ITO, New Delhi V. M/s. Well Worth Construction Udyog Ltd., New Delhi

ITA 4086/DEL/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69675 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 26-09-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 03-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL AGARWAL SHAILESH GU PTA
• Assessee Lawyers: SAMEER SHARMA
• Keywords: Unexplained investment; Business income; Additional evidence; Initiation of penalty proceedings; Accommodation entries; Assessment record; Onus to prove
• Section: 68

Judgement Text

ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4086/DEL/2010 ASSESSMENT YEAR : 2003-04 INCOME TAX OFFICER, VS M/S WELL WORTH CONST RUCTION UDYOG LTD., WARD-18(3), 7, SOUTH PATEL NAGAR, NEW DELHI. NEW DELHI-11 0008 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL AGARWAL, SHAILESH GU PTA RESPONDENT BY : SHRI SAMEER SHAR MA, SR. DR O R D E R PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-XXI, NEW DELHI DATED 25.06.2010 IN APPEAL NO.242/08-09 FOR AY 2003-04. ORIGINALLY, THE FOLLO WING GROUNDS WERE RAISED BY THE REVENUE AT THE TIME OF FILING OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED ON FACTS AND IN LAW BY DELETING THE ADDITION OF RS.1.65 CRORES MADE ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE THROUGH ACCOMMODATION ENTRIES, IGNORING THAT: (I) THE CREDITWORTHINESS OF THE SHARE APPLICANT TO ADVANCE THE HUGE AMOUNTS OF SHARE APPLICATION MONEY WAS NOT ESTABLISHED AND ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 2 (II) THE NEXUS BETWEEN THE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE SHARE APPLICANTS AND THE CHEQUES ISSUED BY THEM TO THE ASSESSEE COMPANY AS SHARE APPLICATION MONEY WAS ESTABLISHED. 2. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED ON FACTS AND IN LAW BY DELETING ADDITION OF RS.1,18,50,000/- ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE BY IGNORING AND NOT DECIDING ON MERITS THE OBSERVATIONS OF THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER AND IN THE REMAND REPORT THAT THE ASSESSEE HAD NO BUSINESS RECEIPTS O R OTHER RECEIPTS DURING THE YEAR TO SUPPORT AND ESTABLISH THE GENUINENESS OF CASH DEPOSITS IN THE BANK ACCOUNT. 2. SUBSEQUENTLY, THE LD. DR SUBMITTED REVISED GROUN DS OF APPEAL ON 13.1.2011. ON THE DATE OF HEARING I.E. 3.3.2011, THE REVENUE F ILED FOLLOWING ADDITIONAL GROUNDS:- THE LD CIT (A) HAS ERRED ON FACTS AND IN LAW BY DELETING THE ADDITION OF RS 1.65 CRORES MADE UNDER SECTION 68 OF THE IT ACT IGNORING THAT: I) THE ASSESSEE COMPANY HAD REPAID THE SHARE APPLICATION MONEY WITHOUT ALLOTTING SHARES TO THE SHARE APPLICANTS. HENCE, THIS FACT DISTINGUISH THE PRESENT CASE FROM THE CASE OF LOVELY EXPORT PVT. LTD (216 CTR 195) RELIED BY THE LD CIT(A). II) THE ASSESSING OFFICER HAS GIVEN A FINDING THAT AMOUNT OF RS 1.65 CRORE RECEIVED BY ASSESSEE WAS IN THE NATURE OF UNSECURED LOAN RATHER THAN THE SHARE APPLICATION MONEY AS CLAIMED BY THE ASSESSEE, FOR WHICH THE CREDIT WORTHINESS OF THE CREDITORS WERE NOT PROVED. HENCE THE ADDITION WAS RIGHTLY MADE UNDER SECTION 68 OF THE INCOME TAX ACT. ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 3 III) THE ASSESSING OFFICER HAS EXAMINED THE BANK A/C OF THE SHARE APPLICANTS AND HAS ALSO NOTICED THAT THE SO CALLED THREE SHARE APPLICANTS HAD FILED INCOME DECLARING LOSS OF RS 3444/-, RS 1022 AND RS 1122/- FOR THE YEAR UNDER CONSIDERATION. HENCE THE ASSESSING OFFICER HAD DRAWN A CORRECT INFERENCE REGARDING CREDITWORTHINESS OF THE M/S RICHIE RICH PVT LTD, M/S GOYAL TEXTILES INDUSTRIES PVT LTD AND M/S ANKUR DISTRIBUTORS PVT LTD.' 3. WE HAVE HEARD BOTH THE PARTIES ON THE ISSUE OF A DMISSIBILITY OF ADDITIONAL GROUNDS. LD. DR SUBMITTED THAT AT THE TIME OF FILI NG OF APPEAL, GROUND NO.1 WAS RAISED PERTAINING TO THE DELETION OF ADDITION OF RS .1.65 CRORE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLICATION M ONEY RECEIVED BY THE ASSESSEE AND THE ADDITIONAL GROUNDS ARE MERELY AN E LABORATION OF THIS GROUND TO AGITATE ALL THE ISSUES RELATED TO THIS IMPUGNED ADD ITION MADE U/S 68 OF THE INCOME TAX ACT, 1961. LD. COUNSEL OF THE ASSESSEE OBJECTE D THE ADMISSIBILITY OF ABOVE ADDITIONAL GROUNDS OF THE REVENUE AND SUBMITTED THA T GROUND ALREADY PLACED AT THE TIME OF FILING OF APPEAL IS SUFFICIENT AND THERE IS NO NEED OF ADDITIONAL GROUND IN THIS REGARD. THE COUNSEL OF THE ASSESSEE ALSO SUBM ITTED THAT THE REVENUE IS TRYING TO SUBMIT FACTS OF THE ISSUE IN THE FORM OF ADDITIO NAL GROUNDS WHICH IS NOT PERMISSIBLE. ON CAREFUL CONSIDERATION OF ABOVE SUBM ISSIONS, WE ARE OF THE VIEW THAT THE REVENUE HAS RAISED GROUND PERTAINING TO AD DITION OF RS.1.65 CRORE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SHARE APPLIC ATION MONEY AND ADDITIONAL GROUNDS ARE MERELY AN ELABORATION OF THIS GROUND. THE REVENUE WANTS TO AGITATE ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 4 THE ISSUE ON THE LEGAL AND FACTUAL MATRIX OF THE CA SE BY SUBMITTING THESE ADDITIONAL GROUNDS. WE ARE OF THE OPINION THAT ALTHOUGH THE A DDITIONAL GROUNDS ARE DESCRIPTION OF FACTS AND ALLEGATIONS OF THE REVENUE RELATED TO ORIGINAL GROUND NO.1 OF THE REVENUE BUT THESE ARE NECESSARY FOR PROPER A DJUDICATION OF THE ISSUE CONTAINED IN ORIGINAL GROUND NO.1 OF THE REVENUE. ACCORDINGLY, ADDITIONAL GROUNDS OF THE REVENUE ARE ADMITTED AS AN EXTENSION AND SUPPORTIVE TO THE ORIGINAL GROUND NO. 1 OF THE REVENUE. ORIGINAL GROUND NO.1 AND ADDITIONAL GROUND NO. (I), (II) & (III) 4. APROPOS THESE GROUNDS, LD. DR SUBMITTED THAT T HE COMMISSIONER OF INCOME TAX(A) HAS ERRED BY DELETING THE ADDITION OF RS.1.6 5 CRORE MADE ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE DU RING THE YEAR UNDER CONSIDERATION THROUGH ACCOMMODATION ENTRIES. THE D R FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) IGNORED THAT THE CRED ITWORTHINESS OF THE SHARE APPLICANTS TO ADVANCE THE HUGE AMOUNT OF SHARE APPL ICANTS MONEY WAS NOT ESTABLISHED AND ALSO THE NEXUS BETWEEN THE CASH DEP OSITS IN THE BANK ACCOUNT OF THE SHARE APPLICANTS AND THE CHEQUES ISSUED BY THEM TO THE ASSESSEE COMPANY AS SHARE APPLICATION MONEY WAS ESTABLISHED. THE DR AL SO POINTED OUT THAT THE ASSESSEE COMPANY HAD REPAID THE SHARE APPLICATION M ONEY WITHOUT ALLOTTING ANY SHARES TO THE RESPECTIVE APPLICANTS, THEREFORE, THI S FACT DISTINGUISHED THE PRESENT ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 5 CASE FROM THE CASE OF LOVELY EXPORT PVT. LTD. 216 CTR 195 (SC) ON WHICH THE COMMISSIONER OF INCOME TAX(A) RELIED WHILE GRANTING RELIEF FOR THE ASSESSEE. 5. THE DR ALSO CONTENDED THAT THE ASSESSING OFF ICER HAS RIGHTLY GIVEN A FINDING THAT THE AMOUNT OF RS.1.65 CRORE RECEIVED B Y THE ASSESSEE WAS IN THE NATURE OF UNSECURED LOAN FOR WHICH CREDITWORTHINESS OF THE CREDITOR COULD NOT BE PROVED BY THE ASSESSEE, HENCE, THE ASSESSING OFFICE R RIGHTLY MADE THE ADDITION U/S 68 OF THE ACT. THE DR VEHEMENTLY CONTENDED THAT AF TER CAREFUL EXAMINATION OF THE BANK ACCOUNT OF THE SHARE APPLICANTS, THE ASSES SING OFFICER NOTICED THAT THE SO-CALLED THREE SHARE APPLICANTS HAD FILED RETURN O F INCOME DECLARING A LOSS OF RS.3,444/-, RS.1022/- AND RS.1122/- FOR THE YEAR UN DER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER HAD DRAWN A CORRECT NEGATIVE INFERENCE REGARDING CREDITWORTHINESS OF SO-CALLED SHARE APPLICANTS NAME LY M/S RICHIE RICH OVERSEAS PVT. LTD., M/S GOYAL TEXTILE INDUSTRIES PVT. LTD. A ND M/S ANKUR DISTRIBUTORS PVT. LTD. 6. THE DR SUPPORTED THE ASSESSMENT ORDER AND SUBM ITTED THAT THE COMMISSIONER OF INCOME TAX(A) DELETED THE IMPUGNED ADDITION WITH OUT ANY BASIS AND COGENT MATERIAL AND WRONGLY HELD THAT ONCE THE IDENTITY OF SHARE APPLICANTS IS PROVED, NO ADDITION CAN BE MADE IN THE HANDS OF ASSESSEE EVEN IF THE SHARE APPLICANTS HAVE BEEN FOUND TO BE PERSONS OF NO MEANS UNTIL AND UNLE SS IT IS OTHERWISE PROVED BY THE REVENUE. THE DR SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT THE ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 6 COMMISSIONER OF INCOME TAX(A) WRONGLY HELD IN THE I MPUGNED ORDER THAT THE REVENUE COULD NOT PROVE THAT THE MONEY RECEIVED BY THE ASSESSEE IN THE FORM OF SHARE APPLICATION MONEY HAS COME FROM ITS OWN SOURC ES. THE LD. COUNSEL OF THE ASSESSEE DREW OUR ATTENTION TOWARDS THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES LTD. 329 ITR 110 (DEL) AND SUBMITTED THAT WHEN THE NAMES OF THE COMPANIES WHICH GRANTED SHARE APPLICATION MONEY WERE AVAILABLE WITH THE ASSESSING OFFICER AND THEIR LEGA L EXISTENCE WAS NOT DISPUTED BY THE ASSESSING OFFICER, AND FURTHER WHEN THE SHARE A PPLICANT COMPANY HAD BANK ACCOUNTS AND THE PAYMENTS WERE MADE TO THE ASSESSEE THROUGH BANKING CHANNELS AND THE IDENTITY OF THE COMPANIES WERE NOT DISPUTED , THEN ADDITION U/S 68 OF THE ACT IS NOT SUSTAINABLE. THE COUNSEL ALSO PLACED RE LIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF LOVELY EXPORT PVT . LTD. (SUPRA) WHEREIN IT HAS BEEN HELD AS UNDER:- 2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961? WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT I F THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT. ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 7 7. IN THE CASE IN HAND, THE ASSESSING OFFICER MADE IMPUGNED ADDITION U/S 68 OF THE ACT WITH FOLLOWING OBSERVATIONS AND FINDINGS:- ALTHOUGH THE RECEIPTS OF SHARE APPLICATION MONEY OF RS.1.65 CRORES WAS THROUGH BANKING CHANNELS, THI S FACT BY ITSELF IS NOT SUFFICIENT TO PROOF THE GENUI NENESS OF THE PERSONS WHO GAVE THE SHARE APPLICATION MONEY OR THEIR CREDITWORTHINESS. A PERUSAL OF THE BANK ACCOUNTS OF THE THREE SHARE APPLICANT PARTIES M/S RICHIE RICH OVERSEAS PVT. LTD., M/S ANKUR DISTRIBUTORS PVT. LTD. AND M/S GOYAL TEXTILES PVT. LTD. REVEAL AS WELL AS PROVE THAT THEY ARE MERE CONDUITS UTILIZED BY THE ENTRY-OPERATORS FOR PROVIDING BOGUS ACCOMMODATION ENTRIES TO INTERESTED PARTIES. THE BALANCES IN THEIR BANK ACCOUNTS ARE VERY LOW ON A GIVEN DATE AFTER WHICH SUBSTANTIAL AMOUNTS ARE DEPOSITED EITHER BY CHEQUES OR BY CASH TO INCREASE THE BALANCE BUT INVARIABLE WITHIN A DAY OR TWO THE SAME IS WITHDRAWN OR TRANSFERRED TO SOME OTHER ACCOUNT BRINGING THE BALANCE DOWN. THE PROCESS IS REPEATED OVER AND OVER AGAIN MANY MANY TIMES ALTHOUGH THE P&L MC OF THE ASSESSEE REVEALS NO BUSINESS ACTIVITY WORTHY OF MENTION. THE COPIES OF INCOME TAX RETURNS OF THE SHARE APPLICANT MIS RICHIE RICH PVT. LTD. REFLECTS A LOSS OF RS. 3444/-. THERE IS NO BUSINESS ACTIVITY IN THIS COMPANY AT ALL AND THE LOSS OF RS. 3444/- IS DUE TO CLAIMS OF CERTAIN STATUTORY EXPENS ES. SAME IS THE CASE WITH M/S ANKUR DISTRIBUTORS PVT. L TD. WHICH HAS A LOSS OF RS.1022/- AND M/S GOYAL TEXTILE INDUSTRIES PVT. LTD. WHICH HAS A LOSS OF RS. 1122/- . THE THREE SHARE APPLICANTS IN THIS CASE DO NOT HAVE ANY SOURCE OF INCOME OF THE STATURE THAT WOULD ENAB LE THEM TO GIVE LARGE AMOUNTS OF SHARE APPLICATION MONEY AS HAS BEEN GIVEN BY THEM TO THE ASSESSEE COMPANY. THE ONUS TO PROVE THEIR CREDITWORTHINESS SQUARELY LAY ON THE ASSESSEE BUT IT HAS TOTALLY FAI LED TO DISCHARGE THE ONUS CAST ON IT. IN THESE CIRCUMSTANC ES THERE IS NO ALTERNATIVE LEFT THAN TO DRAW AN ADVERS E ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 8 INFERENCE REGARDING THE CREDITWORTHINESS OF THE THR EE SHARE APPLICANTS. THE PLEA OF THE ASSESSEE THAT IT HAS NOT ALLOTT ED ANY SHARE TO THE APPLICANTS AND HAD REFUNDED THE SAME EITHER DURING THAT YEAR OR IN THE SUBSEQUENT Y EAR ALSO DOES NOT GIVE ANY LEVERAGE TO THE ASSESSEE. TH E IMPORTANT ISSUE IS WHETHER ANY BENEFIT HAS BEEN DERIVED OR NOT FROM THE SHARE APPLICATION MONEY SO RECEIVED. IT IS SEEN THAT THE SHARE APPLICATION MON EY UNDER CONSIDERATION HAS BEEN RECEIVED BY THE ASSESS EE ON VARIOUS DATES MOSTLY DURING DECEMBER 2002 BARRING TWO CHEQUES ONE OF WHICH IS DATED 18.11.200 2 AND ANOTHER WHICH IS DATED 15.02.03. THE SHARE APPLICATION MONEY RECEIVED HAS BEEN UTILISED ALONG WITH OTHER FUNDS TO GIVE LOANS AND ADVANCES TO SEVE RAL PARTIES AS APPARENT FROM THE NARRATIONS GIVEN IN TH E COPIES OF BANK STATEMENTS OF THE ASSESSEE OF CURREN T ACCOUNT NO. 530011003562 MAINTAINED IN ING VYSYA BANK LTD., KAROL BAGH, NEW DELHI WHICH WAS SUBMITTED DURING THE ORIGINAL SCRUTINY ASSESSMENT PROCEEDINGS VIDE LETTER DATED 05-12-05. THE OPENING BALANCE FOR THE YEAR OF LOANS AND ADVANCES WAS RS. 1,61,30,000/- AND THE CLOSING BALANCE WAS RS. 8,94,55,000/- AS PER THE BALANCE SHEET OF THE ASSESSEE. THUS THE ASSESSEE HAS DERIVED SUBSTANTIAL BENEFIT FROM THE SHARE APPLICATION MONEY RECEIVED B Y IT FROM THE THREE SHARE APPLICANTS EVEN THOUGH THE SAME HAS BEEN REFUNDED BY IT WITHOUT ALLOTTING ANY SHARE TO THEM. EVEN THOUGH THE NOMENCLATURE GIVEN B Y THE ASSESSEE TO THE MONEY CONCERNED IS SHARE APPLICATION MONEY, THE SAME IS MORE IN THE NATURE O F AN UNSECURED LOAN GIVEN WITHOUT INTEREST WHICH WAS RECEIVED AND RETURNED WHILE MAKING PLANNED USE OF I T NOTWITHSTANDING THE APPLICATIONS FOR ALLOTMENT OF SHARES. SO BENEFIT HAS BEEN DERIVED FROM THE SHARE APPLICATION MONEY THAT HAS BEEN RECEIVED ONLY THROUGH ACCOMMODATION ENTRIES SINCE THE CREDITWORTHINESS OF SHARE APPLICANTS HAVE NOT BEEN PROVED. IN VIEW OF THE ABOVE FACTS THE AMOUNT OF RS . ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 9 1,65,00,000/- IS BEING ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME TAX ACT. SINCE IT IS CLEAR THAT THERE IS CONCEALMENT OF INCO ME BY FURNISHING OF INACCURATE PARTICULARS THEREOF INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) IS CALLED FOR ON THIS ISSUE. 8. DURING THE FIRST APPELLATE PROCEEDINGS, THE C OMMISSIONER OF INCOME TAX(A) CONSIDERED THE DETAILED SUBMISSIONS OF THE A SSESSEE AND THE REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER ON THE DETAIL ED DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE. IN THE REMAND REPORT, T HE ASSESSING OFFICER OBJECTED THE ADMISSIBILITY OF DETAILED ADDITIONAL EVIDENCE B UT THE ASSESSING OFFICER ADMITTED THAT THE ASSESSEE RECEIVED SHARE APPLICATI ON MONEY THROUGH BANKING CHANNELS. THE COMMISSIONER OF INCOME TAX(A) GRANTE D RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND FINDINGS: - THE HON'BLE DELHI HIGH COURT VIDE ITA NO. 463/2010 IN THE CASE OF CIT VS SUNTECH VISION LTD. HAS HELD THAT: 'THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL DATE D 15.12.2008 IN RELATION TO THE A.Y. 04-05 ARISING OU T OF ITA NO. 3511/DEL/2007. THE POINT IN ISSUE IS WITH REGARD TO INVESTMENTS OF ABOUT RS. 49.00 LAKHS MADE BY FOUR COMPANIES IN THE ASSESSEE COMPANY. THE SAID AMOUNT OF RS. 49.00 LAKHS WAS RECEIVED BY WAY OF SHARE APPLICATION MONEY. 'THE AO HELD THE SAME TO BE UNEXPLAINED INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. HOWEVER, IN APPEAL, THE CIT(A ) ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 10 HELD IN FAVOR OF THE ASSESSEE AND ALLOWED THE ASSESSEE'S APPEAL BY HOLDING THAT THE ASSESSEE HAD PRODUCED THE PAN NUMBERS, CONFIRMATORY LETTERS, RETURNS OF INCOME, ETC. IN RESPECT OF THE PARTIES W HO HAD MADE THE SAID INVESTMENTS. THEREFORE, THE COMMISSIONER OF INCOME-TAX (A) HAD COME TO THE CONCLUSION THAT THE PRELIMINARY ONUS, WHICH WAS UPO N THE ASSESSEE, HAD BEEN DISCHARGED BY HIM. CONSEQUENTLY, THE ADDITION MADE BY THE ASSESSING OFFICER STOOD DELETED. THE INCOME TAX APPELLATE TRIBUNAL, IN THE APPEAL PREFERRED BY THE REVENUE, CONFIRMED THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(A) AND FOUND THAT THE SAID SHARE APPLICATION MONEY WAS SUBSTANTIATED BY THE ASSESSEE BY PROVIDING ALL THE NECESSARY DETAILS AS INDICATED ABOVE. THE TWO AUTHORITIES BELOW, ON FINDINGS OF FA CT, HELD THAT THE ASSESSEE WAS NOT LIABLE TOT ANY ADDIT ION ON ACCOUNT OF THE SAID SHARE APPLICATION MONEY. WE SEE NO REASON TO INTERFERE WITH THE SAID FINDINGS'. IN THE CASE OF CIT VS DWARKASHIS FINANCIAL SERVICES PVT. LTD VIDE ITA NO. 439/2010 HAS HELD THAT:- THIS IS AN APPEAL AGAINST THE ORDER DATED 12.09.2008 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL IN ITA NO. 82/0/06 FOR THE ASSESSMENT YEAR 2001-02. THE ASSESSING OFFICER HAD MADE THE ADDITIO N OF RS. 45 LAKHS AS UNEXPLAINED INVESTMENT ON ACCOUN T OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE . THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE INCOME TAX APPELLATE TRIBUNAL, AFTER EXAMINING THE CASE ON FACTS AS WELL AS ON LAW, DELETED THE SA ID ADDITION. THE INCOME TAX APPELLATE TRIBUNAL HAS SPECIFICALLY NOTED AMONGST OTHER THINGS THAT THE APPELLANT HAS PRODUCED CONFIRMATION LETTERS FROM TH E SHARE APPLICANTS, THE PAYMENTS HAD BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES AND, THAT TOO, FROM T HE APPLICANT'S ACCOUNTS. THE APPLICANTS WERE ALL REGISTERED COMPANIES AND THEIR IDENTITIES WERE CLEA RLY ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 11 ESTABLISHED. IT IS IN THESE CIRCUMSTANCES THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS THE INCOME TAX APPELLATE TRIBUNAL DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. CONSEQUENTLY, WE SEE NO REASON TO INTERFERE WITH THE FINDINGS RECORDED B Y THE TRIBUNAL' IN THE INSTANT CASE NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO PROVE THAT THE SHARE APPLICATION MONEY EMANATED FROM THE COFFERS OF THE APPLICANT. THE AO HAS NOT MADE ANY ENQUIRIES FROM THE CONCERNED PARTIES NOR DID HE EXAMINE THE ASSESSMENT RECORDS OF THE SHARE APPLICANTS. RELYING ON THE VARIOUS DOCUMENTS PLACED ON RECORD AND THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S LOVELY EXPORT PVT. LTD. WHICH IS DIRECTLY ON THE ISSUE OF SHARE CAPITA L AND IN VIEW OF THE DECISIONS CITED ABOVE, THE ADDITION ON ACCOUNT OF SHARE CAPITAL CANNOT BE SUSTAINED. THE A O HAS NOWHERE PROVED THAT DOCUMENTS IN SUPPORT OF THE IDENTITY OF THE PARTIES HAVE NOT BEEN PLACED ON REC ORD OR THEY WERE FORGED DOCUMENTS. THE AO ALSO HAS NOT BROUGHT ANY EVIDENCE ON RECORD REGARDING THE FACTS THAT THE SHARE APPLICANTS WERE NOT CREDITWORTHY OR GENUINE, DESPITE THE FACT THAT THEIR PAN AND COPIES OF I.T. RETURN WERE SUBMITTED BY THE APPELLANT. AFTER CONSIDERING THE FACTS ON RECORD, JUDICIAL PRONOUNCEMENTS OF THE JURISDICTIONAL HIGH COURT AND HON'BLE SUPREME COURT IT CAN BE CONCLUDED THAT THE APPELLANT HAS UNDOUBTEDLY PROVED THE IDENTITY OF TH E SHARE APPLICANT. ONCE THE IDENTITY OF THESE SHARE APPLICANTS IS PROVED, NO ADDITION CAN BE MADE IN TH E HANDS OF THE APPELLANT EVEN IF THE SHARE APPLICANTS HAVE BEEN FOUND TO BE PERSONS OF NO MEANS UNTIL AND UNLESS IT IS OTHERWISE PROVED BY THE REVENUE. THE REVENUE COULD NOT PROVE THAT THE MONEY RECEIVED BY THE APPELLANT IN THE FORM OF SHARE APPLICATION MONE Y HAS COME FROM ITS OWN SOURCES. ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 12 IN VIEW OF THE DISCUSSION MADE ABOVE THE ADDITION OF RS. 1.65 CRORES IS DELETED. HOWEVER THE AO IS, FREE TO TAKE APPROPRIATE ACTION AS MAY BE PERMISSIBLE UNDER THE LAW IN THE CASE OF VARIOUS SHAREHOLDERS ALLEGED TO BE ENTRY PROVIDERS. 9. IN VIEW OF ABOVE OBSERVATIONS AND FINDINGS OF TH E COMMISSIONER OF INCOME TAX(A) IN THE IMPUGNED ORDER, WE CLEARLY OBSERVE TH AT THE DISPUTED SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKING CHAN NELS AND NAMES, ADDRESS, PAN NOS. SUPPORTED BY CONFIRMATION, COPIES OF BANK ACCOUNT, COPIES OF APPLICATION FOR RETURN OF SHARES, COPIES OF ANNUAL ACCOUNTS OF SHARE APPLICANTS, COPIES OF RETURN OF INCOME OF SHARE APPLICANTS AND AFFIDAVITS OF THE OFFICE BEARERS OF THE APPLICANT COMPANIES WERE SUBMITTED BEFORE TH E REVENUE AUTHORITIES AND ALL THESE DETAILS WERE CONFRONTED TO THE ASSESSING OFFI CER. FROM CAREFUL PERUSAL OF THE REMAND REPORT AND THE ASSESSMENT ORDER, WE ARE UNABLE TO SEE ANY FINDING OF FACT THAT THE ASSESSEE COMPANY ROUTED OR USED ITS O WN MONEY THROUGH SAID SHARE APPLICANTS COMPANY. IN THE PRESENT CASE, THE COMM ISSIONER OF INCOME TAX(A) HAS RIGHTLY HELD THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT THE SHARE APPLICATION MONEY E MANATED FROM THE COFFERS OF THE ASSESSEE AND THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRIES FROM THE CONCERNED AUTHORITIES NOR DID HE EXAMINE THE ASSESS MENT RECORD OF THE SHARE APPLICANTS. IN THIS SITUATION, THE COMMISSIONER OF INCOME TAX(A) RIGHTLY RELIED AND FOLLOWED THE DECISION OF HONBLE APEX COURT IN THE CASE OF C.I.T. VS LOVELY ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 13 EXPORT P. LTD.(SUPRA). WE ALSO OBSERVE THAT THE AS SESSING OFFICER HAS NOWHERE PROVED THAT THE DOCUMENTS IN SUPPORT OF THE IDENTIT Y AND CREDITWORTHINESS OF THE SHARE APPLICANTS HAVE NOT BEEN PLACED ON RECORD OR THEY WERE FOUND AS FORGED DOCUMENTS IN THE COURSE OF VERIFICATION. IN THE AS SESSMENT ORDER AND REMAND REPORT, THE ASSESSING OFFICER HAS NOT BROUGHT ANY E VIDENCE REGARDING THE FACT THAT THE SHARE APPLICANTS WERE NOT CREDITWORTHY OR GENUI NE DESPITE THE FACT THAT THE PAN NOS. AND THE COPIES OF THE INCOME TAX RETURNS W ERE SUBMITTED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE. IN THIS SITUATI ON, WHEN THE IDENTITY OF THE SHARE APPLICANTS IS PROVED BY THE ASSESSEE AND THE ASSESS ING OFFICER HAS NOT BROUGHT ANY ADVERSE MATERIAL OR FACT AGAINST THE SHARE APPL ICANTS, THEN NO ADDITION CAN BE MADE IN THE HANDS OF APPELLANTS. WE HOLD THAT THE ASSESSING OFFICER COULD NOT PROVE THAT THE MONEY RECEIVED BY THE ASSESSEE FROM ALLEGED THREE COMPANIES IN THE FORM OF SHARE APPLICATION MONEY HAD COME FROM T HE OWN SOURCES OF THE ASSESSEE. IN THIS SITUATION, WE ARE UNABLE TO SEE ANY PERVERSITY, INFIRMITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE FINDINGS O F THE COMMISSIONER OF INCOME TAX(A). ACCORDINGLY, GROUND NO.1 AND ADDITIONAL GR OUND NO. (I), (II) AND (III) BEING DEVOID OF MERITS ARE DISMISSED. GROUND NO. 2 OF THE REVENUE 10. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT TH E LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED ON FACTS AND IN LAW BY DELE TING ADDITION OF ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 14 RS.1,18,50,000/- ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE BY IGNORING THE OBSERVATIONS OF THE ASSESSING OFFIC ER THAT THE ASSESSEE HAD NO BUSINESS RECEIPTS OR OTHER RECEIPTS DURING THE YEAR TO SUPPORT AND ESTABLISH THE GENUINENESS OF CASH DEPOSITS IN THE BANK ACCOUNT. THE DR SUPPORTED THE ASSESSMENT ORDER AND SUBMITTED THAT WHEN AS PER PRO FIT AND LOSS ACCOUNT OF THE ASSESSEE, ITS INCOME AND RECEIPTS ARE NIL AND THE A SSESSEE HAS NOT CARRIED OUT ANY BUSINESS DURING THE YEAR, THERE WAS NO INCREASE IN THE SHARE CAPITAL BUT THE SAME WAS NOT RECEIVED IN CASH AND THE OPENING AND CLOSIN G BALANCE OF THE CURRENT LIABILITIES HAVE REMAINED THE SAME, THEN IN THESE C IRCUMSTANCES, THE AMOUNT FOUND DEPOSITED IN CASH TO THE BANK ACCOUNT OF THE ASSESS EE WAS RIGHTLY ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. THE DR F ORCEFULLY CONTENDED THAT SINCE THERE WAS NO EXPLAINED SOURCE FROM WHICH THE ASSESS EE HAD RECEIVED THE DISPUTED CASH DEPOSITS FOUND IN ITS BANK ACCOUNT, THEN THE A SSESSING OFFICER RIGHTLY MADE AN ADDITION IN THIS REGARD BECAUSE THERE WAS A CLEA R CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. 11. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASS ESSEE POINTED OUT THAT THE COPIES OF THE REPLIES BEFORE THE ASSESSING OFFICER (PAGE NO. 19 TO 74), COPIES OF LEDGER AND CASH BOOK (PB PAGE NO. 75-76), COPY OF B ANK STATEMENT RELATED TO FINANCIAL YEAR (PB PAGE NO. 77 TO 86), COPIES OF TH E SUBMISSION BEFORE THE COMMISSIONER OF INCOME TAX(A) DATED 08.02.2009 (PB PAGE NO. 87-92), COPY OF ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 15 REMAND REPORT OF ASSESSING OFFICER DATED 23.04.2010 (PB PAGE 93-98), COPY OF SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX(A ) DATED 26.05.2010 (PB PAGE 99-177) AND COPIES OF LAST SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX(A) (PB 178-193). THE COUNSEL OF THE ASSESSEE S UBMITTED THAT THE DISPUTED CASH DEPOSITS WERE MADE OUT OF CASH WITHDRAWALS MAD E FROM THE SAME BANK ON EARLIER OCCASIONS AND AS PER REMAND REPORT, THE ASS ESSING OFFICER WAS SATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACCO UNT OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX(A), AFTER CONSIDERATION OF DETAILS AND EVIDENCE SUBMITTED BY THE ASSESSEE, REMAND REPORT OF THE ASS ESSING OFFICER AND REJOINDER AND SUBMISSION OF THE ASSESSEE, HELD THAT THE CONCL USION OF THE ASSESSING OFFICER IN THE REASSESSMENT ORDER APPEARS TO BE UNILATERAL AND NO EXPLANATION OF THE ASSESSEE WAS CALLED IN RESPECT OF ALLEGED CASH DEPO SITS. FROM CAREFUL PERUSAL OF THE REMAND REPORT AVAILABLE ON PAPER BOOK PAGE NO. 93-98, WE ALSO OBSERVE THAT THE ASSESSING OFFICER HAS NOT COMMENTED ADVERSELY I N RESPECT OF EXPLANATION FURNISHED BY THE ASSESSEE PERTAINING TO THE CASH DE POSITS FOUND DURING THE FINANCIAL YEAR IN THE BANK ACCOUNTS OF THE ASSESSEE . THE COMMISSIONER OF INCOME TAX(A) RIGHTLY HELD THAT WHEN THE BALANCE MATCHES W ITH THE BALANCE SHEET AND CASH BOOK, NO ADDITION U/S 68 OF THE ACT IS SUSTAI NABLE AND THE COMMISSIONER OF INCOME TAX(A) RIGHTLY DELETED THE SAME. ACCORDINGL Y, WE ARE UNABLE TO SEE ANY ITA NO. 4086/DEL/2010 ASSTT.YEAR: 2003-04 16 VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER I N THIS REGARD. IN THIS SITUATION, GROUND NO. 2 OF THE REVENUE IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/12/2013. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 20TH DECEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR