Advance Lamp Component & table Wares Pvt. Ltd, V. ITO Ward-1 (2),

ITA 2232/DEL/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86491 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-06-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 09-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; Period of limitation; Additional evidence; Assessment record; Onus to prove; Time period of passing order; Capital expenditure
• Section: 43B; 143(3); 142(1); 37(1); 68; 15

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI J. S REDDY , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 2232 /DEL/ 2008 (ASSESSMENT YEAR: 2003 - 04 ) ADVANCE LAMP COMPONENTS AND TABLEWARES PRIVATE LIMITED FACTORY: - VILL, MOHAMMADPUR NAWADA, FIROZABAD (UP) - 283 203 VS. THE INCOME TAX OFFICER WARD 1(2) NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 2076 /DEL/ 2008 (ASSESSMENT YEAR: 2003 - 04 ) THE INCOME TAX OFFICER WARD 1(2) NEW DELHI VS. ADVANCE LAMP COMPONENTS AND TABLEWARES PRIVATE LIMITED FACTORY: - VILL - MOHAMMADPUR NAWADA, FIROZABAD (UP) - 283 203 (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THESE CROSS - APPEALS ARISE FROM THE ORDER DATED 25.03.2008 PASSED BY THE LD CIT(A) - X, NEW DELHI AND RELATE TO ASSESSMENT YEAR 2003 - 04. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. LD CIT( APPEALS) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THE ORDER PASSED UNDER SECTION 143(3) AS VALID WITHOUT PROVING THE VALID SERVICE OF NOTICE UNDER SECTION 143(2) WITH THE LIMITATION PERIOD OF 12 MONTHS AS PER PROVISO 143(2 ) APPELLANT BY : MS. Y KAKKAR RESPONDENT BY : R. MANJANI, ADV. PAGE NO. 2 UNDER THE CIRCUMSTANCES WHEN RECEIPT OF NOTICE IS DENIED BY THE APPLICANT COMPANY. 2. LD CIT(APPEALS) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IS NOT CONFRONTING THE PROOF OF SERVICE OF NOTICE THROUGH REGISTERED POST AND VERIFYIN G THE AUTHENTICITY OF RECEIPT OF REGISTERED POST AS MENTIONED IN THE APPELLATE ORDER AND ADDRESS ON WHICH SUCH REGISTERED POST WAS SENT BY ASSESSING OFFICER AND TO WHIM IT IS SERVED UNDER THE CIRCUMSTANCES WHEN IT IS SPECIFICALLY ASKED FOR BY THE APPELLANT COMPANY AND RECEIPT OF SUCH NOTICE IS DENIED BY THE APPELLANT COMPANY. 3. LD CIT(APPEALS) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS VALID UNDER THE CIRCUMSTANCES WHE N IT IS PASSED BY THE ASSESSING OFFICER AGAINST THE PRINCIPAL OF NATURAL JUSTICE AND APPRECIATING THE CORRECT FACTS OF THE CASE AND WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEAD. 4. LD CIT(APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS CIRCUMSTANCES OF THE C ASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING THE DISALLOWANCE OF RS.2,53,786/ - UNDER SECTION 35D OF THE I.T. ACT AND HOLDING THE EXPENDITURE OF RS.24,02,064/ - UNDER THE VARIOUS HEADS AS CAPITAL EXPENDITURE WHICH IS OTHERWISE ALLOWABLE AS REV ENUE EXPENDITURE UNDER SECTION 37(1) OF THE I.T. ACT AS PRAYED FOR DURING THE COURSE OF APPELLATE PROCEEDINGS 5. LD. CIT(APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS.8,136/ - OUT OF TOTAL ADDITION OF RS.17,407/ - UNDER SECTION 43B READ WITH SECTION 2(24)(X) MADE BY ASSESSING OFFICER UNDER THE CIRCUMSTANCES WHEN PAYMENT IS MADE BY THE APPELLANT COMPANY DURING THE RELEVANT PREVIOUS YEAR. 6. LD. CIT (APPEAL) IS NOT JUSTIFIED INLAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS.1,67,70,000/ - OUT OF TOTAL ADDITION OF RS.2,68,00,000/ - MADE BY ASSESSING OFFICER UNDER SECTION 68 OF THE I.T. ACT, MORE PARTICULARLY IN VIEW OF FOLLOWING FACTS: - A) THE APPELLANT COMPANY HAD FURNISHED FULL PARTICULARS OF THE SHARE APPLICANTS TO THE A.O. B) THE A.O. HAS RELIED UPON INFORMATION COLLECTED BEHIND THE BACK OF APPELLANT WITHOUT GIVING ANY OPPORTUNITY TO REBUT THE SAME BEFORE USING AGAINST THE APPELLANT. 7. LD. CIT (APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN NOT GIVING ANY OPPORTUNITY TO RECONCILE THE ALLEGED DISCREPANCIES AS NOTICED IN THE APPELLATE ORDER FOR CONFIRMING THE ADDITION MADE UNDER SECTION 68 OF THE I.T. ACT. 8. LD. CIT ( APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN HOLDING THAT NO CONFIRMATION FOR RECEIPT IN SHARE CAPITAL FROM CORPORATE ENTITIES IS FILED BY THE APPELLANT COMPANY AND PAGE NO. 3 ACCORDINGLY CONFIRMING THE ADDITION MADE BY THE ASSESSING OFF ICER FOR SHARE APPLICATION RECEIVED FROM CORPORATE ENTITIES. 9. THE LD CIT(APPEALS) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING THE CAPITAL EXPENDITURE OF RS. 4,23,717/ - I.E. 10% OF THE TOTAL EXPENDITURE INCURRED BY THE APPELLANT COMPANY, ON ESTIMATION BASIS. 3. THE GROUNDS RAISED BY THE REVENUE ARE AS FOLLOWS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN HOLDING THAT THE DELETION OF LATE DEPOSIT IONS OF PF CONTRIBUTIONS IS COVERED BY THE AMENDMENT IN THE PROVISIONS OF SECTION 43B BROUGHT ABOUT BY FINANCE ACT 2003. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN HOLDING THAT THE ADDITION OF RS. 45 LACS TO THE SHARE CAPITAL U/S 68 WAS INVALID AS IT RELATED TO AMOUNTS RECEIVED IN EARLIER . 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 23 LACS BY THE AO U/S 68, ON ACCOUNT OF SHARE CAPITAL RECEIVED FROM RELATIVE OF A DIRECTOR, BY ACCEPTING FRESH EVIDENCE WITHOUT REFERRING THE ISSUE TO THE AO, AS PER RULE 46A. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT( A) HAS ERRED IN DELETING THE A DDITION OF RS. 32,30,000/ - BY THE AO U/S 68, ON ACCOUNT OF SHARE CAPITAL RECEIVED IN CASH, BY ACCEPTING FRESH EVIDENCE WITH OUT REFERRING THE IS SUE TO THE AO, AS PER RULE 46A. 4. GROUND NOS. 3 & 4 OF THE ASSESSEE IS NOT PRESSED, SO DISMISSED. 5. GROUND NO. 1&2 OF ASSESSEES APPEAL ARE REGARDING THE VALIDITY OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) WITHOUT PROVING THE VALID SERVICE OF NOTICE AS PER PROVISO TO SECTION 143(2) OF THE ACT. 6. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE COMPANY FURNISHED THE RETURN OF INCOME ON 2 ND DECEMBER 2003 DECLARING LOSS OF RS. 58,510/ - . THE AO ISSUED NOTICE U/S 143(2) ON 15.10.2004 FIXING THE CASE FOR HEARING ON 25 TH OCTOBER 2004. THE ASSESSEE BEFORE THE LD CIT(A), CONTENDED THAT FIRST NOTICE WAS RECEIVED BY THE ASSESSEE WAS DATED 15.05.2005, FIXING THE DATE OF HEARING ON 24.05.2005 AND AS SUCH DENIED THE SERVICE OF NOTICE DATED 15.10.2004. THE LD CIT(A), HOWEVER REJE CTED THE CONTENTION BY HOLDING AS UNDER: - 15.2. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND PAGE NO. 4 PERUSED THE ASSESSMENT RECORDS. FROM THE PERUSAL OF ASSESSMENT RECORDS, IT IS NOTICED THAT THE AO HAS SENT NOTICE U/S 143(2) ON 15 - 10 - 2004 REQUIRING THE APPELLANT TO ATTEND HIS OFFICE ON 27 - 10 - 2004 AT 11 AM. THE NOTICE WAS SENT BY REGISTERED POST VIDE REGISTRY RECEIPT NO.1440 DT. 15 - 10 - 2004. THE NOTICE WAS SENT AT THE CORRECT ADDRESS OF THE APPELLANT AS APPEARING IN THE RETURN OF INCOME. THE NOTICE WA S NOT RECEIVED BACK UNSERVED. THERE IS A PRESUMPTION THAT THE NOTICE WAS SERVED UPON THE APPELLANT WITHIN THREE TO FOUR DAYS AT ITS DELHI ADDRESS. IT MAY BE NOTED THAT HON'BLE ITAT IN THE CASE OF CAPITAL GEM OVERSEAS (P) LTD V. ITO (2006) 101 ITD 117 (DEL. ) HELD THAT WHERE THE ASSESSEE IS A LOCAL RESIDENT OF DELHI, IT IS QUITE REASONABLE TO INFER THAT NOTICE SENT THROUGH SPEED POST WHICH IS A VALIDLY RECOGNIZED MODE OF SERVICE OF NOTICE / SUMMONS AS PER RULE 9 ORDER V OF CODE OF CIVIL PROCEDURE, 1908, MUST HAVE BEEN SERVED UPON THE ASSESSEE AT LEAST WITHIN THREE TO FOUR DAYS. SIMILARLY, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. YAMU INDUSTRIES LTD (2008) 167 TAXMAN 67 (DEL) HELD THAT WHERE NOTICE U/S 143(2) SENT BY REGISTERED POST AT THE CORRECT ADD RESS OF THE ASSESSEE HAD NOT BEEN RECEIVED BACK UNSERVED WITHIN PERIOD OF 30 DAYS OF ITS ISSUANCE, THERE IS A PRESUMPTION UNDER LAW THAT SAID NOTICE HAD BEEN DULY SERVED UPON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION. NOW, IN THIS CASE, THE NOTICE U/S 1 43(2) WAS ISSUED ON 15 - 10 - 2004 AND THE NOTICE WAS NOT RECEIVED BACK UNSERVED, HENCE, THERE IS A PRESUMPTION THAT NOTICE WAS DULY SERVED UPON THE APPELLANT WITHIN THREE TO FOUR DAYS. THE APPELLANT HAS FILED ITS RETURN OF INCOME ON 02 - 12 - 2003 AND THE NOTICE U/S 143(2) WAS TO BE SERVED UPON THE APPELLANT ON OR BEFORE 31 - 12 - 2004. THE NOTICE U/S 143(2) WAS ISSUED AND SENT ON 15 - 10 - 2004 HAS BEEN DEEMED TO BE DULY SERVED UPON THE APPELLANT WITHIN THE STIPULATED TIME AND , THUS, THE AO HAS VALIDLY ASSUMED THE JURI SDICTION TO COMPLETE THE ASSESSMENT U/S 143(3). THEREFORE, THIS ADDITIONAL GROUND OF APPEAL IS DISMISSED. 7. THE LD AR IN THE COURSE OF HEARING DENIED THE SERVICE OF NOTICE DATED 15 TH OCTOBER 2004 , U/S 143(2) OF THE ACT AND THUS CONTENDED THAT THERE WAS NO VALID ASSUMPTION OF JURISDICTION UNDER THE ACT AND RELIED UPON THE CASE CITED AND REPORTED IN THE CASE OF COMMISSIONER OF INCOME TAX VS LUNAR DIAMONDS LTD . 281 ITR 1, WHEREIN IT WAS HELD THAT IN T HE ABSENCE OF VALID SERVICE OF NOTICE, THE AO LACK JURISDICTION TO FRAME AN ORDER OF AMENDMENT U/S 143(3) OF THE ACT . ON THE OTHER HAND, THE LD DR PLACED ON RECORD THE COPY OF THE NOTICE ALONG WITH REGISTERED SLIP PROVING THE DISPATCH OF THE SAID NOTICE. 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE RECORDS AND THE CASE LAWS CITED BY BOTH THE PARTIES. FROM THE MATERIAL PLACED BEFORE PAGE NO. 5 US, WE FIND THAT THE RETURN OF INCOME W AS FURNISHED ON 2 ND DECEMBER 2003, BY THE ASSESSEE COMPANY. ACCORDI NG TO PROVISO TO SECTION 143(2) OF THE ACT, A NOTICE U/S 143(2) MUST BE ISSUED AND SERVED UPON THE ASSESSEE WITHIN A PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN OF INCOME WAS FURNISHED BY THE ASSESSEE. ACCORDING TO THE REVENUE, A NOTI CE DATED 15 TH OCTOBER, 2004 WAS ISSUED AND SERVED UPON THE ASSESSEE WITHIN THE STATUTORY PERIOD PRESCRIBED UNDER THE ACT. THE ASSESSEE HAS HOWEVER DENIED THE SERVICE OF THE SAID STATUTORY NOTICE. THERE IS NO DISPUTE HOWEVER IN RESPECT TO ISSUE OF NOTICE. THE LD CIT(A) HAS HELD THAT SINCE THE NOTICE WAS DISPATCHED BY REGISTERED POST AT THE CORRECT ADDRESS OF THE ASSESSEE, WHICH IS RECOGNIZED MODE OF SERVICE AS PER RULE 9 OF ORDER V OF CPC 1908, THE NOTICE MUST BE DEEMED TO HAVE BEEN VALIDLY SERVED, SINCE THE SAME WAS NOT RECEIVED BACK UN - SERVED. HE HAS ALSO REFERRED TO THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. YAMU INDUSTRIES LTD. (2008) 306 ITR 309/ 167 TAXMA NN 67 HELD AS UNDER: - HELD, THAT THE REQUIREMENT OF SECTION 282 OF THE ACT IS THAT NOTICE MAY BE SERVED UPON THE PERSON NAMED THEREIN, EITHER BY POST OR AS IF IT WERE A SUMMONS ISSUED BY A COURT UNDER THE CODE OF CIVIL PROCEDURE, 1908. THE RECORD SHOWED T HAT NOTICE UNDER SECTION 143(2) OF THE ACT DATED OCTOBER 7, 1997, HAD BEEN SENT BY REGISTERED POST AND ACCORDING TO THE PROVISIONS OF THE ACT IT WAS TO BE SERVED UPON THE ASSESSEE ON OR BEFORE NOVEMBER 30, 1997. THE NOTICE HAD BEEN SENT BY REGISTERED POST TO THE CORRECT ADDRESS OF THE ASSESSEE ON OCTOBER 9, 1997. SO, THE PROVISIONS OF SECTION 282 OF THE ACT WITH REGARD TO SERVICE OF NOTICE HAD BEEN DULY COMPLIED WITH BY THE DEPARTMENT. SINCE THE NOTICE UNDER SECTION 143(2) OF THE ACT SENT BY REGISTERED POST HAD NOT BEEN RECEIVED BACK UNSERVED WITHIN THIRTY DAYS OF IS ISSUANCE, THERE WOULD BE A PRESUMPTION UNDER THE LAW THAT NOTICE HAD BEEN DULY SERVED UPON THE ASSESSEE WITHIN THE PERIOD OF LIMITATION AND THE FINDING OF THE TRIBUNAL THAT NO NOTICE UNDER SEC TION 143(2) OF THE ACT HAD BEEN SERVED WITHIN THE PRESCRIBED PERIOD WAS LIABLE TO BE SET ASIDE. 9 . HAVING REGARD TO THE ABOVE FACTUAL AND JUDICIAL POSITION WHICH HAS NOT BEEN PROVED OTHERWISE BY THE LD AR, WE ARE IN AGREEMENT WITH THE CONCLUSION ARRIVED BY THE LD CIT(A) THAT THE NOTICE DATED 15 TH OCTOBER 2004 WAS DEEMED TO PAGE NO. 6 HAVE BEEN SERVED UPON THE ASSESSEE. AN AFFIDAVIT OF THE ASSESS EE TO STATE THE CONTRARY IN THIS RESP E CT , DOES NOT IN ANY MANNER OVER COME THE BINDING STATUTO RY PRESUMPTION IN THIS RESPECT WITHOUT ANY EVIDENCE TO REBUILT THE SAME. THEREFORE WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 10 . APROPOS GROUND NO. 5 OF ASSESSEES APPEAL IS REGARDING ADDITION OF RS. 8,136/ - U/S 43B READ WITH SECTION 2(24)(X) OF THE ACT REPRESENTING THE EMPLOYE E CONTRIBUTION TO PF AND DEPOSITED LATE BY THE ASSESSEE, LIKE - WISE GROUND NO. 1 OF THE REVENUES APPEAL IS REGARDING THE DELETION OF ADDITION MADE ON ACCOUNT OF LATE DEPOSIT OF PF CONTRIBUTION BY THE EMPLOYER U/S 43(B) OF THE ACT. 11 . THE AFORESAID THE ISSUE IS NO LONGER RES - INTEGRA AND STANDS COVERED BY THE RATIO LAID IN THE CASE OF CIT VS. AIMIL LTD. (2010) 321ITR 508 , WHEREIN IT WAS HELD AS UNDER: - WHERE FOR THE ASSESSMENT YEAR 2002 - 03 THE ASSESSEE HAD DEPOSITED EMPLOYERS CONT RIBUTION AS WELL AS EMPLOYEE CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER THE DUE DATE, AS PRESCRIBED UNDER THE RELEVANT ACT/ RULES BUT BEFORE THE DUE DATE FOR FILING THE RETURN UNDER THE INCOME - TAX ACT HELD ACCORDINGLY, THAT NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY THE FINANCE ACT, 2003. 12 . IN VIEW OF THE AFORESAID, THE DISALLOWANCE MADE AND SUSTAINED IS DELETED. ACCORDINGLY THE GROUND RAISED BY THE REVENUE I S DISMISSED AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 13 . GROUND NOS. 6 TO 8 OF ASSESSEES APPEAL AND GROUND NOS. 2 TO 4 OF THE REVENUES APPEAL PERTAIN S TO ADDITION OF RS. 2,68,00,000/ - U/S 68 OF THE ACT AND PERTAIN S TO ADDITION OF RS. 1,67,70,000 / - OUT OF ADDITION MADE OF RS. 2,68,00,000/ - U/S 68 OF THE ACT. 14 . FACTS OF THE CASE IN BRIEF ARE AS FOLLOWS: - DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAD ALLOTTED RS.2,68,000 / - EQUITY SHARES OF RS. 100/ - EACH AND, THUS, RAISED PAID UP CAPITAL BY RS. 2.68 CRORES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS REGARDING NAME AND ADDRESS OF THE SUBSCRIBERS AND OTHER DOCUMENTARY EVIDENCE TO SUBS TANTIATE ITS CLAIM FOR PAGE NO. 7 CAPITAL INTRODUCTION IN THE BUSINESS. HOWEVER, NO DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE THE AO. THE AO OBSERVED THAT THE APPELLANT COMPANY IS A PRIVATE LIMITED COMPANY AND ADMITTEDLY THE MONEY REALIZED FROM THE ISSUE OF THESE EQUITY SHARES APPEARS TO HAVE BEEN REALIZED FROM THE RELATIVES, FRIENDS AND ASSOCIATES OF DIRECTORS/ PROMOTERS OF THE APPELLANT COMPANY AND THE ALLEGED SHAREHOLDERS MUST HAVE BEEN WELL WITHIN THE KNOWLEDGE OF THE APPELLANT. SINCE THE APPELLANT FAILED TO D ISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION REGARDING SUBSCRIPTION OF THE SHARE CAPITAL I.E. IDENTITY OF THE SUBSCRIBERS, CREDITWORTHINESS OF THE SUBSCRIBERS AND GENUINENESS OF THE TRANSACTIONS THE AO HAS TREATED THE CREDIT OF RS. 2.68 CR ORES AS AN UNEXPLAINED CREDIT IN THE BOOKS OF ACCOUNTS. 15 . THE LD CIT(A)AFTER CONSIDERING THE WRITTEN SUBMISSION AND THE REMAND REPORT, FURNISHED BY THE AO HAS HELD AS UNDER: - THE SHAREHOLDERS CAN BE CATEGORIZED IN FOUR CATEGORIES: - (A) SHARE ALLOTTED OUT OF SHARE APPLICATION MONEY RECEIVED DURING EARLIER YEAR IE.E. FINANCIAL YEAR.2001 - 02. 50,00,000/ - (B) INDIVIDUALS BY CHEQUE 23,00,000/ - (C) OTHER CORPORATE ENTITIES 1,61,70,000/ - 2,68,00000/ - 16 . HE FURTHER DELETED THE ADDITION IN RESPECT OF SHARE CAPITAL RAISED OF RS.100.30 LACS FROM 1 ST THREE CATEGORIES AND SUSTAINED THE ADDITION IN RESPECT OF THE 4 TH CATEGORY OF RS.161.70 LAKHS. AS SUCH BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL . THE LD AR SUBMITTED THAT THE LD CIT(A), WAS INCORRECT IN UPHOLDING THE ADDITION OF RS. 167.70 LAKHS. HE SUBMITTED THAT THE COMPLETE EVIDENCE IN SHAPE OF CONFIRMATION AND COMPANY S MASTER DETAILS AS OBTAINED FROM THE WEB - SITE OF ROC WERE PLACED ON RECORD IN RESPECT OF SHARE BY THE ASSESSEE. HOWEVER THE LD DR SUPPORTED THE F INDING OF THE LD CIT(A) THAT THE ADDITION WAS BASED ON INVESTIGATION CARRIED OUT BY INVESTIGATION WING WHEREIN IT WAS FOUND THAT SOME OF THE SHARE - HOLDERS WERE ENGAGED IN PROVIDING ENTRIES AFTER CHARGING COMMISSION. SHE RELIED ON THE JUDGMENT OF NOVA PROMOTERS 342ITR169 (DELHI) AND POINTED OUT THAT FEW OF THE SHARE - HOLDERS ARE COMMON TO APPELLANT AND IN THE AFORE - C ITED CASE. AS REGARDS THE ADDITION DELETED BY THE LD CIT(A) SHE PAGE NO. 8 SUBMITTED, SINCE THE ASSESSEE HAD NOT LED ANY EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD CIT(A) OUGHT TO HAVE SUSTAINED THE ADDITION AND NOT ADMIT ADDITIONAL EVIDENCE UNDER R ULE 46A. EVEN OTHERWISE ON MERITS THERE WAS NO JUSTIFICATION FOR THE LD CIT(A) TO HAVE GRANTED PART RELIEF TO THE ASSESSEE AS THE BURDEN OF THE ASSESSEE REMAINED UN - DISCHARGED. 17 . WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE AND HAVE CAREFULLY GONE THROUGH THE CASE LAWS CITED BY BOTH THE SIDES. THE ASSESSEE HAS RAISED SHARE CAPITAL OF RS.2,68,00,000/ - IN THE YEAR UNDER CONSIDERATION, BY ALLOTTING RS.2,68,000/ - EQUITY SHARES OF RS.100/ - EACH TO THE SHARE HOLDERS. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE SO AS TO DISCHARGE THE BURDEN U/S 68 IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO THUS MADE THE ADDITION BY OBSERVING AS UNDER: - IN FIRST LETTER ISSUED BY THE UNDERSIGNED TO THE ASSESSEE ON 15.06.2005, ASSESSEE WAS REQUESTED T O FURNISH DETAILS OF PERSONS WITH THEIR ASSESSMENT PARTICULARS WHO WERE ALLOTTED SHARES DURING THE YEAR, WITH COPIES OF THEIR RESPECTIVE BANK ACCOUNTS FROM WHERE PAYMENTS WERE MADE BY THEM. ASSESSEE WAS ALSO REQUESTED TO FURNISH DETAILS OF PERSONS TO WHOM SHARE APPLICATION MONEY WAS RETURNED OR ADJUSTED. EVEN ALMOST IN EVERY LETTER WRITTEN BY THE UNDERSIGNED, ASSESSEE WAS ASKED TO FURNISH DETAILS, ADDRESSES, OF THE SUBSCRIBERS, AND OTHER DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM FOR CAPITAL INTRODUCED IN THE BUSINESS. NO DETAILS WERE FURNISHED BY THE ASSESSEE TILL DATE OF PASSING OF THIS ORDER IN RESPECT OF THE PERSONS WHO CONTRIBUTED TO SHARE CAPITAL OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. ASSESSEE COMPANY IS A PRIVATE LIMITED COMPANY AND ADMITTED THE MONEY REALIZED FROM ISSUE OF THESE EQUITY SHARES APPEARS TO HAVING BEEN REALIZED FROM THE RELATIVES, FRIENDS AND ASSOCIATES OF DIRECTOR PROMOTERS OF THE ASSESSEE COMPANY, AND THE ALLEGED SHARE HOLDERS WOULD HAVE BEEN WELL WITHIN THE KNOWLEDGE OF THE ASSESSEE DESPITE ASKING DETAILS OF THE SUBSCRIBERS, CONFIRMATIONS AND ADDRESSES OF THE PARTIES SO AS TO ESTABLISH THE EXISTENCE OF THE SHARES HOLDERS CONTINUOUSLY IN EVERY LETTER ISSUED BY THIS OFFICE ASSESSEE DID NOT SUBMIT THIS REQUISITE INFORMATI ON. THIS WAY ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE SUBSCRIBERS AND THEIR CREDIT WORTHINESS. EVEN IN THE CASE OF CIT VS. SOPHIA FINANCE LTD. (205ITR98) (DEL) THEIR LORDSHIPS HELD THAT AT LEAST THE IDENTITY OF THE SUBSCRIBERS HAS TO BE PROVED BY THE ASSESSEE. SINCE ASSESSEE COMPANY HAS CREDITED ITS BOOKS OF ACCOUNT WITH SHARE CAPITAL RAISED DURING THE YEAR, ASSESSEE WAS HAVING KNOWLEDGE OF THE SHAREHOLDERS AND THEIR ADDRESSES. THE ASSESSEE COULD PAGE NO. 9 NOT FURNISH EVEN THE ADDRESS OF THE SHAREHOLDERS AND THUS THE INITIAL ONUS CAST UPON THE ASSESSEE COMPANY UNDER SECTION 68 OF THE ACT WAS NOT DISCHARGED. 18 . HOWEVER, IN THE APPELLATE PROCEEDINGS THE ASSESSEE FURNISHED THE LIST OF SHAREHOLDERS ALONG WITH THE EVIDENCE S AND CATEGORIZED TH E SHAREHOLDERS INTO FOUR CATEGORIES WHICH INCLUDED SHARE CAPITAL ALLOTTED IN THE PROCEEDINGS ASSESSMENT YEARS OF RS. 50 LAKHS. THE ENTIRE EVIDENCE WAS SENT TO THE AO FOR HIS COMMENTS AND IN THE REMAND REPORT THE AO OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE. HE HAS STATED IN HIS REPORT DATED 09 TH JANUARY 2007 AS UNDER: - 2. SIR , THE ASSESSMENT FOR THE ABOVE ASSTT. YEAR WAS COMPLETED U/S 143(3), AFTER AFFORDING FOLLOWING OPPORTUNITIES TO THE ASSESSEE, TO FURNISH THE REQUISITE DETAILS INCLUDING THE LIST OF SUBSCRIBERS TO SHARE CAPITAL, THEIR COMPLETE ADDRESSES, TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDIT WORTHINESS OF THE SUBSCRIBERS, T O APPEAR BEFORE THE UNDERSIGNED FOR PERSONAL DEPOSITION ON ANY DATE WHICH SUITS AND CONVENIENT TO THE ASSESSEE. DATE DETAILS OF LETTERS/ NOTICE SENT DATE FIXED FOR REMARKS 15.10.2004 NOTICE U/S 143(2) ISSUED 25.10.2004 15.06.2005 NOTICE U/S 143(2)/ 142(1) AND QUESTIONNAIRE ISSUED 24.06.2005 NONE ATTENDED, NO COMPLIANCE 08.08.2005 NOTICE U/S 143(2)/ 142(1) 18.08.2005 ADJOURNMENT SOUGHT THROUGH COURIER 17.08.2005 LETTER SENT TO ASSESSEE 22.08.2005 ADJOURNMENT SOUGHT THROUGH COURIER 05.09.2005 LETTER SENT TO ASSESSEE 14.09.2005 PART DETAILS SUBMITTED 07.11.2005 NOTICE U/S 143(2)/ 142(1) WITH LETTER 15.11.2005 16.11.2005 LETTER AGAIN SENT (SINCE 15.11.2005 WAS HOLIDAY) ASKING THE ASSESSEE TO FURNISH CONFIRMATION FROM PAR TIES WHO CONTRIBUTED TO INCREASE IN SHARE CAPITAL. 22.11.2005 NO COMPLIANCE 22.11.2005 SHOW CAUSE LETTER ISSUED 05.12.2005 FOR PERSONAL ATTENDANCE OF THE DIRECTOR, AND OF ASHISH BANSAL AND SHRI R. N. HARI - HOWEVER, ASSESSEE SOUGHT ADJOURNMENT 16.11.2005 LETTER WITH NOTICE U/S 142(1) 22.11.2005 WITH FREEDOM TO ATTEND ON ANY CONVENIENT DATE WITH IN 15 DAYS TIME - BUT PAGE NO. 10 ONLY PART INFORMATION SENT BY THE ASSESSEE - NO PERSONAL ATTENDANCE FOR PERSONAL DEPOSITION 12.01.2006 LETTER WRITTEN GIVING SHOW CA USE FOR PROPOSED ADDITIONS AND TO PRODUCE BOOKS OF ACCOUNTS 20.01.2006 NO COMPLIANCE MADE TO LETTER AND SUMMONS ISSUED. 23.01.2006 FINAL OPPORTUNITY PROVIDED - TO MAKE COMPLIANCE - TO FURNISH DETAILS - TO EXPLAIN THE CASE AND DETAILS FURNISHED AND TO PROD UCE THE DIRECTORS. 02.02.2006 NO COMPLIANCE MADE TO THIS OPPORTUNITY AS WELL 15.02.2006 AGAIN ONE MORE OPPORTUNITY PROVIDED, CONSIDERING THE QUANTUM OF TRANSACTIONS INVOLVED, AND THE AMOUNT INTRODUCED AS SHARE CAPITAL TO ATTEND WITHIN SEVEN DAYS ON ANY CONVENIENT DATE TO ASSESSEE NO COMPLIANCE TO LETTER AND NOTICE ISSUED U/S 142(1). 3. SIR, DESPITE ABOVE OPPORTUNITIES PROVIDED ASSESSEE DID NOT LIKE TO AVAIL ANY SUCH OPPORTUNITY, BUT PREFERRED TO FURNISH ONLY PART DETAILS WHICH ASSESSEE LIKED TO SUBMIT AT ITS DISCRETION AND IN SUCH A MANNER THAT THE ASSESSING OFFICER MAY NOT BE IN A PO SITION TO CONDUCT ANY SUBSEQUENT ENQUIRIES ON THE BASIS OF INFORMATION WHAT SO EVER FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSTT. PROCEEDINGS. 4. SIR, FIRST NOTICE IN THIS CASE WAS ISSUED ON 15.10.2004, AND A QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE COMPANY ON 15.6.2005, BUT DESPITE A NUMBER OF OPPORTUNITIES PROVIDED TO THE ASSESSEE COMPANY, IT DID NOT LIKE TO FURNISH THE REQUISITE INFORMATION, A ND TO APPEAR FOR PERSONAL DEPOSITION. SIR, IN VIEW OR THE ABOVE REASONS, AND REASONS EXPLAINED IN DETAIL IN THE ASSTT. ORDER PASSED BY THE UNDERSIGNED AND MORE PARTICULARLY IN PARA 2.13 OF THE ORDER PASSED, ASSESSEE DOES NOT DESERVE TO BE ALLOWED ANY OPPOR TUNITY AS PER PROVISIONS OF RULE 46A. HOWEVER, AS DESIRED PARA WISE COMMENTS ON THE SUBMISSIONS MADE BY THE ASSESSEE UNDER RULE 46A ARE SUBMITTED FOR YOUR KIND. 19 . FURTHER ON MERITS OF THE ADDITION, IN THE REMAND REPORT, IT WAS STATED AS UNDER: - INCREAS E IN ISSUED, SUBSCRIBED CALLED UP AND PAID UP CAPITAL RS. 2,68,00,000 / - : SIR, AS MENTIONED ABOVE IN PARA 2, THAT THE ASSESSEE WAS PROVIDED A NUMBER OF OP PORTUNITIES TO FURNISH THE LIST OF SUBSCRIBERS TO THE SHARE CAPITAL, BUT THE SAME WAS NOT FURNISHED AND IS FURNISHED ON LY BEFORE YOUR HONOUR. ASSESSEE COMPANY HAS NOW FURNISHED A LIST OF 46 PAGE NO. 11 PERSONS WHO SUBSCRIBED TO THE SHARE CAPITAL DURING THE YEAR UNDER CONSIDERATION. IN FOLLOWING CASES NO PAN IS MENTIONED OF THE SUBSCRIBER TO SHARE CAPITAL: - I) VARIND RA HOSIERY INDUSTRIES LTD., RS. 5,00,000 / - II) SMT. SNEH GUPTA RS. 23,00,000/ - III) SATWANT SINGH SODHI CONSTRUCTIONS PVT. LTD., RS. 5,00,000 / - IV) WEBNET SYSTEM INDIA PVT. LTD., RS. 5,00,000/ - V) ARUNFINVEST PVT,. LT D . RS.5,00,000/ - VI) ETHNIC CREATIONS PVT. LTD., RS. 5,00,000/ - 7.1 SIR, MERELY FURNISHING THE NAME, AND ADDRESS OR AMOUNT CONTRIBUTED SHOWN DO NOT JUSTIFY THE GENUINENESS OF THE TRANSACTIONS, AND CREDIT WORTHINESS OF THE SUBSCRIBER TO SHARE CAPITAL. 7.2 EVEN IN OTHER CASES WERE A S SESSEE HAS GIVEN THE PAN OF THE SUBSCRIBER, WITHOUT GIVING THE PRESENT ASSTT. PARTICULARS OF THE SUBSCRIBER AND IN THE ABSENCE OF SOURCE OF DEPOSIT MADE BY THE SUBSCRIBERS, DO NOT DISCHARGE THE ONUS ON THE PART OF THE ASSESSEE COMPANY. SIR, AS PER PROVISIONS OF SECTION 68 OF THE ACT 'WHERE ANY SLIM IS FOUND CREDI TED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABO UT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT , IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. ' 7.4 IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE, THE ONUS IS ON HIM TO EXPLAIN AWAY THE SAID ENTRY BUT IF HE FAILS TO DO SO, IT WILL BE OPEN TO THE TAX AUTHORITIES TO FASTEN HIM WIT H THE TAX LIABILITY ON THE SAID UNEXPLAINED ENTRY. 7.5 ASSESSEE HAS TO PROVE THE NATURE AND SOURCE OF THE RECEIPT. IF THERE IS AN ENTRY IN THE ACCOUNT BOOKS OF THE ASSESSEE WHICH SHOWS THE RECEIPT OF A SUM, IT IS NECESSARY FOR THE ASSESSEE TO ESTABLISH, IF ASKED, WHAT THE SOURCE OF THAT MONEY IS AND TO PROVE THAT IT DOES NOT BEAR THE NATURE OF INCOME. 2 0 . APART FROM THE ABOVE IT WAS ALSO STATED AS U NDER: - 7.15 TO PROVE THE GENUINENESS OF THE TRANSACTION, IT IS ON THE PART OF THE ASSESSEE TO PROVE THE CREDIT WORTHINESS AND EXISTENCE OF THE SUBSCRIBER AT THE GIVEN ADDRESS. NOTHING HAS BEEN BROUGHT ON RECORDS BY THE ASSESSEE, AS TO WHY THE SAID LIST O F THE SUBSCRIBERS WAS NOT FURNISHED DURING THE COURSE OF ASSTT PROCEEDINGS, SO THAT NECESSARY ENQUIRIES COULD HAVE BEEN CONDUCTED BY THE A.O. TO JUSTIFY THE GENUINENESS OF THE TRANSACTION, AND CREDIT WORTHINESS OF THE SUBSCRIBERS. ASSESSEE HAS NOT PRODUC ED ANY OF THE PAGE NO. 12 SUBSCRIBER FOR PERSONAL DEPOSITION SO THAT THE GENUINENESS OF THE T R ANSACTION MAY BE EXAMINED. THE CONFIRMATIONS NOW FILED EVEN DO NOT S PEAK THE MODE OF PAYMENT, DATE OF PAYMENT ETC. BY THE SUBSCRIBERS, AND AY ANYTHING AS TO WHAT IS THEIR SOURCE OF INCOME, OUT OF WHICH THE AMOUNT HAS BEEN CONTRIBUTED. A PERUSAL OF THESE CONFIRMATIONS REVEALS THAT THESE ARE NOT OVEN SIGNED BY THE ACTUAL SUBSCRIBER. A CLOSE EXAM INATION OF THE CONFIRMA TION S FILED OF THE VARIOUS COMPANIES WILL SHOW THAT THESE COMPAN IES EVEN DO NOT HAVE ANY TELEPHONE NUMBERS TO ESTABLISH AS TO WHETHER THESE EXISTS AT THE GIVEN ADDRESSES. MERELY ACCEPTING THE SHARE APPLICATION THROUGH PAYEE'S ACCOUNT CHEQUES DOES NOT ESTABLISH T HE GENUINENESS OF THE TRANSACTIONS. THOUGH THE ASSESSEE HAS NOT FURNISHED ANY DETAILS ABOUT THE SCRIP NUMBER ISSUED TO THESE SUBSCRIBERS, BUT THE UNDERSIGNED IS VERY MUCH SURE THAT MOST OR THE SU B SCRI B ERS TO THE SAID SHARE APPLICATION SHALL NOT EXIST IN THE BOOKS OF THE ASSESSEE AS ON THIS DAY. 7.16 IT IS ALSO NOT OUT OF PLACE TO MENTION HERE, THAT SUBSEQUENTLY, IN JULY, 2006, THIS OF F ICE HAS RECEIVED A LIST OF PARTIES /ASSESSEE S/ C OMPANIES, PROVIDED BY THE DIRECTORATE OF INCOME TAX (INVESTIGATION) NEW DE LHI. ON EXAMINATION OF THE SAID LIST PROVIDED BY THE DIT(INVESTIGATION ), NEW DELHI, FOLLOWING SUBSCRIBERS AS PE R LIST PROVIDED BY THE ASSESSEE ARE ALSO LISTED IN THE SAID LIST SUPP LIED BY THE DIT(INVESTIGATION), WHO ARE INVOLVED IN THE BUSINESS OR PROVIDIN G ENTRIES TO THE PARTIES WHO WISH TO CONVERT THEIR UNACCOUNTED INCOME, BY WAY OF SHOWING THE SAME AS SHARE CAPITAL ETC. FOR THE SAKE OF CONVENIENCE NAMES OF THOSE COMPANIES FROM WHOM SUCH ENTRIES APPEARS TO HAVE BEEN ACCEPTED BY THE ASSESSEE COMPANY ARE LI STED BELOW: - 1. VARINDRA HOSIERY INDUSTRIES LTD. RS.5,00,000/ - 2. AKSHAY PORTFOLIO PVT. LTD. RS.5,00,000/ - 3. VINIYAS FINANCE & INVESTMENT PVT. LTD. RS.6,50,000/ - 4. STEERING SECURITIES & FINANCE PVT. LTD., RS. 4,00,000/ - 5. COSMOS HOLDING INDIA PVT. LTD. RS. 66,00,000/ - 6. SATWANT SINGH SODHI CONSTRUCTIONS PVT. LTD. RS. 5,00,000/ - 7. WEBNET SYSTEMS (INDIA) PVT. LTD., RS. 5,00,000/ - 8. ARUN FINVEST PVT. LTD. RS. 5,00,000/ - 9. ETHNIC CREATIONS PVT. LTD. RS. 5,00,000/ - 10. LOKESH SECFIN PVT. LTD. RS. 5,00,000/ - 11 PCB CONSULTANTS PVT. LTD. RS. 5,00,000/ - 12. DIVYA SECFIN PVT. LTD. RS. 5,00,000/ - 13. RAMSONS TRAVELS LTD., RS. 5,00,000/ - 14. DIGNITY FINVEST PVT. LTD. RS.5,000/ - 15. PARAS I NFOTECH PVT. LTD., RS.10,00,0/ - 00 16. TASH I'CONTRACTORS PVT. LTD. RS. 7,00,000/ - 17. POLO LEASING & FINANCE PVT. LTD., RS. 10,00,000/ - PAGE NO. 13 18. MAESTRO MARKETING & ADVERTISING PVT. LTD., RS.4,65,000/ - 7.17 SIR, IF YOUR HONOUR DESIRE, THE COPY OF THE CD PROVIDED BY THE DIT (INVESTIGATION ), NEW DELHI, CAN BE PRODUCED BEFORE YOUR HONOUR, AND THAT MAY BE CONSIDERED AS AN ADDITIONAL EVIDENCE OF THE DEPARTMENT. 7.18 SIR, NOT ONLY THE ABOVE ENTRIES, BUT EVEN THE OTHER ENTRIES ARE ALSO NOT BEYOND DOUBT, IN THE PRESENT CIRCUMSTANCES, WHEN INFORMATION HAS BEEN RECEIVED ABOUT THE ABOVE NAMED COMPANIES THAT THESE ARE ENGAGED IN THE BUSINESS OF PROVIDING ENTRIES TO THE PARTIES. AS ASSESSEE WAS KNOWN THIS FACT, THAT IN ACTUAL MAJORITY OF THE SHARE CAPITAL SHOWN TO HAVE CONTRIBUTED DURING THE YEAR UNDER CONSIDERATION IS BOGUS, IT THOUGHT BETTER IN ORDER TO GAIN TIME THAT THE REQUISITE INFORMATION SHOULD NOT BE FURNISHED TO THE ASSESSING OFFICER, SO THAT IN THE ABSENCE OF THE LIST OF THE SUBSCRI BERS AND THEIR ADDRESSES, IT WILL BE DIFFICULT FOR THE DEPARTMENT TO LAY ITS HAND ON THESE TRANSACTIONS, AND ASSESSEE SHALL SUCCEED IN ITS GOAL TO CONVERT ITS UNDISCLOSED INCOME THROUGH THIS MEAN. IN VIEW OF THOSE REASONS, AND CONSIDERING THE REASONS DISCU SSED IN DETAILS IN THE ORDER PASSED, ASSESSEE COMPANY DOES NOT RELIEF ON THESE ADDITIONS MADE, AND AS SUCH THE UNDERSIGNED OBJECTS THE FRESH EVIDENCE FURNISHED BY THE ASSESSEE AT THIS STAGE. 2 1 . IN THE LIGHT OF THE ABOVE IT WAS PRAYED AS UNDER: - 7.26 SIR . EVEN AFTER ABOVE SUBMISSIONS OF THE UNDERSIGNED, IF YO UR HONOUR CONSIDER THAT THE ASSESSEE W AS PREVENTED BY SUFFICIENT CAUSE TO FURNISH THE ABOVE INFORMATION, AND THE S AME ARE ACCEPTED BY YOUR HONOUR UNDER RULE 46A, THE UNDERSIGNED REQUEST YOUR HONO UR TO DIRECT THE ASSESSEE TO PRODUCE ALL THE SUBSCRIBERS TO THE SHAR E CAPITAL FOR 'PERSONAL DEPOSITION BEFORE THE ASSESSING OFFICER, TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND THE CREDIT WORTHINESS OF THE SU BSCRIBER . 22 . HAVING REGARD TO THE ABOVE FACTUAL BACKGROUND WE FIND THAT THE ADDITION ON ACCOUNT OF SHARE CAPITAL INCLUDES ADDITION OF RS. 45 LAKHS PERTAIN S TO SHARE CAPITAL RAISED IN THE PRECEDING ASSESSMENT YEAR. THIS ADDITION HAS BEEN RIGHTLY DELETED BY THE LD CIT(A) AS NO SUM HAS BEEN CREDITED IN THE INSTANT YEAR. THE LD CIT(A) HAS HELD AS UNDER: - 10.8 I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT. I HAVE ALSO NOTICED FROM THE BALANCE SHEET THAT THE APPELLANT HAS SHOWN SHARE APPLICATION MONEY AS ON 31.03.2002 OF RS. 65,85,000/ - WHICH HAS REDUCED TO RS.15,85,000/ - AS ON 31.03.2003. THUS, FOR THE AMOUNT OF RS. 50 LAKHS OUT OF SHARE APPLICATION MONEY, THE SHARES HAVE BEEN ALLOTTED TO THESE PERSONS. SINCE THE AMOUNT HAS BEEN CREDITED IN THE BOOKS OF ACCOUNTS OF PAGE NO. 14 THE A PPELLANT DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2002 - 03, THE ADDITION OF THIS AMOUNT CANNOT BE MADE IN THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2003 - 04. HOWEVER, ON COMPARISON OF THE DETAILS FURNISHED BY THE APPELLANT OF THE SHARE A PPLICANTS OF EARLIER YEAR TO WHOM SHARES WERE STATED TO BE ALLOTTED AND THE DETAILS OF SHARES SUBSCRIBERS DURING YEAR AS REPRODUCED IN PARA 10.6 ABOVE, IT IS NOTICED THAT THE NAME OF RAMSON DRUGS LTD IS NOT APPEARING IN THE LIST OF THE PERSONS TO WHOM SHAR ES HAVE BEEN ALLOTTED DURING THE YEAR UNDER CONSIDERATION. THUS, IN THE CASE OF ONLY NINE PARTIES OTHER THAN RAMSON DRUGS LTD, THE SHARES WERE ALLOTTED OUT OF SHARE APPLICATION MONEY RECEIVED DURING EARLIER YEAR TOTALING TO RS.45 LAKHS ONLY AND NOT RS.50 L AKHS AS CLAIMED BY THE APPLICANT. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, AN ADDITION TO THE EXTENT OF RS.45 LAKHS ONLY ON THIS ACCOUNT DESERVES TO BE DELETED AS THE AMOUNT WAS CREDITED ON THE BOOKS IN EARLIER YEAR AND ADDITION OF S UCH AMOUNT CANNOT BE MADE IN ASSESSMENT YEAR 2003 - 04 UNDER CONSIDERATION. HENCE, ADDITION TO THE EXTENT OF RS.45 LAKHS IS DELETED ON THIS ACCOUNT. 23 . IT IS WELL SETTLED LAW THAT CREDIT RAISED IN THE EARLIER YEAR CANNOT BE BROUGHT TO TAX IN ANY SUBSEQUENT YEAR. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER IN THIS REGARD PASSED BY THE LD CIT(A) AND WE CONFIRM IT. 24 . SO FAR AS THE BALANCE ADDITION OF RS.223 LAKHS IS CONCERNED, IT PERTAINS TO SUM RAISED DURING THE YEAR. THE ENTIRE EVIDENCE IN SUPPORT OF THE AFORESAID SUM WAS FURNISHED AS ADDITIONAL EVIDENCE UNDER/RULE 46A, ADMISSION OF WHICH EVIDENCE WAS OBJECTED BY THE AO AS IS NOTED ABOVE IN THE REMAND REPORT. HOWEVER THE LD CIT(A) HAS NOT RECORDED ANY SPECIFIC FINDING AS TO ADMISSION OF S UCH ADDITIONAL EVIDENCE. RULE 46A POSTULATE S THAT THE LD CIT(A) IS BOUND TO RECORD SPECIFIC FINDING GIVING REASON FOR ADMISSION OF ADDITIONAL EVIDENCE. THE REVENUE HAS SPECIFICALLY OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE BY THE LD CIT(A) IN ITS GR OUND ALSO RAISED BEFORE US . 25 . THE LD CIT(A) OUGHT TO HAVE RECORDED A SPECIFIC FINDINGS SPELLING OUT THE REASON AND BASIS BEFORE ADMITTING SUCH EVIDENCE AND CONSIDERING THEM FOR ADJUDICATION. AS THE STATUTORY PRE - CONDITION HAS NOT BEEN FULFILLED WE SET - AS IDE THE ORDER OF THE LD CIT(A) AS REGARDS THE ADDITION OF RS. 223 LAKHS. HOWEVER ON THE PERUSAL OF THE REMAND REPORT WE FIND THAT THE AO ALSO SOUGHT TO LEAD PAGE NO. 15 ADDITIONAL EVIDENCE IN THE FORM OF INVESTIGATION CARRIED OUT BY INVESTIGATING WING APART FROM SEEKI NG PERSONAL DEPOSITION OF SHARE HOLDERS. IN SUCH A SCENARIO, IT WOULD BE IN THE FITNESS OF THINGS AND INTEREST OF JUSTICE THAT THE ISSUE IN HAND AS REGARDS, THE ADDITION OF RS.223 LAKHS IS REMANDED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION. THE ASSESSE E MAY BE PERMITTED TO ADDUCE ANY FRESH EVIDENCE AND THE AO BEFORE RELYING UPON ANY EVIDENCE SHOULD SUPPLY THE SAME TO THE ASSESSEE AND PRINCIPLES OF NATURAL JUSTICE SHALL OBSERVED BEFORE PASSING THE FRESH ORDER BEFORE DRAWING ANY INFERENCE. 26 . IN THE RESULT, THE DELETION OF ADDITION OF RS.45 LAKHS IS UPHELD AND THE REMAINING ADDITION OF RS.223 LAKHS IS REMITTED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AS DIRECTED ABOVE. THE GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED AND THE GROUND NO . 6 TO 8 OF ASSESSEES APPEAL AND GROUND NO.S 3 &4 OF REVENUES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 27 . GROUND NO.9 OF THE ASSESSEES APPEAL IS REGARDING DISALLOWANCE OF RS.4,23,717/ - OUT OF EXPENDITURE INCURRED BY THE ASSESSEE COMPANY. 28 . BRIEF FACTS OF THE CASE ARE THAT : - 17.1. THE AO HAS DISALLOWED CAPITAL EXPENDITURE OF RS.4,23,717/ - OUT OF TOTAL BUILDING CONSTRUCTION EXPENSES OF RS.42,37,171/ - INCURRED BY APPELLANT COMPANY DURING THE YEAR. 29 . THE LD CIT(A)HAS UPHELD THE ADDITION BY OBSER VING AS UNDER: - 17.4 I HAVE CONSIDERED THE OBSERVATION MADE BY THE AO AND SUBMISSION MADE BY THE APPELLANT. I FOUND NO FORCE IN THE SUBMISSION MADE BY THE AR. THE APPELLANT COMPANY NEITHER DURING ASSESSMENT PROCEEDINGS NOR DURING APPELLATE PROCEEDING HAS BROUGHT ANYTHING ON THE RECORDS TO MEET OUT THE OBSERVATIONS MADE BY THE AO. THE APPELLANT HAS SPENT SUBSTANTIAL AMOUNT OF CONSTRUCTION OF BUILDING WITHOUT HAVING PROPER BILLS AND VOUCHERS. THE FABRICATORS HAS CONFIRMED NIL BALANCE TO THE AO WHEREAS THE AP PELLANT BOOKS OF ACCOUNT REFLECTS A DEBIT BALANCE OF RS.1,83,914/ - . THEREFORE, DISALLOWANCE AS MADE BY THE AO IN THE ASSESSMENT ORDER IS CONFIRMED. 30 . WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RECORD AND WE FIND THAT THE LD AR WAS UNABLE TO SHO W ANY INFIRMITY IN THE CONCLUSION ARRIVED BY PAGE NO. 16 THE LD CIT(A). WE THEREFORE UPHOLD THE ADDITION AND THE GROUND OF THE ASSESSEE IS DISMISSED. 31. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 . 01 . 2015 . - SD/ - - SD/ - ( J. S REDDY ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:12 / 01 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI