DCIT, New Delhi V. M/s K.G. Finvest (P) Ltd., New Delhi

ITA 3424/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3242 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Invalid notice; Accommodation entries
• Section: 153A; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NOS.3429, 4709, 3424/DEL/2013 ASSESSMENT YEARS : 2006-07 TO 2008-09 ITA NO.3423/DEL/2013 ASSESSMENT YEAR : 2009-10 ITA NO.4206/DEL/2014 ASSESSMENT YEAR : 2010-11 DCIT, CENTRAL CIRCLE-13, NEW DELHI. VS. K.G. FINVESTS PVT. LTD., 10, 3 RD FLOOR, SATYA NIKETAN, NEW DELHI. PAN: AAACK4032H ITA NOS.999/DEL/2014, 2684, 4437 & 4500/DEL/2013 ASSESSMENT YEARS : 2005-06 TO 2008-09 ITA NO.3980/DEL/2013 ASSESSMENT YEAR : 2009-10 K.G. FINVESTS PVT. LTD., 10, 3 RD FLOOR, SATYA NIKETAN, NEW DELHI. PAN: AAACK4032H VS. ACIT, CENTRAL CIRCLE-13, NEW DELHI. ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 2 ASSESSEE BY : SHRI SALIL KAPOOR, SHRI SUMIT LALCHANDANI & MS ANANYA KAPOOR, ADVOCATES DEPTT. BY : SHRI NAVEEN CHANDRA, CIT, DR DATE OF HEARING : 25.04.2017 DATE OF PRONOUNCEMENT : 28.04.2017 ORDER PER BENCH: THESE 10 APPEALS, SOME OF WHICH ARE ALSO CROSS APP EALS, RELATE TO THE ASSESSMENT YEARS 2005-06 TO 2010-11. SINCE SOME OF THE ISSUES RAISED IN THESE APPEALS ARE COMMON, W E ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEARS : 2005-06 TO 2008-09 2. FOR THE A.Y. 2005-06, ONLY THE ASSESSEE IS IN APPEAL AND FOR THE A.YS. 2006-07 TO 2008-09 THE ASSESSEE AND T HE REVENUE BOTH HAVE FILED CROSS APPEALS AGAINST THE ORDERS OF THE CIT(A). 3. THE ASSESSEE, IN ALL OF ITS APPEALS, HAS CHALLEN GED THE ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER TO INITIATE ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 3 PROCEEDINGS U/S 153A. THE REVENUE HAS FILED CROSS A PPEALS CHALLENGING THE ORDERS OF THE CIT(A) DELETING CERTA IN ADDITIONS ON MERITS. 4. FIRSTLY, WE ARE TAKING UP THE LEGAL ISSUE RAI SED IN THE APPEALS OF THE ASSESSEE, CHALLENGING THE JURISDICTI ON OF THE AO IN ISSUING NOTICES U/S 153A AND THE CONSEQUENTIAL F RAMING OF ASSESSMENTS. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. SIMILAR ISSUE WAS RAISED BY THE ASSESSEE IN ITS APPEAL FOR THE ASSESSMENT YEAR 2004-05 ALSO. SU CH APPEAL ALSO CAME TO BE HEARD SIMULTANEOUSLY WITH THE INSTA NT APPEALS. BOTH THE SIDES HAVE CHOSEN NOT TO MAKE ANY SEPARATE ARGUMENTS BUT ADOPTED THEIR RESPECTIVE ARGUMENTS MADE ON THIS ISSUE FOR THE SAID EARLIER ASSESSMENT YEAR 2004-05. WE HAVE P ASSED A SEPARATE ORDER FOR THE A.Y. 2004-05 (ITA NOS.6759 & 6662/DEL/2013), HOLDING THAT THE ASSESSING OFFICER WRONGLY ASSUMED JURISDICTION U/S 153A OF THE ACT WITHOUT T HERE BEING ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 4 ANY INITIATION OF SEARCH ON THE ASSESSEE U/S 132 OF THE ACT. RESULTANTLY, ALL THE PROCEEDINGS FLOWING FROM SUCH INVALID NOTICE U/S 153A, INCLUDING THE PASSING OF THE ASSES SMENT ORDER, HAVE BEEN QUASHED. AS THE FACTS AND THE LEGAL POSI TION IN APPEALS FOR THE INSTANT YEARS ARE ADMITTEDLY SIMILA R TO THOSE FOR THE A.Y. 2004-05, FOLLOWING THE VIEW TAKEN IN OUR O RDER FOR THE EARLIER YEAR, WE HOLD THAT THE ASSUMPTION OF JU RISDICTION U/S 153A FOR THE YEARS UNDER CONSIDERATION IS NOT VALID . THE ASSESSMENTS FRAMED FOR THESE YEARS ARE ALSO RESULTA NTLY QUASHED. 6. IN VIEW OF OUR DECISION ON THE LEGAL ISSUE RAI SED BY THE ASSESSEE, THERE REMAINS NO NEED TO DEAL WITH THE ME RITS OF THE APPEALS. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND THOSE OF THE ASSESSEE ARE ALLOWED. ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 5 ASSESSMENT YEAR : 2009-10 8. BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE I N APPEAL AGAINST THE ORDER PASSED BY THE CIT(A) FOR THIS YEA R ON 19.03.2013. 9. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SHOWED TO HAVE RECEIVED SHARE CAPITAL AND SHARE PRE MIUM FROM FOUR PARTIES AS UNDER:- S.NO. NAME SHARE CAPITAL (RS.) SECURITIES PREMIUM (RS.) TOTAL AMOUNT (RS.) 1. ACUMEN PAPER & BINDERS PVT. LTD. 2,00,000/- 18,00,000/- 20,00,000/- 2. LION AUTO COMPONENTS PVT. LTD. 2,50,000/- 22,50,000/- 25,00,000/- 3. SAPPHIRE COMMERCIAL PVT. LTD. 1,50,000/- 13,50,000/- 15,00,000/- 4. STARTRANS LOGISTICS PVT. LTD. 1,50,000/- 13,50,000/- 15,00,000/- TOTAL 7,50,000/- 67,50,000/- 75,00,000/- 10. THE ASSESSEE WAS CALLED UPON TO FURNISH THE D ETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPPORT OF THE IDENTITY ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 6 AND CREDIT WORTHINESS OF THE LENDERS AND ALSO THE G ENUINENESS OF THE TRANSACTIONS. IN RESPONSE, THE ASSESSEE SUB MITTED CERTAIN DETAILS, WHICH INDICATED THE POSITION AS UNDER:- S.NO. NAME ASSESSMENT YEAR INCOME RETURNED COMMENTS 1. ACUMEN PAPER & BINDERS PVT. LTD. 2009-10 RS.64,116/- 2. LION AUTO COMPONENTS PVT. LTD. - - NO DETAILS FILED 3. SAPPHIRE COMMERCIAL PVT. LTD. 2006-07 AND 2007- 08 NIL FOR BOTH THE YEARS 4. STARTRANS LOGISTICS PVT. LTD. 2009-10 RS.54,955/- 11. THE ASSESSING OFFICER OBSERVED THAT THE INVESTO R COMPANIES HAD SHOWN ONLY A NOMINAL INCOME AS COMPAR ED TO INVESTMENTS MADE BY THEM; NO DETAILS WERE SUBMITTED IN THE CASE OF LION AUTO COMPONENTS PVT. LTD. TO PROVE THE CREDIT WORTHINESS OF THE INVESTOR; AND NO EVIDENCE WAS FIL ED TO PROVE THAT M/S SAPHIRE COMMERCIAL PVT. LTD. HAD INCOME/CA PITAL TO MAKE INVESTMENT DURING THE FINANCIAL YEAR. ON GOIN G THROUGH ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 7 THE ASSESSEES BALANCE SHEET, IT WAS NOTICED THAT T HE MONEY RECEIVED AS SHARE CAPITAL WAS PASSED ON TO OTHER UN LISTED AND NON-DESCRIPT COMPANIES. THE AO FOUND THAT THE ASSES SEE WAS FACILITATING INTRODUCTION OF UNACCOUNTED MONEY THRO UGH ITS BOOKS OF ACCOUNT. THE MODUS OPERANDI WAS NOTED, BE ING, AN ENTRY OPERATOR OPERATING A NUMBER OF ACCOUNTS IN TH E SAME BANK/BRANCH OR IN DIFFERENT BRANCHES IN THE NAME OF COMPANIES/FIRMS AND INDIVIDUALS. HE FOUND THAT THER E WAS AN ELABORATE NETWORK OF TRANSACTIONS INVOLVED IN THE E NTRY RACKET. THESE ACCOUNTS, IN THE OPINION OF THE ASSESSING OFF ICER, WERE USED FOR ROUTING THE MONEY FOR PROVIDING ACCOMMODAT ION ENTRIES. COMING TO THE FACTS OF THE CASE, THE ASSE SSING OFFICER OBSERVED THAT NO REASONABLE PERSON WOULD INVEST AN AMOUNT EQUAL TO TWICE ITS ANNUAL EARNING IN AN UNKNOWN CO MPANY WITHOUT GETTING ANY BENEFIT IN RETURN. TAKING INTO CONSIDERATION THE HUMAN PROBABILITIES AND THE JUDGM ENTS OF THE HON'BLE SUPREME COURT IN CIT VS. DURGA PRASAD MORE (1971) ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 8 82 ITR 540 (SC) AND SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC), THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE BROUGHT IN ITS OWN UNACCOUNTED FUNDS INTO THE BOOKS THROUGH THE MEDIUM OF SHARE CAPITAL AND SHARE PREMI UM TO THE TUNE OF RS.75 LAC. THE SAME WAS TREATED AS UNEXPLAI NED AND ADDED TO THE ASSESSEES TOTAL INCOME U/S 68 OF THE ACT. 12. DURING THE COURSE OF FIRST APPELLATE PROCEEDI NGS, THE ASSESSEE FILED APPLICATION UNDER RULE 46A ENCLOSING CERTAIN ADDITIONAL DOCUMENTS TO SUBSTANTIATE THAT THE AMOUN TS CREDITED IN ITS BOOKS OF ACCOUNT WERE GENUINE. THE LD. CIT( A) ISSUED DIRECTIONS TO THE ASSESSING OFFICER FOR MAKING NECE SSARY INQUIRIES IN THE MATTER. THE AO SUBMITTED A REPORT DATED 05.12.2012 INDICATING THE RESULT OF INQUIRY CONDUCT ED BY HIM AS UNDER:- S. NO. NAME RESULT OF ENQUIRY BY THE A.O. SHARE CAPITAL (RS.) SECURITIES PREMIUM (RS.) TOTAL AMOUNT (RS.) 1. ACUMEN PAPER & BINDERS PVT. LETTER RETURNED WITH REMARK NO 2,00,000/- 18,00,000/- 20,00,000/- ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 9 LTD. SUCH FIRM AT SUCH ADDRESS 2. LION AUTO COMPONENTS PVT. LTD. LETTER RETURNED WITH REMARK NO SUCH FIRM AT SUCH ADDRESS 2,50,000/- 22,50,000/- 25,00,000/- 3. SAPPHIRE COMMERCIAL PVT. LTD. LETTER RETURNED WITH REMARK NO SUCH FIRM AT SUCH ADDRESS 1,50,000/- 13,50,000/- 15,00,000/- 4. STARTRANS LOGISTICS PVT. LTD. NO REPLY RECEIVED TILL DATE 1,50,000/- 13,50,000/- 15,00,000/- TOTAL 7,50,000/- 67,50,000/- 75,00,000/- 13. THE ASSESSEE RESPONDED TO THE REMAND REPORT BY FURNISHING ITS EXPLANATION WHICH HAS BEEN RECORDED ON PAGES 4- 6 OF THE IMPUGNED ORDER. CONSIDERING ALL THESE MAT ERIAL, THE LD. CIT(A) HELD THAT A SUM OF RS.15 LAC WAS GENUINE LY RECEIVED FROM M/S STARTRANS LOGISTICS PVT. LTD. AS REGARDS THE OTHER TWO AMOUNTS, NAMELY, RS.25 LAC AND RS.35 LAC, THE L D. CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY IF THESE T WO INVESTORS GENUINELY MADE THE INVESTMENT. BOTH THE SIDES HAVE COME UP ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 10 IN APPEAL BEFORE US. WHEREAS, THE ASSESSEE IS AGGR IEVED AGAINST THE RESTORATION OF THE ISSUE BY THE LD. CIT (A) OF THE ADDITION ON ACCOUNT OF SHARE CAPITAL AND SHARE PREM IUM TO THE EXTENT OF RS.60 LAC RATHER THAN DELETING IT, THE RE VENUE IS AGGRIEVED AGAINST THE DELETION OF ADDITION TO THE T UNE OF RS.15 LAC AND ALSO RESTORATION BY THE LD. CIT(A). THE CAS E OF THE DEPARTMENT IS THAT THE LD. FIRST APPELLATE AUTHORIT Y COULD NOT HAVE RESTORED THE ADDITION FOR A FRESH ADJUDICATION . 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT MATERIAL ON RECORD. WE AGREE IN PRINCIPLE WITH THE LD. DR THAT THE LD. CIT(A) CANNOT SEND THE MATTER BACK TO THE AO FOR A FRESH DECISION. SECTION 251 LISTS THE POWERS OF THE CIT(A) IN DISPOSING AN APPEAL. SUB-SECTION (1)(A) OF SEC. 251 PROVIDES THAT THE COMMISSIONER (APPEALS), IN AN APPEAL AGAIN ST AN ORDER OF ASSESSMENT, MAY CONFIRM, REDUCE, ENHANCE OR ANNU L THE ASSESSMENT . THUS, THE POWER OF RESTORATION TO THE AO IS NO MORE AVAILABLE TO THE LD. CIT(A). HE HAS TO TAKE A DECISION AT ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 11 HIS OWN END. IN THAT VIEW OF THE MATTER, THE DECIS ION OF THE LD. CIT(A) IN RESTORING THE ISSUE TO THE AO FOR A FRESH DECISION CANNOT BE UPHELD. 15. IT IS NOTICED FROM THE ASSESSMENT ORDER FOR TH IS YEAR AS WELL AS THE EARLIER YEARS THAT THE ASSESSEE IS SHOW ING TO HAVE RECEIVED SHARE CAPITAL WITH A HUGE SHARE PREMIUM AN D SIMULTANEOUSLY PASSING IT ON TO OTHER UNLISTED COMP ANIES. THE LD. DR SUBMITTED THAT SUCH TOTAL AMOUNT ALLEGEDLY R ECEIVED BY THE ASSESSEE AND THEN PASSED ON TO OTHER NON-DESCRI PT COMPANIES DURING THE YEARS UNDER CONSIDERATION IS M ORE THAN RS.2.50 CRORE. IT CAN BE SEEN FROM THE TOTAL AMOUNT SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR AT RS.75 LAC THAT SHARE CAPITAL IS ONLY TO THE TUNE OF RS.7.50 A ND SHARE PREMIUM IS RS.67.50 LAC. SUCH A HUGE PREMIUM HAS B EEN SHOWN IN THE BACKGROUND OF THE TOTAL INCOME RETURNE D BY THE ASSESSEE AT RS.59,041 FOR THE CURRENT YEAR. ALMOST SIMILAR POSITION IS OBTAINING FOR THE OTHERS YEARS. THE ASS ESSEE DID NOT ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 12 FURNISH COMPLETE DETAILS TO THE ASSESSING OFFICER F OR PROVING THE GENUINENESS OF THE TRANSACTIONS AND CREDIT WORT HINESS OF THE PARTIES. CERTAIN SKETCHY DETAILS WERE FILED WHI CH DID NOT CONVINCE THE ASSESSING OFFICER. AN ATTEMPT WAS MAD E BEFORE THE LD. CIT(A) TO FURNISH FURTHER DETAILS. DURING THE REMAND PROCEEDINGS, ALL EFFORTS MADE BY THE ASSESSING OFFI CER WENT IN VAIN AS THE LETTER SENT TO THE THREE COMPANIES, NAM ELY, ACUMEN PAPER & BINDERS PVT. LTD., LION AUTO COMPONENTS PVT . LTD., AND SAPPHIRE COMMERCIAL PVT. LTD. WERE RETURNED WIT H THE POSTAL REMARKS NO SUCH FIRM AT SUCH ADDRESS AND F OR THE LAST COMPANY, NAMELY, STARTRANS LOGISTICS PVT. LTD., NO REPLY WAS RECEIVED TILL THE SENDING OF THE REMAND REPORT. MER E FACT THAT THE ASSESSEE PLACED ON RECORD BANK STATEMENTS, CONF IRMATIONS, CERTIFICATES OF INCORPORATION, MEMORANDUMS OF ASSOC IATION, ETC. OF THE COMPANIES WHO ALLEGEDLY INVESTED IN THE ASSE SSEES SHARES AT A HUGE PREMIUM, DOES NOT IN ITSELF JUSTIF Y THE GENUINENESS OF THE TRANSACTION. APART FROM THE PAP ER TRAIL, THE ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 13 ASSESSEE IS SUPPOSED TO SATISFY THE ASSESSING OFFIC ER ABOUT THE GENUINENESS OF THE TRANSACTION. IT CAN BE SEEN THAT THE LD. CIT(A) HAS DELETED THE ADDITION TO THE TUNE OF RS.1 5 LAC BEING THE AMOUNT RECEIVED AS SHARE CAPITAL WITH SHARE PRE MIUM FOR M/S STARTRANS LOGISTICS PVT. LTD., SIMPLY ON THE GR OUND THAT THE LETTER SENT TO THIS PARTY WAS NOT RETURNED BY POSTA L DEPARTMENT. THIS, IN OUR CONSIDERED OPINION, IS HARDLY SUFFICIE NT ENOUGH TO PROVE THE NECESSARY INGREDIENTS U/S 68 OF THE ACT. THE IMPUGNED ORDER CANNOT BE COUNTENANCED. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER IS SET ASIDE AND T HE ADDITION OF RS.75 LAC IS RESTORED TO THE FILE OF ASSESSING O FFICER FOR A FRESH ADJUDICATION. THE LD. AR, IN ALL FAIRNESS, C ANDIDLY ACCEPTED THE COURSE OF RESTORATION TO THE AO FOR A FRESH DECISION AS PER LAW. ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 14 16. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEAR 2010-11 17. THE ONLY ISSUE RAISED BY THE REVENUE IN ITS APP EAL IS AGAINST THE DELETION OF ADDITION OF RS.40 LAC MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED RECEIPT OF UNEXPLAINED SHARE CAPITAL ALONG WITH SHARE PREMIUM. THE FACTS OF THE CASE ARE THAT, LIKE EARLIER YEARS, THE ASSES SEE SHOWED TO HAVE RECEIVED SHARE CAPITAL (INCLUDING SHARE PREMIU M) OF RS.20 LAC FROM M/S WIZARD INTERNATIONAL LTD. AND RS.20 LA C FROM M/S CRM SYSTEMS PVT. LTD.). ON BEING CALLED UPON TO FU RNISH THE DETAILS OF THE AMOUNT RECEIVED AND EVIDENCE IN SUPP ORT OF IDENTITY AND CREDIT WORTHINESS OF THE LENDER AND AL SO THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE SIMPL Y FURNISHED A REPLY WHICH HAS BEEN SUMMARIZED BY THE ASSESSING OFFICER BY WAY OF A TABLE ON PAGE 5 OF THE ASSESSMENT ORDER , REPRODUCED BELOW:- ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 15 S.NO. NAME ASSESSMENT YEAR INCOME RETURNED 1 M/S WIZARD INTERNATIONAL LTD. 2010-11 NOT SUBMITTED 2 M/S CRM SYSTEMS PVT. LTD. 2010-11 RS.36,192/- 18. ON THE BASIS OF THE DETAILS FILED BY THE ASSESS EE, THE ASSESSING OFFICER OBSERVED THAT THE INVESTOR COMPAN IES HAD SHOWN ONLY A NOMINAL INCOME AS COMPARED TO INVESTME NTS MADE BY THEM; NO DETAILS WERE SUBMITTED IN THE CASE OF WIZARAD INTERNATIONAL LTD. TO PROVE THE CREDIT WORT HINESS OF THE INVESTOR. ON GOING THROUGH THE ASSESSEES BALA NCE SHEET, IT WAS NOTICED THAT THE MONEY RECEIVED AS SHARE CAPITA L WAS PASSED ON TO OTHER UNLISTED AND NON-DESCRIPT COMPAN IES. THE AO FOUND THAT THE ASSESSEE WAS FACILITATING INTRODU CTION BY UNACCOUNTED MONEY THROUGH ITS BOOKS OF ACCOUNT. TH E MODUS OPERANDI WAS NOTED, BEING, AN ENTRY OPERATOR OPERAT ING A NUMBER OF ACCOUNTS IN THE SAME BANK/BRANCH OR IN DI FFERENT ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 16 BRANCHES IN THE NAME OF COMPANIES/FIRMS AND INDIVID UALS. HE FOUND THAT THERE WAS AN ELABORATE NETWORK OF TRANSA CTIONS INVOLVED IN THE ENTRY RACKET. THESE ACCOUNTS, IN TH E OPINION OF THE ASSESSING OFFICER, WERE USED FOR ROUTING THE MO NEY FOR PROVIDING ACCOMMODATION ENTRIES. COMING TO THE FAC TS OF THE CASE, THE ASSESSING OFFICER OBSERVED THAT NO REASON ABLE PERSON WOULD INVEST AN AMOUNT EQUAL TO TWICE ITS ANNUAL E ARNING IN AN UNKNOWN COMPANY WITHOUT GETTING ANY BENEFIT IN R ETURN. TAKING INTO CONSIDERATION THE HUMAN PROBABILITIES A ND THE JUDGMENTS OF THE HON'BLE SUPREME COURT IN CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC) AND SUMATI DAYAL VS. CIT (1995) 214 ITR 801 (SC), THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE ASSESSEE BROUGHT IN ITS OWN UNACCOUNTED FUNDS INTO THE BOOKS THROUGH THE MEDIUM OF SHARE CAPITAL AND SHARE PREMIUM TO THE TUNE OF RS.40 LAC. THE SAME WAS TREATED AS UNEXPLAINED AND ADDED TO THE ASSESSE ES TOTAL ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 17 INCOME U/S 68 OF THE ACT. HOWEVER, THE LD. CIT(A) D ELETED THIS ADDITION, AGAINST WHICH THE REVENUE HAS COME UP BEF ORE US. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE LD. CIT(A) CONSIDERED CERTAIN DETAILS AS FILED BEFORE THE ASSE SSING OFFICER AND ALSO CERTAIN FRESH DOCUMENTS FILED BEFORE HIM, WHICH FACT EMERGES FROM PARA B. SUPPORTING DOCUMENTS ON PAGE 16 OF THE IMPUGNED ORDER. THE ADDITION WAS DELETED BY NO TICING THAT NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE ASSESSI NG OFFICER DESPITE THE RELEVANT DETAILS FILED BY THE A SSESSEE. WE ARE NOT CONVINCED WITH THE VIEW CANVASSED BY THE LD . CIT(A) FOR THE REASON THAT HE HAS HIMSELF RECORDED ON PAGE 16 OF THE IMPUGNED ORDER THAT: HOWEVER, CERTAIN OTHER DOCUME NTS ARE ALSO ENCLOSED WHICH FORM PART OF THE DEPARTMENTAL R ECORDS OR PUBLIC DOCUMENTS. WE ARE UNABLE TO FIND ANY LOGIC IN THE IMPUGNED ORDER DELETING THE ADDITION ON THE GROUND THAT NO INDEPENDENT ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER, ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 18 WHEN THE LD. CIT(A) HAS HIMSELF RECORDED THAT CERTA IN FRESH DOCUMENTS WERE ALSO FILED BEFORE HIM WHICH WERE NOT THERE BEFORE THE AO. 20. WE HAVE NOTICED ABOVE THAT THE ASSESSEE WAS SHO WING TO HAVE RECEIVED SHARE CAPITAL WITH A HUGE SHARE PREMI UM AND SIMULTANEOUSLY PASSING IT ON TO OTHER UNLISTED COMP ANIES. THIS PRACTICE IS NOT CONFINED ONLY TO THE YEAR UNDER CON SIDERATION, BUT CAN BE SEEN IN ALL THE YEARS ARGUED BEFORE US S TARTING FROM THE A.Y. 2004-05. THE LD. CIT(A) WAS SWAYED BY CERT AIN DOCUMENTS FILED BY THE ASSESSEE AND DELETED THE ADD ITION. AT THE COST OF REPETITION, WE STATE THAT ESCAPE FROM S ECTION 68 CAN BE MADE NOT ONLY BY SHOWING THE IDENTITY BUT ALSO B Y SIMULTANEOUSLY PROVING THE CAPACITY OF THE DEPOSITO R AND ALSO THE GENUINENESS OF TRANSACTION. ALL THE THREE INGRE DIENTS NEED TO BE SIMULTANEOUSLY SATISFIED. MERELY BECAUSE A PR OPER PAPER WORK HAS BEEN DONE, IT WILL NOT DISCHARGE THE ONUS ON THE ASSESSEE UNDER SECTION 68 FROM FURTHER ESTABLISHING THE ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 19 GENUINENESS OF TRANSACTION. IN THIS REGARD, THE LD. DR HAS RIGHTLY RELIED ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN CIT VS. YOUTH CONSTRUCTION PVT. LTD. (2013) 357 ITR 197 (DEL) , IN WHICH IT HAS BEEN HELD THAT THE SOLE FACT THAT SHARE APPLICANTS HAD ESTABLISHED THEIR IDENTITY BY FILING CONFIRMATION LETTERS AND COPIES OF THEIR INCOME-TAX RETURNS IS N OT SUFFICIENT FOR THE PURPOSE OF DISCHARGING CREDIT WORTHINESS OF SHARE APPLICANTS AND GENUINENESS OF TRANSACTIONS. SIMILA R VIEW HAS BEEN TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. ULTRA MODERN EXPORTS PVT. LTD. (2013) 40 TAXMANN.CO M 458 (DEL). IN THIS CASE ALSO, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE RECEIVED SHARE APPLICATION MONEY FROM NINE APPLICANTS. UPON ENQUIRY, FIVE OUT OF NINE NOTICES ISSUED TO SHARE APPLICANTS U/S 133 (6) WERE RETURNED UNSERVED . FURTHER MATERIAL INDICATED THAT APPLICANTS HAD VERY MEAGER INCOME. THE ASSESSING OFFICER INVOKED SECTION 68 AND MADE A DDITION. THE TRIBUNAL, RELYING ON DOCUMENTARY EVIDENCE SUCH AS PAN, ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 20 PARTICULARS OF ADDRESSES, ACCOUNTS AND BANK STATEME NTS OF SHARE APPLICANTS, ETC., CAME TO HOLD THAT CREDIT WORTHINE SS OF SHARE APPLICANTS WAS PROVED AND RESULTANTLY, THE ADDITION WAS DELETED. SETTING ASIDE THE TRIBUNAL ORDER, THE HON 'BLE HIGH COURT HELD THAT THE TRIBUNAL FELL INTO ERROR IN HOL DING THAT THE ASSESSING OFFICER COULD NOT HAVE ADDED BACK THE AMO UNT U/S 68 OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN ONASSIS AXLES (P) LTD. VS. (2014) 44 TAXMANN.COM 408 (DEL) . AGAIN, IN CIT VS. N R PORTFOLIO PVT. LTD. (2013) 263 CTR 456 (DEL) , THE ASSESSEE RECEIVED SHARE APPLICATION MONEY FOR WHICH ADDITION WAS MADE U/S 6 8. THE ADDITION WAS DELETED ON THE GROUND OF DOCUMENTARY E VIDENCE. SETTING ASIDE THE TRIBUNAL ORDER, THE HON'BLE HIGH COURT RESTORED THE ADDITION. A DETAILED DISCUSSION HAS B EEN MADE IN THIS JUDGMENT LAYING DOWN THE DUTY OF THE ASSESSEE IN ESTABLISHING THE GENUINENESS OF TRANSACTION. IT HAS BEEN LAID DOWN THAT MERE FURNISHING THE NAME, ADDRESS, PAN AN D ENTRIES ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 21 IN THE REGISTRAR OF COMPANIES, ETC., DO NOT LEAD TO THE DISCHARGE OF ONUS U/S 68. THE HON'BLE DELHI HIGH C OURT IN CIT VS. JANSAMPARK ADVERTISING AND MARKETING PVT. LTD. (2015) 375 ITR 373 (DEL) DID NOT AGREE WITH THE ROUTING OF TRANSACTION THROUGH BANKING CHANNEL AS NECESSARILY PROVING THE CREDIT WORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIONS. THIS JUDGMENT CLEARLY PROVES THAT TH E VERY FACT THAT THE TRANSACTIONS ARE ROUTED THROUGH BANKING CH ANNEL WOULD NOT PER SE LEND GENUINENESS TO THE TRANSACTION. IT HAS BEEN FURTHER LAID DOWN IN THIS CASE THAT IF THE ASSESSIN G OFFICER HAS NOT CONDUCTED PROPER ENQUIRY, THE ADDITION CANNOT B E DELETED SIMPLY ON THE GROUND THAT THE ASSESSING OFFICER FAI LED TO CONDUCT ENQUIRY. IN SUCH CIRCUMSTANCES, A DUTY HAS BEEN CAST UPON THE APPELLATE AUTHORITIES TO CONSIDER THE EVID ENCE AS TO WHETHER THE ADDITION WAS RIGHTLY CALLED FOR OR NOT. FOR SIMILAR PROPOSITION, THE LD. DR HAS RELIED ON CERTAIN OTHER JUDGMENTS IN WHICH THE GENUINENESS OF TRANSACTIONS HAS NOT BE EN ACCEPTED ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 22 MERELY ON THE BASIS OF DOCUMENTS FURNISHED BY THE A SSESSEE, WHOSE REFERENCE IS BEING SKIPPED FOR AVOIDING REPET ITION. 21. THE LD. AR CONTENDED THAT ALL THE NECESSARY MA TERIAL WAS BEFORE THE AO AND IF HE FAILED TO CONDUCT PROPER IN QUIRY, THEN NO FAULT CAN BE FOUND WITH THE LD. CIT(A) IN DELETI NG THE ADDITION. FOR THIS PROPOSITION, HE RELIED ON THE JU DGMENT OF THE HON'BLE DELHI HIGH COURT IN CIT VS. GANGESHWARI METAL (2014) 361 ITR 10 (DEL). IN OUR CONSIDERED OPINION, THIS JUDGMENT DOES NOT FULLY SUPPORT THE FACTUAL POSITIO N OBTAINING IN THE INSTANT CASE. WE HAVE NOTICED ABOVE THAT TH E ASSESSEE DID NOT FURNISH COMPLETE INFORMATION BEFORE THE ASS ESSING OFFICER. THE LD. CIT(A) HAS CATEGORICALLY RECORDED THIS FACT ON PAGE 16 OF THE IMPUGNED ORDER. WHEN COMPLETE INFORM ATION WAS NOT ADMITTEDLY SUBMITTED BEFORE THE ASSESSING O FFICER, HOW HE COULD HAVE PROCEEDED TO EXAMINE THE GENUINEN ESS OF THE DEPOSITORS, IS ANYBODYS GUESS. IN OUR CONSIDE RED OPINION, THE IMPUGNED ORDER DELETING THE ADDITION CANNOT BE AFFIRMED. ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 23 CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASS ESSING OFFICER. WE ORDER ACCORDINGLY AND DIRECT THE DE NOVO CONSIDERATION OF THE ISSUE AT THE ASSESSING OFFICER S END IN RESPECT OF RECEIPT OF SHARE CAPITAL AND SHARE PREMI UM AMOUNTING TO RS.40 LAC. 22. IN THE RESULT, THE APPEAL IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.04.2017. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 28 TH APRIL, 2017. DK ITA NOS.3429, 4709, 3424,3423, 2684, 4437, 4500&3980/DEL/2013 ITA NOS.4206 & 999/DEL/2014 24 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT NEW DELHI.