ITO 12(3)(3), MUMBAI V. LUCAS MEYER INDUSTRIES, MUMBAI

ITA 3645/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1739 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 19-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Income from undisclosed sources; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Question of law; Difference of opinion; Third party statement; Accommodation entries; Set aside
• Section: 271(1)(c); 143(3); 142(1); 133(6); 143(1); 205; 201; 251; 143(2); 68; 148

Judgement Text

1 ITA 3645/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.3645/MUM/2017 (ASSESSMENT YEAR : ) ITO-12(3)(3), MUMBAI VS M/S LUCAS MEYER INDUSTRIES PVT LTD 205/D, VEENA NAGAR, CHINCHOLI ROAD MALAD W), MUMBAI 400 064 PAN : AAACL6818N APPELLANT RESPONDEDNT APPELLANT BY SHRI RAJNEESH YADAV RESPONDENT BY SHRI BHUPENDRA SHAH DATE OF HEARING 03-05-2019 DATE OF PRONOUNCEMENT 24-05-2019 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A)- 20, MUMBAI DATED 28-02-2017 AND IT PERTAINS TO AY 2 009-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 4,05,00,000/- ON ACCOU NT OF DISALLOWANCE U/S.68 OF THE ACT MADE BY THE AO WITHOUT APPRECIATING THE FACTS O F THE CASE ELABORATELY DISCUSSED BY THE AO IN THE ASSESSMENT ORDER U/S. 143(3) R.W.S . 147 OF THE I.T. ACT TO THE EFFECT THAT GENUINENESS OF SHARE PREMIUM HAS NOT BEEN PROV ED BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ORDER OF THE LD.CIT(A) DESERVES TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2 ITA 3645/MUM/2017 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT( A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF CULTIVATING, IMPORTING, EXPORTING, STORING AND DEALING IN AGRICULTURAL, HORTICULTURAL, FLORICULTURAL INCLUDIN G SOYA, SOYA PRODUCTS, FOODGRAINS, CROPS, OILSEEDS, FRUITS, DAIRY PRODUCTS . THE ASSESSEE IS ALSO ENGAGED IN THE ACTIVITY OF BREEDING AND PROCESSING FOOD ART ICLES AND SPICES. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR AY 2008 -09 ON 30-09-2008 DECLARING TOTAL INCOME OF RS.13,48,850. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. THEREAFTER, THE CASE WAS REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961, AFTER RECORDING REASONS AS PE R WHICH INCOME HAD BEEN ESCAPED ASSESSMENT ON ACCOUNT OF OBTAINING ACCOMMOD ATION ENTRIES OF SHARE CAPITAL FROM SHRI PRAVINKUMAR JAIN AND HIS ASSOCIAT ES AS PER THE INFORMATION RECEIVED FROM THE OFFICE OF THE DIT(INV)-2, MUMBAI. ACCORDINGLY, NOTICE U/S 148 DATED 27-03-2015 WAS ISSUED. IN RESPONSE TO NO TICE, THE ASSESSEE, VIDE LETTER DATED 25-04-2009 REQUESTED TO CONSIDER ORIGI NAL RETURN FILED ON 30-09- 2008 AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. THE CASE HAS BEEN SELECTED FOR SCRUTINY FOR SCRUTINY AND NOTICES U/S 143(2) AN D 142(1) OF THE ACT, WERE ISSUED. 3 ITA 3645/MUM/2017 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATI ON ENTRIES OF BOGUS SHARE CAPITAL RECEIVED FROM COMPANIES CONTROLLED AND MANA GED BY SHRI PRAVINKUMAR JAIN. THEREFORE, CALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCES TO JUSTIFY ISSUE OF SHARE AT A HUGE PREMIUM OF RS.90 PER SHARE . IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED DETAILS OF SHARE CAPITAL RECEIVE D FROM COMPANIES CONTROLLED AND MANAGED BY SHRI PRAVINKUMAR JAIN ALONGWITH CONF IRMATION, COPY OF FINANCIAL STATEMENTS, THEIR PAN AND BANK STATEMENTS AND ARGUED THAT SHARE CAPITAL RECEIVED FROM ABOVE COMPANIES WERE GENUINE IN NATURE, WHICH ARE SUPPORTED BY NECESSARY EVIDENCE. IN ORDER TO ASCER TAIN CORRECTNESS OF CLAIM OF THE ASSESSEE, THE AO ISSUED NOTICES U/S 133(6) AT T HE ADDRESSES GIVEN BY THE ASSESSEE. HOWEVER, THE NOTICES ISSUED TO THE SAID PARTIES WERE RETURNED UNDELIVERED BY POSTAL AUTHORITIES. SINCE, NONE OF THE NOTICES U/S 133(6) WERE SERVED ON THE SAID PARTIES, VIDE NOTICE U/S 142(1) OF THE ACT DATED 08-01-2016, THE ASSESSEE WAS REQUESTED TO PRODUCE THE PARTIES O N 25-01-2016 ALONGWITH THEIR BOOKS OF ACCOUNT, MINUTES OF MEETING FOR SUBS CRIBING SHARE CAPITAL OF THE ASSESSEE COMPANY, SHARE CERTIFICATE IN ORIGINAL AND INVESTMENT REGISTER IN ORIGINAL. THE ASSESSEE COMPANY WAS ALSO SHOWCAUSED AS TO WHY THE AMOUNT OF RS.4,05,00,000 CREDITED IN THE BOOKS OF ACCOUNT SHO ULD NOT BE ADDED TO THE TOTAL INCOME U/S 68 OF THE I.T. ACT, 1961. THE ASS ESSEE HAS NOT PRODUCED THE 4 ITA 3645/MUM/2017 PARTIES BEFORE THE AO FOR EXAMINATION. IN FACT, ON 25-01-2016, THE AR OF THE ASSESSEE FILED A LETTER AND STATED THAT SOME CHANGE S IN THE ADDRESSES OF THOSE PARTIES TO WHOM SHARES HAD BEEN ISSUED. 4. THE AO, AFTER CONSIDERING SUBMISSIONS OF THE ASS ESSEE AND ALSO BY TAKING NOTE OF THE FACT THAT THE PARTIES DID NOT RESPOND T O NOTICES U/S 133(6), CAME TO THE CONCLUSION THAT SHARE CAPITAL RECEIVED FROM THE COMPANIES CONTROLLED AND MANAGED BY SHRI PRAVINKUMAR JAIN IS BOGUS IN NATURE WHICH ARE MERE ACCOMMODATION ENTRIES. THE AO FURTHER OBSERVED THA T THE ENTITIES ARE NOT AVAILABLE AT THE ADDRESS WHEN FIELD ENQUIRIES WAS M ADE. THE FACTS BROUGHT OUT DURING THE COURSE OF SEARCH IN THE CASE OF SHRI PRA VINKUMAR JAIN CLEARLY ESTABLISHES THE FACT THAT SHRI PRAVINKUMAR JAIN WAS INDULGING IN PROVIDING ACCOMMODATION ENTRIES, THROUGH THE WEB OF COMPANIES TO VARIOUS BENEFICIARIES IN LIEU OF COMMISSION. THE BANK ACCO UNTS FURNISHED BY THE ASSESSEE OF CREDITORS SHOWS THAT THERE ARE CONSTANT DEBITS AND CREDITS WITH MEAGRE OR LOW BALANCES. ON ANALYSIS OF FINANCIAL S TATEMENTS FILED BY THE ASSESSEE OF CREDITORS, IT WAS CLEARLY ESTABLISHED T HAT THEY HAD NO SUFFICIENT SOURCE OF INCOME TO EXPLAIN SHARE CAPITAL GIVEN TO THE ASSESSEE COMPANY, BECAUSE THEY HAVE DECLARED LOW NET PROFIT THOUGH TH EY HAVE CARRIED OUT CERTAIN BUSINESS. IT WAS ALSO ESTABLISHED FROM THE VERIFIC ATION THAT SHARE CETRTIFICATES / SHARE APPLICATION FORMS WERE NOT AVAILABLE WITH THE M. FROM THE ABOVE AND 5 ITA 3645/MUM/2017 ALSO ON THE BASIS OF FACTS BROUGHT OUT DURING THE C OURSE OF SEARCH IN THE CASE OF SHRI PRAVINKUMAR JAIN AND MODUS OPERANDI FOLLOWED B Y THE COMPANIES BELONGING TO SHRI PRAVINKUMAR JAIN, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO ESTABLISH IDENTITY, GENUINEN ESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. ACCORDINGLY, BY F OLLOWING VARIOUS JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ONASSIS AXELS PVT LTD VS CIT JUDGEMENT DATED 13-02- 2014 HELD THAT SHARE CAPITAL RECEIVED FROM THE COMPANIES BELONGING TO SH RI PRAVINKUMAR JAIN IS BOGUS IN NATURE AND THE ASSESSEE FAILED TO OFFER EX PLANATION IN ORDER TO PROVE IDENTITY, GENUINENESS OF TRANSACTION AND CREDITWORT HINESS OF THE PARTIES. ACCORDINGLY, MADE ADDITION TOWARDS SHARE CAPITAL RE CEIVED FROM COMPANIES U/S 68 OF THE INCOME-TAX ACT, 1961. THE RELEVANT FINDI NGS OF THE AO ARE AS FOLLOWS:- CONCLUSION ; FROM THE FOREGOING DISCUSSION, FOLLOWING UNCONTREVE RTED AND UNDISPUTED FACTS EMANATE ARE SUMMARIZED AS UNDER: - 1) ASSESSEE COMPANY IS A CLOSELY HELD PRIVAT E LIMITED COMPANY, 2) DIRECTORS OR IHE PERSONS OF THE INVESTOR S ARE NOT RELATED TO THE ASSESSEE. 3) ASSESSEE HAS NOT PRODUCED ANY RESPONSIBLE PERSON FROM INVESTOR COMPANIES FOR EXAMINATION DURING THE COURSE OF THE ASSESSMENT PROCEEDING. 4) FROM THE BANK STATEMENT OF THE INVESTORS COMPANIES, LAYERING OF THE TRANSACTIONS IS FOUND AND PROVED BY THE SEARCH PART Y. 5) T IIERE IS NO-COMMUNICATION ON RECORD PLACED EITHER B Y THE SUBSCRIBING COMPANY OR THE ASSESSEE TO DEMONSTRATE AS TO HOW TH E WHOLE TRANSACTION WAS CONCEPTUALIZED, DISCUSSED AND CONCLUDED. 6} THERE IS NO BASIS OR JUSTIFICATION FOR TH E PREMIUM GIVEN BY EITHER THE ASSESSEE OR THE SUBSCRIBING COMPANIES. 7) INVESTMENTS RECEIVED IN THE GUISE OF SHA RE CAPITAL ARE OUT OF CASH CIRCULATED AND LAYERED IN THE PRAVEEN KUMAR JAIN GR OUP COMPANIES. 6 ITA 3645/MUM/2017 8) IT IS HIGHLY IMPLAUSIBLE THAT UNKNOWN PER SONS WILL MAKE HUGE INVESTMENTS IN A COMPANY WITH NO KNOWN HISTORY OF PAST PROFIT O R ANY HIDDEN ASSETS OR WITHOUT ANY TECHNO-FEASIBILITY STUDY OF PROJECTED/POSSIBLE RETURN ON THEIR INVESTMENT. 9} ALMOST THE ENTIRE SUMS CREDITED IN THE A/ C OF INVESTOR COMPANIES ARE INSTANTLY BEING TRANSFERRED TO SOME OTHER CONCERNS/ ACCOUNTS. 10) THERE IS NO GENUINE BUSINESS BEING CARRIE D OUT BY ANY OF THE GROUP CONCERNS OF COMPANIES ASSOCIATED WITH PRAVEEN KUMAR JAIN. 11) CLOSELY HELD COMPANIES USUALLY RECEIVE SHARE CA PITAL SUBSCRIPTIONS FROM FRIENDS, RELATIVES AND NOT FROM UNRELATED/ UNKNOWN THIRD PARTIES/ GENERAL PUBLIC. IN THIS CASE, THERE IS NO RELATIONSHIP OR CONNECTION B ETWEEN THE INVESTORS AND THE ASSESSES. 12) MERELY PRODUCING PAN NUMBER OR BALANCE SHEET ET C. OF INVESTING COMPANY, DO NOT ESTABLISH THE IDENTITY OF THE PERSO N. THE ACTUAL AND TRUE IDENTITY OF THE PERSON OR A COMPANY IS THE BUSINESS UNDERTAK EN BY THEM IN THE PRESENT CASE NO BUSINESS ACTIVITY IS BEING EARNED OUT EITHE R BY THE ASSESSEE OR BY THE INVESTING COMPANIES EXCEPT FOR PROVIDING THE ACCOMM ODATION ENTRIES OF VARIOUS TYPES IN LIEU OF CASH. 13) IDENTITY, CREDITWORTHINESS OR GENUINENESS OF TH E TRANSACTION IS NOT ESTABLISHED BY MERELY SHOWING THAT THE TRANSACTION WAS THROUGH RANKING CHANNELS OR BY 'ACCOUNT PAYEE INSTRUMENT. IN THE PRESENT CAS E, THREE OF THE INVESTOR COMPANIES ARE BELONGING TO PRAVEEN KUMAR JAIN GROUP OF COMPAN IES. IN THE CASE OF OTHER COMPANIES, THE ASSESSEE COMPANY DID NOT PRODUCE ANY OF THE PARTIES 23.2 FOR INVOKING THE PROVISIONS OF SEC 68 IN ANY CASE, WE NEED TO EXAMINE THE 'NATURE' AND 'SOURCE' OF THE CREDITS IN THE ASSESSEE'S BOOKS . IN THE PRESENT CASE, PARTICULARLY IN VIEW OF THE DETAILED DISCUSSIONS OF THE CIRCUMSTANTIAL FACTS OF THE CASE IN PRECEDING PARAGRAPHS AND CASE LAWS IT STANDS ESTABLISHED BEYOND DOUBT THAT THE EXPLANATION OFFERED BY THE ASSESSEE HAS FAILED TO JUSTIFY AND SUBSTANTIATE THE 'NATURE AND SOURCE' OF THE TRANSACTION. THE TRANSACTION ALSO FAILS ON THE TEST OF GENUINENESS BECAUSE THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE INVESTING COMPANIES WERE GENUINE INVESTORS. INVESTI NG COMPANIES HAVE BEEN USED BY THE ASSESSEE FOR INTRODUCTION OF CAPITAL INTO ASSESSEE COMPANY AND THE WHOLE TRANSACTION IN THE GARB OF SHARE APPLICATION MONEY IS ONLY A COLOURABLE DEVICE USED BY ASSESSEE TO MAKE THE TRANSACTION APPEAR GENUINE. 23.3 DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAS RECEIVED AN AMOUNT OF RS. 4,05,00,000 INCLUDING RS. 80,00,000 FROM COM PANIES OPERATED BY P.K. IN OTHER WORDS THE MONEY WAS CREDITED IN ITS BOOKS OF ACCOUNT IN THE F.Y. 20G7-0& (A V. 2008-2009). THE ASSESSEE IS NOT AWARE OF ADDR ESSES OF ITS INVESTORS COMPANIES OR ITS DIRECTORS AND HAS NOT KEEP ANY TRA CK OF THEM. IT SEEMS THAT THE ASSESSEE HAS NEVER MET THE INVESTORS OR NEVER CARED TO SEND ITS ANNUAL REPORTS TO ITS INVESTORS INCLUDING MEMOS OF BOARD MEETINGS AND CORPORATE DECISIONS, IF THESE INVESTOR PARTIES WERE GENUINE TO THE SMALLEST EXTENT THE ASSESSEE WOULD HAVE PROPER ADDRESSES IN ITS RECORDS. BUT THIS IS N OT A CASE. FURTHER ASSESSEE HAD NOT ISSUED ANY DIVIDEND TO THE INVESTORS TILL D ATE MOREOVER, THE INVESTOR COMPANIES ARE ALSO NOT WORRIED ABOUT THEIR INVESTME NT- IT IS NOT OUT OF BOUND TO SAY THAT TH/S IS A VERY BIG AMOUNT IT IS BEYOND UND ERSTANDING AS TO HOW THE INVESTORS CAN BE SO CARELESS ABOUT THEIR INVESTMENT UNLESS AND UNTIL THE MONEY IS NOT BELONGING TO THEM. THE ASSESSEE HAS NOT DISCHAR GED ITS ONUS OF PRODUCING THE INVESTORS, WHICH ARE ITS OWN WITNESSES, BEFORE THE UNDERSIGNED. FURTHER, THERE IS NO HIDDEN ASSETS SUCH AS PATENT/TRADEMARK ETC WI TH THE ASSESSEE TO ENHANCE ITS SHARE VALUE. 23.4. IN VIEW OF THE NATURE OF TRANSACTION AND ALSO AFTER CONSIDERING THE SUBMISSION ON RECORD, I HOLD THAT THE TRANSACTION W ITH THE ABOVE MENTIONED 7 ITA 3645/MUM/2017 PARTIES REMAIN UNPROVED. THEREFORE, THE SUM OF-RS. 4,05.00,0007- FOUND CREDITED IN THE BOOKS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, IN THE GUISE OF SHARE CAPITAL FRO;' THE SHRI PRAVEEN KUMAR JAIN GRO UP OF COMPANIES, AND OTHER PARTIES IS ASSESSED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME TAX ACT, 1961 AND IT IS ADDED TO ITS TOTAL INCOME, AS THE AS SESSEE HAS FILED INACCURATE PARTICULARS OF INCOME, PENALTY PROCEEDINGS ARE INIT IATED SEPARATELY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961. 5. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITER ATED ITS SUBMISSIONS MADE BEFORE THE AO TO ARGUE THAT IT HAS DISCHARGED INITI AL ONUS CAST UPON U/S 68 OF THE ACT AND PROVED IDENTITY, GENUINENESS OF TRANSAC TION AND CREDITWORTHINESS OF THE PARTIES. THE AO DISREGARDED ALL EVIDENCES F ILED BY THE ASSESSEE ONLY FOR THE REASON THAT SHRI PRAVINKUMAR JAIN HAS ADMITTED IN HIS STATEMENT RECORDED U/S 132(4) THAT HE IS INVOLVED IN PROVIDING ACCOMMO DATION ENTRIES, IGNORING THE FACT THAT THE STATEMENT HAD BEEN SUBSEQUENTLY RETRA CTED BY FILING AN AFFIDAVIT; THEREFORE, THE SAME CANNOT BE CONSIDERED TO BE CONC LUSIVE EVIDENCE TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. THE ASSESS EE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISSUE ALONGWITH CERTAIN JUDICIAL PRECEDENTS, WHICH HAS BEEN REPRODUCED AT PARA 5.3 ON PAGES 4 TO 24 OF THE ORDER OF LD.CIT(A). THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT THE AO HAS RELIED UPON THIRD PARTY STATEMENT W ITHOUT ALLOWING THE ASSESSEE OF CROSS EXAMINATION TO CONFRONT THE PARTI ES FROM WHOM STATEMENT HAS BEEN RECORDED IN VIOLATION OF PRINCIPLES OF NAT URAL JUSTICE. THEREFORE, THE ADDITION MADE BY THE AO ON THE BASIS OF STATEMENT O F THIRD PARTY WITHOUT 8 ITA 3645/MUM/2017 ALLOWING CROSS EXAMINATION IS IN VIOLATION OF PRINC IPLES OF NATURAL JUSTICE; CONSEQUENTLY, THE ADDITION COULD NOT BE SUSTAINED. IN THIS REGARD, HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF KISHANCHAND CHELLARAM VS CIT (1980) 125 ITR 730 (SC). INSOFAR AS ADDITION TOWARDS SHARE CAPITAL RECEIVED FROM COMPANIES CONTROLLED AND MANA GED BY SHRI PRAVINKUMAR JAIN, THE ASSESSEE SUBMITTED THAT IT HAS FILED COMP LETE DETAILS OF IDENTITY AND ALSO PROVED GENUINENESS OF TRANSACTIONS AND CREDITW ORTHINESS OF THE PARTIES. THE ASSESSEE HAS FILED FINANCIAL STATEMENTS OF CRED ITORS ALONGWITH BANK STATEMENTS. THE SHARE CAPITAL HAS BEEN SUBSCRIBED THROUGH PROPER BANKING CHANNEL. THE ASSESSEE HAS ALSO SUBSTANTIATED ISSUE OF SHARES AT A PREMIUM. THEREFORE, THE AO WAS ERRED IN DISREGARDING EVIDENC ES FILED BY THE ASSESSEE TO COME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS INITIAL ONUS OF PROVING THE IDENTITY AND GENUINENESS OF TRANSACT IONS. 6. THE LD.CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELYING UPON CERTAIN JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD REPORTED IN 261 CTR 295 (SC) HELD THAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON U/S 68 OF THE ACT, BY FILING VARIOUS DETAILS INCLUDING CONFIRMATI ONS FROM THE PARTIES, PAN, BANK STATEMENT, FINANCIAL STATEMENTS, SHARE APPLICATION FORM AND BOARD RESOLUTION. ONCE THE ASSESSEE HAS FILED NECESSARY DETAILS IN OR DER TO PROVE IDENTITY AND 9 ITA 3645/MUM/2017 GENUINENESS OF TRANSACTIONS, MERELY ON THE BASIS OF STATEMENT OF THIRD PARTY, NO ADDITION COULD BE MADE IN RESPECT OF SHARE CAPITAL RECEIVED FROM THE COMPANIES. THE LD.CIT(A) FURTHER OBSERVED THAT ONC E THE ASSESSEE HAS FILED NECESSARY EVIDENCE TO PROVE IDENTITY OF THE PARTIES , THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE ASSESSMENT OF CREDITORS IN ACCORDANCE WITH LAW, BUT SUM RECEIVED FROM THE PARTIES CANNOT BE REGARDED AS INCOME OF THE ASSESSEE U/S 68 OF THE ACT. THE RELEVANT FINDINGS OF THE LD .CIT(A) ARE AS UNDER:- 5.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND S UBMISSIONS MADE IN THIS REGARD. IT IS NOTED THAT THE ASSESSING OFFICER DOU BTED THE SHARE CAPITAL AND TREATED THE SAME AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I NCOME TAX ACT, 1961 . 5.5 IT IS NOTED THAT THE A.O. HAS HELD THAT THE APP ELLANT HAS INTRODUCED INCOME FROM UNDISCLOSED SOURCES BROUGHT UNDER THE GARB OF SHARE CAPITAL OF RS.4,05,00,000/- AND HENCE THIS AMOUNT OF ISSUE OF THE SHARE CAPITAL WAS ASSESSED AS INCOME OF THE APPELLANT U/S 68 OF THE A CT. THE A.O. HAD CONCLUDED THAT BASED ON THE TEST OF HUMAN PROBABILI TIES IT IS CLEAR THAT THE ENTIRE TRANSACTION IS A PRE-STRUCTURED TRANSACTION AND A COLORABLE DEVICE USED BY THE ASSESSEE COMPANY TO INTRODUCE UNDISCLOSED IN COME UNDER THE GARB OF SHARE CAPITAL AND SHARE CAPITAL. THE AR HAS CONTEND ED THAT THE A.O. HAD MISSED THE CRUCIAL FACT THAT THE SHARE APPLICANT CO MPANY IS REGULARLY DOING THE BUSINESS AND HAS FILED ITS TAX RETURNS ON REGULAR B ASIS. THE TAXES ARE PAID BY IT ON THE INCOME SO EARNED. IN THE LIGHT OF OBSERVA TIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD, REPORTED IN 216 CTR 295, THE ONUS ON THE APPELLANT HAS BEEN DUTY DI SCHARGED. THE PECULIAR FACTS OF THE CASE MAY HAVE CAUSED SUSPICION IN THE MIND OF THE A.O. BUT THERE IS NO EVIDENCE OR OTHER MATERIAL TO HOLD THAT THE A PPELLANT HAD ROUTED ITS OWN MONEY. 5.6 ON AN ANALYSIS OF THE FACTS ON RECORDS, IT IS S EEN THAT THE SHARE CAPITAL OF ? 4,05,00,000/- HAS COME FROM SHARE SUBSCRIBERS. IT I S NOTED THAT THE SHARE APPLICANTS ARE EXISTING AND HAVE CONFIRMED THAT THE Y HAD CONTRIBUTED TO THE SHARE CAPITAL OF THE ASSESSEE COMPANY. THE NEXT ASP ECT IS CREDITWORTHINESS. THE ASSESSEE HAS FILED COPY OF PAN CARD, BANK STATE MENT, BALANCE SHEET AND P&L ACCOUNT, SHARE APPLICATION FORM, BOARD RESO LUTION OF ASSESSEE COMPANY EMPOWERING THE APPLICANTS TO INVEST IN THE ASSESSEE COMPANY. IT EMERGES OUT FROM THE RECORD THAT THE APPLICANTS HAV E DULY RECORDED THE INVESTMENTS IN THEIR BOOKS OF ACCOUNTS. THUS, THE S HARE APPLICANTS HAD DEMONSTRATED THESE BALANCE IN THEIR BALANCE SHEETS IN THE SHAPE OF INVESTMENT AS WELL LOAN AND ADVANCES. THE NEXT ISSU E IS ABOUT THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE HAS PR ODUCED THE DETAILS OF BANK ACCOUNT. THE SHARE CAPITAL HAS BEEN ISSUED THR OUGH BAKING CHANNEL. 10 ITA 3645/MUM/2017 THERE IS NO CASH TRANSACTION WHICH COULD COMPEL ONE SELF TO ASSUME THAT THE TRANSACTIONS WERE NOT GENUINE. THE ONUS CAST UPON T HE ASSESSEE UNDER SECTION 68 OF THE ACT IS TO SATISFY THE DEPARTMENT ABOUT THE TRUE IDENTITY OF AN INVESTOR, ITS CREDITWORTHINESS AND GENUINENESS OF A TRANSACTION WAS EXPLAINED BY THE SUPREME COURT IN CIT VS. EXPORTS (P) LTD., 2 16 CTR 295. WHILST, THE A.O. ACTED LEGITIMATELY IN JNTO THE MATTER, THE INF ERENCES DRAWN BY HIM WERE NOT JUSTIFIED AT ALL IN CIRCUMSTANCES OF THE CASE. WHETHER THE ASSESSEE COMPANY CHARGED A HIGHER PREMIUM OR NOT, SHOULD NOT HAVE BEEN THE SUBJECT MATTER OF THE ENQUIRY IN THE FIRST INSTANCE. INSTEA D, THE ISSUE HERE WAS WHETHER THE AMOUNT INVESTED BY THE SHARE APPLICANT WAS FROM LEGITIMATE SOURCES. THE OBJECTIVE OF SECTION 68 IS TO AVOID INCLUSION OF AM OUNT WHICH ARE SUSPECT. THEREFORE, THE EMPHASIS IS ON GENUINENESS OF ALL TH E THREE ASPECTS, IDENTITY, CREDITWORTHINESS AND THE TRANSACTION. WHAT IS PECUL IAR IN THE PRESENT CASE IS WHEN THE ASSESSMENT WAS BEING COMPLETED THE A.O. HA S NOT MADE MUCH INVESTIGATION EXCEPT ISSUING OF NOTICE U/S 133 (6) WHICH COULD NOT BE SERVED ON THE SHARE APPLICANT TO FILE CONFIRMATION BALANCE SHEETS AND BANK DETAILS WHICH WOULD HAVE ESTABLISHED THAT THE IDENTITY OF T HE INVESTORS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE SHARE APPLICANTS WERE NOT APPARENT. IT HAS BEEN SUBMITTED THAT THESE DETAILS CALLED FOR BY THE A.O. WERE DULY FILLED BY THE APPELLANT B UT IT FAILED TO PRODUCE THE SHARE APPLICANT COMPANY BEFORE THE A.O.. EVEN OTHER WISE, THE DETAILS OF SHARE APPLICANTS' PARTICULARS WERE AVAILABLE WITH T HE A.O. IN THE FORM OF BALANCE SHEETS INCOME TAX RETURNS, PAN DETAILS ETC. WHILE ARRIVING AT THE CONCLUSION THAT HE DID, THE A.O. DID NOT CONSIDER I T WORTHWHILE TO MAKE ANY FURTHER ENQUIRY BUT BASED HIS ORDER ON THE HIGH VAL UE OF THE SHARE CAPITAL AND CERTAIN FEATURES WHICH APPEARED TO BE SUSPECT, TO D ETERMINE THAT THE AMOUNT HAD BEEN ROUTED FROM THE ASSESSEE'S ACCOUNT TO THE SHARE APPLICANTS' ACCOUNT. THERE IS NO FINDING TO THE EFFECT AS TO HO W THE ALLEGED UNACCOUNTED CASH/MONEY OF THE ASSESSEE COMPANY WAS ROUTED THROU GH VARIOUS LEVELS AND IT FINALLY REACHED TO THE ASSESSEE. THERE IS NO EVI DENCE OR MATERIAL ON RECORD TO SHOW THAT THE SAID AMOUNT REPRESENTING SHARE CAP ITAL MOVED FROM THE ASSESSEE AND REACHED TO THE ASSESSEE. THE ASSESSEE COMPANY HAS RECEIVED THE MONEY THROUGH BANKING CHANNELS AND THE SHARE AP PLICANTS HAD SHOWN THE SAID AMOUNT AS INVESTMENT IN THEIR BOOKS OF ACCOUNT . THE MONEY ROUTED THROUGH BANKING CHANNELS AND THROUGH ACCOUNT PAYEE CHEQUES/BANK DRAFT, UNDISPUTED GIVEN BY THE PARTY. EVEN, THE SOURCE OF THE CAPITAL WAS FOUND IN THE BANK ACCOUNT OF THE SHARE PLICANTS NOT BY ANY C ASH DEPOSIT; BUT THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE, ALL THESE DOCUMEN TARY EVIDENCE ARE CONSIDERED THERE APPEARS NOT MUCH BASIS ADDITION. IT IS SEEN THAT IN THE LATEST DECISION, THE HON'BLE DELHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD (2011) 333 ITR 119 DEL , AFTER CONSIDERING ALL THE RELEVANT DECISIONS ON THE ISSUE INCLUDING THE DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS P LTD (SUPRA), DECISION OF THE FULL BENCH OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SOPH IA FINANCE LTD REPORTED IN 205 ITR 98 (DEL)(FB) AND THE DECISION IN THE CASE OF DIVINE LEASING & FINANCE LTD (SUPRA) HAS OBSERVED AS UNDER: 'IT IS CLEAR FROM THE ABOVE THAT THE INITIAL BURDEN IS UPON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE SHARE CAPITAL RECEIVED BY THE ASSESSE E. IN ORDER TO DISCHARGE THIS BURDEN, THE ASSESSEE IS REQUIRED TO PROVE: (A) THE IDENTITY OF SHAREHOLDER; (B) THE GENUINENESS OF TRANSACTION ; AND (C) THE CREDIT WORTH IN ESS OF SHAREHOLDERS. 11 ITA 3645/MUM/2017 12. IN CASE THE INVESTOR/SHAREHOLDER IS AN INDIVIDU AL, SOME DOCUMENTS 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 REGISTERED ADDRESS OR PAN IDENTITY, ETC., CAN BE FURNISHED. 13. THE GENUINENESS OF THE TRANSACTION IS TO BE DEM ONSTRATED BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MONEY FROM THE SAID SHAREHOLDER AND IT CAME FROM THE COFFERS OF THAT VERY SHAREHOLDER. THE DIVISION BENCH HELD THAT WHEN THE MONEY IS RECEIVED BY CHEQUE AND IS TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE C HANNELS, THE GENUINENESS OF TRANSACTION WOULD BE PROVED. OTHER DOCUMENTS SHOWING THE GENUINENESS OF TRANSACTION COULD BE COPIES OF THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHA RE TRANSFER REGISTER, ETC. 14 AS FAR AS CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVED BY PRODUCING THE BANK STATEMENT OF THE CR EDITOR/SUBSCRIBER SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOUNTS TO ENABLE IT TO SUBSCRIBE T O THE SHARE CAPITAL. THIS JUDGMENT FURTHER HOLDS THAT ONCE THESE DOCUMENTS ARE PRODUCED, THE ASSESSE E WOULD HAVE SATISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSES SING OFFICER TO SCRUTINIZE THE SAME AND IN CASE HE NURTURES ANY DOUBT ABOUT THE VERACITY OF THESE DOCU MENTS TO PROBE THE MATTER FURTHER. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE AFORESAID ASPECTS, THERE HAVE TO BE SOME COGENT REASONS -AND MATERIALS FOR THE ASSESSING OFFICER AND HE CANNOT GO INTO THE REALM OF SUSPICION,' THE BOMBAY HIGH COURT IN THE CASE OF CIT V. CREATIV E WORLD TELEFILMS LTD. (IN I. T. A. NO. '2182 OF 2009 DECIDED ON OCTOBER 12, 2 009) [2011] 333 ITR 100 HAS HELD THAT :- THE RELEVANT PORTION OF THIS ORDER IS REPRODUCED BE LOW: 'IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE A SSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THEIR PA/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PAR T OF THE ASSESSING OFFICER TO MAKE PROPER INVESTIGATION AND REACH THE SHAREHOLDER . THE ASSESSING OFFICER DID NOTHING EXCEPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN ENDORSEMENT 'NOT TRACEABLE'. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL T HE RELEVANT MATERIAL DETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE ASSESS ING OFFICER. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE FAULTED. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE APPEAL. IN THE RE SULT, THE APPEAL IS DISMISSED IN LIMINE WITH NO ORDER AS TO COSTS.' THE HON'BLE BOMBAY HIGH COURT THUS CLEARLY HELD THA T ONCE DOCUMENTS LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS WERE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICE R AND IT IS ON HIM TO REACH THE SHAREHOLDERS TO ASCERTAIN THE TRUE FACTS. IT IS, THUS, FOR THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES WITH RE GARD TO THE STATUS OF THESE PARTIES TO BRING ON RECORD ANY ADVERSE FINDIN GS REGARDING THEIR CREDITWORTHINESS. THIS WOULD BE MORE SO WHERE THE A SSESSEE IS A PUBLIC LIMITED COMPANY AND HAS ISSUED THE SHARE CAPITAL TO THE PUBLIC AT LARGE, AS IN SUCH CASES THE COMPANY CANNOT BE EXPECTED TO KNO W EVERY DETAIL PERTAINING TO THE IDENTITY AND THE FINANCIAL WORTH OF THE SUBSCRIBERS. FURTHER THE INITIAL BURDEN ON THE ASSESSEE WOULD BE SOMEWHA T HEAVY IN CASE THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHERE THE SHA REHOLDERS ARE FAMILY FRIENDS/CLOSE ACQUAINTANCES, ETC. IT IS BECAUSE OF THE REASON THAT IN SUCH CIRCUMSTANCE, THE ASSESSEE CANNOT FEIGN IGNORANCE A BOUT THE STATUS OF THESE PARTIES. 5.8 THE JUDGMENT OF THE SUPREME COURT IN THE CASE O F CIT V. P. MOHANAKALA [2007] 291 ITR 278 IS ALSO RELEVANT ON T HE FACTS OF THE CASE. IN THAT CASE, THE ASSESSEE HAD RECEIVED FOREIGN GIF TS FROM ONE COMMON DONOR. THE PAYMENTS WERE MADE TO THEM BY INSTRUMENT S ISSUED BY FOREIGN BANKS AND CREDITED TO THE CTIVE ACCOUNTS OF THE ASS ESSEES BY NEGOTIATIONS 12 ITA 3645/MUM/2017 THROUGH BANK IN INDIA. THE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE S. THE ASSESSING OFFICER HELD THAT THE GIFTS THOUGH APPARENT WERE NOT REAL RDINGLY TREATED ALL THOSE AM OUNTS WHICH WERE CREDITED IN THE BOOKS OF T OF THE ASSESSEE, AS THEI R INCOME APPLYING SECTION 68 OF THE ACT. THE ASSESSEE DID NOT CONTEND THAT EV EN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUNTS WERE NOT OF THE NA TURE OF INCOME. THE COMMISSIONER OF INCOME-TAX (APPEALS) CONFIRMED THE ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFERENCE OF OPINION B ETWEEN THE TWO MEMBERS OF THE APPELLATE TRIBUNAL AND THE MATTER WA S REFERRED TO THE VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCL USIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TA X (APPEALS). ON APPEAL, THE HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FINDINGS AND CAME TO THE CONCLUSION THAT THE RE ASONS ASSIGNED BY THE TRIBUNAL WERE IN THE REALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TO THE SUPREME COURT, THE COURT WHILE REVER SING THE DECISION OF THE HIGH COURT HELD THAT THE FINDINGS OF THE ASSESS ING OFFICER, COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES A ND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THRO UGH THE PROCESS OF BANKING TRANSACTION AS NOT BY ITSELF OF ANY CONS EQUENCE. THE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONC URRENT FINDINGS OF FACT. WHILE DOING SO, THE LEGAL POSITION CONTAINED IN SEC TION 68 OF THE ACT WAS EXPLAINED BY THE SUPREME COURT BY ASSESSING THAT A BARE READING OF SECTION 68 OF THE ACT SUGGESTS THAT (I) THERE HAS T O BE CREDIT OF AMOUNTS IN THE BOOKS LTD. MAINTAINED BY THE ASSESSEE; (II) SUC H CREDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR; AND (III) EI THER (A) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH CREDITS FOUND IN THE BOOKS, OR (B) THE EXPLANATION OFFERED BY THE AS SESSEE, IN THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISFACTORY. IT IS O NLY THEN THAT THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE EXPRESSION 'THE ASSESSEE OF FERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN T HE BOOKS MAINTAINED BY THE ASSESSEE. THE OPINION OF THE ASSESSING OFFIC ER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATI SFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTH ER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQUIRED TO BE FORMED OBJECTIVELY WITH R EFERENCE TO THE MATERIAL ON RECORD. APPLICATION OF MIND IS E SINE QUA NON FO R FORMING THE OPINION. IN CASES WHERE THE EXPLANATION OFFERED BY ESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDITED IN THE BOOKS TISF ACTORY THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE F M ONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME, AND, IF HE FAILS IT , IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A RECEIPT OF AN INCOME . T HE BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT EVEN IF THE EXPLANAT ION IS NOT ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS BEING TREATED A S A RECEIPT OF INCOME NATURE. 13 ITA 3645/MUM/2017 5.9 IT IS ALSO OF RELEVANCE TO POINT OUT THAT IN CI T V. STELLAR INVESTMENT LTD, [1991] 192 ITR 287 (DELHI) WHERE THE INCREASE IN SU BSCRIBED CAPITAL OF THE RESPONDENT-COMPANY ACCEPTED BY THE INCOME-TAX OFFIC ER AND REJECTED BY THE COMMISSIONER OF INCOME-TAX ON THE GROUND THAT A DET AILED INVESTIGATION WAS REQUIRED REGARDING THE GENUINENESS OF SUBSCRIBERS T O SHARE CAPITAL, AS THERE WAS A DEVICE OF CONVERTING BLACK MONEY BY ISSUING S HARES WITH THE HELP OF FORMATION OF AN INVESTMENT WHICH WAS REVERSED BY TH E TRIBUNAL, THE DELHI HIGH COURT HELD THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, .UNDER NO CIRCUMSTANCES THE AMOUNT OF SHARE CAPITAL COULD BE REGARDED AS UNDISC LOSED INCOME OF THE COMPANY. THIS VIEW WAS CONFIRMED BY THE APEX COURT IN CIT V. STELLER INVESTMENT LTD. [2001] 251 ITR 263. IN VIEW OF THIS LEGAL POSITION, THE PRESENT APPEAL IS TO BE DECIDED. IT IS CLEAR FROM THE DECIS ION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD. 201 1 333 ITR 119 (DEL.), THAT ONCE THE ASSESSEE FILED COPY OF PAN, ACKNOWLEDGEMEN T COPY OF THE RETURN OF INCOME OF THE INVESTING COMPANY, THEIR BANK ACCOUNT S STATEMENTS FOR THE RELEVANT PERIOD; THEN EVEN IF THE PARTIES WERE NOT PRODUCED IN SPITE OF THE SPECIFIC DIRECTIONS OF THE ASSESSING OFFICER, THE A DDITION COULD NOT BE SUSTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING THE PAN, BALANCE SHEET, COPY OF THE ACKNOWLEDGEMENT COPY OF RETURN OF THE APPLICANTS ETC.. IN THE INSTANT CASE, THERE IS NO D ISPUTE ABOUT THE IDENTITY OF THE APPLICANT COMPANY, WHO HAD PAID THE CAPITAL AND THE SOURCE OF THE CAPITAL WAS ALSO FOUND IN THE RESPECTIVE BANK ACCOUNTS OF T HE INVESTING COMPANY AND THERE WAS NO TRACE OF CASH DEPOSIT IN THE BANK ACCO UNTS OF THE INVESTING COMPANY, THEN, THE ACTION OF THE ASSESSING OFFICER DUE TO THE PREMIUM ON SHARES WITHOUT MAKING FURTHER DETAILED ENQUIRY TO E STABLISH THAT THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT WERE ATTRACTED IN THE PRESENT CASE IS [[CULT TO SUSTAIN IN APPEAL. THE ASSESSING OFFICER HAS MAD E ADDITION ON SOME IND SUSPICION BUT HAS NOT ESTABLISHED ANY DIRECT OR IND IRECT LINK OF OWN MONEY FLOWING OUT AND THEN AGAIN RECEIVED BY THE ASSESSEE IN THE LHARE CAPITAL AND PREMIUM. THE ASSESSEE HAD PLACED ON RECORD THE WELL AS COPY OF INCOME-TAX RETURNS OF THE SHARE APPLICANTS. KEEPING IN 'ALL TH ESE EVIDENCE IT CANNOT BE HELD THAT THE ASSESSEE DID NOT ESTABLISH THE IDENTI TY OF THE SHARE APPLICANTS. THIS VIEW IS ALSO SUPPORTED BY THE RECENT DECISION OF THE INCOME TAX APPELLATE TRIBUNAL - HYDERABAD BENCHES 'B' IN THE CASE OF KOM AL AGROTECH PVT.LTD., HYD, ... VS ITO, WARD-2(L), HYDERABAD, ... ON 25 NOVEMBER, 2016 ITA.NO.437/HYD/2016 ASSESSMENT YEARS 2007-2008, WHERE IN SIMILAR FACTS IT WAS HELD THAT: '9.1. A PLAIN READING OF THE ASSESSMENT ORDER DEMON STRATE THAT THE A.O. MERELY WENT BY THE INVESTIGATION DONE BY THE OFFICE OF D.G .I (INVESTIGATION), MUMBAI. NO ENQUIRIES OR INVESTIGATION WAS CARRIED OUT. NO E VIDENCE TO CONTROVERT THE CLAIMS OF THE ASSESSEE WAS BROUGHT ON RECORD BY THE A.O. EVEN THE STATEMENT OF MR.PRAVEEN KUMAR WAS SUPPLIED. NOTHING IS ON RECORD ABOUT THE RESULT IF INVESTIGATIONS DONE BY DGIT (INV.), MUMBAI. THE PAP ERS FILED BY THE ASSESSEE DO DEMONSTRATE, THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MADE MERELY ON SURMISE S AND CONJECTURES. 9.2. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ADDITION MADE UNDER SECTION 68 OF THE ACT IS IN BAD IN LAW. IN THE RESU LT, REOPENING OF THE ASSESSMENT IS QUASHED AND THE ADDITION IS ALSO DELETED ON MERI TS. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D.' 5.10 THE HON'BLE DELHI HIGH COURT IN THE CASE OF CI T VS GANGESHWARI METAL PVT LTD 2014 361 ITR 10 HAS HELD THAT:- 14 ITA 3645/MUM/2017 'IN FACT, IN NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) ITSELF THIS COURT HAS OBSERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA), AS UNDER: - THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APP RECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT W HERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICE R AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATER IAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPO N, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMED Y OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND CACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN PNFESSED 'ACCOMMODATIO N ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE TRIPTION, AND THE ASSESSEE. THE RAT IO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT NE, WHERE THE INVOLVEMENT OF TH E ASSESSEE IN SUCH MODUS OPERAND! IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILAB LE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITI ES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICE R OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE- MEDI TATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOL VEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDIN G, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DI SCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AN D CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. I N SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJE CT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BE FORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. AS CAN BE SEEN FROM THE ABOVE EXTRACT , TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRI ES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER SI TS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS AL! THE EVIDENCE OR MATERIAL IN H IS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER, AFTER NOTING THE FACTS, MERELY REJECTED THE SAME. THIS WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EFFECT:- 'INVESTIGATION MADE BY THE INVESTIGATION WING OF TH E DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRANSACTION OF ACC OMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SAID AM OUNT OF RS. 1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE AS SESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSE E. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FO R ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS. 55,50,000/- AND NOT RS. 1,11,50,0007- AS MENTIONED IN THE NOTICE. THE ASSES SEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TA KEN AT RS. 55,50,000/-. THE ASSESSEE HAS FURTHER TRIED TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS. 55,50,000/- BY FURNISHING COPIES OF SHARE APPLILICATION MONEY, BALANCE SHEET, ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED THAT THE ;STION OF ADD ITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE FS SESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS E NTRY REMAINS UNEXPLAINED IN THE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE IN VESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS. 55,50,0007- RECE IVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSE SSEE AND ADDED TO ITS INCOME. SINCE R AM SATISFIED THAT THE ASSESSEE HAS FURNISHED 15 ITA 3645/MUM/2017 INACCURATE PARTICULARS OF ITS INCOME, PENALTY PROCE EDINGS UNDER SECTION 271(L){C) ARE BEING INITIATED SEPARATELY.' THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. ( SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHAB LE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN TINE WITH FACTS OF LOVELY EXPORTS ( P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICE R ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. C ONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBU NAL IS CORRECT IN LAW. THE APPEAL IS DISMISSED.' 5.11 IN VIEW OF THE LEGAL POSITION EMANATING FROM L EGAL PRECEDENTS AND THE OBSERVATIONS OF HON'BLE DELHI HIGH COURT, IN THE CA SE OF GANGESHWARI METAL P. LTD. AS DISCUSSED ABOVE IT IS NOTED THAT W HEN REQUISITE DOCUMENTS SUCH AS PAN, BANK ACCOUNTS, BALANCE SHEET ETC. WERE AVAILABLE WITH THE A.O., TO ESTABLISH THAT NO CASH TRANSACTIONS WERE I NVOLVED IN THE BANK ACCOUNTS OF THE INVESTING COMPANY THEN WITHOUT FURT HER PROBE TO PROVE CONTRARY THE ADDITION U/S 68 IN THE HAND OF THE ASS ESSEE CANNOT BE MADE. FURTHER IN THE CASE OF H. R. MEHTA VS. ACIT [387 IT R 561 (BOMBAY)] IT WAS HELD THAT THE ASSESSEE IS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTED TO CROSS EXA MINE THE DEPONENTS. THE DENIAL OF SUCH OPPORTUNITY GOES TO ROOT OF THE MATTER AND STRIKES AT THE VERY FOUNDATION OF THE ASSESSMENT ORDER AND RENDERS IT VULNERABLE. ON A VERY FUNDAMENTAL ASPECT, THE REVENUE WAS NOT JUSTIF IED IN MAKING ADDITION AT THE TIME OF REASSESSMENT WITHOUT HAVING FIRST GI VEN THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT ON THE ST ATEMENTS RELIED UPON BY THE ACIT. IN VIEW OF THIS DISCUSSION ON THE FACT S OF THE CASE AND HAVING D TO THE DECISIONS OF COURTS AND JUDICIAL PRECEDENT S AS NOTED ABOVE, THE MADE BY THE A.O. OF THE SHARE CAPITAL OF ? 4,05,00, QOO/- UNDER SECTION HE INCOME ACT 1961 CANNOT BE SUSTAINED IN APPEAL AND I S DIRECTED TO BE DELETED. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 7. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD.DR SUBMITTED THAT THE LD.CIT(A) ERRED IN DELETING ADDITION MADE BY THE AO TOWARDS SHARE CAPITAL RECEIVED FROM CERTA IN COMPANIES CONTROLLED AND MANAGED BY SHRI PRAVINKUMAR JAIN WITHOUT APPREC IATING THE FACT THAT THE AO HAS DISCUSSED THE MODUS OPERANDI OF SHRI PRAVINK UMAR JAIN AND ALSO LINKED FACTS GATHERED DURING THE COURSE OF SEARCH IN THE C ASE OF SHRI PRAVINKUMAR JAIN TO THE CREDITS FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE TO COME TO THE 16 ITA 3645/MUM/2017 CONCLUSION THAT THE ASSESSEE IS ONE OF THE BENEFICI ARIES OF ACCOMMODATION ENTRIES OF SHARE CAPITAL PROVIDED BY COMPANIES BELO NGING TO SHRI PRAVINKUMAR JAIN. THE LD.DR FURTHER SUBMITTED THAT MERE FURNIS HING CERTIFICATE OF INCORPORATION, PAN, ETC ARE NOT SUFFICIENT FOR PURP OSE OF IDENTIFICATION OF SHAREHOLDER WHEN THERE IS MATERIAL TO SHOW THAT SHA REHOLDER WAS A SHELL COMPANY AND NOT A GENUINE INVESTOR. THE LD.DR FURT HER SUBMITTED THAT WHERE ASSESSEE RECEIVED UNSECURED LOANS, BUT COULD NOT PR ODUCE LENDERS FOR VERIFICATION AND THESE LENDERS WERE FOUND TO BE SHE LL COMPANIES, SAID LOAN TRANSACTION COULD NOT BE SAID TO BE GENUINE MERELY BECAUSE ASSESSEE FILED LOAN CONFIRMATIONS, COPIES OF LEDGER ACCOUNT AND OTHER S UPPORTING EVIDENCE TO JUSTIFY TRANSACTIONS AT FAG END OF ASSESSMENT PROCE EDINGS. THE AO HAS BROUGHT OUT ALL THESE FACTS IN HIS ASSESSMENT ORDER, BUT TH E LD.CIT(A) HAS FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE, THEREFOR E THE ADDITION MADE BY THE AO SHOULD BE SUSTAINED. IN THIS REGARD, HE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NAVODAYA CA STLES PVT LTD (2014) 367 ITR 306 (DEL) AND ALSO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PAWANKUMAR M SANGHVI VS ITO (2018) 258 TAXMAN 160 ( DEL). 9. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, S TRONGLY SUPPORTING THE ORDER OF THE LD.CIT(A) SUBMITTED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY FILING VARIOUS DOCUMENTS INCLUDING IDENTITY OF THE CREDITORS AND ALSO PROVED BY 17 ITA 3645/MUM/2017 GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES BY FILING THEIR BANK STATEMENTS AND FINANCIAL STATEMENTS. THE AO H AS DISREGARDED ALL EVINCES MERELY FOR THE REASON THAT SHARE CAPITAL HAS BEEN R ECEIVED THROUGH CERTAIN COMPANIES BELONGING TO SHRI PRAVINKUMAR JAIN ON THE BASIS OF HIS ADMISSION BEFORE THE INVESTIGATION WING AT THE TIME OF SEARCH IN HIS CASE. THE LD.AR FURTHER SUBMITTED THAT THE AO HAS NOT PROVIDED AN O PPORTUNITY TO THE ASSESSEE TO GO THROUGH THE STATEMENT RECORDED FROM SHRI PRAV INKUMAR JAIN AND ALSO NOT GIVEN AN OPTION TO CROSS EXAMINE THE PARTIES. IT I S A SETTLED POSITION OF LAW THAT WHEN ANY ADDITION IS MADE ON THE BASIS OF THIRD PAR TY INFORMATION, IT IS THE DUTY OF THE AO TO CONFRONT THOSE STATEMENTS / INFORMATIO N TO THE ASSESSEE FOR ITS REBUTTAL. IN ABSENCE OF ANY OPTION GIVEN TO THE AS SESSEE TO CROSS EXAMINE THE PARTIES, NO ADDITION COULD BE MADE, OTHERWISE, IT W OULD AMOUNT TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IN THIS REGARD, HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS KISHANC HAND CHELLARAM (SUPRA). THE LD.AR FURTHER SUBMITTED THAT IN RESPECT OF ADDI TION MADE TOWARDS SHARE CAPITAL, THE ASSESSEE HAS FILED ENORMOUS DETAILS IN CLUDING CONFIRMATION FROM THE PARTIES, THEIR BANK STATEMENTS, FINANCIAL STATE MENTS AND PAN. THE ASSESSEE HAS ALSO JUSTIFIED ISSUE OF SHARES AT A PR EMIUM. ONCE THE IDENTITY HAS BEEN PROVED BY FILING NECESSARY DOCUMENTS, THEN THE AO IS FREE TO CALL THE PARTIES BUT THE AMOUNT RECEIVED FROM THE SAID PARTI ES COULD NOT BE REGARDED AS 18 ITA 3645/MUM/2017 INCOME OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT , 1961. IN THIS REGARD, HE RELIED UPON THE FOLLOWING JUDICIAL PRECEDENTS:- 1. ARCELI REALTY LTD. ITA NO 6492/MUM/2016 2 M/S RELIANCE CORPORATION I.T.A NO 1069 TO 1071 /MUM /2017 3. KOMAL AGROTECH P LTD. HYDERABAD ITA.NO 437/HYD/2016 4. ORCHID INDUSTRIES PVT.LTD.ITA NO 1433/2014 5. SHREEDHAM BUILDERS ITA NO 5589/MUM/2017 6. NANCY SALES PVT.LTD.ITA NO.4129/DEL/2017 7. BAIRAGRA BUILDERS P LTD. ITA NO 4691 & 4692 /MUM/20 15 8. RAMESH RAMSWARUPDAS JINDAL ITA NO 3091 TO 3096 / MU M/201 7 9. SHREE GANESH DEVELOPERS ITA NO.L477/MUM/2017 10. KSS PETRON PRIVATE LTD. ITA NO 224/2014 /* 11 'SHODIMAN INVESTMENTS P LTD ITA NO 1297/2015 (2018) 93 TAXMANN.COM 153 (BOMBAY) 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIA L AVAILABLE ON RECORD AND ALSO GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. THE AO HAS MADE ADDITION TOWARDS SHARE CAPITAL RECEIVED FROM CERTAI N COMPANIES ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV), WHICH WAS FUR THER SUPPOTED BY SEARCH CONDUCTED IN THE CASE OF SHRI PRAVINKUMAR JAIN AND HIS ASSOCIATES, WHERE SHRI PRAVINKUMAR JAIN HAD ADMITTED IN HIS STATEMENT RECO RDED U/S 132(4) OF THE I.T. ACT, 1961 THAT HE WAS PROVIDING ACCOMMODATION ENTRI ES TO VARIOUS 19 ITA 3645/MUM/2017 BENEFICIARIES. THE AO HAS BROUGHT OUT VARIOUS FACT S IN HIS ASSESSMENT ORDER AND ALSO THE MODUS OPERANDI OF SHRI PRAVINKUMAR JAI N TO COME TO THE CONCLUSION THAT SHARE CAPITAL RECEIVED FROM COMPANI ES BELONGING TO SHRI PRAVINKUMAR JAIN IS BOGUS IN NATURE AND ASSESSEE FA ILED TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE AO HAS DISBELIEVED DOCUMENTS FILED BY THE ASSESSEE MAINLY FOR THE REASON THAT THE CREDITORS DID NOT APPEAR BEFORE THE AO WHEN NOTICES U/S 133(6) WERE NOT SERVED CALLING FOR VARIOUS DETAILS, WHEREAS THE ASS ESSEE COULD ABLE TO FILE CONFIRMATIONS FROM THE PARTIES ALONGWITH THEIR DETA ILS. THEREFORE, HE CAME TO THE CONCLUSION THAT WHEN THE PARTIES WERE AVAILABLE TO THE ASSESSEE, HOW THEY COULD NOT RECEIVE NOTICES SERVED BY THE DEPARTMENT AND NOT RESPOND BY FILING NECESSARY DETAILS. THEREFORE, HE OPINED THAT THE G ENUINENESS OF TRANSACTION WAS DOUBTFUL AND ACCORDINGLY DISREGARDED ALL EVIDEN CES FILED BY THE ASSESSEE IN RESPECT OF IDENTITY OF THE PARTIES. SIMILARLY, THE AO HAS DOUBTED GENUINENESS OF TRANSACTIONS ON THE BASIS OF FACTS GATHERED DURI NG THE COURSE OF SEARCH CONDUCTED IN THE CASE OF SHRI PRAVINKUMAR JAIN COUP LED WITH FURTHER ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. THE AO HAS ALSO DOUBTED CREDITWORTHINESS OF THE PARTIES ON THE BASI S OF FINANCIAL STATEMENTS FILED BY THE ASSESSEE. AS PER THE AO, NONE OF THE COMPANIES HAVE SUFFICIENT SOURCE OF INCOME TO EXPLAIN SHARE CAPITAL GIVEN TO THE ASSESSEE COMPANY AND 20 ITA 3645/MUM/2017 THE COMPANIES HAVE DISCLOSED MEAGRE OR NIL PROFIT F OR THE RELEVANT FINANCIAL YEARS. THOUGH, THE AMOUNT HAS BEEN TRANSFERRED THR OUGH PROPER BANKING CHANNEL, BUT ON PERUSAL OF BANK STATEMENT OF PARTI ES IT WAS NOTICED THAT THERE ARE ONLY FEW DEBITS AND CREDITS ON EACH DAY WITHOUT ANY BALANCE IN THE BANK ACCOUNT. THEREFORE, HE CAME TO THE CONCLUSION THAT MERE FURNISHING CERTAIN DOCUMENTS INCLUDING CONFIRMATION AND BANK STATEMENT AND ALSO PAYMENT THROUGH BANKING CHANNEL IS NOT SUFFICIENT FOR PURPO SE OF IDENTIFICATION OF SHAREHOLDER WHEN THERE IS MATERIAL TO SHOW THAT SHA REHOLDER WAS A PAPER COMPANY AND NOT A GENUINE INVESTOR. WE FIND THAT T HE AO HAS GIVEN VARIOUS REASONS TO DISBELIEVE DOCUMENTS FURNISHED BY THE AS SESSEE. WE ALSO NOTE THAT ALTHOUGH THE ASSESSEEE ARGUED THAT SUFFICIENT OPPOR TUNITY WAS NOT GIVEN BY THE AO AND ALSO DECIDED THE ISSUE BEHIND THE BACK OF TH E ASSESSEE WITHOUT GIVING AN OPTION TO CROSS EXAMINE THE PERSON, WHO GAVE THE STATEMENT, BUT ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, IT IS ABU NDANTLY CLEAR THAT THE ASSESSEE HAS NOT DISCHARGED HIS ONUS WHEN THE AO HAS CALLED UPON THE ASSESSEE TO PRODUCE THE PARTIES IN PERSON FOR CROSS EXAMINATION . THE QUESTION OF CROSS EXAMINATION AND FURNISHING STATEMENT WOULD ARISE ON LY WHEN THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENT OF PRODUCING THE PART IES WHEN THE AO HAS CALLED UPON THE ASSESSEE TO PRODUCE THE PARTIES IN PERSON. IN THIS CASE, THE ASSESSEE HAS NEITHER PRODUCED THE PARTIES IN PERSON NOR FILED ANY PROOF FOR 21 ITA 3645/MUM/2017 ASKING FOR EVIDENCE COLLECTED FROM THIRD PARTY AND ALSO CROSS EXAMINATION OF THE PARTIES. UNDER THESE FACTS, WE ARE UNABLE TO A CCEPT THE ARGUMENTS OF THE ASSESSEE THAT THE AO HAS VIOLATED PRINCIPLES OF NAT URAL JUSTICE AND ALSO MADE ADDITION BEHIND THE BACK OF THE ASSESSEE WITHOUT GI VING ANY OPPORTUNITY OF CROSS EXAMINATION. BUT, AT THE SAME TIME, IT IS AL SO VERY CLEAR THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF SHARE CAPITAL RECEIVE D FROM THE PARTIES INCLUDING CONFIRMATION FROM THE PARTY ALONGWITH THEIR FINANCI AL STATEMENTS. GENERALLY, ONCE THE BASIC EVIDENCE INCLUDING THE CONFIRMATION HAS BEEN FILED BEFORE THE AO, THEN IT IS AS GOOD AS THE ASSESSEE HAS DISCHARG ED ITS ONUS OF IDENTIFYING THE CREDITOR, BUT IN THE PECULIAR CIRCUMSTANCES OF THIS CASE, IT CANNOT BE ACCEPTED BECAUSE THE DEPARTMENT HAS BROUGHT OUT CLEAR FACTS OF MODUS OPERANDI OF SHRI PRAVINKUMAR JAIN AND ALSO ESTABLISHED FACT THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES OF SHARE CAP ITAL PROVIDED BY SHRI PRAVINKUMAR JAIN. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT IT IS VERY DIFFICULT TO ACCEPT THE ARGUMENTS OF THE ASSESSEE T HAT THE ADDITION HAS BEEN MADE WITHOUT PROVIDING AN OPPORTUNITY OF CROSS EXAM INATION TO THE ASSESSEE. HOWEVER, IN ORDER TO GIVE ONE MORE OPPORTUNITY TO T HE ASSESSEE TO MEET THE ENDS OF NATURAL JUSTICE, WE DEEM IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF THE AO TO GIVE AN OPTION TO THE ASSESSEE TO PROD UCE THE PARTIES IN PERSON BEFORE THE AO AND ALSO TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION OF THE 22 ITA 3645/MUM/2017 PARTIES. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT THE AO TO RECONSIDER THE ISSUE IN THE LIGHT OF THE ARGUMENTS OF THE ASSESSEE THAT THE ASSESSEE IS WILLING TO CROSS EXAMINE THE PARTIES AN D ALSO IN THE LIGHT OF STATEMENT GIVEN DURING THE COURSE OF SEARCH IN THE CASE OF SHRI PRAVINKUMAR JAIN. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS A LLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24-05-201 9. SD/- SD/- (SANDEEP GOSAIN) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 24 TH MAY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI