M/s. OMFA Rubbers PVt. Ltd, New Delhi V. ITO, New Delhi

ITA 2767/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4105 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 25-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 08-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Reopening of assessment; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion
• Section: 143(3); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI I.P.BANSAL AND SHRI K.G. BANSAL I.T.A. NO. 2767(DEL)/2009 ASSESSMENT YEAR: 2004-05 M/S OMFA RUBBERS (P) LTD., INCOME -TAX OFFICER, 37, CHAWLA COMPLEX, WARD 13(4), NEW DELHI. A-125, SHAKARPUR, VS. NEW DELHI. PAN-AAACO0144Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY KUMAR, C.A RESPONDENT BY : SHR I A.K. MONGA, SR. DR ORDER PER K.G. BANSAL : AM THE FACTS OF THE CASE ARE THAT THE ASSESSEE HA D FILED THE RETURN ON 29.10.2004 DECLARING TOTAL INCOME OF RS. 2,99,470/ -. THIS RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 (THE ACT), ON 8.12.2004. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING ON THE BASIS OF WHICH REASONS WERE RECORDED U/S 147, AND NOTICE U/S 148 WAS ISSUED ON 19.03.2007. THE ASSESSEE SUBM ITTED A PHOTOCOPY OF THE RETURN EARLIER FILED ON 29.10.2004 AND SUBMITT ED THAT THE SAME MAY BE TAKEN AS THE RETURN U/S 148. CONSEQUENTLY, STAT UTORY NOTICE U/S 143(2) ITA NO. 2767(DEL)/2009 2 DATED 18.05.2007 WAS SERVED ON THE ASSESSEE FOR THE PURPOSE OF MAKING ASSESSMENT U/S 147. 1.1 IT WAS FOUND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING V-BELTS, FAN-BELTS AN D ALLIED PRODUCTS. THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 2.00 LAKH AS SHARE CAPITAL FROM SAINGER CAPITAL & SECURITIES PVT. LTD. (THE COMP ANY), FOR WHICH 8000 SHARES WERE ALLOTTED TO IT. THE FACE VALUE OF A SHARE IS RS. 10/- AND, THUS, PREMIUM OF RS. 15/- PER SHARE WAS CHARGED. THE INVESTIGATION WING HAD INTIMATED THAT THE COMPANY HAD NOT BEEN C ARRYING ON ANY BUSINESS ACTIVITY AND IT WAS ENGAGED IN THE BUSINESS OF PR OVIDING ACCOMMODATION ENTRIES ONLY. THE MONEY IS HANDED OVER TO THE CO MPANY IN CASH FOR WHICH CHEQUE OR DEMAND DRAFT IS ISSUED IN FAVOUR O F THE BENEFICIARY, THE ASSESSEE IN THIS CASE. IN THE COURSE OF THE PROC EEDINGS, THE BANK STATEMENT OF THE COMPANY WAS OBTAINED WHICH, ACCORDING TO THE AO, LEFT NO ROOM FOR DOUBT THAT THE ACCOUNT WAS USED ONLY FOR FURNISHING ACCOMMODATION ENTRIES. FOR EVERY DEBIT, THERE WAS A PRIOR CREDIT BY CASH OR TRANSFER, LEAVING HARDLY ANY SIGNIFICANT AMOUNT FOR CARRY ING OUT BUSINESS OPERATIONS. SUMMONS WERE ALSO ISSUED TO SHRI SURENDER SINGH MALIK, DIRECTOR OF THE COMPANY. IN RESPONSE TO THE SUM MONS, A LETTER WAS ITA NO. 2767(DEL)/2009 3 FILED EXPLAINING THE STAND OF THE COMPANY IN T HIS MATTER. IT WAS INFORMED THAT THE COMPANY IS NOT HOLDING ANY SHA RE IN ASSESSEE-COMPANY AND FOR THIS PURPOSE, THE BALANCE SHEET OF THE CO MPANY AS ON 31.03.2005 WAS FILED. IT WAS FURTHER INFORMED THAT HE BE CAME THE DIRECTOR IN THE YEAR 2004. AT THAT TIME, THE EXISTING DIRECTO R, SHRI RAMESH KASHMERE DID NOT HAND OVER ANY DOCUMENT CONCERNING THE T RANSACTION WITH THE ASSESSEE-COMPANY. IT WAS ALSO INFORMED THAT THE COMPANY IS NEITHER HOLDING THE SHARES NOR SOLD SUCH SHARES AFTER 2004, AND TO SUPPORT THIS AVERMENT RETURNS FOR ASSESSMENT YEARS 2004-05 AND 2005-06 WERE FILED. FOR THE SAKE OF READY REFERENCE, THE POINTS ME NTIONED IN THE LETTER ARE REPRODUCED BELOW:- 1. I SURENDER SINGH MALIK WAS APPOINTED AS ADDITION AL DIRECTOR OF THE COMPANY IN THE YEAR 2004 AND THE PREVIOUS DIRECTO R, SHRI RAMESH KASHMERE WHO WAS LOOKING AFTER THE COMPANYS AC TIVITIES, HAS RESIGNED IN THE YEAR 2004. 2. AFTER OCCUPYING IN THE POST OF DIRECTOR, OUR COM PANY HAS NEVER DEALT WITH M/S OMFA RUBBERS PVT. LTD. 3. WE ARE NOT HOLDING ANY SHARES OF M/S OMFA RUBBER S PVT. LTD. AND THE COPY OF BALANCE-SHEET FOR THE YEAR ENDED 31 ST MARCH, 2005 CONFIRMING THE ABOVE FACTS ARE ENCLOSED HEREW ITH. 4. WE HAVE NOT SOLD ANY SHARES OF M/S OMFA RUBBERS PVT. LTD. AFTER 2004. ITA NO. 2767(DEL)/2009 4 5. THE OLD DIRECTOR, SHRI RAMESH KASHMERE HAS NEVE R HANDED OVER ANY SHARES OF THE ABOVE SAID COMPANY TO THE NEW DIRECTORS. 6. AS I BECOME THE DIRECTOR ONLY IN THE YEAR 2004 AND THE OLD DIRECTOR, SHRI RAMESH KASHMERE HAS NEVER HANDED OV ER ANY DOCUMENTS/DETAIL CONCERNING THE TRANSACTIONS WITH M/S OMFA RUBBERS PVT. LTD., OUR COMPANY IS UNABLE TO SUBMIT THE REQUIRED DETAILS. 7. WE HEREBY FURTHER CONFIRM THAT WE ARE NOT HOLD ING ANY SHARES OF THE ABOVE COMPANY AND ALSO NOT HAS SOLD ANY SH ARES OF THE ABOVE COMPANY AFTER 2004. 8. WE ARE ASSESSED TO INCOME-TAX VIDE PAN AABCS 22 16A, NEW DELHI. FOR FILING OF INCOME-TAX RETURN FOR THE ASSESSMENT YEAR 2004-05 AND 2005-06 ARE ENCLOSED HEREWITH. 1.2 THESE FACTS WERE INTIMATED TO THE ASSESSEE FOR REBTTAL. IN RESPONSE, THE ASSESSEE FILED COPIES OF SHARE APPLICATION F ORM AND RETURN OF ALLOTMENT OF SHARES FILED WITH THE REGISTRAR OF COMPANIES S HOWING THE COMPANY AS A SHAREHOLDER. THE AO CONSIDERED THE FACTS AND SUBMISSIONS MADE BEFORE HIM. HE WAS OF THE VIEW THAT INFORMATION FROM THE COMPANY CLEARLY SHOWS THAT IT IS NOT THE INVESTOR IN THE ASSESS EE-COMPANY. THE FAILURE TO PRODUCE A RESPONSIBLE PERSON FROM THE COMPANY AL SO STRENGTHENS THE AFORESAID VIEW. THUS, THE AMOUNT OF RS. 2.00 LAK H WAS ADDED WHILE COMPUTING THE TOTAL INCOME. ITA NO. 2767(DEL)/2009 5 2. AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(APPEALS)-XVI, NEW DELHI, WHO DISPOSED OFF THE APPEAL ON 03.03.2009 IN APPEAL NO. 104/2007-08. HE UPHELD THE LEGAL ITY OF NOTICE ISSUED U/S 147 BY MENTIONING THAT THE AO FORMED HIS OPINI ON ON THE BASIS OF INVESTIGATION CONDUCTED BY THE INVESTIGATION WING . THE INFORMATION RECEIVED FROM THE WING WAS NOT GENERAL OR VAGU E AS ALLEGED BY THE ASSESSEE, BUT IT WAS A VERY SPECIFIC INFORMATIO N RELATING TO THE TRANSACTION UNDERTAKEN BY THE ASSESSEE. THE INFORMATION INCLU DED THE DATE OF CHEQUE, THE AMOUNT, THE NAME OF THE PERSON ISSUING THE CH EQUE ETC. THE INVESTIGATIONS CONDUCTED BY IT LED TO THE INFERE NCE THAT THE ENTRY WAS ONLY AN ACCOMMODATION ENTRY. THEREAFTER, THE AO INTIM ATED THE REASONS TO THE ASSESSEE AND DISPOSED OFF ITS OBJECTIONS AS PER PROCEDURE LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF G.K.N. DR IVESHAFT (INDIA) LTD. VS. ITO, (2003) 259 ITR 19. 2.1 COMING TO THE MERITS, IT IS MENTIONED THAT THE ASSESSEE HAS FILED EVIDENCE BY WAY OF COPIES OF SHARE APPLICATION FORM RECEIVED FROM THE COMPANY AND RETURN FILED WITH THE REGISTRAR OF CO MPANIES FOR ALLOTMENT OF SHARES. THE AO HAS MENTIONED THAT BEFORE ISSUIN G THE CHEQUE OF RS. 2.00 LAKH, THERE WAS A CREDIT BY WAY OF CASH OF AN EQUIVALENT AMOUNT. THE ITA NO. 2767(DEL)/2009 6 ASSESSEE-COMPANY AS WELL AS THE COMPANY ARE PRIVATE LIMITED COMPANIES. THE DIRECTOR OF THE COMPANY DENIED HOLDING OF ANY SHARE IN THE ASSESSEE-COMPANY. IN THESE CIRCUMSTANCES, THE RATIO OF VARIOUS CASES RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE. THUS, THE CASE WAS DISMISSED ON MERITS ALSO. 2.2 AGGRIEVED BY THIS ORDER, THE ASSESSEE IS IN AP PEAL BEFORE US. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF NOTICE U /S 148 AS WELL AS THE ADDITION SUSTAINED BY THE LD. CIT(APPEALS). 3. THE LD. COUNSEL REFERRED TO PAGE NO. 48 OF THE PAPER BOOK, WHICH ARE THE REASONS COMMUNICATED TO THE ASSESSEE IN RES PONSE TO ITS LETTER DATED 18.04.2007. THE REASONS READ AS UNDER:- THE INVESTIGATION WING, NEW DELHI HAS SENT DETA ILED INFORMATION. AS PER INFORMATION, THE ASSESSEE COMPANYS NAME APPEARS IN THE LIST OF BENEFICIARIES WHO HAVE OBTAINED ACCOMMODATION ENT RIES. THE DETAIL IN RESPECT OF ACCOMMODATION ENTRY TAKEN IS AS UNDER :- BENEFICIARY BANK NAME BENEFICIARY BANK BRANCH VALUE OF ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF ACCOUNT HOLDER OF ENTRY GIVING ACCOUNT BANK FROM WHICH ENTRY GIVEN ITA NO. 2767(DEL)/2009 7 CANARA BANK NOIDA 200000 17.12.03 SAINGER CAPITAL SECURITY SBBJ NR ROAD A/C 23774 SINCE THE ASSESSEE HAS RECEIVED ENTRIES, I HA VE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE TO THE EXTENT OF RS. 2,00, 000/- HAS ESCAPED ASSESSMENT FOR WHICH ACTION U/S 147 OF THE I.T. ACT, 1961 IS INITIATED FOR THE A.Y. 2004-05. 3.1 IT IS ARGUED THAT THE AO DID NOT APPLY HIS MIND TO THE INFORMATION RECEIVED FROM THE INVESTIGATION WING. THEREFORE, NOTICE ISSUED U/S 148 BASED ON SUCH REASONS IS INVALID IN THE EYES OF LAW. 3.2 ON THE OTHER HAND, THE LD. DR RELIED ON THE F INDINGS OF THE LD. CIT(APPEALS), WHICH READ AS UNDER:- IT IS SEEN THAT IN THIS CASE THE REASONS TO BE LIEVE WAS FORMED BY THE ASSESSING OFFICER ON THE SPECIFIC INFORMATI ON RECEIVED FROM THE DIRECTORATE OF INVESTIGATION, NEW DELHI. THE SAID INFORMATION WAS NOT GENERAL OR VAGUE, AS ALLEGE D BY THE APPELLANT, BUT WAS SPECIFIC INFORMATION, PERTAI NING TO THE TRANSACTIONS MADE BY THE APPELLANT. IN THE SAID INFORMATION DATE OF THE CHEQUE, AMOUNT OF CHEQUE AND NAME OF T HE PERSON ISSUING THE CHEQUE ETC. IN RESPECT OF THE ACC OMMODATION ENTRY RECEIVED BY THE APPELLANT, WERE DULY MENTIONED. THESE FACTS WERE SUFFICIENT FOR FORMATION OF BELIEF BY THE ASSESSING OFFICER. ANY SUBSEQUENT INVESTIGATION COULD ONLY BE DONE ONLY AFTER INITIATING THE PROCEEDINGS AS PER THE PROVISIONS OF THE I.T.ACT. THE AO HAS FOLLOWED ALL THE PROCEDURE LAID DOWN IN THE ACT AND RECORDED REASONS WHICH HAD LIVE LINK WITH THE MATERIAL IN POSSESSION. ITA NO. 2767(DEL)/2009 8 HENCE, IT IS CLEAR THAT THE REASON TO BELIEVE RECORDED BY THE ASSESSING OFFICER WERE HAVING RATIONAL NEXUS/RE LEVANT TO THE FACTS OF THE APPELLANTS CASE AND THE REOPENING WAS DONE BY THE AO AS PER THE PROVISIONS OF THE I.T.ACT. THE COPY OF THE REASONS RECORDED BY THE APPELL ANT WAS PROVIDED TO THE AR OF THE APPELLANT BY THE A.O . DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 28.05.2007. THE OBJECTIONS RAISED BY THE APPELLA NT TO THE RE- ASSESSMENT PROCEEDINGS WERE ALSO DISPOSED OFF BY THE APPELLANT WITH SPECIFIC REASONING GIVEN BY THE AO. FURTHER, THE APPELLANT HAS NOT POINTED OUT ANY SPECIFI C INFIRMITY IN THE ACTION OF THE ASSESSING OFFICER, AS FAR AS REOPENING OF ASSESSMENT AS PER THE PROVISIONS OF SECTION 147 I S CONCERNED. THE REOPENING OF THE ASSESSMENT PROCEEDINGS IS A LSO IN ACCORDANCE WITH THE GUIDELINES LAID DOWN BY HO NBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS ( INDIA) LTD. VS. INCOME-TAX OFFICER, (2003) 259 ITR 19/(200 2) TAXMAN 963 (SC). IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE PROC EEDINGS U/S 147 OF THE IT ACT HAVE BEEN VALIDLY INITIATED IN THE CASE OF THE APPELLANT. 3.3 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE RETURN OF INC OME FILED ON 29.10.2004 WAS PROCESSED U/S 143(1) ON 8.12.2004. THEREAFTE R, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING RECEIPT OF ACCOMMODATION ENTRY BY THE ASSESSEE FROM THE COM PANY. ON THE BASIS OF THE INFORMATION, REASONS WERE RECORDED, WHICH HAVE BEEN REPRODUCED IN PARAGRAPH NO. 3(SUPRA). THE OBJECTIONS OF THE A SSESSEE HAVE BEEN ITA NO. 2767(DEL)/2009 9 DISPOSED OFF IN THE LIGHT OF THE DECISION IN THE CASE OF G.K.N. DRIVESHAFT (INDIA) LTD. (SUPRA). THE CASE OF THE LD. COUNS EL IS THAT THE AO DID NOT APPLY HIS MIND INDEPENDENTLY TO THE INFORMATION RECEIVE FROM THE INVESTIGATION WING. THEREFORE, THE RECORDED REA SONS DO NOT LEAD TO A REASONABLE BELIEF THAT THE INCOME OF RS. 2.00 LAKH ESCAPED ASSESSMENT. IN THIS CONNECTION, RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SARTHANK SECURITIE S CO. P. LTD. VS. ITO, (2010) 329 ITR 110. THE FACTS OF THE CASE AR E THAT THE RETURN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2003-04 HAD B EEN PROCESSED U/S 143(1). THEREAFTER, NOTICE U/S 148 WAS ISSUED. ON A LET TER RECEIVED FROM THE ASSESSEE, THE REASONS WERE SUPPLIED, WHICH READ AS UNDER:- 19/3/2010 INFORMATION WAS RECEIVED FROM THE OF FICE OF THE ADDITIONAL DIT (INVESTIGATION) UNIT-V THAT M/S SARTHAK SECURITIES P. LTD. HAD RECEIVED BOGUS ACCOMMODATION ENTRIES DURING THE F.Y 2002-03 RELE VANT TO THE ASSESSMENT YEAR 2003- 04 AS PER DETAILS PLACED CONTRA. BENEFICIARY NAME BENEFICIARY BANK BENEFICIARY BRANCH VALUE OF ENTRY INSTRU MENT NO. BY WHICH ENTRY TAKEN DATE ON WHICH ENTRY TAKEN NAME OF A/C HOLDING OF ENTRY GIVING A/C BANK FROM WHICH ENTRY GIVEN BRANCH OF ENTRY GIVING BANK SARTHAK SECURITIES P. LTD. -DO- OBC -DO- SAKET -DO- 2,50,000 2,50,000 17.12.02 18.9.02 NISHANT FINVEST DINANATH LUHARIWAL SPINNING MILL SBBJ SBP NRR DG ITA NO. 2767(DEL)/2009 10 -DO- -DO- -DO- -DO- -DO- -DO- 2,50,000 3,00,000 16.12.02 12.3.03 K.R.FINCA P P. LTD. DIVISION TRADING P. LTD. SBBJ BOR NRR ROHTAK ROD. ACCORDING TO THE INFORMATION RECEIVED FROM THE DIT (INV.), THE ACCOMMODATION ENTRIES ARE RECEIVED AS SHARE APPLICATION MONEY OR AS UNSECURED LOAN. THE ASSESSEES BALANCE- SHEET AS ON MARCH 31, 2003 SHOWED THAT THERE I S INTRODUCTION OF SHARE CAPITAL OF RS. 2,84,800 AND SHARE PREMIUM OF RS. 8,65,000. IN THIS CASE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 WAS FILED ON DECLARING INCOME OF RS. 15,360 AND AS PER RECORDS ASSESSME NT HAS NOT BEEN COMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT. AS THE ASSESSEE HAD RECEIVED BOGUS ACCOMMODATI ON ENTRY OF RS. 10,50,000 DURING THE ASSESSMENT YEAR 2003-04, I HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 3.4 THE NOTICE WAS CHALLENGED BEFORE THE HONBLE HIGH COURT. IT WAS MENTIONED THAT THE AO WAS AWARE OF EXISTENCE OF FOUR COMPANIES WITH WHOM THE ASSESSEE HAD ENTERED INTO TRANSACTIONS. BOTH THE ORDERS CLEARLY EXPOSIT THAT THE AO WAS MADE AWARE OF THE SITU ATION BY THE INVESTIGATION WING AND THERE IS NO MENTION THAT THESE COMPANIES ARE FICTITIOUS COMPANIES. NEITHER THE NOTICE U/S 148 NOR THE CO MMUNICATION PROVIDING THE REASONS REMOTELY INDICATE INDEPENDENT APPLI CATION OF MIND. WHAT IS MENTIONED IS THAT THE COMPANIES WERE USED AS C ONDUIT. ON THE FACTS, THE PRINCIPLE LAID DOWN IN LOVELY EXPORTS P. LTD., (20 09) 319 ITR (ST.) 5 GETS SQUARELY ATTRACTED. THE SAME HAS NOT BEEN RE FERRED TO WHILE PASSING THE ORDER OF REJECTION. THE ASSESSEE IN HIS OBJECTIO NS HAD CLEARLY STATED ITA NO. 2767(DEL)/2009 11 THAT THE COMPANIES HAD BANK ACCOUNTS AND THE P AYMENTS WERE MADE TO THE ASSESSEE THROUGH BANKING CHANNELS. THE IDENTIT Y OF THE COMPANIES WAS NOT IN DISPUTE. UNDER THESE CIRCUMSTANCES, IT WA S HELD THAT IT WOULD NOT BE APPROPRIATE TO REQUIRE THE ASSESSEE TO GO THR OUGH THE ENTIRE GAMUT OF PROCEEDINGS. IT IS TOTALLY UNWARRANTED. RESULT ANTLY, THE PROCEEDINGS U/S 147 WERE QUASHED. ON THE OTHER HAND, THE LD. DR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD., (2007) 291 ITR 500. IN THIS CASE ALSO, THE RETURN FILED BY THE ASSESSEE HAD BEEN PROC ESSED U/S 143(1)(A) AND THEREAFTER NOTICE U/S 148 WAS ISSUED ON THE G ROUND THAT CLAIM OF BAD DEBT AS EXPENDITURE WAS NOT ACCEPTABLE. THE HONBLE COURT INTER-ALIA MENTIONED THAT THE SCOPE OF SECTION 147 AFTER ITS AMENDMENT IS ENTIRELY DIFFERENT FROM THE PROVISION AS IT EARLIER STOO D. THE ONLY CONDITION REQUIRED TO BE SATISFIED NOW IS THAT THE AO SHOUL D HAVE REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. THE PROCESSING OF THE RETURN DOES NOT LEAD TO FORMATION OF ANY BELIEF AS I T IS MERELY A MECHANICAL EXERCISE CARRIED OUT BY THE STAFF OF THE ASSESS ING OFFICER. SO LONG AS THE AFORESAID CONDITION OF REASON TO BELIEVE IS FULFI LLED, THE AO IS FREE TO INITIATE PROCEEDINGS U/S 147. ITA NO. 2767(DEL)/2009 12 3.5 ON CONSIDERING THE RIVAL SUBMISSIONS, IT WIL L BE SEEN THAT THE ISSUE BEFORE THE HONBLE SUPREME COURT WAS REGARDING CHANGE OF OPINION. SINCE THE RETURN WAS PROCESSED, THERE WAS NO QU ESTION OF FORMATION OF OPINION. OTHERWISE THE CONDITION OF SECTION 1 47 HAD BEEN SATISFIED AND, THEREFORE, THE ACTION OF THE AO TO MAKE ASSESS MENT U/S 147 WAS UPHELD. THE QUESTION BEFORE US IS AS TO WHETHER THE AO HA S APPLIED HIS MIND TO COME TO A CONCLUSION THAT THE INCOME HAS ESCAPED ASSESSMENT OR HE MERELY ACTED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT APPLICATION OF MIND. WE FIND THAT THE REASONS RECORDED IN THIS CASE AND IN THE CASE OF SARTHAK SECURITIES CO. P . LTD. (SUPRA) ARE SIMILARLY WORDED. IN BOTH THE CASES IT IS MENTIONED THAT THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING RECEIPT OF BOGUS ACCOMMODATION ENTRIES BY THE ASSESSEE AS SHARE A PPLICATION MONEY. THEREAFTER, IT WAS RECORDED THAT THERE IS REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IN NONE OF THE CASES ANY INDEPENDENT ENQUIRY HAS BEEN MADE BY THE AO CONC ERNED BEFORE RECORDING THE REASONS. THE DECISION IN THE CASE OF LOVELY EXPORTS P. LTD. (SUPRA) IS APPLICABLE TO BOTH THE CASES AS THE SE INVOLVE RECEIPT OF SHARE APPLICATION MONEY IN WHICH SHARES ARE ISSUED A T PREMIUM. IN THIS CASE ALSO, THE AO HAS NOT REFERRED TO THE DECISION IN THE CASE OF LOVELY ITA NO. 2767(DEL)/2009 13 EXPORTS P. LTD. WHILE REJECTING THE OBJECTIONS, ALTHOUGH IT MAY BE MENTIONED THAT THIS CASE WAS NOT RELIED UPON EVEN BY THE ASSESSEE WHILE FILING OBJECTIONS. THE IDENTITY OF THE COMP ANY HAS NOT BEEN CHALLENGED IN THIS CASE ALSO. THEREFORE, WE A RE OF THE VIEW THAT THE FACTS OF THE CASE ARE IN PARI-MATERIA AND, THEREFORE , THE RATIO OF THIS DECISION GETS ATTRACTED. RESPECTFULLY FOLLOWING THE DE CISION, IT IS HELD THAT IT WAS NOT APPROPRIATE TO REQUIRE THE ASSESSEE TO GO T HROUGH THE ENTIRE GAMUT OF PROCEEDINGS. 3.6 COMING TO THE MERITS, THE FACTS ARE THAT TH E PRESENT MANAGEMENT OF THE COMPANY DENIED HAVING RECEIVED SHARE FROM THE OLD MANAGEMENT OR HOLDING SUCH SHARES AFTER 2004. THE STATE OF ACCOUNT OF THE SHAREHOLDER RAISES A HOST OF DOUBTS ABOUT THE COMPANY HAVIN G INVESTED ITS MONEY IN THE SHARES OF THE ASSESSEE-COMPANY. HOWEVER, I T IS ALSO AN ADMITTED FACT THAT THE MONEY HAD FLOWED FROM THE ACCOUNT OF THE COMPANY AND THERE IS NO EVIDENCE THAT THE MONEY FOR THE PRECEDENT CREDIT OF RS. 2.00 LAKH WAS PROVIDED BY THE ASSESSEE-COMPANY. THE DECISI ON IN THE CASE OF LOVELY EXPORTS P. LTD. IS THAT EVEN IF SHAREHOLD ER IS FOUND TO BE BOGUS, THE ASSESSMENT SHOULD BE MADE IN THE CASE OF P ERSON WHO INVESTED THE MONEY, AND NO ASSESSMENT CAN BE MADE IN THE CASE OF THE COMPANY ITA NO. 2767(DEL)/2009 14 ISSUING SHARE. THERE IS NO DOUBT ABOUT THE ISS UANCE OF SHARES AS SEEN FROM THE INTIMATION GIVEN TO REGISTRAR OF COMPANIE S. THEREFORE, EVEN THE ADDITION MADE WAS NOT JUSTIFIED. 4. IN THE RESULT, THE APPEAL IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 APRIL, 2011. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29TH APRIL, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: 1. M/S OMFA RUBBERS (P) LTD., NEW DELHI. 2. ITO, WARD 13(4), NEW DELHI. 3. CIT(A) 4. CIT 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.