Appeal Details
Counselvise Citation
[2012] 119 COUNSELVISE.COM (IT) 7849 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-07-2012
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2005-2006
Appeal Filed On
24-04-2012
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.230/IND/2012 A.Y. 2005-06 GAGAN INDUSTRIES PRIVATE LIMITED INDORE PAN AACCG 0691E :: APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX 5(1), INDORE :: RESPONDENT APPELLANT BY SHRI C.P. RAWKA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 12.07.2012 DATE OF PRONOUNCEMENT 16.07.2012 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED29TH FEBRUARY, 2012 ON THE GROUND THAT THE LEARNED CIT(A ) ERRED IN CONFIRMING THE ADDITION MADE ON ACCOUNT OF SHARE AP PLICATION 2 MONEY RECEIVED FROM OPTIMATES TEXTILES INDUSTRIES L IMITED ON ACCOUNT OF UNEXPLAINED INCOME U/S 68 OF THE ACT AMO UNTING TO RS.5 LACS AND RS. 8 LACS FROM M/S MONEY PANNY FINAN CE LIMITED. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I C.P. RAWKA, LD. COUNSEL FOR THE ASSESSEE AND SHRI R.A. V ERMA, LEARNED SENIOR DR. AT THE OUTSET, THE LEARNED SENIOR DR P OINTED OUT THAT THE IMPUGNED ISSUE IS COVERED AGAINST THE ASSE SSEE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF M/S AGRAWAL COAL CORPORATION. THIS FACTUAL MATRIX WAS NOT CONT ROVERTED BY THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED NIL INCOME IN ITS RETURN FILED ON 31 ST OCTOBER, 2012. THE CASE WAS SELECTED FOR SCRUTINY, THEREFOR E, NOTICES U/S 143(2) AND 142(1)(II) WERE ISSUED TO THE ASSESSEE T O WHICH ASSESSMENT PROCEEDINGS WERE ATTENDED BY THE ASSESSE E. IN THE BALANCE SHEET, THE ASSESSEE REFLECTED RS. 5 LACS TO BE RECEIVED AS SHARE APPLICATION MONEY FROM M/S OPTIMATE TEXTILES LIMITED AND THE SAID COMPANY WAS FOUND INVOLVED IN RAMPANT SHAR E TRADING MANIPULATIONS AND WAS DELISTED IN ALL STOCK EXCHANG ES. ON PERUSAL OF ROC DOCUMENTS AND IT RETURNS, THE CO MPANY 3 SHOWED TWO ADDRESSES OF MUMBAI ON WHICH NOTICES U/S 133(6) OF THE ACT WERE ISSUED AND THE SAME WERE RETURNED UNSE RVED. TO CONFIRM THE REAL STATUS, A COMMISSION WAS ISSUED TO THE ADIT (INV.), MUMBAI TO VERIFY THE GENUINENESS OF THE COM PANY. IDENTICAL REPORT CAME THAT THE COMPANY NAMED M/S OP TIMATE TEXTILES LIMITED DOES NOT EXIST AT THE GIVEN ADDRES S. SHOW CAUSE NOTICES OF SEBIS INVESTIGATING DEPARTMENT WERE ISS UED AND THE OBSERVATION HAS BEEN DULY MENTIONED FROM PAGE 2 ONW ARDS OF THE ASSESSMENT ORDER. ULTIMATELY IT WAS FOUND BY THE AS SESSING OFFICER THAT THE ULTIMATE BENEFICIARIES INTRODUCED CASH IN ACCOUNTS SUCH AS M/S SAHAYATA MARKETING AND THEN TR ANSFERRED TO ENTITIES LIKE M/S OPTIMATE TEXTILES LIMITED OR H CL IN THE FORM OF CHEQUE AND FROM THERE IT REACHED TO THE ULTIMATE BENEFICIARIES IN THE FORM OF SHARE APPLICATION MONEY OR UNSECURED LOANS. THE WHOLE PROCESS OF LAYERING WAS DONE ONLY TO GIVE THI S MONEY LAUNDERING ACTIVITY A COLOUR OF GENUINENESS. IN TH E ABSENCE OF IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF SUCH TRANSACTIONS, THE SHARE APPLICATION OF RS. 5 LACS WAS TREATED AS UNEXPLAINED INCOME U/S 68 OF THE ACT. IDENTICAL IS THE SITUATI ON IN THE CASE OF MONEY PANNY FINANCE LIMITED AS IS EVIDENT FROM PARA 3 (PAGE 4) ONWARDS OF THE ASSESSMENT ORDER. ON APPEAL, THE LE ARNED CIT(A) 4 AFFIRMED THE STAND OF THE LEARNED ASSESSING OFFICER . EVEN BEFORE THE LEARNED CIT(A), IDENTICAL SITUATION REMAINED AN D THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM. THE IDENTICAL ISS UE REACHED TO THE LEVEL OF THE TRIBUNAL OF THE SAID COMPANIES AND IT WAS FOUND THAT THESE COMPANIES ARE FICTITIOUS AND A CIRCUITOU S ROUTE WAS OPTED BY THE BENEFICIARIES AND THESE COMPANIES WERE FOUND TO BE A DEVICE TO GIVE THE COLOUR OF OWN MONEY AS GENUINE IN THE FORM OF ISSUING CHEQUES. THE RELEVANT PORTION FROM THE ORDER DATED 31.10.2011 IN THE CASE OF M/S AGRAWAL COAL CORPORAT ION P. LTD. AND OTHERS IS REPRODUCED HEREUNDER :- 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD S HRI P.M. CHAUDHARY AND SHRI AJAY TULSIYAN, THE LEARNED COUNS ELS FOR THE ASSESSEE AND S/SHRI KESHAV SAXENA, SHRI R.K.CHAUDHA RY, SHRI K.K. SINGH, LEARNED COMMISSIONERS OF INCOME TAX ALONG WI TH SHRI ARUN DEWAN, LEARNED SENIOR DR. THE LEARNED REPRESENTATI VES FROM BOTH THE SIDES CONTENDED THAT THE FACTS AND THE ISSUE RE GARDING SHARE APPLICATION MONEY INVOLVED IN THESE APPEALS IS IDE NTICAL AS THE SHARE CAPITAL AND SHARE PREMIUM WAS ALLEGED TO BE R ECEIVED FROM HINDUSTAN CONTINENTAL LIMITED AND OPTIMATES TEXTILE INDUSTRIES LIMITED AND OTHER CONCERNS AS APPLICABLE TO THE RES PECTIVE APPEALS. 3. SINCE THE FACTS ARE IDENTICAL, THEREFORE, THESE APPEALS CAN BE DISPOSED OF BY A COMMON AND CONSOLIDATED ORDER. WE WOULD LIKE TO DEAL WITH ITA NO. 151/IND/2009 FIRST. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN T HE BUSINESS OF TRADING IN COAL. THE ASSESSEE COMPANY, IN THE YEA R, UNDER CONSIDERATION, ENTERED IN POWER GENERATION WITH INS TALLATION OF TWO WIND MILLS. THE ASSESSEE DECLARED INCOME OF RS. 83 ,46,090/- IN ITS RETURN FILED FOR THE ASSESSMENT YEAR 2005-06 ON 30. 10.2005. DURING SCRUTINY PROCEEDINGS THE ASSESSING OFFICER N OTED THAT HINDUSTAN CONTINENTAL LIMITED (IN SHORT HEREINAFTER AS HCL) APPLIED FOR 40,000 SHARES OF THE ASSESSEE COMPANY O N THE FACE VALUE OF RS. 10/- EACH AND PREMIUM OF RS.90/- PER S HARE. SIMILARLY, OPTIMATES TEXILES INDUSTRIES LIMITED (IN SHORT HER EINAFTER AS 5 OTIL) ALSO APPLIED FOR 10,000 SHARES OF THE SAME FACE VALUE AND THE PREMIUM PER SHARE. THE LEARNED ADDITIONAL CIT (ASSESSING OFFICER), REFERRED TO THE REPORT OF ACIT 5(1), INDO RE, WHEREIN IT WAS INFORMED THAT THE INVESTIGATION CARRIED OUT BY HIM IN SOME OTHER CASES ALSO FOUND THAT HCL AND OTIL ARE NOT THE GENU INE COMPANIES AND THESE MERELY EXIST ON PAPERS. SUCH REPORT FIND S PLACE IN THE ASSESSMENT ORDER. THIS REPORT WAS CONFRONTED TO TH E ASSESSEE COMPANY, DURING THE ASSESSMENT PROCEEDINGS, AND AFT ER CONSIDERING THE REPLY THE LEARNED ASSESSING OFFICER CONCLUDED THAT THE ALLEGED SHARE CAPITAL, CLAIMED TO BE APPLIED BY THESE COMPANIES, IS UNEXPLAINED, THEREFORE, THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY. THE RELEVANT PORTIO N FROM THE ASSESSMENT ORDER IS EXTRACTED BELOW :- THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE I.T.A.T., I NDORE BENCH, IN CASE OF ACIT VS. KALANI INDUSTRIES LTD. THE SAID DE CISION WAS NOT ACCEPTABLE TO THE DEPARTMENT AND IS BEING CONTESTED BEFORE HON'BLE HIGH COURT OF M.P. ASSESSEE HAS TRIED TO PR OVE GENUINENESS OF TRANSACTION BY FURNISHING CONFIRMATION, COPY OF BANK ACCOUNT AND ACKNOWLEDGEMENT OF RETURN. IT HAS ALSO FURNISH ED VARIOUS DECISION IN SUPPORT OF ITS CONTENTIONS. BUT IT IS EVIDENT FROM THE INVESTIGATION MADE BY ACIT 5(1), INDORE THAT BOTH T HESE COMPANY ARE NOT EXISTING COMPANIES IN THE REAL SENSE. THESE COMPANIES ARE PAPER COMPANIES ONLY AND EXIST NOWHERE AND WERE USE D TO GIVE ACCOMMODATION ENTRIES TO VARIOUS PARTIES WHO WANT T O LAUNDER THEIR UNACCOUNTED MONEY IN THE GUISE OF SHARE APPLI CATION OR UNSECURED LOAN OR LONG TERM CAPITAL GAIN. THE ASSESSEE IS A CLOSELY HELD PVT. LTD. COMPANY I N WHICH PUBLIC IS NOT SUBSTANTIALLY INTERESTED. THUS AS PE R SECTION 68 ONUS WAS UPON THE ASSESSEE TO ESTABLISH DEPOSITORS IDEN TITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. A SSESSEE IN ITS WRITTEN SUBMISSION STATED THAT COMPANY HAS RECEIVED SHARE APPLICATION MONEY OF RS. 40,00,000/- FROM HINDUSTAN CONTINENTAL LTD. 19, SHUBH KAMNA APARTMENT, GUL BAZAR, JABALPUR . AS PER THE REPORT OF THE ACIT 5(1), INDORE, IT IS CLEAR THAT N O SUCH COMPANY EXIST AT THE GIVEN ADDRESS. THE CREDITWORTHINESS OF THE COMPANY HAS ALSO NOT BEEN ESTABLISHED IN VIEW OF THE FACT THAT THERE IS HUGE INFLOW AND OUTFLOW OF FUND IN THE BANK ACCOUNT WITH OUT ANY LOGIC. THERE IS HUGE CASH DEPOSIT IN THE BANK ACCOUNT OF H INDUSTAN CONTINENTAL LTD. MAINTAINED UTI BANK LTD. COPY OF W HICH IS FILED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. THE COM PANY IS NOT EXISTING IN REAL SENSE THE GENUINENESS OF TRANSACTI ON IS ALSO DOUBTFUL. SINCE ASSESSEE FAILED ESTABLISHED IDENTIT Y, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION, CR EDIT IN THE 6 ACCOUNT OF THE ASSESSEE ON ACCOUNT OF SHARE APPLIC ATION MONEY FROM HINDUSTAN CONTINENTAL LTD. RS. 4,00,000/- AND SHARE PREMIUM AMOUNT OF RS. 36,00,000/- ARE BEING TREATED AS UNEX PLAINED CREDIT U/S 68 AND ADDED BACK TO TAXABLE INCOME. SIMILARLY, ASSESSEE HAS TRIED TO ESTABLISH IDENTI TY OF M/S OPTIMATES TEXTILE INDUSTRIES LTD., BUT IT IS EV IDENT FROM THE REPORT OF THE ACIT 5(1), INDORE THAT COMPANY IS ALS O A PAPER COMPANY USED TO PROVIDING ACCOMMODATION ENTRIES ONL Y. ENQUIRIES REVEALED THAT NO SUCH COMPANY EXISTS AT THE ADDRES S AS PROVIDED BY THE ASSESSEE. ACIT 5(1), INDORE REPORTE D THAT THE ASSISTANT DIRECTOR OF INCOME TAX INVESTIGATION IX(3 ), MUMBAI HAD CONFIRMED IN HIS REPORT THAT M/S OPTIMATES TEXTILE INDUSTRIES LTD. DOES NOT EXIST AT THE GIVEN ADDRESS AND SEEMS TO BE BOGUS. ASSESSEE HAS GIVEN THE ADDRESS OF THE COMPANY AS TO DEV KARAN MENSION IIND FLOOR 63B PRINCES ESTATE MUMBAI WHERE AS THE BANK ACCOUNT OF THE COMPANY HAS BEEN MENTIONED IN INDORE IN WHICH THE ADDRESS OF THE COMPANY WAS GIVEN AS 13, SOUTH HATI PALA, INDORE. THIS COMPANY IS ALSO NOT EXISTING IN REAL SENSE AND ONLY ACCOMMODATION ENTRIES ARE BEING GIVEN TO THE BENEFI CIARIES IN THE FORM OF SHARE APPLICATION MONEY OR UNSECURED LOANS. SINCE ASSESSEE FAILS TO ESTABLISH IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTIONS, SHARE APPLICATION MONEY CREDITED ON ACCOUNT OF M/S OPTIMATES TEXTILE INDUSTRIES LTD . RS. 1,00,000/- SHARE PREMIUM RS.9,00,000/- IS TREATED UNEXPLAINED U/S 68 AND ADDED BACK TO TAXABLE INCOME. TOTAL ADDITION UNDER THIS HEAD IS RS. 50,00,000/- 4. ON APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORI TY, THE LD. COUNSEL FOR ASSESSEE PREFERRED WRITTEN SUBMISSIONS DEALING WITH EACH FINDING OF THE LEARNED ASSESSING OFFICER AND P LACED RELIANCE UPON CERTAIN JUDICIAL PRONOUNCEMENTS. HOWEVER, LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE BY HOLDING THAT THE ASS ESSEE HAS NOT ESTABLISHED THE GENUINENESS OF CREDITS INTRODUCED I N THE FORM OF SHARE CAPITAL AND THUS CONFIRMED THE ADDITION. 5. BEFORE US, THE WHOLE THRUST OF ARGUMENTS ON BEHA LF OF THE ASSESSEE IS THAT ALL THE INGREDIENTS OF SECTION 68 WERE FULFILLED BY THE ASSESSEE WHEREAS THE CRUX OF ARGUMENTS ON BEHAL F OF THE REVENUE IS THAT EVEN THE IDENTITY OF THESE COMPANIE S WAS NOT ESTABLISHED BY THE ASSESSEE AND THESE COMPANIES MER ELY EXISTS ON PAPERS. IT WAS ALSO CONTENDED THAT THE NOTICES ISS UED TO THESE PARTIES AT THE ADDRESSES SUPPLIED BY THE LD. COUNSE L FOR ASSESSEE RETURNED UNSERVED WITH THE REMARK THAT NO SUCH COMP ANIES EVER 7 EXISTED AT THE GIVEN ADDRESSES. THE INSPECTOR WAS DEPUTED TO KNOW THE WHEREABOUTS OF THESE COMPANIES WHO ALSO REPORTE D THAT NO SUCH COMPANIES WERE IN EXISTENCE AT THE GIVEN ADDRE SS. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUN DER THE RELEVANT PROVISIONS OF SECTION 68 OF THE ACT WHICH DEALS WITH CASH CREDITS :- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSES SING] OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 6 . BEFORE US, THE LD. COUNSEL FOR ASSESSEE SUBMITTED I N REGARD TO THE CORRECTNESS AND VALIDITY OF THE ADDIT ION MADE BY AO U/S 68 CREDITS IN RESPECT OF SHARE CAPITAL AND SHAR E PREMIUM RECEIVED FROM TWO COMPANIES VIZ M/S HINDUSTAN CONT INENTAL LTD (RS 40 LACS) & FROM M/S OPTIMAT TEXTILE INDUSTRIES LTD ( RS 10 LACS), THAT THE PRESENT APPEAL RELATES TO AY 2005-0 6 , IN RESPECT OF WHICH THE ASSESSEE HAS FILED ITS RETURN OF INCOME O N 31/10/05 DECLARING TOTAL INCOME AT RS 83,46,090/- (COPY OF COMPUTATION & ACKNOWLEDGMENT OF RETURN AT PAGE 1 TO 3 OF THE COMP ILATION, COPY OF ANNUAL RETURN CONTAINING BALANCE SHEET , P& L A/ C ETC AT PAGE 4 TO 23 AND COPY OF TAX AUDIT REPORT AT PAGE 24 TO 43 OF THE COMPILATION). DURING THE COURSE OF THE SCRUTINY PRO CEEDINGS, THE LD. COUNSEL FOR ASSESSEE FILED DETAILS IN RESPECT OF IN CREASE IN SHARE CAPITAL VIDE REPLIES DATED 16/10/07 (PAGE 47 TO 49 ) OF COMPILATION , REPLY DATED 7/12/07 (PAGE 50 TO 54) , REPLY DATED 1 7/12/07 (PAGE 55 TO 58) AND REPLY DATED 28/12/07(PAGE 60 TO 64) O F THE COMPILATION ALONG WITH DOCUMENTS (PAGE 67 TO 96). T HE LEARNED AO VIDE HIS ORDER OF ASSESSMENT DATED 28/12/07, RELYIN G UPON SOME REPORT OF ACIT 5(1) INDORE, IN SOME OTHER CASES, RE PORT OF INSPECTOR, WHO WAS DEPUTED TO KNOWS THE WHEREABOUTS OF THESE C OMPANIES AND THE REPORT OF THE POSTAL DEPARTMENT THAT NO SUC H COMPANIES WERE EXISTING AT THE GIVEN ADDRESSES AND CAME TO TH E CONCLUSION THAT THE IDENTITY OF THESE COMPANIES, M/S HINDUSTAN CONTINENTAL LTD & M/S OPTIMAT TEXTILES INDUSTRIES LTD FORMERLY KNOWN AS PRIYANSH SARI IND LTD IS NOT ESTABLISHED. RELYING U PON THESE REPORTS, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT T HE COMPANIES ARE PAPER COMPANIES ONLY, NOT EXISTING IN REAL SENS E. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT IT IS PERTINENT TO NOTE THAT NO INDEPENDENT ENQUIRY HAS BEEN CONDUCTED BY ASSESSING OFFICER IN THE CASE OF ASSESSEE NOR ANY SUMMONS ETC WAS ISSUED BY ASSESSING OFFICER TO THE AFORESAID COMPANIES, THUS, NO ATTEMP T HAS BEEN MADE BY ASSESSING OFFICER ON HIS PART TO VERIFY TH E EXISTENCE AND 8 IDENTITY OF THESE TWO COMPANIES WITH REFERENCE TO V OLUMINOUS EVIDENCE PLACED ON RECORD BY THE PRESENT ASSESSEE T O PROVE THE IDENTITY AND CAPACITY OF THESE TWO COMPANIES TO INV EST THEIR MONEY IN SHARE CAPITAL OF ASSESSEE COMPANY. THE LD. COUNS EL FOR ASSESSEE HAS ALSO CLAIMED THAT THE TRANSACTION HAS BEEN CARR IED THROUGH BANKING CHANNELS, WHICH PRIMA FACIE PROVES THE GENU INENESS OF THE TRANSACTION. HE SUBMITTED THAT AS SUCH THE ASSESSEE HAS PLACED ON RECORD THE VOLUMINOUS MATERIAL TOWARDS DISCHARGE OF ITS INITIAL BURDEN TO PROVE THE IDENTITY AND CAPACITY OF THE SHARE HOLDER COMPANIES AS ALSO THE GENUINENESS OF THE TRANSACTIO N. THE LD. COUNSEL FOR ASSESSEE INVITED OUR ATTENTION BY CLAIM ING THAT FOLLOWING INFORMATION AND DOCUMENTS DISCHARGED ITS PRIMARY BURDEN . NAMES AND ADDRESSES OF THE SHARE HOLDERS ALONG WI TH DETAILS OF THEIR PAN FURNISHED ALONG WITH REPLY DATED 7/12/07. A LIST OF FRESH SHARE CAPITAL RECEIVED DURING THE Y EAR ALONG WITH NAMES AND ADDRESS OF THE SHARE HOLDERS AND PAN AGAI N GIVEN ALONG WITH REPLY DATED 17/12/07 ON DEMAND FROM AO . COPIE S OF BOARD RESOLUTION AND SHARE APPLICATION FORMS OF ALL SHARE HOLDERS INCLUDING THE ABOVE TWO COMPANIES ALSO FILED ALONG WITH THE REPLY. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT VARIOUS DOCUMENTS FOR ABOVE TWO COMPANIES WERE FILED BEFORE THE ASSESSING OFFICER TO PROVE THE IDENTITY, CAPACITY AND GENUINENESS OF THE TRANSACTIONS BUT THE ASSESSING OFFICER HAS BRUSHED ASIDE THE SAM E AND MERELY RELYING UPON THE REPORT OF ANOTHER AUTHORITIES HELD THAT THE COMPANIES IN QUESTION ARE PAPER COMPANIES AND NOT E XISTING IN REAL SENSE AND HAS MADE THE AFORESAID ADDITION U/S 68 OF THE IT ACT, WITHOUT APPLICATION OF MIND. 7. SO FAR AS THE LEGAL POSITION IN RESPECT OF APPLI CABILITY OF SECTION 68 TO THE CREDITS IN RESPECT OF SHARE APPLI CATION MONEY/ SHARE CAPITAL CREDITS TOWARDS SHARE APPLICATION MON EY/ SHARE CAPITAL IS CONCERNED, THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT IT HAS TAKEN DIFFERENT TURNS. HE SUBMITTED THAT VARIOU S DECISIONS HAVE TWO ASPECTS I.E. (I) REGARDING APPLICABILITY OF SEC TION 68 TO SUCH CREDITS AND (II) IF SECTION 68 IS APPLICABLE, THEN THE EXTENT OF BURDEN ON ASSESSEE. 8. REGARDING APPLICABILITY OF SECTION 68 TO SUCH C REDITS, THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE FOLLOWING DECI SIONS :- 1. STELLAR INVESTMENT; 192 ITR 287 (DEL) 2. SOPHIA FINANCE LIMITED; 205 ITR 98 (DEL) 9 3. CIT V. LOVELY EXPORTS PVT. LTD.; 216 CTR (SC) 19 5 INVITING OUR ATTENTION TO THE AFORESAID JUDGMENTS, THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT A COMBINED READ ING OF ALL THE ABOVE DECISIONS VIZ THE DECISION OF DELHI H IGH COURT , WHICH HAS BEEN AFFIRMED BY SUPREME COURT IN THE CAS E OF STELLAR INVESTMENT, READ WITH THE LATER DECISION O F SUPREME COURT IN CASE OF LOVELY EXPORTS SHOWS THAT EVEN IF SUCH AMOUNTS ARE RECEIVED BY SUCH ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHARE HOLDERS, NO ADDITION U/S 68 CAN BE MADE IN THE HANDS OF THE COMPANY. IT WAS CANVASSED THAT THE HON'BLE DELHI HIGH COURT HAS HELD THAT IF THE ASSES SMENTS OF THE PERSONS WHO ARE ALLEGED TO HAVE REALLY ADVANCED MONEY IS SOUGHT TO BE REOPENED, THAT WOULD HAVE SOME SENS E BUT THE AMOUNT OF INCREASED CAPITAL CANNOT BE ADDED IN THE HANDS OF THE COMPANY ITSELF . 9. THE LD. COUNSEL FOR ASSESSEE FURTHER SUBMITTED T HAT THE LAW LAID DOWN BY THE SUPREME COURT IS BINDING ON AL L COURTS, TRIBUNALS AND AUTHORITIES UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA AND NO ADDITION CAN BE MADE IN RESPECT OF THE AMOUNT INVESTED BY THE AFORESAID TWO COMPANIES. IT WAS FURTHER SUBMITTED THAT EVEN IF IT IS ASSUMED WITHOU T ADMITTING THAT THE SAID SHARE HOLDER COMPANIES ARE NON EXISTI NG COMPANIES, NO ADDITION COULD BE MADE IN RESPECT OF THE AMOUNTS INVESTED BY THE AFORESAID TWO COMPANIES. HE INVITED OUR ATTENTION TO THE DECISION OF SUPREME COURT IN CIT VS STELLAR INVESTMENT CO LTD (SUPRA) BEING ON DISMISSA L OF CIVIL APPEAL ARISING OUT OF THE DECISION OF DELHI HIGH CO URT, WHICH CONSTITUTES AFFIRMATION OF THE DECISION AND AMOUNTS TO THE DECLARATION OF LAW. IT WAS CANVASSED THAT SIMILARLY THE ORDER OF THE HON'BLE SUPREME COURT, DISMISSING THE SLP IN TH E CASE OF LOVELY EXPORTS PVT LTD (SUPRA), ALSO HAS A BINDING EFFECT FOR WHICH RELIANCE WAS PLACED UPON FOLLOWING DECISIONS :- 1. KUNHAYAMMED & OTHERS VS STATE OF KERALA & ANOTH ER REPORTED IN 245 ITR 360 WHERE THEIR LORDSHIPS HAV E HELD THAT IF THE ORDER REFUSING SPECIAL LEAVE TO A PPEAL IS A SPEAKING ORDER I.E IT GIVES REASON FOR REFUSING T HE GRANT OF LEAVE , THEN THE ORDER HAS TWO IMPLICATIONS. F IRSTLY , THE STATEMENT OF LAW CONTAINED IN THE ORDER IS DECLARA TION OF LAW BY SUPREME COURT WITHIN THE MEANING OF ARTICLE 14 1 WHICH WILL OBVIOUSLY BE BINDING ON ALL COURTS AND TRIBUN ALS IN INDIA AND CERTAINLY THE PARTIES THERETO . SECONDLY OTHER THEN DECLARATION OF LAW , WHATEVER IS STATED IN T HE ORDER ARE FINDINGS RECORDED BY SUPREME COURT WHICH WOUL D BE BINDING ON THE PARTIES AND THE COURTS, TRIBUNAL OR AUTHORITIES WHOSE ORDERS WAS UNDER CHALLENGE . 2. S SHANMUGAVEL NADAR VS STATE OF TAMILNADU REPORTED IN 263 ITR 658 . THEIR LORDSHIPS HAVE HELD THAT A SUMMARY DISMISSAL BY SUPREME COURT WITHOUT LAYI NG 10 DOWN ANY LAW IS NOT A DECLARATION OF LAW ENVISAGE D UNDER ARTICLE 141 BUT WHEN REASONS ARE GIVEN, THE DECIS ION OF THE SUPREME COURT WOULD BE BINDING ON ALL COURT S WITHIN THE TERRITORY OF INDIA 3. SNOWCEM INDIA LTD VS DCIT REPORTED 313 ITR 170(B OM) WHERE THEIR LORDSHIPS HAVE HELD THAT ONCE THE AP PEAL AGAINST THE JUDGMENT OF THE HIGH COURT IS DISMISSE D , IT CAN BE SAID THAT THE DECISION OF THE HIGH COURT HAS BE EN AFFIRMED BY THE SUPREME COURT 10. THE LD. COUNSEL FOR ASSESSEE, SUBMITTED THA T IN VIEW OF THE LEGAL POSITION SETTLED BY THE HON'BLE SUPREME C OURT AGAINST THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF STELLAR INVESTMENT (SUPRA) AND DISMISSAL OF SLP AGAINST JUDGMENT OF DE LHI HIGH COURT IN CASE OF LOVELY EXPORTS (P) LTD (SUPRA), THE PR OPOSITION OF LAW THAT EVEN IF IT IS ASSUMED THAT SOME OF THE SHARE H OLDERS ARE BOGUS, NO ADDITION CAN BE MADE U/S 68 OF THE ACT IN THE HA NDS OF ASSESSEE COMPANY, WHICH IS BINDING ON ALL COURTS INCLUDING T HIS TRIBUNAL. HE, THEREFORE, SUBMITTED THAT ASSUMING WITHOUT ADMITTIN G THAT AS HELD BY AO THE ABOVE TWO COMPANIES VIZ HINDUSTAN CONTINE NTAL LTD AND OPTIMAT TEXTILES INDUSTRIES LTD ARE CONSIDERED AS N ON-EXISTENT COMPANIES, IN THAT EVENT ALSO, NO ADDITION U/S 68 C OULD BE MADE IN THE HANDS OF THE ASSESSEE COMPANY, FOR WHICH FURTHE R RELIANCE WAS PLACED ON THE DECISION OF DELHI HIGH COURT IN THE C ASE OF CIT VS AANCHAL INVESTMENT CO LTD REPORTED IN 268 ITR211 WHEREIN DELHI HIGH COURT HAS APPLIED DECISION IN THE CASE OF STEL LAR INVESTMENT AND ON THAT BASIS UPHELD THE ORDER OF TRIBUNAL. 11. THE LD. COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT RECENTLY THE HON'BLE DELHI HIGH COURT APPLIED THE D ECISION OF LOVELY EXPORTS (SUPRA) IN THE CASES OF CIT VS JAGAT DIAGNO STICS PVT LTD., CIT VS HLT FINANCE PVT. LTD. AND CIT VS MERITONS TOWER PVT LTD.(UNREPORTED) WHICH SHOWS THAT EVEN THE DELHI HI GH COURT IS TREATING THE DECISION OF SUPREME COURT AS BINDING P RECEDENT AND NOT FOLLOWING THE FULL BENCH DECISION IN CASE OF SO PHIA FINANCE (SUPRA). HE FURTHER INVITED OUR ATTENTION TO THE FO LLOWING DECISIONS APPLYING THE PRINCIPLE LAID DOWN BY THE HON'BLE SUP REME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) :- (I) ACIT VS VEKATESHWAR ISPAT PVT LTD REPORTED IN ( 2010) 14 ITJ 83 (CHHATISGARH). (II) ACIT VS HITKARNI PRAKASHAN LTD REPORTED IN (20 10) 14 ITJ 689 (I.T.A.T., JABALPUR). (III) ACIT VS M/S SHRI KELA PRAKASHAN PVT LTD REPOR TED IN (2010) 14 ITJ 539 (I.T.A.T., INDORE) 11 12. SO FAR AS APPLICATION OF SECTION 68 OF THE ACT IS CONCERNED, THE LD. COUNSEL FOR ASSESSEE ON THE ISSUE OF BURDEN OF THE ASSESSEE, SUBMITTED THAT ASSUMING WITHOUT ADMITTING THAT THE VIEW EXPRESSED BY THE FULL BENCH OF DELHI HIGH COURT IN CASE OF SOPHIA FINANCE LTD (SUPRA) STILL HOLDS GOOD AND THE PROVI SIONS OF SECTION 68 ARE APPLICABLE TO THE CREDITS IN RESPECT OF SHARE A PPLICATION MONEY/ SHARE CAPITAL , ALL THAT IS REQUIRED TO BE DONE IS THAT THE ASSESSEE IS REQUIRED TO PROVE THE EXISTENCE OF THE SHARE HOLDER S BECAUSE AS HELD BY THE FULL BENCH OF THE DELHI HIGH COURT, IF THE SHARE HOLDERS EXISTS THEN, POSSIBLY NO FURTHER ENQUIRY NEEDS TO B E MADE. HE, THEREFORE, SUBMITTED THAT AS TO THE EXISTENCE OF TH E SHARE HOLDERS, OF COURSE, THE ASSESSEE IS REQUIRED TO PLACE THE PR IMARY EVIDENCE AND DISCHARGE THE PRIMARY BURDEN, FOR WHICH RELIANC E WAS PLACED ON THE FOLLOWING DECISIONS . 1. CIT VS DIVINE LEASING & FINANCING LTD REPORTED IN 158 TAXMANN 440 (DEL) , WHEREIN THEIR LORDSHIPS HAVE HELD THAT A DISTILLATION OF THE PRECEDENTS YIELDS FOLLOW ING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68. T HE ASSESSEE HAS TO PRIMA FACIE PROVE (I) THE IDENTITY OF THE C REDITOR/ SUBSCRIBER (II) THE GENUINENESS OF THE TRANSACTION ,VIZ, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS (III) THE CREDIT WORTHINESS O R FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER (IV) IF RELEVAN T DETAILS OF ADDRESS OR PAN IDENTITY ARE FURNISHED TO THE DEPART MENT ALONG WITH THE COPIES OF SHARE HOLDER REGISTER, SHA RE APPLICATION FORM , SHARE TRANSFER REGISTER ETC , IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATI ON BY ASSESSEE . FURTHER ,(I) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CR EDITOR / SUBSCRIBER FAILS OR NEGLECT TO RESPOND THE NOTICES (II) THE ONUS WOULD NOT STAND DISCHARGE IF THE CREDITOR / SUBSCRI BER DENIES OR REPUDIATE THE TRANSACTION SET UP BY ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIATION ON FACE VALUE AND CONS TRUE IT , WITHOUT MORE EVIDENCE AGAINST THE ASSESSEE (III) TH E AO IS DUTY BOUND TO INVESTIGATE THE CREDIT WORTHINESS OF THE CREDITOR / SUBSCRIBER , THE GENUINENESS OF THE TRANSACTION A ND VERACITY OF THE REPUDIATION . IN THAT CASE , THEIR LORDSHIPS UPHELD THE ORDER OF TRIBUNAL HOLDING THAT THE AO HAD NOT BROUG HT ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHARE HOLDERS WERE BENAMIDARS OR FICTITIOUS PERSONS OR T HAT ANY PART OF THE SHARE CAPITAL REPRESENTED COMPANYS OW N INCOME FROM UNDISCLOSED SOURCES .' 2. CIT VS DWARKADHISH INVESTMENT (P) LTD REPORTED I N 167 TAXMANN 321 (DEL) 12 3. CIT VS DWARKADHISH FINANCIAL SERVICES REPORTED I N 148 TAXMANN 54 , WHERE IT WAS HELD THAT IN VIEW OF THE EVIDENCE T O ESTABLISH THAT IDENTITY OF SHARE HOLDERS SUCH AS A FFIDAVITS , COPIES OF THE SHARE APPLICATION FORMS, CONFIRMATION FROM APPLICANT COMPANIES COPIES OF BOARD RESOLUTION, DETAILS OF C HEQUE NOS., BRANCH AND ADDRESS OF THE BRANCH THROUGH WHICH THE INVESTMENTS ARE MADE ALONG WITH THE FACT THAT SHARE HOLDERS ARE TAX PAYERS, IT WAS HELD THAT IT COULD NOT BE PRESUMED THAT THE SHA RE HOLDERS, WHO ARE ASSESSED TO TAX, ARE NOT IN EXISTENCE . 4. CIT VS GANGOR INVESTMENT LTD REPORTED IN 179 TAX MANN , WHEREIN THE HIGH COURT HELD THAT THE ASSESSEE HAD F ILED SUBSCRIPTION FORM FOR EACH OF INVESTORS. THE SAID S UBSCRIPTION FORM CONTAINED DETAILS, WHICH SET OUT NOT ONLY THE IDENTITY OF SUBSCRIBER, BUT ALSO GAVE INFORMATION WITH RESPECT TO THEIR ADD RESSES AS WELL AS PANS . DURING SCRUTINY AO HAD ALSO ASKED FOR AND WA S SUPPLIED WITH A COPY OF STATEMENT OF BANK ACCOUNT OF THE SUBSCRIB ER.THE PAYMENTS WERE MADE BY CHEQUES. IN VIEW OF THIS THE COURT HELD THAT NO ADDITION COULD BE MADE U/S 68 BECAUSE ASSESSEE H AS DISCHARGED THE ONUS IN RESPECT OF VERACITY OF THE TRANSACTIONS . 5. CIT VS KC FIBERS LTD REPORTED IN 187 TAXMANN 53 ( DEL) , WHEREIN IT IS HELD THAT NO MATERIAL IS BROUGHT BY A O TO HOLD THAT SHARE HOLDERS COMPANIES ARE UMBRELLA COMPANY OR HAV E ANY RELATION WITH EACH OTHER AND THE AMOUNT CANNOT BE R EGARDED AS UNDISCLOSED INCOME OF THE RECIPIENT ASSESSEE COMPAN Y. IT ALSO HELD THAT IT IS NOT FOR THE ASSESSEE COMPANY TO PROBE AS TO THE SOURCE . IT WAS FOR AO TO ENQUIRE INTO THE AFFAIRS OF THE INVE STOR COMPANY THEIR LORDSHIPS HAVE APPLIED THE RATIO OF THE DECI SION IN CASE OF LOVELY EXPORTS PVT LTD (SUPRA) . 6. CIT VS DOLPHINE CANPACK LTD 283 ITR 190 ( DEL) ---- SHARE APPLICATION MONEY TRIBUNAL WHILE OBSERVING DETAIL S INCLUDING CONFIRMATION DETAILS OF BANK ACCOUNT, PAN OF SUBSCR IBER AND THAT PAYMENTS MADE BY CHEQUE JUSTIFIED IN DELETING ADD ITION U/S 68. ALTHOUGH THE LORDSHIPS APPLIED DECISION IN SOPHIA FINANCE LTD , THEY CAME TO THE CONCLUSION THAT THE SCOPE IS LIMIT ED TO EXAMINING THE EXISTENCE OF SHARE HOLDERS AND SINCE THE ASSESS EE HAS FURNISHED SUFFICIENT MATERIAL TO DISCHARGE THE ONUS , DELETION OF ADDITION WAS CORRECT . 7. CIT VS DOWN TOWN HOSPITALS PVT LTD REPORTED IN 2 67 ITR 489 (GAUHATI) HELD THAT THE ASSESSEE FILED DETAILS REGARDING SOU RCE OF FUNDS OF THE PARTY AND THEIR IT FILE NUMBERS ETC NO ADDITION U/S 68 IS PERMISSIBLE WHERE SHARE HOLDERS ARE IDENTIFIED AND IT IS ESTABLISHED THAT THEY HAD INVESTED THE MONEY IN PUR CHASE OF SHARES . (PAGE 127 TO 131 OF JUDGMENT COMPILATION). 13 8. CIT VS ILLAC INVESTMENT PVT LTD REPORTED IN 287 ITR 135 HELD THAT ASSESSEE SATISFACTORILY ESTABLISHED IDENTITY OF SHARE HOLDERS , THE ADDITION U/S 68 RIGHTLY DELETED NO SUBSTANTIA L QUESTION OF LAW ARISES ( PAGE 146 & 147 OF JUDGMENT COMPILATION) . 9. DCIT VS ROHINI BUILDERS REPORTED IN 256 ITR 360 ASSESSEE FURNISHED ADDRESSES OF ALL CREDITORS ALONG WITH GIR NO / PAN AS WELL AS CONFIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS IN CASE OF INDIVIDUAL CREDITORS WHEREVER AVAILABLE AND COPIES OF RETURNS FILED BY CREDITORS IN OTHER CASES . ALL LOANS RECEIVED AN D REPAID BY ACCOUNT PAYEE CHEQUES RIGHTLY DELETED . ( PAGE NO 1 16&117 OF JUDGMENT COMPILATION) 10. CIT VS SHRI BARKHA SYNTHETICS LTD REPORTED IN 2 70 ITR 477 (RAJ) --- ASSESSEE DISCHARGED ITS INITIAL BURDEN IN RESPE CT OF SIX OUT OF SEVEN COMPANIES BUT REVENUE FAILED TO DISCHARGE ITS BURDEN AS IT DID NOT HOLD ANY ENQUIRY INTO GENUINENESS, ADDITION RIG HTLY DELETED . ( PAGE NO 107 TO 115 OF JUDGMENT COMPILATION) 11. SHREE BARKHA SYNTHETIC LTD. VS ACIT REPORTED IN 283 ITR 377 (RAJ.) THE PRINCIPLE RELATING TO BURDEN OF PROOF CONCERNI NG THE ASSESSEE IS THAT WHERE THE MATTER CONCERNS THE MONE Y RECEIPTS BY WAY OF SHARE APPLICATION FROM INVESTORS THROUGH BAN KING CHANNELS, THE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE PERSON IN WHOSE NAME SHARE APPLICATION IS RECEIVED . ONCE THE EXISTENCE OF THE INVESTOR IS PROVED, IT IS NO FURTHER BURDEN OF THE ASSESSEE TO PROVE WHETHER THAT PERSON HIMSELF INVESTED THE MONEY OR S OME OTHER PERSON MADE INVESTMENT IN THE NAME OF THAT PERSON . THE BURDEN THEN SHIFTS TO THE REVENUE TO ESTABLISH THAT SUCH I NVESTMENT HAS COME FROM ASSESSEE COMPANY ITSELF. ( DECISION IN CA SE OF CIT VS SHRI BARKHA SYNTHETICS LTD (SUPRA) FOLLOWED). 12. WITHOUT PREJUDICE TO ABOVE CONTENTION BASED ON LOVELY EXPORTS CASE, THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT AN ANALYSIS OF ALL THE ABOVE JUDGMENTS THUS GOES TO SH OW THAT EVEN IF THE PRINCIPLE LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN SOPHIAS CASE (SUPRA) IS HELD AS APPLICABLE EVEN THEN THE A SSESSEES BURDEN IS RESTRICTED TO ESTABLISHING THE EXISTENCE OF SHAR EHOLDERS AND ONCE THAT IS ESTABLISHED , THE ASSESSEE IS NOT REQUIRED TO PROVE ANYTHING FURTHER. 13. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT AS PER THE PRINCIPLE LAID DOWN IN THE CASE OF SOPHIA (SUPRA) T HE ASSESSEE HAS DISCHARGED THE ONUS LAY UPON IT. IT WAS, THEREFORE, SUBMITTED BY THE LD. COUNSEL FOR ASSESSEE THAT EVEN IF THE PRINCIPLE LAID DOWN IN THE CASE OF SOPHIA FINANCE LTD (SUPRA) IS TO BE APPLIED THEN EVEN IN SUCH CASE ALSO, THE ASSESSEE IS ONLY REQUIRED TO PROVE T HE EXISTENCE OF THE SHARE HOLDERS AND THE FACT THAT THE MONEY HAS BEEN INVESTED BY SHARE HOLDING COMPANY AND NOT BY THE ASSESSEE COMPA NY. IT WAS 14 SUBMITTED THAT SINCE VARIOUS DOCUMENTS WERE SUBMITT ED BY THE ASSESSEE, PRIMARY BURDEN WHICH LAY UPON THE ASSESSE E, HAS BEEN DISCHARGED. IT WAS STRONGLY CONTENDED THAT THE TRI BUNAL IN THE CASE OF KALANI INDUSTRIES LIMITED (2007) 8 ITJ 165 HAS ACCEPTED THE EXISTENCE AND IDENTITY OF THESE COMPANIES, APART FR OM THE QUESTION OF DISCHARGE OF PRIMARY ONUS AND SHIFTING OF BURDEN TO THE DEPARTMENT, WHICH HAS MISERABLY FAILED TO DISCHARGE ITS ONUS. HE FURTHER SUBMITTED THAT THERE IS ANOTHER FACT THAT B OTH THESE COMPANIES VIZ M/S HINDUSTAN CONTINENTAL LTD. & M/S O PTIMAT TEXTILES INDUSTRIES LTD HAVE BEEN HELD TO BE EXISTI NG COMPANIES ON THE BASIS OF THE SIMILAR EVIDENCE BY THE EARLIER BE NCH OF THIS TRIBUNAL. IT WAS ALSO SUBMITTED THAT THE DECISION O F THE HIGHER FORUMS HAS TO BE FOLLOWED FOR WHICH RELIANCE WAS PL ACED UPON THE FOLLOWING DECISIONS :- 1. KAMALAKSHI FINANCE CORPORATION LTD; 55 ELT 433 2. M/S AGRAWAL WAREHOUSING & LEASING LTD REPORTED IN 257 ITR 235 (MP) 3. DUNLOP INDIA LTD. REPORTED IN 154 ITR 172(SC) 14. THE LD. COUNSEL FOR ASSESSEE ASSERTED THAT IN VIEW OF ABOVE JUDGMENT IN CASE OF ACIT VS KALANI INDUSTRIES LTD ( SUPRA), THE IDENTITY AND EXISTENCE OF BOTH THE COMPANIES CANNO T BE DISPUTED. AS TO THE INVESTMENT OF THE MONEY, HE SUBMITTED THA T THERE IS NO MATERIAL TO SHOW THAT THE SAID MONEY HAS FLOWN FROM THE ASSESSEE COMPANY. HE FURTHER SUBMITTED THAT IT IS WELL ESTAB LISHED PRINCIPLE OF LAW THAT ONCE THE TRANSACTION HAS TAKEN PLACE TH ROUGH BANKING CHANNELS, THE GENUINENESS OF TRANSACTION CANNOT BE DISPUTED. HE SUBMITTED THAT IT IS ALSO WELL ESTABLISHED PROPOSIT ION OF LAW THAT THE ASSESSEE IS NOT REQUIRED TO PROVE SOURCE OF A SOURC E. HE, THEREFORE, SUBMITTED THAT IN THIS VIEW OF THE MATTER, THE ADDI TION MADE BY THE AO IS CLEARLY UNSUSTAINABLE IN LAW ON ALL COUNTS . 15. AS REGARDS THE QUESTION OF DISCHARGE OF ASSESS EES BURDEN IN REGARD TO SECTION 68, THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT EVEN ON GENERAL PRINCIPLES, IT IS WE LL ESTABLISHED THAT THE ASSESSEE HAS ONLY THE PRIMARY BURDEN TO PROVE I DENTITY, CAPACITY AND GENUINENESS. IN THIS REGARD HE PLACED RELIANCE ON THE FOLLOWING DECISIONS . 1.SAROGI CREDIT CORPORATION VS CIT REPORTED IN 103 ITR 344 . THE ASSESSEE HAS ONLY THE PRIMARY BURDEN TO PROVE THE IDENTITY OF CREDITOR AND PLACED MATERIAL POINTING OUT THAT THE ENTRY IS NOT FICTITIOUS . IT IS NOT FOR THE ASSESSEE TO EXPLAIN FURTHER AS TO HOW AND IN W HAT CIRCUMSTANCES THE THIRD PARTY OBTAINED MONEY OR HO W OR WHY HE CAME TO MADE AN ADVANCE AS LOAN TO THE ASSESSEE . 15 2.ADDITIONAL COMMISSIONER VS BAHARI BROTHERS PVT LT D 154 ITR 244 3 ASHOK LAL DAGA VS CIT REPORTED IN 220 ITR 452 (MP ). 4.CIT VS REAL TIME MARKETING PVT LTD 306 ITR 35 (DE L) 5.CIT VS META CHEM INDUSTRIES REPORTED IN 245 ITR 160 6.NEMICHAND KOTHARI VS CIT 264 ITR 254 (GAUHATI) 7.PK SETHI VS CIT 286 ITR 318 ( GAUHATI) 8.CIT VS BARJATIYA CHILDREN TRUST 225 ITR 640 9.CIT VS LAUL TRANSPORT CORPORATION 180 TAXMANN 18 5 (P&H) 10.ARAVALII TRADING CO VS ITO 187 TAXMANN 338 (RAJ) . THE LD. COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT THE LEARNED CIT HAS MERELY PUT THE SEAL OF APPROVAL WITHOUT APPRECI ATING THE LEGAL POSITION IN REGARD TO THE CREDITS FOR SHARE APPLICA TION MONEY/SHARE CAPITAL. HE CANVASSED THAT IT IS IMPORTANT TO NOTE THAT INSPITE OF REFERRING TO THE EVIDENCE PLACED ON RECORD BY THE A SSESSEE IN DISCHARGE OF ITS BURDEN TO PROVE THE IDENTITY AND E XISTENCE OF THE COMPANY, THE LEARNED CIT INSTEAD OF APPLYING AND FO LLOWING THE DECISION OF THIS ITAT IN THE CASE OF KALANI INDUSTR IES LTD (SUPRA) HAS TRIED TO FIND FAULTS WITH THE SYSTEM OF REGISTRATI ON OF COMPANIES, ISSUING PAN OR ABOUT THE OPENING OF BANK ACCOUNT E TC . HE SUBMITTED THAT THE APPROACH OF THE CIT (A) TO SAY T HE LEAST APPEARS TO BE PERVERSE IN THE MATTER. AS TO THE DUTY OF T HE AO TO MAKE ENQUIRIES BY PURSUING THE MATTER AND BY MAKING INDE PENDENT ENQUIRIES, THE LD. COUNSEL FOR ASSESSEE RELIED UPON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS ORISSA CORPORAT ION PVT LTD REPORTED IN 159 ITR 78, WHEREIN THEIR LORDSHIPS HAV E HELD THAT WHEN IT IS IN THE KNOWLEDGE OF THE REVENUE THAT THE CREDITORS ARE INCOME TAX ASSESSEES, THEIR INDEX NUMBERS ARE IN T HE FILE OF REVENUE, NO ADDITION COULD BE MADE. THE LD. COUNSE L FOR ASSESSEE CONTENDED THAT THE DEPARTMENT APART FROM ISSUING NO TICES U/S 131 OF THE ACT, DID NOT PURSUE THE MATTER FURTHER AND N O EFFORT WAS MADE TO PURSUE THE ALLEGED CREDITORS. HE FURTHER SU BMITTED THAT THE AO HAS MADE NO EFFORT ON HIS PART TO EVEN ISSUE THE SUMMONS U/S 131 TO THE AFORESAID COMPANIES NOR ANY PROPER ENQUI RES HAVE BEEN MADE FROM REGISTRAR OF COMPANIES TO FIND OUT ALL DE TAILS ABOUT THE COMPANIES IN QUESTION. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THESE COMPANIES ARE INCORPORATED AND REGISTERE D UNDER THE COMPANIES ACT, 1956 AND THE REGISTRAR OF COMPANIES IS A STATUTORY 16 AUTHORITY POSSESSING DETAILS OF COMPANIES. ALL REG ISTERED COMPANIES ARE REQUIRED TO MAKE STATUTORY COMPLIANCE AND FILE PERIODIC RETURNS ETC UNDER COMPANIES ACT BEFORE THE REGISTRAR. RELIANCE IS ALSO PLACED ON THE DECISION OF GAUHATI HIGH COURT IN THE CASE OF KHANDELWAL CONSTRUCTION VS CIT REPORTED IN 227 ITR 900, WHEREIN IT HAS BEEN HELD THAT SECTION 68 EMPOWERS T HE AO TO MAKE ENQUIRY REGARDING CASH CREDITS. IF HE IS SATISFIED THAT ENTRIES ARE NOT GENUINE HE HAS EVERY RIGHT TO ADD THIS IN INCOME F ROM OTHER SOURCES. THE SATISFACTION OF THE AO IS THE BASIS OF INVOCATION OF POWERS U/S 68 AND THE SATISFACTION MUST BE DERIVED FROM RELEVANT FACTORS ON THE BASIS OF PROPER ENQUIRY . THE ENQUIR Y MUST BE JUST AND REASONABLE. THE LD. COUNSEL FOR ASSESSEE CONTEN DED THAT THE ENQUIRY WAS NOT PROPERLY MADE AND ON THE BASIS OF S UCH ENQUIRY THE AO COULD NOT COME TO THE CONCLUSION THAT THE CREDIT ORS WERE FICTITIOUS. HE SUBMITTED THAT IN THE INSTANT CASE A LSO, THE AO HAS FAILED TO MAKE PROPER ENQUIRIES OR RATHER HAS NOT A T ALL MADE ENQUIRIES HIMSELF AS SUCH, THE FINDING AND CONCLUSI ON ABOUT NON EXISTENCE OF THE COMPANIES CANNOT BE SUSTAINED AND HAS TO BE TREATED AS WITHOUT PROPER MATERIAL/ EVIDENCE. THE A O HAS FAILED TO DISCHARGE THE ONUS TO DISPROVE THE IDENTITY , CAPAC ITY AND GENUINENESS. THE LD. COUNSEL FOR ASSESSEE PLACED RE LIANCE ON THE FOLLOWING DECISIONS :- 1. ITAT DELHI AQUATECH INTERNATIONAL CASE- (2008)119TTJ(DELHI) 2. ITAT DELHI ITO VS NOVA PROMOTERS & FIN LEASE P VT LTD (2010)44 DTR 1. 16. BEFORE US, THE LD. COUNSEL FOR ASSESSEE VEHEME NTLY ARGUED THAT EVEN OTHERWISE AS HELD BY THE ITAT, IND ORE BENCH IN THE CASE OF KALANI INDUSTRIES LTD (SUPRA), A LIMITED CO MPANY DULY INCORPORATED AND REGISTERED UNDER THE COMPANIES ACT CANNOT BE SAID TO BE AN NONEXISTENT COMPANY IN VIEW OF THE LE GAL POSITION THAT THE COMPANY IS A JURISTIC PERSON HAVING SEPARATE EX ISTENCE APART FROM ITS MEMBERS UNDER THE LAW. THE COMPANY HAS ITS LEGAL BIRTH UNDER THE LAW ON ITS INCORPORATION AND THE COMPANY S EXISTENCE CAN COME TO END ONLY BY ITS LEGAL DEATH IN ACCORDANCE W ITH THE PROVISIONS OF COMPANIES ACT I.E BY LIQUIDATION UNDE R THE COMPANY LAW, WHICH TAKES PLACE ONLY THROUGH HIGH COURT. IN THIS RESPECT THE LD. COUNSEL FOR ASSESSEE REFERRED TO THE PROVISIONS OF SECTIONS 13 & 17 OF THE INDIAN COMPANIES ACT, WHICH DEAL WITH REQ UIREMENTS WITH RESPECT TO MEMORANDUM AND ARTICLE OF ASSOCIATION, C HANGE OF MEMORANDUM, CHANGE OF REGISTERED OFFICE ETC., SECTI ON 21 OF THE COMPANIES ACT PRESCRIBING PROCEDURES FOR CHANGE OF NAME. HE FURTHER SUBMITTED THAT IT WOULD ALSO BE USEFUL TO R EFER TO SECTION 34 REGARDING EFFECT OF REGISTRATION OF MEMORANDUM ACCO RDING TO WHICH ON REGISTRATION OF MEMORANDUM, THE REGISTRAR IS REQUIRED TO CERTIFY THAT COMPANY IS INCORPORATED. SUB SECTION ( 2) PROVIDES THAT 17 ON AND FROM DATE OF INCORPORATION THE SUBSCRIBERS O F MEMORANDUM AND OTHER PERSONS, AS MAY FROM TIME TO TIME THE MEM BERS OF THE COMPANY, SHALL BE A BODY CORPORATE HAVING PERPETU AL SUCCESSION AND COMMON SEAL. SIMILARLY SECTIONS 72 , 73 & 75 ETC . WHICH DEAL WITH THE PROCEDURE FOR APPLICATION, ALLOTMENT OF SH ARE ETC. ALSO THROW LIGHT ON THE CORPORATE EXISTENCE OF THE COMPA NY. IT WAS SUBMITTED THAT EVEN THE PROVISION REGARDING APPOINT MENT AND CHANGE OF AUDITORS ETC THROW LIGHT ON THE CORPORATE EXISTENCE OF THE COMPANY UNDER THE LAW. HE SUBMITTED THAT IN THE LI GHT OF THESE STATUTORY PROVISIONS UNDER THE COMPANIES ACT GOVERN ING THE AFFAIRS OF COMPANY RIGHT FROM ITS INCORPORATION TILL WINDIN G UP IT IS DIFFICULT TO CONCEIVE AN IDEA THAT A COMPANY DULY INCORPORATE D UNDER THE ACT CAN BE SAID TO BE A NONEXISTENT COMPANY. 17. REGARDING THE CORRECTNESS OF AD-HOC DISALLOWAN CE OUT OF TELEPHONE EXPENSES, THE LEARNED COUNSEL FOR ASSE SSEE RELIED UPON THE SUBMISSIONS MADE BEFORE THE CIT(A) AND SUB MITTED THAT THE DISALLOWANCE IS ARBITRARY AND UNREASONABLE AND OUGHT TO HAVE BEEN DELETED BY CIT(A). 18. SO FAR AS CERTAIN DOCUMENTS RELATING TO SOME COMPANIES FILED BY THE REVENUE ARE CONCERNED, IT WA S CONTENDED BY THE LD. COUNSEL FOR ASSESSEE THAT THE SHARE HOLDER COMPANIES ARE PAPER COMPANIES. THE LD. COUNSEL FOR ASSESSEE OBJEC TED TO THE SAME ON THE GROUND THAT THE REVENUE IS TRYING TO RE LY ON CERTAIN FACTS WHICH ARE TOTALLY NEW AND NOT BORNE OUT FROM RECORD. THE SAID FACTS DO NOT FIND PLACE EITHER IN THE ORDER OF AO O R THE CIT(A). SO FAR AS THE DOCUMENTS FILED BY THE REVENUE IN PAPER BOOK S PAGE NO 21 TO 125, IT WAS SUBMITTED THAT BY THE LD. COUNSEL FO R ASSESSEE THAT THESE PAPERS/DOCUMENTS, NOT BEING PART OF RECORD, S HOULD NOT BE TAKEN INTO CONSIDERATION AND THE SAME DESERVE TO BE SUMMARILY REJECTED. HE SUBMITTED THAT EVEN OTHERWISE THE FACT S AND THE DOCUMENTS SOUGHT TO BE RELIED UPON BY THE RESPONDEN TS DO NOT HAVE ANY BEARING ON THE ISSUE INVOLVED IN THE PRESE NT CASE. 19. ON THE OTHER HAND, THE LEARNED CIT DR STRONGLY DEFENDED THE IMPUGNED ORDERS BY SUBMITTING THAT ONU S IS ON THE ASSESSEE AT LEAST TO ESTABLISH THE IDENTITY OF SHAR E APPLICANTS. THE NOTICES/ COMMISSION SENT AT 4 PLACES, NAMELY, INDOR E, MANDSAUR, JABALPUR AND MUMBAI WERE FOUND TO BE NON-EXISTING, CONSEQUENTLY, IT WAS CONTENDED THAT THESE ARE MERELY PAPER COMPAN IES CLAIMED TO HAVE GIVEN HUGE SUMS OF CREDIT IN THE FORM OF SH ARE CAPITAL OR LOANS TO LARGE NUMBER OF ASSESSEES AND THEN DISAPPE ARED IN THIN AIR AFTER PROVIDING ACCOMMODATION ENTRIES. IT WAS STRON GLY CONTENDED BY THE LEARNED CIT DR THAT NEITHER CORRECT ADDRESS ES OF CREDITORS WERE GIVEN BY THE ASSESSEE NOR THE CREDITORS WERE P RODUCED BEFORE THE ASSESSING OFFICER FOR EXAMINATION AND THE ASSES SMENT PROCEEDINGS WERE COMPLETELY STALLED AS THE FACTS OF SUCH 18 TRANSACTIONS CAN EITHER BE EXPLAINED BY THE ASSESSE E OR THE CREDITORS WHO KNOWS ENTIRE BASIS OF SUCH CREDITS. RELIANCE WAS PLACED UPON THE DECISION IN KALE KHAN MOHD. HANIF ( 1963) 50 ITR 1 (SC). OUR ATTENTION WAS INVITED TO THE PAPER BOOK DATED 4.5.2010 BY SPECIFICALLY POINTING OUT THAT HUGE CASH WAS DEP OSITED IN NUMBER OF BANK ACCOUNTS, NAMELY, SAHAYATA MARKETING , YASH ASSOCIATE, G.R. INVESTMENT AND V.S. TRADERS, ETC. F ROM WHERE THE AMOUNTS WERE TRANSFERRED TO CREDITORS ACCOUNT AND F ROM THERE TO THE ASSESSEE. IT WAS STRONGLY ASSERTED THAT UNACCOU NTED CASH WAS FLOWN BACK IN THE ACCOUNTS OF THE ASSESSEE AND THE SOURCE OF SUCH CASH REMAINED UNEXPLAINED AS THE PARTIES IN WHOSE A CCOUNTS THE CASH WAS INTRODUCED WERE FOUND NON-EXISTENT BECAUSE EVEN SUMMONS COULD NOT BE SERVED UPON THEM AT THEIR KNOW N ADDRESSES. RELIANCE WAS PLACED UPON THE DECISION OF SUMATI DAY AL; 214 ITR 801 (SC). A PLEA WAS ALSO RAISED THAT THE ONUS/BUR DEN STILL REMAINED FASTENED TO THE ASSESSEE FOR WHICH RELIANC E WAS PLACED ON THE DECISION IN THE CASE OF NIVENDAN VANIJYA NIY OJAY LIMITED; 182 CTR (CAL) 605 AND HINDUSTAN TEA TRADING COMPANY ; 182 CTR (CAL) 585. THE DECISION IN THE CASE OF M/S RATHI F INLEASE (2008) 215 CTR (MP) 429 WAS TIME AND AGAIN REITERATED BY THE L EARNED CIT DR ALONG WITH THE DECISION IN SOPHIA FINANCE LIMITED; 205 ITR 98 (DEL) (FB); CIT VS. PRECISION FINANCE PRIVATE LTD.; 208 I TR 465 (CAL) AND STELLAR INVESTMENT; 251 ITR 263 (SC). 20. MR. SAXENA, THE LEARNED CIT DR STRONGLY CONTEN DED THAT WHEN THE LANGUAGE USED IN THE STATUTORY PROVIS IONS IS CLEAR, THE COURT IS NOT EMPOWERED TO READ ANYTHING INTO A STATUTORY PROVISION WHICH IS PLAIN AND UNAMBIGUOUS FOR WHICH RELIANCE WAS PLACED UPON THE DECISION IN PRAKASH NATH KHANNA; 26 6 ITR 1 (SC), KESHAJIV RAOJI & COMPANY; 183 ITR 1 (SC) AND SMT. TA RULATA SHYAM; 108 ITR 345 (SC). IT WAS FURTHER CONTENDED THAT TH E DECISION IN THE CASE OF M/S STELLAR INVESTMENT LIMITED (SUPRA) IS M ERELY A DISMISSAL OF APPEAL SIMPLICITOR AND NOT A DECLARATION OF LAW AND HENCE IT IS NOT A BINDING PRECEDENCE AS HELD IN THE CASE OF M/S HINDUSTAN TEA TRADING COMPANY; 263 ITR 289 (CAL) AND S. SHYAMUGHV EL NADAR; 263 ITR 658 (SC). A STRONG PLEA WAS RAISED BY THE LEARNED CIT DR THAT THE DECISION IN THE CASE OF M/S LOVELY EXPORTS PRIVATE LIMITED IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEALS AS THE HON'BLE DELHI HIGH COURT HAS CLEARLY DIFFERENTIATED CASES O F SHARE CAPITAL OF PRIVATE LIMITED COMPANY FROM PUBLIC LIMITED COMPANY . IT WAS ALSO SUBMITTED THAT IN THE DECISION OF LOVELY EXPORTS PR IVATE LIMITED THE HON'BLE APEX COURT MERELY DISMISSED SLP AND IT IS N O LONGER A SPEAKING ORDER AS IT IS NEITHER EXPRESSION OF JUDIC IAL VIEW NOR A BINDING PRECEDENT FOR WHICH RELIANCE WAS PLACED UPO N THE DECISION IN CIT V SHRI MANJU NATHESHWARA PACKING PRODUCTS AN D CAMPHOR WORKS; 231 ITR 53 (SC), LATE NAWAB SIR MIR OSMAN AL I KHAN; 162 ITR 888 (SC), CIT V. QUALITY (PAT); 224 ITR 77. A STRONG PLEA WAS 19 ALSO RAISED BY THE LEARNED CIT DR THAT MANY HIGH CO URTS HAVE DISTINGUISHED THE DECISION IN LOVELY EXPORTS PRIVAT E LIMITED BECAUSE IT WAS MERELY DISMISSAL OF SLP FOR WHICH OUR ATTENT ION WAS INVITED TO THE DECISION IN CIT V. OASIS HOSPITALITIES PRIVA TE LIMITED (2011) 333 ITR 119 (DEL). RELIANCE WAS ALSO PLACED UPON TH E DECISION IN M/S STL EXTRUSION PVT. LTD.; 333 ITR 269 (MP). IT WAS SUBMITTED THAT THE DECISION IN RATHI FINLEASE LIMITED (SUPRA) IS A BINDING PRECEDENT FOR WHICH RELIANCE WAS PLACED IN GEOFFREY MANNERS & COMPANY LIMITED; 221 ITR 695, TAYLOR INSTRUMENT COM PANY LIMITED; 232 ITR 771 (DEL); MOHANLAL KANSAL; 114 IT R 583 (P&H); JORHANT GROUP LIMITED; 289 ITR 422 (GAU); VRAJLAL M ANILAL & COMPANY; 127 ITR 512 (MP). 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE (M/S AGRAWAL COAL CORPORATION PRIVATE LIMI TED) IS A PRIVATE LIMITED COMPANY ENGAGED IN THE TRADING BUSI NESS. IN THE YEAR UNDER CONSIDERATION THE COMPANY ENTERED IN THE FIELD OF POWER GENERATION WITH INSTALLATION OF TWO WIND MILLS AND DECLARED INCOME OF RS.83,46,090/- IN ITS RETURN FILED ON 30.10.2005 FOR ASSESSMENT YEAR 2005-06. THE CASE WAS SELECTED FOR SCRUTINY. THE LEARNED ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S, NOTED THAT M/S HINDUSTAN CONTINENTAL LIMITED, APPLIED FOR 40,0 00 SHARES OF THE ASSESSEE COMPANY OF THE COUNTENANCE VALUE OF RS .10/- EACH AT A PREMIUM OF RS.90/- PER SHARE. SIMILARLY, OPTIMAT ES TEXTILE INDUSTRIES LIMITED ALSO APPLIED FOR 10,000 SHARES O F THE ASSESSEE COMPANY OF THE SAME VALUE AND PREMIUM PER SHARE. TH E LEARNED ADDITIONAL CIT, INDORE (ASSESSING OFFICER), HAS REF ERRED THE REPORT OF ACIT 5(1), INDORE, WHEREIN IT WAS FOUND THAT ON THE BASIS OF INVESTIGATION CARRIED OUT BY HIM IN SOME OTHER CASE S, M/S HINDUSTAN CONTINENTAL LIMITED AND OPTIMATES TEXTILE S LIMITED ARE NOT THE GENUINE COMPANIES. THE REPORT OF ACIT 5(1) HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. THIS REPORT WAS CONFRONTED TO THE ASSESSEE COMPANY BY THE ASSESSING OFFICER, D URING THE ASSESSMENT PROCEEDINGS, AND AFTER CONSIDERING THE R EPLY OF THE ASSESSEE COMPANY IT WAS HELD THAT THE SHARE CAPITAL CLAIMED TO BE APPLIED BY THESE COMPANIES IS UNEXPLAINED, THEREFOR E, THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY. THE RELEVANT EXTRACT FROM THE ASSESSMENT ORDER IS EXTRACTED HERE UNDER :- THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE I.T.A.T., I NDORE BENCH, IN CASE OF ACIT VS. KALANI INDUSTRIES LTD. THE SAID DE CISION WAS NOT ACCEPTABLE TO THE DEPARTMENT AND IS BEING CONTESTED BEFORE HON'BLE HIGH COURT OF M.P. ASSESSEE HAS TRIED TO PR OVE GENUINENESS OF TRANSACTION BY FURNISHING CONFIRMATION, COPY OF BANK ACCOUNT AND ACKNOWLEDGEMENT OF RETURN. IT HAS ALSO FURNISH ED VARIOUS DECISION IN SUPPORT OF ITS CONTENTIONS. BUT IT IS EVIDENT FROM THE 20 INVESTIGATION MADE BY ACIT 5(1), INDORE THAT BOTH T HESE COMPANY ARE NOT EXISTING COMPANIES IN THE REAL SENSE. THES E COMPANIES ARE PAPER COMPANIES ONLY AND EXIST NOWHERE AND WERE USE D TO GIVE ACCOMMODATION ENTRIES TO VARIOUS PARTIES WHO WANT T O LAUNDER THEIR UNACCOUNTED MONEY IN THE GUISE OF SHARE APPLI CATION OR UNSECURED LOAN OR LONG TERM CAPITAL GAIN. THE ASSESSEE IS A CLOSELY HELD PVT. LTD. COMPANY I N WHICH PUBLIC IS NOT SUBSTANTIALLY INTERESTED. THUS AS PE R SECTION 68 ONUS WAS UPON THE ASSESSEE TO ESTABLISH DEPOSITORS IDEN TITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. A SSESSEE IN ITS WRITTEN SUBMISSION STATED THAT COMPANY HAS RECEIVED SHARE APPLICATION MONEY OF RS. 40,00,000/- FROM HINDUSTAN CONTINENTAL LTD. 19, SHUBH KAMNA APARTMENT, GUL BAZAR, JABALPUR . AS PER THE REPORT OF THE ACIT 5(1), INDORE, IT IS CLEAR THAT N O SUCH COMPANY EXIST AT THE GIVEN ADDRESS. THE CREDITWORTHINESS OF THE COMPANY HAS ALSO NOT BEEN ESTABLISHED IN VIEW OF THE FACT THAT THERE IS HUGE INFLOW AND OUTFLOW OF FUND IN THE BANK ACCOUNT WITH OUT ANY LOGIC. THERE IS HUGE CASH DEPOSIT IN THE BANK ACCOUNT OF H INDUSTAN CONTINENTAL LTD. MAINTAINED UTI BANK LTD. COPY OF W HICH IS FILED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. THE COM PANY IS NOT EXISTING IN REAL SENSE THE GENUINENESS OF TRANSACTI ON IS ALSO DOUBTFUL. SINCE ASSESSEE FAILED ESTABLISHED IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION, CR EDIT IN THE ACCOUNT OF THE ASSESSEE ON ACCOUNT OF SHARE APPLIC ATION MONEY FROM HINDUSTAN CONTINENTAL LTD. RS. 4,00,000/- AND SHARE PREMIUM AMOUNT OF RS. 36,00,000/- ARE BEING TREATED AS UNEX PLAINED CREDIT U/S 68 AND ADDED BACK TO TAXABLE INCOME. SIMILARLY, ASSESSEE HAS TRIED TO ESTABLISH IDENTIT Y OF M/S OPTIMATES TEXTILE INDUSTRIES LTD., BUT IT IS EVIDEN T FROM THE REPORT OF THE ACIT 5(1), INDORE THAT COMPANY IS ALSO A PAPER COMPANY USED TO PROVIDING ACCOMMODATION ENTRIES ONLY. ENQUIRIES RE VEALED THAT NO SUCH COMPANY EXISTS AT THE ADDRESS AS PROVIDED BY T HE ASSESSEE. ACIT 5(1), INDORE REPORTED THAT THE ASSISTANT DIREC TOR OF INCOME TAX INVESTIGATION IX(3), MUMBAI HAD CONFIRMED IN HIS RE PORT THAT M/S OPTIMATES TEXTILE INDUSTRIES LTD. DOES NOT EXIST AT THE GIVEN ADDRESS AND SEEMS TO BE BOGUS. ASSESSEE HAS GIVEN THE ADDR ESS OF THE COMPANY AS TO DEV KARAN MENSION IIND FLOOR 63B PRIN CES ESTATE MUMBAI WHEREAS THE BANK ACCOUNT OF THE COMPANY HAS BEEN MENTIONED IN INDORE IN WHICH THE ADDRESS OF THE COM PANY WAS GIVEN AS 13, SOUTH HATI PALA, INDORE. THIS COMPANY IS ALSO NOT EXISTING IN REAL SENSE AND ONLY ACCOMMODATION ENTRI ES ARE BEING GIVEN TO THE BENEFICIARIES IN THE FORM OF SHARE APP LICATION MONEY OR UNSECURED LOANS. SINCE ASSESSEE FAILS TO ESTABLISH IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S, SHARE APPLICATION MONEY CREDITED ON ACCOUNT OF M/S OPTIMA TES TEXTILE INDUSTRIES LTD. RS. 1,00,000/- SHARE PREMIUM RS.9,0 0,000/- IS 21 TREATED UNEXPLAINED U/S 68 AND ADDED BACK TO TAXABL E INCOME. TOTAL ADDITION UNDER THIS HEAD IS RS. 50,00,000/- 22. THE ABOVE FINDING WAS CONFRONTED TO THE ASSESSE E DURING APPELLATE PROCEEDINGS AGAINST WHICH THE ASSESSEE PR EFERRED WRITTEN SUBMISSIONS. DURING THE FIRST APPELLATE STAGE AS W ELL AS BEFORE US, THE LD. COUNSEL FOR ASSESSEE HAS CHALLENGED THE FIN DING OF ACIT ON THE GROUND THAT THE SAID COMPANY IS A LISTED COMPAN Y ON STOCK EXCHANGE AND THE ASSESSING OFFICER WAS IN KNOWLEDGE AND POSSESSION OF THE INCOME TAX RETURN OF THE COMPANY. OUR ATTENTION WAS INVITED TO THE DETAILS OF CAPITAL WORK IN PROG RESS AND LICENCE CAPACITY OF HCL LIMITED BY ARGUING THAT THE EXISTEN CE AND CREDIT WORTHINESS OF HCL IS ESTABLISHED SINCE IT IS HAVING SHARE CAPITAL OF RS. 8.09 CRORES. DURING HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE MR. CHOUDHARY, INVITED OUR ATTENTION TO DE POSIT OF CASH IN BANK ACCOUNT OF M/S SAHAYATA MARKETING AND TRANSFER THEREOF THROUGH ACCOUNT PAYEE CHEQUE TO THE BANK ACCOUNT OF M/S SUNIL SHARES STOCKS PRIVATE LIMITED AND THEREAFTER TO THE ULTIMATE BENEFICIARY. IT WAS SUBMITTED THAT THE TRANSACTION S OF CASH TRANSFER AND DEPOSITION OF CASH HAS NOTHING TO DO WITH THE A SSESSEE. A STRONG PLEA WAS RAISED BY THE LD. COUNSEL FOR ASSES SEE THAT IDENTITY OF SHARE APPLICANTS IS ESTABLISHED WHICH WAS STRONG LY DENIED BY THE LEARNED CIT DR. AT THIS STAGE, A QUERY WAS RAISED BY THE BENCH AS TO WHETHER THE ASSESSEE IS IN A POSITION TO PRODUCE BEFORE THIS BENCH ANY OF THE DIRECTORS OR THE EMPLOYEES OF THE SE COMPANIES ? THE LD. COUNSEL FOR ASSESSEE CONVENIENTLY CONTEN DED THAT THE ASSESSEE CANNOT BE PUT TO ADVERSE BURDEN MEANING TH EREBY THAT THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE SUCH PERSONS. THE BENCH AGAIN CONTENDED THAT IN VIEW OF THE ABOVE REP LY OF THE LD. COUNSEL FOR ASSESSEE, AN ADVERSE VIEW MAY BE TAKEN AGAINST THE ASSESSEE. THE LD. COUNSEL FOR ASSESSEE REMAINED MU M AND NOTHING WAS CANVASSED AGAINST THE QUERY RAISED BY T HE BENCH . 23. THE NOTICES ISSUED U/S 133(6) OF THE ACT TO M/S HCL LIMITED AND M/S OPTIMATES TEXTILES INDUSTRIES LIMIT ED COULD NOT BE SERVED AS THESE COMPANIES WERE FOUND NON-EXISTENT A T THE ADDRESSES SUPPLIED TO THE DEPARTMENT BY THE ASSESSE E. THEREAFTER, COMMISSION WAS ISSUED TO ADIT(INV.) UNIT-IX-3, MUMB AI, TO VERIFY THE EXISTENCE/GENUINENESS OF THESE COMPANIES, WHO A LSO REPORTED THAT THE SAID COMPANIES DID NOT EXIST AT THE GIVEN ADDRESSES. THE WHOLE ISSUE FOR ADJUDICATION IS WHETHER THE IDENTIT Y OF THESE COMPANIES WAS ESTABLISHED ? DURING HEARING, THE L D. COUNSEL FOR ASSESSEE CLAIMED THAT IDENTITY OF BOTH THESE COMPAN IES HAS BEEN ESTABLISHED AS BOTH THESE COMPANIES WERE REGISTERED WITH REGISTRAR OF COMPANIES AND THEIR INCOME TAX RETURNS WERE FILE D AND BOTH ARE HAVING PANS/BANK ACCOUNTS. WE ARE NOT AGREEING WITH THIS 22 PROPOSITION BECAUSE AT THE TIME OF REGISTRATION, TH ESE COMPANIES MAY BE EXISTING EITHER ON PAPERS OR IN REAL SENSE B UT THEREAFTER WERE SPECIFICALLY FOUND NON-EXISTENT AS THE SUMMONS / NOTICES ISSUED WERE RETURNED BACK UNSERVED AND THE COMMISSI ON ISSUED WITH THIS PURPOSE ALSO FOUND THAT THESE COMPANIES W ERE NON- EXISTENT. AT THE SAME TIME, NONE OF THE CERTIFICAT ES, CLAIMED TO BE ISSUED BY VARIOUS AUTHORITIES, DOES NOT ESTABLISH T HE IDENTITY OF THE SHARE APPLICANTS AS THE CERTIFICATES WERE ISSUED WI THOUT PHYSICALLY VERIFYING THE EXISTENCE OF APPLICANTS, SUCH AS INCO ME TAX DEPARTMENT RECEIVES RETURNS OF INCOME OR DOCUMENTS WITHOUT VERIFICATION OF EXISTENCE OF THE PERSONS FILING THE RETURNS/DOCUMENTS. PAN IS ALSO ALLOTTED TO THE APP LICANTS ON THE BASIS OF APPLICATIONS WITHOUT VERIFYING THE EXISTEN CE OF APPLICANTS AT THE ADDRESS GIVEN IN THE APPLICATION. LIKEWISE, REGISTRAR OF COMPANIES ALSO REGISTER A COMPANY WITHOUT PHYSICAL VERIFICATION OF THE EXISTENCE OF THE APPLICANT COMPANY. THERE IS A SPECIFIC FINDING THAT ON VERIFICATION BY THE ACIT IN THE CASE OF M/S SAHAYATA MARKETING COMPANY NEITHER THE OPERATORS OF THE ACCO UNTS WERE AVAILABLE AT THE ADDRESSES GIVEN TO THE BANK NOR TH E INTRODUCER. THEREFORE, THE ASSESSEE CANNOT CLAIM TO HAVE ESTABL ISHED THE IDENTITY OF BOTH THESE COMPANIES ON THE BASIS OF SO ME DOCUMENTS. LEAVE IT APART, AS MENTIONED ABOVE, THE LD. COUNSEL FOR ASSESSEE, IN REPLY TO A SPECIFIC QUERY REGARDING PRODUCTION OF A NY OF THE DIRECTORS OR THE EMPLOYEES OF THE SHARE APPLICANTS BEFORE THE BENCH, THE ASSESSEE DID NOT COMPLY WITH THE DIRECTI ONS OF THE BENCH, THEREFORE, TO THIS LIMITED EXTENT, WE ARE OF THE VIEW THAT THESE SHARE APPLICANTS ARE NON-EXISTENT AND THEIR I DENTITY IS NOT PROVED. IT IS PERTINENT TO MENTION HERE THAT THERE IS A DIFFERENCE BETWEEN A PRIVATE AND PUBLIC LIMITED COMPANY AS IN A PRIVATE LIMITED COMPANY, THE PUBLIC AT LARGE IS NOT SUBSCRI BING THE SHARES AS THE SHARES ARE ALLOTTED TO CLOSE RELATIVES, FRIENDS AND OTHER KNOWN PERSONS WHO ARE HAVING FAITH IN THE SUBSCRIBING COM PANY ON PERSONAL RELATIONS WHEREAS THERE IS AN INVITATION T O THE PUBLIC AT LARGE BY A PUBLIC LIMITED COMPANY AND NOT NECESSARI LY HAVING PERSONAL RELATIONS AND IN THAT CASE, THE INDIVIDUAL RELATIONS ARE NORMALLY FOUND TO BE NON-EXISTENT. IN VIEW OF THES E FACTS, THE SHARE APPLICANTS ARE KNOWN TO THE ASSESSEE COMPANY, BEING PRIVATE LIMITED COMPANY, AND THERE SHOULD BE NO DIFFICULTY TO PRODUCE THEM OR THEIR REPRESENTATIVE TO ENABLE THE ASSESSING OFF ICER TO VERIFY THE IDENTITY, GENUINENESS OF THE CAPITAL CLAIMED TO BE SUBSCRIBED BY THEM, THEREFORE, THE ASSESSEE CANNOT CLAIM IGNORANC E ABOUT THESE COMPANIES. UNLESS THE ASSESSEE IS ABLE TO ESTABLIS H IDENTITY OF THE COMPANIES WHO HAVE SUBSCRIBED IN THEIR SHARE CAPITA L, HOW THE DEPARTMENT WILL PROCEED AGAINST THESE COMPANIES IN TERMS OF THE VERDICT OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). ANY ADDITION IN THE HANDS OF SUCH SUBSCRI BING COMPANIES IS ONLY POSSIBLE WHEN THE ASSESSEE IS ABLE TO ESTABLIS H IDENTITY OF 23 THESE COMPANIES WHICH THE ASSESSEE HAS GROSSLY FAIL ED NOT ONLY BEFORE THE ASSESSING OFFICER BUT ALSO BEFORE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL. UNDER THE SE FACTS AND CIRCUMSTANCES, THERE IS NO QUESTION OF APPLY THE PR OPOSITION OF LAW AS SUGGESTED BY THE LD. COUNSEL FOR ASSESSEE. 24. ON THE ISSUE OF DISCHARGE OF ONUS/BURDEN, THE ASSERTION OF THE LD. COUNSEL FOR THE ASSESSEE IS TH AT THE ONUS SHIFTED TO THE DEPARTMENT WHEN COPY OF SHARE APPLICATION FO RM, PAN, NAME AND ADDRESSES AND ROC REGISTRATION, ETC. WERE FILED BY THE ASSESSEE. WE ARE NOT AGREEING WITH THE SUBMISSION OF THE ASSESSEE IN VIEW OF THE FACT THAT AT THE ADDRESSES (4 PLACES ) GIVEN TO THE DEPARTMENT, THESE COMPANIES WERE FOUND TO BE NON-EX ISTENT. EVEN THE INSPECTOR WAS DEPUTED TO VERIFY THE ADDRESSES W HO ALSO REPORTED THAT THESE COMPANIES WERE NOT AVAILABLE AT THE GIVEN ADDRESSES. IT IS NOT POSSIBLE THAT THE COMPANIES M AKING HUGE INVESTMENT IN THE FORM OF SHARE APPLICATION ARE NOT FOUND AT THE GIVEN ADDRESSES. THERE IS A POSSIBILITY THAT THERE MAY BE A CHANGE OF ADDRESS BUT TILL THE STAGE OF THE TRIBUNAL, NOT TO TALK OF THE ASSESSING OFFICER OR THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS), NO SUCH ADDRESS WAS FURNISHED BY THE ASS ESSEE, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT TH E ONUS WAS NOT DISCHARGED AS THE ASSESSEE NEITHER FURNISHED THE CO RRECT ADDRESSES NOR THE CREDITORS WERE PRODUCED RATHER THE ASSESSEE TRIED TO STALL THE ASSESSMENT PROCEEDINGS BY GIVING MISLEADING FAC TS AND INCORRECT ADDRESSES. EVEN AS PER PREPONDERANCE OF P ROBABILITIES, ALL FACTS GO AGAINST THE ASSESSEE AND THE RATIO LAID DO WN BY THE HON'BLE APEX COURT IN THE CASE OF SUMATI DAYAL (214 ITR 801) GOES AGAINST THE ASSESSEE. HON'BLE CALCUTTA HIGH COURT IN THE CASE OF NIVENDAN VANIJYA NIYOJAY LIMITED (SUPRA) (PAGE 14) HELD AS UNDER :- AFTER THE INITIAL ONUS WAS DISCHARGED BY ASSESSE E, THE INCOME TAX AUTHORITIES HAVE MADE ENQUIRIES AND HAD COMMUNI CATED THE RESULT OF THE ENQUIRY TO THE ASSESSEE AND REQUIRED THE ASSESSEE TO PRODUCE THE SUBSCRIBERS WHO PROVIDED SUCH CREDIT, I N ORDER TO ESTABLISH ITS CASE. BUT THE ASSESSEE DID NOT DO SO . ON THIS BASIS ADDITION MADE BY THE A.O. U/S 68 OF I.T. ACT WAS CO NFIRMED. IDENTICALLY, THE HON'BLE CALCUTTA HIGH COURT IN TH E CASE OF HINDUSTAN TEA TRADING COMPANY LIMITED; 182 CTR 585 AT PAGE 23 (PARA 21) WHERE THE IDENTITY OF 12 PERSONS WHO WERE NOT FOUND AT THE ADDRESSES IT WAS HELD THAT IDENTITY IS NOT ESTA BLISHED. ON THE ISSUE OF ONUS, IT WAS HELD THAT PRINCIPLE REGARDIN G ONUS IS LAID DOWN U/S 68 WHEREBY ONCE A REASONABLE ENQUIRY IS MA DE, THEN THE ASSESSING OFFICER CAN DO NO FURTHER EXCEPT ARRIVING AT A CONCLUSION. WHEN SUCH CONCLUSION IS COMMUNICATED TO ASSESSEE, O NUS SHIFTS ON 24 THE ASSESSEE. LIKEWISE, HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S RATHI FINLEASE LIMITED; 215 CTR 429 AT PAGE 28 WHEN COMPANY IS NOT FOUND AT THE GIVEN ADDRESS AGAINST T HE SUMMONS ISSUED BY THE ASSESSING OFFICER OBSERVED AS UNDER THE ASSESSEE TRIED TO EXPLAIN THE GENUINENESS OF T HE CREDIT ON THE BASIS OF LETTERS OF CONFIRMATIONS. IT COULD NOT BE EXPLAINED AS TO HOW THE TRANSACTION WAS MATERIALISED WHEN THE COMPA NIES WERE NOT IN EXISTENCE AND THE AMOUNT WAS PAID BY CHEQUE ONLY ON THE DATE ON WHICH THE AMOUNT WAS CREDITED TO THE ACCOUN T OF THE COMPANY. THE ASSESSEE FAILED TO DISCHARGE THE BURDE N WITH REGARD TO THE CREDIT IN ITS BOOKS AND THE EXISTENCE OF THE CREDITORS TO INDICATE THE GENUINENESS OF THE TRANSACTION. THE FULL BENCH OF HON'BLE DELHI HIGH COURT IN THE C ASE OF M/S SOPHIA FINANCE LIMITED; 205 ITR 98 OBSERVED AS UNDE R :- THE ITO WOULD BE ENTITLED TO ENGAGE AND IT WOULD INDEED BE HIS DUTY TO DO SO WHETHER THE ALLEGED SHAREHOLDERS DO IN FACT EXIST OR NOT. IF THE SHAREHOLDERS EXIST THEN POSSIBLY NO FURTHER ENQUIRY NEED TO BE MADE. BUT IF THE ITO FINDS THAT THE SHA RE HOLDERS DO NOT EXIST, THEN IN EFFECT IT WOULD MEAN THAT THERE IS N O VALID ISSUANCE OF SHARE CAPITAL. SHARES CANNOT BE ISSUED IN THE NAME OF NON-EXISTING PERSONS. THE USE OF WORDS MAY BE CHARGEDIN SECTI ON 68 CLEARLY INDICATES THAT THE ITO WOULD THEN HAVE THE JURISDIC TION IF THE FACTS SO WARRANTS TO TREAT SUCH CREDIT TO BE THE INCOME O F THE ASSESSEE. THE HON'BLE CALCUTTA HIGH COURT IN PRECISION FINANC E PRIVATE LIMITED; 208 ITR 465 HELD THAT INQUIRY OF ITO REVEA LED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FILE AND ACCORDINBGLY THE FIRST INGREDIENT AS TO THE IDENTIT Y OF THE CREDITORS HAS NOT BEEN ESTABLISHED. IF THE IDENTITY OF THE C REDITOR HAS NOT BEEN ESTABLISHED, CONSEQUENTLY, THE QUESTION OF EST ABLISHMENT OF THE GENUINENESS OF THE TRANSACTION OR THE CREDIT WO RTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. DURING HEAR ING RELIANCE WAS PLACED UPON THE DECISION IN THE CASE OF STELLAR INV ESTMENT LIMITED; 251 ITR 263 (SC) WHEREIN THE ISSUE WAS SUBSCRIPTION OF SHARE CAPITAL OF A PUBLIC LIMITED COMPANY WHEREAS IN THE PRESENT APEPALS, PRIVATE LIMITED COMPANIES ARE INVOLVED, THEREFORE, THERE IS A MATERIAL DIFFERENCE BETWEEN THE TWO AS DISCUSSED EARLIER, TH E SHARES OF PRIVATE LIMITED COMPANIES ARE GENERALLY GIVEN TO AP PLICANTS KNOWN TO THE DIRECTORS WHEREAS IN A PUBLIC LIMITED COMPAN Y THE APPLICANTS ARE UNKNOWN TO THE DIRECTORS. IT IS PERTINENT TO M ENTION THAT WHILE COMING TO A PARTICULAR CONCLUSION, THE FULL BENCH O F DELHI HIGH COURT IN THE CASE OF SOPHIA FINANCE LIMITED (SUPRA) DULY CONSIDERED THE CASE OF STELLAR INVESTMENT LIMITED. EVEN IN TH E CASE OF M/S 25 LOVELY EXPORTS PRIVATE LIMITED (SUPRA) THE HON'BLE BLE DELHI HIGHCOURT IN PARA 4 OBSERVED AS UNDER :- REFERENCE TO SECTION 68 OF THE IT ACT IS CONSPICU OUS BY ITS ABSENCE, THE STELLAR INVESTMENT LIMITED RATIO CANNOT BE STRE SSED TO THE EXTENT THAT IT PARTAKES AS A REFLECTION ON SECTION 68, WHEN THE INQUIRY PERTAINED ONLY TO SECTION 263. 25. IN VIEW OF THE FACTS NARRATED ABOVE AND THE JU DICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, IT CAN BE SAI D THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS CAST UPON IT BY THE PROVISIONS OF THE ACT. WE TEND TO REPRODUCE SECTION 68 OF THE ACT :- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE [ASSES SING] OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IF THE AFORESAID PROVISION OF THE ACT IS ANALYSED, IT SPEAKS ABOUT CASH CREDITS AND THE SUM FOUND CREDITED IN THE BOOK S OF AN ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION IS NOT FOUND SATI SFACTORY BY THE ASSESSING OFFICER THEN THE SAME MAY BE CHARGED TO T AX AS THE INCOME OF THE ASSESSEE. IN THE PRESENT APPEAL, AT ANY STAGE THE ASSESSEE DID NOT FILE ANY EXPLANATION REGARDING THE IDENTITY OF THE SHARE APPLICANTS, THEREFORE, THE ONUS WAS NOT DISCH ARGED BY THE ASSESSEE. A BARE READING OF SECTION 68 SUGGEST THA T THERE HAS TO BE CREDITS OF AMOUNTS IN THE BOOKS MAINTAINED BY THE A SSESSEE THAT SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT OR THE EXPLANATION OFFERED BY THE ASSESSEE I N THE OPINION OF THE ASSESSING OFFICER IS NOT SATISFACTORY, IT IS ON LY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. WE ARE AWARE THAT THE OPINI ON OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIV ELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT APPEALS, THE ASSESSING OFFICER WAS NEVER SATISFIED AND THE NOTICES/SUMMONS ISSUED TO THE SUBSCRIBING COMPANIE S, WERE FOUND TO BE FICTITIOUS OR NON-EXISTENT, THEREFORE, ONE FA CT OOZING OUT THAT THE ASSESSEE HAS NOT FULFILLED THE REQUIREMENT OF S ECTION 68. A CLOSE READING OF SECTION 68 MAKES IT CLEAR THAT IN CASE O F SECTION 68 THERE SHOULD BE CREDIT ENTRY IN THE BOOKS OF ACCOUNT. THI S IS A FUNDAMENTAL DIFFERENCE BETWEEN THESE TWO PROVISIONS . THE LAW IS WELL SETTLED THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE IS ON HI M WHERE THE NATURE AND SOURCE OF A RECEIPT WHETHER IT BE OF MON EY OR OTHER 26 PROPERTY, CANNOT BE SATISFACTORILY EXPLAINED BY THE ASSESSEE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME O F THE ASSESSEE AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW T HAT THE INCOME IS FROM ANY PARTICULAR SOURCE FOR WHICH WE ARE SUPP ORTED BY THE DECISION OF THE HON'BLE APEX COURT IN ROSHAN DI HAT TI VS. CIT; 107 ITR 938 AND KALE KHAN MOHD. HANIF VS. CIT; 50 ITR 1 (SC). IT IS FOR THE ASSESSEE TO PROVE THAT EVEN IF CASH CREDIT REPR ESENTS INCOME IT IS INCOME FROM A SOURCE WHICH HAS ALREADY BEEN TAXED F OR WHICH WE ARE SUPPORTED BY THE DECISION IN CIT V. DEVIPRASAD VISHWANATHPRASAD; 72 ITR 194 (SC). THE HONBLE APEX IN THE CASE OF SUMATI DAYAL VS. CIT; 214 ITR 801 CLEARLY HELD THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. THERE ARE CONTR ARY DECISION LIKE ADDL. CIT V. BAHRI BROTHERS; 154 ITR 244 (PAT) HOLD ING THAT IDENTITY OF CREDITORS IS NOT RELEVANT FOR CHEQUE TRANSACTION S BUT AT THE SAME TIME IT IS NOT SACROSANCT AS WAS HELD IN NEMICHAND KOTHARI VS. CIT; 264 ITR 254 (GAU). IN THE CASE OF SHRI BARKHA SYNT HETICS LIMITED VS. ACIT; 155 TAXMAN 289 THE HONBLE RAJASTHAN HIGH COU RT HELD THAT WHERE THE MATTER CONCERNS MONEY RECEIPTS BY WAY OF SHARE APPLICATION FROM THE INVESTORS THROUGH BANKING CHAN NEL, THE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE PERSON I N WHOSE NAME THE SHARE APPLICATION IS RECEIVED . ONCE THE EXISTENCE OF THE INVESTOR IS PROVED, IT IS NOT FURTHER THE BURDEN OF THE ASSESSEE TO PROVE WHETHER THAT PERSON ITSELF HAS INVESTED THE M ONEY OR SOME OTHER PERSON HAS MADE INVESTMENT IN THE NAME OF THA T PERSON. THE BURDEN THEN SHIFTS TO THE REVENUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM THE ASSESSEE COMPANY ITSELF. 26. ONCE THE RECEIPT OF THE CONFIRMATION LETTER F ROM THE CREDITOR IS PROVED AND THE IDENTITY AND EXISTENCE O F THE INVESTOR HAS NOT BEEN DISPUTED, NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE NAME OF SUCH INVESTOR CAN BE MADE IN T HE HANDS OF THE ASSESSEE. IN THE CASE OF CIT V. DIVINE LEASING & FINANCE; 158 TAXMAN 440 (DEL), THE HON'BLE COURT CLEARLY HELD TH AT IN CASE OF PUBLIC ISSUE THE COMPANY CONCERNED CANNOT BE EXPEC TED TO KNOW EVERY DETAIL PERTAINING TO IDENTITY AS WELL AS FINA NCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST HOWEVER MAINT AIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL ALL THE INFORMATION CONTAINED IN THE SHARE APPLICATION DOCUMENTS. THE HON'BLE COURT CLEARLY HELD THAT IN CASE OF PRIVATE PLACEMENT, THE LEGAL REGIME WOULD NOT BE SAME . A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHT ROPE OF SECTION 68 AND 69. THE B URDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSE E. HOWEVER, IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEGITI MACY OF ANY SUBSCRIPTION, HE IS EMPOWERED RATHER DUTY BOUND TO CARRY OUT INVESTIGATIONS. THE ASSESSEE MERELY WANTS TO TAKE SHELTER OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF L OVELY EXPORTS 27 PRIVATE LIMITED WHEREIN IT WAS HELD THAT EVEN THE S HARE APPLICANTS ARE BOGUS, IT CANNOT BE ADDED IN THE HANDS OF THE A SSESSEE. IN THAT CASE THE TRIBUNAL CLEARLY NOTED THAT THE ASSESSEE W AS A PUBLIC LIMITED COMPANY AND SUBSCRIPTIONS WERE RECEIVED FRO M PUBLIC AT LARGE THROUGH BANKING CHANNEL AND THE SHARES WERE A LLOTTED IN CONSONANCE WITH THE PROVISIONS OF THE SECURITIES CO NTRACT (REGULATION) ACT, 1956 AS ALSO THE RULES AND REGULA TIONS OF DELHI STOCK EXCHANGE AND IN PARA 12 THE HON'BLE DELHI HIG H COURT HAS CLEARLY DIFFERENTIATED THE CASES OF SHARE CAPITAL O F PRIVATE LIMITED COMPANY FROM PUBLIC LIMITED COMPANY BY SAYING IN T HE CASE OF PRIVATE PLACEMENT, THE LEGAL REGIME WILL NOT BE THE SAME. THEREFORE, THE FACTS OF THAT CASE ARE NOT APPLICABL E TO THE CASE OF THE ASSESSEE AS IT IS A PRIVATE LIMITED COMPANY OR CLOSELY HELD COMPANY. BESIDES THIS, IN CASE OF M/S LOVELY EXPORT S LIMITED (IN PARA 23), THE HON'BLE DELHI HIGH COURT NOTED THAT T HE ASSESSING OFFICER HAS NEITHER CONTROVERTED NOR DISPROVED THE MATERIAL FILED BY THE ASSESSEE. HOWEVER, IN THE PRESENT CASE, THE A SSESSING OFFICER AFTER MAKING INQUIRY DISAPPROVED THE VERY FIRST INF ORMATION REGARDING IDENTITY OF SUCH CREDITORS AS THEY WERE F OUND NON- EXISTENT AT ALL THE GIVEN ADDRESSES. SO FAR AS THE ARGUMENT OF THE LEARNED CIT DR THAT DISMISSAL OF SLP IN THE CASE OF LOVELY EXPORT, WHERE THERE IS NO MERGER OF ORDER, IS NOT AN EXPRES SION OF JUDICIAL VIEW NOR A BINDING PRECEDENT. WE ARE NOT GOING INT O THIS CONTROVERSY BECAUSE THE FACTS OF THE PRESENT APPEAL S ARE DISTINGUISHABLE FROM THE FACTS OF LOVELY EXPORTS PR IVATE LIMITED. HONBLE DELHI HIGH COURT IN A LATTER DECISION IN CI T V. OASIS HOSPITALITIES PRIVATE LIMITED (2011) 333 ITR 119 HE LD AS UNDER :- WE ARE OF THE VIEW THAT RATIO LAID DOWN IN STELLE R INVESTMENT LTD. (2001) 251 ITR 263 IS APPLICABLE ONLY IN THOSE CASE S WHERE THE ASSESSEE IS A LIMITED COMPANY AND THE SHARES WERE Q UOTED IN THE STOCK EXCHANGE. BUT WHENEVER THE ISSUE IS SUBSCRIB ED WITHOUT QUOTING IT ON THE STOCK EXCHANGE BY A LIMITED OR PR IVATE LIMITED COMPANY, THE PRESUMPTION IS VERY STRONG AGAINST THE ASSESSEE THAT SUBSCRIPTION IS AVAILABLE ONLY TO THE CLOSELY CONNE CTED PERSONS OF THE ASSESSEE. ONCE THE INFERENCE IS AGAINST THE AS SESSEE THAT THE ISSUE IS SUBSCRIBED BY ITS CLOSELY CONNECTED PERSON , THE ONUS IS UPON THE ASSESSEE TO PROVE THE IDENTITY OF THE SUBSCRIBE RS AND THEIR CREDITWORTHINESS. 27. THERE IS ANOTHER PERCEPTION TO LOOK INTO THE D ECISION OF THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORT S PRIVATE LIMITED WHEREIN THE HON'BLE APEX COURT HELD THAT IF THE SHA RE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE FROM ALLEGED BOGU S SHARE HOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFF ICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENT IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED A S UNDISCLOSED INCOME OF THE ASSESSEE COMPANY. IN OUR VIEW, FIRS T OF ALL, THE 28 ALLEGED BOGUS SHARE HOLDERS SHOULD BE IN EXISTENCE, ONLY THEN THE DEPARTMENT MAY BE IN A POSITION TO REOPEN THEIR IND IVIDUAL ASSESSMENT. HOWEVER, IN THE PRESENT APPEALS, THE SH ARE APPLICANTS/SHARE SUBSCRIBERS ARE NO MORE IN EXISTEN CE MEANING THEREBY THEIR IDENTITY IS NOT PROVED, THEREFORE, HO W THE DEPARTMENT CAN PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS. 28. THE HON'BLE MADHYA PRADESH HIGH COURT AFFIRMED THE DECISION OF M/S RATHI FINLEASE LIMITED (SUPRA) IN T HE CASE OF M/S STL EXTRUSION PRIVATE LIMITED (2011) 333 ITR 269, R ELIED UPON BY BOTH THE SIDES BEFORE US. WE FIND THAT THE FACTS IN STL EXTRUSION ARE MATERIALLY DIFFERENT FROM BOTH THE ASSESSEES, N AMELY, M/S AGRAWAL COAL CORPORATION AS WELL AS FROM M/S RATHI FINLEASE LIMITED. IN THE CASE OF M/S STL EXTRUSION ON RECEIP T OF CONFIRMATION OF SHARE APPLICANTS, EXCEPT OBSERVING DISCREPANCIES IN CONFIRMATION, THE ASSESSING OFFICER NEITHER ASKED ANYTHING FROM T HE ASSESSEE NOR MADE ANY INQUIRY TO ARRIVE AT THE CONCLUSION THAT S HARE APPLICANTS WERE BOGUS. HOWEVER, IN THE PRESENT APPEAL, DETAI LED INQUIRIES WERE MADE, NOTICES RECEIVED UNSERVED, COMMISSION AL SO RETURNED EMPTY HANDED AS THE SHARE SUBSCRIBING COMPANIES WER E FOUND NON- EXISTENT. IN THAT SITUATION, THE HON'BLE HIGH COUR T CONCLUDED THAT ONCE EXISTENCE OF AN INVESTOR/SHARE HOLDER IS PROVE D, ONUS SHIFTS TO THE REVENUE TO ESTABLISH THAT EITHER THE SHARE APPL ICANTS ARE BOGUS OR IMPUGNED MONEY BELONGS TO THE ASSESSEE ITSELF. T HE CONTRARY FINDING IN THESE CASES WERE CONFRONTED TO THE ASSES SEE BY THE ASSESSING OFFICER BUT THE ASSESSEE IN SPITE OF SUFF ICIENT OPPORTUNITY PROVIDED, FAILED TO PROVE THE EXISTENCE OF SUCH SHA RE APPLICANTS COMPANIES AS THE CORRECT ADDRESSES WERE NOT PROVIDE D TO THE ASSESSING OFFICER AND EVEN THE DIRECTORS OR ANY OF THE EMPLOYEES OR BOOKS OF ACCOUNT WERE NOT PRODUCED. THEREFORE, THE ONLY CONCLUSION ARRIVED AT BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S RATHI FINLEASE LIMITED THAT THE ASSESSE E FAILED TO DISCHARGE BURDEN WITH REGARD TO CREDITS IN ITS BOOK S AND THE EXISTENCE OF ITS CREDITORS, CONSEQUENTLY, ADDITION U/S 68 WAS SUSTAINED. THIS DECISION IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT APPEALS BECAUSE IDENTITY OF SHARE APPLICANT ITSELF WAS NOT PROVED. THE PRINCIPLE LAID DOWN IN THE CASE OF M/S RATHI FINLEASE LIMITED WAS RECENTLY AFFIRMED BY HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF STL EXTRUSIONS, IT HAS BECOME BINDIN G PRECEDENT ON THE TRIBUNAL ESPECIALLY WHEN THE DECISION OF THE HO N'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS WAS VERY MUCH AVAILAB LE. HON'BLE JURISDICTIONAL HIGH COURT WHILE COMING TO A PARTICU LAR CONCLUSION FOLLOWED THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN CIT V. ASK BROTHERS LIMITED (2011) 333 ITR 333 AND DULY CO NSIDERED THE DECISION FROM THE HON'BLE APEX COURT IN CIT V. LOV ELY EXPORTS PRIVATE LIMITED AND STELLER INVESTMENT LIMITED (SU PRA). IN ANOTHER LATEST DECISION IN CIT V. OASIS HOSPITALITIES PRIVA TE LIMITED, UP BONE 29 MILLS INDIA LIMITED AND VIJAY POWER GENERATORS LIMI TED, ETC. (2011) 333 ITR 119 (DEL), IDENTICALLY HELD THAT IDENTITY A ND CREDIT WORTHINESS OF SHARE APPLICANTS WAS NOT PROVED, THER EFORE, THE ADDITION U/S 68 OF THE ACT WAS JUSTIFIED. WHILE COM ING TO THE AFORESAID DECISION THE HON'BLE DELHI HIGH COURT CON SIDERED THE FOLLOWING DECISIONS :- 1. BHOLA SHANKAR COLD STORAGE P. LTD. V. JCIT; (200 4)270 ITR 487 (CAL (PARA 40) 2. CIT V. AKJ GRANITES P. LTD. (2008) 301 ITR 298 ( RAJ) (PARA 18) 3. CIT V. ARUNANANDA TEXTILES P. LTD. (2011) 333 IT R 116 (KARN) (PARA 17) 4. CIT V. ASK BROTHERS LTD. (2011) 333 ITR 111 (KAR N) 5. CIT VS. CREATIVE WORLD TELEFILMS LTD. (2011) 333 ITR 100 (BOM) 6. CIT VS. DIVINE LEASING & FINANCE LTD. (2008) 299 ITR 268 (DEL) 7. CIT V. DOLPHIN CANPACK LTD. (2006) 283 ITR 190 ( DELHI) 8. CIT V. K.C. FIBERS LTD. (2011) 332 ITR 481 (DEL HI) 9. CIT V. LOVELY EXPORTS P. LTD. (2009) 319 ITR (ST .) 5 (HC) 10.CIT V. MOHANKALA (P) (2007) 291 ITR 278 (SC) 11.CIT V. SOPHIA FINANCE LTD. (1994) 205 ITR 98 (DE L) 12.CIT V. STELLER INVESTMENT LTD. (1991) 192 ITR 28 7 (DEL) 13.CIT V. STELLER INVESTMENT LTD. (2001) 251 ITR 26 3 (S.C.) 14.CIT V. VALUE CAPITAL SERVICES P. LTD. (2008) 307 ITR 334 (DEL) 15. MADHURI INVESTMENT PVT. LTD. V. ACIT(ITA NO. 11 0 OF 2004 DATED 18.2.2006 (KARN.) 16. SHREE BARKHA SYNTHETICS LTD. VS. ACIT; (2006) 2 83 ITR 377 (RAJ.) 29. AS PER THE PROVISIONS OF SECTION 68 OF THE ACT, IN CASE THE ASSESSEE HAS NOT BEEN ABLE TO GIVE SATISFACTORY EXP LANATION IN RESPECT OF NATURE AND SOURCE OF ANY SUM OR IF IN TH E OPINION OF THE ASSESSING OFFICER SUCH EXPLANATION IS NOT SATISFACT ORY, THE ASSESSING OFFICER MAY TREAT THE SAME AS UNDISCLOSED INCOME AN D ADD IT TO THE INCOME OF THE ASSESSEE MEANING THEREBY THE ASSESSEE IS REQUIRED TO GIVE SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUMS FOUND CREDITED IN THE BOOKS OF ACCOUNT. WHAT KIND OF PROOF IS 30 TO BE FURNISHED BY THE ASSESSEE IS A QUESTION. IT HAS COME UP FOR DISCUSSION IN VARIOUS JUDGMENTS RENDERED BY VARIOUS HON'BLE COURTS INCLUDING HON'BLE SUPREME COURT AND HIGH COURTS. T HE LAW DISCUSSED BY THE HON'BLE COURT IN THE CASE OF CIT V . DIVINE LEASING & FINANCE LIMITED (2008) 299 ITR 268 IS ALSO AN IMPOR TANT DECISION TO QUOTE. A DELICATE BALANCE HAS TO BE MAINTAINED. T HE HON'BLE DELHI HIGH COURT IN CIT V. DOLPHIN CANPACK LTD.; 283 ITR 190 QUOTED AT PAGE 193 THE FOLLOWING OBSERVATIONS :- ....CREDIT ENTRY RELATES TO THE ISSUE OF SHARE CAP ITAL, THE INCOMETAX OFFICER IS ALSO ENTITLED TO EXAMINE WHETHER THE ALL EGED SHAREHOLDERS DO IN FACT EXIST OR NOT. SUCH AN INQUIRY WAS CONDUC TED BY THE ASSESSING OFFICER IN THE PRESENT CASE. IN THE COUR SE OF THE SAID INQUIRY, THE ASSESSEE HAD DISCLOSED TO THE ASSESSIN G OFFICER NOT ONLY THE NAMES AND THE PARTICULARS OF THE SUBSCRIBERS OF THE SHARES BUT ALSO THEIR BANK ACCOUNTS AND THE PERMANENT ACCOUNT NUMBERS ISSUED BY THE INCOMETAX DEPARTMENT. SUPER ADDED TO ALL THIS WAS THE FACT THAT THE AMOUNT RECEIVED BY THE COMPANY WA S ALL BY WAY OF CHEQUES. THIS MATERIAL WAS, IN THE OPINION OF T HE TRIBUNAL, SUFFICIENT TO DISCHARGE THE ONUS THAT LAY UPON THE ASSESSEE. THE HON'BLE HIGH COURT TOOK NOTE OF MANY OTHER JUDG MENTS OF MANY OTHER HIGH COURTS AND ON ANALYSIS OF THOSE JUD GMENTS, FORMULATED THE FOLLOWING PROPOSITIONS WHICH EMERGE AS UNDER (DIVINE LEASING & FINANCE LIMITED; 299 ITR PAGE 282 (DEL) :- IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SECTION 68 OF THE INCOME TAX ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE THE IDENTITY OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER UNDISPUTA BLE CHANNELS THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IF RELEVANT DETAILS OF ADDRESS OR PAN, IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHARE HOLDERS REGISTER, SHARE APPLIC ATION FORMS, SHARE TRANSFER REGISTERS, ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAIL S OR NEGLECTS TO RESPOND TO ITS NOTICES THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSA CTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WIT HOUT MORE, AGAINST THE ASSESSEE AND 31 THE ASSESSING OFFICER IS DUTY BOUND TO INVESTIGATE THE CREDIT WORTHINESS OF THE CREDITOR/SUBSCRIBER, THE GENUINEN ESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. 30. IF THE TOTALITY OF FACTS AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE ARE KEPT IN JUXTAPOSITION, IT IS CLEAR THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. IN ORD ER TO DISCHARGE ITS BURDEN, THE ASSESSEE IS REQUIRED TO P ROVE THE IDENTITY OF THE SHARE HOLDER THE GENUINE OF TRANSACTION THE CREDIT WORTHINESS OF THE SHARE HOLDER DURING HEARING, SHRI R.K. CHAUDHARY AND SHRI K.K. S INGH THE LEARNED COMMISSIONERS OF INCOME TAX CONTENDED THAT HINDUSTAN CONTINENT PVT. LTD.; AGRAWAL ROAD CARRIER S PVT. LTD. AND SUNI SHARES AND STOCK LIMITED (INTER-CONNE CTED WITH EACH OTHER), ARE PAPER CONCERNS. THESE COMPANIES P ROVIDED ACCOMMODATION ENTRY TO VARIOUS PARTIES OF INDORE, B HOPAL, GWALIOR, NAGPUR, SURAT, MUMBAI, AHMEDABAD, VADODARA , AND IN VARIOUS OTHER CITIES THROUGH THEIR BANK ACCOUNTS MAINTAINED AXIS BANK, INDORE, DURING THE PERIOD 1.4.2002 TO 31 .3.2005. THE MODUS OPERANDI OPERATED WAS THAT THE ACCOMMODAT ION ENTRIES WOULD FIRST PAY THE CASH WHICH WAS DEPOSITE D IN BANK ACCOUNTS MAINTAINED IN THE NAME OF M/S YASH ASSOCIA TES, M/S G.R. INVESTMENTS, M/S V.S. TRADERS, PATH PRADAR SHAK FINVEST PVT. LTD., M.S. RIBEKA GARG AND BHANURAJ SI NGH RANAWAT, ETC. MAINTAINED IN THE SAME BANK BRANCH (I N DUE COURSE OLD ACCOUNTS WERE CLOSED AND NEW ACCOUNTS IN THE NAME OF NEW CONCERNS WERE OPENED). THEREAFTER, THE AMOUNT WAS TRANSFERRED IN ANY OF THE ACCOUNT OF HINDUSTAN CONTINENTAL PRIVATE LIMITED, AGRAWAL ROAD CARRIERS PRIVATE LIMITED AND SUNIL SHARES & STOCK LIMITED. IT WAS S UBMITTED THAT ON CERTAIN OCCASION THERE IS INTER-TRANSFER OF FUNDS AMONGST THE THREE COMPANIES, THEN THE CHEQUES WERE ISSUED TO DESIRING PARTIES IN THE GARB OF LOAN OR SHARE CA PITAL. NOT ONLY THAT, THE SHARES OF HINDUSTAN CONTINENTAL WER E CLAIMED TO BE TRADED BY SUNIL SHARES & STOCK LIMITED, M/S J AI SHARE FIN LIMITED AND OTHERS THROUGH MANIPULATION GIVING RISE TO ARTIFICIAL HEIGHT SO AS TO ENABLE CERTAIN PARTIES T O RE-INTRODUCE THEIR BLACK MONEY AS HUGE CAPITAL GAIN. IT WAS CLA IMED THAT IN THOSE CASE ALSO THE CASH WAS DEPOSITED FIRST IN CER TAIN ACCOUNT AND THEREAFTER THE FUNDS WERE TRANSFERRED T O THE SHARE BROKERS INVOLVED IN THE MANIPULATION AND THEN ULTIMATELY TO THE ACCOUNTS OF THE PARTY CONCERNED A S SALE PROCEEDS OF SHARES. IT WAS ALSO SUBMITTED THAT SEB I HAS EVEN PENALISED HINDUSTAN CONTINENTAL PRIVATE LIMITE D AND SUNIL SHARES & STOCK PRIVATE LIMITED. THIS ASSERTI ON OF THE LEARNED COMMISSIONER OF INCOME TAX WAS NOT CONTROVE RTED BY THE ASSESSEE BUT MERELY ARGUED THAT THE MONEY WA S TRANSACTED THROUGH BANKING CHANNEL AND IN VIEW OF T HE 32 DECISION IN THE CASE OF LOVELY EXPORTS THEIR INDIVI DUAL ACCOUNTS CAN BE REOPENED. HOWEVER, AS MENTIONED E ARLIER, THE EXISTENCE OF THESE SHARE SUBSCRIBERS/SHARE APPL ICANTS WAS NOT FOUND EXISTENT, THEREFORE, WHERE IS THE QUE STION OF REOPENING THEIR INDIVIDUAL ASSESSMENTS. TRANSACTIO N ENQUIRY WAS ALSO MADE (PAGES 1 TO 104) OF THE PAPER BOOK FI LED ON 4.5.2010. PAGES 108 TO 125 OF THE PAPER BOOK DATED 4.5.2010 CONTAINS THE ADJUDICATION ORDER U/S 151 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT READ WI TH RULE 5(1) OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY THE ADJUDICATING OFFICER). RULES 1995 AGAINST OPTIMATES TEXTILES INDUSTRIES LIMITED (FORMERLY KNO WN AS PRIYANSH SAREE INDUSTRIES LIMITED). VIDE PARA 17 O F THE ORDER (PAGE 125) IT HAS BEEN HELD THAT SUNIL SHARES & STO CKS PRIVATE LIMITED FAILED TO PROVIDE NECESSARY INFORMA TION TO THE INVESTIGATING AUTHORITY OF SEBI AND PENALTY OF RS. 2 LACS WAS IMPOSED IN TERMS OF PROVISIONS OF SECTION 15A(A) OF SEBI ACT, 1992 FOR FAILURE TO PROVIDE NECESSARY INFORMATION T O SEBI. 31. THE HON'BLE APEX COURT IN THE CASE OF VIJAY KUMAR TALWAR V. CIT (2011) 330 ITR 1 (S.C.) ON THE ISSUE U/S 68 READ WITH SECTION 260A DECIDED IN FAVOUR OF THE REVENUE . IDENTICAL RATIO WAS LAID DOWN BY THE HON 'BLE SUPREME COURT IN CASE OF CIT V. BIJU PATNAIK; 160 I TR 674. 32. SO FAR AS THE CONTENTION OF THE LD. COUNSEL FO R ASSESSEE TO THE EFFECT THAT THE ISSUE IS SQUARELY C OVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF KALANI INDUSTRIES IS CONCERNED, WE DO NOT FIND ANY SUBSTAN CE IN THE SAME IN VIEW OF THE FACT THAT THE ADDITION MADE IN THE CASES BEFORE US WAS AFTER PASSING OF THE ORDER BY THE TRI BUNAL AND THE INQUIRY CONDUCTED BY THE DEPARTMENT THEREAFTER. THE ENQUIRY SO CONDUCTED BY THE DEPARTMENT AFTER THE RE LEVANT ASSESSMENT YEARS INVOLVED IN THE CASE OF KALANI IND USTRY, IT WAS FOUND THAT NEITHER THE SHARE APPLICANTS WERE FO UND EXISTING AT THE ADDRESS GIVEN BY THE ASSESSEE NOR A T DIFFERENT ADDRESSES SUPPLIED BY THE ASSESSEE TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS THE FACTS OF SUBSEQUENT YEAR ARE DIFFERENT, THE DECISION ARRIVED AT BY THE TRIBUNAL IN ASSESSMENT YEAR 2003-04 CANNOT BE APPLI ED TO THE ASSESSMENT YEARS 2005-06 & 2006-07, FACTS OF WH ICH ARE MATERIALLY DIFFERENT. 33. THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF LOVELY EXPORTS, THE ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE, AS PER OUR CONSIDERED VIEW, THE CASE OF LOVELY EXPORTS (SU PRA) WILL BE APPLICABLE ONLY AFTER THE IDENTITY OF THE SHARE APP LICANT IS ESTABLISHED. SINCE IN THE INSTANT APPEALS BEFORE U S, THE IDENTITY ITSELF HAS NOT BEEN ESTABLISHED, THERE IS NO JUSTIF ICATION TO APPLY THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). 33 34. THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF RATHI FINLEASE (SUPRA) HAS CLEARLY LAID DOWN THE PR OPOSITION WITH RESPECT TO CIRCUMSTANCES WHEREIN THE IDENTITY IS ES TABLISHED IN CASE THE SHARE APPLICANTS ARE COMPANIES. IT WAS HELD TH AT EVEN FILING OF CONFIRMATION OF SHARE APPLICANTS BY THE ASSESSEE WI LL NOT SERVE THE PURPOSE OF ESTABLISHING THE IDENTITY INSOFAR AS THE INQUIRY CONDUCTED BY THE ASSESSING OFFICER AND THE LETTER I SSUED BY THE ASSESSING OFFICER WERE RETURNED UNSERVED BY THE POS TAL DEPARTMENT WITH THE REMARK THAT THE ADDRESSEES ARE NOT EXISTIN G AT THE GIVEN ADDRESSES WHICH CLEARLY ESTABLISHES THAT EITHER THE SHARE APPLICANTS ARE NON-EXISTENT OR IF EXIST, THEN MERELY EXIST ON PAPERS AND NOT IN REAL SENSE, THEREFORE, THEIR IDENTITY IS NOT PROVE D. WITH ALL RESPECT, WITHIN THE TERRITORIAL JURISDICTION OF MADHYA PRADE SH, WE ARE BOUND TO FOLLOW THE PROPOSITION OF LAW LAID DOWN BY THE H ONBLE JURISDICTIONAL HIGH COURT, WHICH WAS FURTHER CONFIR MED BY HON'BLE HIGH COURT IN THE CASE OF STL EXTRUSION (SUPRA), AF TER CONSIDERING THE PROPOSITION LAID DOWN IN THE CASE OF LOVELY EXP ORT (SUPRA), THE FACTS OF WHICH ARE PARI MATERIA ESPECIALLY WHEN THE FACTS OF THE INSTANT APPEALS BEFORE US ARE IDENTICAL TO THE FAC TS WHEREIN THE HONBLE HIGH COURT HAS DECIDED IN FAVOUR OF THE REV ENUE WHEREAS THE FACTS IN THE CASE OF LOVELY EXPORTS ARE DISTING UISHABLE, AS DISCUSSED ABOVE. 35. SO FAR AS THE CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE THAT THE COMPANY CAN ONLY BE WOUND UP BY T HE ORDER OF THE HONBLE HIGH COURT AND DEATH OF THE COMPANY IS KNOWN TO THE PROCESS OF LAW AND ALSO THAT THE COMPANY IS STILL A VAILABLE ON THE WEBSITE OF THE COMPANY LAW BOARD IS CONCERNED, WE A RE NOT AGREEING WITH THIS PROPOSITION OF THE ASSESSEE BECA USE HERE IT IS NOT A CASE OF WINDING PROCESS RATHER IT IS A CASE OF AD MISSIBILITY OF CLAIM OF THE ASSESSEE U/S 68 OF THE ACT. SINCE THE SHARE APPLICANTS/SHARE SUBSCRIBERS IDENTITY IS NOT PROVED, THEREFORE, THE ASSESSEE CANNOT BE PERMITTED TO TAKE SHELTER OF TECHNICALITIES. EV EN OTHERWISE, WEBSITE EXISTENCE ON THE COMPANY LAW BOARD IS NOT A SOLE PROOF THAT IN FACT THE SHARE APPLICANTS ARE IN EXISTENCE ESPECIALLY WHEN RIGHT FROM THE ASSESSMENT STAGE TO THE STAGE OF THE TRIBUNAL (THREE STAGES) THE ASSESSEE DID NOT PROVE THE IDENTITY OF THE SHARE APPLICANTS. TECHNICALITIES ALSO HELP THOSE WHO ARE WITH CLEAN HANDS. HOWEVER, WE ARE IN AGREEMENT WITH THE ARGUME NT OF THE ASSESSEE THAT THE WINDING UP POWERS OF A COMPANY LI ES WITH THE HONBLE HIGH COURT BUT THIS ISSUE IS NOT BEFORE US, THEREFORE, WE ARE REFRAINING OURSELVES TO COMMENT FURTHER. IT WAS FAI RLY ACCEPTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE PRESEN T APPEALS MERELY THE ASSESSEE FILED CERTAIN DOCUMENTS WHICH DID NOT PROVE THE IDENTITY BUT DID NOT PRODUCE THE SHARE APPLICANTS/S UBSCRIBERS. AT THE SAME TIME, THE LEARNED CIT DR TIME AND AGAIN IS HARPING THAT THE SHARE APPLICANTS ARE MERELY PAPER COMPANIES. TH EREFORE, FROM 34 THIS ANGLE ALSO, WE ARE NOT CONVINCED WITH THE ARGU MENT OF THE ASSESSEE. WITH REGARD TO THE CONTENTION OF LD. AR T HAT COPY OF THE INQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS FURN ISHED TO THE ASSESSEE ONLY ONE DAY PRIOR TO THE COMPLETION OF AS SESSMENT, WE FOUND THAT THE ASSESSEE HAS GOT FULL OPPORTUNITY TO SUBSTANTIATE ITS CLAIM AND NEGATE THE REPORT BEFORE THE LD. CIT(A) B UT THE ASSESSEE GROSSLY FAILED TO REBUT THE REPORT REGARDING NON-ES TABLISHMENT OF IDENTITY OF SHARE APPLICANTS. THE LD. CIT(A) HAS GO T CO-TERMINUS POWERS TO DO WHAT THE ASSESSING OFFICER HAS FAILED TO DO. PROCEEDIGNS BEFORE LD. CIT(A) IS ALSO EXTENSION OF ASSESSMENT PROCEEDINGS IN ADDITION TO THE APPELLATE PROCEEDING S. HOWEVER, INSPITE OF FULL OPPORTUNITY THE ASSESSEE FAILED TO REBUT THE CONTENTS OF THE REPORT WHICH INDICATED THAT NO SHAREHOLDERS EXIST IN THE NAME OF THE COMPANIES SO PROVIDED BY THE ASSESSEE. EVEN THOUGH, THE REPORT RELIED BY THE ASSESSING OFFICER WAS IN R ESPECT OF ANOTHER ASSESSEE BUT THE FACT REMAINS THAT THE INQUIRY WAS IN THE CASE OF SAME SHARE SUBSCRIBERS I.E. M/S. HINDUSTAN CONTINEN TAL LTD. & M/S. OPTIMATES TEXTILES IND. LTD. UNDER THESE CIRCUMSTAN CES, THE INQUIRY CONDUCTED IN RESPECT OF M/S. HINDUSTAN CONTINENTAL LTD. & M/S. OPTIMATES TEXTILES IND. LTD. WHICH ARE COMMON APPLI CANTS IN THE CASE OF ALL THE ASSESSEES BEFORE US, COULD NOT BE S AID TO BE A RELEVANT AND NOT CONCERNING TO THE ASSESSEE IN THE INSTANT CASES. 36. EVEN IF THE CASES RELIED UPON BY THE LD. COUNS EL FOR THE ASSESSEE, AS MENTIONED/CITED/DISCUSSED IN THE PRECE DING PARAS OF THIS ORDER LIKE DIVINE LEASING & FINANCE LIMITED, DW ARKADHEESH INVESTMENT PRIVATE LIMITED, GANGOR INVESTMENT LIMIT ED, K.C. FIBRES LIMITED, DOLPHIN CANPACK LIMITED, SHREE BARKHA SYNT HETICS (RAJ.), DOWN TOWN HOSPITALS PRIVATE LIMITED, ILLAC INVESTME NTS PRIVATE LIMITED, ROHINI BUILDERS AND SHREE BARKHA SYNTHETIC S (RAJ.) (SUPRA) ARE CONSIDERED, THE HONBLE COURTS HAVE CLEARLY HEL D THAT AT LEAST THE ASSESSEE HAS TO POVE THE IDENTITY/EXISTENCE OF THE PERSON IN WHOSE NAMES SHARE APPLICATIONS ARE RECEIVED MEANING THEREBY THE BURDEN LIES ON THE ASSESSEE IS TO ESTABLISH THE IDE NTITY/EXISTENCE OF SUCH SHARE HOLDINGS AND ONCE IT IS ESTABLISHED, THE ASSESSEE IS NOT REQUIRED TO PROVE ANYTHING FURTHER. THEREFORE, THE SE JUDICIAL PRONOUNCEMENTS ARE IN FAVOUR OF THE REVENUE AND MAY NOT HELP THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT PROVED THE ID ENTITY OF SUCH SHARE APPLICANTS. 37. THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE TO THE EFFECT THAT THE DECISION OF RATHI FINLEASE BY THE JURISDIC TIONAL HIGH COURT WAS RENDERED MUCH PRIOR TO THE DECISION OF THE SUPR EME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) THEREFORE, THE P ROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN RATHI FINL EASE CANNOT BE APPLIED AFTER THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF LOVELY EXPORTS, HAVE NO LEGS TO STAND INSOFAR AS THE JURISDICTIONAL HIGH COURT IN THE CASE OF STL EXTRUSION WHEREIN CAS E OF LOVELY 35 EXPORT WAS RELIED ON, DULY APPROVED ITS PREVIOUS PR OPOSITION LAID DOWN IN CASE OF RATHI FINLEASE. HE FURTHER SUBMITTE D THAT JURISDICTIONAL HIGH COURT IN THE CASE OF ACIT VS. S HREE KELA PRAKASHAN PRIVATE LIMITED AFFIRMED THE DECISION OF THE TRIBUNAL REPORTED AT (2010) 14 ITJ 539 DATED 8.10.2009, THER EFORE, THE LATER DECISION HAS TO BE FOLLOWED. AS PER OUR CONSIDERED VIEW, THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE IS WHOLL Y MISPLACED INSOFAR AS DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) ITSELF PRESUPPOSES THE ESTABLISHMEN T OF IDENTITY AS A PRE-CONDITION FOR NOT MAKING ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. IN THE CASE OF SHRI KELA PRAKASHAN PRIVAT E LIMITED, THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE A SSESSEE HAS PROVED THE IDENTITY OF THE SUBSCRIBERS. THEREFORE, NO ADDITION WAS WARRANTED IN THE HANDS OF THE ASSESSEE. HOWEVER, IN THE INSTANT CASE BEFORE US, THE IDENTITY OF THE SUBSCRIBERS HAS NOT BEEN ESTABLISHED AS PER OUR DISCUSSION DETAILED HEREINAB OVE. THIS FINDING OF THE TRIBUNAL WAS AFFIRMED BY THE HON'BLE HIGH CO URT AND, THEREFORE, THE APPEAL FILED BY THE REVENUE WAS DISM ISSED, WHEREAS IN THE PRESENT APPEAL THE MATTER WAS INVESTIGATED B Y THE ASSESSING OFFICER AND EVEN THE INSPECTOR OF THE DEPARTMENT WH O WAS DIRECTED BY THE ASSESSING OFFICER TO KNOW THE WHEREABOUTS RE PORTED THAT THE SHARE SUBSCRIBING COMPANIES ARE NON-EXISTENT AND TH E ADDRESSEES GIVEN OF FOUR PLACES WERE ALSO FOUND TO BE FICTITIO US. THE SUMMONS/NOTICES ISSUED BY THE DEPARTMENT WERE ALSO RETURNED UNSERVED BY THE POSTAL DEPARTMENT WITH THE REMARK T HAT NO SUCH COMPANIES ARE EXISTING AT THE GIVEN ADDRESSES, THER EFORE, IN THE PRESENT APPEALS, THE IDENTITY OF SHARE HOLDERS WAS NOT PROVED AT ANY STAGE, CONSEQUENTLY, THE DECISION IN THE CASE O F SHRI KELA PRAKASHAN PRIVATE LIMITED IS NOT APPLICABLE BEING O N DIFFERENT FINDINGS, THEREFORE, MAY NOT HELP THE ASSESSEE. LI KEWISE, THE HON'BLE KARNATKA HIGH COURT IN THE CASE OF CIT VS. ARUNANANDA TEXTILES PRIVATE LIMITED (2011) 333 ITR 116 DEALT W ITH IDENTICAL ISSUE AND THAT TOO AFTER CONSIDERING THE DECISION I N THE CASE OF LOVELY EXPORTS PRIVATE LIMITED AND STELLER INVESTME NT LIMITED. THE HON'BLE COURT HELD AS UNDER :- IT IS NOT FOR THE ASSESSEE TO PLACE MATERIAL BEFOR E THE ASSESSING OFFICER IN REGARD TO THE CREDIT WORTHINESS OF THE S HARE HOLDERS. IF THE ASSESSEE HAS GIVEN THE ADDRESSES OF THE SHARE H OLDERS AND THEIR IDENTITY IS NOT IN DISPUTE , WHETHER THEY WERE CAPABLE OF INVESTING, THE ASSESSING OFFICER SHALL INVESTIGATE. IT IS NOT FOR THE ASSESSEE TO ESTABLISH BUT IT IS FOR THE DEPARTMENT TO INQUIRE WITH THE INVESTORS ABOUT THEIR CAPACITY TO INVEST THE AMOUNT IN THE SHARES. IF THE AFORESAID CONCLUSION IS ANALYSED, ONE FACT I S CLEAR THAT THE IDENTITY OF THE SHARE HOLDERS HAS TO BE PROVED BY T HE ASSESSEE. 36 HOWEVER, IN THE PRESENT APPEALS THE IDENTITY ITSEL F IS IN DISPUTE, THEREFORE, THE AFORESAID DECISION CLEARLY SUPPORTS THE CASE OF THE REVENUE. 38. LIKEWISE IN THE CASE OF CIT V. ASK BROTHERS ( 2011) 333 ITR 111 (KARN.) THE SHAREHOLDERS ADMITTED THE PAYME NT OF AMOUNT FOR SHARES TO BE ALLOTTED. IN THESE CIRCUMSTANCES, HON'BLE COURT HELD THAT THE AMOUNTS OF SHARE CAPITAL CANNOT BE AD DED IN THE ASSESSEES HANDS. HOWEVER, IN THE PRESENT APPEALS, THE SHARE APPLICANTS ITSELF ARE NON-EXISTENT, CONSEQUENTLY, T HERE IS NO QUESTION OF ADMITTING BY THE SHARE HOLDERS REGARDIN G MONEY INVESTED BY THEM AND THEN SHARES ALLOTTED TO THEM. THIS JUDICIAL PRONOUNCEMENT ALSO GOES AGAINST THE ASSESSEE. HON' BLE DELHI HIGH COURT IN A LATER DECISION IN VIJAY POWER GENERATORS LIMITED V. DIRECTOR OF INCOME TAX AND OTHERS (ITA NO. 514 OF 2 007) (2011) 333 ITR 119 (DEL) AT PAGE 136 THE APPEAL WAS ADMITTED O N THE FOLLOWING QUESTION OF LAW :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE INCOME TAX APPELLATE TRIBUNAL HAS ERRED IN LAW IN SUSTAINING THE ADDITION OF RS. 25,23,500/- ON ACCOUNT OF RECE IPT OF SHARE APPLICATION MONEY ? 37. THE FACTS LEADING TO THE ADMISSION OF THE AFORE SAID QUESTION WERE AS FOLLOWS :- THE ASSESSEE IN THE INCOME TAX RETURN FOR THE ASSE SSMENT YEAR 1997-98 HAD SHOWN RECEIPTS IN THE FORM OF SHARE MON EY SUBSCRIBED OF 15 PER CENT TO WHOM THE SHARES WERE LATER ON ALL OCATED. TOTAL MONEY ON THIS ACCOUNT RECEIVED BY THE ASSESSEE WAS RS. 25,23,500. THE INVESTMENT IN THESE SHARES WAS RANGING FROM RS . 1 LAKH TORS. 2.5 LAKHS. IN ORDER TO VERIFY THE GENUINENESS OF TH ESE TRANSACTIONS, THE ASSESSING OFFICER ISSUED SUMMONS TO THESE PARTI ES WHICH WERE RECEIVED BACK EITHER WITH THE REMARKS INCOMPLETE A DDRESS OR IN SPITE OF BEST EFFORTS THE ADDRESS NOT FOUND OR NO T MET OR NO SUCH PERSON OR NOT FOUND, ETC. THE ASSESSING OF FICER THEREAFTER ASKED THE ASSESSEE TO PRODUCE THESE PERSONS WHO HAD INTRODUCED THE SHARE CAPITAL IN THE COMPANY. THE ASSESSEE WAS ALSO ASKED TO FURNISH CHEQUE NUMBERS/DRAFT NUMBERS FOR PAYMENT OF SHARE APPLICATION MONEY ALONG WITH THE NAMES OF THE DRAWE E BANK AND BRANCH OF THE BANK. HOWEVER, NO DETAILS WERE FURN ISHED DESPITE VARIOUS OPPORTUNITIES. THE ASSESSEE COULD NOT EVEN IDENTIFY THE ENTRIES IN THE BANK ACCOUNT REGARDING THE RECEIPTS OF THE SHARE APPLICATION MONEY NOR COULD HE PRODUCE THE RELEVANT LEDGER FOR VERIFYING THE RECEIPTS, ACCORDING TO THE ASSESSING OFFICER. ULTIMATELY, THE ASSESSEE PRODUCED FIVE PERSONS WHOS E STATEMENTS WERE RECORDED. THE ASSESSEE DID NOT CROSS EXAMINE THESE PERSONS. THEY DID NOT FURNISH ANY PROOF OF THEIR IDENTITY IN THE FORM OF RATION 37 CARD, ELECTION CARD OR PASSPORT DESPITE REQUEST BY THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER ANALYSING THE STATEMENTS OF THESE PERSONS OBSERVED THAT THESE FIVE PERSONS WERE SMALL AGRICULTURISTS AND HAD NO MEANS TO MAKE INVESTMENT IN THE COMPANY. 38. IN THESE CIRCUMSTANCES, THE ENTIRE RECEIPT OF RS.25,23,500/- IN RESPECT OF THESE FIVE PERSONS WAS TREATED AS UNEXPLAINED INVESTMENT AND MADE THE ADDITION U/S 68 OF THE ACT. 39. THE LEARNED COMMISSIONER RE-EXAMINED THE ENTIR E ISSUE ANALYSING THE EVIDENCE IN THE LIGHT OF THE JU DGMENT IN THE CASE OF STELLER INVESTMENT LIMITED AND SOPHIA FINANCE LI MITED (SUPRA) AND ULTIMATELY CONFIRMED THE ADDITION. ON FURTHER APPEAL, THE TRIBUNAL AFFIRMED THE DECISION OF LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) IN THE FOLLOWING MANNER :- 15. HAVING CAREFULLY EXAMINED THE MATERIAL AVAILAB LE ON RECORD AND THE ORDERS OF THE LOWER AUTHORITIES, WE FIND TH AT SHARES WERE NOT QUOTED ON THE STOCK EXCHANGE AND IT WAS SUBSCRI BED BY THE PERSONS WHO WERE KNOWN TO THE ASSESSEE BUT DURING T HE COURSE OF HEARING DESPITE VARIOUS OPPORTUNITIES THE ASSESSEE COULD NOT PRODUCE THEM FOR VERIFICATION NOR WAS ANY EVIDENCE FILED WITH REGARD TO THEIR FINANCIAL STATUS. OUT OF 15 SUBSCR IBERS, 5 SUBSCRIBERS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND DURI NG THE COURSE OF THE EXAMINATION IT WAS ADMITTED THAT THEY WERE S MALL AGRICULTURISTS AND WERE CULTIVATING THE AGRICULTURA L LAND AFTER TAKING IT ON LEASE FROM OTHER AGRICULTURISTS. NO EVIDENCE REGARDING THE AGRICULTURAL HOLDINGS WERE PRODUCED BEFORE THE ASSE SSING OFFICER NOR HAVE THEY FILED ANY EVIDENCE WITH REGARD TO THE IR FINANCIAL SOUNDNESS WHEREAS THE INVESTMENT IN SHARES WERE MAD E BETWEEN RS. 1 LAKH TO RS. 2.5 LAKHS. COPY OF THE STATEMENT ARE (SIC. IS) PLACED ON RECORD AND FROM ITS PERUSAL ONE WOULD FIND THAT ALL THESE 5 PERSONS ARE OF ORDINARY STATUS AND THEY HAVE NO MEA NS TO INVEST A HUGE SUM IN SHARES WITH THE ASSESSEE. 16. SO FAR AS THE LEGAL POSITION AND THE JUDGMENT O F THE APEX COURT IN THE CASE OF STELLER INVESTMENT LTD. (2001) 251 ITR 263 IS CONCERNED, WE ARE OF THE VIEW THAT THE RATIO LAID D OWN IN STELLER INVESTMENT LTD. (2001) 251 ITR 263 IS APPLICABLE ON LY IN THOSE CASES WHERE THE ASSESSEE IS A LIMITED COMPANY AND THE SHA RES WERE QUOTED IN THE STOCK EXCHANGE. ONCE THE SHARES ARE QUOTED IN THE STOCK EXCHANGE AND THE SUBSCRIPTION IS OPEN TO PUBL IC AT LARGE, THE ASSESSEE CANNOT HAVE CONTROL OVER THE SUBSCRIPTION AND ALSO CANNOT MAKE A VERIFICATION OF THE SUBSCRIBERS AS SUBSCRIPT ION CAN BE DONE BY ANY PERSON. BUT WHENEVER THE ISSUE IS SUBSCRIBE D WITHOUT QUOTING IT ON THE STOCK EXCHANGE BY A LIMITED OR PR IVATE LIMITED 38 COMPANY THE PRESUMPTION IS VERY STRONG AGAINST THE ASSESSEE THAT SUBSCRIPTION IS AVAILABLE ONLY TO THE CLOSELY CONNE CTED PERSONS OF THE ASSESSEE. ONCE THE INFERENCE IS AGAINST THE AS SESSEE THAT THE ISSUE IS SUBSCRIBED BY ITS CLOSELY CONNECTED PERSON S, THE ONUS IS UPON THE ASSESSEE TO PROVE THE IDENTITY (SIC. IDENT IFICATION) OF THE SUBSCRIBERS AND THEIR CREDIT WORTHINESS. THEIR LORD SHIPS OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF BHOLA SH ANKAR COLD STORAGE P. LTD. V. JOINT CIT (2004) 270 ITR 487 HAV E EXAMINED THE JUDGMENT OF THE APEX COURT IN THE CASE OF STELLER I NVESTMENT LTD. AND THAT OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF SOPHIA FINANCE LTD (1994) 205 ITR 98 AND HAVE HELD THAT IN THE CASE OF STELLER INVESTMENT LTD. THE RATIO LAID DOWN BY THE FULL BENCH OF THE DELHI HIGH COURT WAS NOT OVERRULED AND IT STILL HOL DS THE FIELD. WHENEVER THE ISSUE WAS SUBSCRIBED BY CLOSELY CONNEC TED PERSONS OF THE ASSESSEE AND THE ASSESSEE HAS FAILED TO PROVE T HE IDENTITY AND CREDITWORTHINESS THE ADDITION UNDER SECTION 68 CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN THE INSTANT CASE, THE AS SESSEE COULD NOT PLACE ANY EVIDENCE ON RECORD TO PROVE THE IDENTITY AND THE CREDITWORTHINESS OF THE SO-CALLED SUBSCRIBERS AND T HE ASSESSING OFFICER WAS JUSTIFIED IN TREATING THIS INVESTMENT A S UNEXPLAINED AND MADE THE ADDITION UNDER SECTION 68 OF THE INCOME TA X ACT. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, WE CONFIRM THE SAME. XXX XXX XXX XXX 42. WE HAVE CONSIDERED THESE SUBMISSIONS IN SO FAR AS THE STATEMENTS OF THE PERSONS WHO ARE PRODUCED ARE CONC ERNED, THEY ARE GONE INTO AND ANALYSED BY THE THREE AUTHORITIES BELOW ON THE BASIS OF WHICH FINDING OF FACT IS ARRIVED AT THAT N EITHER THEIR IDENTITY IS ESTABLISHED NOR THEIR CAPACITY TO INVEST THIS KI ND OF MONEY IS PROVED. THEY ARE ALL AGRICULTURISTS AND HAD NOT PRO DUCED A SINGLE DOCUMENT TO SUPPORT THEIR VERSION. THIS IS A FINDIN G OF FACT AND THERE IS NO REASON TO INTERFERE WITH THE SAME. LEA RNED COUNSEL FOR THE REVENUE HAD DRAWN OUR ATTENTION TO VIEW ALL THE SE STATEMENTS. ONE MR. SUKH LAL SINGH IN HIS STATEMENT HAD STATED THAT HE HAD PURCHASED THE SHARES OF RS. 1,90,000. OUT OF THE S HARE MONEY, HE HAD PAID RS. 70,000 OUT OF HIS OWN SOURCE AND RS. 1 ,20,000 WAS RECEIVED BY HIM FROM HIS FRIENDS AND WAS PAID IN MA NY INSTALMENTS. LIKEWISE ONE MR. VIJAY KUMAR WHO ALSO PURPORTEDLY P URCHASED THE SHARES OF RS. 1.90 LAKHS STATED THAT THE PAYMENTS W ERE MADE BY HIM IN CASH IN MANY INSTALMENTS. HE ALSO STATED TH AT HE PERSONALLY 39 KNEW THE DIRECTORS OF THE COMPANY AND HAD VERY OLD RELATION WITH HIM. ON THE BASIS OF SUCH STATEMENT WITHOUT AN IOTA OF DOCUMENTARY EVIDENCE TO SUPPORT, WE ARE OF THE OPIN ION THAT THE FINDINGS OF THE AUTHORITIES BELOW CANNOT BE TREATED AS PERVERSE. IT IS ON PROPER ANALYSIS OF THE STATEMENTS OF THESE PE RSONS WHICH WERE RECORDED BY THE ASSESSING OFFICER. WHEN WE KEEP IN MIND THE PRINCIPLE OF LAW LAID DOWN IN THE RATIO IN THE AFOR ESAID DECISIONS AND APPLY THE SAME TO THE FACTS OF THIS CASE, IT IS DIF FICULT TO FIND FAULT WITH THE APPROACH OF THE TRIBUNAL. WE HAVE TO KEEP IN MIND THAT THE RATIO IN A DECISION CANNOT BE APPLIED IN EACH C ASE. THE FACTS AND CIRCUMSTANCES OF EACH CASE ARE TO BE WEIGHED AND EX AMINED AS TO WHETHER A PARTICULAR RATIO DECIDED IN A PARTICULAR CASAE COULD BE APPLIED. AS NOTED ABOVE, THE INITIAL ONUS IS UPON T HYE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MIS CHIEF OF SECTION 68 OF THEACT. THESE ARE : (I) THE IDENTITY OF INVES TORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS, AND (III) THE GENUINE NESS OF THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE IT IS ONLY THEN THE DEPARTMENT IS REQUI RED TO UNDERTAKE FURTHER EXERCISE AS DISCUSSED ABOVE. IN THE INSTAN T CASAE, NO SUCH DOCUMENTS ARE FILED AND NO STEPS TAKEN BY THE ASSES SEE WHICH COULD ESTABLISH THE AFORESAID THREE INGREDIENTS. ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENT, ETC. IS GIVEN BUT THE ASSESSEE HAS NOT DONE ANYTHING TO PRO VE THESE BANK ACCOUNTS. ON THIS EVIDENCE PRODUCED BY THE ASSESSE E REMAND REPORT WAS CALLED FOR AND THE ASSESSING OFFICER IN HIS REMAND REPORT DATED DECEMBER 23, 2003 SUBMITTED AS UNDER :- NONE OF THE 6 ALLEGED SHAREHOLDERS PRODUCED ANY D OCUMENTS IN SUPPORT OF THEIR IDENTITY. THE FACT WAS INTIMAT ED TO THE ASSESSEE VIDE ORDER SHEET ENTRIES DATED JUNE 13, 2002 AND MA RCH 17, 2003 . THEY ARE NOT ASSESSED TO TAX. THEY HAVE NOT PRODUCE D ANY DOCUMENTARY EVIDENCE SHOWING THAT THEY ARE CAPABLE OF SAVING/INVESTING ANY AMOUNT AT ALL. IF THE PERSONS PRODUCVED ARE NOT CARRYING RELEVANT DOCUMENTS TO ESTABLISH THEIR IDENTITY, CREDITWORTHINESS AT THE TIME OF RECORDING OF THE ST ATEMENTS AND FURNISHING PHOTO COPY OF SOME DOCUMENTS AFTER A GAP OF SUBSTANTIAL PERIOD, IT IS NOT POSSIBLE TO VERIFY IT S CORRECTNESS UNLESS THE CONCERNED PERSONS ARE PRODUCED WITH NECESSARY D OCUMENTARY EVIDENCE (IN ORIGINAL) IN SUPPORT OF THEIR IDENTITY AND CREDITWORTHINESS. THE ASSESSEE HAS NOT EVEN FURNISHED BASIC REQUIREM ENTS OF SHARE CAPITAL I.E. CHEQUE NUMBER, DATE, AMOUNT(S), DETAIL S OF DRAWEE BANK, ETC. THE ASSESSEES BANK ACCOUNT WAS ALSO NO T PRODUCED. 40 HENCE, THE ASSESSEES CLAIM REGARDING INVESTMENT BY THE SHAREHOLDERS REMAINED UNVERIFIABLE. NO COMMENTS CA N NOW BE OFFERED AT THIS STAGE WITHOUT NECESSARY VERIFICATIO N. PROOF OF IDENTITY PRODUCED AT A LATER STAGE CANNOT BE VERIFI ED IN THE ABSENCE OF CONCERNED PERSONS ORIGINAL DOCUMENTS. 45. THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) CLEARLY DEMONSTRATES THAT THIS REMAND REPORT WAS SENT TO TH E ASSESSEE WHO HAD SUBMITTED HIS REPLY DATED FEBRUARY 10, 2004 WHICH IS EVEN REPRODUCED IN THE ORDER AND THEREAFTER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DISCUSSED THE SAME IN THE L IGHT OF CERTAIN DECISIONS CITED BEFORE HIM AND CAME TO THE CONCLUSI ON THAT THE ASSESSEE HAD NOT GIVEN SATISFACTORY EVIDENCE TO DIS CHARGE THE ONUS. IT HAD MERELY GIVEN NAMES OF THE PARTIES WITHOUT AN YTHING MORE. THAT WOULD NOT BE SUFFICIENT COMPLIANCE. EVEN THE BANK STATEMENT OF THE ASSESSEE WHICH WAS SUBMITTED HAS NOT BEEN PR OVED. 46. FOR ALL THESE REASONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAD NOT BEEN ABLE TO DISCHARGE THE ONUS PROBANDI AN D ADDITION WAS RIGHTLY MADE. WE, THEREFORE, ANSWER THE QUESTION IN THE NEGATIVE AND DISMISS THIS APPEAL OF THE ASSESSEE. 40. IF THE AFORESAID CONCLUSION DRAWN BY THE HON'B LE HIGH COURT IS KEPT IN JUXTAPOSITION WITH THE FACTS OF TH E PRESENT APPEAL, ONE FACT IS CLEARLY OOZING OUT THAT THE ASSESSEE HA S NOT DISCHARGED ITS ONUS TO THE SATISFACTION OF THE ASSESSING OFFIC ER AND EVEN DID NOT PROVE THE IDENTITY OF THE SHARE APPLICANTS. MERELY GIVING THE NAMES OF SUCH SHARE APPLICANTS IS NOT ENOUGH ESPECIALLY W HEN THESE APPLICANTS WERE FOUND NON-EXISTENT, THEREFORE, THIS JUDICIAL PRONOUNCEMENT CLEARLY GOES AGAINST THE ASSESSEE. I T IS PERTINENT TO MENTION HERE THAT WHILE COMING TO THE AFORESAID CON CLUSION THE HON'BLE COURT ALSO DISCUSSED THE DECISIONS LIKE AKJ GRANITES PRIVATE LIMITED; 301 ITR 291 (RAJ), CIT V. ARUNALANDA TEXTI LES PVT. LTD. (2011) 333 ITR 116 (KARN.) (PARA 17) ORDER DATED 2 ND MARCH, 2010, CIT V. ASK BROTHERS (2011) 333 ITR 111 (KARN.) ORDE R DATED 18 TH FEBRUARY, 2010 . IN BOTH THESE CASES, THE HON'BLE KARNATAKA HIGH COURT HAS DULY DISCUSSED THE DECISION IN LOVELY EXP ORTS PVT. LTD. AND STELLER INVESTMENT LTD. (SUPRA) MEANING THEREBY THA T BOTH THESE DECISIONS WERE RENDERED AFTER THE PRONOUNCEMENTS OF DECISIONS FROM HON'BLE APEX COURT IN LOVELY EXPORTS PRIVATE L IMITED (SUPRA). AS DISCUSSED IN OTHER PARAS OF THIS ORDER, SO FAR A S THE DECISION IN THE CASE OF M/S STL EXTRUSION VS. DCIT (2010) 15 IT J 872 (I.T.A.T., INDORE) IS CONCERNED, THAT DECISION WAS RENDERED BY THE BENCH ON THE FACTS THAT SINCE THE ASSESSEE PROVED THE IDENTI TY OF THE INVESTORS, THEREFORE, IT WAS HELD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY WHEREAS IN THE PR ESENT APPEALS, THE EXISTENCE/IDENTITY OF SHARE SUBSCRIBERS WAS NOT PROVED, 41 CONSEQUENTLY, THESE JUDICIAL PRONOUNCEMENTS RATHER HELPS THE REVENUE AND NOT THE ASSESSEE. 41. EVEN OTHERWISE, IF THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF LOVELY EXPORTS PRIVATE LI MITED, WHILE DISMISSING THE SPECIAL LEAVE PETITION, IT IS CLEAR THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO PROVE THE IDENTITY O F SHARE SUBSCRIBERS AND ONCE THE IDENTITY IS PROVED, IN CAS E OF BOGUS INVESTMENT, ADDITION CAN BE MADE IN THEIR INDIVIDUA L CAPACITY AND NOT IN THE CASE OF THE COMPANY. HOWEVER, IN THE PR ESENT APPEALS EVEN THE IDENTITY OF SUCH SHARE HOLDERS IS NOT PROV ED AS WE HAVE DISCUSSED ABOVE, THEREFORE, THE INITIAL ONUS HAS NO T BEEN DISCHARGED BY THE ASSESSEE ESPECIALLY WHEN THE ASSESSEE WAS CO NFRONTED WITH THE FINDING OF THE COMMISSION (INSPECTOR), SUMMONS/ NOTICES RETURNED UNSERVED AND THE ADDRESSES GIVEN BY THE AS SESSEE ITSELF THAT TOO AT FOUR PLACES WERE FOUND TO BE FICTITIOUS . THE ASSESSEE HAS NOT GIVEN SATISFACTORY EVIDENCE TO DISCHARGE TH E ONUS. IT HAS MERELY GIVEN THE NAMES OF FICTITIOUS PARTIES AND IN OUR HUMBLE OPINION THIS IS NOT A SUFFICIENT COMPLIANCE, THEREF ORE, THE DECISION FROM HON'BLE SUPREME COURT IN THE CASE OF LOVELY EX PORTS MAY NOT HELP THE ASSESSEE. IN A LATER DECISION DATED 25 TH OCTOBER, 2010 THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T V. STL EXTRUSION (P) LIMITED; (2011) 17 ITJ 648 (MP) EVEN CONSIDERED VARIOUS DECISIONS INCLUDING THE OFF-QUOTED DECISION OF DIVI NE LEASING & FINANCE LIMITED, RATHI FINLEASE LIMITED, STELLER IN VESTMENT LIMITED AND OF COURSE LOVELY EXPORTS PRIVATE LIMITED WHEREI N THE ASSESSEE FILED LIST OF ALL SUBSCRIBERS AND GAVE AFFIDAVITS O F ALL SUBSCRIBERS IN THE FORM OF CONFIRMATIONS AND IN THAT SITUATION THE HON'BLE COURT HELD THAT THE ASSESSEE IS REQUIRED TO ESTABLISH THE IDENTITY AND SOURCE OF CREDITS AND FURTHER HELD THAT IF THE CONF IRMATION IS GIVEN, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE WHER EAS IN THE CASE OF THE ASSESSEE THE SHARE APPLICANTS WERE FOUN D TO BE NON- EXISTENT, THEREFORE, THIS JUDICIAL PRONOUNCEMENT FR OM THE HON'BLE JURISDICTIONAL HIGH COURT CLEARLY GOES AGAINST THE ASSESSEE. 4. IF THE TOTALITY OF FACTS MENTIONED IN THE ASSESS MENT ORDER, IMPUGNED ORDER, CONCLUSION DRAWN IN THE ORDER OF TH E TRIBUNAL IN THE CASE OF M/S AGRAWAL COAL CORPORATION PRIVATE LI MITED AND THE ASSERTION MADE BY THE RESPECTIVE LEARNED COUNSEL AR E KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND THAT THE OPTIMA TES TEXTILES INDUSTRIES LIMITED (PREVIOUSLY KNOWN AS PRIYANSH SA REE 42 INDUSTRIES) AND MONEY PENNY FINANCE LIMITED AS NON- EXISTENT COMPANIES, THEREFORE, THEIR IDENTITY IS EVEN IN DIS PUTE. THE TRANSACTION MADE WITH THE NON-EXISTENT ENTITY CANNO T BE SAID TO BE GENUINE RATHER A CIRCUITOUS METHOD HAS BEEN DEVI SED BY THE ASSESSEE ITSELF TO ENROUTE ITS OWN MONEY THROUGH TH ESE CAMOUFLAGE ROUTES, THEREFORE, THE BENEFIT OF THE DE CISION IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED (216 CTR 195 ) (SC) CANNOT BE EXTENDED TO THE ASSESSEE. THE TRIBUNAL WHILE CO NCLUDING IN THE CASE OF M/S AGRAWAL COAL CORPORATION LIMITED (S UPRA) HAS ALREADY DELIBERATED UPON VARIOUS DECISIONS FROM THE HONBLE HIGH COURTS AS WELL AS FROM THE HONBLE APEX COURT. IDEN TICAL IS THE SITUATION WITH RESPECT TO UNEXPLAINED INCOME OF RS. 11 LACS CLAIMED TO BE RECEIVED AS SHARE APPLICATION MONEY F ROM PRAMILA INVESTMENT & FINANCE LIMITED. THE ASSESSING OFFICER FOUND CONSIDERABLE AMOUNTS OF CASH TRANSACTION WITH RESPE CT TO THIS COMPANY. INSPITE OF SUFFICIENT OPPORTUNITIES AND S UMMONS ISSUED U/S 131 OF THE ACT TO PRAMILA INVESTMENT & F INANCE LIMITED, THE IDENTITY AND CREDIT WORTHINESS WAS NOT ESTABLISHED. THIS COMPANY NEVER COOPERATED IN THE ASSESSMENT PRO CEEDINGS. IT IS NOT THE CASE THAT NO OPPORTUNITY WAS PROVIDED TO THE CLAIMED SHARE APPLICANT. RIGHT FROM THE ASSESSMENT STAGE, F IRST APPELLATE 43 STAGE AND EVEN BEFORE THE TRIBUNAL, NO EFFORT WAS M ADE BY THE ASSESSEE TO PROVE THE REQUIRED INGREDIENTS OF SECTI ON 68 OF THE ACT, THEREFORE, WE FIND NO INFIRMITY IN THE STAND O F THE CIT(A). IT IS AFFIRMED. FINALLY, THE APPEAL OF THE ASSESSEE IS HAVING NO M ERIT, THEREFORE, DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 12 TH JULY, 2012. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 16 TH JULY, 2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-121313 44
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