M/s. Conton Textiles Mills Pvt. Ltd., New Delhi V. Pr. CIT- 9, New Delhi

ITA 2742/DEL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8837 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Source of fund; Assessment record; Reason to believe; Set aside
• Section: 142(1); 133(6); 250; 147; 68; 148; 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2742/DEL/2017 ASSESSMENT YEAR: 2010-11 CONTON TEXTILES MILLS PVT. LTD., (NOW KNOWN AS VNG PACKAGING PVT. LTD.), 206, VARDHMAN SHRENIK PLAZA, LSP, MAYUR VIHAR, PHASE-II, NEW DELHI. PAN: AACCC9563D (APPELLANT) VS. PRINCIPAL C.I.T. 9, NEW DELHI (RESPONDENT) APPELLANT BY SH. RAJ KUMAR, C.A. AND SH. RAJEEV AHUJA, C.A. RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT/DR ORDER PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST IMPUGNED ORDER DATED 29.03.2017, PASSED BY PRINCIPA L COMMISSIONER OF INCOME TAX -9, NEW DELHI IN HIS REVI SIONARY JURISDICTION U/S. 263 FOR THE ASSESSMENT YEAR 2010- 11. IN VARIOUS DATE OF HEARING 27.03.2019 DATE OF PRONOUNCEMENT 08.04.2019 ITA NO. 2742/DEL/2017 2 GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE PR. CIT PASSED U/S. 263, CANCELING THE ASSESSMENT ORDER DATED 29.03.2015 PASSED U/S. 147/143(3), MAINLY ON THE IS SUE OF INTRODUCTION OF SHARE CAPITAL AMOUNTING TO RS.12,10 ,13,000/-. 2. THE BRIEF FACTS AND BACKGROUND OF THE CASE ARE THAT, IN THE CASE OF ASSESSEE, NOTICE U/S. 148 WAS ISSUED ON 20.0 3.2014 MAINLY TO EXAMINE THE SOURCE OF INTRODUCTION OF SHARE CAPI TAL AMOUNTING TO RS.48,40,520/- AND SHARE PREMIUM AMOUNTING TO RS.11 ,61,72,480/- THE REASONS RECORDED FOR REOPENING THE CASE WERE AS UNDER : SCRUTINY ASSESSMENT IN THE CASE OF THE ASSESSEE FO R AY-2011-12 U/S 143(2) WAS SELECTED THROUGH CASS AND NOTICE WAS SENT ON 12-08-2013. THE RETURN FOR AY 2011-12 WAS FILED ON 12-12- 2012. THE CASS REASONS FOR SELECTION OF THE CASE FOR AY-2 011-12 WAS 'LARGE SHARE PREMIUM RECEIVED'. HOWEVER, FORM B/S F OR AY- 2011-12, NO SUCH INTRODUCTION OF SHARE CAPITAL, SHA RE PREMIUM (RESERVE & SURPLUS), UNSECURED LOANS, INVESTMENTS W ERE SEEN. THERE WERE NO CHANGES IN THEM IN THE AY 2011-12. THE ASSESSEE WAS ASKED TO FILE B/S FOR AY 2010-11 W HEREIN IT COULD BE SEEN THAT THE INTRODUCTION OF NEW SHARE CA PITAL AMOUNTING TO RS.48,40,520/-, SHARE PREMIUM (RESERVE & SURPLUS) AMOUNTING TO RS. 11,61,72,480/- AND ALSO I NVESTMENTS OF RS. 12,07,70,000/- HAD TAKEN PLACE. THE ASSESSEE HAS NOT FILED THE ITR FOR AY 2010-11. THEREFORE THE ABOVE M ENTIONED NEW INTRODUCTIONS IN SHARE CAPITAL, SHARE PREMIUM WITH RELATED INVESTMENTS ARE REQUIRED TO BE SCRUTINIZED AS IT CO ULD NOT BE DONE DUE TO ASSESSEE'S NON- FILING OF ITR FOR AY-2010-11 . DUE TO THIS REASON THE SHARE CAPITAL, SHARE PREMIUM AND INVESTM ENTS ARE NOT SCRUTINIZED IN THE AY 2011-12; AS IT IS REQUIRED TO BE DONE IN THE AY 2010-11. ITA NO. 2742/DEL/2017 3 THEREFORE, FOR THE REASONS MENTIONED ABOVE, I HAVE REASON TO BELIEVE THAT AMOUNTS TO THE TUNE OF RS.12,10,13,000 /- ALTOGETHER HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE I.T. ACT, 1961 AS THIS WAS WILLFULLY AND PUR POSELY DONE ON THE PART OF THE ASSESSEE BY NOT FILING THE ITR FOR THE RELEVANT AY 2010-11. I AM SATISFIED FOR THE REASONS MENTIONED ABOVE THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961 FOR THE AY 2010- 11. 2.1 IN THE COURSE OF THE ASSESSMENT PROCEEDINGS U/ S. 147/143(3), THE ASSESSING OFFICER HAS RAISED VARIOUS QUERIES AN D ISSUED NOTICE TO THE ASSESSEE TO EXAMINE THE GENUINENESS OF INTRODUC TION OF SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY FROM VARIO US ENTITIES. AS CULLED OUT FROM THE RECORD, THE LD. ASSESSING OFFIC ER HAD ALSO ISSUED NOTICES U/S. 133(6) TO ALL THE PARTIES AND IN RESPO NSE, THESE PARTIES HAVE PROVIDED ALL THE DETAILS TO THE ASSESSING OFFI CER. AFTER EXAMINING THE DOCUMENTS, THE ASSESSING OFFICER ACCEPTED THE I NTRODUCTION OF SHARE CAPITAL AND SHARE PREMIUM VIDE HIS ORDER DATE D 29.03.2015 PASSED U/S. 147/143(3). 2.2. THEREAFTER, IT APPEARS FROM THE DOCUMENTS S UBMITTED BEFORE US, THE ASSESSING OFFICER AFTER FRAMING THE ASSESSM ENT, SENT A PROPOSAL VIDE LETTER DATED 20.04.2015 TO THE PRINCI PAL CIT TO TAKE ACTION U/S. 263, STATING THAT, FIRSTLY , THERE WAS NON-COOPERATIVE ATTITUDE OF THE ASSESSEE; SECONDLY , THE DETAILS WERE PROVIDED AT THE FAG-END OF THE PROCEEDINGS; THIRDLY , THOROUGH INVESTIGATION COULD NOT ITA NO. 2742/DEL/2017 4 BE MADE; AND LASTLY , THEREFORE, HE DECIDED THAT IT WOULD NOT BE WISE TO PASS A WEAK ASSESSMENT ORDER. ON RECEIPT OF SAID PROPOSAL, THE LD. PR. CIT ISSUED A SHOW CAUSE NOTICE DATED 20.02.2017 AND 14.03.2017 U/S. 263 STATING AS UNDER: ON PERUSAL OF ASSESSMENT RECORD, IT IS FOUND THAT THE ASSESSEE COMPANY HAD CREDITED AN AMOUNT OF RS. 12,10,13,000/ - ON ACCOUNT OF SHARE PREMIUM AND SHARE CAPITAL FROM 15 DIFFERENT SHARE APPLICANT COMPANIES, HOWEVER, THESE SO CALLED SHARE SUBSCRIBERS GOT NEITHER DIVIDEND NOR SHARE OF PROFI T AGAINST THEIR HUGE INVESTMENTS FROM THE ASSESSEE COMPANY. FURTHER , THE ASSESSING OFFICER HAD NOT EXAMINED THE FINANCIAL WO RTH, GENUINENESS AND CREDITWORTHINESS OF THESE TRANSACTI ONS. THEREFORE, THE ASSESSMENT ORDER PASSED U/S 147/143( 3) DATED 29.03.2015 FOR THE A.Y. 2010-11 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE NE EDS A REVIEW U/S 263 OF THE IT ACT, 1961. 3. LD. PR. CIT IN HIS IMPUGNED ORDER HAD INCORPOR ATED EXACTLY THE SAME REASONING AS WAS PROPOSED BY THE ASSESSING OFFI CER VIDE LETTER DATED 20.04.2015, PLACED AT PAPER BOOK PAGE 537 TO 543, AND HELD THAT THE ORDER FRAMED BY THE ASSESSING OFFICER U/S. 147/143(3) IS NOT ONLY ERRONEOUS IN LAW BUT ALSO PREJUDICIAL TO THE IN TEREST OF REVENUE. ACCORDINGLY, HE SET ASIDE THE ASSESSMENT WITH THE DI RECTION TO RE- FRAME THE ASSESSMENT DE NOVO. THE MAIN FACTS NOTED BY THE LD. PR. CIT, CAN BE SUMMARISED AS UNDER: (I). PRIOR TO ISSUANCE OF NOTICE U/S. 148, THE ASSE SSEE HAD NOT FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11. ITA NO. 2742/DEL/2017 5 (II). THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03 .2010 REVEALS THAT THE ASSESSEE HAS ISSUED 4,94,052 EQUIT Y SHARES AT A FACE VALUE OF RS.10/- AND PREMIUM OF RS.240/- PER S HARE. THE PAID UP CAPITAL WAS INCREASED FROM RS.1,00,000/- TO RS.49,40,520/- AND THE ASSESSEE HAD RESERVES & SUR PLUS SHARE PREMIUM ACCOUNT AMOUNTING TO RS.11,61,72,480/-, TH EREBY INCREASING THE SHARE CAPITAL/ RESERVE & SURPLUS TO RS.12,10,13,000/-. HE HAS ALSO NOTED THE DETAILS OF THE COMPANIES WHO SUBSCRIBED THEIR SHARES. (III). THE FUNDS RECEIVED BY THE ASSESSEE IN THE F ORM OF SHARE CAPITAL/PREMIUM HAVE BEEN FURTHER INVESTED IN UNQUO TED SHARES OF VARIOUS OTHER COMPANIES AND NEITHER ANY A CTIVITIES HAVE BEEN SHOWN BY THE ASSESSEE NOR DOES IT HAVE AN Y FIXED ASSETS. (IV). THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE C OMPANY REVEALS THAT TOTAL GROSS RECEIPTS OF THE ASSESSEE C OMPANY WERE MERELY RS. 3,732/- AND THE ASSESSEE HAS SHOWN A LOS S OF RS.57,277/-. (V). AFTER ANALYZING THE INCOME-TAX PARTICULARS, BA LANCE SHEET, PROFIT & LOSS ACCOUNTS OF THESE SHARE SUBSCRIBER CO MPANIES, HE DEDUCED FOLLOWING POINTS: (I) IT IS SEEN THAT NONE OF THESE COMPANIES WERE ENG AGED IN ANY BUSINESS ACTIVITY. THEIR ONLY DECLARED INCOME W AS A SMALL AMOUNT OF OTHER INCOME. ITA NO. 2742/DEL/2017 6 (II). ALSO THE PROFIT & LOSS ACCOUNT REVEALED THAT THE GROSS ANNUAL REVENUE RECEIPT OF THESE COMPANIES AS WELL A S THE ANNUAL PROFIT DECLARED BY THESE COMPANIES WAS PRACTI CALLY INSIGNIFICANT DURING THE RELEVANT PERIOD. (III) A PERUSAL OF BALANCE SHEET OF THESE COMPAN IES HAVE SHOWN SUBSTANTIAL AMOUNT OF RECEIPTS IN THEIR BALANC E SHEET IN THE FORM OF SHARE CAPITAL AT HIGH PREMIUM, WHICH HAVE BEEN TRANSFERRED AS INVESTMENTS IN SOME OTHER CORRE LATED ENTITIES. (IV). IT IS ALSO WORTHWHILE TO NOTE THAT THOUGH THE SE AFORESAID COMPANIES HAD MADE COLOSSAL AMOUNT OF INVESTMENTS I N OTHER ENTITIES IN FORMS OF SHARE CAPITAL AND LOANS AND AD VANCES, THEY HAVE NOT RECEIVED ANY DIVIDEND OR PROFIT FROM THESE INVESTMENTS, AS IS EVIDENT FROM PERUSAL OF THEIR BA LANCE SHEET AND P&L A/C. (V). IT IS VERY STRANGE THAT DESPITE HAVING NO FINA NCIAL WORTH OF THEIR OWN, THESE SHARE APPLICANT COMPANIES HAVE MANA GED TO RECEIVE SUCH HUGE SHARE PREMIUM AND THE ENTIRE SUM HAS FURTHER BEEN TRANSFERRED TO SOME OTHER ENTITY, INCL UDING THE ASSESSEE RATHER THAN UTILIZING THE SAME FOR BUSINES S PURPOSES. THUS, HE DEDUCED THAT A COMPANY WHICH NEITHER HAD AN Y BUSINESS ACTIVITY NOR ENGAGED IN ANY PROFIT GENERATING APPAR ATUS, HOW IT COULD ITA NO. 2742/DEL/2017 7 HAVE RECEIVED SUCH A HUGE SHARE CAPITAL FROM THE CO MPANIES, WHO THEMSELVES DID NOT HAD ANY FINANCIAL WORTH. FURTHER, FORM NO. 2 AND OTHER DOCUMENTS FILED WITH THE ROC WERE ONLY AFTER A LAPSE OF FOUR YEARS OF SHARE APPLICATION MONEY, I.E., ON 25.02.20 14. ON THESE REASONS, HE SET ASIDE THE ASSESSMENT ORDER. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, FIR ST OF ALL RAISED LEGAL OBJECTION THAT HERE IN THIS CASE, THE ASSESSI NG OFFICER HAS SENT A PROPOSAL TO THE PR. CIT TO INITIATE PROCEEDINGS U/S . 263 AND WITHOUT ANY INDEPENDENT APPLICATION OF MIND, THE LD. PR. CI T HAS INITIATED THE REVISIONARY PROCEEDINGS U/S. 263. THERE HAS TO BE I NDEPENDENT APPLICATION OF MIND AFTER THE PR. CIT HAS EXAMINED THE ASSESSMENT RECORDS HIMSELF AND THEN REACH TO A CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE AND HE CANNOT ACQUIRE JURISDICTION MEREL Y ON THE PROPOSAL OF THE ASSESSING OFFICER. IN SUPPORT, HE RELIED UPO N FOLLOWING DECISIONS: (I). KISHORE MADNANI VS. CIT (ITA NO. 508/JP/2013- ORDER DATED 31.01.2014) (II). SHRI DHARMENDRA KUMAR BANSAL VS. CIT (ITA NO. 350/JP/2013- ORDER DATED 28.02.2014. (III) SHRI GAURAV BHATIA VS. CIT (ITA NO. 1730/DEL/ 2013 ORDER DATED 13.04.2017. THUS, HE SUBMITTED THAT ON THIS GROUND ALONE, SUCH AN ACTION OF THE LD. PR. CIT SHOULD BE STRUCK DOWN. ITA NO. 2742/DEL/2017 8 4.1 ON MERITS, HE SUBMITTED THAT, ON PERUSAL OF R EASONS RECORDED ITSELF, IT CAN BE SEEN THAT, PRECISELY ON THE SAME ISSUE, PROCEEDINGS U/S. 147/148 WERE INITIATED, THAT IS, FOR EXAMINING THE SHARE CAPITAL AND SHARE PREMIUM AMOUNT AGGREGATING TO RS.12,10,13 ,000/- AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAD NOT ONLY EXAMINED THE SAID ISSUE BY RAISING VAR IOUS QUESTIONNAIRES AND QUERIES, BUT ALSO CONDUCTED DETA ILED INQUIRY DIRECTLY FROM THE PARTIES. BEFORE THE ASSESSING OFF ICER, THE ASSESSEE HAD FILED ALL THE REQUISITE DOCUMENTS AND AFFIDAVIT S IN ALL THE 15 COMPANIES. THEREAFTER, THE ASSESSING OFFICER HAD IS SUED NOTICES U/S. 133(6) TO ALL THE PARTIES AND ALL OF THEM HAD RESPO NDED AND FURNISHED ALL THE RELEVANT DETAILS AS WAS ASKED BY THE ASSESSI NG OFFICER. IN SUPPORT, HE DREW OUR ATTENTION TO VARIOUS DOCUMENTS FILED BY THE PARTIES BEFORE THE AO AND ALSO THE DOCUMENTS WHICH W ERE FURNISHED BY THE ASSESSEE IN RESPONSE TO VARIOUS QUERIES RAIS ED BY THE ASSESSING OFFICER FROM TIME TO TIME. THUS, HE CONTE NDED THAT IT CANNOT BE HELD THAT THE ASSESSING OFFICER HAS NOT M ADE ANY ENQUIRY OR HAS NOT EXAMINED THE ISSUE. 4.2 LD. COUNSEL VEHEMENTLY POINTED OUT THAT, ONE VERY IMPORTANT FACT PECULIAR TO THIS CASE IS THAT, THE ISSUE OF SH ARES WAS NOT AGAINST ANY MONEY IN FORM OF CASH OR CHEQUE, BUT AGAINST PU RCHASE OF INVESTMENTS IN EQUITY SHARES ALREADY HELD BY THOSE 15 COMPANIES. THERE IS NO AMOUNT OR PAYMENT OF MONEY WHICH HAS BEE N RECEIVED BY THE ASSESSEE COMPANY AGAINST ISSUE OF THESE SHARES, ALBEIT SHARES ITA NO. 2742/DEL/2017 9 HAVE BEEN RECEIVED FROM THE ALLOTTEES WHICH WERE ALRE ADY HELD BY THEM, AS PURCHASE CONSIDERATION OF THE SHARES SUBSC RIBED BY THEM. THIS VITAL FACT HAS NOT BEEN ADDRESSED BY THE LD. P R. CIT WHICH WAS SPECIFICALLY BROUGHT TO HIS NOTICE. PRECISELY, IT WA S FOR THIS REASON ALONE, THE LD. ASSESSING OFFICER HAD ACCEPTED THE E NTIRE EVIDENCE AND DOCUMENTS FILED BY THE ASSESSEE AND ALSO THE RESPON SE GIVEN BY VARIOUS PARTIES IN THE COURSE OF ENQUIRIES CONDUCTE D BY THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT FOR INVOKING THE DEEMING PROVISIONS OF SECTION 68, IT IS SINE QUA NON THAT THERE HAS TO BE SUM IN TERMS OF MONEY WHICH HAS BEEN FOUND TO BE CREDITE D IN THE BOOKS OF ACCOUNT OF THE ASSESSEE MAINTAINED FOR ANY PREVI OUS YEAR. ONCE, THERE IS NO MONEY OR AMOUNT RECEIVED AGAINST THE IS SUE OF SHARES, THEN WHERE IS THE QUESTION OF INVOKING THE DEEMING P ROVISION OF SECTION 68. HENCE, ON THIS GROUND ALSO, THE IMPUGNE D REVISIONARY ORDER DESERVES TO BE QUASHED. 5. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF LD. PCIT AND SUBMITTED THAT MERE FILING OF ALL THE DOCUMENTS BY THE ASSESSEE DOES NOT MEAN THAT THE AO HAS EXAMINED THE ISSUE. THE ASSESSING OFFICER HAS TO CONDUCT PROPER ENQUIRY ABO UT THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION SPECIFICALLY WHEN PROCEEDINGS HAVE BEEN INITIATED U/S. 147. EVEN FROM THE PERUSAL OF THE DOCUMENTS FURNISHED BY THESE COMPANI ES LIKE, INCOME-TAX RETURNS, BALANCE SHEET, PROFIT AND LOSS ACCOUNT, IT CAN BE SEEN THAT THE INCOME OF ALL THE 15 COMPANIES DID NO T COMMENSURATE ITA NO. 2742/DEL/2017 10 WITH THE AMOUNT OF SHARE APPLICATION MONEY AND SHARE PREMIUM. THIS SHOWS THAT THERE WAS NO APPLICATION OF MIND OF T HE ASSESSING OFFICER ON THE DETAILS FURNISHED BY THE ASSESSEE. H E FURTHER SUBMITTED THAT THE ASSESSMENT ORDER IS VERY CRYPTIC WHICH FINISHES IN FEW LINES WITHOUT ADHERING TO THE ISSUE. THUS, IN SUC H SITUATION AND CIRCUMSTANCES AND IN VIEW OF EXPLANATION-2 TO SECTION 263, SAID ORDER IS DEEMED TO BE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN SUPPORT, SHE HAS RELIED UPON THE JUDGME NT OF HONBLE SUPREME COURT IN THE CASE OF DENIEL MERCHANTS P. LTD. VS. ITO IN SLP NO. 23976/2017 JUDGMENT AND ORDER DATED 29.11 .2017 . SHE ALSO RELIED UPON THE JUDGMENT OF DELHI HIGH COU RT IN THE CASE OF CIT VS. NAGESH KNITWEARS P. LTD. AND CIT VS. ORIENT CRAFTS LTD. REPORTED IN 345 ITR 135. 6. IN REJOINDER, THE LD. COUNSEL SUBMITTED THAT HER E IT IS NOT THE CASE OF NO INQUIRY. IN FACT, THE ENTIRE ASSESSMENT PROCEEDINGS REVOLVE AROUND THE INQUIRY ON THIS PARTICULAR ISSUE ONLY. T HEREFORE, IT CANNOT BE HELD THAT IN TERMS OF EXPLANATION-2 , IT IS A DEEMED CASE OF CANCELING OF ASSESSMENT U/S. 263. WITHOUT PREJUDICE , HE SUBMITTED THAT, IF IT IS HELD THAT THERE WAS SOME KIND OF INAD EQUATE ENQUIRY BY THE ASSESSING OFFICER, THEN IN SUCH CIRCUMSTANCES A LSO IT CANNOT BE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HE SUBMITTE D THAT LEGISLATURE HAS NOT SPECIFICALLY PROVIDED AS TO WHAT KIND OF INQ UIRY IS TO BE DONE BY THE ASSESSING OFFICER AND ONLY AFTER THAT IT CAN BE SAID THAT THE ITA NO. 2742/DEL/2017 11 ASSESSING OFFICER HAS NOT CARRIED OUT INVESTIGATION AS PER LAW. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SUNBEAM AUTO LTD., REPORTED IN 332 ITR 167; CIT VS. VIKAS POLYMERS, REPORTED IN 194 TAXMAN 57 AND CATENA OF OTHER JUDGMENTS IN HIS COMPILATION. FURTH ER, EVEN IF ASSESSMENT ORDER IS CRYPTIC, IT DOES NOT RENDER THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. WHAT IS REQUIRED TO BE SEEN IS, WHETHER THE ASSESSING OFFICER HAS CONDUCTED PROPER ENQUIRY OR NOT, WHICH IN THIS CASE HAS BEEN DONE. 6.1 FURTHER, WITHOUT PREJUDICE, HE SUBMITTED THAT IF LD. PR. CIT WAS NOT SATISFIED WITH THE INQUIRY MADE BY THE ASSESSING OFFICER, THEN HE HIMSELF COULD HAVE CARRIED OUT SOME PRIMA FACIE INQ UIRY SO AS TO COME TO THE CONCLUSION THAT THE INQUIRY DONE BY THE ASSESSING OFFICER WAS NOT PROPER OR SUFFICIENT. IN ABSENCE OF ANY SELF INQUIRY BY THE PR. CIT AND WITHOUT REACHING AND RECORDING HIS SELF INDE PENDENT SATISFACTION, THE CASE CANNOT BE SET ASIDE TO THE A SSESSING OFFICER FOR FRESH ASSESSMENT. IN SUPPORT OF THIS PROPOSITION, H E RELIED UPON THE JUDGMENT OF PR. CIT VS. DELHI AIR PORT EXPRESS PVT. LTD. ITA NO. 705/2017 ORDER DATED 05.09.2017 . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, THE JUDGM ENTS RELIED UPON BY THE PARTIES, FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS VARIOUS MATERIAL AND DOCUMENTS REFERRED TO BEFORE U S AT THE TIME OF HEARING. IN THIS CASE, ACTION U/S. 147 WAS TAKEN BY THE ASSESSING ITA NO. 2742/DEL/2017 12 OFFICER ONLY TO EXAMINE THE INTRODUCTION OF SHARE C APITAL AND SHARE PREMIUM AGGREGATING TO RS.12,10,13,000/-. FROM THE RECORDS SUBMITTED BEFORE US, WE FIND THAT THE ASSESSING OFF ICER IN HIS NOTICE U/S. 142(1) DATED 17.07.2014 APART FROM ASKING VARI OUS OTHER DETAILS, HAD SPECIFICALLY ASKED FOR NEW SHARE APPLIC ATION MONEY AND SHARE PREMIUM RECEIVED DURING THE FINANCIAL YEAR AN D TO FILE CONFIRMATIONS ALONG WITH ALL THE DETAILS AND ALSO RE QUIRED THE ASSESSEE TO JUSTIFY AS TO UNDER WHAT CIRCUMSTANCES, SHARES WERE ISSUED AT SUCH A HIGH PREMIUM. IN RESPONSE, THE ASS ESSEE HAD FILED DETAILED REPLY ALONG WITH THE DOCUMENTS AS ARE AVAIL ABLE IN THE PAPER BOOK. IT WAS ALSO INFORMED TO THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAS ALLOTTED ITS EQUITY SHARES NOT IN CONSI DERATION FOR ANY MONEY, ALBEIT THE ASSESSEE HAS RECEIVED INVESTMENTS HELD BY ALLOTTEE COMPANIES AS REFLECTED IN THEIR BALANCE SHEETS. THE DETAILED CHART OF INVESTMENT RECEIVED BY THE ALLOTTEE COMPANY IN FORM NO. 2 FILED BY THE ALLOTTEE COMPANIES WAS ALSO ENCLOSED. FROM THE D OCUMENTS PLACED BEFORE US, AS APPEARING FROM PAGES 8 TO 536, IN 2 VOLUMES OF PAPER BOOK, IT IS SEEN THAT PRECISELY ON ISSUE OF S HARE APPLICATION MONEY AND SHARE PREMIUM, THE ASSESSING OFFICER HAD CONDUCTED DETAILED ENQUIRY AND HAS RAISED QUERIES, IN RESPONS E TO WHICH THESE DOCUMENTS HAVE BEEN FILED. HERE IN THIS CASE, THE A SSESSING OFFICER HAD ISSUED NOTICES U/S. 133(6) TO ALL THE PARTIES, WHO HAD DULY CONFIRMED THAT SHARE APPLICATION MONEY AND SHARE PR EMIUM HAS BEEN SUBSCRIBED OTHER THAT THE CONSIDERATION OF CAS H AND HAVE COMPLIED WITH SUCH NOTICES AND FILED THE ENTIRE DETA ILS. FOR THE SAKE ITA NO. 2742/DEL/2017 13 OF READY REFERENCE, THE DETAILS OF THE DOCUMENTS FI LED BY ALL THE 15 PARTIES BEFORE THE ASSESSING OFFICER ARE AS UNDER: M/S. SAFFRON LOGISTIC (P) LTD (RS.94,20,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) ITR ACK. - A.Y. 10-11. AUDITED FINANCIAL STATEMENTS OF SAFFRON - A.Y. 10 - 11. LEDGER A/C OF ASSESSEE IN BOOKS OF SAFFRON - A.Y. 10-11 CONFIRMATION OF A/C FROM SAFFRON CONFIRMATION FROM SAFFRON FOR SUBSCRIBING THE SHA RES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES SHARE ALLOTMENT LETTER FROM UPVAN LEASING P LTD. TO SAFFRON --DO FROM GANESH GANGA INVESTMENT P LTD. TO SAFF RON -DO FROM ROYAL MIRAGE FINANCIAL CONSULTANT P LTD . TO SAFFRON AFFIDAVIT BY DIRECTOR OF SAFFRON CERTIFICATE OF INCORPORATION OF SAFFRON M/S. BANKEY BIHARI APPARELS (P) LTD (RS. 91,00,000/ -) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) PAN CARD ITR ACK. -A.Y. 11-12. AUDITED FINANCIAL STATEMENTS LEDGER A/C OF ASSESSEE IN THE BOOKS OF BANKEY - A .Y. 1011. CONFIRMATION OF A/C FROM BANKEY CONFIRMATION FROM BANKEY FOR SUBSCRIBING THE SHAR ES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM SALASARJI INFOSOFT LEASING P LTD. TO BANKEY DO FROM MAHARATHI STEEL P LTD. TO BANKEY DO FROM REALFRAME INFRASTRUCTURE P LTD. TO BANK EY DO FROM FLIMA ISPAT P LTD. TO BANKEY DO FROM SUBHAM SHOPPERS KHAZANA P LTD. TO BANKE Y DO FROM KANHAIYA IMPEX LTD. TO BANKEY AFFIDAVIT BY DIRECTOR OF BANKEY CERTIFICATE OF INCORPORATION OF BANKEY ITA NO. 2742/DEL/2017 14 M/S. JAGUAR SOFTEEH (P) LTD TRS.90,00,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 03.1 1.14 OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF JAGUAR - A .Y. 10-11. CONFIRMATION OF A/C FROM JAGUAR CONFIRMATION FROM JAGUAR FOR SUBSCRIBING THE SHAR ES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM PRAMHASH MOTOR FINANCE CO. P LTD. TO JAGUAR DO FROM REWIN CERAMICS P LTD. TO JAGUAR DO FROM SAINGER CAPITAL & SECURITIES P LTD. TO JAGUAR DO FROM GANESH GANGA INVESTMENT P LTD. TO JAGUA R AFFIDAVIT BY DIRECTOR OF JAGUAR CERTIFICATE OF INCORPORATION OF JAGUAR M/S. MILLENIUM AGI O SYSTEM (RS.80,00,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) PAN CARD AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF MILLENI UM - A.Y. 10 - 11. CONFIRMATION OF A/C FROM MILLENIUM CONFIRMATION FROM MILLENIUM FOR SUBSCRIBING TH E SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM CITRUS TECHNOLOGIES P LT D. TO MILLENIUM DO FROM SHIV DURGA MARKETING P LTD. TO MILLE NIUM DO FROM UNIPACK PACKAGING P LTD. TO MILLENIU M DO FROM JAI DURGAY GARMENTS P LTD. TO MILLEN IUM DO FROM G WILLIAMS (FABRICATIONS) P LTD. TO MILLENIUM DO FROM SAINGER CAPITAL & SECURITIES P LTD. TO MILLENIUM AFFIDAVIT BY DIRECTOR OF MILLENIUM CERTIFICATE OF INCORPORATION OF MILLENIUM M/S. RHVTHM EXIM (P) LTD (RS.91,03.000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 04.1 1.14 OF NOTICE U/S. 133(6) ITA NO. 2742/DEL/2017 15 PAN CARD ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF RHYTHM - A.Y. 10-11. CONFIRMATION OF A/C FROM RHYTHM CONFIRMATION FROM RHYTHM FOR SUBSCRIBING THE S HARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM UPVAN LEASING P LTD. TO RHYTHM -DO FROM SAFFRON LOGISTIC (P) LTD TO RHYTHM AFFIDAVIT BY DIRECTOR OF RHYTHM CERTIFICATE OF INCORPORATION OF RHYTHM M/S. ROVAL MIRASE FINANCIAL CONSULTANTS (P) LTD (RS 85,00,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 04.11.14 OF NOTICE U/S. 133(6) PAN CARD ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF ROYAL - A.Y. 10 - 11. CONFIRMATION OF A/C FROM ROYAL CONFIRMATION FROM ROYAL FOR SUBSCRIBING THE SH ARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM UPVAN LEASING P LTD. TO ROYAL AFFIDAVIT BY DIRECTOR OF ROYAL CERTIFICATE OF INCORPORATION OF ROYAL M/S. GREENVISION CONSTRUCTION (P) LTD (RS.70,00,000 /-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) PAN CARD ITR ACK -A.Y. 10-11. AUDITED FINANCIAL STATEMENT - A.Y. 1011. LEDGER A/C OF ASSESSEE IN THE BOOKS OF GREENVIS ION - A.Y. 10 - 11. CONFIRMATION OF A/C FROM GREENVISION CONFIRMATION FROM GREENVISION FOR SUBSCRIBING T HE SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM UPVAN LEASING P LTD. TO G REENVISION ITA NO. 2742/DEL/2017 16 CONFIRMATION OF APPLICATION BY GANESH GANGA INV ESTMENT P LTD. AFFIDAVIT BY DIRECTOR OF GREENVISION CERTIFICATE OF INCORPORATION OF GREENVISION M/S. USK EXIM (P) LTD (RS.80.00,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10 - 11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF USK EX IM - A.Y. 10 - 11. CONFIRMATION OF A/C FROM USK EXIM CONFIRMATION FROM USK EXIM FOR SUBSCRIBING THE SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM ANAND MOTOR PRODUCT P LT D. TO USK EXIM DO FROM AMP MOTOR P LTD. TO USK EXIM AFFIDAVIT BY DIRECTOR OF USK EXIM CERTIFICATE OF INCORPORATION OF USK EXIM M/S. STAR DELTA TRADERS (P) LTD (RS.1,00,00.000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. NIL OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10 - 11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF STAR DE LTA - A.Y. 10 - 11. CONFIRMATION OF A/C FROM STAR DELTA CONFIRMATION FROM STAR DELTA FOR SUBSCRIBING T HE SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM UPVAN LEASING P. LTD. TO STAR DELTA CONFIRMATION OF APPLYING SHARES BY GANESH GAN GA INVESTMENT P LTD. TO STAR DELTA CONFIRMATION FOR APPLYING SHARES BY ROYAL MIRAG E FINANCIAL CONSULTANTS P LTD. TO STAR DELTA AFFIDAVIT BY DIRECTOR OF STAR CERTIFICATE OF INCORPORATION OF STAR M/S. JOIN FASHION (P) LTD (RS.80.00,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 04.1 1.14 OF NOTICE U/S. 133(6) ITA NO. 2742/DEL/2017 17 ITRACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10- 11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF JOIN FA SHION - A.Y. 10 11 CONFIRMATION OF A/C FROM JOIN FASHION CONFIRMATION FROM JOIN FASHION FOR SUBSCRIBING THE SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES CONFIRMATION FOR APPLYING THE SHARES BY BHOOMI EARTHMOVERS P LTD. TO JOIN FASHION ALLOTMENT LETTER FROM PRABHASH MOTOR FINANCE CO. P LTD. TO JOIN FASHION DO FROM SARAL COMMUNICATIONS P LTD. TO JOIN FASHION AFFIDAVIT BY DIRECTOR OF JOIN FASHION CERTIFICATE OF INCORPORATION OF JOIN FASHION M/S. ACCENT TELECOM SERVICES (P) LTD (RS.89,00,000/ -) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 03.11.14 OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF ACCENT - A.Y. 10-11. CONFIRMATION OF A/C FROM ACCENT CONFIRMATION FROM ACCENT FOR SUBSCRIBING THE S HARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM UPVAN LEASING P LTD. TO ACCENT DO FROM GANESH GANGA INVESTMENT P LTD. TO AC CENT -DO- FROM RHYTHM EXIM P LTD. TO ACCENT AFFIDAVIT BY DIRECTOR OF ACCENT CERTIFICATE OF INCORPORATION OF ACCENT M/S. SHUBH PRONBUILD (PJ LTD (RS. 85,00.000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. NIL OF NOTICE U/S. 133(6) PAN CARD AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF SHUBH - A.Y. 10-11. CONFIRMATION OF A/C FROM SHUBH CONFIRMATION FROM SHUBH FOR SUBSCRIBING THE SH ARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ITA NO. 2742/DEL/2017 18 ALLOTMENT LETTER FROM REWIN CERAMICS P LTD. TO SHUBH DO FROM SARAL COMMUNICATIONS P LTD. TO SHUBH DO FROM GANESH GANGA INVESTMENT P LTD. TO SH UBH DO FROM PRABHASH MOTOR FINANCE CO. P LTD. T O SHUBH AFFIDAVIT BY DIRECTOR OF SHUBH CERTIFICATE OF INCORPORATION OF SHUBH M/S. RANCHOR ELECTRONICS (P) LTD (RS. 86,50,000/-) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 07.11.14 OF NOTICE U/S. 133(6) PAN ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF RANCHOR - A.Y. 10-11. CONFIRMATION OF A/C FROM RANCHOR CONFIRMATION FROM RANCHOR FOR SUBSCRIBING THE SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES ALLOTMENT LETTER FROM BHAVYA ALUMINIUM P LTD. TO RANCHOR DO FROM NABKRI DEVELOPERS P LTD. TO RANCHOR DO FROM REALFRAME INFRASTRUCTURE P LTD. TO R ANCHOR DO FROM JAYBEE TRANSFORMERS P LTD. TO RANCHO R DO FROM HIMA ISPAT P LTD. TO RANCHOR AFFIDAVIT BY DIRECTOR OF RANCHOR CERTIFICATE OF INCORPORATION OF RANCHOR M/S. TRANSMISSION MERCANDISE (P) LTD (RS.45,00,000/ -) NOTICE U/S. 133(6) DTD. 27.10.14. REPLY OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10-11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF TRANSMISSI ON - A.Y. 10-11. CONFIRMATION OF A/C FROM TRANSMISSION CONFIRMATION FROM TRANSMISSION FOR SUBSCRIBING TH E SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES CONFIRMATION FOR APPLYING THE SHARES BY GANESH GA NGA INVESTMENT P LTD. TO TRANSMISSION AFFIDAVIT BY DIRECTOR OF TRANSMISSION CERTIFICATE OF INCORPORATION OF TRANSMISSION ITA NO. 2742/DEL/2017 19 M/S. WHITE COLLAR MANAGEMENT SERVICES (PI LTD (RS.4 3,40,000/-) PAN NOTICE U/S. 133(6) DTD. 27.10.14. REPLY DTD. 03.11.14 OF NOTICE U/S. 133(6) ITR ACK. -A.Y. 10-11. AUDITED FINANCIAL STATEMENTS - A.Y. 10 - 11. LEDGER A/C OF ASSESSEE IN THE BOOKS OF WHITE COLL AR - A.Y. 10 - 11. CONFIRMATION OF A/C FROM WHITE COLLAR CONFIRMATION FROM WHITE COLLAR FOR SUBSCRIBING TH E SHARES OF ASSESSEE AGREEMENT FOR PURCHASE OF SHARES CONFIRMATION FOR APPLYING THE SHARES BY GANESH GA NGA INVESTMENT P LTD. TO WHITE COLLAR ALLOTMENT LETTER FROM PRABHASH MOTOR FINANCE CO. P LTD. TO WHITE COLLAR AFFIDAVIT BY DIRECTOR OF WHITE COLLAR CERTIFICATE OF INCORPORATION OF WHITE COLLAR 7.1 THUS, IN THE WAKE OF THE AFORESAID EVIDENCES B ROUGHT ON RECORD AND INQUIRIES CONDUCTED BY THE ASSESSING OFFICER DI RECTLY FROM THE PARTIES IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT CANNOT BE PRESUMED THAT, THE ASSESSING OFFICER HAD NOT CARRIE D OUT ANY ENQUIRY OR VERIFICATION WHICH HE WAS REQUIRED TO DO SO, SPECI FICALLY WHEN THE JURISDICTION TO ASSESS WAS ACQUIRED U/S. 147 ON THI S REASON ALONE, THAT IS, TO EXAMINE THE GENUINENESS OF THE SHARE CA PITAL AND SHARE PREMIUM. 8 ONE MORE IMPORTANT FACT WHICH CLINCHES THE ENTIR E ISSUE AND SEPARATES THE CASE OF THE ASSESSEE FROM ALL OTHER C ASES OF SHARE CAPITAL AND SHARE PREMIUM IS THAT, HERE IT IS NOT T HE CASE WHERE THE ASSESSEE HAS RECEIVED ANY MONEY IN FORM OF CASH OR CHEQUE IN LIEU OF SHARE APPLICATION OR SHARE PREMIUM; RATHER THE ASSE SSEE HAD ITA NO. 2742/DEL/2017 20 RECEIVED INVESTMENTS IN FORM OF EQUITY SHARES HELD BY THESE COMPANIES IN THEIR BALANCE SHEET FOR A LONG TIME AN D DULY DISCLOSED IN THEIR INCOME TAX PARTICULARS. THIS FACT IS UNDIS PUTED AND IS CLEARLY BORNE OUT FROM VARIOUS REPLIES FILED BY THE ASSESSE E BEFORE THE ASSESSING OFFICER AND ALSO BEFORE THE LD. PCIT. THE DETAILS OF INVESTMENTS PURCHASED BY THE ASSESSEE COMPANY IN LI EU OF SHARE ALLOTMENT FOR THE F.Y. 2009-10 IS REPRODUCED HEREUN DER: DETAILS OF INVESTMENTS PURCHASED IN LIEU OF SHARE A LLOTMENT FOR THE FY 2009-10 SL. NO. NAME OF ALLOTTEE NAME OF THE SCRIPT (INVESTMENTS) NO. OF SHARES VALUE PER SHARE VALUE OF INVESTME NT GROSS VALUE OF INVESTMENT S 1 BANKEY BIHARI APPARELS LTD. (36400 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) SALASARJI INFOSOFT PVT. LTD MAHARTHI STEELS PVT. LTD REAL FRAME INFRASTRUCTURE PVT. LTD WELCO AGENCIES PVT. LTD KANAHIYA IMPEX LIMITED SHUBHAM SHOPPERS KHAZANA (P)LTD HIMA ISPAT PVT. 15000 23000 15000 1600 10000 2000 600 100 100 100 1250 100 100 1000 1500000 2300000 1500000 2000000 1000000 200000 600000 9100000 2 SAFFRON LOGISTICS PVT. LTD. (37680 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) ROYAL MIRAGE FINANCIAL CONSULTANTS (P)LTD. UPVAN LEASING PVT. LTD. GANESH GANGA INVESTMENT PVT. LTD. 35360 2500 25000 125 1000 100 4420000 2500000 2500000 9420000 3 JAGUAR SOFTECH PVT. LTD. (36000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) PRABHAS MOTOR FINANCE CO. PVT. LTD. REWIN CERAMICS PVT. LTD. SAINGER CAPITAL & SECURITIES PVT. LTD. GANESH GANGA INVESTMENT PVT. LTD 7000 25000 25000 5000 500 100 100 100 3500000 2500000 2500000 500000 9000000 4 MILLENIUM AGRO SYSTEM PVT. LTD. (32000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) CITRUS TECHNOLOGIES PVT. LTD. SHIVDURGA MARKETING PVT. LTD. UNLPACK PACKAGING PVT. LTD. JAY DURGEY GARMENTS PVT. LTD. G WILLIAM (FABRICATIONS) LTD. SAINGER CAPITAL & SECURITIES PVT. LTD. 5000 7500 20000 10000 6660 17500 100 100 100 100 300 100 500000 750000 2000000 1000000 2000000 1750000 8000000 ITA NO. 2742/DEL/2017 21 5 RHYTHM EXIM PVT. LTD. (36412 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) UPVAN LEASING PVT. LTD. SAFFRON LOGISTICS PVT. LTD. 4000 510300 1000 10 4000000 5103000 9103000 6 ROYAL MIRAGE FINANCIAL CONSULTANTS (P) LTD. (34000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) UPVAN LEASING PVT. LTD. SAINGER CAPITAL &. SECURITIES PVT. LTD. 5000 35000 1000 100 5000000 3500000 8500000 7 GREEN VISION CONSTRUCTION PVT. LTD. (28000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) UPVAN LEASING PVT. LTD. GANESH GANGA INVESTMENT PVT. LTD. 3000 40000 1000 100 3000000 4000000 7000000 8 USKEXLM PVT. LTD. (32000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) ANAND MOTOR PRODUCTSJM. LTD. AMP MOTOR PVT. LTD. 25000 30000 200 100 5000000 3000000 8000000 9 STAR DELTA TRADERS PVT. LTD. (40000 EQ SHARES OF RS. 10 EACH AT-A PREMIUM OF RS. 240 PER SHARE) UPVAN LEASING PVT. LTD. GANESH GANGA INVESTMENT PVT. LTD. ROYAL MIRAGE FINANCIAL CONSULTANTS (P)LTD. 3000 25000 36000 1000 100 125 3000000 2500000 4500000 10000000 10 JOIN FASHION PVT. LTD. (32000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) BHOOMI EARTHMOVERS PVT. LTD. PRABHAS MOTOR FINANCE CO. PVT. LTD. SARAL COMMUNICATIONS PVT. LTD. 30000 5000 12500 100 500 200 3000000 2500000 2500000 8000000 11 AT A PREMIUM OF RS. 240 PER SHARE) GANESH GANGA INVESTMENT PVT. LTD. RHYTHM EXIM PVT. LTD. 45000 190000 100 10 4500000 1900000 8900000 12 SUBH PROPBUILD PVT. LTD. (34000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) REWIN CERAMICS PVT. LTD. SARAL COMMUNICATIONS PVT. LTD. GANESH GANGA INVESTMENT PVT. LTD. PRABHAS MOTOR FINANCE CO. PVT. LTD. 20000 12500 5000 7000 100 200 100 500 2000000 2500000 500000 3500000 8500000 13 RANCHOR ELECTRONICS PVT. LTD. (34600 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) BHAVYA ALUMINIUM PVT. LTD. NABKRI DEVELOPERS PVT. LTD. REAL FRAME INFRASTRUCTURE PVT. LTD. JAYBEE TRANSFORMERS PVT. LTD. FLIMA ISPAT PVT. LTD. 9000 20000 15000 20000 4250 100 50 100 50 1000 900000 1000000 1500000 1000000 4250000 8650000 14 TRANSMISSION MERCANDISE PVT. LTD. (18000 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) GANESH GANGA INVESTMENT PVT. LTD. 45000 100 4500000 4500000 ITA NO. 2742/DEL/2017 22 15 WHITE COLLAR MANAGEMENT SERVICES(P) LTD. (17360 EQ SHARES OF RS. 10 EACH AT A PREMIUM OF RS. 240 PER SHARE) GANESH GANGA INVESTMENT PVT. LTD. PRABHAS MOTOR FINANCE CO. PVT. LTD. 23400 4000 100 500 2340000 2000000 4340000 TOTAL 121013000 9. APART FROM ASSESSEE FILING VARIOUS DOCUMENTS T O DISCHARGE ITS ONUS, ALL THESE COMPANIES IN RESPONSE TO THE INQUIR IES CONDUCTED BY THE ASSESSING OFFICER HAD DULY GIVEN DETAILS OF INV ESTMENTS HELD BY THEM WHICH DULY DISCLOSED IN THEIR RESPECTIVE BALANC E SHEETS WHICH HAS BEEN TRANSFERRED OR SOLD TO THE ASSESSEE IN LIE U OF WHICH THE ASSESSEE HAS ALLOTTED SHARES TO THESE COMPANIES. FO R INSTANCE, ONE OF THE COMPANY, SAFFRON LOGISTICS PVT. LTD. IN RESPONS E TO NOTICE U/S. 133(6), VIDE LETTER DATED 07.11.2014 HAD STATED AS UNDER: 07 TH NOVEMBER, 2014 TO, INCOME TAX OFFICER, WARD 3(2), 385A, CR BUILDING, ITO, NEW DELHI RESPECTED SIR, REF : YOUR NOTICE DATED 22/10/2014 FOR INFORMATION REQUIRED AS PER SECTION 133 (B) IN CASE OF CANTON TEXTILE MILLS P. LTD. FOR A.Y. 2010-11 REG.- IN ABOVE REFERENCE OUR SUBMISSION IS STATED AS FOLL OWING : THAT COPY OF LEDGER ACCOUNT FOR TRANSACTIONS WITH C ONCERNED COMPANY FOR F.Y. 2003-10 AS PER BOOKS OF OUR COMPAN Y IS ATTACHED FOR YOUR KIND REFERENCE. ITA NO. 2742/DEL/2017 23 THAT WE HAVE NOT MADE ANY PAYMENT OR RECEIVED ANY A MOUNT BY CASH OR BANK FROM THE SAID COMPANY DURING F.Y. 2003 -10. THAT OUR COMPANY HAS SUBSCRIBED 37680 EQUITY SHARES OF FACE VALUE RS. 10/- EACH OF M/S. CANTON TEXTILE MILLS PR IVATE LIMITED AT A PREMIUM OF RS. 240/- PER SHARE AGGREGATING TO VALUE RS. 34,20.000/- DURING F.Y. 2009-10 ONLY. CERTIFIED TRU E PHOTOCOPY OF ALLOTMENT LETTER/ AGREEMENT EXECUTED IN THIS REGARD IS ENCLOSED. THE AFORESAID SHARES HAVE BEEN ALLOTTED TO US TOWAR DS AGREED CONSIDERATION OF OTHERWISE THAN CASH OF RS. 34,20.0 00/- AGAINST SALE OF OUR PRE-EXISTING INVESTMENT IN 35360 EQUITY SHARES OF M/S. ROYAL MIRAGE FINANCIAL CONSULTANTS(P)LTD., 250 0 EQUITY SHARES OF M/S UPVAN LEASING (P)LTD. AND 25000 EQUIT Y SHARES OF M/S CANESH GANGA INVESTMENT PVT. LTD. DULY SOLD AND TRANSFERRED TO M/S. CANTON TEXTILE MILLS PRIVATE LI MITED AT THE SAME TIME DURING F.Y. 2003-10. THEREFORE WE HAVE NO T MADE ANY PAYMENT FOR THE SAME IN CASH OR BY ANY MODE THROUGH BANK. AFORESAID TRANSACTIONS ARE DULY RECORDED IN OUR BOO KS OF ACCOUNTS FOR THE YEAR ENDED 31.03,2010 AND THE SHAR ES SO SUBSCRIBED WERE TAKEN TO OUR INVESTMENT ACCOUNT IN FINANCIAL STATEMENT. FURTHER WE CONFIRM THAT OUR COMPANY IS REGULAR INCO ME TAX ASSESSEE HAVING PAN AANCS7339J. COPY OF OUR AUDITED BALANCE SHEET AND ITR FOR F.Y. 2009-10 IS ENCLOSED AS REQUI RED BY YOUR GOOD OFFICE. 9.1 ALONG WITH THAT, IT HAS ALSO FILED ITS BALANCE S HEETS WITH THE ANNEXURE AND COPY OF LEDGER ACCOUNT WHEREIN INVESTME NT IN SHARES HAVE BEEN GIVEN. THUS, THE SHARES HAVE BEEN ALLOTTE D TO THESE COMPANIES TOWARDS AGREED CONSIDERATION OTHERWISE THAN CASH AND AGAINST THE SALE OF THEIR PRE-EXISTING INVESTMENTS. PRECISELY, SIMILAR ITA NO. 2742/DEL/2017 24 REPLIES AND LETTERS ALONG WITH DOCUMENTS HAVE BEEN G IVEN BY ALL OTHER PARTIES. 10. ERGO, WHEN ASSESSEE IN LIEU OF ALLOTMENT OF S HARES INCLUDING FACE VALUE OF SHARES AS WELL AS PREMIUM AMOUNT, HAS RECEIVED INVESTMENTS IN THE FORM OF EQUITY SHARES OF VARIOUS COMPANIES, THEN WHETHER THESE COMPANIES HAD AVAILABILITY OF CASH OR NOT MAY NOT BE VERY RELEVANT FACTOR. THE CREDITWORTHINESS WHICH IS R EQUIRED TO BE EXAMINED U/S. 68 CAN BE WITH REGARD TO THE TRANSACTI ON IN FORM OF ANY MONEY EITHER IN CASH OR CHEQUE. TO INVOKE THE D EEMING PROVISIONS OF SECTION 68, IT IS AXIOMATIC THAT THE CREDIT APPEARING IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE SHO ULD BE WITH REFERENCE TO ANY SUM RECEIVED BY THE ASSESSEE. IF T HE ASSESSEE HAS NOT RECEIVED ANY SUM IN TERMS OF ANY MONEY, I.E., I N CASH OR CHEQUE, THEN DEEMING PROVISION OF SECTION 68 WILL NOT APPLY. 11. HERE IN THIS CASE, WHAT THE LD. PR. CIT IN THE IMPUGNED REVISIONARY ORDER HAS NOTED IS THAT, ALL THESE COMP ANIES HAVE DECLARED VERY MEAGER AMOUNT OF INCOME AND ALSO THES E COMPANIES HAVE SUBSTANTIAL AMOUNT OF INVESTMENT IN THEIR BALA NCE SHEET IN THE FORM OF SHARES AND SHARE PREMIUM AND NOTHING HAS BE EN RECEIVED IN DIVIDEND AND PROFIT FROM THESE INVESTMENTS. WHAT IS REQUIRED TO BE SEEN IN SUCH CASES, WHERE THE ISSUE OF CREDITWORTHINE SS OF THE SUM INVESTED IS AT FOCAL POINT IS, WHETHER THESE COMPANI ES HAD FINANCIAL WORTH OR CAPITAL OR INVESTMENT OR INCOME TO MAKE SUC H HUGE INVESTMENTS IN A COMPANY. IF THE ENTITIES MAKING IN VESTMENTS ARE ITA NO. 2742/DEL/2017 25 UNABLE TO OFFER EXPLANATION ABOUT THE NATURE AND SO URCE OF INVESTMENT IN THE FORM OF SHARE APPLICATION MONEY, THEN DEEMING PROVISION OF SECTION 68 CAN BE INVOKED FOR TAXING T HE SAID AMOUNT IN THE HANDS OF THE ASSESSEE. HERE IN THIS CASE, ONCE THERE IS NO TRANSACTION IN TERMS OF ANY MONEY, THEN THERE COULD BE NO QUESTION OF SEEING THE CREDITWORTHINESS BY WAY OF THEIR ANNUAL REVENUE OR INCOME. THE REASON BEING, ALL THESE COMPANIES WERE HOLDING INVESTMENTS RIGHT FROM THE EARLIER YEARS IN THE FOR M OF EQUITY SHARES OF VARIOUS COMPANIES AND THE SHARES HELD AS INVESTM ENT BY THEM HAS BEEN TRANSFERRED TO THE ASSESSEE IN CONSIDERATION F OR ALLOTMENT OF EQUITY SHARES. THUS, THE SOURCE OF SHARES RECEIVED BY THE ASSESSEE IS FLOWING FROM INVESTMENTS HELD BY THEM IN THEIR BALAN CE SHEET WHICH HAVE BEEN PART OF THEIR ASSESSMENT RECORDS. UNDER T HE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY R EASON THAT THERE WAS ANY LACK OF ENQUIRY DONE BY THE AO OR NON-APPLIC ATION OF MIND QUA THE CREDITWORTHINESS OR GENUINENESS OF THE TRANS ACTION. ONCE, THE ASSESSING OFFICER HAS FOUND THAT A TRANSACTION IS NOT IN TERMS OF ANY MONEY AFTER THE DETAILED INQUIRY AND GETTING TH E ENTIRE RECORDS FROM THESE 15 COMPANIES, THEN WE ARE UNABLE TO APPR ECIATE AS TO HOW THE LD. PR. CIT HAD REACHED TO A CONCLUSION THAT TH E ASSESSING OFFICER HAS FAILED TO INVESTIGATE THE GENUINENESS AND CREDI TWORTHINESS OF SOURCE OF FUNDS CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. HERE IN THIS CASE, FIRSTLY , IDENTITY OF THE PARTIES CANNOT BE IN DISPUTE; SECONDLY , THE GENUINENESS OF THE TRANSACTION IS FULLY PROVEN BY THE FACT THAT THESE COMPANIES HAVE GIVEN SHARES TO THE ITA NO. 2742/DEL/2017 26 ASSESSEE IN LIEU OF SHARES ALLOTTED TO THEM; AND LASTLY , THERE IS NO REQUIREMENT TO EXAMINE THE CREDITWORTHINESS OF ANY S UM ADVANCED OR INVESTED BY THESE COMPANIES BECAUSE THERE IS NO TRA NSACTION IN TERMS OF CASH/MONEY. THE SOURCE OF INVESTMENT WHICH HAS BEEN TRANSFERRED TO THE ASSESSEE COMPANY IS FLOWING FROM THEIR BALANCE SHEETS AS THESE SHARES WERE HELD BY THESE COMPANIES AS INVESTMENT DULY REFLECTED IN THEIR BALANCE SHEETS IN EARLIER Y EARS. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FIND IT A FIT CASE WHEREIN THE REVISIONARY JURISDICTION U/S. 263 COULD HAVE BEEN E XERCISED IN THE LIGHT OF THE FACT THAT THE ASSESSING OFFICER HAD CA RRIED OUT DETAILED INQUIRY AND EXAMINATION DIRECTLY FROM THE PARTIES I N THE COURSE OF ASSESSMENT PROCEEDINGS. 12 OTHERWISE ALSO, IT IS TRITE LAW THAT, IF THE LD. PR. CIT WAS NOT SATISFIED WITH THE INQUIRY CONDUCTED BY THE ASSESSIN G OFFICER, THEN AT LEAST HE SHOULD HAVE CARRIED OUT SOME PRIMA FACIE E NQUIRY HIMSELF SO AS TO REACH TO A CONCLUSION THAT THE INQUIRY CONDUC TED BY THE ASSESSING OFFICER WAS DEFICIENT OR LACKING. WITHOUT CONDUCTING ANY INQUIRY, LD. PCIT CANNOT HOLD THAT THE EITHER THE I NQUIRY CONDUCTED BY THE ASSESSING OFFICER WAS INSUFFICIENT OR THERE I S NO VERIFICATION OF THE EVIDENCES. THIS PROPOSITION IS FULLY SUPPORTED BY THE JUDGMENTS OF HONBLE JURISDICTIONAL HIGH COURT AS RELIED BY T HE LD. COUNSEL. EXPLANATION 2 CONTEMPLATES A SITUATION WHERE ASSESSING OFFICER HA S PASSED THE ORDER WITHOUT MAKING ANY INQUIRY OR VERIF ICATION. THE SAID EXPLANATION CANNOT BE INVOKED WHERE ASSESSING OFFICER HAS CALLE D FOR ITA NO. 2742/DEL/2017 27 THE EVIDENCES AND SOUGHT ASSESSEES EXPLANATION AND HAS VERIFIED THE EVIDENCES AND THEN CARRIED OUT INQUIRY U/S 133(6) F ROM THE PARTIES FROM WHERE HE GATHERED THAT NO MONEY IN FORM OF CASH OR CHEQUE HAS BEEN RECEIVED IN LIEU OF SHARE SUBSCRIPTION AND SHA RE PREMIUM. UNDER THESE FACTS AND CIRCUMSTANCES THE ASSESSMENT ORDER CANNOT BE SET ASIDE ON THE GROUND THAT NO INQUIRY HAS BEEN MADE OR SUCH AN ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, WE QUASH THE IMPUGNED REVISIONARY ORDE R U/S. 263 AND RESTORE THE ASSESSMENT ORDER. 13. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH APRIL, 2019 SD/- SD/- (L.P. SAHU) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH APRIL, 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI