Feron Life Sciences Pvt. Ltd., Delhi V. ACIT, New Delhi

ITA 2452/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3793 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 24-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: K SAMPAT SHRI V RAJAKUMAR ADVS
• Keywords: Accommodation entries; Onus to prove
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 2 452 /DEL/2017 [A.Y. 200 7 - 08 ] FERRON LIFE SCIENCES PVT. LTD VS. THE A.C.I .T. B - 1, YADAV PARK, OPP METRO PILLAR CIRCLE 11 ( 1 ) ABOVE CANARA BANK NEW DELHI MAIN ROHTAK ROAD NANGLOI, DELHI PAN : AAACF 9565 G [APPELLANT] [RESPONDENT] DATE OF HEARING : 1 1 .10.2017 DATE OF PRONOUNCE MENT : 31 .10.2017 ASSESSEE BY : SHRI K. SAMPAT SHRI V. RAJAKUMAR, ADVS REVENUE BY : SHRI T. VASANTHAN SR. DR ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A), DELHI VIDE ORDER DATED 19 . 03 .201 5 FOR A.Y. 20 07 - 08. . 2. THE ASSESSEE HA S RAISED BY THE FOLLOWING G ROUNDS OF APPEAL : - BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT RESPECTFULLY SUBMITS THAT : 2 1. THE HONBLE CIT (APPEALS) - 3, NEW DELHI HAS ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING ADDITIONS OF RS.47,00,000/ - UNDER SECTION 68 OF THE I.T. ACT; 2. THE LD. A.O AND THE HONBLE CIT(A ) HAVE ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IN MAKING AND UPHOLDING RESPECTIVELY THE ADDITION OF RS. 47,00,000/ - ON ACCOUNT OF SHARE APPLICA TION MONEY RECEIVED BY THE APPELLANT, IGNORING THE FACTS THAT IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS HAD BEEN PROVED BY THE APPELLANT; 3. THE LD. A O AND THE HONBLE CIT(A) HAVE ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IN APPLYING THE PROVISIONS OF SECTION 68 OF THE ACT DESPITE THE FACT THAT IDENTITY OF THE SHARE APPLICANTS, GENUIN ENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHARE APPLICANTS HAD BEEN PROVED DURING THE PROCEEDINGS BY THE APPELLANT. THE ABOVE GROUNDS ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER A ND/OR WITHDRAW ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THE APPEAL. 3 2. BRIEFLY STATED, THE F ACTUAL MATRIX OF THE CASE REVEALS THAT THE APPELLA N T - COMPANY IS TRADING IN ALL KINDS OF PHARMACEUTICAL FORMULATIONS. A RETURN OF INCOME SHOWING A LOSS OF RS. 28,32,700/ - WAS FILED BY THE APPELLANT . THE ASSESSING OFFICER DIRECTED THE C OMPANY TO ESTABLISH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE FIVE SUBSCRIBERS TO THE SHARE CAPITAL OF RS. 50 LAKHS RECEIVED BY THE APPELLANT DURING THE COURSE OF THE YEAR. THE ASSESSEE HAD FILED A FACTUAL NOTE TO THE AFORESAID QUERY RAISED BY THE ASSESSING OFFICER BUT NO EVIDENCE WAS STATED TO BE FILED TO SHOW THAT THE SUBSCRIBERS WERE HAVING THEIR OWN PROFIT MAKING APPARATUS AND THAT THEY WERE INVOLVED IN GENUINE BUSINESS ACTIVITY. T HE ASSESSING OFFICER , A FTER GOING THROUGH THE STATEMENTS MADE AN ADDITION OF RS.50,00,000/ - U/S 68 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] ON THE FINDING THAT THE ASSESSEE HAS FAILED TO ESTABLISH IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SUBSCRIBERS WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE COMPANY. T HE ASSESSING OFFICER ADDED THE CONTRIBUTION OF THE FOL LOWING SUBSCRIBERS U/S 68 OF THE ACT : - NAME OF THE SHARE HOLDER SHARE APPLICATI O N RECEIVED DURING FY 2006 - 07 DATE OF APPLICATION MONEY RECEIVED NO. OF SHARES ALLOTTED FACE VALUE PER SHARE PRAVEEN BHATNAGAR 300,000.00 23/08 / 06 30 000 10.00 SACHET MEDIA PVT. 1,000,000.00 05/04/06 10000 0 10.00 4 LTD SACHET MEDIA PVT. LTD 1,000,000.00 05/04/06 10000 0 10.00 PRAKASH PUNIT COMMERCE & CONSULTANTS PVT. LTD. 700,000.00 01/05/06 70 000 10.00 POLO LEASING & FINANCE PVT. LTD. 1,000,000.00 17/05/06 100 000 10.00 LAXMI INFIN PVT LTD. 1,000,000.00 11/09/06 100000 10.00 3. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT( A), THE APPELLANT FILED PHOTO COPIES OF THE CONFIRMATIONS, COPY OF THE BALANCE SHEET AND COPY OF THE BANK ACCOUNTS IN THE CASE OF LAXMI INFIN PVT. LTD. THE APPELLANT WAS DIRECTED BY THE CIT(A) TO ESTABLISH IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE SUBSCRIBERS IN THE LIGHT OF THE OBSERVATIONS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF N.R. PORTFOLIO PVT. LTD. AND MAF ACADEMY PVT. LTD. THE CIT(A) CITING THE OBSERVATIONS OF THE HONBLE HIGH COURT IN CIT VS. N.R. PORTFOLIO PVT. LTD. NOTICED THAT TH E APPELLANT HAD SUBMITTED THE REQUISITE DETAILS THROUGH THE C OMPANY DIRECTOR SHRI PRAVEEN BHATNAGAR. ACCORDING TO THE CIT(A) THE APPELLANT HAD NOT FILED ANY EVIDENCE WITH REGARD TO THE PROFIT MAKING APPARATUS OF THE OTHER SUBSCRIBERS. THE CIT(A) OBSERVED T HAT N O INTEREST OR DIVIDEND HAD BEEN PAID BY THE COMPANY TO THE SUBSCRIBERS AND THAT T HE PROFIT MOTIVE IN THE CASE OF THESE INVESTMENTS WAS ENTIRELY ABSENT. THE CIT(A) REASONED THAT ANY PERSON WHO WOULD 5 INVEST MONEY OR GIVE LOAN WOULD CERTAINLY SEEK A RETURN OR INCOME AS CONSIDERATION. THESE CRUCIAL FACTS REMAINING UN - REBUTTED, WHICH WERE MATERIAL FOR ASCERTAINING CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS, A SUM OF RS. 47,00,000/ - WAS CONFIRMED U/S 68 OF TH E ACT BY THE CIT(A) . 4. THE ASSESSEE COM PANY IS NOW IN APPEAL BEFORE THIS TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW HAD MIS DIRECTED THEMSELVES IN THE VERIFICATION OF THE AMOUNTS RECEIVED AS SHARE CAPITAL SUBSCRIPTIO NS FROM THE VARIOUS COMPANIES AS NAMED . THE REVENUE AUTHORITIES HAD OVERLOOKED THE PRINCIPLE THAT THE ONUS ON THE ASSESSEE WA S ONLY TO SUBMIT PRIMA FACIE EVIDENCE WITH REGARD TO THE IDENTITY, CREDIT - WORTHINESS AND GENUINENESS OF THE TRANSACTIONS IN QUESTION. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HIS PRINCIPLE HAS BEEN REITERATED MANY TIMES BY DIFFERENT HIGH COURTS IN THE COUNTRY. HE SUBMITTED THAT EVEN THE HON'BLE A PEX COURT HA D GONE TO THE EXTENT OF RULING THAT IN CASES WHERE THE IDENTITY IS CERTAIN THEN THE VERIFICATION OF THE RELEVANT AMOUNT IS REQUIRED TO BE DONE IN THE HANDS OF THE SUBSCRIBERS SO IDENTIFIED. IF ANY FLAW OR DISCREPANCY IS NOTICE D THEREIN THEN IT HA S TO BE DEALT WITH IN THE ACCOUNT OF THE SUBSCRIBER. HE POINTED OUT THAT THE HON'BLE A PEX COURT HAS HELD SO IN THE CASE OF CIT VS. STELLER INVESTMENTS LTD. (2001) 251 ITR 263 AND LATER REITERATED 6 IT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 319 ITR (S T ) 5 (S C ). EVEN THE FULL BENCH OF THE JURISDICTIONAL HIGH COURT IN SOPHIA FINANCE (1994) 205 ITR 98 HAS ABIDED BY THIS BASIC PRINCIPLE AS STATED IN STELLER INVESTMENTS. 5. LD. COUNSEL FOR THE ASSESSEE ARGUED THAT T HE CRITERIA AS ENUNCIATED BY THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF N.R. PORTFOLIO PVT. LTD. [ SUPRA ] AND MAF ACADEMY PVT. LTD. [ SUPRA ] W ERE IN THE CONTEXT OF THE FACTS OF THOSE CASES WHERE THE STATED SUBSCRIBERS WERE EITHER UNTRACEABLE AND/OR WERE NOT RESPOND ING TO THE NOTICES OF THE ENQUIRY AND THE INITIAL ONUS ON THE ASSESSEE HAD BEEN DISPLACED THROUGH THE FINDINGS MADE BY THE ASSESSING OFFICER . THE LD. COUNSEL POI NTED OUT THAT THE SUBJECT CASE WA S NOT ONE SUCH. THE LD. COUNSEL FURTHER SUBMITTED THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAD SUBMITTED BEFORE THE ASSESSING OFFICER THE REQUISITE DETAILS OF SHARE APPLICATION MON IES , INCLUDING THE CONFIRMATION S OF THE SEVERAL SHARE APPLICANTS, THEIR ADDRESSES, DETAILS OF ALLOTMENT WITH BANK PARTICULARS AND SUCH OTHER SIMILAR DETAILS AND EVIDENCES WHICH HA D ALL GONE TO CONFIRM THE IDENTITY, CREDIT - WORTHINESS AND THE GENUINENESS OF THE SHARE SUBSCRIBERS . THE LD. COUNSEL FURTHER 7 SUBMITTED THAT ALL TRANSACTIONS WERE INVARIABLY THROUGH BANKING CHANNELS. 6. REFERRING IN DETAIL TO THE ASSESSING OFFICERS ORDER , THE LD. COUNSEL POINTED OUT THAT THE ASSESSING OFFICER HAS ERRONEOUSLY RELIED UPON COURT CASES WHICH HAD NO RESEMBLANCE WITH THE FACTS OF THE PRESENT CASE. THE DECISION IN THE CASE OF CIT VS. MU S SADI LAL RAM BHAROSE (1987) 165 ITR 14 AND CIT VS. SARDAR STORE (1986) 161 ITR 53 WERE MAINLY IN THE CONTEXT OF THE PENAL TY PROVISIONS . THE OTHER D ECISION CITED BY THE ASSESSING OFFICER AS CIT VS. S. KAMARAJ PANDIAN OF THE MADRAS HIGH COURT (1984) 150 ITR 703 WAS IN THE CONTEXT OF A CASE WHERE IN RESPONSE TO SUMMONS ISSUED FOR VERIFI CATION OF LOANS , ONE OF THE BANKERS HAD DENIED THE TRANSACTION , AND SO AN ADVERSE NOTICE AS TAKEN IN ASSESSMENT WAS APPROVED BY THE HONBLE HIGH COURT . THE CASE OF SUMIT I DAYAL VS. CIT (1997) 214 ITR 801 WAS IN THE CONTEXT OF A PERSON DOING BUSINESS IN FANCY ITEMS AND WHO STATED TO HAVE PARTICIPAT ED IN RACES WHEN IT W AS FOUND BY THE ASSESSING OFFICER THAT THE SAID PERSON HAD NO EXPERIENCE OF RACES . THE ASSERTIONS OF THE ASSESSEE AS INCOME DERIVED FROM RACES WERE , THEREFORE, DISBELIEVED AND SO THE OBSERVATION S OF THE HON'BLE SUPREME COURT ENSUED IN THAT CONTEXT. 8 7. LD. COUNSEL FURTHER POINTED OUT THAT N EXT DECISION CITED BY THE ASSESSING OFFICER IS IN THE CASE OF SREE LEKHA BANERJEE VS. CIT ( 1963) 49 ITR 112 WHICH WAS IN THE CONTEXT OF THE BURDEN OF PROOF IN THE ENCASHMENT OF HIGH DENOMINATION NOTES AND THE CONSEQUENCE OF THE REJECTION OF THE EXPLANATION OF THE ASSESSEE AND THE RELEVANT INFERENCE THEREAFTER . THAT AGAIN WAS HARDLY MATERIAL IN THE FACTS OF THE SUBJECT CASE. THE LD. COUNSEL EMPHASIZED THAT T HERE WAS NO DISPUTE IN THE SUBJECT CASE AS TO THE INITIAL BURDEN OF PROOF WHICH ALL DECISIONS HAVE UNIFORMLY CONFIRMED THAT IT LAY ON THE ASSESSEE ONLY PRIMA FACIE. THE LD. COUNSEL ALSO POINTED OUT THAT THE DECISION OF THE HON'BLE APEX COURT IN A. GOVINDARAJULU MUDALIAR VS. CIT (1958) 34 ITR 807 WAS DELIVERED UNDER THE 1922 ACT WHICH DID NOT CONTAIN A DEEMING PROVISION LIKE SECTION 68 IN THE 1961 ACT . THAT DECISION IS WIDELY RECOGNIZED TO HAVE LAID FOUNDATION IN THE 1961 ACT IN TERMS OF THE EVIDENCE ACT REQUIREMENTS . 8. LD. COUNSEL FOR THE ASSESSEE , REFERRING TO THE ORDER OF THE LD. CIT(A), POINTED OUT THAT THE LD. CIT(A) ERRED IN RELYING UPON THE TWO PRECEDEN TS AS CITED BY HIM FOR THERE WAS NO SIMILARITY OF FACTS OF THE CITED CASES WITH THE CASE OF THE ASSESSEE . IT WAS EXPLAINED THAT I N THE CASE OF N.R. PORTFOLIO PVT. LTD. , THOUGH THE BASIC DETAILS WITH REGARD TO 9 THE SHARE SUBSCRIPTION TO PROVE THE IDENTIFY, CREDIT - WORTHINESS AND GENUINENESS WAS SUBMITTED BY THAT ASSESSEE , YET AFTER ENQUIRY BY THE ASSESSING OFFICER, THE SUBSCRIBERS CONCERNED WERE FOUND TO BE ENTRY OPERATORS WHO HAD DEPOSITED LARGE SUMS OF MONEY IN CASH AND WHO HAD FAILED TO RESPOND TO SUMMONS ISSUED BY THE ASSESSING AUTHORITIES FOR VERIFICATION PURPOSES. 9. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISION S : A) CIT V. DIVINE LEASING & FINANCE LTD. (2008) 299 I T R 268 (DEL) , B) CIT V. CREATIVE WORLD TELEFILMS LTD. (2011) 333 ITR 100 (BOM) , C) CIT V. VICTOR ELECTRODES LTD. (2010) 329 ITR 271 (DEL) , D) CIT V. WINSTRAL PETROCHEMICALS (P) LTD. ((2011) 330 ITR 603 (DEL) , E) CIT V. GANGESHWARI METAL (P) LTD. (2013) 361 ITR 10 (DEL) AND , F) U NREPORTED ORDER OF THE HONBLE DELHI HIGH COURT IN CIT V. GOEL SONS GOLDEN ESTATE PVT. LTD. ITA 212/2012 DATED 11.04.2012 T HE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PARAMETERS ENUNCIATED IN THE ABOVE MENTIONED CASES WAS DULY COMPLIED WITH IN THE SUBJECT CASE IN THE CASE OF ALL THE SUBSCRIBERS . THE OBJECTION TAKEN 10 BY THE ASSESSING OFFICER WAS, THEREFORE , ERRONEOUS , NEEDLESS AN D UNTENABLE . 10. ON THE OTHER HAND, T HE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT CREDENTIALS OF THE PARTIES TO THE SUBSCRIPTION OF THE SHARE CAPITAL OF THE APPELLANT DID NOT INSPIRE CONFIDENCE. THE ASSESSEE COMPANY HAD NOT PRODUCED THE MANDATORY BASIC DOCUMENTS FROM THE PARTIES FROM WHOM SUBSCRIPTION FOR SHARE CAPITAL H AD BEEN RECEIVED. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE PARTIES SUBSCRIBING TO THE SHARES REMAINED UN - ESTABLISHED. THE CASES C ITED BY THE ASSESSING OFFICER WERE IN THE CONTEXT OF THE GENERAL PRINCIPLES INVOLVED IN COMPLETING THE ASSESSMENT IN SUCH TYPE OF CASES. IT MATTERED LITTLE, THEREFORE, TO WHICH CATEGORY THEY BELONGED. THE SUBSCRIBERS WER E PAPER COMPANIES WHO WE RE ENGAGED O NLY IN PROVID ING ACCOMMODATION ENTRIES . C O NSEQUENTLY , THE NECESSARY ADDITIONS WERE CORRECTLY MADE U/S 68 OF THE ACT BY THE ASSESSING OFFICER . STRONGLY SUPPORTING THE ORDER OF THE CIT(A) , THE LD. DR SUBMITTED THAT THE CIT(A) HAD RIGHTLY CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER BECAUSE THE BASIC EVIDENCE CONCERNING THE GENUINENESS OF THE TRANSACTIONS REMAINED UN - PROVED BY THE ASSESSEE. 11 11. THE LD. SENIOR DR STRONGLY RELIED UPON THE DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. JANSAMPARK ADVERTISING & MA RKETING PVT. LTD. (2015) 375 ITR 373 TO SUBMIT THAT IF ANY LAPSE IS FOUND BY THE TRIBUNAL IN THE VERIFICATION AS CONDUCTED B Y THE ASSESSING OFFICER OR THE CIT(A), THE MATTER REQUIRES TO BE REMITTED BACK TO THE LOWER AUTHORITIES FOR CONDUCTING A PROPER SCRUTINY. THE LD. DR ALSO RELIED UPON THE RECENT DECISION OF THE HON'BLE DELHI HIGH COURT IN PRINCIPAL CIT VS. B IKRAM SINGH, ITA NO. 55/2016 TO SUBMIT THAT THE ADDITIONS MADE U/S 68 OF THE ACT WERE DONE RIGHTLY BY THE ASSESSING OFFICER IN TERMS OF THE PRINCIPLES ENUMERATED IN THAT CASE CONCERNING BOGUS ENTRIES . 12. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILA BLE ON RECORD INCLUDING THE IMPUGNED ORDER AND THE PAPER BOOK AS FILED BY THE ASSESSEE - COMPANY AND ALSO THE SEVERAL CASE LAWS AS CITED BY BOTH SIDES . ALL THE GROUNDS ARE IN CONNECTION WITH THE ADDITION MADE IN ASSESSMENT U/S 68 AMOUNTING TO RS.50,00,000/ - WHICH WA S SUSTAINED BY THE CIT(A) TO THE EXTENT OF RS.47,00,000/ - . IT IS A CASE WHERE SEVERAL PARTIES HAVE PAID SUBSCRIPTION TO THE SHARE CAPITAL OF THE ASSESSEE - COMPANY WHICH IS INTO THE BUSINESS OF MANUFACTURING AND SALE OF MEDICAL FORMUL ATION S . ONE OF THE SUBSCRIBERS SHRI PRAVEEN BHATNAGAR IS A DIRECTOR OF THE COMPANY. H IS SUBSCRIPTION IN A SUM OF RS. 3 LAKHS 12 WAS ADDED TO THE INCOME OF THE SUBJECT YEAR AS UNEXPLAINED BY THE ASSESSING OFFICER. THE LD. CIT(A) HAS DELETED THIS ADDITION IN T HE APPEAL. 13. I N THE CASE OF THE OTHER SUBSCRIBERS, T HE COMPLETE ADDRESS ALONG - WITH THE BANK PARTICULARS, THE DATE OF RECEIPT OF SUBSCRIPTION AND THE DATE OF ALLOTMENT OF SHARES , ETC. ACCOMPANIED BY THE BANK STATEMENT OF THE RESPECTIVE PARTIES WERE SUBMITTED BEFORE THE ASSESSING OFFICER . IN PARTICULAR THERE IS NO ALLEGATION BY THE AUTHORIT IES THAT THERE IS ANY INVOLVEMENT OF CASH IN THE SUBJECT TRANSACTION S . IT IS ALSO A FACT THAT THERE IS NO REMARK OR COMPLAINT BROUGHT ON RECORD BY THE ASSESSING OF FICER WITH REGARD TO THE CHARACTER AND CONDUCT OF ANY OF THE SHARE APPLICANT S BY THE INVESTIGATION WING. ALL THE SUBSCRIBERS ARE TAX ASSESSEES. T HEIR IDENTITY HAS BEEN ACCEPTED BY THE AO . FURTHER, THE SUBSCRIPTIONS ARE INVARIABLY THROUGH BANKING CHANNEL S . IN T HE BANK ACCOUNTS AS SUBMITTED BEFORE THE LOWER AUTHORIT IES, THERE IS NO REPORT OF ANY PRE - DEPOSIT OF CASH TO CLEAR THE CHEQUE S ISSUED FOR SHARE SUBSCRIPTION BY THE SEVERAL PARTIES. IN THAT BACKGROUND THE CON FIRMATION SUBMITTED BY THE ASSESSEE OF THE SU BSCRIBERS TO THE SHARE CAPITAL APPEAR PRIMA FACIE TO BE COMPLETE AND IN ORDER . NO SPECIFIC 13 FLAW OR DISCREPANCY OF ANY NATURE HAS BEEN EITHER NOTICED BY THE REVENUE AUTHORITIES OR OTHERWISE BROUGHT ON RECORD BY THEM . 14. THE REVENUE AUTHORITIES STATE THAT VERIFICATION IS IN COMPLETE IN THE CONTEXT OF THE RULING S OF THE JURISDICTIONAL HIGH COURT IN N.R. PORTFOLIO PVT. LIMITED ( SUPRA) AND MAF ACADEMY PVT. LIMITED (SUPRA ) . THE IR SPECIFIC OBJECTION IS THAT THE PROFIT EARNING APPARATUS OF THE SUBSCRIBER S HAS NOT BEEN EXPLAINED BY THE ASSESSEE WHICH, THEREFORE, WARRANTED AN ADDITION U/S 68 OF THE ACT. ALSO THE POTENTIAL FOR INCOME GENERATION IS ABSEN T . THAT APPROACH IN MY VIEW IS NOT CORRECT. THAT IS BECAUSE IN THE TWO CASES AS CITED BY THE DEPARTMENT , THE INITIAL ONUS AS CLAIMED TO BE DISCHARGED BY THE ASSESSEE WAS NOT FOUND TO HAVE BE EN DISCHARGED . IT IS IN THAT CONTEXT THAT COLLATERAL PROOF WAS DESIRED BY THE REVENUE AUTHORITIES . THE ASSESSING OFFICER , IN THE PRESENT CASE, HAD NOT BROUGHT ON RECORD AN Y MATERIAL IN REPUDIATION OF THE ASSESSE E S CONTENTION S. HE HAS REJECTED TH IS EVIDENCE CANVASSED BY THE ASSESSEE WITHOUT ANY MATERIAL. THE JURISDICTIONAL HIGH COURT HAS POINTED OUT IN NOVA PROMOTERS & FINLEASE PVT. LIMITED, (2012) 342 ITR 169 (DEL ) AS UNDER: IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE 14 BURDEN PLACED UPON HIM UNDER SEC. 68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT A ND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT A NY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM 15. THE CASE IN HAND IS ALSO ONE SUCH CASE WHERE THE EVIDENCE AS MUSTERED AND CANVASSED BY THE ASSESSEE REMAINED UN - REPUDIATED ON FACTS BY THE ASSESSING OFFICER . SO THE NEED FOR OTHER EVIDENCE WAS NOT QUITE NECESSARY IN THE CIRCUMSTANCES OF THE CASE . T HE OMISSION TO FILE EITHER THE BANK STATEMENT OR THE PROOF OF THE PROFIT EARN ING APPARATUS OF THE SUBSCRIBING SHARE HOLDER IS, IN SUCH CIRCUMSTANCES, NOT FATAL TO THE PROOF OF THE CREDIT ORS . S UCH MAY BECOME NECESSARY IN A SITUATION WHERE THE ASSESSING OFFICER HAS DISPLACED THE ONUS AND HAS SHIFTED IT BACK TO THE ASSESSEE WITH MATERIAL ADDUCED BY HIM IN REPUDIATION. TO INSIST THAT THE PROOF OF THE EXISTENCE OF A PROFIT EARNING APPARATUS MU ST EXIST AS A PRE - CONDITION TO THE ACCEPTANCE OF THE GENUINENESS SHARE SUBSCRIPTION IN ALL CASE S WOULD BE STRETCHING THE ONUS OF PROOF BEYOND THE LIMITS. THE SHAREHOLDERS ARE NOT SUCH WHO WERE NOT FOUND AT THE GIVEN ADDRESS OR WHO HAD FAIL ED TO APPEAR BEFORE THE DEPARTMENTAL AUTHORITIES ON SUMMON S . THESE ARE ALSO NOT SUCH CASES 15 WHERE CASH HAS BEEN DEPOSITED BY THE SUBSCRIBERS IN THEIR BANK ACCOUNT TO PAY FOR THE SHARE SUBSCRIPTION S . 16. I HAVE NOTED THAT THE ASSESSING OFFICER HAS BEEN PROVI DED CONFIRMATIONS FROM ALL THE SHARE SUBSCRIBERS. THEIR MASTER DATA FROM THE ROC RECORDS HAS ALSO BEEN OBTAINED AND PLACED ON RECORD . THEIR OWN INDIVIDUAL BANK STATEMENTS HAVE BEEN SCRUTINIZED AND NOTHING INTRIGUING OR QUESTIONABLE HAS BEEN FOUND IN THEM. COPIES OF ALL THESE DOCUMENTS HAVE BEEN FILED AT PAGES 74 TO 111 OF THE PAPER BOOK . NO SPECIFIC FLAW OR DISCREPANCY HAS BEEN NOTICED IN THEM . THEY ALL GO TO CONFIRM THAT NECESSARY AND ADEQUATE ENQUIRIES AND INVESTIGATIONS HAVE BEEN CARRIED OUT BY THE REVENUE AUTHORITIES . NOT ONLY THAT, THE CIT(A) IN THE APPEAL PROCEEDINGS HAD REFERRED THE MATTER BACK TO THE ASSESSING OFFICER AND OBTAINED A REMAND REPORT FROM HIM ON THE VARIOUS POINTS IN CONTROVERSY . THAT REMAND REPORT HAS BEEN CONSIDERED BY THE CIT (A) WHILE PASSING THE IMPUGNED ORDER. IN FACT, THEREFORE, THIS IS NOT A CASE OF ANY INADEQUATE ENQUIRY SO AS TO COMPEL ME TO REFER THE MATTER BACK TO THE REVENUE AUTHORITIES FOR A SCRUTINY AND EXAMINATION IN TERMS OF THE DECISION CITED BY THE LD. DR IN THE CASE OF JAN SAMPARK LIMITED SUPRA. THE EVIDENCE ON RECORD IN SUPPORT OF THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SUBSCRIBERS AS EXAMINED AND 16 REPORTED BY THE ASSESSING OFFICER DOES NOT CONTAIN ANY MATERIAL WHICH COULD BE STATED TO BE FALSE, FACTITIOUS OR OTHERWISE CONTRIVED. 17. I AGREE WITH THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN TERMS OF CASE LAWS INCLUDING NOVA PROMOTERS & FINLEASE PVT. LIMITED [ SUPRA [ UNLESS THE ASSESSING OFFICER HAS SHIFTED BACK THE INITIAL ONUS DISCHARGED BY THE ASSESSEE WITH REPUDIATOR Y EVIDENCE AND MATERIAL S T HE ASSESSEE CANNOT BE VISITED WITH ADVERSE CONSEQUENCE U/S 68 OF THE ACT . I FIND THAT NO SUCH MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO DISPLACE THE EV IDENCE MARSHA L LED BY THE ASSESSEE. IN THE CIRCUMSTANCES THE ADDITION AS SUSTAINED BY THE CIT(A) IN A SUM OF RS . 47 LAKHS U/S 68 OF THE ACT IS UNSUSTAINABLE AND THE SAME IS DIRECTED TO BE DELETED. ACCORDINGLY, ALL THE THREE GROUNDS RAISE D BY THE ASSESSEE ARE ALLOWED. 18 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 2 452 /DEL/2017 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 .10.2017. SD/ - [B.P. JAIN] ACCOUNTANT MEMBER DATED: 31 ST OCTOBER, 2017 VL/ 17 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI