ACIT, Patiala V. M/s Vishal Coaters Pvt. Ltd., Patiala

ITA 360/CHANDI/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5239 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Depreciation; Source of fund; Revenue expenditure; Capital expenditure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.360/CHD/2013 (ASSESSMENT YEAR : 2009-10) THE A.C.I.T., VS. M/S VISHAL COATERS PVT. LTD., CIRCLE PATIALA. VILL. KHUSROPUR, MIN ROAD, PATIALA. PAN: AABCV2767P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, DR RESPONDENT BY : NONE DATE OF HEARING : 03.01.2017 DATE OF PRONOUNCEMENT : 03.04.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 09.01.2013 RELATING TO ASS ESSMENT YEAR 2009-10. 2. GROUND NOS. 1 AND 2 OF REVENUES APPEAL ARE ON THE SAME ISSUE AND READ AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.22,05,189/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE INCURRED, INTERALIA, ON PURCHASE OF NEW 2 ITEMS LIKE PUMPS, UPS, PEN DRIVES, PRINTEX ETC. IGNORING THE FACT THAT MOST OF THE ITEMS PURCHASED BY THE APPELLANT WERE NEW IDENTIFIABLE ASSETS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN HOLDING THE ACQUISITION OF NEW ASSETS FOR REPLACEMENT OF EXISTING ASSETS AS CURRENT REPAIRS, THOUGH THE HON'BLE SUPREME COURT IN THE CASES OF CIT VS. SRI MANGAYARKARSHI MILLS (P) LTD. (315 ITR 114) (2009) & CIT VS. SARAVANA SPINNING MILLS (P) LTD. (29 3 ITR 201)(2007) HAS HELD THAT REPLACEMENT OF MACHINERY WAS CAPITAL EXPENDITURE AND COULD NOT BE TREATED AS CURRENT REPAIRS. 3. THE ABOVE GROUNDS RAISED BY THE REVENUE ARE AGAINST THE ACTION OF THE LD. CIT (APPEALS) IN DEL ETING ADDITION OF RS.22,05,189/- MADE BY THE ASSESSING OF FICER HOLDING EXPENSES INCURRED ON PURCHASE OF ITEMS LIKE PUMPS, UPS, PENDRIVES, ETC. TO BE CAPITAL IN NATURE . 4. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED EXPENDITURE ON ACCOUNT OF VARIOUS ITEMS/SERVICES AS REVENUE, AS FOLLOWS: S.NO. NAME OF ITEM/SERVICE AMOUNT SPENT (RS.) 1. S.S. PIPE 36582/- 2. SPARE FOR AIR CONDITIONER 5100/- 3. PULP VALVE 24901/- 4. SYNTHETIC WIRE 462432/- 5. S.S. WIRE 279248/- 3 6. BREAK DRUM SHAFT 40010/- 7. FENNER COUPLING 287018/- 8. STEEL HOSE 39679/- 9. MAGNETIC FLOW METER 194950/- 10. REAR SHAFT, MOTOR PULLY 4108/- 11. PEN DRIVES 4070/- 11. S.S. JALI 3525/- 13. MULTITECH 279604/- 14. PRINTEX 413533/- 15. SERVO SYSTEM 257036/- 16. UPS 9850/- 17. CI PULP VALUE 121120/- 18. REPAIR OF COMPUTER 33365/- 19. PUMP 7425/- 20. OPTICAL MOUSE 7225/- 21. KSB PUMP 29570/- 22. UPS BATTERY, PRINTER 32393/- 23. S.S. NOZZLES 39259/- 5. ON CONFRONTING THE ASSESSEE WITH THE SAME AND ASKING HIM TO EXPLAIN WHY THE SAME SHOULD NOT BE TR EATED AS CAPITAL, THE ASSESSEE SUBMITTED THAT THE AFORESA ID EXPENSES WERE IN THE NATURE OF CURRENT REPAIRS, TO RUN AND MAINTAIN THE REGULAR BUSINESS ACTIVITIES DURING THE IMPUGNED YEAR AND WERE THEREFORE, DEBITED TO THE RE PAIR AND MAINTENANCE ACCOUNT AND CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE SUBMITTED THAT NO NEW AS SET HAD BEEN CREATED AND ONLY THE WORN OUT OLD ASSETS W ERE 4 REPAIRED AND REPLACED. FURTHER A CHART GIVING PART ICULARS OF USE OF THESE SPARE PARTS AND ACCESSORIES AS TO W HERE THEY WERE USED AND THEIR RESPECTIVE LIFT TERM WHICH MAKES THESE SPARE PARTS AND ACCESSORIES AS CONSUMABLE IN THE REGULAR COURSE OF BUSINESS ACTIVITIES, WERE ALSO FI LED. THE ASSESSEE SUBMITTED THAT ALL THE ABOVE ITEMS WERE ME ANT FOR DAY-TO-DAY RUNNING OF THE PLANT AND MACHINERY I N AN EFFICIENT AND MORE PROFITABLE MANNER AND HAD, THERE FORE, BEEN RIGHTLY CLAIMED AS REVENUE EXPENDITURE. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTIO N AND TREATED THE ABOVE EXPENSES AS CAPITAL EXPENSES, HOL DING THAT NEW IDENTIFIABLE ASSET HAD BEEN CREATED OR BRO UGHT INTO EXISTENCE BY INCURRING THESE EXPENSES. HE FUR THER HELD THAT SIMILAR EXPENSES HAD BEEN DEBITED TO CAPI TAL ASSETS LIKE ELECTRICAL MOTORS, FUSE SWITCHES, MCCB, SHEETS, ETC. AND NO EXPLANATION HAS BEEN GIVEN BY THE ASSES SEE AS TO WHY SAME ITEMS WERE DEBITED TO BOTH FIXED ASSETS ACCOUNT AS WELL AS TO REPAIR AND MAINTENANCE ACCOUN T. HE, THEREFORE, TREATED THE ENTIRE EXPENSES AS CAPIT AL IN NATURE AND AFTER ALLOWING DEPRECIATION ON THE SAME ADDED BACK THE BALANCE AMOUNTING OF RS.22,05,189/- TO THE INCOME OF THE ASSESSEE. 6. AGGRIEVED BY THE SAME, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (APPEALS). THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND FURTHER STATED THAT ON EXACTL Y SIMILAR SET OF FACTS IN ASSESSMENT YEAR 2007-08, TH E 5 I.T.A.T. HAD DELETED IDENTICAL ADDITION MADE IN THE CASE OF THE ASSESSEE AND HELD THE EXPENSES TO BE REVENUE IN NATURE. THE SUBMISSIONS OF THE ASSESSEE WERE SENT TO THE ASSESSING OFFICER FOR HIS COMMENTS, WHO VIDE HIS RE PLY DATED 27.12.2012 STATED THAT KEEPING IN VIEW THE FA CT THAT THE I.T.A.T. HAD ALLOWED ASSESSEES APPEAL ON THIS POINT IN ASSESSMENT YEAR 2007-08, THE APPEAL FILED BY THE AS SESSEE MAY BE DECIDED ACCORDINGLY. THE LD. CIT (APPEALS) AFTER CONSIDERING ASSESSEES SUBMISSIONS AND CONSIDERING THE FACT THAT THE ITEMS INCLUDED PIPES, SPARE PARTS FOR AC, JALI, ETC. AND HAVING REGARD TO THE NATURE OF THE I TEMS AND THEIR USE, HELD THE EXPENSES TO BE REVENUE IN NATUR E. THE LD. CIT (APPEALS) FURTHER FOLLOWED THE ORDER OF THE I.T.A.T. IN ASSESSEES CASE FOR ASSESSMENT YEAR 2007-08 AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST THIS ACTION OF THE LD. CIT (APPEALS), THE R EVENUE HAS RAISED THE ABOVE GROUNDS BEFORE US. 7. DURING THE COURSE OF ARGUMENTS BEFORE US, THE LD. DR CONTENDED THAT IDENTICAL ISSUE HAD BEEN DECI DED IN ASSESSEES CASE FOR ASSESSMENT YEAR 2008-09 ALSO BY THE I.T.A.T., WHEREIN A PART OF THE EXPENSES WAS HELD T O BE CAPITAL IN NATURE. THE LD. DR STATED THAT CONSIDER ING THE JUDGMENT OF THE I.T.A.T. IN A.Y 2008-09, THE ORDER OF THE ASSESSING OFFICER SHOULD BE UPHELD. 8. WE HAVE HEARD THE LD. DR, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND DOCUMENTS REFERRED TO BEF ORE US. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT 6 (APPEALS). THE LD. CIT (APPEALS), WE HOLD, HAS RIGH TLY APPRECIATED THE FACTS OF THE CASE AND HELD THE ABOV E EXPENSES TO BE REVENUE IN NATURE. ADMITTEDLY, THE EXPENSES INCURRED RELATE TO PURCHASE OF SS PIPES, S S WIRE, SYNTHETIC WIRE, CI PULP VALVE S.S. NOZZLES AND OTHE R ITEMS. DETAILS OF THE SAME WERE FILED BEFORE THE ASSESSING OFFICER ALONGWITH CHART GIVING USE OF THE ITEMS, AS TO WHER E THEY WERE USED AND THEIR RESPECTIVE LIFT TERM. THE RELE VANT CHART IS PLACED AT PAPER BOOK PAGE NO.37 BEFORE US. THE LD. DR HAS NOT DISPUTED THE ABOVE FACTS.THE ABO VE FACTS CLEARLY DEMONSTRATE THAT THE ITEMS WERE PRIMA RILY IN THE NATURE OF CONSUMABLES USED FOR REPLACING OLD AN D WORN OUT ITEMS OF MACHINERY . THE CONTENTION OF TH E LD. DR THAT NEW IDENTIFIABLE ASSETS HAVE BEEN CREATED WE FIND HAS NO MERIT, PARTICULARLY WHEN THE ASSESSEE HAS DEMONSTRATED THAT THESE ITEMS DO NOT HAVE AN INDEPE NDENT EXISTENCE BUT WERE TO BE USED FOR REPLACEMENT OF OL D AND WORN OUT PARTS IN MACHINERY. SUCH EXPENSES ARE UNDENIABLY IN THE NATURE OF CURRENT REPAIRS AND ARE REVENUE IN NATURE AS HELD BY THE I.T.A.T. IN ASSESS EES CASE FOR ASSESSMENT YEAR 2007-08 ALSO AND FOLLOWED BY THE LD. CIT (APPEALS). 9. AS FOR THE DECISION OF THE I.T.A.T. IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 2008-09, RELIED UPON BY THE LD. DR, WE FIND THAT IN THAT CASE NO SPECIFI C DETAILS OF THE EXPENSES WERE FILED AND, THEREFORE, CERTAIN EXPENSES WERE HELD TO BE CAPITAL IN NATURE. THE FA CTS OF 7 THE PRESENT CASE ARE, THEREFORE, CLEARLY DISTINGUIS HABLE FROM THAT IN ASSESSMENT YEAR 2008-09 SINCE IN THE P RESENT CASE THE ASSESSEE HAS FILED COMPLETE DETAILS OF THE EXPENSES. THE SAID DECISION WILL THEREFORE NOT APP LY TO THE PRESENT CASE. 10. FURTHER, IT IS PERTINENT TO POINT OUT THAT EVE N THE ASSESSING OFFICER IN HIS COMMENTS TO THE LD. CI T (APPEALS) HAD CONCEDED THAT THE ISSUE WAS COVERED I N FAVOUR OF THE ASSESSEE IN VIEW OF THE DECISION OF T HE I.T.A.T. IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007- 08. IN VIEW OF THE SAME, THERE CANNOT BE ANY GRIEV ANCE OF THE REVENUE NOW VIS--VIS THE DELETION OF THE DISAL LOWANCE BY THE LD. CIT (APPEALS) IN THIS REGARD. 11. IN VIEW OF THE ABOVE, WE HOLD THAT THE EXPENSE S INCURRED AMOUNTING TO RS.22,05,189/- ARE REVENUE IN NATURE AND THE ACTION OF THE LD. CIT (APPEALS) IN D ELETING THE ADDITION MADE ON THIS ACCOUNT IS, THEREFORE, UP HELD. 12. GROUND NO.1 AND 2 RAISED BY THE REVENUE ARE, THEREFORE, DISMISSED. 13. GROUND NOS.3, 4 AND 5 RAISED BY THE REVENUE READ AS UNDER: 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.90,00,000/- MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF NEW SHARE 8 CAPITAL/PREMIUM, IGNORING THE FACT THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS OF PROVING IDENTITY AND CREDITWORTHINESS OF THE ALLEGED SHAREHOLDERS & GENUINENESS OF THE TRANSACTIONS TO THE SATISFACTION OF THE AO AT THE TIME OF THE ASSESSMENT PROCEEDINGS. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ENCLOSURE STATED TO CONTAIN THE NAMES AND COMPLETE ADDRESSES OF THE SHAREHOLDERS WASNOTENCLOSEDWITHTHEASSESSEE'SREPLYDATED1 0.07.2011, AND THAT THE INCOME OF THE PERSONS APPLYING FOR SHARES AS PER COPIES OF ACKNOWLEDGEMENT OF THEIR RETURNS SHOWING VERY LITTLE INCOME, FILED MUCH LATER DID NOT PROVE THEIR CREDITWORTHINESS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS FAILED TO APPRECIATE THAT ISSUING SUMMONS TO THE SHAREHOLDERS ON 29.12.2011 WOULD BE FUTILE FOR CALLING THE SHAREHOLDERS FROM DELHI SINCE THE LIMITATION FOR COMPLETING THE ASSESSMENT WAS 31.12.2011, AND HE FAILED TO GRANT OPPORTUNITY TO THE AO DURING THE APPELLATE PROCEEDINGS TO EXAMINE THE SHAREHOLDERS, WHOSE ADDRESSES WERE SUPPLIED BY THE ASSESSEE AT ALMOST THE END OF THE ASSESSMENT PROCEEDINGS, BEFORE ACCEPTING THE ASSESSEES VERSION. 14. THE ISSUE IN THE ABOVE GROUNDS PERTAINS TO DELETION OF ADDITION MADE U/S 68 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON ACCOUNT OF SHARE CAPIT AL AMOUNTING TO RS.90 LACS. 9 15. BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE COMPANY HAD RECEIVED SHARE CAPITAL OF RS.9 0 LACS DURING THE YEAR. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH COMPLETE DETAILS OF P ERSONS FROM WHOM NEW SHARE CAPITAL HAD BEEN RECEIVED DURIN G THE YEAR. THE ASSESSEE SUBMITTED THE BANK ACCOUNT NUMB ERS, NUMBER OF SHARES AND AMOUNT OF SHARE CAPITAL/PREMIU M RECEIVED. THE ASSESSEE WAS FURTHER ASKED TO FILE C OPY OF ITRS ALONGWITH BANK STATEMENTS OF NEW SHAREHOLDERS AND WAS FURTHER ASKED TO EXPLAIN WHY ADDITION OF RS.90 LACS ON ACCOUNT OF NEW SHARE CAPITAL BE NOT MADE TO ITS RET URN OF INCOME. THE ASSESSEE SUBMITTED THAT THE COPY OF AC COUNT OF SHARE CAPITAL ALONGWITH NAMES AND ADDRESSES OF T HE SHAREHOLDERS HAD ALREADY BEEN SUBMITTED AND IT HAD ALSO BEEN EXPLAINED THAT ALL INVESTMENTS HAD BEEN MADE B Y ACCOUNT PAYEE CHEQUES. CONFIRMATIONS FROM ALL THE INVESTORS TOGETHER THEIR RESPECTIVE BANK ACCOUNT STATEMENTS AND COPY OF ACKNOWLEDGEMENT OF THEIR RET URNS OF INCOME WERE ALSO ENCLOSED. IT WAS FURTHER STATE D THAT THE INVESTMENTS HAD BEEN DULY DISCLOSED IN THE AUDI TED STATEMENTS OF ASSETS AND LIABILITIES OF THE INVESTO RS, COPY OF WHICH WAS ALSO PLACED BEFORE THE ASSESSING OFFIC ER. THE ASSESSEE, THEREFORE, SUBMITTED THAT IT HAD FURN ISHED EXPLANATION OF THE SHARE CAPITAL ALONGWITH SUPPORTI NG EVIDENCE AND, THEREFORE, NO ADDITION U/S 68 OF THE ACT WAS WARRANTED. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEES SUBMISSIONS HELD THAT NO INFORMATION REG ARDING NAMES AND ADDRESSES OF SHAREHOLDERS WAS GIVEN AND 10 DESPITE ASKING THE ASSESSEE TO PRODUCE PARTIES FROM WHOM SHARE CAPITAL HAD BEEN RECEIVED, NO ONE WAS PRODUCE D. HE FURTHER POINTED OUT THAT ALL THE INVESTOR COMPANIES WERE BASED IN DELHI AND TWO OUT OF THE FIVE COMPANIES HA D THE SAME ADDRESS AND ALSO THAT ALL THE INVESTORS HAD TH EIR BANK ACCOUNTS IN THE SAME BRANCH I.E. AXIS BANK, 78 , OLD RAJINDER NAGAR, NEW DELHI. THE ASSESSING OFFICER S TATED THAT IT WAS QUITE SURPRISING THAT THE COMPANIES HAV ING DIFFERENT ADDRESSES HAD ACCOUNTS IN THE SAME BANK. HE ALSO FOUND THAT ALL THE INVESTOR COMPANIES HAD FILE D THEIR INCOME TAX RETURNS BELOW RS.1 LAC, WHICH DID NOT PR OVE THEIR CREDITWORTHINESS AND FURTHER THAT THE DATE ON WHICH CHEQUES WERE ISSUED TO THE ASSESSEE, THE SHAREHOLDE R COMPANIES HAD RECEIVED PAYMENTS FROM THE SAME ENTIT Y I.E. TULIKA, WHICH WAS PRACTICALLY NOT POSSIBLE. T HE ASSESSING OFFICER, THEREFORE, HELD THAT ALL THE INV ESTOR COMPANIES WERE JUST PAPER COMPANIES AND THE ASSESSE E HAD FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THESE COMPANIES. HE, THEREFORE, MAD E ADDITION OF THE ENTIRE AMOUNT OF SHARE CAPITAL RECE IVED DURING THE YEAR OF RS.90 LACS, U/S 68 OF THE ACT. 16. BEFORE THE LD. CIT (APPEALS), THE ASSESSEE CONTENDED THAT IT HAD DISCHARGED IT ONUS OF SATISFA CTORILY EXPLAINING THE CREDIT, BY ESTABLISHING THE IDENTITY OF THE SHARE SUBSCRIBERS, GENUINENESS OF THE TRANSACTIONS AND THE CREDITWORTHINESS OF THE APPLICANTS. THE ASSESSE E CONTENDED THAT THE DOCUMENT FILED BY IT, BEING THE RETURNS 11 OF INCOME OF THE SHARE APPLICANTS, PROVIDED PAN NUM BERS, NAMES AND COMPLETE ADDRESSES OF THE COMPANIES.IT WA S ALSO STATED THAT THE SUBSCRIBER COMPANIES WERE DULY REGISTERED WITH THE ROC AND PAYMENTS HAD BEEN MADE BY BANKING CHANNELS AND AUDITED BALANCE SHEET OF THE INVESTOR COMPANIES SHOWED AVAILABILITY OF ADEQUATE FUNDS BY WAY OF SUBSCRIBED CAPITAL OF RS.2 CRORES EACH. THUS, IT WAS CONTENDED THAT IT HAD DISCHARGED ITS ONUS U/S 6 8 OF THE ACT. FURTHER THE ASSESSEE CONTENDED THAT IT HA D ASKED THE ASSESSING OFFICER TO ISSUE SUMMONS TO SHARE APPLICANTS WHICH HAD BEEN DENIED BY THE ASSESSING OFFICER. 17. THE LD. CIT (APPEALS) AGREED WITH THE CONTENTI ON OF THE ASSESSEE AND DELETED THE ADDITION MADE, HOLD ING AS FOLLOWS: 9.6 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A S WELL AS THE CASE LAWS. IN THIS CASE THE APPELLANT HAD SUBMITTED THE COPY OF SHARE CAPITAL ACCOUNTS WITH THE NAME AND ADDRESS OF THE S HARES HOLDERS. THE INVESTORS ARE EXISTING ASSESSES AND THE INVESTMENT HAVE BEEN MADE THROUGH THEIR BANK ACCOUNTS BY WAY OF ACCOUNT PAYEE CHEQUES. THE APPELLANT HAS ALSO SUBMITTED CONFIRMATION FROM ALL THESE INVESTORS TOGETHER WITH THEIR RESPECTIVE BANK ACCOUNT STATEME NT, COPY OF ACKNOWLEDGMENT OF RETURNS OF THEIR INCOME. THE APPE LLANT COMPANY HAS DELIVERED PHYSICAL POSSESSION OF THE SHARES TO THE INVESTORS WHICH HAVE ALSO BEEN CONFIRMED BY INVESTORS IN THEIR RESPECTIV E CONFIRMATIONS. THE AUDITED STATEMENT OF ASSETS AND LIABILITY AS ON 31.03.2009 OF THE INVESTORS WAS ALSO SUBMITTED. IN THE CASE OF ONE OF THE INVESTORS I.E. MANI MALA DELHI PROPERTIES (P) LTD, IT IS NOTED THA T THE COPY OF ACKNOWLEDGMENT OF RETURNS IS SUBMITTED WHICH SHOWS THE ADDRESS AS WELL AS PAN NO. OF THE INVESTOR. THE AUDITED COPY OF BAL ANCE ACCOUNT SHOWS SOURCE THE FUND TO THE TUNE OF RS. 18,81,O8,075/- I N THE BALANCE SHEET INCLUDING RESERVE. THE CONFIRMATION HAS BEEN DULY F ILED AND THE SOURCE 12 IS SAID TO BE OUT OF SALE OF SHARES. SIMILARLY ALL SUCH DETAILS HAVE BEEN FILED BY HUM TURN MARKETING PVT. LTD. AND THE BALAN CE SHEET SHOWS SOURCE OF FUND TO THE TUNE OF RS. 18,37,37,447/-. SIMILAR IS THE CASE OF VICTORY SOFTWARE PVT. LTD. AND HERE ALSO THE BALANC E SHEET SHOWS THE SOURCES OF FUND TO THE TUNE OF RS. 19,34,28,437/-. IN THE CASE OF VIRGIN CAPITAL SERVICES PVT. LTD. THE SITUATION IS SIMILAR AND THE SOURCE OF FUND IS TO THE TUNE OF RS. 18,03,48,120/-. IN THE CASE OF VIP LEASING & FINANCE PVT. LTD. AGAIN THE SOURCE OF FUND IS TO THE TUNE O F RS. 17,14,54,900/-. IN ALL THESE CASES, THERE ARE REGULAR TRANSACTIONS IN THE BANK ACCOUNTS WITH MANY PARTIES. UNDER SUCH CIRCUMSTANCES, IT IS OBSERVED THAT THE IDENTITY OF SUBSCRIBERS HAS BEEN PROVED AS COPY OF THEIR ACKNOWLEDGMENT OF IT RETURNS HAVE BEEN DULY FILED ALONG WITH FULL DETAILS OF PAN AND ADDRESSES. GENUINENESS OF TRANSACTIONS IS ALSO PROV ED AS ALL SUCH INVESTMENTS HAVE BEEN MADE THROUGH REGULAR BANKING CHANNEL. THE CREDIT WORTHINESS OF THE INVESTORS IS ALSO ESTABLIS HED LOOKING INTO THE EXTENT OF SOURCE OF FUND AVAILABLE TO THE INVESTORS AND THE BANK ACCOUNTS. THE A.O. HAS NOT REBUTTED THESE SUBMISSIONS OF THE APPELLANT. THERE IS NOTHING ON RECORD TO SUGGEST ANY SHORTCOMING ON THE PART OF THE APPELLANT. ALL DOCUMENTS ARE DULY FILED IN SUPPORT OF THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES. IN VIEW OF THE FACTS OF THE CASE AND RELYING ON THE CASE LAWS, I AM OF THE OPINION THAT THE AMOUNT CANNOT BE ADDED U/S 68 OF THE IT ACT. IN VIE W OF THIS THE ADDITION IS HERE BY DELETED. 18. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 19. WE HAVE HEARD THE LEARNED D.R., PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. 20. WE ARE IN COMPLETE AGREEMENT WITH THE LD. CIT (APPEALS) THAT AS FAR AS THE ONUS WHICH LAY ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE SHARE APPLIC ATION RECEIVED, IT WAS DULY DISCHARGED BY THE ASSESSEE BY FILING 13 FOLLOWING DOCUMENTS OF RELATING TO THE IMPUGNED SHAREHOLDERS. 1. ACKNOWLEDGEMENT OF RETURNS OF INCOME FOR A.Y 2009-10, WHICH CONTAINED THE IS PAN NUMBERS AND COMPLETE NAMES AND ADDRESSES. 2. PROOF OF BEING REGISTERED WITH THE REGISTRAR OF COMPANIES. 3. BANK STATEMENTS SHOWING PAYMENT ON ACCOUNT OF SHARES SUBSCRIBED BY WAY OF ACCOUNT PAYEE CHEQUE. 4. AUDITED STATEMENT OF ACCOUNTS OF THE SUBSCRIBER COMPANY, SHOWING SUBSCRIBED CAPITAL OF RS.2 CRORES ,PROVING THE FINANCIAL CAPACITY TO MAKE THE INVESTMENT. 21. THERE IS NO DISPUTE ABOUT THE DOCUMENTS FILED, NOR ANY INFIRMITY POINTED OUT IN THE SAID DOCUMENTS BY THE REVENUE. 22. FURTHER WE FIND THAT THE LD.CIT(A) HAS ALSO GI VEN A CATEGORICAL FINDING REGARDING THE AVAILABILITY OF E NOUGH FUNDS WITH THE SUBSCRIBER COMPANIES TO MAKE THE INVESTMENTS. THE LD CIT(A) HAS ALSO GIVEN A FINDING THAT VERY SHORT TIME WAS GIVEN TO THE ASSESSEE TO PRODUC E THE DIRECTORS OF THE SUBSCRIBER COMPANIES ,WHICH THE AS SESSEE HAD EXPRESSED HIS INABILITY TO DO SO SINCE A FEW WE RE OUT OF THE COUNTRY WHILE OTHERS HAD EXPLAINED THAT THEY WOULD 14 ATTEND ONLY ON RECEIVING SUMMONS FROM THE DEPARTMEN T.LD CIT(A) HAS ALSO NOTED THAT CONFIRMATIONS OF ALL THE DIRECTORS WAS FILED BY THE ASSESSEE AND FURTHER THE ASSESSEE HAD REQUESTED THE AO TO ISSUE SUMMONS TO T HEM, BUT NO SUMMONS WERE ISSUED AND NO OTHER INQUIRY MAD E BY THE AO. THESE FACTS HAVE NOT BEEN CONTROVERTED B Y THE LD.DR. THEREFORE LD.CIT(A), WE HOLD, HAS RIGHTLY HE LD THAT THE ASSESSEE HAS DULY DISCHARGED ITS ONUS U/S 68 OF THE ACT, TO SATISFACTORILY EXPLAIN THE AMOUNT RECEIVED AS BEING ON ACCOUNT OF SHARE CAPITAL. THE DECISION RELIED UP ON BY THE LD. CIT (APPEALS) IN THIS REGARD IN THE CASE OF CIT VS SAMIR BIOTECH (P) LTD 325 ITR 294 (DEL),CIT VS DWARKADHISH INVESTMENT (P) LTD. 330 ITR 298(DEL),CI T VS BRIJ PAL SHARMA 333 ITR 229(P&H) AND BHAVSHAKTI STE EL MINES (P) LTD. VS CIT 320 ITR 619(DEL) IS APT AS IN ALL THESE CASES IT HAS BEEN HELD THAT THE ASSESSEE HAVI NG DISCHARGED HIS INITIAL ONUS U/S 68 NO ADDITION IS C ALLED FOR MERELY BECAUSE THE SUBSCRIBERS DID NOT RESPOND TO SUMMONS OR DID NOT PROVE THE SOURCE OF SOURCE. 23. THE ONLY THING,WE FIND, WHICH AROSE THE SUSPICION OF THE ASSESSING OFFICER WAS THE FACT THA T ALL THE COMPANIES WERE BASED IN DELHI WITH TWO OF THEM HAVI NG THE SAME ADDRESS AND ALL COMPANIES HAVING THE SAME BANK ACCOUNT. THE ASSESSING OFFICER FOUND IT SURPRISING THAT WITH DIFFERENT ADDRESSES THE COMPANIES STILL HAD AC COUNTS IN THE SAME BANK. FURTHER HE FOUND THAT ALL COMPAN IES HAD FILED RETURNS OF INCOME BELOW RS.1 LAC AND THE DATE ON 15 WHICH CHEQUES WERE ISSUED, THERE WERE DEBITS FROM T HE SAME COMPANY I.E. TULIKA IN THE CASES OF ALL SHARE APPLICANTS. FOR THESE REASONS, HE HELD THAT THE CO MPANIES WERE JUST PAPER COMPANIES. THE LD. COUNSEL FOR THE ASSESSEE HAS COUNTERED AND REBUTTED ALL THE OBSERVA TIONS OF THE ASSESSING OFFICER BY STATING THAT THERE IS N OTHING UNUSUAL IN THE FACTS AND NOTHING ADVERSE CAN BE INF ERRED FROM THEM. WE ARE IN AGREEMENT WITH THE SAME. MER ELY BECAUSE THE COMPANIES HAVE ACCOUNTS IN THE SAME BAN K, IT DOES NOT PROVE THAT THE TRANSACTIONS UNDERTAKEN BY THEM WERE BOGUS AND ON BEHALF OF THE ASSESSEE, ROUTING T HE ASSESSEES OWN MONEY. AT THE MOST, THE ABOVE FINDINGS/OBSERVATIONS OF THE ASSESSING OFFICER RAIS E A DOUBT ABOUT THE VERACITY OF THE TRANSACTIONS, AT WH ICH POINT THE ASSESSING OFFICER OUGHT TO HAVE INVESTIGA TED FURTHER INTO THE AUTHENTICITY OF THE TRANSACTIONS, HAVING ALL THE DETAILS WITH HIM TO PROCEED WITH AND HAVING BEEN ASKED BY THE ASSESSEE TO ISSUE SUMMONS TO THE INVES TOR COMPANIES IN THIS REGARD, BEFORE GIVING ANY ADVERSE FINDING. THE ASSESSEE, WE HOLD, HAS DISCHARGED HIS ONUS BY FILING ALL NECESSARY DOCUMENTS PROVING THE IDENT ITY, GENUINENESS AND CREDITWORTHINESS OF THE APPLICANTS AND NOTHING FURTHER WAS REQUIRED FROM HIM, TILL THE ASS ESSING OFFICER CAME UP WITH SOME COGENT EVIDENCE AGAINST H IM AT WHICH POINT OF TIME THE ONUS TO REBUT THE EVIDENCE WOULD HAVE SHIFTED TO THE ASSESSEE. THE ASSESSING OFFICE R HAVING FAILED TO DO SO IN THE PRESENT CASE, THE ADDITION M ADE BY HIM IS MERELY ON THE BASIS OF SUSPICION WHICH CANNO T BE 16 DONE IN THE CASE OF ADDITION MADE U/S 68 OF THE AC T. THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL C IT VS N.C CABLES LTD.(2017) 391 ITR 11(DEL) HAS HELD THAT ON BEING FURNISHED ALL DETAILS OF THE SUBSCRIBERS TO S HARE CAPITAL, THE AO SHOULD HAVE INQUIRED INTO THESE DET AILS IN SUPPORT OF ITS SUSPICION THAT THE TRANSACTIONS WERE NOT GENUINE AND COULD NOT HAVE MADE ADDITION MERELY ON THE BASIS OF SUSPICION. THE HONBLE HIGH COURT HELD AT PARA 8 OF ITS ORDER AT FOLLOWS; 8. AS FAR AS THE ADDITION IS CONCERNED,THE ASSESSEE HAD FURNISHED LARGE AMOUNTS OF MATERIAL IN THE FORM OF DOCUMENTS TO EVIDENCE THE GENUINENESS OF THE IDENTITY AND THE TRANSACTIONS AS WELL AS THE CREDITWORTHINESS OF THE PARTIES. THE ASSESSING OFFICER APPARENTLY CONDUCTED THE PERFUNCTORY INQUIRY BY DEPUTING AN INSPECTOR TO THE PREMISES. AS IS CONTENDED BY THE ASSESSEE, THE ABSENCE OF THESE PARTIES AFTER SEVEN OR EIGHT YEARS, IPSO FACTO COULD NOT HAVE LED THE ASSESSING OFFICER TO CONCLUDE THAT THE PARTIES WERE FICTITIOUS OR NON-EXISTENT. THE ASSESSEE HAD PROVIDED DETAILS OF PERMANENT ACCOUNT NUMBERS AND INCOME TAX RETURNS FOR THE RELEVANT YEARS. NOTHING PREVENTED THE ASSESSING OFFICER FROM INQUIRING INTO THESE DETAILS IN SUPPORT OF ITS SUSPICION THAT THE TRANSACTIONS WERE NOT GENUINE. UNDOUBTEDLY, THE ASSESSING OFFICER HAD CERTAIN BANK STATEMENTS WHICH DISCLOSED FACIALLY THAT THE AMOUNTS WERE INFUSED IN CASH AT THE RELEVANT TIME BEFORE THE SHARES WERE SUBSCRIBED TO OR CREDITS WERE GIVEN.HOSE SUSPICIOUS CIRCUMSTANCES AT THE SAME TIME COULD NOT HAVE BEEN THE CONCLUSIVE FACTOR IN THIS CASE. 24. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF T HE LD. CIT (APPEALS) IN DELETING THE ADDITION MADE OF SHARE CAPITAL AMOUNTING TO RS.90 LACS. 25. THE GROUND OF APPEAL NOS.3, 4 AND 5 RAISED BY THE REVENUE ARE, THEREFORE, DISMISSED. 17 26. IN EFFECT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3 RD APRIL, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH