ITO 14(3)(2), MUMBAI V. VINAYLENE TEXTILE INDUSTRIES P.LTD, MUMBAI

ITA 3240/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0417 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AARJOO GORADIA
• Assessee Lawyers: RAHUL K HAKANI; DR K SHIVARAM
• Keywords: Bogus purchase; Unexplained cash credit; Bogus Share capital; Search and seizure; Opportunity of being heard; Accommodation entries
• Section: 142(1); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , A M AND SHRI RAM LAL NEGI, JM ./ I.T.A. NO. 3240/MUM/2017 ( / ASSESSMENT YEAR: 2012 - 13 ) ITO - 14(3)(2), 45 8, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. GALA NO. 8, 1 ST FLOOR, KUNTAL MODI ESTATE, L.B.S. MARG, GHATKOPAR (WEST), MUMBAI - 400 086 ./ ./ PAN/GIR NO. AAACV 1653 K ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. AARJOO GORADIA / RESPONDENT BY : DR. K. SHIVARAM & SHRI RAHUL K. HAKANI / DATE OF HEARING : 07.12.2017 / DATE OF PRONOUNCEMENT : 23.02 .2018 / O R D E R PER S HAMIM YAHYA , A. M.: T HIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND PERTAINS TO THE ASSESSMENT YEAR 2012 - 13. 2. T HE GROUNDS OF APPEAL REA D AS UNDER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.70,00,000/ - ON A/C OF UNEXPLAINED CASH CREDIT U/S 68. THE COMPANIES FROM WHICH THE ASSESSEE HAS ACCEPTED SHARES APPLICA TION MONEY OF RS. 70,00,000/ - WERE CONTROLLED AND 2 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. OPERATED BY SHRI PRAVEEN KUMAR JAIN, WHO ADMITTED IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH AND SEIZURE ACTION THAT THE CONCERNS/COMPANIES CONTROLLED BY HIM WERE ONLY ENGAGED IN PROVIDING ACCOMMO DATION ENTRIES TO VARIOUS PARTIES OF WHICH THE ASSESSEE IS ALSO ONE OF THE BENEFICIARIES. 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE THE AFORESAID GROUND OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. B RIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF GREY FABRICS ON JOBWORK BASIS. ON PERUSAL OF THE BALANCE SHEET IT HAS BEEN NOTICED THAT THE ASSESSEE HAS RECEIVED SHARE PREMIUM OF RS . 1,39,50, 0 00/ - DURING THE RELEV ANT A.Y.. DURING THE C O URSE OF ASSESSMENT PROCEEDINGS VIDE NOTICE U/S 142(1) DT.07.08.2014, THE ASSESSEE WAS REQUESTED TO FURNISH DETAILS OF SHARE PREMIUM RECEIVED DURING THE YEAR WITH NAME AN D ADDRESS OF THE PERSON FROM WHOM THE SHARE PREMIUM WAS RECEIVED ALONG WITH THE BANK STATEMENT. IN RESPONSE TO THIS , THE ASSESSEE VIDE LETTER DT. 20.08.2014 SUBMITTED THE NAME AND ADDRESS OF THE PERSON FROM WHOM THE SHARE PREMIUMS WAS RECEIVED DURING THE RELEVANT ASSESSMENT YEAR. ON PERUSAL OF THE DETAILS FURNISHED IT IS NOTICED THAT ASSESSEE HAS ISSUED SHARE OF FACE VALUE OF RS. 10 AT A PREMIUM OF RS. 90 PER SHARE. 4. THE ASSESSING OFFICER NOTED THAT I N THIS CASE THERE IS INFORMATION RECEIVED FROM DGIT (INV) - II, MUMBAI VIDE LETTER ALONG WITH LIST OF BENEFICIARIES OF ACC OMMODATION ENTRIES IN THE CASE OF MR. PRAVEEN KUMAR JAIN. IT HAS BEEN FURTHER INFORMED THAT A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN THE CASE OF SHRI PRAV EE N KUMAR JAIN GROUP ON 1/10/2013. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, SHRI P RAVEEN KUMAR JAIN ADMITTED THAT THE ONLY ACTIVITY CARRIED OUT BY ALL CONCERNS 3 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. CONTROLLED BY HIM IS PROVIDING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS UNSECURED LOANS, SHARE APPLICATION MONEY, BOGUS SALES AND LTCG ETC. FURTHER FROM THE STATEMENTS OF DUM MY DIRECTORS/PROPRIETORS IT WAS REVEALED THAT THEY WERE USED TO SIGN DIFFERENT PAPERS FOR NOMINAL CONSIDERATION GIVEN BY SHRI PRAVEEN KUMAR JAIN. SHRI PRAVEEN KUMAR JAIN HIMSELF IS A DIRECTOR IN FEW CONCERNS ONLY. HOWEVER, THROUGH VARIOUS DUMMY DIRECTORS/P ROPRIETORS HE CONTROLS, OPERATES AND MANAGE S A LARGE NUMBER OF CONCERNS. ALL THESE CONCERNS ARE NOT CARRYING OUT ANY GENUINE BUSINESS. THEY DO NOT HAVE ANY PHYSICAL STOCK OF GOODS. FURTHER THESE CONCERNS HAVE NOT EMPLOYED ANY PERSONS EXCEPT A FEW COMMON AC COUNTANTS WHO MANAGE ACCOUNTS AND BANKING TRANSACTIONS OF ALL SUCH CONCERNS AND ALL THESE CONCERNS ARE INDULGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES ONLY. 5. THE ASSESSING OFFICER FURTHER NOTED THAT S UBSEQUENT TO THE SEARCH ACTION IN THE CA SE OF SHRI PRAVEEN KUMAR JAIN, SEARCH AND SEIZURE ACTION WAS CARRIED OUT BY THE MUMBAI INVESTIGATION WING IN SUBHLAXMI GROUP. SUBHALAXMI GROUP ENGAGED IN THE BUSINESS OF MANUFACTURING OF TEXTILES, HAD TAKEN ACCOMMODATION ENTRIES OF BOGUS SHARE CAPITAL FROM VARIOUS ENTRY PROVIDERS INCLUDING THE CONCERNS OF SHRI PRAVEEN KUMAR JAIN. IN HIS STATEMENT RECORDED ON OATH U/S 132(4), SHRI YOGESH AGARWAL, PROMOTER OF THE GROUP ADMITTED THAT SUCH ENTRIES OF SHARE CAPITAL ARE IN THE NATURE OF ACCOMMODATION ENTRIES ONLY . THE ABOVE SEARCH FINDINGS CORROBORATE THAT ALL THE CONCERNS RUN, CONTROLLED AND OPERATED BY SHRI PRAVEEN KUMAR JAIN ARE INDULGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES ONLY. 4 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. 6. THE ASSESSING OFFICER FURTHER NOTED THAT S UBSEQUENTLY ANOTHER L ETTER DT. 07.07.2014 WAS FURNISHED WHEREIN IT WAS STATED THAT CERTAIN ENQUIRIES IN THE CASE OF FEW BENEFI CIAR IES AND BROKERS WERE CARRIED OUT BY THE DIRECTORATE ON 25.03.2014 AND FORWARDED A REVISED NOTE INCORPORATING THE NEW FINDINGS. IT HAS BEEN FURTHER STATED THAT ON FURTHER ANALYSIS OF SEIZED MATERIAL IT HAS BEEN REVEALED THAT MR. PRAVEEN KUMAR JAIN DIRECTLY CONTROLS AND OPERATES CERTAIN COMPANIES ARID FURNISHED THE DATA CONTAINING THE DETAILS OF BENEFICIARIES WHO HAVE TAKEN ACCOMMODATION ENTRIES FROM T HE CONCERNS DIRECTLY UNDE R THE CONTROL OF MR. PRAVEEN KUM AR JAIN. ON PERUSAL OF THE DETAILS, IT HAS BEEN NOTICED THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF THE ACCOMMODATION ENTRY FROM MR. PRAVEEN KUMAR JAIN GROUP FOR SHARE APPLICATION MONEY. AS PER TH E DETAILS, THE A SSESSEE HAS OBTAINED ACCO MMODATION ENTRIES IN RESPECT OF SHARE APPLICATION MONEY FROM THE FOLLOWING PARTIES: NAME OF THE BOGUS CONCERN OPERATED BY PRAVEEN KUMAR JAIN ASSESSMENT YEAR NATURE OF TRANSACTION PAN OF THE BENEFICIARY NAME OF TH E BENEFICIARY AS PER BOOKS OF BOGUS CONCERNS AMOUNT OF TRANSACTION (IN RS.) CASPER ENTERPRISES P LTD (OSTWAL TRADING(I) P LTD) 2012 - 13 SHARE APPLICATION MONEY AAACV1653K VINAYLENE TEXTILE INDUSTRIES PVT LTD 2,500,000 OLIVE OVERSEAS P LTD (REALGOLD TRADING CO. P LTD) 2012 - 13 SHARE APPLICATION MONEY AAACV1653K VINAYLENE TEXTILE INDUSTRIES PVT LTD 2,500, 000 TRIANGULAR INFOCOM LTD (LEXUS JNFOTECH LTD) 2012 - 13 SHARE APPLICATION MONEY AAACV1653K VINAYLENE TEXTILE INDUSTRIES PVT LTD 2,000,OC 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT HAS BEEN CLAIMED BY THE ASSESSEE THAT IT HAS RECEIVED THE SHARE APPLICATION MONEY FROM THE ABOVE PARTIES AS UNDER : 5 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. NAME OF THE PARTY NO. OF SHARES PAID UP VALUE OF SHARE PREMIUM TOTAL CASPE R ENTERPRISES P LTD (OSTWA L TRADING(I) P LTD) AAACO7955M 25000 250000 2250000 2,500,000 OLIVE OVERSEAS P LTD (REALGOLD TRADING CO P LTD) AACCR4512K 25000 250000 22500 00 2,500,000 TRIANGULAR INFOCOM LTD (LEXUS INFOTECH LTD) AAACL 4646 G 20000 20000 0 1800000 2,000,000 TOTAL 70000 7000 6300000 7000000 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICE U/S 333(6) VIDE LETTER DT. 06.02.2015 WAS ISSUED TO THE ABOVE MENTIONED THREE PARTIES, TO VERIFY THE GENUINENESS OF A SSESSEE'S CONTENTIONS. IN RESPONSE TO THIS ALL THE PARTIES HAVE REPLIED TO THE NOTICE U/S 133(6) AND AFFIRMED THAT THEY HAD SUBSCRIBED TO THE SHARE CAPITAL IN THE ASSESSEE'S COMPANY. 9. AS ALREADY STATED THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CAS E OF MR. PRAVEEN KUMAR JAIN GROUP AND CONSEQUENT TO THE SEARCH THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN WAS' RECORDED AND DURING THE COURSE OF STATEMENT HE HAS CONFIRMED THAT HE AND HIS .GROUPS HAS NOT CARRIED OUT ANY BUSINESS ACTIVITIES AND ENGAGED IN PRO VIDING ACCOMMODATION ENTRIES FOR BOGUS PURCHASES, LONG TERM CAPITAL GAIN AND SHARE APPLICATION MONEY SHRI PRAVEEN KUMAR JAIN IN HIS STATEMENT FURNISHED DETAILS OF THE CONCERNS OPERATED BY HIM. THE ABOVE MENTIONED PARTIES ARE THE CONCERNS OPERATED BY SHRI P RAVEEN KUMAR JAIN. IN VIEW OF THIS, VIDE ORDER SHEET NOTING DT. 02.03.2015, THE ASSESSEE WAS REQUESTED TO EXPLAIN AS TO WHY THE ALLEGED SHARE .APPLICATION MONEY FROM THE ABOVE PARTIES SHOULD NOT BE ASSESSED TO TAX AS 6 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. UNEXPLAINED CASH CREDIT U/S 68 OF THE I .T.ACT. IN RESPONSE TO THIS, ASSESSEE VIDE LETTER DT. 09.03.2015 SUBMITTED AS UNDER: 'WITH REFERENCE TO THE QUERIES RAISED BY YOU RELATING TO THE ISSUE OF SHARES AT A PREMIUM TO THE THREE INVESTORS NAMELY (I) OLIVE OVERSEAS P.LTD. (II) CASPER ENTERPRISES P . LTD. AND ( II I) TRIANGULAR INFOCOM LTD. WE A RE INSTRUCTED BY OUR ABOVE CLIENT TO WRITE TO YOU AS UNDER: 1. THAT A STATEMENT HAS BEEN SUBMITTED GIVING NAME, ADDRESS AND PAN OF THE ABOVE INVESTORS TO WHOM THE SHARES HAVE BEEN ISSUED AT A PREMIUM. THE STAT EMENT ALSO CONTAINS THE PARTICULARS OF NO. OF SHARES ISSUED AND AMOUNTS RECEIVED TOWARDS SHARE CAPITAL AND SHORE PREMIUM. COPIES OF THE BANK STATEMENTS HAVE ALSO BEEN SUBMITTED HIGHLIGHTING THE AMOUNT RECEIVED THROUGH BANKING CHANNEL. KINDLY ALSO FIND ENCL OSED THE FOLLOWING: I. COPIES OF SHARE APPLICATION RECEIVED FROM THE INVESTORS II. CONFIRMATION LETTERS OF THE INVESTORS FOR THE INVESTMENT IN SHARES AND MODE OF PAYMENT OF SHARE APPLICATION MONEY. III. CERTIFIED COPY OF RESOLUTION OF THE BOARD OF DIRECTORS OF THE INV ESTOR COMPANY FOR THE INVESTMENT IN THE SHARES OF OUR ABOVE CLIENT . IV. COPIES OF THE BANK STATEMENTS OF T HE INVESTOR COMPANIES HIGHLIGHTING THE AMOUNT PAID TO OUR ABOVE CLIENT THROUGH BANKING CHANNEL. Y OU WILL KINDLY APPRECIATE THE FACT THAT IN SUPPORT OF THE TRANSACTIONS RE LATING TO THE SHARE APPLICATION MONEY RECEIVED FR OM THE ABOVE INVESTORS, THEIR EXISTENCE IS PRO VED. THE COPIES OF THE BANK STATEMENTS OF OUR ABOVE CLIENT AND OF THE INVESTORS ON RECORD PROVE THAT THE SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH BANKING CHANNELS . IN VIEW OF THE DOCUMENTARY EVIDENCES SUBMITTED IN SUPPORT OF THE ADDITION CAN BE MADE U/S 68 OF THE ACT. RELIANCE IS MAD E ON THE RATIO OF THE JUDGEMENTS OF HON' BLE RAJASTHAN HIGH COURT IN SHREE BA RKHS SYNTHETICS LTD. VS ASSISTA NT CIT (2006) 155 TAX 289 (RAJ), DELHI HIGH COURT IN CIT VS. VLS FOODS P.LID. (2011) 203 TAX 213/15 TAXMANN.COM 225(DE LHI). 3. IN VIEW OF THE INFORMATION AND EXPLANATION S GIVEN AND C. EVIDENCES ON RECORD MERELY BECAUSE THE TRANSACTION S ARE A LLEGED TO BE BOGUS, THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED FROM THE IN VESTORS THROUGH BANKING CHANNELS CANNOT BE REGARDED AS UNDISCLOSED INCOME U/S. 68 OF OUR ABOVE CLIENT. RELIANCE IS MADE ON THE RATIO OF THE JUDGEME NT OF HON' BLE SUPREME COU RT IN CIT V/S LOVELY EXPORTS P.LTD. (2008) 216 CTR 195 (SC). 4. UNDER THE CIRCUMSTANCES WE REQUEST YOU NOT TO MAKE ADDITION U/S 68 OF THE ACT FOR THE SHARE APPLICATION MONEY RECEIVED FROM THE ABOVE INVESTORS'. 7 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. 10. ASSESSEE'S ABOVE SUBMISSION HAS BEEN C AREFULLY CONSIDERED BUT THE SAME IS NOT ACCEPTABLE AS THE STATEMENT RECORDED C ONSEQUENT TO ACTION U/S 132, SHRI PRAVEEN KUMAR JAIN HAS CATEGORICALLY CONFIRMED THAT HE AND HIS COMPANY CONTROLLED BY HIM DID NOT ENGAGE IN ANY BUSINESS ACTIVITY AND THEY WERE P ROVIDING ACCOMMODATION ENTRY IN PURCHASE, LONG TERM CAPITAL GAIN AND UNSECURED LOAN AND SHARE APPLICATION MONEY. IN THE INFORMATION GATHERED BY THE INVESTIGATION WING FROM THE PREMISES OF SHRI PRAVEEN KUMAR JAIN, IT IS SEEN THAT THE ASSESSEE IS ONE OF THE BENEFICIARY OF THE ACCOMMODATION ENTRIES IN RESPECT OF SHARE APPLICATION MONEY FROM THE ABOVE REFERRED CONCERNS. IN VIEW OF THIS THE ALLEGED SHARE APPLICATION MONEY OF RS. 70,00,000/ - IS ASSESSED TO TAX AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT, 196 1. 11 . AGAINST THE ABOVE ORDER THE ASSESSEE APPE A LED BEFORE THE LEARNED CIT - A. 12 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) F OUND THAT ASSESSEE HAS SUBMITTED ALL THE NECESSARY DETAILS. HENCE , HE FOUND THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF THE SHARE APPLICANTS HAS BEEN PROVED. HE FURTHER REFERRED TO VARIOUS DECISIONS FROM HONBLE JURISDICTIONAL HIGH COURT AND HONBLE APEX COURT ON THIS SUBJECT. HE ALSO HELD THAT IF THERE WERE SOME MORE ENQUIRIES REQUIRED THE ASSESSING OFFICER HAS FAILE D TO DO THE SAME. THE LEARNED CIT - A CONCLUDED AS UNDER : 5.3.23. THUS, IT HAS TO BE SAID THAT THE APPELLANT HAD DONE EVERYTHING IN ITS POWER TO PROVE THE 3 INGREDIENTS REQUIRED TO PROVE THE SATISFACTORY NATURE OF THE LOAN TRANSACTIONS. IN THESE CIRCUMSTANCE S, THE ONUS HAD SHIFTED TO THE AO. IF THE AO WAS STILL NOT SATISFIED, HE HAD THE OPTION OF MAKING INQUIRIES FROM THE ALLEGED SHARE APPLICANTS BY SUMMONING THEM. HOWEVER, AS SEEN FROM THE ASSESSMENT ORDER, HE DID NOT ANY SUCH THING. FURTHER, IF THE AO WAS N OT 8 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. SATISFIED WITH WHAT HAD BEEN GIVEN TO HIM BY THE APPELLANT, HE WAS DUTY BOUND TO SPECIFY WHAT MORE MATERIAL HE WANTED THE APPELLANT TO FURNISH. THE AO NEVER ASKED FOR ANY FURTHER MATERIAL, THOUGH TIME AND AGAIN THE APPELLANT ASKED IN THEIR SUBMISSIONS. THIS LEADS TO THE INESCAPABLE CONCLUSION THAT THE AO COULD NOT THINK OF ANY FURTHER MATERIAL TO ASK FOR AND PROCEEDED TO REJECT THE APPELLANT'S CLAIMS, RELYING UPON THE INFORMATION/MATERIAL, WHICH HE NEVER EVEN BROUGHT TO THE NOTICE OF THE APPELLANT FOR AN Y REBUTTAL. THE UNEQUIVOCAL CONCLUSION IS THAT ALL T H E 3 INGREDIENTS HAVING BEEN SATISFIED, .THE IMPUGNED SHARE APPLICATION MONEY HAVE T O BE TREATED AS EXPLAINED ' SATISFACTORILY AND THE AO WAS NOT JUSTIFIED IN HAVING DISREGARDED OVERWHELMINGLY SUPPORTIVE EVIDENCE. NO COGENT MATERIAL WAS ADDUCED BY HIM TO SHOW THAT LOANS WERE UNEXPLAINED. THEREFORE, THE IMPUGNED ADDITION OF UNDER THE HEADING SHARE APPLICATION MONEY AS MADE IN THE ASSESSMENT ORDER, FAILS ON SEVERAL COUNTS - (1) RELIANCE ON EVIDENCE THAT IS T OTALLY INADEQUATE; (2) FAILURE TO MAKE AVAILABLE INCRIMINATING MATERIAL (REP ORTS, STATEMENTS, ETC.) FORMING BASIS FOR ACTION BY THE AO; (3) FAILURE TO GIVE DUE OPPORTUNITY TO THE APPELLANT TO CROSS EXA MINE WITNESSES, W HOSE STATEMENT MIGHT HAVE BEEN RELIEF UPON; AND (4) FAILURE TO RECOGNIZE THE SATISFACTORY NATURE OF THE EXPLANATION /EVIDENCE TENDERED BY THE APPELLANT TO EXPLAIN IDENTITY OF CREDITORS, CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE LOAN TRANSACTIONS. HENCE THE IMPUGNED ADDITION CANNOT BE SUSTAINED. 13. AGAINST THE ABOVE ORDER , THE ASSESSEE IS IN APPEAL BEFORE THE ITAT . 14. W E HAVE HEARD BOTH THE C OUNSEL AND PERUSED THE RECORDS. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE SHARE APPLICANTS IN THIS CASE ARE BO GUS COMPAN IES BEING OPERATED BY SHRI PRAVEEN KUMAR JAIN . HE SUBMITTED THAT BEFORE THE I NVESTIGATION DEPARTMENT SHRI PRAVEEN KUMAR JAIN HAS CLEARLY ADMITTED THAT THE SHARE APPLICANTS COMPANIES WE RE CONTROLLED BY HIM AND THESE COMPANIES USED TO INDULGE IN PROVIDING BO GUS ACCOMMODATION ENTRIES, WHICH IN THE PRESENT CASE IS IN THE FORM OF SHARE APPLICATION AT PREMIUM OF RS.9 0 FOR SHARE OF RS.10. HENCE , THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT CIT - A HAS GRIEVOUSLY ERRED IN DISREGARDING THIS BASIC FACT. LEARN ED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IF THAT LEARNED CIT - 9 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. A WAS OF THE OPINION THAT SOME MORE ENQUIRY WAS REQUIRED IN THIS CASE , IT WAS INCUMBENT UPON THE LEARNED CIT - A TO CARRY OUT THE SAME AS HIS POWERS ARE COTERMINOUS WITH THAT OF THE ASSESSING OFFICER. 15. PER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER'S OF THE LEARNED CIT - A. HE SUBMITTED THAT ASSESSEE HAS FULLY DISCHARGED ITS ONUS. HE REFERRED TO SEVERAL CASE LAWS ON THE SUBJECT FROM THE HONBLE HIGH COURT AS WELL AS HON BLE APEX COURT. HE FURTHER SUBMITTED THAT SHRI PRAVEEN KUMAR JAIN HAS DULY RETRACTED HIS STATEMENT. HENCE , LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ADDITION HAS RIGHTLY BEEN DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 16. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT THE BASIS OF THE REVENUE'S ACTION IN THIS CASE IS THAT THE ASSESSEE COMPANY HAS RECEIVED ACCOMMODATION ENTRIES IN THE GUISE SHARE APPLICATION MONEY INCLUDING HUGE SHARE PREMIUM. THESE WERE F OUND TO HAVE BEEN RECEIVED FROM BOGUS/SHELL COMPANIES OPERATED BY SHR I PRAVEEN KUMAR JAIN. THE PERPETRATORS OF THESE BOGUS COMPANIES HAD ACCEPTED BEFORE THE REVENUE THAT THESE COMPANIES WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES IN THE GUISE OF SHARE APPLICATION MONEY, UNSECURED LOAN, LONG - TERM CAPITAL GAIN. IN A NUMBER OF CASES , SUCH COMPANIES HAVE EVEN ACCEPTED BEFORE THE REVENUE THAT THEY ARE ONLY PROVIDING ACCOMMODATION ENTRY AND THE IR INCOME IS ONLY 1 TO 2 PERCENT OF THE TURNOVER. THUS , THE BA CKGROUND OF BOGUS ACCOMMODATION ENTRY CANNOT BE IGNORED BY PUTTING ON BLINKERS AND ONLY LOOKING AT THE DOCUMENTS BEING SUBMITTED. NONE OF THE CASE LAWS REFERRED BY THE LEARNED CIT - A AND THE LEARNED 10 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. COUNSEL OF THE ASSESSEE WERE NOT IN CONNECTION WITH BOGUS ACCOMMODATION ENTRY PROVIDER. AS A MATTER OF FACT HONBLE HIGH COURT S DECISION IN THE CASE OF M AJOR M ETALS LTD. VS. UNION OF INDIA [2013] 359 ITR 450 (BOM) HAS UPHELD THE SETTLEMENT COMMISSION'S ORDER WHERE IN UNJUSTIFIED HUGE SHARE PREMIUMS WHERE ADDED A S BOGUS ACCOMMODATION ENTRY. THE HONBLE APEX COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) AND SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) HAS ALSO EXPOUNDED THAT REVENUE SHOULD NOT PUT UPON BLINKERS AND SHOULD LOOK INTO THE SURRO UNDING CIRCUMSTANCES AND THE T HEORY OF PREPONDERANCE OF PROBABILITY WAS ALSO UPHELD. HONOURABLE JUDICIAL HIGH COURT IN THE CASE OF SANJAY BIMALCHAND JAIN VS. PR. CIT [2018] 89 TAXMANN.COM 196 (BOM) HAS UPHELD THE ADDITION AS BOGUS LONG - TERM CAPITAL GAIN IN LIGHT OF HUGE IMPROBABLE INCREASE IN SHARE PRICES OF LITTLE - KNOWN COMPANIES ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITY. THE HONBLE APEX COURT IN THE CASE OF S ECURITY E XCHANGE B OARD OF INDIA V S. RAKHI T RADING PVT. LTD. IN CIVIL APPEAL NO. 1969 OF 2 011 AND OTHERS VIDE ORDER DATED 0 8 .02. 2018 IN THE CONTEXT OF BOGUS SHARE MARKET ACTIVITY HAS NOTED IN PARAGRAPH 42 THE HONBLE APEX COURT DECISIONS WHERE IT WAS HELD THAT IN ABSENCE OF DIRECT PROOF OF MEETING OF MINDS ELSEWHERE IN SYNCHRONIZED TRANSACTIONS , THE CASE SHOULD BE ONE OF PREPONDERANCE OF PROBABILITIES AS FAR AS ADJUDICATION OF CIVIL LIABILITIES ARISING OUT OF THE VIOLATION OF THE ACT OR THE PROVISION OF THE REGULATION IS CONCERNED. FURTHER HONOURABLE APEX COURT IN PARAGRAPH 4 , 6 OF THE SAME DECI SION HAS OBSERVED THAT IT WILL BE TOO NAIVE TO VIEW ALL SUCH TRANSACTIONS DEHORSE THE SURROUNDING CIRCUMSTANCES. 11 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. 17. ON THE TOUCHSTONE OF ABOVE SAID HONOURABLE APEX COURT DECISION , IN OUR CONSIDERED OPINION , LEARNED CIT - A HAS TOTALLY ERRED IN IGNORING THE BACKGROUND OF THIS CASE WHEREIN IT HAS BEEN FOUND THAT THE ASSESSEE COMPANY HAD RECEIVED BOGUS ACCOMMODATION ENTRIES IN THE FORM OF HUGE UNJUSTIFIED SHARE PREMIUMS FROM BOGUS/SHELL COMPANIES OPERATED AND CONTROLLED BY NOTED BOGUS ENTRY OPERATOR SHRI PRAVEE N K UMAR JAIN. THE LEARNED CIT - A HAS HELD THAT ONLY THE DOCUMENTS BEING SHOWN SHOULD BE CONSIDERED. HE HAS FURTHER HELD THAT ASSESSING OFFICER HAS NOT MADE ANY FURTHER ENQUIRY. IN OUR CONSIDERED OPINION , THE FACTS AND CIRCUMSTANCES OF THE CASE CLEARLY MANDA TED THAT WHERE THE LEARNED CIT - A WAS NOT SATISFIED WITH THE ENQUIRY MADE BY THE ASSESSING OFFICER, H E SHOULD HAVE HI MSELF MADE THE NECESSARY ENQUIRY. IT IS SETTLED LAW THAT POWERS OF LEARNED CIT - A ARE COTERMINOUS WITH THAT OF THE ASSESSING OFFICER. FURTHER MORE HONOURABLE APEX COURT HAS HELD IN THE CASE OF KAPOORCHAND SHRIMAL [1981] 131 ITR 451 (SC) THAT IT IS THE DUTY OF THE APPELLATE AUTHORITY TO CORRECT THE ERRORS IN THE ORDER'S OF THE AUTHORITIES BELOW. 18. HENCE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE , WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN THIS CASE NEEDS TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER. ASSESSING OFFICER IS DIRECTED TO MAKE FURTHER ENQUIRIES BY ISSUING NECESSARY SUMMONS TO THE S HELL COMPANIES OPERATED BY SHRI PRAVEE N KUMAR JAIN W HO ARE SAID TO HAVE CONTRIBUTED SHARE APPLICATION MONEY IN ASSESSEE COMPANY. THIS IS NECESSARY IN VIEW OF THE BACKGROUND FINDING OF REVENUE THAT THE SHARE APPLICANT S COMPANIES ARE BOGUS COMPANIES. FURTHERMORE , THOUSANDS OF SUCH COMPANIES HAV E BEEN STRUCK FROM 12 ITA NO. 3240/MUM/2017 (A.Y 2012 - 13) ITO VS. M/S. VINAYLENE TEXTILE INDUSTRIES PVT. LTD. THE REGIST ER OF COMPANIES. THE ASSESSING OFFICER SHOULD ALSO MAKE REFERENCE TO THE ACTION TAKEN BY THE F INANCE M INISTRY IN THIS REGARD , AS TO WHETHER NAME S OF THESE COMPANIES APPEAR IN THE LIST OF SUCH STRUCK OFF COMPANIES. IN THE RESULT , THE ISSUE STANDS REMITTED TO THE FILE OF THE ASSESSING OFFICER. ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH KEEPING IN MIND OUR OBSERVATIONS HERE IN ABOVE. NEEDLESS TO ADD ASSESSEE SHOULD BE GRANTED ADEQUA TE OPPORTUNITY OF BEING HEARD. 1 9 . IN THE RESULT , THIS APPEAL FILED BY THE R EVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23.02.2018 SD/ - SD/ - ( RAM LAL NEGI ) (S HAMIM YAHYA ) / J UDICI AL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 23.02.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI