V. OASIS HOSPITALITIES PRIVATE LIMITED, (2011) 333 ITR 119. WE HAVE GIVEN UTMOST CONSIDERATION TO THE JUDGMENT. IT DISPOSES OF SEVERAL APPEALS IN THE CASE OF DIFFERENT ASSESSE ES. EXCEPT THE CASE OF CIT V OASIS HOSPITALITIES P LTD. (ITA N OS.2093 & 2095/2010), THE OTHER CASES FALL UNDER THE CATEGORY OF ORISSA CORPORATION (SUPRA). HOWEVER, IN THE CASE OF OASIS HOSPITALITIES P LTD., THERE IS REFERENCE TO INFORMA TION RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIGATION WIN G OF THE REVENUE ON THE BASIS OF WHICH IT WAS FOUND THAT SIX INVESTORS BELONG TO ONE MAHESH GARG GROUP WHO WERE NOT CARRYI NG ON ANY REAL BUSINESS ACTIVITY AND WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THEY WERE ENTRY OP ERATORS AND THE ASSESSEE IN THAT CASE WAS ALLEGED TO BE A B ENEFICIARY. WHILE DISPOSING OF THESE APPEALS, THIS COURT OBSERV ED: - 'THE ASSESSEES FILED COPIES OF PAN, ACKNOWLEDGEMENT OF FILING INCOME TAX RETURNS OF THE COMPANIES, THEIR B ANK ACCOUNT STATEMENTS FOR THE RELEVANT PERIOD, I.E., FOR THE P ERIOD WHEN THE CHEQUES WERE CLEARED. HOWEVER, THE PARTIES WERE NOT PRODUCED IN SPITE OF SPECIFIC DIRECTION OF THE AO I NSTEAD OF TAKING OPPORTUNITIES IN THIS BEHALF. SINCE THE SO-C ALLED DIRECTORS OF THESE COMPANIES WERE NOT PRODUCED ON T HIS GROUND COUPLED WITH THE OUTCOME OF THE DETAILED INQ UIRY MADE BY THE INVESTIGATING WING OF THE DEPARTMENT, THE AO MADE THE ADDITION. THIS ADDITION COULD NOT BE SUSTAINED AS T HE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING PA N NUMBER, BANK ACCOUNT, COPIES OF INCOME TAX RETURNS OF THE SHARE APPLICANTS, ETC. WE ALSO FIND THAT THE ASSESS ING OFFICER WAS INFLUENCED BY THE INFORMATION RECEIVED BY THE INVESTIGATING WING AND ON THAT BASIS GENERALLY MODU S ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 22 OPERANDI BY SUCH ENTRY OPERATORS IS DISCUSSED IN DE TAIL. HOWEVER, WHETHER SUCH MODUS OPERANDI EXISTED IN THE PRESENT CASE OR NOT WAS NOT INVESTIGATED BY THE AO. THE ASS ESSEE WAS NOT CONFRONTED WITH THE INVESTIGATION CARRIED OUT B Y THE INVESTIGATING WING OR WAS GIVEN AN OPPORTUNITY TO C ROSS- EXAMINE THE PERSONS WHOSE STATEMENTS WERE RECORDED BY THE INVESTIGATING WING.' THESE QUOTED OBSERVATIONS CLEA RLY DISTINGUISH THE PRESENT CASE FROM CIT V OASIS HOSPI TALITIES P LTD. (SUPRA). EXCEPT FOR DISCUSSING THE MODUS OPERA NDI OF THE ENTRY OPERATORS GENERALLY, THE ASSESSING OFFICER IN THAT CASE HAD NOT SHOWN WHETHER ANY LINK BETWEEN THEM AND THE ASSESSEE EXISTED. NO ENQUIRY HAD BEEN MADE IN THIS REGARD. FURTHER, THE ASSESSEE HAD NOT BEEN CONFRONTED WITH THE MATERIAL COLLECTED BY THE INVESTIGATION WING OR WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STAT EMENTS WERE RECORDED BY THE INVESTIGATION WING. 41. IN THE CASE BEFORE US, NOT ONLY DID THE MATERIA L BEFORE THE ASSESSING OFFICER SHOW THE LINK BETWEEN THE ENTRY P ROVIDERS AND THE ASSESSEE- COMPANY, BUT THE ASSESSING OFFICE R HAD ALSO PROVIDED THE STATEMENTS OF MUKESH GUPTA AND RAJAN J ASSAL TO THE ASSESSEE IN COMPLIANCE WITH THE RULES OF NATURA L JUSTICE. OUT OF THE 22 COMPANIES WHOSE NAMES FIGURED IN THE INFORMATION GIVEN BY THEM TO THE INVESTIGATION WING , 15 COMPANIES HAD PROVIDED THE SO-CALLED 'SHARE SUBSCRI PTION MONIES' TO THE ASSESSEE. THERE WAS THUS SPECIFIC IN VOLVEMENT OF THE ASSESSEE-COMPANY IN THE MODUS OPERANDI FOLLO WED BY MUKESH GUPTA AND RAJAN JASSAL. THUS, ON CRUCIAL FAC TUAL ASPECTS THE PRESENT CASE STANDS ON A COMPLETELY DIF FERENT FOOTING FROM THE CASE OF CIT V OASIS HOSPITALITIES P. LTD. (SUPRA). ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 23 13. IN VIEW OF ABOVE, WE HOLD THAT IN THE CASE BEFO RE US, THE ASSESSING OFFICER NOT ONLY AFFORDED THE OPPORTUNITY TO THE AS SESSEE OF BEING HEARD BUT ALSO THE ASSESSING OFFICER ISSUED NOTICES TO THE AL LEGED SHARE APPLICANTS TO THE ADDRESSES GIVEN IN THEIR CONFIRMATION AFFIDAVIT S AND ALSO ON THE ADDRESSES AS PER RECORD OF THE REGISTRAR OF COMPANIES BUT THE SAME COULD NOT BE SERVED AS THEY WERE RECEIVED BACK WITH THE REMARK SHOP AL WAYS LOCKED IN CASE OF M/S GANGA INFIN P. LTD. AND WITH THE REMARK NO SUC H COMPANY IN THE CASE OF M/S KUBERCO SALES P. LTD. FURTHER, THE ASSESSIN G OFFICER ALSO DEPUTED INCOME TAX INSPECTOR OF CONCERNED WARD TO MAKE INQU IRIES AT THE GIVEN ADDRESSES BUT THE INSPECTOR REPORTED THAT THE SAID ENTITIES WERE NOT FOUND TO BE EXISTING AT THE SAID ADDRESSES IN THE SENSE THAT THERE WAS NO SIGN OF ANY BUSINESS ACTIVITY IN THE FORM OF EMPLOYEES, ASSETS OF BUSINESS OR ANY OTHER EVIDENCE OF ANY KIND OF BUSINESS ACTIVITY. THE ASS ESSEE WAS ALSO CONFRONTED WITH THE REPORT OF INCOME TAX INSPECTOR AND HE AGAI N SUBMITTED A NEW ADDRESS I.E. 104, B.D. CHAMBERS, KAROL BAGH, NEW DE LHI BUT THE NOTICES BY THE ASSESSING OFFICER ON THIS ADDRESS AGAIN WENT UN COMPLIED WITH. WE ALSO OBSERVE THAT THE ASSESSEE ONLY SUBMITTED CONFIRMATO RY AFFIDAVITS SIGNED BY SHRI MAHESH GARG, DIRECTOR M/S GANGA INFIN LTD. AND SHRI ANIL KUMAR DIRECTOR M/S KUBERCO SALES P. LTD. AND IN BOTH THES E CONFIRMATIONS, THE RESPECTIVE AMOUNTS WERE MENTIONED TO HAVE BEEN GIVE N TO THE ASSESSEE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 24 COMPANY AS UNSECURED LOANS AND SUBSEQUENT CONFIRMATIONS SENT BY DAK DESK OF ASSESSING OFFICER STATES THAT THE AMOUNTS W ERE GIVEN AS SHARE APPLICATION MONEY . APART FROM SAID CONTRADICTORY CONFIRMATIONS, NO OTHER SUPPORTING DOCUMENT IN SUPPORT OF IDENTITY AND CRED ITWORTHINESS OF THE PARTY AND GENUINENESS OF THE TRANSACTION WAS SUBMITTED. 14. ON THE OTHER HAND, COMMISSIONER OF INCOME TAX(A ) DISCUSSED PLETHORA OF JUDGMENTS BUT HE SIMPLY NOTED THAT AS N O ADVERSE/INCRIMINATING MATERIAL HAS BEEN GATHERED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE, HE DID NOT SEE ANY J USTIFICATION ON THE PART OF ASSESSING OFFICER TO MAKE ANY ADDITION ON ACCOUNT O F SHARE APPLICATION MONEY IN QUESTION. HE WAS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT HAD DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE IDE NTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANS ACTION BECAUSE THE ASSESSING OFFICER NOT ONLY ISSUED NOTICES TO THE VA RIOUS ADDRESSES SUBMITTED BEFORE HIM BUT HE ALSO CALLED A REPORT FROM THE INC OME TAX INSPECTOR OF THE WARD. THE NOTICES REMAINED UNSERVED AND UNCOMPLIED AND THE REPORT OF THE INSPECTOR REVEALS THAT THERE WAS NO PHYSICAL EXISTE NCE OF SHARE APPLICANT COMPANIES IN THE NAME OF M/S GANGA INFIN P. LTD. AN D M/S KUBERCO SALES P. LTD. ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 25 15. IN THE CASE OF NOVA PROMOTERS (SUPRA), THEIR LO RDSHIPS HELD THAT THE RATIO OF THE DECISIONS IN THE CASE OF LOVELY EXPORT S (P) LTD. BY THE APEX COURT AND IN THE CASES OF CIT VS DIVINE LEASING & F INANCE LTD.(2008) 299 ITR 268(SC) AND OASIS HOSPITALITIES (P) LTD.(2011) 333 ITR 119 BY HONBLE JURISDICTIONAL HIGH COURT IS TO BE UNDERSTO OD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THESE CASES. THEIR LORD SHIPS FURTHER HELD THAT IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANT SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBE RS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSI NG OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY FURTHER INQUIRY INTO THE SAME AND HE HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE DOCUM ENTARY EVIDENCE AND PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON AND NO ADDITION CAN BE MADE IN THE HANDS OF COMPANY U/S 68 OF THE ACT AND THE R EMEDY IS OPEN TO THE REVENUE TO GO AFTER THE SHARE APPLICANTS IN ACCORDA NCE WITH LAW. BUT IN THE PRESENT CASE WHERE THE ASSESSING OFFICER WAS IN POS SESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE ALSO ESTABLISHES LINK BETWEEN SELF-CONFESSED ENTRY PROVI DERS WHOSE EXCLUSIVE BUSINESS WAS TO HELP THE ASSESSEE TO BRING INTO THE IR BOOKS OF ACCOUNTS THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBS CRIPTION, THEN WE ARE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 26 INCLINED TO RESPECTFULLY HOLD THAT THE BENEFIT OF T HE RATIO OF THESE JUDGEMENTS IS NOT AVAILABLE TO THE ASSESSEE IN THE PRESENT CAS E. THE RATIO IS INAPPLICABLE TO A CASE SUCH AS THE PRESENT CASE WHERE THE MODUS OPERANDI OF THE ASSESSEE IS CLEARLY INDICATED BY THE VALID MATERIAL MADE AVA ILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATION CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS. IN THE PRE SENT CASE, WE OBSERVE THAT THE ASSESSING OFFICER DID NOT LEAVE ANY STONE UNTUR NED TO TEST AND CHECK THE IDENTITY AND CREDITWORTHINESS OF ALLEGED SHARE APPL ICANTS OFFICE AND THE GENUINENESS OF THE TRANSACTION BUT EXCEPT THE SELF CONTRADICTORY CONFIRMATIONS IN THE FORM OF AFFIDAVIT WHEREIN IT H AS BEEN STATED THAT THE AMOUNTS IN QUESTION HAVE BEEN GIVEN AS UNSECURED LOANS. THE ASSESSEE DID NOT FURNISH ANY DOCUMENT OR EVIDENCE WHICH COUL D BE SUBMITTED IN THE FORM OF PAN NO., INCOME TAX RETURNS, BANK STATEMENT , SHARE SUBSCRIPTION APPLICATION, SHARE TRANSFER REGISTER ETC. 16. IN VIEW OF ABOVE, WE HOLD THAT THE FINDINGS OF THE ASSESSING OFFICER FOR MAKING ADDITION OF RS. 15 LAKH MADE U/S 68 OF T HE ACT WAS BASED ON JUSTIFIED AND REASONABLE GROUNDS. PER CONTRA, THE LD. COMMISSIONER OF INCOME TAX(A) WAS WRONG IN HOLDING THAT THE APPELLA NT ASSESSEE HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE IDE NTITY OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTION. THEREFORE, WE ARE UNABLE TO UPHOLD THE ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 27 ORDER OF THE COMMISSIONER OF INCOME TAX(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. THE JUDGEM ENT OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF N OVA PROMOTERS & FINLEASE PVT. LTD. (SUPRA) IS RESPECTFULLY FOLLOWED. 17. IN VIEW OF ABOVE, GROUND NO. 1, 3 AND 4 ARE ALL OWED. GROUND NO.2 18. FROM A BARE READING OF THE ASSESSMENT ORDER, WE OBSERVE THAT THE ASSESSING OFFICER CONCLUDED WITH THE FINDING THAT T HE AMOUNT OF RS.15 LAKH WAS ASSESSEES OWN UNACCOUNTED MONEY WHICH WAS ROUT ED THROUGH THE BANK ACCOUNT EXISTING IN THE NAME OF ENTRY OPERATORS BY WHICH A COMMISSION WAS PAID TO THE PERSONS WHO ARRANGED TRANSACTION AND TH E ASSESSING OFFICER MADE AN ADDITION OF RS.37,500 ON ESTIMATION BASIS. THIS ADDITION WAS DELETED BY THE COMMISSIONER OF INCOME TAX(A) WITH AN OBSERVATI ON THAT THE ADDITION OF RS.37,500 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENT OF COMMISSION OUT OF DISCLOSED SOURCES FOR ARRANGING A CCOMMODATION ENTRIES IS DELETED BECAUSE AN ADDITION U/S 68 OF THE ACT HAS B EEN DELETED. ALTHOUGH AS PER FOREGOING DISCUSSIONS PERTAINING TO GROUNDS NO. 1, 3 AND 4, WE CONFIRM THE ADDITION MADE BY THE ASSESSING OFFICER, SETTING ASIDE THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(A) IN THIS REGARD IN THE IMPUGNED ORDER BUT ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 28 REGARDING ADDITION OF RS.37,500 FOR PAYMENT OF COMM ISSION, WE OBSERVE THAT THE ASSESSING OFFICER MADE THIS ADDITION ON HYPER T ECHNICAL APPROACH ON THE BASIS OF PRESUMPTION, THEREFORE, ITS DELETION BY TH E IMPUGNED ORDER IS HELD JUSTIFIED AND WE CONFIRM THE SAME ALTHOUGH ON DIFFE RENT REASONING. 19. IN VIEW OF ABOVE, GROUND NO. 2 OF THE REVENUE I S DISMISSED. 20. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2012. SD/- SD/- ( J.S. REDDY ) (CHANDRA MOHAN G ARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 12 TH OCTOBER 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR TRUE CO PY BY ORDER ASSTT. REGISTRAR ITA NO.2081/DEL/2010 ASSTT.YEAR: 2006-07 29