Assistant Commissioner of Income tax, V. M/s. Ashwa Multi Trade Pvt.Ltd., Jalna

ITA 2568/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0102 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-08-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Unexplained cash credit; Bogus Share capital; Source of fund; Additional evidence; Question of law; Fair market value; Accommodation entries; Onus to prove; Liquidation; Capital Gains
• Section: 271(1)(c); 143(3); 195; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM SL. NO. ITA NO. NAME OF APPELLANT NAME OF RESPONDENT ASST. YEAR 1 - 2 1602/PUN/2015 1603/PUN/2015 ACIT, JALNA CIRCLE, JALNA. ASHVA MULTI TRADE PVT. LTD., BLOCK NO.175, LAXMIKANT NAGAR, JALNA AMBAD ROAD, NEAR SAI GARDEN HOTEL, JALNA-431203. PAN: AAECM3414F 2010 - 11 2011-12 3 2568/PUN/2016 ACIT, JALNA CIRCLE, JALNA. ASHVA MULTI TRADE PVT. LTD., BLOCK NO.175, LAXMIKANT NAGAR, JALNA AMBAD ROAD, NEAR SAI GARDEN HOTEL, JALNA-431203. PAN: AAECM3414F 2012 - 13 REVENUE BY : SHRI N. ASHOK BABU ASSESSEE BY : SHRI RAHUL KAUL SHRI ANAND R. PARTANI / DATE OF HEARING : 14.08.2019 / DATE OF PRONOUNCEMENT : 20.09.2019 / ORDER PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION FILED BY THE REVENUE. THE APPEALS IN ITA NO.1602 & 1603/PUN/2015 ARE DIRECTED AGAINST THE SEPARATE ORDER OF CIT(A)-1, AURANGABAD DATED 21.09.2015 & 22.09.2015 FOR THE ASSESSMENT YEARS 2010-11 & 2011-12 RESPECTIVELY. THE APPEAL IN ITA NO.2568/PUN/2016 IS DIRECTED AGAINST THE ORDER OF CIT(A)-1, AURANGABAD DATED 24.08.2016 FOR THE ASSESSMENT YEAR 2012-13. 2 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 2. THE GROUNDS RAISED IN ALL THESE THREE APPEALS OF THE REVENUE ARE WITH COMMON ISSUE I.E. THE ISSUE OF ADDITION U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED CASH CREDITS. THEREFORE, CONSIDERING THE COMMONALITY OF THE ISSUE, WE PROCEED TO EXTRACT THE GROUNDS RELEVANT FOR THE ASSESSMENT YEAR 2010-11 IN ITA NO.1602/PUN/2015 , WHICH READ AS UNDER :- I) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AURANGABAD HAS ERRED IN DELETING THE ADDITION OF RS.3,55,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF INCOME TAX ACT, 1961. II) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), AURANGABAD HAS ERRED IN NOT CONFIRMING THE FACTS AS SUBMITTED BY THE A.O. IN HIS REMAND REPORT ABOUT THE CREDIBILITY, GENUINENESS AND IDENTITY OF THE SHARE APPLICATION MONEY RECEIVED. III) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A), AURANGABAD BE QUASHED AND THAT THE ORDER OF THE A.O. BE RESTORED. IV) THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEMAND. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE WAS FORMERLY KNOWN AS M/S. ASHWA MULTI TRADE PVT. LTD. AND IS A GROUP CONCERN OF M/S. LAXMI COTSPIN LIMITED. BEFORE THE ASSESSING OFFICER 4. DURING THE PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSING OFFICER NOTICED FROM THE BALANCE SHEET THAT THE FACTS RELATING TO THE DETAILS OF SHARE APPLICATION MONEY PENDING FOR ALLOTMENT AMOUNTING TO RS.6.55 CRORES. THE BREAKUP OF THE SAME INCLUDES THE FOLLOWING :- SR.NO. NAME OF THE PARTY F.Y. 2008-09 F.Y. 2009-10 3 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 1 ANAND VYAPAR PVT. LTD. RS.2,50,00,000/- RS.6,05,00,000/- 2 PUSHPANJALI TRADING PVT. LTD. - RS. 32,00,000/- 3 RADICO SERVICES PVT. LTD. - RS. 12,00,000/- 4 KAILASH LOYA - RS. 1,00,000/- 5 MADHAVI DINESH RATHI RS. 3,50,000/- RS. 3,50,000/- 6 MRS. SAROJ KANTILAL RATHI RS. 1,50,000/- RS. 1,50,000/- TOTAL RS.2,55,00,000/- RS.6,55,00,000/- 5. THE SHARE APPLICATION MONEY, WHICH WAS SUBSCRIBED BY (I) ANAND VYAPAR PVT. LTD. (RS.6.05 CRORE); (II) PUSHPANJALI TRADING PVT. LTD. (RS.32 LAKH); AND, (III) RADICO SERVICES PVT. LTD. (RS.12 LAKH), WAS SCRUTINIZED BY THE ASSESSING OFFICER. ON FINDING THAT THESE THREE PARTIES ARE THE KOLKATA BASED COMPANIES, THE ASSESSING OFFICER ISSUED A COMMISSION TO THE ITO (INV.), KOLKATA FOR EXAMINATION OF THE SAID THREE PARTIES. ON 14.01.2013, THE ITO (INV.), KOLKATA INVOKED THE PROVISIONS OF SECTION 131 OF THE ACT ON THESE THREE COMPANIES AND ALSO SENT INSPECTOR OF INCOME TAX (ITI) FOR ENQUIRY OF SAID THREE COMPANIES. THE SUMMONS WERE RETURNED UN-SERVED AND THEN, THE ITI SUBMITTED A NEGATIVE REPORT TO THE ITO (INV.), KOLKATA. ON THE BASIS OF THE SAID NEGATIVE REPORT OF THE ITI, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ON 21.01.2013 PROPOSING TO TREAT THE SAID SHARE APPLICATION MONEY AS BOGUS. IN REPLY TO THE SAID SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED A REPLY ON 29.01.2013 CONFIRMING THE IDENTIFY, GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS OF THESE THREE COMPANIES AS WELL AS THE TRANSACTIONS. THE ASSESSEE FURNISHED THE PAN DETAILS, CIN DETAILS, INCOME TAX RETURNS OF THESE THREE COMPANIES AND ROC RETURNS OF THE COMPANIES ETC TO THE ASSESSING OFFICER. FURTHER, THE ASSESSEE RELIED HEAVILY ON THE RELATED 4 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 DOCUMENTATION AND ON THE ACCOUNTING ENTRIES IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THE SAID THREE COMPANIES. CONSIDERING THE ABOVE SUBMISSIONS, THE ASSESSING OFFICER FURTHER ASKED FOR THE SUPPLEMENTARY REPORT FROM ITO (INV.), KOLKATA. IN REPLY TO THE REPORT OF THE ITO (INV.), KOLKATA, THE ASSESSEE ON 28.02.2013 SUBMITTED FURTHER INFORMATION STATING THAT THE ASSESSEE/COMPANIES SUBMITTED THE DETAILS THROUGH THE CENTRAL RECEIVING SECTION (CPS) AND NOT DIRECTLY TO THE ITO (INV.), KOLKATA. THUS, WHILE COMMENTING ON THE ALLEGED NON-EXISTENCE NATURE OF THE SAID THREE COMPANIES, THE ITO ACKNOWLEDGED THE FACTS RELATING TO THE SUBMISSION/COMPLIANCE BY THE ASSESSEE AND SUBMISSION OF THE SUBMITTED THE DETAILS IN THE CENTRAL RECEIVING SECTION. ASSESSING OFFICER RECEIVED THE SAME LATER AFTER THE FIRST NEGATIVE REPORT OF THE ITI WAS SENT BY THE ITO (INV.), KOLKATA. SHRI NEMICHAND JAIN, WHICH IS DIRECTOR OF THE ONE OF THE THREE COMPANIES (PARA 4.1 TO 4.5 OF THE ASSESSMENT ORDER) ATTENDED TO NOTICES OF THE ITO (INV.), KOLKATA. THE ASSESSING OFFICER ISSUED ONE MORE SHOW CAUSE NOTICE TO THE ASSESSEE ON 11.03.2013 PROPOSING TO TREAT THE TRANSACTIONS AS BOGUS. IN REPLY TO THE SAID SHOW CAUSE NOTICE, THE ASSESSEE AGAIN SUBMITTED THAT ALL THE THREE COMPANIES ARE GENUINELY EXISTING AND THEY COMPLIED WITH ALL THE PROVISIONS OF I.T. ACT AND COMPANIES ACT. ACCORDINGLY, THE COMPANIES HAVE CREDITWORTHINESS TO INVEST AND RELY ON THE TRANSACTIONS RELATING TO SHARE APPLICATION MONEY. THE COMPLIANCE LEVELS OF THE INFORMATION BY ASSESSEE IS TABULATED AS UNDER :- TABLE SHOWING THE FURNISHING OF INFORMATION/DOCUMENTATION BY THE ASSESSEE. 5 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 M/S ANAND VYAPAR PVT. LTD. M/S. PUSHPANJALI TRADING PVT. LTD. M/S. RADICO SERVICES PVT. LTD. PAN DETAILS FURNISHED FURNISHED FURNISHED CIN DETAILS FURNISHED FURNISHED FURNISHED BALANCE SHEET FURNISHED FURNISHED FURNISHED INCOME TAX RETURNS FURNISHED FURNISHED FURNISHED ROC RETURNS FURNISHED FURNISHED FURNISHED 6. SHARE APPLICATION MONEY DETAILS: FURTHER, EXPLAINING THE REASONS FOR RAISING OF THE SHARE APPLICATION MONEY, THE ASSESSEE SUBMITTED THAT M/S. LAXMI COTSPIN LIMITED THE GROUP COMPANY HAD A PROPOSAL TO GO FOR PUBLIC ISSUE AND THE ASSESSEE HAD A PROPOSAL TO INVEST AN AMOUNT OF RS.10 CRORE INTO THE SAID COMPANY. THE ASSESSEE COULD ONLY RAISE THE SAID AMOUNT OF RS.6.55 CRORE AS A PART OF THE AMOUNT TO BE INVESTED OR TRANSFERRED TO M/S. LAXMI COTSPIN LIMITED. CONSIDERING THE FAILURE TO TRANSFER THE ENTIRE AMOUNT OF RS.10 CRORE, THE PROPOSAL OF THE PUBLIC ISSUE HAD TO BE CANCELLED AND, THEREFORE, THE IPO DID NOT MATERIALIZE. IN THE PROCESS, THE PAYMENTS RECEIVED FROM (I) M/S. PUSHPANJALI TRADING PVT. LTD. AND (II) M/S. RADICO SERVICES PVT. LTD. (RS.12 LAKH) WERE REFUNDED . AGAINST THE SHARE APPLICATION MONEY RECEIVED FROM M/S. ANAND VYAPAR PVT. LTD., OUT OF OWN SHARES OF M/S. LAXMI COTSPIN LIMITED, THE ASSESSEE ALLOTTED THE SAID SHARES TO M/S. ANAND VYAPAR PVT. LTD. IN LIEU OF THE SHARE APPLICATION MONEY. EXPLAINING ALL THE SAID ISSUES AND RELYING ON VARIOUS DECISIONS, THE ASSESSING OFFICER, AS PER DISCUSSION GIVEN IN PARA 5 AND 5.1 OF HIS ORDER, PROCEEDED TO INVOKE THE PROVISIONS OF SECTION 68 OF THE ACT IN RESPECT OF 6 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 ONLY SUM OF RS.3.55 CRORE. FOR THE SAKE OF COMPLETENESS, THE SAID PARA 5 AND 5.1 ARE EXTRACTED HEREUNDER :- 5. IN RESPECT OF SHARE APPLICATION MONEY OF RS.3,55,00,000/- RECEIVED FROM ANAND VYAPAR PVT. LTD., THE CONTENTION OF THE AR OF THE ASSESSEE IS NOT ACCEPTABLE ON THE FOLLOWING GROUNDS : I) ON VERIFICATION OF RETURN OF INCOME FILED BY THE ANAND VYAPAR PVT. LTD., FOR THE A.Y. 2010-11, IT IS NOTICED THAT COMPANY HAS SHOWN A LOSS OF RS.37,287/-. II) ON VERIFICATION OF BALANCE SHEET OF ANAND VYAPAR PVT. LTD., IT IS NOTICED THAT COMPANYS AUTHORIZED SHARE CAPITAL IS OF RS.33,00,000/- OUT OF WHICH, ONLY RS.32,96,000/- IS ISSUED AND PAID-UP CAPITAL. AGAINST THIS CAPITAL, COMPANY HAS SHOWN SECURITY PREMIUM OF RS.6,07,05,000/-. III) ON VERIFICATION OF BANK ACCOUNT EXTRACT OF ANAND VYAPAR PVT. LTD., IT IS NOTICED THAT AT THE TIME OF DECISION OF INVESTMENT, THE COMPANY WAS NOT HAVING SUFFICIENT FUNDS. FUNDS HAVE BEEN CREDITED IN INSTALMENTS, INTO COMPANYS BANK ACCOUNT AT VARIOUS DATES AND ON THE SAME DATE, THE SAME FUNDS HAVE BEEN TRANSFERRED TO THE ASSESSEES BANK ACCOUNT. 5.1 AN ANALYSIS OF ASSESSEES AUTHORIZED CAPITAL AND MONEY RECEIVED AS SHARE APPLICATION MONEY AND IN THE BACKGROUND OF ENQUIRIES CONDUCTED BY ITO (INV) AND ALSO THE FACT THAT, THE ASSESSEE WAS HAVING MEAGRE AMOUNT OF SHARE CAPITAL, IT IS BEYOND IMAGINATION AND PRUDENCE THAT, AN INVESTOR WILL INVEST SUBSTANTIAL AMOUNT IN COMPANY WHICH HAS VERY LIMITED AND NEGLIGIBLE NET WORTH AND HAVING NOT ANY BUSINESS ACTIVITY. THEREFORE, THE RECEIPT OF SHARE APPLICATION MONEY IS DOUBTFUL. IT IS QUIET SURPRISING THAT A SUBSTANTIAL AMOUNT OF MONEY HAS BEEN INTRODUCED IN THE ASSESSEE COMPANY IN THE FORM OF SHARE APPLICATION MONEY PENDING FOR ALLOTMENT, INSPITE OF THE FACT THAT, IT IS NOT DOING ANY BUSINESS AROUSES SUSPICION, AS REGARDS THE SHARE APPLICATION MONEY INTRODUCED BY ANAND VYAPAR PVT. LTD. IT WAS NOTICED THAT THE SOURCE OF MONEY INTRODUCED OF IS NOT PROVED SATISFACTORILY IN THE LIGHT OF FACTS MENTIONED ABOVE. 7. OTHERWISE, THE ASSESSEE RELIED ON THE RATIO OF VARIOUS DECISIONS SUCH AS (I) ROSHAN DI HATTI VS. CIT, 107 ITR 938 (SC) (FOR DISCHARGING THE ONUS); (II) CIT VS. N. R. PORTFOLIO PVT. LTD. IN ITA NO.134/2012 DATED 21.12.2012 (DELHI-HC) (THE DETAILS OF IDENTIFICATION, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS); (III) CIT VS. LOVELY EXPORT, 216 CTR 195 7 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 (SC) ETC. DISTINGUISHING THE ABOVE DECISIONS IN PARA 5.3, THE ASSESSING OFFICER ACCEPTED THE FACTS THAT THE ASSESSEE FURNISHED ALL THE DETAILS SUCH AS NAMES, ADDRESSES, PAN PARTICULARS, BANK STATEMENTS AND COMMENTED THAT THE SAME IS NOT SUFFICIENT. FURTHER, THE ASSESSING OFFICER IN PARA 5.6 COMMENTED THAT THE PRINCIPLE OF PREPONDERANCE OF EVIDENCES DECIDED AGAINST THE ASSESSEE FOR THE REASON THAT THE ANAND VYAPAR PVT. LTD. (AVPL) IS AN EXISTENCE ONLY ON PAPER AND DID NOT INDULGE IN BUSINESS ACTIVITY. THERE WAS A REFERENCE TO THE (I) HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. DURGA PRASAD MORE, 82 ITR 540, (II) HONBLE DELHI HIGH COURT JUDGEMENT IN THE CASE OF INDUS VALLEY PROMOTERS (P) LTD. VS. CIT, 305 ITR 202 (RELATING TO ASSESSING OFFICERS SATISFACTION), (III) HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. P. MOHANAKALA, 291 ITR 278 (SC) (RELATING TO ENTRIES IN THE BANK TRANSACTION IS NOT SACROSANCT) BEFORE TAKING A DECISION AGAINST THE ASSESSEE AND IN FAVOUR OF MAKING ADDITION OF RS.3.55 CRORE. BEFORE THE CIT(A) 8. THE CIT(A) DISCUSSED THE ABOVE FACTS AND THE DEVELOPMENT BEFORE THE ASSESSING OFFICER AND DELETED SUCH ADDITION OF RS.3.55 CRORE. THE DISCUSSION GIVEN IN PARA 5.10 OF HIS ORDER IS RELEVANT. WHILE GIVING RELIEF, CIT(A) FOLLOWED AND RELIED ON VARIOUS JUDICIAL PRECEDENTS AS REFERRED TO IN PARA 5.10 (SUPRA). FOR THE SAKE OF COMPLETENESS, THE SAID PARA 5.10 OF THE ORDER OF THE CIT(A) IS EXTRACTED HEREUNDER :- 8 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 5.10 AS REGARDS ADDITION OF RS.3.55 CRORES MADE AN ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/S ANAND VYAPAR PVT. LTD., THE APPELLANT HAD FILED THE NECESSARY EVIDENCES. SINCE THE DIRECTOR OF INVESTOR COMPANY WAS RESIDING AT KOLKATA AND ITS REGISTERED OFFICE WAS ALSO AT KOLKATA, THE APPELLANT COULD NOT HAVE COMPELLED THE DIRECTOR TO APPEAR BEFORE THE A.O AT AURANGABAD. ACCORDING TO THE FINANCIAL STATEMENT OF THE APPLICANT COMPANY FOR THE YEAR ENDED 31.03.2010, THE SAID COMPANY HAD ENOUGH CREDITWORTHINESS TO MAKE INVESTMENT IN THE SHARE CAPITAL OF THE APPELLANT COMPANY. NOTHING ADVERSE HAS BEEN NOTICED IN THE DOCUMENTS AND BANK STATEMENT FILED BY THE APPELLANT COMPANY. THERE IS NO EVIDENCE THAT MONEY DEPOSITED IN THE BANK ACCOUNT OF INVESTOR COMPANY, CAME FROM THE COFFERS OF THE APPELLANT. ON THE OTHER HAND, IT IS OBVIOUS THAT SOURCES OF INVESTMENT WERE LIQUIDATION OF EARLIER INVESTMENTS. THE DOCUMENTS FILED WITH REGISTRAR OF COMPANIES ALSO DO NOT LEAD TO ANY ADVERSE INFERENCE. IT IS NOT A CASE WHERE THE ASSESSING OFFICER WAS IN POSSESSION OF SOME MATERIAL THAT DISCREDITED AND IMPEACHED THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHED THE LINK BETWEEN SELF-CONFESSED ACCOMMODATION ENTRY PROVIDERS WHOSE BUSINESS IT WAS TO HELP ASSESSEE BRING INTO ITS BOOKS OF ACCOUNT THE UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION. THE TRANSACTION ENTERED BY THE APPELLANT COMPANY WITH M/S ANAND VYAPAR PVT. LTD. IS TRUE, GENUINE AND NOT A CAMOUFLAGE. IT IS ALSO DUTY RECORDED IN THE BOOKS OF SHARE APPLICANT. EVEN THE SOURCES OF THE SHARE APPLICANT FOR MAKING INVESTMENT STAND EXPLAINED. THE SUSPICION HOWEVER STRONG IT MAY BE, CANNOT TAKE PLACE OF PROOF. ON THE FACTS & CIRCUMSTANCES AND IN LAW, THE ADDITION MADE BY THE A.O. HAS NO LEGS TO STAND AND CANT BE SUSTAINED. ACCORDINGLY, I DIRECT THE A.O. TO DELETE THE ADDITION OF RS.3,55,00,000/- MADE BY HIM. THESE GROUNDS OF APPEAL ARE ALLOWED. 9. FROM THE ABOVE, IT IS EVIDENT THAT WITH REFERENCE TO THE AVPL, ONE OF THE SHARE APPLICATION MONEY SUBSCRIBER, THE CIT(A) HELD THAT THE SAID COMPANY AND ITS IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS ARE NOT TO BE DOUBTED. NO ADVERSE INFERENCE WAS BROUGHT BY THE ASSESSING OFFICER TO DEMONSTRATE THAT IT IS A CASE OF ACCOMMODATION ENTRIES. THE SOURCE OF THE CONTRIBUTION OF RS.3.55 CRORE OF THE SHARE APPLICATION MONEY IS IN THE SALE PROCEEDS OF THE EARLIER INVESTMENTS OF THE SAID COMPANY. ABSENCE OF ANY ADVERSE MATERIAL TO DISCREDIT THE BOOK ENTRIES WAS ALSO DISCUSSED. THE CIT(A) HELD THAT THE TRANSACTIONS ENTERED BY THE ASSESSEE AND THE AVPL ARE GENUINE. HE DISMISSED THE 9 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 ASSESSING OFFICERS FINDINGS ON THE SUSPICION NATURE OF THE TRANSACTIONS IN ITS ENTIRETY. 10. AGGRIEVED WITH THE ABOVE FINDING OF THE CIT(A), THE REVENUE IS IN APPEALS BEFORE US. PROCEEDINGS BEFORE THE TRIBUNAL 11. THE LD. DRS ARGUMENTS : THE LD. DR FOR THE REVENUE, AT THE OUTSET, RELIED HEAVILY ON THE ORDER OF THE ASSESSING OFFICER, REPORT OF THE ITO (INV.), KOLKATA, ETC. THE LD. DR IS CRITICAL OF THE FINDINGS GIVEN IN THE ORDER OF THE CIT(A). MENTIONING OF THE ABOVE FACTS, LD. DR SUBMITTED THAT THIS IS A CASE WHERE OUT OF RS.6.55 CRORES, THE TOTAL INVESTMENTS MADE BY THIS CONCERN AVPL ONE OF THREE KOLKATA BASED COMPANIES, I.E. RS.3.55 CRORE, WAS ONLY ADDED BY THE ASSESSING OFFICER AS BOGUS SHARE APPLICATION MONEY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. FURTHER, LD. DR SUBMITTED THAT WHEREVER THE SHARE APPLICATION MONEY WAS REFUNDED TO THE TWO OTHER COMPANIES, THE ASSESSING OFFICER FAIRLY DID NOT MAKE ANY ADDITION. THOUGH, THE FACTS ARE IDENTICAL, NO ALLEGATION OF BOGUS TRANSACTION OR ACCOMMODATION ENTRIES IN THESE TWO CASES. IT IS ONLY DUE TO THE DISTINGUISHING FACT OF REFUND OF THE SHARE APPLICATION MONEY. HOWEVER, THE ADDITION OF RS.3.55 CRORE INVOLVING THE AVPL MADE AS THE SHARE APPLICATION MONEY WAS NEVER REFUNDED BY THE ASSESSEE TO THE AVPL. ACKNOWLEDGING THE FACT, SHRI NEMICHAND JAIN IS THE PROMOTER AND DIRECTOR OF THE AVPL I.E. THE SUBJECT-MATTER OF ADDITION, LD. DR 10 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 SUBMITTED THAT SHRI NEMICHAND JAIN IS THE DIRECTOR AND THE DETAILS WERE SUBMITTED IN KOLKATA IN THE CENTRAL RECEIVING SECTION. FURTHER, LD. DR MENTIONED THAT, BEING A KOLKATA BASED COMPANY, THE TRANSACTIONS BETWEEN THE ASSESSEE AND THE AVPL ARE DOUBTFUL AS MENTIONED IN PARA 5.1 OF THE ASSESSMENT ORDER. WHEN THE QUESTION IS RAISED BY THE BENCH ABOUT THE ADVERSE EVIDENCE, IF ANY, GATHERED BY THE ASSESSING OFFICER/ITO (INV.), KOLKATA, THE LD. DR FAIRLY RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE REPORT OF THE ITO (INV.), KOLKATA. 12. THE LD. ARS ARGUMENTS : ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELIED HEAVILY ON THE ORDER OF THE CIT(A). REFERRING TO ALL THE DETAILS NARRATED ABOVE, LD. COUNSEL SUBMITTED THAT THERE ARE 6 SUBSCRIBERS IN TOTAL CONTRIBUTION RS.6.55 CRORE BY THE END OF THIS YEAR UNDER CONSIDERATION AND SAME WERE COLLECTED BY THE ASSESSEE FOR IN TURN SUBSCRIBING INTO THE SHARE CAPITAL IN M/S. LAXMI COTSPIN LIMITED, WHICH IS GOING TO THE PUBLIC ISSUE. THE ASSESSING OFFICER PICKED UP 3 KOLKATA BASED COMPANIES I.E. (I) ANAND VYAPAR PVT. LTD.; (II) PUSHPANJALI TRADING PVT. LTD.; AND, (III) RADICO SERVICES PVT. LTD FOR DEEP SCRUTINY AND OUTSOURCED THE SERVICES OF THE INVESTING WING, KOLKATA. ALTHOUGH THE SUMMONS WERE ISSUED TO ALL THE 3 COMPANIES, THE RESPONSE OF THE POSTAL AUTHORITIES, THE REPORTING OF THE INSPECTOR OF INCOME TAX, ARE EQUALLY ADVERSE TO ALL THE 3 COMPANIES. HOWEVER, THE ASSESSING OFFICER PROCEEDED TO BELIEVE THE TRANSACTIONS OF THE ASSESSEE WITH (I) PUSHPANJALI TRADING PVT. LTD. AND (II) RADICO SERVICES PVT. LTD. AND REJECTED THE 11 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 ASSESSEES TRANSACTIONS WITH AVPL. REFERRING TO THE TRANSACTIONS OF AVPL, THE LD. AR FOR THE ASSESSEE SUBMITTED THAT WHILE THE GROSS TRANSACTIONS WITH AVPL TO THE TUNE OF RS.6.55 CRORE, THE ASSESSING OFFICER TREATED THE AVPL TO THE EXTENT OF RS.3.55 CRORE OF THE CURRENT ASSESSMENT YEAR 2010-11. IN THE PROCESS, ASSESSING OFFICER ACCEPTED RS.2.5 CRORES RECEIVED IN THE ASSESSMENT YEAR 2009-10 FROM SAME AVPL. FOR THIS YEAR ONLY, THE ASSESSING OFFICER TREATED THE AVPL AS NON- EXISTENT, BOGUS ETC AND INVOKED PROVISIONS OF SECTION 68 OF THE ACT AND NOT TO THE ENTIRE AMOUNT OF RS.6.55 CRORE. EXPLAINING THE SAME, LD. AR SUBMITTED THAT THE ASSESSEE RECEIVED A SUM OF RS.2.5 CRORE FROM THE AVPL IN THE ASSESSMENT YEAR 2009-10 AND THE SAME STANDS UNDISTURBED BY THE ASSESSING OFFICER. REITERATING THE ARGUMENT, LD. AR FOR THE ASSESSEE ARGUED STATING THAT FOR THE PURPOSE OF RS.2.5 CRORE AVPL CANNOT BE AN EXISTING TAXPAYERS AND FOR BALANCE AMOUNT OF RS.3.55 CRORE AVPL CANNOT BE NON-EXISTENT TAXPAYERS. ON FINDING FAULT WITH THE ASSESSING OFFICERS MANNER OF MAKING ADDITION OR INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT, LD. AR SUBMITTED THAT THE ASSESSING OFFICER BLIND OBLIGATION FOLLOWED TO THE FACTS OF THE PRESENT CASE AND THE SAME CANNOT BE FREE TO SUSPECT OR DOUBT THE GENUINENESS OF THE TRANSACTIONS. 13. FURTHER, EXPLAINING THE JUDGEMENTAL LAWS IN THIS REGARD, LD. COUNSEL SUBMITTED THAT THE ASSESSEE FURNISHED A LOT OF FACTS RELATING TO THE AVPL I.E. PAN DETAILS, CIN DETAILS, COPIES OF THE INCOME TAX RETURNS OF AVPL, COPIES OF RETURNS FILED BY ROC FOR THE RELEVANT PERIOD, COPIES OF 12 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 THE BANK STATEMENTS EVIDENCING THE REQUISITE TRANSACTIONS AMOUNTING TO RS.6.55 CRORE ETC. MENTIONING THAT THE ASSESSEE DISCHARGED HIS ONUS IN ITS ENTIRETY, LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFICER CANNOT MERELY REJECT THE DATA WITHOUT FINDING FAULT WITH ANY ONE OF THEM IN ANY FORUM. SUBMITTING THAT THE ASSESSING OFFICER CANNOT REJECT THE TRANSACTIONS AS BOGUS WHILE THE ASSESSEE SUCCESSFULLY DISCHARGED HIS ONUS LEAVE ALONE PRIMARILY ONUS. IN THIS CASE, THE ASSESSING OFFICER DID NOT GATHER ANY ADVERSE INFORMATION WHATSOEVER AGAINST THE ASSESSEE. REFERRING TO THE REPORT OF THE INSPECTOR OF INCOME TAX AND THE POSTAL AUTHORITIES RESPONSE ABOUT THE EXISTENCE OF AVPL, LD. COUNSEL SUBMITTED THAT THE FACTS OF SHRI NEMICHAND JAIN, THE PROPRIETOR AND DIRECTOR OF THE AVPL IS APPEARED BEFORE THE ITO (INV.), KOLKATA WHO CONFIRMS THE EXISTENCE OF THE ASSESSEE AND THE SAME CONSTITUTES AN ADDITIONAL EVIDENCE IN THE PRE-ACTIVE STAND OF THE ASSESSEE IN MATTERS RELATING TO THE DISCHARGE OF ONUS. FURTHER, LD. COUNSEL RELIED HEAVILY ON THE VARIOUS DECISIONS/JUDGEMENTS DISCUSSED BY THE ASSESSING OFFICER AND THE CIT(A) IN THEIR RESPECTIVE ORDERS WHICH RELIED ON BY THE ASSESSEE. MENTIONING THAT THERE IS NO REASON TO DISCREDIT TRANSACTIONS, LD. COUNSEL SUBMITTED THAT THIS IS NEITHER A CASE OF SHELL COMPANY NOR A CASE OF ACCOMMODATION ENTRIES. COMMENTING ON THE ASSESSING OFFICERS DECISION IN RESTRICTING THE ADDITION TO THE CONTRIBUTION OR INVESTMENTS OF AVPL, LD. COUNSEL SUBMITTED THAT THE SUSPICION ABOUT THE KOLKATA BASED COMPANIES IS RESTRICTED TO AVPL ONLY AND LEFT THE INVESTMENT BY (I) PUSHPANJALI TRADING PVT. LTD. AND (II) RADICO SERVICES PVT. LTD.. THERE IS NO CONSISTENCY WITH 13 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 THE ASSESSING OFFICER IN DEALING WITH THE ISSUE UNDER CONSIDERATION. RESTRICTING THE ARGUMENT, LD. COUNSEL SUBMITTED THAT THE AVPL CANNOT BE NON-EXISTENT FOR THE AMOUNT OF RS.3.55 CRORE AND OUT OF THE TRANSACTION OF RS.6.55 CRORE, HE ALSO FILED A WRITTEN SUBMISSION IN THIS REGARD. THUS, DURING THE HEARING TIME, CERTAIN ISSUES RELATING TO IDENTITY, CREDITWORTHINESS AND THE ASSESSING OFFICERS DECISION TO ADD PART AMOUNT OF PAYMENT TO THE ASSESSEE, ONUS ETC WERE SHORTLISTED AND THE LD. AR WAS DIRECTED TO ADDRESS TO THE SAID ISSUES. IN RESPONSE, THE LD. AR FOR THE ASSESSEE FILED A WRITTEN SUBMISSION AND THE RELEVANT PARTS OF THE SAME ARE EXTRACTED HEREUNDER :- REF:- APPEAL NO. ITA 1602 AND 1603 /PN/2015 FOR AY 2010-11 AND AY 2011-12, APPEAL NO. ITA 2568/PN/2016 FOR AY 2012-13 M/S. ASHVA MULTI TRADE PVT. LTD., PAN:AAECM3414F 1. ISSUE RELATED TO IDENTITY OF ANAND VYAPAR PVT LTD M/S ANAND VYAPAR PVT LTD WAS SUBJECTED TO SCRUTINY ASSESSMENT FOR A.YR 2007-08 ON 18.06.2009. BY THAT TIME THE FUNDS AVAILABLE WITH M/S AVPL ON ACCOUNT OF SHARE CAPITAL AND RESERVES WERE RS 4.31CR, WHICH HAVE PARTLY FUNDED THE INVESTMENT IN M/S ASHVA MULTITRADE PVT LTD. THESE FUNDS WERE RECEIVED BY AVPL IN THE YEAR 2006-07 I.E. A.YR. 2007-08, AND HAD BEEN SUBJECTED TO VERIFICATION. AVPL HAD FURNISHED BANK ACCOUNT DETAILS/ BALANCE SHEET /PL ACCOUNT AT TIME OF ASSESSMENT AND IT'S CREDITORS WERE VERIFIED UNDER SECTION 133(6). NOTHING ADVERSE WAS FOUND BY THE ASSESSING OFFICER OF AVPL. FURTHER, NEMICHAND JAIN ONE OF THE DIRECTORS OF AVPL VISITED THE INCOME TAX OFFICE AT KOLKATTA ON 24.12.2012, AND WAS TOLD THAT THE ITO (INV), HANDLING THE ENQUIRIES, IS ON LEAVE AND TO COME BACK IN 2 WEEKS TIME. HE WENT AGAIN ON 14.1.2013, AND WAS ASKED TO DEPOSIT HIS SUBMISSION IN CRU(CENTRAL RECEIVING UNIT). (RECEIPT OF CRU DATED 14.1.2013 WAS ENCLOSED WITH THE RESPONDENT'S SUBMISSION). ONE COPY WAS SENT DIRECTLY TO THE AO IN AURANGABAD. A SHOW CAUSE NOTICE WAS ISSUED TO THE RESPONDENT ON 21.1.2013. REPLY DATED 29.1.2013 WAS FILED, WHEREIN IT WAS STATED THAT NEMICHAND JAIN DIRECTOR OF ANAND VYAPAR HAD SUBMITTED DOCUMENTS TO ITO KOLKATTA ON 14.1.2013 AND THAT AVPL HAD REGULARLY FILED IT RETURNS AND ROC RETURNS WERE ALSO REGULARLY FILED. ITO(INV) KOLKATTA WAS ASKED TO CONDUCT FRESH ENQUIRIES BY THE ASSESSING OFFICER, IN VIEW OF THE CONTENTION OF NEMICHAND JAIN. HE HOWEVER, DID NOT CARRY OUT ANY FRESH ENQUIRY BUT 14 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 INSTEAD MERELY STATED THAT AS PER POSTAL AUTHORITIES THE COMPANY IS NON- EXISTENT, AND THAT THE SUBMISSION WAS MADE BY NEMICHAND JAIN TO THE CENTRAL RECEIVING UNIT AND NOT TO THE ITO PERSONALLY. THUS THE IDENTITY OF AVPL STANDS ESTABLISHED NOT MERELY BY THE SUBMISSIONS MADE BY THE RESPONDENT BUT ALSO AS A RESULT OF SCRUTINY ASSESSMENT CARRIED OUT BY ITS ASSESSING OFFICER. 2. ISSUE RELATED TO CREDIT WORTHINESS OF M/S ANAND VYAPAR PVT LTD. AS STATED ABOVE, THE ASSESSING OFFICER OF AVPL HAD CARRIED OUT SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08, IN WHICH YEAR THE SAID COMPANY HAD RECEIVED RS 4.31 CRORES AS SHARE CAPITAL / SHARE APPLICATION MONEY. ENQUIRIES U/S 133(6), WERE CARRIED OUT BY THE ASSESSING OFFICER IN RESPECT OF THE CONTRIBUTORS TO SHARE CAPITAL / SHARE APPLICATION MONEY. THE ASSESSING OFFICER FOUND NOTHING ADVERSE AND SATISFIED HIMSELF AS TO THE SOURCE OF FUNDS IN THE HANDS OF M/S AVPL. THE TOTAL AMOUNT RECEIVED BY THE RESPONDENT FROM AVPL IS RS 6.05 CRORES, AND THUS A LARGE PART OF THE SAME, HAS BEEN SUBJECTED TO VERIFICATION BY THE DEPARTMENT AND FOUND TO BE IN ORDER. 3. ISSUE RELATED TO GENUINENESS OF THE TRANSACTIONS WITH AVPL. THE AMOUNT RECEIVED FROM AVPL AND OTHER INVESTING COMPANIES, WAS NOT AS SHARE APPLICATION MONEY OR SHARE PREMIUM FOR PURCHASE OF SHARES OF M/S ASHWA MULTITRADE. THESE AMOUNTS WERE ADVANCES RECEIVED AGAINST PROPOSED PURCHASE OF SHARES OF M/S LAXMI COTSPIN FROM M/S ASHWA MULTITRADE WHICH OWNED 37.64% STAKE IN M/S LAXMI COTSPIN AMOUNTING TO 6,29,00,000 SHARES. M/S LAXMI COTSPIN LTD WAS A COMPANY PROMOTED BY THE ASHWA GROUP OF WHICH THE RESPONDENT IS A PART. M/S LAXMI COTSPIN IS A LISTED COMPANY, AND THE SHARES WERE SOLD TO AVPL AT RS 17.80 PER SHARE, BASED ON FMV AS PER RULE 11UA OF INCOME TAX RULES. SUBSEQUENTLY, THE SHARES WERE OFFERED TO THE PUBLIC AT RS 20 PER SHARE DURING THE COURSE OF PUBLIC ISSUE. MOREOVER, AVPL AND OTHER INVESTORS HAVE BEEN REGULARLY RECEIVING DIVIDEND FROM M/S LAXMI COTSPIN, REGULARLY FOR THE LAST 5 YEARS. 4. ASSESSING OFFICERS DECISION IN ASSESSING ONLY RS 3.55 CRORES OUT OF RS 6.05 CRORES RECEIVED FROM AVPL. THE RESPONDENT COMPANY RECEIVED RS 6.05 CRORES FROM AVPL, OUT OF WHICH RS 2.50 CRORES WAS IN A.YR 2009-10, AND RS 3.55 CRORES IN A.YR 2010-11. NO ASSESSMENT WAS CARRIED OUT FOR THE YEAR 2009-10. AT THE TIME OF COMPLETION OF ASSESSMENT FOR THE YEAR 2010-11, AMPLE TIME WAS AVAILABLE WITH THE ASSESSING OFFICER TO INVOKE JURISDICTION U/S 148. HOWEVER, THE ASSESSING OFFICER CHOSE NOT TO DO SO. 5. ADDITION NOT MADE WHEN AMOUNTS REFUNDED, BUT ADDITIONS MADE WHEN SHARES OF MATCHING VALUE WERE ALLOTTED. DURING A.YR 2010-11, THE RESPONDENT HAD RECEIVED ADVANCES FROM THREE KOLKATTA BASED PARTIES, NAMELY, M/S RADICO SERVICES PVT LTD (RS 12 LACS) M/S PUSHPANJALI TRADING PVT LTD (RS 32 LACS) APART FROM AVPL. SUMMONS WERE ISSUED TO THE THREE PARTIES ON 14.11.12. ITO(INV) KOLKATTA, VIDE HIS REPORT DATED 14.1.2013 STATED THAT SUMMONS U/S 131(1) WERE RETURNED UN 15 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 SERVED. HOWEVER, NO ADVERSE VIEW OF THE TRANSACTIONS, WITH THE FIRST 2 PARTIES WAS TAKEN BY THE ASSESSING OFFICER, ON THE GROUNDS THAT THE AMOUNT RECEIVED FROM THESE TWO PARTIES WAS SUBSEQUENTLY, REFUNDED AND THE PROPOSED TRANSACTION DID NOT GO THROUGH. THUS THIS INDICATES THAT THE ASSESSING OFFICER WAS NOT IN DOUBT REGARDING THE IDENTITY OF THE CREDITORS, BUT HAD DOUBTS REGARDING THE TRANSACTION PERTAINING TO THE SALE OF SHARES OF M/S LAXMI COTSPIN. IT SHOULD BE NOTED THAT M/S LAXMI COTSPIN IS A LISTED COMPANY AND IS REGULARLY PAYING DIVIDEND, AND SHARES OF THIS COMPANY WERE SOLD BY THE RESPONDENT TO AVPL AT THE CORRECT MARKET VALUE AS PER RULE 11UA OF THE INCOME TAX RULES. LATER THE SHARES OF M/S LAXMI COTSPIN WERE OFFERED AT A HIGHER PRICE DURING THE INITIAL PUBLIC OFFERING (IPO). THUS AVPL RECEIVED AN ASSET OF MATCHING VALUE FROM THE RESPONDENT IN LIEU OF THE ADVANCE RECEIVED. 6. EXISTENCE OF ADVERSE EVIDENCE WITH THE ASSESSING OFFICER REVENUE HAS PLACED GREAT STRESS ON THE FACT THAT THE REPLY RECEIVED FROM M/S AVPL, DURING THE REMAND PROCEEDINGS WAS IN THE PRINTED ENVELOPE OF M/S METAROLLS WHICH IS A GROUP CONCERN OF THE RESPONDENT. HOWEVER, THIS IS NOT A FATAL FLAW. IT IS A COMMON EXPERIENCE THAT WHENEVER, SUMMONS ARE ISSUED TO A WITNESS BY THE TAX AUTHORITIES, THERE IS HESITATION TO RESPOND AND IT IS THE ASSESSEE WHO HAS TO FOLLOW UP TO SEE THAT A REPLY IS DULY FILED. THE REPLY RECEIVED HAS TO BE TESTED ON THE BASIS OF DOCUMENTS SUBMITTED AND THE SOURCES OF FUNDS RECEIVED AND NOT ON THE BASIS OF THE ENVELOPE IN WHICH THE LETTER WAS SENT. FURTHER, IT IS ON RECORD THAT THE LETTER IN QUESTION WAS MAILED FROM KOLKATTA, FOR WHICH PROOF FROM THE POSTAL AUTHORITIES HAS BEEN SUBMITTED BY THE RESPONDENT. APART FROM THIS THE OTHER CONTENTION OF REVENUE IS REGARDING LACK OF RESPONSE TO THE INITIAL SUMMONS ISSUED BY THE ITO(INV) KOLKATTA. THIS HAS BEEN EXPLAINED EARLIER IN PARA 1. 7. DISCHARGE OF PRIMARY ONUS BY THE ASSESSEE. THE RESPONDENT COMPANY HAS DISCHARGED, THE INITIAL ONUS OF PROOF THAT THE LAW CASTS UPON IT. IT IS FOR THE ASSESSING OFFICER, TO THEN INVESTIGATE AND SHOW, HOW THE EVIDENCE IS INADEQUATE, OR THAT THE CONTENTIONS OF THE ASSESSEE ARE INCORRECT OR NOT BACKED BY ENOUGH PROOF. ONLY THEN DOES THE ONUS SHIFT BACK TO THE APPELLANT. THE ASSESSING OFFICER, HAS PROCEEDED TO CLAIM THAT THE IDENTITY OF THE INVESTORS, THEIR GENUINENESS, AND THEIR CREDIT WORTHINESS HAS NOT BEEN ESTABLISHED. THE CONTENTION OF THE ASSESSING OFFICER IS NOT CORRECT. AS DISCUSSED ABOVE, THE RESPONDENT HAS PROVIDED ALL DETAILS ASKED FOR AND DISCHARGED THE ONUS CAST UPON IT. THE ASSESSING OFFICER, DID NOT EITHER CONFRONT THE RESPONDENT WITH HIS DOUBTS, IF ANY, NOR CONDUCT ANY FURTHER ENQUIRIES. IN PRINCIPLE, THERE CANNOT BE A DISPUTE WITH THE PROPOSITION THAT THE ONUS WAS ON THE APPELLANT TO ADEQUATELY EXPLAIN THE AMOUNT CREDITED ON ACCOUNT OF THE SAID ADVANCE RECEIVED. IN THIS CASE, THE RESPONDENT HAS SUPPORTED THE MONEY RECEIVED ON THE BASIS OF VALUATION OF THE SHARES OF LAXMI COTSPIN, EVIDENCE REGARDING SALE OF SHARES OF LAXMI COTSPIN TO AVPL, EVIDENCE OF HAVING RECEIVED PAYMENT FROM THE CREDITORS THROUGH BANKING CHANNEL ETC. IN ADDITION TO ABOVE EVIDENCES, THE INVESTORS HAD ALSO SENT CONFIRMATION. THE IDENTITY AND CREDITWORTHINESS HAS ALSO BEEN ESTABLISHED AS DISCUSSED ABOVE. THEREFORE, IN THE FACE OF SUCH EVIDENCE, PRIMA FACIE THE APPELLANT HAS DISCHARGED THE INITIAL BURDEN CAST ON HIM. IT IS PERTINENT TO NOTE HERE, THAT THE ONUS WHICH IS CAST ON THE 16 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 APPELLANT TO EXPLAIN THE TRANSACTIONS OF THE INSTANT NATURE, IS NOT AN ABSOLUTE OR STATIC ONUS. IN THE COURSE OF THE VERIFICATION EXERCISE, WHICH THE ASSESSING OFFICER IS EXPECTED TO CARRY OUT, THE ONUS KEEPS SHIFTING. IN THE INSTANT CASE, THE AFORESAID EVIDENCES LED BY THE APPELLANT PRIMA FACIE SUPPORTED HIS CASE. NOW IT WAS UP-TO THE AO TO HAVE BROUGHT ON RECORD MATERIAL SO AS TO NEGATE THE STAND OF THE APPELLANT. 1.1 OASIS HOSPITALITIES PVT. LTD. (2010-TIOL-69-HC-DEL). 1.2 DIVINE LEASING & FINANCE LTD. (299 ITR 268). 1.3 CIT VS. ORBITAL COMMUNICATION (P) LTD. (327 ITR 560). 1.4 CIT VS. K. C. FIBERS LTD. (87 TAXMAN 53) 1.5 CIT VS. AQUATIC REMEDIES PVT. LTD. (96 TAXMANN.COM 609). 1.6 SHYAM INDUS POWER SOLUTIONS PVT. LTD. [62 ITR (TRIB) 512]. 1.7 WIZ-TECH SOLUTIONS PVT. LTD. [ITA NO.1162/KOL/2015]. 1.8 LOVELY EXPORTS PRIVATE LIMITED [216 CTR 195]. 1.9 CIT VS. CREATIVE WORLD TELEFILMS LTD. (333 ITR 100). 1.10 PR.CIT VS. PARADISE INLAND SHIPPING PVT. LTD. (400 ITR 439). 1.11 ORCHID INDUSTRIES PVT. LTD. (88 TAXMANN.COM 502). 1.12 CIT VS. GREEN INFRA LTD. (ITA NO.1162 OF 2014]. 8. IS IT A CASE OF SHELL COMPANIES AND ACCOMMODATION ENTRIES BOTH ANAND VYAPAR AND MANGALMAYEE STOCK MANAGEMENT ARE ACTIVE COMPANIES TILL DATE AND REGULAR IT RETURNS ARE BEING FILED AND ROC COMPLIANCE IS BEING MADE. THEY DO NOT FIND MENTION IN ANY LIST OF SHELL COMPANIES PREPARED BY THE DEPARTMENT, OR ANY OTHER BODY. THESE COMPANIES ARE GENUINE. IN VIEW OF THE DISCUSSIONS ABOVE, IT IS HUMBLY SUBMITTED THAT CONSIDERING THE VARIOUS JUDICIAL PRONOUNCEMENTS AND THE EXPLANATIONS AND CLARIFICATIONS. IN CASE ANY, FURTHER DETAILS TO BE SUBMITTED WITH REGARDS TO THIS CASE WE ARE READY TO SUBMIT THE SAME AT THE ITAT BENCH. DECISION OF TRIBUNAL 14. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF ADDITION OF RS.3.55 CRORE U/S 68 OF THE ACT INVOLVING AVPL, THE CREDITOR, FOR THE ASSESSMENT YEAR 2010-11. THE TRANSACTION WITH THIS CREDITOR EXAMINED BY THE ASSESSING OFFICER ALONG WITH TWO OTHER CREDITORS AND ACCEPTED THE TRANSACTION WITH INVOLVING TWO OTHER CREDITORS. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT INVOLVING THE AVPL ONLY. THERE IS NO DISPUTE ON THE FACT ABOUT PAN NUMBERS, TIN NUMBERS, PAYMENT OF SHARE 17 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 APPLICATION MONEY THROUGH BANKING CHANNELS ETC IN VIEW OF THE FULL PROOF DOCUMENTATION AVAILABLE AND FILED BY THE CREDITOR BEFORE THE INVESTIGATION WING, KOLKATA AS WELL AS THE ASSESSING AUTHORITY IN PUNE. WHILE ACCEPTING THE SAID DETAILS IN CASE OF OTHER TWO CREDITORS, THE ASSESSING OFFICER DIFFERENTLY HANDLE THIS CREDITOR ONLY FOR THE REASON THAT THE SHARE APPLICATION MONEY GIVEN BY THE CREDITOR TO THE ASSESSEE WAS NOT REFUNDED WHEN THERE IS A FAILURE OF SAID IPO BY THE M/S. LAXMI COTSPIN LIMITED, THE GROUP CONCERN OF THE ASSESSEE. THE ASSESSEE MOBILISED THE FUNDS FOR ULTIMATE TRANSFER OF THE SAME TO THE SAID M/S. LAXMI COTSPIN LIMITED AS A PART OF THE PUBLIC ISSUE BY THE SAID COMPANY. CERTAIN LAPSES WITH REFERENCE TO THE SERVICE OF NOTICE, THE ITOS ADVERSE REPORT AND FAILURE OF THE ASSESSEE IN REFUNDING THE MONEY TO AVPL ARE THE SOME OF THE REASONS FOR THE ASSESSING OFFICER TO TAKE AN ADVERSE INFERENCE. HOWEVER, THE ASSESSING OFFICER IGNORED THE FACT THAT THERE WAS ALLOTMENT OF SHARE TO AVPL BY THE ASSESSEE OUT OF THE SHARES AVAILABLE WITH IT. THUS, THE ASSESSING OFFICER IGNORED THE FACT THE SAID AVPL RECEIVED THE SHARES ALLOTMENT IN LIEU OF THE LOANS, RECEIVED BY THE ASSESSEE. THE ABOVE SAID OBJECTIONS ARE NOW BEING ANALYZED IN DETAILED MANNER : (I) THE IDENTITY/CREDITWORTHINESS/GENUINENESS OF THE TRANSACTIONS WITH AVPL. (II) ASSESSING OFFICERS DECISION IN ASSESSING ONLY RS.3.55 CRORES OUT OF RS.6.55 CRORES AVPL EXISTENCE. (III) ADDITION NOT ADDED WHEN REFUNDED AND ADDITION ADDED WHEN SHARES WERE ALLOTTED FOR EQUAL AMOUNT. (IV) THE EXISTENCE OF ADVERSE EVIDENCE WITH THE ASSESSING OFFICER AND THE DISCHARGE OF PRIMARILY ONUS BY THE ASSESSEE? (V) IS IT A CASE OF ACCOMMODATION ENTRIES PROVIDER? 18 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 15. REGARDING IDENTITY OF AVPL: THE AVPL ADDRESS IS 35B, BRAJADULAL STREET, JORABAN, KOLKATA, WEST BENGAL-700006. THIS COMPANY ASSESSED TO TAX OVER THE YEARS WITH PAN NO.AAGCA2061E. THE SAME IS ASSESSED TO TAX IN ITO, WARD-1(3), KOLKATA. THE COPY OF THE WRITTEN SUBMISSIONS ARE PLACED IN THE PAPER BOOK OF THE REVENUE AT PAGE 15 ONWARDS. THEREFORE, SHRI NEMICHAND JAIN IS THE DIRECTOR OF THE COMPANY. S. SADHU & ASSOCIATES ARE THE STATUTORY AUDITORS BEARING THE MEMBERSHIP NO.061636. THIS COMPANY HAS THE SHARE CAPITAL OF RS.32,96,000/- AND IT HAS RESERVES AND RS.6,07,05,000/- AS ON 31.03.2010. IT IS A RECORDED TRANSACTION THAT ASHVA MULTI TRADE PVT. LTD. RECEIVED RS.6.55 CRORES AS SEEN FROM THE SCHEDULE 3 OF THE BALANCE SHEET PAGE 25 OF THE PAPER BOOK. THE SAID CREDITOR AVPL IS FILING THE RETURNS WITH THE ACTIVE COMPANY IN THE RECORDS OF MINISTRY OF COMMERCE AND IS NOT STRUCK FOR ANY DEFAULT OR REASON. CONSIDERING THE SAME, THE ABOVE ALLEGATION THAT THE IDENTITY OF THE CREDITOR IS UNSUSTAINABLE WITHIN THE MEANING OF SECTION 68 OF THE ACT. ACCORDINGLY, THE REVENUE FAILS ON THIS ISSUE. 16. CONSIDERING THE HUGE RESERVES AND SURPLUSES AVAILABLE WITH THE SAID AVPL, THE CREDITWORTHINESS OF THE AVPL ALSO CANNOT BE DOUBTED. THE ASSESSING OFFICER HAS NOT BROUGHT EXCEPT STATING THAT THE COMPANY HAS MEAGRE INCOME AS SHOWN IN THE RETURNS. THE ASSESSING OFFICER HAS NOT BROUGHT ANY INCRIMINATING MATERIAL TO SHOW THAT THE CREDITOR HAS NOT CREDITWORTHINESS. AS STATED THIS COMPANY HAS 10 CRORES AS RESERVES AND SURPLUS AT THE END OF THE MARCH, 2010 AT THE RELEVANT POINT OF TIME. 19 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 17. REGARDING THE GENUINENESS OF THE TRANSACTIONS, WE FIND THAT THE ASSESSING OFFICER OBJECTION IS THAT THE AVPL BEING KOLKATA BASED COMPANY AND ITS TRANSACTION WITH THE ASSESSEE HAS TO BE SUSPECTED. IN OUR VIEW, SUCH OBJECTION IS UNSUSTAINABLE FOR THE REASON THAT THE COMPANY WITH ADEQUATE RESERVES IS ASSESSED TO TAX REGULARLY AND THE SAME IS ACTIVE COMPANY IN THE RECORDS OF THE MINISTRY OF COMMERCE. THE ASSESSING OFFICER HAS NOT MADE OUT A CASE WHATSOEVER TO DEMONSTRATE THAT THE TRANSACTION OF PAYMENT OF LOAN BY AVPL TO THE ASSESSEE BOGUS OR SHAM. THE TRANSACTIONS ARE THROUGH BANKING CHANNELS AND THE ASSESSEE ALLOTTED THE SHARES TO THE AVPL AS BORN OUT ON THE RECORDS OF THE LATER YEARS. REGARDING THE MAKING ADDITION OF RS.3.55 CRORES IN THE YEAR UNDER CONSIDERATION WHILE THERE IS A TOTAL LOAN TRANSACTION OF RS.6.05 CRORES, WE FIND IT IS UNDISPUTED FACT THAT THE ASSESSEE RECEIVED AN AMOUNT OF RS.2.5 CRORES IN THE ASSESSMENT YEAR 2009-10 AND RS.3.55 CRORES IN THE ASSESSMENT YEAR 2010-11. WHILE THE CURRENT LOAN OF RS.3.55 CRORES IS ADDED FOR SOME UNDISPUTED REASONS, THE ASSESSING OFFICER ACCEPTED THE TRANSACTION OF RS.2.5 CRORES DONE IN THE ASSESSMENT YEAR 2009-10 WITHOUT ANY CHANGE. THIS KIND OF AMBIGUOUS APPROACH OF THE ASSESSING OFFICER IN THE GENUINENESS OF THE TRANSACTION IS UNACCEPTABLE. HOW CAN THE TRANSACTION WITH AVPL IS ACCEPTABLE ON THE AMOUNT OF RS.2.5 CRORES AND THE SAME IS NOT ACCEPTABLE FOR THE BALANCE OF RS.3.55 CRORES. THEREFORE, IT IS A CASE OF AMBIGUOUS APPROACH OF THE ASSESSING OFFICER THAT THE SAID ADDITION OF RS.3.55 CRORES IN THE YEAR UNDER CONSIDERATION WHEN THE LOAN TRANSACTION TILL THE DATE OF RS.6.05 20 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 CRORES, AVPL CANNOT BE SUSPECTED FOR RS.3.55 CRORES AND NOT THE BALANCE OF RS.2.5 CRORES. THIS APPROACH OF THE ASSESSING OFFICER GOES AGAINST THE INTEREST OF THE REVENUE. IT IS EVIDENT THAT NO ADDITION IS MADE BY THE ASSESSING OFFICER FOR THE AMOUNT OF RS.2.5 CRORES IN THE ASSESSMENT YEAR 2009-10. THEREFORE, THIS KIND OF TRANSACTION WITH THE CREDITOR CAN BE PARTLY SUSPECTABLE OR PARTLY UNSUSPECTABLE AND PARTLY EXISTING OR PARTLY NOT EXISTING AND PARTLY GENUINE OR PARTLY NON-GENUINE ETC. REGARDING THE ALLEGATION OF KOLKATA BASED COMPANY, THEREFORE FICTITIOUS COMPANY ARE ACCOMMODATION ENTRIES PROVIDER ETC. WE FIND THAT THE AVPL WITH SO MUCH OF BACKGROUND AS NARRATED ABOVE I.E. EXISTENCE, IDENTITY, SIZE RESERVES, PUNCTUAL FILING THE DOCUMENT ETC., THE SAID COMPANY CANNOT BE JUST ACCOMMODATION ENTRIES PROVIDER. SHRI NEMICHAND JAIN IS THE DIRECTOR OF THE AVPL APPEARED BEFORE THE AUTHORITIES FILING VARIOUS DOCUMENTS CLEARLY DEMONSTRATED THE EXISTENCE, GENUINENESS, CREDITWORTHINESS OF THE AVPL. FROM THIS POINT OF VIEW, WE ARE OF THE OPINION THAT THE HUGE AMOUNT OF DOCUMENTATION WAS FILED BY THE ASSESSEE. PER CONTRA , THE ASSESSING OFFICER DID NOT GATHER ANY IOTA OF DIRECT EVIDENCE OR INDIRECT EVIDENCE TO DEMONSTRATE THAT THE AVPL IS BOGUS CONCERN OR SHAM CONCERN OR ACCOMMODATION ENTRIES PROVIDER. CONSIDERING THE SAME, WE PROCEED TO EXTRACT THE FINDING OF THE CIT(A) AS GIVEN IN PARA 9 AND 10 OF HIS ORDER AND THE SAME ARE AS UNDER :- 5.9 THE APPELLANT COMPANY HAS FILED THE VARIOUS DOCUMENTS SUCH AS APPLICATION FOR INVESTMENT IN SHARES, CONFIRMATION FOR INVESTMENT IN SHARES, BOARD RESOLUTION FOR INVESTMENT IN SHARES, COPY OF ACKNOWLEDGMENT OF RETURN, COPY OF THE BALANCE SHEET, DETAILS OF PAN, COPY OF THE BANK ACCOUNT, COPY OF DOCUMENTS FILED WITH ROC AND COPY OF THE ASSESSMENT ORDER FOR AY 2010-11. ALL THE DOCUMENTS AND INFORMATION HAVE CLEARLY PROVED THE 21 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 IDENTITY OF THE APPLICANT COMPANY AND THE GENUINENESS OF THE TRANSACTION. THE ONUS OF THE ASSESSEE IN CASE OF RECEIPT OF SHARE APPLICATION MONEY WAS TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDER. IN THE PRESENT CASE, THE APPELLANT HAS FILED ALL THE EVIDENCES TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBER COMPANY. THERE IS NOTHING ON RECORD TO SUGGEST THAT TRANSACTIONS WERE NOT GENUINE. HENCE, NO ADDITION IN THE HANDS OF THE APPELLANT COMPANY WAS CALLED FOR. IN THE CASE OF CIT VS. FIRST POINT FINANCE LTD. (286 ITR 477), THE ASSESSEE HAVING BEEN ASKED TO FURNISH EXPLANATION ABOUT THE RECEIPT OF SHARE APPLICATION MONEY, IT HAD FURNISHED DETAILS OF THE IDENTITY OF PERSONS WHO HAD MADE SUCH INVESTMENT, PARTICULARS OF THE RECEIPT AND GIR NUMBER. THE COURT HELD THAT ASSESSEE HAD DISCHARGED THE INITIAL BURDEN AND FURTHER ENQUIRY HAD NOT BEEN PURSUED BY THE REVENUE. THE TRIBUNAL HAD THEREFORE RIGHTLY DELETED THE ADDITION MADE U/S 68. THE HONBLE DELHI HIGH COURT HELD IN THE CASE OF CIT VS. DOLPHIN CANPACK LTD. (283 ITR 190) THAT IN CASE OF AMOUNTS SHOWN AS SHARE CAPITAL, THE BURDEN OF PROOF ON THE ASSESSEE-COMPANY LAY TO THE EXTENT OF MAKING OUT A CASE THAT THE INVESTORS EXISTED AND, THEREAFTER, IT WAS NOT FOR THE ASSESSEE TO FURTHER PROVE FROM WHERE THEY HAD BROUGHT MONEY FOR INVESTMENT WITH IT. IT WAS NOT DENIED THAT ALL THE SHAREHOLDERS/SHARE APPLICANTS WERE GENUINELY EXISTING PERSONS. IT WAS ALSO NOT DENIED THAT EACH OF THEM WAS AN INCOME-TAX ASSESSEE AND COPIES OF THE RETURN OF THEIR INCOME WERE ALSO PLACED BEFORE THE ASSESSING OFFICER. THERE WAS NO PRESUMPTION THAT THE ASSESSEE WAS THE BENAMI OWNER OF THE INVESTMENT MADE BY THE EXISTING PERSONS. ACCORDINGLY THE ADDITION WAS DELETED. IN THE CITED CASE, IN ITS RETURN FOR THE ASSESSMENT YEAR 1998-99, THE ASSESSEE CLAIMED TO HAVE RECEIVED SHARE APPLICATION MONEY OF RS. 62 LAKHS. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND ADDED THE AMOUNT TO THE TAXABLE INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD FURNISHED COMPLETE DETAILS TO THE ASSESSING OFFICER REGARDING THE TRANSACTIONS IN QUESTION, WHICH INCLUDED CONFIRMATION DETAILS OF BANK ACCOUNT AND THE PERMANENT ACCOUNT NUMBERS OF THE PARTIES IN WHOSE FAVOUR THE SHARE CAPITAL WAS SUBSCRIBED. THE TRIBUNAL ALSO NOTED THAT ALL THE PAYMENTS WERE RECEIVED BY THE ASSESSEE BY CHEQUES AND THAT THE ASSESSEE HAD, IN THE PROCESS, FULLY DISCHARGED THE ONUS THAT LAY UPON IT FOR PROVING THE IDENTITY OF THE SUBSCRIBERS AND THE GENUINENESS OF THE TRANSACTIONS. ON THAT BASIS, IT DELETED THE ADDITION MADE BY THE AUTHORITIES BELOW. ON APPEAL, IT WAS HELD THAT IN THE ABSENCE OF ANY PERVERSITY IN THE VIEW TAKEN BY THE TRIBUNAL OR ANYTHING TO ESTABLISH CONCLUSIVELY THAT THE FINDING REGARDING THE GENUINENESS OF THE SUBSCRIBERS AND THE TRANSACTION SUFFERED FROM ANY IRRATIONALITY, NO SUBSTANTIAL QUESTION OF LAW AROSE FROM THE ORDER OF THE TRIBUNAL. THE DELETION OF THE AMOUNT WAS JUSTIFIED. IN THE FOLLOWING CASES, THE HONBLE HIGH COURTS HAVE ALSO HELD THAT ONCE THE IDENTITY OF THE SHARE HOLDER IS PROVED, THE SHARE APPLICATION MONEY CANT BE TREATED AS BOGUS. CIT VS ARUNANANDA TEXTILES PRIVATE LIMITED (333 ITR 119) (DELHI) CIT VS K.C.FIBER LIMITED (333 ITR 116) (KARNATAKA) CIT VS VICTOR ELECTRODES LIMITED (332 ITR 481) (DELHI) CIT VS UJALA DYING AND PRINTING PRIVATE LIMITED (328 ITR 437) (GUJARAT) 5.10 AS REGARDS ADDITION OF RS.3.55 CRORES MADE AN ACCOUNT OF SHARE APPLICATION MONEY RECEIVED FROM M/S ANAND VYAPAR PVT. LTD., THE APPELLANT HAD FILED THE NECESSARY EVIDENCES. SINCE THE DIRECTOR OF INVESTOR 22 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 COMPANY WAS RESIDING AT KOLKATA AND ITS REGISTERED OFFICE WAS ALSO AT KOLKATA, THE APPELLANT COULD NOT HAVE COMPELLED THE DIRECTOR TO APPEAR BEFORE THE A.O AT AURANGABAD. ACCORDING TO THE FINANCIAL STATEMENT OF THE APPLICANT COMPANY FOR THE YEAR ENDED 31.03.2010, THE SAID COMPANY HAD ENOUGH CREDITWORTHINESS TO MAKE INVESTMENT IN THE SHARE CAPITAL OF THE APPELLANT COMPANY. NOTHING ADVERSE HAS BEEN NOTICED IN THE DOCUMENTS AND BANK STATEMENT FILED BY THE APPELLANT COMPANY. THERE IS NO EVIDENCE THAT MONEY DEPOSITED IN THE BANK ACCOUNT OF INVESTOR COMPANY, CAME FROM THE COFFERS OF THE APPELLANT. ON THE OTHER HAND, IT IS OBVIOUS THAT SOURCES OF INVESTMENT WERE LIQUIDATION OF EARLIER INVESTMENTS. THE DOCUMENTS FILED WITH REGISTRAR OF COMPANIES ALSO DO NOT LEAD TO ANY ADVERSE INFERENCE. IT IS NOT A CASE WHERE THE ASSESSING OFFICER WAS IN POSSESSION OF SOME MATERIAL THAT DISCREDITED AND IMPEACHED THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHED THE LINK BETWEEN SELF-CONFESSED ACCOMMODATION ENTRY PROVIDERS WHOSE BUSINESS IT WAS TO HELP ASSESSEE BRING INTO ITS BOOKS OF ACCOUNT THE UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION. THE TRANSACTION ENTERED BY THE APPELLANT COMPANY WITH M/S ANAND VYAPAR PVT. LTD. IS TRUE, GENUINE AND NOT A CAMOUFLAGE. IT IS ALSO DUTY RECORDED IN THE BOOKS OF SHARE APPLICANT. EVEN THE SOURCES OF THE SHARE APPLICANT FOR MAKING INVESTMENT STAND EXPLAINED. THE SUSPICION HOWEVER STRONG IT MAY BE, CANNOT TAKE PLACE OF PROOF. ON THE FACTS & CIRCUMSTANCES AND IN LAW, THE ADDITION MADE BY THE A.O. HAS NO LEGS TO STAND AND CANT BE SUSTAINED. ACCORDINGLY, I DIRECT THE A.O. TO DELETE THE ADDITION OF RS.3,55,00,000/- MADE BY HIM. THESE GROUNDS OF APPEAL ARE ALLOWED. 18. CONSIDERING THE ABOVE, WE FIND THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, THE RELEVANT GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1602/PUN/2015 FOR THE ASSESSMENT 2010-11 IS DISMISSED. REST OF TWO APPEALS ITA NO.1603/PUN/2015 A.Y. 2011-12 ITA NO.2568/PUN/2016 A.Y. 2012-13 20. NOW, COMING TO THE REST OF TWO APPEALS IN ITA NO.1603/PUN/2015 AND ITA NO.2568/PUN/2015 FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 RESPECTIVELY. 23 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 21. FOR THE A.Y. 2011-12 : ASSESSING OFFICER IN HIS ORDER DATED 21.03.2014 ADDED AN AMOUNT OF RS.1.78 CRORE ON THE SUSPICION AND DOUBTFUL NATURE OF THE TRANSACTIONS. THE CONTENTS OF PARA 4.8 OF THE ASSESSMENT ORDER ARE RELEVANT IN THIS REGARD AND THE SAME ARE EXTRACTED HEREUNDER :- 4.8 IT IS ALREADY ESTABLISHED IN THE INSTANT CASE THAT DUE TO THE CLOSE CONNECTION BETWEEN THE INVESTING COMPANY AND THE ASSESSEE COMPANY, THE ATTEMPT TO TAKE SHELTER BEHIND LEGAL PRONOUNCEMENT IS WOEFULLY INADEQUATE. THE FACT THAT THE ASSESSEE HAS GIVEN CERTAIN INFORMATION IS INSUFFICIENT TO HOLD THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS OF THE SHARE APPLICANT, WHICH I HAVE NOTICED IS CONDUITS FOR PASSING THROUGH OF MONIES TO THE ASSESSEE COMPANY. THE ASSESSEE HAS BEEN UNABLE TO PROVE THE GENUINENESS OF TRANSACTION AS WELL BY BEING UNABLE TO SUBSTANTIATE CREDITWORTHINESS OF SHARE APPLICANT BEYOND DOUBT FROM WHOM SHARE APPLICATION MONEY HAS BEEN RECEIVED. UNDER THESE CIRCUMSTANCES AFTER CONSIDERING THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE UNDERSIGNED HOLD THAT THE AMOUNTS RECEIVED AS SHARE ADVANCE IS UNEXPLAINED CASH CREDIT LIABLE TO BE TAXED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. 22. FOR THE A.Y. 2012-13 : SIMILAR ADDITION WAS ADDED BY THE ASSESSING OFFICER AS PER THE DISCUSSION GIVEN IN PARA 4.8 AND 4.9 OF HIS ORDER AND THE SAME ARE EXTRACTED HEREUNDER :- 4.8 IT IS ALREADY ESTABLISHED IN THE INSTANT CASE THAT DUE TO THE CLOSE CONNECTION BETWEEN THE INVESTING COMPANY AND THE ASSESSEE COMPANY, THE ATTEMPT TO TAKE SHELTER BEHIND LEGAL PRONOUNCEMENT IS WOEFULLY INADEQUATE. THE FACT THAT THE ASSESSEE HAS GIVEN CERTAIN INFORMATION IS INSUFFICIENT TO HOLD THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS OF THE SHARE APPLICANT, WHICH I HAVE NOTICED IS CONDUITS FOR PASSING THROUGH OF MONIES TO THE ASSESSEE COMPANY. THE ASSESSEE HAS BEEN UNABLE TO PROVE THE GENUINENESS OF TRANSACTION AS WELL BY BEING UNABLE TO SUBSTANTIATE CREDITWORTHINESS OF SHARE APPLICANT BEYOND DOUBT 24 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 FROM WHOM SHARE APPLICATION MONEY HAS BEEN RECEIVED. UNDER THESE CIRCUMSTANCES AFTER CONSIDERING THE DOUBTFUL NATURE OF THE TRANSACTION AND THE MANNER IN WHICH THE SUMS WERE CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE UNDERSIGNED HOLD THAT THE AMOUNTS RECEIVED AS SHARE ADVANCE IS UNEXPLAINED CASH CREDIT LIABLE TO BE TAXED AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. 4.9 THEREFORE, AN ADDITION OF RS.1,78,00,000/- IS MADE TO THE TOTAL INCOME OF ASSESSEE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT, 1961 ARE SEPARATELY INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. 23. THE CIT(A) DELETED THE ADDITION IN BOTH THE APPEALS AS PER THE DISCUSSION GIVEN IN PARA 5.7 OF HIS ORDER AND THE SAME IS EXTRACTED HEREUNDER :- 5.7 I FIND THAT IN THE PRESENT CASE, THE APPELLANT COMPANY HAD BEEN ABLE TO DISCHARGE ITS ONUS IN RESPECT OF THE VERACITY OF THE TRANSACTIONS. SINCE THE CREDITOR WAS A PRIVATE LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT, AND THE AMOUNT WAS RECEIVED THROUGH BANKING CHANNELS AND THE CREDITOR WAS EXISTING INCOME TAX ASSESSEE, ITS EXISTENCE HAD BEEN PROVED BEYOND DOUBT. THE BANK STATEMENT OF THE CREDITOR COMPANY DID NOT SHOW ANY CASH DEPOSITS. ACCORDING TO THE FINANCIAL STATEMENT OF THE CREDITOR COMPANY FOR THE YEAR ENDED 31.03.2011, THE SAID COMPANY HAD ENOUGH CREDITWORTHINESS TO GIVE ADVANCE TO THE APPELLANT COMPANY. NOTHING ADVERSE HAS BEEN NOTICED IN THE DOCUMENTS AND BANK STATEMENT FILED BY THE APPELLANT COMPANY. THERE IS NO EVIDENCE THAT MONEY DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR COMPANY, CAME FROM THE COFFERS OF THE APPELLANT COMPANY. ON THE OTHER HAND, IT IS OBVIOUS THAT SOURCES OF ADVANCE WERE CHEQUES RECEIVED FROM GOLD SECURITIES PRIVATE LIMITED, M/S GOPAL STEELS, M/S ACUTE DESIGNFAB AND RIMS FASTNERS AND OUT OF CREDIT BALANCE, IT GAVE RTGS TO THE APPELLANT COMPANY. THIS EXPLAINED THE SOURCES OF INVESTMENT OF M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. THE AO HAD RAISED DOUBTS THAT M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. HAD ITSELF RECEIVED SHARE PREMIUM AND THIS AMOUNT WAS GIVEN TO THE APPELLANT COMPANY WITHOUT ANY APPARENT MOTIVE OF CONDUCTING ANY ACTUAL BUSINESS. ON THE CONTRARY, I FIND THAT M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. HAD RECEIVED DIVIDEND OF RS.9,25,025/- ON SHARES OF LAXMI COTSPIN LTD. AND THIS AMOUNT WAS ALSO CREDITED IN ITS BANK ACCOUNT WITH HDFC BANK. THEREFORE IT CANT BE SAID THAT NO ACTUAL BUSINESS WAS CONDUCTED. THE FACT THAT DIRECTOR OF M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. VISITED KOLKATA ONLY ONCE IN TWO YEARS WILL NOT MAKE IT A DUMMY/BOGUS ENTITY. THE AO HAD CLAIMED THAT M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. DID NOT HAVE ANY EMPLOYEE WHEREAS SHRI PIYUSH SHIVRATAN MUNDADA HAD REPLIED IN ANSWER TO QUESTION NO. 5 THAT SHRI 25 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 SANTOSH PANDEY WAS WORKING AS AN EMPLOYEE AND HE WAS PAID SALARY OF RS.36,000/- PER ANNUM. MOREOVER BOTH THE DIRECTORS WERE INVOLVED IN DAY TO DAY OPERATIONS OF M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. THE VARIOUS DOUBTS RAISED BY THE AO HAD NO BASIS AND COULD HAVE BEEN EASILY DISPELLED IF HE HAD CONFRONTED THE APPELLANT COMPANY ABOUT THEM. THE DOCUMENTS FILED WITH REGISTRAR OF COMPANIES ALSO DO NOT LEAD TO ANY ADVERSE INFERENCE. IT IS NOT A CASE WHERE THE ASSESSING OFFICER WAS IN POSSESSION OF SOME MATERIAL THAT DISCREDITED AND IMPEACHED THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHED THE LINK BETWEEN SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS' WHOSE BUSINESS IT WAS TO HELP ASSESSEE BRING INTO ITS BOOKS OF ACCOUNT THE UNACCOUNTED MONIES THROUGH THE MEDIUM OF LOANS/ADVANCES. THE TRANSACTION ENTERED BY THE APPELLANT COMPANY WITH M/S MANGALMAYEE STOCK MANAGEMENT PVT. LTD. IS TRUE, GENUINE AND NOT A CAMOUFLAGE. IT IS ALSO DULY RECORDED IN THE BOOKS OF CREDITOR. EVEN THE SOURCES OF THE ADVANCE OF THE CREDITOR ALSO STAND EXPLAINED. THE SUSPICION HOWEVER STRONG IT MAY BE, CANNOT TAKE PLACE OF PROOF. THE ADDITION MADE BY THE AO ALSO CANNOT BE SUSTAINED ON THE GROUND THAT IT WOULD RESULT INTO DOUBLE TAXATION. ON ONE HAND, SALE CONSIDERATION OF RS.2,72,12,640/- (INCLUDING ADVANCE OF RS.1,78,00,000/-) HAS BEEN SHOWN IN THE SUBSEQUENT YEAR BY THE APPELLANT COMPANY IN ITS COMPUTATION OF CAPITAL GAINS ON ACCOUNT OF SALE OF SHARES OF LAXMI COTSPIN LTD. AND ON THE OTHER HAND, SAME AMOUNT HAS BEEN ASSESSED U/S 68 OF THE ACT BY THE AO IN THE CURRENT YEAR. THE SALE PROCEEDS CANNOT BE TREATED AS CASH CREDIT BY ANY STRETCH OF IMAGINATION. SUCH ADVANCE RECEIPTS HAVE BEEN ADJUSTED AGAINST THE SALE OF SHARES AND IT WOULD TANTAMOUNT TO DOUBLE TAXATION OF THE SAME AMOUNT WHICH IS UNWARRANTED AND UNAUTHORIZED BY LAW AS LAID DOWN BY THE APEX COURT IN THE CASE OF LAXMIPAT SINGHANIA VS. CIT (72 ITR 291). ON THE FACTS & CIRCUMSTANCES AND IN LAW, THE ADDITION MADE BY THE AO HAS NO LEGS TO STAND AND CANT BE SUSTAINED. ACCORDINGLY, I DIRECT THE AO TO DELETE THE ADDITION OF RS. 1,78,00,000/- MADE BY HIM. THESE GROUNDS OF APPEAL ARE ALLOWED. 24. CONSIDERING THE COMMONALITY OF THE ISSUES, FACTS AND ARGUMENTS OF BOTH THE SIDES, WE ARE OF THE OPINION THAT OUR DECISION IN ITA NO.1602/PUN/2015 FOR THE ASSESSMENT YEAR 2010-11 SHALL APPLY MUTATIS MUTANDIS TO REST OF THESE TWO APPEALS I.E. ITA NO.1603/PUN/2015 & ITA NO.2538/PUN/2016 FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 RESPECTIVELY. THUS, THE RELEVANT GROUNDS RAISED BY THE REVENUE IN THESE TWO APPEALS ARE DISMISSED AS SUCH. 26 ITA NOS.1602 & 1603/PUN/2015 ITA NO.2568/PUN/2016 25. IN THE RESULT, ALL THE THREE APPEALS OF THE REVENUE ARE DISMISSED AS ABOVE. ORDER PRONOUNCED ON 20 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 20 TH SEPTEMBER, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-1, AURANGABAD. 4. THE PR.CIT-1, AURANGABAD. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.