DCIT, Agra V. M/s Surajmal Cold Storage Pvt. LTd, Agra

ITA 345/AGR/2009

• Counselvise Citation: 34520314 RSA 2009
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 31-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Business income; Income from undisclosed sources; Share purchase agreement; Deemed to accrue or arise in india; Question of law; Capital receipt; Onus to prove
• Section: 143(3); 131; 69; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.345/AGR/2009 ASSESSMENT YEAR : 2004-05 DY. COMMISSIONER OF INCOME TAX, VS. M/S. SURAJMAL COLD STORAGE PVT. LTD., CIRCLE 4(1), AGRA. PALTU KI PIYAU, KHANDAULI, AGRA. (PAN: AAICS 2107 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. DATE OF HEARING : 24.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 09.08.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 26.05.2009 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION AMOUNTING TO RS.1,04,73,000/- MADE U/S 68 OF THE I.T. ACT, 1961 BEING UNEXPLAINED SHARE MONEY & LOANS WITHOUT PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IGNORING THE OBSERVATIONS AND FINDINGS OF THE AO DISCUSSED IN TH E ASSESSMENT ORDER. ITA NO.345/AGR/2009 A.Y. 2004-05. 2 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION AMOUNTING TO RS.1,04,73,000/- MADE U/S 68 OF THE I.T. ACT, 1961 BEING UNEXPLAINED SHARE MONEY & LOANS, ESPECIA LLY RELAYING UPON THE DOCUMENTS FURNISHED BY THE ASSESSEE PERTAI NING TO THE TRANSACTIONS OF THE PERIOD BEGINNING 1 ST APRIL, 2004 ONWARDS. 3. THAT THE APPELLANT CRAVES TO ADD OR ALTER ANY OR MORE GROUND OR GROUND OF APPEAL AS MAY BE DEEMED FIT AT THE TIME O F HEARING OF APPEAL. 4. THAT THE DECISION OF LEARNED CIT(A) AGRA BEING E RRONEOUS IN LAW & ON FACTS DESERVE TO BE QUASHED & THAT OF A.O. DESERVES TO BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE D ERIVES INCOME FROM COLD STORAGE. THE ASSESSEE COMPANY WAS INCORPORATED W.E .F. 03.06.2003. THE COLD STORAGE WAS CONSTRUCTED AND INSTALLED DURING THE YE AR. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O.) NOTICED T HAT THE ASSESSES HAS SHOWN RECEIPT OF SHARE MONEY AMOUNTING TO RS.90,00,000/- FROM 140 PERSONS. RS.12,62,000/- FROM 5 DIRECTORS, NAMELY SHRI BHAGWA N SINGH, HIS WIFE SMT. SHEELA DEVI, HIS SON SHRI BHUPENDRA SINGH AND SHRI PAWAN KUMAR AND HIS DAUGHTER-IN-LAW SMT. GEETA DEVI, AND BALANCE AMOUNT HAS BEEN RECEIVED FROM 135 PERSONS, ALL ARE AGRICULTURISTS. IN ADDITION TO SH ARE APPLICATION MONEY, THE ASSESSEE HAS SHOWN RECEIPTS OF RS.25,51,000/- BY WAY OF UNSE CURED LOAN FROM DIRECTORS AND SHARE HOLDERS. THE A.O. ASKED THE ASSESSEE TO FURN ISH DETAILS OF NAME & ADDRESS OF PERSONS WHO HAD GIVEN SHARE APPLICATION MONEY, COPY OF APPLICATION FILED BY THEM FOR ALLOTMENT OF SHARES, DATE AND MODE OF PAYMENT O F SHARE APPLICATION MONEY, ITA NO.345/AGR/2009 A.Y. 2004-05. 3 COPY OF BANK ACCOUNT IN WHICH SHARE APPLICATION MON EY WAS DEPOSITED BY THE ASSESSEE. NAME AND ADDRESS OF ALL SHARE HOLDERS, N UMBER OF SHARES APPLIED AND ALLOTTED TO THEM, DATE AND MODE OF PAYMENT FOR PURC HASING SHARES, COPY OF APPLICATION FILED BY THEM FOR ALLOTMENT OF SHARES. IN RESPECT OF LOAN, THE A.O. ASKED THE ASSESSEE TO FURNISH COMPLETE ADDRESS OF P ERSONS FROM WHOM LOANS WERE TAKEN, THEIR IDENTITY, CREDITWORTHINESS AND GENUINE NESS OF THE TRANSACTION. THE DOCUMENTS AND EVIDENCES FILED BY THE ASSESSEE IN RE SPECT OF SHARE MONEY AND LOANS HAVE BEEN EXAMINED BY THE A.O. LOOKING TO THE LARG E NUMBER OF SHARE HOLDERS, THE A.O. NOTED THAT IT WAS NOT POSSIBLE TO EXAMINE AND VERIFY THE MONEY RECEIPT FROM ALL SUCH SHARE APPLICANTS. HOWEVER, FEW OF THEM SU CH AS SMT. BARFI DEVI AND SHRI PRADEEP KUMAR WERE EXAMINED. THE A.O. RECORDED THE DETAILS OF THE FACTS OF HIS EXAMINATION PARTY-WISE. THE PARTY-WISE BRIEF OBSER VATION OF THE A.O. ARE AS UNDER:- 3. REGARDING SHARE MONEY OF RS.3,94,000/- AND LOAN RS.1,10,000/- FROM SHRI BHAGWAN SINGH, MAIN DIRECTOR : THE ASSESSEE TAKEN LOAN OF RS.1,10,000/- THROUGH CHEQUE DATED 22.07.2003 AND SHARE APPLICATION MONEY RS.3,94,000/- IN CASH FROM SHRI BHAGWAN SINGH. THE ASSESSEE FURNISHED THE CON FIRMATORY LETTER, PHOTOCOPY OF RATION CARD AND KISAN BAHI AND A COPY OF BANK PASS BOOK OF SHRI BHAGWAN SINGH WAS ALSO FURNISHED. THUS, THE A.O. EXAMINED THE DE TAILS FILED BY THE ASSESSEE AND NOTICED THAT SHRI BHAGWAN SINGH IS AGED ABOUT 56 YE ARS, HIS MAIN SOURCE OF INCOME ITA NO.345/AGR/2009 A.Y. 2004-05. 4 IS AGRICULTURE AND HIS ANNUAL INCOME IS RS.70,000/- . THE FAMILY OF SHRI BAHAGWAN SINGH CONSISTS OF 5 PERSONS INCLUDING THREE GROWN U P CHILDREN. THE A.O. OBSERVED THAT OUT OF SUCH INCOME IT IS NOT POSSIBLE TO SAVE INCOME AFTER MEETING HOUSEHOLD EXPENSES AND OTHER EXPENSES ON ACCOUNT OF SOCIAL A ND FAMILY OBLIGATIONS. THE A.O. WHILE EXAMINING THE BANK ACCOUNT IN CANARA BAN K NOTICED THAT BALANCE AS ON 01.04.2003 WAS RS.14,278/- AND IT REMAINED THE SAME TILL 24.06.2003 EXCEPT THAT 3 CHEQUES TOTALING RS.4,00,000/- WERE CREDITED IN THI S ACCOUNT IN THE MONTH OF MAY AND JUNE. THE ENTIRE RS.4,00,000/- WAS TRANSFERRED TO SOME OTHER ACCOUNT. SIMILARLY, IN THE MONTH OF JULY 2 CHEQUE AGGREGATIN G TO RS.1,60,000/- WAS CREDITED AND OUT OF THAT LOAN OF RS,1,10,000/- WAS GIVEN TO THE ASSESSEE. ON THE BASIS OF THESE OBSERVATIONS THE A.O. WAS OF THE VIEW THAT TH E ASSESSEE HAS FAILED TO PROVE THE CAPACITY TO ADVANCE SUM OF RS.1,10,000/- OR RS. 3,94,000/- BY WAY OF SHARE MONEY. THE A.O., AFTER CONSIDERING THE FACTS OF TH E CASE, MADE THE ADDITION OF RS.3.94,000/- ON ACCOUNT OF SHARE APPLICATION MONEY AND LOAN OF RS.1,10,000/- TREATING THE SAME AS UNEXPLAINED. 4. REGARDING SHARE MONEY OF RS.3,67,000/- AND LOAN OF RS.6,60,700/- FROM SHRI BHUPENDRA SINGH, S/O. SHRI BHAGWAN SINGH : THE A.O. NOTICED THAT SHRI BHUPENDRA SINGH IS AGED ABOUT 28 YEARS, HIS SOURCE OF INCOME IS AGRICULTURE, HIS ANNUAL INCOME IS RS.48,000/-. THE A.O. OBSERVED TH AT AFTER CONSIDERING THE HOUSEHOLD EXPENSES, IT IS NOT POSSIBLE TO SAVE ANYT HING. THE A.O. ALSO EXAMINED ITA NO.345/AGR/2009 A.Y. 2004-05. 5 BANK ACCOUNT AND NOTED THAT BANK ACCOUNT WAS OPENED ON 13.05.2003 BY DEPOSITING CASH OF RS.2,00,000/- AND 2,50,000/- ON 12.06.2003, RS.1,99,500 ON 07.07.2003 AND RS.1,00,000/- ON 17.07.2003. THE A. O. NOTED THAT IMMEDIATELY AFTER DEPOSITING THE AMOUNT THE ENTIRE AMOUNT WAS G IVEN AS LOAN TO THE ASSESSEE. 5. REGARDING SHARE MONEY OF RS.48,000/- AND LOAN OF RS.2,00,000/- FROM SHRI GIRRAJ SINGH : THE A.O. NOTICED THAT SHRI GIRRAJ SINGH IS AGED ABOUT 48 YEARS, HIS SOURCE OF INCOME IS AGRICULTURE. THERE ARE 7 MEMBE RS IN HIS FAMILY INCLUDING THREE GROWN UP CHILDREN. THE A.O. ALSO EXAMINED THE BANK ACCOUNT AND NOTICED THAT RS.2,00,000/- WAS DEPOSITED ON 05.05.2003 IN CASH O UT OF THAT A LOAN CHEQUE WAS GIVEN TO THE ASSESSEE. THE A.O. MADE ADDITION OF R S.2,00,000/- AND RS.48,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE CAPACITY OF SHRI GIRRAJ SINGH. 6. REGARDING LOAN OF RS.2,00,000/- AND SHARE MONEY OF RS.48,000/- FROM SHRI GOPAL SINGH : SHRI GOPAL SINGH IS AGED ABOUT 38 YEARS, HIS SOU RCE OF INCOME IS AGRICULTURE. THERE WERE 6 MEMBERS IN HIS FAMILY AN D HIS ANNUAL INCOME IS RS.30,000/-. THE A.O. ALSO EXAMINED THE BANK ACCOU NT OF SHRI GOPAL SINGH AND NOTICED THAT SIMILAR OBSERVATIONS WERE MADE AS MADE IN THE CASE OF SHRI GIRRAJ SINGH, SHRI BHUPENDRE SINGH AND OTHERS. THE A.O. M ADE ADDITION OF RS.2,00,000/- AND RS.48,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CAPACITY OF SHRI GOPAL SINGH. ITA NO.345/AGR/2009 A.Y. 2004-05. 6 7. REGARDING LOAN OF RS.1,00,000/- AND SHARE MONEY OF RS.48,000/- FROM SHRI HAMBEER SINGH: SHRI HAMBEER SINGH IS AGED ABOUT 35YEARS, HIS SOU RCE OF INCOME IS AGRICULTURE. THERE ARE 5 MEMBERS IN HIS FAMILY AND HIS ANNUAL INCOME IS RS.36,000/-. THE A.O. EXAMINED HIS BANK ACCOUNT AL SO AND ON SIMILAR REASONS AS DISCUSSED ABOVE, THE A.O. MADE ADDITION OF RS.1,00, 000/- AND RS.48,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CA PACITY OF SHRI HAMBEER SINGH. 8. REGARDING LOAN OF RS.4,03,000/- AND SHARE MONEY OF RS.49,000/- FROM SHRI JAI PAL SINGH SINGH : SHRI JAI PAL SINGH IS AGED ABOUT 40 YEARS, HIS S OURCE OF INCOME IS AGRICULTURE. THERE ARE 4 MEMBERS IN HIS FAMILY AND HIS ANNUAL INCOME IS RS.40,000/-. THE A.O. ALSO EXAMINED BANK ACCOUNT O F SHRI JAI PAL SINGH. AFTER SIMILAR DISCUSSIONS, THE A.O. MADE ADDITION OF RS.4 ,03,000/- AND RS.49,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE TH E CAPACITY TO ADVANCE THE MONEY. 9. REGARDING LOAN OF RS.2,00,000/- AND SHARE MONEY OF RS.49,000/- FROM SHRI PREM SINGH : SHRI PREM SINGH IS AGED ABOUT 35 YEARS, HIS SOUR CE OF INCOME IS AGRICULTURE. THERE ARE 5 MEMBERS IN HIS FAMILY AND HIS ANNUAL INCOME IS RS.30,000/-. THE A.O. ALSO EXAMINED HIS BANK ACCOU NT. AFTER EXAMINING, THE A.O. MADE ADDITION OF RS.2,00,000/- AND RS.49,000/- ON S IMILAR GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CAPACITY OF SHRI PREM SINGH . ITA NO.345/AGR/2009 A.Y. 2004-05. 7 10. REGARDING LOAN OF RS.2,80,000/- AND SHARE MONEY OF RS.49,000/- FROM SHRI SAHAB SINGH: SHRI SAHAB SINGH IS AGED ABOUT 56 YEARS AND HIS S OURCE OF INCOME IS AGRICULTURE. THERE ARE 4 MEMBERS IN HIS FAMILY, HI S ANNUAL INCOME IS RS.42,000/-. AFTER EXAMINING THE BANK ACCOUNT, THE A.O. MADE ADD ITION OF RS.2,00,000/- AND RS.49,000/- ON THE GROUND THAT THE ASSESSEE HAS FAI LED TO PROVE THE CAPACITY OF SHRI SAHAB SINGH. 11. REGARDING LOAN OF RS.3,00,000/- AND SHARE MONEY OF RS.49,000/- OF SHRI SHIV KUMAR SINGH: SHRI SHIV KUMAR SINGH IS AGED ABOUT 35 YEARS AND HIS SOURCE OF INCOME IS AGRICULTURE. THE A.O. EXAMINED HIS BA NK ACCOUNT AND MADE ADDITION OF RS.3,00,000/- AND RS.49,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CAPACITY OF SHRI SHIV KUMAR SINGH. 12. THE A.O. FURTHER NOTICED THAT SIMILAR IS THE PO SITION WITH REGARD TO SHARE MONEY RECEIVED FROM OTHER PERSONS. THE A.O. EXAMIN ED SMT. BARPHI DEVI AND SHRI PRADEEP KUMAR. ON EXAMINATION OF THEM, IT HAS BEEN FOUND THAT THEY ARE ALMOST COMPLETELY IGNORANT AS TO WHAT THE SHARE IS AND HOW THEY HAVE ACQUIRED THE SHARES. THEY FAILED TO GIVE SATISFACTORY EXPLANATI ON. THE A.O. ON THE BASIS OF STATEMENT OF THESE TWO PERSONS GATHERED THAT THE EN TIRE AFFAIRS REGARDING INVESTMENT IN SHARE WAS CARRIED BY SHRI BHUPENDRA SINGH, DIREC TOR OF THE ASSESSEE COMPANY. ITA NO.345/AGR/2009 A.Y. 2004-05. 8 13. APART FROM THE ABOVE EXAMINATION, THE A.O. HAS ALSO EXAMINED THE STATUS OF THE ASSESSEE COMPANY AND NOTICED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. AS PER THE PROVISIONS OF SECTION 3(1)(III) OF THE C OMPANYS ACT, THERE CANNOT BE MORE THAN 50 MEMBERS (SHARE HOLDERS) IN A PRIVATE C OMPANY, AND IF THERE ARE, THEN SUCH MEMBERS WILL BE TREATED AS DEPOSITORS. ON THE BASIS OF EXAMINATION, THE A.O. OBSERVED THAT THE ASSESSEE FIRST INVESTED ITS UNDIS CLOSED INCOME IN THE COLD STORAGE AND THEREAFTER WITH A VIEW TO GIVE A COLOUR OF GENU INENESS TO THE INVESTMENT RECEIPT CASH SHARE APPLICATION MONEY FROM AGRICULTURISTS WA S ARRANGED. THUS, THIS ASPECT ALSO PROVES THE NON-GENUINENESS OF SHARE MONEY RECE IVED BY THE ASSESSEE FROM AGRICULTURISTS. 14. AFTER CONSIDERING THE FACTS OF THE CASE, THE A. O. HELD THAT THE ASSESSEE DID NOT FURNISH EVIDENCE TO PROVE THE IDENTITY, CAPACIT Y AND GENUINENESS OF RECEIPT OF SHARE MONEY FROM THE SHARE APPLICANTS. HOWEVER, NO ADDITION WAS MADE IN RESPECT OF RS.10,78,000/- INCLUDED IN THE SHARE MONEY IN TH E NAME OF SMT. SHEELA DEVI BECAUSE SHE HAS CONTRIBUTED HER LAND FOR COLD STORA GE BUILDING EQUIVALENT TO ABOVE AMOUNT IN LIEU OF SHARE MONEY. THE A.O. THUS TREAT ED RS.90,00,000 MINUS RS.10,78,000 = RS.79,22,000/- AS UNEXPLAINED SHARE MONEY AND RS.25,51,000/-AS UNEXPLAINED LOANS AND MADE TOTAL ADDITION OF RS.1,0 4,73,000/- UNDER SECTION 68 OF THE ACT. ITA NO.345/AGR/2009 A.Y. 2004-05. 9 15. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUB MISSION NOTICED THAT THERE WERE NO DOUBT THAT ALL THE PERSONS CONCERNED EITHER BY WAY OF DEPOSITORS FOR UNSECURED LOANS OR SHAREHOLDERS WERE AGRICULTURISTS . THEY HAVE MADE SHARE APPLICATION AND RECEIVED THEIR SHARE CERTIFICATES. THE STATEMENTS OF TWO SHAREHOLDERS SMT. BARFI DEVI AND SHRI PRADEEP KUMAR WERE RECORDED BY THE A.O. WHEREIN THEY HAVE CATEGORICALLY STATED THAT THEY HA VE LAND HOLDINGS AND BECOME SHAREHOLDERS OF THE ASSESSEE COMPANY. THEY ALSO CO NFIRMED HAVING RECEIVED THEIR SHARE CERTIFICATES. ALL THE CONCERNED PERSONS HAVE AGRICULTURAL INCOME. SHRI BHAGWAN SINGH WHO IS BOTH A SHAREHOLDER AS WELL AS A CREDITOR HAS SHOWN AGRICULTURAL INCOME IN A.Y. 2006-07. THE ASSESSMEN T WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ACCEPTING THE RETURNED IN COME FILED BY THE ASSESSEE. THERE HAS BEEN NO CHANGE IN THE SHARE HOLDING. IT HAS ALSO BEEN NOTED BY CIT(A) THAT THE ALLEGED SHAREHOLDERS WERE NEAR RELATIVES A ND FRIENDS OF THE PROMOTERS/DIRECTORS OF THE COMPANY. THE A.O. EXAMI NED TWO SUCH PERSONS WHO HAVE CONFIRMED THEIR INVESTMENT IN THE ASSESSEE COM PANY. NONE OF THE SHAREHOLDERS AND LENDERS HAS DENIED HIS INVESTMENT IN THE ASSESSEE COMPANY. THE LENDERS/SHAREHOLDERS HAVE USED THE COLD STORAGE IN THE SUBSEQUENT YEAR FOR PRESERVING THEIR AGRICULTURAL PRODUCE. THE LIST AT TACHED WITH BALANCE SHEET SHOWS THAT THEIR NAMES APPEAR UNDER - II. APPLICATION OF FUND 3. CURRENT ASSETS, LOANS & ADVANCES SCH. I RS.39,60,000/- SCHEDULE I : LOANS & ADVANCES ADVANCE TO FARMERS 39,60,000/-. THE CIT(A) NOTE D THE DETAILS OF PARTIES AT ITA NO.345/AGR/2009 A.Y. 2004-05. 10 PAGE NO.8 OF HIS ORDER. IT HAS ALSO BEEN NOTED BY THE CIT(A) THAT IN SUPPORT OF GENUINENESS OF THE SHARE APPLICATION MONEY AND UNSE CURED LOAN, THE ASSESSEE HAS FURNISHED COMPLETE ADDRESS OF THE PARTIES, COPIES O F THEIR ACCOUNTS IN THE BOOKS OF THE ASSESSEE, DULY CONFIRMED BY RESPECTIVE PARTIES, KISAN BAHIS AS THE LENDERS ARE AGRICULTURISTS, COPY OF RATION CARD, COPIES OF THEI R BANK PASS BOOK & COPIES OF INCOME TAX RETURNS. ALL THE SHARE HOLDERS HAVE FIL ED AFFIDAVITS BEFORE THE A.O. SIMILARLY, CONFIRMATION LETTERS OF ALL THE LENDERS ALONG WITH PHOTOCOPIES OF THEIR RATION CARDS, SAVINGS BANK ACCOUNTS/KISAN BAHIS AND KHATAUNIS WERE ALSO FURNISHED BEFORE THE A.O. AFTER CONSIDERING THE SUBMISSION O F THE ASSESSEE, THE CIT(A) DELETED THE ADDITION AS UNDER :- (PARAGRAPH NO.5) 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE IDENTITY OF THE SHAREHOLDERS AND THE LENDERS AND THEIR INVESTMENT IN THE SHARE CAPITAL O F THE COMPANY AND ADVANCES OF LOANS RESPECTIVELY ARE NOT IN DOUBT. I T IS SEEN THAT BARRING SMT. BARFI DEVI AND SHRI PRADEEP KUMAR, NONE OF THE REMAINING SHAREHOLDERS OR LENDERS HAS BEEN EXAMINED AND NO UN TRUTH/FALSITY HAS BEEN FOUND IN THEIR CLAIMS. VARIOUS DOCUMENTS HAVE BEEN FURNISHED BY THE APPELLANT IN THE FORM OF RATION CARDS, KISAN BAHIS, SAVING BANK ACCOUNT STATEMENTS, CONFIRMATION LETTERS ETC. FOR E STABLISHING THE IDENTITY OF THE CREDITORS AND THE GENUINENESS OF TH E TRANSACTIONS, WHICH HAVE NOT BEEN REFUTED BY THE AO WITH ANY EVID ENCE TO THE CONTRARY EITHER IN THE COURSE OF ASSESSMENT PROCEED INGS OR REMAND PROCEEDINGS. THE FACT THAT THE SHAREHOLDERS AND TH E LENDERS ARE AGRICULTURISTS HAS NOT BEEN DOUBTED OR REFUTED BY T HE AO WITH ANY EVIDENCE TO THE CONTRARY. IN MANY CASES, THE SHARE HOLDERS AND LENDERS ARE FOUND TO BE DEPOSITING CASH PERIODICALLY IN THE IR SAVINGS ACCOUNTS AS WELL AS KISAN CREDIT CARD ACCOUNTS, OSTENSIBLY O UT OF THEIR AGRICULTURAL RECEIPTS. THERE IS NO MATERIAL OR EVI DENCE ON RECORD TO SHOW THAT THE SHAREHOLDERS AND LENDERS DID NOT HAVE AGRICULTURAL INCOME. ON THE CONTRARY, THE ADVANCE OF MONEY TO S EVERAL ITA NO.345/AGR/2009 A.Y. 2004-05. 11 LENDER/SHAREHOLDER FARMERS AS LISTED HEREINABOVE FR OM THE BALANCE SHEET AS ON 31.03.2004, ENDORSES THE ABOVE FACT. THE WRITTEN SUBMISSIONS FIELD DURING THE COURSE OF APPELLATE PR OCEEDINGS ON 23.01.2008 ENCLOSING THEREWITH VARIOUS DOCUMENTARY EVIDENCES, AS DISCUSSED HEREINABOVE, WERE FORWARDED TO THE AO FOR HIS REPORT VIDE THIS OFFICE LETTER DATED 18.03.2008. A REPORT DATE D 28.05.2008 OF DCIT, CIR-4(1), AGRA FORWARDED BY ADDL. CIT, RANGE- 4, AGRA WAS RECEIVED IN THIS OFFICE, MERELY REITERATING THE VIE W GIVEN IN THE ASSESSMENT ORDER. THUS, NEITHER IN THE COURSE OF A SSESSMENT PROCEEDINGS NOR IN THE COURSE OF REMAND PROCEEDINGS HAS THE AO FOUND (A) ANY FALSITY IN THE LAND HOLDINGS, BANK ACCOUNTS & OTHER DOCUMENTS FURNISHED BY THE UNSECURED LOAN CREDITORS AND SHAREHOLDERS (B) ANY EVIDENCE TO SHOW THAT THE AMO UNTS CLAIMED TO HAVE BEEN ADVANCED BY THEM OUT OR THEIR ALLEGED SAV INGS WERE NOT ADVANCED OR WERE EXCESSIVE OR UNREASONABLE, (C) TH AT THE SAID CREDITORS HAD ROUTED THE UNACCOUNTED FUNDS OF THE A PPELLANT COMPANY THROUGH THEIR OWN BANK ACCOUNTS. THE AO EXAMINED 2 SHAREHOLDERS WHO CONFIRMED THEIR INVESTMENTS. HOWEVER, ON THE S TRENGTH OF THESE 2 STATEMENTS, THE AO TREATED THE ENTIRE SHARE APPLICA TION MONEY AMOUNTING TO RS.79,22,000/- RECEIVED FROM 140 SHARE HOLDERS AS BOGUS AND HENCE THE APPELLANT COMPANYS DEEMED INCOME. A S FOR THE UNSECURED LOANS OF RS.25,51,000/- RECEIVED FROM 9 C REDITORS, THE AO TREATED THE SAME AS BOGUS WITHOUT EXAMINING EVEN A SINGLE CREDITOR AND WITHOUT ESTABLISHING THAT THE APPELLANT HAD FAI LED TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS A ND THE GENUINENESS OF THE TRANSACTIONS. THUS, THE ADVERSE CONCLUSION WAS DRAWN BY THE AO ON THE BASIS OF GENERAL AND VAGUE OBSERVATIONS RATH ER THAN CONCRETE MATERIAL AND COGENT EVIDENCE. THERE IS ALSO A CONTRADICTION IN THE FINDING OF TH E AO INSOMUCH THAT HE HAS ACCEPTED THE ADVANCED GIVEN BY THE APPE LLANT COMPANY TO 21 FARMERS BUT REJECTED THE RECEIPTS FROM THE SAME FARMERS BY WAY OF SHARE APPLICATION MONEY/LOANS. THE AO HAS HIGHLIGHTED AND DRAWN ADVERSE INFERENCE FROM THE FACT THAT THE IMPUGNED AMOUNTS WERE DEPOSITED IN CA SH IN THE BANK ACCOUNTS OF THE RESPECTIVE LENDERS/SHAREHOLDERS PRI OR TO THEIR ADVANCE TO THE APPELLANT COMPANY. HOWEVER, THE SOURCE OF T HE DEPOSITS IS LIABLE TO BE EXAMINED AND ANY CONCLUSION AS TO WHET HER SUCH FUNDS ITA NO.345/AGR/2009 A.Y. 2004-05. 12 ARE EXPLAINED OR UNEXPLAINED, IS LIABLE TO BE DRAWN IN THEIR RESPECTIVE CASES. IT WOULD BE ILLOGICAL TO TREAT THE DEPOSITS AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE APPELLANT COMPANY WITHO UT FIRST TREATING THE SAME AS UNEXPLAINED CASH CREDITS IN THE HANDS OF TH E CREDITORS IN WHOSE BANK ACCOUNTS THE CASH DEPOSITS INITIALLY APP EARED. UNDER THESE CIRCUMSTANCES, THE ADDITION OF RS.1,04,73,000 /- AS UNEXPLAINED CASH CREDITS IS NOT SUSTAINABLE AND HENCE DELETED. 16. THE LD. DEPARTMENTAL REPRESENTATIVE WITH REFERE NCE TO THE PROVISIONS OF COMPANYS ACT SUBMITTED THAT THE STATUS OF THE COMP ANY IS NOT A PRIVATE LIMITED COMPANY BUT IT IS A LIMITED COMPANY. LD. AUTHORISE D REPRESENTATIVE, WHILE CLARIFYING THE POSITION, SUBMITTED THAT THE ASSESSE E IS A PRIVATE LIMITED COMPANY CONVERTED INTO LIMITED COMPANY AND NECESSARY INFORM ATION/AND RETURN/STATEMENTS IN THIS REGARD WERE FILED BEFORE THE ROC. IN VIEW OF CLARIFICATION AND SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE, WE DO NOT FIN D ANY SUBSTANCE IN THE SUBMISSION OF THE LD. DEPARTMENTAL REPRESENTATIVE. 17. LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THAT BEFORE RECEIVING THE SHARE APPLICATION MONEY AND LOAN, THE AMOUNTS WERE DEPOSITED BY THE RESPECTIVE APPLICANTS AND CREDITORS. LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE CIT(A) DID NOT GIVE FINDING IN EACH CASE AS TO WHET HER THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION. IN SUPPORT OF HIS CONTENTION, THE LD. DEPARTMENTAL REPRESENTATIVE REL IED UPON THE THIRD MEMBER ITA NO.345/AGR/2009 A.Y. 2004-05. 13 DECISION OF I.T.A.T. JABALPUR BENCH IN THE CASE OF DCIT VS. VISHWANATH PRASAD GUPTA, 129 ITD 95. 18. THE LD. DEPARTMENTAL REPRESENTATIVE WHILE REFER RING RELEVANT PAGES OF PAPER BOOK OF THE ASSESSEE AS WELL AS OF DEPARTMENT SUBMI TTED THAT THE ASSESSEE HAS FAILED TO FURNISH THE PROOF IN RESPECT OF CREDITWOR THINESS OF SHARE APPLICANTS AND DEPOSITORS. HE SUBMITTED THAT IN RESPECT OF SHRI B HAGWAN SINGH & AND SHRI BHUPENDRA SINGH THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF DEPOSIT IN THEIR BANK ACCOUNT. LD. DEPARTMENTAL REPRESENTATIVE FUR THER SUBMITTED THAT IN RESPECT OF OTHER PARTIES, THERE ARE NO BANK ACCOUNTS. LD. DEPARTMENTAL REPRESENTATIVE DREW OUR ATTENTION ON THE AFFIDAVITS FILED BY THE A SSESSEE AND POINTED OUT THAT THE PARTIES DID NOT KNOW ABOUT WHAT IS THE COMPANY AND THEY ARE NOT AWARE OF SHARE CERTIFICATES. IN THE AFFIDAVITS THEY SUBMITTED THA T THEY DO NOT HAVE BANK ACCOUNTS. THEREFORE, SUCH AFFIDAVITS CANNOT BE RELIED UPON. THE LD. AUTHORISED REPRESENTATIVE CLARIFIED THAT THE SAID CLAUSE OF AF FIDAVIT WAS WITH REFERENCE TO AGRICULTURE LAND BANK. 19. THE LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE ASSESSEE COMPANY W AS INCORPORATED ON 03.06.2003. LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT THE A.O. IS NOT CORRECT IN MAKING THE ADDITION AS HELD BY THE APEX COURT IN THE CASE OF CIT VS. BHARAT ITA NO.345/AGR/2009 A.Y. 2004-05. 14 ENGINEERING & CONSTRUCTION COMPANY, 83 ITR 187 AND AMOUNT RECEIVED BEFORE THE COMMENCEMENT OF ASSESSEES BUSINESS CANNOT BE A DDED AS ASSESSEES BUSINESS INCOME. LD. AUTHORISED REPRESENTATIVE ALSO RELIED UPON THE ORDER OF I.T.A.T. AGRA BENCH IN THE CASE OF DCIT VS. SUGANDHI COLD STORAGE (P) LTD. IN ITA NO.368/AGR/2010 ORDER DATED 20.04.2012 WHEREIN IT H AS BEEN HELD THAT NO BUSINESS ACTIVITIES WERE CARRIED OUT AND THE ASSESSEE WAS AT THE STAGE OF FORMATION AND COMPLETION OF THE COMPANY, THEREFORE, SUCH AN ADDIT ION UNDER SECTION 68 IS UNJUSTIFIED. LD. AUTHORISED REPRESENTATIVE HAS ALS O RELIED UPON THE FOLLOWING DECISIONS WHICH ARE REPRODUCED FROM PAPER BOOK/WRIT TEN SUBMISSION :- A) JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF INDIA RICE MILLS VS. CIT, 218 ITR 508 (ALL.) B) DECISION OF I.T.A.T., AGRA BENCH IN THE CASE OF ITO VS. SHARTHI CONSTRUCTION CO. IN ITA NO.143/AGR/2011 ORDER DATED 27 TH APRIL, 2012. C) JUDGEMENT OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF MITESH ROLLING MILLS P. LTD. VS. CIT, 258 ITR 278 (GUJ.) D) ITA NO.134/HYD/2011 IN THE CASE OF ITO VS. M/S D IVYA FUELS, MAHABOOBNAGAR. E) ITAT, LUCKNOW BENCH IN THE CASE OF SURENDER PRAS AD MISHRA, 7 SOT 457. F) ITAT, DELHI BENCH IN THE CASE OF SAI BABA RUPADA S IN ITA NO.1543/98. G) ITAT, DELHI BENCH IN THE CASE OF GHABIABAD FOOTW EAR, 142 TAXMAN 8 MAGAZINE. H) ITAT, ALLAHABAD BENCH IN THE CASE OF SMT. MEERA DEVI, 14 SOT 190. 20. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE APEX COURT IN THE CASE OF CIT VS. LOVELY EXPORT (P) LTD., 216 CTR (SC) 195 WHEREIN IT HAS BEEN HELD THAT SHARE APPLICATION MONEY CANNOT BE ADDED IN THE HAND S OF THE ASSESSEE COMPANY. ITA NO.345/AGR/2009 A.Y. 2004-05. 15 LD. AUTHORISED REPRESENTATIVE HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL SER VICE P. LTD., 307 ITR 334 (DELHI), HONBLE ALLAHABAD HIGH COURT IN THE CASE O F CIT VS. JAISWAL MOTOR FINANCE, 141 ITR 706 (ALL.), HONBLE SUPREME COURT IN THE CASE OF CIT VS. STELLER INVESTMENT LTD., 251 ITR 263 (SC) & HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF CIT VS. M/S ARJUN COLD STORAGE GENERAL MILLS PVT. L TD. 2012 (5) TMI 118 (ALL.). LD. AUTHORISED REPRESENTATIVE HAS ALSO RELIED UPON THE ORDERS OF I.T.A.T., AHMEDABAD AND OTHERS. LD. AUTHORISED REPRESENTATIV E SUBMITTED THAT THERE IS ADDITIONAL BURDEN ON THE DEPARTMENT TO SHOW THAT SH ARE APPLICANTS DID NOT HAVE THE MEANS TO MAKE INVESTMENT, THE INVESTMENT MADE BY TH EM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO B E TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. LD. AUTHORISED REPRESENTATIVE SUB MITTED THAT THE DEPARTMENT HAS FAILED TO DISCHARGE THIS BURDEN. LD. AUTHORISED REP RESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE JUDGEMENT OF HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS. KAMADHENU STEEL & ALLOYS LTD. & OTHERS, 248 CTR 30 (DEL). 21. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEE HAS FURNISHED AFFIDAVITS OF DEPOSITORS AND SHARE APPLICANTS AND T HE CONTENTS OF THE AFFIDAVITS CANNOT BE DISBELIEVED WITHOUT REJECTING THE SAME. LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF MEHTA PAREKH, 30 ITR 181 (SC) AND ACIT VS. S.S. PHARMACEUTICALS (P) ITA NO.345/AGR/2009 A.Y. 2004-05. 16 LTD., 87 ITD 119 (ALL). LD. AUTHORISED REPRESENTAT IVE HAS ALSO RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. ORISSA CORPORATION P. LTD., 159 ITR 78 (SC). 22. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E A.O. CANNOT ASK THE ASSESSEE TO PROVE THE SOURCE OF THE SOURCE. LD. AU THORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. JAUHARIMAL GOEL, 201 C TR 54 (ALL) AND DCIT VS. ROHINI BUILDERS, 256 ITR 360 (GUJ.). LD. AUTHORISE D REPRESENTATIVE HAS ALSO RELIED UPON THE JUDGEMENT OF HONBLE RAJASTHAN HIG H COURT IN THE CASE OF ARAVALI TRADING CO. VS. ITO, 220 CTR 622 (RAJ). LD. AUTHOR ISED REPRESENTATIVE HAS ALSO RELIED UPON SOME DECISIONS OF I.T.A.T., AGRA BENCH IN SUPPORT OF HIS CONTENTION. 23. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. THE CRUX OF THE MATTER TO EXAMINE IN THE CASE UNDER CONSIDERATION WHETHER UNDER THE FACTS AND CIRCUMSTANCES THE CIT(A) IS CORRECT I N DELETING THE ADDITION ON ACCOUNT OF CASH CREDIT AND SHARE APPLICATION MONEY MADE BY THE A.O. UNDER SECTION 68 OF THE ACT. SECTION 68 OF THE ACT EMPOWERS THE A.O. TO TREAT ANY SUM FOUND CREDITED IN HE BOOKS OF ACCOUNT OF THE ASSESSEE FOR ANY PREVIOUS YEAR, IF THE ASSESSEE FAILS TO OFFER AN EXPLANATION ABOUT THE NA TURE AND SOURCES OF SUCH FUND OR IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO, ITA NO.345/AGR/2009 A.Y. 2004-05. 17 SATISFACTORY, AS INCOME FROM UNDISCLOSED SOURCES AN D CHARGE THE SAME TO TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE POWER OF THE A.O. UNDER SECTION 68 IS NOT AN ABSOLUTE ONE. IT IS SUBJECT TO HIS SA TISFACTION WHERE AN EXPLANATION IS OFFERED. THE POWER IS ABSOLUTE WHERE THE ASSESSEE OFFERS NO EXPLANATION. THE SATISFACTION WITH REGARD TO THE EXPLANATION IS IN E FFECT AN IN-BUILT SAFEGUARD IN SECTION 68 PROTECTING THE INTEREST OF THE ASSESSEE. IT PROVIDES FOR AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF TH E FUND. ONCE IT IS EXPLAINED, IT IS INCUMBENT ON THE A.O. TO CONSIDER THE SAME AND FORM AN OPINION WHETHER THE EXPLANATION IS SATISFACTORY OR NOT. IF THE CONCLUS ION IS ADVERSE WHOLLY OR IN PART TO THE INTEREST OF THE ASSESSEE, IT IS INCUMBENT ON TH E A.O. TO INTIMATE OR INFORM THE CONCLUSION ARRIVED AT TO THE ASSESSEE. WHEN SUCH I NFORMATION OR INTIMATION IS RECEIVED BY THE ASSESSEE, THE ONUS SHIFTS ON THE AS SESSEE. HE MAY FURNISH FURTHER EXPLANATION OR INFORMATION TO SUPPORT ITS CONTENTIO N. IF FURTHER INFORMATION OR MATERIALS ARE FURNISHED, THE A.O. IS BOUND TO EXAMI NE THE SAME AND FORM HIS FINAL OPINION AND PASS AN APPROPRIATE ORDER. AS STATED A BOVE THAT SECTION 68 SUGGESTS THAT THERE HAS TO BE CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE, THAT SUCH CREDIT HAS TO BE OF A SUM DURING THE PREVIOUS YEAR, AND THAT THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS OR THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISFACTORY. IT IS ONLY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE EXPRESSION THE ASSESSEE ITA NO.345/AGR/2009 A.Y. 2004-05. 18 OFFERS NO EXPLANATION MEANS WHERE THE ASSESSEE OFF ERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CR EDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. IT IS TRUE THAT THE OPINION OF THE A.O. FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFAC TORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD. THE OPINION OF THE A.O. IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABLE ON RECORD. APP LICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. 24. AS REGARDS THE BURDEN OF PROOF, IT IS SETTLED P OSITION OF LAW IN RESPECT OF CASH CREDIT THAT THE BURDEN IS ON THE ASSESSEE TO EXPLAI N THE THREE INGREDIENTS NAMELY, IDENTITY, CREDITWORTHINESS & GENUINENESS OF THE TRA NSACTION. 25. WITH THE ABOVE BACKGROUND OF GENERAL DISCUSSION IN RESPECT OF SECTION 68 OF THE ACT, NOW WE COME TO HAVE DISCUSSION REGARDING S ECTION 68 OF THE ACT AND SHARE APPLICATION MONEY. WHERE THE MATTER CONCERNS MONEY RECEIPTS BY WAY OF SHARE APPLICATION FROM INVESTORS, THE ASSESSEE HAS TO PRO VE THE EXISTENCE OF THE PERSON IN WHOSE NAME THE SHARE APPLICATION IS RECEIVED. ONCE THE EXISTENCE OF THE INVESTOR IS PROVED, IT IS NOT FURTHER THE BURDEN OF THE ASSESSE E TO PROVE WHETHER THAT PERSON ITSELF HAS INVESTED THE SAID MONEY OR SOME OTHER PE RSON HAS MADE INVESTMENT IN THE NAME OF THAT PERSON. THE BURDEN THEN SHIFTS ON TO THE REVENUE TO ESTABLISH THAT SUCH ITA NO.345/AGR/2009 A.Y. 2004-05. 19 INVESTMENT HAS COME FROM THE ASSESSEE-COMPANY ITSEL F. ONCE THE RECEIPT OF THE CONFIRMATION LETTER FROM THE CREDITOR IS PROVED AND THE IDENTITY AND THE EXISTENCE OF THE INVESTOR HAS NOT BEEN DISPUTED, NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE NAME OF SUCH INVESTOR CAN BE MADE IN T HE ASSESSEES HANDS. 26. THE IDENTITY OF THE SHAREHOLDER CAN BE PROVED B Y EITHER PRODUCING THE PERSON BEFORE THE A.O. OR BY WAY OF DOCUMENTS, REGISTERED ADDRESS, PAN ETC. THE GENUINENESS OF THE TRANSACTION CAN BE SHOWN FROM TH E FACT THAT THE MONEY HAS BEEN RECEIVED FROM THE SHARE HOLDER. IF THE MONEY IS RE CEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE C HANNELS, THE GENUINENESS OF TRANSACTION WOULD BE PROVED UNLESS OTHERWISE MATERI AL FOUND. OTHER DOCUMENTS SHOWING THE GENUINENESS OF TRANSACTION COULD BE THE COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER R EGISTER, ETC. THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER CAN BE PROVED BY PRODUCI NG THE BANK STATEMENT OF THE CREDITORS/SUBSCRIBERS SHOWING THAT IT HAD SUFFICIEN T BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. ONCE THESE D OCUMENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE O NUS CAST UPON HIM. THE A.O. CAN DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSE E WITH COGENT REASONS AND MATERIALS BUT NOT ON THE REALM OF SUSPICION. IN TH IS REGARD, WE WOULD LIKE TO REFER SOME JUDICIAL PRONOUNCEMENTS WHICH ARE AS UNDER :- ITA NO.345/AGR/2009 A.Y. 2004-05. 20 27. HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE O F CIT VS. LANCO INDUSTRIES LTD., 242 ITR 357(A.P.) OBSERVED THAT HOW MERELY BY REASON OF UNSATISFACTORY EXPLANATION RELATING TO THE SOURCE OF INVESTMENT BY THE SHAREHOLDERS, THE MONEY INVESTED ON SHARES SHOULD BE TREATED AS INCOME OF T HE ASSESSEE. IF THE OSTENSIBLE SHAREHOLDERS FAILED TO EXPLAIN THE MEANS OF INVESTM ENT, THAT SHOULD HAVE BEEN TREATED AS UNEXPLAINED INCOME IN THEIR HANDS. IN O RDER TO ADD IT TO THE INCOME OF THE ASSESSEE THERE MUST BE A FURTHER FINDING THAT I N FACT THE SHAREHOLDERS WERE MERE NAME-LENDERS AND THE MONEY ALLEGEDLY INVESTED BY TH EM REALLY BELONGED TO THE DIRECTORS OF THE ASSESSEE-COMPANY. IN THE ABSENCE OF A FINDING THAT THE PERSONS TO WHOM THE SHARE CERTIFICATES WERE ISSUED ON RECEIPT OF CONSIDERATION AS PER THE BOOK ENTRIES WERE IN FACT DUMMIES OR STOOGES OF THE DIRE CTORS OF THE ASSESSEE-COMPANY, THE SAME CANNOT BE TREATED AS UNACCOUNTED INCOME OF THE ASSESSEE. THERE WAS NO SUCH FINDING BY THE ASSESSING AUTHORITY. 28. HONBLE KARNATAKA HIGH COURT IN THE CASE OF TAM TAM PEDDA GURUVA REDDY VS. JCIT (ASSESSMENTS) & ANOTHER, 291 ITR 44 (KARN) HELD AS UNDER :- (HEADNOTE PAGE 45) HELD, ALLOWING THE APPEAL, (I) THAT THE AFFIDAVIT FILED BY R SHOWED THAT HE HAD INCOME FROM AGRICULTURE AND FROM BUSINESS AND THAT HE HAD TWO FIXED DEPOSITS WHICH HAD MATURED DU RING THE SAID PERIOD. THEREFORE, THE SOURCE OF INCOME HAD BEEN C LEARLY SPELT OUT AND THIS CREDIT COULD NOT BE TREATED AS UNEXPLAINED CREDIT IN TERMS OF SECTION 68. THE FINDING OF THE AUTHORITY THAT THE SAID AMOUNT WAS UNEXPLAINED INCOME COULD NOT BE ACCEPTED. ITA NO.345/AGR/2009 A.Y. 2004-05. 21 29. THE HONBLE PATNA HIGH COURT IN THE CASE OF SAR OGI CREDIT CORPORATION VS. CIT, 103 ITR 344 (PAT.) HELD AS UNDER :- (HEADNOTE PAGE NOS.344, 345 & 346) IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE PR EVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1962-63, THERE WERE CREDIT ENTRIES IN THE NAME OF Z FOR RS.12,000 AND IN THE NAME OF R FO R RS.8,000. BOTH Z AND R GAVE STATEMENTS BEFORE THE INCOME TAX OFFIC ER THAT THEY HAD DEPOSITED THE AMOUNTS WITH THE ASSESSEE. THE INCOM E TAX OFFICER DID NOT ACCEPT THOSE STATEMENTS AND ADDED A SUM OF RS.2 0,000 AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. ON APPEA L, THE APPELLATE ASSISTANT COMMISSIONER DELETED THE ADDITION. ON FU RTHER APPEAL, THE APPELLATE TRIBUNAL HELD THAT THE DEPOSITS BY Z AND R REMAINED UNEXPLAINED, THAT THE MERE ADMISSION OF THE DEPOSIT ORS COULD NOT LEAD TO THE CONCLUSION THAT THEY WERE IN A POSITION TO A DVANCE THE MONEYS TO THE ASSESSEE AND, SINCE THE ASSESSEE COULD NOT P ROVE THAT THE DEPOSITORS WERE IN A POSITION TO MAKE THE DEPOSITS TO THE EXTENT THEY STOOD IN THE BOOKS, THE ONUS THAT LAY ON THE ASSESS EE UNDER SECTION 68 OF THE INCOME TAX ACT, 12961, HAD NOT BEEN DISCHARG ED. THE TRIBUNAL ALSO FOUND THAT AS THE DEPOSITORS WERE DOING SOME B USINESS AND LATER FILED INCOME TAX RETURNS, IT WOULD BE FAIR AND REAS ONABLE TO ALLOW A SUM OF RS.5,000/- AS EFFECTIVELY EXPLAINED BUT THE REMAINING RS.15,000 SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. ON A REFERENCE AT THE INSTANCE OF THE ASSESSEE: HELD, THAT IF THE CREDIT ENTRY IN THE BOOKS OF THE ASSESSEE STANDS IN THE NAME OF THE ASSESSEE OR THE ASSESSEES WIFE AND CHILDREN, OR IN THE NAME OF ANY OTHER CLOSE RELATION OR AN EMPLOYEE OF THE ASSESSEE, THE BURDEN LIES ON THE ASSESSEE TO EXPLAIN SATISFAC TORILY THE NATURE AND SOURCE OF THE ENTRY. BUT IF THE ENTRY DOES NOT STA ND IN THE NAME OF ANY SUCH PERSON HAVING A CLOSE RELATION OR CONNECTION W ITH THE ASSESSEE, BUT IN THE NAME OF AN INDEPENDENT PARTY, THE BURDEN WILL STILL LIE ON HIM TO ESTABLISH THE IDENTITY OF THAT PARTY AND TO SATISFY THE INCOME TAX OFFICER THAT THE ENTRY IS REAL AND NOT FICTITIOUS. ONCE THE IDENTITY OF THE THIRD PARTY IS ESTABLISHED BEFORE THE INCOME TAX OF FICER AND OTHER SUCH EVIDENCE ARE PRIMA FACIE PLACED BEFORE HIM POI NTING TO THE FACT THAT THE ENTRY IS NOT FICTITIOUS, THE INITIAL BURDE N LYING ON THE ASSESSEE CAN BE SAID TO HAVE BEEN DULY DISCHARGED BY HIM. I T WILL NOT, THEREFORE, BE FOR THE ASSESSEE TO EXPLAIN FURTHER A S TO HOW OR IN WHAT CIRCUMSTANCES THE THIRD PARTY OBTAINED THE MONEY OR HOW OR WHY HE CAME TO MAKE AN ADVANCE OF THE MONEY AS A LOAN TO T HE ASSESSEE. ITA NO.345/AGR/2009 A.Y. 2004-05. 22 ONCE SUCH IDENTITY IS ESTABLISHED AND THE CREDITORS , AS IN THE PRESENT CASE, HAVE PLEDGED THEIR OATH THAT THEY HAVE ADVANC ED THE AMOUNTS IN QUESTION TO THE ASSESSEE, THE BURDEN IMMEDIATELY SH IFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEES CASE CO ULD NOT BE ACCEPTED AND AS TO WHY IT MUST BE HELD THAT THE ENT RY, THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY, STIL L REPRESENTED THE INCOME OF THE ASSESSEE FROM A SUPPRESSED SOURCE. A ND, IN ORDER TO ARRIVE AT SUCH A CONCLUSION, EVEN THE DEPARTMENT HA S TO BE IN POSSESSION OF SUFFICIENT AND ADEQUATE MATERIALS. THE INCOME TAX OFFICERS REJECTION, NOT OF THE EXPL ANATION OF THE ASSESSEE, BUT OF THE EXPLANATION REGARDING THE SOUR CE OF INCOME OF THE DEPOSITORS, COULD NOT BY ITSELF LEAD TO ANY INFEREN CE REGARDING THE NON- GENUINE OR FICTITIOUS CHARACTER OF THE ENTRIES IN T HE ASSESSEES BOOKS OF ACCOUNT. THE APPELLATE ASSISTANT COMMISSIONER CLEA RLY POINTED OUT THAT THE FINDINGS RECORDED BY THE INCOME TAX OFFICE R WERE NOT POSITIVE FINDINGS. FURTHER, THE TRIBUNAL HAD PARTLY ACCEPTED THE SOURC E TO THE EXTENT OF RS.5,000 AND PARTLY REJECTED IT TO THE EX TENT OF RS.15,000. HAVING ACCEPTED THE GENUINENESS OF THE ENTRIES IN T HE BOOKS OF ACCOUNT, HAVING ACCEPTED THE EXPLANATION OFFERED BY THE THIRD PARTIES WITH REGARD TO THEIR SOURCES OF MONEY IN PART AT LE AST, THERE WAS NO MATERIAL FOR THE TRIBUNAL TO HOLD THAT THE ASSESSEE HAD NOT DISCHARGED THE ONUS ON HIM AND THE FINDING TO THAT EFFECT MUST BE HELD TO BE WITHOUT ANY EVIDENCE AND, HENCE, WHOLLY ILLEGAL AND THE CONCLUSIONS DRAWN PERVERSE. THEREFORE, THE ASSESSEE HAD DISCHARGED THE ONUS WIT HIN THE MEANING OF SECTION 68 OF THE ACT FOR THE CASH CREDI TS AND THE APPELLATE TRIBUNAL WAS NOT JUSTIFIED IN MAINTAINING THE ADDIT ION OF RS.15,000 AS THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES. 30. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. (1) DIVINE LEASING & FINANCE LIMITED (2) GENERAL EXPORTS & CREDITS LIMIT ED & (3) LOVELY EXPORTS PVT. LTD, 299 ITR 268 (DELHI) HELD AS UNDER :- (PAGE NOS . 275 TO 276) ITA NO.345/AGR/2009 A.Y. 2004-05. 23 WE FIND IT INDEED REMARKABLE THAT THE ATTENTION OF THE SOPHIA FINANCE THE FULL BENCH HAD NOT BEEN DRAWN TO THE DE CISION OF THE SUPREME COURT IN CIT V. ORISSA CORPORATION P. LTD. [1986] 159 IR 78, WHICH IF CITED WOULD REALLY HAVE LEFT NO ALTERN ATIVE TO THE FULL BENCH BUT TO ARRIVE AT THE CONCLUSION IT DID. THE BOOKS OF ACCOUNT OF THE ASSESSEE CONTAINED THREE CASH CREDITS AGGREGATI NG RS.1,50,000 ALLEGEDLY RECEIVED AS LOANS FROM THREE INDIVIDUAL C REDITORS UNDER HUNDIS. LETTERS OF CONFIRMATION AS WELL AS THE DIS CHARGED HUNDIS WERE PRODUCED; BUT NOTICES/SUMMONS SENT TO HEM REMAINED UNNERVED BECAUSE THEY HAD REPORTEDLY LEFT THAT ADDRESS. T HE VIEW OF THE TRIBUNAL WAS THAT MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THESE THERE PARTIES, THERE WAS NEVERTHELESS NO JUST IFICATION TO DRAW AN ADVERSE INFERENCE. THIS APPROACH AS ACCORDED APPRO VAL BY THE SUPREME COURT IN THESE WORDS (PAGE 84) : IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE . THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 1 31 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CRE DITWORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THE RE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITO RS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING F URTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSIO N THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREAS ONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSIO N IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVE D AT, NO QUESTION OF LAW AS SUCH ARISES. (PAGE NO.276) SUMATI DAYAL V. CIT [1995] 214 ITR 801 (SC) A SUCC INCT YET COMPLETE PRCIS ON THE ESSENTIALS OF INCOME TAX LIA BILITY CAN BE DISCERNED FROM THESE WORDS (HEADNOTE): IN ALL CAS ES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS INCOME, THE BURDEN LIES ON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXING PR OVISION AND IF THE ITA NO.345/AGR/2009 A.Y. 2004-05. 24 RECEIPT IS IN THE NATURE OF INCOME, THE BURDEN OF P ROVING THAT IT IS NOT TAXABLE BECAUSE IT FALLS WITHIN THE EXEMPTION PROVI DED BY THE ACT LIES UPON THE ASSESSEE. THIS DECISION IS ADEQUATE AUTH ORITY FOR THE PROPOSITION THAT BY VIRTUE OF SECTION 68 OF THE INC OME TAX ACT THE ASSESSEE IS OBLIGED TO ESTABLISH THAT AMOUNTS CREDI TED IN THE ACCOUNTS DO NOT REPRESENT ITS INCOME; IN THAT CASE THE ASSES SEES VERSION THAT SHE HAD WON THEM THROUGH BETTING ON HORSE RACING IN TWO CONSECUTIVE YEARS DID NOT ATTRACT CREDIBILITY. (PAGE NOS.279 TO 283) THE CALCUTTA HIGH COURT HAS HELD IN CIT V. PRECISI ON FINANCE P. LTD. [1994] 208 ITR 465 THAT IT IS NOT SUFFICIEN T FOR AN ASSESSEE TO DISCLOSE THAT CREDITS IN THEIR BOOKS HAD BEEN RECEI VED THROUGH BANKING CHANNELS; THE IDENTITY AS WELL AS THE CREDITWORTHIN ESS OF THE CREDITOR MUST NEVERTHELESS BE PROVED. IN SAJAN DASS AND SON S V. CIT [2003] 264 ITR 435 (DELHI) THE DIVISION BENCH WAS NOT CONV INCED THAT MERELY BECAUSE MONEYS COULD BE IDENTIFIED AND TRACE D THROUGH BANKING CHANNELS THE GENUINENESS OF THE GIFT IN QUE STION STOOD ESTABLISHED. THIS IS OBVIOUSLY BECAUSE AN ASSESSEE CAN SCARCELY BE HEARD TO SAY THAT HE DOES NOT KNOW ALL PARTICULARS PERTAINING TO THE DONOR. THEREAFTER, THE SAME DIALECTIC LED THE BENC H TO ARRIVE AT THE OPPOSITE CONCLUSION IN CIT V. R.S. SIBAL [2004] 269 ITR 429 (DELHI). IN CIT V. MAKHNI AND TYAGI P. LTD. [2004] 267 ITR 4 33, THIS COURT HAS NOT GIVEN ITS IMPRIMATUR TO THE INACTION OF THE ASSESSING OFFICER IN DOING NOTHING FURTHER AFTER THE ISSUANCE OF SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT. IT DID NOT CONDONE THE ASSESSING OFFICER, FAILING TO ISSUE COERCIVE PROCESS, AND IN THIS MANN ER ATTEMPTING INCORRECTLY TO SHIFT THE BURDEN ON THE ASSESSEE TO ESTABLISH THE LEGITIMACY OF THE TRANSACTION. IN CIT V. ANTARTICA INVESTMENT P. LTD. [2003] 262 ITR 493 (DELHI), THE COURT WAS SATISFIED THAT NO INTERFERENCE WAS JUSTIFIED SINCE THE ASSESSEE HAD P RODUCED THE SHARE APPLICATION FORMS ALONG WITH CONFIRMATION LETTERS A ND COPIES OF THEIR ACCOUNTS, COPIES OF THEIR BANK ACCOUNTS OF CHEQUE P AYMENTS AND THEIR AUDITORS REPORT. THE ASSESSING OFFICERS CONCLUSI ON THAT THE GENUINENESS OF THE TRANSACTION HAD NOT BEEN MADE GO OD WAS NOT UPHELD. THIS CONCLUSION WAS REACHED DESPITE THE FA CT THAT NOTICES RECEIVED BY ONE OF THE COMMON DIRECTORS OF THE TWO SUBSCRIBING COMPANIES HAD BEEN IGNORED AND NO INFORMATION WAS F ORTHCOMING FROM THE LATTER. HOWEVER, THE UNDER SECRETARY (LAN D REVENUE, ITA NO.345/AGR/2009 A.Y. 2004-05. 25 GOVERNMENT OF SIKKIM, GANGTOK) HAD STATED THAT BOTH THE SUBSCRIBING COMPANIES WERE INCORPORATED IN SIKKIM AND THEIR ADD RESSES WERE DISCLOSED IN THE RETURN OF ALLOTMENTS; THE SUBSCRIB ERS THUS STOOD IDENTIFIED. THEIR FINANCIAL STANDING OR CAPACITY W AS NOT INVESTIGATED BY THE COURT. THE DECISION IN CIT V. ACHAL INVESTM ENT LTD. [2004] 268 ITR 211(DELHI) IS ALSO ON THE SAME LINES. THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT THE PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST BE FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHERE T HE PREPONDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND CO MPLEXITY OF THE ASSESSEE IT SHOULD NOT BE HARASSED BY THE REVENUES INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF A PUBLIC ISSUE, THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL P ERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMAT ION CONTAINED IN THE STATUTORY SHARE APPLICATION DOCUMENTS. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WOULD NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF S ECTIONS 68 & 69 OF THE INCOME TAX ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE; IF THE ASSESSING OFFICER HARBOURS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE ASSE SSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OB DURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. IN CIT V. S. KAMARAJA PANDIAN [1984] 150 ITR 703, T HE MADRAS HIGH COURT TOOK THE VIEW THAT IT IS FOR THE ASSESSEE TO INITIALLY PROVE THE GENUINENESS OF THE LOAN, AND THAT THE ONU S SHIFTS TO THE DEPARTMENT ONLY AFTER THE ASSESSEE HAS PRIMA FACIE SUBSTANTIATED THIS FACT. IN THAT CASE, ONE OF THE CREDITORS HAD DENIE D THE TRANSACTION. THE PATNA HIGH COURT IN ADDL. CIT V. HANUMAN AGARWA L [1985] 151 ITR 150 WAS FACED WITH THE AVAILABILITY OF A CONFIR MATORY LETTER FILED BY THE ASSESSEE IN WHOSE BOOKS OF ACCOUNT A CREDIT WAS FOUND. GIR NUMBER OF THE CREDITOR WAS SUPPLIED, AND IT APPEARS THAT HE HAD CONFESSED THAT THIS TRANSACTION WAS NOT GENUINE. T HE HIGH COURT DID NOT ACT ON THE CONFESSION SINCE IT HAD NOT BEEN MAD E AVAILABLE TO THE ASSESSEE. THE BENCH OBSERVED THAT SINCE THE CORREC T NAME AND ITA NO.345/AGR/2009 A.Y. 2004-05. 26 ADDRESS, AND THE GIR NUMBER OF THE CREDITOR HAD BEE N SUPPLIED BY THE ASSESSEE THE INITIAL ONUS UNDER SECTION 68 OF THE I NCOME TAX ACT HAD BEEN COMPLETELY DISCHARGED BY THE ASSESSEE. IT C OULD NOT BE SANGUINE TO CONCEIVE OF A POSSIBILITY OF A GENUINE CONTRIBUTOR ABANDONING HIS INVESTMENT FOR DIVERSE REASONS. THA T WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE IS AUTOMATICALL Y GUILTY OF ATTEMPT OF CONVERTING ITS INCOME INTO CAPITAL. IN BHARATI P. LTD. V. CIT [1978] 111 ITR 951 (CAL) WHERE NOTICES TO THESE ALLEGED CREDITORS HAD COME BACK UN SERVED, THE DIVISION BENCH AFFIRMED THAT THE MERE FILING OF CON FIRMATORY LETTERS BY THE ASSESSEE DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE. DIFFERENT DIVISION BENCHES OF THE SAME HIGH COURT H AVE OPINED THAT THE ASSESSEE MUST APPROVE (A) THE IDENTITY, (B) THE CAPACITY OF THE CREDITORS TO ADVANCE MONEY, (C) THE GENUINENESS OF THE TRANSACTION. (SEE SHANKAR INDUSTRIES V. CIT [1978] 114 ITR 689 ( CAL), C. KANT AND CO V. CIT [1980] 126 ITR 63 (CAL) AND CIT V. UN ITED COMMERCIAL AND INDUSTRIAL CO. P. LTD. [1991] 187 IT R 596 (CAL.). IN CIT V. KORLAY TRADING CO. LTD. [1998] 232 ITR 820 ( CAL), CERTAIN SHARES PURCHASED THROUGH A BROKER WERE LOST. THE A SSESSEE FURNISHED THE NAME OF THE BROKER, AS ALSO THE DATE OF THE SAL E, AMOUNT OF PURCHASE MONEY AND SALE MONEY. THE BROKER WAS FOUN D NOT TO HAVE MAINTAINED REGULAR ACCOUNTS. HOWEVER, THE COURT RE FUSED TO DRAW AN INFERENCE ADVERSE TO THE ASSESSEES INTERESTS. INS TEAD THE CALCUTTA HIGH COURT OBSERVED THAT THE INCOME TAX OFFICER OUG HT TO HAVE INVESTIGATED THE MATTER MORE THOROUGHLY TO CONTROVE RT THE CLAIM OF THE ASSESSEE, AND CONCURRED WITH THE CONCLUSION OF THE TRIBUNAL THAT THE LATTER HAD DISCHARGED THE INITIAL BURDEN THAT LAY O N IT. THE HIGH COURT SET ASIDE THE DECISION OF THE TRIBUNAL WHICH HAD RE VERSED THE FINDINGS OF THE INCOME TAX OFFICER AS WELL AS THE COMMISSION ER OF INCOME TAX (APPEALS) SINCE THE ASSESSEE HAD SUPPLIED THE INCOM E TAX FILE NUMBER OF THE CREDITOR BEFORE IT. THE HIGH COURT NOTED TH AT THE MERE FILING OF THE INCOME TAX NUMBER WAS NOT SUFFICIENT TO ESTABLI SH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. ALTHOUGH ORISSA CORPORATION [1986] 159 ITR 78 (SC) WAS REFERRED TO THE DECISION OF THE FULL BENCH OF THIS COURT IN SOP HIA FINANCE [1994] 205 ITR 98 WAS NOT EVEN CITED. KORLAY TRADING [199 8] 232 ITR 820 (CAL.) AS WELL AS SOPHIA FINANCE [1994] 205 ITR 98 (DELHI) WAS APPLIED BY THE SAME DIVISION BENCH OF THE CALCUTTA HIGH COURT IN FOUR DECISIONS DELIVERED IN MARCH 2003. IN HINDUST HAN TEA TRADING CO. LTD. V. CIT [2003] 263 ITR 289, THE BENCH OPINE D THAT IN THE CASE ITA NO.345/AGR/2009 A.Y. 2004-05. 27 OF A SUBSCRIPTION TO THE SHARE CAPITAL OF A COMPANY , IF SECTION 68 OF THE INCOME TAX ACT IS TO BE RESORTED TO, IT IS NECESSAR Y FOR THE ASSESSEE TO PROVE AND ESTABLISH THE IDENTITY OF THE SUBSCRIBER, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSA CTION. ONCE MATERIAL TO PROVE THESE INGREDIENTS ARE PRODUCED IT IS FOR THE ASSESSING OFFICER TO FIND OUT AS TO WHETHER, ON THE SE MATERIALS, THE ASSESSEE HAS SUCCEEDED IN ESTABLISHING THE INGREDIE NTS MENTIONED ABOVE. THE ASSESSING OFFICER CAN LIFT THE VEIL A ND ENQUIRE INTO THE REAL NATURE OF THE TRANSACTION. CIT V. RUBY TRADER S AND EXPORTERS LTD. [2003] 263 ITR 300 (CAL), CIT V. NIVEDAN VANIY A NIYOJAN LTD. [2003] 263 ITR 623 (CAL) AND CIT V. KUNDAN INVESTME NT LTD. [2003] 263 ITR 626 (CAL) ARE THE OTHER THREE. IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF SEC TION 68 OF THE INCOME TAX ACT. THE ASSESSEE HAS TO PRIMA FACIE PR OVE (1) THE IDENTITY OF THE CREDITOR/SUBSCRIBER; (2) THE GENUIN ENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTE D THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDITWORTH INESS OF FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER; (4) IF RELEVAN T DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER, ETC., I T WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE A SSESSEE. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADV ERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLE CTS TO RESPOND TO ITS NOTICES; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSA CTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST T HE ASSESSEE; AND (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE T RANSACTION AND THE VERACITY OF THE REPUDIATION. FOR A COMPLETE UNDERSTAND OF THE CONCEPT OF BURDEN OF PROOF ATTENTION SHOULD BE DRAWN TO THE DECISIONS DELIVERE D IN THE CONTEXT OF PENALTY PROCEEDINGS UNDER SECTION 271 OF THE INCOME TAX ACT. CIT V. ANWAR ALI [1970] 76 ITR 696 WAS DECIDED BY THE APEX COURT HOLDING THAT, IF THERE IS NO EVIDENCE ON RECORD EXCEPT THE EXPLANATION OF THE ASSESSEE, WHICH EXPLANATION HAS BEEN FOUND TO BE FA LSE, IT STILL DOES NOT FOLLOW THAT THE RECEIPT CONSTITUTES TAXABLE INC OME. THIS DECISION ITA NO.345/AGR/2009 A.Y. 2004-05. 28 WAS FOLLOWED BY THE APEX COURT IN ANANTHARAM VEERAS INGHAIAH AND CO. V. CIT [1980] 123 ITR 457 OPINING THAT THE (HEA DNOTE) MERE FALSITY OF THE EXPLANATION GIVEN BY THE ASSESSEE IS INSUFFICIENT WITHOUT THERE BEING, IN ADDITION, COGENT MATERIAL OR EVIDEN CE FROM WHICH THE NECESSARY CONCLUSION ATTRACTING A PENALTY COULD BE DRAWN. HOWEVER, AS HAS BEEN NOTED IN ADDL. CIT V. JEEVAN L AL SAH [1994] 205 ITR 244 (SC); [1995] SUPP. (4) SCC 247 AMENDMEN TS WERE INCORPORATED BY THE FINANCE ACT, 1964, INTO SECTION 271 WHICH HAD DELETED THE WORD DELIBERATELY IN ITS SUB-SECTION (1)(C), THEREBY SHIFTING THE ONUS OF PROOF ONTO THE ASSESSEE, RENDE RING ANWAR ALI [1970] 76 ITR 696 (SC) INEFFECTUAL. NEVERTHELESS, IN CIT V. MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 IT HAS BEE N ENUNCIATED BY THE SUPREME COURT THAT THOUGH THE EXPLANATION SH IFTS THE BURDEN TO THE ASSESSEE TO SHOW ABSENCE OF FRAUD, THIS ONUS IS A REBUTTABLE ONE. THE BURDEN IS NOT DISCHARGED BY THE ASSESSEE TENDER ING AN INCREDIBLE OR FANTASTIC EXPLANATION; AND VERY EXPLANATION DOES NOT HAVE TO BE ACCEPTED. IN OUR OPINION, IT IS FOR PARLIAMENT TO INTRODUCE LEGISLATION IF THE DUTY PRESENTLY RESTING ON THE DEPARTMENT IS THOUGHT TO BE TOO ONEROUS. WE OUGHT NOT TO TWIST THE LANGUAGE OF A S TATUTE TO REMOVE THE BURDEN OF PROOF ALTOGETHER FROM THE DEPARTMENT EVEN THOUGH IT HAS THE NECESSARY WHEREWITHAL TO DISCHARGE IT. THE MALAISE CAN ALSO BE ARRESTED IF UNCLAIMED SHARE SUBSCRIPTIONS ARE TA KEN OVER BY THE STATE AND/OR IF THE ASSESSEE CONCERNED IS PRECLUDED FROM DISTRIBUTING DIVIDENDS, BONUS SHARES, ETC., AGAINST SUCH SHARE S UBSCRIPTIONS UNLESS THEY ARE DULY CLAIMED BY THE ORIGINAL SUBSCRIBERS W ITHIN A PRESCRIBED PERIOD, PERHAPS NOT EXCEEDING THREE YEARS. THEREAF TER, THE SHARES COULD AUTOMATICALLY STAND TRANSFERRED TO THE STATE ON THE PRINCIPLE OF ESCHEAT. FOR THESE EVENTS TO HAPPEN, REQUISITE AME NDMENTS TO THE INCOME TAX ACT MAY BE REQUIRED. 31. THE ABOVE JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. (1) DIVINE LEASING & FINANCE LIMITED (2) GENERAL EXPORTS & CRE DITS LIMITED & (3) LOVELY EXPORTS PVT. LTD, 299 ITR 268 (DELHI) CONFIRMED BY THE APEX COURT AS UNDER :- ITA NO.345/AGR/2009 A.Y. 2004-05. 29 (319 ITR (STATUTES) PAGE NOS.5 & 6) SHARE APPLICATION MONEYS RECEIVED BY COMPANY 11-1-2008: THEIR LORDSHIPS S.H. KAPADIA AND B. SUDERSHAN REDDY JJ. DISMISSED THE DEPARTMENTS SPEC IAL LEAVE PETITION AGAINST THE JUDGEMENT DATED NOVEMBER 16, 2 006 OF THE DELHI HIGH COURT IN I.T.A. NO.953 OF 2006 REPORTED IN 299 ITR 268, WHEREBY THE HIGH COURT AFFIRMED THE DELETION BY THE TRIBUNAL OF ADDITIONS MADE ON ACCOUNT OF SUMS RECEIVED FROM DIR ECTORS OF PROMOTERS AND ALSO BY WAY OF A PUBLIC ISSUE. THE C OURT WHILE DISMISSING THE SPECIAL LEAVE PETITION HELD AS FOLLO WS:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE -COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HEN CE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGEMENT: CIT V. LOVE LY EXPORTS P. LTD. : S.L.P. (CIVIL) NO.1153 OF 2008. 32. ANOTHER ASPECT OF THE MATTER IS WHETHER ADDITIO N UNDER SECTION 68 OF THE ACT CAN BE MADE BEFORE START OF BUSINESS BY THE ASSESSE E. IN THIS REGARD, WE WOULD LIKE TO REFER THE FOLLOWING JUDGEMENTS :- 33. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . BHARAT ENGINEERING & CONSTRUCTION CO., 83 ITR 187 (SC) HELD AS UNDER :- (PAGE NOS.188 & 189) THE ASSESSEE-COMPANY IS AN ENGINEERING CONSTRUCTIO N COMPANY. IT COMMENCED BUSINESS IN MAY, 1943. IN T HEIR ACCOUNT BOOKS, THERE ARE SEVERAL CASH CREDIT ENTRIES IN THE FIRST YEAR OF ITS BUSINESS. WE ARE CONCERNED WITH ONLY FIVE OF THOSE CASH CREDIT ENTRIES. ON 1 ST JUNE, 1943, THERE IS A CASH CREDIT ENTRY OF RS.1,0 0,000. ITA NO.345/AGR/2009 A.Y. 2004-05. 30 ON 6 TH JULY, 1943, THERE IS A CASH CREDIT ENTRY OF RS.50, 000. ON 30 TH AUG, 1943, THERE IS A CASH CREDIT ENTRY OF RS.50,00 0. ON 2 ND DEC., 1943, THERE IS A CASH CREDIT ENTRY OF RS.15,000 AND ON 15 TH MARCH, 1944, THERE IS A CASH CREDIT ENTRY OF RS.35,000. T HESE CASH CREDIT ENTRIES TOTAL UP TO RS.2,50,000. THE ITO CALLED UP ON THE ASSESSEE TO EXPLAIN THOSE CASH CREDIT ENTRIES. THE EXPLANATION GIVEN BY THE ASSESSEE WAS FOUND TO BE FALSE BY THE ITO, THE AAC AND THE TRIBUNAL. BUT, ALL THE SAME, THE TRIBUNAL FELT THAT THESE CAS H CREDIT ENTRIES COULD NOT REPRESENT THE INCOME OR PROFITS OF THE ASSESSEE -COMPANY AS THEY WERE ALL MADE VERY SOON AFTER THE COMPANY COMMENCED ITS ACTIVITIES. IN OUR OPINION, THOUGH THE ORDER OF THE TRIBUNAL IS NOT HAPPILY WORDED, ITS FINDING APPEARS TO BE THAT IN THE VERY NATURE OF THINGS THE ASSESSEE COULD NOT HAVE EARNED SUCH A HUGE AMOUNT A S PROFITS VERY SOON AFTER IT COMMENCED ITS ACTIVITIES. A CONSTRUC TION COMPANY TAKES TIME TO EARN PROFITS. IT COULD NOT HAVE EARNED PRO FIT OF RS.1,00,000 WITHIN A FEW DAYS, AFTER THE COMMENCEMENT OF ITS BU SINESS. HENCE, IT IS REASONABLE TO ASSUME THAT THOSE CASH CREDIT ENTR IES ARE CAPITAL RECEIPTS THOUGH FOR ONE REASON OR OTHER THE ASSESSE E HAD NOT COME OUT WITH THE TRUE STORY AS REGARDS THE PERSON FROM WHOM IT GOT THOSE AMOUNTS. IT IS TRUE THAT IN THE ABSENCE OF SATISFA CTORY EXPLANATION FROM THE ASSESSEE THE ITO MAY ASSUME THAT CASH CRED IT ENTRIES IN ITS BOOKS REPRESENT INCOME FROM UNDISCLOSED SOURCES. B UT WHAT INFERENCE SHOULD BE DRAWN FROM THE FACTS PROVED IS A QUESTION OF FACT AND THE TRIBUNALS FINDING ON THAT QUESTION IS FINAL. 34. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF INDIA RICE MILLS VS. CIT, 218 ITR 508 (ALL.) HELD AS UNDER :- (HEADNOTE PAGE NOS. 508 & 509) THE ASSESSEE-FIRM WHICH WAS CONSTITUTED ON AUGUST 12, 1977, BECAME OPERATIVE FROM FEBRUARY 2, 1978. DURING THE PERIOD FROM 1977 TO FEBRUARY, 1978 TEN PARTNERS OF THE FIRM MAD E CAPITAL CONTRIBUTIONS, TOTALING RS.1,43,000. SINCE THIS WA S CREDITED IN THE BOOKS OF THE FIRM THE FIRM WAS CALLED UPON BY THE A SSESSING AUTHORITY TO EXPLAIN THE SOURCE OF THE DEPOSIT. ALL THE PART NERS HAD FILED RETURNS AFTER THE CLOSE OF THE ACCOUNTING YEAR OF THE FIRM AND THEY HAD NOT FILED ANY RETURNS IN EARLIER YEARS. THEREFORE, THE ASSES SING AUTHORITY HELD THAT THE AMOUNT REPRESENTED THE INCOME OF THE ASSES SEE-FIRM FROM UNDISCLOSED SOURCES. ON APPEAL, THE COMMISSIONER O F INCOME TAX (APPEALS) HELD THAT AS THE DEPOSITS WERE MADE BY TH E PARTNERS BEFORE ITA NO.345/AGR/2009 A.Y. 2004-05. 31 THE FIRM STARTED ITS BUSINESS, THE SAME COULD NOT B E TAKEN TO BE THE INCOME OF THE FIRM FROM UNDISCLOSED SOURCES. THE T RIBUNAL HELD THAT AS THE AMOUNT WAS CREDITED IN THE BOOKS OF THE ASSE SSEE-FIRM, IT WAS FOR THE ASSESSEE-FIRM TO EXPLAIN THE SOURCES OF DEP OSITS. ON A REFERENCE : HELD, THAT ALL THE DEPOSITS CAME TO BE MADE DURING THE ACCOUNTING YEAR IN THE BOOKS OF THE ASSESSEE-FIRM B EFORE IT STARTED ITS BUSINESS AND THE DEPOSITS REPRESENTED THE CAPITAL C ONTRIBUTION OF THE PARTNERS. IT WAS FOR THE PARTNERS TO EXPLAIN THE S OURCE OF DEPOSITS AND IF THEY FAILED TO DISCHARGE THE ONUS THEN SUCH DEPO SITS COULD BE ADDED IN THE HANDS OF THE PARTNERS ONLY. THESE DEPOSITS COULD IN NO CASE BE THE INCOME OF THE ASSESSEE-FIRM BECAUSE THE FIRM ST ARTED ITS BUSINESS AFTER THE CREDITS HAD BEEN MADE IN ITS BOOKS. 35. IN THE LIGHT OF ABOVE DISCUSSIONS, IF WE CONSID ER THE FACTS OF THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSEE HAS DISCHA RGED THE BURDEN IN RESPECT OF SHARE APPLICATION MONEY BY FURNISHING COMPLETE DETA ILS IN THE FORM OF SHARE CERTIFICATE, AFFIDAVIT, KHASRA KHATAUNI, KISAN BAHI , KCC LEDGER ACCOUNT, BANK ACCOUNTS AND OTHERS. THE ASSESSEE HAS FILED A CHAR T IN WHICH DETAILS WERE FURNISHED ALONG WITH RELEVANT PAGE NOS. OF PAPER BOOK OF EACH AND EVERY PARTY. THE CIT(A) BEFORE DELETING THE ADDITION INCORPORATED DETAILED CHART OF THE EVIDENCE FILED BY THE ASSESSEE WHICH HE HAS REPRODUCED AT PAGE NOS.3 TO 5 OF HIS ORDER. IN THE LIGHT OF THE LAW LAID DOWN BY THE APEX COURT IN THE CASE OF LOVE LY EXPORTS, (319 ITR (STATUTES) PAGE NOS.5 & 6), WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.79,22,000/- ON ACCOUNT OF SHARE APPLICATION M ONEY RECEIVED BY THE ASSESSEE. THE CIT(A) ALSO TOOK CARE OF REVENUE BY GIVING DIRE CTIONS THAT THE DEPOSITS ARE LIABLE TO BE EXAMINED AND ANY CONCLUSION, AS TO WHE THER SUCH FUNDS ARE EXPLAINED ITA NO.345/AGR/2009 A.Y. 2004-05. 32 OR UNEXPLAINED, ARE LIABLE TO BE DRAWN IN THEIR RES PECTIVE CASES. IN RESPECT OF LOAN OF RS.25,51,000/-, WE FIND THAT THE ASSESSEE HAS AL SO DISCHARGED ITS BURDEN CAST UNDER SECTION 68 OF THE ACT. WE NOTICE THAT SOME O F THE LOANS WERE GIVEN BY THE SAME PERSONS WHO HAD APPLIED FOR SHARE APPLICATION MONEY. WHEN THE ASSESSEE HAS DISCHARGED HIS BURDEN IN RESPECT OF SHARE APPLI CATION MONEY AND FURNISHED SUFFICIENT MATERIAL, UNDER THE CIRCUMSTANCES, IT CA NNOT BE HELD THAT THE SHARE APPLICATION MONEY WAS GENUINE TRANSACTION AND LOAN TRANSACTION WAS BOGUS. IT IS PERTINENT TO MENTION THAT INSPITE OF DETAILS FURNIS HED BY THE ASSESSEE, THE A.O. DID NOT EXAMINE ANY OF THE CREDITORS BEFORE REJECTING T HE ASSESSEES CONTENTION AND DOCUMENTS FURNISHED. THE A.O. EXAMINED TWO PERSONS WHEREIN THEY CONFIRMED THAT THEY HAD APPLIED FOR THE SHARES OF THE COMPANY AND SHARE APPLICATION AMOUNT WAS GIVEN BY THEM. UNDER THE FACTS AND CIRCUMSTANC ES, WHEN THE ASSESSEE DISCHARGED ITS BURDEN BY FURNISHING NECESSARY EVIDE NCE AND MATERIAL IN RESPECT OF IDENTITY, CREDITWORTHINESS AND GENUINENESS AND THER E IS NO CONTRARY MATERIAL TO THE FINDING OF THE CIT(A) ON RECORD OR NEITHER HAS BEEN POINTED OUT AT THE TIME OF HEARING. WE ARE, THEREFORE, INCLINED TO UPHOLD THE ORDER OF CIT(A). 36. APART FROM THE FACT THAT THE ASSESSEE HAS DISCH ARGED THE BURDEN CAST UNDER SECTION 68 OF THE ACT, WE NOTICE THAT THE ASSESSEE COMPANY INCORPORATED W.E.F. 03.06.2003, THEREFORE, IN THE LIGHT OF JUDGEMENT OF HONBLE SUPREME COURT IN THE ITA NO.345/AGR/2009 A.Y. 2004-05. 33 CASE OF CIT VS. BHARAT ENGINEERING & CONSTRUCTION C O., 83 ITR 187 (SC), THE ADDITION IS NOT WARRANTED. 37. IN GROUND NO.2, THE REVENUE RAISED THE ISSUE TH AT THE CIT(A) ERRED IN DELETING THE ADDITION BY RELYING UPON THE TRANSACTI ON OF THE PERIOD BEGINNING 01.04.2004 ONWARDS. IN THIS REGARD, OBJECTION OF T HE REVENUE CANNOT BE SUSTAINED BECAUSE THE CIT(A) CONSIDERED THOSE DETAILS AND TRA NSACTIONS IN SUPPORT OF DISCHARGE OF BURDEN OF PROVING CAPACITY OF SHARE AP PLICANTS AND CASH CREDITS. THESE DOCUMENTS WERE NOT FURNISHED TO SUPPORT THAT IN FACT THE MONEY OF SHARE APPLICATION AND CASH CREDITS WERE OUT OF THOSE TRAN SACTION. FURTHER, THE JUDGEMENTS RELIED UPON BY THE REVENUE DOES NOT HELP TO THE REV ENUE IN THE LIGHT OF JUDGEMENTS OF JURISDICTIONAL HIGH COURT AND THE APEX COURT AS CITED ABOVE. 38. IN THE LIGHT OF ABOVE DISCUSSION, THE ORDER OF THE CIT(A) IS CONFIRMED. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* ITA NO.345/AGR/2009 A.Y. 2004-05. 34 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY