ITO Ward- 7 (4), V. SBS Properties & Finvest (P) Ltd,

ITA 378/DEL/2008

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7516 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-04-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 06-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Assessee Lawyers: R C RAI
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Question of law; Onus to prove
• Section: 143(3); 260A; 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCO UNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO: 378/DEL/2008 AY : - 2000-01 INCOME TAX OFFICER WARD-7(4), VS M/S. SBS PROPER TIES & FINVEST PVT. LTD. NEW DELHI. 401/4V/3198, 4 TH FLOOR, GALI NO. 1, SANGATRASHAN, PAHARGANJ, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 2164/DEL/2008 AY : - 2000-01 INCOME TAX OFFICER WARD-7(4), VS M/S. SBS PROPER TIES & FINVEST PVT. LTD. NEW DELHI. 401/1/XIV, GALI SANGHTARASHA, PAHARGANJ, NEW DELHI - 55 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI O.P. MEENA, CIT (DR) RESPONDENT BY : SH. R.C. RAI, ADVOCATE DATE OF HEARING : 27.04.2016 DATE OF PRONOUNCEMENT : 3 0.05.2016 O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE REVENUE. 2. ITA NO. 378/DEL/2008 IS FILED AGAINST THE ORDER OF THE CIT(A) X, NEW DELHI DATED 23.11.2007, WHEREIN HE HAS DELETED THE ADDITI ONS MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961 (THE ACT) AND ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 2 20X5 3. ITA NO. 2164/DEL/2008 IS AGAINST THE ORDER OF LD . CIT(A)-X, NEW DELHI DATED 13.3.2007 WHEREIN THE PENALTY U/S 271(1)(C) OF THE ACT WAS QUASHED ON THE GROUND THAT ON MERITS THE ADDITION WAS DELETED AND THE PEN ALTY HAS NO LEGS TO STAND. 4. AGGRIEVED THE REVENUE IS IN APPEAL. WE FIRST TAK E UP THE REVENUES APPEAL IN ITA NO. 378/DEL/2008. 5. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF INVESTMENT AND FINANCE. THE ASSESSEE FILED RETURN O F INCOME FOR AY 2000-01 ON 29.05.01 DECLARING A LOSS OF RS. 8,210/-. THE CASE WAS SUBSEQUENTLY REOPENED U/S 147 BY ISSUING NOTICE U/S 148 DATED 21.08.02. IN RE SPONSE TO THE NOTICE THE APPELLANT SUBMITTED BEFORE THE AO VIDE LETTER DATED 21.5.2003 THAT THE RETURN ALREADY FILED ON 29.5.2001 MAY BE TREATED TO HAVE B EEN FILED IN RESPONSE TO NOTICE U/S 148. THE ASSESSMENT U/S 147 READ WITH SECTION 1 43(3) WAS COMPLETED VIDE ORDER DATED 29.3.2004 DETERMINING TAXABLE INCOME AT RS. 1 ,64,95,070/-. THE AO INTERALIA MADE ADDITION OF RS. 1,64,80,335/- ON ACCOUNT OF UN EXPLAINED INTRODUCTION OF SHARE CAPITAL AND SHARE PREMIUM U/S 68 OF THE ACT. THE A SSESSEE HAD PREFERRED AN APPEAL AGAINST THE ASSESSMENT ORDER BEFORE THE CIT(A) WHO, VIDE HER ORDER A. NO. 104/04- 05 DATED 26.8.2004, HAD DISMISSED THE APPEAL OF THE APPELLANT THEREBY CONFIRMING THE ADDITION MADE BY THE AO IN THE ASSESSMENT ORDER . THE ASSESSEE PREFERRED AN APPEAL AGAINST THE LD. CIT(A)S ORDER BEFORE THE I TAT. THE ITAT IN ITA NO. 4648/DEL OF 2004 FOR AY 2000-01 VIDE ORDER DATED 23 .5.07 RESTORED THE MATTER BACK TO THE FILE OF THE LD. CIT(A) OBSERVING AS UNDER :- IN VIEW OF THE SUBMISSIONS OF BOTH THE COUNSELS, W E RESTORE THE MATTER BACK TO THE FILE OF CIT(A). LD. CIT(A) SHALL GRANT SUFFI CIENT OPPORTUNITY OF BEING HEARD TO THE ASSESEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE IN THE ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 3 20X5 DISPOSAL OF THE APPEAL AS OTHER LEARNED CIT(A) IS E NTITLED TO DRAW AN ADVERSE INFERENCE. 6. THE LD. CIT(A) IN THE SECOND ROUND OF APPELLATE PROCEEDINGS, DATED THE ADDITION MADE BY THE ASSESSEE U/S 68 AND ALLOWED TH E APPEAL OF THE ASSESSEE. AGGRIEVED THE REVENUE IS IN APPEAL. 7. THE ISSUE IN DISPUTE IS AN ADDITION OF SHARE CA PITAL OF RS. 20,98,000/- ALONGWITH SHARE PREMIUM OF RS. 1,43,82,335/- U/S 68 OF THE ACT TOTALLING TO RS. 1,64,80,335/-. 8. THE FACTS OF THE ADDITION ARE BROUGHT OUT AT PARA NO. 5 OF THE CIT(A) ORDER WHICH IS EXTRACTED FOR READY REFERENCE :- 5. THE FACTS OF THE CASE ARE THAT IN THE ASSESSME NT ORDER, THE AO HAS ADDED THE SHARE CAPITAL AND SHARE PREMIUM RECEIVED FROM T HE FOLLOWING COMPANIES U/S 68 OF THE ACT BY HOLDING THAT THE ASSESSEE HAS FAIL ED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE SAID SHARE CAPITAL RECEIVED FROM THE FOLLOWINGS :- NAME SHARE CAPITAL (AMT. IN RS.) SHARE PREMIUM (AMT. IN RS.) TIMELY FINCAP PVT. LTD. 3,00,000/ - NIL GRAPH FINANCIAL SERVICES PVT. LTD. 2,00,000/ - NIL VPC FINANCIAL SERVICES PVT. LTD. 3,11,000/ - 27,90,000/ - KILA FINANCIAL SERVICES PVT. LTD. 2,73,000/ - 24,57,000/ - HIGHYIELD SECURITIES PVT. LTD. 3,00,000/ - 27,00,000/ - MEHUL FINVEST PVT. LTD. 2,42,000/ - 21,78,000/ - SYNERGY FINLEASE PVT. LTD. 4,73 ,000/ - 42,57,000/ - ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 4 20X5 9. THE AO CONCLUDED THE ASSESSMENT U/S 143(3) R.W.S 14 8 DETERMINING THE TOTAL INCOME AT RS. 1,64,95,075/-. AGGRIEVED THE ASSESEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION BY GIVING THE FOLLOWING REASONS :- A) THE LD. CIT(A) HELD AS FOLLOWS :- THE REASONS TENDERED BY THE AO FOR MAKING THE AFOR ESAID ADDITIONS TO INCOME ARE SUMMARIZED AS UNDER :- (I) THAT THE FACTS OF THE CASE ARE SIMILAR TO THAT OF O NE M/S. SYNERGY FINLEASE PVT. LTD. WHERE THE AO PASSED AN ORDER ADD ING THE SHARE CAPITAL RECEIVED DURING THE YEAR. THE AO HAS ALLEGE D THAT THE CASH CREDITS ARE ENTRIES ARRANGED BY ONE MR. S.K. JAIN IN WHOSE CASE, A SEARCH WAS CONDUCTED ON 14.12.1999 AND THE ENTIRE M ODUS-OPERANDI OF CONVERTING UN-ACCOUNTED MONEY INTO ACCOUNTED ONE WAS UNEARTHED. THE AO FURTHER STATED THAT THE MATERIAL SEIZED DURI NG SEARCH ON MR. S.K. JAIN INDICATES INVOLVEMENT OF CERTAIN PARTIES SOME OF WHOM ARE THOSE WHO HAVE CONTRIBUTED TO THE SHARE CAPITAL OF THE COMPANY. (II) THE BANK TRANSACTIONS AND BOOKS OF ACCOUNTS W ERE VERIFIED BY THE AO AND OBSERVED THAT THE APPELLANT COMPANY HAS NO FINA NCIAL BASE AND IT IS NOT DOING ANY REAL BUSINESS EXCEPT RECEIVING MON EY AND REMITTING THE SAME IMMEDIATELY. HE FURTHER OBSERVED THAT NO E XPLANATION ON REASONS FOR RECEIPT OF HIGH PREMIUM ON SHARES COULD BE FURNISHED AND THE ASSESSEE FAILED TO PRODUCE THE PARTIES FROM WHO M SHARE CAPITAL AND SHARE PREMIUM WAS RECEIVED. (III) THE AO FURTHER STATED THAT THE BANK MANAGER OF STANDARD CHARTERED BANK, PARLIAMENT STREET, NEW DELHI WAS SUMMONED ULS 131 OF THE ACT BUT THERE WAS NO RESPONSE FROM HIM. ACCORDING TO TH E AO, STANDARD CHARTERED BANK HAS THE ACCOUNTS OF THE SHARE HOLDER S WHO HAVE CONTRIBUTED TO THE SHARE CAPITAL OF THE COMPANY. (IV) THE AO HAS FINALLY STATED THAT FILING OF MERE CONFIRMATION LETTERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND HE HAS RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT I N THE CASE OF CIT V. TOTAL 20,98,000/ - 1,43,82,335/ - GRAND TOTAL 1,64,80,335/ - ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 5 20X5 SOFIA FINANCE LTD. (1994) 205 ITR 98 (DEL) TO HOLD THAT THE SHARE CAPITAL IS TO BE TREATED AS INCOME U/S 68 OF THE AC T IF THE ASSESSEE COMPANY FAILS TO PROVE THE SOURCE OF INVESTMENT. TH E LD. AO HAS FURTHER STATED THAT THE CASE OF STELLAR INVESTMENT 251 ITR 263 (SC) CANNOT BE RELIED UPON BECAUSE IT WAS A MERE DISMISS AL OF SLP BY THE HONBLE SUPREME COURT WITHOUT ASSIGNING ANY REASONS AND, THEREFORE, THE SAID SUMMARY DISMISSAL DID NOT HAVE ANY BINDING PRECEDENT. THE AO RELIED UPON THE JUDGEMENT IN THE CASE OF CIT V. RUBY TRADERS 263 ITR 300 AND CIT V. HINDUSTAN TEA CO. 263 ITR 289 TO HOLD THAT IT IS FOR THE ASSESSEE TO ESTABLISH THE GENUINENESS AND C REDITWORTHINESS OF THE INVESTING COMPANY. THE AO ALSO REFERRED THE JUD GEMENT OF THE DELHI HIGH COURT IN THE CASE OF ANTARCTICA INVESTME NTS (P) LTD. 262 ITR 493 WHEREIN IT WAS HELD THAT ADDITION CAN ONLY BE DELETED IF THE ASSESSEE FURNISH THE SOURCE OF INVESTMENT IN SHARE CAPITAL. B) THE AO RELIED UPON THE STATEMENT OF SHRI S.K. JA IN WHICH WAS RECORDED BY THE INVESTIGATION WING DURING THE COURSE OF SEARCH. THE AO ALSO REFERRED THE MATERIAL SEIZED DURING THE COURSE OF SEARCH IN THE CASE OF S HRI S.K. JAIN. THE ASESSEE WAS NEITHER CONFRONTED WITH THE STATEMENT OF SHRI S.K. JAIN NOR WITH THE MATERIAL REFERRED TO BY THE AO AS SEIZED FROM SHRI S.K. JAIN AND THUS THE STATEMENT AND THE MATERIAL CANNOT BE USED AGAINST THE ASSESSEE. THE A O ALSO FAILED TO PROVIDE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE SHRI S .K. JAIN AND HENCE THIS STATEMENT CANNOT BE USED AS EVIDENCE AGAINST THE AS SESSEE. C) IF STATEMENT OF SHRI S.K. JAIN AND THE MATE RIAL WHICH IS NOT CONFRONTED TO THE ASSESSEE IS ELIMINATED, THEN THERE IS NO MATERIAL A VAILABLE WITH THE AO TO SUPPORT HIS FINDING THAT THE RECEIPT OF SHARE CAPITAL AND S HARE PREMIUM OF RS. 1,64,80,335/- WAS NOT A GENUINE TRANSACTION. ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 6 20X5 D) THE ALLEGATIONS OF THE AO THAT MONEY HAD BEEN RECEIVED BY THE ASSESSEE COMPANY AS SHARE CAPITAL AND THAT IT HAD INTURN AD VANCED THE SAME AS SHARE APPLICATION MONEY TO OTHER COMPANIES IS NO GOOD REA SON FOR MAKING AN ADDITION AS THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT AND FINANCE AND TO ARRANGE AND MANAGE ITS BUSINESS AFFAIRS IN THE MANN ER IT LIKES. E) THE ASSESSEE COMPANY HAS FILED CONFIRMATION LE TTERS FROM THE SHARE HOLDERS GIVING THEIR PERMANENT ACCOUNT NUMBER AND WARD/CIRC LE IN WHICH IT EXIST, BALANCE SHEET OF THE RESPECTIVE COMPANIES EVIDENCING CONTRI BUTION TOWARDS SHARE CAPITAL , REGISTRATION NUMBERS OF THE COMPANIES WITH DATE OF INCORPORATION AS PER THE RECORDS OF THE REGISTRAR OF COMPANIES AND WHEREVER THE SHAR EHOLDER COMPANIES WERE REGISTERED WITH THE RBI, AS ENVISAGED, THE CERTIFIC ATE NUMBER OF NBFC. HE OBSERVED THAT THE INVESTMENTS WERE MADE BY ACCOUNT PAYEE CHE QUES. HE RECORDED THAT FINAL ASSESSMENT ORDERS PASSED U/S 143(3) OF THE ACT PAS SED IN THE CASE OF FIVE SHAREHOLDERS COMPANIES WERE ALSO FILED. HE RELIED O N CERTAIN CASE LAWS AND HELD THAT ASSESSEE HAD DISCHARGED THE BURDEN OF PROOF THAT LA Y ON IT. F) ON THE ISSUE OF NON PRODUCTION OF THE DIRE CTORS OF THE SHARE HOLDER COMPANIES FOR EXAMINATION BEFORE THE AO, THE LD. CIT(A) HELD THAT NO ADDITION CAN BE MADE FOR NON-PRODUCTION OF PERSONS AND THAT THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS AND THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN T HE EVIDENCES FILED BY THE ASSESSEE. HE HELD THAT THE ASSESSEE CANNOT BE FAULT ED FOR NON-APPEARANCE OF A BANK MANAGER, IN RESPONSE TO SUMMONS U/S 143(3) OF THE ACT. 10. AGGRIEVED THE REVENUE IS IN APPEAL BEF ORE US ON THE FOLLOWING GROUNDS :- ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 7 20X5 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 1,64,95,070/- MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961. 11. LD. DR SHRI O.P. MEENA SUBMITTED THAT SHAR E CAPITAL WAS TAKEN BY THE ASSESSEE COMPANY AT HUGE PREMIUM WITHOUT ANY JUSTIF ICATION. HE POINTED OUT THAT ON 6 TH DECEMBER, 1999, THE ASSESSEE RECEIVED SHARE CAPITA L FROM M/S. TIMELY FINCAP AND M/S. GRAPH FINANCIAL OF RS. 3,00,000/- AND RS. 2,00,000/- RESPECTIVELY, AS SHARE APPLICATION MONEY, AT PAR AND WITHOUT ANY SHARE PREMIUM AND IMMEDIATELY THEREAFTER FROM JANUARY, 2000 TO MARCH, 2000, THE ASSESSEE RECEIVED SHARE APPLICATIONS AT HUGE PREMIUMS. HE POINTED OUT THERE IS NO CO-RELATION NOR A PROPER EXPLANATION WAS GIVEN FOR THE QUANTUM OF PREMIUM CH ARGED BY THE ASSESSEE COMPANY. HE SUBMITTED THAT THE GENUINENESS OF TRANS ACTIONS HAVE NOT BEEN PROVED BY THE ASSESSEE AND THIS IS APPARENT ON THE FACE OF THE TRANSACTIONS. ON THE FINDING OF THE LD. CIT(A) THAT THE AO HAS NOT PROVIDED PROP ER OPPORTUNITY TO THE ASSESSEE AND HAS NOT PROVIDED THE STATEMENT OF SHRI S.K. JAI N AND THE MATERIAL FOUND IN SEARCH, TO THE EXTENT RELIED UPON BY THE AO, TO THE ASSESSEE, HE RELIED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS . JANSAMPARK ADVERTISING & MARKETING (P) LTD. (2015) 56 TAXMANN.COM 286 (DELHI ) WHEREIN, IT WAS HELD THAT, THE COMMISSIONER (APPEALS) AND TRIBUNAL ARE ALSO FO RUMS FOR FACT FINDING AND THAT, IN THE EVENT OF THE ASSESSING OFFICER FAILING TO DI SCHARGE HIS FUNCTIONS PROPERLY, OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD NATURALLY SHIFT TO THE DOOR OF SAID APPELLATE AUTHORITIES AND WHEN THEY HAVE NOTICED WA NT OF PROPER INQUIRY, IT CANNOT CLOSE THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITION MADE AND THAT MUCH DEFICIENCY SHOULD BE CURED BY THE APPELLA TE AUTHORITIES. HE ALSO RELIED ON ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 8 20X5 THE JUDGMENT OF M/S. DEEPAK AGRO FOODS VS. STATE OF RAJASTHAN & ORS. 2008 TIOL 134 (SC). 12. HE FURTHER RELIED ON THE FOLLOWING CASE LAWS FOR THE PROPOSITION THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND HENCE THE ADDITION U/S 68 OF THE ACT HAS BEEN RIGHTLY MADE BY THE AO. 1. NAVODAYA CASTLE (P) LTD. VS. CIT (2015) 56 TAXMANN .COM 18 (SC) 367 ITR 306 (DELHI) 2. RAJAT EXPORT IMPORT INDIA (P) LTD. VS. ITO (2012) 1 8 TAXMANN.COM 311 (DELHI) 3. CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. (2012) 3 42 ITR 169 (DELHI) 4. ROSHAN DI HATTI VS. CIT (1977) 107 ITR 938 (SC) 5. CIT VS. GLOBUS SECURITIES & FINANCE (P). LTD. (2014 ) 264 CTR 481 (DELHI) 13. THE LD. COUNSEL FOR THE ASSESSEE ON THE OT HER HAND OPPOSED THE CONTENTIONS AND SUBMITTED THAT THE ASESSEE HAS FURNISHED ALL NE CESSARY DETAILS BEFORE THE AO AND THE AO WAS WRONG IN MAKING AN ADDITION U/S 68 O F THE ACT. HE ARGUED THAT THE SO CALLED MODUS OPERANDI OF SHRI S.K. JAIN WAS MER ELY A FIGMENT OF IMAGINATION AND LACKS IN SUBSTANCE AND HAS NO RELEVANCE TO THE PROC EEDINGS AGAINST THE ASSESEE. ON A QUERY FROM THE BENCH AS TO THE BASIS ON WHICH QUA NTUM OF SHARE PREMIUM AMOUNT WAS FIXED, THE LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT SHARES OF RS. 10/- WAS ALLOTTED AT A PREMIUM OF RS. 90/- PER SHARE TO SOME OF THE COMPANIES AND THAT IT IS THE PREROGATIVE OF THE ASSESSEE TO FIX THE AMOUNT O F SHARE PREMIUM. NO EXPLANATION OR SUBSTANTIATION OF THE AMOUNT CHARGED AS SHARE PR EMIUM WAS GIVEN. HE RELIED THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. OASIS HOSPITALITIES PVT. LTD. (2011) 333 ITR 119 (DEL) AND CIT VS. LOVELY EX PORTS PVT. LTD. (2008) 216 CTR ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 9 20X5 195 (SC), CIT VS. GANGESHWARI METAL PVT. LTD. ITA N O. 597/2012 JUDGMENT DATED 21.2.2013 AND SUBMITTED THAT THE ASSESSEE HAS FILED BEFORE THE AO ALL POSSIBLE EVIDENCES IN SUPPORT OF THE GENUINENESS, IDENTITY AS WELL AS CREDITWORTHINESS OF THE SHAREHOLDERS OF THE TRANSACTIONS AND HENCE THE ADDI TION IS BAD IN LAW. HE RELIED ON THE ORDER OF THE LD. CIT(A). 14. IN REPLY THE LD. DR SUBMITTED THAT ALL TH E DECISIONS CITED BY THE ASSESSEE WERE CONSIDERED IN DETAIL BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING (P.) LTD. (SUPRA ) AS WELL AS BY THE DECISION IN THE CASE OF NAVODAYA CASTLE (P.) LTD. VS. CIT REPOR TED IN 367 ITR 306 (DELHI) AND THAT EACH CASE STANDS ON ITS OWN FACTS. 15. ON A CAREFUL CONSIDERATION OF THE RIVAL CO NTENTIONS, THE FACTS OF THIS CASE AND ON A PERUSAL OF THE PAPER ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW THE CASE LAW CITED WE HOLD AS FOLLOWS :- 16. THE SHARE CAPITAL IN QUESTION WHICH IS A SU BJECT MATTER OF ADDITION U/S 68 OF THE ACT IS GIVEN IN THE FORM OF TABLE BY THE AO IS EXTRACTED FOR READY REFERENCE :- DATE NAME OF THE SHARE HOLDER SHARE CAPITAL SHARE PREMIUM 06/12/99 TIMELY FINCAP PVT. LTD. 3,00,000/ - --------- 06/12/99 GRAPH FINANCIAL SERVICES PVT. 2,00,000/ - --------- 04/01/2000 VPC FINANCIAL SE RVICES PVT. LTD. 45,000/ - 4,05,000/ - 31/03/2000 - DO - 2,65,000/ - 23,85,000/ - 04/01/2000 KILLA FINANCIAL SERVICES PVT. LTD. 1,35,000/ - 12,15,000/ - ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 10 20X5 17. A PERUSAL OF THE ABOVE TABLE DEMONSTRATES THAT IN THE CASE OF TIMELY FINCAP PVT. LTD. AND GRAPH FINANCIAL SERVICES PVT. LTD. 30 ,000 SHARES AND 20,000 SHARES WERE APPLIED FOR AND ALLOTTED AT THE FACE VALUE OF RS. 10 PER SHARE. NO AMOUNT WAS CHARGED AS SHARE PREMIUM. MONEY WAS RECEIVED FROM M/S. TIMELY FINCAP PVT. LTD. AND M/S. GRAPH FINANCIAL SERVICES PVT. LTD. ON 10 TH DECEMBER, 1999 AS PER THE ENTRIES IN ITS BOOKS OF ACCOUNT THOUGH THE CHEQUES MAY HAVE BEEN DATED 6.12.99. WITHIN LESS THAN A MONTH OF ALLOTMENT OF SHARES TO M/S. TIMELY FINCAP PVT. LTD. AND M/S. GRAPH FINANCIAL SERVICES PVT. LTD. AT PAR, ON 4.1.2000 AN AMOUNT OF 4,05,000/- WAS RECEIVED FROM M/S. VPC FINANCIAL SERVICES PVT. LTD. AND SHARES WERE ALLOTTED TO THIS COMPANY AT A PREMIUM OF RS. 90/- PER SHARE. S IMILARLY IN THE CASE OF KILA FINANCIAL SERVICES PVT. LTD. 1,35,000 SHARES WERE A LLOTTED AT A PREMIUM OF RS. 90 PER SHARE ON 4 TH JANUARY, 2000. NO EXPLANATION AS TO WHY THE SHARES WERE ALLOTTED AT A PREMIUM AND THE LOGIC OR BASIS ON WHICH SUCH PREM IUM WAS CHARGED WAS GIVEN. FURTHER ALLOTMENT OF 26500 SHARES WERE MADE TO VP C FINANCIAL SERVICES PVT. LTD. AND SHARE OF 1380 TO M/S. KILLA FINANCIAL SERVICES PVT. LTD. ON 31 ST MARCH 2000. 18. IN THE CASE OF HIGHYIELD SECURITIES PVT. LTD. 30,000 SHARES AND IN CASE OF MEHUL FINVEST PVT. LTD. 24,200 SHARES WERE ALLOTTED AT A PREMIUM OF RS. 90 PER SHARE ON 30 TH MARCH,2000. SIMILARLY IN THE CASE OF M/S. SYNERGY FINLEASE PVT. LTD. 47,300 SHARES WERE ALLOTTED ON 30.3.2000 AT A PREMIUM OF R S. 90/- PER SHARE. 31/03/2000 - DO - 1,38,000/ - 12,42,000/ - 30/03/2000 HIGHYIELD SEC URITIES PVT. LTD. 3,00,000/ - 27,00,000/ - 30/03/2000 MEHUL FINVEST PVT. LTD. 2,42,000/ - 21,78,000/ - 31/03/2000 SYNERGY FINLEASE PVT. LTD. 4,73,000/ - 42,57,000/ - 20,98,000/ - 1,43,82,335/ - ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 11 20X5 19. THE ASSESSEE HAS FILED BALANCE SHEETS, IN COME TAX ASSESSMENT DETAILS AND WHEREVER THE SHAREHOLDER IS A NBFC, COPY OF CERTIF ICATE ISSUED BY RBI OF THE SHARE HOLDER COMPANIES HAVE BEEN FILED. THE LIST OF DOCUM ENTS FILED BY THE ASSESSEE ARE LISTED OUT BY THE LD. CIT(A) FROM PAGES 6 TO 10 OF HIS ORDER. WE DO NOT REPEAT THE SAME FOR THE SAKE OF BREVITY. 20. THE AO IN THIS CASE HAS IN HIS ASSESSMENT ORDER, REFERRED TO A MODUS OPERANDI OF SHRI S.K. JAIN, AS POINTED OUT BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. FROM A PERUSAL OF THE COPY OF THE A SSESSMENT ORDERS OF THE SHARE HOLDER COMPANIES FILED AS EVIDENCE BY THE ASSESSEE IT IS CLEAR THAT SHRI S.K. JAIN HAD APPEARED BEFORE THE RESPECTIVE AOS OF THE COMPANIES WHICH HAVE APPLIED FOR SHARE CAPITAL OF THE ASSESSEE AS A DIRECTOR OF THOSE COM PANIES. THIS FACT IS CLEAR FROM COPIES OF THE ASSESSMENT ORDERS FILED IN THE CASE O F GRAPH FINANCIAL SERVICES PVT. LTD. M/S. TIMELY FINCAP PVT. LTD., HIGHYIELD SECUR ITIES PVT. LTD., SYNERGY FINLEASE PVT. LTD. , AND KILA FINANCIAL SERVICES PVT. LTD. HENCE IT IS CLEAR THAT SHRI S.K. JAIN WAS A DIRECTOR IN ALL THE COMPANIES WHICH HAVE APPL IED FOR SHARES IN THE ASSESSEE COMPANY AND HENCE IS NO STRANGER TO THE ASSESSEE C OMPANY. THE FINDING OF THE LD. CIT(A) THAT THE REFERENCE TO SHRI S.K. JAIN AND THE MODUS OPERANDI AS A FIGMENT OF IMAGINATION IS PERVERSE. UNDER THESE CIRCUMSTANCES THE STATEMENT GIVEN BY SHRI S.K. JAIN IS RELEVANT AND THE ACTIVITIES OF SHRI S.K. JA IN AS RECORDED BY THE AO CANNOT BE IGNORED. 21. ANY HOW, AS POINTED OUT BY THE LD. COM MISSIONER OF INCOME TAX (APPEALS), THE AO SHOULD HAVE CONFRONTED THE ASSESS EE WITH THE STATEMENT OF SHRI S.K. JAIN ON WHICH HE PLACED RELIANCE. THE MATERIA L ON WHICH THE AO PLACED ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 12 20X5 RELIANCE FOR MAKING THE ADDITION, SHOULD HAVE ALSO BEEN CONFRONTED TO THE ASSESSEE. THUS TO THE EXTENT TO WHICH THE AO PLACES RELIANCE ON THE STATEMENT OF SHRI S.K. JAIN, AS WELL AS THE MATERIAL SEIZED BY THE INVESTI GATION WING WHICH HAS BEEN USED IN THE ASSESSMENT PROCEEDINGS IN THE CASE CANNOT BE TREATED AS EVIDENCE FOR THE PURPOSE OF THIS ADDITION. IT CAN BE USED ONLY WHEN THE SAME IS CONFRONTED TO THE ASSESSEE. THE AO HAS ALSO NOT PROVIDED THE ASSESSEE WITH A CHANCE TO CROSS EXAMINE SHRI S.K. JAIN. 22. BE THAT IT MAY, WE HAVE TO EXAMINE AS TO WH ETHER THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON IT TO EXPLAIN THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE CASH CREDIT IN ITS BOOKS OF ACCO UNTS. IF THE ASSESSEE HAS NOT DISCHARGED THE INITIAL BURDEN OF PROOF THAT LAY ON IT, THEN THE ADDITION HAS TO BE CONFIRMED. 23. WE HAVE TO ALSO EXAMINE THE DUTY OF THE A PPELLATE AUTHORITIES AS LAID DOWN BY THE JURISDICTIONAL HIGH COURT. 24. THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. JANSAMPARK ADVERTISING & MARKETING (P) LTD. (SUPRA) HAS CONSIDERED THE ISSUE AT LENGTH. THE DECISIONS OF THE HIGH COURT AS WELL AS THE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA), CIT VS. GANGESHWARI METAL PVT. LTD. ( SUPRA), M/S. OASIS HOSPITALITIES PVT. LTD., M/S. DIVINE LEASING AND FINANCE LIMITED (SUPRA) HAD BEEN CONSIDERED BY THE COURT AND IT WAS HELD AS FOLLOWS :- 35. ASSESSMENT PROCEEDINGS UNDER THE INCOME TAX AC T ARE NOT A GAME OF HIDE AND SEEK. THE INQUIRY IN THE WAKE OF A NOTICE UNDER SECTION 148 IS NOT AN EMPTY FORMALITY. IT MUST BE EFFECTIVE AN D WITH A SENSE OF PURPOSE. THERE IS AN ELABORATE PROCEDURE S ET OUT WHICH REQUIRES SCRUPULOUS ADHERENCE AND FOLLOWED UP ON. I N THE HIERARCHY OF ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 13 20X5 THE AUTHORITIES, THE AO IS PLACED AT THE BOTTOM RUN G. THE TWO LAYERS OF APPEALS, BEFORE THE MATTER ENGAGES THE APPELLATE JU RISDICTION OF THIS COURT, ARE AUTHORITIES VESTED WITH THE JURISDICTION , POWER AND OBLIGATION TO REACH APPROPRIATE FINDINGS ON FACTS. NOTICEABLY, IT IS ONLY THE APPEAL TO THE HIGH COURT, UNDER SECTION 260-A, WHICH IS RESTRICTED TO CONSIDERATION OF 'SUBSTANTIAL QUESTION OF LAW', IF ANY ARISING. AS WOULD BE SEEN FROM THE DISCUSSION THAT FOLLOWS, THE OBLIGATION TO MAKE PROPER INQUIRY AND REACH FINDING ON FACTS DOES NOT END WITH THE AO. THIS OBLIGATION MOVES UPWARDS TO CIT (APPEALS), AND ALSO ITAT, SHOULD IT COME TO THEIR NOTICE THAT THERE HAS BEEN DEFAULT IN SUCH RESPECT ON THE PART OF THE AO. IN SUCH EVENT, IT IS THEY WHO A RE DUTY BOUND TO EITHER THEMSELVES PROPERLY INQUIRE OR CAUSE SUCH IN QUIRY TO BE COMPLETED. IF THIS WERE NOT TO BE DONE, THE POWER U NDER SECTION 148 WOULD BE RENDERED PRONE TO ABUSE. 36. THE AUTHORITY TO BRING TO TAX UNACCOUNTED MONEY BY EXERCISING THE POWER GIVEN TO THE AO UNDER SECTION 68 IS OF GREAT IMPORTANCE. IT IS EXPECTED THAT THE AO WOULD RESORT TO THIS PROVISION WITH ALL REQUISITE CIRCUMSPECTION. SINCE THE PROVISION IS GENERALLY IN VOKED, AS HAS BEEN DONE IN THE CASE AT HAND, BY RECOURSE TO THE PROCED URE OF NOTICE UNDER SECTION 148 UPON SATISFACTION UNDER SECTION 147 THA T THE INCOME (PURPORTEDLY REPRESENTED BY THE UNEXPLAINED SUMS FO UND CREDITED IN THE BOOKS OF ACCOUNTS), WITHIN THE MISCHIEF OF SECT ION 68, IT IS INHERENT THAT THE EXPLANATION OF THE ASSESSEE RESPECTING SUC H CREDIT ENTRIES WOULD BE CALLED FOR ONLY WITH CIRCUMSPECTION AND SO LELY UPON SOME CONCRETE MATERIAL COMING UP TO SUPPORT THE TENTATIV E IMPRESSION ABOUT IT BEING SUSPECT. 37. THUS, WHEN THE AO SETS ABOUT SEEKING EXPLANATIO N FOR THE UNACCOUNTED CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN TERMS OF SECTION 68, IT IS LEGITIMATELY EXPECTED TH AT THE EXERCISE WOULD BE TAKEN TO THE LOGICAL END, IN ALL FAIRNESS TAKING INTO ACCOUNT THE MATERIAL SUBMITTED BY THE ASSESSEE IN SUPPORT OF HI S ASSERTION THAT THE PERSON MAKING THE PAYMENT IS REAL, AND NOT NON- EXISTENT, AND THAT SUCH OTHER PERSON WAS ACTUALLY THE SOURCE OF THE MO NEY FORMING THE SUBJECT MATTER OF THE TRANSACTION AS INDEED THAT TH E TRANSACTION IS REAL AND GENUINE, SAME AS IT IS REPRESENTED TO BE. HAVIN G EMBARKED UPON SUCH EXERCISE, THE AO IS NOT EXPECTED TO SHORT-SHRI FT THE INQUIRY OR IGNORE THE MATERIAL SUBMITTED BY THE ASSESSEE. 38. THE PROVISION OF APPEAL, BEFORE THE CIT (APPEAL S) AND THEN BEFORE THE ITAT, IS MADE MORE AS A CHECK ON THE ABUSE OF P OWER AND AUTHORITY BY THE AO. WHILST IT IS TRUE THAT IT IS T HE OBLIGATION OF THE AO TO CONDUCT PROPER SCRUTINY OF THE MATERIAL, GIVEN T HE FACT THAT THE TWO APPELLATE AUTHORITIES ABOVE ARE ALSO FORUMS FOR FAC T-FINDING, IN THE EVENT OF AO FAILING TO DISCHARGE HIS FUNCTIONS PROP ERLY, THE OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD NATURALLY SHIFT TO THE DOOR OF THE SAID APPELLATE AUTHORITY. FOR SUCH PURPOSES, WE ONLY NEED TO POINT OUT ONE STEP IN THE PROCEDURE IN APPEAL AS PRESCRIB ED IN SECTION 250 OF THE INCOME TAX ACT WHEREIN, BESIDES IT BEING OBL IGATORY FOR THE RIGHT ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 14 20X5 OF HEARING TO BE AFFORDED NOT ONLY TO THE ASSESSEE BUT ALSO THE AO, THE FIRST APPELLATE AUTHORITY IS GIVEN THE LIBERTY TO M AKE, OR CAUSE TO BE MADE, 'FURTHER INQUIRY', IN TERMS OF SUB-SECTION (4 ) WHICH READS AS UNDER:- 'THE COMMISSIONER (APPEALS) MAY, BEFORE DISPOSING O F ANY APPEAL, MAKE SUCH FURTHER INQUIRY AS HE THINKS FIT, OR MAY DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INQUIR Y AND REPORT THE RESULT OF THE SAME TO THE COMMISSIONER (APPEALS ). 39. THE FURTHER INQUIRY ENVISAGED UNDER SECTION 250 (4) QUOTED ABOVE IS GENERALLY BY CALLING WHAT IS KNOWN AS 'REMAND RE PORT'. THE PURPOSE OF THIS ENABLING CLAUSE IS ESSENTIALLY TO ENSURE TH AT THE MATTER OF ASSESSMENT REACHES FINALITY WITH ALL THE REQUISITE FACTS FOUND. THE ASSESSMENT PROCEEDINGS RE-OPENED ON THE BASIS OF PR ELIMINARY SATISFACTION THAT SOME PART OF THE INCOME HAS ESCAP ED ASSESSMENT, PARTICULARLY WHEN SOME UNEXPLAINED CREDIT ENTRIES H AVE COME TO THE NOTICE (AS IN SECTION 68), 'CANNOT CONCLUDE, SAVE A ND EXCEPT BY REACHING SATISFACTION ON THE TOUCHSTONE OF THE THRE E TESTS MENTIONED EARLIER; VIZ. THE IDENTITY OF THE THIRD PARTY MAKIN G THE PAYMENT, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . WHILST IT IS TRUE THAT THE ASSESSEE CANNOT BE CALLED UPON TO ADDUCE C ONCLUSIVE PROOF ON ALL THESE THREE QUESTIONS, IT IS NONETHELESS LEGITI MATE EXPECTATION OF THE PROCESS THAT HE WOULD BRING IN SOME PROOF SO AS TO DISCHARGE THE INITIAL BURDEN PLACED ON HIM. SINCE SECTION 68 ITSE LF DECLARES THAT THE CREDITED SUM WOULD HAVE TO BE INCLUDED IN THE INCOM E OF THE ASSESSEE IN THE ABSENCE OF EXPLANATION, OR IN THE EVENT OF E XPLANATION BEING NOT SATISFACTORY, IT NATURALLY FOLLOWS THAT THE MATERIA L SUBMITTED BY THE A E EE WITH HIS EXPLANATION MUST ITSELF BE WHOLESOME OR NOT UNTRUE. IT I ONLY WHEN THE EXPLANATION AND THE MATERIAL OFFERED BY THE ASSESSEE AT THIS STAGE PASSES THIS MUSTER THAT THE INITIAL ONUS PLACED ON HIM WOULD SHIFT LEAVING IT TO THE AO TO START INQUIRING INTO THE AFFAIRS OF THE THIRD PARTY. 40. THE CIT (APPEALS), AS ALSO THE ITAT, IN THE CAS E AT HAND, IN OUR VIEW, UNJUSTIFIABLY CRITICIZED THE AO FOR NOT HAVIN G CONFRONTED THE ASSESSEE WITH THE FACTS REGARDING RETURN OF SOME OF THE SUMMONS UNDER SECTION 13 1 OR NOT HAVING GIVEN OPPORTUNITY FOR THE IDENTITY OF ALL THE SHARE APPLICANTS TO BE PROPERLY ESTABLISHED . THE ORDERS SHEET ENTRIES TAKEN NOTE OF IN THE ORDER OF CIT (APPEALS) SEEM TO INDICATE OTHERWISE. THE ORDER OF CIT (APPEALS), WHICH WAS CO NFIRMED BY ITA T IN 'THE SECOND APPEAL, DOES NOT DEMONSTRATE AS TO O N THE BASIS OF WHICH MATERIAL IT HAD BEEN CONCLUDED THAT THE GENUI NENESS OF THE TRANSACTIONS HAD BEEN DULY ESTABLISHED. THERE IS VI RTUALLY NO DISCUSSION IN THE SAID ORDERS ON SUCH SCORE, EXCEPT FOR VAGUE DESCRIPTION OF THE MATERIAL SUBMITTED BY THE ASSESS EE AT THE APPELLATE STAGE. WHILST IT DOES APPEAR THAT THE TIME GIVEN TO THE ASSESSEE FOR PROVING THE IDENTITY OF THE THIRD PARTY WAS TOO SHO RT, AND FURTHER THAT IT IS PROBABLY NOT ALWAYS POSSIBLE FOR THE ASSESSEE PLACED IN SUCH SITUATION TO BE ABLE TO ENFORCE THE PHYSICAL ATTEND ANCE OF SUCH THIRD ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 15 20X5 PARTY (WHO, IN THE CASE OF SHARE APPLICANTS VIS-A-V IS A COMPANY, WOULD BE INDIVIDUALS AT LARGE AND MAY NOT BE EVEN IN DIRE CT OR PERSONAL CONTACT), THE CURTAINS ON SUCH EXERCISE AT VERIFICA TION MAY NOT BE DRAWN AND ADVERSE INFERENCES REACHED ONLY ON THE BA SIS OF RETURNING UNDELIVERED OF THE SUMMONSES UNDER SECTION 131. CON VERSELY, WITH DOUBTS AS TO THE GENUINENESS OF SOME OF THE PARTIES PERSISTING ON ACCOUNT OF NON- DELIVERY OF THE PROCESSES, THE INIT IAL BURDEN ON THE ASSESSEE TO ADDUCE PROOF OF IDENTITY CANNOT BE TREA TED AS DISCHARGED. 25. THE HONBLE JURISDICTIONAL HIGH COURT AT PARA 42 FURTHER HELD AS FOLLOWS :- 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS O BLIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGI CAL CONCLUSION. BUT CIT (APPEALS), HAVING NOTICED WANT OF PROPER INQUIR Y, COULD NOT HAVE CLOSED THE CHAPTER SIMPLY BY ALLOWING THE APPEAL AN D DELETING THE ADDITIONS MADE. IT WAS ALSO THE OBLIGATION OF THE F IRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENSURED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACE OF THE AL LEGATIONS OF TH E REVENUE THAT THE ACCOUNT STATEMENTS REVEAL A UNIFOR M PATTERN OF CASH DEPOSITS OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNT S PRECEDING THE TRANSACTIONS IN QUESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO T HE NOTICE UNDER SECTION 148 ISSUED BY THE AO, AS ALSO THE MATERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSING TO BE MADE A 'FURTHER INQUIRY' IN EXERCISE OF THE POWER U NDER SECTION 250(4). THIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSEQUENTLY THAT OF CIT (APPEALS), CANNOT BE A PPROVED OR UPHELD. (EMPHASIS OWN) 26. A PERUSAL OF THE ABOVE DECISIONS DEMONSTRAT ES THAT THE LD. CIT(A) SHOULD HAVE ENSURED THAT, NECESSARY EVIDENCES AND COPY OF STATEMENTS AND OPPORTUNITY OF CROSS EXAMINATIONS ARE PROVIDED TO THE ASSESSEE AND NOT TO SIMPLY DELETE THE ADDITION ON THE GROUND THAT, THE AO HAS NOT CONFRON TED THE ASSESSEE WITH THE STATEMENT AND EVIDENCES OR ON THE GROUND THAT OPPO RTUNITY OF CROSS EXAMINATION HAS NOT BEEN PROVIDED BY THE AO TO THE ASSESSEE. HE NCE THE LD. CIT(A) HAS ERRED IN HIS APPROVAL. ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 16 20X5 27. WE NOW CONSIDER THE MERITS OF THE ADDITION WITHOUT TAKING INTO CONSIDERATION THE STATEMENT OF SHRI S.K. JAIN OR THE MATERIAL FOU ND DURING THE SEARCH OF SHRI S.K. JAIN. ON A PERUSAL OF THE DOCUMENTS SUBMITTED BY TH E ASSESSEE, WE ARE OF THE CONSIDERED OPINION THAT THE GENUINENESS OF THE TRAN SACTION AND THE CREDITWORTHINESS OF THE CREDITORS HAS NOT BEEN DEMONSTRATED BY THE A SSESSEE. THE AO IN HIS ORDER AT PAGE 7 HAS CLEARLY RECORDED THAT THE ASSESSEE COMPA NY HAS NO FINANCIAL BASE OR BUSINESS AND THE MONEY RECEIVED BY IT WAS WITHDRAWN THE VERY SAME DAY OR THE NEXT DAY. MORE IMPORTANT HE HAS RECORDED THAT THE ASSESS EE HAS NOT GIVEN ANY LET ALONE SATISFACTORY EXPLANATION FOR THE HIGH PREMIUM CHAR GED ON THE SHARES. WHEN SHARES ARE ALLOTTED WITHIN A SPAN OF LESS THAN ONE MONTH, THE REASON FOR CHARGING HIGH PREMIUM IN THE CASE OF VPC FINANCIAL SERVICES P LTD . , KILLA FINANCIAL SERVICES PVT. LTD., HIGHYIELD SECURITIES PVT. LTD. , MEHUL FINVE ST PVT. LTD. AND SYNERGY FINLEASE P. LTD. AND REASON FOR NOT CHARGING PREMIUM IN THE CASE OF M/S. TIMELY FINCAP PVT. LTD. AND GRAPH FINANCIAL SERVICES PVT. LTD. IS NOT AT ALL EXPLAINED. THE EXPLANATION GIVEN THAT THE LD. COUNSEL FOR THE ASSESSEE THAT CH ARGING OF PREMIUM IS THE SOLE DISCRETION OF THE COMPANY AND THAT PRICE IS A CONTR ACT ENTERED BETWEEN TWO PARTIES AND CANNOT BE QUESTIONED BY THE REVENUE IS DEVOID O F MERIT. THE AO CANNOT BE EXPECTED TO WEAR BLINKERS AND ACCEPT BALD EXPLANAT IONS OF THE ASSESSEE. THERE SHOULD BE SOME EXPLANATION WHICH IS LOGICAL AND RAT IONALE. LD. COUNSEL COULD NOT DEMONSTRATE THAT THE ASSESSEE COMPANY WAS IN FACT, CARRYING ON THE BUSINESS OF FINANCE AND INVESTMENT. IT IS COMMON SENSE THAT SHA RES OF LOSS MAKING COMPANIES DO NOT COMMAND A PREMIUM. THE FINANCIAL STATUS OR THE PROJECTED CASH FLOW OF THE ASSESSEE COMPANY OR ANY SUCH RECORD HAS BEEN PRODUC ED BY THE ASSESSEE TO JUSTIFY THE CHARGING OF SUCH PREMIUMS FOR ALLOTMENT. DISCO UNTED CASH FLOW MATTER IS ONE OF ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 17 20X5 THE ACCEPTED METHODS TO DETERMINE PREMIUM CHARGEAB LE ON SHARE CAPITAL. CERTAIN OTHER METHODS HAVE ALSO BEEN PRESCRIBED. PREMIUM C ANNOT BE CHARGED AS PER THE WHIMS AND FANCIES OF THE COMPANY. IN CASES WHERE E XPLANATION OR JUSTIFICATION OF THE VALUATION OF SHARES IS GIVEN, TO EXPLAIN THE B ASIS ON WHICH SHARE PREMIUM HAS BEEN FIXED, THEN NO ADDITION CAN BE MADE, AS THE GE NUINENESS OF THE TRANSACTION CAN BE HELD AS EXPLAINED. IN THIS CASE NO EXPLANATION W HATSOEVER HAS BEEN GIVEN. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINIO N THAT THE ASSESSEE HAS NOT DISCHARGED THE BURDEN THAT LAY ON IT IN PROVING THE GENUINENESS OF THE CASH CREDITS. WE ALSO FIND THAT THE AO WAS RIGHT IN HOLDING THAT THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS OF THE SHARE HOLDER COMPANIES. THE BALANCE SHEETS, INCOME TAX ASSETS ETC. SHOW THAT THE RESOURCES OF THESE COMPAN IES ARE LIMITED. WE NOW DISCUSS THE CASE LAW ON THE SUBJECT. 28. IN THE CASE OF NOVA PROMOTORS AND FINLEA SE (P) LTD. THE HONBLE DELHI HIGH COURT AT PARA 18 AND 19 HELD AS FOLLOWS : 18. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE HAD ADDUCED DOCUMENTARY EVIDENCE IN AN ATTEMPT TO PROVE ALL THE THREE INGREDIENTS OF SECTION 68 VIZ. (I) IDENTITY OF THE CREDITOR, (II) CREDITWORTHINESS OF THE CREDITOR AND (III) THE GENUINENESS OF THE TRANSACTION. BUT T HE QUESTION BEFORE US CANNOT BE RESOLVED MERELY ON THE BASIS OF THE DOCUM ENTARY EVIDENCE. THE EVIDENCE ADDUCED BY THE ASSESSEE HAS TO BE EXAMINED NOT SUPERFICIALLY BUT IN DEPTH AND HAVING REGARD TO THE TEST OF HUMAN PROBAB ILITIES AND NORMAL COURSE OF HUMAN CONDUCT. BEFORE WE PROCEED TO NOTE THE FIN DINGS OF THE TRIBUNAL AND DECIDE WHETHER THEY HAVE BEEN PROPERLY ARRIVED AT, IT IS RELEVANT TO NOTE A FEW JUDGMENTS OF THE SUPREME COURT. IN CIT V . DURGA PR ASAD MORE [1971] 82 ITR 540 HEGDE J. SPEAKING FOR THE SUPREME COURT OBS ERVED AS UNDER: - 'NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 18 20X5 CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE RE ASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF THE PRES ENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL B E VERY EASY TO MAKE SELF- SERVI NG STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND R ELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO EVAD E TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVAD E TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT R EQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BE FORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMST ANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS.' IN CIT VS. DAULAT RAM RAWATMULL [1973] 87 ITR 349, THE SUPREME COURT DEALT WITH THE QUESTION AS TO WHEN THE FINDINGS OF FACTS RECORDED BY THE TRIBUNAL CAN BE INTERFERED WITH IN A REFERENCE MADE UNDER SECTION 66 OF THE INDIAN INCOME TAX ACT, 1922. THE SUPREME COURT REFE RRED TO THE LEADING CASE OF EDWARDS ( INSPECTOR OF TAXES) V. BAIRSTOW [1955] 28 ITR 579 (H.L.) DECIDED BY THE HOUSE OF LORDS IN WHICH VISCOUNT SIM ONDS OBSERVED AS UNDER: 'FOR IT IS UNIVERSALLY CONCEDED THAT, THOUGH IT IS A PURE FINDING OF FACT, IT MAY BE SET ASIDE ON GROUNDS WHICH HAVE BEEN STATED IN VARIOUS WAYS BUT ARE, I THINK, FAIRLY SUMMARIZED BY SAYING THAT THE COURT SHOULD TAKE THAT COURSE IF IT APPEARS THAT THE COMMISSIONERS HA VE ACTED WITHOUT ANY EVIDENCE OR UPON A VIEW OF THE FACTS WHICH COUL D NOT REASONABLY BE ' IN THE SAME CASE LORD RADCLIFFE EXPRESSED HIMSELF I N THE FOLLOWING WORDS: 'IF THE CASE CONTAINS ANYTHING EXFACIE WHICH IS BAD LAW AND WHICH BEARS UPON THE DETERMINATION, IT IS, OBVIOUSLY, ERR ONEOUS IN POINT OF LAW. BUT, WITHOUT ANY SUCH MISCONCEPTION APPEARING EX FACIE, IT MAY BE THAT THE FACTS FOUND ARE SUCH THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW COULD HA VE COME TO THE DETERMINATION UNDER APPEAL. IN THOSE CIRCUMSTANCES, TOO, THE COURT MUST INTERVENE.' REFERENCE WAS ALSO MADE TO THE OBSERVATIONS OF BHAG WATI, J. (SPEAKING FOR THE MAJORITY) IN THE CASE OF MEHTA PARIKH & CO. V. CIT [1956] 30 ITR 181(SC), WHICH ARE AS UNDER:- 'IT FOLLOWS, THEREFORE, THAT FACTS PROVED OR ADMITT ED MAY PROVIDE EVIDENCE TO SUPPORT FURTHER CONCLUSIONS TO BE DEDUC ED FROM THEM, WHICH CONCLUSIONS MAY THEMSELVES BE CONCLUSIONS OF FACT AND SUCH INFERENCES FROM FACTS PROVED OR ADMITTED COULD BE M ATTERS OF LAW. THE COURT WOULD BE ENTITLED TO INTERVENE IF IT APPEARS THAT THE FACT-FINDING AUTHORITY HAS ACTED WITHOUT ANY EVIDENCE OR UPON A VIEW OF THE FACTS, WHICH COULD NOT REASONABLY BE ENTERTAINED OR THE FA CTS FOUND ARE SUCH ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 19 20X5 THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTR UCTED AS TO THE RELEVANT LAW WOULD HAVE COME TO THE DETERMINATION I N QUESTION.' IN DIT V. BHARAT DIAMOND BOURSE [2003] 259 ITR 280 / 126 TAXMAN 365 , THE SUPREME COURT AGAIN REITERATED THE AFORESAID POSITI ON AND HELD AS UNDER: - 'AS A PRINCIPLE, THIS COURT DOES NOT DISTURB FINDIN GS OF FACT UNLESS THE FINDINGS OF FACT ARE PERVERSE. IT APPEARS TO US THI S IS ONE OF THOSE EXCEPTIONAL CASES WHERE THE CORRECT CONCLUSION RECO RDED BY THE ASSESSING OFFICER, AND AFFIRMED BY THE APPELLATE AU THORITY, HAS BEEN REVERSED BY THE TRIBUNAL ON ACCOUNT OF PERVERSE REA SONING, AS WE SHALL PRESENTLY SEE.' 19. THE POSITION THUS IS THAT EVEN WHERE A REFERENC E OF A QUESTION OF LAW IS MADE TO THE HIGH COURT UNDER SECTION 66 OF THE INDI AN INCOME TAX ACT, 1922 OR SECTION 256 OF THE INCOME TAX ACT, 1961 OVER WHI CH THE HIGH COURT EXERCISES ADVISORY JURISDICTION, AND NOT APPELLATE JURISDICTION, WHERE NORMALLY THE FINDINGS OF FACT RECORDED BY THE TRIBUNAL ARE B INDING ON THE HIGH COURT, IT HAS BEEN HELD BY THE SUPREME COURT THAT THE FINDING S ARE NOT BINDING ON THE HIGH COURT IF THEY ARE PERVERSE OR IF THE FINDINGS ARE SUCH THAT NO PERSON ACTING JUDICIALLY AND PROPERLY INSTRUCTED AS TO THE RELEVANT LAW COULD HAVE COME TO THE DETERMINATION UNDER APPEAL. THE POSITIO N IN AN APPEAL UNDER SECTION 260A OF THE ACT IS 'A FORTIORI' AS THE JUDG MENT OF THE SUPREME COURT IN THE CASE OF BHARAT DIMOND BOURSE, (SUPRA) WOULD SHOW. WE SHALL DEMONSTRATE IN THE FOLLOWING PARAGRAPHS AS TO HOW B OTH THE CIT (APPEALS) AND THE TRIBUNAL HAVE FAILED TO APPRECIATE THE EVID ENCE IN THE PROPER PERSPECTIVE AND ON THE LINES INDICATED BY THE HEGDE J. IN THE CASE OF DURGA PRASAD MORE (SUPRA). THE PRESENT CASE IS ALSO NOT O NE, AS WE SHALL SHOW PRESENTLY, WHERE THE CONCLUSION OF THE TRIBUNAL IS A REASONABLE CONCLUSION WHICH SHOULD NOT NORMALLY BE DISTURBED EVEN IF THE APPELLATE COURT WOULD HAVE TAKEN A DIFFERENT VIEW ON THE SAME EVIDENCE AN D MATERIAL. IN THE PRESENT APPEAL THE EVIDENCE AND MATERIAL ON RECORD, PROPERLY CONSIDERED IN THE LIGHT OF THE SURROUNDING CIRCUMSTANCES AND WITH OUT ATTACHING WEIGHT TO NEUTRAL CIRCUMSTANCES OR CIRCUMSTANCES OF NO RELEVA NCE, POINT TO ONLY ONE CONCLUSION, NAMELY, THAT THE MONIES INTRODUCED BY T HE ASSESSEE AS SHARE SUBSCRIPTIONS FROM 15 COMPANIES WERE ITS OWN UNACCO UNTED MONIES. 29. AT PARA 41 HE FURTHER HELD AS FOLLOWS :- 41. IN THE CASE BEFORE US, NOT ONLY DID THE MATERI AL BEFORE THE ASSESSING OFFICER SHOW THE LINK BETWEEN THE ENTRY PROVIDERS A ND THE ASSESSEE-COMPANY, BUT THE ASSESSING OFFICER HAD ALSO PROVIDED THE STA TEMENTS OF MUKESH GUPTA ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 20 20X5 AND RAJAN JASSAL TO THE ASSESSEE IN COMPLIANCE WITH THE RULES OF NATURAL JUSTICE. OUT OF THE 22 COMPANIES WHOSE NAMES FIGURE D IN THE INFORMATION GIVEN BY THEM TO THE INVESTIGATION WING, 15 COMPANI ES HAD PROVIDED THE SO- CALLED SHARE SUBSCRIPTION MONIES TO THE ASSESSEE . THERE WAS THUS SPECIFIC INVOLVEMENT OF THE ASSESEE-COMPANY IN THE MODUS OP ERANDI FOLLOWED BY MUKESH GUPTA AND RAJAN JASSAL. THUS, ON CRUCIAL FAC TUAL ASPECTS THE PRESENT CASE STANDS ON A COMPLETELY DIFFERENT FOOTING FROM THE CASE OF OASIS HOSPITALITIES (P) LTD. (SUPRA). 30. THE CASE ON HAND THE ASSESSEE COMPANY HAS LINKS WITH THE ENTRY OPERATOR OF SHRI S.K. JAIN. THIS IS EVIDENT FROM THE DETAILS FI LED BY THE ASSESSEE COMPANY IN THE FORM OF ASSESSMENT ORDERS OF THE COMPANIES WHICH HA VE MADE SHARE APPLICATIONS. INDEPENDENT OF THIS LINK WE HOLD THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTION IN THIS CASE. THE HONBLE HIGH C OURT HAS LAID DOWN THAT THE EVIDENCE ADDUCED IN THE ASSESSEE HAS TO BE EXAMINED , NOT SUPERFICIALLY, BUT IN DEPTH AND HAVING REGARD TO THE TEST OF HUMAN PROBABILITIE S AND NORMAL COURSE OF HUMAN CONDUCT. WHEN WE DO SO IN THIS CASE WE HAVE TO UPHO LD THE ACTION OF THE AO. 31. IN THE CASE OF CIT VS. GLOBAL SECURITIES & FINA NCE (P.) LTD. (2014) 264 CTR 481 (DELHI) IT IS HELD AS UNDER :- 11. THE RESPONDENT ASSESSEE IS A PRIVATE LIMITED C OMPANY. IT IS NOT THE CASE OF THE RESPONDENT THAT THEIR DIRECTORS OR PERSONS B EHIND THE COMPANIES, WHO HAD PURPORTEDLY MADE INVESTMENT IN THE SHARES WERE RELATED OR KNOWN TO THEM. IN THE PRESENT CASE SUBSTANTIAL INVESTMENT HA S BEEN MADE IN A PRIVATE LIMITED COMPANY WHICH INCLUDES SHARE PREMIUM @ RS.4 0/- PER SHARE AMOUNTING TO RS.41 ,88,000/-. IT IS NOT A CASE OF T HE RESPONDENT ASSESSEE THAT THEY HAD A PROVEN GOOD PAST TRACK RECORD JUSTI FYING A HEFTY PREMIUM, FOUR TIMES THE FACE VALUE. WHAT WAS PLACED ON RECOR D WERE CERTAIN PAPERS WHICH SHOWED THAT THE RESPONDENT ASSESSEE HAD TAKEN CARE TO ENSURE LEGAL COMPLIANCES. THE SAID EVIDENCE IS PRIMARILY DOCUMEN TARY EVIDENCE. BUT, WHAT THE TRIBUNAL HAS NOTICED BUT NOT GIVEN DUE CREDENCE TO ARE THE SURROUNDING CIRCUMSTANCES WHICH INCLUDE A HUGE PREMIUM I.E. FOU R TIMES OF THE FACE VALUE OF THE SHARES, CREDIT ENTRIES IN THE BANK ACCOUNTS BEFORE TRANSFER OF MONEY TO ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 21 20X5 THE ASSESSEE, FAILURE OF THE COMPANIES TO FILE DETA ILS OF THE INVENTORIES AND THE FACT THAT THE ASSESSEE COMPANY HAD NOT CHARGED ANY PREMIUM EARLIER. IDENTITY, CREDITWORTHINESS OF THE SHAREHOLDERS AND GENUINENESS OF THE TRANSACTION IN ALL CASES IS NOT ESTABLISHED BY ONLY SHOWING THAT THE TRANSACTION WAS THROUGH BANKING CHANNELS OR ACCOUNT PAYEE INSTR UMENT. IT WOULD BE INCORRECT TO STATE THAT THE ONUS TO PROVE GENUINENE SS OF THE TRANSACTION AND CREDITWORTHINESS OF THE CREDITOR STANDS DISCHARGED IN ALL CASES IF PAYMENT IS MADE THROUGH BANKING CHANNELS. SURROUNDING AND CORR OBORATIVE FACTUAL DETAIL ARE EQUALLY IMPORTANT AND MAY JUSTIFY FURTHER PROOF OR DETAILS BEFORE IT IS HELD THAT ONUS IS DISCHARGED. AS HELD IN N.R. PORTFOLIO (P.) LTD. (SUPRA) THE QUESTION OF DISCHARGE OF ONUS DEPENDS UPON WHETHER THE TWO PARTIES ARE RELATED OR KNOWN TO EACH OTHER, THE MANNER IN WHIC H THE PARTIES APPROACHED EACH OTHER, WHETHER THE TRANSACTION WAS ENTERED INT O THROUGH WRITTEN DOCUMENTS TO PROTECT THE INVESTMENT, WHETHER THE IN VESTOR PROFESSES AND WAS AN ANGEL INVESTOR, THE QUANTUM OF MONEY , CREDITWOR THINESS OF THE RECIPIENT. THE OBJECT AND PURPOSE FOR WHICH PAYMENT WAS MADE E TC. THESE FACT ARE PRIMARILY IN KNOWLEDGE OF THE ASSESSEE AND IT IS DI FFICULT FOR REVENUE TO PROVE AND ESTABLISH THE NEGATIVE. THUS, MERE RELIANCE ON NEUTRAL DOCUMENTARY EVIDENCE CANNOT ALWAYS BE REGARDED A SATISFACTORY D ISCHARGE OF ONUS. 12. INVESTMENT DECISIONS, THAT TOO OF INVESTING IN SHARE CAPITAL AT A PREMIUM IN A PRIVATE LIMITED COMPANY, IN THE NORMAL CIRCUMS TANCES, UNLESS THERE ARE OTHER PECULIAR OR PERSONAL REASONS, ENTAILS DUE DIL IGENCE BY BOTH THE SHARE APPLICANT AND THE RECIPIENT COMPANY. THIS IMPLIES I NQUIRY AND VERIFICATION BY THE PERSONS BEHIND THE ARTIFICIAL ENTITY. THERE HAV E BEEN A SPATE OF CASES WHERE PRIVATE LIMITED COMPANIES HAVE PURPORTEDLY RE CEIVED SHARE APPLICATION MONEY FROM UNCONCERNED, UNRELATED PARTIES WITHOUT S ECURING ADEQUATE PROTECTION OF THEIR INVESTMENT AND WITH OTHER SURRO UNDING CIRCUMSTANCES CLEARLY INDICATIVE OF RACKET OR A SEAM. WE REPRODUC E A PORTION THE RULING IN ONKAR NATH V. DELHI ADMINISTRATION AIR 1977 SC 1108 , WHEREIN IT WAS STATED: '6. THE LIST OF FACTS MENTIONED IN SECTION 57 OF WH ICH THE COURT CAN TAKE JUDICIAL NOTICE IS NOT EXHAUSTIVE AND INDEED T HE PURPOSE OF THE SECTION IS TO PROVIDE THAT THE COURT SHALL TAKE JUD ICIAL NOTICE OF CERTAIN FACTS RATHER THAN EXHAUST THE CATEGORY OF FACTS OF WHICH THE COURT MAY IN APPROPRIATE CASES TAKE JUDICIAL NOTICE. RECOGNIT ION OF FACTS WITHOUT FORMAL PROOF IS A MATTER OF EXPEDIENCY AND NO ONE H AS EVER QUESTIONED THE NEED AND WISDOM OF ACCEPTING THE EXISTENCE OF M ATTERS WHICH ARE UNQUESTIONABLY WITHIN PUBLIC KNOWLEDGE . ......... . ........ NO COURT THEREFORE INSISTS ON FORMAL PROOF , BY EVIDENCE, OF NOTORIOUS FACTS OF HISTORY, PAST OR PRESENT. THE DA TE OF POLL' PASSING AWAY OF A MAN OF EMINENCE AND EVENTS THAT HAVE ROCK ED THE NATION ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 22 20X5 NEED NO PROOF AND ARE JUDICIALLY NOTICED. JUDICIAL NOTICE, IN SUCH MATTERS, TAKES THE PLACE OF PROOF AND IS OF EQUAL F ORCE. IN FACT, AS A MEANS OF ESTABLISHING NOTORIOUS AND WIDELY KNOWN FA CTS IT IS SUPERIOR TO FORMAL MEANS OF PROOF..... ' 13. IT IS IMPORTANT, TO SEGREGATE CASES OF BONAFIDE OR GENUINE INVESTMENTS BY THIRD PERSONS IN A PRIVATE LIMITED COMPANY, FROM CA SES WHERE RECEIPT OF SHARE APPLICATION MONEY IS ONLY A FACADE FOR CONVERSION O F UNACCOUNTED FOR MONEY OR MONEY LAUNDERING. THE SAID QUESTION CANNOT BE DE CIDED WITHOUT TAKING NOTICE OF THE SURROUNDING FACTS AND CIRCUMSTANCES, BY MERELY RELYING UPON PAPER WORK WHICH AT BEST IN SOME CASES WOULD BE A N EUTRAL FACTOR. THE PAPER WORK THOUGH IMPORTANT MAY NOT BE ALWAYS CONCLUSIVE OR DETERMINATIVE OF THE FINAL OUTCOME OR FINDING WHETHER THE TRANSACTION WA S GENUINE. WHEN AND UNDER WHAT CIRCUMSTANCES ONUS IS DISCHARGED, AS HEL D IN NR. PORTFOLIO (P.) LTD. (SUPRA), CANNOT BE PUT IN A STRAIT JACKET UNIV ERSAL FORMULA. IT WILL DEPEND UPON SEVERAL RELEVANT FACTORS. CUMULATIVE EFFECT HA S TO BE ASCERTAINED AND UNDERSTOOD BEFORE FORMING ANY OBJECTIVE OPINION WHE THER OR NOT ONUS HAS BEEN DISCHARGED BY THE ASSESSEE. OF COURSE SUSPICIO N OR DOUBTS MAY NOT BE SUFFICIENT AND CARE AND CAUTION HAS TO BE TAKEN THA T THE ASSESSEE HAS LIMITATIONS BUT THIS CANNOT BE A GROUND TO IGNORE C ONTRARY INCRIMINATING EVIDENCE OR MATERIAL WHICH WHEN CONFRONTED, MEETS S ILENCE OR NO ANSWER. (EMPHASIS OWN) 32. THE PROPOSITION OF LAW LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE REFERRED ABOVE AND THE SURROUNDING FACTS AND CIRCUM STANCES CONSIDERED BY IT ARE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE AS SESSEE COMPANY. ON A CAREFUL CONSIDERATION OF THE DOCUMENTS FILED BY THE ASSESSE E AND THE EXPLANATIONS GIVEN BY IT, AND WITHOUT REFERENCE TO EVIDENCES IN THE FORM OF STATEMENT RECORDED FROM SHRI S.K. JAIN OR THE MATERIAL SEIZED BY THE INVESTIGATI ON WING TO THE EXTENT USED AGAINST THE ASSESSEE, WE HOLD THAT THE ASSESSEE HAS NOT DI SCHARGED THE BURDEN OF PROOF THAT LAY OUT ON IT, TO PROVE THE GENUINENESS OF THE SE CASH CREDITS AS WELL AS THE CREDITWORTHINESS OF THE SHARE APPLICANT COMPANIES. IN VIEW OF THE ABOVE DISCUSSIONS, ITA NO. 378/DEL/2008 & ITA NO. 2164/DEL/2008 23 20X5 THE ADDITION MADE BY THE AO U/S 68 OF THE ACT IS UP HELD AND THE ORDER OF THE LD. CIT(A) IS VACATED. 33. IN THE RESULT WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ORDER OF THE AO. THE APPEALS OF THE REVENUE ARE ALLOWED. 34. IN THE RESULT THE APPEALS OF THE REVENUE AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MAY ,2016. SD/- SD/- (SUCHITRA KAMBLE) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 30 TH MAY, 2016 VEENA COPY OF THE ORDER FORWARDED TO:98 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSTT. REGISTRAR