HEATFLEX CABLES PVT. LTD., NEW DELHI V. ITO, WARD- 11(2), NEW DELHI

ITA 2376/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4900 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Bogus Share capital; Income from undisclosed sources; Question of law; Block assessment; Onus to prove
• Section: 153A; 133(6); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.2376/DEL./2018 ASSESSMENT YEAR 2008-2009 M/S. HEAT FLEX CABLES (P) LTD., H-1464, DSIDC, NARELA INDUSTRIAL AREA, NEW DELHI 110 040. PAN AABCH3816K VS THE INCOME TAX OFFICER, WARD-11(2), NEW DELHI. (APP ELLANT ) (RESPONDENT) FOR ASSESSEE : SHRI GAUTAM JAIN, ADVOCATE & SHRI LALIT MOHAN, C.A. FOR REVENUE : SHRI S.L. ANURAGI, SR. D.R. DATE OF HEARING : 12 .0 7 .2018 DATE OF PRONOUNCEMENT : 01 .0 8 .2018 ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-35, NEW DELHI, DATED 15 .02.2018, FOR THE A.Y. 2008-2009, CHALLENGING THE REOPENING O F THE ASSESSMENT UNDER SECTION 147/148 OF THE I.T. ACT, 1 961 AND ADDITION OF RS.40 LAKHS UNDER SECTION 68 OF THE I.T . ACT, 1961. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ORIGINAL RETURN DECLARING INCOME OF RS.9,74,054/- FOR THE ASSESSMEN T YEAR 2 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI UNDER APPEAL WAS FILED BY THE ASSESSEE-COMPANY ON 2 9.09.2008 AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE I.T. ACT. THEREAFTER, THE DCIT, INVESTIGATION WING VIDE THEIR LETTER DATED 12.03.2013 HAS INFORMED THAT DURING THE COURSE OF S EARCH/ SURVEY ACTION UNDER SECTION 132/133A OF THE I.T. AC T CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMISES OF SHRI SU RENDER KUMAR JAIN AND HIS BROTHER SHRI VIRENDER JAIN, CERT AIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THES E DOCUMENTS INCLUDE DATE-WISE HAND-WRITTEN CHEQUE BOO KS AND CASH HOOKS MAINTAINED BY SHRI S.K. JAIN AND HIS BRO THER OVER A LONG PERIOD OF TIME. IN THESE CHEQUE BOOKS AND CA SH BOOKS DETAILS OF CHEQUE PROVIDED TO THE BENEFICIARIES COM PANIES/ ENTITIES/PERSONS AND RECEIPT OF CASH BY THEM AND BE NEFICIARIES WERE RECORDED. DURING THE COURSE OF POST SEARCH INV ESTIGATION, IT HAS BEEN EVIDENTLY ESTABLISHED ACCOMMODATION ENT RIES TO VARIOUS BENEFICIARY COMPANIES/ENTITIES/PERSONS THRO UGH CHEQUES THROUGH A NUMBER OF PAPER AND DUMMY COMPANI ES IN LIEU OF CASH. THESE DUMMY COMPANIES WERE CONTROLLED BY SHRI 3 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI SURENDER KUMAR JAIN AND BROTHERS. IT WAS FOUND FROM THE LIST THAT ASSESSEE HAS OBTAINED ACCOMMODATION ENTRY OF R S.40 LAKHS IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, ASSESSM ENT WAS REOPENED UNDER SECTION 148 OF THE I.T. ACT. THE ASS ESSEE WAS DIRECTED TO FILE RETURN OF INCOME, TO WHICH, ASSESS EE SUBMITTED THAT ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE I.T. AC T. THE ASSESSEE DO NOT FILE ANY OBJECTION TO THE REOPENING OF THE ASSESSMENT. THE A.O. ASKED THE ASSESSEE TO PROVE TH E GENUINENESS OF THE AMOUNT RECEIVED OF RS.40 LAKHS. THE ASSESSEE FILED DETAILS AS WELL AS LEDGER ACCOUNT AN D CONFIRMATION FROM THE PERSONS WHO HAVE CONTRIBUTED TO SHARE APPL ICATION MONEY AND UNSECURED LOANS. THE ASSESSEE EXPLAINED T HAT IT HAS RECEIVED THE AMOUNT OF RS.20 LAKHS EACH FROM M/S. F INAGE LEASING AND FINANCE (INDIA) LTD., AND M/S. SINGHAL SECURITIES PVT. LTD., THE A.O. IN ORDER TO VERIFY THE GENUINEN ESS AND CREDITWORTHINESS OF THESE COMPANIES, ISSUED NOTICE UNDER SECTION 133(6) TO BOTH THE COMPANIES. BOTH THE COMP ANIES HAVE 4 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI REPLIED THE LETTER UNDER SECTION 133(6) DIRECTLY TO THE A.O. ALONG WITH DOCUMENTARY EVIDENCE LIKE BANK STATEMENT, COPY OF THE RETURN AND CONFIRMATION OF ACCOUNTS AND CONFIRMATIO N OF TRANSACTION WITH THE ASSESSEE-COMPANY. THE A.O. THE N ASKED THE ASSESSEE TO PRODUCE DIRECTORS OF BOTH THESE COM PANIES. THE ASSESSEE IN RESPONSE TO THE SAME, PRODUCED MS. LOVE LY KUMARI AS DIRECTOR OF M/S. FINAGE LEASING AND FINANCE (IND IA) LTD. WHO IS ALSO EMPLOYEE OF THE SAME COMPANY, WHICH WAS REC ENTLY APPOINTED AS DIRECTOR. THE A.O. DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THAT ASSESSEE FAILED TO PROV E CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THE INSPECTOR REPORTED T HAT ABOVE COMPANY DO NOT EXIST AT THE ADDRESS. THE A.O. MADE ADDITION OF RS.40 LAKHS UNDER SECTION 68 OF THE I.T. ACT. THE A SSESSEE CHALLENGED THE REOPENING OF THE ASSESSMENT AS WELL AS ADDITION ON MERIT BEFORE LD. CIT(A). THE LD. CIT(A) NOTED TH AT ASSESSEE HAS NOT RAISED OBJECTION TO THE RE-ASSESSMENT PROCE EDINGS AND THAT INVESTIGATION CONDUCTED BY THE INVESTIGATION W ING IS PART OF 5 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI THE DEPARTMENT WHO HAVE PRODUCED SUFFICIENT EVIDENC E ON RECORD AGAINST THE ASSESSEE FOR REOPENING OF THE AS SESSMENT. THEREFORE, HE DID NOT INTERFERE WITH THE REOPENING OF THE ASSESSMENT AND REJECTED THIS GROUND OF APPEAL OF AS SESSEE. 3. THE ASSESSEE-COMPANY AS REGARDS THE ADDITION ON MERIT, SUBMITTED THAT ASSESSEE-COMPANY FILED COMPLE TE DOCUMENTARY EVIDENCE BEFORE THE AUTHORITIES BELOW W HICH PROVE THE IDENTITY OF THE INVESTORS, THEIR CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTION. ONE OF THE INVESTOR M/S. SINGHAL SECURITIES PVT. LTD., HAS ASSESSED TO TAX E VEN FOR BLOCK ASSESSMENT ORDER UNDER SECTION 153C/153A AND BOTH T HE INVESTORS HAVE CONFIRMED THE GENUINENESS OF THE TRA NSACTION DIRECTLY TO THE A.O. IN THEIR REPLY TO THE NOTICE U NDER SECTION 133(6) OF THE I.T. ACT. ONE OF THE DIRECTOR OF THE INVESTOR COMPANY M/S. FINAGE LEASING & FINANCE (INDIA) LTD., WAS PRODUCED BEFORE A.O. WHO HAVE CONFIRMED THE TRANSAC TION WITH THE ASSESSEE-COMPANY AND INVESTMENT MADE BY THEM. T HE A.O. DID NOT MAKE ANY FURTHER ENQUIRY ON THE SAME, THERE FORE, NO 6 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI ADDITION SHOULD BE MADE AGAINST THE ASSESSEE-COMPAN Y. THE ASSESSEE-COMPANY FILED THE BALANCE-SHEET OF BOTH TH E INVESTORS TO SHOW THAT M/S. SINGHAL SECURITIES PVT. LTD., HAS AVAILABILITY OF FUNDS OF RS.10,49,97,-000/- AND HAVE OTHER ASSET S AS WELL. IN THE CASE OF M/S. FINAGE LEASING & FINANCE (INDIA ) LTD., THEY HAVE AVAILABILITY OF THE FUNDS OF RS.14,57,42,032/- ALONG WITH OTHER ASSETS. IT WAS, THEREFORE, SUBMITTED THAT ASS ESSEE- COMPANY PROVED IDENTITY OF THE INVESTORS, THEIR CRE DITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. LARGE NUMBER O F CASE LAW WERE RELIED UPON IN SUPPORT OF THE ABOVE CONTENTION . THE CASE LAW RELIED UPON BY THE A.O. WERE DISTINGUISHABLE ON FACTS. THE LD. CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE-COMPANY AND DISMISSED THE APPEAL OF THE AS SESSEE- COMPANY. 4. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 7 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI 5. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO VARIOUS DOCUMENTS FILED BEFORE AUTHORITIES BELOW, H AS RELIED UPON THE SAME CASE LAWS WHICH WERE RELIED UPON BEFO RE LD. CIT(A). HE HAS ALSO RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOEL SONS G OLDEN ESTATE (P) LTD., IN ITA.NO.212/2012, DATED 11.04.2012 IN H IS WRITTEN SUBMISSIONS, IN WHICH IT WAS HELD AS UNDER : 3. WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES, THEIR PAN NUMBER, COPY OF BANK STATEMENT S, AFFIDAVITS AND BALANCE SHEET. THEREAFTER THE ASSESS ING OFFICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS/PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. THEAO DID NOT CONSEQUENT THERETO COND UCT ANY INQUIRY AND CLOSED THE PROCEEDINGS. THIS IS A C ASE WHERE THE ASSESSING OFFICER HAS FAILED TO CONDUCT 8 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI NECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE M ATTER IN DEPTH SPECIALLY AFTER THE AFFIDAVIT/ CONFIRMATION A LONG WITH THE BANK STATEMENTS ETC. WERE FILED. IN CASE THE AS SESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVEST IGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NO N- VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSME NT PROCEEDINGS, THE FACTUAL FINDINGS RECORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDER PASSED CANNOT BE TREATED AND REGARDE D AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES. 5.1. HE HAS ALSO RELIED UPON THE ORDER OF ITAT, DE LHI, SMC-BENCH IN THE CASE OF MOTI ADHESIVES P. LTD., DE LHI VS. ITO, WARD-17(2), NEW DELHI IN ITA.NO.3133/DEL./2018 DATE D 25.06.2018 IN WHICH IN PARAS 6 AND 7 IT WAS HELD AS UNDER : 9 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI 6. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, I HOLD THAT MERE NON-PRODUCTION OF DIREC TOR OF SAID SHAREHOLDER COMPANY CANNOT JUSTIFY ADVERSE INFERENCE U/S 68 OF THE ACT. EVEN IF THERE WAS ANY DOUBT IF ANY REGARDING THE CREDITWORTHINESS OF THE SHARE APPLICANTS WAS STILL SUBSISTING, THEN AO SHOULD HAV E MADE ENQUIRIES FROM THE AO OF THE SHARE SUBSCRIBERS AS HELD BY HON'BLE HIGH COURT IN CIT VS DATAWARE (SUPR A) WHICH HAS NOT BEEN DONE, SO NO ADVERSE VIEW COULD H AVE BEEN DRAWN, IN THIS CASE ON HAND, THE ASSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLICANTS, THEREAFTER THE ONUS SHIFTED TO AO TO DI SPROVE THE DOCUMENTS FURNISHED BY ASSESSEE AND IN MY VIEW IT CANNOT BE BRUSHED ASIDE BY THE AO TO DRAW THE ADVER SE VIEW WHICH HERE IN PRESENT FACTS CANNOT BE COUNTENA NCED. THEREFORE ADDITION OF RS. 25,45,000 MADE BY AO AND 10 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI SUSTAINED BY LD CIT(A) ARE HEREBY DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. 6. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O WRITTEN SUBMISSIONS FILED BY THE ASSESSEE-COMPANY A ND CASE LAWS RELIED UPON IN THE WRITTEN SUBMISSIONS WOULD B E CONSIDERED IN THIS ORDER. IT IS AN ADMITTED FACT TH AT DURING THE ASSESSMENT YEAR UNDER APPEAL, ASSESSEE-COMPANY HAS RECEIVED RS.40 LAKHS FROM THE TWO INVESTOR COMPANIES MENTION ED ABOVE. THE ASSESSEE-COMPANY HAS FILED DETAILS OF THEIR NET WORTH SUPPORTED BY THEIR BALANCE-SHEET WHICH SHOWS THAT M /S. SINGHAL SECURITIES PVT. LTD., WAS HAVING AVAILABILI TY OF THE FUNDS OF RS.10,49,97,000/- AND IN CASE OF FINAGE LEASING & FINANCE (INDIA) LTD., IT HAS AVAILABILITY OF FUNDS OF RS.14 ,57,42,032/-. THE TRANSACTIONS ARE CONDUCTED THROUGH BANKING CHAN NEL AND NO CASH WAS FOUND DEPOSITED IN THE BANK ACCOUNT OF THE INVESTOR 11 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI COMPANIES. THE ASSESSEE-COMPANY IN THE CASE OF BOTH THE INVESTOR COMPANIES FILED CONFIRMATION OF BOTH THE I NVESTORS, THEIR CERTIFICATE OF INCORPORATION, PAN OF THE INVE STOR COMPANIES AND THEIR DIRECTORS, COPY OF THE BOARD RESOLUTION, COPY OF THE SHARE APPLICATION FORM, COPY OF THE RECEIPT OF SHAR ES, COPY OF THE MEMORANDUM AND ARTICLE OF ASSOCIATION OF BOTH THE I NVESTORS, THEIR AUDITED ACCOUNTS, ACKNOWLEDGMENT OF FILING OF THE RETURN OF INCOME AND BANK STATEMENT. IN THE CASE OF M/S. S INGHAL SECURITIES PVT. LTD., COPY OF THE ASSESSMENT ORDER FOR A.Y. 2008- 2009 UNDER SECTION 153C, 153A HAVE BEEN FILED. IN T HE CASE OF M/S. FINAGE LEASING & FINANCE (INDIA) LTD., THE DIR ECTOR WAS PRODUCED FOR EXAMINATION WHOSE STATEMENT WAS RECORD ED BY A.O. IN WHICH SHE HAS CONFIRMED MAKING INVESTMENT I N ASSESSEE-COMPANY. THESE DOCUMENTS ON RECORD CLEARLY SUPPORT THE EXPLANATION OF THE ASSESSEE-COMPANY THAT IT HAS PROVED IDENTITY OF THE INVESTORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION IN THE MATTER. NO EV IDENCE HAVE BEEN BROUGHT ON RECORD IF SUCH INVESTMENT WAS MADE FROM THE 12 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI COFFERS OF THE ASSESSEE COMPANY. THE MATERIAL ON RE CORD SHOWS THAT INVESTORS HAVE NET WORTH TO MAKE THE ABOVE INV ESTMENTS IN THE ASSESSEE-COMPANY. BOTH THE INVESTORS ARE CORPOR ATE ENTITIES AND ASSESSED TO TAX AND TRANSACTIONS ARE MADE THROU GH BANKING CHANNEL. THE DOCUMENTARY EVIDENCES FILED BY ASSESSEE- COMPANY ON RECORD HAVE NOT BEEN REBUTTED BY THE A.O . IN ANY MANNER. I RELY UPON THE FOLLOWING DECISIONS. 7.1. CIT VS. FAIR INVESTMENT LTD., 357 ITR 146 IN WHICH IT WAS HELD THAT A.O. DID NOT SUMMON INVESTORS AND DID NOT MAKE EFFORTS. THERE IS NO FINDING THAT MATERIAL DISCLOSE D WAS UNTRUSTWORTHY. THE APPELLATE AUTHORITIES RIGHTLY DE LETED THE ADDITION. 7.2. DECISION OF SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD., (2008) 216 CTR 195 IN WHI CH IT WAS HELD AS UNDER: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S 13 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANC E WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOM E OF ASSESSEE COMPANY. 7.3. DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KAMDHENU STEEL AND ALLOYS LTD., & O RS. 361 ITR 220 (DEL.) IN WHICH IT WAS HELD AS UNDER : ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WO ULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TR ANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTE R IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED TH AT IT HAS CREATED EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AN D FASTEN THE ASSESSEE WITH SUCH A LIABILITY UNDER S.68; AO F AILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHE R INVESTIGATION AND THEREFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE. 14 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI 7.4. DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. VRINDAVAN FARMS PVT. LTD., ETC. ITA .NO.71 OF 2015 DATED 12 TH AUGUST, 2015 (DEL.), IN WHICH IT WAS HELD AS UNDER : THE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INCOME AS REFLECTED IN THEIR RETURN OF INCOME. IT WAS OBSERVED BY THE ITAT THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF THE VERACIT Y OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DEPARTMENT AL APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT. 7.5. DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. LAXMAN INDUSTRIAL RESOURCES PVT. LTD., ITA. NO.169 OF 2017 DATED 14 TH MARCH, 2017, IN WHICH IT WAS HELD AS UNDER : THE CIT(A) TOOK NOTE OF THE MATERIAL FILED BY THE ASSESSEE AND PROVIDED OPPORTUNITY TO THE AO IN REMAND PROCEE DINGS. THE AO MERELY OBJECTED TO THE MATERIAL FURNISHED BU T DID NOT UNDERTAKE ANY VERIFICATION. THE CIT(A) DELETED THE 15 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI ADDITION BY RELYING UPON THE DECISION OF THE HONBL E APEX COURT IN THE CASE OF LOVELY EXPORTS PVT.LTD. (SUPRA ) AND JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268. THE ITA T CONFIRMED THE OPINION OF THE LD.CIT(A). HONBLE HI GH COURT IN VIEW OF THE ABOVE FINDINGS NOTED THAT THE ASSESS EE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. THE ASSESSEE PROVIDED DETAILS OF SHARE APPLICANTS I.E. COPY OF THE PAN, ASSESSMENT PARTICULARS, MODE OF AMOUNT INV ESTED THROUGH BANKING CHANNEL, COPY OF RESOLUTION AND COP IES OF THE BALANCE SHEET. THE AO FAILED TO CONDUCT ANY SC RUTINY OF THE DOCUMENT, THE DEPARTMENTAL APPEAL WAS ACCORDING LY DISMISSED. 7.6. DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EARTH METAL ELECTRIC PVT. LTD., VS. CIT DATED 30 TH JULY, 2010 IN SLP.NO.21073 OF 1999, IN WHICH IT WAS HELD AS UNDER : 16 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI WE HAVE EXAMINED THE POSITION, WE FIND THAT THE SHAREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOG US AND FICTITIOUS THEREFORE, THE IMPUGNED ORDER IS SET ASI DE. 7.7. DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD., 299 ITR 268, IN WHICH IT WAS HELD AS UNDER : NO ADVERSE INFERENCE SHOULD BE DRAWN IF SHAREHOLDE RS FAILED TO RESPOND TO THE NOTICE BY A.O. 7.8. DECISION OF HONBLE M.P. HIGH COURT IN THE CA SE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD., (2013) 356 I TR 65, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEALS, THAT IF THE ASSESSEE HAD R ECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSUE THROUGH BANKING CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAREHOLDERS, NO ADDITION COULD BE MADE UNDER SECTI ON 68 OF THE INCOME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EVIDENCE TO INDICATE THAT THE SHAREHOLD ERS WERE 17 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI BENAMIDARS OR FICTITIOUS PERSONS OR THAT ANY PART O F THE SHARE CAPITAL REPRESENTED THE COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. IT WAS NOBODY'S CASE THAT THE NON- RESIDENT INDIAN COMPANY WAS A BOGUS OR NON-EXISTENT COMPANY OR THAT THE AMOUNT SUBSCRIBED BY THE COMPAN Y BY WAY OF SHARE SUBSCRIPTION WAS IN FACT THE MONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE IDENTITY OF THE INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONTENTION WAS THAT THE CREDITWORTHINESS OF THE CRE DITOR WAS ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHMENT O F THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS , THE ADDITION WAS RIGHTLY DELETED. CIT V. LOVELY EXPORTS P. LTD. [2009] 319ITR (ST.) 5 (SC) APPLIED. 7.9. DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. (I) DWARAKADHISH INVESTMENT P. LTD. , (ITA.NO. 911 OF 2010) AND (II) DWARKADHISH CAPITAL P. LTD., (ITA.NO.913 18 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI OF 2010) (2011) 330 ITR 298 (DEL.) (HC), IN WHICH I T WAS HELD AS UNDER : IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC O NE. THOUGH IN SECTION 68 OF THE INCOME TAX ACT, 1961, THE INIT IAL BURDEN OF PROOF LIES ON THE ASSESSES YET ONCE HE PROVES TH E IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISH ING THEIR PAN NUMBER OR INCOME-TAX ASSESSMENT NUMBER AND SHOW S THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO T HE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANT S COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIV E THE REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NO T LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER , IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE 'SOURCE OF SOURCE'. THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR TH E 19 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI ASSESSMENT YEAR 2001-02 ON SCRUTINY OF ACCOUNTS, TH E ASSESSING OFFICER FOUND AN ADDITION OF RS.71,75,000 IN THE SHARE CAPITAL OF THE ASSESSEE. THE ASSESSING OFFICE R SOUGHT AN EXPLANATION OF THE ASSESSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OFFERED A DETAILED EXPL ANATION. HOWEVER, ACCORDING TO THE ASSESSING OFFICER, THE AS SESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE APPLICATION MONEY FROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY, THE ASS ESSING OFFICER MADE AN ADDITION OF RS.35,50,000/- WITH THE AID OF SECTION 68 OF THE ACT, 1961 ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE. HOW EVER, IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) DE LETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD PR OVED THE EXISTENCE OF THE SHAREHOLDERS AND THE GENUINENE SS OF THE TRANSACTION. THE INCOME-TAX APPELLATE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS) AS IT WAS ALSO OF THE OPINION THAT THE AS SESSEE HAD BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE AP PLICANTS 20 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI AND THE SHARE APPLICATION MONEY HAD BEEN RECEIVED B Y WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COU RT: HELD, DISMISSING THE APPEALS, THAT THE DELETION OF ADDITION WAS JUSTIFIED. 7.10. DECISION OF HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. WINSTRAL PETROCHEMICALS P. LTD., 33 0 ITR 603, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUT ED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASS ESSEE- COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NO RMAL BANKING CHANNELS. ADMITTEDLY, COPIES OF APPLICATIO N FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSES SING OFFICER. SINCE THE APPLICANT COMPANIES WERE DULY INCORPORATED, WERE ISSUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH MONEY WAS TRANSFERRED TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES, THEY COUL D NOT BE SAID TO BE NON-EXISTENT, EVEN IF THEY, AFTER SUB MITTING THE 21 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI SHARE APPLICATIONS HAD CHANGED THEIR ADDRESSES OR H AD STOPPED FUNCTIONING. THEREFORE, THE COMMISSIONER ( APPEALS) AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE GENUINENESS OF THE TRANSACTIONS HAD BEEN DULY ESTAB LISHED BY THE ASSESSEE. 7.11. DECISION OF HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD., ( 2008) 307 ITR 334 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLI CANTS DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TR EATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. NO SUBSTANTIA L QUESTION OF LAW AROSE. 7.12. THE DECISIONS RELIED UPON BY THE LEARNED COU NSEL FOR THE ASSESSEE ABOVE SQUARELY APPLY TO THE FACTS AND 22 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI CIRCUMSTANCES OF THE CASE. SINCE THE INVESTOR COMPA NIES HAVE CONFIRMED THE TRANSACTION WITH THE ASSESSEE-COMPANY WHICH WERE CONDUCTED THROUGH BANKING CHANNEL AND ENTIRE E VIDENCE WERE BROUGHT ON RECORD, THEREAFTER, IF THE A.O. WAS NOT SATISFIED WITH THE DOCUMENTS ON RECORD AND EXPLANATION OF THE ASSESSEE- COMPANY AND THE INVESTORS, THE A.O. SHOULD HAVE MAD E FURTHER ENQUIRY ON THE SAME. HOWEVER, IT IS A CASE WHERE TH E A.O. HAS FAILED TO CONDUCT NECESSARY ENQUIRY, VERIFICATION A ND DEAL WITH THE MATTER IN DEPTH. THEREFORE, THE EXPLANATION OF THE ASSESSEE- COMPANY SHOULD NOT HAVE BEEN DISBELIEVED BY THE AUT HORITIES BELOW. IN THIS VIEW OF THE MATTER, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.40 LAKHS. THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 8. AS REGARDS REOPENING OF THE ASSESSMENT IS CONCE RNED, LEARNED COUNSEL FOR THE ASSESSEE DID NOT ARGUE SPEC IFICALLY THIS GROUND IN APPEAL. FURTHER, NO OBJECTIONS WERE FILED BEFORE THE AUTHORITIES BELOW TO CHALLENGE THE REOPENING OF THE ASSESSMENT IN THE MATTER. IN THIS VIEW OF THE MATTER, I AM OF THE VIEW THAT 23 ITA.NO.2376/DEL./2018 M/S. HEAT FLEX CABLES (P) LTD., NEW DELHI NO INTERFERENCE IS CALLED FOR IN THE MATTER AS REGA RDS REOPENING OF THE ASSESSMENT. I, ACCORDINGLY, REJECT THIS GROU ND OF APPEAL OF ASSESSEE. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 01 ST AUGUST, 2018 VBP/- COPY TO 1. THE APP ELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI.