ITO, New Delhi V. M/s. Kansal Fincap Ltd., New Delhi

ITA 392/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65411 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-07-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 28-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SRUJANI MOHANTYDR
• Assessee Lawyers: RAJ KUMARAR
• Keywords: Reopening of assessment; Bogus Share capital; Gift; Search and seizure; Opportunity of being heard; Question of law; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 69C; 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BENC H BEFORE SHRI U.B.S. BEDI, JM & SHRI A.N. PAHUJA, A M ITA NO.392/DEL/2010 WITH CO NO.62/DEL./2010 ASSESSMENT YEAR:2001-02 INCOME-TAX OFFICER, WARD 5(1), NEW DELHI V/S . M/S KANSAL FINCAP LTD., 4630/18B 2 ND FLOOR, ANSARI NAGAR, DARYA GANJ, NEW DELHI [PAN : AAACK 5664 M] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RAJ KUMAR,AR REVENUE BY MS. SRUJANI MOHANTY,DR DATE OF HEARING 11-07-2012 DATE OF PRONOUNCEMENT 31-08-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 28.01.2010 BY THE REVENUE AND THE CORRESPONDING CROSS-OBJECTION [CO] FILED BY THE ASS ESSEE ON 25 TH MARCH,2010 AGAINST AN ORDER DATED 18.11.2009 OF THE LD. CIT(A) -VIII, NEW DELHI, RAISE THE FOLLOWING GROUNDS:- ITA NO.392/DEL/2010[REVENUE] 1. THE ORDER OF LEARNED CIT(A) IS ERRONEOUS AND CONTRA RY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F ` ` 63 LACS MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. AC T, BEING THE BOGUS SHARE APPLICATION MONEY AND ` ` 31,500/- BEING THE UNACCOUNTED CASH PAID FOR OBTAINING ACCOMMODATION E NTRIES. ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 2 2.1 THE LEARNED CIT(A) IGNORED THE FACT THAT THE AS SESSEE DID NOT DISCHARGE THE ONUS OF PROVING THE CREDIT WORTHI NESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS A ND HAS ALSO IGNORED THE FINDINGS RECORDED BY THE ASSESSING OFFICER. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF T HE HEARING. CO NO.62/DEL/2010[ASSESSEE] 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, INITIATION OF PROCEEDINGS U/S 147/148 AND CONSEQUENTIAL ASSTT. FR AMED IS ABSOLUTELY UNSUSTAINABLE AND UNJUSTIFIED IN LAW AS WELL AS ON MERITS AND UNCALLED FOR. 2. THAT NO INTEREST U/S 234D SHOULD HAVE BEEN CHARG ED. 3. THAT LEARNED CIT(A) HAS BEEN FULLY JUSTIFIED IN LAW AS WELL AS ON MERITS IN DELETING THE ADDITION OF ` `63 LACS AND ` `31,500/- MADE SHARE APPLICATION MONEY AND ALLEGED COMMISSION THEREON. 2. ADVERTING FIRST TO GROUND NO.1 IN THE CROSS OBJ ECTION [CO] FILED BY THE ASSESSEE, FACTS, IN BRIEF, AS PER RELEVANT ORDERS A RE THAT RETURN DECLARING NIL INCOME, AFTER SET OFF OF B/F LOSS OF ` 24,327/-,FILED ON 12.7.2001 BY THE ASSESSEE WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT). SUBSEQUENTLY, ON AN INFORMATION RECEIVED FROM DIT (INVESTIGATION), REVEALING MODUS OPERANDI OF THE ACCOMMODATION ENTR Y PROVIDERS, THE ASSESSING OFFICER (A.O. IN SHORT) RECORDED THE FOLLOWING REAS ONS IN WRITING IN TERMS OF PROVISIONS OF SEC.148(2) OF THE ACT:- 'INVESTIGATIONS WERE CONDUCTED BY THE INVESTIGATIO N WING OF THE DEPARTMENT ON CERTAIN PERSONS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO BENEFICIARIES OF THEIR SERVICES, IN RETURN OF, COMMISSION. IT HAS BE EN REVEALED THAT MANY PERSONS WERE USING SERVICES OF ACCOMMODATION ENTRY OPERATOR S TO CHANNELISE THEIR OWN UNACCOUNTED MONEY IN THEIR REGULAR BOOKS OF ACCOUNT S BY ROUTING THE SAME THROUGH THE ACCOUNTS OF ACCOMMODATION ENTRY PROVIDE RS. THE MODUS OPERANDI OF THESE ENTRY PROVIDERS AND BENEFICIARIES OF THEIR SE RVICES, WAS DETECTED TO BE AS UNDER: A) THE PERSONS WHO, HAD UNACCOUNTED MONEY (HEREINAF TER CALLED AS ENTRY TAKERS OR BENEFICIARIES) AND WANTED TO INTRODUCE TH E SAME IN THE BOOKS OF ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 3 ACCOUNTS WITHOUT PAYING TAX, APPROACHED SUCH ANOTHE R PERSON (HEREINAFTER CALLED AS ENTRY OPERATOR) AND WOULD HAND OVER THE C ASH (PLUS COMMISSION) TO THE LATTER, THE ENTRY OPERATOR IN TURN WOULD ISS UE CHEQUES/DDS/POS IN THE NAME OF THE BENEFICIARY FROM THE SAME ACCOUNT ( IN WHICH THE CASH IS DEPOSITED) OR ANOTHER ACCOUNT IN WHICH FUNDS ARE TR ANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES . B) THE BENEFICIARY THEREAFTER DEPOSITED THESE INSTR UMENTS IN ITS BANK ACCOUNT AND THE MONEY WOULD COME TO HIS REGULAR BOO KS OF ACCOUNT IN THE FORM OF GIFT, SHARE APPLICATION MONEY, LOAN ETC THR OUGH BANKING CHANNELS. 2. THE STATEMENT OF BANK ACCOUNT OF ACCOMMODATION ENTRY PROVIDERS WAS COLLATED BY THE INVESTIGATION WING AND, IT IS SEEN THAT THE NAME OF THE ASSESSEE COMPANY ALSO FIGURES IN THE LIST OF NAMES HAVING RE CEIVED FROM SUCH ACCOUNTS, AN AMOUNT IN AGGREGATE AMOUNTING TO RS.6300000/- IN TH E FORM OF ENTRY GIVEN AS PER TABLE BELOW: S.NO. ENTRY PROVIDER DATE OF ENTRY AMOUNT[IN ` ] BANK OF ENTRY PROVIDER 1 SOBER ASSOCIATES PVT. LTD. 12-JUN-00 500000 BOMBAY MERCANTILE BANK, DARYAGANJ 2 TRANSPAN FINANCE SERVICE 10-JUNE-00 1000000 SBP, DG 3 PARTICULAR MANAGE FINLEASE P. LTD. 14-NOV-00 300000 SBP, DG 4 ROYAL CREDIT PVT. LTD. 18-NOV-00 300000 RAMGARHIA, PAHARGANJ 5 ROYAL CREDIT PVT. LTD. 6-DEC-00 200000 SBP, DG 6 RAHUL FINLEASE PVT. LTD. 13-DEC-00 200000 RAMGARHIA, PAHARGANJ 7 SPARROW MARKETING PVT. LTD. 1-JAN-01 1000000 RAMGARHIA, PAHARGANJ 8 BASANT AGENCY P. LTD. 01-JAN-01 500000 INNOVATIVE, WAZIR PUR 9 RAHUL FINLEASE PVT. 05-JAN-01 800000 RAMGARHIA, ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 4 LTD. PAHARGANJ 10 KULDEEP TEXTILES PVT. LTD. 26-FEB-01 500000 INNOVATIVE, WAZIR PUR 11 CHANGIA STEELS PVT. LTD. 19-JAN-01 1000000 KVB, KAROL BAGH TOTAL 6300000 3. HAVING REGARD TO THE MODUS OPERANDI OF THE ENT RY PROVIDERS AS UNCOVERED BY THE INVESTIGATION WING OF THE DEPARTME NT AND THE NAME OF ASSESSEE APPEARING IN THE LIST OF PERSONS WHO HAVE ENTERED INTO TRANSACTIONS WITH THE ACCOMMODATION ENTRY PROVIDERS ESPECIALLY WITH R EGARD TO TRANSACTIONS MENTIONED IN TABLE SUPRA, I HAVE, THEREFORE REASONS TO BELIEVE THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE COMPANY TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, AND THAT THE AS SESSEE COMPANY HAS UNDERSTATED ITS INCOME AND AS SUCH INCOME CHARGEABL E TO TAX AMOUNTING TO RS.6300000/- HAS ESCAPED ASSESSMENT. 4 NOTICE U/S 148 IS ISSUED FOR REASONS RECORDED SU PRA, WITH THE PRIOR APPROVAL OF ADDL. COMMISSIONER OF INCOME TAX, RANGE -5 DELHI.' 2.1 ACCORDINGLY, A NOTICE U/S 148 OF THE ACT WAS I SSUED ON 17.03.2008. IN RESPONSE, THE ASSESSEE FILED A LETTER DATED 6 TH MAY, 2008 STATING THAT RETURN FILED EARLIER MAY BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 148 OF THE ACT. INTER ALIA, THE AO SUPPLIED A COPY OF REASONS RECOR DED BY HIM FOR INITIATING ACTION U/S 147/148 OF THE ACT. THE OBJECTIONS RAISED BY T HE ASSESSEE AGAINST INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT WERE DISPOSED OF BY THE AO VIDE ORDER DATED 1.12.2008, AS EXTRACTED IN PARA 3.4 OF THE IM PUGNED ORDER. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, VIDE ORDER SHEE T ENTRY DATED 18 TH DECEMBER, 2008, THE AO ASKED THE ASSESSEE TO FURNIS H CONFIRMATIONS OF THE INVESTORS AND PRODUCE DIRECTORS OF THE AFORESAID NI NE COMPANIES IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE R EPLIED VIDE LETTER DATED 22 ND DECEMBER, 2008 THAT CONFIRMATIONS WERE ALREADY FILE D WHILE IT SOUGHT TIME OF SEVEN DAYS TO PRODUCE THE DIRECTORS OF THE AFORESAI D COMPANIES FOR VERIFICATION OF TRANSACTIONS. ACCORDINGLY, THE AO ALLOWED FURTHER T IME UNTIL 24 TH DECEMBER, 2008, THE ASSESSMENT BEING TIME BARRING ON 31 ST DECEMBER, 2008. HOWEVER, ON 24 TH ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 5 DECEMBER, 2008, THE ASSESSEE FILED A LETTER, SEEKIN G PROPER OPPORTUNITY AND AT LEAST ONE WEEKS TIME TO PRODUCE THE DIRECTORS OF THE CONTRIBUTING COMPANIES. BUT THE AO DID NOT ALLOW ANY FURTHER TIME. SINCE T HE ASSESSEE FAILED TO PRODUCE ANY OF THE DIRECTORS OF THE AFORESAID NINE COMPANIE S, THE AO ADDED THE AMOUNT OF ` `63 LACS U/S 68 OF THE ACT BESIDES COMMISSION OF ` 31,500/-[20,000+12,500] U/S 69C OF THE ACT IN OBTAINING THE ACCOMMODATION E NTRIES. 3. ON APPEAL, THE ASSESSEE QUESTIONED THE VALIDITY OF REOPENING THE ASSESSMENT ON THE GROUND THAT THE REASONS RECORDED DID NOT HAVE ANY NEXUS WITH THE MATERIAL ON RECORD AND WERE VAGUE. THE ASS ESSEE PLEADED THAT AO DID NOT APPLY HIS INDEPENDENT MIND AND SIMPLY FOLLOWED THE OPINION AND FINDINGS OF THE INVESTIGATION WING. IT WAS FURTHER PLEADED THA T RECORDING OF ENTRIES IN THE BOOKS DOES NOT IPSO FACTO AMOUNTS TO GENERATION OF INCOME AND THAT TOO ESCAPED INCOME. INTER ALIA, THE ASSESSEE RELIED UPON A NUMB ER OF DECISIONS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD . CIT(A) UPHELD THE VALIDITY OF REOPENING, HOLDING AS UNDER:- 3.5 ON A CAREFUL CONSIDERATION OF THE REASONS RECO RDED BY THE AO AS ALSO THE BASIS PROVIDED BY HIM FOR REOPENING OF ASSESSMENT W HILE DEALING WITH THE OBJECTIONS OF THE ASSESSEE COMPANY, IT MAYBE SEEN T HAT:- (A) THE AO HAD SPECIFIC AND PRECISE INFORMATION IN RESPECT OF ALLEGED ENTRY PROVIDERS, DATE OF ENTRY, AMOUNT OF MONEY RECEIVED FROM INDIVIDUAL PERSONS, CHEQUE/DRAFT NOS. AND NAME AND BRANCH OF THE BANKER S. (B) THE AO, IT SEEMS, MADE A LIMITED VERIFICATION S O AS TO ENSURE THAT THE INFORMATION IN QUESTION RELATED TO THE ASSESSEE COM PANY. (C) AS NO SCRUTINY ASSESSMENT HAD BEEN MADE IN THIS CASE WITH REFERENCE TO ORIGINAL RETURN OF INCOME, THE CORRECTNESS AND GENU INENESS OF THE SUBJECT TRANSACTIONS HAD NEVER BEEN EXAMINED AND; (D) FORMED A PRIMA FACIE OPINION THAT THIS WAS A CA SE WHICH REQUIRED FURTHER INVESTIGATION. (E) A PERUSAL OF BALANCE SHEET CLEARLY SUGGESTS THA T THERE ARE NO DETAILS ABOUT THE NAMES, AMOUNTS AND CHEQUE NOS. ETC AVAILABLE IN THE SCHEDULE REFLECTING SHARE CAPITAL IN THE BALANCE SHEET. THUS, IN MY VIEW THE AO HAD REASONABLY SUFFICIENT I NFORMATION TO INITIATE THE PROCEEDINGS U/S 147/148 OF THE ACT. 3.6 FURTHER, THERE ARE CONSIDERABLE DISTINGUISH ABLE FEATURES BETWEEN THE CASE IN HAND AND THE CASES RELIED UPON BY THE ID. COUNSE L FOR THE ASSESSEE COMPANY. ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 6 IN THE PRESENT CASE IT CAN NOT BE SAID THAT THE INF ORMATION RECEIVED FROM THE INVESTIGATION WING DID NOT RELATE TO THE ASSESSEE C OMPANY AND THERE IS NO MECHANISM TO FIND OUT AS TO WHAT VERIFICATION AND O THER RELATED EXAMINATION THE AO CONDUCTED BEFORE REACHING A BELIEF THAT TAXABLE INCOME HAS PRIMA FACIE ESCAPED ASSESSMENT. I ENTIRELY AGREE WITH THE AO TH AT FOR THE PURPOSES OF COMMENCEMENT OF REASSESSMENT IT IS THE PRIMA FACIE MATERIAL AND INFORMATION WHICH SHOULD BE AVAILABLE WITH THE CONCERNED AO. HE HAS VERY RIGHTLY RELIED UPON THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RAYMOND WOOLEN MILLS LTD. VS. ITO 236 ITR 34 (SC). SECONDLY, AS STATED EARLIER, THE ORIGINAL ASSESSMEN T IN THIS CASE HAD BEEN MADE U/S 143(1) OF THE IT ACT AND THE AO DID NOT HAVE AN Y OCCASION TO EXAMINE THE CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF TR ANSACTIONS RELATING TO RECEIVING OF SHARE APPLICATION MONEY SALE OF SHARES . THEREFORE, THE COURT RULINGS RELIED UPON BY THE LD. COUNSEL HAVE TO BE SEEN IN T HE LIGHT OF THIS VITAL DISTINGUISHING FEATURE OF THE PRESENT CASE. 3.7 AT .THIS STAGE IT WILL BE USEFUL TO MAKE A REFE RENCE TO CERTAIN IMPORTANT JUDGMENTS WHEREIN THE ISSUE OF TRUE AND FULL DISCLO SURE HAS BEEN ELABORATELY DISCUSSED. ESS ESS KAY ENGINEERING CO. P. LTD VS COMMISSIONER OF INCOME TAX ; THE MERE FACT THAT THE CASE OF THE ASSESSEE WAS ACC EPTED AS CORRECT IN THE ORIGINAL ASSESSMENT. FOR AN ASSESSMENT YEAR, DOES NOT PRECLU DE THE INCOME-TAX OFFICER FROM RE- OPENING THAT ASSESSMENT UNDER SECTION 147(A) OF THE INCOME-TAX ACT, 1961, ON THE BASIS OF HIS FINDINGS OF FACT MADE ON THE BASIS OF FRESH MATERIALS OBTAINED IN THE COURSE OF ASSESSMENT FOR THE NEXT ASSESSMENT YEAR. SRI KRISHNA PVT. LTD. VS. INCOME TAX OFFICER HELD DISMISSING THE APPEAL, THAT HAVING CREATED AND RECORDED BOGUS ENTRIES OF LOANS, THE ASSESSEE COULD NOT SAY THAT IT HAD TRULY AND FULLY DISCLOSED ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. THE INCOME-TAX OFFICE R COULD HAVE INVESTIGATED THE TRUTH OF THE SAID ASSERTION WHICH HE ACTUALLY DID IN THE SUB SEQUENT ASSESSMENT YEAR BUT THAT DID NOT RELIEVE THE ASSESSEE OF THE OBLIGATION, PLACED UPON IT BY THE STATUTE, TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. INDUBITABLY, WHETHER A LOAN ALLEGED TO HAVE BEEN TAKEN BY THE ASSESSEE, IS TRUE OR FALSE, IS A MATERIAL FACT AND NOT AN INFERENCE, FACTUAL OR LEGAL, TO BE DRAWN FROM GIVEN FACTS. HENCE, THERE WAS A REASO NABLE GROUND FOR THE INCOME-TAX OFFICER TO BELIEVE THAT ON ACCOUNT OF THE FAILURE O F THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY, NOT A MERE FAILURE BUT A POSITIVE DESIGN TO MISLEAD, INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT PROCEEDINGS HAD BEEN V ALIDLY INITIATED. DECISION OF THE CALCUTTA HIGH COURT AFFIRMED. ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 7 CALCUTTA DISCOUNT CO. LTD VS. INCOME TAX OFFICER THAT THE WORDS 'OMISSION OR FAILURE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT YEAR' USED IN SECTION 34 PO STULATED A DUTY ON EVERY ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. WHAT FACTS WERE MATERIAL AND NECESSARY FOR ASSESSMENT DIFFERED FROM CASE TO CASE. IN EVERY ASSESSMENT PROCEEDINGS, THE ASSESSING AUTHORITY WOULD, FOR THE PURPOSE OF COMPUTING OR DETERMINING THE PROPER TAX DUE FROM AN ASSESSEE, REQUIRE TO KNO W ALL THE FACTS WHICH HELP HIM INCOMING TO THE CORRECT CONCLUSION. FROM THE PRIMAR Y FACTS IN HIS POSSESSION, WHETHER ON DISCLOSURE BY THE ASSESSEE, OR DISCOVERED BY HIM ON THE BASIS OF THE FACTS DISCLOSED, OR OTHERWISE, THE ASSESSING AUTHORITY HAD TO DRAW INFE RENCES AS REGARDS CERTAIN OTHER FACTS; AND ULTIMATELY FROM THE PRIMARY FACTS AND THE FURTH ER FACTS INFERRED FROM THEM, THE AUTHORITY HAD TO DRAW THE PROPER LEGAL INFERENCES, AND ASCERTAIN, ON A CORRECT INTERPRETATION OF THE TAXING ENACTMENT, THE PROPER TAX LEVIABLE. SO FAR AS PRIMARY FACTS WERE CONCERNED, IT WAS THE ASSESSEE'S DUTY TO DISCL OSE ALL OF THEM-INCLUDING PARTICULAR ENTRIES IN ACCOUNT BOOKS, PARTICULAR PORTIONS OF DO CUMENTS, AND DOCUMENTS AND OTHER EVIDENCE WHICH COULD HAVE BEEN DISCOVERED BY THE AS SESSING AUTHORITY, FROM THE DOCUMENTS AND OTHER EVIDENCE DISCLOSED. THAT IF THERE WERE IN FACT SOME REASONABLE GROUNDS FOR THE INCOME-TAX OFFICER TO BELIEVE THAT THERE HAD BEEN ANY NON-DISCLOSURE AS REGARDS A NY PRIMARY FACT, WHICH COULD HAVE A MATERIAL BEARING ON THE QUESTION OF UNDER ASSESSMEN T THAT WOULD BE SUFFICIENT 'TO GIVE JURISDICTION TO THE INCOME-TAX OFFICER TO ISSUE THE NOTICES UNDER SECTION 34. WHETHER THESE GROUNDS WERE ADEQUATE OR NOT FOR ARRIVING AT THE CONCLUSION THAT THERE WAS A NON- DISCLOSURE OF MATERIAL FACTS WAS NOT OPEN FOR THE C OURT'S INVESTIGATION. IN OTHER WORDS, ALL THAT WAS NECESSARY TO GIVE THIS SPECIAL JURISDICTIO N WAS THAT THE INCOME-TAX OFFICER HAD WHEN HE ASSUMED JURISDICTION, SOME-PRIMA FACIE GROU NDS FOR THINKING THAT THERE HAD BEEN SOME NON-DISCLOSURE OF MATERIAL FACTS. IT WAS THE DUTY OF THE ASSESSEE, WHO WANTED THE COURT TO HOLD THAT JURISDICTION WAS LACKING, TO ESTABLISH THAT THE INCOME-TAX OFFICER HAD NO MATERIAL AT ALL BEFORE HIM FOR BELIEVING THA T THERE HAD, BEEN SUCH NON-DISCLOSURE. K.P.ARTHANARISWAMY CHETTIAR VS. FIRST INCOME TAX OF FICER SECTION 147 OF THE INCOME-TAX ACT, 1961, DEEMS INCO ME AS HAVING ESCAPED IF THE OFFICER HAS REASON TO BELIEVE THAT THE ASSESSEE, WHILE DISC LOSING THE PRIMARY FACTS FOR PURPOSES OF ASSESSMENT, HAD FAILED TO DISCLOSE THEM FULLY AN D TRULY. THE CONJUNCTION 'AND' IS IMPORTANT AND HAS TO BE INTERPRETED AS A STRICT PRE SCRIPTION OF LAW. THE DISCLOSURE SHOULD NOT ONLY BE FULL, BUT ALSO BE TRUE. IT IS NOT ENOUG H IF IT IS TRUE, FOR, EQUALLY, IT MAY NOT BE FULL. IN THIS BEHALF, THE TWO ELEMENTS PRESCRIBED B Y THE STATUTE, NAMELY, THE FULLNESS AND TRUTHFULNESS OF THE MATERIALS SHOULD INVARIABLY BE PRESENT WHICH ONLY CAN DISABLE THE OFFICER FROM ACTING UNDER SECTION 147(A). 3.8 IN VIEW OF THE ABOVE FACTUAL POSITION OF THE C ASE AND HAVING REGARD TO THE OBSERVATIONS OF THE HON'BLE SUPREME COURT AND THE H ON'BLE JURISDICTIONAL DELHI ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 8 HIGH COURT, I AM OF THE FIRM OPINION THAT THE PROCE EDINGS U/S 147/148 HAVE BEEN PROPERLY INITIATED BY THE AO IN THIS CASE AND SAME ARE ACCORDINGLY UPHELD. 4 THE ASSESSEE IS NOW IN APPEAL BEFORE US QUESTION ING THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LD. CIT(A) CONTENDED T HAT THE AO DID NOT APPLY HIS MIND INDEPENDENTLY NOR SUPPLIED THE PAPERS FORWARDE D BY THE INVESTIGATION WING TO THE ASSESSEE. IN THE ABSENCE OF INDEPENDENT APPL ICATION OF MIND, THE AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT. IN THIS CONNECTION, THE LD. AR RELIED UPON DECISIONS IN CIT VS. SFIL STOCK BROKING LTD. 2 33 CTR (DEL.) 69; CHHUGAMAL RAJPAL 79 ITR 603 (SC);MRS. VINITA JAIN V S. INCOME-TAX OFFICER, 158 TAXMAN 167 (DEL.);SARTHAK SECURITIES (P) LTD., 329 ITR 110 (DEL.); RAINEE SINGH 125 TTJ 816(DEL.);CIT VS. SMT. PARAMJIT KAUR 311 IT R 38 (P&H);TEJ PRATAP SINGH 116 ITD 388 (DEL.);AND PRIYA FINANCIAL SERVIC ES (P) LTD. VS. INCOME-TAX OFFICER IN I.T.A. NO.115/D/2010 VIDE ORDER DATED 16 .11.2010; 5. ON THE OTHER HAND, THE LD. DR SUPPORTED THE FIN DINGS OF THE LD. CIT(A) WHILE RELYING UPON DECISIONS IN A.G. INVESTM ENTS VS. CIT 339 ITR 146 (DELHI); INCOME-TAX OFFICER VS. SMT. GURINDER KAUR, 102 ITD 189 (DELHI); RAJESH JHAVERI VS. CIT 291 ITR 500(SC) AND ITO VS. SELECTED DALURBAND COAL CO. PRIVATE LIMITED.217 ITR 597 (SC). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSMENT IN THIS CASE WA S COMPLETED U/S 143(1) OF THE ACT IN PURSUANCE TO RETURN FILED ON 12.7.2001. IN THE ASSESSMENT UNDER SECTION 143(1) OF THE ACT INQUIRY RELATING TO THE INCOME OF AN ASSESSEE IS NOT MADE. UNDER SECTION 147 OF THE ACT, AS SUBSTITUTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, WITH EFFECT FROM 1-4-1989, T HE ONLY REQUIREMENT FOR INITIATING PROCEEDING IS THAT THE AO SHOULD HAVE RE ASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT. H OWEVER, WHERE AN ASSESSMENT HAS BEEN MADE UNDER SUB-SECTION (3) OF S ECTION 143, THE ACTION IS REQUIRED TO BE TAKEN WITHIN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 9 YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. EXPLANATION 1 PROVIDES THAT THE PRODUCTION BEFORE THE ASSESSING O FFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD W ITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO TO SEC. 147 OF THE ACT. EXP LANATION 2(B) & (C), INTER ALIA, STIPULATE DEEMED CASES OF INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT WHERE EXCESSIVE DEDUCTION OR RELIEF HAS BEEN CLAIM ED IN THE RETURN. IN THE INSTANT CASE, RETURN WAS MERELY ACCEPTED U/S 143(1) OF THE ACT . IN THE ASSESSMENT MADE WITHIN THE FRAMEWORK OF THE PROVISIONS OF SECTION 1 43(1) OF THE ACT ITSELF, THE AO NEITHER CALLS UPON THE ASSESSEE TO APPEAR PERSONALL Y NOR SEEKS PRODUCTION OF ANY DOCUMENT. THE ASSESSMENT IS MADE ON THE BASIS OF RE TURN ONLY AND WITHOUT MAKING ANY ADJUSTMENTS. THERE IS NO SCRUTINY AT ALL . IN THESE CIRCUMSTANCES, IF THE CONDITIONS MENTIONED IN SECTION 147 OF THE ACT ARE FULFILLED, THE JURISDICTION CAN BE VALIDLY EXERCISED IN SUCH A CASE. FROM THE MATERIAL COMMUNICATED BY THE DIT(INV.) AND RECORDS , THE AO HAD THE RELEVANT MAT ERIAL FOR FORMING THE REASONABLE BELIEF THAT THE INCOME HAD ESCAPED ASSES SMENT TO TAX. WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT( A) IN UPHOLDING REOPENING THE ASSESSMENT ON THAT GROUND, SO LONG AS INGREDIENTS O F PROVISION OF SECTION 147/148 ARE FULFILLED. HONBLE PUNJAB AND HARYANA H IGH COURT IN THE CASE OF METAL PRODUCTS OF INDIA VS. CIT, 293 ITR 618 HELD THAT ONCE THE RETURNS WERE PROCESSED UNDER SECTION 143(1) OF THE ACT, PROCEEDI NGS UNDER SECTION 148 OF THE ACT COULD BE INITIATED. IF THE INGREDIENTS OF SECT ION 147 OF THE ACT ARE SATISFIED, THERE IS NO BAR TO INITIATION OF PROCEEDINGS UNDER SECTION 148 OF THE ACT. IN THIS CONNECTION, HONBLE SUPREME COURT HELD IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD.,291 ITR 500(SC) OBSERVED AS UNDER: THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFE RENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PRO VISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UND ER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE A SSESSED OR REASSESSED. TO ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 10 CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDIT IONS WERE REQUIRED TO BE SATISFIED: FIRSTLY THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCA PED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT S UCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSAR Y FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME H AS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE AS SESSMENT. IT IS, HOWEVER, TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFIL LED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HA ND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULFI LLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDING UNDER SECTION 147 AND F AILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICE R POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED. 6.1 IN RAJAT IMPORT EXPORT INDIA PVT. LTD.,HON BLE JURISDICTIONAL HIGH COURT IN THEIR DECISION DATED 18.1.2012IN WP(C) NO. 8341/201 1 WHILE ADJUDICATING A SIMILAR ISSUE OF VALIDITY OF REOPENING OF ASSESSMEN T ON THE BASIS OF REPORT OF DIT(INVESTIGATION) , OBSERVED AS UNDER: THE MATERIAL BEFORE THE ASSESSING OFFICER, IN OUR OPINION, IS RELEVANT AND AFFORDS A LIVE LINK OR NEXUS TO THE FORMATION OF TH E PRIMA FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT IN THE ASSESSEES HANDS. WE ARE NOT AT THIS STAGE CONCERNED WHETHER THE MATE RIAL BEFORE THE ASSESSING OFFICER IS SUFFICIENT FOR THE FORMATION OF THE BELIEF. WHAT WE ARE CONCERNED AT THIS STAGE IS WHETHER THE MATERIAL BEF ORE THE ASSESSING OFFICER IS RELEVANT FOR FORMING THE PRIMA FACIE BELIEF THAT INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS ALSO WELL SETTLED THA T AT THAT STAGE, THAT IS AT THE STAGE WHEN REASONS ARE RECORDED FOR REOPENING THE A SSESSMENT, THE ASSESSING OFFICER IS NOT REQUIRED TO BUILD A FOOL P ROOF OR A FORT-LIKE CASE FOR MAKING ADDITION TO THE ASSESSEES INCOME; ALL THAT HE IS REQUIRED AT THAT STAGE IS TO FORM A PRIMA FACIE OPINION OR BELIEF TH AT INCOME HAS ESCAPED ASSESSMENT. THE RELEVANCY OF THE MATERIAL BEFORE TH E ASSESSING OFFICER IS TO BE JUDGED ONLY FROM THAT PERSPECTIVE AND NOT FROM T HE PERSPECTIVE AS TO WHETHER THE MATERIAL IS SUFFICIENT OR ADEQUATE TO S USTAIN THE ADDITION ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 11 ULTIMATELY. THAT WILL BE AN ASPECT WHICH THE ASSESS ING OFFICER WILL EXAMINE AND DECIDE IN THE COURSE OF THE RE-ASSESSMENT PROCE EDINGS AFTER HEARING THE ASSESSEE IN THE MANNER REQUIRED BY LAW. THESE PROPO SITIONS ARE SO WELL SETTLED THAT THEY DO NOT REQUIRE CITING OF ANY AUTH ORITY. 6.11 IN THE INSTANT CASE ALSO, SIMILAR ARE THE FACT S AND CIRCUMSTANCES. THERE IS NOTHING TO SUGGEST NOR THE LD. AR DENIED THAT THE I NFORMATION RECEIVED FROM THE DIT (INV.) BY THE AO DID NOT CONTAIN ANY MATERIAL L INKING AFORESAID NINE ENTRY PROVIDERS WITH THE ASSESSEE. THIS INFORMATION IS PA RT OF THE INFORMATION GATHERED BY THE INVESTIGATION WING IN RESPECT OF GROUPS OF PERSONS OPERATING AS ENTRY PROVIDERS OR ENTRY OPERATORS HELPING ASSESSEE TO IN TRODUCE THEIR UNACCOUNTED MONIES INTO THEIR BOOKS OF ACCOUNTS BY DUBIOUS MEAN S. THE PLEA OF THE LD. AR THAT THE REPORT OF DIT(INVESTIGATION) WAS NOT PROVI DED TO THEM ,IS BASELESS, SINCE THE ASSESSEE MERELY SOUGHT REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT AND NO SUCH REQUEST FOR REPORT OF DIT(I NVESTIGATION) HAS BEEN BROUGHT TO OUR NOTICE. THE REASONS TO BELIEVE RECOR DED IN WRITING BY THE AO IN THE PRESENT CASE ARE DETAILED AND SHOW APPLICATION OF M IND. NOT ONLY WAS THERE A LINK BETWEEN THE NAMES OF THE ENTRY OPERATORS AND T HE ASSESSEE, BUT THE MATERIAL ALSO DISCLOSED THE DATE ON WHICH THE ENTRY WAS TAKE N, THE NAME OF THE BANK . WITH SUCH PRECISE MATERIAL BEFORE THE AO, THE EXIST ENCE OF WHICH IS BEYOND CHALLENGE, IT CAN HARDLY BE SAID THAT THE AO COULD NOT HAVE HAD EVEN A PRIMA FACIE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCA PED ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02. 6 .2 IN AG HOLDINGS PVT. LTD. VS. ITO, HONBLE JUR ISDICTIONAL HIGH COURT IN THEIR DECISION DATED 25.4.2012 IN W.P.(C) 8031/2011 NOW REPORTED IN 333 ITR146 (DEL.) WHILE ADJUDICATING A SIMILAR ISSUE OF VALIDI TY OF REOPENING OF ASSESSMENT ON THE BASIS OF REPORT OF DIT (INVESTIGATION) OBSERVE D AS UNDER: 9 THE INVESTIGATION REPORT IS A POINTER AND COSTS GRAVE DOUBTS ON BASIS OF EVIDENCE/MATERIAL ON THE GENUINENESS OF THE SHARE CONTRIBUTION. WE HAVE NO DOUBT THAT FO R THE PURPOSE OF ENABLING THE RESPONDENT TO REACH A PRIMA FACIE BELI EF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, THE DETAI LS GIVEN IN THE ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 12 INVESTIGATION REPORT ARE RELEVANT. WE ARE AWARE OF THE DISTINCTION BETWEEN THE RELEVANCY AND THE SUFFICIENCY OF THE MA TERIALS ON THE BASIS OF WHICH REASONS ARE RECORDED FOR REOPENING T HE ASSESSMENT. WE ARE ALSO AWARE OF THE SETTLED LEGAL POSITION THA T WHEREAS THE RELEVANCY OF THE MATERIALS LEADING TO THE BELIEF AR E JUSTICIABLE, THE SUFFICIENCY OF THOSE MATERIAL IS NOT. EVEN ON AN OB JECTIVE ANALYSIS, IT CANNOT BE SAID THAT THE MATERIALS ON THE BASIS OF W HICH THE RESPONDENT FORMED THE BELIEF WERE IRRELEVANT. WE ARE ALIVE TO THE LEGAL POSITION THAT AT THE TIME OF ISSUING THE NOTICE TO REOPEN THE ASS ESSMENT, THE ASSESSING OFFICER IS ONLY EXPECTED TO FORM A PRIMA FACIE OR TENTATIVE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED AS SESSMENT. WHETHER THE ADDITION HAS TO BE MADE OR NOT IS A MAT TER TO BE DECIDED ON MERITS IN THE COURSE OF THE REASSESSMENT PROCEED INGS. WE ARE ONLY CONCERNED WITH THE PRELIMINARY STAGE OF RECORDING R EASONS AND ISSUING NOTICE TO REOPEN THE ASSESSMENT. IN OUR OPINION THE MATERIALS AVAILABLE BEFORE THE ASSESSING OFFICER, THE RESPOND ENT HEREIN, WERE WHOLLY RELEVANT FOR THE FORMATION OF THE BELIEF THA T INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF THE FAI LURE OF THE PETITIONER-COMPANY TO FURNISH FULL AND TRUE PARTICU LARS REGARDING THE RECEIPT OF SHARE CAPITAL FROM M/S QUALITY SECURITY SERVICES (P) LTD. 6.21 WE MAY NOTE HERE THAT THE INFORMATION PROVI DED BY THE DIRECTORATE OF INCOME TAX INVESTIGATION WAS NOT AVAILABLE WITH THE AO DURING THE COURSE OF THE ORIGINAL PROCEEDINGS. THE SAID INFORMATION CONSTITU TES NEW AND FRESH EVIDENCE ON WHICH THE AO DREW INFERENCE AND FORMED A PRIMA FACI E OPINION TO INITIATE REASSESSMENT PROCEEDINGS. IN THE CONTEXT OF OUR DISCUSSION, WE MAY REFER TO T HE DECISION OF THE HONBLE APEX COURT IN THE CASE OF A . L. A. FIRM V. CIT, 189 ITR 285. IN THIS DECISION, EVEN WITH RESPECT TO ASSESSM ENT PROCEEDINGS WHICH AROSE PRIOR TO THE AMENDMENT IN SECTION 147 OF THE ACT WI TH EFFECT FROM 1.4.1989, THE HONBLE APEX COURT REFERRING TO LARGE NUMBER OF DEC ISIONS ON THE POINT, ACCEPTED THAT FOR REOPENING OF THE ASSESSMENT, THE BELIEF TH AT THE AO MAY FORM MAY BE BASED ON THE INFORMATION WHICH MAY HAVE BEEN OBTAIN ED EVEN FROM THE RECORD OF THE ORIGINAL ASSESSMENT FROM THE INVESTIGATION OF T HE MATERIALS ON RECORD OR THE FACTS DISCLOSED THEREBY OR FROM OTHER INQUIRY OR RE SEARCH INTO THE FACTS OR LAW. 7. NOW ADVERTING TO THE DECISIONS RELIED UPON BY THE LD. AR, FIRST SUCH DECISION IS SFIL STOCK BROKING LTD.(SUPRA),WHEREIN HONBLE D ELHI HIGH COURT WAS DEALING WITH THE VALIDITY OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE HONBLE ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 13 HIGH COURT REPRODUCED THE INITIAL ISSUANCE OF NOTIC E AND THEREAFTER REFERRED TO THE REASONS FOR ISSUE OF NOTICE U/S 148 WHICH WAS PROVI DED TO THE ASSESSEE. THEREAFTER, THE BENCH REFERRED TO THE DECISIONS IN CIT V. ATUL JAIN, 299 ITR 383 (DEL), RAJESH JHAVERI STOCK BROKERS PVT. LTD (SUPRA ), JAY BHARAT MARUTI LTD. V. CIT, 223 CTR 269 (DEL) AND CIT V. BATRA BHATTA COMP ANY, 174 TAXMAN 444 (DEL) AND EVENTUALLY HELD AS UNDER : - 9. IN THE PRESENT CASE, WE FIND THAT THE FIRST SEN TENCE OF THE SO-CALLED REASONS RECORDED BY THE ASSESSING OFFICER IS MERE INFORMATI ON RECEIVED FROM THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION). THE SECOND SENTENCE IS A DIRECTION GIVEN BY THE VERY SAME DEPUTY DIRECTOR OF INCOME TAX (INV ESTIGATION) TO ISSUE A NOTICE UNDER SECTION 148 AND THE THIRD SENTENCE AGAIN COMP RISES OF A DIRECTION GIVEN BY THE ADDITIONAL COMMISSIONER OF INCOME TAX TO INITIA TE PROCEEDINGS UNDER SECTION 148 IN RESPECT OF CASES PERTAINING TO THE RELEVANT WARD. THESE THREE SENTENCE ARE FOLLOWED BY THE FOLLOWING SENTENCE, WHICH IS THE CO NCLUDING PORTION OF THE SO- CALLED REASONS :- THUS, I HAVE SUFFICIENT INFORMATION IN MY POSSESSI ON TO ISSUE NOTICE U/S 148 IN THE CASE OF M/S SFIL STOCK BROKING LTD. ON THE BASIS OF REAS ONS RECORDED AS ABOVE. 10. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING OFFICER REFERRED TO THE INFORMATION AND THE TWO DIRECTIONS AS REASONS' ON THE BASIS OF WHICH HE WAS PROCEEDING TO ISSUE NOTICE UNDER SECTION 148. WE AR E AFRAID THAT THESE CANNOT BE THE REASONS FOR PROCEEDING UNDER SECTION 147/148 OF THE SAID ACT. THE FIRST PART IS ONLY AN INFORMATION AND THE SECOND AND THE THIRD PARTS OF THE BEGINNING PARAGRAPH OF THE SO-CALLED REASONS ARE MERE DIRECTI ONS. FROM THE SO-CALLED REASONS, IT IS NOT AT ALL DISCERNIBLE AS TO WHETHER THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE INFORMATION AND INDEPENDENT LY ARRIVED AT A BELIEF THAT, ON THE BASIS OF THE MATERIAL WHICH HE HAD BEFORE HIM, INCOME HAD ESCAPED ASSESSMENT. CONSEQUENTLY, WE FIND THAT THE TRIBUNAL HAS ARRIVED AT THE CORRECT CONCLUSION ON FACTS. THE LAW IS WELL SETTLED. THERE IS NO SUBSTANTIAL QUESTION OF LAW WHICH ARISES FOR OUR CONSIDERATION. 7.01 IN THE AFORESAID DECISION, AS IS APPARENT FROM ABOVE, NOTICE U/S 148 OF THE ACT WAS ISSUED ON THE DIRECTIONS OF DDIT(INV. ) & A DDL. CIT. FROM THE AFORESAID THREE SENTENCES REFERRED TO IN PARA 9 OF THE DECISI ON, HONBLE JURISDICTIONAL HIGH COURT CONCLUDED THAT THE AO HAD NOT APPLIED HIS MIN D TO THE INFORMATION INDEPENDENTLY. BUT SUCH ARE NOT THE REASONS OR FACT S IN THE INSTANT CASE BEFORE US AND AS POINTED OUT BY THE LD. CIT(A), THE AO HAD SP ECIFIC AND PRECISE INFORMATION IN RESPECT OF ALLEGED ENTRY PROVIDERS, DATE OF ENTR Y, AMOUNT OF MONEY RECEIVED ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 14 FROM INDIVIDUAL PERSONS, AND NAME AND BRANCH OF THE BANKERS AND THE AO VERIFIED THAT THE INFORMATION IN QUESTION RELATED T O THE ASSESSEE COMPANY AND SINCE NO SCRUTINY ASSESSMENT HAD BEEN MADE NOR THE CORRECTNESS AND GENUINENESS OF THE SUBJECT TRANSACTIONS HAD BEEN E XAMINED WHILE BALANCE SHEET REVEALED THAT THERE WERE NO DETAILS ABOUT THE NAMES, AMOUNTS AND CHEQUE NOS. ETC AVAILABLE IN THE SCHEDULE REFLECTING SHARE CAPITAL IN THE BALANCE SHEET. IN THESE CIRCUMSTANCES, THE REOPENING WAS JUSTIFIED. M OREOVER, THE LD. AR APPEARING BEFORE US DID NOT EVEN ATTEMPT TO ESTABLISH AS TO H OW THE AFORESAID DECISION HELPS THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT RELIANCE ON THE AFORECITED DECISION IS TOTALLY MISPLACED. 7.1. IN CHHUGAMAL RAJPAL(SUPRA),RELIED UPON BY T HE LD. AR, THE ITO DID NOT EVEN COME TO A PRIMA FACIE CONCLUSION THAT THE TRAN SACTIONS TO WHICH HE REFERRED WERE NOT GENUINE TRANSACTIONS AND HAD ONLY A VAGUE FEELING THAT THESE MIGHT BE BOGUS TRANSACTIONS.THEREFORE, HONBLE APEX COURT CONCLUDED THAT SUCH A CONCLUSION DOES NOT FULFIL THE REQUIREMENTS OF SECT ION 151(2) OF THE ACT. IN MRS. VINITA JAIN(SUPRA) THERE WERE ABSOLUTELY NO DETAILS AVAILABLE AND THE INFORMATION SUPPLIED WAS EXTREMELY SCANTY AND VAGUE. EVEN THE B ASIS FOR THE REASONS WAS ABSENT NOR DID THE AO VERIFY THE CORRECTNESS OF TH E INFORMATION RECEIVED BY HIM AND NOR EVEN RECORDED HIS SATISFACTION ABOUT THE CO RRECTNESS OR OTHERWISE OF THE INFORMATION OR HIS SATISFACTION THAT A CASE HAS BEE N MADE OUT FOR ISSUING A NOTICE UNDER S. 148 OF THE ACT. IN THE CASE OF SARTHAK SE CURITIES CO. PVT. LTD.(SUPRA), THE HONBLE HIGH COURT NOTED THAT CERTAIN COMPANIES WERE USED AS CONDUITS BUT THE ASSESSEE HAD, AT THE STAGE OF ORIGINAL ASSESSME NT, FURNISHED THE NAMES OF THE COMPANIES WITH WHICH IT HAD ENTERED INTO TRANSA CTIONS AND THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION AND FURTHER THE REASON RECORDED DID NOT INDICATE APPLICATION OF MIND. THAT APART, THE EXIST ENCE OF THE COMPANIES WAS NOT DISPUTED AND THE COMPANIES HAD BANK ACCOUNTS AND PA YMENTS WERE MADE TO THE ASSESSEE COMPANY THROUGH THE BANKING CHANNEL. REGAR D BEING HAD TO THE AFORESAID FACT SITUATION, THE COURT HAD INTERFERED. IN SMT. PARAMJIT KAUR(SUPRA) THE ASSESSEE FILED HER ORIGINAL RETURN DECLARING NIL IN COME AND THE AO ON RECEIVING ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 15 THE INFORMATION FROM SURVEY WING OF THE INCOME-TAX DEPARTMENT THAT NETA METAL WORKS PREPARED A DEMAND DRAFT FOR A SUM OF RS. 83,0 40 PAYABLE AT CHANDIGARH IN FAVOUR OF M/S. COAL INDIA LTD., WHICH WAS NOT AC COUNTED IN THE ASSESSEE'S BOOKS OF ACCOUNT, ISSUED A NOTICE UNDER SECTION 148 OF THE ACT. THE AO AFTER RECORDING REASONS FRAMED ASSESSMENT UNDER SECTION 1 43(3) OF THE ACT AT AN INCOME OF ` 83,040/- ON 2-9-1994. ON APPEAL BY THE ASSESSEE, T HE FIRST APPELLATE AUTHORITY UPHELD THE VALIDITY OF NOTICE UNDER SECTI ON 148 OF THE ACT BUT SET ASIDE THE ASSESSMENT ON THE ADDITION MADE BY THE ASSESSIN G OFFICER AND REMITTED THE MATTER TO HIM TO FRAME A FRESH ASSESSMENT AFTER ALL OWING REASONABLE OPPORTUNITY OF BEING HEARD TO HER. THE ASSESSEE TOOK THE MATTER IN SECOND APPEAL AND THE TRIBUNAL VIDE ITS ORDER DATED 19-4-1996 HELD THAT S INCE THE AO HAD FAILED TO INCORPORATE MATERIAL AND ITS SATISFACTION FOR REOPE NING THE ASSESSMENT, THE SAME WAS INVALID. HONBLE HIGH COURT UPHELD THE FINDINGS OF THE ITAT. AS IS APPARENT FROM THE FACTS AND CIRCUMSTANCES IN THE AFORESAID DECISIONS, THESE ARE DISTINGUISHABLE ON THE FACTUAL SCORE ALONE. HOW THE SE DECISIONS HELP THE ASSESSEE, THE LD. AR DID NOT EXPLAIN BEFORE US. REL IANCE BY THE LD. AR ON DECISIONS WHICH WERE RENDERED IN DIFFERENT CONTEXT AND CIRCUMSTANCES, IS NOT IN ACCORDANCE WITH LAW , IN VIEW OF FOLLOWING OBSERVA TIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUN ENGINEERIN G WORKS PVT. LTD., 198 ITR 257 : IT IS NEITHER DESIRABLE NOR PERMISSIBLE TO PICK OUT A W ORD OR A SENTENCE FROM THE JUDGMENT OF THIS COURT, DIVORCED FROM THE CONT EXT OF THE QUESTION UNDER CONSIDERATION AND TREAT IT TO BE THE COM PLETE ' LAW ' DECLARED BY THIS COURT. THE JUDGMENT MUST BE READ AS A WHOLE AND THE OBSERVATIONS FROM THE JUDGMENT HAVE TO BE CONSIDERED IN THE LIGHT OF THE QUESTIONS WHICH WERE BEFORE THIS COURT. A DECISION O F THIS COURT TAKES ITS COLOUR FROM THE QUESTIONS INVOLVED IN THE CASE I N WHICH IT IS RENDERED AND, WHILE APPLYING THE DECISION TO A LATER CASE, THE COURTS MUST CAREFULLY TRY TO ASCERTAIN THE TRUE PRINCIPLE LAID DOWN BY THE DECISION OF THIS COURT AND NOT TO PICK OUT WORDS OR SENTE NCES FROM THE JUDGMENT, DIVORCED FROM THE CONTEXT OF THE QUESTIONS UN DER CONSIDERATION BY THIS COURT, TO SUPPORT THEIR REASONINGS. IN MADHAV RAO JIVAJI RAO SCINDIA BAHADUR V. UNION OF INDIA [19 71] 3 SCR 9; AIR 1971 SC 530, THIS COURT CAUTIONED (AT PAGE 578 OF AIR 1971 SC). ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 16 8. IN THIS CONTEXT ,HONBLE SUPREME COURT CAUTIO NED IN THEIR DECISION DATED 6.3.2009 IN THE CASE OF STATE OF AP VS. M. R ADHA KRISHNA MURTHY,[CRIMINAL APPEAL NO. 386 OF 2002] 6. COURTS SHOULD NOT PLACE RELIANCE ON DECI SIONS WITHOUT DISCUSSING AS TOHOW THE FACTUAL SITUATION FITS IN WITH THE FACT S ITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURTS ARE NEIT HER TO BE READ AS EUCLID'S THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN W HICH THEY APPEAR TO HAVE BEEN STATED. JUDGMENTS OF COURTS ARE NOT TO BE CONS TRUED AS STATUTES. TO INTERPRET WORDS, PHRASES AND PROVISIONS OF A STATUT E, IT MAY BECOME NECESSARY FOR JUDGES TO EMBARK INTO LENGTHY DISCUSSIONS BUT T HE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRET STATUTE S, THEY DO NOT INTERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUTES; THEIR WORDS ARE NOT TO BE INTERPRETED AS STATUTES . 8. CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES. DISPOS AL OF CASES BY BLINDLY PLACING RELIANCE ON A DECISION IS NOT PROPER. 9. THE FOLLOWING WORDS OF LORD DENNING IN THE MA TTER OF APPLYING PRECEDENTS HAVE BECOME LOCUS CLASSICUS: 'EACH CASE DEPENDS ON ITS OWN FACTS AND A CLOSE SIMILARITY BETWEEN ONE CASE AND ANOTHER IS NOT ENOUGH BECAUSE EVEN A SING LE SIGNIFICANT DETAIL MAY ALTER THE ENTIRE ASPECT, IN DECIDING SUCH CASE S, ONE SHOULD AVOID THE TEMPTATION TO DECIDE CASES (AS SAID BY CORDOZO) BY MATCHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECIDE THER EFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANCE TO ANOTHER CASE IS NOT AT ALL DECISIVE.' *** *** *** 'PRECEDENT SHOULD BE FOLLOWED ONLY SO FAR AS IT MARKS THE PATH OF JUSTICE, BUT YOU MUST CUT THE DEAD WOOD AND TRIM OFF THE SIDE B RANCHES ELSE YOU WILL FIND YOURSELF LOST IN THICKETS AND BRANCHES. MY PLEA I S TO KEEP THE PATH TO JUSTICE CLEAR OF OBSTRUCTIONS WHICH COULD IMPEDE IT.' 8.1 IN CASE OF UNION OF INDIA AND ANOTHER V.MAJOR BAHADUR SINGH, REPORTED IN (2006) 1 SCC 368, THE HONBLE APEX COURT OBSERVED AS UNDER : COURTS SHOULD NOT PLACE RELIANCE ON DECISIONS WITH OUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION OF THE DE CISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF COURTS ARE NEITHER TO BE READ AS EU CLID'S THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT . THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR TO HAVE BEEN STATE D. JUDGMENTS OF COURTS ARE NOT TO BE CONSTRUED AS STATUTES. TO INTERPRET WORDS, PHRASES AND PROVISIONS OF A STATUTE, IT MAY ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 17 BECOME NECESSARY FOR JUDGES TO EMBARK INTO LENGTHY DISCUSSIONS BUT THE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRE T STATUTES,THEY DO NOT INTERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUTES; THEIR WORDS ARE NOT TO BE INTERPRETED AS STATUTES. 8.2 IN CASE OF UNION OF INDIA AND ANOTHER V. ARULMO ZHI INIARASU AND OTHERS, REPORTED IN (2011) 7 SCC 397, IT WAS OBSERVED AS UN DER : BEFORE EXAMINING THE FIRST LIMB OF THE QUESTION, F ORMULATED ABOVE, IT WOULD BE INSTRUCTIVE TO NOTE, AS A PREFACE, THE WELL SETTLED PRINCIPLE OF LAW IN THE MATTER OF APPLYING PRECEDENTS THAT THE COURT SHOULD NOT PLACE RELIANCE ON DECISIONS WITHOUT DISCUSSING AS TO HOW THE FACT SITUATION OF THE CASE BEFORE IT FITS IN WITH THE FACT SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED.OBSERVA TIONS OF COURTS ARE NEITHER TO BE READ AS EUCLID'S THEOREMS NOR AS PROVISIONS OF STATUTE A ND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN W HICH THEY APPEAR TO HAVE BEEN STATED. DISPOSAL OF CASES BY BLINDLY PLACING RELIAN CE ON A DECISION IS NOT PROPER BECAUSE ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD O F DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES. (REF.: BHARAT PETROLEUM CORPN. LTD. & ; ANR. VS. N.R. VAIRAMANI & ANR.3; SARVA SHRAMIK SANGHATANA (KV), MUMBAI VS. ST ATE OF MAHARASHTRA & ORS.4 ANDBHUWALKA STEEL INDUSTRIES LIMITED VS. BOMBAY IRO N & STEEL LABOUR BOARD & ANR.5.) 8.3 IN THE CASE OF DAVINDER SINGH AND OTHERS V. STATE O F PUNJAB AND OTHERS, REPORTED IN (2010) 13 SCC 88, THE HONBLE APEX COURT OBSERVED THAT A JUDGEMENT IS AUTHORITY FOR THE PROPOSITION W HICH IT DECIDES AND NOT WHAT CAN LOGICALLY BE DEDUCED THEREFROM. IT WAS OBS ERVED AS UNDER : 18. A JUDGEMENT, AS IS WELL KNOWN, IS THE AUTHORITY FOR THE PROPOSITION WHICH IT DECIDES AND NOT WHAT CAN LOGICALLY BE DEDUCED THERE FROM. THIS COURT IN UNION OF INDIA V. MAJOR BAHADUR SINGH, (2006) 1 SCC 368 HAS OBSERVED: 9. THE COURTS SHOULD NOT PLACE RELIANCE ON DECISIONS WITHOUT DISCUSSING AS TO HOW THE FACTUAL SITUATION FITS IN WITH THE FACT SITUATION OF THE DECISION ON WHICH RELIANCE IS PLACED. OBSERVATIONS OF THE COURTS ARE NEITHER TO BE `READ AS EUCLID'S THEOREMS NOR AS PROVISIONS OF THE STATUTE AND THAT TOO TAKEN OUT OF THEIR CONTEXT. THESE OBSERVATIONS MUST BE READ IN THE CONTEXT IN WHICH THEY APPEAR TO HAVE BEEN STATED. JUDGMENTS OF THE COURTS ARE NOT TO BE CONSTRUED AS STATUTES. TO ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 18 INTERPRET WORDS, PHRASES AND PROVISIONS OF A STAUTTE, IT MAY BECOME NECESSARY FOR JUDGES TO EMBARK INTO LENGTHY DISCUSSIONS BUT THE DISCUSSION IS MEANT TO EXPLAIN AND NOT TO DEFINE. JUDGES INTERPRET STATUTES, THEY DO NOT INTERPRET JUDGMENTS. THEY INTERPRET WORDS OF STATUTES; THEIR WORDS ARE NOT TO BE INTERPRETED AS STATUTES . 8.4 IT IS WELL SETTLED THAT AT THE TIME OF IS SUE OF NOTICE UNDER SECTION 148, IT IS ONLY THE RELEVANCY OF THE REASONS THAT CAN BE LOOKE D INTO AND NOT THE SUFFICIENCY [S. NARAYANAPPA V. CIT [1967] 63 ITR 219 (SC)]. IN THE INSTANT CASE BEFORE US, WE ARE SATISFIED THAT THE MATERIAL BEFORE THE AO RE CEIVED FROM THE DIT(INVESTIGATION) HAD A RATIONAL CONNECTION OR LIV E LINK WITH THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT IN THE ASSESSEE'S CASE. THE BELIEF WAS BONA FIDE HELD, IT WAS NOT A P RETENCE. THE MATERIAL GAVE RISE TO 'REASON TO BELIEVE' THAT INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT IN THE ASSESSEE'S CASE. 9. IN THE LIGHT OF AFORESAID DECISIONS OF HONBL E SUPREME COURT AND JURISDICTIONAL HIGH COURT, ESPECIALLY IN AG HOLDIN GS PVT. LTD.(SUPRA) & RAJAT IMPORT EXPORT INDIA PVT. LTD,(SUPRA) S INCE THE AO HAS REOPENED THE ASSESSMENT AFTER DULY RECORDING THE REASONS, WE HAVE NO HESITA TION IN UPHOLDING THE REOPENING OF ASSESSMENT. IT IS SETTLED LAW THAT O NCE PROCEEDINGS U/S 147 ARE TAKEN TO BE VALIDLY INITIATED, THE JURISDICTION OF THE AO CANNOT BE CONFINED ONLY TO THAT PORTION OF INCOME WHICH IS MENTIONED IN THE RE ASONS BUT TO ENTIRE INCOME THAT HAD ESCAPED ASSESSMENT DURING THE YEAR. THEREFORE, GROUND NO.1 IN THE CO IS DISMISSED. 10. GROUND NO.2 IN THE CO RELATES TO LEVY OF INTER EST U/S 234D OF THE ACT. THERE IS NO DISCUSSION ON THIS ASPECT OF THE ASSESSMENT ORDER WHILE THE LEARNED CIT(A) TREATED THE GROUND PERTAINING TO LEV Y OF INTEREST AS CONSEQUENTIAL IN NATURE. ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 19 11. BEFORE US, THE LD. AR ON BEHALF OF THE ASSESSE E RELIED UPON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF EKTA P ROMOTERS (P) LTD. 113 ITD 719 (DEL.)(SB). TO A QUERY BY THE BENCH REGARDING APP LICABILITY OF EXPLANATION 2 TO SECTION 234D OF THE ACT IINSERTED BY FINANCE ACT 20 12 FROM 1.6.2003, THE LD. AR DID NOT OBJECT TO THE APPLICABILITY OF THE SAID EXP LANATION. 12. ON THE OTHER HAND, LEARNED DR SUPPORTED THE LE VY OF INTEREST U/S 234D IN THE LIGHT OF SAID EXPLANATION, WHICH READS AS UNDER:- 'EXPLANATION 2.FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT THE PROVISIONS OF THIS SECTION SHALL ALSO APPLY TO AN A SSESSMENT YEAR COMMENCING BEFORE THE 1ST DAY OF JUNE, 2003 IF THE PROCEEDINGS IN RESPECT OF SUCH ASSESSMENT YEAR IS COMPLETED AFTER THE SAID DA TE.'. 13. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. INDISPUTABLY, THE LOWER AUTHORITIES DID NOT HAVE ANY OCCASION TO EXAMINE THE LEVY OF INTEREST U/S 234D IN THE LIGHT OF AFORE SAID EXPLANATION 2 TO SECTION 234D OF THE ACT INSERTED BY FINANCE ACT 2012 W.E.F 1.6.2003 NOR THE IMPUGNED ORDER IS SPEAKING ON SUCH LEVY OF INTEREST. IN THE SE CIRCUMSTANCES, WE VACATE THE FINDINGS OF LD. CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH THE DIRECTIONS TO RE-ADJUDICATE THE ISSUE OF LEVY OF IN TEREST AND PASS A SPEAKING ORDER IN THE LIGHT OF AFORESAID EXPLANATION 2 TO SECTION 234D OF THE ACT AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. WITH THESE DIRECTIONS, GROUND NO.2 IN THE CO IS DISPOSED OF. 14. GROUND NOS.2 AND 2.1 IN THE APPEAL OF THE REVE NUE RELATE TO DELETION OF ADDITION OF ` ` 63 LACS U/S 68 OF THE ACT ON ACCOUNT OF SHARE APPL ICATION MONEY AND ` `31,500/- TOWARDS UNACCOUNTED CASH PAID FOR OBTAINI NG ACCOMMODATION ENTRIES U/S 68 OF THE ACT. AS ALREADY STATED ABOVE, THE AO MADE THE ADDITION, THE ASSESSEE HAVING FAILED TO SATISFA CTORILY EXPLAIN THE GENUINENESS OF SHARE APPLICATION OF ` `63 LACS RECEIVED FROM AFORESAID 9 COMPANIES NOR ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 20 PRODUCED DIRECTORS OF THEIR AFORESAID COMPANIES DES PITE SUFFICIENT OPPORTUNITY ALLOWED. 15. ON APPEAL, THE LD.. CIT(A) ,IN THE LIGHT OF V IEW TAKEN IN CIT VS. STELLAR INVESTMENT 192 ITR 287 (DEL) AFFIRMED BY TH E HONBLE APEX COURT IN 251 ITR 263 (SC); LOVELY EXPORTS, 299 ITR 268 (SC); CIT VS. ORISSA CORPORATION LTD., 159 ITR 78 (SC) AND CIT VS. GUJARAT HEAVY CH EMICALS LTD. (2002) 256 ITR 795 (SC),DELETED THE ADDITION ,HOLDING AS UNDER: 4.4 WHEN THE FACTS OF THE PRESENT CASE ARE AN ALYZED IN THE LIGHT OF THESE DECISIONS, IT WILL BE SEEN THAT THE RATIO LAI D DOWN BY THE HON'BLE COURTS SQUARELY COVERS THE APPELLANT'S CASE. IN THE CASE O F THE APPELLANT, THOUGH THE AO REFERS TO AN ENQUIRY CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT, NO ATTEMPT IS MADE BY HIM TO ESTABLISH THE FACT THAT T HE MONEY IN QUESTION HAS ORIGINATED FROM THE COFFERS OF THE ASSESSEE COMPANY . MERELY CASTING A SHADOW OF DOUBT IS NOT SUFFICIENT TO CHARGE THE ASSESSEE WITH THE TAX LIABILITY WITHOUT COLLECTING POSITIVE EVIDENCES TO CONVERT THE DOUBTS INTO A REAL ACT OF TAX EVASION. 4.5 THEREFORE, I DO NOT FIND THAT THE AO HAS REALLY MADE OUT A CASE FOR TAXING THE SHARE APPLICATION MONEY RECEIVED THROUGH BANKIN G CHANNELS FROM THE PERSONS REGULARLY ASSESSED TO TAX. UNDER THE CIRCUM STANCES THE ADDITION OF RS.63.00,000/- IS NOT SUSTAINABLE AND IS ACCORDINGL Y BEING DELETED. 5. AS REGARDS ADDITION OF RS.31,500/- MADE ON ACCOU NT OF AMOUNT OF COMMISSION ALLEGEDLY PAID TO THE ENTRY OPERATORS, SINCE THE AD DITION ON ACCOUNT OF PRINCIPAL AMOUNTS ITSELF DOES NOT SURVIVE, THIS ADDITION IS A LSO BEING DELETED. 16. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR WHILE INVITIN G OUR ATTENTION TO THE FINDINGS OF THE AO CONTENDED THAT SINCE DIRECTORS OF THE AFORES AID 9 COMPANIES WERE NOT PRODUCED BEFORE THE AO, THE LD. CIT(A) WAS NOT JUST IFIED IN DELETING THE ADDITION, ESPECIALLY WHEN CREDITWORTHINESS OF THE AFORESAID C OMPANIES AND GENUINENESS OF THE TRANSACTIONS HAD NOT BEEN ESTABLISHED. WHILE R ELYING UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. NOVA PROMOTER S & FINLEASE (P) LTD,342 ITR 169(DEL.), AND REFERRING TO PARA 11 TO 14 OF THE D ECISION IN CIT VS. OASIS HOSPITALITIES, 333 ITR 119 (DELHI), THE LD. DR VEHM ENTLY ARGUED THAT MATTER ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 21 REQUIRES RECONSIDERATION IN THE LIGHT OF AFORESAID DECISION IN NOVA PROMOTERS & FINLEASE (P) LTD(SUPRA). 17. ON THE OTHER HAND, THE LD. AR DID NOT RAISE AN Y OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE AO FOR RE-ADJ UDICATION, THE ASSESSEE HAVING NOT BEEN AFFORDED SUFFICIENT TIME TO PRODUCE THE DI RECTORS OF THE AFORESAID COMPANIES. 18. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPON BY THE LD. DR. INDISPUTABLY, THE ASSESSEE DID NOT PRODUCE THE DIRECTORS OF THE AFOR ESAID NINE COMPANIES DESPITE SUFFICIENT OPPORTUNITY ALLOWED BY THE AO IN THE LIG HT OF FACTS POINTED OUT IN THE REPORT OF DIT(INVESTIGATION) REGARDING RECEIPT OF A CCOMMODATION ENTRY BY THE ASSESSEE FROM THE AFORESAID NINE COMPANIES, NOR THE LD. CIT(A) HAD THE BENEFIT OF DECISION IN CIT VS. NOVA PROMOTERS & FINLEASE (P ) LTD,342 ITR 169(DEL.), WHEREIN WHILE EXAMINING THE MODUS OPERANDI FOLLOWE D BY THE ACCOMMODATION ENTRY OPERATORS SHRI MUKESH GUPTA AND RAJAN JASSAL, THE HONBLE HIGH COURT CONCLUDED THAT THE GENUINENESS OF THE TRANSACTION C RITICALLY HINGES ON THE TRUE AND VERACITY OF THE CLAIM MADE BY THE ASSESSEE. IN THE INSTANT CASE, THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE ESTABLISHED GE NUINENESS OF THE TRANSACTIONS OR CREDITWORTHINESS OF THE AFORESAID N INE COMPANIES. THE ASSESSEE IN THE INSTANT CASE, A PRIVATE LIMITED COMPANY, REC EIVED THE SHARE APPLICATION MONEY THROUGH PRIVATE PLACEMENT. THE AO AFTER PERU SAL OF THE DETAILS FURNISHED ON BEHALF OF THE ASSESSEE DESIRED PRESENCE OF DIREC TORS OF THE AFORESAID NINE COMPANIES, PROVIDING ACCOMMODATION ENTRIES. THOUGH THE ASSESSEE COULD OBTAIN PAN DETAILS AND FILED AFFIDAVITS OF DIRECTORS OF FE W COMPANIES, FOR REASONS BEST KNOWN TO THE ASSESSEE, THE DIRECTORS OF THE AFORESA ID COMPANIES WERE NEVER PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEE DINGS OR EVEN BEFORE THE LD. CIT(A) IN APPELLATE PROCEEDINGS. THUS, IT CANNO T BE SAID THAT THE AO DID NOT BRING ON RECORD ANY EVIDENCE TO SHOW THAT THERE WER E STRONG INDICATION THAT THE SO-CALLED SHARE APPLICANTS WERE MERE PAPER ENTITIES AND DID NOT HAVE THE ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 22 REQUISITE CAPACITY TO ADVANCE THE IMPUGNED AMOUNTS. MOREOVER, HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. NOVA PROMOTER S & FINLEASE (P) LTD,342 ITR 169(DEL.) WHILE CONSIDERING VARIOUS DECISIONS INCLU DING IN LOVELY EXPORTS P LTD.(SUPRA) & ORISSA CORPORATION (P) LTD.(SUPRA) RE LIED UPON BY THE LD. CIT(A) OBSERVED IN SIMILAR CIRCUMSTANCES, AS UNDER: 38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND AP PRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD , IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE AP PLICANTS 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 A SSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOS E PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CA N BE MADE IN THE HANDS OF THE COMPANY UNDER SEC. 68 AND THE REMEDY O PEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCO RDANCE 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 O F MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSE D 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSE SSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THR OUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVO LVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATE D BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVENUE AUTHORITIES INTO THE ACT IVITIES 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- MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXEC UTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS AT TRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC. 68 TO PROVE AND E STABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICAN T AND THE GENUINENESS OF THE TRANSACTION. IN 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 COM E FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VE RIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFOR E US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF T RUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 23 39. THE CASE OF CIT V. ORISSA CORPORATION (P.) LTD. [1 986] 159 ITR 78/25 TAXMAN 80 (SC) EXEMPLIFIES THE CATEGORY OF CA SES WHERE NO ACTION IS TAKEN BY THE ASSESSING OFFICER TO VERIFY OR CONDUCT AN ENQUIRY INTO THE PARTICULARS ABOUT THE CREDITORS FURNISHED BY THE ASSESSEE, INCLUDING THEIR INCOME-TAX FILE NUMBERS. IN THE SAM E CATEGORY FALL CASES DECIDED BY THIS COURT IN CIT V. DOLPHIN CANPA CK [2006] 283 ITR 190, CIT V. MAKHNI & TYAGI (P.) LTD. [2004] 267 ITR 433/136 TAXMAN 641, CIT V. ANTARTICA INVESTMENT (P.) LTD. [2003] 2 62 ITR 493/133 TAXMAN 605 AND CIT V. ACHAL INVESTMENT LTD. [2004] 268 ITR 211/136 TAXMAN 335. TO PUT IT SIMPLY, IN THESE CASES THE DE CISION WAS BASED ON THE FUNDAMENTAL RULE OF LAW THAT EVIDENCE OR MAT ERIAL ADDUCED BY THE ASSESSEE CANNOT BE THROWN OUT WITHOUT ANY ENQUI RY. THE RATIO DOES NOT EXTEND BEYOND THAT. THE BOUNDARIES OF THE RATIO CANNOT BE, AND SHOULD NOT BE, WIDENED TO INCLUDE THEREIN CASES WHERE THERE EXISTS MATERIAL TO IMPLICATE THE ASSESSEE IN A COLL USIVE ARRANGEMENT WITH PERSONS WHO ARE SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS'. 18.1 IN THE LIGHT OF VIEW TAKEN IN THE AFORESAI D DECISIONS, WE ARE OF THE OPINION THAT THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. (SUPRA) AND OTHER DECISIONS RELIE D UPON BY THE LD. CIT(A),WITHOUT ANALYZING THE FACTS AND CIRCUMSTANCES OR MATERIAL/ DOCUMENTS FORWARDED TO THE AO BY THE DIT(INV.), IS NOT APPLICABLE IN THE PRESENT CASE. 18.2 MOREOVER, ALL THE AFORESAID NINE COMPANIES ARE STATED TO BE ASSESSED TO TAX IN SOME YEAR OR OTHER. WHAT IS THE POSITION OF ASSESSMENTS OF THESE COMPANIES FOR THE RELEVANT ASSESSMENT YEAR IS NOT EVIDENT FROM THE IMPUGNED ORDER NOR HAS BEEN BROUGHT TO OUR NOTICE BY THE LD . DR OR THE LD. AR. IF THE IMPUGNED AMOUNTS WERE ASSESSED IN THE HANDS OF THE SHARE APPLICANTS, THE SAME COULD NOT BE ASSESSED IN THE HANDS OF THE ASSE SSEE AND VICE VERSA. 18.3 IN VIEW OF THE FOREGOING, WE CONSIDER IT FA IR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE ISSUES RAISED IN THE GROUND NOS. 2 & 2.1 IN THE APPEAL, AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF OUR AFORESAID O BSERVATIONS AND VARIOUS JUDICIAL ITA NO.392/DEL./2010 &CO NO. 62/DEL./2010 24 PRONOUNCEMENTS, INCLUDING THOSE REFERRED TO ABOVE AND OF COURSE, AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE. WITH THESE OBSERVATIONS, GROUND NOS. 2 & 2.1 IN THE APPEAL OF THE REVENUE ARE DISP OSED OF. CONSEQUENTLY, GROUND NO.3 IN THE CO BECOMES INFRUCTUOUS. 19.. GROUND NO.1 IN THE APPEAL OF THE REVENUE BEIN G GENERAL IN NATURE, DOES NOT REQUIRE FOR ANY SEPARATE ADJUDICATION WHIL E NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL OF THE REVENUE, ACCORDINGLY ALL THESE GROUNDS ARE DISMISSE D. 20. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 21. IN RESULT, APPEAL OF THE REVENUE IS ALLOWED W HILE THE CO IS PARTLY ALLOWED BUT BOTH FOR STATISTICAL PURPOSES. SD/- SD/- (U.B.S. BEDI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. INCOME-TAX OFFICER, WARD 5(1), NEW DELHI 3.CIT CONCERNED. 4. CIT(A)-VIII, NEW DELHI 5. DR, ITAT,D BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT