M/s Chauhan Polypack Pvt.Ltd., Kanpur V. ITO, Kanpur

ITA 327/LKW/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75176 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-12-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 02-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.327/LKW/2011 A.Y.:2000 - 2001 M/S CHAUHAN PLOYPACK (P) LTD., KANPUR. PAN:AABCC3509Q VS. INCOME TAX OFFICER - 6(1), KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY SHRI Y. P. SRIVASTAVA, D.R. DATE OF HEARING 16/12/2013 DATE OF PRONOUNCEMENT 3 0 /01/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT ( A) - I, KANPUR DATED 01/03/2011 FOR ASSESSMENT YEAR 2000 - 2001. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT OUT OF 31 PERSONS BEING SUBSCRIBER FOR SHARES IN THE COMPANY 27 PERSONS HAVE NOT GIVEN PROPER EXPLANATION IN RESPECT OF THEIR SOURCE OF INCOME AND CREDITWORTHINESS. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE APPELLANT FAILED IN FURNISHING EXPLANATION FOR CREDITS IN APPELLANT'S ACCOUNT FOR ALLOTMENT OF SHARES OF THE COMPANY INSPITE OF TH E FACT THAT CONFIRMATION IN RESPECT OF ALL THE SUBSCRIBERS FOR ALLOTMENT OF SHARES WERE FILED BEFORE THE ASSESSING OFFICER AND WERE ALSO DIRECTLY CONFIRMED BY THE 2 ASSESSING OFFICER IN COMPLIANCE OF ENQUIRY MADE U/S.133(6). 3. THAT T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE EVIDENCES SUBMITTED BY THE APPELLANT ARE INSUFFICIENT FOR EXPLANATIONS OF CREDITS ON THE BASIS OF TEST LAID DOWN IN THE CASES CIT ED IN THE ORDER WITHOUT ALLOWING ANY OPPORTUNITY TO THE APPELLANT TO DISTINGUISH THE CASE LAWS RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPEAL) WHILE REJECTING THE APPELLANTS CONTENTIONS MADE BEFORE HIM. 4. THAT THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ONUS WAS NOT DISCHARGED BY THE APPELLANT IN RELATION TO CREDIT ENTRIES FOR SHARE APPLICATIONS WITHIN THE MEA N ING OF SECTION 68 OF THE INCOME TAX ACT AND SINCE THE ASSESSI NG OFFICER REACHED A FINDING THAT THE SHARE APPLICANTS CANNOT BE TREATE D AS GENUINE TRANSACTIONS OF SHARE SUBSCRIPTION TO THE COMPANY, CASE LA W CITED BY THE APPLICANT IS NOT APPLICABLE TO THE FACTS AND CIRC U MSTAN C ES OF T H E CASE OF THE APPELLANT. 5. T H AT THE LEARNED CIT(A) HAS ERRED ON FACTS AN D IN LAW IN REJECTING THE APPELLANTS CONTENTIONS AND EVIDENCE PLACED BEFORE THE ASSESSING OFFICER AS WELL AS THE 1ST APPELLATE AUTHORITY TO PROVE THE GENUINENESS OF SHARE APPLICATION M O N E Y RECEIVE D BY THE APPELLANT COMPANY AND THE ORDER REJECTING THE APPEAL IS NOT BASED ON CORRECT INTERPRETATION OF LAW AND PROPER APPRECIATION OF FACTS OF THE CASE. 6. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) REJECTING THE GROUNDS OF APPEAL RAISED BY THE APPELLANT IS ARBITRARY, ILLEGAL, NOT SUSTAINABLE, LIABLE TO BE QUASHED. 3. BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NOTED BY LEA RNED CIT(A) IN PARA 5 AND 6 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 3 5. THE BASIS OF ADDITION MADE BY AO AFTER EXAMINING 21 PARTIES FOR ASSESSMENT YEAR 2000 - 01 CAN BE SUMMARIZED AS FOLLOWS : - (A) DUE TO PEAK AGRICULTURAL SEASON, IT IS NOT POSSIBLE TO BRING THE SHAREHOLDERS FROM FAR OFF PLACES AND PRODUCE THEM FOR VERIFICATION AND EXAMINATION AT THIS STATE. (B) THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE ABOVE PARTIES AND HAS ALSO NOT BEEN ABLE TO FURNISH SUFFICIENT EVIDENCE TO PROVE THE CREDIT WORTHINESS OF ABOVE TWENTY ONE PERSONS. (C) T HE ASSESSEE HAS BEEN GIVEN SUFFICIENT TIME AND OPPORTUNITY RIGHT FROM 18.11.2003 TO 8.3.2004 I.E. ALMOST 5 MONTHS TO PROVE THE IDENTITY OF THE PERSONS AND ALS O PROVE THE CREDIT WORTHINESS OF THESE PARTIES, BUT THE ASSESSEE HAS UTTERLY FAILED TO PRODUCE THESE ALLEGED SHAREHOLDERS, IT MEANS THAT THERE IS SOMETHING WHICH THE ASSESSEE IS HIDING AND NOT PRODUCING THESE ALLEGED SHAREHOLDERS BEFORE ME WHEN ALREADY SUF FICIENT TIME WAS GIVEN TO THE ASSESSEE. (D) ALL THE REPLIES ARE HAND WRITTEN ON SIMILAR PATTERN. NONE OF THE PERSONS EXPLAINED ANY SOURCE OF INCOME OR PRODUCE ANY DOCUMENTARY EVIDENCE TO PROVE THE AVAILABILITY OF CASH WITH THEM. IN MANY CASES, ALLEGED SHAREHOLDERS BORROWED MONEY FOR THEMSELVES FROM BANK. (E) BEFORE DEALING WITH THE INDIVIDUAL CASES, IT WOULD BE APPROPRIATE TO DISCUSS SOME COMMON FACTORS RELATING TO ALL SUCH INDIVIDUAL PERSONS WHO HAVE APPLIED FOR SHARES AND ACCORDINGLY ARE STATED TO HA VE INVESTED MONEY AS SHARE APPLICATION MONEY WITH THE ASSESSEE. (F) IN THE CASE OF SHRI OM PAL SINGH, S/O SHRI BHIM SINGH, NOTICE U/S 133(6) DATED 22.1.2004 SENT . ...................................................................... . TRANSACTION APPE ARS TO BE DUBIOUS AND NON - GENUINE. (G) IN THE CASE OF SHRI RAM KHILARI, S/O SHRI RAGHUBAR SINGH, NOTICE DATED 22.01.2004 HAS BEEN RETURNED BACK IN THIS 4 OFFICE WITH THE REMAR K 'NO SUCH PERSON IN THIS VILLAGE' ............................... TRANSACTION IS NON GENUINE. (H) SHRI MAHESH CHANDRA, RAJESH KUMAR AND SHRI SURESH CHANDRA, ALL THE SONS OF SHRI CHIRANJI LAL ................................................................................BOR ROWED MONEY FROM BANK CANNOT BE IN A POSITION T O INVEST IN SHARES IN PRIVATE COMPANY. (I) SHRI PAL SINGH, JASWANT SINGH AND BACCHU SINGH S/O SHRI EDAL SINGH - FROM PERUSAL OF KISAN BAHI NO.162988 . .......................INVESTING A HUGE MONEY IN A PRIVATE COMPANY SEEMS TO HAVE BEEN FABRICATED ONE. (J ) SHRI JAI PRAKASH S/O SHRI SHIV NARAIN, THE ALLEGED SHAREHOLDER TOOK SHARES OF 95000 DURING THE YEAR 99 - 2000........................ .......................... THEY THEMSELVES WERE BORROWING FUNDS FROM THE BANK. (K) SHRI SURESH C HANDRA S/O SHRI CHIRANJEEV LAL ....................................... .......................... INVESTING IN THE ASSESSEE COMPANY COULD NOT BE ESTABLISHED. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, SINCE THE ASSESSEE HAS FAILED TO PRODUCE ALL THE ABOVE PERSONS FOR CROSS EXAMINATION AND TO PROVE THE GENUINENESS OF ABOVE MENTIONED ALLEGED SHARE APPLICATION MONEY ALSO IN THE LIGHT OF THE DISCUSSION MADE IN FEW OF THE CASES AS ABOVE, THE SUM OF RS.25,70,000/ - IS HEREBY TREATED AS UNEXPLAINED CASH C REDIT INTRODUCED BY THE ASSESSEE COMPANY IN ITS BOOKS U/S 68 OF THE I. T.ACT, 1961 AND ACCORDINGLY ADDED TO THE INCOME OF THE ASSESSEE. 6. THE AO HAS DISCUSSED IN DETAIL IN RESPECT OF RECORDED STATEMENT OF 11 SHAREHOLDERS IN THE FOLLOWING MANNER : - (A) IT WAS STATED THAT SHRI RAM PRATAP SINGH PURCHA S ED 800 SHARES OF RS.80,000/ - . ..................................................... ......................................................... HE HAS NO BANK ACCOUNT AND KEEPS ALL HIS EARNINGS AT HIS HOUSE. FROM PERUSAL OF KHATAUNI, IT IS REVEALED THAT AGRICULTURAL HOLDINGS IS IN JOINT NAMES OF 9 PERSONS AND THE SAME IS SITUATED IN INTERIOR VILLAGE FAR FROM MAIN TRANSPORT SYSTEM. THUS, THE AVERAGE YIELD 5 WILL HARDLY BE ABLE TO CONTRIBUTE SO MUCH AMOUNT TO INVE ST A SUM OF RS.80,000/ - IN THE ASSESSEE COMPANY. HE HAS DEPOSITED RS.20,000/ - ON 17.2.2000, RS.20,000/ - ON 19.2.2000 AND AGAIN RS.20,000/ - ON 20.2.2000. IT IS DOUBTFUL THAT A PERSON RESIDING AT GURGAON COULD NOT MANAGE TO COME KANPUR THREE TIMES IN FOUR DAY FOR PURCHASE OF SHARES. IN VIEW OF ABOVE FACTS, IT IS CLEAR THAT HE HAS NO DOCUMENTARY EVIDENCE REGARDING SALE OF AGRICULTURAL PRODUCE OF WORTH RS.1,00, 000 / - NOR HAVING ANY EVIDENCE REGARDING SOURCE OF HIS SAVING OF RS. 80, 000 / - . CONSIDERING THE FACTS OF THE CASE, SHRI RAM PRATAP SINGH HAS NO CAPACITY TO INVEST A SUM OF RS.80,000/ - IN THE ASSESSEE COMPANY AND THEREFORE, THE ALLEGED SHARE APPLICATION MONEY ALLEGEDLY INVESTED BY SHRI RAM PRATAP SINGH IS UNPROVED AND UNEXPLAINED IN ABSENCE OF ANY DOCUMENTARY EVIDENCE. THUS, THE CREDIT WORTHINESS OF SHRI RAM PRATAP SINGH AND GENUINENESS OF THE TRANSACTION IS UNPROVED AND THEREFORE, THE AMOUNT OF RS.80,000/ - IS BEING ADDED TO THE INCOME OF THE ASSESSEE COMPANY U/S 68 OF THE I. T.ACT, 1961 AS UNEXPLAINED CASH CRED IT. (B) IT WAS STATED THAT SHRI KISHAN PAL SINGH INVESTED RS.72,000/ - IN 720 SHARES OF THE ASSESSEE COMPANY AND MADE PAYMENT ALL IN CASH OUT OF AGRICULTURAL - INCOME .......................................................................................... . .... ............................................................................................... ............................................................................................ IN VIEW OF ABOVE FACTS, THE CREDITWORTHINESS OF SHRI KISHAN PAL SINGH AND GENUINENESS OF THE TRANSACTION IS UNPROVED AND THEREFORE, THE AMOUNT OF RS.72,000/ - IS BEING ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF I. T.ACT, 1961 AS UNPROVED AND UNEXPLAINED CASH CREDIT. (D) IT WAS STATED THAT SHRI BRIJENDRA SINGH INVEST ED RS.80,000/ - IN 800 SHARES OF THE ASSESSEE COMPANY AND MADE PAYMENT ALL IN CASH OUT OF AGRICULTURAL - INCOME .............................................................. THUS, IT C LEARLY SHOWS THAT SHRI BRIJENDRA SINGH HAS NO CAPACITY TO INVEST RS.80,000/ - IN SHARES. THEREFORE, THE CREDITWORTHINESS OF THE ALLEGED SHAREHOLDER IS NOT PROVED. THUS, THE ALLEGED SHARE APPLICATION MONEY INVESTED IN THE ASSESSEE COMPANY REMAINS UNEXPLAINED AND UNPROVED AND IS BEING ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED MONEY U/S 68 OF THE I. T.ACT, 1961. 6 (E) IT WAS STATED THAT SHRI JOGINDRA SINGH SUBSCRIBED TO 900 SHARES FOR A SUM OF RS.90,000/ - IN THE ASSESSEE COMPANY. THE PAYMENT HAS BEEN MADE IN CASH AND THE SOURCE IS AGRICULTURAL INCOME. ....................................... .............................. THUS, THE ALLEGED INVESTMENT IS NOT RELIABLE IN VIEW OF THE ABOVE STATED FACTS AND REMAINS UNEXPLAINED AND UNPROVED. HENCE CREDIT WORTHI NESS OF THE SHRI JOGINDRA SINGH AND GENUINENESS OF THE TRANSACTION IS UNPROVED. THEREFORE, A SUM OF RS.90,000/ - IS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED U/S 68 OF THE I.T.ACT, 1961 AS UNPROVED AND UNEXPLAINED CASH CREDIT. (F) IT WAS STATED TH AT SHRI VIJAY PAL SINGH PURCHASED 1000 SHARES FOR RS.1,00,000/ - DURING THE YEAR UNDER CONSIDERATION. HE HAS MADE INVESTMENT ALL IN CASH AND OUT OF HIS AGRICULTURAL INCOME. .............................. ................................................................. ............................................................................................... .................................................................... AS PER COPY OF KHATAUNI, AGR ICULTURAL HOLDING IS IN THE NAMES OF 5 PERSONS JOINTLY. MERELY FILING OF COPY OF KHATAUNI AS EVIDENCE OF AGRICULTURAL HOLDING IS NOT A SUFFICIENT PROOF TO PROVE THE CAPACITY OF A INVESTOR. BEFORE ME SHRI VIJAY PAL SINGH HAS FILED NO EVIDENCE WHATSOEVER TO SHOW WHETHER ANY AGRICULTURAL OPERATIONS WERE CONDUCTED ON THE SO CALLED AGRICULTURAL LAND AND SUBSEQUENT SALE OF AGRICULTURAL PRODUCE, IF ANY. IT IS NOT EVEN CLEAR WHETHER LAND IS FIT FOR AGRICULTURAL OPERATIONS OR IS SIMPLY A BARREN LAND. IN VIEW OF THE ABOVE STATED FACTS, IT CLEAR WHETHER SHRI VIJAI PAL SINGH HAS SUFFICIENT MONEY TO INVEST IN SHARES OF A PRIVATE COMPANY WHEN HE DID NOT HAVE ANY AGRICULTURAL LAND AT THE RELEVANT PERIOD OF TIME. HENCE, THE CREDIT WORTHINESS OF THE SHRI VIJAI PAL SINGH AND GENUINENESS OF THE TRANSACTION REMAINS UNEXPLAINED AND UNPROVED. THEREFORE, THE AMOUNT OF RS.1,00,000/ - IS BEING ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED U/S 68 OF THE I. T.ACT, 1961 AS UNEXPLAINED CASH CREDIT. (G) IT WAS STATED THAT SHRI MAHIPAL SINGH PURCHASED 900 SHARES OF THE ASSESSEE COMPANY FOR A SUM OF RS.90,000/ - DURING THE YEAR UNDER CONSIDERATION AND HE HAS MADE PAYMENT ALL IN CASH AND OUT OF HIS AGRICULTURAL INCOME AND PAST SAVINGS.. ....................... .... .. ......................... ....... .................. .............. .. ............................................................................................... 7 ............................................................................................. . SINCE, HE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE REGARDING SALE OF AGRICULTURAL PRODUCE AS WELL AS EVIDENCE OF HAVING SUCH HUGE AMOUNT AT HOME. HIS CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION IS UNPROVED AND UNEXPLAINED AND THEREFORE, THE AMOUNT OF RS.90, 000 / - IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE I.T. ACT, 1961 AS UNEXPLAINED AND UNPROVED CASH CREDIT. (H) IT WAS STATED THAT SHRI SUSHIL SINGH PURCHASED 1200 SHARES OF THE ASSESSEE COMPANY FOR A SUM OF RS.1,20,000/ - AND THE MO NEY WAS INVESTED IN CASH OUT OF AGRICULTURAL INCOME AND PAST SAVINGS . .............................................................................. ................. .................................................................... ........................... ............................................................................................... ......................................................................................... SINCE, SHRI SUSHIL SINGH COULD NOT FURNISH ANY EVIDENCE REGARDING SAVINGS OF HUGE AMOUNT OF RS. 1,20, 000 / - AT HOME. HE STATEMENT CANNOT BE REGARDED AS RELIABLE. HENCE CAPACITY FOR INVESTING IN SHARES OF A PRIVATE COMPANY IS NOT PROVED. THEREFORE, CREDIT WORTHINESS OF SHRI SUSHIL SINGH AND GENUINENES S OF THE TRANSACTION IS UNPROVED AND UNEXPLAINED. THEREFORE, THE AMOUNT OF RS.1,20,000/ - IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE I. T.ACT, 1961. (I) IT WAS STATED THAT SHRI ANIL SINGH PURCHASED 750 SHARES OF THE AS SESSEE COMPANY FOR A SUM OF RS. 75, 000 / - DURING THE YEAR UNDER CONSIDERATION AND HAS MADE PAYMENT ALL IN CASH OUT OF HIS AGRICULTURAL INCOME . .................................... .... ................................................................................. .............. ..... .......................................................................................... ............................................................................................... ....................................................................... .................... HENCE, THE ALLEGED INVESTMENT IS NOT RELIABLE, IN VIEW OF MEAGER SAVING OF RS.6, 000 / - ANNUALLY WHICH THE ASSESSEE SUPPOSED TO MEET HIS OWN DAY TO DAY REQUIREMENT. THUS, THE CREDIT WORTHINESS OF SHRI ANIL SINGH AND GENUINENESS OF THE TRANSACTION REMAINS UNEXPLAINED AND UNPROVED. THEREFORE, THE AMOUNT OF RS.75, 000 / - IS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE I. T.ACT, 1961 AS UNEXPLAINED CASH CREDIT. 8 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US . 5. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT IN PARA 8 OF HIS ORDER, COMPLETE DETAILS HAVE BEEN NOTED BY LEARNED CIT(A) AS PER WHICH, IT IS NOTED BY HIM THAT IN MOST OF THE CASES, CONFIRMATIONS WERE FILED AND ALSO CONFIRMED BY THE SHARE APPLICANTS IN REPLY TO NOTICE ISSUED BY THE ASSESSING OFFICER U/S 133(6 ) OF THE ACT. HE ALSO POINTED OUT THAT IN MANY CASES, THE SHARE APPLICANTS APPEARED AND STATEMENT WAS RECORDED BY THE ASSESSING OFFICER IN ADDITION TO FILING OF CONFIRMATION. HE SUBMITTED THAT UNDER THESE FACTS, THE ADDITION IS NOT JUSTIFIED. HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (I) COMMISSIONER OF INCOME - TAX VS BHARAT ENGINEERING AND CONSTRUCTION CO. [1972] 83 ITR 187 (SC) (II) ANIS AHMAD AND SONS VS COMMISSIONER OF INCOME - TAX (APPEALS) [2008] 297 ITR 441 (SC) (III) JAYA SECURITIES LTD. VS. COM MISSIONER OF INCOME - TAX - II, KANPUR [2008] 166 TAXMAN 0007 (IV) J.R. SECURITIES LIMITED VS. CIT ALLAHABAD HIGH COURT DATED 15 TH MAY 2007. (COPY FILED) 6. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT S CITED BY LEARNED A.R. OF THE ASSESSEE. FIRST OF ALL , WE WOULD LIKE TO OBSERVE THAT IN THE PRESENT CASE, THE DISPUTE IS REGARDING VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER U/S 6 8 OF THE ACT. IT IS BY NOW A SETTLED POSITION OF LAW THAT IN RESPECT OF CASH CREDIT, THE ASSESSEE HAS TO FULFILL THREE INGREDIENTS I.E. IDENTITY OF CREDITOR, HIS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. IN THE PRESENT CASE, THE BASIS OF ADDIT ION MADE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE COULD NOT 9 ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. THESE ADDITIONS WERE UPHELD BY LEARNED CIT(A) WITH THE FINDING THAT THE ASSESSEE HAS FAILED TO ESTABL ISH THE CREDITWORTHINESS OF THE CREDITORS AND IT IS ALSO HELD BY HIM THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS IN MOST OF THE CASES BECAUSE THE TRANSACTIONS ARE IN CASH. 7.1 BEFORE US, RELIANCE HAS BEEN PLACED ON VARIO US JUDICIAL PRONOUNCEMENTS BUT THE CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS COULD NOT BE ESTABLISHED. AS PER SO CALLED CONFIRMATIONS OF THE CREDITORS AVAILABLE IN THE PAPER BOOK, WE FIND THAT MOST OF THESE PERSONS ARE RESI D ENT OF GURGAON, HARYANA AND THE AMOUNT IS STATED TO BE GIVEN BY THEM IN CASH FOR SHARE APPLICATION. NO COPY OF SHARE APPLICATION FORM HAS BEEN FURNISHED IN THE PAPER BOOK. COPY OF M EMORANDUM & ARTICLE S OF ASSOCIATION OF THE ASSESSEE COMPANY HAS ALSO NOT BEEN FURNISHED TO SHOW AS TO WHETHER THE AUTHORIZED CAPITAL OF THE COMPANY IS SUFFICIENT OR NOT TO RECEIVE SHARE APPLICATION MONEY OF THIS MAGNITUDE . WE ALSO FIND THAT THESE PERSONS ARE CLAIMING THAT THEY HAVE TRAVELLED ALL THE WAY FROM GURGAON, HARYANA TO KANPUR FOR DEPOSITING THIS MONEY IN CASH WITH THE ASSESSEE COMPANY AND THAT TOO ON MANY OCCASIONS AFTER VERY SMALL GAP. FOR EXAMPLE, AS PER THE CONFIRMATION AVAILABLE ON PAGE 42 & 43 OF THE PAPER BOOK, SHRI MAHESH CHAND HAS STATED THAT HE HAS GIVEN RS. 10,000/ - ON 22/05/99 AND FURTHER RS.40,000/ - ON 27/05/99. IT MEANS THAT HE HAS COME TO KANPUR ON 22 ND MAY AND AGAIN ON 27 TH MAY, WHICH APPEARS TO BE HIGHLY IMPROBABLE. SIMILAR IS THE SITUATION IN VARIOUS OTHER CASES ALSO. FOR EXAMPLE, AS PER THE CONFIRMATION AVAILABLE ON PAGE NO. 51 & 52 OF THE PAPER BOOK, SHRI MAHESH SINGH HAS STATED THAT HE HAS GIVEN RS.20,000/ - ON 26/03/2 000 AND RS.20,000/ - ON 28/03/2000 AND FURTHER RS.20,000/ - ON 31/03/2000. IT MEANS THAT HE HAS COME FROM GURGAON TO KANPUR ON 26 TH MARCH AND THEN WENT BACK AND AGAIN CAME ON 28 TH MARCH AND WENT BACK AND AGAIN CAME ON 31 ST MARCH. HE HAS STATED THAT HIS INC OME 10 IS FROM AGRICULTURE AND IT IS NOT SHOWN THAT THE AMOUNT STATED TO HAVE BEEN GIVEN ON 28 TH MARCH AND 31 ST MARCH WAS NOT AVAILABLE WITH HIM ON 26 TH MARCH AND, THEREFORE, HE HAS GIVEN THIS AMOUNT OF RS.50,000/ - IN THREE INSTALLMENTS ON THREE DATES BY TRAV ELLING BETWEEN GURGAON TO KANPUR IN SHORT SPAN. AGAIN ON PAGES 56, 57 & 58 OF THE PAPER BOOK, IT IS STATED BY SHRI SANGRAM SINGH, SMT. KAPOORI DEVI AND SHRI PAL SINGH THAT THEY HAVE GIVEN MONEY ON 26 TH MARCH, 28 TH MARCH & 31 ST MARCH. SINCE SIMILAR FACTS ARE THERE IN OTHER CASES ALSO, WE ARE NOT GIVING THOSE DETAILS HERE FOR THE SA K E OF BREVITY BUT UNDER THESE FACTS, THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THESE PERSONS CANNOT BE SAID TO HAVE BEEN ESTABLISHED. 7.2 NOW IN THE LIGHT OF ABOVE FACTS, AS NARRATED ABOVE, WE EXAMINE THE APPLICABILITY OF VARIOUS JUDICIAL PRONOUNCEMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 7.3 THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE O F COMMISSIONER OF INCOME - TAX VS BHARAT ENGINEERING AND CONSTRUCTION CO. (SUPRA). WE WOULD LIKE TO OBSERVE THAT THIS IS NOT THE CASE OF A LIMITED COMPANY BUT THIS IS A CASE OF PARTNERSHIP FIRM AND THEREFORE, THIS JUDGMENT OF HON'BLE APEX COURT HAS NO APPLICATION IN THE PRESENT CASE. 7.4 THE SECOND JUDGMENT IS OF HON'BLE APEX COURT RENDERED IN THE CASE OF ANIS AHMAD AND SONS VS COMMISSIONER OF INCOME - TAX (APPEALS) (SUPRA). THIS JUDGMENT IS ALSO N OT IN THE CASE OF A LIMITED COMPANY BUT IN THE CASE OF PARTNERSHIP FIRM AND THEREFORE, THIS JUDGMENT IS NOT ALSO APPLICABLE IN THE FACTS OF THE PRESENT CASE. 7.5 THE THIRD JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF JAYA SECURITIES LTD. VS. COMMISSIONER OF INCOME - TAX - II, KANPUR (SUPRA). 11 IN THIS CASE, THE DECISION IS BASED ON THE BASIS OF A JUDGMENT OF DELHI HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS STELLAR INV ESTMENT LTD. [1991] 192 ITR 287 (DEL) WHICH HAS BEEN UPHELD BY HON'BLE APEX COURT AS PER THE JUDGMENT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS STELLER INVESTMENT LTD. [2001] 251 ITR 263 (SC) . THE RELEVANT PORTION OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT HAS BEEN REPRODUCED BY HON'BLE ALLAHABAD HIGH COURT IN PARA 6 OF ITS ORDER. THERE , IT IS NOTED BY HON'BLE DELHI HIGH COURT THAT THE SHARES ISSUED MAY BE IN THE NAME OF SOME BOGUS SHAREHOL DE RS. IN THE PRESENT CASE, EVEN THIS IS NOT ESTABLISHED BY THE ASSESSEE BEFORE US THAT THE ASSESSEE COMPANY WAS HAVING SUFFICIENT AUTHORIZED CAPITAL OR NOT. EVEN THE COPY OF SHARE APPLICATION BY THOSE PERSONS CLAIMED TO HAVE PROVIDED SHARE APPLICATION MO NEY HAD NOT BEEN BROUGHT ON RECORD BEFORE US OR BEFORE ANY OF THE AUTHORITIES BELOW. EVEN THE RECEIPT OF MONEY IN CASH FROM THESE PERSONS AS CLAIMED IS NOT ESTABLISHED BECAUSE THE CLAIM THAT THESE PERSONS TRAVELLED FROM GURGAON TO KANPUR IN SUCH A SHORT S PAN IS HIGHLY IMPROBABLE. U NDER THESE FACTS, IT IS NOT ESTABLISHED THAT THE AMOUNT IN QUESTION SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE, IS IN FACT RECEIVED FROM THESE PERSONS ON ACCOUNT OF SHARE APPLICATION MONEY. THEREFORE, THIS JUDGMENT OF HON'BLE A LLAHABAD HIGH COURT RENDERED IN THE CASE OF JAYA SECURITIES (SUPRA) AND HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME - TAX VS STE LLER INVESTMENT LTD. (SUPRA) ARE NOT APPLICABLE IN THE PRESENT CASE. 7. 6 RELIANCE WAS ALSO PLACED ON THE TRIBUNAL DECISION RENDERED IN THE CASE OF BHAGWATI INDUSTRIES LIMITED VS. INCOME TAX OFFICER REPORTED IN 2009 (13) MTC 76 (TRIB.). IN THAT CASE , THESE FACTS WERE NOTED BY THE TRIBUNAL THAT ASSESSING OFFICER CALLED THE ASSESSEE TO PRODUCE ALL THE SO CA LLED SHAREHOLDERS BUT SOME OF THE APPLICANTS WERE NOT AVAILABLE ON THE ADDRESS GIVEN IN THE APPLICATION FORM. HENCE AS PER THE FACTS OF THAT CASE, COPY OF THE SHARE APPLICATION WAS BROUGHT ON RECORD BEFORE THE AUTHORITIES BELOW AND ALSO 12 BEFORE THE TRIBUNA L WHEREAS IN THE FACTS OF THE PRESENT CASE , NO SUCH COPY OF SHARE APPLICATION HAS BEEN BROUGHT ON RECORD BEFORE US OR ANY OF THE AUTHORITIES BELOW AND, THEREFORE, THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE AMOUNT IN QUESTION WAS RECEIVED BY THE ASSESSEE FROM THOSE PERSONS ON ACCOUNT OF SHARE APPLICATION MONEY. IN THE PRESENT CASE, THE ASSESSEE HAS NOT BROUGHT ON RECORD THE MEMORANDUM & ARTICLE S OF ASSOCIATION OF THE ASSESSEE COMPANY TO ESTABLISH THAT THE ASSESSEE WAS HAVING SUFFICIENT AUTHORIZED CAPITAL TO RECEIVE SUCH HUGE AMOUNT OF SHARE APPLICATION MONEY. EVEN THE BALANCE SHEET OF THE ASSESSEE COMPANY IS NOT BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE WAS HAVING SUFFICIENT AUTHORIZED CAPITAL TO RECEIVE THE SHARE APPLICATION MONEY OF THIS MAGNITUD E. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT ANY ALLOTMENT OF SHARES WAS MADE TO THESE PERSONS IN THE CURRENT YEAR OR IN ANY OF THE SUBSEQUENT YEAR S AGAINST THIS AMOUNT CLAIMED TO HAVE BEEN RECEIVED BY THE ASSESSEE FROM THESE PERSONS. HENCE, TH IS TRIBUNAL DECISION IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. 7. 7 WE WOULD ALSO LIKE TO POINT OUT THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA 6 OF ASSESSMENT ORDER THAT THE ASSESSEE WAS ASKED TO PRODUCE THE SHARE APPLICANTS ON VARIOUS DATES I.E. 18/112003, 25/11/2003, 02/12/2003, 05/01/2004, 09/01/2004, 16/01/2204, 23/01/2004, 30/01/2004, 23/02/2004 AND 08/03/2004. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 27/02/2004 AND FURTHER VIDE LETTER DATED 12/03/2004 THAT DUE TO PEAK AGRICULTURAL SEASON, IT IS NOT POSSIBLE TO BRING SHAREHOLDERS FROM FAR O F PLACES AND PRODUCE THEM FOR VERIFICATION AND EXAMINATION. NOW WE FIND THAT AS PER THE DETAILS AVAILABLE IN THE PAPER BOOK, IT IS CLAIMED THAT THESE PERS ONS HAVE VISITED KANPUR TO DEPOSIT SHARE APPLICATION MONEY IN THE MONTH OF DECEMBER 1999, JANUARY 2000, FEBRUARY 2000 AND MARCH 2000 ALSO. WHEN THESE PERSONS CAN VISIT KANPUR DURING DECEMBER 1999, JANUARY, FEBRUARY AND MARCH 2000 THEN HOW AND WHY NONE OF THESE PERSONS CAN VISIT KANPUR DURING 13 SAME MONTHS OF 2003 AND 2004. THIS GOES TO SHOW THAT NO EFFORT WAS MADE BY THE ASSESSEE TO PRODUCE THESE PERSONS AND IT CAN BE SAID THAT THE ASSESSEE AVOIDED TO PRODUCE THESE PERSONS. 8 . CONSIDERING ALL THESE FACTS, A S PER WHICH THE ASSESSEE HAS NOT PRODUCED THESE PERSONS AND IT IS CLAIMED THAT ALL THESE PERSONS HAVE COME ALL THE WAY FROM GURGAON, HARYANA TO KANPUR TO DEPOSIT SHARE APPLICATION MONEY IN CASH WITH THE ASSESSEE COMPANY ON VARIOUS DATES WITH VERY SMALL INT ERVAL AND THE FACT THAT THE ASSESSEE HAS NOT PRODUCED THE MEMORANDUM & ARTICLE OF ASSOCIATION , ITS BALANCE SHEET AS WELL AS COPY OF SHARE APPLICATIONS ETC., IT HAS TO BE ACCEPTED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY OF THESE PERSONS AND T HEIR CREDITWORTHINESS AND THE ASSESSEE HAS ALSO FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AND, THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WA S PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H JANUARY, 2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR