DCIT CEN CIR 3, THANE V. LEENA CONSTRUCTION P. LTD, MUMBAI

ITA 3807/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1986 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Keywords: Unexplained cash credit; Search and seizure; Loose papers; Opportunity of being heard
• Section: 153A; 133(6); 13; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO . 3807 / MUM . /2017 ( ASSESSMENT YEAR : 20 08 09 ) DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3, MUMBAI . APPELLANT V/S LEENA CONSTRUCTION PVT. LTD. 432/434, RAHIM CHAMBERS VIJAYWADI CHIRA BAZAR MUMBAI 400 002 AAACL1474A . RESPONDENT REVENUE BY : SHRI ANADI VARMA ASSESSEE BY : SHRI RAKESH JOSHI DATE OF HEARING 15 . 11 .2019 DATE OF ORDER 28.11.2019 O R D E R PER SAKTIJIT DEY, J.M . T HE CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 3 RD MARCH 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PUNE 11. THOUGH, THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) IS FOR THE ASSESSMENT YEAR S 2007 08 AND 2008 09, HOWEVER, PRESENTLY WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2008 09 ONLY. 2 LEENA CONSTRUCTION PVT. LTD. 2. IN THE MEMORANDUM OF APPEAL, THE REVENUE HAS RAISE D SIX GROUNDS. HOWEVER, THE GROUND S ARE ON THE COMMON ISSUE OF DELETION OF ADDITION MADE OF ` 1.50 CRORE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 3. BRIEF FACTS ARE, THE ASSESSEE , A RESIDENT COMPANY , IS ENGAGED IN CONSTRUCTION BUSINESS. ORIGINALLY, THE ASSESSEE FILED ITS RETURN OF INCOME ON 19 TH AUGUST 2008, DECLARING TOTAL INCOME OF ` 12,03,486. SUBSEQUENTLY, A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN CASE OF THE ASSESSEE AS WELL AS OTHER GROUP ENTITIES. PURSUANT T O SUCH SEARCH AND SEIZURE OPERATION , PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE INITIATED AGAINST THE ASSESSEE. IN PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE ASSESSEE AGAIN FILED ITS RETURN OF I NCOME ON 10 TH MARCH 2015, DECLARING TOTAL INCOME OF ` 12,03,486. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED AN AMOUNT OF ` 1.50 CRORE TOWARDS SHARE CAPITAL AND SHARE PREMIUM FROM VARIOUS COMPANIES AS UNDER: 27. THE FACTS OF THE CAWSE AND THE APPELLANTS SUBMISSIONS ARE IDENTICAL TO THOSE DISCUSSED ABOVE IN ASST YEAR 2007 08 EXCEPT FOR THE NAMES OF THE INVESTOR COMPANIES WHICH ARE AS UNDER: 1. NAME OF PARTY AMO UNT 2. ARTILEGENCE BIO INNOVATION LTD. ` 25,00,000 3. DOLDRUM INVET AND FIN PVT. LTD. ` 25,00,000 3 LEENA CONSTRUCTION PVT. LTD. 4. NOVELTY TRADERS LTD. ` 25,00,000 5. OSHIN INVEST AND FINANCE PVT. LTD. ` 25,00,000 6. SIDH HOUSING DEVELOPMENT CO. LTD. ` 50,00,000 TOTAL: ` 1,50,00,000 4. TO VERIFY THE GENUINENESS OF THE TRANSACTION S RELATING TO SHARE APPLICATION MONEY AND SHARE PREMIUM AS WELL AS TO ASCERTAIN THE IDENTITY AND CREDITWO RTHINESS OF THE INVESTOR COMPANIES, THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT. AS ALLEGED BY THE ASSESSING OFFICER, SOME OF THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT RETURNED BACK UN SERVED WITH THE POSTAL REMARK PARTY NOT AVAILABLE AT GIVEN ADDRESS . WHEREAS, IN RESPECT OF SOME OTHER PARTIES , THOUGH , NOTICES ISSUED DID NOT RE TURN BACK, HOWEVER, NO REPLY WAS RECEIVED. IN ADDITION TO THE INDEPENDENT ENQUIRY CONDUCTED, THE ASSESSING OFFICER ALSO CALLED UPON THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION OF THEIR IDENTITY, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS. IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED A NOTE STATING THAT THE AMOUNT RECEIVED TOWARDS SHARE PREMIUM AND S HARE APPLICATION ARE GENUINE AND IN SUPPORT OF SUCH CLAIM, THE ASSESSEE ALSO FURNISHED CERTAIN DOCUMENTARY EVIDENCE S, SUCH AS , APPLIC ATION FOR ISSUE OF SHARE , BOARD RESOLUTION OF INVESTOR COMPANY, ACKNOWLEDGMENT OF RETURN OF INCOME FILED BY THE INVESTOR COMPANY, FINANCIAL STATEMENT OF THE INVESTOR 4 LEENA CONSTRUCTION PVT. LTD. COMPANY, COMPLIANCE MA DE BEFORE REGISTRAR OF COMPANIES , BANK STA TEMENT OF INVESTOR COMPANY. THUS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE TRANSACTION RELATING TO RECEIPT OF SHARE APPLICATION AND SHARE PREMIUM IS GENUINE. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE. HE OBSERVED , NEITH ER THE INVESTOR COMPANIES HAD CREDITWORTHINESS TO INTRODUCE FUND NOR THE ASSESSEE COMPANY HAD PROVED ITS WORTH TO ATTRACT SUCH INVESTMENT. HE OBSERVED , THE SHARE APPLICATION MONEY AND SHARE PREMIUM WERE RECEIVED FROM DUBIOUS SOURCE AND ULTIMATELY TRANSFERR ED TO ANOTHER ENTITY , LEENA BUILDERS. THUS, ULTIMATELY, THE ASSESSING OFFICER CONCLUDED THAT THE SHARE APPLICATION MONEY AND SHARE PREMIUM OF ` 1.50 CRORE IS NOTHING BUT UNEXPLAINED CASH CREDIT AS PER SECTION 68 OF THE ACT AND ADDED BACK TO THE INCOME OF T HE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 5. L EARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND RELYING UPON THE OBSERVATIONS MADE BY HIM WHILE DECIDING IDENTICAL ISSU E IN ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2007 08, DELETED THE ADDITION ON TWO REASONING . FIRSTLY, THE ADDITION IS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SECONDLY, THE ASSESSING OFFICER HAS MADE THE ADDITION PURELY ON THE BASIS OF NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT WITHOUT ESTABLISHING ANY DIRECT OR INDIRECT LINK OF ASSESSEES 5 LEENA CONSTRUCTION PVT. LTD. OWN MONEY FLOWING OUT AND AGAIN RECEIVED BACK IN THE FORM OF SHARE CAPITAL AND SHARE PREMIUM. 6. SHRI ANADI VERMA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAD NOT RAISED ANY SPECIFIC GROUND CHALLENGING THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. HE SUBMITTED , IN MEMOR ANDUM OF APPEAL FILED BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAD CHALLENGED THE ADDITION ON MERITS ONLY. HE SUBMITTED , ONLY ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE LEARNED COMMISSIONER (APPEALS) HAS DECIDED THE ISSU E IN ASSESSEES FAVOUR BY HOLDING THAT IN ABSENCE OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION, NO ADDITION CAN BE MADE. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , NO OPPORTUNITY WAS GIVEN TO THE ASSESSING OFFICER TO HAVE HIS SAY ON THE CONTENTION RAISED BY THE ASSESSEE REGARDING ABSENCE OF INCRIMINATING MATERIAL . HE SUBMITTED , NO REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER TO VERIFY WHETHER THE ADDITION MADE WAS ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH OR NOT . DELIBERATING ON THE FACTUAL ASPECT OF THE ISSUE THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBM ITTED , THE ADDITION MADE ON ACCOUNT OF SHARE CAPITAL AND SHARE PREMIUM WAS ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPE RATION. 6 LEENA CONSTRUCTION PVT. LTD. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE REPORT DATED 30 TH NOVEMBER 2018, RECEIVED BY HIM FROM THE ASSESSING OFFICER. HE SUBMITTED , IN THE SAID REPORT THE ASSESSING OFFICER HAS SPECIFICALLY REFERR ED TO INCRIMINATING MATERIALS FOUND IN LOOSE PAPER BUNDLES NO.10, 11, 12, 13, 15 AND 16, REVEALING INTRODUCTION OF SHARE CAPITAL. HE SUBMITTED , IN THE COURSE OF SEARCH AND SEIZURE OPERATION, UNSIGNED SHARE TRANSFER FORMS WERE SEIZED FROM THE OFFICE OF SHRI DILIP PORWAL, ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY. HE ALSO DREW OUR ATTENTION TO SUCH SHARE APPLICATION FORM PLACED IN THE PAPER BOOK FILED BY THE ASSESSING OFFICER. FURTHER, HE DREW OUR ATTENTION TO THE REPORT DATED 4 TH NOVEMBER 2019, RECEIVED FROM THE ASSESSING OFFICER MENTIONING THE DETAILS OF INCRIMINATING MATERIAL RELATING TO INVESTMENTS IN SHARE CAPITAL AND SHARE PREMIUM WHICH WERE FOUND DURING THE SEARCH AND SEIZURE OPERATION. THUS, HE SUBMITTED , THE REPORTS FURNISHED BY THE ASSESSING OFFICER ALONG WITH OTHER MATERIALS CLEARLY INDICATE EXISTENCE OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION CONNECTED WITH INVEST MENT IN SHARE APPLICATION AND SHARE PREMIUM. THUS, HE SUBMITTED, LEARNED COMMISSIONER (APPEALS) WAS TOTALLY UNJUSTIFIED IN HOLDING THAT THE ADDITION CANNOT BE MADE IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH. HE SUBMITTED , IT MAY B E A FACT THAT WHILE MAKING THE ADDITION, THE ASSESSING OFFICER HAS NOT SPECIFICALLY REFERRED TO ANY INCRIMINATING 7 LEENA CONSTRUCTION PVT. LTD. MATERIAL, HOWEVE R , SUCH DEFICIENCY IN THE ASSES SMENT ORDER SHOULD NOT HAVE LED LEARNED COMMISSIONER (APPEALS) TO HOLD THAT THE ADDITION HAS BE EN MADE WITHOUT ANY INCRIMINATING MATERIAL. HE SUBMITTED , TO ASCERTAIN THE CORRECT FACTS REGARDING AVAILABILITY OR OTHERWISE OF THE INCRIMINATING MATERIAL RE LATING TO THE ADDITION MADE, LEARNED COMMISSIONER (APPEALS) EITHER SHOULD HIMSELF HAVE CONDUCTED NE CESSARY ENQUIRY OR AT LEAST CALL ED FOR A FACTUAL REPORT FROM THE ASSESSING OFFICER. HE SUBMITTED, LEARNED COMMISSIONER ( APPEALS) HAVING FAILED TO DO SO HAS NOT DISCHARGED HIS STATUTORY FUNCTIONS CORRECTLY. IN THIS CONTEXT, HE RELIED UPON THE DECISION OF TH E HONBLE DELHI HIGH COURT IN CIT V/S JAN SAMPARK ADVERTISING AND MARKETING PVT. LTD., [2015] 375 ITR 373 (DEL.). FURTHER, HE SUBMITTED , ENQUIRY DURING THE SEARCH AND SEIZURE OPERATION AS WELL AS POST SEARCH CLEARLY REVEAL ED THAT THE INVESTOR COMPANIES LAC K CREDITWORTHINESS TO INTRODUCE SHARE PREMIUM AND SHARE CAPITAL WITH THE ASSESSEE. HE SUBMITTED , THROUGH DETAILED ENQUIRY CONDUCTED BY THE INVESTIGATION WING, IT WAS FOUND THAT THE INVESTOR COMPANIES ARE SHELL COMPANIES. HENCE , NEITHER THE TRANSACTIONS WER E GENUINE NOR THEY HAVE THE CREDITWORTHINESS. THEREFORE, THOUGH , THE IDENTITY OF THE CREDITORS MIGHT HAVE BEEN ESTABLISHED , NEITHER THE GENUINENESS OF TRANSACTION NOR THE CREDITWORTHINESS OF THE INVESTORS HAVE BEEN ESTABLISHED. HE SUBMITTED , THE ONUS IS EN TIRE LY ON THE ASSESSEE TO PROVE THE IDENTITY , 8 LEENA CONSTRUCTION PVT. LTD. CREDITWORTHINESS AND GENUINENESS OF THE CREDITORS APPEARING IN ITS BOOKS WHICH ARE THE BASIC INGREDIENTS OF SECTION 68 OF THE ACT. HE SUBMITTED , THE ASSESSEE HAVING FAILED TO ESTABLISH THE CREDITWORTHINESS OF T HE INVESTORS AND THE GENUINENESS OF THE TRANSACTION , THE PROVISION OF SECTION 68 OF THE ACT IS CLEARLY ATTRACTED. IN SUPPORT, HE RELIED UPON THE DECISION OF THE HON'B LE SUPREME COURT IN PCIT V/S NR A IRON & STEEL PVT. LTD., [2019] 412 ITR 161 (SC). THUS, HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAVING NOT PROPERLY EXAMINED THE ISSUE FACTUALLY, THE MATTER MAY BE RESTORED BACK TO HIS FILE FOR DE NOVO ADJUDICATION AFTER CALLING FOR REPORT FROM THE ASSESSING OFFICER REGARDING AVAILABILITY OF INCRIMINATING MA TERIAL RELATING TO THE ADDITION MADE. 7. SHRI RAKESH JOSHI, THE LEARNED AUTHORISED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE STRONGLY RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS) AND SUBMITTED , IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT REFERRED TO ANY INCRIMINATING MATERIAL WHILE MAKING THE ADDITION OF ` 1.50 CROR E UNDER SECTION 68 OF THE ACT. H E SUBMITTED , IN FACT , IN COURSE OF APPELLATE PROCEEDINGS BEFORE LEARNED COMMISSIONER (APP EALS), THE ASSESSING OFFICER HAD FURNISHED A REPORT VIDE LETTER DATED 14 TH MARCH 2016. HE SUBMITTED , NOTHING HAS BEEN BROUGHT TO ON RECORD TO SHOW THAT THE ADDITION OF ` 1.50 CRORE WAS MADE ON THE BASIS OF INCRIMINATING 9 LEENA CONSTRUCTION PVT. LTD. MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATION. HE SUBMITTED , SINCE , IT IS A CASE OF UNABATED ASSESSMENT, THE ADDITION CAN ONLY BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE SEARCH. AS REGARDS THE REPORTS OF ASSESSING OFFICER AND OTHER DOCUMENTARY EVIDENCES SUBMITTE D BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , SOME OF THE DOCUMENTS PLACED IN THE PAPER BOOK DO NOT BELONG TO THE YEAR UNDER CONSIDERATION. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON R ECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS CITED BEFORE US. ON A PERU SAL OF THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS), IT IS CLEAR THAT INSOFAR AS THE APPEAL RELATING TO THE IMPUGNED ASSESSMENT YEAR IS CONCERNED HE HAS NOT RENDERED A NY INDEPENDENT FINDING, BUT , HAS MERELY RELIED UPON HIS REASONING WHILE DELETING SIMILAR ADDITION MADE IN THE ASSESSMENT YEAR 2007 08. HOWEVER, IT IS CLEAR, HE HAS DELETED THE ADDITION ON TWO GROUNDS; FIRSTLY, THERE IS NO INCRIMINATING MATERIAL FOUND DURI NG THE SEARCH RELATING TO THE ADDITION MADE AND SECONDLY, THE ASSESSEE HAS FURNISHED EVIDENCE REGARDING THE AMOUNT RECEIVED TOWARDS SHARE CAPITAL AND SHARE PREMIUM, WHEREAS, THE ASSESSING OFFICER HAS MADE THE ADDITION WITHOUT MAKING PROPER ENQUIRY. AS REGA RDS THE AVAILABILITY OR OTHERWISE OF INCRIMINATING MATERIALS FOUND DURING THE SEARCH RELATING TO THE 10 LEENA CONSTRUCTION PVT. LTD. ADDITION MADE, IT IS NOTICED THAT , THOUGH , LEARNED COMMISSIONER (APPEALS) HAS RECORDED A FINDING THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE S EARCH INSOFAR AS THE AMOUNT RECEIVED TOWARDS SHARE APPL ICATION MONEY AND SHARE PREMIUM, H OWEVER, IT IS NOT FORTHCOMING ON WHAT BASIS LEARNED COMMISSIONER (APPEALS) HAS RECORDED SUCH FINDING. A T LEAST, THE ORDER PASSED BY LEARNED COMMISSIONER (APPEALS) DOES NOT DISCLOSE ANY SUCH FACTUAL BA SIS. MERELY RELYING UPON LEGAL PROPOSITION S ENUNCIATED IN CERTAIN JUDICIAL PRECEDENTS, HE HAS HELD THAT NO ADDITION CAN BE MADE IN THE ABSENCE OF INCRIMINATING MATERIAL IN CASE OF AN UNABATED ASSESSMENT. HOWEVER, BEFORE APP LYING THE LEGAL PROPOSITION, TRUE AND CORRECT FACTS RELATING TO THE ADDITION MADE HA S TO BE ASCERTAINED. THOUGH, LEARNED COMMISSIONER (APPEALS) HAS REFERRED TO THE LETTER DATED 14 TH MARCH 2016, RECEIVED FROM THE ASSESSING OFFICER , HOWEVER, IT IS QUITE UNCL EAR WHETHER SUCH LETTER OF THE ASSESSING OFFICER IS IN RESPONSE TO THE QUERY RAISED BY THE LEARNED COMMISSIONER (APPEALS) REGARDING AVAILABILITY OF INCRIMINATING MATERIAL. O N A SPECIFIC QUERY RAISED BY THE BENCH, THE LEARNED AUTHORISED REPRESENTATI VE FAIRLY SUBMITTED, ASSESSEE IS UNAWARE OF THE CONTENTS OF LETTER DATED 14 TH MARCH 2016, SENT BY THE ASSESSING OFFICER AND WHETHER SUCH LETTER IS IN PURSUANCE TO A QUERY RAISED BY THE LEARNED COMMISSIONER (APPEALS) REGARDING AVAILABILITY OF INCRIMINATING MAT ERIAL IS NOT IN HIS KNOWLEDGE. HE ALSO FAIRLY SUBMITTED THAT HE IS NOT 11 LEENA CONSTRUCTION PVT. LTD. AWARE OF ANY REPORT BEING CALLED FOR BY THE LEARNED COMMISSIONER (APPEALS) FROM THE ASSESSING OFFICER REGARDING AVAILABILITY OF INCRIMINATING MATERIAL RELATING TO THE ADDITION MADE. THE REFORE, HE SUBMITTED , THE I SSUE CAN BE RESTORED BACK TO LEARNED COMMISSIONER (APPEALS) FOR ASCERT AINING THE CORRECT FACT REGARDING AVAILABILITY OR OTHERWISE OF INCRIMINATING MATERIAL RELATING TO THE ADDITION MADE FROM THE ASSESSING OFFICER. KEEPING IN PERS PECTIVE THE AFORESAID SUBMISSIONS OF LEARNED AUTHORISED REPRESENTATIVE, WE MUST OBSERVE THAT BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS FILED TWO REPORTS DATED 30 TH NOVEMBER 2018 AND 4 TH NOVEMBER 2019, RECEIVED FROM THE ASSESSING OFFICER , WHERE IN , IT HAS BEEN VERY CLEARLY AND CATEGORICALLY STATED THAT CERTAIN LOOSE PAPERS FOUND DURING THE SEARCH AND SEIZURE OPERATION WERE RELATING TO THE INTRODUCTION OF SHARE CAPITAL AND SHARE PREMIUM. IN FACT, IN THE SAID REPORT S THE ASSESSING OFFICER HAS ALSO SPECIFICALLY REFERRED TO THE LOOSE PAPER BUNDLES CONTAINING SUCH MATERIAL. FURTHER, CERTAIN DOCUMENTARY EVIDENCE S REPRESENTING SUCH INCRIMINATING MATERIAL FOUND DURING SEARCH HAVE BEEN FILED ALONG WITH THE SAID REPORT. IT IS NOT FORTHCOMING , WHETHER LEARNE D COMMISSIONER (APPEALS) HAD TAKEN EFFORT TO VERIFY ALL THESE FACTS AND MATERIALS NOW BROUGHT ON RECORD BY THE REVENUE. ON GOING THROUGH THE AFORESAID REPORTS OF THE ASSES SING OFFICER AND THE ACCOMPANYING MATERIALS, PRIMA FACIE IT APPEARS THAT SOME INCRIMI NATING MATERIAL 12 LEENA CONSTRUCTION PVT. LTD. CONNECTED TO INTRODUCTION OF SHARE CAPITAL WAS FOUND DURING THE SEARCH AND SEIZURE OPERATION. HOWEVER, A FINAL CONCLUSION ON THE ISSUE CAN BE ARRIVED AT ONLY AFTER PROPER VERIFICATION OF ALL THE SEIZED MATERIAL S. NEITHER THE ASSESSING OFFIC ER WHILE MAKING ADDITION IN THE ASSESSMENT ORDER HAS REFERRED TO ANY INCRIMINATING MATERIAL NOR LEARNED COMMISSIONER (APPEALS) HAS HIMSELF CONDUCTED ANY ENQUIRY TO RENDER A CONCLUSIVE FINDING THAT THE ADDITION IS NOT MADE ON THE BASIS OF ANY SE IZED MATERIA L. P ERU SAL OF THE IMPUGNED ORDER OF LE ARNED COMMISSIONER (APPEALS) GIVES AN IMPRESSION THAT HE HAS RENDERED HIS FINDING ON UNAVAILABILITY OF INCRIMINATING MATERIAL PRIMARILY ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE. AVAILABILITY OR OTHERWISE OF INC RIMINATING MATERIAL BEING A PURELY FACTUAL ISSUE, LEARNED COMMISSIONER (APPEALS) SHOULD HAVE DONE WELL TO EITHER VERIFY THE SEIZED MATERIAL HIMSELF OR CALLED FOR A REPORT FR OM THE ASSESSING OFFICER FOR ASCERTAINING THE CORRECT FACTS. N O SUCH EXERCISE HAS B EEN UNDERTAKEN BY THE LEARNED COMMISSIONER (APPEALS) BEFORE DELETING TH E ADDITION MADE ON THE GROUND OF UNAVAILABILITY OF INCRIMINATING MATERIAL. THEREFORE, TO THAT EXTENT, THE DECISION OF LEARNED COMMISSIONER (APPEALS) IS UNSUSTAI NABLE, HENCE, HAS TO BE S ET ASIDE . HOWEVER, IN OUR CON SIDERED OPINION, THE ISSUE, WHETHER THE ADDITION IS ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING SEARCH OR NOT HAS TO BE RESTORED BACK TO LEARNED COMMISSIONER (APPEALS) FOR DE NOVO ADJUDICATION AFTER 13 LEENA CONSTRUCTION PVT. LTD. PROPER ENQUIRY AND VERIFICATION OF ALL THE ANCILLARY AND INCIDENTAL FACTS AS WELL AS THE SEIZED MATERIAL. IN THIS CONTEXT, HE MAY ALSO EXAMINE THE REPORTS OF THE ASSESSING OFFICER SUBMITTED BEFORE US ALONG WITH ACCOMPANYING DOCUMENTS TO COME TO A CONCLUSIO N WHETHER THE SUBJECT ADDITION MADE IS ON THE BASIS OF INCRIMINATING MATERIAL OR NOT. INSOFAR AS THE MERIT OF THE IS SUE IS CONCERNED, THAT WILL ARISE ONLY AFTER THE PRELIMINARY ISSUE OF AVAILABILITY OF INCRIMINATING MATERIAL OR OTHERWISE IS RESOLVED. IN A NY CASE OF THE MATTER, EVEN ON MERITS OF THE ADDITION ALSO, LEARNED COMMISSIONER (APPEALS) IS REQUIRED TO EXAMINE WHETHER THE INVESTORS POSSESS THE CREDITWORTHINESS TO MAKE THE INVESTMENT IN SHARE CAPITAL AND SHARE PREMIUM AND ALSO THE GENUINENESS OF THE T RANSACTION. THIS IS IN VIEW OF THE ENQUIRY CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT IN COURSE OF WHICH IT WAS FOUND THAT THE INVESTORS ARE SHELL COMPANIES HAVING NO CREDENTIALS TO INVEST IN SHARE PREMIUM OR SHARE CAPITAL. WITH THE AFORESAID OB SERVATIONS, ALL THE ISSUES RELATING TO THE ADDITION OF ` 1.50 CRORE UNDER SECTION 68 OF THE AC T IS RESTORED TO THE FILE OF LEARNED COMMISSIONER (APPEALS) FOR DE NOVO ADJUDICATION AFTER CONDUCTING PROPER ENQUIRY AND KEEPING IN VIEW OUR OBSERVATIONS HEREIN AB OVE. NEEDLESS TO MENTION, THE ASSESSEE MUST BE PROVIDED A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THE ISSUES. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 14 LEENA CONSTRUCTION PVT. LTD. 9. IN THE RESULT, APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 28.11.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI