DCIT, New Delhi V. M/s. Diamount Jewels (P) Ltd., New Delhi

ITA 3425/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3346 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Recovery proceedings; Search and seizure; Document seized; Source of fund; Additional evidence; Corroborative evidences; Accommodation entries; Documents seized
• Section: 153A; 131; 132; 2; 68

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3428 & 3425 /DEL/2013 (ASSESSMENT YEAR: 2004 - 05 & 2008 - 09 ) CIT, CENTRAL CIRCLE - 13, ROOM NO. 332, ARA CENTRE, JHANDEWALN EXTN, NEW DELHI VS. DIAMOND HUT INDIA PVT. LTD , 2883/17, HARDHAYAN SINGH ROAD, KAROL BAGH, NEW DELHI PAN: AABCD7234M (APPELLANT) (RESPONDENT) ITA NO. 342 7 /DEL/2013 (ASSESSMENT YEAR: 2008 - 09 ) DCIT, CENTRAL CIRCLE - 13, ROOM NO. 332, ARA CENTRE, JHANDEWALN EXTN, NEW DELHI VS. DIAMOND JEWELS PVT. LTD , SHOP NO. 2612 - 13, BANK STREET, KAROL BAGH, NEW DELHI PAN:AACCD5204E (APPELLANT) (RESPONDENT) REVENUE BY : MS. R A CH N A SINGH, CIT DR ASSESSEE BY: NONE DATE OF HEARING 06/12/ 2017 DATE OF PRONOUNCEMENT 0 5 / 0 3 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. ALL THESE THREE APPEA LS FILED BY THE REVENUE IN CASE OF TWO COMPANIES OF SAME GROUP HAVING SIMILAR FACTS AND INVOLVE SIMILAR ADDITIONS/ ISSUES AND THEREFORE THEY ARE HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. ITA NO . 34282/ DEL/ 2013 ASSESSMENT YEAR 2004 05 M/S DIAMOND HUT INDIA PRIVATE LIMITED PAGE | 2 2. 1 ST WE TAKE UP ITA NO. 34282/DEL/2013 FOR ASSESSMENT YEAR 2004 05 FILED BY THE DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI IN CASE OF DIAMOND HUT INDIA PRIVATE LIMITED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, NEW DELHI DATED 21/3/ 2013 WHEREIN ADD ITION UNDER SECTION 68 OF RS. 7 000000/ MADE BY THE LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, NEW DELHI V IDE ORDER DATED 30/12/2011 UNDER SECTION 153A READ WITH SECTION 143 (3) OF THE ACT WAS DELETED. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 3428/DEL/2013 FOR THE ASSESSMENT YEAR 2004 - 05: 1. THE ORDER OF THE LD CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN LAW AND FACT IN DELETING THE ADDITION OF RS. 7000000/ - MADE BY AO ON A/C OF UNEXPLAINED CREDIT/ SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY WHOSE GENUINENESS COULD NOT BE PROVED AND C REDITWORTHINESS OF INVESTORS COULD NOT BE PROVED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE OF INVESTORS AND THE BANK ACCOUNT OF STATEMENT OF THE INVESTORS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. 3. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT IN M/S DIAMOND HUT GROUP OF CASES ON 27/10/2009. THE ASSESSEE IS ONE OF THE GROUP CONCERNS . NOTICE UNDER SECTION 153A WAS ISSUED ON 13/4/2010 IN RESPONSE TO WHICH THE RETURN OF INCOME WAS FILED ON 7/8/2010 AT TOTAL INCOME OF RS. 107770/ . 4. DURING THE ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT ASSESSEE HAS INCREASED SHARE CAPITAL OF RS. 70 LAKHS AND ASSESSEE WAS ASKED TO PROVE THE IDENTITY, CAPACITY OF THE PERSON AND GENUINENESS OF THE TRANSACTIONS WITH RESPECT TO THE INCREASE IN THE SHARE CAPITAL. THE ASSESSEE DID NOT SUBMIT ANY REPLY INITIALLY BUT ON 16/12/2011, ASSESSEE SUBMITTED T HE DETAILS OF TWO INDIVIDUALS TO WHOM SHARES WERE ALLOTTED SUBMITTING THEIR CONFIRMATION , PAN NUMBER, ACKNOWLEDGEMENT OF INCOME TAX RETURN AND RELEVANT PORTION OF BANK STATEMENT OF SHAREHOLDERS. IT WAS SUBMITTED THAT THESE TWO SHAREHOLDERS HAVE ALSO PURCHA SED SHARES FROM ANOTHER PERSON DURING THE YEAR. THE LD. ASSESSING OFFICER NOTED THAT NO DETAILS WITH RESPECT TO THE ORIGINAL ALLOTTEE OF SHARES MR. VARUN VERMA HAS BEEN PAGE | 3 SUBMITTED TO WHOM THE SHARE CAPITAL OF RS. 40 LAKHS HAVE BEEN ALLOTTED AND SIMILARLY B ANK STATEMENT SHOWING OUTFLOW OF RS. 30 LAKHS IN CASE OF SRI SURESH VERMA IS NOT FILED. THEREFORE, THE LD. ASSESSING OFFICER MADE AN ADDITION OF RS. 70 LAKHS UNDER SECTION 68 OF THE INCOME TAX ACT. 5. ASSESSEE AGGRIEVED WITH THE ORDER OF THE LD. AO PREFERRED AN APPEAL BEFORE THE LD. CIT (A) SUBMITTING CERTAIN ADDITIONAL EVIDENCES VIDE PARA NO. 2.7 OF THE ORDER OF THE LD. CIT (A). FURTHER SUCH DETAILS ARE ALSO REFERRED VIDE PARA NO. 2.12 OF HIS ORDER. VIDE PARA NO. 3.3 OF THE ORDER IN THE REMAND REPORT REVENUE OBJECTED THE ADMISSION OF THE ADDITIONAL EVIDENCE PLACED BY THE ASSESSEE BEFORE HIM. THE LD. CIT (A) DECIDED THE ISSUE VIDE PARA NO. 3.4 AS UNDER: - 3.4 I HAVE CONSIDERED THE ASSESSME NT ORDER, DOCUMENTS FILED, SUBMISSIONS MADE, AND THE REPORT OF THE AO. THE MATTER IN DISPUTE HERE IS SUBSCRIPTION TO SHARE CAPITAL OF THE APPELLANT COMPANY BY THE DIRECTORS, SHAREHOLDERS. FACTS ARE THAT SH. SURESH VERMA AND SH. VARUN VERMA WERE ORIGINAL SHAREHOLDERS OF THE APPELLANT COMPANY HOLDING SHARES OF RS. 50,000 EACH. SUBSEQUENTLY SH. VARUN VERMA AND SH. SURESH VERMA WERE ALLOTTED SHARES OF RS. 40 LACS AND RS. 30 LAKHS RESPECTIVELY. DURING THE YEAR SH. SURESH VERMA, TAKING HIS INVESTMENT IN THE APPELLANT COMPANY TO RS. 61 LACS TRANSFERRED SHAR ES OF RS. 40.50 LAKHS SUBSCRIBED SH. VARUN VERMA TO SH. SURESH VERMA AND HIS BROTHER SHRI ASHOKA VERMA AND FURTHER SHARES OF RS. 30 LAKHS . THE APPELLANT PROVIDED THESE DETAILS DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, THE AO DISBELIEVE THE CLAIM IN ABSEN CE OF THE SUPPORTING EVIDENCE. THE APPELLANT ON THE OTHER HAND CLAIMS THAT THE AO DID NOT GIVE ANY FURTHER INDICATION THAT HE WAS NOT SATISFIED WITH THE REPLY AND DID NOT GIVE AN OPPORTUNITY BEFORE TAKING ANY ADVERSE VIEW IN THE MATTER. IN REMAND, THE CASE OF THE REVENUE IS THAT THE DOCUMENTS NOW SUBMITTED SHOULD PAGE | 4 HAVE BEEN SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AND AS NO REASON HAS BEEN GIVEN FOR NON - SUBMISSION, THE DOCUMENT FILED SHOULD NOT BE ADMITTED AS EVIDENCE. THE CASE OF THE APPELLANT IS THAT TH E REVENUE CANNOT TAKE THIS PLEA BECAUSE THE SHAREHOLDERS ARE ASSESSED TO TAX BY THE SAME AO WHO HAS ALL THE TAX RETURNS AND OTHER BOOKS OF ACCOUNTS AND SEIZED DOCUMENTS IN HIS POSSESSION. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FACT REMAINS THAT AT THE EN D OF THE PREVIOUS YEAR THE OWNERSHIP OF ENTIRE SALE CAPITAL OF RS. 71 LACS WAS WITH THE DIRECTORS OF THE COMPANY WHO ARE ASSESSED TO TAX WITH THE SAME AO AND THAT TAX RECORDS AND OTHER DOCUMENTS WERE AVAILABLE WITH HIM. THE DOCUMENTS RELATING TO SH. VARU N VERMA, WHO EARLIER HELD EQUITY IN THE COMPANY WILL NOT BE RELEVANT AS HIS SHARES IS TRANSFERRED TO SRI SURESH VERMA AND SH. ASOKA VERMA. DURING APPEAL, I ASKED THE APPELLANT TO ESTABLISH THE TRANSFER OF SHARES. THE ROC DOCUMENTS FILED BEFORE ME SHOW THAT TRANSFERS OF SHARES WERE INDEED AFFECTED FROM SH. VARUN VERMA TO SRI SURESH VERMA AND SH. ASOKA VERMA AS CLAIMED. IT IS DECIDED LAW THAT ANY EVIDENCE THAT HAS MATERIAL BEARING ON THE FACTS AND SURROUNDING CIRCUMSTANCES OF CASE, SHOULD NOT BE OVERLOOKED BY THE COURTS FOR DISPENSING JUSTICE AND UNCOVERING THE TRUTH. IN MY OPINION, NO CASE FOR ADDING THE SHARE CAPITAL IN THE HANDS OF THE APPELLANT COMPANY IS MADE OUT. THE IDENTITY AND CAPACITY OF THE TWO DIRECTORS, SHAREHOLDERS WHO ARE ADMITTEDLY ASSESSED TO TAX WITH THE SAME AO, CANNOT BE UNDER DOUBT. IN VIEW OF THE MATTER, THE ADDITION MADE CANNOT BE SUSTAINED AND IS DELETED. THIS GROUND OF APPEAL IS ALLOWED AND APPELLANT GETS A RELIEF OF RS. 70 LAKHS. PAGE | 5 6. THE LD. CIT DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CON TESTED THAT THE FIRST APPELLATE AUTHORITY HAS ADMITTED THE ADDITIONAL EVIDENCE WITHOUT GIVING PROPER OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER. SHE FURTHER SUBMITTED THAT WHERE ADDITIONAL EVIDENCES WAS ADMITTED REASONS ARE REQUIRED TO BE RECORDED IN WRITING BY THE LD. CIT (A) SATISFYING ONE OF THE CONDIT IONS LAID DOWN UNDER SECTION 4 6A OF THE INCOME TAX RULES. SHE SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY DOES NOT RECORD SUCH FINDING . SHE FURTHER PRESSED RELIANCE UPON HONBLE JURISDICTIONAL HIG H COURTS DECISION IN CASE OF CIT VERSUS MANISH BUILD WELL (P) LTD 16 TAXMANN.COM 27 (DELHI) WHEREIN IT HAS BEEN HELD THAT WHERE ADDITIONAL EVIDENCES WAS ADMITTED AND ACCEPTED AS GENUINENESS AT 1 ST APPELLATE STAGE WITHOUT ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION, REQUIREMENT OF RULE 46A (3) WERE NOT SATISFIED. IN VIEW OF THIS, SHE SUBMITTED THAT THE ISSUE MIGHT BE RESTORED BACK TO THE FILE OF THE LD. AO. 7. THE LD. DEPARTMENTAL REPRESENTATIVE WAS ALSO QUESTIONED BY THE BENCH THAT THERE IS NO SUCH GROUND TAKEN BY THE REVENUE IN THE APPEAL HOWEVER IT WAS REPLIED THAT IT IS COVERED IN THE FIRST GROUND OF APPEAL WHEREIN IT HAS BEEN CHALLENGED THAT THE ORDER OF TH E LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 8. DESPITE NOTICE TO THE ASSESSEE, NONE APPEARED OR PLACED APPLICATION FOR ADJOURNMENT OF HEARING. THEREFORE, THIS APPEAL IS DECIDED ON MERITS OF THE CASE AS PER INFORMATION AVAILABLE ON THE RECORD. 9. WE HAVE CAREF ULLY CONSIDERED THE IMPUGNED ORDERS AS WELL AS SUBMISSION MADE BY THE LD. CIT DEPARTMENT REPRESENTATIVE. THE FIRST GROUND OF APPEAL CHALLENGES THE ORDER OF THE LD. CIT (A) ON LAW AND FACTS OF THE CASE AND THEREFORE THE ISSUE OF ADMISSION OF ADDITIONAL EVID ENCES ARE COVERED IN THAT. ADMITTEDLY, IN THIS CASE THE LD. CIT (A) HAS ADMITTED ADDITIONAL EVIDENCES HOWEVER THE LD. ASSESSING OFFICER HAS NOT COMMENTED UPON SUCH ADDITIONAL EVIDENCES. THE HONBLE DELHI HIGH COURT IN 16 TAXMANN.COM 27 (DELHI) (2011) IN CI T VERSUS MANISH BUILD WELL PRIVATE LIMITED HAS HELD IN PARA NO. 22 ONWARDS WHILE DEALING WITH RULE 46A AS UNDER: - PAGE | 6 22 . AS WE HAVE WITH THE CONSENT OF THE LEARNED COUNSEL, HEARD THEM ON MERITS, WE PROCEED TO DECIDE THE AFORESAID SUBSTANTIAL QUESTIONS OF LAW. SINCE THE CIT (A) HIMSELF REFERS TO RULE 46A AND HAS ALSO ADMITTED THAT THE CONFIRMATION LETTERS ADDUCED BY THE ASS ESSEE BEFORE HIM WERE TECHNICALLY FRESH EVIDENCE, IT IS NOT POSSIBLE TO ACCEPT THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE CIT (A), IN EXAMINING THE CONFIRMATION LETTERS, WAS EXERCISING HIS INDEPENDENT POWERS OF ENQUIRY UNDER SUB - SECTION (4) OF SECTION 250 OF THE INCOME TAX ACT. IT IS TRUE THAT THE CIT (A) AS FIRST APPELLATE AUTHORITY HAS CONTERMINOUS POWERS OVER THE SOURCES OF INCOME CONSTITUTING THE SUBJECT MATTER OF THE ASSESSMENT, EXCEPT THE POWER TO TACKLE NEW SOURCES OF INCOME NOT CONSID ERED BY THE ASSESSING OFFICER, AND CAN DO WHAT THE ASSESSING OFFICER CAN DO AND CAN DIRECT THE ASSESSING OFFICER TO DO WHAT HE HAS FAILED TO DO, AS HELD BY THE SUPREME COURT IN THE CASE OF CIT V. KANPUR COAL SYNDICATE , [1964] 53 ITR 225 , BUT IN THIS CASE, THE CIT (A) DID NOT EXERCISE THIS RIGHT. THIS POWER, WHICH IS RECOGNIZED IN SUB - SECTION (4) OF SECTION 250, HAS TO BE EXERCISED BY THE C IT (A) AND THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT HE, WHILE DISPOSING OF THE APPEAL, HAD DIRECTED FURTHER ENQUIRY AND CALLED FOR THE CONFIRMATION LETTERS FROM THE ASSESSEE EVEN IN RESPECT OF RECEIPT OF MONIES FROM CUSTOMERS BY WAY OF CHEQUES. RULE 46A IS A PROVISION IN THE INCOME TAX RULES, 1962 WHICH IS INVOKED, ON THE OTHER HAND, BY THE ASSESSEE WHO IS IN AN APPEAL BEFORE THE CIT (A). ONCE THE ASSESSEE INVOKES RULE 46A AND PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT (A), THEN THE PR OCEDURE PRESCRIBED IN THE SAID RULE HAS TO BE SCRUPULOUSLY FOLLOWED. THE FACT THAT SUB - SECTION (4) OF SECTION 250 CONFERS POWERS ON THE CIT (A) TO CONDUCT AN ENQUIRY AS HE THINKS FIT, WHILE DISPOSING OF THE APPEAL, CANNOT BE RELIED UPON TO CONTEND THAT THE PROCEDURAL REQUIREMENTS OF RULE 46A NEED NOT BE COMPLIED WITH. IF SUCH A PLEA OF THE ASSESSEE IS ACCEPTED, IT WOULD REDUCE RULE 46A TO A DEAD LETTER BECAUSE IT WOULD THEN BE OPEN TO EVERY ASSESSEE TO FURNISH ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND THER EAFTER CONTEND THAT THE EVIDENCE SHOULD BE ACCEPTED AND TAKEN ON RECORD BY THE CIT (A) BY VIRTUE OF HIS POWERS OF ENQUIRY UNDER SUB - SECTION (4) OF SECTION 250. THIS WOULD MEAN IN TURN THAT THE REQUIREMENT OF RECORDING REASONS FOR ADMITTING THE ADDITIONAL E VIDENCE, THE REQUIREMENT OF EXAMINING WHETHER THE CONDITIONS FOR ADMITTING THE ADDITIONAL EVIDENCE ARE SATISFIED, THE REQUIREMENT THAT THE ASSESSING OFFICER SHOULD BE ALLOWED A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE ETC. CAN BE THROWN TO THE WIND S, A POSITION WHICH IS WHOLLY UNACCEPTABLE AND MAY RESULT IN UNACCEPTABLE AND UNJUST CONSEQUENCES. THE FUNDAMENTAL RULE WHICH IS VALID IN ALL BRANCHES OF LAW, INCLUDING INCOME TAX LAW, IS THAT THE ASSESSEE SHOULD ADDUCE THE ENTIRE EVIDENCE IN HIS POSSESSIO N AT THE EARLIEST POINT OF TIME. THIS ENSURES FULL, FAIR AND DETAILED ENQUIRY AND VERIFICATION. A 7 - JUDGE BENCH OF THE SUPREME COURT IN KESHAV MILLS CO. LTD. V. CIT [1965] 56 ITR 365 HAD OBSERVED AS UNDER: - 'PROCEEDINGS TAKEN FOR THE RECOVERY OF TAX UNDER THE PROVISIONS OF THE ACT ARE NATURALLY INTENDED TO BE OVER WITHOUT UNNECESSARY DELAY, AND SO, IT IS THE DUTY OF THE PARTIES, BOTH THE DEPARTMENT AND THE ASSESSEE, TO LEAD ALL THEIR EVIDENCE AT THE STAGE WHEN THE MATTER IS IN CHARGE OF THE INCOME - TAX OFFICER.' PAGE | 7 23 . IT IS FOR THE AFORESAID REASON THAT RULE 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT (A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE ADDUCED BY HIM BEFORE THE ASSESSING OFFICER. AFTER MAKING SUCH A GENERAL STATEMENT, WHICH IS IN CONSONANCE WITH THE PRINCIPLE STATED IN THE ABOVE JUDGMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT (A) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONAL EVIDENCE CAN BE PRODUCED AT THE FIRST APPELLATE STAGE WHEN CONDITIONS STIPULATE IN THE RULE 46A ARE SATISFIED AND A FINDING IS RECORDED. RULE 46 A READS: - 'PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS)]. 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISS IONER (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 ) WHERE THE [ASSESSING OFFICER] HAS REFU SED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR ( B ) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS 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 A DDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB - RULE (1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. PAGE | 8 (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB - RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE OPPORTUNITY ( A ) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR ( B ) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER O F THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB - SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.] WE ARE HIGHLIGHTING THESE ASPECTS ONLY TO PRESS HOME THE POINT THAT THE CONDITIONS PRESCRIBED IN RULE 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HAS TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISE D AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES RULE 46A TO ADDUCE ADDITIONAL EVIDENCE BEFORE THE CIT (A) AND A CASE WHERE THE CIT (A), WITHOUT BEING PROMPTED B Y THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB - SECTION (4) OF SECTION 250. IT IS ONLY WHEN HE EXERCISES HIS STATUTORY SUO MOTO POWER UNDER THE ABOVE SUB - SEC TION THAT THE REQUIREMENTS OF RULE 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES RULE 46A, IT IS INCUMBENT UPON THE CIT (A) TO COMPLY WITH THE REQUIREMENTS OF THE RULE STRICTLY. 24 . IN THE PRESENT CA SE, THE CIT (A) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE ASSESSING OFFICER. THIS OBSERVATION TAKES CARE OF CLAUSE (C) OF SUB - RULE (1) OF RULE 46A. THE OBSERVATION OF THE CIT (A) ALSO TAKES CARE OF SUB - RULE (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB - RULES PAGE | 9 (1) AND (2) OF RULE 46A HAVE BEEN COMPLIED WITH. HOWEVER, SUB - RULE (3) WHICH INTERDICTS THE CIT (A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE ASSESSING OFFICER HAS HAD A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF THE CI T (A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AN D ACCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT (A) WITH THE DIRECTION TO HI M TO COMPLY WITH SUB - RULE (3) OF RULE 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO MIX UP THE POWERS OF THE CIT (A) UNDER SUB - SECTION (4) OF SECTION 250 WITH THE POWERS VESTED IN HIM UNDER RULE 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB - RULE (4) OF RULE 46A WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE POWERS CONFERRED BY THE CIT (A) UNDER THE STATUTE WHILE DISPOSING OF THE ASSESSEE'S APPEAL AND THE POWERS CONFERRED UPON HIM UNDER RULE 46A. T HE TRIBUNAL ERRED IN ITS INTERPRETATION OF THE PROVISIONS OF RULE 46A VIS - - VIS SECTION 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT (A), BY VIRTUE OF HIS CONTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE WAS NO VIOLATION OF RULE 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE RULE 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES' CONTENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT (A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCRIBED IN RULE 46A BECAUSE IN ANY CASE THE CIT (A) IS VESTED WITH CONTERMINOUS PO WERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEPENDENT ENQUIRY UNDER SUB - SECTION (4) OF SECTION 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. 25 . FOR THE ABOVE REASONS, WE ANSWER THE SUBSTANTIAL QUESTIONS OF LAW FRAMED IN PARAGRAPH 21 ABOVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE ISSUE RELATING TO THE ADDITION OF RS. 1,61,67,600/ - MADE UNDER SECTION 68 OF THE ACT IS RESTORED TO THE CIT (A) WHO SHALL COMPLY WITH THE REQUIREMENTS OF RULE 46A AND TAKE A FRESH DECISION ON THE MERITS OF THE ADDITION IN ACCORDANCE WITH LAW. 10. THE PRESENT CASE IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT AS FAR AS THE ISSUE OF ADMITTING THE ADDITIONAL EVIDENCES ARE CONCERNED . WE DO NOT FIND ANY REASONS RECORDED BY THE LD CIT (A) WHILE ADMITTING THE ADDITIONAL EVIDENCE. THEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT WE SET A SIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD. ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE PAGE | 10 ABOVE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT (A) AND AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE DECIDE THE ISSUE AFRE SH. IN THE RESULT GROUND NO. 1 - 3 OF THE APPEAL OF THE REVENUE ARE SET ASIDE TO THE FILE OF THE LD. ASSESSING OFFICER ACCORDINGLY. 11. IN THE RESULT ITA NO. 3428/DEL/2013 FOR ASSESSMENT YEAR 2004 05 FILED BY THE LD. AO IS FOR STATISTICAL PURPOSES. ITA NO 342 7/DEL/2013 AY 2008 - 09 DCIT V DIAMOND HUT INDIA ( P) LIMITED 12. THIS APPEAL IS FILED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, NEW DELHI AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS 1, NEW DELHI DATED 22/3/2013 PASSED IN CASE OF M/S DIAMOND HUTS (INDIA) PRIVATE LI MITED WHEREIN ADDITION OF RS. 6 8250000/ MADE BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, NEW DELHI VIDE HIS ORDER DATED 30/12/2011 UNDER SECTION 153A READ WITH SEC TION 143 (3) OF THE ACT WAS DELETED TO THE EXTENT OF RS. 3.17 CRORES AND CONFIRMED TO THE EXTENT OF RS. 3 555 0000/ ON PROTECTIVE BASIS ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL RECEIVED BY THE ASSESSEE. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L IN ITA NO. 3427/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09: 1 THE ORDER OF THE LD. CIT (A) IS NOT CORRECT IN LAW AND FACTS. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,17,00,000/ - , AND UPHOLDING T HE ADDITION (ON PROTECTIVE BASIS) OF RS.3,55,50,000/ - ON A/C OF UNEXPLAINED SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY WHOSE GENUINENESS COULD NOT BE PROVED AND CREDITWORTHINESS OF INVESTORS COULD ALSO NOT BE PROVED. 3. ON THE FACTS AND CIRCUMSTANCES O F THE CASE THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE INCOME OF THE INVESTORS WAS NOT COMMENSURATE WITH THE AMOUNT OF SHARE APPLICATION MONEY GIVEN BY THEM. THUS THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION WERE IN DOUBT. THE ADD ITION WAS TO BE UPHELD ON SUBSTANTIVE BASIS BUT NOT ON PROTECTIVE BASIS AS THE ASSESSEE HAS FAILED IN DISCHARGING ITS ONUS TO PRODUCE THE SHAREHOLDERS BEFORE THE ASSESSING OFFICER. PAGE | 11 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN ADJUDICATING THE ISSUE INVOLVED WITH CERTAIN DIRECTIONS AND UPHELD THE ADDITION MADE BY AO ON PROTECTIVE BASIS WHICH IS BEYOND THE POWERS OF CIT ( A) ONLY TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ISSUES INVOLVED IN APPEAL. 13. FACTS STATED IN THE NARROW COMPASS SHOWS THAT SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME TAX ACT 1961 WAS CARRIED OUT IN DIAMOND HUT GROUP OF CASES ON 27/10/2009. NOTICE UNDER SECTION 153A WAS ISSUED ON 13/4/2010. ASSESSEE FILED RETURN ON 7/9/2010 DECLARING TOTAL INCOME OF RS. 1005 3080/ . 14. THE LD. ASSESSING OFFICER HAS NOTED THAT ON THE BASIS OF THE ENQUIRIES CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT , DURING THE PRE - SEARCH INVESTIGATION AND POST SEARCH PROCEEDINGS , IT WAS NOTED THAT M/S DIAMOND HUT INDIA PRIVATE LIMITED AND M/S DIAMOND JEWELS PRIVATE LIMITED COMPANIES OF DIAMOND HUT GROUP HAD ACCUMULATED HUGE SHARE CAPITAL DURING THE PAST YEARS. THEREFORE , THE SHAREHOLDING OF THE VARIOUS GROUP COMPANIES WAS EXAMINED AND IT WAS NOTED THAT APART FROM THE FAMILY MEMBERS VARIOUS NON DESCRIPT COMPANY HAVE ALSO HOLD MOST OF THE SHARES OF THESE CO MPANIES. ON VERIFICATION OF SHAREHOLDERS BY THE INVESTIGATION WING IT WAS FOUND THAT THE SHAREHOLDERS COMPANIES WERE EITHER NOT EXISTING AT THEIR KNOWN ADDRESS THEIR PRESENT WHERE ABOUT WERE NOT KNOWN. IN THE POST - SEARCH ENQUIRIES, ALSO, THE VERIFICATION O F THE SHAREHOLDER WAS CARRIED OUT AND SAME RESULT WAS FOUND. DURING THE COURSE OF POST - SEARCH ENQUIRIES, SUMMONSES WERE ALSO ISSUED TO THE SHAREHOLDER COMPANIES HOWEVER IN CASE OF NINE SHAREHOLDERS THERE WAS NO COMPLIANCE TO THE SUMMONS. EVEN THE ASSESSEE HAS ALSO NOT PRODUCED ANY EVIDENCES WITH RESPECT TO THE SHAREHOLDERS. THE LD. ASSESSING OFFICER FURTHER DISCRIMINATED BETWEEN THE LOCATIONS OF REGISTERED OFFICE OF THE SHAREHOLDER COMPANIES IN DIFFERENT CITIES. THE INSPECTORS WERE ALSO DEPUTED TO FIND OUT WHEREABOUTS OF THE ABOVE - MENTIONED COMPANIES HOWEVER, NONE OF THE COMPANIES WERE FOUND TO BE IN EXISTENCE AT THE KNOWN ADDRESS OF THE SHAREHOLDERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ALSO GIVEN AN OPPORTUNITY TO EXPLAIN THE IDENTITY, CAPACITY, AND GENUINENESS OF THE PERSONS TO WHOM THE SHARES WERE ISSUED. HOWEVER, NO REPLY WAS FURNISHED INITIALLY BUT LATER ON PAGE | 12 16/12/2011, THE ASSESSEE SUBMITTED THE DETAILS OF THE INVESTORS SUBMITTING THEIR INCOME TAX RETURN, BANK ACCO UNT STATEMENT, AND BALANCE SHEET ETC . ON EXAMINATION OF THE DETAILS, THE LD. ASSESSING OFFICER NOTED THAT THESE COMPANIES HAVE MEAGER INCOME IN ITS RETURN OF INCOME FURTHER THESE COMPANIES DO NOT POSSESS FIXED ASSETS AND ALSO DOES NOT HAVE ANY REAL ACTIVITY TO PERFORM BUT AR E USED FOR PROVIDING ACCOMMODATION ENTRIES ONLY. IN VIEW OF THIS , ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT WAS MADE OF RS. 68250000/ VIDE ASSESSMENT ORDER DATED 30/12/2011 MADE BY THE LD. ASSESSING OFFICER UNDER SECTION 153A READ WITH SECTION 143 ( 3) OF THE ACT WHEREIN THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 7910 9135/ AGAINST THE RETURNED INCOME OF RS. 1 005 3080/ . 15. ASSESSEE AGGRIEVED WITH THE ORDER OF THE ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) ALSO OBTAINED REMAND REPORT OF THE ASSESSING OFFICER WHO OBJECTED TO THE CONSIDERATION OF THE ADDITIONAL EVIDENCES. THE LD. ASSESSING OFF ICER FURTHER NOTED THAT OUT OF THE SUM OF RS. 6 825 0000/ THE ASSESSEE HAS ONLY DETAILS OF RS. 6 725 0000/ AND THEREFORE APPELLANT DOES NOT HAVE THE DETAILS OF RS. 10 LACS OF SHARE CAPITAL. WITH RESPECT TO THE 9 ALLOTTEES THE SUMMONS WERE ISSUED UNDER SE CTION 131 OF THE INCOME TAX ACT BUT THERE WAS NO COMPLIANCE OF THESE COMPANIES AND SAME WERE ALSO NOT FOUND AT THE GIVEN ADDRESS AS THE INSPECTOR DEPUTED BY THE LD. AO. FURTHER SIX COMPANIES WERE ALSO NOT FOUND AT THE GIVEN ADDRESSES. THE LD. CIT (A) NOTE D THAT ASSESSEE HAS FURNISHED THE COPIES OF THE INCOME TAX RETURNS, BANK STATEMENTS AND BALANCE SHEETS OF ALL THE 19 COMPANIES AND STATED THAT THE INCOME SHOWN BY THESE COMPANIES IS INSUFFICIENT OR HAVING INSUFFICIENT ASSETS. THEREFORE THE LD. CIT (A) HELD THAT IN CASE OF 8 COMPANIES WHERE THE TOTAL SHARE CAPITAL OF RS. 3.17 CRORES HAVE BEEN ALLOTTED WHICH ARE NOT SUBJECT TO ANY VERIFICATION BY THE LD. ASSESSING OFFICER CANNOT BE ADDED INTO THE HANDS OF THE ASSESSEE. FURTHER WITH RESPECT TO THE SHARE CAPITA L OF 3555 00 00/ PERTAINING TO 11 COMPANIES, THE LD. CIT (A) SET ASIDE THE WHOLE MATTER BACK TO THE FILE OF THE LD. ASSESSING OFFICER TO CARRY OUT FURTHER ENQUIRIES AND CONFIRMED THE ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE PAGE | 13 BASIS ONLY WHEREAS TH E LD. ASSESSING OFFICER MADE THE ADDITION ON SUBSTANTIVE BASIS. 16. THE REVENUE IS AGGRIEVED WITH THE ORDER OF THE LD. CIT (A) AND VEHEMENTLY OPPOSED THE DECISION PASSED BY HIM FOR UPHOLDING THE ADDITION ONLY ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE WH EREAS THE LD. ASSESSING OFFICER HAS MADE SUBSTANTIVE ADDITION ON THE BASIS OF COMPLETE INVESTIGATION REPORT. IT WAS FURTHER SUBMITTED THAT WITH RESPECT TO THE DELETION OF THE ADDITION OF RS. 3.17 CRORES THERE IS NO FINDING BY THE LD. CIT (A) ABOUT THESE CO MPANIES THAT HOW THEY ARE CAPABLE OF ADVANCING SUCH A HUGE SUM TO THE ASSESSEE A S A SHARE CAPITAL. THE LD. CIT DEPARTMENTAL REPRESENTATIVE VEHEMENTLY REFERRED TO PARA NO. 3.7 OF THE ORDER OF THE LD. CIT APPEAL STATING THAT THERE ARE EIGHT COMPANIES, WHICH ARE RECORDED IN THE TABLE WHEREIN MOST OF THE COMPANIES HAVE INVESTED FROM RS. 2 0 LACS TO RS. 80 LACS IN THE SHARE CAP ITAL OF THE ASSESSEE COMPANY. SH E FURTHER STATED THAT THE LD. CIT APPEAL HAS GROSSLY ERRED IN MENTIONING THAT NO ENQUIRY HAS BEEN MADE BY THE LD. ASSESSING OFFICER WHEREAS REFERRING TO THE TABLE PREPARED BY THE LD. ASSESSING OFFICER WHERE EACH OF THESE COMPANIES HAVE BEEN CONSIDERED AND HAS BEEN HELD BY THE LD. ASSESSING OFFICER THAT THE COMPANY DOES NOT POSSESS ANY FIXED ASSETS OR DOES NOT HAVE ANY REAL ACTIVITY TO PERFORM . THEREFORE, ACCORDING TO HER, THE LD AO HAS CONCLUSIVELY HELD THAT INVESTMENTS ARE NOT GENUINE AND INVESTORS DO NOT HAVE ANY CAPACITY TO INVEST. SHE FURTHER REFERRED TO SERIAL NO. 10,11, 12, 13, 15, 16, 17 AND 19 OF THAT P ARTICULAR TABLE TO SHOW THAT THESE COMPANIES DO NOT HAVE ANY CAPACITY TO MAKE INVESTMENT IN THE SHARES OF THE COMPANY. SHE FURTHER STATED THAT WHAT IS THE PURPOSE OF THIS COMPANY IN MAKING AN INVESTMENT IN THE ASSESSEE COMPANY WHERE THERE IS NO PAYMENT OF ANY DIVIDEND OR THERE IS NO EXIT ROUTE AVAILABLE TO THIS COMPANY. SHE SUBMITTED THAT MOOT POINT IS THAT ASSESSEE IS A PRIVATE LIMITED COMPANY AND HOW IT HAS COME IN TO THE KNOWLEDGE OF THESE COMPANIES FOR MAKING INVESTMENTS. FURTHER, WHAT ARE THE PROJECTS OF THE ASSESSEE COMPANY AND HOW IT HAS INVITED THESE COMPANIES FOR MAKING INVESTMENT IN ASSESSEE COMPANIES? THE CIT (A) ANSWERS NOT ALL THESE QUESTIONS . SHE SUBMITTED THAT IF THE QUESTIONS ARE LOOKED IN TO THEN THE PAGE | 14 MYSTERIOUS WAY OF ACCOMMODATION ENTRIES W ILL COME OUT . THEREFORE, IT WAS SUBMITTED THAT IT IS A PURE ACCOMMODATION ENTRY AND NOTHING MORE REQUIRES TO BE PROVED BY THE LD. ASSESSING OFFICER. IT WAS FURTHER STATED THAT ASSESSEE BEFORE THE ASSESSING OFFICER DOES NOT PROVE THE GENUINENESS OF THE INVE STMENT BY THIS COMPANY IN THE ASSESSEE COMPANY THEREFORE WHERE THE ADDITION HAS BEEN DELETED BY THE LD. CIT (A) ON SUBSTANTIVE BASIS WITH RESPECT TO THE 3.17 CRORES THE ASSESSEE HAS FAILED TO PROVE CAPACITY I.E. THE CREDITWORTHINESS OF THE INVESTOR COMPANIES AS WELL AS THE GENUINENESS OF THE INVESTMENT IN THE ASSESSEE COMPANY. SHE FURTHER SUBMITTED THAT ASSESSEE HAS THOSE INVESTORS OF SUCH A HUGE AMOUNT IN ITS BOOKS THEREFORE IT IS THE DUTY OF THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES BEFORE THE AO FOR PROPER EXAMINATION SHOWING HOW THEY HAVE MADE INVESTMENTS, FOR WHAT PURPOSES AND WHAT IS THE EXPECTED RETURN AND WHAT THEY PROPOSE TO DO WITH THE INVESTMENTS . SHE STATED THAT IT IS SURPRISING THA T INVESTMENTS OF SUCH A HUGE MAGNITUDE MADE IN THE ASSESSEE COMPANIES BY THOSE INVESTORS AND THEY VANISH IN TO THE THIN AIR WITHOUT A TRACE. 17. WITH RESPECT TO THE OTHER ADDITION WHICH HAS BEEN CONFIRMED BY THE LD. CIT (A) ON PROTECTIVE BASIS SHE SUBMITTED T HAT THE ADDITIONS SHOULD HAVE BEEN UPHELD BY HIM ON SUBSTANTIVE BASIS THAT THERE IS NO REASON THAT IT SHOULD BE CHANGED BY HIM TO TAX IT ON PROTECTIVE BASIS. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION THE ADDITION IS REQUIRED TO BE UPHELD BY HIM UNDER SECTION 68 OF THE ACT AND HE SHOULD NOT HAVE CONFIRMED THE ADDITION ONLY ON PROTECTIVE BASIS. IT WAS FURTHER STATED THAT HE HAS DIRECTED THE LD. ASSESSING OFFICER TO FIND OUT THE REAL NATURE OF THIS TRANSACTION AND THE REAL SOURCE OF THE MONEY AND ITS BENEFICIARIES. SUCH DIRECTION IS FUTILE FOR THE SIMPLE REASON THAT THE REAL BENEFICIARY OF THIS TRANSACTION IS THE ASSESSEE COMPANY, WHICH HAS BEEN PROVED BY REPORT OF THE INVEST IGATION WING AND BY THE NECESSARY ENQUIRIES CONDUCTED BY THE LD. ASSESSING OFFICER. IN VIEW OF THIS, SHE SUBMITTED THAT THE WHOLE ADDITION OF RS. 6.82 CRORES MADE BY THE LD. ASSESSING OFFICER DESERVES TO BE CONFIRMED. EVEN OTHERWISE, IT WAS SUBMITTED THAT WHOLE PAGE | 15 ISSUE IS SHROUDED BY THE MYSTERY AND THEREFORE ASSESSEE MUST COME OUT WITH THE CLEAN HANDS TO AVOID ANY ADDITION. 18. DESPITE NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE ARE NO APPLICATION FOR ADJOURNMENT WAS RECEIVED. THEREFORE, THE ISSUE IS D ECIDED ON MERITS OF THE CASE BASED ON INFORMATION AVAILABLE ON RECORD. 19. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE REVENUE AS WELL AS PERUSED THE ORDERS OF LOWER AUTHORITIES. WE HAVE ALSO CONSIDERED THE PAPER BOOK FILED BY THE ASSESSE . IN THE PRESE NT CASE THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY OF RS. 6 825000/ . THE ASSESSING OFFICER HAS MADE THE ADDITION UNDER SECTION 68 OF THE ABOVE SUM AS ASSESSEE HAS FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS, GENUINENESS OF THE INVESTOR COMPANIES . THE ASSESSEE ALSO COULD NOT GIVE DETAIL OF RS. 10 LACS TO WHOM THE SUCH SHARES HAVE BEEN ALLOTTED. THEREFORE, TO THE EXTENT OF RS. 10 LACS THE LD. CIT APPEAL HAS CORRECTLY CONFIRMED THE ADDITION AND THERE IS NO GRIEVANCE TO THE REVENUE ON THIS COUNT. HOWEVER, THE REVENUE IS REALLY AGGRIEVED BY THE ADDITION OF RS. 3.17 CRORES DELETED HOLDING THAT ASSESSEE HAS PRODUCED THE RELEVANT DETAILS AND NO ENQUIRIES HAVE BEEN CONDUCTED BY THE AO. APPARENTLY, WITH RESPECT TO RS. 3.17 CRORES THE ASSESSEE HAS SUBMITT ED SOME PRIMA FACIE DETAILS HOWEVER, THE LD. AO HAS ANALYZED THE BALANCE SHEET OF THOSE COMPANIES AND HELD THAT THEY DO NOT HAVE ANY CAPACITY TO MAKE INVESTMENT IN THE SHARES OF THE ASSESSEE COMPANIES AND THEREFORE THE I R CAPACITY IS DOUBTED. FURTHER, THE A O HAS ALSO DOUBTED THE GENUINENESS OF THE INVESTMENT MADE BY THESE COMPANIES IN THE ASSESSEE COMPANY ALSO. THEREFORE, THE LD. CIT APPEAL IS INCORRECT IN HOLDING THAT THE ASSESSING OFFICER HAS NOT MADE ANY EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSE E. IN FACTS, HE HAS THROWN ONUS BACK ON THE ASSESSEE. IT IS FURTHER REQUIRED TO BE EXAMINED WHETHER THE ASSESSEE HAS DISCHARGED INITIAL ONUS CAST UPON HIM OR NOT WITH RESPECT TO THE ADDITION OF RS. 3.17 CRORE DELETED BY THE LD. CIT (A). THE DETAILS OF SUC H COMPANIES ARE LISTED AT PARA NO. 3.7 OF THE ORDER OF THE LD. CIT (A). WE PROCEED TO EXAMINE THE FINANCIAL STATUS OF THE INDIVIDUAL INVESTOR; WITH RESPECT TO M/S SHARVAN TOUR & TRANSPORTS PRIVATE LIMITED, THE ASSESSEE HAS NOT FURNISHED THE COPY OF THE BAL ANCE PAGE | 16 SHEET AS AT 31 / 3/2008 OF THE INVESTOR COMPANIES INSTEAD OF THE ASSESSEE HAS SUBMITTED THE BALANCE SHEET AS AT 31/3/2007. NO COPY OF THE ACCOUNT OF THE INVESTMENT FROM THE BOOKS OF THE ACCOUNTS OF THE INVESTOR COMPANY WAS SUBMITTED. THE CONFIRMATION WA S IN THE FORM OF AFFIDAVIT BUT IN NOT IN THE FORM LEDGER FROM THE BOOKS OF THE INVESTOR COMPANY OF THE ASSESSEE COMPANY. IN VIEW OF THIS, IT IS APPARENT THAT ASSESSEE HAS NOT DISCHARGE D ITS ONUS COMPLETELY WITH THE RESPECT TO THIS INVESTOR. FURTHER WITH RE SPECT TO THE INVESTMENT BY THE LOTUS REAL CORN PRIVATE LIMITED OF RS. 50 LACS THE ASSESSEE HAS NOT SUBMITTED THE COMPLETE BANK ACCOUNT WHERE THE INVESTMENT OF RS. 25 LACS MADE ON 05/12/2007 IS REFLECTED FURTHER THE BANK ACCOUNTS SUBMITTED ALSO DOES NOT SO FROM WHICH BANK ACCOUNT THE CHECK ARE ISSUED. THE CONFIRMATION ALSO DOES NOT SHOW FROM WHICH BANK ACCOUNT THE INVESTMENT HAS BEEN MADE AND WHETHER SUCH BANK ACCOUNT EXIST IN THE BOOKS OF THE ACCOUNT OF THE ASSESSEE COMPANY OR NOT IS ALSO NOT CLEAR. ADMIT TEDLY, THE CONFIRMATION SUBMITTED BY THE INVESTOR THERE IS NO REFERENCE FROM WHICH BANK ACCOUNT THE CHECK IS ISSUED OF RS. 25 LACS EACH ON TWO DIFFERENT DATES. SURPRISINGLY THE LIST OF INVESTMENTS IS ANNEXED TO THE BALANCE SHEET BUT NOT SHOWN BY SUBMITTING THE COPY OF THE ACCOUNT OF THE INVESTMENT MADE IN THE ASSESSEE COMPANY. SIMILARLY IS THE CASE WITH ANOTHER INVESTOR COMPANY, WHICH HAS ALSO INVESTED 50 LAKHS RUPEES BY THE NAME OF MONI MALA DELHI PROPERTIES PRIVATE LIMITED. THERE IS NO REFER ENCE OF THE BANK ACCOUNT FROM WHICH THE CHECK IS ISSUED AND SIMILARLY THE CONFIRMATION SUBMITTED ALSO DOES NOT SHOW FROM WHICH BANK ACCOUNT THE CHECK IS ISSUED . FURTHER WITH RESPECT TO SUKANT STE E LS PRIVATE LIMITED WHICH HAS INVESTED RS. 25 LACS IN THE A SSESSEE COMPANY SURPRISING TO NOTE THAT THE CHECK ARE ISSUED FROM THE AXIS BANK ACCOUNT OF THE INVESTOR COMPANY HOWEVER WHILE LOOKING AT SCHEDULE 4 OF THE BALANCE SHEET THERE IS NO AXIS BANK ACCOUNT IN THE BALANCE SHEET OF THE INVESTOR COMPANY. NO CONFIRM ATION WITH RESPECT TO THE ABOVE INVESTMENT BY SUBMITTING THE COPY OF THE LEDGER ACCOUNT OF INVESTMENT FROM THE BOOKS OF THE INVESTOR COMPANY WAS SUBMITTED. FURTHER, WITH RESPECT TO WARNER METALLIC PRIVATE LIMITED, WHICH HAS INVESTED RS. 80 LACS IN THE ASSE SSEE COMPANY, DOES NOT HAVE ANY PAGE | 17 INVESTMENT IN ITS BALANCE SHEET OF SUCH AMOUNT. IT IS SURP RISING THAT WHEN THE ASSESSEE HAS ISSUED SHARE CAPITAL TO THIS COMPANY OF RS. 80 LACS THE AMOUNT IS NOT SHOWN AS AN INVESTMENT BY THIS COMPANY IN ITS BALANCE SHEET OF SUCH A HUG E AMOUNT. THE INVESTOR COMPANY DOES NOT HAVE ANY INVESTMENT SCHEDULE IN ITS BALANCE SHEET. IT IS ALSO INTERESTING TO NOTE THAT SUCH COMPANY HAS VERY MEAGER BALANCE IN ITS BANK ACCOUNT THROUGHOUT THE YEAR AND AT THE END OF THE YEAR ALSO. SUCH I S THE CASE WITH OTHER INVESTOR COMPANIES WHERE THE LD. CIT (A) HAS DELETED THE ADDITION TO THE EXTENT OF RS. 3.17 CRORES. THERE ARE NO REASONS GIVEN FOR INVESTMENTS MADE BY THESE COMPANIES IN THE INVESTORS COMPANIES. WHEN SUCH A HUGE INVESTMENT IS MADE BY THESE COMPANIES IN THE ASSESSEE COMPANY, THERE MUST BE CLOSE NEXUS OR RELATIONSHIP BETWEEN THE DIRECTORS/ PROMOTERS OF THE ASSESSEE COMPANY WITH THE DIRECTORS/ PROMOTERS OF THE INVESTORS COMPANIES OTHERWISE SUCH HUGE INVESTMENTS IN PRIVATE LIMITED COMPANI ES CANNOT BE MADE. NATURALLY THERE IS CONSIDERABLE FORCE IN THE ARGUMENTS OF THE LD CIT DR THAT HOW THE INVESTORS VANISH IN THIN AIR AFTER MAKING SUCH A HUGE INVESTMENT. THEY MUST BE PRODUCED BY THE ASSESSEE BEFORE THE LD AO. 20. FURTHER, WITH RESPECT TO TH E ADDITION WHICH HAS BEEN MADE BY THE LD. AO ON SUBSTANTIVE BASIS AND CIT (A) HAS MADE IT ON PROTECTIVE BASIS WITHOUT ANY REASON. 21. IN VIEW OF THE ABOVE FACTS WE SET ASIDE THE WHOLE ISSUE OF ADDITION OF RS. 6.82 CRORES BACK TO THE FILE OF THE LD. ASSESSING O FFICER WITH A DIRECTION TO THE ASSESSEE TO SUBMIT THE REQUISITE DETAILS OF ALL THE COMPANIES WHO HAVE INVESTED IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY TO PROVE THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF SUCH A HUGE INVESTMENT. SUCH DETAILS CA N BE FURTHER CORROBORATED BY PRODUCING THE DIRECTORS OF THOSE INVESTOR COMPANIES ALONG WITH THEIR BOOKS OF ACCOUNTS FOR THE RESPECTIVE YEAR AND TO SHOW THE REAL PURPOSE OF MAKING INVESTMENT IN THE ASSESSEE COMPANY. THEY MAY ALSO BE EXAMINED BY THE LD. ASSE SSING OFFICER ABOUT THESE INVESTMENTS. IT IS ALSO ACCEPTED FACT THAT WHEN THE ASSESSEE HAS OBTAINED SUCH A HUGE INVESTMENTS IN THE COMPANY AND IF THE INVESTORS COMPANIES DIRECTORS ARE NOT EXAMINED, IT IS APPARENT WHAT KIND PAGE | 18 OF INVESTMENT IT IS. WE FULLY AGREE WITH THE ARGUMENTS OF THE LD DR. ON PRODUCTION OF ALL DETAILS OF THE INVESTOR COMPANIES , DIRECTORS OF THE INVESTOR COMPANIES AND THEREAFTER EXAMINING THE M, LD . ASSESSING OFFICER WILL DECIDE THE ISSUE AFRESH . THE ASSESSING OFFICER IS DIRECTED TO MINUTELY EXAMINE THESE INVESTMENTS IN THE ASSESSEE COMPANY IN THE LIGHT OF OUR OBSERVATIONS MADE EARLIER IN THIS ORDER. IN CASE IF AFTER GIVING THE NOTICE TO THE ASSESSEE COMPANY, IF ASSESSEE DOES NOT FURNISH THE REQUISITE DETAILS AND FAIL TO PRODUCE THE DIRECTORS OF THE INVESTOR COMPANIES ALONG WITH THE BOOKS OF THOSE COMPANIES , THE LD AO MAY TAKE VIEW IN ACCORDANCE WITH THE LAW. IN THE RESULT WE DO NOT AGREE WITH THE ORDER OF THE LD CIT (A) TO IN THE RESULT GROUND NO. 1 4 OF THE APPEAL OF TH E REVENUE IS ALLOWED ACCORDINGLY. 22. IN THE RESULT ITA NO. 3427/DEL/2013 FOR ASSESSMENT YEAR 2008 09 IN CASE OF DIAMOND HUT INDIA PRIVATE LIMITED PREFERRED BY REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3425/DEL/2013 ASSESSMENT YEAR 2008 - 09 DIAMOND JEWELS LIMITED 23. THIS IS THE APPEAL FILED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, NEW DELHI AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 1, NEW DELHI DATED 22/3/2013 FOR ASSESSMENT YEAR 2008 09 IN CASE OF DIAMOND JEWELS PRIVATE LIMITED WHEREIN THE ADDITION MADE BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 13, NEW DELHI OF RS. 4 CRORES UNDER SECTION 68 WITH RESPECT TO THE INVESTMENT BY 7 COMPANIES IN THE SHARE CAPITAL OF THE ASSESSEE COMPANY HAS BEEN UPHELD ONLY ON PROTECTIVE BASIS WHERE THE LD. ASSESSING OFFICER HAS MADE THE ADDITION ON SUBSTANTIVE BASIS. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN ITA NO. 3425/DEL/2013 FOR THE ASSESSMENT YEAR 2008 - 09: 1 THE ORDER OF THE LD. C IT (A) IS NOT CORRECT IN LAW AND FACTS. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 4,00,00,000/ - MADE BY AO AS PROTECTIVE BASIS AS AGAINST SUBSTANTIAL BASIS IN RESPECT OF UNEXPLAINED PAGE | 19 SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY WHOSE GENUINENESS AND CREDITWORTHINESS OF INVESTORS COULD NOT BE PROVED GENUINE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE INCOME OF THE INVESTORS WAS NOT COMMENSURATE WITH THE AMOUNT OF SHARE APPLICATION MONEY GIVEN BY THEM. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW IN ADJUDICATING THE ISSUES INVOLVED WITH DIRECTIONS BEYOND THE POWERS OF CIT(A) AS SECTION 251(L)(A) OF THE I.T. ACT, EMPOWERS CIT(A) ONLY TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE I SSUES INVOLVED IN APPEAL. 24. AS NOTED EARLIER THE ASSESSEE IS ONE OF THE COMPANIES BELONGING TO THE DIAMOND HUT GROUP ON WHICH SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT WAS CARRIED OUT ON 27/10/2009. BASED ON THE VARIOUS ENQUIRIES CONDUCTED PRIOR TO THE SEARCH AND POST SEARCH IT WAS NOTED THAT ASSESSEE HAS ISSUED SHARE CAPITAL WITH RESPECT TO SEVEN COMPANIES AMOUNTING TO RS. 4 CRORES. THE LD. ASSESSING OFFICER ENQUIRED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE INVESTMENT MADE BY THIS COMPANY IN THE ASSESSEE COMPANY TO WHICH THE ASSESSEE REPLIED VIDE LETTER DATED 16/12/2011. THE LD. ASSESSING OFFICER HAS STATED AT PAGE NO. 13 AND 14 OF THE ASSESSMENT ORDER WHEREIN IT HAS BEEN HELD THAT THESE CO MPANIES ARE HAVING VERY MEAGER INCOME AND DOES NOT HAVE ANY REAL ACTIVITY BUT ARE ONLY CARRYING ON THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. THEREFORE, THE ADDITION OF RS. 4 CRORES WAS MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. 25. THE LD. CIT (A) DELETED THE ADDITION ON SUBSTANTIVE BASIS MADE BY THE ASSESSING OFFICER PART DIRECTED HIM TO RETAIN THE ADDITION ON PROTECTIVE BASIS IN THE HANDS OF THE COMPANY NOTING THAT WHETHER THE SUBSCRIPTION TO THE SHARE CAPITAL WAS GENUINE NESS OR UNACCOUNTED FUNDS WERE BROUGHT IN SHARE CAPITAL FOR WHICH FURTHER ENQUIRIES ARE REQUIRED. THE LD. CIT (A) HELD THAT APPELLANT COMPANY IS THE PRESENT BENEFICIARY OF FUNDS RAISED THEIR SHARE CAPITAL AND THEREFORE HE UPHELD THE ADDITION OF RS. 4 CRORE S ON PROTECTIVE BASIS IN THE HANDS OF THE COMPANY. 26. REVENUE AGGRIEVED WITH THE ORDER OF THE FIRST APPELLATE AUTHORITY HAS PREFERRED AN APPEAL BEFORE US. THE LD. CIT DEPARTMENTAL REPRESENTATIVE PAGE | 20 VEHEMENTLY SUBMITTED THAT ISSUE INVOLVED IN THIS APPEAL IS IDENT ICAL TO ISSUE INVOLVED IN APPEAL NO. 3427/DEL/2013 FOR ASSESSMENT YEAR 2008 09 IN CASE OF DIAMOND HUT INDIA PRIVATE LIMITED WHERE THE LD. CIT (A) HAS DELETED THE ADDITION OF RS. 3.17 CRORES ON IDENTICAL FACTS AND CIRCUMSTANCES. IT WAS FURTHER SUBMITTED BY HER THAT IN THAT PARTICULAR CASE THE CIT (A) HAS DELETED THE ADDITION ON THE IDENTICAL FACTS AND CIRCUMSTANCES WHEREAS IN THE PRESENT CASE ON IDENTICAL FACTS AND CIRCUMSTANCES HE HAS UPHELD THE ADDITION ON PROTECTIVE BASIS THOUGH STATING THAT ASSESSEE I S THE REAL BENEFICIARY OF THE ACCOMMODATION ENTRIES. SH E FURTHER REFERRED THE BALANCE SHEET OF THE COMPANIES, WHICH ARE SUBMITTED BY THE ASSESSEE TO SHOW THAT IN CASE OF CHANDI MATA MANAGEMENT PRIVATE LIMITED THAT HAS INVESTED RS. 95 LACS IN THE COMPANY SH ARE CAPITAL DOES NOT HAVE INVESTMENT IN THE BALANCE SHEET OF THAT PARTICULAR INVESTOR COMPANY. IT WAS FURTHER STATED BY HER THAT THERE IS NO SCHEDULE SUBMITTED WHEREIN IT CAN BE SEEN THAT WHETHER THE INVESTMENT OF THE ASSESSEE COMPANY ARE SHOWN IN ITS BALA NCE SHEET OR NOT. FURTHER FORMATION WAS ALSO SUBMITTED WHICH IS IN THE FORM OF LEDGER ACCOUNT FROM THE BOOKS OF THE INVESTOR. OVER AND ABOVE SEA SUBMITTED THAT THE COMPANY, WHICH HAS INVESTED 95 LACS, HAS FILED THE RETURN OF TOTAL INCOME OF RS. 2 LACS ONLY . SHE FURTHER ENDORSED THE FINDING OF THE LD. AO THAT THIS COMPANY IS EXISTING ONLY ON PAPER AND DOES NOT HAVE REAL ACTIVITY. SIMILARLY, FOR THE PURPOSE OF WELL - BUILD CEMENT PRIVATE LIMITED INVESTMENT OF RS. 50 LACS IN THE ASSESSEE COMPANY IT WAS SUBMITTED THAT IT DOES NOT HAVE ANY INVESTMENT IN THE BALANCE SHEET OF THAT COMPANY A S AT 31 ST OF MARCH 2008. S H E FURTHER STATED THAT THE CONFIRMATION IS ALSO ON LETTER PAD AND NOT THE LEDGER ACCOUNT OF THE INVESTMENT. SHE FURTHER STATED THAT 70 LAKH INVESTED BY T ELSTAR PACKAGING PRIVATE LIMITED IN THE ASSESSEE COMPANY HOWEVER IN THE BALANCE SHEET OF THE INVESTOR COMPANY NO SUCH INVESTMENT IS SHOWN FURTHER IT IS ALSO NOT KNOWN FROM WHICH BANK ACCOUNT THE CHECK IS ISSUED. WITH RESPECT TO TUTICORIN TEXIM PRIVATE LIMITED NO SUCH INVESTMENTS ARE SHOWN IN THE BALANCE SHEET IN THE ASSESSEE COMPANY AND FURTHER THERE IS NO REFERENCE FROM WHICH BANK ACCOUNT THE MONIES GIVEN AS WELL AS THE CONFIRMATION STATEMENT IS NOT PAGE | 21 ALSO SUPPORTED BY THE LEDGER ACCOUNT OF INVESTMENT. SIMILARLY IS THE CASE WITH OTHER THREE COMPANIES. THEREFORE, SHE SUBMITTED THAT THE ASSESSEE HAS MISERABLY FAILED TO DISCHARGE ITS INITIAL ONUS CAST UPON HIM. SHE THEREFORE SUBMITTED THAT THE ADDITION MIGHT BE CONFIRMED BY REVERSING THE ORDER OF THE LD. C IT (A). IT WAS FURTHER STATED BY HER THAT THERE IS NO BASIS FOR CIT APPEAL TO UPHOLD THE ADDITION ONLY ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE COMPANY. 27. DESPITE NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THEREFORE WE DECIDE THE ISSUE ON TH E INFORMATION AVAILABLE ON RECORD ON THE MERITS OF THE CASE. 28. WE HAVE CONSIDERED THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS THE ARGUMENTS OF THE LD. CIT DEPARTMENTAL REPRESENTATIVE AND PAPER BOOK FILED BY THE ASSESSE . ADMITTEDLY, THE ASSESSEE COMPANY HA S ISSUED SHARES WORTH RS. 4 CRORES TO 7 COMPANIES. ASSESSEE HAS SUBMITTED CERTAIN DETAILS IN THE FORM OF THE BALANCE SHEET, THE PERMANENT ACCOUNT NUMBER, AND CERTAIN BANK ACCOUNTS. THE CONFIRMATION SUBMITTED BY THE INVESTOR COMPANIES ARE MERELY ON THE LETT ERHEAD HOWEVER, NO LEDGER ACCOUNTS OF SUCH INVESTMENTS ARE SUBMITTED. FURTHER, IN THE BALANCE SHEET OF MOST OF THE INVESTOR COMPANY THE INVESTMENT MADE BY THEM INTO THE ASSESSEE COMPANY ARE NOT SHOWN AS AN INVESTMENT THEREFORE THE CONFIRMATION SUBMITTE D BY THE ASSESSEE ARE ALSO SHROUDED WITH DOUBT. ON LOOKING AT THE BALANCE SHEET OF ALL THESE INVESTOR COMPANIES THERE IS NO INVESTMENT A S STATED BY THE LD. DEPARTMENTAL REPRESENTATIVE. EVEN ON EXAMINATION BY US, ALSO WE COULD NOT FIND THAT INVESTMENT HAS BEEN SHOWN BY THE INVESTOR COMPANIES IN THE ASSESSEE COMPANY. NATURALLY, THESE COMPANIES HAVE BEEN AUDITED AND IF THE CHEQUES ARE ISSUED FROM THE RECORDED BANK ACCOUNTS WHEN THE SHARE APPLICATION IS MADE IT IS SURPRISING THAT THESE INVESTMENTS ARE NO T CLASSIFIED AS INVESTMENT BY THE INVESTOR COMPANIES. THE LD. CIT (A) HAS CONFIRMED THE ADDITION ONLY ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE WITHOUT ANY REASON . IN FACT, HE SHOULD HAVE ANALYZED THE VARIOUS BALANCE SHEETS AND INFORMATION SUBMITT ED BY THE ASSESSEE AND SHOULD HAVE GIVEN HIS OWN FINDING ON THE VARIOUS ASPECTS RAISED BY THE LD. ASSESSING OFFICER IN HIS ASSESSMENT ORDER. THE LD. CIT PAGE | 22 (A) HAS FAILED TO CONSIDER THE REAL ISSUE IN THIS APPEAL AND WITHOUT ANY REASON DELETED THE ADDITION ON SUBSTANTIVE BASIS. FURTHERMORE, THE BALANCE SHEETS AND OTHER DETAILS SUBMITTED BY THE ASSESSEE ALSO DO NOT SHOW CONCLUSIVELY THAT THESE COMPANIES HAVE MADE INVESTMENT IN THE ASSESSEE COMPANY OR NOT. THIS FACT NEEDS A DETAILED EXAMINATION ADMITTEDLY AS ARG UED BY THE LD CIT DR. HENCE, WE REVERSE THE FINDING OF THE LD CIT (A). IN VIEW OF THIS, WE DIRECT THE ASSESSEE TO PRODUCE RELEVANT DETAILS WITH RESPECT TO THE IDENTITY, CREDITWORTHINESS OF THE INVESTOR COMPANIES AS WELL AS THE GENUINENESS OF THE TRANSACTI ON. IN THE PECULIAR CIRCUMSTANCES AND THE FACTS , AND WHERE THE POST - SEARCH ENQUIRIES ALSO PROVE OTHERWISE, THE HIGHER ONUS IS CAST UPON THE ASSESSEE AND THEREFORE THE ASSESSEE IS DIRECTED TO DISCHARGE ITS ONUS BY PRODUCING THE RELEVANT DETAILS AS WELL AS T HE BOOKS OF ACCOUNTS OF THE INVESTOR COMPANIES ALONG WITH THE DIRECTORS OF THOSE COMPANIES BEFORE THE ASSESSING OFFICER FOR THE EXAMINATION. THEY NEED TO EXPLAIN THAT HOW DESPITE MAKING SUCH A HUGE INVESTMENTS IT IS NOT SHOWN IN THE BALANCE SHEET AS INVEST MENTS. THE LD. AO MAY EXAMINE THE DIRECTORS OF THE INVESTOR COMPANY ALONG WITH THE BOOKS OF ACCOUNT AND RESPECTIVE BANK STATEMENTS AND BALANCE SHEETS OF THE INVESTOR COMPANY AND THEN DECIDE THE I SSUE IN ACCORDANCE WITH THE LAW AFTER CONSIDERING THE VARIOUS ISSUES RAISED BY THE LD CIT DR IN HER ARGUMENTS. IN THE RESULT GROUND NO. 1 4 OF THE APPEAL OF THE REVENUE IS ALLOWED ACCORDINGLY. 29. IN THE RESULT, ITA NO. 34 25/ DEL/ 2013 IN CASE OF DIAMOND JEWELS PRIVATE LIMITED FOR ASSESSMENT YEAR 2008 09 IS ALLOWED F OR STATISTICAL PURPOSES. 30. IN THE RESULT, ALL THREE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 0 5 / 0 3 / 2018 . - S D / - - S D / - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 5 / 0 3 / 2018 A K KEOT COPY FORWARDED TO PAGE | 23 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI