GABS Fabrics (P) Ltd., New Delhi V. ITO, New Delhi

ITA 3473/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77764 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-05-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G H SEMA SENIOR
• Assessee Lawyers: R S AHUJA
• Keywords: Unexplained expenditure; Principle of natural justice; Opportunity of cross examination; Third party statement; Accommodation entries; Onus to prove
• Section: 69C; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.3473/DEL./2013 (ASSESSMENT YEAR : 2003-04) M/S. GABS FABRICS (P) LTD., VS. ITO, WARD 12 (1), E 335, EAST OF KAILASH, NEW DELHI. NEW DELHI 110 065. (PAN : AAACG0862H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. AHUJA, CA REVENUE BY : SHRI G.H. SEMA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF CIT (APPEALS)- VIII, NEW DELHI DATED 25.03.2013 FOR THE ASSESSMENT YEAR 2003-04. 2. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT NIL ON 28.11.2013. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX A CT, 1961. THE CASE WAS REOPENED U/S 148 ON THE BASIS OF CERTAIN INFORMATIO N RECEIVED FROM INVESTIGATION WING THAT ASSESSEE HAS TAKEN BENEFIT OF ACCOMMODATI ON ENTRY PROVIDERS. DURING THE YEAR, THE ASSESSEE HAS RECEIVED SHARE APPLICATION M ONEY OF RS.44,75,000/-. THE ASSESSING OFFICER MADE THE ADDITION OF SHARE APPLIC ATION MONEY TO THE INCOME OF THE ASSESSEE AND ALSO COMMISSION PAID TO ENTRY PROV IDERS OF RS.67,125/-. THE CIT ITA NO.3473/DEL./2013 2 (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY HOLDING THAT ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF T HE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTION BY NOT PRODUCING THE DIRECTOR OF THE SHARE APPLICANT COMPANY. THE CIT (A) ALSO NOTED THAT THE ASSESSEE HAS NOT PRODUCED THE PERSONS CONTROLLING THE SHARE APPLICANT COMPANIES IN SPITE OF SEVERAL OPPORTUNITIES BEING GIVEN DURING THE ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS TO DISCHARGE THE BURDEN OF PROOF AND THE APPEAL OF THE ASSESSEE WAS DISMISSED BY RELYING ON THE DECISIONS OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 (DELHI), CIT VS. GOLD LEAF CAPITAL CORPN. LTD. (2012) 205 TAXMAN 16 (DELHI), CIT VS. NEELKANTH ISPAT UDHYOG PVT. LTD. 2012-TIOL- 606-HIGH COURT-DEL-IT AND ALSO ON THE DECISION OF CIT VS. M/S. N.R. PORTFOLIO PVT. LTD. 2012-TIOL-1056- HIGH COURT-DEL-IT. AFTER SUSTAINING THE ADDITION O F SHARE APPLICATION MONEY, THE CIT (A) HAS ALSO SUSTAINED THE ADDITION OF RS.67,12 5/- TREATING THE SAME AS UNEXPLAINED EXPENDITURE FOR THE PAYMENT OF COMMISSI ON TO ACQUIRE ACCOMMODATION ENTRIES U/S 69C OF THE ACT. 3. NOW, THE ASSESSEE IS IN APPEAL BY TAKING THE FOL LOWING GROUNDS OF APPEAL :- (I) THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED ITO & CIT (A) ERRED IN (A) ADDING AS INCOME FROM UNEXPLAINED SOURCES, TH E SHARE APPLICATION MONEY RECEIVED DURING THE YEAR RS.44,75 ,000/- (B) ADDING THE COMMISSION PAID FOR RS.67,125 TAKING THE COMMISSION RATE AS 1.5% (1.5% OF RS.44,75,000) (C) NOT ACCEPTING THE IDENTITY, CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTION OF RS.44,75,000 PARTICULARLY WHE N THE COPY OF SHARE APPLICATION FORM, CONFIRMATION FORM THE PA RTIES, COPY OF THE INCOME TAX RETURN ACKNOWLEDGEMENT WITH PAN ITA NO.3473/DEL./2013 3 & BANK STATEMENT OF ALL THE PARTIES WERE PRESENTED BEFORE THE LEARNED ASSESSING OFFICER. (II) THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AME ND THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING. 4. WHILE PLEADING ON BEHALF OF THE ASSESSEE, THE LD . AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBM ITTED THE FOLLOWING DOCUMENTS OF EACH SHARE APPLICANTS :- (I) SHARE APPLICATION FORM (II) CONFIRMATION OF SHARE APPLICANT (III) BANK STATEMENT SHOWING RELEVANT TRANSACTION (IV) COPY OF CHEQUES/DRAFTS FROM WHICH PAYMENT RECE IVED (V) COPY OF INCOME TAX RETURN FILED BY SHARE APPLICANT (VI) PAN OF EACH SHARE APPLICANT AND (VII) IN SOME CASES OTHER DOCUMENTS SUCH AS AFFIDAV IT, COPY OF BOARD RESOLUTION, ETC. ON AN ENQUIRY FROM THE BENCH, THE ASSESSEE WAS ABLE TO SUBMIT THE SHARE ALLOTMENT LETTERS ISSUED TO ALL THE SHAREHOLDERS AND ALSO RET URN OF ALLOTMENT OF SHARES FILED WITH THE REGISTRAR OF COMPANIES ON 26.03.2013. COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE ASSESSMENT YEAR 2003-04 AND RECONCI LIATION OF THE SHARE APPLICATION AND SHARE PREMIUM MONEY IS ALSO SUBMITT ED. THE ASSESSEE HAS DISCHARGED THE ONUS CASTED UPON HIM BY LAW BY SUBMI TTING ALL RELEVANT DOCUMENTS. THE ASSESSING OFFICER HAS NEITHER DONE ANY EXERCISE TO SCRUTINIZE THESE DOCUMENTS NOR HE HAD MADE ANY FURTHER INQUIRY TO VERIFY THE V ERACITY OF THESE DOCUMENTS. THE ASSESSING OFFICER HAS NOT MADE ANY VERIFICATION. H E HAS NOT ISSUED THE SUMMONS U/S 131 TO ANY OF THE SHARE APPLICANT REQUIRING PER SONAL ATTENDANCE. NONE OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE WERE EXAMINED. HE FURTHER SUBMITTED THAT IN THE CASE OF CIT VS. OASIS HOSPITALITY P LTD REPORTE D IN 333 ITR 119 (DELHI), THE ITA NO.3473/DEL./2013 4 HON'BLE HIGH COURT HAS DECIDED THAT ONCE THE DOCUME NTS ARE SUBMITTED WHICH WILL BE SUFFICIENT TO PROVE IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF SHARE APPLICANT, THEN ASSESSING OFFICER TO SCRUTINIZE THE SAME AND I F HE NURTURES ANY DOUBT ABOUT VERACITY THEN PROBE THE MATTER FURTHER. AS PER THI S JUDGMENT OF HON'BLE HIGH COURT, THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY OF T HE SHAREHOLDER, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDER S. IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDUAL, SOME DOCUMEN TS WILL HAVE TO BE FILED OR THE SAID SHAREHOLDER WILL HAVE TO BE PRODUCED BEFORE TH E ASSESSING OFFICER TO PROVE HIS IDENTITY. IF THE CREDITOR/SUBSCRIBER IS A COMPANY, THEN THE DETAILS IN THE FORM OF ITS REGISTERED ADDRESS OR PAN IDENTITY, ETC., CAN BE FU RNISHED. IT HAS BEEN STATED IN PARA 12 OF THE JUDGMENT THAT GENUINENESS OF THE TRANSACT ION IS TO BE DEMONSTRATED BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MO NEY FROM THE SAID SHAREHOLDER AND IT HAD COME FROM THE COFFERS OF THAT VERY SHARE HOLDER. WHEN THE MONEY IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKI NG OR OTHER UNDISPUTABLE CHANNELS THEN GENUINENESS OF THE TRANSACTION WOULD BE PROVED. OTHER SUPPORTING DOCUMENTS SHOWING THE GENUINENESS OF THE TRANSACTIO N CAN BE THE COPIES OF THE SHAREHOLDERS' REGISTER, SHARE APPLICATION FORMS, SH ARE TRANSFER REGISTER, ETC. AS STATED IN PARA 13 OF THE JUDGMENT. AS FAR AS THE CREDITWO RTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE P ROVED BY PRODUCING THE BANK STATEMENT OF THE CREDITORS/SUBSCRIBERS SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAP ITAL. ONCE THESE DOCUMENTS ARE PRODUCED, THE ASSESSEE WOULD HAVE SATISFACTORILY DI SCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSESSING OFFICER TO SCRU TINIZE THESE DOCUMENTS AND IN CASE ITA NO.3473/DEL./2013 5 OF ANY DOUBT ABOUT THE VERACITY OF THESE DOCUMENTS, HE CAN PROBE THE MATTER FURTHER. IN THE ASSESSEES CASE, NO DOCUMENT PRODU CED BY THE ASSESSEE HAS BEEN INVESTIGATED OR SCRUTINIZED UPON AND NO DOUBT WAS C ASTED DURING THE INVESTIGATION. THEREFORE, AFTER SUBMITTING DOCUMENTS AS MENTIONED ABOVE, THE ASSESSEE SATISFACTORILY DISCHARGED THE ONUS CASTS UPON HIM. HE FURTHER SUBMITTED THAT IN THE CASE OF CIT VS. ROCK FORT METAL & MINERALS LTD REPO RTED IN [2011] 198 TAXMAN 497 (DELHI)/ 9 TAXMANN.COM 305 (DELHI), THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHEN THE ASSESSEE HAS SUBMITTED LIST OF ALL SH AREHOLDERS GIVING THEIR FULL NAMES, ADDRESSES, DETAILS OF PAYMENT MADE BY CHEQUE AND HA D ALSO SUBMITTED CONFIRMATIONS FROM ALL SHAREHOLDERS GIVING COMPLETE PARTICULARS I N FORM OF ADDRESS, CHEQUE NUMBERS AND NAME OF BANK, PAN AND PLACE OF ASSESSME NT, ETC. AND ALSO SUBMITTED COPIES OF BANK STATEMENTS SHOWING DEPOSIT OF ALL TH ESE RECEIPTS, THEN ASSESSEE HAD DISCHARGED ITS PRIMARY ONUS AS PER LAW IN PROVING I DENTITIES OF ALL SHAREHOLDERS AND ACCORDINGLY, ADDITION MADE UNDER SECTION 68 WAS DEL ETED. LD. AR ALSO RELIED ON THE DECISION OF CIT VS. DIVINE LEASING AND FINANCE LTD - [2008] 299 ITR 268 WHERE THE HON'BLE SUPREME COURT HAD REJECTED THE SLP. LD . AR ALSO SUBMITTED THAT THE REVENUES RELIANCE ON THE JUDGMENT IN THE CASE OF N OVA PROMOTERS AND FINLEASE PVT LTD REPORTED IN 342 ITR 169 (DELHI) IS NOT APPLICAB LE TO THE FACTS OF ASSESSEES CASE AS NO SUMMONS HAVE BEEN RETURNED UNACCEPTED IN ASSE SSEES CASE, THERE IS NO DEPARTMENTAL ENQUIRY TO STATE THAT THE COMPANIES DO NOT EXIST AT THE ADDRESSES GIVEN, THERE HAS BEEN NO ACCEPTANCE BY THE SO CALLED CAPIT AL SUBSCRIBERS THAT THEY ARE ENTRY OPERATORS AND THERE IS NO COMMON DIRECTORSHIP IN VA RIOUS COMPANIES. HE FURTHER SUBMITTED THAT HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GANGESHWARI METAL ITA NO.3473/DEL./2013 6 P LTD (2013) 214 TAXMAN 423 (DELHI) HAS HELD THAT THERE ARE TWO TYPES OF CASES, ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER SITS B ACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIO NS. THE CASE OF GANGESHWARI METAL P. LTD., CITED SUPRA, WAS HELD TO BE FALLEN I N THE LATTER CATEGORY. IN ASSESSEES CASE ALSO, THERE IS A COMPLETE LACK OF ENQUIRY ON T HE PART OF THE ASSESSING OFFICER WHEN THE ASSESSEE FURNISHED ALL THE RELEVANT MATERI AL TO THE ASSESSING OFFICER AND AS PER THE RATIO IN THE CASE OF GANGESHWARI METAL P. L TD., NO ADDITION CAN BE MADE U/S 68 IN THE ASSESSEES CASE. HE ALSO SUBMITTED THAT T HE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS & FINLEASE PVT. LTD., CITED SUPRA, HAS BEEN DULY CONSIDERED AND DISTINGUISHED IN THE CASE OF CIT VS. GANGESHWARI METAL P. LTD., CITED SUPRA. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KAMDHENU STEEL & ALLOYS LTD - [2012] 248 CTR 33 (DELHI) AND HON'BLE SUPREME COURT IN THE CASE O F CIT VS. LOVELY EXPORTS - [2008] 216 CTR 195 (SC). THE LD. AR ALSO SUBMITTED THAT THE HON'BLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. MAF ACADEMY PVT. LTD. IN ITA NO.241/2012 DATED 28.11.2013 IS NOT APPLICABLE TO T HE ASSESSEES CASE AS IN THAT CASE ASSESSING OFFICER ISSUED SUMMONS U/S 131 WHICH WAS RECEIVED BACK UNSERVED. THE ASSESSING OFFICER AGAIN ISSUED SUMMONS TO 8 OTH ER PARTIES WHICH WERE AGAIN RETURNED UNSERVED AND INSPECTOR WAS DEPUTED WHO RET URNED THAT NO PARTY WAS AVAILABLE AT THE GIVEN ADDRESS AND ASSESSING OFFICE R THEN ASKED THE ASSESSEE TO PRODUCE THE DIRECTORS OF THE SHARE APPLICANT AND AS SESSEE SHOWED ITS INABILITY TO ITA NO.3473/DEL./2013 7 PRODUCE THE PARTIES. ASSESSING OFFICER OBSERVED TH AT CASH WAS DEPOSITED JUST BEFORE ISSUING CHEQUES AND SHARE APPLICANTS BELONG TO MAHE SH GARG GROUP OF ENTRY OPERATORS. BUT, IN ASSESSEES CASE, THE FACTS ARE COMPLETELY DIFFERENT. HE FURTHER SUBMITTED THAT THE CIT (A) WAS NOT JUSTIFIED IN CON FIRMING THE ADDITION ON THE BASIS OF NON-PRODUCTION OF SHARE HOLDERS AND DIRECTORS OF THE ASSESSEE COMPANY. AS HELD BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD REPORTED IN 329 ITR 271 (DELHI), THERE WAS NO LEGAL OBLIGATI ON ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLIC ANT-COMPANIES BEFORE THE ASSESSING OFFICER. THEREFORE, FAILURE OF THE ASSESS EE TO PRODUCE THEM CANNOT JUSTIFY THE ADDITIONS MADE BY THE ASSESSING OFFICER, WHEN T HE ASSESSEE HAS FURNISHED ALL THE RELEVANT DOCUMENTS, ON THE BASIS OF WHICH, THE ASSE SSING OFFICER, IF HE SO WANTED, COULD HAVE SUMMONED THEM FOR VERIFICATION. IN ASSES SEES CASE, NO SUCH ATTEMPT WAS MADE BY THE ASSESSING OFFICER TO SUMMON THE DIRECTO RS OF THE APPLICANT-COMPANIES. THE ADDRESSES OF THESE COMPANIES WERE MADE AVAILABL E TO THE ASSESSING OFFICER AND MEMORANDUM AND ARTICLES OF ASSOCIATION AND THEIR IN COME-TAX RETURNS WAS AVAILABLE WITH ASSESSEE AND IF THE ASSESSING OFFICE R HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLICANTS, HE COULD HAVE SUMMONED THE DI RECTORS OF THE APPLICANT- COMPANIES. SIMILARLY, IN THE CASE OF CIT VS. ORBITA L COMMUNICATION P. LTD [2010] 327 ITR 560 (DELHI), HON'BLE DELHI HIGH COURT HAS H ELD THAT WHERE THE ASSESSEE HAD PRODUCED SUBSTANTIAL EVIDENCE TO ESTABLISH IDEN TITY AND CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF SHARE APPLICATION, MER ELY BECAUSE IT FAILED TO PRODUCE CREDITORS, SHARE APPLICATION MONEY COULD NOT BE REG ARDED AS UNDISCLOSED INCOME OF ASSESSEE UNDER SECTION 68. HE ALSO PLACED RELIANCE ON THE DECISION OF HON'BLE DELHI ITA NO.3473/DEL./2013 8 HIGH COURT IN THE CASE OF CIT VS. ROCK FORT METAL & MINERALS LTD - [2011] 198 TAXMAN 497 (DELHI) AND ITAT, INDORE BENCH IN THE CA SE OF ACIT VS. ETC INDUSTRIES LTD - [2012] 150 TTJ 527 (INDORE). HE F URTHER SUBMITTED THAT ASSESSING OFFICER AS WELL AS CIT (A) ERRED IN MAKING ASSESSME NT BY NOT PROVIDING COPIES OF THIRD PARTY STATEMENTS RECORDED UNDER SEARCH EVEN A FTER REPETITIVE REQUEST OF ASSESSEE WHICH HAS BEEN USED AGAINST THE ASSESSEE I N ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT IN THE CASE OF CIT VS. A.L. LALPURIA CONSTRUCTION P. LTD. REPORTED IN [2013] 32 TAXMANN.COM 384 (RAJASTHAN), THE HON'BLE HIGH COURT HAS HELD THAT ADDITION ON ACCOUNT OF ACCOMMODATION ENTRY CANNOT B E MADE ON THE BASIS OF UN- CONFRONTED ORAL STATEMENTS OF THIRD PARTIES. HE AL SO RELIED ON THE DECISION OF ITAT, DELHI IN THE CASE OF YAMUNA SYNTHETICS P. LTD. VS. DCIT - [2004] 3 SOT 35 (DELHI) WHEREIN IT WAS HELD THAT THE ONLY MATERIAL AVAILABL E WITH THE ASSESSING OFFICER TO HOLD THAT IT WAS ACCOMMODATION ENTRY WAS THE STATEM ENT MADE BY A THIRD PARTY. THE SAID STATEMENT HAD NOT BEEN CONFRONTED TO THE ASSES SEE. IT IS AN ACCEPTED POSITION IN LAW THAT WHENEVER THE REVENUE PROPOSES TO RELY ON A MATERIAL FOUND FROM A THIRD PARTY, WHICH IS ADVERSE TO THE ASSESSEE, THE REVENU E HAS TO CONFRONT THE SAME TO THE ASSESSEE. HE ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF REACH CABLE NETWORK LTD VS. DCIT - [2008] 299 ITR 3 16 (DELHI) WHEREIN IT IS HELD THAT WHERE ASSESSEE HAD REPEATEDLY REQUESTED FOR SU PPLY OF COPIES OF DOCUMENTS ON BASIS OF WHICH SECTION 147 PROCEEDINGS HAD BEEN INI TIATED BUT ASSESSING OFFICER FRAMED REASSESSMENT WITHOUT FURNISHING TO ASSESSEE COPIES OF THOSE DOCUMENTS, REASSESSMENT WAS VITIATED AND LIABLE TO BE SET ASID E. HE ALSO SUBMITTED THAT SIMILAR VIEW HAS BEEN UPHELD BY THE ITAT, DELHI IN CASE OF ITO VS. PAWAN KUMAR GUPTA ITA NO.3473/DEL./2013 9 REPORTED IN 131 TTJ 92 (DELHI) AND ITAT, AHMEDABAD IN THE CASE OF VIJAYBHAI H. SHAH VS. DCIT REPORTED IN [2006] 6 SOT 75 (AHD). HE SPECIFICALLY SUBMITTED THAT ASSESSING OFFICER AND CIT (A) HAS ERRED BY NOT GIVI NG ANY OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENTS HAVE BEEN RECO RDED AND USED AGAINST THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE AS SESSING OFFICER HAS COMMUNICATED TO THE ASSESSEE THAT WHENEVER THE THIR D PARTY STATEMENT IS USED AGAINST THE ASSESSEE THEN ONLY COPY WILL BE PROVIDE D. THIS STATEMENT HAS BEEN USED AGAINST THE ASSESSEE BUT NO COPY WAS PROVIDED. FIN ALLY, THE ASSESSING OFFICER PASSED THE ORDER WITHOUT GIVING COPIES OF STATEMENT RECORDED UNDER SEARCH AND OPPORTUNITY OF CROSS EXAMINATION OF PERSONS WHOSE S TATEMENTS HAVE BEEN USED AGAINST THE ASSESSEE. THE REVENUE HAS ALSO EARED B Y MAKING ASSESSMENT BY NOT GIVING ANY OPPORTUNITY TO ASSESSEE TO CROSS EXAMINE THE PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED AND USED DURING THE ASSESSMENT P ROCEEDINGS. THERE IS A VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. NO SEI ZED MATERIAL WAS PROVIDED TO THE ASSESSEE NOR OPPORTUNITY WAS PROVIDED TO THE ASSESS EE TO CROSS EXAMINE THE PERSONS WHOSE STATEMENTS HAVE BEEN RECORDED AND SUCH ACT OF THE REVENUE WOULD BE FATAL TO THE PROCEEDINGS. THE RELIANCE WAS PLACED ON THE DE CISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. SMC SHARE BROKER LTD. REPO RTED IN 288 ITR 345, HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. ASHWANI GUPTA - 322 ITR 396 (DELHI) AND HON'BLE GUJARAT HIGH COURT IN CASE OF CIT VS. INDRA JIT SINGH SURI - [2013] 215 TAXMAN 581 (GUJRAT). FINALLY, HE PLEADED THAT ASSE SSEE HAS NOT BEEN SUPPLIED REASONS RECORDED U/S 148 WITHIN REASONABLE TIME, I. E. WITHIN MAXIMUM TIME PERIOD OF SIX YEARS IN WHICH NOTICE U/S 148 CAN BE ISSUED AND, THEREFORE, ASSESSMENT IS ITA NO.3473/DEL./2013 10 INVALID IN LAW. FOR THIS PROPOSITION, LD. AR RELIE D ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF HARYANA ACRYLIC MFG. CO. VS. CIT 308 ITR 38 (DELHI). HE FINALLY SUBMITTED THAT THE ASSESSING OFFICER HAS ALSO RECORDED THAT ASSESSEE HAS FAILED TO FILE COPIES OF THE CONFIRMATION, AFFIDAVI T AND CURRENT ITR FROM M/S. SHUBHAM ELECTRONICS & ELECTRIC, ONE OF THE SHARE AP PLICANTS. LD. AR DRAWS OUR ATTENTION TO PAGE 35 OF THE PAPER BOOK WHICH IS A C ONFIRMATION FROM M/S. SHUBHAM ELECTRONICS & ELECTRIC DATED 14.12.2010 WHEREIN M/S . SHUBHAM ELECTRONICS & ELECTRIC HAD CONFIRMED THAT THEY HAVE MADE THE CONF IRMATION OF RS.4,90,000/- IN THE EQUITY SHARES OF M/S. GABS FABRICS (P) LTD. (ASSESS EE) DURING THE FINANCIAL YEAR ENDED 31.03.2003. IN THIS CONFIRMATION PAN OF THE SHARE APPLICANT WAS ALSO MENTIONED WITH THE ADDRESS. COPY OF THE BANK ACCOU NT WAS ALSO SUBMITTED WHICH IS PLACED AT PAGE 36 OF THE PAPER BOOK. INCOME-TAX RE TURN FOR ASSESSMENT YEAR 2002- 03 IS ALSO SUBMITTED WHICH IS PLACED AT PAGE 37 OF THE PAPER BOOK. APPLICATION FOR ALLOTMENT OF EQUITY SHARES WAS ALSO FILED WHICH IS PLACED AT PAGE 38 OF THE PAPER BOOK. AN AFFIDAVIT OF DIRECTOR OF M/S. SHUBHAM ELE CTRONICS & ELECTRIC IS ALSO PLACED AT PAGE 39 OF THE PAPER BOOK. DETAILS OF TH E DIRECTORS OF M/S. SHUBHAM ELECTRONICS & ELECTRIC ARE ALSO PROVIDED ALONG WITH ADDRESSES WHICH ARE PLACED AT PAGE 40 OF THE PAPER BOOK. COPY OF THE BOARD RESOL UTION IS ALSO SUBMITTED. FINALLY, HE SUBMITTED THAT THE FACTS OF ASSESSEES CASE ARE SIMILAR TO THE FACTS OF CIT VS. GANGESHWARI METAL P LTD, CITED SUPRA. LD. AR P LEADED THAT IN THIS CASE, NO INQUIRY WAS MADE WITH REGARD TO THE VERACITY OF DOC UMENTS SUBMITTED BY ASSESSEE. NOW, REVENUE CANNOT BE GIVEN A SECOND ROUND OF INVE STIGATION WHEN THEY HAVE FAILED TO DO SO. ITA NO.3473/DEL./2013 11 5. LD. DR RELIED ON THE ORDER OF THE AUTHORITIES BE LOW AND ALSO THE CASE LAWS RELIED UPON BY THE LOWER AUTHORITIES AND ALSO THE D ECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF ONASSIS AXLES PRIVATE LTD. VS. CIT IN ITA NO.31/2013 DATED 13.02.2014 AND ALSO CIT VS. ULTRA MODERN EXPORTS PV T. LTD. IN ITA NO.262/2002 DATED 11.12.2012. HE PLEADED TO SUSTAIN THE ADDITI ON MADE BY ASSESSING OFFICER AND PLEADED TO DISMISS THE ASSESSEES APPEAL. 6. WE HAVE HEARD BOTH THE SIDES. WE HAVE CONSIDERE D THE CASE LAWS RELIED UPON BY BOTH THE SIDES. WE HAVE ALSO GONE THROUGH THE P APER BOOK FILED IN THIS CASE. THE CASE WAS REOPENED U/S 148 OF THE ACT ON THE BASIS O F INFORMATION FROM INVESTIGATION WING THAT ASSESSEE IS A BENEFICIARY OF ACCOMMODATIO N ENTRY PROVIDERS. THE ASSESSEE SUBMITTED THE DOCUMENTS IN RESPECT OF EACH OF THE SHARE APPLICANTS LIKE SHARE APPLICATION FORM, CONFIRMATION OF SHARE APPLI CATION, BANK STATEMENT SHOWING RELEVANT TRANSACTION, COPY OF CHEQUES/DRAFTS OF WHI CH PAYMENT WAS RECEIVED, COPY OF INCOME-TAX RETURN OF THE SHARE APPLICANT, PAN OF EACH APPLICANT AND ALSO AFFIDAVITS AND BOARD RESOLUTION. THE ASSESSING OFF ICER HAS NOT DONE ANY VERIFICATION WITH REGARD TO THE DOCUMENTS TO KNOW V ERACITY OF THESE DOCUMENTS. THE ASSESSING OFFICER HAS ALSO NOT ISSUED SUMMONS U/S 1 31 OF THE ACT TO THE SHARE APPLICANTS FOR THEIR PERSONAL PRESENCE. THE ASSESS ING OFFICER HAS ALSO NOT CASTED ANY DOUBT ABOUT THE VERACITY OF THESE DOCUMENTS. T HE ASSESSING OFFICER HAS ALSO NOT GOT ANY ENQUIRY CONDUCTED THROUGH THE FIELD STA FF WITH REGARD TO THE SHARE APPLICANTS. HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. GANGESHWARI METAL P. LTD. (2013) 214 TAXMAN 423 (DELHI) HAS HELD THAT THERE ARE TWO TYPES OF CASES, ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW ITA NO.3473/DEL./2013 12 AND THE OTHER IN WHICH THE ASSESSING OFFICER SITS BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIO NS. THE ASSESSEES CASE FALLS IN THE SECOND CATEGORY AS THE ASSESSING OFFICER HAS NO T MADE ANY INVESTIGATION WITH REGARD TO THE VERIFICATION OF THE DOCUMENTS SUBMITT ED BY THE ASSESSEE BEFORE HIM. THIS SHOWS THAT THERE WAS A CLEAR LACK OF ENQUIRY O N THE PART OF THE ASSESSING OFFICER. IN SUCH A SITUATION, HON'BLE JURISDICTION AL HIGH COURT HAS HELD THAT NO ADDITION CAN BE SUSTAINED U/S 68 OF THE ACT. WE WO ULD ALSO LIKE TO MENTION HERE THAT IN THE CASE OF CIT VS. GANGESHWARI METAL P. LTD., C ITED SUPRA, THE HON'BLE HIGH COURT HAS ALSO CONSIDERED THE DECISION OF HON'BLE D ELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD., CITED S UPRA. WE WOULD ALSO LIKE TO MENTION THAT THE FACTS OF CASES RELIED UPON BY THE REVENUE ARE AT VARIANCE FROM THE FACTS OF ASSESSEES CASE. CONSIDERING ALL THESE AS PECTS, WE FIND THAT THE ASSESSEE HAS ADDUCED ADEQUATE EVIDENCE/MATERIAL WHICH ARE SUFFIC IENT TO DISCHARGE THE PRIMA FACIE BURDEN CASTED UPON IT BY SECTION 68 OF THE AC T. AFTER THIS, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE AND NAIL THE ASSESS EE AND FASTEN THE ASSESSEE WITH THE LIABILITY U/S 68 OF THE ACT. IN ABSENCE OF ANY SUCH THING, WE ARE OF THE VIEW THAT THE CIT (A) WAS NOT JUSTIFIED TO SUSTAIN THE ADDITI ON. WE DIRECT TO DELETE THE SAME. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JUNE, 2014. SD/- SD/- (A.T. VARKEY) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF JUNE, 2014 TS ITA NO.3473/DEL./2013 13 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.