ITO, New Delhi V. M/s. ISF Securities Pvt. Ltd., New Delhi

ITA 2347/DEL/2010

• Counselvise Citation: 234720114 RSA 2010
• Duration Of Justice: 5 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Income from undisclosed sources; Share purchase agreement; Opportunity of being heard; Question of law
• Section: 115JB; 133(6); 68; 144

Judgement Text

ITA NO.2347/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 2347 /DEL/201 0 A.Y. : 20 05 - 0 6 INCOME TAX OFFICER, WARD 11(4), ROOM NO. 324, CR BUILDING, NEW DELHI VS. M/S ISF SECURITIES PVT. LTD., 11/5B, SECOND FLOOR, PUSA ROAD, NEW DELHI (PAN: AAACII667E) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. T. VASANTHAN, SR. DR ASSESSEE BY : SH. RAJ KUMAR GUPTA, CA DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 16 1616 16- -- -12 1212 12- -- -201 201 201 2015 55 5 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 18 1818 18- -- -12 1212 12- -- -201 201 201 2015 55 5 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XIII, NEW DELH I DATED 1.4.2010 PERTAINING TO ASSESSMENT YEAR 2005-06 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER OF THE LD. CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASI DE. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,44,85,000/- MADE U/S. 68 OF THE I.T. ACT, 1961 ON ACCOUNT ITA NO.2347/DEL/2010 2 OF INCOME FROM UNDISCLOSED SOURCES FROM UNEXPLAINED SHARE APPLICATION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,20,000/ - ON ACCOUNT OF DISALLOWANCE OF INTEREST. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARI NG. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E ON 31.10.2005 FILED ITS RETURN DECLARING NIL INCOME AFTER SETTING OFF THE B /F LOSSES, BUT HAS PAID TAX AS PER THE PROVISION OF SECTION 115JB AT BOOK PROFIT. THE RETURN WAS PROCESSED U/S 143(1) VIDE INTIMATION DATED 11/02/2006 AT THE RETU RNED INCOME. THE CASE WAS SELECTED UNDER SCRUTINY BY CASS AND ACCORDINGLY, NO TICE U/S 143(2) WAS ISSUED ON 09/10/2006 FIXING THE CASE FOR HEARING ON 23/10/ 2006. ON 9 TH JULY 2007, THE CASE WAS AGAIN FIXED FOR 3/8/2007, AND NOTICES U/S 142(1)/143(2) WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE ABOVE, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE CASE PR OCEEDING AND FILED PART DETAILS AS CALLED FOR WHICH ARE PLACED ON RECORD. D URING THE YEAR, THE ASSESSEE HAS SHOWN INCOME FROM BUSINESS OF SHARE TRADING & B ROKERAGE. FROM THE DETAILS FILED, IT WAS NOTICED THAT DURING THE YEAR, THE ASS ESSEE COMPANY HAS RAISED SHARE APPLICATION MONEY OF RS. 1,44,85,000/-. VIDE QUESTI ONNAIRE DATED 09/07/2007; THE ASSESSEE WAS ASKED TO FILE DETAIL O F SHARE APPLICANT ALONG WITH THEIR BANK STATEMENT, CONFIRMATION AND ALSO DE TAILS OF INCOME-TAX PARTICULARS FOR VERIFICATION OF SHARE APPLICANT'S CREDITWORTHIN ESS, GENUINENESS OF THE TRANSACTIONS. THEREAFTER, THE AO OBSERVED THAT SIN CE THE ASSESSEE HAS FAILED TO PROVE ANY EVIDENCE TO PROVE THEIR IDENTITY, CREDITW ORTHINESS AND GENUINENESS OF THE SHARE APPLICATION MONEY RECEIVED, IN THE ENTIRE ASSESSMENT PROCEEDINGS, THEREFORE, HE ADDED A SUM OF RS. 1,44,85,000/- AS INCOME FROM UNDISCLOSED SOURCES IN THE DECLARED INCOME OF THE ASSESSEE COMP ANY. AS REGARDS THE INTEREST ITA NO.2347/DEL/2010 3 OF RS. 1,20,000/- IS CONCERNED, THE COMPANY IS PA YING INTEREST ON THE AMOUNT BORROWED BY IT, HENCE, IN THE ABSENCE OF ANY DETAIL AND NATURE OF THE ADVANCE A SUM EQUIVALENT TO RS. 1,20,000/- ON PROPORTIONATE BASIS WAS DISALLOWED OUT OF THE INTEREST DEBITED IN P&L ACCOUNT AND ADDED T O THE INCOME OF THE ASSESSEE. ACCORDINGLY, INCOME OF THE ASSESSEE WAS ASSESSED A T RS. 1,69,22,730/- U/S. 144 OF THE I.T. ACT, 1961 VIDE ORDER DATED 31.12.20 07 PASSED U/S. 144 OF THE I.T. ACT, 1961. 3. AGAINST THE AFORESAID ASSESSMENT ORDER, THE ASSE SSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 1.4.2010 ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITIONS IN DISPUTE. 4. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6. ON THE CONTRARY, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT TH E ORDER OF THE LD. CIT(A) IS A WELL REASONED ORDER AND THEREFORE, THE SAME MAY BE UPHELD AND REVENUES APPEAL MAY BE DISMISSED ACCORDINGLY. HE FURTHER S TATED THAT THE ISSUE NO. 1 RELATING TO ADDITION U/S. 68 IS SQUARELY COVERED B Y THE ORDER DATED 12.8.2015 OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ITA NO. 71, 72 & 84/2015 IN THE CASE OF CIT-9 (ERSTWHILE CIT-VI) VS. VRINDAVAN FARM S (P) LTD., WHEREIN THE SIMILAR ITA NO.2347/DEL/2010 4 ISSUE WAS TAKEN UP BY THE DEPARTMENT AND THE APPE ALS OF THE DEPARTMENT WERE DISMISSED. ACCORDINGLY, HE ALSO REQUESTED THAT THE SAME RATIO OF THE HONBLE HIGH COURT OF DELHI MAY BE FOLLOWED IN THE PRESEN T APPEAL INVOLVED IN ISSUE NO. 1. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAW CITED BY THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE. WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN D ISPUTE BY CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AN D ADJUDICATED THE ISSUE IN DISPUTE AS UNDER VIDE PARA 5 TO 6 AT PAGES 30 TO 34 OF HIS IMPUGNED ORDER. AS APPEAR FROM THE FACE OF THE ASSESSMENT ORDER IT SELF, THE ORDER HAS BEEN PASSED U/S 144 AND AO HAS ADMITTED THAT AS SESSEE COULD NOT FILE ANY EVIDENCE WITH REGARD TO SHARE CAPITAL APPLICANT AS THEY ARE OUT OF COUNTRY, THEREFORE THE APPELLANT, AS APP EARS FROM THE FACTS OF THE CASE, WAS PREVENTED FROM THE SUFFICIEN T CAUSE IN FILLING THESE EVIDENCE BEFORE THE AO. NOW DURING THE APPELL ANT PROCEEDINGS THESE EVIDENCE HAS BEEN FILED & AS PER RULE 46A AO WAS GIVEN OPPORTUNITY TO VERIFY THEM. HOWEVER AO HA S CHOSEN NOT TO VERIFY THESE EVIDENCE. AS THESE ARE MATERIAL EVI DENCE IN DECIDING THIS APPEAL, HENCE THEY ARE ADMITTED. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE A.O HAS NOT MENTIONED AN Y DETAILS OF THE INVESTIGATION CARRIED OUT AND THE SPECIFIC INFO RMATION COLLECTED BY THE DEPARTMENT EXCEPT ISSUE OF 133(6) NOTICE, ON THE BASIS OF WHICH IT WAS HELD THAT THE PAYMENT RECEIVED BY THE APPELLANT FROM THE PERSON IN THE GARB OF SHARES APPLICATION MONEY WAS ACTUALLY ITA NO.2347/DEL/2010 5 ACCOMMODATION ENTRY. IT HAS BEEN HELD IN PLETHORA O F JUDICIAL PRONOUNCEMENT THAT IF THE INFORMATION OR THE SOURCE OF THAT INFORMATION IS COLLECTED AT THE BACK OF THE ASSEESS E AND THE SAME IS NOT CONFRONTED TO THE ASSESSEE OR THE ASSESSE IS NO T GIVEN REASONABLE OPPORTUNITY TO REBUT THEM, THEN THE SAME CANNOT BE USED AGAINST THE ASSEESEE. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENT GIVEN BY HONBLE A PEX COURT AND JURISDICTION HIGH COURT:- C. VSANTLAL & CO. V. CIT (1962) 45 ITR 206(SC) MEENGLAS TEA ESTATE V. WORKMEN. 1963-(050)-AIR- 171 9 -SC DHAKESHWARI COTTON MILLS LTD. VS CIT 26LTR 775.782- 3SC MENKA GANDHI VS UOI (AIR1978 SC 597) J.T. (INDIA) EXPORTS AND ANOTHER VS UOI AND ANOTHER 262 ITR269(DEL FB) TULARI RAM PATE 45- ITR - 206 (SC) C.B. GAUTAM (SUPRA)1993-199-ITR-530(SC) CIT VS RAJESH KUMAR 2008-306-ITR-27(DEL) CIT VS REAL TIME MARKETING PVT. LTD. 2008-306-ITR-3 5 (DEL) CIT VS NAVEEN GUPTA 2006-5-S0T-94 (DEL)/07 (DELHI I TAT) MANOJ BANSAL V. ACIT ITA NO. IT (SS)AL14/DEI/07 (DE L ITAT) FURTHER IT HAS ALSO BEEN HELD IN VARIOUS JUDICIAL PRONOUNCEMENT CITED SUPRA THAT A STATEMENT MADE DUR ING THE COURSE OF SEARCH/SURVEY PROCEEDINGS IS NOT THE FINA L WORD FOR ITA NO.2347/DEL/2010 6 MAKING ANY ADDITION BUT HAS TO BE SEEN IN THE LIGHT OF SUPPORTING FACTS AND MATERIALS. HOWEVER IN THE PRESENT CASE TH E AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD WHICH COULD PROVE TH AT THE IMPUGNED SHARE APPLICATION MONEY RECEIVED BY THE AP PELLANT REFLECTS ITS UNACCOUNTED INCOME. ON THE OTHER HAND THE APPELLANT HAD DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE IDENTITY OF THE PARTIES. IT HAS HELD IN THE CASE OF HARBANS LAL SAR NA VS. DCIT (2007) 109 TTJ861 (CHD) THAT AS THE ASSESSEE'S TRANSACTION S WITH THE SAID PARTIES WERE COMPLETE & WAS NOT HAVING ANY TRANSACT ION IN FUTURE WITH THEM, IT WAS VERY DIFFICULT FOR THE ASSESSEE C OMPANY TO PRODUCE THEM BEFORE THE AO. IT WAS FURTHER HELD THAT WHERE APPELLANT HAD SHOWN CERTAIN CREDIT ENTRY, WHICH IS SUPPORTED BY B ILLS AND THE PAYMENT HAVE BEEN RECEIVED THROUGH BANKING CHANNEL, THEN SUCH CREDIT ENTRY COULD NOT BE TREATED AS UNEXPLAINED CA SH CREDIT IN APPELLANT'S HANDS. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS PRAD EEP GUPTA 207 CTR 115, WHICH HAS ALSO BEEN RELIED UPON BY THE DELHI ITAT IN THE RECENT JUDGMENT IN THE CASE OF BABITA G UPTA ITA N 0.2897 106 WHERE IN IT IS HELD THAT IN THE FACTS OF THE CASE BEFORE US IT MAY BE SEEN THAT FROM THE VERY BEGINNING A.O HAD SHIFTED ENTRIES BURDEN UPON THE APPELLANT AND NO MATERIAL WAS BROUG HT BY HIM TO PROVE HIS ALLEGATION THAT THE IMPUGNED AMOUNT REPR ESENTED ASSESSEE COMPANY'S UNDISCLOSED INCOME. IT WAS ARGUED BY THE APPELLANT THAT IN ASSESSMENT O RDER, THE AO HAS NOT GIVEN ANY DETAILS ABOUT THE ENQUIRY COND UCTED BY HIM ON THE BASIS OF WHICH IT WAS HELD THAT THE SAID PAR TIES WERE INVOLVED ITA NO.2347/DEL/2010 7 IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY. T HE HON'BLE DELHI HIGH COURT IN THE CASE OF J.T. INDIA EXPORTS AND ANOTHER VS. UOL AND ANOTHER (2003) 262 ITR 269(DEL-FB) HAS HELD THAT THE AO MUST PASS A SPEAKING ORDER GIVING REASONS FOR THE C ONCLUSION ARRIVED AT, AND OPPORTUNITY OF BEING HEARD MUST BE PROVIDED TO THE APPELLANT BEFORE PASSING ANY ADVERSE ORDER. IT HAS BEEN FURTHER HELD THAT IN THE NOTICE ISSUED BY THE AO SPECIFIC R EQUIREMENT SHOULD BE INDICATED AND REASONABLE OPPORTUNITY MUST BE GRA NTED. IT WAS HELD BY THE HON'BLE HIGH COURT THAT IN A ABSENCE OF NOTICE OF THE KIND AND SUCH REASONABLE OPPORTUNITY, THE ORDER PAS SED AGAINST THE PERSON IN ABSENTIA AND BECOME WHOLLY VITIATED. IT WAS VEHEMENTLY ARGUED BY THE APPELLANT THAT THE AO IN THE ASSESSMENT ORDER HAS NOT BROUGHT ANY MATERIAL ON RE CORDS, WHICH CAN PROVE THAT THIS MONEY WAS APPELLANTS OWN UNDISC LOSED INCOME. IT HAS ALSO BEEN HELD BY THE VARIOUS COURTS THAT AO MUST BRING ON RECORDS SOME POSITIVE MATERIAL OR EVIDENCE TO INDIC ATE THAT THE SHARE HOLDER WERE BENAMIDARS, FICTITIOUS PERSON OR THAT ANY PART OF THE SHARE CAPITAL MONEY REPRESENTED THE COMPANIES O WN INCOME FROM UNDISCLOSED SOURCES. THE APPELLANT HAS CITED V ARIOUS CASE LAWS IN THE ITS SUBMISSION WHERE IN IT HAS BEEN HELD THA T THE SHARE APPLICATION MONEY CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE APPELLANT AND CANNOT BE ADDED ULS 68, OF THE INCOME TAX ACT. THE FACTS OF THE CASE CITED BY THE APPELLANT ARE IDENTI CAL WITH THAT OF THE INSTANT CASE. RELIANCE IS ALSO PLACED ON FOLLOWING JUDICIAL PRONOUNCEMENTS: - - HARBANS LAL SARNA VS. DCIT (2007) 109 TTJ 861(CHD.) ITA NO.2347/DEL/2010 8 - CIT VS A.K. DAGA & SONS (2007) 163 TAXMAN 682 (MADR AS) - DIVINE LEASING & FINANCE LTD. 2991TR, DELHI - GENERAL EXPORTS & CREDITS PVT. LTD. 880/2006(SC) - A-ONE HOUSING COMPLEX LTD. V ITO WARD 1(1) 110ITD 3 61(DELHI) - CIT VS VALUE CAPITAL SERVICE PVT. LTD. 307 IT 334 ( DELHI) - CIT VS ORRISSA CORPORATION PVT. LTD 159 ITR 789(SC) IN A RECENT JUDGMENT DATED 30/01109 HON'BLE DELHI H IGH COURT IN THE CASE OF CIT VS GANGOUR INVESTMENT LTD. (ITA NO 34/2007) HAS HELD THE REVENUE CAN MAKE ADDITION UNDER SECTION 68 OF THE ACT ONLY IF THE ASSESSEE IS UNABLE TO EXPLAIN THE CREDITS APPEA RING IN THE BOOKS OF ACCOUNTS. IN THE INSTANT CASE THE APPELLANT HAS DUL Y EXPLAINED THE SAID CREDIT ENTRIES IN THE FROM OF VARIOUS DOCUMENTARY E VIDENCE. THE DOCUMENTARY EVIDENCE FILED CONTAINED DETAILS, WHICH SET OUT NOT ONLY THE IDENTITY OF THE SUBSCRIBERS, BUT ALSO GAVE INFO RMATION, WITH RESPECT TO THEIR ADDRESS, AS WELL AS, PAN NUMBERS, ASSESSME NT PARTICULARS ETC. BASED ON THESE FACTS, THE HON'BLE DELHI COURT DISMI SSED THE APPEAL OF REVENUE. THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. A.K. DAGA & SONS (2007) 163 TAXMAN 682 (MADRAS) HAS HELD THAT THE AMOUNT RECEIVED ON ACCOUNT OF SALE OF JEWELLERY CAN NOT BE BROUGHT TO TAX U/S 68 IN THE ABSENCE OF MATERIAL TO SHOW THAT THE TRANSACTION WERE SHAM. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE ITAT DELHI SMC BENCH IN THE CASE OF ITO VS RAJIV AGGARWAL (ITA NO.960/DELHIL2004) DATED 04-06-04. IN THIS CASE THE APPELLANT HAS MADE INVESTMENT IN SHARES IN EARLIER ASSESSMENT YEA R AND DURING THE RELEVANT ASSESSMENT YEAR, HE HAD SOLD THE SAID SHAR ES THROUGH A BROKER ITA NO.2347/DEL/2010 9 AND PAYMENT HAD BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUE. THE AO HAS FAILED TO BRING ANY MATERIAL ON RECORD IN SU PPORT OF HIS ALLEGATION THAT TRANSACTION WAS BOGUS. THE ITAT IN VIEW OF THE FACTS HAS CONCLUDED THAT THE TRANSACTION SHOWN BY ASSESSEE IN HIS RETURN WAS GENUINE TRANSACTION. 6. AFTER GOING THROUGH VARIOUS FACTS OF THE CASE A ND JUDICIAL PRONOUNCEMENT ON THIS ISSUE, CITED SUPRA, IT IS SEE N THAT THE APPELLANT'S CASE, IS COVERED BY THE ABOVE JUDGMENTS. IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENT AND THE FACTS OF THE CASE, I AM OF THE OPINION THAT THE APPELLANT DURING THE COU RSE OF PROCEEDINGS HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BON AFIDES OF THE TRANSACTION AND THE AO WAS NOT JUSTIFIED IN IGNORING VARIOUS EV IDENCE PROVIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE SHARE CAPITAL MONEY RECEIVED BY THE APPELLANT REPRESENTED ITS OWN UNDISCLOSED INCOME. IN FACT THE APPELLANT HAD FILED THE SHARE PURCHASE AGREEMENT WITH MR. VINAY KHOSLA WHO IS NRI ALONGWITH ALL THE DETAILS OF NRE BANK ALC FROM WHICH THE SHARE AP PLICATION MONEY WAS PAID. SIMILARLY ABOUT OTHER SHARE APPLICANT ALL THE EVIDENCE ARE FILED LIKE PAN NO. BANK ALC DETAILS, RESIDENTIAL ADDRESS ETC. WAS FILED. SINCE IN THE PRESENT CASE THE AO HAS FAILED TO BRIN G ANY CLINCHING EVIDENCES TO SUPPORT THE PRESUMPTION TAKEN BY HIM, IT IS CLEAR THAT EVEN THE RATIO OF JUDGMENT IN THE CASE OF MCDOWELL LTD. IS N OT APPLICABLE IN THE INSTANT CASE. IN THE LIGHT OF THE ABOVE DISCUSSION, I AM INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE AP PELLANT TO SUBSTANTIATE THAT THE SHARE APPLICATION MONEY RECEI VED BY IT WAS GENUINE TRANSACTION AND THE SAME WAS NOT ACCOMMODATION ENTR Y. I ALSO DON'T FIND ITA NO.2347/DEL/2010 10 ANY EVIDENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING R S. 1,44,85,000/- THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE A PPELLANT AS ITS UNDISCLOSED INCOME. THEREFORE THIS GROUND OF APPEAL IS ALLOWED. 7.1 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A) ON THE ISSUE IN DISPUTE AND THE CASE LAWS CITED IN THE IMPUGNED O RDER, WE ARE OF THE VIEW THAT THE ASSESSEE DURING THE COURSE OF PROCEEDINGS HAS D ISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BONAFIDES OF THE TRANSACTION AND T HEREFORE, THE AO WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCE PROVIDED TO HIM BY THE ASSESSEE. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO EST ABLISH THAT THE SHARE CAPITAL MONEY RECEIVED BY THE ASSESSEE REPRESENTED ITS OWN UNDISCLOSED INCOME. IN FACT THE ASSESSEE HAD FILED THE SHARE PURCHASE A GREEMENT WITH MR. VINAY KHOSLA WHO IS NRI ALONGWITH ALL THE DETAILS OF NRE BANK ALC FROM WHICH THE SHARE APPLICATION MONEY WAS PAID. SIMILARLY ABOUT OTHER S HARE APPLICANT ALL THE EVIDENCE ARE FILED LIKE PAN NO. BANK ALC DETAILS, R ESIDENTIAL ADDRESS ETC. WAS FILED. IN THE LIGHT OF THE ABOVE DISCUSSIONS, WE ARE INCLINED TO AGREE WITH THE FINDING OF THE LD. CIT(A) THAT THE SHARE APPLICATIO N MONEY RECEIVED BY THE ASSESSEE WAS A GENUINE TRANSACTION AND THE SAME WAS NOT AN ACCOMMODATION ENTRY. WE ALSO NOT FIND ANY EVIDENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. HENCE, LD. CIT(A) HAS RIGHTLY DELETED TH E ADDITION IN DISPUTE. ITA NO.2347/DEL/2010 11 MOREOVER, WE FIND CONSIDERABLE COGENCY IN THE SUBMI SSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN DISPUTE IS ALSO COVERED BY THE ORDER DATED 12.8.2015 OF THE HONBLE DELHI HIGH COURT PASSED I N ITA NO. 71, 72 & 84/2015 IN THE CASE OF CIT-9 (ERSTWHILE CIT-VI) VS. VRINDAV AN FARMS (P) LTD. WHEREIN IT HAS BEEN HELD AS UNDER:- 4. THE COURT IS OF THE VIEW THAT THE ASSESSEE BY PRODUCED SUFFICIENT DOCUMENTATION DISCHARGED ITS INITIAL ONU S OF SHOWING THE GENUINENESS AND CREDITWORTHINESS OF THE SHARE A PPLICANTS. IT WAS INCUMBENT TO THE AO TO HAVE UNDERTAKEN SOME INQUIRY AND INVESTIGATION BEFORE COMING TO A CONCLUSION ON THE ISSUE OF CREDITWORTHINESS. IN PARA 39 OF THE DECISION IN CIT VS. NOVA PROMOTERS & FINLEASE LTD. 342 ITR 169, THE COU RT HAS TAKEN NOTE OF A SITUATION WHERE THE COMPLETE PARTI CULARS OF THE SHARE APPLICANTS ARE FURNISHED TO THE AO AND TH E AO FAILS TO CONDUCT AN INQUIRY. THE COURT HAS OBSERVED THAT IN THAT EVENT NO ADDITION CAN BE MADE IN THE HANDS OF THE A SSESSEE UNDER SECTION 68 OF THE ACT AND IT WILL BE OPEN TO THE REVENUE TO MOVE AGAINST THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. 5. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEA LS, THE COURT IS SATISFIED THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEALS ARE DISMISSED. 7.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE PRECEDENT, AS AFORESAID, WE UPHOLD THE ACTION O F THE LD.CIT(A) ON THE DELETION OF ADDITION OF RS. 1,44,85,000/- MADE U/S. 68 OF THE ACT ON ACCOUNT OF ITA NO.2347/DEL/2010 12 INCOME FROM UNDISCLOSED SOURCES FOR UNEXPLAINED SHA RE APPLICATION AND ACCORDINGLY, WE DISMISS THE GROUND NO. 2 RAISED BY THE REVENUE. 8. AS REGARDS THE GROUND NO. 3 RELATING TO DISALLO WANCE OF 1,20,000/- BEING INTEREST PAID BY THE ASSESSEE IS CONCERNED, IT IS N OTICED THAT SAID INTEREST WAS PAID ON THE MONEY BORROWED FOR THE PURCHASE OF CAR. AS THERE IS DIRECT NEXUS WITH THE BORROWING FOR THE BUSINESS PURPOSE, NO DIS ALLOWANCE CAN BE MADE ON THE PRESUMPTION THAT INTEREST BEARING LOAN WAS ADVA NCED AS INTEREST FREE LOAN. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY, WE UPHOLD THE ACTION OF TH E LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, THE GROUND NO. 3 RAISED BY THE REVENUE STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/12/2015. SD/- SD/- [ [[ [O.P. KANT O.P. KANT O.P. KANT O.P. KANT] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 18/12/2015 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO.2347/DEL/2010 13