M/s. Oracle Buildwell Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2978/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3890 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Bogus Share capital; Gift; Income from undisclosed sources; Additional evidence; Tangible material; Speculation loss; Corroborative evidences; Accommodation entries; Onus to prove; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 142(1); 143(1); 201; 191; 147; 68; 148; 131

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHIR K.N.CHARY, JUDICIAL MEMBER ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 ) M/S. ORACLE BUILDWELL PVT. LTD, 42, SHARDA NIKETAN, PITAMPURA, NEW DELHI PAN: AAACO8317R VS. DCIT, CIRCLE - 13(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY: MS. RINKU SINGH, SR. DR DATE OF HEARING 28/08 / 201 9 DATE OF PRONOUNCEMENT 2 7 / 11 / 2019 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF THE LD CIT(A) , NEW DELHI DATED 22.03.2017 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) ERRED IN CO NFIRMING THE ADDITION OF RS 45, 00,000 INCORRECTLY AND UNJUSTIFIABLY MADE BY THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) ERRED IN CONFIRMING THE ADDITION OF RS 1,12,500 INCORRECTLY AND UNJUSTIFIABLY MADE BY THE AO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT ( APPEAL) ERRED IN REJECTING THE ADDITIONAL GROUND OF APPEAL RAISED REGARDING INVALIDITY OF ACTION U/S 147 AND THUS FURTHER ERRED IN HOLDING THAT THE AO HAS RIGHTLY AND CORRECTLY TAKEN ACTION U/S 147/148. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) ERRED IN REJECTING AND NOT ACCEPTING ADDITIONAL EVIDENCES FILLED BY THE ASSESSE DURING APPEAL PROCEEDING. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) WAS INCORRECT AND UNJUSTIFIED IN HOLDING THAT T HE ASSESSE'S CASE WAS NOT COVERED UNDER RULE 46A. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) WAS INCORRECT AND UNJUSTIFIED IN NOT CONSIDERING SUBMISSION OF THE ASSESSE IN SUPPORT OF THE GENUINENESS IDENTITY AND CREDIT WORTHINESS OF THE SHARE CAPITAL OF RS 45, 00,000. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) WAS INCORRECT AND UNJUSTIFIED IN CONFIRMING THE AMOUNT OF M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 2 SHARE CAPITAL OF RS. 25,00,0000 IN RESPECT OF WHICH THE AO HAD NE VER MADE ANY ENQUIRY NOR CONFRONTED THE ASSESSE DURING ASSESSMENT PROCEEDING. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (APPEAL) WAS INCORRECT AND UNJUSTIFIED IN UPHOLDING ADDITION OF RS.45,00,0000 EVEN WITHOUT CONSIDERING VA RIOUS JUDGMENTS OF THE HIGH COURTS, SUPREME COURTS AND TRIBUNAL FILLED BY THE ASSESSE DURING APPEAL PROCEEDING IN SUPPORT OF GENUINENESS IDENTITY AND CREDIT WORTHINESS OF THE SHARE HOLDERS 3. BRIEF FACTS FO THE CASE SHOWS THAT ASSESSEE IS A COMPANY WHICH FILE D ITS RETURN OF INCOME ON 15.11.2007 DECLARING INCOME OF RS. 1111410/ - . THIS RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 ON 22.08.2008. NO ASSESSMENT U/S 143(3) WAS PASSED IN THIS CASE. 4. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM THE INVES TIGATION WING THAT ASSESSEE IS A BENEFICIARY ACCOMMODATION ENTRY RECEIVE FROM MR. SK GUPTA AND MR. TARUN GOYAL. THEREFORE, IT WAS NOTED THAT ASSESSEE HAS RECEIVED RS. 20 LAKHS FROM M/S. TORUS IRON & STEEL COMPANY PVT. LTD. FOR AY 2008 - 09 CERTAIN DETAILS W ERE CALLED FOR AND IT WAS FOUND THAT ASSESSEE HAS RECEIVED ABOVE SUM IN AY 2007 - 08. THUS, NOTICE U/S 148 WAS ISSUED ON 29.03.2013. IN RESPONSE TO THE ABOVE NOTICE ASSESSEE DID NOT FILE ANY RETURN OF INCOME. SUBSEQUENTLY, NOTICE U/S 142(1) WAS ALSO ISSUED HOWEVER, NO RETURN WERE FILED AS WELL AS NO DETAILS WERE SUBMITTED INITIALLY . LATER ON 22.02.2013 AT THE FAG END OF THE ASSESSMENT PROCEEDINGS ASSESSEE ASKED FOR THE REASONS RECORDED FOR REOPENING. SAME WERE PROVIDED ON 30.03.2012. ASSESSEE FILED OBJECTION S ON 05.03.2013 WHICH WERE DISPOSED OFF BY AN ORDER DATED 06.03.2013. THE LD ASSESSING OFFICER ASKED FOR THE DETAILS ALONG WITH THE BOOKS OF ACCOUNT OF THE COMPANY AND TO PRODUCE DIRECTORS OF THE ASSESSEE COMPANY ALONG WITH THE DIRECTORS OF THE COMPANY FRO M WHOM ASSESSEE RECEIVED SHARE APPLICATION MONEY. IN RESPONSE TO THIS ASSESSEE SUBMITTED THAT SUMMONS MAY BE ISSUED TO THE DIRECTORS OF THE SHARE APPLICANTS COMPANIES AND SUBMITTED THEIR COPY OF BANK ACCOUNT AND RETURN OF INCOME FILED. NEITHER THE DIRECTOR S OF THE ASSESSEE NOR THE DIRECTORS OF SHARE APPLICANT COMPANY WERE PRODUCED. THE DETAILS CALLED U/S 142(1) OF THE ACT ABOUT SHARE APPLICATION MONEY WERE ALSO NOT FILED. THE LD AO ISSUED SUMMONS TO MR. TARUN GOYAL, DIRECTOR OF THE SHARE APPLICANT COMPANY A ND TO THE PRINCIPAL OFFICER OF THE ASSESSEE. NOBODY APPEARED ON THE APPOINTED M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 3 DATE. NO DETAILS AS CALLED FOR OF THE SHARE APPLICANT WERE SUBMITTED. THEREFORE, THE LD AO NOTED THAT ASSESSEE HAS FAILED TO SHOW THE IDENTITY, CREDITWORTHINESS OF THE SHARE APPL ICANT AMOUNTING TO RS. 45 LAKHS AND GENUINENESS OF THE TRANSACTION AND THEREFORE, ADDITION U/S 68 OF THE ACT WAS MADE. ALONG WITH THAT COMMISSION EXPENDITURE WAS ALSO ADDED @2.5% OF THE ACCOMMODATION ENTRY AMOUNTING TO RS. 112500/ - . CERTAIN OTHER DISALLOWA NCE ON ACCOUNT OF SECURITY TRANSACTION TAX (STT) WAS MADE OF RS. 279532/ - . CONSEQUENTLY, ASSESSMENT WAS MADE U/S 147 READ WITH SECTION 143 OF THE ACT AT RS. 6003442/ - . 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) ON THE ISSUE OF REOPENING OF THE ASSESSMENT AS WELL AS ON THE MERITS OF THE CASE. BOTH THE ISSUES WERE DECIDED AGAINST THE ASSESSEE AND THEREFORE, ASSESSEE IS IN APPEAL BEFORE US. 6. DESPITE NOTICE TO THE ASSESSEE NONE APPEARED BEFORE US, HOWEVER, THE ASSESSEE HAS SUBMITTED A DETAILED APPEA L SET WHEREIN, REQUISITE DETAILS FILED BEFORE THE LD LOWER AUTHORITIES ARE SUBMITTED. IN VIEW OF THIS WE PROCEED TO DECIDE THE ISSUE ON THE MERIT OF THE CASE AS PER INFORMATION AVAILABLE ON RECORD. 7. THE LD DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LOWER AUTHORITIES ON BOTH THESE ISSUES. 8. WE FIRST COME TO THE ISSUE OF REOPENING OF THE ASSESSMENT. THIS ISSUE HAS BEEN DEALT BY THE LD CIT(A) IN PARA NO. 4 ONWARDS AS UNDER: - 4. THE AO PASSED ORDER U/S 143(3)/147 STATING AS UNDER: 'SUBSEQUENTLY, INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE ACIT, CENTRAL CIRCLE 22, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI THAT THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM SHRI S. K. GUPTA AND SHRI TARUN GOYA ! WORKED AS AN ENTRY OPERATOR AND PROVIDED ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES THROUGH A LARGE NUMBER OF SHELL COMPANIES MANAGED BY HIM. CASH WAS RECEIVED AND DEPOSITED IN THE BANK ACCOUNT OF THESE SHELL COMPANIES AND THROUGH VARIOUS CONDUITS TR ANSFERRED TO . THE BANK ACCOUNTS OF THE ULTIMATE BENEFICIARIES. IN THE INSTANT CASE, THE APPELLANT IS FOUND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR AS PER THE FOLLOWING SPECIFIC DETAILS OF TRANSACTIONS: M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 4 BENEFICIARY MEDIATORY AMOUNT ORACLE BUILDWELL (P) LTD. TAURUS IRON & STEEL CO. (P) LTD. 20,00,000/ - SUMMONS U/S 131 DATED 18.03.2013 WERE ISSUED TO DIRECTOR OF THE COMPANY M/S TAURAS IRON & STEEL LTD., SHRI TARUN GOEL AND PRINCIPAL OFFICER OF M/S ORACLE BUILDWELL (P) LTD. FOR PERSONAL DEPOSITION FOR 25.03.2013 ALONGWITH BOOKS OF ACCOUNTS BEFORE THE UNDERSIGNED. ON THE FIXED DATE I.E. 25.03.2013 NONE OF PERSONS APPEARED BEFORE THE UNDERSIGNED NOR ANY REPLY SUBMITTED. ON 26.03.2013, THE AR OF THE ASSESSEE COMPANY FI LED A PART REPLY IN RESPONSE TO NOTICE ISSUED ON 28.01.2013 BUT NO REPLY WAS FILED IN RESPONSE TO COLUMN NO. 18 OF THE QUESTIONNAIRE DATED ! 8.01.2013, EXCEPT SHARE APPLICATION MONEY RECEIVED FROM M/S TAURAS IRON & STEEL LTD., WHICH IS REPRODUCED AS. . NOW THE ONUS OF THE ASSESSEE TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF TRANSACTION APPEARED IN THE BOOKS OF ACCOUNT OF RS.46,00,000/ - INCLUDING PREMIUM AMOUNT. THE ASSESSEE COMPANY FAILED TO PROVE THE GENIUSES AND CREDITWORTHINESS OF THE TRANSACT IONS. FROM THE FACTS NOTED ABOVE IT IS CLEAR THAT THE ASSESSEE CO. HAS INTRODUCED ITS INCOME FROM UNDISCLOSED SOURCES IN THE NAME OF THE COMPANY AND OTHERS THROUGH ENTRY OPERATOR. THE IDENTITY, CREDIT WORTHINESS, GENUINENESS OF DEPOSITS IN THE NAME OF ABOV E SAID COMPANY AND OTHERS WITH THE ASSESSEE CO. HAS NOT BEEN PROVED. CONSIDERING THE TOTALITY OF CIRCUMSTANCES, IT IS OBVIOUS THAT THE TRANSACTIONS' WERE ONLY A CAMOUFLAGE. THE ASSESSEE COMPANY DID NOT PROVIDE THE DETAILS OF TOTAL SHARE APPLICATION MONEY AND PREMIUM AMOUNT THEREON THE TOTAL AMOUNT, OF RS.45,00,000/ - (46,00,000 - 1,00,000 BASIS REQUIREMENTS SHARE APPLICATION MONEY) ALLEGEDLY RECEIVED FROM THE SAID PARTIES REPRESENTS THE ASSESSEES OWN UNACCOUNTED MONEY WHICH HAS SOUGHT TO BE INTRODUCED INTO ITS BUSINESS IN THE GARB OF SHARE APPLICATION MONEY. THUS KEEPING IN VIEW THE TOTALITY OF THE FACTS, THE AMOUNT OF RS.45,00,000/ - IS ADDED TO THE INCOME OF THE ASSESSEE COMPANY AS INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE I. T. ACT. 2. COMMISSION AS D ISCUSSED ABOVE, THE SAID AMOUNT OF RS.45,00,000/ - IS THE ASSESSEES OWN UNACCOUNTED MONEY WHICH HAS ONLY BEEN ROUTED THROUGH THE BANK ACCOUNT EXISTING IN THE NAME OF ABOVE - MENTIONED ENTRY OPERATORS BY PAYING COMMISSION TO PERSONS WHO ARRANGE THE TRANSACTIO N. THE COMMISSION PAID IN TRANSACTIONS OF SUCH NATURE GENERALLY VARIES FROM 2 TO 3 PERCENT, CONSIDERING THE COST - BENEFIT ANALYSIS OF THE TRANSACTIONS. TAKING THE AVERAGE OF THE COMMISSION RATES (2.5%), A SUM OF RS.1,12,500/ - (BEING 2.5% OF RS.45,00,000/ - ) IS ALSO ADDED TO THE INCOME OF THE ASSESSEE AS THE COMMISSION PAID TO THE ENTRY OPERATORS OUT OF ITS UNDISCLOSED INCOME. M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 5 3. ADDITION ON ACCOUNT OFSTT: ON PERUSAL OF COMPUTATION OF INCOME AND P &L A/C FILED BY THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDE RATION, IT HAS BEEN SEEN THAT THE ASSESSEE COMPANY HAS NOT ADDED BACK IN THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT ON ACCOUNT OF STT PAID RS.279532/ - IN THE NET PROFIT OF RS.662744/ - , WHICH HAS BEEN TAKEN REDUCING THE STT OF RS.279532/ - ON ACCOUNT OF R EBATE. RESUITED, THE INCOME FROM THE BUSINESS OTHER IIIAN SPECULATIVE LOSS SHOUITI BE NIL INSTEAD OF LOSS CLAIMED RS.279532/ - WHICH WAS LATER ADJUSTED WITH INCOME FROM SPECULATION BUSINESS. THEREFORE, THE SUM OF RS.2,79,532/ - IS BEING ADDED'BACK TO THE ASS ESSEES INCOME.' 5. THE LD. AR FILED WRITTEN SUBMISSION AS UNDER: 'ASSESSMENT U/S 143(3) WAS COMPLETED ON A TOTAL INCOME OF RS.60,03,442/ - BUT WHILE DOING SO, THE AO TREATED THE FOLLOWING THREE ITEMS ON INCOME OF THE ASSESSEE: - (1) INCOME U/S 68 ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL 45,00,000/ - (2) ESTIMATED COMMISSION EXPENSES 1,12,500/ - (3) INCOME ON ACCOUNT OF STT 2,79,532/ - EARLIER TO THIS ASSESSMENT A RETURN OF INCOME ALONGWITH AUDITED BALANCE SHEET, ETC WAS FILED AND THE RETURN OF INCOME WAS PROCESS ED U/S 143(1). SUBSEQUENTLY, BECAUSE OF ACTION U/S 147, THE ASSESSMENT WAS REOPENED. THE RE - OPENING WAS MADE SINCE ACCORDING TO THE AO, THE AMOUNT OF SHARE CAPITAL OF RS.20 LACS IN THE NAME OF TAURUS IRON & STEEL LIMITED WAS ONLY AN ACCOMMODATION ENTRY. DU RING ASSTT PROCEEDINGS, THE AO MADE INQUIRIES AND TREATED THE ENTIRE AMOUNT OF RS.45 LACS IN THE BALANCE SHEET ON ACCOUNT OF SHARE CAPITAL AND PREMIUM (INCLUDING RS.20 LACS) AS THE INCOME OF THE ASSESSEE U/S 68. THIS ADDITION OF RS.45 LACS HAS BEEN MADE BY THE AO WITHOUT NAME AND ADDRESS OF THE SHARE CAPITAL HOLDERS (EXCEPT TAURUS IRON & STEEL LIMITED). THE AO DURING ASSTT. PROCEEDING REQUIRED THE ASSESSEE TO EXPLAIN IN DETAIL THE SOUCE OF SHARE CAPITAL IN THE NAME OF JAURUS, NO SUCH DETAILS IN RESPECT OF O THER SHARE CAPITAL HOLDERS WERE CALLED FOR EVEN KNOWING ' LLY WELL THAT EXCEPT RS.20 LACS, THE BALANCE AMOUNT OF SHARE CAPITAL BELONG TO OTHERS BUT NO SPECIFIC OPPORTUNITY WAS PROVIDED OR ASSESSED FOR REGARDING THE SOURCE OF OTHER BALANCE SHARE CAPITAL HOL DERS OF RS.25 LAKH AND THEREFORE, THE ASSESSEE TILED COMPLETE DETAILS AND SOURCE OF RS.201 LACS ON SPECIFICALLY AND PARTICULARLY ASKED FOR. THE ASSESSEE VIDE ITS LETTER AS PER COPY ENCLOSED EXPLAINED THE SOURCE OF TAURUS IRON & STEEL LTD'S SHARE CAPITAL AN D IN THIS CONNECTION FILED THE FOLLOWING DOCUMENTS, THE COPY OF WHICH ARE ALSO ENCLOSED HEREWITH.. (A) MINISTRY OF CORPORATE AFFAIRS SITE EVIDENCE CERTIFYING THAT TAURUS IRON & STEEL LTD WAS AN ACTIVE COMPANY. M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 6 (B) A COPY OF BANK ACCOUNT OF TAURUS IRON & ST EEL LTD WITH HDFC BANK CERTIFYING PAYMENT OF RS.20 LACS TO THE ASSESSEE COMPANY VIDES CHEQUE NO.0157675 DATED 16 - 06 - 2006. (C) A COPY OF FORM NO.32 FILED WITH THE OFFICE OF ROC CERTIFYING THE NAME OF TAURUS IRON & STEEL LTD AND ITS DIRECTOR AS TARUN GOEL AL ONGWITH HIS DIN NUMBER. (D) A COPY OF AFFIDAVIT BY TARUN GOEL CERTIFYING THAT TARUN HAS MADE AN INVESTMENT OF RS.20 LACS IN THE SHARE CAPITAL OF ORACLE BUILDWELL (P) LTD VIDES CHEQUE NO. 157675 DATED 16 - 06 - 2006. (E) A COPY OF PAN OF TARUN GOEL (F) A COPY OF FORM NO.32 IN THE NAME OF TARUN & PARMOD KUMAR, DIRECTOR WITH HIS DIN NUMBER. (G) VIEW SIGNATORY DETAILS (H) AGAIN, THE COPY OF AFFIDAVIT BY PRAMOD KUMAR CERTIFYING THE CONTRIBUTION OF RS.20 LACS AS SHARE CAPITAL BY TAURUS IRON & STEEL LTD WITH ORACLE BUILDWELL (P) LTD. (I) PAN OF PRAMOD KUMAR (J) A COPY OF INCOME TAX RETURN ACKNOWLEDGEMENT OF TAURUS IRON & STEEL LTD. (K) A COPY OF MEMORANDUM AND ARTICLE OF ASSOCIATION OF TAURUS IRON & STEEL LTD INCLUDING ITS CERTIFICATE OF INCORPORATION. AFTER T HIS LETTER ,ANOTHER LETTER WITH EXPLANATION WAS FILED (COPY ENCLOSED). ALONGWITH THIS LETTER FOLLOWING DOCUMENTS WERE FILED: - (A) A COPY OF BANK ACCOUNT OF THE ASSESSEE SHOWING RECEIPT OF RS.20 LACS FROM TAURUS IRON & STEEL LTD. (B) CONFIRMATION FROM TAUR US IRON & STEEL LTD (C) A COPY OF THE RESOLUTION OF THE BOARD OF DIRECTORS OF TAURUS IRON & STEEL LTD FOR INVESTMENT IN SHARES INCLUDING THE LIST OF DIRECTORS. (D) A COPY OF PAN LETTER OF TAURUS IRON & STEEL LTD (E) A COPY OF SHARE APPLICATION FORM OF TAUR US IRON & STEEL LTD (F) A COPY OF FORM NO. 2 REGARDING ALLOTMENT OF SHARES BY ORACLE BUILDWELL (P) LTD OF THE SHARE CAPITAL OF RS.12,25,000/ - . (G) CONFIRMATION LETTER OF RS.20 LACS BY TAURUS IRON & STEEL LTD. (H) AFFIDAVIT OF TARUN GOEL REGARDING RS. 20 LACS. M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 7 (I) BALANCE SHEET OF TAURUS IRON & STEEL LTD SHOWING SHARE CAPITAL INVESTMENT OF RS. 20 :ACS WITH ORACLE BUILDWELL (P) LTD. (J) IN THIS LETTER A REQUEST WAS ALSO MADE TO ISSUE SUMMONS U/S 131 TO TARUN GOEL FOR RECORDING ITS STATEMENT STILL ANOTHER LE TTER WAS FILED WITH THE AO DURING ASSESSMNENT PROCEEDINGS ENCLOSING INTER - ALIA RECEIPT OF SHARES BY TAURUS IRON & STEEL LTD FROM ORACLE BUILDWELL (P) LTD AND A CERTIFICATE FROM TARUN GOEL AND ALSO AN AFFIDAVIT OF TARUN GOEL GIVING DETAILS OF PAYMENT ETC. T HE AO WHILE COMPLETING THE ASSESSMENT TREATED THE CONSOLIDATED AMOUNT OF RS.45 LACS AS INCOME WITHOUT GIVING THE FULL DETAILS. HE ASKED FOR EXPLANATION ONLY TAURUS IRON & STEEL LTD WHICH WAS AS EXPLAINED EARLIER. A. THE AO DID NOT CONSIDER THE EXPLANATION. B. HE NEVER EXAMINED THE SUBMISSIONS. C. HE ALSO DID NOT FIND OUR SUBMISSION AND DOCUMENTS AS INCORRECT OR WRONG. D. HE DID NOT ENFORCE THE ATTENDANCE OF TAURUS IRON & STEEL LTD. E. SUMMON ISSUED ONLY IS NEITHER THE REMEDY NOR THE FINAL CONCLUSION THAT TH E SHARE CAPITAL IS NOT GENUINE. F. THE AO SHOULD HAVE USED HIS POWERS U/S 131 FORCEFULLY. G. HE SHOULD HAVE EXAMINED THE ASSTT. RECORDS. H. HOW CAN HE IGNORE THE VERY IMPORTANT EVIDENCE THAT THE BALANCE SHEET OF TAURUS IRON & STEEL LTD SHOWS AND DECLARES T HE INVESTMENT IN THE SHARES OF ORACLE BUILDWELL (P) LTD., IF THIS DOCUMENT IS WRONG, DEFINITELY NOT. I. THE BALANCE SHEET AND OTHER DETAILS ARE AUDITED DUTY SIGNED BY THE AUDITORS AND THE DIRECTORS. WHEN IT IS SO, HOW CAN HE IGNORE THE SAME. J. WE, THE AS SESSEE, CONFIRM THE RECEIPT OF RS.20 LACS AND THE TAURUS IRON & STEEL LTD, THE GIVER, CONFIRM THE PAYMENT AND IN SUCH A SITUATION WHAT IS THE THERMOMETER OR BAROMETER WITH THE AO TO IGNORE AND SAY THAT WHOLE OF THE INCOME IS CORRECT. K. IN THE ALTERNATIVE IF THE. AO HAS DEVELOPED SOME DOUBT OR SUSPICION AND TARUN GOEL WAS NOT COOPERATING, THE AO SHOULD HAVE CALLED THE AUDITORS AND SHOULD HAVE ALSO EXAMINED THE CASE RECORDS. L. BUT HE CHOSE TO DO NOTHING AND PROCEED IN ASSUMPTION AND PRESUMPTION WHICH IS NOT PERMISSIBLE IN AN ASSESSMENT U/S 143(3). M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 8 THIS IS SUPPORTED LONG BACK BY THE HON'BLE SUPREME COURT IN THE CASE OF WHERE IT HAS BEEN HELD AS UNDER: - THIS IS EXACTLY APPLICABLE IN OUR CASE AND ADDITION HAS BEEN MADE ONLY ON PURE GUESS BESIDES THE AO HAD AL SO TREATED THE ANOTHER AMOUNT OF RS.25 LACS AS INCOME BUT WITHOUT ANY DETAILS, NAME ETC. THE AO ALSO DID NOT ASK FOR ANY INQUIRY OR INFORMATION REGARDING THIS AMOUNT OF RS.25 LACS. HE ONLY INQUIRED ABOUT RS.20 LACS. SECTION 68 DOES NOT PERMIT CONSOLIDATED ADDITION OF ANY ONE OR MORE AMOUNT OF CREDIT. EACH CREDIT HAS TO BE EXAMINED INDEPENDENTLY AND SEPARATELY AND THEN THE DECISION SHOULD BE TAKEN. THIS HAS NOT BEEN DONE IN OUR CASE. THIS SUBMISSION OF OURS FIND SUPPORT FROM THE HON;BLE RAJASTHAN HIGH COURT DECISION IN THE CASE OF R.S RATHORE REPORTED IN 'EVEN THOUGH THE AO HAD NOT CLARIFIED ANYTHING IN THE ORDER REGARDING RS.25 LACS, YET WE ARE MAKING THE FOLLOWING SUBMISSION IN THIS RESPECT: - THERE IS SHARE CAPITAL OF RS.10 LACS FROM 'AT ALL TIMED YOURS SEC URITIES (P) LTD'. IN THIS CONNECTION WE ARE FILING THE FOLLOWING DOCUMENTS: - (A) RECEIPT OF SHARES OF ORACLE BUILDWELL (P) LTD BY THE SHARE APPLICANT. (B) CONFIRMATION FROM THE SHAREHOLDER GIVING COMPLETE DETAILS OF SHARE CAPITAL OF RS. 10 LACS (C) A COP Y OF SHARE APPLICATION FORM BY THE SHARE HOLDER. (D) A COPY OF AFFIDAVIT BY THE DIRECTORS OF THE SHARE CAPITAL HOLDER CONFIRMING THE CONTRIBUTION OF RS.10 LAKHS VIDE BANKING CHANNEL TO THE SHARE CAPITAL OF ORACLE BUILDWELL (P) LTD. (E) CONFIRMATION WITH P AN (F) A COPY OF CERTIFICATE OF INCORPORATION OF THE COMPANY (SHAREHOLDER) WITH A COPY OF MEMORANDUM AND ARTICLE OF ASSOCIATION. (G) A COPY OF BOARD'S MEETING RESOLUTION PASSED BY THE SHARE CAPITAL HOLDER COMPANY TO BUY SHARES OF RS. 10 LACS IN THE SHARE CAPITAL OF ORACLE BUILDWELL (P) LTD. THE THIRD ADDITION IS OF RS. 15 LAC WHICH IS BY THE 'FIRST HI - FIN LIMITED', WE ARE ENCLOSING THE FOLLOWING SUBMISSION AND DOCUMENTS IN THIS RESPECT: - (A) A COPY OF BOARD'S MEETING RESOLUTION PASSED BY THE SHARE CAPITAL HOLDER COMPANY TO BUY SHARES OF RS.15 LACS IN THE SHARE CAPITAL OF ORACLE BUILDWELI (P) LTD. M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 9 (B) A COPY OF MEMORANDUM AND ARTICLE OF ASSOCIATION OF THE FIRST HI - FIN LIMITED. (C) A COPY OF THE CERTIFICATE OF INCORPORATION. (D) CONFIRMATION FROM THE SHAREHOLDER GIVING COMPLETE DETAILS OF SHARE CAPITAL OF RS. 15 LACS. (E) A COPY OF AFFIDAVIT BY THE DIRECTORS OF THE SHARE CAPITAL HOLDER CONFIRMING THE CONTRIBUTION OFRS.15 LAKHS VIDE BANKING CHANNEL TO THE SHARE CAPITAL OF ORACLE B UILDWELL (P) LTD. (F) A COPY OF THE RETURN OF INCOME OF THE SHARE HOLDER COMPANY ALONGWITH THE COPY OF THE AUDITED BALANCE SHEET ETC. (G) IN ADDITION TO THE ABOVE WE ARE ENCLOSING A COPY OF OUR BANK ACCOUNT IN OUR BOOKS SHOWING AND CONFIRMING THE RECEIPT O F SHARE CAPITAL CHEQUE FROM ALL THREE SHARE HOLDERS. WE ARE ALSO ENCLOSING THE COPY OF ACCOUNT OF 'PAID UP CAPITAL AJC' IN OUR BOOKS AND ALSO A COPY OF ACCOUNT OF ALL THE THREE SHAREHOLDERS CREDITING THEIR ACCOUNT WITH THE RECEIPT OF CHEQUE. AN ADDITION OF RS.20 LACS ON ACCOUNT OF SHARE CAPITAL IN THE ACCOUNT OF TAURUS IRON & STEEL LTD. HAS BEEN MADE WITHOUT ANY REASON BASED ON EVIDENCE AND MORE IMPORTANTLY WITHOUT CONSIDERING AND ANALYZING THE ENORMOUS EVIDENCES FILED IN SUPPORT OF THE IDENTITY, GENUINENES S OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR. WHEN THE ASSESSEE HAD PROVED ITS INITIAL ONUS OF PROVING IDENTITY ETC. THE ONUS SHIFTED TO THE REVENUE WHICH IN THIS CASE THE AO TOTALLY FAILED TO DISCHARGE AND TRAVELLED IN COMPLETE ASSUMPTION, PR ESUMPTION AND IDEAS AND ALSO ON GIVEN WORK. WHEN THE ASSESSEE HAD FILED THE IT RETURN, COPY OF PAN, BANK A/C, SHARE APPLICATION FORM, FORM NO. 2,CONFIRMATION, BOARD RESOLUTION, THE AO SHOULD HAVE ACCEPTED THE SHARE CAPITAL UNLESS HE HAS FOUND ANYTHING CONT RARY TO THE PRESUMPTION AND OR BROUGHT ANYTHING ON RECORD TO PROVE THAT THE EVIDENCES AND DOCUMENTS WERE NOT WORTHY OF ACCEPTANCE AND ARE WRONG OR INCORRECT. EVEN IN SUCH CASES, THE HON'BLE SUPREME COURT OF INDIA IN THE FAMOUS CASE OF LOVELY EXPORTS HAS HE LD THAT WHEREVER IDENTITY IS PROVED, THERE WAS NO NEED TO MAKE ANY ADDITION IN THE HANDS OF THE COMPANY AND ADDITION,IF NECESSARY COULD BE TAKEN IN THE HANDS OF THE BOGUS SHARE HOLDERS. APART FROM LOVELY EXPORTS, DIVINE AND OTHER LIKE CASES OF COURTS AND T RIBUNALS, WE ARE MAKING STRONG RELIANCE ON THE FOLLOWING CASES: - (1) GANGESHWARI METALS (P) LTD - (361 TTR/PAGE )10 - DELHI HELD 'ADDITION U/S 68 - DUTY OF THE AO TO CONDUCTINQUIRY - AMOUNT SHOWN AS SHARE APPLICATION MONEY - EVIDENCE FURNISHED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION - NO INQUIRY BY THE ASSESSING OFFICER - MERE REJECTION OF THE EVIDENCE WITHOUT GIVING REASON - ADDITION NOT VALID. ' M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 10 THE FACTS OF OUR CASE ARE EXACTLY IDENTICAL. THE AO HAS REJECTED OUR EXPLANATION WITHOUT GIVING ANY REASONS. HE NCE, THE ADDITION MAY KINDLY BE DELETED. (2) EXPO GLOBE INDIA LIMITED - (361 ITR 147) - DELHI HELD 'THE ASSESSEE HAD FURNISHED MATERIAL INCLUDED INCOME TAX RETURNS, BALANCE SHEETS, REGISTRAR OF COMPANIES PARTICULARS AND BANK STATEMENT ACCOUNTS. ON THE BASIS OF THESE, THE CIT(A) HELD THAT THE SHARE APPLICATION MONEY AND ITS SOURCE HAS BEEN SATISFACTORILY EXPLAINED. THE TRIBUNAL HELD THAT THERE WAS NO CASE FOR ANY INTERFERENCE' THE FACTS OF OUR CASE ARE EXACTLY THE SAME. WE HAVE FILED ALL SUCH DETAILS AND THERE WAS HO CASE OF ANY ADDITION. (3) NIPUN AUTO (P) LTD - 361 UR DELHI HELD 'ASSESSEE DISCHARGED ITS INITIAL BURDEN TO ESTABLISH IDENTITY, CREDITWORTHINESS AND GENUINENESS FOR THE ALLOTMENT OF SHARES. DELETION OF ADDITION JUSTIFIED OUR CASE IS ALSO THE SAME. W E HAVE SATISFIED OUR THING WITH RESPECT TO RS.20 LACS AND THEREFORE THE ADDITION NEED TO BE DELETED.' (4) KAMDHENU STEEL & ALLOYS LTD - 361 ITR 220 HELD SHARE APPLICATION MONEY - ASSESSEE EXPLAINING SOURCE OF MONEY - IDENTITIES AND APPLICANTS OR THEIR CREDITWO RTHINESS ESTABLISHED - BURDEN OF PROOF DISCHARGED BY THE ASSESSEE - ONLY SHIFTED TO DEPARTMENT - NO EVIDENCE TO SHOW TRANSACTIONS WERE GENUINE - SECTION 68 NOT APPLICABLE.' OUR CASE IS ALSO THE SAME. ALL THE ABOVE SAID FOUR JUDGEMENTS ARE OF JURISDICTIONAL HIGH COURT AND ARE BINDING ON ALL JURISDICTIONAL AUTHORITIES WORKING IN DELHI JURISDICTION. HENCE, IT IS REQUESTED THAT THE ADDITION OF RS.20 LACS MAY KINDLY BE DELETED ON THESE BASIS. STILL; ANOTHER DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MOD CREATIONS (P) LTD REPORTED IN 202 DTR 10, IT WAS HELD AS UNDER: - 'THE ASSESSEE HAS DISCHARGED ITS ONUS AND IF THE REVENUE STILL HAS A DOUBT WITH REGARD TO THE GENUINENESS OF THE TRANSACTION IN ISSUE OR THE CREDITWORTHINESS OF THE CREDITORS, IT HAS TO DISCHARGE ONUS WHICH HAS SHIFTED ON TO IT. NO SUCH EXERCISE BEEN TAKEN BY THE REVENUE AUTHORITIES, ADDITION U/S 68 IN THE HANDS OF THE ASSESSEE WAS UNJUSTIFIED. VISHNU JAISWAL VS CIT - (76 DTR 26S) - TTAT 3RD MEMBER - LUCKNOW 'ALL THE THREE CREDITORS HAVE BEEN ASSESSED TO TAX AND THEY HAVE ADVANCED THE AMOUNTS THROUGH ACCOUNT PAYEE CHEQUES. THUS M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 11 THEIR IDENTITY AND GENUINENESS OF CASH CREDITS CANNOT BE DOUBTED. SINCE THE AO DID NOT EXAMINE THE PARTIES, HE COULD NOT PROCEED MERELY ON THE ASSUMPTION THAT THE CREDITORS COULD NOT HAVE SAVED ANY MONEY TO ADVANCE LOANS - THEREFORE, ADDITION U/S 68 WAS NOT SUSTAINABLE* SAMIR BIO - TECH (P) LTD - 325 TTR 294 'THE IDENTITY OF THE SUBSCRIBERS WAS NOT IN DOUBT. THE TRANSACTIONS HAD ALSO BEEN DONE THROUGH BANK CHANNELS AS THE APPLICATION MONEY FOR THE SHARES WAS GIVEN THROUGH ACCOUNT PAYEE CHEQUES. THE CREDITWORTHINESS HAS ALSO BEEN ESTABLISHED. THE SUBSCRIBERS HAD ALSO GIVEN THEIR COMPLETE DETAILS WITH REGARD TO THEIR TAX RETURNS AND ASSESSMENTS. THE DEPA RTMENT COULD NOT DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE ONLY BECAUSE THE SUBSCRIBERS DID NOT INITIALLY RESPOND TO THE SUMMONS. THE TRIBUNAL HAD RIGHTLY DELETED THE ADDITION. ALL THESE JUDGEMENTS FAVOUR THE CASE OF THE ASSESSEE WITH REGARD TO THE A DDITION OF RS. 20 LACS. NOW SO FAR OTHER ADDITION IS CONCERNED, WE ARE FILING THE ADDITIONAL EVIDENCE UNDER RULE 46A IN RESPECT OF RS.25 LACS. HE ONLY ASKED THE EVIDENCE IN RESECT OF RS.20 LACS WHICH HAS ALREADY BEEN FILED MORE THAN ONCE. BUT THE AO IN THE ASSTT ORDER HAD TREATED THE AMOUNT OF ALL CREDITORS ON TOTAL BASIS AS PER THE BALANCE SHEET EVEN WITHOUT THE NAMES AND ADDRESS OF THE CREDITORS. THEREFORE, THE ASSESSEE WAS PREVENTED FROM SUFFICIENT CAUSE FROM FILING THE ENCLOSED EVIDENCES IN RESPECT OF R S.25 LACS CREDITORS. THEREFORE, THE ASSESSEES CASE IS TOTALLY COVERED BY THE RULES UNDER RULE 46A AND IT IS ACCORDINGLY REQUESTED THAT THE ADDITIONAL EVIDENCE MAY VERY KINDLY BE ACCEPTED AND FOR ONCE THE ASSESSEE SHALL REMAIN ALWAYS. THIS IS IN CONTINUATIO N TO OUR EARLIER SUBMISSIONS ON MERITS OF THE ADDITIONS. WE ARE RAISING AN ADDITIONAL GROUND OF APPEAL BY WHICH THE PROCEEDING INITIATED U/S 147 ARE INVALID, ILLEGAL AND VOID - AB - INITIO. IN THIS REGARD WE ARE GIVING THE FOLLOWING SUBMISSIONS. REASONS FOR R EOPENING THE CASE U/S 147 OF THE INCOME TAX ACT IN THE CASE OF M/S ORACLE BUILDWELL PVT LTD. A.Y - 2007 - 2008 2) 'RETURN OF INCOME DECLARING INCOME OF RS. LL,LL,410/ - WAS FILE BY THE ASSESSEE ON 15.11.2007. THE CASE WAS PROCESSED U/S 143(1) OF THE IT ACT ON 22 .08.2008 AT AN INCOME OF RS. 11,11,410/ - INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE ACIT, CENTRAL CIRCLE - 22, ARA CENTRE, JHANDEWALAN EXTN, NEW DELHI THAT THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 12 RECEIVED FROM SH. S.K GUP TA WHO WORKED AS ENTRY OPERATOR AND PROVIDED ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES THROUGH A LARGE NUMBER OF SHELL COMPANIES MANAGED BY HIM. CASH WAS RECEIVED AND DEPOSITED IN THE BANK ACCOUNT OF THESE SHELL COMPANIES AND THROUGH VARIOUS CONDUITS TRANSFERRED TO THE BANK ACCOUNTS OF THE ULTIMATE BENEFICIARIES. IN THE INSTANT CASE, THE ASSESSEE IS FOUND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR AS PER THE FOLLOWING SPECIFIC DETAILS TRANSACTION: S.NO BENEFICIARIES NAME OF THE PROVIDER AMOUNT 1 ORACLE BUILDWELL PVT LTD TAURUS IRON & STEEL CO. PVT LTD. 20,00,000/ - 3) DURING THE ASSESSMENT OF THE ASSESSEE COMPANY FOR A.Y 2008 - 2009, THE SIMILAR INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING ACCOMMODATION ENTRY OF RS.20,00,000/ - RECEIVED FROM SH. TARUN GOYAL BY THE ASSESSEE DURING THE A.Y2008 - 2009, DURING THE ASSESSMENT PROCEEDING, DETAILS WERE CALLED FOR. THE ASSESSEE COMPANY HAD SUBMITTED THAT IT HAD RECEIVED AN AMOUNT OF RS.20,00,000/ - IN A.Y 2007 - 2008, THE COPY OF THE BANK STATEMENT AND SHARE APPLICATION FORM HAD BEEN FILED BY THE ASSESSEE. 4) THE ASS ESSEE HAS RECEIVED UNEXPLAINED SUMS FROM THE ENTRY OPERATOR AS PER THE ABOVE DETAIL AS PER INFORMATION AVAILABLE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WITH THE PERSONS FOUND TO BE ENTRY OPER ATOR CANNOT BE ESTABLISHED. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR THAT THE ASSESSEE HAD INTRODUCED HIS OWN UNDISCLOSED INCOME IN THE GARB OF SHARE APPLICATION MONEY/GIFTS/UNSECURED LOANS/UNACCOUNTED PURCHASES & SALES THROUGH TAURUS IRON & STEEL CO. PVT LTD. 5) THEREFORE, THE ASSESSEE HAS DELIBERATELY FURNISHED WRONG FACTS AT THE TIME OF FILING OF RETURN. I, THEREFORE, HAVE REASONS TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FUIIY ALH MATERIAL FACTS NECE SSARY FOR ASSESSMENT FOR A.Y 2007 - 2008, AN INCOME OF RS.20,00,000/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SECTION 147 OF THE ACT.' B) THE AFORESAID REASONS CONSIST OF FIVE PARAS. PARA 1 ONLY STATES THAT ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(1) PARA 2) GIVES THAT INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE ACTT CENTRAL CIRCLE, 22, THAT THE ASSESSEE IS BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM SK GUPTA WHO WAS AN M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 13 ENTRY PROVIDER. BUT IN THE TABLE GIVEN BELOW THIS PARA, IT IS GIVEN THAT THE ASSESSEE WAS FOUND TO BE BENEFICIARY OF ACCOMMODATION ENTRY OF RS. 20 LAKH FROM TAURUS IRON AND STEEL COMPANY PRIVATE LIMITED. C) PARA 3) DOES NOT RELATE TO THIS YEAR. IN ANY CASE IT GIVES THAT IN THE ASSESSMENT YEAR 2008 - 2009 SIMILAR INFORMATION WAS RECEIVED FROM INVESTIGATION WING REGARDING ACCOMMODATION ENTRY OF RS. 20 LAKH RECEIVED FROM TARUN GOYAL BY THE ASSESSEE. IT FURTHER STATES THAT THE ASSESSEE COMPANY HAD SUBMITTED TO HAVE RECEIVED AN AMOUNT OF RS. 20 LAKH IN A.Y 2007 - 2008 B Y WAY OF SHARE APPLICATION. D) PARA 4} GIVES THAT THE ASSESSEE HAD RECEIVED UNEXPLAINED SUMS AS PER THE INFORMATION AVAILABLE WITH THE UNDER SIGNED, THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WITH THE PERSON FOUND TO BE ENTRY OPERATOR CANNOT BE ESTABLISHED. IN VIEW OF THESE DISCUSSION IT WAS CLEAR THAT THE ASSESSEE HAS INTRODUCED HIS OWN MONEY M THE GARB OF SHARE APPLICATION MONEY/GIFT/UNSECURED LOANS/UNACCOUNTED PURCHASES AND SALES THROUGH TAURUS IRON AND STEEL COMPANY PRIVATE LIMITED . THEREFORE, THE ASSESSEE HAS DELIBERATELY FURNISHED WRONG FACTS AT THE TIME OF FILING THE RETURN. E) PARA 5) GIVES THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT NECESSARY FOR THE A.Y 2007 - 08 AN INCOM E OF RS. 20 LAKH HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SECTION 147 OF THE ACT. OUR SUBMISSIONS ON THE REASONS. A) IN PARA 2 IT IS GIVEN THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY RECEIVED FROM SK GUPTA WHO WAS AN ENTRY OPER ATOR. IT IS FURTHER GIVEN IN THE TABLE THAT THE ASSESSEE IS FOUND TO BE BENEFICIARY OF 20 LAKH FROM TARUS. B) FURTHER IN PARA 3 IT IS GIVEN THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY OF RS. 20 LAKH FROM TARUN GOYAL. THE PURPOSE OF WRITING THESE LIN ES IS TO HIGHLIGHT THAT THE ASSESSING OFFICER TAKING ACTION U/S 147 IS NOT AWARE AS TO FROM WHOM IN FACT THE ASSESSEE HAS TAKEN ALLEGED ACCOMMODATION ENTRY. IT IS FROM SK GUPTA OR TARUS OR TARUN GOYAL. THE REASONS ARE, THEREFORE, ON SUSPICION AND WITHOUT A NY MATERIAL MUCH LESS COGENT MATERIAL. THE AO IS NOT SURE OR CONFIRMED OF ANYTHING AND IT IS IN HIS MIND ONLY THAT THE ASSESSEE MIGHT HAVE TAKEN AN ENTRY FROM ANYONE OF THESE THREE. C) IN PARA 4 IT IS STATED THAT THE ASSESSEE HAS CONVERTED UNDISCLOSED INCOME IN THE GARB OF SHARE APPLICATION ETC. THIS PARA M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 14 BY ITSELF PROVES THAT THE ASSESSING OFFICER TAKING ACTION U/S 147 IS NOT AWARE REGARDING THE TRUE AND EXACT FACTS OF THE CASE AS TO WHETHER I T WAS SHARE APPLICATION, GIFT OR PURCHASE OR SALE ETC. THIS BY ITSELF PROVES THAT IN THE ABSENCE OF THE MATERIAL, THE AO IS NOT AWARE ABOUT ANYTHING AND HE WAS TRAVELING ON SUSPICION. HE HAS NOT APPLIED HIS MIND WHEREFROM THE AO HAS RECEIVED THE INFORMATIO N THAT THE ASSESSEE HAS CONVERTED UNDISCLOSED INCOME. WHERE IS SUCH MATERIAL. IN FACT THERE IS NON. E) IN PARA 4 IT IS FURTHER GIVEN THAT IDENTITY CREDITWORTHINESS AND GENUINENESS OF TRANSACTION WITH THE OPERATOR CANNOT BE ESTABLISHED. THIS BY ITSELF PROVE THAT ACTION U/S 147 HAS BEEN TAKEN FOR THE PURPOSES OF VERIFICATION AND CLARIFICATION AND WITH A VIEW TO ESTABLISH IDENTITY, CREDITWORTHINESS AND: .GENUINENESS OF TRANSACTIONS FOR WHICH THERE CANNOT BE ANY 147 ACTION. THIS PARA FURTHER PROMTS THAT 147 ACT ION HAS NOT BEEN TAKEN FOR ANY REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HHD ESCAPED ASSESSMENT BUT TO ESTABLISHED IDENTITY, CREDITWORTHINESS AND GENUINENESS. F) IN PAR 4 AND 5 WHICH ARE CONTRADICTORY IT IS STATED THAT THE ASSESSEE HAS DELIBERATELY FURNISHED WRONG FACTS AND FURTHER IT IS STATED THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR A. Y 2007 - 2008 AND ON ACCOUNT OF SUCH FAILURE INCOME HAS ESCAPED ASSESSMENT. THIS PARA ITSELF PROVES THA T 147 ACTION IS NOT ON ACCOUNT OF ANY MATERIAL OR ANY BELIEF BUT ONLY ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. IT IS TO BE NOTED THAT THIS IS THE CASE OF 143(1) ASSESSMENT AND THE POINT OF FAILURE IS APPLICABLE ONLY TO AN ASSESSMENT U/S 143(3). M OREOVER THE REASONS DO NOT STATE AS TO WHAT IS THE FAILURE WHICH, HAVE LED TO BELIEVE THAT INCOME OF RS. 20 LAKH HAS ESCAPED ASSESSMENT. IN THE RETURN WE DISCLOSED THE RECEIPT OF SHARE APPLICATION MONEY. WE DO NOT UNDERSTAND AS TO WHAT WE HAVE NOT DISCLOSE D AND WHAT WE HAVE NOT DISCLOSED FULLY AND TRULY. G) IN PARA 4 IT IS ALSO GIVEN THAT THE ASSESSEE HAS RECEIVED UNEXPLAINED SUMS AS PER THE DETAILS GIVEN. BUT IN DIE ENTIRE REASONS THERE ARE NO DETAILS GIVEN PROVING THAT THE ASSESSEE HAS RECEIVED ANY UNEXP LAINED SUMS. IF THERE IS ANY INFORMATION WITH THE ASSESSING OFFICER HE SHOULD HAVE GIVEN IN THE REASONS AND HE CANNOT KEEP THE INFORMATION TO HIS CHEST AND TAKE ACTION U/S 147 ALSO. H) THE REASONS COMMUNICATED BY THE ACTT DOES NOT SPEAK OF ESCAPEMENT OF IN COME OF ANY A.Y WHAT TO SPEAK OF A.Y 2007 - 2008. THERE IS NO NAME OF THE BANK, NO CHEQUE DETAILS AND NO DATE OF SUCH ALLEGED ACCOMMODATION ENTRIES. I) IT IS FURTHER GIVEN THAT FROM THE DISCUSSION IN THE REASONS', IT WAS CLEAR THAT THE ASSESSEE HAS INTRODUC ED HIS OWN UNDISCLOSED M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 15 INCOME. BUT IT IS NOT CORRECT. THERE IS NO MATERIAL OR ANY REASON TO MAKE IT DEAR THAT THE ASSESSEE HAS INTRODUCED ITS OWN UNDISDOSED INCOME. THE QUESTION OF INTRODUCTION OF OWN UNDISCLOSED INCOME IS ONLY IN THE REALM OF DOUBT AND SU SPICION ASSUMPTION AND PRESUMPTION AND NOT IN THE REASONS. THE REASONS ALSO STATES THAT THE ASSESSEE HIMSELF AGREES TO HAVE RECEIVED RS. 20 LAKH IN A. Y 2007 - 2008. BUT THERE IS NO ADMISSION OF ANY KIND ON THE PART OF THE ASSESSEE THAT IT HAD RECEIVED ANY U NDISDOSED INCOME. THEREFORE, THESE LINES CARRY NO MEANING SO FAR AS THE VALID REASONS ARE CONCERNED. J) HOWEVER WHATEVER MAY BE THE POSITION THERE IS NO INDEPENDENT APPLICATION MIND BY THE AO. THERE IS NO PERSONAL/OWN SATISFACTION OF THE AO REGARDING ESCAP EMENT OF INCOME. THERE IS NO MATERIAL WHAT TO SPEAK OF COGENT MATERIAL. THERE IS NO NEXUS BETWEEN THE MATERIAL/REASONS RELIED UPON AND THE BELIEF FORMED FOR ESCAPEMENT OF INCOME. THERE IS NO INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME. THE C ASE WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED FROM EITHER INVESTIGATION WING OR ASSESSING OFFICER WHICH SUFFERS WITH SERIOUS DEBILITY AND LACKS DEFINITENESS, WITHOUT DESCRIBING THE BASIC ASPECTS OF ALLEGED TRANSACTIONS AND IN THE ABSENCE OF THE SAM E WHOLE ACTION OF THE AO GETS VITIATED. THE AO EVEN DOES NOT'KNOW AS TO FROM WHOM THE ASSESSEE HAD TAKEN ALLEGED ACCOMMODATION ENTRY. ACTION HAS BEEN TAKEN WITHOUT ANY ENQUIRY AND HAS BEEN TAKEN ONLY ON THE BASIS OF INFORMATION RECEIVED FROM OTHERS. EVEN T HERE IS NO NAME OF BANK OR CHEQUE NUMBER OR DATE OF THE CHEQUE, K) IN THIS CONNECTION WE RELY ON THE HONBLE TTAT JUDGMENT IN THE CASE OF R.K GARG DEVELOPERS PVT LTD. AS PER COPY ENCLOSED. ACTION U/S 147 IS NOT VALID AND HAS BEEN TAKEN JUST FOR THE PURPOSE OF VERIFICATION, IN THE ABSENCE OF ANY COGENT MATERIAL AND WITHOUT FULFILLING THE CONDITIONS NECESSARY FOR VALID 147 ACTION. IT IS SUBMITTED THAT THE PROCEEDINGS U/S 147 MAY BE HELD TO BE ILLEGAL. THE HONBLE DELHI TRIBUNAL HAS DISCUSSED IN DETAIL IN THE CASE OF R.K GARG THAT THE REASONS RECORDED DID NOT LEAD TO VALID ACTION U/S 147. IN THIS JUDGMENT RELIANCE HAS BEEN PLACED ON VARIOUS JUDGMENT INCLUDING THE JUDGMENTS OF THE HON'BLE DELHI HIGH COURT. THE REASONS GIVEN FOR 147 IN THIS CASE ARE THE SAME AND RELYING ON THE JUDGMENT R.K GARG AND OTHERS AS GIVEN IN THE JUDGMENTS. ANOTHER IMPORTANT POINT FOR CONSIDERATION IS THAT IN THE CASE OF R.K GARG ALSO TARUN GOEL WAS INVOLVED AND HERE ALSO THE PERSON INVOLVED IS THE SAME. WE ARE SUBMITTING THAT THE ACTION U /S 147 IS INVALID, ILLEGAL AND VOID - AB - INITIO. ONCE 147 PROCEEDINGS ARE HELD TO BE VOID, THE SUBSEQUENT PROCEEDINGS WILL ALSO RESULT IN ILLEGAL PROCEEDINGS. IT IS REQUESTED THAT THE ASSESSMENT MADE MAY KINDLY BE QUASHED.' M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 16 6. THE APPELLANT IN THE ADDITIONAL GROUND TAKEN HAS CHALLENGED THE REASSESSMENT PROCEEDINGS U/S 147 AS INVALID, LEGAL AND VOID AB INITIO. 6.1. I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION FILED BY THE LD. AR IN WHICH HE HAS STATED THAT THERE IS NO SATISFACTION OR NEXUS BETWEEN THE MA TERIAL/REASONS RELIED UPON AND THE BELIEF FORMED BY THE AO FROM THE ESCAPEMENT OF INCOME. BASICALLY, HE HAS QUESTIONED THE SUFFICIENCY OF REASONS RECORDED BY THE AO FOR INITIATING REASSESSMENT PROCEEDINGS. THE LD. AR HAS RELIED ON THE JUDGEMENT OF THE HON' BLE ITAT IN THE CASE OF R.K GARG DEVELOPERS (P) LTD. WHERE ACCOMMODATION ENTRY WAS RECEIVED FROM THE COMPANIES FLOATED BY SHRI TARUN.GOYAL AND THE HONBLE ITAT HELD THAT THE REASONS RECORDED DID NOT LEAD TO VALID ACTION U/S 147 OF THE ACT. THE AO RECORDED THE FOLLOWING REASONS FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT: 2) RETURN OF INCOME DECLARING INCOME OF RS. 11,11,410/ - WAS FILE BY THE ASSESSEE ON 15.11.2007. THE CASE WAS PROCESSED U/S 143(1) OF THE IT ACTON 22.08.2008 AT AN INCOME OF RS. 11,11,410 / - INFORMATION HAS BEEN RECEIVED FROM THE OFFICE OF THE ACIT, CENTRAL CIRCLE - 22, ARA CENTRE, JHANDEWALAN EXTN, NEW DELHI THAT THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM SH. S.K GUPTA WHO WORKED AS ENTRY OPERATOR AND PR OVIDED ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES THROUGH A LARGE NUMBER OF SHELL COMPANIES MANAGED BY HIM. CASH WAS RECEIVED AND DEPOSITED IN THE BANK ACCOUNT OF THESE SHELL COMPANIES AND THROUGH VARIOUS CONDUITS TRANSFERRED TO THE BANK ACCOUNTS OF T HE ULTIMATE BENEFICIARIES. IN THE INSTANT CASE, THE ASSESSEE IS FOUND TO BE THE BENEFICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR AS PER THE FOLLOWING SPECIFIC DETAILS TRANSACTION: S.NO BENEFICIARIES NAME OF THE PROVIDER AMOUNT 1 ORACLE BUILDWELL PVT LTD TAURUS IRON & STEEL CO. PVT LTD. 20,00,000/ - 3) DURING THE ASSESSMENT OF THE ASSESSEE COMPANY FOR A.Y 2008 - 2009, THE SIMILAR INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING ACCOMMODATION ENTRY OF RS.20,00,000/ - RECEIVED FROM SH. TARUN GOYAL BY THE ASSESSEE DURING THE A. Y 2008 - 2009, DURI NG THE ASSESSMENT PROCEEDING, DETAILS WERE CALLED FOR. THE ASSESSEE COMPANY HAD SUBMITTED THAT IT HAD RECEIVED AN AMOUNT OF RS.20,00,000/ - IN A.Y 2007 - 2008, THE COPY OF THE BANK STATEMENT AND SHARE APPLICATION FORM HAD BEEN FILED BY THE ASSESSEE. 4) THE A SSESSEE HAS RECEIVED UNEXPLAINED SUMS FROM THE ENTRY OPERATOR AS PER THE ABOVE DETAILS AS PER INFORMATION AVAILABLE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WITH THE PERSONS FOUND TO BE ENTRY OPERATOR CANNOT BE ESTABLISHED. IN VIEW OF THE FOREGOING DISCUSSION, IT IS CLEAR M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 17 THAT THE ASSESSEE HAD INTRODUCED HIS OWN UNDISCLOSED INCOME IN THE GARB OF SHARE APPLICATION MONEY/GIFTS/UNSECURED LOANS/UNACCOUNTED PURCHASES & SALES THROUGH TAURUS IRON & ST EEL CO. PVT LTD. 5) THEREFORE, THE ASSESSEE HAS DELIBERATELY FURNISHED WRONG FACTS AT THE TIME OF FILING OF RETURN. I, THEREFORE, HAVE REASONS TO BELIEVE THAT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FADS NECESSARY FOR ASSESSMENT FOR A.Y 2007 - 2008, AN INCOME OF RS. 20,00,000/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SECTION 147 OF THE ACT.' 6.2. IT IS EVIDENT THAT THERE WERE SUFFICIENT REASONS FOR THE AO TO BELIEVE THAT INCOME HAD ESCAPED ASS ESSMENT AND PROCEEDINGS WERE INITIATED AFTER RECORDING REASONS. A REASSESSMENT IS VALID IF THERE IS PRIME FACIE REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. INFORMATION WAS AVAILABLE WITH THE AO AND REASONS WERE RECORDED THAT THERE OF INCOME. THI S HAS BEEN REAFFIRMED IN THE CASES OF RATNACHUDAMANI S. UTNAL V ITO (2004) 269 ITR 212 (KARN) AND ITO & OTHERS V SHREE BAJRANG COMMERCIAL CO (PVT.) LTD (2004) 269 ITR 338 (CAL). AFTER THE AMENDMENT OF SECTION 147 W. E. F. 01.04.1989, THE SCOPE OF SECTION 1 47 HAS BEEN CONSIDERABLY WIDENED. AFTER THE AMENDMENT THE ONLY REQUIREMENT UNDER THE SECTION IS THAT AO MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE AO IS NOT REQUIRED TO CONCLUSIVELY PRO VE ESCAPEMENT OF INCOME AT THE STAGE OF ISSUE OF NOTICE U/S 148L THIS ASPECT WAS CONSIDERED BY HONBLE SUPREME COURT IN THE CASE OF RAYMOND WOOLLEN MILLS LTD (1999) 236 ITR 34. THE HONBLE COURT HELD AS UNDER: 'IN THIS CAST, WE DO NOT HAVE TO GIVE A FINAL DECISION AS TO WHETHER THERE IS SUPPRESSION OF MATERIAL FUELS BY THE ASSESSEE OR NOT. WE HAVE ONLY TO SEE WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENT OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO HE CONSIDERED AT THIS STAGE. WE ARE OF THE VIEW THAT THE COURT CANNOT STRIKE DOWN THE REOPENING OF THE - CASE IN THE FACTS OF THIS CASE. IT WILL BE OPEN TO THE ASSESSEE TO PROVE THAT THE ASSUMPTION OF FACTS MADE IN THE NOTICE WAS ERRONEOUS. THE ASSESSEE MAY ALSO PROVE THAT NO NEW FACTS CAME TO THE KNOWLEDGE OF THE INCOME - TAX OFFICER AFTER COMPLETION OF THE ASSESSMENT PROCEEDING. WE ARE NOT EXPRESSING ANY OPINION ON THE MERITS OF THE CASE. THE QUESTIONS OF FACT AND LAW ARE LEFT OPEN TO BE INV ESTIGATED AND DECIDED BY THE ASSESSING AUTHORITY. THE APPELLANT WILL BE ENTITLED TO TAKE ALL THE POINTS BEFORE THE ASSESSING AUTHORITY. THE APPEALS ARE DISMISSED. THERE WILL BE NO ORDER AS TO COSTS.' M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 18 6.3. THE HONBLE SUPREME COURT IN THE CASE OF ACIT V. RA JESH JHAVERI STOCK BROKERS (P) LTD. [2007] 291 ITR 500 HAS EXPLAINED THE IAW AS UNDER: 16. SECTION 147 AUTHORIZES AND PERMITS THE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVER THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE AO IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN IN - BUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE DELHI HIGH COURT IN CENTRAL PROVINCES MANGANESE ORE COMPANY. LTD. V. ITO [1991] 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STQGE, WHAT IS REQUIRED IS REASON TO BELIEVE, BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. A T THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT S TAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE AC IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS ALSO 7 SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 147, SEPARATE CLAUSE (A) AND (B) LAID DOWN THE ASSESSEE OR REASSESSED TO CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTLY THE AO MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME - TAX HAVE ESCAPED ASSESSMENT AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER (I) OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR: BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE AO COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS, IF THE AO FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS . JURISDICTION TO RE - OPEN THE ASSESSMENT. IT IS, HOWEVER, TO BE NOTED THAT BOTH THE CONDITIONS M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 19 MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. * 6.4. THE REASONS RECORDED SHOW THAT AO HAD TANGIBLE MATERIAL FROM RECORDS DURING ASSESSMENT FOR A.Y. 2008 - 09 THAT THE APPELLANT HAD RECEIVED AN AMOUNT OF RS.20,00,000/ - FOR THE YEAR UNDER CONSIDERATION AS ACCOMMODATION ENTRY FROM M/S TAURUS & IRON STEEL CO. (P) LTD., A GROUP COMPANY OF TARUN GOYAL, A KNOWN ENTRY OPERATOR REGARDING WHOM INFORMATION WAS RECEIVED FROM THE OFFICE OF THE ACIT, CENTRAL CIRCLE FOR THE A.Y. 2008 - 09. IN VIEW OF SUCH INFORMATION THE AO UNDOUBTEDLY HAD EVERY REASON TO COME TO A REASONABLE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. 6.5 . IN A CASE EVEN WHERE AN ASSESSMENT HAD BEEN FRAMED EARLIER U/S 143(3), THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF INDIA TERMINAL CONNECTOR SYSTEM LTD. (21 TAXMANN.COM 69) FOLLOWED ITS EARLIER DECISION IN THE CASE OF M/S AGR INVESTMENT LTD. (197 TAXM AN 177) TO COME TO THE CONCLUSION THAT ORDINARILY, THE COURTS CANNOT INTERFERE WITH THE SUFFICIENCY OF REASONS FOR FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. 6.6. IN THE PRESENT CASE, WHERE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(1), FROM T HE REASONS RECORDED, IT IS APPARENT THAT THE AO HAS APPLIED HIS MIND TO THE INFORMATION AND COME TO THE INDEPENDENT BELIEF, ON THE BASIS OF MATERIAL WHICH HE HAD BEFORE HIM, THAT INCOME HAS ESCAPED ASSESSMENT. THE REASONS RECORDED IN THIS CASE DO REVEAL TH E APPLICATION OF MIND AND THE BELIEF ON THE PART OF THE AO THAT OWING TO THE NEW MATERIAL/INFORMATION RECEIVED, THERE HAD BEEN ESCAPEMENT OF INCOME. 6.7. REFERENCE MAY ALSO BE MADE TO THE DECISION OF THE HONBLE SUPREME COURT OF INDIA RENDERED IN THE CASE OF PURUSHOTTAM DASS BANGUR REPORTED IN 224 ITR 362, ON THE ISSUE OF APPLICATION OF MIND BY THE A.O TO INFORMATION RECEIVED WHILE RECORDING REASONS. IT WAS HELD, THAT ON BASIS/OF FACTS AND INFORMATION CONTAINED IN LETTER OF DIRECTORATE OF INVESTIGATION, TH E ITO COULD HAVE FORMED OPINION THAT THERE WAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND HE WAS JUSTIFIED IN HIS ACTION AND MERELY BECAUSE NOTICE WAS ISSUED ON VERY NEXT DAY OF RECEIPT OF LETTER IT DID NOT MEAN THAT ITO DID NOT APPLY HIS MIND TO THE INFORMATION. 6.8. IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND THE LEGAL PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT AND THE HONBLE HIGH COURT REFERRED ABOVE, I AM OF THE VIEW THAT THE AO WAS JUSTIFIED IN FORMIN G A BELIEF THAT THE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. I, THEREFORE, DO NOT FIND AN ERROR OF LAW AND FACT COMMITTED BY THE AO IN INVOKING PROVISIONS OF SECTION 148 READ WITH SECTION 147 FOR THE YEAR UNDER CONSI DERATION IN CASE OF THE APPELLANT. IT IS ALSO NOTED THAT THE REASONS FOR REOPENING M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 20 WERE DULY COMMUNICATED TO THE APPELLANT COMPANY AND THE OBJECTIONS RAISED WERE DULY ADDRESSED BY THE AO VIDE ORDER DATED 14.08.2014. NOTICE U/S 148 OF THE ACT IS THEREFORE, VALIDLY ISSUED BY THE AO. THIS GROUND OF APPEAL IS RULED AGAINST THE APPELLANT. 9. ON READING OF THE REASONS RECORDED BY THE LD ASSESSING OFFICER IT IS CLEAR THAT RETURN OF INCOME FILED BY THE ASSESSEE WAS ACCEPTED U/S 143(1) OF THE ACT. THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRIES FROM MR. TARUN GOYAL . THE INFORMATION WAS ALSO AVAILABLE IN THE ONGOING PROCEEDING FOR AY 2008 - 09. BASED ON THIS INFORMATION THE LD ASSESSING OFFICER RECORDED THE REASON THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THOUGH, REOPENING OF ASSESSMENT IS MADE BEYOND FOUR YEARS HOWEVER, THERE IS A TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WHICH SHOWS THAT THE ASSE SSEE HAS FAILED TO SHOW THE FULL AND TRUE INCOME. IT WOULD BE SEEN THAT THE PRIMARY REASON FOR REOPENING IS THAT ASSESSEE HAS MADE CAPITAL INFUSION IN THE BUSINESS FORM THE PERSONS FOUND TO BE ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THI S FACT CAME TO THE NOTICE OF THE ASSESSEE ONLY ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING. THOSE PERSONS WERE SEARCHED AND IT WAS FOUND THAT THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES WHICH HAS BEEN ESTABLISHED. THEREFORE , THERE IS LIVE LINK BETWEEN THE MATERIAL INFORMATION AND THE FORMATION OF THE BELIEF OF THE AO WHICH IS ACCESSIBLE , HENCE, THE REOPENING OF THE PROCEEDINGS ARE VALIDLY INITIATED. FURTHER, THE SUBSEQUENT ACQUISITION OF THE KNOWLEDGE THAT MONETARY TRANSACTI ON UNDERTOOK BY THE ASSESSEE WHICH ARE IN THE FORM OF ACCOMMODATION ENTRIES, WHICH ACTION WAS NOT AVAILABLE WITH THE LD AO AT THE TIME OF THE MAKING OF THE ORIGINAL ASSESSMENT WOULD BE A MATERIAL CHANGE OF CIRCUMSTANCES AND THEREFORE, FORMATION OF THE BEL IEF WOULD BE VALID IN SUCH CASES MORE SO WHEN THE ASSESSMENT WAS NOT FRAMED U/S 143(3) OF THE ACT. IN VIEW OF THIS WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE LD CIT(A) WITH RESPECT TO THE REOPENING OF THE ASSESSMENT. ACCORDINGLY, WE REJ ECT GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE. 10. THE NEXT ALL OTHER GROUNDS ACCEPT GROUND NO. 3 ARE RELATED TO THE ADDITION U/S 68 OF THE ACT. THE ASSESSEE HAS SUBMITTED BEFORE THE LD CIT(A) THE M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 21 INFORMATION OF THE SHARE APPLICANT COMPANY BEING THE STATUS O F THE SHARE APPLICANT ON THE WEBSITE OF MCA, BANK ACCOUNT OF THE DEPOSITOR, COPY OF AFFIDAVIT OF INVESTMENT, COPY OF PAN OF DIRECTOR, COPY OF INCOME TAX RETURN, MOA AND AOA OF THE SHARE APPLICANT COMPANY, CONFIRMATION LETTER OF MR. TARUN GOYAL AND FORM NO. 2 REGARDING ALLOTMENT OF THE SHARE. BASED ON THE ABOVE FACTS THE ASSESSEE TRIED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ASSESSEE ALSO SUBMITTED THIS INFORMATION AS ADDITIONAL EVIDENCES WHICH WERE NOT ADMITTED BY THE LD CIT(A), HOWEVER, FOR THE PROPER APPRECIATION OF THE FACT SAME ARE CONSIDERED. THE LD CIT(A) DEALT WITH THE ABOVE ISSUE VIDE PARA NO. 7 OF THE APPELLATE ORDER AS UNDER: - 7. GROUND NO. 1 IS DIRECTED AGAINST ADDITION OF RS.45,00,000/ - U/S 68 OF THE A CT. 7.1. THE LD. AR VIDE APPLICATION DATED 11.01.2015 REQUESTED FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A WHICH WAS FORWARDED TO THE AO FOR A REPORT. THE AO FURNISHED A REPORT DATED 21.01.2016 ENCLOSING AN EARLIER REPORT DATED 27.04.2015 OBJECTI NG TO THE APPELLANTS PLEA FOR ADMISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT SUFFICIENT OPPORTUNITIES WERE PROVIDED DURING ASSESSMENT PROCEEDINGS. THE AO FURTHER REPORTED THAT THE APPELLANT COMPANY HAD NOT PRODUCED BOOKS OF ACCOUNTS AND DETAILS OF PA ID UP SHARE CAPITAL EVEN DURING REMAND PROCEEDINGS. 7.2. REASSESSMENT PROCEEDINGS WERE INITIATED AND A NOTICE U/S 148 DATED 29.03.2012 WAS ISSUED TO THE APPELLANT. THE APPELLANT COMPANY DID NOT FILE THE RETURN IN RESPONSE TO THE SAID NOTICE. NOTICE U/S 14 2(1) ISSUED TWICE ON 24.05.2012 AND 14.12.2012 WHICH WAS NOT COMPLIED. SUBSEQUENTLY, NOTICE U/S 142(1) DATED 28.01.2013 ALONGWITH DETAILED QUESTIONNAIRE INCLUDING DETAILS OF SHARE CAPITAL/SHARE APPLICATION MONEY RECEIVED DURING THE YEAR WHICH WAS ALSO NOT COMPLIED AND NO DETAILS WERE FURNISHED. FINAL OPPORTUNITY WAS AFFORDED BY ISSUE OF NOTICE U/S 142(1) DATED 11.02.2013 FOR COMPLIANCE ON 22.02.2013. ON THIS DATE FINALLY THE AR APPEARED AND SOUGHT REASONS FOR ISSUE OF NOTICE U/S 148 AND TJ THEREAFTER FILED OBJECTION TO THE SAME WHICH WAS DISPOSED OFF BY THE AO VIDE ORDER 06.03.2013. VIDE NOTICE DATED 11.03.2013, THE APPELLANT WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS ALONGWITH SUPPORTING EVIDENCE AS WELL AS DIRECTOR OF THE COMPANY AND ALSO THE DIRECTOR OF T HE COMPANY FROM WHOM, THE SHARE APPLICATION MONEY WAS RECEIVED FOR EXAMINATION AND VERIFICATION. IN RESPONSE, THE AR FILED COPY OF BANK ACCOUNT AND COPY OF RETURN FILED BY M/S TAURUS IRON & STEEL CO. (P) LTD. HOWEVER, DETAILS OF SHARE CAPITAL/SHARE APPLICA TION MONEY WERE NOT FILED. ON REQUEST OF THE APPELLANT, SUMMONS M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 22 U/S 131 WAS ISSUED TO THE DIRECTOR OF THE COMPANY M/S TAURUS IRON & STEEL CO. (P) LTD. SUMMONS WERE ALSO TO THE DIRECTOR OF THE APPELLANT COMPANY FOR PERSONAL DEPOSITION AND PRODUCTION OF BOOK S OF ACCOUNT ON 25.03.2013. ON THIS DATE, NONE APPEARED NOR ANY REPLY WAS FURNISHED. HOWEVER, ON 26.03.2013, THE AR FILED PART REPLY TO THE QUESTIONNAIRE DATED 28.01.2013 REFERRED EARLIER. NO INFORMATION HOWEVER, WAS FURNISHED REGARDING DETAILS OF SHARE CA PITAL/SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT DURING THE YEAR. IN THE ABSENCE OF ANY INFORMATION REGARDING THE SHARE CAPITAL/SHARE APPLICATION MONEY, THE AO, HELD THAT THE APPELLANT HAD FAILED TO PROVE GENUINENESS AND CREDITWORTHINESS OF TRANSACT ION OF RS.45,00,000/R ALLEGEDLY RECEIVED AS SHARE APPLICATION MONEY/PREMIUM THEREON AND ACCORDINGLY INVOKED PROVISIONS OF SECTION 68 AND MADE THE IMPUGNED ADDITION. FURTHER, RS.1,12,500/ - WAS ALSO ADDED AS COMMISSION ADDED AS EXPENDITURE ON COMMISSION @ 2% TO THE ENTRY OPERATORS FOR THE IMPUGNED ACCOMMODATION ENTRY. 7.3. I HAVE CONSIDERED THE REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER 46A MADE BY THE APPELLANT COMPANY. THE SAID REQUEST IS MADE ON THE GROUND THAT THE AO DID NOT ASK FOR ANY DETAILS OR DOCUMENTS AND THEREFORE, THE APPELLANT WAS PREVENTED FROM SUFFICIENT CAUSE FROM FILING THESE EVIDENCE AND THE SAME BE ADMITTED. THE RELEVANT PROVISIONS OF RULE 46A IS AS UNDER: ''PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) A ND COMMISSIONER (APPEALS). 46A.(1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER 4 ITA NO.604/DEL./2012 (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY: - A) WHETHER THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR B) WHETHER THE A PPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE TICS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL' M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 23 NO CASE HAS BEEN MADE OUT BY THE APPELL ANT THAT HIS CASE FALLS UNDER CLAUSES (B), (C) <& (D) OF RULE 46A. IN VIEW OF THE ABOVE, THE ADDITIONAL EVIDENCE SOUGHT TO BE PRODUCED BY THE APPELLANT IS NOT ADMITTED.' 7.4. IT IS EVIDENT FROM THE ASSESSMENT ORDER ABOVE THAT THE AO HAS ALLOWED NUMEROUS O PPORTUNITIES TO THE APPELLANT TO FURNISH DOCUMENTS/EVIDENCE WITH REFERENCE TO THE RECEIPT OF SHARE APPLICATION MONEY/PREMIUM RECEIVED DURING THE YEAR. SPECIFIC QUESTIONNAIRE IN THIS REGARD WAS ISSUED ON 28.01.2013 IN WHICH ITEM NO. 18 CALLED FOR SUCH DETAI LS. THIS WAS NEVER COMPLIED WITH BY THE APPELLANT. IN VIEW OF THESE FACTS, NO CASE HAS BEEN MADE OUT BY THE APPELLANT THAT ITS CASE FALLS UNDER CLAUSES (B), (C) & (D) OF RULE 46A. THEREFORE, THE ADDITIONAL EVIDENCE SOUGHT TO BE PRODUCED BY THE APPELLANT IS NOT ADMITTED. 7.5. THE APPELLANT RELIED ON THE BANK STATEMENTS OF M/S TAURAS IRON & STEEL CO. (P) LTD. AND AFFIDAVIT BY THE DIRECTOR AND ALSO COPY OF ACKNOWLEDGEMENT OF RETURN FILED, PAN CARD TO EXPLAIN RECEIPT OF RS.20,00,000/ - AS SHARE CAPITAL IN THE AP PELLANT COMPANY. 7.6. THE MODUS OPERANDI DEPLOYED BY COMPANIES FLOATED BY SHRI TARUN GOYAL FIND MENTION IN THE ORDER OF THE HON'BLE TRIBUNAL IN THE CASE OF TARUN'GOYAL (ITA NOS. 4636 AND 4637/DEL/2012 DATED 18.10.2013), WHEREIN THE HON'BLE TRIBUNAL HELD A S UNDER: '. RIVAL CONTENTION HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND PERUSAL OF THE PAPERS ON RECORD IN THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 20. THE UNDISPUTED FACT ACCEPTED BY THE ASSESSEE IS THAT MR. TARUN GOYAL WAS RUNNING A RACKET OF PROVIDING ACCOMMODATION ENTRIES BY FLOATING NUMEROUS COMPANIES. THE MODUS OPERANDI BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER, IS NOT DISPUTED BY THE ASSESSEE. THE ONLY ISSUE BEFOR E US IS THE QUANTIFICATION OF THE INCOME IN THE HANDS OF MR. TARUN GOYAL AND EACH OF THE ENTITIES FORMED BY HIM. 7.7. THE COMPANY M/S TAURUS IRON & STEEL CO. (P) LTD., FROM WHOM THE APPELLANT HAS RECEIVED THE ACCOMMODATION ENTRY WAS FLOATED BY SHRI TARUN GOYAL, ALSO FINDS MENTION IN THE REFERRED ORDER OF THE HBN'BIE TRIBUNAL AS APPEAL FILED BY THIS COMPANY WAS SET ASIDE BY THE HONBLE TRIBUNAL BY THE SUBJECT ORDER FOR DETERMINING THE QUANTUM OF INCOME IN THE HANDS OF SHRI TARUN GOYAL. THERE IS, THEREFORE, AN IMPLICIT RECOGNITION THAT THE COMPANY M/S TAURUS IRON & STEEL CO. (P) LTD. IS ALSO ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY. IN VIEW THEREOF, THE RECEIPT OF RS.20,00,000/ - AS SHARE CAPITAL PRIMA FACIE APPEARS AS AN ACCOMMODATION ENTRY. 7.8. THE LD. AR HAS RELIED ON A NUMBER OF DECISIONS TO SUPPORT HIS CONTENTION THAT THE ONUS CAST ON THE APPELLANT TO DISCHARGE THE M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 24 OBLIGATION REGARDING IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS IS MET. IN MY OPINION, THIS IS NOT SUFFICIEN T TO DISCHARGE THE ONUS CAST ON THE APPELLANT. THE HON'BLE DELHI ITAT IN THE CASE OF DHINGRA GLOBAL CREDENCE (P) LTD. 1 ITR(T) 529, HAS HELD THE IDENTITY OF A PERSON IS NOT PROVED ON PAPER. THE RECORD AVAILABLE WITH THE ROC IS AS FILED BY SOME PERSONS BUT THE OFFICE OF THE ROC NEVER TOOK ANY ACTION TO VERIFY THE EXISTENCE OF THE COMPANIES AT THE SO - CALLED ADDRESSES. SINCE THE EXISTENCE OF THE SHARE APPLICANT ITSELF IS NOT FOUND TO BE TRUE, THE AO CANNOT FURTHER ENQUIRE AS TO THE SOURCE OF THEIR INVESTMENT. MERE FILING OF UNDATED CONFIRMATION LETTERS/SHARE APPLICATION FORMS WILL NOT PROVE THE IDENTITY OF THE SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. THE GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THESE PARTIES IS STILL A BIG QUESTION MARK. THE SHARE APPLICATION MONEY IN QUESTION IS RECEIVED BY WAY OF PRIVATE PLACEMENT. THE HON'BLE DELHI HIGH COURT IN SEVERAL CASES SUCH AS NR PORTFOLIO PVT. LTD., N. TARIKA - PROPERTY INVEST. (P) LTD.(221 TAXMAN 14) AND NAVODAYA CASTLE PVT. LTD.(226 TAXMA N 190), ON IDENTICAL FACTS OF THE CASE WHEREIN IT WAS FOUND THAT THERE WERE CORRESPONDING DEPOSITS IN THE BANK ACCOUNTS BEFORE ISSUE OF SHARE APPLICATION CHEQUES, HAS HELD THAT THE CERTIFICATE OF INCORPORATION, PAN ETC. WERE NOT SUFFICIENT FOR PURPOSES OF IDENTIFICATION OF THE SUBSCRIBER COMPANY. THE SUPREME COURT OF INDIA HAS UPHELD THE DELHI HIGH COURTS ORDERS IN N. TARIKA PROPERTY INVEST. (P) LTD AND NAVODAYA CASTLE PVT. LTD. (51 TAXMANN.COM 387 AND 56 TAXMANN.COM 18) BY DISMISSING THE ASSESSEES SLP. 7 .9. THE HONBLE DELHI HIGH COURT IN CIT VS. FOCUS EXPORTS PVT. LTD. (228 TAXMAN 88) WHILE EXAMINING THE PROVISIONS# SECTION, 68 HAS RULED THAT WHERE THE ASSESSEE FAILED TO OFFER A REASONABLE AND ACCEPTABLE EXPLANATION REGARDING THE SOURCE AND NATURE OF C REDIT, THE AO IS ENTITLED TO DRAW INFERENCE THAT THE RECEIPT ARE THAT OF AN ASSESSABLE NATURE. THE HIGH COURT OBSERVED AS UNDER: 9: A BARE READING OF SECTION 68 OF THE ACT SUGGESTS THAT THERE HAS TO BE CREDIT OF AMOUNTS IN / THE BOOKS MAINTAINED BY AN ASS ESSEE; SUCH CREDIT HAS TO BE A SUM DURING THE PREVIOUS YEAR AND IF THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT OR THE EXPLANATION OFFERED IS NOT SATISFACTORY, THEN THE SUMS SO CREDITED CAN BE TREATED AS INCOME OF THE ASSES SEE FOR THAT PREVIOUS YEAR. THE EXPRESSION 'NO EXPLANATION IS OFFERED' OR 'THE EXPLANATION OFFERED IS NOT SATISFACTORY' PUTS AN ONUS ON THE ASSESSEE TO OFFER A LUCID, REASONABLE AND ACCEPTABLE EXPLANATION BEFORE THE ASSESSING OFFICER AND THEREUPON THE ASSE SSING OFFICER SHOULD FORM AN OPINION ACCEPTING OR REJECTING THE EXPLANATION BASED UPON APPRECIATION OF FACTS/MATERIALS AND OTHER ATTENDING CIRCUMSTANCES. SECTION 68 OF THE ACT WAS EXAMINED IN A. GOVINDARAJULU MUDALIAR V. CIT, [1958! 34 ITR 807 (SC) OBSERVI NG THAT THERE WERE AMPLE AUTHORITIES FOR THE PROPOSITION THAT WHERE AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 25 CERTAIN AMOUNT OF CASH RECEIVED DURING AN ACCOUNTING YEAR, THE ASSESSING OFFICER IS ENTITLED TO DRAW INFERENCE THAT THE R ECEIPTS ARE OF AN ASSESSABLE NATURE. WHETHER EXPLANATION SHOULD BE ACCEPTED OR NOT IS NOT TO BE EXAMINED FACTUALLY BUT HAVING REGARD TO TEST OF HUMAN PROBABILITIES AND NORMAL COURSE OF CONDUCT. REFERENCE CAN BE MADE TO CIT V. DURGA PRASAD MORE [1971182ITR 540 (SC). CIT V. DAULAT RAM RAWA TMUH, F1973187ITR 349 (SC) AND OTHER CASES REFERRED TO IN CIT V. NOVA PROMOTERS & FINLEASE (P.) LTD. F2012! 342 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI). IN THESE CASES, IT HAS BEEN OBSERVED THAT WHAT IS APPARENT M UST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT REAL. CAUTION MUST BE EXERCISED ON SELF - SERVING STATEMENTS MADE IN THE DOCUMENTS AS THEY ARE EASY TO MAKE AND RELY UPON IN CASE AN ASSESSEE WANTS TO EVADE T AXES. PROOF IS REQUIRED AND THE ASSESSING AUTHORITIES SHOULD NOT PUT BLINKERS WHILE LOOKING AT THE DOCUMENTS BEFORE THEM. SURROUNDING CIRCUMSTANCES ARE EQUALLY IMPORTANT.0 7.10. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT - II VS. MAF ACADEMY (P) LTD. HELD AS UNDER: 23. THE CONTENTION THAT THE REVENUE MUST HAVE EVIDENCE TO SHOW CIRCULATION OF MONEY FROM THE ASSESSEE TO THE THIRD PARTY IS FALLACIOUS AND HAS BEEN REPEATEDLY REJECTED, EVEN WHEN SECTION 68 OF THE ACT WAS NOT IN THE STATUTE. IN A. GOVINDARCJULU AIUDALICR V. CIT [1958] 34 ITR 807, SUPREME COURT OBSERVED THAT IT. WAS NOT THE DUTY OF THE REVENUE TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOURCE, INCOME WAS DERIVED AND WHY IT SHOULD BE TREATED AS CONCEALED INCOME. THE ASSESSEE MUST PROVE SATI SFACTORILY THE SOURCE AND NATURE OF CASH RECEIVED DURING THE ACCOUNTING YEAR. SIMILARLY OBSERVATIONS WERE MADE IN CIT VS. M. GANAPATHI MUDALIAR [1964] 53 ITR 623 (SC), INTER ALIA HOLDING THAT IT WAS NOT NECESSARY FOR THE REVENUE TO LOCATE THE EXACT SOURCE. THIS PRINCIPLE WAS REITERATED IN CIT VS. DEVI PRASAD VISHWANATH PRASAD[1969] 72 ITR 194 (SC), WHEREIN THE CONTENTION THAT THE ASSESSING OFFICER SHOULD INDICATE THE SOURCE OF INCOME BEFORE IT WAS TAXABLE, WAS DESCRIBED AS AN INCORRECT LEGAL POSITION. THUS WHEN THERE IS AN UNEXPLAINED CASH CREDIT, IT IS OPEN TO THE ASSESSING OFFICER TO HOLD THAT IT WAS INCOME OF THE ASSESSEE AND NO FURTHER BURDEN LIES ON HIM TO SHOW THE SOURCE. IN YADU HARI DA/MIA VS. CIT [1980] 126 ITR 48, A DIVISION BENCH OF DELHI HIGH COU RT HAS OBSERVED: - 'IT IS WELL KNOWN THAT THE WHOLE CATENA OF SECTIONS STARTING FROM S. 68 HAVE BEEN INTRODUCED INTO THE TAXING ENACTMENTS STEP BY STEP IN ORDER TO PLUG LOOPHOLES AND IN ORDER TO PLACE CERTAIN SITUATIONS BEYOND DOUBT EVEN THOUGH THERE WERE J UDICIAL DECISIONS COVERING SOME OF THE ASPECTS. FOR EXAMPLE, EVEN LONG M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 26 PRIOR TO THE INTRODUCTION OF S. 68 IN THE STATUTE BOOK, COURTS HAD HELD THAT WHERE ANY AMOUNTS WERE FOUND CREDITED IN THE BOOKS OF THE ASSESSEE IN THE PREVIOUS YEAR AND THE ASSESSEE OFF ERED NO EXPLANATION ABOUT THE NATURE END SOURCE THEREOF OR THE EXPLANATION OFFERED WAS, IN THE OPINION OF THE ITO, NOT SATISFACTORY, THE SUMS SO CREDITED 'COULD BE CHARGED TO INCOME - TAX AS INCOME OF THE ASSESSEE OF A RELEVANT PREVIOUS YEAR. SECTION 66'IYAS INSERTED IN THE I. T. ACT, 1961, ONLY TO PROVIDE STATUTORY RECOGNITION TO A PRINCIPLE WHICH HAD PEEN CLEARLY ADUMBRATED IN JUDICIAL DECISIONS.' 7.11. ADVERTING TO THE FACTS IN THE APPELLANTS CASE, IT IS OBVIOUS THAT ONLY DOCUMENTARY EVIDENCE BY WAY OF A FFIDAVITS, BANK STATEMENT, COPY OF ACKNOWLEDGEMENT OF RETURN IS FILED TO EXPLAIN THE SOURCE OF THE IMPUGNED CREDIT. DESPITE, REPEATED OPPORTUNITIES, THE DIRECTOR OF THE COMPANY WAS NOT PRODUCED BEFORE THE AO AND DID NOT RESPOND TO SUMMONS U/S 131 OF THE AC T. COPY OF BANK ACCOUNT OF THE COMPANY ALSO REVEALS SIMULTANEOUS DEPOSITS AND WITHDRAWALS LEADING CREDENCE TO THE MODUS OPERANDI TO PROVIDE ACCOMMODATION ENTRIES. THESE FACTS ONLY SHOW THAT A PAPER TRAIL IS SOUGHT TO BE CREATED TO CAMOUFLAGE THE ENTIRE TRA NSACTION TO INTRODUCE UNACCOUNTED INCOME BY WAY OF SHARE CAPITAL IN THE HANDS OF THE APPELLANT COMPANY. 7.12. IN VIEW OF THE FACTS OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS REFERRED ABOVE, IT IS QUITE APPARENT THAT THE APPELLANT HAS TAKEN ACCOMMODATION ENTRY OF RS.20,00,000/ - FROM M/S TAURUS IRON & STEEL CO. (P) LTD. AND FOR THE BALANCE RS.25,00,000/ - NO EVIDENCE WAS FILED IN SUPPORT OF RECEIPT OF SHARE CAPITAL/SHARE PREMIUM RECEIVED DURING THE YEAR. IN EFFECT, THEREFORE, NEITHER THE GENUINENESS OF TRANS ACTION NOR THE CREDITWORTHINESS OF THESE COMPANIES, THE ONUS OF WHICH RESTED ON THE APPELLANT HAS BEEN DISCHARGED. ACCORDINGLY, THE ADDITION MADE BY THE AO WITH REGARD TO UNEXPLAINED CREDITS OF RS.45,00,000/ - U/S 68 OF THE ACT IS UPHELD. THESE GROUNDS OF A PPEAL ARE RULED AGAINST THE APPELLANT. 11. ON CAREFUL ANALYSIS OF THE ABOVE FACTS WE FIND THAT THEY ARE SIMILAR TO THE ISSUE DECIDED BY THE HONBLE SUPREME COURT IN CASE OF PR. CIT VS. NRA IRON & STEEL LTD 412 ITR 161 AS WELL AS BY THE HONBLE JURISDICTIONAL HIGH COURT IN PR. CIT VS. NDR PROMOTERS PVT. LTD 410 ITR 379. IN THE PRESENT CASE ALSO UNDOUBTEDLY THE SHARE CAPITAL HAS BEEN TAKEN FROM MR. TARUN GOYAL, WHO IS AN ALLEGED ACCOMMODATION ENTRY PROVIDER. NEITHER THE DIRECTOR OF THE SHARE APPLICANT COMPANY NOR THE DIRECTORS OF THE ASSESSEE COMPANY WERE PRODUCED BEFORE THE LD AO. THE BANK ACCOUNT OF THE SHARE APPLICANT COMPANY SHOWS PRIOR TO ISSUE OF THE CHEQUE TO THE ASSESSEE COMPANY RECEIPT OF S UM THROUGH BANK TRANSFER FOR WHICH NO EXPLANATION IS AVAILABLE. THE M/S. ORACLE BUILDWELL PVT. LTD VS DCIT ITA NO. 2978/DEL/2017 (ASSESSMENT YEAR: 2007 - 08 PAGE | 27 RETURN OF INCOME FILED FOR AY 2008 - 09 OF THE SHARE APPLICANT WAS NOT AT ALL RELIABLE BUT IS OF VERY LOW SUM. THE CONFIRMATION SUBMITTED IS ALSO UNDATED. THE ANNUAL ACCOUNT SUBMITTED OF TH E SHARE APPLICANT THERE IS A MEAGER PROFIT OF RS. 4 LAKHS IN THE YEAR ENDED MARCH 2007. THE BALANCE SHEET FOR MARCH 2008 WAS NOT PRODUCED. THE INVESTMENT SCHEDULE SHOWS THAT THIS SHARE APPLICANT HAS INVESTED IN MANY UNLISTED COMPANIES AND IS HAVING LOAN AN D ADVANCES OF RS. 5.36 CRORES. THE INVESTMENT IS IN ALMOST 60 COMPANIES OF RS, 31.49 CRORES. THIS COMPANY HAS RESERVE AND SURPLUS ON ACCOUNT OF SHARE PREMIUM RS. 34.35 CRORES. THERE IS NO INFORMATION ABOUT WHO THE SHARE HOLDERS OF THIS COMPANY ARE. SURPRIS INGLY, SUCH A HUGE INVESTMENT DID NOT YIELD A SINGLE PAISA DIVIDEND IN THE HANDS OF THAT COMPANY. THE DIRECTORS WERE ASKED TO BE PRODUCED BUT THEY WERE NOT PRODUCED. SIMILAR IS THE FATE AND FACTS OF THE OTHER SHARE HOLDERS. IN VIEW OF THIS WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN CONFIRMING THE ADDITION OF RS. 45 LAKHS ALONG WITH COMMISSIONS OF RS. 11500/ - FOR OBTAINING SUCH ACCOMMODATION ENTRY. ACCORDINGLY, 1 TO 8 EXCEPT GROUND NO. 3 ARE DISMISSED AND ORDERS OF THE LOWER AUTHORITIES IS UPHELD. 12. ACCORDINGLY, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 / 11 / 2019 . - SD/ - - SD/ - ( K.N.CHARY ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 11 / 2019 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI