DCIT Circle-1, V. Rana Papers Ltd,

ITA 2184/DEL/2008

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3152 (ITAT-DELHI)
• Duration Of Justice: 11 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-07-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 04-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJOG KAPOOR
• Keywords: Depreciation; Income from undisclosed sources; Additional evidence; Tangible material; Accommodation entries; Non compliance; Onus to prove; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 143(3); 142(1); 133(6); 143(1); 250; 143(2); 264; 192; 131; 68; 148; 144; 154

Judgement Text

ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 1 OF 63 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: A: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 2184/DEL/2008 ( ASSESSMENT YEAR: 2002-03) DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, MUZAFFARNAGAR. VS. M/S RANA PAPERS LTD., JANSATH ROAD, MUZAFFARNAGAR. PAN NO: AAACR7902B APPELLANT RESPONDENT REVENUE BY : SHRI SANJOG KAPOOR, SR. DR ASSESSEE BY : NONE ORDER PER ANADEE NATH MISSHRA, AM [A]. THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE IMPUGNED APPELLATE ORDER DATED 27.03.2008 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MUZAFFARNAGAR, [IN SHORT, LD.CIT(A)] PERTAINING T O ASSESSMENT YEAR 2002-03, ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW & ON FACTS BY DELETING THE ADDITION OF ACCOMMODATION ENT RIES OF RS. 18,54,625/-, EVEN WHEN 11 MONTHS TIME WAS GIVEN BY ASSESSING OFFICER FOR FURNISHING THE EVIDENCES. THE HONBLE S.C. HAS HELD IN 57 ITR 532, 53 ITR 623 THAT BURDEN TO PROVE NATURE AND SOURCE OF RECEIPT WAS ON THE ASSESSEE, WHICH HA S NOT BEEN DISCHARGED BY THE ASSESSEE IN THIS CASE. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 2 OF 63 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW BY DELETING THE SHARE CAPITAL OF RS. 4,28,50,000/- , A ND ADDITION MADE U/S 68. NOTICES U/S 144 DATED 16-10-2007 AND 6-11-2007 WERE SERVED PROPERLY ON THE ASSESSEE BUT NO SHARE CAPITAL SUBSCRIBER WAS PRODUCED BEFORE ASS ESSING OFFICER AND LD. CIT(APPEALS) IGNORED THIS FACT, MERELY FILING DOCUM ENTS CANNOT BE TREATED AS SUFFICIENT EVIDENCES TO PROVE GENUINESS OF CREDIT A S REPORTED IN 140 ITR 151 (ALL.) AND 50 ITR (SC). 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S BY DELETING THE ADDITION OF UNSECURED LOANS OF RS. 1,18,63,549/-. THE LD. CIT( APPEALS) HAS ACCEPTED FRESH / ADDITIONAL EVIDENCES PRODUCED BEFORE HIM AND IGNORE D THE REQUEST OF ASSESSING OFFICER TO EXAMINE THE SAME. 4. THAT ORDER OF THE LD. CIT(A) BE SET ASIDE AND TH AT OF THE A.O. BE RESTORED. [B]. VIDE ASSESSMENT ORDER DATED 05.12.2007 PASSED U/S 148/143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). IN THIS ASSESSM ENT ORDER, ASSESSED U/S 143(3) OF I.T. ACT, ON INCOME OF RS. 5,75,52,110 ( ROUNDED OF F). THE RELEVANT PORTION OF THE ASSESSMENT ORDER IS REPRODUCED AS UNDER:- RETURN OF INCOME IN ORIGINAL WAS FILED BY THE ASSES SEE COMPANY ON 31-10-2007 DECLARING LOSS AT RS. 2,59,78,987/- WHICH WAS PROCE SSED ON 15-1-2003 ON THE RETURNED LOSS LATER ON NOTICE U/S 148 WAS ISSUED ON 12-12-20 06 ON THE BAIS OF INCORMATION RECEIVED FROM DIRECTOR OF INCOME TAX (INV.-I), NEW DELHI THROUGH COMMISSIONER OF INCOME TAX MUZAFFARNAGAR THAT THE ASSESSEE COMPANY HAD RECEIVED FOLLOWING ACCMMODATION ENTRIES BENEFICIARY BANK VALUE OF ENTRY INSTRUMENT NO. DATE OF RECEIPT NAME OF THE ENTRY GIVEN DD OF P&S. B.MZR RS. 2,00,500/- 146903 2 1 MAY, 2001 SHYAM LAL DD OF SBI. MZN RS. 2,00,500/- 489663 24 MA Y, 2001 BANSAL TRADING CO. DD OF SBI. MZN RS. 2,00,500/- 134049 24 MAY , 2001 SAVITRI DEVI DD OF P & SB. MZN RS. 3,00,750/- 504104 26 MA Y, 2001 NAVNEET TRADING DD OF P & SB. MZN RS. 2,00,500/- 132636 26 M AY, 2001 SITA DEVI DD OF SBI. MZN RS. 2,00,500/- 123564 02 JUNE , 2001 RAJ RANI BANSAL DD OF SBI. MZN RS. 2,00,500/- 116579 02 JUNE , 2001 RAM PRAKASH DD OF SBI. MZN RS. 1,50,375/- 144537 02 JUNE, 2001 SHREE RAM GARG DD OF P & SB. MZN RS. 2,00,500/- 505261 03 JULY , 2001 BANSAL TRADING CO. TOTAL VALUE RS. 18,54,625/- ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 3 OF 63 ENTRY OPERATORS BANK NAME, BRANCH A/C NO. FROM ENTRY GIVEN JAI LAXMI CO-OPERATIVE BANK, FATEHPURI 12382 -DO- 3171 -DO- 11176 -DO- 1811 -DO- 1177 -DO- 12735 -DO- 10157 -DO- 14470 -DO- 3170 IN RESPONSE OF NOTICE U/S 148 COUNSEL OF THE ASSESS EE COMPANY FILED REPLY ON 05.01.2007 STATING AS UNDER: 1. THAT THE NOTICE ISSUED IS TIME BARRED, BAD IN LAW A ND HAS BEEN ISSUED FOR NO REASON. IN THIS EASE, THE RETURN OF INCOME HAS ALRE ADY BEEN FILED ON 3 1.10.2002 VIDE RECEIPT NO. 160(PHOTO COPY ENCLOSED), 2. IN THE FACTS AND CIRCUMSTANCES THE ASSESSEE IS UNAB LE TO UNDERSTAND THE INITIATIONS OF PROCEEDINGS U S 148 147. THEREFORE, YOU ARE REQUESTED TO PLEASE SUPPLY THE CERTIFIED COPY OF REASONS AS RECORDED BY YOU ON RECORD. HOWEVER, WITHOUT PREJUDICE TO ABOVE, THE RETURN OF INCOME AL READY FILED ON 31.10.2002 MAY PLEASE BE TREATED AS RETURN OF INCOME IN COMPLI ANCE OF NOTICE ISSUED. ACCORDINGLY, ASSESSEE COMPANY WAS SUPPLIED COPY O F REASONS VIDE THIS OFFICE LETTER AAACR7902B/DCIT, CIRCLE-1/MZN/06-07 DATED 25 .01.2007 AND ASSESSEE WAS REQUIRED TO JUSTIFY AS HOW THE PROCEEDINGS OF INSUR ANCE OF NOTICE IS TIME BARRED AND BAD IN LAW AS MENTIONED IN THE REPLY FILED BY THE COUNS EL. THEREAFTER, NOTICE U/S 143(2) AND 142(1) ISSUED ALONGWITH THE DETAILED QUESTIONNAIRE ON 30.04.2007 AND DULY SERVED UPON THE ASSESSEE COMPANY ON 03.05.2007. THE DATE WAS F IXED FOR COMPLIANCE ON 07.05.2007 BUT NO COMPLIANCE WAS MADE ON THE DATE F IXED NOR ANY ADJOURNMENT WAS SOUGHT. HOWEVER, A LETTER DATED 23.04.2007 WAS REC EIVED ON 07.05.2007 FROM THE COUNSEL WHEREIN REQUEST WAS MADE FOR SUPPLY OF REAS ONS AND ; ADJOURNED THE CASE SINE DIE. ACCORDINGLY, ASSESSEE COMPANY WAS INTIMATED T HAT REASONS HAVE ALREADY BEEN SUPPLIED VIDE LETTER DATED 25.01.2007 AND COMPANY W AS AGAIN ASKED TO MAKE COMPLIANCE AS PER QUESTIONNAIRE DATED 30.04.2007 AN D DATE WAS FIXED FOR COMPLIANCE ON 11.06.2007 THROUGH NOTICE U/S 142(1) DATED 30.05.20 07 ATTACHED WITH THE REPLY. AGAIN THE COMPLIANCE WAS MADE ON THE DATED FIXED NOR ANY ADJOURNMENT WAS SOUGHT. HENCE NOTICE U/S 148/ 143(2) /142(1) WAS ISSUED ON 06.11. 2007 AS UNDER: TO, THE PRINCIPAL OFFICER, M/S RANA PAPERS LTD., JANSATH RAOD, MUZAFFARNAGAR, ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 4 OF 63 SUB: ASSESSMENT PROCEEDINGS U/S 148/143(3) OF I.T . ACT, 1961 A.Y. 2002-03 NOTICE U/S 144 OF THE I.T. ACT, 1961- FINA L OPPORTUNITY- REGARDING. PLEASE REFER TO THE ABOVE, YOUR ATTENTION IS INVITED TO WARDS FOLLOWING NOTIC ES ISSUED FROM TIME TO TIME AND HAVE ALREADY BEEN SERVED UPON YOU. 1. NOTICE U/S 148 DT. 12.12.2006 SERVED ON 21.12.2006 2. NOTICE U/S 143(2) ISSUED ALONGWITH NOTICE UNDER SEC TION 142(1) AND QUESTIONNAIRES AND ANNEXURE A DT. 30.04.2007 DULY SERVED ON 03.05.2007 FIXING HEARING ON 07.05.2007. 3. NOTICE U/S 142(1) DT. 30.05.2007 FIXING HEARING ON 11.06.2007 SERVED ON 05.06.2007 AND NOTICE U/S 144/142(1) DT. 16.10.2007 FIXING 23.10.2007. NO COMPLIANCE TO THE ABOVE NOTICES EXCEPT FILING R EPLY TO THE NOTICE U/S 148 STATING THEREIN THAT RETURN OF INCOME FILED ON 31.1 0.2002 BE TREATED AS FILED IN COMPLIANCE OF NOTICE U/S 148 AND ASKING FOR SUPPLY OF REASONS WHICH WERE SUPPLIED VIDE THIS OFFICE LETTER F.NO. AAACR7902B/D CIT/CIRLCE-1/MZN/06-07 DATED 25.01.2007. NON COMPLIANCE OF NOTICES U/S 142(1) MAY ENTAIL PE NAL ACTION AND EXPART ASSESSMENT. SINCE IT IS AN TIME BARRING MATTER AND ADEQUATE OPPORTUNITIES HAVE ALREADY BEEN AVAILED PROVIDED TO YOU. YOU ARE THER EFORE REQUIRED TO MAKE COMPLIANCE AS PER QUESTIONNAIRE DT. 30.04.1007 AND TO PRODUCE COMPLETE BOOKS OF ACCOUNT. YOUR ALSO REQUIRED TO EXPLAINED THE ENTIR ES WORTH RS. 18,54,625/- RECEIVED FROM VARIOUS PERSONS THROUGH JAI LAXMI CO- OPERATIVE BANK, FATEHPURI, DELHI DETAILS OF WHICH ARE GIVEN IN THE REASONS SUP PLIED TO YOU. THE DATE IS FIXED FOR COMPLIANCE ON 14.11.2007. P LEASE NOTE IF NO COMPLIANCE IS MADE ON THE DATE FIXED, ASSESSMENT SHALL BE FRAMED EXPART AS PER PROVISION OF SECTION 144 OF THE I.T. ACT, 1961 ON THE BASIS OF M ATERIAL AVAILABLE ON RECORD WITHOUT FURTHER INTIMATION. NOTICE U/S 142(1) ALSO ENCLOSED. SD/- (DILIP SINGH) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, MUZAFFARNAGAR, THIS NOTICE WAS SERVED THROUGH REGD. POST AND IN R ESPONSE TO THIS NOTICE A REPLY WAS RECEIVED THOUGH MESSENGER OF THE COUNSE L ON 15.11.2007 AS UNDER- WITH REFERENCE TO YOUR NOTICE U/S 142(1) DT. 30.04. 2007 AND YOUR QUARRIES LETTER SAME DATE AND REASONS FOR U/S 148 DATED 25.0 1.2007, IT IS MOST RESPECTFULLY SUBMITTED AS UNDER: THAT, THE ASSESSEE IS A PRIVATE LTD. COMPANY ENJOYI NG INCOME OF MANUFACTURING AND KRAFT PAPER. IN THE YEAR UNDER C ONSIDERATION, THE ASSESSEE ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 5 OF 63 HAS GOT SAME SHARE APPLICATION MONEY FOR AGAINST WH ICH THE SHARES HAVE BEEN ISSUED TO THE APPLICANTS. IN THIS CONNECTION IT IS FURTHER SUBMITTED AS BELOW: 1. THAT FROM THE REASON RECORDED U/S 148 IT IS NOT CLEAR FORM THE INSTRUMENT NO., WHETHER, THE ENTRY BELONG TO THE AS SESSEE ARE NOT HENCE. SOME MORE ELABORATE AND SPECIFIC DOCUMENTARY EVIDENCE, I F ANY, IN YOUR PASSIONS FOR U/S 148 AVAILABLE, THE SAME MAY PLEASE BE COMMUNICA TED SO THAT PROPER COMPLIANCE' REPLY CAN BE MADE. 2. THE ASSESSEE HAS RECEIPT THE MONEY FOR PURCHASE OF SHARES THROUGH ACCOUNT PAYEE DEMAND DRAFT ONLY AND THE APPLICATION ARE IDENTIFIABLE, ASSESSED TO TAX AND CREATED WORTHY, IN SUPPORT OF WHICH THE COPIES OF THE APPLICATIONS RECEIPT FOR SHARES PURCHASES ARE BEING FILED FOR YO UR READY REFERENCE. 3. IT IS FURTHER REQUESTED, THAT THE ASSESSEE IS FI LING THE COMPLETE POSTAL ADDRESSES OF THE APPLICANTS FOR YOUR READY REFERENC E AND IT REQUIRED THE APPLICANTS MAY EITHER BE CONTACTED U/S 133(6) OR MA Y BE SUMMONS U/S 131. AT THE COST OF THE ASSESSEE, SO THAT THE REAL PICTURE OF THESE APPLICANTS WILL COME OUT BEFORE THE DEPARTMENT THE COPIES OF SHARE APPLI CATION ARE BEING ENCLOSED AS AVAILABLE WITH THE ASSESSEE IN SUPPORT OF AMOUNT RECEIVED. IN ANY CIRCUMSTANCES THESE ENTRIES CANNOT BE ASSESS ED AND CONSIDERED ACCOMMODATION ENTRIES AS PURPOSED BECAUSE THE ASSES SEE HAS ALREADY ALLOTTED SHARES TO THESE PARTIES. THE ASSESSEE ALSO RELIED ON VARIOUS JUDGMENTS AND S TALED THAT IN THE LASTS AND CIRCUMSTANCES, TO KINDLY DROPPED THE RE-A SSESSMENT PROCEEDINGS OR IN THE ALTERNATIVE BE COMPLETED ON INCOME RETURNED. NO OTHER DETAILS INFORMATION AS REQUIRED BY THE QUE STIONNAIRE DATED 30.04,2007 WERE O BOOKS OF ACCOUNTS WERE PRODUCED. HOWEVER, REPLY FILED BY THE ASSESSEE COMPANY HAS DULY BEEN CONSIDERED, BUT ASSESSEES REQUEST THAT THE APPLICANTS SHOULD BE SUMMONED OR CONTACTED U/S 133(6). AT THIS STAGE NEITHER POSSIBLE NOR ACCEPTABLE AS IT IS AN TIME TA KING PROCESS AND ASSESSEE COMPANY DELIBERATELY PASSED TIME SO THAT DEPARTMENT MAY NOT ENQUIRE MUCH MORE. ASSESSEE HAS ADOPTED DELAYING TACTICS AND AFT ER 11 MONTHS THIS REPLY HAS BEEN FILED IF IT WAS THE REPLY, COMPANY SHOULD HAVE MAKE THIS REQUEST EARLIER WHEN NOTICE U/S 148 WAS SERVED OR WHEN ASSESSEE WAS SERVED WITH A NOTICE U/S 142(1) ALONG WITH DETAILED QUESTIONNAIRE ON 30- 4-2 007 BUT AT THAT LIME ASSESSEE COMPANY SLEPT OVER THE MATTER NOW COMPANY SUDDENLY AWAKEN AND TILED THESE REPLY ON 15-11-2007 WHEN THERE IS NO TI ME TO MAKE AN ENQUIRY. SO FAR AS MORE ELABORATE OR SPECIFIC DOCUMENTS ARE CON CERNED, EACH AND EVERY THING HAS BEEN MENTIONED IN REASONS COPY OF WHICH H AS ALREADY BEEN SUPPLIED. IT IS NOT UNDERSTANDABLE WHAT TYPE OF CLEARETY COMP ANY REQUIRES. THE COMPANY HAS TRIED TO PROVE GENUINENESS O! TRANSACTION ON TH E BASIS OF SHARE APPLICATIONS FORM AND DEMAND DRAFT ETC. BUT MERELY FILING OF THE SE DOCUMENTS COULD NOT BE TREATED AS SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF A CREDIT ,[140 ITR 15I (AIL) 50 ITR (SC)]. ASSESSEE'S CONTENTION THAT SINC E TRANSACTION WAS THROUGH BANKING CHANNEL, THE SAME PROVED THE GENUINENESS OF THE TRANSACTION CANNOT NOT HE ACCEPTED FOR THE REASON THAT THERE IS NO SUC H LAW. THERE ARE LARGE NUMBER OF COURTS DECISIONS WHEREIN THIS VIEW HAS BE EN UPHELD 255 ITR 573, 254 ITR 617, 214 ITR 801 (SC.) 264 ITR 435 ETC. THE CALCUTTA HIGH COURT IN THE CASE OF BHOLA SANKAR COLD STORAGE (P) LTD. VS. JCIT 270 ITR 487 AFTER REFERRING ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 6 OF 63 TO VARIOUS DECISIONS HELD THAT WHERE PAYMENT BY CHE QUE IS NOT SACROSANCT AS IT WOULD NOT MAKE A NON GENUINE TRANSACTION AS GENUINE . THE BURDEN TO PROVE NATURE AND SOURCES OF THE RECEIPT IS ON THE ASSESSE E AS HELD BY THE HONBLE S.C. IN 57 ITR 532 (SC) 53 ITR 623 (SC). IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 THE HONBLE SC HAS HELD THAT THE BURDEN OR PROOF IS ON THE ASSESSEE TO PROVE THAT THE AMOUNTS CREDITED IN ACCOUNTS DO NOT REPRESENT INCOME AND THE ISSUE OF GENUINENESS OF SUCH CREDIT I TO BE CONSIDE RED IN THE LIGHT TO HUMAN PROBABILITY AND SURROUNDINGS CIRCUMSTANCES. IN THE INSTANT CASE SURROUNDING CIRCUMSTANCES CLEARLY SPEAKS THAT ASSESSEE COMPANY HAS INTRODUCED ITS UNACCOUNTED MONEY THROUGH ACCOMMODATION ENTRIES. T HEREFORE, ASSESSEES CONTENTION IS NOT ACCEPTABLE AND ACCOMMODATION ENTR IES OF RS. 18,54,625/- ARE TREATED AS INCOME FROM UNDISCLOSED SOURCES AND ADDE D TO THE INCOME OF THE ASSESSEE COMPANY. (ADDITION RS. 18,54,625/-) SHARE CAPITAL IN THE YEAR UNDER CONSIDERATION COMPANYS AUTHORIZE D SHARE CAPITAL HAS INCREASED FROM RS. 4,50,000/- TO RS. 9,05,00,000/-. THE ISSUED, SUBSCRIBED AND PAID UP CAPITAL IN PREVIOUS YEAR WAS RS. 4,08,98,00 0/- WHICH IN THE YEAR UNDER CONSIDERATION HAS INCREASED TO RS. 8,37,48,000/-. THUS, THERE IS INCREASE OF RS. 4,28,50,000/- IN THE ISSUED SUBSCRIBED AND PAID UP CAPITAL FOR WHICH NOT DETAILS, EVIDENCES ETC. HAVE FILED. THE COMPANY WAS SPECIFI CALLY REQUIRED TO FILE DETAILS OF INCREASE IN SHARE CAPITAL THAT IS NAMES, ADDRESSES, AMOUNT, MODE OF PAYMENT, SOURCES AND ASSESSEMENT PARTICULARS OF THE SUBSCRIB ERS, CONFIRMATION WITH COPIES OF SHARE CAPITAL VIDE QUERY NO. 33 OF THE QUESTIONN AIRE ATTACHED WITH NOTICE U/S 142(1) DATED 30.04.2007. ASSESSEE FIELD REPLY ON 3 -12-2007 ALONGWITH COPY OF FORM NO. 2 FILED WITH ROC IN RESPECT OF INCREASE IN MENTIONED. ASSESSEE COMPANY HAS ALSO FILED COPIES OF SHARE APPLICATION AND COPIES OF INCOME TAX RETURN ACKNOWLEDGMENT OF I.T. RETURN COULD NOT BE T REATED AS SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF A CREDIT. RELIANC E IS ALSO PLACED ON HONBLE SC DECISION IS PLACED ON 57 ITR 532, 53 ITR 623, 50 IT R , 49 ITR 112 35 ITR 416, 34 ITR 807 (ALL. S.S. DECISION). CONSIDERING ALL TH ESE FACTS AND LEGAL POSITION THE SHARE APPLICATION MONEY RECEIVED IS TREATED AS UNEX PLAINED AND WILL BE ADDED TO THE INCOME OF THE ASSESSEE. (ADDITION RS. 4,28,50,000) UNSECURED LOANS AS PER SCHEDULE FOR ATTACHED TO BALANCE SHEET, COMP ANYS UNSECURED LOANS IN THE PREVIOUS YEAR AND IN THE CURRENT YEAR ARE SHOWN AS UNDER- CURRENT YEAR PREVIOUS YEAR FROM DIRECTORS 786549 180000 INTER-CORPORATE DEPOSITS 28393812 17036812 29180361 17216812 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 7 OF 63 THUS, THERE IS INCREASE IN UNSECURED LOANS OF RS. 1 ,19,63,549/- FOR WHICH NO DETAILS, EVIDENCE ETC HAVE BEEN FILED. EVEN NAMES A ND ADDRESSES AND AMOUNT HAS NOT BEEN GIVEN ATTACHED WITH THE RETURN. BESID ES, AS PER ANNEXURE I ATTACHED WITH AUDIT REPORT, THE AMOUNT OF LOANS TAK EN DURING THE YEAR ARE SHOWN AS UNDER:- 1. SHRI NOOR SALIM RANA RS. 6,38,675 2. M/S DOABA ROLLING MILLS (P) LTD. RS. 1,69,16,000/- RS. 1,75,54,675/- THE ASSESSEE COMPANY WAS SPECIFICALLY REQUIRED TO F ILE DETAILS OF INTER CORPORATE DEPOSITS WITH CONFIRMED COPIES OF ACCOUNT. ASSESSE E COMPANY FILED REPLY ON 3-12-2007 ENCLOSING THEREWITH DETAILS OF UNSECURED LOANS AS U NDER:- S.NO. NAME AMOUNT 1. SH. NOOR SALEEN RANA RS. 6,06,549/- 2. M/S DOABA ROLLING MILLS LTD. MZN RS. 51,90,00 0/- 3. M/S SANJAY SALES CORPORATION RS. 10,00,000/- 4. M/S A.P. ENTERPRISES, CHANDIGARH RS. 3,00,000 /- 5. M/S BHARAT TRADING CO. RS. 12,00,000/- 6. M/S PARAS PAPER CO. RS. 10,00,000/- 7. M/S SHREE SALES RS. 10,00,000/- 8. M/S SHYAM SUNDER & CO. RS. 10,00,000/- 9. M/S KRAFT MARKETING RS. 6,66,000/- TOTAL RS. 1,19,63,549/- IN SUPPORT OR TO PROVE GENUINENESS OF THESE LOANS A SSESSEE HAS FIELD COPIES OF LEDGER ACCOUNT OF THE COMPANY DULY SIGNED BY THE CO MPANYS AUTHORIZED SIGNATORY WHEREIN DATE WISE DEBIT AND CREDIT ENTRIES ARE APPE ARING. NEITHER THESE WERE SIGNED BY THE LOANER/ DEPOSITORS NOR SEPARATE CONFIRMATION LE TTER OR REPLY EXPLAINING SOURCES OF DEPOSITS/ ASSESSMENT PARTICULAR ETC. HAVE BEEN GIVE N. MERELY FILING OF COPIES OF LEDGER ACCOUNT CANNOT BE TREATED AS SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF A CREDIT AS HELD BY HONBLE HIGH COURT OF ALLAHABAD 140 ITR 151 AND HONBLE SC 50 ITR 1. RELIANCE IS ALSO PLACED ON 57 ITR 532, 53 ITR 623, 49 ITR 11 2, 35 ITR 416, 34 ITR 80(AL. SC. JUDGMENT). IN VIEW OF THESE FACTS UNSECURED LOANS OF RS. 1,19,63,549/- TREATED AS UNEXPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE . (ADDITION RS. 1,19,63,549/-) INCOME TAX EXPENSES:- THE ASSESSEE HAD DEBITED INCOME TAX EXPENSES AT RS. 58,415/- TO THE P & L ACCOUNT WHICH IS NOT ALLOWABLE AND SAME ARE ADDED T O THE INCOME OF THE ASSESSEE. (ADDITION : RS. 58,415/-) SUBSCRIPTION & MEMBERSHIP EXPENSES:- ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 8 OF 63 ASSESSEE HAD DEBITED TO P&L ACCOUNT AT RS. 30,261/- UNDER THE HEAD OF SUBSCRIPTION & MEMBER SHIP EXPENSES BUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOT DETAILED / EVIDENCES HAS BEEN FILED. THEREFORE , SAME IS ADDED TO THE INCOME OF THE ASSESSEE. (ADDITION RS. 30,261/-) IT IS NOTICED FROM COMPUTATION OF INCOME THAT THE A SSESSEE COMPANY HAS DEDUCTED AN AMOUNT OF RS. 2,67,74,200/- FROM THE IN COME WORKED OUT AT RS. 7,95,262/- AND HAVE SHOWN LOSS AT RS. 2,59,78,987/- WHICH HAS BEEN CARRIED FORWARDED TO NEXT YEAR. THE AMOUNT WHICH HAS BEEN DEDUCTED CLAIMED T O HAVE BEEN PAID ON ACCOUNT FINANCE CHARGES EXPENSES RELATED TO EARLIER YEAR AN D PAID DURING THE YEAR RS. 2,31,50,050/- AND CHARGES PAID DURING THE YEAR BUT ADDED TO THE INCOME IN 2000-01 RS. 289,97,100/-. SINCE NO EVIDENCE IN THIS REGARD HAS BEEN ENCLOSED WITH THE RETURN OF INCOME NOR FILED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE SAME IS NOT ALLOWABLE. BESIDES, THERE IS NO MENTION IN THE AUD IT REPORT BY THE AUDITOR IN THIS REGARD. THEREFORE, NO DEDUCTION ON THIS ACCOUNT IS BEING ALLOWED. WITH THESE REMARKS THE INCOME OF THE ASSESSEE COMP ANY IS COMPUTED AS UNDER: NET PROFIT AS PER P&L ACCOUNT RS. 45,66,713/- ADD: DEPRECIATION FOR SEPARATE CONSIDERATION RS. 32,54,315/- RS. 78,21,028/- ADDED BACK: 1. PENALTY ON PF DEBITED TO P & L A/C RS. 22,676/- 2. EXCISE DUTY PAID RELATED TO EARLIER YEAR RS. 6,45,1 31/- 3. P.F. PAID DELAYED RS. 32,655/- ADD:- 1. ADDITION AS DISCUSSED ABOVE RS. 18,54625/- 2. ADDITION AS DISCUSSED ABOVE RS. 4,28,50,000/- 3. ADDITION AS DISCUSSED ABOVE RS. 1,19,63,549/- 4. ADDITION AS DISCUSSED ABOVE RS. 58,415/ - 5. ADDITION AS DISCUSSED ABOVE RS. 30,261/ - RS. 6,52,78,340/- LESS:- DEPRECIATION AS PER I.T. RULES (-) RS. 67,40,444/- RS. 5,85,37,896/- LESS:- B UNABSORBED DEPRECIATION (-) RS. 9, 85,783/- RS. 5,75,52,113/- RS. 5,75,52,110/- OR ASSESSED U/S 143(3) OF I.T. ACT, 1961 ON INCOME OF RS. 5,75,52,110/- INTEREST U/S 234B- 14790045 HAVE BEEN CHARGED. ISSUED NOTICE OF DEMAN D AND CHALLAN NOTICE U/S 271 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 9 OF 63 (1)(C) HAS BEEN ISSUED SEPARATELY AS THE ASSESSEE C OMPANY HAS CONCEALED PARTICULARS OF ITS INCOME AND FURNISHED IN ACCURATE PARITUCLARS OF ITS INCOME WITH THE MEANING OF SECTION 271(1)(C) READ WITH EXPLANATION 1 OF SECTIO N 271(1)(C) OF THE I.T. ACT. PENALTY NOTICE U/S 271(1)(B) ARE BEING ISSUED SEPARATELY FO R NON COMPLIANCE OF NOTICE U/S 142(1) ON FIXED DATED SD/- (DILIP SINGH) DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, MUZAFFARNAGAR. [C] ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A ) AGAINST THE AFORESAID ASSESSMENT ORDER DATED 05.12.2007. VIDE AFORESAID IMPUGNED APPELLATE ORDER DATED 27.03.2008 THE LD. CIT(A) DELETED THE ADDITIONS OF RS. 18,54,625/- (ON ACCOUNT OF ACCOMMODATION ENTRIES), RS. 4,28,50,000/- (ON ACCOU NT OF ADDITION MADE U/S 68 OF I.T. ACT TOWARDS SHARE CAPITAL) AND RS. 1,18,63,549/- (O N ACCOUNT OF UNSECURED LOANS). THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER:- THE APPEAL HAS BEEN FILED AGAINST THE ORDER OF DCI T, CIRLCE- I, MUZAFFARNAGAR PASSED U/S 143(3)OF THE ACT LOR ASSESSMENT YEARS 2002-03 2. IN RESPONSE TO NOTICE, SHRI DINESH MOHAN, ADVOCA TE ATTENDED, FILED WRITTEN SUBMISSION AND ARGUED THE APPEAL. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURING OF PAPER. ROI WAS FILED ON 31.10.2002 DECLARING, LOSE OF RS.2,59, 78,987/-. LATER, NOTICES U/S 148 WAS ISSUED ON 12.12.20 06 ON THE BASIS OF INFORMATION RECEIVED FROM DIRECTOR OF INCOME LAX (LNV.1), NEW DELHI THRO UGH COMMISSIONER OF INCOME-TAX, MUZAFFARNAGAR THAT THE ASSESSEE COMPANY HAD RECEIVE D FOLLOWING ACCOMMODATION ENTRIES: ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 10 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 11 OF 63 THE ASSESSEE OBJECTED TO THE 148 PROCEEDINGS, ON T HE GROUND THAT THE PROCEEDINGS WERE TIME BARRED. 3.1 FURTHER, THE AO ISSUED NOTICE, A DETAILED QUEST IONNAIRE IN RESPECT OF THE AFOREMENTIONED ENTRIES. THE ASSESSEE SUBMITTED THAT THESE PERSONS WERE AS MENTIONED ABOVE, AND THE MONEY RECEIVED WAS PART OF SHARE APP LICATION MONEY. ACCORDING TO THE AO, ALTHOUGH THE ASSESSEE GAVE VARIOUS DETAILS AND INFORMATIONS BUT DID NOT PRODUCE THESE PERSONS. THE AO HELD THAT THE ASSESSEE'S REQU EST THAT APPLICANTS SHOULD BE SUMMONED OR CONTACTED U/S 133(6) WAS NEITHER POSSIB LE NOR ACCEPTABLE, AS THE APPELLANT HAD USED DELAYING TACTICS AND HAD FILED THIS REPLY AFTER 11 MONTHS. ACCORDING TO AO, SUCH REQUEST SHOULD HAVE BEEN MADE IN RESPONSE TO INITIA L QUESTIONNAIRE DATED 30.4,2007. THE AO HELD THAT THE ASSESSEES EFFORT TO PROVE TH E GENUINENESS OF TRANSACTIONS ON THE BASIS OF SHARE APPLICATION FORM S/DEMAND DRAFT ETC. COULD NOT BE TREATED AS SUFFICIENT EVIDENCE TO PROVE THE GENUINE NESS OF A CREDIT. THE AO RELIED ON 140 ITR 151 (ALL.) AND 50 ITR (SC). THE AO FURTHER STAT ED THAT- THE ASSESSEES CONTENTION THAT TRANSACTIONS WERE THROUGH BANKING CHANNEL; COULD NO T BE ACCEPTED FOR THE REASON THAT PAYMENT BY CHEQUE WOULD NOT MAKE NON GENUINE TRANSA CTION AS GENUINE. THE AO ADDED RS. 18,54,625/- TREATING THE SAME AS INCOME FROM UN DISCLOSED SOURCES. 3.2 DURING THE YEAR, THE COMPANYS AUTHORIZED SHA RE APPLICANTS HAD INCREASED AND CORRESPONDINGLY THERE WAS INCREASE OF RS.4,28,5 6,000/- IN THE SHARE CAPITAL FOR WHICH THE COMPANY WAS SPECIFICALLY REQUIRED TO FILE DETAI LS AND EVIDENCES, THE ASSESSEE FILED COPY OF FORM NO.2 FILING WITH ROC', WHICH CONTAIN N AMES, ADDRESS AND AMOUNT OF SHARES ALLOTTED. FURTHER, THE ASSESSEE COMPANY ALSO FILED COPIES OF SHARE APPLICATION FORMS AND COPIES OF INCOME- TAX RETURNS ACKNOWLEDGEMENT OF TH ESE PERSONS. HOWEVER, AO CONCLUDED THAT THESE WERE NOT SUFFICIE NT EVIDENCES TO PROVE THE GENUINENESS OF CREDIT AND ADDED ENTIRE SHARE APPLIC ATION MONEY OF RS.4,28,50,000/- AS UNEXPLAINED INCOME OF THE ASSESSEE. 3.3 THE ASSESSEE WAS REQUIRED TO FILE DETAILS AND E VIDENCES IN RESPECT OF INCREASE IN UNSECURED LOANS TO THE EXTENT OF RS.19,63,549/- . THE ASSESSEE FILED COPIES OF LEDGER ACCOUNT OF THE COMPANY SIGNED BY THE COMPANY'S AUTH ORIZED SIGNATORY BUT NEITHER THESE WERE SIGNED BY LOANERS OR DEPOSITORS NOR THE SAID C ONFIRMATION LETTER OR REPLY EXPLAINING THE SOURCE OF DEPOSITS ETC. WERE FILED. THE AO, THE REFORE, TREATED THESE AMOUNTS OF RS. 1,19,63,549/- AS UNEXPLAINED AND ADDED TO THE INCOM E OF THE ASSESSEE. 3.4 THE AO DISALLOWED RS.58.415/- DEBITED IN PROFIT AND LOSS ACCOUNT AS INCOME-TAX EXPENSES. 3.5 THE AO FURTHER DISALLOWED RS.30,261/- DEBITED U NDER THE HEAD SUBSCRIPTION MEMBERSHIP EXPENSES FOR WHICH NO DETAILS/EVIDENCES WERE FILED. 4. WRITTEN SUBMISSIONS MADE BY THE APPELLANTS COUN SEL DURING THE APPELLATE PROCEEDINGS ARE REPRODUCED AS UNDER: ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 12 OF 63 SIR , WITH REFERENCE \N THE ABOVE, IT A MOST RESPECTFULLY SUBMITTED US UNDER:- THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY CARR YING BUSINESS OF MANUFACTURING AND TRADING OF CRAFT PAPER WHICH IS A RAW-MATERIAL FOR PACKAGING INDUSTRY MAINLY. THE COMPANY IS USING PAPER SCRAP AND SUGAR CANE BAGGASS E AND TAUT A ETC. AS A RAW- MATERIAL FOR PULPING PURPOSE AND FROM THAT BY ADDIN G CERTAIN CHEMICALS , THE CRAFT PAPER IS BEING MANUFACTURED. FOR THE YEAR UNDER CON SIDERATION, THE RETURN OF INCOME HAS BEEN FILED ON A BOOK PROFIT OF RS. 45,66. 713=8 9 ON WHICH TAX HAS BEEN PAID AT RS.4,00,000-00 UNDER MAT. ALONG WITH RETURN OF INCO ME, THE ASSESSEE HAS FILED TAX AUDITED REPORT AS REQUIRED U/S 44AB, AUDITED BALANC E SHEET, PROFIT & LOSS ACCOUNT AND OTHER DETAILS. THE ASSESSEE COMPANY HAS MAINTAINED THE REGULAR AND PROPER BOOKS OF ACCOUNTS DURING THE ORDINARY COURSE OF BUSINESS ALO NG WITH MANUFACTURING RECORD SUCH AS RG-J AND FORM IV AS REQUIRED UNDER EXCISE RULES. THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2001-02. 2003-04 AND 2004-05 HAS ALSO BEEN COM PLETE U/S 143(3) UNDER SCRUTINY, THE COPIES OF THE ASSESSMENT ORDER (.ERE ON RECORDS . THE ASSESSING OFFICER HAS MADE THE FOLLOWING ADDITIONS TO THE INCOME OF THE ASSESSEE W HILE COMPLETING THE ASSESSMENT U/S 143(3):- 1. ON ACCOUNT OF SHARE APPLICATION MONEY AT RS. 4 , 23 , 50 , 000 . 00 . 2. ON ACCOUNT OF UNSECURED LOANS AT RS., 1,19,63,549,00. 3. ON ACCOUNT OF INCOME TAX EXPENSES AT RS. 58,415.00. 4. ON ACCOUNT OF SUBSCRIPTION & MEMBER SHIP EXP. AT RS. 30,261.00. THAT THE AFORESAID ADDITIONS AND OBSERVATION ARE HI GHLY ARBITRARY, UNJUSTIFIED AND AGAINST THE FACT OF THE CASE. 1. REGARDING ADDITION OF RS.4,28,50,OO0.00 ON ON ACCOU NT OF SHARE APPLICATION MONEY THAT , IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS R ECEIVED CERTAIN APPLICATION MONEY FROM DIFFERENT PARTIES. THE ASSES SEE APPELLANT COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY THROUGH ACCOUN T PAYEE DRAFT ONLY.. THE DRAFT HAS DULY BEEN CLEARED BY CLEARING HOUSE IN THE BANK ACCOUNT OF THE ASSESSEE APPELLANT COMPANY. THE ASSESSEE COMPANY HAS ALREADY ALLOTTED SHARES TO THE SHARE APPLICANT INFORMATION OF WHICH HAS DULY BEEN REMITT ED TO THE REGISTRAR OF COMPANIES VIDE FORM NO. 2, COPY OF WHICH IS BEING E NCLOSED FOR YOUR READY ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 13 OF 63 REFERENCE. COPY OF ALL SHARE HOLDERS ALONGWITH INCO ME TAX RETURN RECEIPT ARE BEING ENCLOSED. THE ASSESSEE APPLICANT COMPANY HAVE AMPLY PROVED IDENTIFICATION OF SHARE HOLDER. GENUINENESS OF TRANSACTIONS, HIS CRED ITWORTHINESS BY FILING THE RELEVANT EVIDENCES OF THE SHARE HOLDER. THE ASSESSI NG OFFICER HAS NOT GIVEN THE COPY OF EVIDENCE AS OBTAINED BY HIM NOR ANY OPPORTUNITY TO CROSS EXAMINE THEM HAS BEEN ALLOWED. FOR INVOCATION OF SECTION 68,PROPER ENQUIRY IS NEED ED:- SECTION 6B EMPOWERS THE ASSESSING OFFICER TO MAKE ENQUIRY SPECIFICALLY TO B E SATISFIED REGARDING THE CASH CREDIT. IT HE IS SATISFIED THAT THESE ENTRIES ARE N OT GENUINE HE HAS EVERY RIGHT TO ADD THESE AMOUNTS AS INCOME FROM OTHER SOURCES . THE SA TISFACTION OF THE ASSESSING OFFICER IS THE BASIS OF INVOCATION OF THE POWERS UN DER SECTION 68 AND THE SATISFACTION MUST BE DERIVED FROM RELEVANT FACTORS ON THE BASIS OF PROPER ENQUIRY ENVISAGED UNDER SECTION 68 IS AN ENQUIRY WHICH IS REASONABLE AND JUST [KHUNDELWAL CONSTRUCTION V. CIT,(1997)227 JTR 900,904( GAUH )]F IN THE FACTS OF THAT CASE ,IT HAS BEEN HELD THAT THE AMOUNT OF CASH CREDITS COULD NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE BECAUSE THE ENQUIRY WAS NOT PROPERL Y MADE. AMOUNT FOUND CREDITED IN THE BOOKS OF A COMPANY AS RECEIPT OF SHORE APPLICATION MONEY:- SECTION 68 IS VERY WIDELY WOEDED AND THE ASSESSING OFFICER IS NOT PRECLUDED FROM MAKING AN ENQUIRY AS TO THE NATURE AND SOURCE OF A SUM CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY EVEN IF THE SAME IS CREDITED AS RECEIPT OF SHARE APPLICATION MONEY . WHERE, THEREFORE ,AN ASSESSEE-C OMPANY REPRESENTS THAT IT HAS ISSUED SHARES ON RECEIPT OF SHARE APPLICATION MONEY THEY THE AMOUNT SO RECEIVED WOULD BE ENTITLED TO ENQUIRE ,AND IT WOULD INDEED B E HIS DUTY TO DO SO, WHETHER THE ALLEGED SHAREHOLDER DO IN FACT EXIST OR NOT .IF THE SHAREHOLDER EXIST THEN, POSSIBLY, NO FURTHER ENQUIRY NEED HE MADE. BUT IF THE ASSESSING OFFICER FINDS THAT THE ALLEGED SHAREHOLDER DO NOT EXIST THEN , IN EFFECT FIT WOULD MEAN THAT THERE IS NO VALID ISSUANCE OF SHARE CAPITAL. SHARES CANNOT BE ISSUED IN THE NAME OF NON-EXISTING PERSONS. THE USE OF THE WORDS MAY HE CHARGED' IN SE CTION 68 CLEARLY INDICATES THAT THE ASSESSING OFFICER WOULD THEN HAVE THE JURISDICT ION, IF THE FACTS SO WARRANT, TO TREAT SUCH A CREDIT TO THE INCOME OF THE ASSESSEE [ CIT V. SOPHIA FINANCE LTD.(1994)205 ITR 98, 104 , 104-05(DEL-FB)F. IN VIEW IF THIS FULL BENCH DECISION ,THE OBSERVATIONS IN CFF V. STELLAR INVESTMENT LTD.F(1991) 192 ITR 287, 288 (DEL)] TO THE EFFECT THAT 'EVEN IF IT BE ASSUMED THAT THE SUBSCRI BES TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTAN CES , CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE AS SESSEE 'CANNOT BE REGARDED AS LAYING DOWN THE CORRECT PROPOSITION OF LAW. ALSO SE E, CIT V. ACTIVE TRADERS (P)LTD., (1993)115 CTR (CAL)69,72; CIT V. KWICK TRAVELS, SLP (CIVIL)NO. 15056 OF 1992: (1993)199 ITR (ST.)85-86(SC) ; CIT V. PRATEEK FINAN CE & INVESTMENT CO. LTD.,(1995)215 ITR 272 (DEL). ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 14 OF 63 AS LAID DOWN BY THE SUPREME COURT IN CIT V. DURGA PRASAD MORE 1(1997) 82 ITR 540, 545,547(SC )], APPARENT MUST HE CONSIDERED REAL UNTIL IT IS SH OWN THAT THERE ARE REASONS TO DISBELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE S URROUND ING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTER HAS TO BE CONSIDERED BY APPL YING THE TEST OF HUMAN PROBABILITIES . WHEN A QUESTION ARISES AS TO WHETHER A CASH CREDIT APPEARING IN THE BOOKS OF ACCOUNT OF AN ASSESSEE HAS TO BE ACCEPTED OR TO BE REJECTED AND ADDITION TO BE MADE IN ACCORDANCE WITH SECTION 68, THE ASSESSEE IS REQUIRED TO ESTABLISH THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF THE CREDI TOR TO ADVANCE THE MONEY AND THE GENUINENESS OF THE TRANSACTION. IF THE ASSESSEE IES TABLISHED THE AFORESAID THREE PRE- CONDITIONS, THEN IT WOULD BE FOR THE DEPARTMENT TO DISPROVE THE SAME /CIT V. BUISHNAB CHARAN MOHANTY,(1995)212 ITR 199,201 ( ORI )/. IN THE FACTS OF THAT CASE, THE TRIBUNAL WAS HELD JUSTIFIED IN HOLDING THAT THE TRANSACTIONS APPEARING IN CERTAIN NAMES WERE GENUINE TRANSACTIONS AND THE ADDITION MA DE UNDER SECTION 68 WAS UNTENABLE. IN ORDER TO ESTABLISH THE FACT OF THE RECEIPT OF TH E CASH CREDIT AS REQUIRED UNDER SECTION 68, THE ASSESSEE MUST PROVE THREE IMPORTANT CONDITIONS .NAMELY.) I) THE IDENTITY OF THE PERSON, (2) THE GENUINENESS OF THE TRANSACTION, AND (3) THE CAPABILITY OF THE PERSON GIVING THE CASH CREDIT IJ(DAN TIMBERS V.CIT, ( 1997)223 ITR 11,17 (GAUH)J THE ASSESSING OFFICERS REJECTION, NOT OF THE EXPLA NATION OF THE ASSESSEE, BUT OF THE EXPLANATION REGARDING THE SOURCE OF INCOME OF T HE DEPOSITOR, CANNOT BY ITSELF LEAD TO ANY INFERENCE REGARDING THE NON- GENUINE OR FICTITIOUS CHARACTER OF THE INTRIES IN THE ASSESSEE S BOOKS OF ACCOUNT /SAROGI CREDIT CORPORATION B, CIT,(1976) 103 ITR 344, 349-50(PAT)]. THERE CANNOT BE ONE GENERAL OR UNIVERSAL PROPOSITIO N OF LAW WHICH COULD BE THE GUIDING YARDSTICK IN MATTER ,EACH CASE HAS GOT TO B E DECIDED ON THE FACTS AND CIRCUMSTANCES OF THAT CASE, THE SURROUNDING CIRCUMS TANCE TO BE CONSIDERED MUST HOWEVER BE OBJECTIVE FACTS, EVIDENCE ADDUCED BEFORE THE TAXING AUTHORITIES , PRESUMPTION OF FACTS BASED ON COMMON HUMAN EXPERIEN CE IN LIFE AND REASONABLE CONCLUSIONS IN HOLDING A PARTICULARS RECEIPT AS INC OME FROM UNDISCLOSED SOURCE, THE FATE OF THE ASSESSEE CANNOT BE DECIDED BY THE REVEN UE ON THE BASIS OF SURMISES, SUSPICIONS OR PROBABILITIES [NORTHERN BENGAL JUTE T RADING CO,LTD. V, CIT,(1968)70 1TR 407, 415 (CAL)]. APPARENT IS NOT REAL - BURDEN OF PROOF ON THE DEPARTMENT :-IN BEDI & CO. PR. LTD. V. CIT 1(1983)144 ITR 352 (KARN), AFFIRMED IN, CIT V. BEDI & CO. PVT. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 15 OF 63 LTD.,(1998)230 ITR 580 (SC)/, AN AMOUNT OVER RS. 32 LAKHS WAS SHOWN BY THE ASSESSEE AS A LOAN FROM A CANADIAN COMPANY. SUCH LO AN WAS EVIDENCED BY AN AGREEMENT. THE DEPARTMENT TREATED THE SAME AS COMMI SSION PAID BY THE CANADIAN COMPANY TO THE ASSESSEE. IT WAS HELD THAT THE BURDE N OF SHOWING THAT THE APPARENT STATE OF AFFAIRS WAS NOT THE REAL ONE WAS VERY HEAV Y ON THE DEPARTMENT . IN THE FACTS OF THE INSTANT CASE, APART FROM CIRCUMSTANCES WHICH BY THEMSELVES COULD BE SAID TO BE NEUTRAL, THERE WAS NO OTHER MATERIAL TO DOUBT TH E NATURE OF THE TRANSACTION AND TO HOLD THAT IT WAS INCOME. EVERY LOAN GRANTED WITH OUT SECURITY OR IN REGARD TO WHICH NO REPAYMENT HAS BEEN MADE CANNOT AUTOMATICALLY BE TERMED AS A PAYMENT EITHER TOWARDS COMMISSION OR AS A RECEIPT FROM BUSINESS. W ITHOUT TANGIBLE MATERIAL TO SUSPECT THAT THE RECEIPT WAS BY WAY OF COMMISSION A ND WITHOUT RECORDING SUCH A FINDING , THE CONCLUSION OF THE TRIBUNAL THAT THE A MOUNT WAS ASSESSABLE AS INCOME WAS WHOLLY UNTENABLE. AN EXPLANATION OFFERED BY AN ASSESSEE IN RELATION T O A CASH CREDIT ENTRY IN HIS BOOKS OF ACCOUNT CAN BE REJECTED BY THE ASSESSING O FFICER ON COGENT GROUNDS. WHEN SUCH GROUNDS ARE THEMSELVES BASED ON NO EVIDENCE , THE QUESTION OF RAISING A PRESUMPTION AGAINST THE ASSESSEE DOES NOT ARISE [SANA ELECTRIC CO. V. CIT, (1985)152 ITR 507 (DEL)/. THUS, WHERE THE I TO HAS ACCEPTED THE RETUR N OF THE THREE CREDITORS, IT SHOULD GO TO MEAN THAT THE AMOUNTS GI VEN BY THOSE CREDITORS WERE ALSO GENUINE. THEREFORE, THE TRIBUNAL CANNOT BE JUSTIFIE D IN UPHOLDING THE ADDITION AS THE TRIBUNAL DID NOT MAKE ANY ENDEAVOR TO GIVE ANY COGE NT REASON WHY THE INCOME -TAX RETURNS FILE,' BY THE CREDITORS AND ACCEPTED BY THE /TO SHOULD BE IGNORED [JALAN TIMBERS V. CIT (1997)223 ITR 11,17,18 (GAUH)]. BUT, WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE REGARDING THE CASH CREDITS APPEARING IN HIS BOOKS, IF THE EVIDENCE IS SHUT OUT AND THE WITNESSES PRODUCED ARE NOT PERMITTED TO EXPLAIN THE CREDIT, IT WILL BE OPE N TO THE TRIBUNAL TO APPRAISE THE EVIDENCE AS IT IS AND REACH ITS OWN CONCLUSION WHIC H MAY RESULT IN THE CASH CREDIT BEING ACCEPTED AS GENUINE [CIT VS ISHWAR PUSS SHURNUI ,(1986) 158 ITR 168,169 (DEL)]. EXPLANATION OFFERED BY THE ASSESSEE :- AN EXPLANATION PRIMA FACIE REASONABLE CANNOT BE REJECTED ON CAPRICIOUS OR ARBITRARY GROUN DS [R.B.N.J.NAIDU V. CIT, (1956) 29 ITR 194 (NAG); KANPUR STEEL CO. LTD. V. CIT,(1957)3 2 ITR 56(ALL)] OR ON MERE SUSPICION OR ON IMAGINARY OR IRRELEVANT GROUNDS [ LAJWANTI SIAL V. CIT, (1956)30 ITR 228 (NAG)]. WHERE AN ASSESSEE FURNISHES REASONABLE EXPLANATION , THERE IS NO JUSTIFICATION FOR ACCEPTING HIS EXPLANATION IN PART AND DISCARDIN G / IN RELATION TO THE REST [ CHUNILUL TICAMCHAND COAL CO. LTD. V. CIT, (1955) 27 ITR 602 (PAT); MEHTA PARIKH & CO. V CIT, (1956) 30 ITR ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 16 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 17 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 18 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 19 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 20 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 21 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 22 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 23 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 24 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 25 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 26 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 27 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 28 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 29 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 30 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 31 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 32 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 33 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 34 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 35 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 36 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 37 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 38 OF 63 ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 39 OF 63 [D] THIS PRESENT APPEAL HAS BEEN FILED BY REVENUE A GAINST THE AFORESAID IMPUGNED APPELLATE ORDER DATED 27.03.2008 OF THE LD. CIT(A). IN THE COURSE OF APPELLATE PROCEEDINGS IN INCOME TAX APPELLATE TRIBUNAL (ITAT , FOR SHORT), PAPER BOOKS WERE FILED FROM THE ASSESSEES SIDE CONTAINING THE FOLLO WING PARTICULARS: 1. COPY OF NOTICE U/S 148 DATED 12.12.2006 2. COPY OF THE REASON RECORDED BY THE ASSESSING OF FICER 3. COPY OF LIST OF THE SHARE APPLICANT ALONGWITH T HERE ADDRESSES 4. COPY OF THE FORM NO. 2 FILED BEFORE REGISTRAR O F COMPANY ALONGWITH THE ACKNOWLEDGMENT 5. COPY OF DOCUMENTS FILED IN RESPECT OF M/S SAHIL AGENCIES PVT. LTD. A) COPY OF THE APPLICANTS FOR EQUITY SHARES ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 40 OF 63 B) COPY OF THE CONFIRMATION ALONGWITH THE BOARD R ESOLUTION PASSED BY THE BOARD OF THE DIRECTORS OF SAHIL AGENCIES PVT. LTD. C) COPY OF ACKNOWLEDGMENT OF THE RETURN OF INCOME 6. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI RAM GARG. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF THE RETURN OF INCOME 7. COPY OF DOCUMENTS FILED IN RESPECT OF SMT. NAUS HABA BEGUM. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF THE RETURN OF INCOME 8. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI ZAKI R RANA. A) COPY OF APPLICATION OF EQUITY SHARES B) COPY OF THE RETURN OF INCOME 9. COPY OF DOCUMENTS FILED IN RESPECT OF SMT. AMNA BEGUM A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 10. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI QAMR UZAMA RANA A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 11. COPY OF DOCUMENTS FILED IN RESPECT OF SHIR INTA KAB RANA A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 12. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI QADI R RANA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 13. COPY OF DOCUMENTS FILED IN RESPECT OF SHIR SHAH NAWAZ RANA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 41 OF 63 14. COPY OF DOCUMENTS FILED IN RESPECT OF SMTK. SHA MIA ZEENAT. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 15. COPY OF DOCUMENTS FILED IN RESPECT OF SMT SHAHI N KHATOON. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 16. COPY OF DOCUMENTS FILED IN RESPECT OF SHIR NOOR SALEEM RANA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 17. COPY OF DOCUMENTS FILED IN RESPECT OF SMT SAIDA BEGAM. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURN OF INCOME 18. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI GANE SHI LAL PROPK. GANESH TRADING COMPANY. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF INTIMATION U/S 143(1) C) COPY OF THE ORDER PASSED U/S 154 D) CO9PY OF THE INTIMATION U/S 143(1)(A) 19. COPY OF DOCUMENTS FILED IN RESPECT OF M/S LABH TRONICS OVERSEAS PVT. LTD. A) COPY OF CONFIRMATION B) COPY OF THE RETURN OF INCOME 20. COPY OF DOCUMENTS FILED IN RESPECT OF M/S FNS C ONSULTANCY PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF THE RETURN OF INCOME 21. COPY OF DOCUMENTS FILED IN RESPECT OF SAHGAL FL UIDLINE EQUIPMENTS PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 42 OF 63 B) COPY OF CONFIRMATION C) COPY OF THE RETURN OF INCOME 22. COPY OF DOCUMENTS FILED IN RESPECT OF RABIK EXPO RTS PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF THE RETURN OF INCOME 23. COPY OF DOCUMENTS FILED IN RESPECT OF MAESTRO M ARKETING & ADVERTISING PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF THE RETURN OF INCOME 24. COPY OF DOCUMENTS FILED IN RESPECT OF WEBNET SU YSTMENS (INDIA) PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF THE RETURN OF INCOME 25. COPY OF DOCUMENTS FILED IN RESPECT OF KVF SECUR ITIES PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF INTIMATION U/S 143(1) 26. COPY OF DOCUMENTS FILED IN RESPECT OF ROOPIN CA PITAL PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF THE RETURN OF INCOME 27. COPY OF DOCUMENT FILED IN RESPECT OF SHASHI SAL ES & MARKETING PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT D) COPY OF THE RETURN OF INCOME 28. COPY OF DOCUMENTS FILED IN RESPEPCT OF BAWEJA EX PORTS PVT. LTD. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 43 OF 63 A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNTS 29. COPY OF DOCUMENTS FILED IN RESPECT OF ESS SQUAR E TRAVELS PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT 30. COPY OF DOCUMENTS FILED IN RESPECT T OF SAUDAM INI TRADING & INVESTMENT CO. PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT 31. COPY OF DOCUMENTS FILED IN RESPECT OF CHEMAX (I NDIA) PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION 32. COPY OF DOCUMENTS FILED IN RESPECT OF ASHIAN NE EDLESS PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION 33. COPY OF DOCUMENTS FILED IN RESPECT OF KVF SECUR ITIES PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT 34. COPY OF DOCUMENTS FILED IN RESPECT OF SPARROW R ESORTS PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT 35. COPY OF DOCUMENTS FILED IN RESPECT OF KANODIA P HARMACEUTICALS PVT. LTD. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 44 OF 63 A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION 36. COPY OF DOCUMENTS FILED IN RESPECT OF BLOSSOM A DVERTISEMENT PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF CONFIRMATION C) COPY OF BANK ACCOUNT 37. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI SANJ AY GUPTA A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 38. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI RAJ ESH KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 39. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI PRAV EEN KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 40. COPY OF DOCUMENTS FILED IN RESPECT OF SHRI ASH OK KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF INTIMATION U/S 143(1) 41. COPY OF DOCUMENT FILED IN RESPECT OF SHIR HEMAN T KUMAR JAIN. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 42. COPY OF DOCUMENT FILED IN RESPECT OF SHRI OM PR AKASH. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 43. COPY OF DOCUMENT FILED IN RESPECT OF SHRI PREM PRAKASH AGARWAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 45 OF 63 44. COPY OF DOCUMENT FILED IN RESPECT OF SHRI NIRA J GOEL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 45. COPY OF DOCUMENT FILED IN RESPECT OF D.K. ISPAT & TIMBER LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 46. COPY OF DOCUMENT FILED IN RESPECT OF SMT. SITA DEVI. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 47. COPY OF DOCUMENT FILED IN RESPECT OF SMT. RAJ R ANI. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION U/S 143(1) 48. COPY OF DOCUMENT FILED IN RESPECT OF SHRI GHANS HYAM DASS PROP. NAVNEET TRADING CO. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF THE INTIMATION U/S 143(1) C) COPY OF ORDER U/S 154 49. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAM G ARG. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 50. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAM P RAKASH. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 51. COPY OF DOCUMENT FILED IN RESPECT OF SHRI AMIT BANSAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 46 OF 63 C) COPY OF INTIMATION U/S 143(1) 52. COPY OF DOCUMENT FILED IN RESPECT OF SHRI SHYAM LAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOME 53. COPY OF DOCUMENT FILED IN RESPECT OF SHRI SUNIL KUMAR JAIN. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 54. COPY OF DOCUMENT FILED IN RESPECT OF SHRI OM PR AKASH. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 55. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAJIN DER KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 56. COPY OF DOCUMENT FILED IN RESPECT OF SHRI MURAR I LAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 57. COPY OF DOCUMENT FILED IN RESPECT OF SHRI MOHIN DER GUPTA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION U/S 143(1) 58. COPY OF DOCUMENT FILED IN RESPECT OF SHRI KRISH ANA BANSAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION U/S 143(1) 59. COPY OF DOCUMENT FILED IN RESPECT OF SHRI BABU LAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 47 OF 63 C) COPY OF INTIMATION U/S 143(1) 60. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAME SH GUPTA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 61. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAM BABU BANSAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 62. COPY OF DOCUMENT FILED IN RESPECT OF SHRI NAND LAL BANSAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF ASSESSMENT ORDER U/S 143(3) D) COPY OF INTIMATION U/S 143(1) 63. COPY OF DOCUMENT FILED IN RESPECT OF SHRI SHRI ONKAR MAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 64. COPY OF DOCUMENT FILED IN RESPECT OF SHRI KRISH NA KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION U/S 143(1) 65. COPY OF DOCUMENT FILED IN RESPECT OF SHRI JAGMO HAN RAM. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION U/S 143(1) 66. COPY OF DOCUMENT FILED IN RESPECT OF SMT. SANT OSH KUMARI. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 67. COPY OF DOCUMENT FILED IN RESPECT OF SMT. REKH A BANSAL. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 48 OF 63 A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF THE INTIMATION 68. COPY OF DOCUMENT FILED IN RESPECT OF SHRI SUBH ASH KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 69. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAJES H KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 70. COPY OF DOCUMENT FILED IN RESPECT OF SHRI DINES H KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 71. COPY OF DOCUMENT FILED IN RESPECT OF SHRI SUREH CHAND. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 72. COPY OF DOCUMENT FILED IN RESPECT OF SHRI VIKAS H GOEL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 73. COPY OF DOCUMENT FILED IN RESPECT OF SHRI ASHOK GUPTA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 74. COPY OF DOCUMENT FILED IN RESPECT OF SHRI NAREN DER KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 75. COPY OF DOCUMENT FILED IN RESPECT OF SHRI MADAN SINGH. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 49 OF 63 A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 76. COPY OF DOCUMENT FILED IN RESPECT OF SHRI MUKE SH KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 77. COPY OF DOCUMENT FILED IN RESPECT OF SMT. SUNIT A GUPTA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 78. COPY OF DOCUMENT FILED IN RESPECT OF SHRI BEER SINGH. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 79. COPY OF DOCUMENT FILED IN RESPECT OF SHRI LAL CHAND. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 80. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAJ KUMAR AGARWAL. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 81. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAM G UPTA. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF THE INTIMATIONS 82. COPY OF DOCUMENT FILED IN RESPECT OF SHRI RAJA RAM. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 50 OF 63 83. COPY OF DOCUMENT FILED IN RESPECT OF SHRI S K M ITTAL PROPK. M/S S.K. TRADING CO. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF INTIMATION 84. COPY OF DOCUMENT FILED IN RESPECT OF SHRI VED P RAKASH. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 85. COPY OF DOCUMENT FILED IN RESPECT OF SHRI VISHW AS KUMAR. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES C) COPY OF INTIMATION 86. COPY OF DOCUMENT FILED IN RESPECT OF SHIV SHAKT I MERCHANTS PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES 87. COPY OF DOCUMENT FILED IN RESPECT OF TOUCH WOOD S AGENCIES PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES 88. COPY OF DOCUMENT FILED IN RESPECT OF MADHU MAT I SECURITIES PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES 89. COPY OF DOCUMENT FILED IN RESPECT OF SAHIL AGEN CIES PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES 90. COPY OF DOCUMENT FILED IN RESPECT OF UNNTI CONS ULTANTS PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 51 OF 63 91. COPY OF DOCUMENT FILED IN RESPECT OF TIDY TEXT ILE PVT. LTD. A) COPY OF THE CONFIRMATIONS B) COPY OF RETURNS OF INCOMES 92. COPY OF DOCUMENT FILED IN RESPECT OF VPS VALVES & TUBES PVT. LTD. A) COPY OF THE APPLICATION OF EQUITY SHARES B) COPY OF RETURNS OF INCOMES 93. AUDITED REPORT ALONWTIH THE FINANCIAL STATEMENT S AS ON 31.03.02. 94. COPY OF THE RETURN OF ALLOTMENT PURSUANT TO SEC . 75(1) OF THE COMPANIES ACT ALONGWITH THE LIST OF SHAREHOLDERS. 95. COPY OF THE SHARE APPLICANTS ON INSTANCE BASIS ALONG WITH THE NECESSARY AVAILABLE DOCUMENTS AND EVIDENCE 96. LEDGER ACCOUNT OF SHARE APPLICATION MONEY 97. SUBMISSION TO AO VIDE LETTER DT. 15.11.07 98. SUBMISSION TO CIT(A) DT. 21.02.08 99. LETTER TO CIT(A) DT. 21.02.08 100. ALLAHABAD HIGH COURT IN THE CASE OF JAYA SECUR ITIES 101. NOTICE U/S 143(2), 142(1) WITH QUESTIONNAIRE D T. 30.04.07. 102 DETAILS OF INCREASE SHAREHOLDING 103. DETAILS OF LOAN / DEPOSITS 104. DETAILS OF FEW ALLEGED SHAREHOLDERS DETAILS OF OTHERS ARE AVAILABLE WHICH ARE VOLUMINOUS HENCE NOT FILED IF DIRECTED WOULD B E FILED. [D.1] PERUSAL OF RECORDS SHOWS THAT PRECEDENTS OF H ONBLE SUPREME COURT OF INDIA, IN THE CASES OF COMMISSIONER OF INCOME TAX, ORISSA V. ORISSA CORPORATION P. LTD. 159 ITR 78; HONBLE SUPREME COURT OF INDIA IN THE CASE OF C OMMISSIONER OF INCOME TAX V. J.K. HOSIERY FACTORY 159 ITR 85; HONBLE HIGH COURT OF D ELHI IN THE CASE OF COMMISSIONER OF INCOME TAX V. DIAMOND PRODUCT LTD. [2009] 177 TA XMAN 133 (DELHI); HONBLE HIGH ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 52 OF 63 COURT OF PUNJAB & HARYANA IN THE CASE OF ABHESHEK I NDUSTRIES LTD. V. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE [2009] 177 TAXMAN 335 (P UNJ. & HAR.); CO-ORDINATE BENCH OF ITAT, AMRITSAR IN THE CASE OF A.P. S. ASSOCIATES (P .) LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE-III, [2006] 101 ITD 215 (ASR.); C O-ORDINATE BENCH OF ITAT, JODHPUR, IN THE CASE OF BHILWARA SPINNERS LTD. V. C OMMISSIONER OF INCOME-TAX, UDAIPUR [2006] 101 ITD 237 (JODH.); WERE ALSO BROUGHT TO TH E ATTENTION OF ITAT. AT THE TIME OF HEARING ON 07.11.2019, REVENUE WAS REPRESENTED B Y SHRI SANJOG KAPOOR, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (LD. SR. DR, F OR SHORT). HOWEVER, NONE WAS PRESENT FROM THE ASSESSEES SIDE. THIS IS A VERY O LD APPEAL FILED IN 2008, AND HEARINGS FIRST STARTED IN THIS CASE ON 12.11.2008 SINCE THEN THE APPEAL CAME UP FOR HEARING MANY TIMES IN THE PAST. AFTER SEVERAL ADJOURNMENTS, ON 26.08.2019, THE HEARING WAS ADJOURNED TO 07.11.2019 AS LAST OPPORTUNITY TO THE LD. AUTHORIZED REPRESENTATIVE (LD. AR, FOR SHORT) OF THE ASSESSEE. IN THE ABSENCE OF ANY REPRESENTATION FROM ASSESSEES SIDE ON 07.11.2019, AT THE TIME OF HEARING BEFORE U S, WE HEARD THIS APPEAL EX-PARTE QUA THE RESPONDENT ASSESSEE. [E] WE HEARD THE LD. SR. DR; WHO RELIED UPON THE ORD ER DATED 05.12.2007 OF THE ASSESSING OFFICER AND THE AFORESAID IMPUGNED ORDER DATED 27.03.2008 OF THE LD. CIT(A); AND SUBMITTED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED BELOW FOR READY REFERENCE: SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 53 OF 63 KINDLY BE CONSIDERED IN VIEW OF THE FACTS OF THE AB OVE CASE WITH REGARD TO ADDITION MADE U/S 68 OF I T.ACT IN ADDITION TO ORAL ARGUMENT S: 1. PCIT VS NRA IRON & STEEL (P.) LTD. T20191 103 TAXMANN.COM 48 (SC)/F20191 262 TAXMAN 74 (SC)/R20191 412 ITR 161 (SC) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT REVERSE ORDER OF LOWER AUTHORITIES HOLDING THAT WHERE THERE WAS FAILURE OF ASSESSEE TO ESTABLISH CR EDIT WORTHINESS OF INVESTOR COMPANIES, ASSESSING OFFICER WAS JUSTIFIED IN PASSI NG ASSESSMENT ORDER MAKING ADDITIONS UNDER SECTION 68 FOR SHARE CAPITAL / PREM IUM RECEIVED BY ASSESSEE COMPANY. MERELY BECAUSE ASSESSEE COMPANY HAD FILED ALL PRIMARY EVIDENCE, IT COULD NOT BE SAID THAT ONUS ON ASSESSEE TO ESTABLIS H CREDIT WORTHINESS OF INVESTOR COMPANIES STOOD DISCHARGED. 2. PCIT VS NDR PROMOTERS PVT LTD (F20191 102 TAXMANN.C OM 182 (DELHI)/F20191 261 TAXMAN 270 (DELHI)/R2019L 410 ITR 379 (DELHI)) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSING OFFICER MADE ADDITIONS TO ASSESSEE'S INCOME UNDER SECTION 68 IN RESPECT OF AMOUNT RECEIVED AS SHARE CAPITAL FROM SEVERAL COMPANIES, IN VIEW OF FACT THAT ALL OF THESE COMPANIES WERE MAINTAINED BY ONE PERSON WHO WAS ENG AGED IN PROVIDING ACCOMMODATION ENTRIES THROUGH PAPER COMPANIES AND A LL SUCH COMPANIES WERE LOCATED AT SAME ADDRESS, IMPUGNED ADDITION WAS JUSTIFIED 3. CIT VS NAVODAVA CASTLE PVT LTD T20141 367 ITR 306 ( DEL) WHERE HONBLE DELHI HIGH COURT ACCEPTED THAT SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE DIRECTORS AND THE PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THAT AS PER THE INFORMATION AND DETAILS COLLECTED BY THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSE SSING OFFICER HAD OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDE NTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACT IONS. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 54 OF 63 '20. NOW, WHEN WE GO TO THE ORDER OF THE TRIBUNAL I N THE PRESENT CASE, WE NOTICE THAT THE TRIBUNAL HAS MERELY REPRODUCED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND UPHELD THE DELETION OF THE ADDITION. IN FACT, THEY SUBSTANTIALLY RELIED UPON AND QUOTED THE DECISION OF ITS CO-ORDINATE BEN CH IN THE CASE OF MAF ACADEMY P. LTD., A DECISION WHICH HAS BEEN OVERTURNED BY THE D ELHI HIGH COURT, VIDE ITS JUDGMENT IN CIT V. MAF ACADEMY P. LTD. [2014] 206 DLT 277 ; [2014] 361 ITR 258 (DELHI)). IN THE IMPUGNED ORDER IT IS ACCEPTED THAT THE ASSESSEE WAS UNABLE TO PRODUCE DIRECTORS AND PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPA NIES AND ALSO THE FACT THAT AS PER THE INFORMATION AND DETAILS COLLECTED BY THE ASSESS ING OFFICER FROM THE CONCERNED BANK, THE ASSESSING OFFICER HAS OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDENTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACTIONS. 21. IN VIEW OF THE AFORESAID DISCUSSION, WE FEEL TH AT THE MATTER REQUIRES AN ORDER OF REMIT TO THE TRIBUNAL FOR FRESH ADJUDICATION KEEPIN G IN VIEW THE AFORESAID CASE LAW.' NAVODAVA CASTLE PVT LTD VS CIT 20151 56 TAXMANN.CO M 18 (SC)/[2015] 230 TAXMAN 268 (SC)) SLP OF ASSESSEE DISMISSED BY HONBLE SUPREME COURT. 4. KONARK STRUCTURAL ENGINEERING (P.) LTD. VS DCIT R20 181 96 TAXMANN.COM 255 (SC) WHERE ASSESSEE-COMPANY RECEIVED CERTAIN AMOUNT AS S HARE CAPITAL FROM VARIOUS SHAREHOLDERS, IN VIEW OF FACT THAT SUMMONS TO SHAREHOLDERS UNDER SECTION 131 COULD NOT BE SERVED AS ADDRESSES WERE N OT AVAILABLE, AND, MOREOVER, THOSE SHAREHOLDERS WERE FIRST TIME ASSESS EES AND WERE NOT EARNING ENOUGH INCOME TO MAKE DEPOSITS IN QUESTION, ADDITIO N MADE BY ASSESSING OFFICER UNDER SECTION 68 WAS TO BE CONFIRMED; SLP D ISMISSED KONARK STRUCTURAL ENGINEERING (P.) LTD. VS DCIT T20 181 90 TAXMANN.COM 56 (BOMBAY) WHERE HONBLE BOMBAY HIGH COURT HELD THAT WHERE ASS ESSEE-COMPANY RECEIVED CERTAIN AMOUNT AS SHARE CAPITAL FROM VARIO US SHAREHOLDERS, IN VIEW OF FACT THAT SUMMONS SERVED TO SHAREHOLDERS UNDER SECT ION 131 WERE UNSERVED WITH REMARK THAT ADDRESSEES WERE NOT AVAILABLE, AND , MOREOVER, THOSE SHAREHOLDERS WERE FIRST TIME ASSESSEES AND WERE NOT EARNING ENOUGH INCOME TO MAKE DEPOSITS IN QUESTION, IMPUGNED ADDITION MAD E BY AO UNDER SEC. 68, WAS TO BE CONFIRMED ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 55 OF 63 5. PRATHAM TELECOM INDIA PVT LTD VS DCIT (2018-TIQL-19 83-HC-MUM- IT) WHERE HONBLE BOMBAY HIGH COURT HELD THAT MERE PROD UCTION OF PAN NUMBERS & BANK STATEMENTS IS SUFFICIENT ENOUGH TO DISCHARGE THE BURDEN ON TAXPAYER TO ESCAPE THE REALMS OF SECTION 68 6. ROYAL RICH DEVELOPERS (P.) LTD. VS PCIT F20191 108 TAXMANN.COM 382 (BOMBAY) WHERE HONBLE BOMBAY HIGH COURT HELD THAT WHERE REV ENUE AUTHORITIES MADE ADDITION TO ASSESSEE'S INCOME UNDER SECTION 68 IN R ESPECT OF SHARE APPLICATION MONEY RECEIVED FROM VARIOUS INVESTORS, SINCE ASSESS EE FAILED TO PRODUCE THEM DESPITE VARIOUS OPPORTUNITY GRANTED TO IT AND, MORE OVER THERE WAS NO EVIDENCE ON RECORD ESTABLISHING GENUINE INVESTMENTS ON THEIR PART IN SHARES OF ASSESSEE-COMPANY, IMPUGNED ADDITION WAS TO BE CONFI RMED 7. CIT VS NIPUN BUILDERS & DEVELOPERS (P.) LTD (30 TAX MANN.COM 292, 214 TAXMAN 429, 350 ITR 407. 256 CTR 34) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSEE FAILED TO PROVE IDENTITY AND CAPACITY OF SUBSCRIBER COMPANIES TO PA Y SHARE APPLICATION MONEY, AMOUNT SO RECEIVED WAS LIABLE TO BE TAXED UNDER SEC TION 68. IT WAS HELD AS FOLLOWS: 12 . A PERUSAL OF THE ORDER OF THE TRIBUNAL SHOWS THAT IT HAS GONE ON THE BASIS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE BEFORE T HE AO AND HAS HELD THAT IN THE LIGHT OF THOSE DOCUMENTS, IT CAN BE SAID THA T THE ASSESSEE HAS ESTABLISHED THE IDENTITY OF THE PARTIES. IT HAS FUR THER BEEN OBSERVED THAT THE REPORT OF THE INVESTIGATION WING CANNOT CONCLUSIVEL Y PROVE THAT THE ASSESSEE'S OWN MONIES WERE BROUGHT BACK IN THE FORM OF SHARE A PPLICATION MONEY. AS NOTED IN THE EARLIER PARAGRAPH, IT IS NOT THE BURDE N OF THE AO TO PROVE THAT CONNECTION. THERE HAS BEEN NO EXAMINATION BY THE TR IBUNAL OF THE ASSESSMENT PROCEEDINGS IN ANY DETAIL IN ORDER TO DEMONSTRATE T HAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO PROVE NOT ONLY THE IDENTITY OF THE SHARE APPLICANTS, BUT ALSO THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. NO ATTEMPT WAS MADE BY THE TRIBUNAL TO SCRATCH THE SUR FACE AND PROBE THE ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 56 OF 63 DOCUMENTARY EVIDENCE IN SOME DEPTH, IN THE LIGHT OF THE CONDUCT OF THE ASSESSEE AND OTHER SURROUNDING CIRCUMSTANCES IN ORD ER TO SEE WHETHER THE ASSESSEE HAS DISCHARGED ITS ONUS UNDER SECTION 68. WITH RESPECT, IT APPEARS TO US THAT THERE HAS ONLY BEEN A MECHANICAL REFERENCE TO THE CASE-LAW ON THE SUBJECT WITHOUT ANY SERIOUS APPRAISAL OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. WE, THEREFORE, ANSWER THE SUBSTANTIAL QUESTION OF L AW FRAMED BY US IN THE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE APPEAL OF THE REVENUE IS ALLOWED WITH NO ORDER AS TO COSTS. 8. CIT VS NOVA PROMOTERS & FINLEASE (P) LTD (18 TAXMAN N.COM 217, 206 TAXMAN 207, 342 ITR 169. 252 CTR 187) WHERE HONBLE DELHI HIGH COURT HELD THAT AMOUNT REC EIVED BY ASSESSEE FROM ACCOMMODATION ENTRY PROVIDERS IN GARB OF SHARE APPL ICATION MONEY, WAS TO BE ADDED TO ITS TAXABLE INCOME UNDER SECTION 68. IT WA S HELD AS FOLLOWS: 41. IN THE CASE BEFORE US, NOT ONLY DID THE MATERIAL BE FORE THE ASSESSING OFFICER SHOW THE LINK BETWEEN THE ENTRY PROVIDERS AND THE ASSESS EE-COMPANY, BUT THE ASSESSING OFFICER HAD ALSO PROVIDED THE STATEMENTS OF MUKESH GUPTA AND RAJAN JASSAL TO THE ASSESSEE IN COMPLIANCE WITH THE RULES OF NATURAL JU STICE. OUT OF THE 22 COMPANIES WHOSE NAMES FIGURED IN THE INFORMATION GIVEN BY THE M TO THE INVESTIGATION WING, 15 COMPANIES HAD PROVIDED THE SO-CALLED 'SHARE SUBSCRI PTION MONIES' TO THE ASSESSEE. THERE WAS THUS SPECIFIC INVOLVEMENT OF THE ASSESSEE -COMPANY IN THE MODUS OPERANDI FOLLOWED BY MUKESH GUPTA AND RAJAN JASSAL. THUS, ON CRUCIAL FACTUAL ASPECTS THE PRESENT CASE STANDS ON A COMPLETELY DIFFERENT FOOTI NG FROM THE CASE OF OASIS HOSPITALITIES (P.) LTD. (SUPRA). 42. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDER OF THE TRIBUNAL CONFIRMING THE DELETION OF THE ADDITION OF RS. 1,18,50,000 MADE UNDER SECTION 68 OF THE ACT AS WELL AS THE CONSEQUENTIAL ADDITION OF RS. 2,96,250. WE ACCORDINGLY ANSWER THE SUBSTANTIAL QUESTIONS OF LAW IN THE NEGATIVE AND IN FAVOUR OF THE DEPARTMENT. THE ASSESSEE SHALL PAY COSTS WHICH WE ASSESS AT RS. 30,000/-. 9. CIT VS N R PORTFOLIO PVT LTD [20141 42 TAXMANN.COM 339 (DELHI)/[2014] 222 TAXMAN 157 (DELHI)(MAG)/[2014L 26 4 CTR 258 (DELHI) ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 57 OF 63 WHERE HONBLE DELHI HIGH COURT HELD THAT IF AO DOUB TS THE DOCUMENTS PRODUCED BY ASSESSEE, THE ONUS SHIFTS ON ASSESSEE T O FURTHER SUBSTANTIATE THE FACTS OR PRODUCE THE SHARE APPLICANT IN PROCEEDING. IT WAS HELD AS FOLLOWS: 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITIO N OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRODUCTIO N OF INCORPORATION DETAILS, PAN NOS. OR THE FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHE N SURROUNDING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFL ECT PROPER PAPER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHINESS, ID ENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSO NS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 10. CIT VS EMPIRE BUILTECH (P.) LTD (366 ITR 110) WHERE HONBLE DELHI HIGH COURT HELD THAT U/S 68 IT IS NOT SUFFICIENT FOR ASSESSEE TO MERELY DISCLOSE ADDRESS AND IDENTITIES OF SHAREHOLDERS; IT HAS TO SHOW GENUINENESS OF SUCH INDIVIDUALS OR ENTITIES. [E.1] AFTER HEARING THE LEARNED DEPARTMENTAL REPRE SENTATIVE (LD. DR, FOR SHORT) AND AFTER CAREFUL PERUSAL OF RECORDS, WE FIND THAT IN PARAGRAPH 9.2.1 OF THE AFORESAID IMPUGNED APPELLATE ORDER DATED 27.03.2008, THE LD. CIT(A) HAS OBSERVED THAT INFORMATION RECEIVED BY THE ASSESSING OFFICER (AO , FOR SHORT) FROM DIRECTORATE WAS NOT PROCESSED BY THE AO, TO THE EXTENT THAT IT BECOMES BASIS OF ADDITION; AND THAT THE INFORMATION WAS UNRIPE. THE LD. CIT(A) ALSO FURT HER OBSERVED THAT .. THESE INFORMATIONS ARE ONLY STARTING POINT AND NOT END IN ITSELF. IN OTHER WORDS, ALTHOUGH THE AO HAS TO ENQUIRE AND UNDERTAKEN VERIFICATION PROCE EDINGS; BUT HE IS REQUIRED TO TAKE THIS INQUIRY TO A LOGICAL CONCLUSION AS TO WHETHER SOME OF THESE ENTRIES MAY BE INDICATING INCOME OUT SIDE THE TAX NET. BUT FOR TH AT, THE AO WILL HAVE TO VERIFY THE ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 58 OF 63 BOOKS OF THE ASSESSEE AND THEN WILL HAVE TO PROVE T HAT SOME OF THESE BANK INSTRUMENTS, ALTHOUGH RECEIVED BY THE ASSESSEE, HAVE NOT FOUND P ART OF ITS ACCOUNTED BOOKS . THE AO IS DIRECTED TO MAKE FURTHER VERIFICATION, FIRST BY CALLING FROM THE DIRECTORATE MORE PRECISE DETAILS ABOUT SUCH ENTRIES AND THEN TO CROS S CHEQUE FROM THE BOOKS AND BANK ACCOUNTS OF THE ASSESSEE. THE AO CAN AND SHOULD AL SO OBTAIN INFORMATION FROM THE RESPECTIVE BANKS AS TO WHETHER AND IN WHOSE ACCOUNT S THESE DDS. WERE ENCASHED. THE AO CAN ALSO OBTAIN INFORMATION DIRECTLY FROM THE E NTRY GIVER, AS TO IN WHOSE FAVOUR AND FOR WHAT PURPOSE, THESE INSTRUMENTS HAD BEEN ISSUED BY THEM. IF ONLY AFTER SUCH PURPOSEFUL VERIFICATION, SOME ADVERSE MATERIAL, AGA INST THE ASSESSEE, COMES TO THE KNOWLEDGE OF THE AO; HE CAN ALWAYS TAKE REMEDIAL ME ASURE IN THE HANDS OF THE ASSESSEE COMPANY. WITH THIS LINE OF REASONING, THE LD. CIT(A) WENT ON TO DELETE THE AFORESAID ADDITION OF RS. 18,54,625/- ON ACCOUNT OF ACCOMMODATION ENTRIES. [E.2] IN RESPECT OF THE ADDITION OF RS. 4,28,50,000/ - MADE UNDER SECTION 68 OF I.T. ACT IN RESPECT OF SHARE CAPITAL. THE LD. CIT(A) HAS OB SERVED IN PARA 9.3.1 OF THE AFORESAID IMPUGNED APPELLATE ORDER DATED 27.03.2008; . I HAVE NO DOUBT THAT IF IS AOS PREROGATIVE TO VERIFY THE ISSUE MORE DEEPLY; BUT FO R THAT, HE WOULD HAVE TO ISSUE LETTERS U/S 133(6) AND IF REQUIRED SUMMONS U/S 131 OF THE A CT; TO ENFORCE THEIR ATTENDANCE AND THEN TO MAKE PERSONAL INQUIRY. IF AFTER ALL TH IS, ANY ADVERSE FINDING COMES FORTH; AO WOULD BE JUSTIFIED TO TAKE REMEDIAL ACTION IN TH E HANDS OF THE COMPANY. IN THE PRESENT CASE, AO CAN STILL MAKE SUCH INDEPTH INQUIR Y, IN CASE HE FINDS IT WORTHWHILE. BUT HE WOULD HAVE TO TAKE PAINS TO ISSUE NOTICES U/S 13 1 OF THE INCOME- TAX ACT, 1961, AND ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 59 OF 63 TAKE FURTHER ACTION AS MENTIONED EARLIER. WITH THIS LINE OF REASONING, THE LD. CIT(A) WENT ON TO DELETE THE AFORESAID ADDITION OF RS. 4,2 8,50,000/-. [E.3] IN RESPECT OF THE AFORESAID ADDITION OF RS. 1, 19,63,549/- (ON ACCOUNT OF UNSECURED LOANS); PERUSAL OF PARAGRAPH 10 OF THE AF ORESAID IMPUGNED APPELLATE ORDER DATED 27.03.2008, SHOWS THAT THE LD. CIT(A) ADMITTE D ADDITIONAL EVIDENCES AND WENT ON TO DELETE THE AFORESAID ADDITION OF RS. 1,19,63, 549/-, ON THE BASIS OF ADDITIONAL EVIDENCES SO ADMITTED. [F] FROM PERUSAL OF THE FOREGOING, WE FIND THAT AS FAR AS AFORESAID ADDITIONS AMOUNTING TO RS. 18,54,625/- (SUBJECT MATTER TO GRO UND 1 OF APPEAL) AND THE AFORESAID ADDITION OF RS. 4,28,50,000/- (SUBJECT MATTER OF GR OUND 2 OF THIS APPEAL) ARE CONCERNED; THE LD. CIT(A) WAS OF THE VIEW THAT FURTHER INQUIRY / INVESTIGATION / VERIFICATION IN THESE ASPECTS WERE DESIRABLE BUT, ACCORDING TO THE LD. CI T(A), THE AO FAILED TO DO THIS. IN FACT, IN PARAGRAPH 9.2.1. OF HIS IMPUGNED APPELLATE ORDER DATED 27.03.2008, THE LD. CIT(A) EVEN DIRECTED THE AO TO MAKE FURTHER VERIFIC ATION. SIMILARLY, IN PARAGRAPH 9.3.1. OF THE AFORESAID IMPUGNED APPELLATE ORDER DATED 27. 03.2008, HE COMMENTED THAT THE AO WOULD HAVE TO ISSUE LETTERS U/S 133(6) AND IF RE QUIRED SUMMONS U/S 131 OF I.T. ACT. HE WENT ON TO STATE, IN PARAGRAPH 9.3.1. OF HIS IMP UGNED APPELLATE ORDER DATED 27.03.2008 THAT THE AO CAN STILL MAKE INDEPTH INQUI RY, IN CASE HE FINDS IT WORTHWHILE AND THAT THE AO WOULD HAVE TO TAKE PAINS TO ISSUE N OTICES US 131 OF THE I.T. ACT, AND ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 60 OF 63 TAKE FURTHER ACTION. ONCE LD. CIT(A) TAKEN THE VIEW THAT FURTHER INQUIRIES / INVESTIGATION / VERIFICATION ARE NECESSARY, IT IS INCUMBENT UPON THE LD. CIT(A) TO HAVE THE NECESSARY INQUIRIES / INVESTIGATION / VERIFICATION CARRIED OU T DURING THE APPELLATE PROCEEDINGS BEFORE HIM EITHER BY HIMSELF OR BY REMAND TO THE AO . A PERUSAL OF SECTION 251(1)(A) OF I.T. ACT SHOWS THAT IN AN APPEAL AGAINST AN ORDER O F ASSESSMENT, LD. CIT(A) MAY CONFIRM, REDUCE, ENHANCE OR ANNUL, THE ASSESSMENT. HOWEVER, W.E.F. 1.6.2001, AS A RESULT OF AMENDMENT TO INCOME TAX ACT, THE POWER OF LD. CIT(A) TO SET ASIDE AN ORDER OF ASSESSMENT HAS BEEN WITHDRAWN. THEREFORE, ANY N ECESSARY INQUIRY / INVESTIGATION OR VERIFICATION IS REQUIRED TO BE CARRIED OUT DURING P ENDENCY OF THE APPELLATE PROCEEDINGS BEFORE LD. CIT(A). FURTHER, PERUSAL OF SECTION 250 (4) OF I.T. ACT SHOWS THAT LD. CIT(A) HAS POWERS, BEFORE DISPOSING OFF ANY APPEAL, TO MAK E SUCH FURTHER INQUIRY AS HE THINKS FIT, OR HE MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIRY AND REPORT THE RESULT OF THE SAME TO THE LD. CIT(A). IT IS WELL SETTLED THAT POWERS OF LD. CIT(A) ARE CO- TERMINUS WITH POWERS OF THE ASSESSING OFFICER. FOR THIS PURPOSE, WE MAY REFER TO THE ORDER OF APEX COURT DECISION IN CIT VS. KANPUR COAL SYNDICATE 53 ITR 225 (SC) IN WHICH IT WAS HELD THAT AAC HAS PLENARY POWERS IN DISPOSIN G OFF AN APPEAL; THAT THE SCOPE OF HIS POWER IS CO-TERMINUS WITH THAT OF THE ITO, AND THAT HE CAN DO WHAT THE ITO CAN DO AND CAN ALSO DIRECT HIM TO DO WHAT HE FAILED TO DO. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE, WE ARE OF THE VIEW, CONSIDERIN G THE STATUTORY POSITION AS DISCUSSED, THAT IT WAS GROSS ERROR, ON THE PART OF THE LD. CIT (A), HAVING HIMSELF BEEN OF THE VIEW THAT FURTHER INQUIRIES / INVESTIGATION / VERIFICATI ON; TO NOT ENSURE THAT SUCH FURTHER INQUIRIES / INVESTIGATION / VERIFICATION WERE DONE DURING THE PENDENCY OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A); AND IN ACCORDANC E WITH SECTION 250(4) OF I.T. ACT. ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 61 OF 63 FOR COMING TO THIS CONCLUSION, WE ARE GUIDED BY ORD ER OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S JANSAMPA RK ADVERTISING AND MARKETING (2015) 375 ITR 373 (DEL.) IN WHICH HONBLE DELHI HI GH COURT HELD AS UNDER: 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS O BLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. B UT CIT (APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE C HAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENS URED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACE OF THE ALLEGA TIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL A UNIFORM PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY' IN EXERCISE OF THE POWER UNDER S ECTION 250(4). THIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AN D CONSEQUENTLY THAT OF CIT (APPEALS), CANNOT BE APPROVED OR UPHELD. [F.1] THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN RESPECT OF AFORESAID ADDITIONS AMOUNTING TO RS. 18,54,625/- (SUBJECT MAT TER OF GROUND 1 OF APPEAL) AND THE AFORESAID ADDITION OF RS. 4,28,50,000/- (SUBJECT MA TTER OF GROUND 2 OF THIS APPEAL); AND DIRECT THE LD. CIT(A) TO PASS FRESH ORDER ON THESE ISSUES, AFTER FURTHER INQUIRIES, IN ACCORDANCE WITH SECTION 250(4) OF I.T. ACT. GROUN DS 1 AND 2 OF APPEALS ARE DISPOSED OFF ACCORDINGLY, AND ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. [G] AS FAR AS GROUND NO. 3 OF APPEAL IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS ADMITTED ADDITIONAL EVIDENCES. PROVISIONS REGARDIN G ADMISSION OF ADDITIONAL EVIDENCES BY THE LD. CIT(A) ARE CONTAINED IN RULE 46A OF INCO ME TAX RULES, 1962 (I.T. RULES, ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 62 OF 63 FOR SHORT). THE LD. CIT(A), IN ACCORDANCE WITH RUL E 46A(2) OF I.T. RULE, WAS DUTY BOUND TO RECORD IN WRITING THE REASONS FOR ADMISSIO N OF ADDITIONAL EVIDENCES. FROM PERUSAL OF RECORDS, WE FIND THAT THE LD. CIT(A) HAS FAILED TO RECORD ANY REASONS FOR ADMISSION OF ADDITIONAL EVIDENCES. FURTHER, IN ACC ORDANCE WITH RULE 46A(3) OF I.T. RULES, THE LD. CIT(A) WAS DUTY BOUND TO ALLOW A REA SONABLE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCE OR DOCUME NTS OR TO CROSS-EXAMINE THE WITNESS PRODUCED BY THE APPELLANT OR TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTLE OF THE ADDITIONAL EVIDENCE PROD UCED BY THE APPELLANT. HOWEVER, FROM PERUSAL OF RECORDS, WE FIND THAT NO SUCH OPPOR TUNITY WAS PROVIDED BY THE LD. CIT(A) TO THE ASSESSING OFFICER. THUS, THE ORDER P ASSED BY THE LD. CIT(A), AS FAR AS THE AFORESAID ADDITION OF RS. 1,18,63,549/- (SUBJECT MA TTER TO GROUND 3 OF APPEAL) IS IN GROSS VIOLATION OF THE REQUIREMENTS PRESCRIBED UNDE R RULE 46A(2) AND 46A(3) OF I.T. RULES. THEREFORE, WE SET ASIDE THE ORDER OF THE LD . CIT(A) ON THE ISSUE OF AFORESAID ADDITION OF RS. 1,18,63,549/- AND DIRECT HIM TO PAS S A FRESH ORDER ON THIS ISSUE WHILE ENSURING FULL ADHERENCE TO RULE 46A OF I.T. RULES. GROUND NO. 3 OF APPEAL IS DISPOSED OFF ACCORDINGLY, AND IS TREATED AS PARTLY ALLOWED F OR STATISTICAL PURPOSES. [H] IN THE RESULT, APPEAL FILED BY REVENUE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /11/19. SD/- SD/- (H.S. SIDHU) (ANA DEE NATH MISSHRA) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 15/11/19 POOJA/- ITA NO.- 2184/DEL/2008 M/S RANA PAPERS LTD. PAGE 63 OF 63 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER