ASHTECH INDUSTRIES PVT. LTD., NEW DELHI V. DCIT, Circle-3(2), NEW DELHI

ITA 2332/DEL/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9290 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Share purchase agreement; Principle of natural justice; Additional evidence; Tangible material; Corroborative evidences; Accommodation entries; Competent authority; Reason to believe; Documents seized; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 142(1); 143(1); 147; 131; 68; 148

Judgement Text

1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 2332/DEL/2018 ASSESSMENT YEAR: 2009-10 ASHTECH INDUSTRIES PVT. LTD., VS. DCIT, CIRCLE 3(2 ), D-49, MANSAROVAR PARK, NEW DELHI SHAHDARA, DELHI 110 032 (PAN: AAECA0120G) (ASSESSEE) (RESPONDENT) ASSESSEE BY: SH. KAPIL GOEL, ADVOCATE REVENUE BY: SH. SRIDHAR DORA, SR. DR. ORDER PER H.S. SIDHU, JM THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 08.3.2018 PASSED BY THE LD. CIT(A), NEW DELHI RELATING TO ASSESSME NT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THE INITIATION OF PROCEEDINGS U/S 148 IS WITHOUT JURISDICTION. 2. THE INITIATION OF ACTION U/S 148 IS BAD IN LAW, BEI NG BASED ON BALD ALLEGATIONS EQUATING THE SAME WITH TANGIBLE MATERIAL. 2 | P A G E 3. THE INITIATION OF ACTION U/S 147 ON THE BASIS OF SEARCH MATERIAL FOUND DURING SEARCH OF THIRD PARTY I.E. JAIN BROTHERS, IS CONTRARY TO LAW IN VIEW OF NON- OBSTANTE CLAUSE IN S. 153A/153C, SPECIFICALLY PROHIBITING ACTION U/S. 147, INTER ALIA. 4. EVEN OTHERWISE, THE INITIATION OF PROCEEDINGS U/S 1 48 AND THE CONSEQUENT ASSESSMENT U/S 147 IS CONTRARY TO LAW IN THE ABSENCE OF ANY INCRIMINATING MATERIAL T O FORM REASON TO BELIEVE, AS PER THE REPORT OF INVESTIGATION WING & AO RELIED ON, WHICH ONLY DIRECTS THE AO TO EXAMINE THE DETAILS AND AFTER THIS EXAMINATION ONLY TO DETERMINE WHETHER THERE COULD BE ANY JUSTIFICATION FOR INITIATION OF ACTION U/S 147. THUS, THE ISSUE OF NOTICE U/S. 148 AND THE CONSEQUENT ASSESSMENT U/S 147 IS WITHOUT THE AUTHORITY OF LAW AND DO NOT PROVIDE JURISDICTION TO THE AO TO MAKE RE-ASSESSMENT U/S 147. 5. THAT THE ASSESSMENT U/S 147 IS UNLAWFUL, ARBITRARY AND WITHOUT JURISDICTION ON ACCOUNT OF LACK OF APPLICATION OF MIND AND LACK OF APPROVAL U/S.151 FROM COMPETENT AUTHORITY. 3 | P A G E 6. THAT THE ASSESSMENT U/S 147 IS CONTRARY TO LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN GKN DRIVESHAFT CASE, WITHOUT FOLLOWING THE PROCEDURE LAID DOWN BY THE HON'BLE SUPREME COURT. 7. THAT THE ASSESSMENT IS BAD IN LAW BEING MADE WITHOUT FOLLOWING THE PRINCIPLES OF EQUITY AND JUSTICE AND DENYING THE ASSESSEE OF PROPER OPPORTUNITY TO DEFEND, WITHOUT SUPPLYING THE COPIES OF MATERIAL RELIED ON AND CROSS EXAMINATION OF THE WITNESSES WHOSE STATEMENTS HAVE BEEN RELIED UPON TO INITIATE ACTION AND COMPLETE ASSESSMENT. 8. THAT THE ID. AO HAS ERRED ON FACTS AND IN LAW IN MAKING THE ADDITION OF RS. 1,85,00,000/- ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRY, MERELY FOLLOWING THE INVESTIGATION REPORT, IGNORING THE VOLUMINOUS EVIDENCE TO THE CONTRARY BROUGHT ON RECORD BY THE ASSESSEE. THE ADDITION IS MADE ON THE BASIS OF CONJECTURES AND SURMISES. 9. THAT THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING THE ORDER OF ID. AO BOTH ON LEGAL GROUNDS AND ON MERITS. 4 | P A G E 10. THAT THE ID. CIT(A) HAS ERRED IN LAW IN TREATING THE VAGUE AND GENERAL INFORMATION OF INVESTIGATION WING AND OF THE AO OF THE SEARCHED PARTY M/S JAIN BROTHERS AS SACROSANCT WITHOUT EXAMINATION WITH REFERENCE TO THE SEIZED MATERIAL AND THE FACTS OF THE ASSESSEE'S CASE. 11. THAT THE ID CIT(A) HAS ERRED IN IMPORTING APPROV AL OF THE HIGHER AUTHORITIES U/S 151 ON ASSUMPTIONS WITHOUT EXISTENCE OF THE ACTUAL CORRESPONDENCE REGARDING APPROVAL AND WITHOUT CONFRONTING THE ASSESSEE WITH THE SAME.. 12. THE APPELLANT CRAVES LEAVE AND SANCTION OF THE HON'BLE ITAT TO FILE ADDITIONAL EVIDENCE, IF SO REQUIRED FOR PROPER PROSECUTION OF THE CASE, BASED ON FACTS AND CIRCUMSTANCES, WHICH HAS NOT BEEN OR COULD NOT BE ADDUCED OR FILED BEFORE LOWER AUTHORITIES EITHER BECAUSE PROPER AND SUFFICIENT OPPORTUNITY WAS NOT PROVIDED OR BECAUSE IT WAS NOT SOLICITED OR ITS NEED WAS NOT APPRECIATED. 13. THE APPELLANT CRAVES LEAVE TO AND PERMISSION OF THE HON'BLE ITAT TO ADD TO OR ALTER ANY OF THE GROUNDS 5 | P A G E OF APPEAL AT ANY TIME UP TO THE FINAL DECISION OF THE APPEAL. 14. THE ASSESSMENT MAY PLEASE BE SET ASIDE AS NULL AND VOID AND ADDITION OF RS. 1,85,00,000/- BE DELETED OR SUCH OTHER RELIEF AS YOUR HONORS MAY DEEM FIT UNDER THE CIRCUMSTANCES OF THE CASE, BE ALLOWED. 2. THE ASSESSEE HAS ALSO FILED THE FOLLOWING ADDITIONAL GROUND UNDER RULE 11 OF THE ITAT RULES. THAT IMPUGNED ASSESSMENT ORDER PASSED BY THE AO U/S. 147/143(3) OF THE ACT IS INVALID AND VOID ABNITIO FOR WANT OF VALID NOTICE U/S. 143(2) AS PER LAW AS EVIDENT FROM FACT THAT WHEN RETURN IN RESPONSE TO NOTICE U/S. 148 WAS ADMITTEDLY FILED ON 27.4.2016 NOTICE U/S. 143(2) IS ISSU ED ON VERY SAME DAY THAT IS 27.4.2016 WHICH SHOWS NON APPLICATION OF MIND IN ISSUING NOTICE U/S. 143(2) AND THEREAFTER IN FRAMING THE ASSESSMENT AND ACCORDINGLY ALL PROCEEDINGS ARE NULLITY. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ON 29.9.2009 DECLARING AN INCOME OF RS. 3,39,85,750/-. THE ASSESSMENT U/S. 143(3)/147 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS MADE ON 24.11.2016 AT A TOTAL INCOME OF RS. 5,24,85,750/-. I N THE ASSESSMENT 6 | P A G E ORDER, AO ADDED RS. 1,85,00,000/- ON ACCOUNT OF ACCOMMOD ATION ENTRIES U/S. 68 OF THE I.T. ACT. AGGRIEVED WITH THE ADDITION , THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE ITS IMPUGNED ORDER DATED 8.3.2016 DISMISSED THE APPEAL OF THE ASSESSEE. NOW AGAINST THE IM PUGNED ORDER, ASSESSEE IS IN APPEAL BEFORE US. 4. LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ADD ITIONAL GROUND IN IDENTICAL FACTS HAS BEEN ACCEPTED AND ASSESSMENT U/S. 143( 3) OF THE ACT WAS PASSED WITHOUT PROPER ISSUE AND SERVICE OF NOTICE U/S. 143(2) OF THE ACT, WHICH WAS LATER QUASHED BY THE ITAT AND THE HONBLE HIGH COURT IN THE FOLLOWING CASES:- I) HONBLE DELHI ITAT IN CASE OF MICRON ENTERPRISES PVT. LTD . VS. ITO IN I.T.A .NO. 901/DEL/2016 (A.Y .2006-07) ORDER DATED 14/05/2018 II) HONBLE DELHI ITAT IN HARSH BHATIA CASE ITA NOS. 1262/& 1263/DEL/2017 [A.YS. 2008-09 & 2009-10] ORDER DATED 17.10.2017. III) HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOM E TAX VS. SOCIETY FOR WORLDWIDE INTER BANK FINANCIAL, TELECOMMUN ICATIONS IN ITA NO. 441/2010, REPORTED AT 323 ITR 249 IV) DELHI HIGH COURT DECISION IN THE CASE OF SILVER LINE REP ORTED AT 383 ITR 455. 5. ON THE MERITS OF THE CASE, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ADDITION MADE U/S 68 OF THE ACT IS FOR MERE REASON OF N ON PRODUCTION OF DIRECTORS IN PERSON OF SHARE HOLDER COMPANIES SAME CANNOT BE A JUSTIFIED GROUND TO DRAW ADVERSE INFERENCE U/S 68 OF THE ACT WHER E THOSE SHARE 7 | P A G E HOLDERS ARE FOUND TO BE EXISTING AND IDENTIFIED IN DE TAIL AS SUMMONS HAVE BEEN DULY SERVED ON THEM. MERE NON PRODUCTION OF SHAR E HOLDER COMPANIES DIRECTOR IS ARGUED TO BE NO VALID REASON FOR MAKING AD DITION U/S 68 OF THE ACT DEHORS VOLUMINOUS EVIDENCES FILED WHICH HAS NOT BEEN OBJECTIVE LY AND LAWFULLY CONTROVERTED IN MANNER KNOWN TO LAW, IN VIE W OF FOLLOWING COORDINATE BENCHES DECISIONS, WHERE SIMILAR ARGUMENT IN I DENTICAL CIRCUMSTANCES OF ADDITIONS BASED ON S.K.JAIN GROUP SEARCH HA S BEEN DELETED U/S 68 OF THE ACT. KAUTILYA MONETARY SERVICES PVT LTD ITA 5975/DEL/2014 D BENCH (30/11/2018) ITAT DELHI MOTI ADHESIVES P LTD ITA: 3133/DEL/2018 SMC 25/06/20 18 ITAT DELHI HEAT FLEX CABLES P LTD ITA: 2376/DEL/2018 SMC 1/8/20 18 ITAT DELHI ALOK FINTRADE P LTD ITA: 180/JP/2015 ITAT JAIPUR BE NCH SIGNATURE BUILDWELL PVT LTD ITAT DELHI D BENCH ITA: 4249/DEL/2015 12/12/2018 SRM SECURITIES PVT LTD ITAT G BENCH ITA 7825/DEL/2017 11/12/2018 6. ON THE CONTRARY, LD. SR. DR VEHEMENTLY OPPOSED THE REQUEST OF LD. COUNSEL FOR THE ASSESSEE AND PRAYED FOR DISMISSAL OF ADDIT IONAL GROUND APPLICATION. HOWEVER, ON THE MERIT OF THE CASE, HE AR GUED THAT WITHOUT PRODUCTION OF DIRECTOR OF SHARE HOLDER COMPANIES, ADDIT ION U/S 68 MAY PLEASE BE CONFIRMED AND ACCORDINGLY, HE RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 8 | P A G E 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE IMPUGNED ORDER AND THE CASE LAWS CITED BY THE LD. C OUNSEL FOR THE ASSESSEE. WE NOTE THAT ASSESSEE FILED ITS RETURN OF INCOME F OR THE ASSESSMENT YEAR 2009-2010 ON 29.09.2009 DECLARING INCOME OF RS. 339,85,750/- AND THE SAME WAS PROCESSED U/S 143(1) OF TH E ACT ON 19.02.2011. LATER ON, CERTAIN INFORMATION AS MENTION ED IN ASSESSMENT ORDER WAS RECEIVED FROM INVESTIGATION WING REGARDIN G SEARCH AND SURVEY ACTION OF SURENDER KUMAR JAIN AND HIS BROTHER VIRENDR A JAIN AND IT WAS REPORTED BY INVESTIGATION WING TO THE AO THAT THEY W ERE ENGAGED IN BUSINESS OF PROVIDING ACCOMMODATION ENTRIES ALLEGEDLY THR OUGH CERTAIN COMPANIES. ON THE BASIS OF SAID INVESTIGATION WING INFORM ATION, REOPENING WAS MADE U/S 148 OF THE ACT BY THE AO VIDE NOTICE U/S 14 8 OF THE ACT DATED 28.03.2016. IN RESPONSE TO THE SAME, ADMITTEDLY RETUR N WAS FILED BY LETTER DATED 27.04.2016 WHICH IS SPECIFICALLY ACKNOWLEDGED BY AO IN ASSESSMENT ORDER AT PARA 2 OF THE ASSESSMENT ORDER. NOTABLY, SAID RETURN IS EXPRESSLY ACCEPTED BY AO AS VALID RETURN FOR PURPOSES OF ASSESSMENT U /S 148 OF THE ACT. AS MENTIONED IN ASSESSMENT ORDER ITSELF, WHEN THE SAID RETURN WAS TAKEN ON ORDER SHEET BY AO VIDE ORDER SHEET ENTRY DAT ED 27.04.2016, AT SAME TIME, NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON VERY SAME DATE THAT IS 27.04.2016 WHICH IS ONE OF THE MAJOR ISSUE ON WHICH V ALIDITY OF THE ASSESSMENT IS CHALLENGED BEFORE US. COPY OF THIS RETURN AND NOTICE U/S 143(2) OF THE ACT DATED 27.04.2016 ARE PLACED ON RECOR DS BEFORE US. WE 9 | P A G E FURTHER NOTE THAT AO SUPPLIED THE REASONS RECORDED (WIT HOUT APPROVAL) TO ASSESSEE (AS PLACED IN PAPER BOOK BEFORE US) WHICH WERE OBJ ECTED BEFORE THE AO IN DETAILED MANNER VIDE OBJECTION LETTER DATED 27 .04.2016 IN WHICH NOTE WORTHY ASPECT IS ASSESSEE SPECIFICALLY SOUGHT FROM AO COPIES OF BACK MATERIAL REFERRED IN REASONS INCLUDING INVESTIGATION WI NG REPORT/LETTER, SEIZED DOCUMENTS ETC REFERRED THEREIN, AO WITHOUT CONFRONTING ANY BACK MATERIAL AS EVIDENT FROM OBJECTION DISPOSAL ORDER DATED 17.05.2 016 REJECTED ASSESSEES OBJECTION CHALLENGING REOPENING ACTION. IN VARI OUS LETTERS PLACED IN PAPER BOOK AND REFERRED IN WRITTEN SUBMISSION BEFOR E US, IT WAS SPECIFICALLY ASKED TO AO DURING ASSESSMENT PROCEEDINGS TO CON FRONT THE BACK MATERIAL AS REFERRED IN REASONS RECORDED NAMELY IN LETT ERS DATED 07/06/2016, 20/10/2016 WHICH REQUEST OF ASSESSEE HAS NOT B EEN ADVERTED TO BY THE AO IS PATENT FROM OBJECTION DISPOSAL ORDER DA TED 17/05/2016 AND FURTHER NOTICES DATED 09/08/2016 U/S 142(1) AND SHOW CA USE NOTICE DATED 13/10/2016. IN NONE OF THESE NOTICES AS PLACED IN PAPER BOOK, WE COULD FIND THE BACK MATERIAL BEING CONFRONTED TO ASSESSEE AS SPECIFICAL LY REQUESTED BY ASSESSEE. WE NOTE HERE THAT THE TRIBUNAL IN VARIOUS D ECISIONS SPECIALLY ONE WHICH IS REFERRED BY LD COUNSEL FOR THE ASSESSEE EXTENSIVEL Y IN CASE OF MOTI ADHESIVES (ITA 3133/DEL/2018) IN ORDER DATED 25/06/ 2018 COPY PLACED BEFORE US, HAS BEEN CONSISTENTLY HOLDING WHILE TAKING SUPPORT FROM HONBLE APEX COURT LEADING DECISION IN ANDAMAN TIMBER INDUSTRIE S CASE (CIVIL APPEAL NO. 4228 OF 2006) REPORTED AT 127 DTR 241 THAT VIO LATION OF PRINCIPLE OF 10 | P A G E NATURAL JUSTICE (HERE WITHHOLDING OF BACK MATERIAL REF ERRED IN REASONS WHICH IS SPECIFICALLY REQUESTED FOR REPEATEDLY) IS A SERIOUS FLAW AND RESULTS IN NULLITY OF THE ORDER SO PASSED, WHICH IS SQUARELY APPLICABLE TO PRESENT CASE. BE THAT AS IT MAY, EVEN ON MERITS, FOR THE COMPANIES FROM WHERE ASSESSEE RECD. SHARE CAPITAL ASSESSEE PLACED BEFORE LD AO IN ITS REPLY DA TED 07/06/2016 ALL EVIDENCES LIKE SHARE APPLICATION FORM, BOARD RESOLUTION CONFIRMING INVESTMENT MADE, CONFIRMATION OF SHARE CAPITAL RAISED, S HARE CERTIFICATE, INCOME TAX PARTICULARS OF SHARE HOLDERS, BANK STATEMENT OF SHARE HOLDERS AND FORM 2 FOR ALLOTMENT OF SHARES ALONG WITH THEIR AUDIT ED FINAL A/C THUS DISCHARGING ITS PRIMARY BURDEN U/S 68 ON THREE INGREDI ENTS OF IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SHARE HOLDERS. AO UNIM PRESSED BY THE SAME IN THE ONLY SHOW CAUSE NOTICE WHICH IS PLACED IN PAPE R BOOK IS DATED 13/10/2016 WHERE ONLY THING ASKED BY AO IS TO PRODUCE THE DIRECTORS OF THOSE SHARE HOLDER COMPANIES. FOR MERE NON PRODUCTION OF SAID SHAREHOLDERS WITHOUT ANYTHING MORE, AS EVIDENT FROM PAGES 6 & 12 E VEN THOUGH SUMMON ISSUED U/S 131 HAVE BEEN ACCEPTED TO BE SERVED ON THEM IN THE ASSESSMENT ORDER ADVERSE INFERENCE U/S 68 OF THE ACT IS DRAWN BY AO TO MAKE ADDITION OF RS 185,00,000 WHICH IS IMPUGNED HERE BEFORE US. IN FIRST APPEAL, BEFORE LD CIT(A) CONFIRMED THE ORDER OF THE AO HAS REJECTED ASSESSE ES DETAILED SUBMISSIONS CHALLENGING REOPENING ACTION U/S 148 OF THE ACT AND WHILE CONFIRMING THE ADDITION MADE BY AO IT IS VERY GLARING FROM LD CIT(A)S ORDER PAGE 16 THAT PRIMARY REASON WHICH HAS WEIGHED ON HIM TO CONFIRM SAID 11 | P A G E ADDITION IS MERE NON PRODUCTION OF SHARE HOLDER COMPAN IES DIRECTORS IN PERSON. IN THIS BACKGROUND, THE ASSESSEE IS BEFORE US CHALL ENGING THE ORDERS OF THE AUTHORITIES BELOW. 7.1 AT THE OUTSET LD COUNSEL FOR THE ASSESSEE HAS DRAWN O UR ATTENTION TO THE ADDITIONAL GROUND APPLICATION FILED BEFORE US IN TERMS OF RULE 11 OF ITAT RULES. IN SAID ADDITIONAL GROUND APPLICATION IT IS STATE D AS UNDER: QUOTE ADDITIONAL GROUND OF APPEAL THAT IMPUGNED ASSESSMENT ORDER PASSED BY LD. ASSESSING OFFICER U/S 147/143(3) OF THE ACT IS INVALID AND VOID A B INITIO FOR WANT OF VALID NOTICE U/S 143(2) AS PER LAW AS EVIDENT FROM FACT THAT WHEN RETURN IN RESPONSE TO NOT ICE U/S 148 WAS ADMITTEDLY FILED ON 27/04/2016 NOTICE U/S143(2) IS ISSUED ON VERY SAME DAY THAT IS 27/04/2016 WHICH SHOWS NON APPLICATION OF MIND IN ISSUING NOTICE U/S 143(2) AND THEREAFTER IN FRAMING THE ASSESSMENT AND ACCORDINGLY ALL PROCEEDINGS ARE NULLITY 7.2 WE NOTE THAT THE AFORESAID ADDITIONAL GROUND IN IDENTICAL FACTS IS ACCEPTED AND ASSESSMENT U/S 143(3) OF THE ACT WAS QUASHED B Y THE ITAT AND HONBLE HIGH COURT, ARE MENTIONED HEREIN BELOW: I) HONBLE DELHI ITAT IN CASE OF MICRON ENTERPRISES PVT. LTD . VS. ITO IN I.T.A .NO. 901/DEL/2016 (A.Y .2006-07) ORDER DATED 14/05/2018 12 | P A G E II) HONBLE DELHI ITAT IN HARSH BHATIA CASE ITA NOS. 1262/& 1263/DEL/2017 [A.YS. 2008-09 & 2009-10] ORDER DATED 17.10.2017 III) HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOM E TAX VS. SOCIETY FOR WORLDWIDE INTER BANK FINANCIAL, TELECOMMUNICATIONS IN ITA NO. 441/2010, REPORTED AT 32 3 ITR 249 IV) SECTION 292BB & SECTION 143(2) ARE BOTH DEALT SUCCINCTLY IN DELHI HIGH COURT DECISION IN CASE OF SILVER LINE REPORTE D AT 383 ITR 455 WHEREIN IT HAS BEEN HELD AS UNDER:- 12. THE COURT FIRST PROPOSES TO CONSIDER THE QUESTION AS TO WHETHER IN TERMS OF THE PROVISO TO SECTION 292BB OF TH E ACT, THE ASSESSEE WAS PRECLUDED, AT THE STAGE OF THE PROCEEDINGS BEFO RE THE ITAT, FROM RAISING A CONTENTION REGARDING FAILURE OF THE AO TO ISSUE A NOTICE UNDER SECTION 143(2) OF THE ACT. THE LEGA L POSITION APPEARS TO BE FAIRLY WELL SETTLED THAT SECTION 292BB O F THE ACT TALKS OF THE DRAWING OF A PRESUMPTION OF SERVICE OF NOT ICE ON AN ASSESSEE AND IS BASICALLY A RULE OF EVIDENCE. IN COMMISSIONER OF INCOME TAX V. PARIKALPANA ESTATE DEVELOPMENT (P.) LT D. (SUPRA) IN ANSWERING A SIMILAR QUESTION, THE COURT REFERRED TO ITS EARLIER DECISION IN COMMISSIONER ITA NO. 578 OF 2015 & CONNECTED MATTERS PAGE 10 OF 15 OF INCOME TAX V. MUKESH KUMAR AGRAWAL (2012) 345 ITR 29 (ALL .) AND POINTED OUT THAT SECTION 292BB OF THE ACT WAS A RULE OF EVIDENCE WHICH VALIDATED SERVICE OF NOTICE IN CERTAIN CIRCUMSTANCES. IT INTRODUCES A DEEMING FICTION THAT ONCE THE ASSESSEE APPEARS IN ANY PROCEEDING O R HAS COOPERATED IN ANY ENQUIRY RELATING TO ASSESSMENT OR REASSESSMENT IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY 13 | P A G E PROVISION OF THE ACT THAT IS REQUIRED TO BE SERVED HAS B EEN DULY SERVED UPON HIM IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THE ASSESSEE IN THOSE CIRCUMSTANCES WOULD BE PRECLUDED FROM OBJECTING THAT A NOTICE THAT WAS REQUIRED TO BE SE RVED UPON HIM UNDER THE ACT WAS NOT SERVED UPON HIM OR NOT SERVED IN TIME OR WAS SERVED IN AN IMPROPER MANNER. IT WAS HELD THAT SECTION 292BB OF THE ACT IS A RULE OF EVIDENCE AND IT H AS NOTHING TO DO WITH THE MANDATORY REQUIREMENT OF GIVING A NO TICE AND ESPECIALLY A NOTICE UNDER SECTION 143(2) OF THE ACT WHI CH IS A NOTICE GIVING JURISDICTION TO THE AO TO FRAME AN ASSESSMEN T. THE DECISION OF THE ALLAHABAD HIGH COURT IN MANISH PRAKASH GUPTA V. COMMISSIONER OF INCOME TAX (SUPRA) IS ALSO TO THE SAME EFFECT. 7.3 WHILE ARGUING ON ABOVE ADDITIONAL GROUND APPLI CATION, LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO WRITTEN SUBMISSIO N FILED IN PAPER BOOK OF 218 PAGES (FROM PAGE 1 TO 27) THAT AS NOTED I N IMPUGNED ASSESSMENT ORDER AT PAGES 5&6 THAT NOTICE U/S 143(2) OF T HE ACT WAS ISSUED ON 27/04/2016 ON RETURN SUBMITTED U/S 148 OF THE ACT V IDE ORDER SHEET ENTRY DATED 27/04/2016, (COPY OF RETURN U/S 148 LET TER DATED 27.04.2016 AND NOTICE U/S 143(2) DATED 27/04/2016 ARE AT PAGES 5& 6 WITH ADDITIONAL GROUND APPLICATION), IN VIEW OF JURISDICTIONAL DELHI HIGH COURT DECISION IN CASE OF SOCIETY FOR WORLDWIDE REPORTED AT 323 ITR 249 FOLLOWED IN IDENTICAL SET OF FACTS BY DELHI ITAT IN CASE OF MICRON ENTERPRISES P VT LTD VS ITO IN ITA 901/DEL/2016 DATED 14/05/2018 (COPIES ENCLOSED IN ADDIT IONAL GROUND APPLICATION AT PAGES 12 TO 24) AND IN VIEW OF NO CONT RARY JURISDICTIONAL HIGH 14 | P A G E COURT DECISION, WE REQUEST THAT EXTANT ORDERS OF AO AN D LD CIT(A) MAY BE QUASHED ON THIS SHORT COUNT ITSELF. THE LOGIC BEHIND THIS PROPOSITION IS PATENT NON APPLICATION OF MIND AND UNDUE HASTE ON PART OF AO IN ISSUING NOTICE AT SAME TIME WHEN RETURN U/S 143(2) OF THE ACT IS FILED AS ADMITTED IN ORDER ITSELF, WHICH IS SINE QUA NON U/S 143(2) OF THE ACT WHICH USES THE PHRASE IF CONSIDERS IT NECESSARY OR EXPEDIENT, AND ON EXPRESSION CO NSIDERS IT NECESSARY WE DRAW OUR KIND ATTENTION TO HONBLE APEX C OURT DECISION IN CASE OF BHIKUBHAI PATEL VS STATE OF GUJARAT (4 SCC 144 ) RELEVANT EXTRACT OF WHICH IS REPRODUCED BELOW FOR SAKE OF READY REFERENCE (W HICH DIRECTLY FITS IN EXTANT FACTS TO SUPPORT PROPOSITION PUT FORTH): 24. PROVISO OPENS WITH THE WORDS WHERE THE STATE GOVERNMENT IS OF OPINION THAT SUBSTANTIAL MODIFICATION S IN THE DRAFT DEVELOPMENT PLAN AND REGULATIONS ARE NECESSAR Y ..THESE WORDS ARE INDICATIVE OF THE SATISFACTION BEING SUBJECTIVE ONE BUT THERE MUST EXIST CIRCUMSTANCES STATED IN THE PROVISO WHICH ARE CONDITIONS PRECEDENT FOR THE FORMATION OF THE OPINION. OPINION TO BE FORMED BY T HE STATE GOVERNMENT CANNOT BE ON IMAGINARY GROUNDS, WISHFUL THINKING, HOWEVER, LAUDABLE THAT MAY BE. SUCH A COURSE IS IMPERMISSIBLE IN LAW. THE FORMATION OF THE OPINION, THOUGH SUBJECTIVE, MUST BE BASED ON THE MATER IAL DISCLOSING THAT A NECESSITY HAD ARISEN TO MAKE SUBSTANTIAL MODIFICATIONS IN THE DRAFT DEVELOPMENT PLAN. 25. THE FORMATION OF THE OPINION BY THE STATE GOVER NMENT IS WITH REFERENCE TO THE NECESSITY THAT MAY HAVE HAD ARI SEN 15 | P A G E TO MAKE SUBSTANTIAL MODIFICATIONS IN THE DRAFT DEVELOP MENT PLAN. THE EXPRESSION: SO CONSIDERED NECESSARY IS AGAIN OF CRUCIAL IMPORTANCE. THE TERM CONSIDER MEANS TO THINK OVER; IT CONNOTES THAT THERE SHOULD BE ACTIVE APPLICATI ON OF THE MIND. IN OTHER WORDS THE TERM CONSIDER POSTULATES CONSIDERATION OF ALL THE RELEVANT ASPECTS OF THE MATTER . A PLAIN READING OF THE RELEVANT PROVISION SUGGESTS THAT THE STATE GOVERNMENT MAY PUBLISH THE MODIFICATIONS ONLY AFTER CONSIDERATION THAT SUCH MODIFICATIONS HAVE BECOME NECESSARY. THE WORD NECESSARY MEANS INDISPENSABLE, REQUISITE; INDISPENSABLY REQUISITE, USEFUL, INCIDENTAL OR CONDUCIVE; ESSENTIAL; UNAVOIDABLE; IMPOSSIBLE TO BE OTHERWISE; NOT TO BE AVOIDED; INEVITABLE. THE WORD NECESSARYMUST BE CONSTRUED IN THE CONNECTION IN WHICH IT IS USED. (SEE-ADVANCED LAW LEXICON, 3RD EDITION, 2005; P. RAMANATHA AIYAR) 26. THE FORMATION OF THE OPINION BY THE STATE GOVER NMENT SHOULD REFLECT INTENSE APPLICATION OF MIND WITH REFEREN CE TO THE MATERIAL AVAILABLE ON RECORD THAT IT HAD BECOME NECESSARY TO PROPOSE SUBSTANTIAL MODIFICATIONS TO THE DRAF T DEVELOPMENT PLAN. 7.4 LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT THERE IS NO APPLICATION OF MIND IN PRESENT CASE WHAT TO SPEAK OF INTENSE APPLICATION OF MIND WHERE NOTICE U/S 143(2) IS OSTENSIBLY PREPARED BEFORE HAND OR HAND IN HAND AT SAME TIME WHEN RETURN U/S 148 IS FILED ON 27/04/2016, HENCE, HE REQUESTED TO QUASH THE ASSESSMENT. 16 | P A G E 7.5 ON CAREFUL CONSIDERATION OF THE ENTIRE CONSPECTUS OF THE CASE, AS PER HONBLE SUPREME COURT RULING IN CASE OF NATIONAL THERMA L POWER CORPORATION LTD VS CIT [(1998) 229 ITR 383 SC)], WE ADMIT THE A DDITIONAL GROUND RAISED ABOVE BY THE ASSESSEE BEING PURELY LEGAL IN NATURE ON B ASIS OF MATERIAL ON RECORDS. ONCE THE DECKS ARE CLEAR FROM ADMISSION OF PURELY LEGAL ADDITIONAL GROUND , WE NOW TURN OUR ATTENTION TO THE ADJUDICATI ON OF THE SAME WHICH SHOULD NOT DETAIN US FOR LONG IN VIEW OF DELHI ITAT D ECISION IN CASE OF MICRON ENTERPRISES PVT. LTD.(SUPRA) WHICH HAS DECIDED THE IDENT ICAL ISSUE IN FAVOUR OF ASSESSEE BY RELYING ON HONBLE DELHI HIGH COURT IN TH E CASE SOCIETY FOR WORLDWIDE INTER BANK FINANCIAL, TELECOMMUNICATIONS SU PRA. WE ARE REPRODUCING THE REASONING FROM ITAT DECISION IN CASE OF M ICRON ENTERPRISES PVT. LTD.(SUPRA) ON WHICH NO CONTRARY DECISION IS BROUGH T TO OUR ATTENTION: LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE FILED REPLY TO THE NOTICE UNDER SECTION 148 OF THE I.T . ACT ON DATED 26.11.2013 WHICH IS NOTED IN THE ASSESSMENT ORDER, COPY OF WHICH, IS FILED AT PAGE-11 OF THE PAP ER BOOK, IN WHICH, ASSESSEE EXPLAINED THAT THE RETURN ALREADY FIL ED UNDER SECTION 139(1) MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. ACT. HE HAS SUBMITTED THAT ON THE SAME DAY A.O. ISSUED NOTICE UNDER SECTION 143(2) I.E., ON 26.11.2013, COPY OF WHICH , IS FILED AT PAGE-12 OF THE PAPER BOOK. HE HAS, THEREFOR E, SUBMITTED THAT THE A.O. HAS NOT VALIDLY ASSUMED JURISDICTION UNDER SECTION 147 AND 143(3) OF THE I.T. A CT TO PASS THE ASSESSMENT ORDER AGAINST THE ASSESSEE. HE HAS 17 | P A G E SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TELECOMMUNICATIONS (201 0) 323 ITR 249 (DEL.) IN WHICH IT WAS HELD AS UNDER : B OTH THE CIT(A) AND THE TRIBUNAL HAVE RETURNED A CONCURREN T AND CLEAR FINDING OF FACT THAT THE NOTICE UNDER S. 143( 2) WAS ISSUED ON 23RD MARCH, 2000 AND SINCE THE RETURN WAS FILED ON 27TH MARCH, 2000, THE NOTICE WAS NOT A VALID ONE AND, THEREFORE, THE ASSESSMENT COMPLETED ON THE BASIS OF THE NOTICE WAS ALSO INVALID AND WAS CONSEQUENTLY SET ASIDE . IT IS FOR THE FIRST TIME THAT THE COUNSEL FOR THE APPE LLANT CONTENDS THAT THE NOTICE, IN FACT, WAS ISSUED ON 27TH MARCH, 2000 AND NOT ON 23RD MARCH, 2000, THE DATE WHI CH IS RECORDED ON THE NOTICE ITSELF. NO SUCH CONTENTION WAS RAISED BEFORE THE LOWER APPELLATE AUTHORITIES. CONSEQUENTLY, THE SAID CONTENTION CANNOT BE RAISED BEFOR E THE COURT FOR THE FIRST TIME. THE APPELLANT HAS STATED THAT THE RETURN WAS FILED BY THE ASSESSEE ON 27TH MARCH, 2000 AND THE NOTICE UNDER S. 143(2) WAS SERVED UPON THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE BY HAND WHEN THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CAME AND FILED RETURN. HOWEVER, THE DATE OF THE NOTICE WAS MISTAKENLY MENTIONED AS 23RD MARCH, 2000. ASSUMING THE AFORESAID TO BE TRUE, THE NOTICE WAS SERVED ON THE AUTHORIZED REPRESENTATIVE SIMULTANEOUSLY ON HIS FILING THE RETURN WHICH CLEARLY INDICATES THAT THE NOTICE WAS READY EVEN PRIOR TO THE FILING OF THE RETURN. THE PROVISIO NS OF S. 143(2) MAKE IT DEAR THAT THE NOTICE CAN ONLY BE SERVED 18 | P A G E AFTER THE AO HAS EXAMINED THE RETURN FILED BY THE ASSESSEE. WHEREAS IT IS DEAR THAT WHEN THE ASSESSEE CAME TO FILE THE RETURN, THE NOTICE UNDER S. 143(2) WAS SERV ED UPON THE AUTHORIZED REPRESENTATIVE BY HAND. THUS, IT WOULD AMOUNT TO GROSS VIOLATION OF THE SCHEME OF S. 143(2). 5.1. AND THE CONCLUSION IS AS UNDER : ASSESSMENT MADE IN PURSUANCE OF A NOTICE UNDER SECTION 143(2) ISSUED ON 23RD MARCH, 2000 WHEN THE RETURN WAS FILED ON 27TH MARCH, 2000 IS INVALID. 6. HE HAS SUBMITTED THAT THE SAM E ORDER HAVE BEEN FOLLOWED BY ITAT, DELHI BENCH, IN TH E CASE OF SHRI HARSH BHATIA, NEW DELHI VS. ITO, WARD-50(3), N EW DELHI IN ITA.NO.1262 AND 1263/DEL./2017 DATED 17.10.2017 IN WHICH THE TRIBUNAL HELD AS UNDER : 10. IT WAS FURTHER ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE DR. RAKESH GUPTA THAT NOTICE U/S 143(2) OF THE ACT, WAS ISSUE D ON 17.09.2014 AND WHICH IS THE SAME DATE ON WHICH RETUR N WAS FILED. THIS IS APPARENT FROM THE ASSESSING OFFICERS ORDER IN PARA 3 AT PAGE 1. THEREFORE, THE ASSESSING OFF ICER HAS NOT APPLIED HIS MIND INDEPENDENTLY WHILE ISSUING N OTICE U/S 148 OF THE ACT. ON THIS COUNT ALSO, THE ASSESSMENT DESERVES TO BE QUASHED. ACCORDINGLY, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEGAL GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. ON THE OTHER HAND, LD. D.R. SUBMITTED THAT ASSESSEE DID NOT FILE RETURN UNDER SECTION 148 WITHIN THE SPECIFIED PERIOD. THEREFORE, THIS GROU ND OF APPEAL OF ASSESSEE MAY BE DISMISSED. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THE ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCO ME 19 | P A G E TAX VS. SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TELECOMMUNICATIONS (SUPRA) AND ORDER OF ITAT, DELHI BENCH IN THE CASE OF SHRI HARSH BHATIA, NEW DELHI VS. ITO , WARD-50(3), NEW DELHI (SUPRA). IT IS AN ADMITTED FACT THAT ASSESSEE FILED REPLY IN RESPONSE TO THE NOTICE UNDER SECTI ON 148 OF THE I.T. ACT ON 26.11.2013 AND SUBMITTED BEFOR E A.O. THAT ORIGINAL RETURN FILED BEFORE HIM MAY BE T REATED AS RETURN FILED IN RESPONSE TO THE NOTICE UNDER SECTION 14 8 OF THE I.T. ACT. THE A.O. ON THE SAME DAY SERVED NOTICE UN DER SECTION 143(2) UPON ASSESSEE-COMPANY WHOSE SIGNATURE TALLY ON THE SAID NOTICE. THEREFORE, NOTICE ISSUED UNDER SECTION 143(2) IS INVALID AND RESULTANTLY, THE ASSESSMENT I S VITIATED AND IS LIABLE TO BE QUASHED. I, ACCORDINGLY, SE T ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH TH E RE- ASSESSMENT PROCEEDINGS IN THE MATTER. RESULTANTLY, ALL ADDITIONS STANDS DELETED. IN VIEW OF THE ABOVE, THERE IS NO NEED TO DECIDE OTHER CONTENTIONS RAISED BY LEARNED COUNSEL FOR THE ASSESSEE. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 7.6 FURTHER WE ALSO FIND FORCE IN ARGUMENT OF LD CO UNSEL FOR THE ASSESSEE THAT LANGUAGE OF SECTION 143(2) OF THE ACT IN SO FAR A S IT USES THE PHRASE IF CONSIDERS IT NECESSARY OR EXPEDIENT PRESUPPOSES APPLICATION OF MIND ON PART OF LD AO BEFORE NOTICE U/S 143(2) OF THE ACT IS ISSUED W HICH WORDS HAVE BEEN EXPLAINED BY HONBLE APEX COURT IN CASE OF BHIKUBH AI PATEL VS STATE OF GUJARAT (4 SCC 144) RELEVANT EXTRACT OF WHICH IS REPRO DUCED ABOVE WHERE IT IS OBSERVED BY HONBLE APEX COURT THAT THE EXPRESSION: SO CONSIDERED 20 | P A G E NECESSARY IS AGAIN OF CRUCIAL IMPORTANCE. THE TERM CONSIDER MEANS TO THINK OVER; IT CONNOTES THAT THERE SHOULD BE ACTIVE APPLICATIO N OF THE MIND. IN OTHER WORDS THE TERM CONSIDER POSTULATES CONSIDERATION OF ALL THE RELEVANT ASPECTS OF THE MATTER. A PLAIN READING OF THE RELEVAN T PROVISION SUGGESTS THAT THE STATE GOVERNMENT MAY PUBLISH THE MODIFICATIONS O NLY AFTER CONSIDERATION THAT SUCH MODIFICATIONS HAVE BECOME NECESSARY. THE WORD NE CESSARY MEANS INDISPENSABLE, REQUISITE; INDISPENSABLY REQUISITE, USEFU L, INCIDENTAL OR CONDUCIVE; ESSENTIAL; UNAVOIDABLE; IMPOSSIBLE TO BE OTHER WISE; NOT TO BE AVOIDED; INEVITABLE. THE WORD NECESSARYMUST BE CONSTRUED IN THE CONNECTION IN WHICH IT IS USED. (SEE-ADVANCED LAW LEXICON, 3RD EDI TION, 2005; P. RAMANATHA AIYAR).. WHICH FITS IN PRESENT CASE FULLY. GUIDED BY THESE FELICITOUS OBSERVATION OF HONBLE SUPREME COURT WE HAVE NO HESITATION IN OUR MIND IN ACCEPTING THE LEGAL PLEA RAISED BY LD AR BEFOR E US AND THUS HOLDING THAT NOTICE U/S 143(2) ISSUED AT SAME TIME AND DATE OF R ETURN FILING U/S 148 ( VIDE ORDER SHEET ENTRY DATED 27/04/2016) VITIATES T HE ENTIRE EXERCISE AND ACCORDINGLY ALL SUBSEQUENT PROCEEDINGS ARE HELD TO BE IN VALID IN EYES OF LAW AND THEREFORE WE QUASH THE ORDERS PASSED BY AO AND LD C IT(A) AND ALLOW ADDITIONAL GROUND RAISED BY ASSESSEE. 7.7 EVEN OTHERWISE, ON THE MERIT OF THE CASE I.E. A DDITION MADE U/S 68 THAT FOR MERE REASON OF NON PRODUCTION OF DIRECTORS IN PERSON OF SHARE HOLDER COMPANIES SAME CANNOT BE A JUSTIFIED GROUND TO DRAW ADV ERSE INFERENCE U/S 68 OF THE ACT WHERE THOSE SHARE HOLDERS ARE FOUND TO BE EXISTING AND 21 | P A G E IDENTIFIED IN DETAIL AS SUMMONS HAVE BEEN DULY SERVED O N THEM. MERE NON PRODUCTION OF SHARE HOLDER COMPANIES DIRECTOR IS ARGUED TO BE NO VALID REASON FOR MAKING ADDITION U/S 68 OF THE ACT DEHORS VOLUMINOUS EVIDENCES FILED WHICH HAS NOT BEEN OBJECTIVELY AND LAWFULLY CONTR OVERTED IN MANNER KNOWN TO LAW. FOR THIS LD COUNSEL FOR THE ASSESSEE PLACED BEFORE US DURING THE COURSE OF HEARING A COMPREHENSIVE CHART OF CASE LAWS FR OM COORDINATE BENCHES OF ITAT WHERE SIMILAR ARGUMENT IN IDENTICAL CIRCU MSTANCES OF ADDITIONS BASED ON S.K.JAIN GROUP SEARCH HAS BEEN DELET ED U/S 68 OF THE ACT. OUR VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- KAUTILYA MONETARY SERVICES PVT LTD ITA 5975/DEL/2014 D BENCH (30/11/2018) ITAT DELHI (HELD IN CRUX THAT ..THE ASSE SSING OFFICER, AFTER GOING THROUGH THE EVIDENCES FURNISHED BY THE ASSESS EE SAT WITH FOLDED HANDS AND DID NOT MAKE ANY EFFORT AND NOT MAD E ANY INDEPENDENT ENQUIRY AND MADE THE ADDITION ONLY BY R ELYING ON THE REPORT OF THE INVESTIGATION WING) MOTI ADHESIVES P LTD ITA: 3133/DEL/2018 SMC 25/06/20 18 ITAT DELHI (AUTHORED BY ONE OF US HONBLE JM) (HELD IN CRUX THAT WHETHER ONCE ASSESSEE PLACES BEFORE LD AO ALL THE RELEVANT AND BEST DOCU MENTS IN ITS POSSESSION TO ESTABLISH ITS BURDEN U/S 68 OF THE ACT QUA CASH CREDIT (HERE SHARE CAPITAL RECEIVED) , CAN SIMPLY BECAUSE THERE I S NO PERSONAL APPEARANCE FROM DIRECTOR OF SAID CASH CREDITOR (SHARE HOLD ER) AS CALLED FOR BY LD AO, ADVERSE INFERENCE U/S 68 CAN BE DRAWN BY LD AO WITHOUT 22 | P A G E DISCHARGING SECONDARY BURDEN LYING ON LD AO U/S 68 OF TH E ACT? IN MY VIEW THE ANSWER TO THIS ISSUE AS FRAMED, CAN ONLY BE IN NEGATIVE AS ONCE ALL IMPORTANT AND CRUCIAL DOCUMENTS ARE FILED BY A SSESSEE TO PROVE ITS CASE QUA SHARE CAPITAL RECEIVED U/S 68 OF THE ACT , THEN SIMPLY HARPING ON NON PRODUCTION OF DIRECTOR IN PERSON BEFORE THE AO CANNOT BE JUSTIFIED GROUND TO DRAW ADVERSE INFERENCE WITHOU T ADEQUATE DISCHARGE OF SECONDARY BURDEN LYING ON AO U/S 68 OF THE ACT. BURDEN U/S 68 OF THE ACT AS IT IS SETTLED LAW KEEPS SHIFTING. A LSO HELD THAT EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CR EDITWORTHINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAVE MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS HELD BY HONBLE HIGH COURT IN CIT VS DATAWARE (SUPRA) WHICH HAS NOT BEEN DON E, SO NO ADVERSE VIEW COULD HAVE BEEN DRAWN.) HEAT FLEX CABLES P LTD ITA: 2376/DEL/2018 SMC 1/8/20 18 ITAT DELHI (HELD IN CRUX THAT SINCE THE INVESTOR COMPANIES HAVE CONF IRMED THE TRANSACTION WITH THE ASSESSEE-COMPANY WHICH WERE CONDUCTED T HROUGH BANKING CHANNEL AND ENTIRE EVIDENCE WERE BROUGHT ON RECORD, THEREAFTER, IF THE A.O. WAS NOT SATISFIED WITH THE DOCU MENTS ON RECORD AND EXPLANATION OF THE ASSESSEE- COMPANY AND THE INVESTOR S, THE A.O. SHOULD HAVE MADE FURTHER ENQUIRY ON THE SAME. HOWEVER, IT IS A CASE WHERE THE A.O. HAS FAILED TO CONDUCT NECESSARY ENQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH. THEREFORE, THE E XPLANATION OF THE 23 | P A G E ASSESSEE- COMPANY SHOULD NOT HAVE BEEN DISBELIEVED BY THE AUTHORITIES BELOW.) ALOK FINTRADE P LTD ITA: 180/JP/2015 ITAT JAIPUR BE NCH (HELD THAT ..IT IS THUS A CASE WHERE THE AO WAS IN RECEIPT OF MATE RIAL INFORMATION FROM THE INVESTIGATION WING, DELHI THAT THE ASSESSEE COMP ANY HAS RECEIVED ACCOMMODATION ENTRIES IN FORM OF SHARE APPLICATION/INVESTMENT FROM TWO COMPANIES AS DIVULGED DU RING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN CASE OF S K JAI N GROUP. IN THESE SITUATIONS, THE COURTS HAVE HELD THAT THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS AND THEN COME FORWARD TO MERELY REJECT THE EXPLANATION SO MADE, WITHOUT CARRYING OUT A NY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM BY TH E ASSESSEE. IF THE ASSESSING OFFICER HARBOURS ANY DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY O UT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING OFFICER FAILS TO UNEAR TH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF T HE COMPANY. 22. FURTHER, BEING THE REASSESSMENT PROCEEDINGS , WHERE THE AO IS CEASED OF CERTAIN INFORMATION AND DOCUMENTS, IT IS INCUMBENT UPON HIM TO CONFRONT THE SAME TO THE ASSESSEE AND ALLOW T HE LATTER TO FILE ITS OBJECTIONS AND REBUTTAL. THE ADDITIONS MADE, M ERELY RELYING ON THESE INFORMATION AND DOCUMENTATION, WITHOUT CONFRONTI NG THE 24 | P A G E ASSESSEE CANNOT BE ACCEPTED. BESIDES FURNISHING THE REASONS FOR REOPENING THE ASSESSMENT TO THE ASSESSEE COMPANY, THERE IS NO THING ON RECORD THAT SUCH INFORMATION/DOCUMENTATION WAS CONFRON TED TO THE ASSESSEE. FURTHER, THE AO HAS RELIED UPON THE STATEMENT O F THIRD PARTIES NAMELY, SHRI S.K. JAIN, SHRI V.K. JAIN, SHRI ASSE M KUMAR GUPTA AND SHRI RAJESH AGARWAL, THE ASSESSEE AGAIN DESERVES AN OPP ORTUNITY TO CROSS EXAMINE SUCH PERSONS AS HELD BY THE HON'BLE SUPRE ME COURT IN CASE OF ANDAMAN TIMBER INDUSTRIES (SUPRA)) SIGNATURE BUILDWELL PVT LTD ITAT DELHI D BENCH ITA: 4249/DEL/2015 12/12/2018 (HELD IN CRUX THAT THERE IS NO DISPUTE THA T THE INFORMATION RECEIVED FROM THE OFFICE OF THE DIT [INV] , NEW DELHI TRIGGERED THE PROCEEDINGS AND THE ASSESSING OFFICER, TAKI NG A LEAF OUT OF THE SAID INV REPORT, PROCEEDED TO VERIFY THE TRANSA CTIONS ENTERED INTO BY THE ASSESSEE WITH THE FIVE COMPANIES MENTIONED EL SEWHERE. IT IS NOT THE CASE OF THE REVENUE THAT CASH WAS FOUND TO BE DEPOSITED IN THE ACCOUNTS OF FIVE COMPANIES PRIOR TO SUBSCRIBING THE SH ARES OF THE APPELLANT COMPANY. IT IS ALSO NOT THE CASE OF THE REVENU E THAT THE ASSESSEE HAS PRODUCED CHEQUES FROM THE FIVE COMPANIES BY GIVI NG CASH. NO DOUBT THERE IS A CONTRADICTION IN THE STATEMENT OF SHRI WASEEM GUPTA, BUT THAT ALONE CANNOT BE A DECIDING FACT OR ONCE THE CORROBORATIVE EVIDENCES IN THE FORM OF BANK STATEMENTS H AVE BEEN 25 | P A G E FILED BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT MAKE AN Y EFFORT TO EXAMINE THE BANK STATEMENT FURNISHED BY THE ASSESSEE.) SRM SECURITIES PVT LTD ITAT G BENCH ITA 7825/DEL/2017 11/12/2018 (HELD IN CRUX THAT WHEN ASSESSEE HAS DISCHARGED ITS INITIAL B URDEN OF PROVING THE IDENTITY, CREDITWORTHINESS OF THE PARTIES A ND GENUINENESS OF THE TRANSACTIONS. LD AO MUST REACH TO THE SUBMISSION O F THE ASSESSEE BY CONDUCTING EXHAUSTIVE INQUIRES TO THROW BACK THE ONUS ON THE ASSESSEE. FURTHER NON RECEIPT OF THE DETAILS U/S 133 ( 6) SHOULD BE THE TRIGGER POINT TO MAKE FURTHER INQUIRES; IT IS NOT THE RESTING POINT. IN THE PRESENT CASE, THE FACT SHOWS THAT THE ASSESSING OFFICER HA S MERELY RELIED UPON THE ENQUIRIES CONDUCTED BY THE INVESTIGATI ON WING OF THE DEPARTMENT AND HAS NOT CONFRONTED THE ASSESSEE WITH MATER IAL THAT HE HAS RECEIVED FROM THE INVESTIGATION WING TO THE ASSESSEE T O REBUT THE SAME. UNLESS THE INITIAL ONUS DISCHARGED BY THE ASSESSEE IS TH ROWN BACK TO THE ASSESSEE BY AO BY CARRYING OUT SYSTEMATIC INVESTI GATION/ INQUIRY, ADDITION U/S 68 CANNOT BE UPHELD) 7.8 WE FIND THAT ASSESSEE HAS FILED ALL EVIDENCES LIKE SH ARE APPLICATION FORM, BOARD RESOLUTION CONFIRMING INVESTMENT MADE, CONFIRMATI ON OF SHARE CAPITAL RAISED, SHARE CERTIFICATE, INCOME TAX PARTICULARS OF SHARE HOLDERS, BANK STATEMENT OF SHARE HOLDERS AND FORM 2 FOR ALLOTMENT OF SHARES ALONG WITH THEIR AUDITED FINAL A/C IN SUPPORT OF SHARE CAPITAL RE CD. TO ESTABLISH ITS CASE AS STATED IN REPLY TO LD AO DATED 07/06/2016 (PAPER BOO K PAGES 47 TO 50). WE FURTHER FIND THAT NO WHERE ANY SHAREHOLDER COMPANY WA S FOUND TO BE FICTITIOUS OR NON EXISTING RATHER ALL SHARE HOLDER COM PANIES ARE DULY FOUND TO BE EXISTING AS SUMMONS HAVE BEEN SERVED ON THEM. (REFER HONBLE SUPREME COURT IN ORISSA CORPORATION CASE 159 ITR 78). WE FURTHER FIND THAT NO COGENT 26 | P A G E MATERIAL IS BROUGHT ON RECORDS IN ASSESSMENT ORDER BY LD AO TO DEMOLISH THE COPIOUS EVIDENCES FURNISHED BY ASSESSEE. WE FURTEHR FIND TH AT LD AO HAS NO WHERE CONFRONTED ANY BACK MATERIAL TO ASSESSEE AS STATED I N FACTS ABOVE. WE FIND THAT LD AO NOWHERE MADE ANY INDEPENDENT ENQUIR Y FROM CONCERNED AND COMPETENT AO OF SHARE HOLDER COMPANIES ETC. WE FIND THA T ONLY ON BASIS OF INVESTIGATION WING REPORT (UNCONFRONTED TO ASSESSEE) ACTIN G PURELY ON BORROWED SATISFACTION WITHOUT ANY INDEPENDENT APPLICATI ON OF MIND ADDITION HAS BEEN MADE U/S 68 BY LD AO. WE FIND THAT NO WHERE IN ENTIRE ASSESSMENT ORDER LD AO FRAMED HIS OWN INDEPENDENT OBJECTIVE AND RATIONAL OPINION ON BASIS OF MATERIAL PLACED ON RECORD WITHIN THE MEANING O F PROVISION OF SECTION 68 OF THE ACT. FURTHER LD CIT-A HAS ALSO SIMPLY AND EASI LY ENDORSED FINDING OF LD AO WITHOUT MAKING ANY INDEPENDENT EFFORTS ON E NQUIRY ON HIS PART , WHICH FINDING OF LD CIT-A ALSO DO NOT OBJECTIVELY CONSID ER THE VARIOUS SUBMISSIONS AND ARGUMENTS OF ASSESSEE. SO WE HAVE NO HESITATI ON IN ACCEPTING LD ARS ARGUMENT THAT FOR MERE REASON OF NON PRODUCTION OF DIRECTORS IN PERSON OF SHARE HOLDER COMPANIES SAME CANNOT BE A JUSTIFIED GROUND TO DRAW ADVERSE INFERENCE U/S 68 OF THE ACT. WE ARE SUPPORTED BY DECISIONS RELIED BY LD AR AS MENTIONED ABOVE. MOREOVER, OUR STATED DECISION IS SUPPORTED BY DECISION OF HONOURABLE DELHI HIGH COURT AGAINST WHICH THE SLP HAS BEEN DISMISSED BY THE HONOURABLE SUPREME COURT RECENTLY IN [2018] 99 TAXMANN.COM 45 (SC) IN PRINCIPAL COMMISSIONER OF INCO ME TAX, CENTRAL- 1 V. ADAMINE CONSTRUCTION (P.) LTD; HONOURABLE SUPR EME COURT HAS ALSO 27 | P A G E DISMISSED THE SPECIAL LEAVE PETITION OF THE REVENUE IN [2018] 98 TAXMANN.COM 173 (SC) PRINCIPAL COMMISSIONER OF INCOME TA X V. HIMACHAL FIBERS LTD.; HON'BLE DELHI HIGH COURT IN THE CASE OF ORI ENTAL INTERNATIONAL COMPANY PVT. LTD 401 ITR 83 WHICH DECISIONS ARE RELIED IN DECISIONS MENTIONED ABOVE IN ARGUMENTS OF LD AR. WE THUS REVE RSE THE FINDING OF LD AO AS CONFIRMED BY LD CIT(A) IN THIS REGARD. ON BASIS OF THIS DISCUSSION WE FIND NO MERIT IN ADDITION OF RS 1,85,00,000 MADE U/S 68 OF THE ACT, HENCE, WE DELETE THE SAME AND ALLOW THE APPEAL OF THE ASSESSEE ACCORDINGLY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 20/12/2018. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 20/12/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES