Powerdeal Energy Systems (India) Pvt. Ltd., Nashik V. ACIT, Circle-2, Nashik

ITA 2202/PUN/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9249 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 68

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2202/PUN/2012 / ASSESSMENT YEAR : 2009-10 POWERDEAL ENERGY SYSTEMS (INDIA) PVT. LTD., S.NO.5/2, 6/2/1, OPP.JAIN MANDIR, MUMBAI AGRA HIGH WAY, VILHOLI, NASHIK. PAN : AADCP4254D . / APPELLANT V/S ASST.COMMISSIONER OF INCOME TAX, CIRCLE -2, WANI HOUSE, MUMBAI, AGRA ROAD, NASIK 422002. . / RESPONDENT / APPELLANT BY : SHRI CH. NANIWADEKAR / RESPONDENT BY : SHRI ACHAL SHARMA. / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF T HE ORDER OF COMMISSIONER OF INCOME TAX (A) - II, NASHIK DT.31.08.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- / DATE OF HEARING : 15.06.2017 / DATE OF PRONOUNCEMENT: 30.06.2017 2 2.1 ASSESSEE IS A COMPANY STAT E D TO ENGAGED IN THE BUSINESS OF MANUFACTURING OF CONTROL PANELS. ASSESSEE ELECTRONICALLY FILED THE RETURN OF INCOME FOR A.Y. 2009 - 10 ON 21.4.2010 DECLARING TOTAL INCOME OF RS . 8,69,680/ - THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143 (3) OF THE ACT VIDE ORDER DATED 28 . 12 . 201 1 AND THE TOTAL INCOME WAS DETERM I NED AT RS . 69,28,9 1 1 /-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE OR DER DATED 31.08.2012 ( IN APPEAL NO.NSK/CIT(A)-II/464/11-12) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.C IT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FO LLOWING EFFECTIVE GROUND: THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING ADDITI ON OF RS.5639000/- , BEING SHARE SUBSCRIPTION MONEYS, MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOM E TAX ACT . 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT DURING THE YEAR THERE WAS INTRODUCTION OF SHARE AP PLICATION MONEY OF RS.56,39,000/- IN CASH FROM VARIOUS PERSONS (THE DETAI L S OF WHICH ARE LISTED AT PARA 3.3 OF THE ASSESSMENT ORDER). ASSESSEE FILED CONFIRMATIONS , COPIES OF SHARE APPLICAT I ONS, 7/12 EXTRACTS TO PROVE THE EXISTENCE AND CREDIT-WORTHINESS . AO ON FURTHER VERIFICATION OF THE DOCUMENTS NOTED THAT ALL THE SHARE APP LICANTS WERE STATED TO BE AGRICULTURISTS, THE MONEY WAS RECEIVED IN CASH AND THAT THE 7/12 EXTRACTS OF LANDS PRODUCED BELONGED MOSTLY FOR FINANCIAL YEAR 2010 - 11 WHICH DID NOT PROVE THE CREDIT-WORTHINESS OF THE SHARE APPLICANTS . AO ON VERIFICATION OF 7/12 EXTRACT NOTED THAT MOST OF THE FARMERS WERE MARGINAL FARMERS AND ACCORDING T O H I M 3 THE FARMERS PREFER INVESTING THE SURPLUS MONEY IN NEXT SE ASONS CROP AND HARDLY ANY SURPLUS MONEY REMAINS IN THEIR HAND S FOR MAKING INVESTMENTS IN SHARES . HE THEREFORE CONCLUDED THAT THOUGH THE ASSESSEE HAS PROVED THE EXISTENCE OF THE PERSONS BUT ACCORDING TO HIM SINCE ASSESSEE HAS NOT PROVED THE CREDIT-WO R THINESS AND GENUINENESS OF THE PAYMENTS HE THEREFORE CONCLUDED TH E SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE TO BE NOT GENUINE BUT BELONGING TO THE ASSESSEE . HE ACCORDINGLY MADE ADDITION OF RS.56,39,000/ - U/S 68 OF THE ACT . AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD CIT(A), WHO VIDE ORDER DATED 31.08.2012 (IN APPEAL NO.NSK/CIT(A)-II/464/11-12) UPHELD THE ORDER OF AO BY HOLDING AS UNDER. 6 . I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, SUBMISSION OF THE A PPELLANT AND THE MATERIAL AVAILABLE ON RECORD. THE APPELLANT HAS SHOWN TO HA V E RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS. 56,39,000/- IN CASH FROM 14 A PPLICANTS WHO HAPPENED TO BE AGRICULTURISTS. THE SHARE APPLICANTS ARE S TA T E D TO HAVE INVESTED THE SAID MONEY OUT OF THE SALE PROCEEDS OF THE AG RICULTURAL PRODUCE/ SALE OF LAND. THE DETAILS OF SHARE APPLICATION MONEY ARE AS FO LLO W S: N AME OF THE APPLICANT AMOUNT ( RS. ) MR. KAMLAKAR Y. WAGHCHAURE 2,55,000 MR. SHRIKANT DAREKAR 2,55,600 M R. PANDURAN G KANAWADE 2,97,000 I M R . V ASANTRAO WAGHCHAURE 5,00 , 400 MR. CHANDRABHAN GURULE 4,78,800 MR . BALASAHEB MUNGSE 2,98,800 I MR. VAMANRAO KHAIMAR 4,69,800 M R . RAJENDRA GADHAKH 5,25,500 MR . YADAVRAO WAKCHAURE 5,04,000 MR. MADHAV U G ALE 4,86,000 MR . SHUBHASH AMBRE 3,29 , 400 ! MR . BABANRAO KHAIRNAR 4,80,000 MR . BHANUDAS WAKCHAURE 5,00,000 I MR. AMOL WAKCHAURE 2,51,000 TOTAL : 56,39,000* 7. THE APPELLANT HAS FURNISHED A CHART SHOWING LAND HO LDINGS OF THESE 14 PERSONS, CROPS CULTIVATED, INCOME OF THE FAMILY, NO . OF FAMILY MEMBERS AND 4 LOANS RAISED BY THEM. A PERUSAL OF THE DETAILS REVE ALS THE FOLLOWING: NAME OF THE APPLICANT SHARE APPLICATION MONEY AREA UNDER CULTIVATION (ACRE) INCOME SHOWN (RS.) LOANS TAKEN (RS.) REMARKS MR. KAMLAKAR Y. WAGHCHAURE 2,55,000 11.05 4,33,000 1/6 SHARE OF SOME PART OF AGRI.LAND SHOWN MR. SHRIKANT DAREKAR 2,55,600 9.8 5,15,000 M R. PANDURANG KANAWADE 2,97,000 2.47 4,20,000 I M R . V ASANTRAO WAGHCHAURE 5,00 , 400 4.87 4,20,000 1/3 TO 1/4 SHARE OF SOME PART OF AGRI.LAND SHOWN MR. CHANDRABHAN GURULE 4,78,800 25.72 10,62,500 1,50,000 1/3 SHARE OF SOME PART OF AGRI.LAND SHOWN MR . BALASAHEB MUNGSE 2,98,800 20.7 8,90,000 1/2 SHARE OF SOME PART OF AGRI. LAND SHOWN I MR. VAMANRAO KHAIMAR 4,69,800 18.0 11,58,000 3,00,000 1/2 SHARE OF SOME PART OF AGRI. LAND SHOWN M R . RAJENDRA GADHAKH 5,25,500 14.0 6,70,000 1/2 SHARE OF SOME PART OF AGRI. LAND SHOWN MR . YADAVRAO WAKCHAURE 5,04,000 11.67 8,60,000 1/2 SHARE OF SOME PART OF AGRI. LAND SHOWN MR. MADHAV UGALE 4,86,000 6.25 3,40,000 1/2 SHARE OF SOME PART OF AGRI. LAND SHOWN MR . SHUBHASH AMBRE 3,29 , 400 3.72 80,000 50,000 ! MR . BABANRAO KHAIRNAR 4,80,000 15.07 12,05,000 5,00,000 & 72,000 MR . BHANUDAS WAKCHAURE 5,00,000 6.85 6,55,000 SOLD LAND I MR. AMOL WAKCHAURE 2,51,000 5.0 3,10,000 8. A PATTERN THAT EMERGES FROM THE PERUSAL OF THE A BOVE CHART AND THE OTHER DETAILS FILED BY THE APPELLANT IS AS FOLL OWS: MAJORITY OF THE LAND SHOWN UNDER CULTIVATION WAS IN JOINT OWNERSHIP WITH THE SHARE APPLICANTS. MAJORITY OF TH E APPLICANTS WOULD THEREFORE FALL IN THE CATEGORY OF SMALL/MARGINAL FARMERS AS POINTED OUT BY THE AO IN HIS ASSESSMENT ORDER. SOME OF THE SHARE APPLICANTS HAD RAISED 5 HUGE LOANS FROM CO-OP SOCIETIES/BANKS. THE CROPS CU LTIVATED BY THEM MORE OR LESS CONSTITUTED NON-CASH CROPS (BA JRA, WHEAT ETC). NONE OF THE SHARE APPLICANTS COULD FURN ISH DETAILS OF AGRICULTURAL EXPENSES, CASH SALE RECEIPT S OF THE AGRICULTURAL PRODUCE AND ANY OTHER DETAIL WHATSOEVE R IN RELATION TO PRODUCTION OF CROPS BUT FOR COPIES OF 7/12 EXTRACTS. NONE OF THE APPLICANTS COULD FURNISH BANK ACCOUNT EXTRACTS. IN FACT AS STATED BY THE APPELLANT, SOME OF THEM DID NOT HAVE THE BANK ACCOUNT . MOST OF THEM FOUND TO BE RELATED TO THE DIRECTORS OF THE APPELLANT COMPANY. THE ENTIRE SHARE APPLICATION MONEY HAS BEEN RECEIVED IN CASH. A CCORDING TO THE DEPARTMENT OF AGRICULTURAL ECONOMIC S, RAHURI (GOVT.OF MAHARASHTRA) APPROX. INCOMES PER AC RE IN THE CASE OF WHEAT; ONION; BAJRA; DALIMB; SOYABEAN; GRAPE AND TOMATO ARE RS.3483/; RS.52195/-; RS. 715/-; RS. 138962/-; RS.1124/- ; RS.92624/- AND RS.32,993/- RESPECTIVELY . THE A V ERAGE AGRICULTURAL INCOME/ACRE ON THE BASIS OF AGRI CULTURAL INCOME SHOWN BY THE SHARE APPLICANTS IN RESPECT OF WHEAT; ONION; BAJRA; DALIMB; SOYABEAN; GRAPE AND TOMATO IS WORKED OUT AS FOLLOWS: CROP AVG. INCOME ON INCOME FURNISHED BY DEPARTMENT OF AGRICULTURAL ECONOMICS, RAHURI (RS. / ACRE) THE BASIS OF INCOME SHOWN BY SHARE APPLICANT (RS. /ACRE) WHEAT 31,200 3 , 483 ONION 92,313 52,195 BAJRA 18,107 715 DALIMB 1,86,006 1,38,962 SOYABEAN 39,097 1,124 GRAPE 2,00,000 92,624 TOMATO 45,614 32,993 IN VIEW OF THE ABOVE, INCOME SHOWN BY THE SHARE APP LICANTS IN RESPECT OF THE ABOVE CROPS RAISES A SERIOUS DOUB T OVER THE V ERAC I TY AND AUTHENTICITY OF THE FIGURES. A NET INCOME OF RS. 20,000/- ACRE IN THE CASE OF BAJRA, WHICH IS ESSENT IALLY A FODDER CROP IS UNHEARD OF. SIMILARLY, AN INCOME OF RS. 6 LAC/HA (RS.2 . 40 LAC/ACRE) IN THE CASE OF DALIMB IS ALMOST DOUBLE THAN THAT OF THE FIGURE PROVIDED BY THE TECHNICAL OFFICE R, DEPARTMENT OF AGRICULTURAL ECONOMICS, RAHURI (GOVT. OF MAHARASHTRA). IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THE APPELLANT HAS HIKED THE AGR ICULTURAL INCOME OUT OF PROPORTION TO EXPLAIN AVAILABILITY OF CASH WITH THE SHARE APPLICANTS. NO DETAILS WHATSOEVER HAVE . BEEN PRODUCED BY THE APPELLANT IN SUPPORT OF AGRICULTURA L INCOME SHOWN BY THE SHARE APPLICANTS. IN A NUT SHELL. AGRI CULTURAL INCOME SHOWN BY THE SHARE APPLICANTS REMAIN UNSUBSTANTIATED. 9. THE APPELLANT FURNISHED DETAILS OF SHARE APPLICA NTS' IDENTITY AND 7/12 EXTRACTS IN SUPPORT OF GENUINENESS OF THE TRAN SACTIONS. THESE 7/12 WERE ALSO PRODUCED BEFORE THE AO AS MENTIONED IN PARA 2 ABOVE. 6 DETAILS FURNISHED BY THE APPELLANT BEFORE ME IN REG ARD TO SIZE OF LAND HOLDING, INCOME GENERATED, SIZE OF THE FAMILY AND LOANS RAISED BY SOME OF THE SHARE APPLICANTS DID NOT PROVE THAT THE SHARE APPLICANTS WERE PERSONS OF GOOD FINANCIAL STANDING. APART RS. FROM THE ABOVE DETAILS, THE APPELLANT HAS FAILED TO PROV IDE ANY OTHER DOCUMENTARY EVIDENCE WHICH COULD ESTABLISH CREDITWO RTHINESS OF THE SHARE- APPLICANTS. FURTHER, THE APPELLANT COULD NOT PROVIDE ANY ANSWER AS TO WHY TRANSACTIONS DID NOT ROUTE THROUGH BANKING CHANNELS ESPECIALLY WHEN MOST OF THE SHARE APPLICAN TS HAD DEALING WITH CO-OPERATIVE BANKS. SIMILARLY, THERE WAS NO SA TISFACTORY EXPLANATION WITH THE APPELLANT AS TO WHY SUCH HEAVY CASH WAS KEPT BY THE SHARE APPLICANTS DESPITE THEIR HAVING BANK A CCOUNTS., IN ORDER TO GIVE ANOTHER OPPORTUNITY TO PROVE CREDIT-W ORTHINESS OF THE SHARE APPLICANTS, APPELLANT WAS ASKED TO FURNISH DE TAILS OF THEIR MOVEABLE/IMMOVABLE ASSETS. THE WHOLE IDEA FOR SEEKI NG THE SAID DETAILS IN THE APPELLATE PROCEEDINGS WAS TO ASCERTA IN SHARE APPLICANTS' CREDITWORTHINESS. THE APPELLANT HOWEVER , FAILED TO FURNISH ANY ADDITIONAL DETAIL. IN A NUT SHELL, THE APPELLANT DURING THE APPELLATE PROCEEDINGS TOO FAILED TO PROVE CREDIT-WO RTHINESS OF THE SHARE APPLICANTS. THE APPELLANT HAS RELIED UPON VAR IOUS CASES. HOWEVER, NONE OF THE CASES CITED BY IT HAS DONE AWA Y WITH THE NEED OF ESTABLISHING CREDIT-WORTHINESS OF THE SHARE APPL ICANTS BY THE APPELLANT. IT IS ALSO TO BE MENTIONED THAT NO INCOM E TAX PARTICULARS OF THESE SHARE APPLICANTS WERE FURNISHED MEANING TH EREBY THAT NONE OF THE SHARE APPLICANT FILED INCOME TAX RETURN OR ASSESSED TO TAX. 10. THE DIVISION BENCH OF DELHI HIGH COURT IN THE C ASE OF LOVELY EXPORTS P. LTD. HAS INTERALIA HELD AS FOLLOWS : THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. IN ORDER TO DISCHARGE THIS BURDEN, THE AS SESSEE IS REQUIRED TO PROVE: A) IDENTITY OF SHAREHOLDER; B) GENUINENESS OF TRANSACTION; AND C) CREDIT WORTHINESS OF SHAREHOLDERS. IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDUAL, SOME DOCUMENTS WILL HAVE TO BE FILED OR THE SAID SHAREHO LDER WILL HAVE TO BE PRODUCED BEFORE THE AO TO PROVE HIS IDEN TITY. GENUINENESS OF THE TRANSACTION IS TO BE DEMONSTRATE D BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MONEY FROM THE SAID SHAREHOLDER AND IT CAME FROM THE COFFERS F ROM TH AT VERY SHAREHOLDER. AS FOR AS CREDITWORTHINESS OR FINANCIAL STRENGTH OF T HE CREDIT/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PRODUCING THE BANK STATEMENT OF T HE CREDITORS/ SUBSCRIBERS SHOWINQ THAT IT HAD SUFFICIE NT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SH ARE CAPITAL . 11. THE HON'BLE COURTS IN VARIOUS OTHER CASES HAVE ALSO HELD THAT: 'INITIAL BURDEN LIES ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE APPLICATION MONEY RECEIVED BY T HE ASSESSEE. IT IS ALSO CLEAR THAT THE ASSESSEE HAS TO SATISFACTORILY ESTABLISH THE IDENTITY OF THE SHAREH OLDERS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE SHAREHOLDERDS'. 7 12. HOWEVER, IT IS SEEN THAT IN THE PRESENT CASE MA JORITY OF THE SHARE APPLICANTS HAVE PRODUCED NONE OTHER THAN THE ELECTION IDENTITY CARDS IN SUPPORT OF THEIR IDENTITY. MOREOV ER, NONE HAS PRODUCED DETAILS OF EXPENSES INCURRED FOR AGRICULTU RAL OPERATIONS, SALES PROCEEDS OF SUCH PRODUCTS RAISED IN THEIR LAN DS. NO RELIABLE DOCUMENTARY PROOF TO SUBSTANTIATE AVAILABILITY OF CASH IN THE HANDS OF THE SHARE APPLICANTS HAS BEEN PRODUCED BY THE AP PELLANT DURING THE APPELLATE PROCEEDINGS. THE APPELLANT HAS NOT GI VEN ANY EVIDENCE SHOWING THAT THESE AGRICULTURIST SHARE APPLICANTS H AVE ANY OTHER SOURCE OF INCOME. NO CREDIBLE DOCUMENTARY EVIDENCE TO VOUCH THAT THEY WERE IN A POSITION TO INVEST WITH THE APPELLAN T COMPANY WAS PRODUCED BEFORE ME. DESPITE SPECIFIC QUERY IN REGAR D TO SHARE APPLICANTS' MOVEABLE AND IMMOVABLE PROPERTIES TO ASC ERTAIN THEIR CREDITWORTHINESS, APPELLANT DID NOT COME FORWARD TO FURNISH ANY DOCUMENTARY EVIDENCE WHICH COULD ESTABLISH THE FINA NCIAL STRENGTH OF SHARE APPLICANTS. AS GIVEN IN PARA 6 ABOVE, MOST OF THE SHARE APPLICANTS WERE SMALL AND MARGINAL FARMERS AND COUL D NOT HAVE INVESTED THEIR HARD EARNED MONEY IN THE FORM OF SHA RE APPLICATION MONEY IN A 'CLOSELY HELD COMPANY' FROM WHICH NO IMM EDIATE RETURNS WERE EXPECTED. THERE IS NO MATERIAL ON RECORD TO PR OVE THAT THESE PERSONS HAD EVER INVESTED IN SHARES. THESE SMALL AG RICULTURISTS SEEM TO HAVE ACCOMMODATED THE APPELLANT COMPANY BY LENDING THEIR NAMES. IT IS UNBELIEVABLE THAT THE SMALL/MARG INAL FARMERS WOULD INVEST IN SHARES THAT TOO IN A COMPANY FROM W HICH NO RETURNS WERE IMMINENT IGNORING THE NEEDS OF THE FAMILY AND T HEIR LIMITED AGRICULTURAL HOLDINGS. IT IS SURPRISING THAT 'WHILE ON THE ONE HAND THESE PERSONS TAKE LOANS ON INTEREST FROM BANKS TO UNDERTAKE AGRICULTURAL OPERATIONS, ON THE OTHER HAND, INVEST THE ENTIRE SALE PROCEEDS IN A CLOSELY HELD COMPANY FROM WHICH NO RETURNS WE RE OBTAINED. AN INTERESTING CASE IS THAT OF SHRI. SUBH ASH HARIBAU AMBRE WHO HAS TOTAL AGRICULTURAL LAND HOLDING OF 3. 72 ACRES, PRODUCES MAINLY BAJRA, EARNS AN INCOME OF RS. 80,00 0/-; HAS TAKEN A LOAN OF RS. 50,000/- FROM GANORE V.K.S. SOCIETY B UT INVESTS RS. 3,31,000/- AS SHARE APPLICATION MONEY IN THE APPELL ANT COMPANY. IN VIEW OF THE FACTS AND CIRCUMSTANCES DISCUSSED ABOVE , I AM OF THE CONSIDERED VIEW THAT THE PREPONDERANCE OF PROBABILI TY AND EVIDENCE AVAILABLE ON RECORD MAKES IT AMPLY CLEAR THAT THE W HOLE SET OF TRANSACTION WAS NOTHING BUT A SHAM TRANSACTION WHIC H DISTINGUISHES IT FROM THE VARIOUS CASES CITED BY TH E APPELLANT INCLUDING OASIS HOSPITALITIES (2011) 333 ITR 119. 13. THERE REMAINS ABSOLUTELY NO DOUBT THAT THE APPE LLANT HAS HIS UNACCOUNTED INCOME IN THE GUISE OF 'SHARE APPLI CATION MONE Y '. THE ENTIRE EXERCISE OF EXPLAINING THE SHARE APPL ICATION MONEY SEEMS TO BE FABRICATED AND AFTERTHOUGHT . MERE FILING OF CONFIRMATION AND THE IDENTITY PROOF DON'T ESTABLISH THE GENUINENESS OF THE CASH CREDIT . THE BURDEN WAS ON THE APPELLANT TO PROVE THE CREDITWORTHINESS OF THE SHARE A PPLICANTS WHICH HE FAILED TO DO SO. THE E X PLANATION OF CREDITORS IN R E GARD TO SOURCE OF THE DEPOSITS IS FOUND TO BE DEVOID OF ANY MERIT . NO PROOF IN SUPPORT OF SO CALLED AGRICULTURAL INCOME HAS BEEN FILED BY ANY OF TH E SHARE APPLICANTS. AS MENTIONED IN PARA 6 A BOVE AGRICULTURAL INCOMES SHOWN BY THE SHARE APPLICANTS ARE HIGHLY INFLATED VIS-A-VIS SIZE OF THEIR L A ND HOLDING. AS STATED ABOVE THE SOURCE OF CAS H DEPOSITS BY THE CREDITORS I N THE APPELLANT COMPANY REMAINS UNVERIFIAB L E IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE. NO SATISFACTOR Y EXPLANATION WITH REGARD TO THEIR CREDIT WORTHINESS HAS COME ON RECORD DESPI TE REPEATED OPPORTUNITIES GI V EN TO THE APPELLANT . THE CREDITORS HAVE 8 FAI L ED TO PROVE THAT THEY ARE PERSONS OF MEANS. THE APP ELLANT HAS ALSO FAIL E D TO DISCHARGE HIS ONUS OF PRO VI NG THAT THE CREDITORS HAD THE CAPACITY TO I N V EST MONEY. IN THE FACTS A ND CIRCUMSTANCES OF THE CASE, I AM OF THE C ONSIDERED VIEW THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINENES S OF THE SHARE APPLICATION M O N EY. THE AO WAS THEREFORE, JUSTIFIED IN T R E ATING THE SAID SHARE AP PLICATION MONEY OF RS. 56,39,000/- (ACTUA L T O TAL RS. 56,26 , 400/-) AS UN EX PLAINED CASH CREDIT U/S 68 IN THE HANDS OF THE APPELLANT COMPANY . THE ADDITION IS CONFIRMED AND THE GROUNDS O F T HE APPEAL IN REGARD TO A DDITION U / S 68 ARE REJECTED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 4. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT ASSESSEE HA D RECEIVED SHARE APPLICAT I ON MONEY FROM 14 PERSON, THE DETAILS OF WHICH ARE LISTED AT PAGE 17 TO 20 OF THE PAPER BOOK . FROM THE AFORESAID LIST HE POINTED OUT THAT ASSESSEE HAD FURNISHED THE DETAILS OF LANDHOLDINGS OF THE PERSONS, THE CROPS GROWN ON THE LAND, THEI R RESPECTIVE INCOME . TO PROVE THE IDENTITY OF THE CREDITORS, ASSESSEE HAD FILED THE COPIES OF THE THEIR ELECTION CARD/BANK PASS . FOR SOME OF THE LENDERS, ASSESSEE HAD FILED THE COPY OF THEIR PAN CARDS/ACKNOWLEDGEMENT OF PROOF OF FILING OF RETURN OF INCOME . HE THEREFORE SUBMITTED THAT ASSESSEE HAD DISCHARGED THE ' INITIAL ONUS CAST UPON THE ASSESSEE OF PROVIDING THE IDENTITY, CREDIT-W ORTHINESS AND GENUINENESS OF THE TRANSACTION BUT THE AO DID NOT MAKE ANY FURTHER INQUIRIES NOR ISSUED SUMMONS TO THE CREDITORS TO CONCLUDE THAT THE CREDITORS D I D NOT HAVE THE CAPAC I TY TO LEND THE MONEY . HE FURTHER SUBMITTED THAT LD CIT(A) WHILE ESTIMATING THE INCOME S PER ACRE HAD RE L IED ON THE FIGURE RECEIVED FROM DEPARTMENT OF AGRICULTURAL ECONOMICS, RAHUR I (MAHARASHTRA) WHICH WAS RECEIVED AT THE BACK OF ASSESSEE AND THE ASSESSEE WAS NOT CO NFRONTED WITH IT . HE THEREFORE SUBMITTED THAT WHEN ASSESSEE HAD DISCHARGED THE 9 INITIA L ONUS CAST UPON BY THE ASSESSEE AS RE QU IRED U / S 6 8 O F T H E A C T , N O A DDI T IO N WA S CALL E D F OR . H E A LSO REL I ED ON TH E DECISION REND E R E D BY HON' B LE BO M BA Y H IGH COUR T IN T HE C AS E O F CI T VS. M/S. GAGA NDEE P IN F RASTRUCTURE PVT. LTD (I T A NO 16 1 3 OF 20 14 ORD E R DTD. 20.03. 20 1 7) . H E ALSO PLAC E D O N R ECORD T H E COPY OF THE AFO R ESA I D DECISION . LD DR ON TH E O T H E R HAND SUPPORTED THE ORD E R OF LOW E R AU T HO R ITI E S AND FU R THER R EL I ED ON TH E DECISION RENDER E D BY HON ' BLE D EL H I H IGH COU R T I N TH E C A SE O F CIT VS. E MP IR E BU IL TE C H PVT. LTD. IN ITA NO.493 OF 2013 ORDER DT.27.01.2014 RE PORTED IN (2014) 367 ITR 306 (DEL). HE THUS SUPPO R TED T H E O RDER OF LO W ER A UTH O R I TI ES . LD AR I N THE R E JOIND ER S U B M I TTED THAT THE RATIO OF THE DECISI O N IN THE CA S E OF E MPIRE BU ILT ECH ( SU PR A) IS NO T APP L ICABLE T O TH E PRESENT FACTS O F THE CASE, AS THE FACTS ARE D ISTINGUIS H A B LE A S IN THAT CAS E TH E SUMMONS W E RE ISSU E D BY T H E AO T O T HE CRE D IT O R S/ LE ND E R S BU T W E R E NOT C O M PL IE D WITH BY THE CREDITORS WHEREAS I N TH E PRES E NT CASE NO SUMMONS W E R E I SS U E D BY T H E AO . 5. WE HAVE HE A RD TH E RIVAL S UB MI S SI ON S AN D P E R U S ED THE MATE R IA L O N REC ORD . T H E I SS UE IN THE PR E SENT CASE IS WITH RESPECT TO ADDITION U/ S 68 OF TH E A C T. 6. SECTION 68 OF THE ACT CON TE MPLAT E S T H AT W H ERE A N Y S UM I S FO U ND C REDITED I N TH E BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR , AND THE A SS E SS E E OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF , OR THE EXP L ANATION OFFE R ED BY T H E ASSESSEE IS NOT , IN THE OPINION OF THE AO SATISFACTORY , THEN THE SUM SO CRED IT ED I N TH E A C COU N TS M AY BE TREA TE D A S IN COM E O F THE ASSESSEE OF THAT PREV I OUS YEAR . SECTION 68 OF THE ACT ON L Y SETS UP A 10 PRESU M PTION AGA I NST TH E ASSESS E E WHEN E VER UNE X P L AINED CREDITS ARE FOUND I N THE BOOKS OF ACCOUNT OF TH E ASSESSE E . THE PRESUMPTION I S REBUTTABL E . IN REBUTTING THE PRESUMP TI ON R A I SED , T HE I NI T I AL B U RD E N I S O N T HE ASS E SSE E . THI S B U R D E N , W H I C H I S PLACED O N THE ASSESSEE , SH I F T S AS SOO N AS T H E ASSESS EE E S TA B L I S HES THE A UTHENTICIT Y OF TR A N SA CT I O N S E XE C UT ED B ET W E E N TH E ASSESSEE A ND IT S C RED IT O R S . 7. IN THE PR ES EN T CA S E , I T I S AN UN D I S PUTED FACT THA T TO PRO V E THE RE C E I P T OF SHA RE APP LI CAT I ON MONEY BEFOR E T H E AO , ASSESSEE HAD FURNI S HE D THE L IST O F DE P OS I TO R S , THEIR ADDRESSES, COPY OF THE E L ECT I ON CARD/BANK PASS BOO K , COPY OF T H E 7 / 12 EXTR A CT S O F TH E IR LAN D HOLD I NG , CROPS GROWN AND THEIR INCOME . THUS THE I N I TIAL ONUS CAST UPO N TH E ASS E SS E E WAS DIS C HARGED ON SUBM I TTING OF THE AFORESAID INFORMATION. THE AO IN THE ORDER HAS ALSO ADMITTED IN THAT ASSESSEE HAS PROVED THE EX I STENCE O F THE L ENDERS. I T IS ALSO A FACT THAT ON R E C E IPT OF TH E AFORESAID DETAILS , AO DID NOT MAKE ANY FURTHER I NQU I RIES NOR DI D IT S U M M O N T H E C R ED I T O R S T O DE M O LI SH THE C ONTE N T I ON OF T HE ASSESSEE ABOUT TH E CRED I T-WORT HI NESS O F THE L E N DERS . W E FURTHER FIND T HAT TO E S TIM A TE T H E I NC OME OF C R OPS PER ACR E EA R NED BY THE I ND I VIDUA L C R E D I TO R S , LD C IT( A ) H A D RELIED O N THE R E PO R T REC EIVED FROM TH E DEPARTMENT O F AGR I CULTU R AL EC ONOM IC S, R A H U R I (M A HAR A S HT R A ) BUT I T W A S RECE IV E D AT TH E BACK OF THE ASSESSE E AND NO OPPORTUNITY WAS GI V E N T O T H E AS S E S SEE T O C O NTR OV ERT TH E SA ME. I T IS A S ET TLED LA W T HA T T HE PRINCIP L ES O F N ATU R A L JU ST I C E R EQ U I RE T H A T BEF O RE A N Y MATER I A L I S U S ED AG A I N S T A PA RT Y , IT SHOU L D BE PUT TO HIM . 11 8. HON ' B L E APE X CO UR T IN THE C AS E OF C I T V S. LO V ELY EXP O RTS (P) LT D ( 2 0 08) 317 ITR 21 8 ( SC ) H AS H E L D T H A T WHEN SHARE APP L I CA TI O N M O N EY I S R EC E I V E D BY T H E ASS E SSEE COMPANY F ROM A LL EGED BOG U S S H A R EHO L DERS W H OSE N A M ES A R E G I VE N T O TH E AO THEN TH E DEPAR TME N T I S FR EE T O P R OCEED T O REOPE N THE I R I ND I V I DUA L ASSESS M E N TS I N A CC OR D A NCE W I TH L AW B UT I T C A NNO T B E RE GA RDE D AS UN D I S CL OSED IN CO ME OF T HE ASSESS E E COMPANY. 9. CONS I DER I NG THE TO T A LIT Y O F TH E AFORE SA ID F A CT S A ND REL Y I NG O N THE D E C I S I ONS C I T E D HE R E IN ABOVE , WE A R E OF TH E V I EW T H A T IN THE PR E SE NT CA SE , TH E REQUI SI TE PRERE Q U I S I TE FOR IN VO KIN G TH E PR OV I S I ONS OF SEC.68 WERE NO T SAT I S F I E D A N D TH ER EF O RE NO ADD I T I O N C O U L D BE MADE IN THE HANDS OF ASSESSEE . WE THEREFORE SE T AS I D E THE O R D ER O F AO ON THE I SS UE O F ADD IT ION U/S 68 O F THE AC T. THU S THE G R O UN D O F THE ASSESSEE IS ALLOWED. 10. I N T HE R ES ULT THE AP PE A L O F ASS E SS EE I S AL L OW ED . ORDER PRONOUNCED ON 30 TH DAY OF JUNE, 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; ! DATED : 30 TH JUNE, 2017. YAMINI 12 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-II, NASHIK. CIT-II, NASHIK. #$% &&'(, * '(, / DR, ITAT, A PUNE; %+, - / GUARD FILE. / BY ORDER, // //// // TRUE COP // /// TRUE // //COPY // TRUE COPY // . /012 / ASSISTANT REGISTRAR, * '( , / ITAT, PUNE.