Appeal Details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 5771 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 6 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-01-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2008-2009
Appeal Filed On
03-07-2015
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , .., , ! BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.4137/MUM/2015 ASSESSMENT YEARS: 2008-09 INCOME TAX OFFICER-13(3)(3), ROOM NO.227,02 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. M/S VULVAN TRADERS, 805, A WINGH, CORPORATE AVENUE, SONAWALA RAOD, GOREGAON EAST, MUMBAI-400063 ( $ / REVENUE) ( %&' ( /ASSESSEE) P.A. NO.AAACV1603K ITA NO.4144/MUM/2015 ASSESSMENT YEARS: 2008-09 M/S VULVAN TRADERS, 805, A WINGH, CORPORATE AVENUE, SONAWALA RAOD, GOREGAON EAST, MUMBAI-400063 / VS. INCOME TAX OFFICER-13(3)(3), ROOM NO.227,02 ND FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( %&' ( /ASSESSEE) ( $ / REVENUE) P.A. NO.AAACV1603K %&' ( / ASSESSEE BY SHRI NEELKANTH KHANDELWAL-AR $ / REVENUE BY SHRI RAJIV GUBGOTRA-DR ) $*+( , / DATE OF HEARING : 24/01/2019 +( , / DATE OF PRONOUNCEMENT 30/01/2019 ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 2 / O R D E R PER JOGINDER SINGH (VICE PRESIDENT) THE REVENUE AS WELL AS ASSESSEE IS IN CROSS APPE AL AGAINST THE IMPUGNED ORDER DATED 09/04/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO.4144/MUM/2015), WHEREIN, GROUNDS NO. 1 TO 5, RAISED BY THE ASSESSEE , IS WITH RESPECT TO REOPENING OF ASSESSMENT UNDER SECTION 14 7/148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI NEELKANTH KHANDELWAL, DREW OUR ATTENTION TO TH E REASONS RECORDED BY THE LD. ASSESSING OFFICER BY CONTENDING THAT IN THE REASONS, THE NAME OF THE ASS ESSEE HAS NOT BEEN MENTIONED TO THE EFFECT THAT FROM WHER E THE SHARE CAPITAL WAS RECEIVED. IT WAS CONTENDED THAT THE REASONS RECORDED BY THE LD. ASSESSING OFFICER ARE INCOMPLETE AND THE REOPENING WAS OBJECTED BY THE ASSESSEE. THE CRUX OF THE ARGUMENT IS THAT THE REAS ONS SO RECORDED CANNOT BE IMPROVED UPON BY THE LD. ASSESSI NG OFFICER AT THE LATER STAGE. OUR ATTENTION WAS INVIT ED TO THE STATEMENT OF FACTS AVAILABLE AT PAGE-3 OF THE PAPER BOOK. IT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 3 WAS PLEADED THAT THE ASSESSMENT WAS REOPENED ON 25/03/2013 WHEREAS THE SEARCH WAS CARRIED OUT ON 01/10/2013. PLEA WAS ALSO RAISED THAT THE PAYMENT I S THROUGH BANKING CHANNEL AND EVEN THE LD. COMMISSION ER OF INCOME TAX (APPEAL) GRANTED RELIEF TO THE ASSESS EE AMOUNTING TO RS.2.76 CRORES, WHICH HAS BEEN CHALLEN GED BY THE REVENUE BY WAY OF CROSS APPEAL. ON THE OTHER HA ND, THE LD. DR, SHRI RAJIV GUBGOTRA, DEFENDED THE REOPENING OF ASSESSMENT BY SUBMITTING THAT THE LD. ASSESSING OFF ICER RECEIVED INFORMATION WITH RESPECT TO THE TRANSACTIO NS, THEREFORE, THE REASONS RECORDED BY THE LD. ASSESSIN G OFFICER ARE SUFFICIENT. THE REOPENING OF ASSESSMENT WAS DE FENDED. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SO FAR AS , RE- OPENING OF ASSESSMENT U/S 147/148 OF THE ACT ON THE PLEA THAT THE LD. ASSESSING OFFICER IGNORED THE FACT THA T THERE WAS NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AS THERE WAS NO TANGIBLE MATERIAL WITH T HE ASSESSING OFFICER AND INDEPENDENT APPLICATION OF MI ND IS CONCERNED, WE FIND THAT THE ASSESSEE COMPANY, DURIN G THE RELEVANT TIME, WAS ENGAGED IN THE BUSINESS OF GENER AL ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 4 MERCHANTS, TRADER IN GOODS AND COMMODITIES ON READY OR FORWARD BASIS, COMMISSION AGENTS, BROKERS, IMPORTER S BESIDES SALE AND DEALING IN SHARES AND STOCKS ETC, DECLARED INCOME OF RS.9,290/- IN ITS RETURN FILED ON 18/09/2 008, WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 19/08/2009. SUBSEQUENTLY, THE LD. ASSESSING OFFICER RECORDED THE REASONS AND REOPENED THE ASSESSMENT UN DER SECTION 147/148 OF THE ACT. THE ASSESSEE ASKED FOR THE REASONS WHICH WERE PROVIDED TO THE ASSESSEE. THE RE ASONS OF REOPENING ARE AS UNDER:- IT WAS ALLEGED THAT APPELLANT COMPANY HAS TAKEN ACCOMMODATION ENTRIES TO THE TUNE OF RS.2,76,70,000 /- FROM ONE SHRI SURENDRA KUMAR JAIN GROUP IN LIEU OF CASH IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM/LOAN. THE ASSESSING OFFICER ALSO STATED IN THE REASONS RECORD ED THAT ANALYSIS OF ITR OF THE APPELLANT SHOWED THAT THERE WAS INCREASE IN THE ISSUED CAPITAL FROM RS.9,70,000/- T O RS.97,55,000/- AND ALSO THAT SECURITIES PREMIUM OF RS.11,78,10,000/- WAS RECEIVED DURING THE YEAR. PURSUANT TO NOTICE UNDER SECTION 148 OF THE ACT, ISSUED TO THE ASSESSEE, VIDE WRITTEN SUBMISSIONS DA TED 28/11/2013 THE ASSESSEE RAISED OBJECTIONS AND CHALL ENGED THE REOPENING OF ASSESSMENT ON THE PLEA THAT EVEN T HE DEPARTMENT DOES NOT KNOW THE NAME OF THE PARTY FROM WHOM THE ALLEGED ACCOMMODATION ENTRIES WERE RECEIVE D AND ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 5 THE REASSESSMENT WAS DONE MERELY ON THE BASIS OF SUSPICION. 2.2. IN THE LIGHT OF THE FOREGOING DISCUSSIONS, IT IS OU R BOUNDED DUTY TO EXAMINE THE VALIDITY OF REOPENING U /S 147 R.W.S 148 OF THE ACT, THEREFORE, BEFORE ADVERTING FURTHER WE ARE REPRODUCING HEREUNDER THE RELEVANT PROVISION OF SECTION 147 OF THE ACT FOR READY REFERENCE AND ANALYSIS:- . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATE D OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY A SSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTER S WHICH ARE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 6 THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REV ISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN T HE RETURN ; (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E ; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESS ED ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXCE SSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR AN Y OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSES S OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED A SSESSMENT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THA T THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASON S RECORDED UNDER SUB-SECTION (2) OF SECTION 148 . EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE FINANCE ACT, ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 7 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT Y EAR BEGINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. 2.3. IF THE AFORESAID PROVISION OF THE ACT IS ANAL YZED, WE FIND THAT AFTER INSERTION OF EXPLANATION -3 TO S ECTION 147 OF THE ACT BY THE FINANCE (NO.2) ACT OF 2009 WITH E FFECT FROM 01/04/1989 SECTION 147 HAS AN EFFECT THAT ASSESSING OFFICER HAS TO ASSESS OR REASSESS INCOME (SUCH INCO ME) WHICH HAS ESCAPED ASSESSMENT AND WHICH WAS BASIS OF FORMATION OF BELIEF AND, IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSM ENT AND WHICH CAME TO THE NOTICE DURING THE COURSE OF PROCEEDINGS. IDENTICAL RATIO WAS LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN CIT VS JET AIRWAYS IND IA PVT. LTD. (2010) 195 TAXMAN 117 (MUM.) AND THE FULL BENC H DECISION FROM HONBLE KERALA HIGH COURT IN CIT VS B EST WOOD INDUSTRIES AND SAW MILLS (2011) 11 TAXMAN.COM 278 (KERALA)(FB). A PLAIN READING OF EXPLANATION-3 TO SECTION 147 CLEARLY DEPICTS THAT THE ASSESSING OFFICER HAS POWER TO MAKE ADDITION, WHERE HE ARRIVED TO A CONCLUSION THA T INCOME HAS ESCAPED ASSESSMENT WHICH CAME TO HIS NOT ICE DURING THE COURSE OF PROCEEDINGS OF REASSESSMENT U/ S ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 8 147/148 OF THE ACT. OUR VIEW IS FORTIFIED BY THE D ECISION IN MAJINDER SINGH KANG VS CIT (2012) 25 TAXMAN.COM 124/344 ITR 358 (P & H) AND JAY BHARAT MARUTI LTD. VS CIT (2010) TAX LR 476 (DEL.) AND V. LAKSHMI REDDY V S ITO (2011) 196 TAXMAN 78 (MAD.). THE PROVISION OF THE ACT IS VERY MUCH CLEAR AS WITH EFFECT FROM 01/04/1989, THE ASSESSING OFFICER HAS WIDE POWERS TO INITIATE PROCE EDINGS OF REOPENING. THE HONBLE KERALA HIGH COURT IN CIT VS ABDUL KHADAR AHMAD (2006) 156 TAXMAN 206 (KERALA) EVEN WE NT TO THE EXTENT SO LONG AS THE AO HAS INDEPENDENTLY A PPLIED HIS MIND TO ALL THE RELEVANT ASPECT AND HAS ARRIVED TO A BELIEF THE REOPENING CANNOT BE SAID TO BE INVALID. 2.4. WE ARE AWARE THAT MERE CHANGE OF OPINION CANNOT FORM THE BASIS OF REOPENING WHEN THE NECESSA RY FACTS WERE FULLY AND TRULY DISCLOSED BY THE ASSESSE E IN THAT SITUATION, THE ITO IS NOT ENTITLED TO REOPEN THE AS SESSMENT MERELY ON THE BASIS OF CHANGE OF OPINION. HOWEVER, POWERS UNDER AMENDED PROVISION ARE WIDE ENOUGH WHERE THERE IS A REASONABLE BELIEF WITH THE ASSESSING OFFICER, THAT INCOME HAS ESCAPED ASSESSMENT, BECAUSE THE POWERS WITH EFF ECT FROM 01/04/1989 ARE CONTEXTUALLY DIFFERENT AND THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 9 CUMULATIVE CONDITIONS SPELT OUT IN CLAUSES (A) AND (B) OF SECTION 147, PRIOR TO ITS AMENDMENT ARE NOT PRESENT IN THE AMENDED PROVISION. THE ONLY CONDITION FOR ACTION I S THAT THE ASSESSING OFFICER SHOULD HAVE REASON TO BELIEV E THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. S UCH BELIEF CAN BE REACHED IN ANY MANNER AND IS NOT QUAL IFIED BY A PRE-CONDITION OF FAITH AND TRUE DISCLOSURE OF MAT ERIAL FACTS BY AN ASSESSEE AS CONTEMPLATED IN PRE-AMENDED SECTI ON 147 OF THE ACT. VIEWED IN THAT ANGLE, POWER TO REO PEN ASSESSMENT IS MUCH WIDER UNDER THE AMENDED PROVISIO N. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE DELHI HIGH COURT IN BAWA ABHAI SINGH VS DCIT (2001) 117 TAXMAN 12 AND RAKESH AGARWAL VS ACIT (1996) 87 TAXM AN 306 (DEL.). THE HONBLE APEX COURT IN CIT VS SUN ENGINEERING WORKS PVT. LTD. 198 ITR 297 (SC) CLEARL Y HELD THAT PROCEEDINGS U/S 147 ARE FOR THE BENEFIT FOR TH E REVENUE, WHICH ARE AIMED AT GATHERING THE ESCAPED INCOME. AT THE SAME TIME, WE ARE AWARE THAT POWER S U/S 147 AND 148 OF THE ACT ARE NOT UNBRIDLED ONE AS IT IS HEDGED WITH SEVERAL SAFEGUARDS CONCEIVED IN THE INT EREST OF ELIMINATING ROOM FOR ABUSE OF THIS POWER BY THE AO. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 10 HOWEVER, THE MATERIAL AVAILABLE ON RECORD, CLEARLY INDICATES THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMEN T, THEREFORE, THE LD. ASSESSING OFFICER WAS WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT. THE HONBLE APEX COURT IN ESS ESS KAY ENGINEERING CO. PVT. LTD. (20 01) 247 ITR 818 (SC) HELD THAT MERELY BECAUSE THE CASE OF T HE ASSESSEE WAS CORRECT IN ORIGINAL ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR, IT DOES NOT PRECLUDE THE ITO TO RE OPEN THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF FINDI NG OF FACTS THAT FRESH MATERIAL CAME TO HIS KNOWLEDGE. 2.5. UNDER SECTION 147, AS SUBSTITUTED WITH EFFECT FROM 01/04/1989, THE SCOPE OF REASSESSMENT HAS BEEN WIDENED. AFTER SUCH SUBSTITUTION, THE ONLY RESTRICT ION, PUT IN THAT SECTION IS THAT REASON TO BELIEVE. THAT R EASON HAS TO BE A REASON OF A PRUDENT PERSON WHICH SHOULD BE FAIR AND NOT NECESSARILY DUE TO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND PARTIALLY SOME MATERIAL FACTS RE LEVANT FOR ASSESSMENT (DR. AMINS PATHOLOGY LABORATORY VS JCIT (2001) 252 ITR 673, 682 (BOM.) IDENTICAL RATIO WAS LAID DOWN BY HONBLE DELHI HIGH COURT IN UNITED ELECTRIC AL COMPANY PVT. LTD. VS CIT (2002) 258 ITR 317, 322 (D EL.) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 11 AND PRAFULL CHUNNILAL PATEL VS ACIT 236 ITR 832, 83 8 (GUJ.). THE ESSENTIAL REQUIREMENT FOR INITIATING REASSESSMENT PROCEEDING U/S 147 R.W.S 148 OF THE AC T IS THAT THE LD. ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT. THE HONBLE GUJARAT HIGH COURT IN PRAFULL CHUNNILAL PATEL VS ACIT (SUPRA) EVEN WENT TO THE EXTENT THAT AT THE INITIATION STAGE FORMATION OF REASONABLE BELIEF IS NEEDED AND NOT A CONCLUSIVE FINDING OF FACTS . IDENTICAL RATIO WAS LAID DOWN IN BRIJMOHAN AGRAWAL VS ACIT ( 2004) 268 ITR 400, 405 (ALL.) AND RATNACHUDAMANI S. UTNAL VS ITO (2004) 269 ITR 272, 277 (KARNATAKA) APPLYING SOWDAGAR AHMED KHAN VS ITO (1968) 70 ITR 79(SC). 2.6. SO FAR AS, THE MEANING OF EXPRESSION, REASON TO BELIEVE IS CONCERNED, IT REFERS TO BELIEF WHICH PR OMPTS THE ASSESSING OFFICER TO APPLY SECTION 147 TO A PARTICU LAR CASE. IT DEPEND UPON THE FACTS OF EACH CASE. THE BELIEF M UST BE OF AN HONEST AND REASONABLE PERSON BASED ON REASONABLE GROUNDS. THE ASSESSING OFFICER IS REQUIRED TO ACT, NOT ON MERE SUSPICION, BUT ON DIRECT OR CIRCUMSTANTIAL EVI DENCE. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 12 OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN F OLLOWING CASES:- I. EPICA LABORATORIES LTD. VS DCIT 251 ITR 420, 425-426 (BOM.), II. VISHNU BOREWELL VS ITO (2002) 257 ITR 512 (ORISSA), III. CENTRAL INDIA ELECTRIC SUPPLY COMPANY LTD. VS ITO (201 1) 333 ITR 237 (DEL.), IV. V.J. SERVICES COMPANY MIDDLE EAST LTD. VS DCIT (2011) 339 ITR 169 (UTTRAKHAND), V. CIT VS ABHYUDAYA BUILDERS (P. ) LTD. (2012) 340 ITR 310 (ALL.), VI. CIT VS DR. DEVENDRA GUPTA (2011) 336 ITR 59 (RAJ.), VII. EMIRATES SHIPPING LINE FZE VS ASST. DIT (2012) 349 I TR 493 (DEL.). VIII. REFERENCE MAY ALSO MADE TO FOLLOWING JUDICIAL DECISI ONS:- IX. SAFETAG INTERNATIONAL INDIA P. LTD. (2011) 332 ITR 622 (DEL.), X. CIT VS ORIENT CRAFT LTD. (2013) 354 ITR 536 (DEL.) XI. ACORUS UNITECH WIRELSS PVT. LTD. VS ACIT (2014) 362 I TR 417 (DEL.). XII. PRAFUL CHUNILAL PATEL: VASANT CHUNILAL PATEL VS ASST. CIT (1999) 832, 843-44, 844-45 (GUJ.), XIII. VENUS INDUSTRIAL CORPORATION VS ASST. CIT (1999) 236 I TR 742, 746 (PUNJ.), XIV. SRICHAND LALCHAND TALREJA VS ASST. CIT (1998) 98 TAXM AN 14, 19 (BOM.), XV. USHA BELTRON LTD. VS JCIT (1999) 240 ITR 728, 736-37, 739 (PAT.) XVI. KAPOOR BROTHERS VS UNION OF INDIA (2001) 247 ITR 32 4, 331, 332-33 XVII. VIPPY PROCESSORS PVT. LTD. VS CIT (2001) 249 ITR 7, 8 (MP) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 13 2.8. IN DILIP S. DAHANUKAR VS ASST. CIT (2001) 248 ITR 147, 150-51 (BOM.). THE HONBLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- HELD, THAT THERE WAS MATERIAL ON RECORD ON THE BASIS OF SURVEY AND STATEMENT OF PERSON TO SHOW THAT THE ASSESSEE HAD WRONGFULLY CLAIM DEDUCTION U/S 80IA. THEREFORE, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 1994- 95. IDENTICALLY IN THE CASE OF SRICHAND LALCHAND TALREJ A V. ASST. CIT, (1998) 98 TAXMAN 14, 19 (BOM), WHERE THE INFORMATION REGARDING ACQUISITION OF THE ASSET WAS NOT AVAILABLE WITH THE ASSESSING OFFICER DURING THE REL EVANT ASSESSMENT YEAR 1992-93 AND SUCH INFORMATION WAS DISCLOSED IN THE RETURN FOR THE ASSESSMENT YEAR 199 5- 96, THE HONBLE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSING OFFICER CAN FORM A BONA FIDE BELIEF THAT THERE WAS ESCAPEMENT OF INCOME IN RELATION TO ASSESSMENT YEAR 1992-93 . ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 14 2.9. THE HONBLE JURISDICTIONAL HIGH COURT IN EXP ORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT, (2013) 350 ITR 651 (BOM), WHERE THERE HAD BEEN NO APPLICATION OF MIND TO THE RELEVANT FACTS DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFI CER, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE VALID. 2.10. THE HONBLE JURISDICTIONAL HIGH COURT IN GIRILAL & CO. V. S.L. MEENA, ITO, (2008) 300 ITR 43 2 (BOM), HELD THAT IN ORDER TO INVOKE THE EXTRAORDIN ARY JURISDICTION OF THE COURT THE PETITIONER MUST ALSO MAKE OUT A CASE THAT NO PART OF THE RELEVANT MATERIAL HA D BEEN KEPT OUT FROM THE ASSESSING OFFICER). THE INFORMATION WAS IN THE ANNEXURES AND CONSEQUENTLY EXPLANATION 2(C)(IV) OF SECTION 147 WOULD APPLY. TH E REASSESSMENT PROCEEDINGS AFTER FOUR YEARS WERE VALI D. 2.11. IN THE CASE OF DEPUTY CIT V. GOPAL RAMNARAYA N KASAT, (2010) 328 ITR 556 (BOM), IT WAS NOT THE CAS E OF THE ASSESSEE THAT THE NOTICE ISSUED WAS AFTER THE EXPIR Y OF THE TIME LIMIT PROVIDED IN SECTION 153(2). THE REASSESS MENT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 15 PROCEEDINGS WERE HELD TO BE VALID. IN INDIAN HUME PIPE CO. LTD. V. ASST. CIT, (2012) 348 ITR 439 (BOM), BOTH I N THE COMPUTATION OF TAXABLE LONG-TERM CAPITAL GAINS IN T HE ORIGINAL RETURN OF INCOME AND IN THE COMPUTATION TH AT WAS SUBMITTED IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICER THERE WAS A COMPLETE SILENCE IN REGARD TO THE DATES ON WHICH THE AMOUNTS WERE INVESTED, AS SUCH THERE BEIN G A FAILURE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDINGS WERE H ELD TO BE VALID. THIS VIEW WAS ALSO CONFIRMED IN FOLLOWING CASES:- A. DALMIA P. LTD. V. CIT, (2012) 348 ITR 469 (DEL); B. CIT V. K. MOHAN & CO. (EXPORTS), (2012) 349 ITR 653 (BOM); C. REMFRY & SAGAR V. CIT, (2013) 351 ITR 75 (DEL); D. OPG METALS & FINSEC LTD. V. CIT, (2013) 358 ITR 144 (DEL). 2.12. IN THE CASE OF VENUS INDUSTRIAL CORPORATION V. ASST. CIT, (1999) 236 ITR 742, 746 (P & H) [WHERE I NITIATION WAS STARTED WITHIN FOUR YEARS FOR RE-EXAMINING THE DEDUCTION UNDER SECTION 80HHC, WAS HELD TO BE WRONG LY ALLOWED IN THE ORIGINAL ASSESSMENT. IDENTICALLY, IN THE CASE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 16 OF HAPPY FORGING LTD. V. CIT, (2002) 253 ITR 413,41 6-17 (P & H), WHERE EXCISE DUTY PAID IN ADVANCE WAS SHOWN A S AN ASSET IN THE BALANCE SHEET AND WAS ALLOWED AS A DED UCTION, REASSESSMENT NOTICE ON THE GROUND THAT EXCISE DUTY WAS SHOWN AS AN ASSET IN THE BALANCE SHEET AND WAS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. THE REOPENING AT THIS STAGE WAS HELD TO BE VALID. IN THE CASE OF VIPAN K HANNA V. CIT, (2002) 255 ITR 220, 230 (P & H), WHERE FROM THE FACTS IT WAS CLEAR THAT THE ASSESSEE HAD CLAIMED DEPRECIATION IN THE RETURN AT THE RATE OF 50 PER CE NT AND HE HAD NOWHERE DISPUTED THE FACT THAT THE ADMISSIBLE R ATE OF DEPRECIATION TO HIM WAS 40 PER CENT., SUCH FACT ALO NE WAS SUFFICIENT TO INITIATE REASSESSMENT PROCEEDINGS UND ER SECTION 147 OF THE ACT, THEREFORE, SUCH INITIATION WAS SUSTAINED. THE HONBLE PUNJAB & HARYANA HIGH COURT IN MRS. RAMA SINHA V. CIT, (2002) 256 ITR 481, 483, 48 6, WHERE THE REASSESSMENT NOTICE HAS BEEN ISSUED ON TH E BASIS OF DEFINITE INFORMATION FROM CBI REGARDING INVESTMENTS BY THE ASSESSEE WHICH HAD NOT BEEN DISC LOSED DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, SUCH IN ITIATION HAS BEEN UPHELD. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 17 2.13. IN THE CASE OF PAL JAIN V. ITO, (2004) 267 I TR 540, 544-45, 548, 549 (P & H), APPLYING PHOOL CHAND BAJRANG LAL V. ITO, (1993) 203 ITR 456 (SC), ALTHOU GH THE TRANSACTION OF SALE OF SHARES WAS DISCLOSED AND ACC EPTED IN THE ORIGINAL ASSESSMENT, BUT THE SUBSEQUENT DISCOVE RY BY THE DDI (INVESTIGATION) REVEALED THAT THE TRANSACTI ON WAS NOT GENUINE, A REASSESSMENT NOTICE AFTER FOUR YEARS HAS BEEN HELD TO BE VALID BECAUSE THERE WAS NO TRUE DIS CLOSURE OF THE MATERIAL FACTS. IN THIS REGARD, THE PETITION ER-ASSESSEE CANNOT DRAW ANY SUPPORT FROM THE STATEMENT FOR CHALLENGING THE VALIDITY OF THE NOTICE FOR REASSESS MENT. IT GOES WITHOUT SAYING THAT FOR THE PURPOSE OF MAKING THE ASSESSMENT, THE ASSESSING OFFICER SHALL HAVE TO CON FRONT THE PETITIONER WITH THE ENTIRE MATERIAL IN HIS POSSESSI ON ON THE BASIS OF WHICH HE PROPOSES TO MAKE THE ADDITIONS. I N PUNJAB LEASING PVT. LTD. V. ASST. CIT, (2004) 267 I TR 779, 781-82 (P & H), WHERE DEPRECIATION WAS ALLOWED TO T HE ASSESSEE, WHO WAS ENGAGED IN THE BUSINESS OF FINANC ING OF VEHICLES AND CONSUMER DURABLES ON 'HIRE-PURCHASE BA SIS' AS WELL AS ON 'LEASE/RENT BASIS', A REASSESSMENT NOTIC E ISSUED ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 18 AFTER FOUR YEARS HAS BEEN HELD NOT TO SUFFER FROM A NY ILLEGALITY AS THE SAME WAS BASED ON THE BONA FIDE A CTION OF THE COMPETENT AUTHORITY TO DETERMINE WHETHER OR NOT THE VEHICLES IN RESPECT OF WHICH THE PETITIONER HAD BEE N CLAIMING DEPRECIATION, WERE ACTUALLY OWNED BY IT. 2.14. IN JAWAND SONS V. CIT(A), (2010) 326 ITR 39 (P & H), IN THE INITIAL ASSESSMENT, THE BENEFIT OF DEDUC TION OF THE DUTY DRAWBACK AND DEPB UNDER SECTION 80-IB WAS WRON GLY GRANTED TO THE ASSESSEE, FOR WHICH IT WAS NOT ENTIT LED. THEREFORE, REASSESSMENT PROCEEDINGS TO WITHDRAW THE DEDUCTION WERE HELD TO BE VALID. LIKEWISE, IN CIT V. HINDUSTAN TOOLS & FORGINGS P. LTD., (2008) 306 ITR 209 (P & H), WHERE, THE ASSESSEE IN THE REGULAR ASSESSMENT HAD BEEN ALLOWED DEDUCTION MORE THAN ACTUALLY ALLOWABLE UNDER SECTION 80HHC. THEREFORE, THE ACTION INITIATED BY T HE AO FOR REASSESSMENT UNDER SECTION 147(B) COULD NOT BE HELD TO BE INVALID. 2.15. IN THE CASE OF MARKANDA VANASPATI MILLS LTD. V. CIT, (2006) 280 ITR 503 (P & H), WHEREIN, THE INFOR MATION FURNISHED BY THE ASSESSEE GAVE NO CLUE TO THE PAYME NT OF ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 19 LIABILITY IN REGARD OF THE SALES TAX COLLECTED IN E XCESS. THE ASSESSING OFFICER WAS HELD TO BE VALIDLY INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 FOR BOTH THE YEARS UNDER CONSIDERATION. IN THE CASE OF SAT NAR AIN V. CIT, (2010) 320 ITR 448 (P & H), THE DOCUMENT DID N OT FORM THE SOLE BASIS FOR THE ASSESSING OFFICER TO INITIA TE REASSESSMENT PROCEEDING BUT HE ALSO TOOK INTO CONSIDERATION THE LETTER WRITTEN BY THE ASSISTANT COMMISSIONER AS WELL AS THE FACT THAT NO RETURN HAD BEEN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 1995-96. THUS, IT WAS HELD THAT THE ASSESSING OFFICER HAD RIGHTLY INV OKED THE JURISDICTION TO INITIATE THE REASSESSMENT PROCEEDIN GS UNDER SECTION 147. IN THE CASE OF CIT V. HUKAM SINGH, (2 005) 276 ITR 347 (P & H), IT WAS HELD THAT THE RESPONDEN TS DID NOT HAVE THE LOCUS STANDI TO QUESTION THE ORDERS OF REASSESSMENT ON THE GROUND OF LACK OF NOTICE. NON-I SSUANCE OF NOTICE TO SOME OF THE LEGAL HEIRS OF THE LATE P WAS MERELY AN IRREGULARITY AND THE SAME DID NOT AFFECT THE VAL IDITY OF THE REASSESSMENT ORDERS. LIKEWISE, IN TILAK RAJ BE DI V. JOINT CIT, (2009) 319 ITR 385 (P & H), WHEREIN, FAC TS COMING TO LIGHT IN A SUBSEQUENT ASSESSMENT YEAR COU LD ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 20 VALIDLY FORM THE BASIS FOR INITIATING REASSESSMENT PROCEEDINGS, IN VIEW OF EXPLANATION 2 TO SECTION 14 7. THE ACTION OF THE INCOME TAX AUTHORITIES IN REOPENING T HE ASSESSMENT OF THE ASSESSEE AND RESTRICTING THE DEDU CTION UNDER SECTION 80-IB WAS HELD TO BE VALID. 2.16. IN THE CASE OF SMT. USHA RANI V. CIT, (2008) 301 ITR 121 (P & H), THERE WAS NOTHING ON RECORD TO SHO W THE RELATIONSHIP BETWEEN THE DONOR AND THE DONEE, CAPAC ITY OF THE DONOR TO MAKE GIFTS AND THE OCCASION THEREFORE. THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS TO PROVE THE GIFTS. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALID. IN THE CASE OF USHA BELTRON LTD. V. JOINT CIT, (1999) 240 ITR 728, 736-37, 739 (PAT), WHERE THE INVESTIGATION REPORT I NDICATED THAT THE OFFICER HAD REASON TO BELIEVE THAT ON ACCO UNT OF FAILURE ON THE PART OF THE PETITIONER-ASSESSEE TO D ISCLOSE TRUE AND FULL FACTS, INCOME HAD BEEN GROSSLY UNDER ASSESSED, REASSESSMENT PROCEEDINGS WERE HELD VALIDL Y INITIATED. 2.17. IN THE CASE OF KAPOOR BROTHERS V. UNION OF I NDIA, (2001) 247 ITR 324, 331, 332-33 (PAT), WHERE THE MA TERIAL ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 21 EVIDENCE FOR THE PURPOSE OF REOPENING OF THE ASSESS MENT ALREADY COMPLETED HAS BEEN BROUGHT TO THE NOTICE OF THE AUTHORITY DURING THE COURSE OF ENQUIRY. THE NOTICE WAS HELD TO BE VALID BY THE HONBLE HIGH COURT. IN THE CASE OF VIPPY PROCESSORS PVT. LTD. V. CIT, (2001) 249 ITR 7, 8 (M P), WHERE THE NEED TO ISSUE NOTICE AROSE DUE TO NOTICING OF V AST DIFFERENCE IN VALUE OF PROPERTIES DISCLOSED BY THE ASSESSEE AND THAT OF THE REPORT OF THE VALUATION OFFICER AND THE REASONS THAT LED TO THE ISSUE OF THE NOTICE WERE DU LY RECORDED AND THE SAME WERE ALSO ADEQUATE AND BASED ON RELEVANT FACTS AND MATERIAL, INITIATION WAS UPHELD. IN TRIPLE A TRADING & INVESTMENT PVT. LTD. V. ASST. CIT, (200 1) 249 ITR 109, 110-11 (MP), WHERE THE NOTICE WAS ISSUED A FTER RECORDING REASONS IN THAT REGARD, INITIATION WAS UP HELD. 2.18. LIKEWISE, HONBLE GUJARAT HIGH COURT IN GARD EN FINANCE LTD. V. ADD/. CIT, (2002) 257 ITR 481, 489, 494- 95, SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COURT: (2002) 255 ITR (ST.) 7-8 (SC), WHERE THE ASSESSEE W AS HOLDING SHARES IN AN AMALGAMATING COMPANY AND HE WA S ALLOTTED SHARES IN THE AMALGAMATED COMPANY AND SUCH SHARES WERE SOLD BY HIM AND HE HAS DISCLOSED THE MA RKET ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 22 PRICE OF SUCH SHARES AS ON THE DATE OF AMALGAMATION AS THE COST OF ACQUISITION OF SUCH SHARES AND HAS NOT DISC LOSED THE COST OF ACQUISITION OF SHARES IN THE AMALGAMATING C OMPANY IN ACCORDANCE WITH SECTION 49(2) READ WITH SECTION 47(VII), INITIATION OF REASSESSMENT PROCEEDINGS AFTER FOUR Y EARS HAS BEEN SUSTAINED BECAUSE THERE WAS FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS NECESSARY FOR ASSESSMENT. LIKEWISE, IN SUMAN STEELS V. UNION OF INDIA, (2004) 269 ITR 412,418-19 (RAJ), WHERE THE RETURN O F THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 WAS PROCESSED UNDER SECTION 143(1)(A) ACCEPTING THE NET PROFIT RATE DEC LARED BY THE ASSESSEE, WHO CARRIED ON CON- TRACT BUSINESS, I NITIATION OF REASSESSMENT PROCEEDINGS BY ISSUING A NOTICE DAT ED 15- 5-2001 PROPOSING TO REASSESS PETITIONER-ASSESSEE AT HIGHER RATE IN VIEW OF THE PRESUMPTIVE RATE PRESCRIBED UND ER SECTION 44AD HAS BEEN SUSTAINED. IN THE CASE OF D R. SAHIB RAM GIRI V. ITO, (2008) 301 ITR 294 (RAJ), THE REASSESSMENT PROCEEDINGS WERE INITIATED AFTER RECOR DING REASONS IN WRITING BY THE AO. THE NON-AVAILABILITY OF A FEW DOCUMENTS DEMANDED BY THE ASSESSEE WOULD NOT MAKE T HE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 23 REASSESSMENT PROCEEDINGS INITIATED FOR THE REASONS RECORDED IN DETAIL ILLEGAL. 2.19 IN THE CASE OF DESH RAJ UDYOG : CHAMAN UDYOG V. ITO, (2009) 318 ITR 6 (ALL), IN THE ASSESSMENT Y EARS IN QUESTION, THE MATTER WAS STILL TO BE DECIDED FINALL Y BY THE ASSESSING AUTHORITY WHETHER THE INCOME SHOULD BE TR EATED UNDER THE HEAD 'BUSINESS INCOME' OR 'PROPERTY INCOM E'. THE ASSESSEE WOULD GET OPPORTUNITY TO SHOW SUFFICIENT C AUSE TO THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESS MENT. THUS, IT COULD NOT BE SAID THAT THERE WAS NO RELEVA NT MATERIAL TO INITIATE PROCEEDINGS UNDER SECTION 147. IN THE CASE OF KARTIKEYA INTERNATIONAL V. CIT, (2010) 329 ITR 539 (ALL), IN VIEW OF THE MATTER, THE PETITIONER WAS NO T ENTITLED FOR THE DEDUCTION ON THE DUTY DRAWBACK AMOUNT UNDER SECTION 80-IB AND SINCE IT HAD BEEN ALLOWED IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(1), IT HA D ESCAPED ASSESSMENT. ON THESE FACTS THE INITIATION O F THE PROCEEDINGS UNDER SECTION 147 READ WITH SECTION 148 FOR ASSESSMENT YEARS 2005-06 AND 2006-07 WAS LEGAL AND IN ACCORDANCE WITH LAW. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 24 2.20. LIKEWISE, IN THE CASE OF SUNIL KUMAR LAIN: S URESH CHANDRA LAIN V. ITO, (2006) 284 ITR 626 (ALL), NOTWITHSTANDING THE FACT THAT THE AMOUNT HAD BEEN ASSESSED TO TAX IN THE HANDS OF P, HE HAD TAKEN A S TAND THAT THE AMOUNT DID NOT BELONG TO HIM AND INSTEAD BELONGED TO S. THUS, IT WAS NOT CLEAR AS TO IN WHOS E HANDS THE AMOUNT IN QUESTION HAD TO BE ASSESSED. THE ITO WAS JUSTIFIED IN TAKING PROCEEDINGS UNDER SECTION 147 F OR ASSESSING THE AMOUNTS IN THE HANDS OF THE PETITIONE RS ACCORDING TO THE CLAIM MADE BY THE PETITIONERS. LI KEWISE, HONBLE KERALA HIGH COURT IN CIT V. DR. SADIQUE UMM ER, (2010) 322 ITR 602 (KER), WHERE, THE ASSESSING OFFI CER COLLECTED FURTHER INFORMATION TO COMPLETE THE REASS ESSMENTS WHICH WAS ALSO PERMISSIBLE UNDER THE ACT. THE FINDI NG OF THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUN AL, THAT THE ASSESSING OFFICER HAD NO MATERIAL TO BELIEVE TH AT THE INCOME HAD ESCAPED ASSESSMENT WAS WRONG AND CONTRAR Y TO FACTS. THE ASSESSEE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT. THEREFORE, THE REOPENING OF ASSESSMENTS WA S HELD TO BE VALID AND WITHIN TIME. IN THE CASE OF CIT V . UTTAM CHAND NAHAR, (2007) 295 ITR 403 (RAJ), THE NOTICE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 25 REQUIRING THE ASSESSEE TO FILE THE RETURN WITHIN 30 DAYS WAS IN ACCORDANCE WITH SECTION 148 AS IT MUST BE DEEMED TO BE IN FORCE WITH EFFECT FROM 1-4-1989, AND IN FORCE AS ON THE DATE NOTICE WAS ISSUED. THERE WAS NO VIOLATION OF S ECTION 148 IN RESPECT OF THE SPECIFIED PERIOD WITHIN WHICH THE RETURN IS TO BE SUBMITTED. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. 2.21. IN THE CASE OF CIT V. C. V. LAYACHANDRAN, (2 010) 322 ITR 520 (KER), WHERE, THE ASSESSEE DID NOT CONC EDE THE INCOME ON CAPITAL GAIN EITHER UNDER THE UN-AMENDED PROVISION OR UN-DER THE AMENDED PROVISION, THE RECO URSE OPEN TO THE DEPARTMENT WAS TO BRING TO TAX INCOME ESCAPING ASSESSMENT UNDER SECTION 147 WHICH WAS NOT TIME BARRED OR OTHERWISE INVALID. LIKEWISE, IN ATUL TR ADERS V. ITO, (2006) 282 ITR 536 (ALL), THE ACCOUNT BOOKS OR RECORD AND OTHER MATERIAL WERE ALL COMMON WHICH WERE BEING CONSIDERED BY THE CIT(A) IN THE PROCEEDINGS RELATIN G TO THREE APPEALS. THE PETITIONER HAD NOTICE AND OPPORT UNITY OF BEING HEARD. THE REASSESSMENT PROCEEDINGS WERE HELD TO BE VALIDLY INITIATED. IN THE CASE OF INDUCTOTHERM (IN DIA) P. LTD. V. LAMES KURIAN, ASST. CIT, (2007) 294 ITR 341 (GUJ ), THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 26 ASSESSING OFFICER HAD FOUND THAT THERE WERE ERRORS IN THE COMPUTATION OF ALLOWANCES. THE REASSESSMENT PROCEED INGS WERE HELD TO BE VALID. IN THE CASE OF PAPAYA FARMS PVT. LTD. VS. DCIT, (2010) 323 ITR 60 (MAD), WHERE THE ASSESS EE HAD FURNISHED INCORRECT PARTICULARS AND THEREFORE, THE REOPENING OF THE ASSESSMENT WAS HELD TO BE JUSTIFIED. 2.22. IN THE CASE OF CIT V. KERALA STATE CASHEW DEVELOPMENT CORPORATION LTD., (2006) 286 ITR 553 (K ER), WHEREIN, THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING SHOULD NOT HAVE CLAIMED DEDUCTION OF PENAL INTEREST WHICH HAD ACCRUED NOT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BUT IN EARLIER YEAR S. THIS THE ASSESSEE HAD NOT DISCLOSED. THE REASSESSMENT WA S HELD TO BE VALID. LIKEWISE, IN KUSUM INDUSTRIES P. LTD. V. CIT, (2008) 296 ITR 242 (ALL), AS THE AWARD HAD BECOME F INAL IT WOULD BE TAKEN THAT THE DIRECTORS OF THE ASSESSEE H AD ACCEPTED THE FACTUM OF EARNING OF SECRET PROFIT NOT REFLECTED IN THE BOOKS OF ACCOUNT, WHICH WAS ALSO BINDING ON THE COMPANY. THE NON-APPEARANCE OF ONE OF THE ARBITRATO RS AND ONE OF THE DIRECTORS IN RESPECT OF THE SUMMON ISSUE D UNDER SECTION 131 WOULD NOT MAKE THE REASSESSMENT INVALID . THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 27 HONBLE KERALA HIGH COURT IN CIT V. INDO MARINE AGE NCIES (KERALA) P. LTD., (2005) 279 ITR 372 (KER), HELD TH AT THE ENTRY WOULD AMOUNT TO AN ORDER UNDER SECTION 144. T HE MERE FACT THAT IT WAS NOT COMMUNICATED TO THE ASSES SEE WOULD NOT MAKE SUCH AN ASSESSMENT RECORDED IN THE O RDER SHEET ILLEGAL AND THAT WOULD NOT BAR FURTHER PROCEE DINGS UNDER SECTION 147 OF THE ACT. THUS, THE ASSESSMENT WAS HELD TO BE VALIDLY REOPENED UNDER EXPLANATION 2(C) TO SECTION 147. LIKEWISE, IN CIT V. N. JAYAPRAKASH, ( 2006) 285 ITR 369 (KER), WHERE, THE ASSESSEE COULD NOT, A FTER HAVING PERSUADED THE ASSESSING AUTHORITY TO WITHDRA W THE NOTICE DATED 1-10-1993, POINTING OUT THAT IT WAS NO T IN CONFORMITY WITH LAW, BE ALLOWED TO CONTEND THAT THE NOTICE WAS VALID DUE TO THE OMISSION OF THE TIME-LIMIT BY THE FINANCE (NO.2) ACT, 1996, WITH EFFECT FROM 1-4-1989 . IN THE ABSENCE OF SPECIFIC PROVISION IN THE FINANCE (NO. 2 ) ACT, 1996, INVALIDATING PROCEEDINGS INITIATED BY THE INC OME-TAX OFFICER, THE ACTION TAKEN BY HIM APPLYING THE THEN EXISTING LAW COULD NOT BE SAID TO BE INVALID. 2.23. LIKEWISE, IN CIT V. S.R. TALWAR, (2008) 305 ITR 286 (ALL), THE FACTUM OF TAKING ADVANCES OR LOAN FR OM T AND ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 28 K, IN WHICH THE ASSESSEE WAS ONE OF THE DIRECTORS H AD NOT BEEN DISCLOSED NOR A COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE MAINTAINED BY THE COMPANY FILED. IN VIEW O F THE ABSENCE OF THESE DETAILS, THE ASSESSING OFFICER COU LD NOT EXAMINE THE TAXABILITY OF ADVANCES OR LOAN RAISED B Y THE ASSESSEE. THERE WAS FAILURE TO DISCLOSE MATERIAL FA CTS NECESSARY FOR ASSESSMENT. THE REASSESSMENT PROCEEDI NGS WERE HELD TO BE VALID. IN ANOTHER CASE, THE HONBL E ALLAHABAD HIGH COURT IN CHANDRA PRAKASH AGRAWAL V. ASST. CIT, (2006) 287 ITR 172 (ALL), WHEREIN, THE INCOME- TAX DEPARTMENT HAD SENT A REQUISITION ON 27-3-2002, UND ER SECTION 132A REQUISITIONING THE BOOKS OF ACCOUNT AN D OTHER DOCUMENTS SEIZED BY THE CENTRAL EXCISE DEPARTMENT. THE RECORD OF THE PROCEEDING DATED 18-4-2002, SHOWED TH AT THE REQUISITION WAS NOT FULLY EXECUTED AS ALL THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS HAD NOT BEEN DELIVERED TO THE REQUISITIONING AUTHORITY. THE PROCEEDINGS INITIATED UNDER SECTION 147 WAS HELD TO BE VALID. 2.24. IN RAMILABEN RATILAL SHAH V. CIT, (2006) 282 ITR 176 (GUJ), HELD THAT THE NOTING IN THE DIARY CONSTITUTED SUFFICIENT INFORMATION FOR THE ESCAPEME NT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 29 OF INCOME BY EITHER NON-DECLARATION OF CORRECT SALE CONSIDERATION OR FURNISHING OF INACCURATE PARTICULA RS AS REGARDS SALE CONSIDERATION. THUS, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FAILED T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR THE ASSESSMENT OF THE RELEVANT ASSESSMENT YEAR. THE REASSESSMENT PROCEEDINGS HAD BEEN VALIDLY INITIATED . 2.25. LIKEWISE, IN CIT V. ABDUL KHADER AHAMED, (2006) 285 ITR 57 (KER), IT WAS CLEAR FROM THE REAS ONS RECORDED BY THE DEPUTY CIT THAT HE PRIMA FACIE HAD REASON TO BELIEVE THAT THE ASSESSEE HAD OMITTED TO DISCLOS E FULLY AND TRULY THE MATERIAL FACTS AND THAT AS A CONSEQUE NCE INCOME HAD ESCAPED ASSESSMENT. THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF U.P. STATE BRASSW ARE CORPORATION LTD. V. CIT, (2005) 277 ITR 40 (ALL), T HE PRINCIPLES LAID DOWN BY THE CALCUTTA HIGH COURT IN CIT V. NEW CENTRAL JUTE MILLS CO. LTD. : (1979) 118 ITR 10 05 (CAL) DID CONSTITUTE INFORMATION ON A POINT OF LAW WHICH SHOULD BE TAKEN INTO CONSIDERATION BY THE ITO IN FORMING H IS BELIEF THAT THE INCOME TO THAT EXTENT HAD ESCAPED ASSESSME NT TO TAX AND, THE REASSESSMENT WAS HELD TO BE VALID. IN SUNDER ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 30 CARPET INDUSTRIES V. ITO, (2010) 324 ITR 417 (ALL), HELD THAT THE DEPARTMENTAL VALUER'S REPORT CONSTITUTED MATERI AL FOR ENTERTAINING A BELIEF OF ESCAPED INCOME IN THE YEAR S UNDER CONSIDERATION. THE REASSESSMENT PROCEEDING WAS HELD TO BE VALID. 2.26. IN AUROBINDO SANITARY STORES V. CIT, (2005) 276 ITR 549 (ORI), THERE BEING A SUBSTANTIAL DIFFERENCE BETWEEN THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE PARTY LEDGERS OF THE ASSESSEE-FIRM AND THE FIGURES OF LIABILITIES TOWARDS SUNDRY CREDITORS IN THE BALANCE -SHEET OF THE ASSESSEE-FIRM FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1989-90. THESE MATERIALS HAD A DIRE CT LINK AND NEXUS FOR FORMATION OF A BELIEF BY THE ASSESSIN G OFFICER THAT INCOME OF THE ASSESSEE-FIRM HAD ESCAPED ASSESS MENT BECAUSE OF FAILURE OF THE ASSESSEE TO DISCLOSE FULL Y AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. I N THE CASE OF CIT V. BEST WOOD INDUSTRIES & SAW MILLS, (2011) 331 ITR 63 (KER), THE ASSESSEE CHALLENGED THE VALIDITY OF T HE REASSESSMENT ON THE GROUND THAT THE AO HAD EXCEEDED HIS JURISDICTION UNDER SECTION 147 AND BOTH THE FIRST A PPELLATE AUTHORITY AS WELL AS THE TRIBUNAL ACCEPTED THE CONT ENTION OF ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 31 THE ASSESSEE HOLDING THAT SO FAR AS THE REASSESSMEN TS RELATED TO ASSESSMENT OF UNEXPLAINED TRADE CREDITS, THEY WERE INVALID. ON APPEAL, IT HAS BEEN HELD THAT THE REASSESSMENTS WERE TO BE VALID. IN HONDA SIEL POWE R PRODUCTS LTD. V. DEPUTY CIT, (2012) 340 ITR 53 (DEL ), THERE BEING OMISSION AND FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THUS REASSE SSMENT PROCEEDINGS WERE HELD TO BE VALID. 2.27. IN ATMA RAM PROPERTIES PRIVATE LTD. V. DEPUT Y CIT, (2012) 343 ITR 141 (DEL), AS THE BOOKS OF ACCO UNT AND OTHER MATERIAL WERE NOT PRODUCED AND NO LETTER WAS FILED, THE ORDER PASSED BY THE COMMISSIONER (APPEALS) IN T HE ASSESSMENT YEAR 2001-02 WOULD CONSTITUTE 'INFORMATI ON' OR MATERIAL FROM ANY EXTERNAL SOURCE AND, AS SUCH, THE REASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 20 00-01 WERE HELD TO BE VALID. LIKEWISE, IN THE CASE OF C IT V. SMT. R. SUNANDA BAI, (2012) 344 ITR 271 (KER), THE REASSESSMENT IN QUESTION WERE HELD TO BE VALID ON T HE FACT THAT THE ASSESSEE CLAIMED AND WAS GIVEN RELIEF UNDE R SECTION 80HHA FOR THE THREE PRECEDING YEAR WHICH ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 32 DISENTITLED HER FOR DEDUCTION UNDER SECTION 80HH FO R THE ASSESSMENT YEARS 1992-93 AND 1993-94. 2.28. IN THE CASE OF AQUAGEL CHEMICALS P. LTD. V. ASST. CIT, (2013) 353 ITR 131 (GUJ), SINCE THERE BEING SU FFICIENT MATERIAL ON RECORD FOR THE ASSESSING OFFICER TO FOR M A BELIEF AS REGARDS THE ESCAPEMENT OF INCOME IN RELATION TO THE CLAIM OF DEPRECIATION IN RESPECT OF THE BUILDING OF COAL FIRE BOILER, THE REASSESSMENT WAS HELD TO BE VALID. IN THE CASE OF CONVERGYS CUSTOMER MANAGEMENT V. ASST. DIT, (201 3) 357 ITR 177 (DEL), WHERE THERE BEING PRIMA FACIE MA TERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO FORM A T ENTATIVE BELIEF THAT SECTION 9(1)(I) HELD ATTRACTED, SAID RE ASON BY ITSELF CONSTITUTED A RELEVANT GROUND TO REOPEN THE ASSESSM ENT OF THE ASSESSEE. REFERENCE MAY ALSO BE MADE TO I. AJAI VERMA V. CIT [(2008) 304 ITR 30 (ALL)]; II. ASHOK ARORA V. CIT [(2010) 321 ITR 171 (DEL)]; III. CIT V. CHANDRASEKHAR BALAGOPAL [(2010) 328 ITR 619 (KER)]; IV. JAYARAM PAPER MILLS LTD. V. CIT [(2010) 321 ITR 56 ( MAD)]; V. KERALA FINANCIAL CORPORATION V. JOINT CIT [(2009) 30 8 ITR 434 (KER)]; ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 33 VI. MAVIS SATCOM LTD. V. DEPUTY CIT [(2010) 325 ITR 428 (MAD)]; VII. CIT V. MADHYA BHARAT ENERGY CORPORATION LTD. [(2011) 337 ITR 389 (DEL)]; VIII. KONE ELEVATOR INDIA P. LTD. V. ITO [(2012) 340 ITR 45 4 (MAD)]; IX. VIJAY KUMAR SABOO V. ASST. CIT [(2012) 340 ITR 382 (KARN)]; X. SIEMENS INFORMATION SYSTEMS LTD. V. ASST. CIT [(2012) 3 43 ITR 188 (BOM)]; XI. I.P. PATEL & CO. V. DEPUTY CIT [(2012) 346 ITR 207 (GUJ)]; XII. DISHMAN PHARMACEUTICALS & CHEMICALS LTD. V. DEPUTY CI T [(2012) 346 ITR 228 (GUJ)]; XIII. VIDEO ELECTRONICS LTD. V. JOINT CIT [(2013) 353 ITR 7 3 (DEL)]; XIV. A G GROUP CORPORATION V. HARSH PRAKASH [(2013) 353 I TR 158 (GUJ)]; XV. INDUCTOTHERM (INDIA) P. LTD. V. M. GOPALAN, DEPUTY CIT [(2013) 356 ITR 481 (GUJ)]; CIT V. DHANALEKSHMI BAN K LTD. [(2013) 357 ITR 448 (KER)]; XVI. SITARA DIAMOND PVT. LTD. V. ITO [(2013) 358 ITR 424 (BOM)]; XVII. RAYALA CORPORATION P. LTD. V. ASST. CIT [(2014) 363 IT R 630 (MAD)]. 2.29. SO FAR AS, THE DECISION IN THE CASE OF CIT V S KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) IS CONCERNED, THE HONBLE APEX COURT, WHILE COMING TO A ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 34 PARTICULAR CONCLUSION, ONLY IN A SITUATION, WHEN NO T A SINGLE PIECE OF PAPER OR DOCUMENT WAS RECOVERED, THEREFORE , THE HONBLE COURT HELD THAT SINCE THERE WAS NO TANGIBLE MATERIAL FOUND AND THE ADDITION WAS MERELY ON THE B ASIS OF STATEMENT ONLY THEN REOPENING OF ASSESSMENT U/S 147 OF THE ACT WAS NOT PERMISSIBLE. LIKEWISE, IN THE CASE OF CIT VS S. KHADER KHAN SON (2012) 254 CTR 228 (SC), AFFIRMI NG THE DECISION OF MADRAS HIGH COURT IN (2008) 300 ITR 157 (MAD.), THE WHOLE ADDITION WAS MADE SOLELY ON THE B ASIS OF STATEMENT U/S 133A AND NO OTHER MATERIAL WAS FOUND, IN THAT SITUATION, IT WAS HELD THAT THE SUCH STATEMENT HAS NO EVIDENTIARY VALUE. 2.30. IN THE CASE OF ARADHNA ESTATE PVT. LTD. VS D CIT (2018) 91 TAXMANN.COM 119 (GUJARAT), THE HON'BLE HI GH COURT OBSERVED/HELD AS UNDER:- IN REASONS RECORDED BY THE ASSESSING OFFICER FOR R EOPENING THE ASSESSMENT. HE POINTED OUT THAT THE INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT AT CALCUTTA RE GARDING SHELL COMPANIES WHICH HAD GIVEN ACCOMMODATION ENTRIES FOR SHARE PREMIUM TO SURAT BASED COMPANIES. A LIST OF 114 CALCUTTA BASED COMPANIES WAS PROVIDED WHICH HAD GIVEN ACCOMMODATION ENTRIES TO S UCH SURAT BASED COMPANIES. STATEMENTS OF MANY ENTRY OPERATORS AND D UMMY DIRECTORS RECORDED DURING VARIOUS SEARCH AND SEIZURE OPERATIO N, SURVEY OPERATION AND INVESTIGATION WERE CHECKED. THE ASSESSING OFFIC ER THEREUPON PROCEEDED TO RECORD THAT 'ON PERUSAL OF DATA SO PRO VIDED BY THE DEPUTY DIRECTOR (INVESTIGATION), IT IS NOTICED THAT DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS ACCEPTED SH ARE CAPITAL/SHARE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 35 PREMIUM FROM THE FOLLOWING ENTRIES/PARTIES WHICH HA VE BEEN PROVED TO BE SHELL COMPANIES BASED ON THE INVESTIGATION CONDUCTE D BY THE DEPUTY DIRECTOR (INVESTIGATION). UNDERNEATH, HE PROVIDED A LIST OF 17 COMPANIES WHO HAD TRANSACTED WITH THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION AND WERE ALLOTED EQUITY SHARES BY PUR PORTED INVESTMENT OF SIZEABLE SHARE CAPITAL AND SHARE PREMIUM AMOUNTS. O N VERIFICATION OF SUCH MATERIALS, THE ASSESSING OFFICER NOTED THAT TH E ASSESSEE HAD RECEIVED SHARE CAPITAL/SHARE PREMIUM AMOUNT, SINCE THE INVESTOR COMPANIES WERE FOUND TO BE SHELL COMPANIES INDULGIN G IN PROVIDING ACCOMMODATION ENTRIES, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE SHARE CAPITAL/SHARE PREMIUM CLAIMED TO HAVE BEEN RE CEIVED FROM THE COMPANY BY THE ASSESSEE WAS NOT GENUINE. AMOUNT IS NOTHING BUT ASSESSEE'S OWN MONEY INTRODUCED IN THE GARB OF SHAR E CAPITAL/SHARE PREMIUM FROM THE SHELL COMPANIES AND THEREFORE, SUC H AMOUNT IS LIABLE TO BE TAXED UNDER SECTION 68. HE THEREFORE, RECORDE D HIS SATISFACTION THAT THE INCOME HAD ESCAPED ASSESSMENT AND THAT THIS WAS DUE TO THE ASSESSEE HAVING FAILED TO DISCLOSE TRULY AND FULLY ALL FACTS . [PARA 7] SECTION 147 PROVIDES INTER ALIA THAT IF THE ASSESSING OFFICER HAS THE REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY SUBJECT TO THE PROVISIONS OF SEC TIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME. PROVISO TO SECTION 147 OF COURSE REQUIRES THAT WHERE THE ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SH ALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF THE FOUR YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO MAKE RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR 148 OR TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YE AR. IN THIS CONTEXT, IT IS WELL SETTLED THAT THE REQUIREMENT OF FULL AND TR UE DISCLOSURE ON PART OF THE ASSESSEE IS NOT CONFINED TO FILING OF RETURN AL ONE BUT WOULD CONTINUE ALL THROUGHOUT DURING THE ASSESSMENT PROCEEDINGS AL SO. IN THIS CONTEXT, THE MATERIALS ON RECORD WOULD SUGGEST THAT THE ASSE SSING OFFICER HAD RECEIVED FRESH INFORMATION AFTER THE ASSESSMENT WAS OVER PRIMA FACIE SUGGESTING THAT SIZEABLE AMOUNT OF INCOME CHARGEAB LE TO TAX IN CASE OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND THAT SUC H ESCAPEMENT WAS ON ACCOUNT OF FAILURE ON PART OF THE ASSESSEE TO DISCL OSE TRULY AND FULLY ALL MATERIAL FACTS. THE ASSESSING OFFICER FORMED SUCH A BELIEF ON THE BASIS OF SUCH MATERIALS PLACED BEFORE HIM AND UPON PERUSAL O F SUCH MATERIAL. THIS IS NOT A CASE WHERE THE ASSESSING OFFICER WAS REEXAMINING THE MATERIALS AND THE DOCUMENTS ALREADY ON RECORD FILED BY THE ASSESSEE ALONG WITH THE RETURN OR SUBSEQUENTLY, BROUGHT ON R ECORD DURING THE ASSESSMENT PROCEEDINGS. IT WAS A CASE WHERE ENTIREL Y NEW SET OF DOCUMENTS AND MATERIALS WAS PLACED FOR HIS CONSIDER ATION COMPILED IN THE FORM OF REPORT RECEIVED FROM THE INVESTIGATION WING. SUCH MATERIAL WAS PERUSED BY THE ASSESSING OFFICER AND UPON EXAMI NATION THEREOF, HE FORMED A BELIEF THAT THE ASSESSEE COMPANY HAD RECEI VED SHARE APPLICATION AND SHARE PREMIUM MONEY FROM AS MANY AS 20 DIFFEREN T INVESTOR ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 36 COMPANIES WHO WERE FOUND TO BE SHELL COMPANIES AND INDULGING IN GIVING ACCOMMODATION ENTRIES. FROM THIS VIEW POINT, SINCE THE ASSESSING OFFICER HAD SUFFICIENT MATERIAL AT HIS COMMAND TO FORM SUCH A BELIEF. SUCH MATERIALS DID NOT FORM PART OF THE ORIGINAL ASSESSM ENT PROCEEDINGS AND WAS PLACED BEFORE THE ASSESSING OFFICER ONLY AFTER THE ASSESSMENT WAS COMPLETED. SINCE ON THE BASIS OF SUCH MATERIALS, AS SESSING OFFICER, CAME TO A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TA X HAD ESCAPED ASSESSMENT, MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINISED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT AL SO WOULD NOT PRECLUDE HIM FROM REOPENING THE ASSESSMENT. HIS SCRUTINY DUR ING THE ASSESSMENT WILL NECESSARILY BE ON THE BASIS OF THE DISCLOSURES MADE BY THE ASSESSEE. [PARA 8] THE CONTENTION THAT THERE WAS NO FAILURE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY FACTS CANNOT BE ACCEPTED. THE ASSESSING OFFICER, AS NOTED, RECEIVED FRESH MATERIAL AFTER THE ASSESSM ENT WAS OVER, PRIMA FACIE , SUGGESTING THAT THE ASSESSEE COMPANY HAD RECEIVED BOGUS SHARE APPLICATION/PREMIUM MONEY FROM NUMBER OF SHELL COMP ANIES. [PARA 10] MERELY BECAUSE THE TRANSACTIONS IN QUESTION WERE EX AMINED BY THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT WO ULD NOT MAKE ANY DIFFERENCE. THE SCRUTINY WAS ON THE BASIS OF DISCLO SURES MADE AND MATERIALS SUPPLIED BY THE ASSESSEE. SUCH MATERIAL I S FOUND TO BE PRIMA FACIE UNTRUE AND DISCLOSURES NOT TRUTHFUL. EARLIER SCRUT INY OR EXAMINATION ON THE BASIS OF SUCH DISCLOSURES OR MATERIALS WOULD NOT DEBAR A FRESH ASSESSMENT. EACH INDIVIDUAL CASE OF THIS NATURE IS BOUND TO HAVE SLIGHT DIFFERENCE IN FACTS. [PARA 11] THE NEXT CONTENTION THAT THE ASSESSING OFFICER DID NOT DEMONSTRATE ANY MATERIAL ENABLING HIM TO FORM A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS FALLACIOUS. THE ASSESSING OFF ICER RECORDED DETAILED REASONS POINTING OUT THE MATERIAL AVAILABL E WHICH HAD A LIVE LINK WITH FORMATION OF BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. AT THIS STAGE, AS IS OFTEN REPEATED, ON E WOULD NOT GO INTO SUFFICIENCY OF SUCH REASONS. [PARA 13] SECTION 68 AS IS WELL KNOWN, PROVIDES THAT WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FR OM ABOVE-NOTED COMPANIES WAS ONLY BY NATURE OF ACCOMMODATION ENTRI ES AND IN REALITY, IT WAS THE FUNDS OF THE ASSESSEE WHICH WAS BEING RE-RO UTED. UNDOUBTEDLY. SECTION 68 WOULD HAVE APPLICABILITY. PROVISO ADDED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1-4-2013, DOES NOT CHANGE THI S POSITION. [PARA 14] AS PER THIS PROVISO, WHERE THE ASSESSEE IS A COMPAN Y AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 37 PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, EXPLANATION OFFERED BY THE ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS THE PERSON IN WHOSE NAME SUCH CREDIT IS RECO RDED IN THE BOOKS OF THE COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NA TURE AND SOURCE OF SUM SO CREDITED AND SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER HAS BEEN FOUND TO BE SATISFACTORY. ESSENTIA LLY, THIS PROVISO EASES THE BURDEN OF PROOF ON THE REVENUE WHILE MAKING ADD ITION UNDER SECTION 168 WITH RESPECT TO NON GENUINE SHARE APPLICATION M ONEY OF THE COMPANIES. EVEN IN ABSENCE OF SUCH PROVISO AS WAS T HE CASE GOVERNING THE PERIODS WITH WHICH WE ARE CONCERNED IN THE PRES ENT CASE, IF FACTS NOTED BY THE ASSESSING OFFICER AND RECORDED IN REAS ONS ARE ULTIMATELY ESTABLISHED, INVOCATION OF SECTION 68 WOULD BE CALL ED FOR. [PARA 15] THE CONTENTION THAT THE ASSESSING OFFICER HAD MEREL Y AND MECHANICALLY ACTED ON THE REPORT OF THE INVESTIGATION WING ALSO CANNOT BE ACCEPTED. ONE HAS REPRODUCED THE REASONS RECORDED BY THE ASSE SSING OFFICER AND NOTED THE GIST OF HIS REASONS FOR RESORTING TO REOP ENING OF THE ASSESSMENT. THE ASSESSING OFFICER HAD PERUSED THE MATERIALS PLA CED FOR HIS CONSIDERATION AND THEREUPON, UPON EXAMINATION OF SU CH MATERIALS FORMED A BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. [PARA 16] IN THE RESULT, PETITION IS DISMISSED. [PARA 17] 2.31. THE HON'BLE GUJARAT HIGH COURT WHILE VALIDAT ING THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 O F THE ACT IN A LATER ORDER (AFORESAID) DATED 20/02/2018 O N THE ISSUE OF CASH CREDIT (SHARE APPLICATION MONEY) DULY CONSIDERED THE ARGUMENTS OF BOTH SIDES AND FOLLOWED THE FOLLOWING THE DECISIONS I. JAYANT SECURITY AND FINANCE LTD. V. ASSTT. CIT [SPECIAL CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-2018] (PA RA 12); II. RAYMOND WOOLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC) (PARA 13); III. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 38 IV. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16) AND DISTINGUISHED THE FOLLOWING DECISIONS I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 11) AND II. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 11) THE HON'BLE HIGH COURT WHILE UPHOLDING THE VALIDITY OF REOPENING ALSO CONSIDERED FOLLOWING DECISION, WHICH WERE REFERRED BY BOTH SIDES- I. ALLIED STRIPS LTD. V. ASSTT. CIT [2016] 384 ITR 424/69 TAXMANN.COM 444 (DELHI) (PARA 5), II. HARIKRISHAN SUNDERLAL VIRMANI V. DY. CIT [2017] 394 ITR 146 (GUJ.) (PARA 5), III. RAYMOND WOOLEN MILLS LTD.V. ITO [1999] 236 ITR 34 (SC) (PARA 6), IV. YOGENDRAKUMAR GUPTA V. ITO [2014] 366 ITR 186/46 TAXMANN.COM 56 (GUJ.) (PARA 6), V. AASPAS MULTIMEDIA LTD. V. DY. CIT [2017] 83 TAXMANN.COM 82/249 TAXMAN 568 (GUJ.) (PARA 6), VI. JAYANT SECURITY & FINANCE LTD. V. ASSTT. CIT [SP. CIVIL APPLICATION NO. 18921 OF 2017, DATED 12-2-2018] (PARA 12), VII. ASSTT. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500/161 TAXMAN 316 (SC) (PARA 13) AND VIII. PR. CIT V. GOKUL CERAMICS [2016] 241 TAXMAN 1/71 TAXMANN.COM 341 (GUJ.) (PARA 16). ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 39 2.32. THE SUM AND SUBSTANCE OF THE AFORESAID DECIS ION WAS THAT SINCE THE ASSESSING OFFICER WAS HAVING SUF FICIENT MATERIAL AT HIS COMMAND TO FORM A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT, ME RELY BECAUSE THIS TRANSACTIONS WERE SCRUTINIZE BY THE AS SESSING OFFICER DURING THE ORIGINAL ASSESSMENT, WOULD NOT P RECLUDE HIM FROM REOPENING ASSESSMENT. THUS, THE ASSESSMENT NOTICE WAS HELD TO BE JUSTIFIED. IN THE APPEAL BEFO RE US, THE ASSESSMENT WAS PROCESSED MERELY UNDER SECTION 143(1 ) OF THE ACT ON 19/08/2009, ACCEPTING THE RETURNED INCOM E AND THE ASSESSMENT WAS REOPENED AFTER DULY RECORDING TH E REASONS AS REQUIRED UNDER SECTION 148(2) OF THE ACT . IT IS NOT THE CASE THAT ORIGINAL ASSESSMENT AS FRAMED UND ER SECTION 143(3) OF THE ACT AND EVEN THE REASONS RECO RDED BY THE LD. ASSESSING OFFICER BY DULY CONVEYED TO THE A SSESSEE ON 09/05/2013, WHICH WERE OBJECTED BY THE ASSESSEE. NOTICE UNDER SECTION 143(2) AND THEREAFTER 142(1) A LONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE ASSESSEE. IN THE PRESENT APPEAL, THE DETAILS AND IN FORMATION AVAILABLE ON RECORD CLEARLY SHOWS THAT THERE WAS SEARCH/SURVEY ACTION WAS CARRIED OUT AT THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 40 RESIDENTIAL/BUSINESS PREMISES OF SHRI SURENDRA KUMA R JAIN AND HIS BROTHER SHRI BIRENDRA JAIN ON 14/09/20 10 BY THE INVESTIGATION WING, DELHI, WHEREIN IT WAS FOUND THAT BOTH THESE PERSONS WERE PROVIDING ACCOMMODATION ENT RIES TO VARIOUS BENEFICIARIES IN LIEU OF CASH. A SIMILAR INFORMATION WAS RECEIVED FROM INVESTIGATION WING AT MUMBAI, THEREFORE, THE LD. ASSESSING OFFICER WAS UN DER A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AS THE LD. ASSESSING OFFICER HAD NOT FORMED ANY OPINION AND THIS INFORMATION WAS RECEIVE D AT THE LATER STAGE, WHICH IN OUR OPINION WAS SUFFICIEN T TO INITIATE REASSESSMENT PROCEEDINGS. EXPLANATION-1 TO SECTION 147 OF THE ACT SUPPORTS OUR VIEW. REFERRING TO THE SAID EXPLANATION IN CONSOLIDATED PHOTO & FINVEST LTD. (2 006) 281 ITR 394 (DEL.), HON'BLE HIGH COURT OBSERVED AS UNDER:- 8. IT IS CLEAR FROM THE ABOVE THAT THE TWO CRITICAL A SPECTS WHICH NEED TO BE ADDRESSED IN ANY ACTION UNDER SECTION 147 ARE WHETHER THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND WHETHER THE PROPO SED REASSESSMENT IS WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER THE PROVISO TO SECTION 147. EXPLANATION (1 ) TO THE SAID PROVISION MAKES IT CLEAR THAT PRODUCTION OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH THE ASSESSING OFFICER COULD WITH DUE DILIGENCE DISCOVER MATERIAL EVIDENCE WOULD NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN T HE MEANING OF THE PROVISO THAT STIPULATES AN EXTENDED PERIOD OF LIMIT ATION FOR ACTION IN CASES WHERE THE ESCAPEMENT ARISES OUT OF THE FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 41 THE FORMATION OF OPINION BY THE ASSESSING OFFICER HAS TO BE CONSIDERED ON THE TOUCH STONE WHETHER THERE W AS REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND FOR THAT PURPOSE, THE HON'BL E APEX COURT IN RAYMOND WOOLEN MILLS LTD. VS INCOME TAX OF FICER THROWS LIGHT ON THE ISSUE AND FURTHER BY HON'BLE JURISDICTIONAL HIGH COURT IN M/S GIRILAL & COMPANY VS INCOME TAX OFFICER 300 ITR 432 (BOM.). THUS, WE FOU ND THAT THERE WAS FRESH INFORMATION WITH THE ASSESSING OFFICER, WHICH IN OUR VIEW, ENTITLE THE ASSESSING OFFICER TO HAVE PRIMA FACIE REASON TO BELIEVE THAT INCOME CHARGEABL E TO TAX HAD ESCAPED ASSESSMENT. THE RATIO LAID DOWN BY HON' BLE APEX COURT IN CLAGGETT BRACHI COMPANY LTD. VS CIT 1 77 ITR 409 (SUPREME COURT), HON'BLE BOMBAY HIGH COURT IN ANUSANDHAN INVESTMENT LTD. VS DCIT 287 ITR 482 AND PIAGGIO VHICLES PVT. LTD. VS DCIT 290 ITR 377 (BOM. ) HELD THAT IN A CASE OF REOPENING AFTER FOUR YEARS SUBSEQ UENT TO SCRUTINY ASSESSMENT, CONTRADICTION WAS RECOVERED BY BETWEEN TAX AUDIT REPORT AND RETURN OF INCOME, IT W AS A CASE OF OMISSIONS AND/OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL FACTS FOR COMPUTATI ON OF ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 42 INCOME. SO FAR AS, THE CONTENTION OF THE LD. COUNS EL FOR THE ASSESSEE THAT THE ADDITION OF RS.2,76,70,000/-, WHI CH WAS THE BASIS OF REOPENING THE ASSESSMENT, IS CONCERNED , SUCH ADDITION WAS DELETED BY THE LD. COMMISSIONER OF INC OME TAX (APPEAL) HIMSELF, THEREFORE, REOPENING IS NOT SUBSTANTIATED. WE ARE NOT CONVINCED WITH THIS ARGUM ENT OF THE ASSESSEE BECAUSE SO FAR AS DELETING THE ADDITIO N ON MERIT IS CONCERNED, IT WAS DONE AT THE FIRST APPELL ATE STAGE, WHEREAS, WE ARE EXAMINING THE VALIDITY OF REOPENING AT THE ASSESSMENT STAGE ITSELF. POSSIBLY, THE ASSESSEE MAY OR MAY NOT BE HAVING A GOOD CASE ON MERIT BUT SO FAR AS RE OPENING IS CONCERNED, WE FIND NO INFIRMITY IN THE CONCLUSIO N DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DEC ISIONS AND THE FACTUAL MATRIX NARRATED BEFORE US, WE UPHELD TH E SAME, RESULTING IN TO, DISMISSAL OF THE GROUNDS (1 TO 6) RAISED BY THE ASSESSEE WITH RESPECT TO REOPENING OF ASSESSMEN T. 3. SO FAR AS, THE ADDITION OF RS.4,02,20,000/- MAD E UNDER SECTION 68 OF THE ACT IS CONCERNED, WE NOTE T HAT THE ASSESSEE RECEIVED SHARE CAPITAL/PREMIUM FROM 12 PAR TIES, WHICH ARE SUMMARIZED HEREUNDER:- ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 43 SR. NO. NAME OF THE PERSON AMOUNT IN RS. 1 EAGLE INFRATECH PVT. LTD. 22,10,000 2 FINAGE LEASING & FINANCE (I) LTD. 22,10,000 3 LOTUS REALCON PVT. LTD. 8,50.000 4 MEGA TOP PROMOTERS PVT. LTD. 22,10,000 5 MANIMALA DELHI PROPERTIES PVT.LD. 22,10,000 6 SHALINI HOLDING LTD. 22,10,000 7 SINGHAL SECURITIES PVT. LTD. 22,10,000 8 V.I. P. LEASING AND FINANCE PVT. LTD. 22,10,000 9 VIRGIN CAPITAL SERVICES PVT. LTD. 22,10,000 10 ZENITH AUTOMOTIVE PVT. LTD. 22,10,000 11 MICROLAND DEVELOPERS PVT. LTD. 22,10,000 12 BRITE INDUSTIRES RESOURCES LTD. 20,10,000 TOTAL 2,76,70,000 SO FAR AS, THE ABOVE SHARE CAPITAL/PREMIUM FROM TWELVE PARTIES IS CONCERNED, THE SAME WAS DELETED B Y THE FIRST APPELLATE AUTHORITY BY OBSERVING AS UNDER:- 5.7 I HAVE CIRCUMSPECTED THE SPECTRUM OF FACTS A ND CIRCUMSTANCES OF THE CASE AND HAVE ALSO CAREFULLY CONSIDERED THE FINDING OF THE ASSESSING OFFICER AND COUNTER REPRESENTATION OF THE APPELLANT. I HAVE ALS O PERUSED THE PAPER BOOK CONTAINING 258 PAGES AND VARIOUS CASE LAWS RELIED UPON BY THE ASSESSING OFFI CER AS WELL AS LD AR OF THE APPELLANT. I FIND THAT LD. ASSESSING OFFICER HAS MADE ADDITION OF SHARE CAPITA L AND PREMIUM OF RS.2,76,70,000/- MAINLY ON THE BASIS OF REPORT OF INVESTIGATION WING, WITHOUT CORROBORAT ING THE FINDING WITH ANY RELIABLE EVIDENCE. IT IS VERY EVIDENT FROM THE ASSESSMENT ORDER THAT ASSESSING OFFICER HA S JUMPED TO THE CONCLUSION ON THE BASIS OF PRESUMPTIO N WITHOUT ESTABLISHING THE IN GENUINENESS OF SOURCE O F SHARE CAPITAL AND PREMIUM SHOWN IN THE NAME OF 12 COMPANIES THE VARIOUS PRESUMPTIVE FINDING OF THE ASSESSING OFFICER HAS BEEN SUCCESSFULLY REFUTED BY. THE APPELLANT / LD. A.R. DURING THE APPELLATE PROCEEDIN GS. 5.8 BEFORE COMING TO THE VARIOUS REFERENCES OF STATEMENT AND OUTCOME OF SEARCH AND SURVEY PROCEEDI NG U/.S 132 / 133A IN THE CASES OF SURENDRA KUMAR JAIN AND VIRENDRA KUMAR JAM, AT THE OUTSET, IT IS PERTIN ENT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 44 TO MENTION THAT AN AMOUNT OF RS.22,10,000/- MENTIONED BY THE ASSESSING OFFICER IN THE NAME OF M /S. MICROLAND DEVELOPERS PVT. LTD. AND RS.20,00,000/- IN THE NAME OF M/S. BRITE INDUSTRIES RESOURCES LTD., H AS NOT BEEN CREDITED IN THE BOOKS OF ACCOUNT OF THE APPELLANT, HENCE THERE IS NO REASON OF MAKING ANY S UCH ADDITION. I FIND THAT THE AC HAS NOT BROUGHT ANY AD VERSE MATERIAL ON RECORD TO SUGGEST THAT THE APPELLANT HA S ACTUALLY RECEIVED THE CHEQUES AND/OR EN-CASHED IMPUGNED CHEQUES OR, INTER ALIA THE APPELLANT COMPANY HAS ISSUED ANY SHARES TO THEM MATCHING THE ALLEGED AMOUNTS DURING THE YEAR AY 2008-01. THE ADDITION U/ S 68 CAN BE MADE ONLY FOR AMOUNT THAT ARE CREDITED IN THE BOOKS OF THE APPELLANT COMPANY, IN CASE THE AO FIND S THE CREDITORS ARE BOGUS AND/OR THERE IS NO CREDITWORTHINESS OF THE CREDITORS. SINCE THE AMOUNT OF RS.42,10,000/- OUT OF RS.2,76,70,000/- IS NOT CREDI TED IN THE OF THE BOOKS OF ACCOUNT OF THE APPELLANT COM PANY, THE APPELLANT WAS NOT UNDER ANY OBLIGATION TO PROVE THE IDENTITY OF ALLEGED CREDITORS GENUINENESS OF THE AL LEGED TRANSACTIONS AND CREDITWORTHINESS OF THESE TWO PART IES NAMED AT SERIAL NO.11 & 12 OF THE TABLE MENTIONED B Y THE ASSESSING OFFICER. MOREOVER, THE STAND OF THE A O APPEARS TO BE CONTRADICTORY WITH RESPECT TO THESE T WO PARTIES AS HE HAS NOT MADE ANY DISTINCTION OF THESE TWO PARTIES WITH THE REST OF TEN PARTIES IN THE TABLE. THE AO WAS IN POSSESSION OF THE COPY OF THE BANK STATEMENT S FOR THE PERIOD W.R.T. THE IMPUGNED ASSESSMENT YEAR AND HE COULD NOT POINT OUT THESE ENTRIES IN THOSE BANK STATEMENTS. IT IS NOT THE CASE OF THE AO THAT THE APPELLANT HAD NOT PRODUCED THE REQUISITE ACCOUNTS F OR HIS EXAMINATION BEFORE HIM DURING RE-ASSESSMENT PROCEEDINGS. HIS STAND THAT SINCE ASSESSEE COULD NO T CONFIRM FROM HIS BOOKS THAT HE HAD NOT RECEIVED SUC H AMOUNTS, AND THEREFORE ADDITION IS CALLED FOR U/S. 68, IS HIGHLY UNJUSTIFIED. NOBODY UNDER LAW IS BURDENED TO PROVE A NEGATIVE FACT. RATHER, AO WAS UNDER OBLIGAT ION TO ESTABLISH THE FACT THAT THESE AMOUNTS ARE ACTUAL LY RECEIVED BY THE APPELLANT, IF HE ALLEGES THE SAME. THE QUESTION OF ONUS PROBANDI IS CERTAINLY IMPORTANT IN THE EARLY STAGE OF A CASE. IT MAY ALSO ASSUME IMPORTANC E WHERE NO EVIDENCE AT ALL IS LED ON THE QUESTION IN DISPUTE BY EITHER SIDE; IN SUCH A CONTINGENCY THE P ARTY ON WHOM THE ONUS LIES TO PROVE A CERTAIN FACT MUST FAIL. WHERE, HOWEVER, EVIDENCE HAS BEEN LED BY THE CONTESTING PARTIES ON THE QUESTION IN ISSUE, ABSTRA CT CONSIDERATIONS OF ONUS ARE OUT OF PLACE; THE TRUTH OR OTHERWISE OF THE CASE MUST ALWAYS BE ADJUDGED ON TH E ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 45 EVIDENCE LED BY THE PARTIES (KALWA DEVADATTAM V. UN ION OF INDIA, (1963) 49 ITR (SC) 165, 175), SUCH STAND AND APPROACH OF THE ASSESSING OFFICERS HAS BEEN DISAPPROVED BY THE HON'BLE ITAT IN THE CASE OF ITO VS. BALARAM JAKHAR (2005) 98 TTJ 924 (AMRITSAR ITAT) 5.9 AS REGARDS REST OF THE ADDITION OF RS.2,44,60,0 00/-, BEING SHARE CAPITAL AND PREMIUM APPEARING IN THE NA ME OF 10 COMPANIES IN THE TABLE GIVEN BY THE ASSESSING OFFICER, I FURTHER FIND THAT ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH WITH ANY RELIABLE EVIDENCE T HAT SUCH SHARE CAPITAL IS UNEXPLAINED AND RECEIVED FROM NON-EXISTING PERSON / COMPANIES. SOME OF THE REFERENCES AND STATEMENTS RELIED UPON BY THE ASSESS ING OFFICER MAY BE GOOD FOR INVESTIGATION AND CONSEQUENTIALVERIFICATION BUT NO ADDITION COULD BE MADE AS THERE IS NO DIRECT AND LIVENEXUS THAT CHEQUES HAVE BEEN RECEIVED AFTER GIVING CASH TO SUC H PARTIES. HAD THERE BEEN NO SEARCH AND SURVEY IN THE CASES OF SURENDRA KUMAR JAIN AND VIRENDRA KUMAR JAIN, THE FINDING OF THE ASSESSING OFFICER BASED ON THE PRESUMPTION WOULD HAVE BEEN HAVING SOME FORCE. HOWEVER, WHEN SEARCH AND SURVEY HAS BEEN CONDUCTED EFFECTIVELY AND NO EVIDENCE OF RECEIPT OF CASH FROM APPELLANT COMPANY HAS BEEN FOUND AND THERE IS NO EVIDENCE OF NEXUS OF TRANSACTION BETWEEN APPELLATE COMPANY AND SURENDRA KUMAR JAIN / VIRENDRA KUMAR JAIN, IT IS VERY DIFFICULT TO SUBSCRIBE TO THE FIND ING OF THE ASSESSING OFFICER. 5.10 THE FINDING OF THE ASSESSING OFFICER THAT THE INVESTING COMPANIES ARE NOT IN EXISTENCE OR THEIR TRANSACTION IS NOT GENUINE OR THESE ARE ONLY COMPAN IES ON PAPER GET CONTRADICTED OR REFUTED BY THE FACT TH AT OUT OF 15 COMPANIES, 6 COMPANIES WERE SUBJECTED TO SEAR CH AND SEIZURE PROCEEDING AND THAT IS WHY ORDER U/S.15 3A/ (C) HAVE BEEN PASSED BY THE ACIT CENTRAL CIRCLE 23, NEW DELHI ON 28.03,2013 , THAT IS EXACTLY ONE YEAR BEFO RE THE ORDER OF THE ASSESSING OFFICER DATED 27.03.2014. TH ESE COMPANIES ARE AS UNDER:- I.FINAGE LEASE AND FINANCE INDIA PVT. LTD. II.LOTUS REALCON PVT.LTD III. MANIMALA DELHI PRO PVT.LTD. IV.SHALINI HOLDINGS PVT. LTD. V.SINGHAL SECURITIES PVT. LTD. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 46 VI.VIP LEASING FINANCE PVT. LTD. 5,11 THE COPIES OF ASSESSMENT ORDERS OF THE ABOVE COMPANIES APPEAR AT PAGE NO.69 TO 80 OF THE PAPER B OOK OF THE APPELLANT. SINCE, DEPARTMENT HAS ACCEPTED TH E EXISTENCE OF THE ABOVE COMPANIES AND EVEN AFTER SEA RCH ON SURENDRA KUMAR JAIN AND VIRENDRA KUMAR JAIN ON 14.09.2010, AFTER THREE YEARS, ASSESSMENTS HAVE BEE N MADE OF ABOVE COMPANIES AND NO ADVERSE INFERENCE HA S BEEN DRAWN NOR HAS BEEN HELD THAT THESE ARE COMPANI ES ONLY ON PAPERS, THERE IS NO PROPRIETY ON THE PART O F THE ASSESSING OFFICER TO PRESUME THAT THESE COMPANIES A RE PAPER FLOATED COMPANIES, HAVING NO EXISTENCE OR SOU RCE OF INCOME OR THERE IS NO GENUINE TRANSACTION OF SUC H INVESTMENT UNDER REFERENCE. SUCH CONCLUSIVE EVIDENC ES FILED BY THE APPELLANT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS HAS BEEN IGNORED BY THE ASSESSING OFFIC ER WITHOUT ANY CONTRARY EVIDENCE IN POSSESSION. IT IS RELEVANT TO MENTION THAT BY LETTER DATED 14.3.2014, THE LD. A.R. OF THE APPELLANT HAD SUBMITTED THE COPIES OF THE ASSESSMENT ORDER U/S.153C OF THE I.T. ACT OF THESE COMPANIES WHO HAD MADE INVESTMENTS IN SHARES, HENCE UNLESS OTHERWISE IS ESTABLISHED , SUCH CONCLUSIVE EVIDENCE HAS TO BE ACCEPTED. 5.12 FURTHER, AN IMPORTANT EVIDENCE IS ALSO WORTH HIGHLIGHTING THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF, ASSESSING OFFICER HAS ISSUED SUMMONS TO THE FOLLOWING PARTIES WHO HAD DULY REPLI ED TO THE ASSESSING OFFICER AND HAD COMMUNICATED THE F ACT OF INVESTMENT IN EQUITY SHARES OF THE APPELLANT COM PANY I. ZENITH AUTOMOTIVE PVT. LTD. II, VT LEASING FINANCE PVT, LTD. III. VIRGIN CAPITAL SERVICES PVT. LTD. IV, SHALINI HOLDINGS PVT. LTD. V. SINGHAL SECURITIES PVT. LTD. VI, MANIMALA DELHI PRO PVT. LTD. VII EAGLE INFRATECH PVT. LTD. VIII. MEGA TOP PROMOTERS PVT. LTD IX. FINANCE FINAGE LEASE AND FINANCE INDIA PVT, LTD . X. LOTUS REALCON PVT. LTD. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 47 WHEN AFTER SEARCH ON 14.09.2010, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER HAD MADE ENQUIRY FROM THE ABOVE PARTIES WHO HAD GIVEN INFORMATION AND HAD CONFIRMED THE INVESTMENTS IN EQUITY -SHARES, ASSESSING OFFICER CANNOT IGNORED TH ESE FACTS AND EVIDENCES AND CANNOT PROCEED FOR MAKING ADDITION ON THE BASIS OF REPORT FROM THE INVESTIGAT ION WING WITHOUT ESTABLISHING OTHERWISE. 5.13 FURTHER, IT IS PERTINENT TO MENTION THAT BY L ETTER DATED 10.03.2014, LD. A.R. OF THE APPELLANT HAS EXPLAINED THE RECEIPT OF SHARE CAPITAL AND HAS REFE RRED TO IN PARA '5' THE REPLIES OF ABOVE COMPANIES TO THE ASSESSING OFFICER, IT WAS THE RESPONSIBILITY OF THE ASSESSING OFFICER TO PROVE OTHERWISE FOR MAKING ANY SUCH ADDITIONS. APPARENTLY, LD. ASSESSING OFFICER H AS FAILED TO DO SO, HENCE SUCH CONCLUSIVE EVIDENCES CA NNOT BE IGNORED. SIMILARLY, THE EXPLANATION AND COUNTER ARGUMENTS OF THE APPELLANT, LD. A.R. CANNOT HE LIGH TLY IGNORED. OBVIOUSLY, LD. ASSESSING OFFICER HAS IGNOR ED THE EXPLANATION AND SUCH EVIDENCES WITHOUT CONTRARY EVIDENCE UNEARTHED BY HIM SUBSEQUENTLY, HENCE HE CANNOT REFER TO THE STATEMENTS OF VARIOUS PERSONS N OT DISPROVING CLAIM OF THE APPELLANT OF RECEIPT OF SHA RE CAPITAL FROM VARIOUS COMPANIES UNDER REFERENCE. THEREFORE THE APPROACH AND FINDING OF THE ASSESSING OFFICER CANNOT BE APPROVED. 5.14 WHEN BY LETTER DATED 23.12.2013, APPELLANT HAD SUBMITTED THE COPIES OF FOLLOWING DOCUMENTS OF THE ABOVE COMPANIES, IT WAS THE RESPONSIBILITY OF THE ASSESSING OFFICER TO PROVE OTHERWISE IF HE WANTED T O MAKE ADDITION OF SUCH SHARE CAPITAL, BUT, AS EVIDEN T FROM THE ASSESSMENT ORDER THAT LD. ASSESSING OFFICE R HAS FAILED TO DO SO, HENCE SUCH ADDITION IS FOUND T O BE BASELESS. THE FOLLOWING DOCUMENTS, AS REFERRED TO HEREINABOVE, SUPPORT THE CONTENTION OF THE APPELLAN T- 1. APPLICATION FORMS 2, ACKNOWLEDGEMENT OF RETURN OF INCOME 3, BANK STATEMENT 4. CONFIRMATION OF LEDGER ACCOUNTS 5. BOARD RESOLUTION 6. MEMORANDUM OF ASSOCIATION ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 48 7. FINANCIAL STATEMENT OF THE ABOVE COMPANIES INCLU DING BALANCE SHEET AND PROFIT AND LOSS ACCOUNT 8, RETURN OF ALLOTMENT OF SHARES FILED WITH REGISTR AR OF COMPANIES 5.15 ASSESSING OFFICER HAS OBVIOUSLY NOT DISPROVED THE GENUINENESS OF THE ABOVE DOCUMENTS NOR HAS ESTABLISHED OTHERWISE, THEREFORE, HIS FINDING FOR M AKING ADDITION CANNOT BE SUBSCRIBED. FURTHER IT IS VERY IMPORTANT TO POINT OUT THAT BY LETTER DATED 10.03.2 014, APPELLANT HAS VERY CATEGORICALLY CHALLENGED THE SHO W CAUSE NOTICE DATED 04.02.2014 THAT BECAUSE OF ABOVE EVIDENCES AND REPLIES OF THE COMPANIES, NO ADDITION COULD BE MADE AND THERE WAS NOT ACCOMMODATION ENTRIES, AND ADDITION COULD NOT BE MADE UJS.68, THE N ASSESSING OFFICER HAD TO MEET OUT THE VARIOUS OBJEC TIONS WITH FRESH EVIDENCES, SUBSEQUENTLY, BUT LD. ASSESSI NG OFFICER HAD FAILED TO DO SO, HENCE THE EXPLANATION AND EVIDENCES RELIED UPON BY THE APPELLANT HAS TO BE ACCEPTED. THUS IT IS VERY EVIDENT THAT APPELLANT H AS SUCCESSFULLY ESTABLISHED THE GENUINENESS OF TRANSACTIONS, IDENTITY OF SHAREHOLDERS AND CREDITWORTHINESS OF SUCH COMPANIES, THOUGH ALL THES E THREE CRITERIA ARE NOT APPLICABLE IN THE CASE OF SH ARE CAPITAL. OBVIOUSLY, INITIAL BURDEN ON THE APPELLANT WAS DISCHARGED, HENCE IF ANY ADDITION WAS TO BE MADE, T HE BURDEN SHIFTED UPON THE ASSESSING OFFICER TO PROVE THAT INVESTMENT MADE BY THEM ACTUALLY EMANATED FROM THE ASSESSEE. OBVIOUSLY, IN ABSENCE OF CONTRARY EVIDENC E, ASSESSING OFFICER CAN MAKE ANY SUCH ADDITION. 5.16 HERE, IT IS PERTINENT TO MENTION THAT HONBLE DELHI HIGH COURT IN THE CASE OF DIVINE LEASING & FINANCE LTD. 299 ITR 299 HELD THAT THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED- BY THE COMPANY FROM ALLEGED BOGUS SHAREHOLDER CANNOT BE REGARDED AS THE INCOME OF THE ASSESSEE COMPANY/S.68 FOR THE SIMPLE REASON THAT IF THE NAME OF THE ALLEGED BOGUS SHAREHOLDERS ARE GIVEN TO THE A.O., THEN THE DEPART MENT IS FREE 'TO PROCEED THE REOPENING OF THEIR INDIVIDU AL ASSESSMENTS IN ACCORDANCE WITH THE LAW. THIS DECISI ON OF DELHI HIGH COURT WAS ALSO CONFIRMED BY THE SUPREME COURT 319 ITR (ST) 5 BY DISMISSING THE SLP FILED BY THE DEPARTMENT. FURTHER, THE HON'BLE DELHI HIGH COURT IN CASE OF OASIS HOSPITALITIES PVT. LTD . HELD THAT IF THE ASSESSEE HAS PRODUCED THE DETAILS LIKE PAN CREDIT B ANK A/C. DETAILS OF CONFIRMATION, ETC., THEN NO ADDITIO N CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. THUS ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 49 THE ADDITION MADE AGAINST THE JUDGMENT OF SUPREME COURT IS BAD IN LAW AND LIABLE TO BE STRUCK DAWN, SIMILARLY, THE JURISDICTIONAL MUMBAI TRIBUNAL IN TH E CASE OF SAIMANGAL INVESTMENT LTD. 3924/MUM/2009 CONCLUDED AS UNDER- IT IS CLEAR FROM THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES PVT. LTD (SUPRA) THAT ONCE THE ASSESSEE FILED COPY OF PAN, ACKNOWLEDGMENT COPY OF THE RETURN OF INCOME OF THE INVESTING COMPANIES, THEIR BANK ACCOUNTS STATEMENTS FOR THE RELEVANT PERIOD; THEN EVEN THE PARTIES WERE NOT PRODUCED IN SPITE OF THE SPECIFIC DIRECTIONS OF THE ASSESSING OFFICER, THE ADDITION COULD NOT BE SUSTAI NED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING THE PAN, BALANCE SHEET, COPY OF THE ACKNOWLEDGMENT COPY OF RETURN OF THE APPLICANTS ETC . 10 IN THE CASE IN HAND, THERE IS NO DISPUTE ABOUT THE IDENTITY OF THE APPLICANT COMPANIES, WHO HAD PAID T HE APPLICATION MONEY AND THE SOURCE OF THE APPLICATION MONEY WAS ALSO FOUND IN THE RESPECTIVE BANK ACCOUNT S F THE INVESTING COMPANIES AND THERE WAS NO TRACE OF C ASH DEPOSIT IN THE BANK ACCOUNTS OF THE INVESTING COMPANIES, THEN, THE ACTION OF THE ASSESSING OFFICE R UNDER INFLUENCED OF THE REPORT OF THE INVESTIGATION WING WITHOUT GIVING OPPORTUNITY TO THE ASSESSEE FOR CROS S EXAMINATION OF THE PERSONS, IS NOT SUSTAINABLE' 5.17 FURTHER, APPELLANT GETS SUPPORT FROM THE FOLLO WING DECISIONS- 1. I.T.O. VS. PROVID TRADE IMPEX PVT.LTD IN IT APPE LLANT NO. 2219/MUM/2009 2. I.T.O. VS. ALEX SECURITIES PVT.LTD. IN ITAPPELLA NT NO. 4241/MUM/2009 3. CIT VS. CREATIVE WORLD TELE-FILMS LTD. [333 ITR 100] 4. CIT VS. LOVELY EXPORTS PVT.LTD. [2009] 319 ITR ( ST.)5. (SC) 5. SHREE BARKHA SYNTHETICS LTD. VS. ASST. CIT(283 I TR 377) 6. M/S. UMA POLYMERS PVT.LTD VS. DCIT [100 ITD1, 7. CIT VS DWRKADHISH INVESTMENT (P) LTD. (330 ITR 2 98 9. CIT VS. VALUE CAPITAL SERVICES LTD. (307 ITR 334 , DELHI) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 50 10.CIT VS. ARUNANANDA TEXTILES PVT.LTD. (333 ITR 11 6 KAR) 11. AIM PROPERTIES VS INCOME-TAX OFFICER, I.T. APPE LLATE NO. 7426/MUM/2012 RECENTLY THE DELHI HIGH COURT IN THE CASE OF KAMDHENU STEEL (SURPA ) SUMMARIZED ALL THE EARLIER JUDGMENT OF ALL THE COURTS INCLUDING THE JUDGMENT O F HONBLE BOMBAY HIGH COURT IN THE CASE OF CREATIVE WORLD (SUPRA) AND HELD THAT WHEN THE ASSESSEE HAS SUBMITTED THE DETAILS OF IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION HE HAS DISCHARG ED ITS BURDEN AND NOW IT IS FOR THE REVENUE TO PROVE T HAT THE AMOUNT CAME FROM THE COFFERS OF THE ASSESSEE. 5.18 THE CASE OF THE APPELLANT IS ON BETTER FOOTIN G AS NOT ONLY THE DETAILS OF THE PARTIES WERE SUBMITTED BUT THE PARTIES HAVE ALSO CONFIRMED THE TRANSACTIONS, THEREFORE, IN THE BACKGROUND OF THESE LEGAL PROPOSI TIONS, THE APPROACH AND FINDING OF THE ASSESSING OFFICER CANNOT BE SUSTAINED. 5.19 AS REGARDS, STATEMENT OF MR. RAJKUMAR AGRAWAL, IT IS PERTINENT TO MENTION THAT HE HAS NEITHER ANY CONNECTION WITH THE APPELLANT COMPANY NOR HE HAS MENTIONED THE APPELLANT'S NAME CATEGORICALLY IN HIS IMPUGNED STATEMENT AND FURTHER STATEMENT HAD NOT BEEN PROVIDED TO THE APPELLANT DURING THE REASSESSM ENT PROCEEDINGS BY THE AO. THERE IS NO MATERIAL ON RECO RD THAT CAN SUGGEST THAT MR. RAJKUMAR AGRAWAL, THOUGH, A THIRD PARTY, HAS ANY RELATION WITH THE APPELLANT COMPANY OR ITS DIRECTORS. MOREOVER THE AO HAS NOT PROVIDED THE COPY OF STATEMENT OF MR. RAJKUMAR AGRA WAL TO THE APPELLANT DURING THE REASSESSMENT PROCEEDING SO HIS STATEMENT BEING OF THIRD PARTY, AT THE BACK OF THE APPELLANT, COULD NOT HAVE BEEN UTILIZED AGAINST THE APPELLANT WITHOUT PROVIDING THE COPY OF THE STATEME NT TO THE APPELLANT AND WITHOUT PROVIDING AN OPPORTUNITY FOR CROSS-EXAMINATION IF DESIRED BY THE APPELLANT COMPA NY. OBVIOUSLY, SUCH STATEMENT CANNOT BE UTILIZED IN ROU ND ABOUT MANNER WITHOUT ANY DIRECT EVIDENCE AGAINST TH E APPELLANT. FURTHER, THERE IS NO MATERIAL ON RECORD THAT CAN SUGGEST OR INDICATE THAT RAJKUMAR AGRAWAL OR SH RI SURNDRA KUMAR JAIN/ VIRENDRA JAIN HAS ACCEPTED IN ANY OF THEIR STATEMENTS RECORDED DURING THE SEARCH AND SEIZURE OPERATION REPRODUCED BY THE AO IN HIS ASSESSMENT ORDER, THAT THEY ARE IN THE BUSINESS OF PROVIDING ALLEGED ACCOMMODATION ENTRIES OR NAMED TH E ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 51 APPELLANT COMPANY OR ITS DIRECTORS AS BENEFICIARY T O ISSUE SUCH ALLEGED ACCOMMODATION ENTRIES IN FAVOUR OF THE APPELLANT COMPANY. 5.20 EVEN THERE IS NO REBUTTAL BY THE AO IN HIS ASSESSMENT ORDER AS TO HOW THE SHARE ALLOTTED TO TH E COMPANIES MENTIONED IN TABLE PARS IN 6.1. OF THE IMPUGNED ASSESSMENT ORDER TO THE PARTIES MENTIONED AT SERIAL NO. 1. TO 10 TO THE EXTENT OF RS,2,44,60,000 /- ARE AN EYE WASH AND THESE SHARES HAVE NOT ACTUALLY BEEN ALLOTTED BY THE APPELLANT COMPANY TO THE PERSONS BY FOLLOWING DUE PROCESS AS REQUIRED BY THE COMPANIES ACT 1956. NEITHER OF THESE PERSONS HAS DENIED THE RECEI PT OF THEIR RESPECTIVE SHARES WORTH RS.2,44,60,000/- COLLECTIVELY. 5.20 AS FAR AS THE ADDITION FOR THE AMOUNTS TOTALLI NG TO RS. 2,44,60,000/- U/S 68 CORRESPONDING TO THE 10 PARTIES IN THE SAID TABLE IS CONCERNED AS DISCUSSED ABOVE. I FIND THAT THERE IS NO DISPUTE THAT SHARES TO THESE PARTIES HAVE BEEN DULY ISSUED THROUGH THEIR S HARE APPLICATIONS AND THE PARTIES HAVE CONFIRMED THE PAYMENT OF SHARE APPLICATION MONEY ALONG WITH THEIR RETURN OF INCOME, BALANCE SHEET, COPY OF BANK STATEMENT FROM WHERE CHEQUES FOR PAYMENT OF SHARES APPLICATION MONEY WERE APPEARING BEFORE THE AO IN RESPONSE TO THE NOTICES ISSUED U/S 133(6) OF THE IT ACT, 1961 DURING THE RE-ASSESSMENT PROCEEDINGS. FURTHER, THE APPELLANT COMPANY HAS ALSO FILED COPY OF THE BO ARD RESOLUTION, MOA, COPY OF RETURN OF ALLOTMENT FILED WITH THE ROC. THUS, I FIND THAT THE APPELLANT COMPANY HA S DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT BY PROVING THE IDENTITY OF THE PARTIES, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES AN D THE AO HAD NOT FOUND ANY FOUL PLAY IN THAT. HE HAS SIMP LY MADE THE ADDITION RELYING ON THE REPORT OF THE INVESTIGATION WING WITHOUT REBUTTING PROPERLY THE EVIDENCE CAME IN HIS WAY THROUGH THESE CONFIRMATION S AND DOCUMENTS. 5.21 THE LEARNED AO HAS DISPUTED ON THE CREDITWORTHINESS OF THE PARTIES ON THE GROUND THAT DURING THE YEAR UNDER CONSIDERATION THE PROFIT AND LOSS ACCOUNT OF THESE PARTIES DOES NOT SHOW SIGNIFICANT BUSINESS ACTIVITIES AND THEIR TOTAL INCOME FOR THE YEAR IS ALSO LESS, THIS IS NOT A CORRECT VIEW TO JUDGE CREDITWORTHINESS FOR ANY TRANSACTION. THE CREDITWORTHINESS REPRESENTS ONE'S CAPACITY TO INVES T MONEY AND IT HAS NOTHING TO DO WITH THE INCOME EARN ED ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 52 ALONE IN A SINGLE YEAR OR THE ACTIVITY UNDERTAKEN I N THAT YEAR. AS HELD BY THE HONBLE DELHI HIGH COURT IN TH E CASE OF KAMDHENU STEEL AND ALLOY LTD 361 ITR 220 (SUPRA) THAT CREDITWORTHINESS CAN BE PROVED WITH TH E FACT THAT THE PARTY HAS SUFFICIENT BANK BALANCE TO SUBSCRIBE TO THE SHARE CAPITAL. IN THE BANK STATEME NT PRODUCED IN THE PAPER BOOK OF THESE PARTIES HAVE SUFFICIENT BANK BALANCES ON THAT DATE. THUS THE CREDITWORTHINESS OF THE PARTIES STANDS PROVED. NOTH ING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT FROM THESE PARTIES CAME FROM THE COFF ERS OF THE APPELLANT COMPANY OR THERE IS ANY TRACE OF CASH DEPOSIT IN THE BANK ACCOUNT OF THE INVESTING COMPANY/COMPANIES. 5.22 THE AO FURTHER HELD THAT THE APPELLANT COULD N OT PRODUCE THESE PARTIES FOR EXAMINATION. ONCE, THE PA RTIES HAVE CONFIRMED THE TRANSACTION, THE APPELLANT WAS UNDER NO OBLIGATION TO PRODUCE THEM BEFORE THE AO A ND THE AO COULD HAVE CALLED THEM BY ISSUANCE OF SUMMON U/S 131. EVEN OTHERWISE THERE ARE SERIES OF DECISIO NS ON THIS POINT WHEN THE IDENTITY AND THE CAPACITY OF TH E CREDITORS HAS BEEN PROVED BY THE ASSESSEE AND SOURC E BEING THE BANKING CHANNEL ALSO ESTABLISHED BY PRODUCING RELEVANT EVIDENCES THEN WITHOUT FINDING A NY DEFECT IN THE EVIDENCES PRODUCED BY THE ASSESSEE, T HE AO IS NOT JUSTIFIED TO MAKE THE ADDITION SOLELY ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE CRED ITORS IN PERSON. 5.23 NEVERTHELESS, THE FACT THAT THE PARTIES IN QUE STION ARE KNOWN TO THE AO WHICH IS EVIDENT FROM THE FACT THAT THE DEPARTMENT HAD ASSESSED THEM FOR AY 2008-09 U/S 143(3) R.W.S. 153A. THE AO COULD HAVE NOT IGNORED T O MENTION IN HIS ASSESSMENT ORDER AND THE OTHER FACT ALSO THAT NONE OF THESE PARTIES ARE ASSESSED FOR COMMISS ION ON ACCOUNT OF ALLEGED BUSINESS OF ACCOMMODATION ENTRIES, THE ASSESSMENT ORDER HAS BEEN FRAMED BY TH E ASSESSING OFFICER ONLY ON THE BASIS OF THE INFORMAT ION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT WITHOUT MAKING ANY FURTHER INVESTIGATION. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT REPRESENTED ITS OWN UNDISCLOSED INCOM E. HENCE, THIS ADDITION IS NOT JUSTIFIED IN THE FACTS & CIRCUMSTANCES OF THE INSTANT CASE. IN HOLDING THIS, I AM FORTIFIED BY THE LAW PROPOUNDED BY HONBLE APEX COU RT IN CIT VS. DIVINE LEASING & FINANCE LTD. (CC 375/20 08) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 53 DATED 21.01.2008; APEX COURT IN THE CASE OF LOVELY EXPORTS PVT LTD 216 CTR 195, HONBLE BOMBAY HIGH COURT IN THE CASES OF CREATIVE WORLD TELEFILMS LTD, 333 ITR 100 (BOM), DECISION OF DELHI HIGH COURT IN THE CASE OF KAMDHENU STEELS AND ALLOYS LTD 361 ITR 220, MUMBAI TRIBUNAL IN THE CASE OF PROVID TRADE IMPEX P VT LTD 2219/MUM 2009, AIM PROPRIETIES AND INVESTMENT PVT LTD 2219/MUM 2009, AIM PROPRIETIES AND INVESTMENT PVT LTD ITA 7426/MUM/2012, SAIMANGAL INVESTMENT LTD 3924/MUM/2009, UTTAM CHAND JAIN THAT UPHELD THE DECISION OF SPL, BENCH OF ITAT, MUM BAI APART FROM LATEST CLINCHING DECISION OF HONBLE ITA T (DELHI-E BENCH) DT. 1.4. 2015 IN ITA NO. 2821/ DEL/2009 IN THE CASE OF ITO, WARD 13(2), NEW DELHI VS. NEELKANTH, FINBUILD LTD., NEW DELHI. AS DISCUSSED ABOVE, UNDOUBTEDLY THE ISSUE HAS BEEN SETTLED BY TH E HONBLE ITAT, J BENCH, MUMBAI VIDE: SAIMANGAL INVESTMENT LTD 3924/MUM/2009 DT. 20.12.2013. FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE UNION OF INDIA V. KAMLAKSHI FINANCE CORPORATIO N LTD., AIR 1992 SC 711; [1991] 55 ELT 433 (SC). THE RELEVANT PORTION ON JUDICIAL PROPRIETY FROM THE AFO RESAID JUDGMENT OF THE HONBLE MADHYA PRADESH HIGH COURT I S REPRODUCED HERE UNDER FOR THE PURPOSES OF CLARITY: NEEDLESS TO SAY THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL. DEALING WIT H THIS VERY ASPECT OF THE MATTER, THE SUPREME COURT IN THE CASE OF UNION OF INDIA V. KAMLAKSHI FINANCE CORPORA TION LTD., AIR 1992SC 711; [1991] 55 ELT 433 (SC) EMPHASIZED: IT CANNOT BE TOO VEHEMENTLY EMPHASIZED THAT IT IS OF UTMOST IMPORTANCE THAT, IN DISPOSING OF THE QUASIJUDICIAL ISSUES BEFORE THEM REVENUE OFFICERS A RE BOUND BY THE DECISIONS OF THE APPELLATE AUTHORITIES . THE ORDER OF THE APPELLATE COLLECTOR IS BINDING ON THE ASSISTANT COLLECTORS WORKING WITHIN HIS JURISDICTIO N AND THE ORDER OF THE TRIBUNAL IS BINDING UPON THE ASSIS TANT COLLECTORS AND THE APPELLATE COLLECTORS WHO FUNCTIO N UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIP LES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVED LY BY THE SUBORDINATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT ACCEPTABLE TO THE DEPARTMENT-IN ITSELF AN OBJECTIONABLE PHRASEAND IS THE SUBJECT-MATTER OF AN APPEAL CAN FURNISH NO GROUND F OR NOT FOLLOWING IT UNLESS ITS OPERATION HAS BEEN SUSP ENDED ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 54 BY A COMPETENT COURT. IF THIS HEALTHY RULE IS NOT F OLLOWED, THE RESULT WILL ONLY BE UNDUE HARASSMENT TO ASSESSE E AND CHAOS IN ADMINISTRATION OF TAX LAWS. 5.24 THUS, IN THE LIGHT OF THE ABOVE FACTUAL ANALYS IS EVIDENCES ON RECORD, CONSIDERING SUCCESSFUL REBUTTA L BY THE APPELLANT, UNSUBSTANTIATED FINDING OF THE ASSES SING OFFICER, VARIOUS JUDICIAL PROPOSITIONS AND UNCONTRO VERTED REPRESENTATION OF THE LD. A.R., I FIND THAT LD. ASS ESSING OFFICER HAS MADE ADDITION OF RS.2,76,70,000/- WITHO UT ANY 'CONCLUSIVE EVIDENCE' AND WITHOUT DISCHARGING O NUS SHIFTED UPON HIM ON ACCOUNT OF VARIOUS EVIDENCES SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, ASSESSING OFFICER IS DIRECTED TO DELETE THE BASELESS ADDITION OF RS.2,76,70,000/- 5.25. IN THE RESULT, GROUND NOS. 6 TO 10 ARE ALLOWED. IF THE AFORESAID CONCLUSION OF THE FIRST APPELLATE AUTHORITY IS ANALYZED, IT IS NOTED THAT THE LD. COM MISSIONER OF INCOME TAX (APPEAL) HAS DULY CONSIDERED THE BASI S OF ADDITION MADE BY THE LD. ASSESSING OFFICER, WHEREIN , THE CREDITWORTHINESS OF THE PARTIES WERE SUSPECTED. THE LD. FIRST APPELLATE AUTHORITY RELIED UPON THE DECISION FROM THE HON'BLE DELHI HIGH COURT IN THE CASE OF KAMDHENU ST EELS AND ALLOY LTD. 361 ITR 220 ((SUPRA)) AND DULY FOUND FROM THE BANK STATEMENT OF THESE PARTIES THAT THEY WERE HAVING SUFFICIENT BANK BALANCES AND CONCLUDED THAT THE CREDITWORTHINESS OF THE PARTIES STANDS PROVED. THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE FROM THE SE PARTIES WERE FOUND TO BE GENUINE AND THE CAPACITY O F THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 55 INVESTING PARTIES WAS ALSO PROVED. THE PARTIES ALSO CONFIRMED THE TRANSACTIONS AND IF THE LD. ASSESSING OFFICER WAS STILL APPREHENSIVE OF THEIR CREDITWORTHINESS, N OTHING PREVENTED HIM TO ISSUE SUMMONS UNDER SECTION 131 OF THE ACT. IT IS ALSO NOTED THAT THESE PARTIES/INVESTING PARTIES WERE ASSESSED BY THE DEPARTMENT UNDER SECTION 143(3 ) R.W.S 153A OF THE ACT AND THIS FACT HAS BEEN MENTIO NED IN THE ASSESSMENT ORDER ITSELF. NOTHING ADVERSE HAS BE EN BROUGHT ON RECORD BY THE LD. ASSESSING OFFICER. THU S, FOLLOWING THE DECISION FROM HON'BLE APEX COURT IN T HE CASE OF CIT VS DEVINE LEASING AND FINANCE LTD., ORDER DA TED 21/01/2008, LOVELY EXPORT PVT. LTD. (216 CTR 195)(SUPREME COURT), HON'BLE BOMBAY HIGH COURT IN CREATIVE WORLD TELEFILMS LTD. 333 ITR 100 (BOM.), H ON'BLE DELHI HIGH COURT IN KAMDHENU STEELS AND ALLOYS LTD. 361 ITR 220 AND VARIOUS OTHER DECISIONS QUOTED IN THE IMPUGNED ORDER, WE FIND NO INFIRMITY IN THE CONCLUS ION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL ). SO FAR AS THE DELETING THE ADDITION OF RS.2,76,70,000/ - IS CONCERNED, WHICH WAS MADE BY THE LD. ASSESSING OFFI CER WITHOUT ANY EVIDENCE AND MERELY BASED ON SURMISES, MORE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 56 SPECIFICALLY WHEN THE INVESTMENT WERE MADE THROUGH BANKING CHANNEL AND SUFFICIENT MATERIAL WAS PRODUCE D BY THE ASSESSEE DURING ASSESSMENT STAGE ITSELF BY DISC HARGING ITS ONUS CAST UPON THE ASSESSEE. 4. SO FAR AS, THE REMAINING ADDITION OF RS.1,25,50,000/- IS CONCERNED THE ARGUMENT OF THE L D. COUNSEL FOR THE ASSESSEE IS THAT THIS ADDITION WAS MADE BY THE LD. ASSESSING OFFICER MERELY ON THE BASIS OF S TATEMENT OF SHRI PRAVIN KUMAR JAIN/SURENDRA KUMAR JAIN, WHO HAS NEVER SPECIFICALLY NAMED THE ASSESSEE. OUR ATTENTIO N WAS INVITED TO VARIOUS PAGES OF THE ASSESSMENT ORDER AN D MORE SPECIFICALLY PAGES 2 TO 26 BY SUBMITTING THAT THE N AME OF THE ASSESSEE HAS NOWHERE MENTIONED BY MR. JAINS IN THEIR STATEMENTS. THE LD. COUNSEL CITED VARIOUS DECISIONS OF THIS TRIBUNAL, WHEREIN ON IDENTICAL FACTS, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE DECISIONS CITED ARE INCOME TAX OFFICER VS M/S CHAND MERCHANT PVT. LTD. (ITA NO.4868/MUM/2015) ORDER DATED 05/12/2018, INCOME TAX OFFICER VS MS/ TRISHUL TRADERS PVT. LTD.(ITA NO.3060/MUM/2017), ORDER DATED 20/12/2018. ON THE OTHER HAND, THE LD. DR DEFENDED THE ORDER OF THE LD . ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 57 COMMISSIONER OF INCOME TAX (APPEAL) BY PLACING RELI ANCE UPON THE DECISION FROM HON'BLE DELHI HIGH COURT IN PR. CIT VS NDR PROMOTER PVT. LTD. (ITA NO.49/2018) DATED 17/01/2019. THE LD. COUNSEL FOR THE ASSESSEE EXPLAI NED THAT THE AFORESAID DECISION FROM HON'BLE DELHI HIGH COURT IS NOT APPLICABLE BECAUSE THE FACTS ARE ENTIRELY DI FFERENT. 4.1. IN THE LIGHT OF THE AFORESAID ARGUMENTS MADE FROM BOTH SIDES, WE DEEM IT APPROPRIATE TO REPRODUC E THE AFORESAID DECISIONS CITED BEFORE US. THE FIRST SUCH DECISION IS ORDER DATED 05/12/2018 OF THIS TRIBUNAL IN THE C ASE OF INCOME TAX OFFICER VS CHAND MERCHANT PVT. LTD. (ITA NO.4868/MUM/2015):- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-16, MUMBAI DATED 10-06-2015 AND IT PERTAINS TO AY 2018-19. THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL:- I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE,THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,10,00,000 MADE U/S 68 OF THE I.T.ACT DESPITE O F THE FACTS THAT THE APPELLANT FAILED TO PROVE CREDITWORTHINESS OF T HE CREDITORS AND THEIR IDENTITY & GENUINENESS OF TRANSACTION AS THE CREDITORS WERE ACCOMMODATION ENTRY PROVIDERS? II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN NOT RELYING ON INVESTIGATIO N CARRIED OUT BY DIT DELHI AND WITHOUT CALLING REMAND REPORT FROM TH E AO THE ADDITIONS HAS BEEN DELETED IT HAS CO TERMINUS POWER OF THE ASSESSING OFFICER. III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE AD DITION OF RS.5,25,000/- ON ACCOUNT OF COMMISSION PAID @2.75% TO OBTAIN ALLEGED ENTRY TO THE TUNE OF RS.1,10,000 IV) ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 58 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND SECURITIES AND TEXTILES, FILED ITS RETUR N OF INCOME ON 12-09-2008 DECLARING TOTAL INCOME OF RS. 7,600. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961. SUBSEQUENTLY, THE CASE HAS BEEN REOPENED BY ISSUING NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 ON 26-03-2013 FOR THE REASONS RECORDED, AS PER WHICH, INCOME CHARGEABLE TO TAX HA D BEEN ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961 ON ACCOUNT OF ACCOMMODATION ENTRIES IN THE FORM OF BOGUS SHARE APPLICATION MONEY RECEIVED FROM COMPANIES CONTROLLE D AND MANAGED BY S.K. JAIN GROUP WHICH WAS EVIDENT DURING THE COURSE OF SEARCH IN THE CASE OF SHRI S.K . JAIN ON 14-09-2010. IN RESPONSE TO NOTICE, THE ASSESSEE, VIDE LETTER DATED 06-5-2013, OPPOSED REOPENING OF THE ASSESSMENT AND ALSO REQUESTED FOR COPY OF REASONS RECORDED FOR REOPENING OF THE ASSESSMENT. THE OBJECTIONS FILED BY THE ASSESSEE WA S DISPOSED OF AND ALSO THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WAS FURNISHED TO THE ASSESSEE. THEREAFTER, NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE ASSESSEE, VIDE LETTER DATED 27-01-2014 AND 11-02-20 14 FILED DETAILED WRITTEN SUBMISSIONS ON THE ISSUE TO ARGUE THAT SHARE APPLICATION MONEY RECEIVED FROM M/S BRI TE INDU RESOURCES LTD, VOGUE LEASING & FINANCE PVT. LT D, FINAGE LEASE & FINANCE INDIA LTD,SINGHAL SECURITIES PVT LTD AND SHALINI HOLDINGS LTD ARE GENUINE TRANSACTIONS WHICH WERE SUPPORTED BY NECESSARY DOCUMENTS INCLUDING SHARE APPLICATION FORM, PAN OF SUBSCRIBERS, BANK STATEMENTS AND OTHER RELATED DOCUMENTS. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING TH E INFORMATION RECEIVED FROM INVESTIGATION WING WHICH WERE FURTHER SUPPORTED BY THE STATEMENT OF SHRI SIC JAIN DURING SEARCH PROCEEDINGS OBSERVED THAT THE ENQUIRIES CONDUCTED DURING THE COURSE OF ASSESSMENTPROCEEDINGS CLEARLY PROVED THE FACT THAT THE ASSESSEE HAS OBTAINED BOGUS / ACCOMMODATION ENTRY O F SHARE APPLICATION MONEY FROM COMPANIES CONTROLLED B Y SHRI S.K. JAIN. THEREFORE, HE OPINED THAT IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIESARE NOT PROVED TO THE SATISFACTION IN OR DER TO ESCAPE FROM THE PROVISIONS OF 68 OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, HE MADE ADDITION OF RS.1.10 CROR ES U/S 68 OF THE INCOME- TAX ACT, 1961. THE AO ALSO MA DE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 59 ADDITION OF RS.1,75,000 BEING 1.75% COMMISSION PAID TO SHRI SATISH GARG FOR ARRANGING ACCOMMODATION ENTRIES THROUGH COMPANIES CONTROLLED BY SHRI SK JAI N, 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT( A), THE ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT Q:1 THE GROUND THAT THE AO HAS FORMED REASONABLE BELIEF OF ESCAPEMENT OF INCOME ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WITHOU T INDEPENDENTLY APPLYING HIS MIND TO ASCERTAIN WHETHE R THERE BEING ANY ESCAPEMENT OF INCOME. THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THE ISSU E WHICH HAS BEEN REPRODUCED BY THE LD.CIT(A) AT PARA 3.3 ON PAGES 4 TO 9 OF HIS ORDER. THE ASSESSEE ALSO CHALLENGED ADDITION MADE BY THE AO TOWARDS UNEXPLAINED CREDIT U/S 68 OF THE LT. ACT, 1961 AND FILED ELABORATE WRITTEN SUBMISSIONS ALONG WITH CERT AIN JUDICIAL PRECEDENTS TO ARGUE THAT WHEN ENORMOUS DETAILS ARE FILED TO PROVE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHIN5 OF THE PARTIES, THE AO WAS ERRED IN MAKING ADDITION TOWARDS SHARE APPLICATION MONEY RECEIVED FROM COMPANIES CONTROLLE D BY SHRI S.K. JAIN ONLY ON THE BASIS OF HIS STATEMEN T WITHOUT PROVIDING AN OPPORTUNITY TO CROSS EXAMINE T HE WITNESS AND ALSO TO VERIFY THE STATEMENT GIVEN BY T HE PARTIES. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS , WHICH HAVE BEEN REPRODUCED AT PARA 4.2 ON PAGES 10 TO 22 OF LD.CIT(A)'S ORDER. 4. THE LD. CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELYING UPO N CERTAIN JUDICIAL PRECEDENTS, DISMISSED LEGAL GROUND TAKEN BY THE ASSESSEE CHALLENGING REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO HAS VALIDLY REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WHICH CONSTITUTE F RESH TANGIBLE MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME. THE RELEVANT OBSERVATIONS OF THE LD.CIT(A) ARE EXTRACTED BELOW:- '3.4 I HAVE GONE THROUGH THE CONTENTS OF THE IMPUGN ED ASSESSMENT ORDER DT. 29.3.2014., ARGUMENTS AND WRIT TEN SUBMISSIONS OF THE LD. AR, CASE LAW RELIED UPON IN THE INSTANT CASE AND THE MATERIAL AVAILABLE ON RECORD. I FIND T HAT IT'S WRONGLY MENTIONED BY AO IN PARA 4 OF THE IMPUGNED ASSESSMEN T ORDER THAT THE CASE WAS SELECTED IN SCRUTINY AS NOTICE U/ S 143(2) CANNOT HE ISSUED ON 24.07.2013 FOR AY 2008-09 SINCE THE RE TURN IS FILED INDISPUTABLY ON 12.09.2008. THIS, NOTICE WAS ISSUED ONLY BECAUSE & SUBSEQUENT TO THE NOTICE U/S 148 ISSUED ON 26.03. 2013. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 60 THOUGH, THE REASONS RECORDED & CONVEYED TO THE APPE LLANT & MANNER OF INFORMATION RECEIVED BY AO, IT HAS BEEN C LARIFIED BY HIM IN PARA 3 THAT IT'S DIT (INV).)-II, NEW DELHI WHO C ONDUCTED ACTION U/S 132/133(A) OF THE IT ACT, 1961 ON BUSINESS/RESI DENTIAL PREMISES OF SHRI SURENDRA KUMAR JAIN & HIS BROTHER SHRI VIRENDRA KUMAR JAIN AND SENT INTIMATION TO THE AO O F THE APPELLANT SUGGESTING THAT APPELLANT HAD TAKEN ACCOM MODATION ENTRIES FROM THE PERSONS OF THE GROUP OF THOSE PERS ONS. IT'S A WELL SETTLED LAW THAT THE 'BELIEF U/S 147 IS A SUBJECTIV E MATTER OF AN INDIVIDUAL AO AND THAT CANNOT BE A MATTER OF JUDICI AL SCRUTINY. WHAT CAN BE SCRUTINIZED IS, THE VERY EXISTENCE OF REASON SUPPORTED BY VALID MATERIAL TO FORM BELIEF AND INV OKE JURISDICTION U/S 147 BEFORE ISSUING NOTICING U//S 148. I FIND T HAT THE SOURCE OF INTIMATION BEING INVESTIGATION WING OF IT DEPT., IT IS A JUSTIFIED REASON TO RECORD & FORM BELIEF THAT THERE IS A CASE FOR ESCAPEMENT TO BE SCRUTINIZED BY THE AO. THERE IS NO ADVERSE MA TERIAL AVAILABLE ON RECORD THAT CAN SUGGEST THAT HIS BELIEF IS NOT HONEST BELIEF AS NO OFFICER OF THE IT DEPARTMENT WOULD HONESTLY DISB ELIEVE THEIR REPORT PRIMA FACIE THAT ALONE IS REQUIRED AT THE TIME OF RECODING HIS REASONS TO BELIEVE ABOUT ESCAPEMENT AT THE STAGE OF -RE-OPENING, IRRESPECTIVE OF THE FACT WHETHER, THE AO CONFIRMS T HE SUGGESTED ,ESCAPEMENT OR NOT AT THE END OF THE SCRUTINY & FIN ALIZATION OF ASSESSMENT PROCEEDINGS. HENCE, I DON'T CONCUR WITH VIEWS OF LD. AR THAT IT WAS A 'REASON TO SUSPECT' ONLY & NOT A ' REASON TO BELIEVE' WITHIN THE MEANING OF' SEC. 147 OF THE I.T . ACT, 1961 5. INSOFAR AS ADDITION MADE U/S 68 TOWARDS SHARE APPLICATION MONEY RECEIVED FROM FIVE COMPANIES, THE LD.CIT(A) HELD THAT THERE IS NO DISPUTE THAT THE PA RTIES HAVE CONFIRMED THE PAYMENT OF SHARE APPLICATION MONEY ALONG WITH THEIR RETURN OF INCOME BALANCE-SHE ET AND COPY OF BANK STATEMENT. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE ALSO PROVED THE CREDITWORTHINESS OF THE PARTIES BY FILING THEIR FIN ANCIAL STATEMENTS, AS PER WHICH, THE SHARE APPLICATION MON EY RECEIVED BY THE ASSESSEE IS SUFFICIENTLY EXPLAINED AS OUT OF SHARE CAPITAL AND RESERVES AND SURPLUS. THEREFOR E, THERE IS NO REASON FOR THE AO TO MAKE ADDITION WHEN ASSESSEE HAS FILED COMPLETE DETAILS IN RESPECT OF F IVE COMPANIES TO PROVE IDENTITY, CREDITWORTHINESS OF TH E PARTIES AND GENUINENESS OF TRANSACTIONS. THE LD.C1T (A) ALSO DELETED ADDITION MADE BY THE AO TOWARDS ESTIMATED COMMISSION @1.75% ON TOTAL AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE BY HOLDING THAT THE AO HAS MADE THE ADDITION HAVING A PERCEPTION THAT THE ASSESSEE MIGHT HAVE PAID 1.75% COMMISSION FOR OBTAINING ALLEGED ACCOMMODATION ENTRIES. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A ) ARE EXTRACTED BELOW:- 4.6 I FIND THAT APPELLANTS SUBMISSIONS IS CORRECT THAT NEITHER THE COPY OF STATEMENT, IF ANY, OF THE SHRI SURENDRA KUM AR JAIN/ VIRENDRA JAIN HAS BEEN PROVIDED TO THE APPELLANT DU RING THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 61 ASSESSMENT PROCEEDING NOR THE INCREMENTING PART, IF ANY, OF THOSE ALLEGED STATEMENT HAD BEEN INCORPORATED IN THE BODY OF THE IMPUGNED ASSESSMENT ORDER. A PERUSAL OF THE SHOW CA USE NOTICE ISSUED BY THE AO OF THE APPELLANT DURING THE ASSESS MENT PROCEEDING ALSO DOES NOT GIVE ANY SPECIFIC AND DEFI NITE INCREMENTING PIECE OF EVIDENCE ARISING OUT SURVEY/S EARCH AND SEIZURE OPERATION ON THE JAIN BROTHERS THAT CAN BE TAGGED WITH THE CASE OF THEAPPELLANT COMPANY OF ACCEPTED IN ANY OF THEIR STATEMENTS RECORDED DURING THE SEARCH AND SEIZURE O PERATION REPRODUCED BY THE O IN HIS ASSESSMENT ORDER THAT TH EY ARE IN THE BUSINESS OF PROVIDING ALLEGED ACCOMMODATION ENTRIES OR NAMED THE APPELLANT COMPANY OR ITS DIRECTORS AS BENEFICIA RY TO ISSUE SUCH ALLEGED ACCOMMODATION ENTRIES IN FAVOUR OF THE APPE LLANT COMPANY 4.7 AS FAR AS THE ADDITION FOR THE AMOUNTS TOTALING TO RS.1,00,00,000/- U/S 68 CORRESPONDING TO THE 5 PART IES IN THE SAID TABLE IS CONCERNED AS DISCUSSED ABOVE, I FIND THAT THERE IS NO DISPUTE THAT THE PARTIES HAVE CONFIRMED THE PAYMENT OF SHARE APPLICATION MONEY ALONG WITH THEIR RETURN OF INCOME . BALANCE SHEET. COPY OF 1ANK STATEMENT OF THE APPELLANT WHER ECHECJUES RECEIVED ON ACCOUNT OF SHARES APPLICATION MONEY AND CHEQUE PAID FOR RETURN OF SHARE APPLICATION MONEY WERE APPEARIN G. HAD THE AO WAS IN DOUBT HE COULD HAVE FURTHER INVESTIGATED THE SOURCE OF MONEY AS WELL AS THE RECIPIENT OF THE RETURN OF MON EY BY THE WAY OF ISSUING NOTICE U/S 133(6) AT LEAST AS GENUINELY REQUESTED BY THE APPELLANT DURING THE ASSESSMENT PROCEEDINGS. WITHOU T TAKING THAT RECOURSE THE AO WAS NOT JUSTIFIED IN PRESUMING THAT THE AMOUNT WAS CREDITED FROM NON-EXISTING, AND NON- CREDIT WOR THY CREDITORS AND RETURNED THE SAME TO SOME BOGUS PERSONS. NO ADV ERSE MATERIAL HAS BEEN BOUGHT BY THE AO TO SUPPORT HIS A CTION ON RECORD. THUS, SUCH ADDITION APPEARS TO HAVE BEEN MA DE ON THE BASIS OF VAGUE INFORMATION RECEIVED. 4.8 THE AO HAS DOUBTED CREDITWORTHINESS OF THE PART IES M/S FINANGE LEASING AND FINANCE PVT LTD. ON THE GROUND THAT THE TURNOVER OF THE COMPANY WAS MEAGRE AND NET CURRENT ASSETS OF THE COMPANY AS ON 31.3.2007 TO A NEGATIVE FIGURE OF 17.78 CRORES. HE HAS NOT OBSERVED THAT ACTUALLY THE NET CURRENT A SSETS IS A POSITIVE FIGURE OF RS.1,72,950/- AS ON 31.3.2008 AN D THE NET WORTH OF THE COMPANY ALSO WAS FOR 14,57 COMES. SIMI LAR IS THE CASE OF SINGHAL SECURITIES PVT LTD, M/S SHALINIHOLI DNGS LTD AND BRITE INDUSTRIAL RESOURCE LIMITED WHERE THE AO HAS NOT GIVEN THOUGHT TO THE NET WORTH EF KS.20,00,000/- EACH. TH E REASON GIVEN FOR REJECTING THEIR CREDITWORTHINESSFOR VOGUE LEASI NG AND FINANCE LTD ARE VERY VAGUE AND THE AO HAS NOT GIVEN THOUGHT TO THE HUGE NET WORTH OF 17.61 CRORES AS ON 31.3.2008. WHEREAS THIS PARTY ALSO HAS PAID THE SHARE APPLICATION MONEY FOR RS.20 ,00,000/- ONLY. THEREFOREON ONE OF THE PARTIES CAN BE HELD LA CKING IN THEIR CREDITWORTHINESS AS WRONGLY PRESUMED BY THE AO. THE IDENTIFY OF THESE PARTIES WAS NEVER IN DOUBT AS THE DETAILS OF THEIR PAN WAS PROVIDED TO THE AO BY THE APPELLANT DURING THE ASSE SSMENT PROCEEDINGS BY FURNISHING THE COPY OF ACKNOWLEDGMEN T OF RETURN OF INCOME. 4.9 THUS I FIND THAT THE AO HAS NOT BEEN ABLE TO ES TABLISH THE FACT THAT THE AMOUNT FROM THESE PARTIES IS RECEIVED IN C HEQUE IN LIEU OF CASH GIVEN TO THEM THROUGH ANY CREDIBLE PIECE OF EV IDENCE. THE REFERENCE AND STATEMENTS IF ANY RELIED UPON BY THE AO DURING THE ASSESSMENT PROCEEDINGS COULD HAVE BEEN THE BEGINNIN G POINT AND ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 62 GOODS FOR FURTHER INVESTIGATION AND CONSEQUENTIAL V ERIFICATION BUT NO ADDITION OUT OF THE IMPUGNED ADDITION COULD HAVE BEEN MADE MERELY ON THE MATERIAL WITH THE AO THAT HAD DECISIV ELY NO DIRECT AND LIVE NEXUS WITH THE CHEQUE RECEIVED FROM THE PA RTIES AND ALLEGED CASH GIVEN TO SUCH PARTIES IN LIEU OF SUCH CHECKS. THE DEPARTMENT HAD CONDUCTED SEARCH AND SURVEY BOTH IN THE CASE OF SURENDRA KUMAR JAIN AND VIRENDRA KUMAR JAIN THAT AR E BIGGEST TOOL OF ACCURATE FACT FINDING AND AFFAIRS OF THE PA RTIES. IF THESE TOOLS COULD NOT PROVIDE ANY CREDIBLE EVIDENCE TO ESTABLIS H DIRECT AND LIVE NEXUS BETWEEN CHEQUES RECEIVED AND ALLEGED CASH GIV EN TO THE PARTIES. THE AO COULD HAVE NOT MADE THE ADDITION ON THE FLIMSY GROUND OR SIMPLY BECAUSE RECOMMENDATION OF SOME OTH ER I.TAX AUTHORITY DEVOID OF SUCH A CREDIBLE EVIDENCE IN HIS POSSESSION. THE VERY IMPORTANT FACT HAS ALSO BEEN IGNORED BY TH E AO THAT ALL THESE PARTIES HAVE GIVEN BACK THEIR DUE MONEY DURIN G THE YEAR ITSELF WITHOUT ENTERTAINING THEIR CLAIM FOR ALLOTME NT OF SHARES AS PER THEIR RESPECTIVE APPLICATION. HENCE THE ALLEGAT ION, EVEN IF, IOTA OF DOUBT COULD HAVE BEEN IN THE MIND OF THE AO ABOU T THESE PARTIES TO HAVE BEEN ENGAGED IN BUSINESS OF PROVIDI NG ENTRIES ONLY THOUGH THIS SHARE APPLICATION MONEY, SHOULD HAVE GO NE IN VIEW OF THE FACT THAT RETURN OF MONEY IS NEVER A PART OF BU SINESS OF ENTRY PROVIDERS. 4.10 NEVERTHELESS, THE FACT THAT THE PARTIES IN QUE STION ARC KNOWN TO THE AO WHICH IS EVIDENT FROM THE FACT THAT THE D EPARTMENT HAD ASSESSED THEM FOR AY 2008-09 U/S 143(3) R.W.S. 153A . THE AO COULD HAVE NOT IGNORED TO MENTION IN HIS IMPUGNED A SSESSMENT ORDER, THE OTHER FACT ALSO THAT NONE OF THESE PARTI ES ARE ASSESSED FOR COMMISSION ON ACCOUNT OF ALLEGED BUSINESS OF AC COMMODATION ENTRIES. THE IMPUGNED ASSESSMENT ORDER HAS BEEN FRA MED BY THE ASSESSING OFFICER ONLY ON THE BASIS OF THE INFORMAT ION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WITHO UT MAKING ANY FURTHER INVESTIGATION. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE SHARE APPLIC ATION MONEY RECEIVED BY THE APPELLANT REPRESENTED ITS OWN UNDIS CLOSED INCOME. HENCE, THIS ADDITION TOO, IS NOT JUSTIFIED IN THE F ACTS & CIRCUMSTANCES OF THE INSTANT CASE. IN HOLDING THIS & THESE ADDITIONS, I AM FORTIFIED BY THE LAW PROPOUNDED BY HON'BLE APEX COURT IN C1T VS DIVINE LEASING & FINANCE ,LTD (CC 3 75/2008) DATED 21.04.2008; APEX COURT IN THE CASE OF LOVELY EXPORTS PVT LTD 216 CTR [95,HON'BLE BOMBAY HIGH COURT IN THE CA SES OF CREATIVE WORLD TELEFILMS LTD, 333 ITR 100 (BOM), DE CISION OF DELHI HIGH COURT IN THE CASE OF KAMDHENU STEELS AND ALLOY S LTD 361 ITR 220, MUMBAI TRIBUNAL IN THE CASE OF' PROVID TRADE I MPEX PVT LTD 2219/MUM 2009, AIM PROPRIETIES AND INVESTMENTPV LTD ITA 7426/MUM/2012, SAIMANGAL INVESTMENT LTD 3924/MUM/20 09, UTTAM CHAND JAIN THAT UPHELD THAT DECISION OF SP. B ENCH OF ITAT, MUMBAI APART FROM LATEST CLINCHING DECISION OF HON BLE ITAT (DELHI-E) BENCH) DT. 1.4.2015 IN ITA NO. 2821/DEL/2 009 IN THE CASE OF ITO, WARD 13(2), NEW DELHI VS. NEELKANTH, F INBUILD LTD., NEW DELHI. AS DISCUSSED ABOVE, UNDOUBTEDLY THE ISSU E HAS BEEN SETTLED BY THE HONBLE ITAT, J BENCH, MUMBAI, (SA IMANGAL INVESTMENT LTD 3924/MUM/2009 DT, 20.12.2013) IN THE SIMILAR FACTS AND CIRCUMSTANCES OF SHARE APPLICATION MONEY VIS A VIS ALLEGATION OF ACCOMMODATION ENTRIES AS DISCUSSED AB OVE AND THAT IS THE JURISDICTIONAL FINAL FACT FINDING AUTHORITY AND SUPERIOR TO THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER THEIR JU RISDICTION IN MUMBAI. THUS, IN VIEW OF THE DECISION OF HONBLE MA DHYA PRADESH ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 63 HIGH COURT IN THE CASE OF AGGARWAL WAREHOUSING & LE ASING LTD V. C.I.T. (257 ITR 235), I. CIT(A) BEING THE AUTHORITY SUBORDINATE TO THE HONBLE ITAT HAVE NO OPTION BUT TO FOLLOW RESPE CTFULLY THE DECISION OF HONBLE JURISDICTIONAL ITAT ON THE ISSU E IN TANDEM WITH JUDICIAL PROPRIETY THAT HAS BEEN EMPHASIZED BY THE HONBLE MADHYA PRADESH HIGH COURT FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE UNION OF INDIA V. KAMLAKS HI FINANCE CORPORATION LTD., AIR 1992 SC 711; [1991] 55 ELT 43 3 (SC). THE RELEVANT PORTION ON JUDICIAL PROPRIETY FROM THE AFO RESAID JUDGMENT OF THE HONBLE MADHYA PRADESH HIGH COURT IS REPRODU CED HERE UNDER FOR THE PURPOSES OF CLARITY:- 'NEEDLESS TO SAY THE ORDERS PASSED BY THE TRIBUNAL ARE BINDING ON ALL THE REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL DEALING WITH THIS VERY ASPECT OF THE MATTER, THE SUPREME COURT IN THE CASE OF UNION OF INDIA V. KAMLAKSHI FINANCE CORPORATION LTD., AIR 1992 SC 711; [1991] 55 ELT 433 (SC) EMPHASIZED: IT CANNOT BE TOO VEHEMENTLY EMPHASIZED THAT IT IS OF UTMOST IMPORTANCE THAT, IN DISPOSING OF THE QUASI-JUDICIAL ISSUES BEFORE THEM REVENUE OFFICERS ARE BOUND BY THE DECISIONS OF THE APPELLATE AUTHORITIES. THE ORDER OF THE APPELLATE COLLECTOR I S BINDING ON THE ASSISTANT COLLECTORS WORKING WITHIN HIS JURISDICTION AND THE ORDER OF THE TRIBUNAL IS BINDING UPON THE ASSISTANT COLLECTORS AND THE APPELLATE COLLECTORS WHO FUNCTION UNDER THE JURISDICTION OF THE TRIBUNAL. THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE MERE FACT THAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT ACCEPTABLE TO THE DEPARTMENT-IN ITSELF AN OBJECTIONABLE PHRASE-AND IS THE SUBJECT-MATTER OF AN APPEAL CAN FURNISH NO GROUND FOR NOT FOLLOWING I T UNLESS IT OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. IF THIS HEALTHY RULE IS NOT FOLLOWED. THE RESULT WILL ONLY BE UNDUE HARASSMENT TO ASSESSEES AND CHAOS IN ADMINISTRATION OF TAX LAWS. 4.11 OBVIOUSLY, THE COMMISSIONER OF INCOME-TAX (APPEALS) NOT ONLY COMMITTED JUDICIAL IMPROPRIETY B UT ALSO ERRED IN LAW IN REFUSING TO FOLLOW THE ORDER O F THE APPELLATE TRIBUNAL. EVEN WHERE HE MAY HAVE SOME RESERVATIONS ABOUT THE CORRECTNESS OF THE DECISION OF THE TRIBUNAL, HE HAD TO FOLLOW THE ORDER. HE COULD AND SHOULD HAVE LEFT IT TO THE DEPARTMENT TO TAKE THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 64 MATTER IN FURTHER APPEAL TO THE TRIBUNAL AND GET TH E MISTAKE, IF ANY RECTIFIED. THEREFORE THE TOTAL ADD ITION OF RS.1,10,000/- IS DELETED IN VIEW OF ABOVE DISCUSSIO N. (RELIEF: RS. 1,10,00,0007-) 4.12 GROUND 11 4. 12.1 1 HAVE GONE THROUGH THE CONTENTS OF THE IMP UGNED ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLAN T ON THIS ISSUE. I FIND THAT THIS IS A NOTIONAL ADDITION MADE BY THE AO CONSEQUENT TO THE PRESUMPTION THAT APPELLANT HAS TA KEN ENTRIES ONLY AND AS A MATTER OF GENERAL PERCEPTION HE MIGHT HAVE PAID 1.75% COMMISSION FOR OBTAINING THE ALLEGED ENTRY TO THE TUNE OF 1,10,00,000/- 4.12.2 SINCE I HAVE ALREADY HELD THAT RS.10,00,000/ - WAS NEVER RECEIVED BY THE APPELLANT AND RS.1,00,00,000/- WAS RECEIVED ON ACCOUNT OF SHARE APPLICATION MONEY AND NOT BY THE W AY OF ENTRY ALONE AND THE SAME HAS BEEN RETURNED BACK TO THE RE SPECTIVE PARTIES WITHOUT ALLOTTING ANY SHARES TO THEM DURING THE IMPUGNED ASSESSMENT YEAR ITSELF, AND THE IMPUGNED ADDITION O F RS.1,10,00,000/- HAS BEEN DELETED, FURTHER CONSEQUE NTIAL ADDITION OF RS.1,75,000/- AGITATED BY THE APPELLANT IN THIS GROUND HAS NO LEGS TO STAND. ACCORDINGLY, THE SAME IS DELETED. 6. THE LD. DR SUBMITTED THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FACT IN RIGHT PERSPECTIVE BEFORE DEL ETING ADDITION MADE BY THE AO TOWARDS SHARE RIGHT PERSPECTIVE BEFORE DELETING ADDITION MADE BY THE AO TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE ACT. THE LD.DR FURTHER SUBMITTED THAT THE AO HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT SHRI S.K. JAIN H AS ADMITTED IN HIS STATEMENT RECORDED DURING SEARCH TH AT HE HAS PROVIDED ACCOMMODATION ENTRIES TO VARIOUS COMPANIES IN THE FORM OF SHARE APPLICATION MONEY AR ID LOANS AND ADVANCES WHICH WAS FURTHER SUPPORTED BY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE LD.DR FURTHER SUBMITTED THAT THE LD.CIT (A) DELETED ADDITION ONLY ON THE BASIS OF EVIDENCES FIL ED BY THE ASSESSEE INCLUDING BANK STATEMENTS AND PAN, BUT MERE FURNISHING BANK STATEMENTS AND PAN WOULD NOT PROVE THE GENUINENESS OF TRANSACTIONS, MORE PARTICULARLY, WHEN THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTRIES THROUGH HAWALA OPERATOR. IN THIS REGARD, HE RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF C1T VS JAN SAMPARK ADVERTISING & MARKETING PVT LTD (2015) 375 ITR 373 (DEL). 7. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTE D THAT THE LD.C1T(A) HAS RIGHTLY APPRISED THE FACTS O N THE BASIS OF EVIDENCE PRODUCED BY THE ASSESSEE DURING ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 65 ASSESSMENT PROCEEDINGS AND ALSO APPELLATE PROCEEDINGS WHERE THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. T HE LD.AR FURTHER SUBMITTED THAT THE AO HAS MADE ADDITION ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WHICH WAS FURTHER SUPPORTED BY STATEMENT OF SHRI S.K. JAIN WHERE IN HIS CASE, DURI NG SEARCH HE STATED THAT HE WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SOUGHT DETAILS OF EVIDENCES RELIED UPON BY THE AO TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE INCLUDING STATEMENT RECORDED FROM SHRI S.K. JAIN. THE ASSESSEE ALSO SOU GHT CROSS EXAMINATION OF THE WITNESS, BUT THE AO HAS TURNED DOWN THE REQUEST OF THE ASSESSEE AND MADE ADDITION ONLY ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING IN RESPECT OF SHARE APPLICATION MONEY RECEIVED FROM FIVE COMPANIES, EVEN THROUGH TH E ASSESSEE HAS FILED COMPLETED DETAILS OF COMPANIES, WHICH SUBSCRIBED TO SHARE APPLICATION MONEY. IN TH IS REGARD, HE RELIED UPON THE DECISION OF HON'BLE SUPR EME COURT IN THE CASE OF CIT VS SUNITADHADDA IN SLP (C) NO.9002 OF 2018 REPORTED IN 403 ITR 309 (SC). THE ASSESSEE ALSO RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS COMMISSIONER OF CENTRAL EXCISE 52 GST 355 (SC). 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS NO DISPUTE WI TH REGARD TO THE FACT THAT THE ASSESSEE HAS FILED ENOR MOUS DETAILS IN RESPECTOF FIVE COMPANIES FROM WHICH SHAR E APPLICATION MONEY HAS BEEN RECEIVED. THEASSESSEE HA S FILED COMPLETE NAMES AND ADDRESSES OF THE SUBSCRIBE RS, PAN, BANK STATEMENTS AND ALSO FINANCIAL STATEMENTS FOR THE RELEVANT FINANCIAL YEAR IN ORDER TO PROVE I DENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE AO HAS MADE ADDITION BY IGNORING A LL DETAILS FILED BY THE ASSESSEE ONLY ON THE BASIS OF STATEMENT OF SHRI S.K. JAIN RECORDED U/S 132(4) OF THE ACT, DURING SEARCH PROCEEDINGS WHERE HE STATED THAT HE WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES OF SHARE APPLICATION MONEY / UNSECURED LOANS. EXCEPT THIS, THE AO HAS NOT CARRIED OUT ANY ENQUIRY TO ASCERTAIN WHETHER THE STATEMENT GIVEN B SHRI SK JAI N IS CORROBORATED WITH ANY EVIDENCE OR NOT. THE AO AL SO ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 66 NOT ALLOWED THE ASSESSEE TO EXAMINE THE STATEMENT GIVEN BY SHRI SK JAIN AND ALSO TO CROSS EXAMINE THE WITNESS BEFORE MAKING ADDITION, EVEN THOUGH THE ASSESSEE HAS SPECIFICALLY ASKED FOR STATEMENT OF SH RI S.K. JAIN AND ALSO CROSS EXAMINATION OF THE WITNESS ES. IN THIS REGARD, THE ASSESSEE HAS FILED COPIES OF LE TTER ADDRESS TO THE AO DURING ASSESSMENT PROCEEDINGS WHEREIN IT WAS SPECIFICALLY ASKED TO FURNISH STATEM ENT OF SHRI SK JAIN AND ALSO TO ALLOW CROSS EXAMINATION OF WITNESS. THE AO HAS TURNED DOWN THE REQUEST OF THE ASSESSEE AND MADE ADDITION U/S 68 ON THE BASIS OF STATEMENT OF SHRI SK JAIN. WHEN THIRD PARTY INFORMATION / EVIDENCES ARE RELIED UPON OR USED AGAINST THE ASSESSEE TO DRAW AN ADVERSE INFERENCE, IT IS THE DUTY OF THE AO TO FURNISH SUCH EVIDENCE AND ALS O TO ALLOW CROSS EXAMINATION OF WITNESS BEFORE TAKING AN Y ADVERSE INFERENCE ON THE ASSESSEE. THIS LEGAL PROPOSITION IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS SUNITADHADDA (SUPRA),WHEREIN THEIR LORDSHIPS ADARSH KUMAR GOEL AND ROHINGTON FALI NARIMANCATEGORICALLY HELD THAT UNLESS IT WAS ESTABLISHED ON RECORD BY THE DEPARTMENTTHAT AS A MATTER OF FACT THE CONSIDERATIO N DID PASS TO THE SELLER FROM THE PURCHASER IN ADVANC E, ESPECIALLY, SINCE NONE OF THE WITNESSES WERE EXAMIN ED BY THE AO AND THE ASSESSEE DID NOT HAVE ANY OPPORTUNITY TO CROSS EXAMINE THEM. THIS LEGAL PROPOSITION IS FURTHER SUPPORTED BY THE DECISION OF HON'BLE SUPREME COURT, IN THE CAE OF ANDAMAN TIMBER INDUSTRIES VS CCE (SUPRA), WHEREIN IT WAS HELD THAT WHEN STATEMENT OF WITNESSES ARE MADE BASIS OF ADMISSION, NOT ALLOWING ASSESSEE TO CROSS EXAMINE WITNESS, IS A SERIOUS FLAW WHICH MAKES ORDER NULLI TY AS IT AMOUNTS TO VIOLATION OF PRINCIPLES OF NATURAL JU STICE. IN THIS CASE, ON PERUSAL OF DETAILS IT IS VERY CLEA R THAT THE ASSESSEE HAS SOUGHT FOR STATEMENT OF WITNESSES AND ALSO CROSS EXAMINATION DURING ASSESSMENT PROCEEDINGS. THE AO, NEITHER ALLOWED THE ASSESSEE T O CROSS EXAMINE WITNESSES NOR FURNISHED STATEMENT WHICH WAS USED AGAINST THE ASSESSEE TO MAKE ADDITIO N TOWARDS SHARE APPLICATION MONEY. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS VIOLATED PRINCI PLES OF NATURAL JUSTICE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE MAKING ADDITION TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE INCOME-TAX ACT, 196 1. 9. COMING TO THE ISSUE ON MERIT, THE LD.CIT(A) CATEGORICALLY STATED IN HIS ORDER THAT THE ASSESSEE HAS ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 67 FILED ENORMOUS DETAILS TO PROVE IDENTITY AND ALSO F ILED FINANCIAL STATEMENTS OF SUBSCRIBERS AND BANK STATEMENT TO PROVE CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF TRANSACTIONS. THE LD.CIT(A) FURTHER OBSERVED THAT THE SUBSCRIBERS TO THE SHARE CAPITAL ARE HAVING CAPACITYTO EXPLAIN SHARE APPLICATION MONEY GIVEN TO THE ASSESSEE WHICH IS EVIDENT FROM THE FAC T THAT THEY ARE HAVING HUGE NET WORTH IN THE FORM OF SHARE CAPITAL AND RESERVES. THE AO NEITHER POINTED OUT ANY CASH DEPOSITS OR ANY OTHER CREDITS IN THE BANK STATEMENTS OF THE SUBSCRIBERS IMMEDIATELY PRECEDING THE DAY ON WHICH THE AMOUNT HAS BEEN TRANSFERRED TO THE ASSESSEE. IT IS ALSO NOT A CASE OF THE AO THAT THE COMPANIES ARE NOT HAVING ENOUGH SOURCE OF INCOME TO ESTABLISH CREDITWORTHINESS. THEREFORE, WE ARE OF TH E CONSIDERED VIEW THAT THE ASSESSEE HAS DISCHARGED IT S BURDEN CAST UPON U/S 68 OF THE ACT, TO PROVE THE CREDITS FOUND IN THE BOOKS OF ACCOUNT. THE LD.CIT(A ), AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETE D ADDITION MADE BY THE AO TOWARDS SHARE APPLICATION MONEY U/S 68 OF THE ACT. WE DO NOT FIND ANY ERROR I N THE FINDINGS OF THE LD.CIT(A) AND HENCE, WE ARE INC LINED TO UPHOLD ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. 4.2. ANOTHER DECISION CITED BEFORE US IS INCOME TAX OFF ICER VS M/S TRISHUL TRADERS PVT. LTD. (ITA NO.3060/MUM/2017), ORDER DATED 20/12/2018, WHICH IS REPRODUCED HEREUNDER:- THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 21, MUMBAI DATED 17.02.17 FOR AY 2012-13 ON THE GROUNDS MENTIONED HEREIN BELOW:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS .5,75,00,000/-, WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS OF ES TABLISHING IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS, IGNORING THE RATIO OF DECISION IN THE FOLLOWING CASES: ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 68 (I) CIT VS N.R.PORTFOLIO(P) LTD. (II) CIT VS ULTRA MODERN EXPORTS P. LTD. (III) AGRAWAL COAL CORPORATION P. LTD VS. ADDL.CIT, RANGE 5 (IV) CIT VS YOUTH CONSTRUCTION P. LTD. (V) NOVA PROMOTERS & FINLEASE P. LTD. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ST ATEMENT OF WITNESS RECORDED WAS NOT CONCLUDED DUE TO NON-COOPERATION O F THE DEPONENT, AND HENCE, NO ADVERSE INFERENCE COULD BE DRAWN OUT OF IT. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A) ERRED IN CONCLUDING THAT NO OPPORTUNITY H AS BEEN PROVIDED TO THE ASSESSEE FOR CROSS EXAMINATION OF WITNESS, WHIL E HE HAS ALSO CONCLUDED THAT OPPORTUNITY FOR CROSS EXAMINATION DI D NOT ADVANCE THE CASE OF THE AO. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CI T(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFI CER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALT ER ALL OR ANY OF THE GROUNDS OF APPEAL WHICH MAY BE NECESSARY. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS AS GENERAL MERCHANTS AND TRADER IN GOODS AND COMMODITIES ON READY OR FORWARD BASIS, COMMISSION A GENTS, BUYING AND SELLING AGENTS, ETC. DURING THE YEAR, TH E ASSESSEE HAS SHOWN INCOME FROM HOUSE PROPERTY AND INCOME FRO M BUSINESS AND THE RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WAS FILED ON 28.09.12 DECLARING TOTAL INCOME OF RS 4,00,323/-. SUBSEQUENTLY THE CASE WAS SELECTED F OR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND PR OVIDING OPPORTUNITY OF HEARING, ASSESSMENT ORDER U/S 143(3) OF THE I.T. ACT WAS PASSED ASSESSING INCOME OF RS. 5,76,48 ,940/- THEREBY MAKING ADDITIONS ON ACCOUNT OF UNACCOUNTED CASH CREDIT AND DISALLOWANCE MADE U/S 14A OF THE I.T ACT . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE HAS PREFERRED THE PRESE NT APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 TO 3 ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 69 3. THESE GROUNDS RAISED BY THE REVENUE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENG ING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION MADE B Y AO, WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS CO MMON ORDER. 4. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JU DGMENT CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED B Y REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECE SSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. C IT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE ASSE SSEE IN PARA NO.4 OF ITS ORDER. THE OPERATIVE PORTION IS CO NTAINED IN PARA NO. 4.8 TO 4.16 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW:- 4.8. I HAVE CONSIDERED THE FACTS ON RECORD, THE ASS ESSMENT ORDER, THE REMAND REPORT AND RIVAL CONTENTIONS CARE FULLY. THE APPELLANT IS AN EXISTING IS AN EXISTING PROFIT MAKI NG COMPANY ENGAGED IN TRADING IN SHARES AND SECURITIES. THERE HAS BEEN INCREASE IN SHARE CAPITAL IN THE CURRENT YEAR. THE ASSESSING OFFICER HAS OBSERVED THAT SHARES WERE ALLOTTED TO S ISTER CONCERNS, THOUGH ALSO AT PREMIUM, BUT AT LOWER PREM IUM THAN THAT AT WHICH IT IS ALLOTTED TO OTHER THIRD PARTY C OMPANIES. THIS HAS BEEN VIEWED ADVERSELY BY THE ASSESSING OFF ICER. THE APPELLANT HAS EXPLAINED THAT THIS IS ON ACCOUNT AMA LGAMATION OF THREE COMPANIES AND SHARES WERE ISSUED TO THE SHAREHOLDERS OF THE AMALGAMATING COMPANIES AT BOOK VALUE. THOUGH THIS WAS EXPLAINED IN THE ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER HAS IGNORED THE EXPLANATION. THE ASSESSING OFFICER HAS NOT ADDRESSED THE CONTENTION OF THE APP ELLANT THAT THE INVESTOR COMPANIES ARE NOT PRAVEEN JAIN COMPANI ES BY BRINGING ON RECORD ANY EVIDENCE TO LINK THE INVESTO R COMPANIES TO SHRI PRAVEEN JAIN. 4.9. I DO NOT FIND ANY MERIT IN THE CONTENTION OF T HE APPELLANT THAT THE INVESTMENT BEING A SHARE CAPITAL IS A CAPI TAL RECEIPT AND THEREFORE CANNOT BE CONSIDERED AS INCOME IN THE HANDS OF THE APPELLANT. THE CREDITS FALL WITHIN THE SCOPE OF SECTION 68 WHICH IS A DEEMING PROVISION. SEVERAL CASE LAWS INC LUDING ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 70 THOSE OF THE APEX COURT AND HIGH COURT HAVE CONSIDE RED CREDITS MADE TO CAPITAL ACCOUNT OF THE ASSESSEE'S T O BE COVERED UNDER THE PROVISIONS OF SECTION 68 AND THER EFORE DEEMED INCOME. THE RULE FOR APPLICATION OF SECTION 68 IS THAT THE IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR/ LENDER /CREDITOR HAS TO BE ESTABLISHED AND THE GENUINENESS OF THE TRANSACTION HAS TO BE ESTABLISHED. 4.10. THE APEX COURT UPHELD THE ADDITION U/S 68 IN THE CASE OF CREDITS AS SHARE CAPITAL IN THE CASE OF N. TARIK A PROPERTY INVEST. (P.) LTD. V. COMMISSIONER OF INCOME-TAX*[20 14] 51 TAXMANN.COM 387 (SC) BY DISMISSING THE SLP FILED BY THE APPELLANT. 4.11. IN THE REMAND REPORT CALLED THE ASSESSING OFF ICER WAS CLEARLY GIVEN A FREE HAND TO BRING IN ANY EVIDENCE THAT SPECIFICALLY LINKED THE APPELLANT COMPANY RECEIVING SHARE CAPITAL MONEY IN LIEU OF CASH. NO SPECIFIC PERSON W AS SPECIFIED AND IT WAS STATED AS A GENERAL PROPOSITIO N THAT FOR ANY STATEMENT TO BE USED AGAINST THE APPELLANT, AN OPPORTUNITY OF CROSS EXAMINATION MUST BE PROVIDED. THE ASSESSING OFFICER HAS MADE EFFORTS TO BRING IN SHRI PRAVEEN JAM, BUT HAS NOT OBTAINED ANY STATEMENT INCRIMINATI NG THE APPELLANT. THE STATEMENT RECORDED OF SHRI PRAVEEN J AIN ON 9.1.2017 DOES APPEAR TO BE MEANDERING AND TOO SHORT FOR THE THREE HOURS FOR WHICH SHRI JAIN ATTENDED. NOT A SIN GLE QUESTION RELATING TO THE INVESTORS IN THIS CASE WAS ASKED. IT IS ALSO NOTED THAT THERE IS NOTHING ASKED NOR CONFIRME D TO LINK THE INVESTOR COMPANIES IN THIS CASE TO SHRI PRAVEEN JAM, MUCH, LESS LINK IT TO THE APPELLANT COMPANY. 4.12. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THOUGH THE CONCLUSIONS OF THE INVESTIGATION WING HAS BEEN REFERRED TO IN THE ASSESSMENT ORDER, THERE ARE NO SPECIFIC REFE RENCE TO THE APPELLANT COMPANY. THERE ARE NO EVIDENCES TO SHOW THAT THERE IS ANY CA SH TRAIL IN RESPECT OF THE AMOUNTS RECEIVED BY THE APPELLANT CO MPANY FROM THE INVESTORS. THOUGH THE AO WAS SPECIFICALLY ASKED TO FURNISH SPECIFIC INCRIMINATING EVIDENCES, IT IS NOT ED THAT THE AO HAS NOT BEEN ABLE TO PIN POINT THE SPECIFIC EVID ENCES WHICH WOULD CLEARLY SHOW THAT THE SHARE APPLICATION MONEY HAS BEEN RECEIVED IN LIEU OF CASH. THE FACT REMAINS THAT THE INVESTOR COMPANIES ARE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 71 ASSESSED TO TAX AND HAVE FILED THEIR RETURNS OF INC OME. NOTICES U/S 133(6) WERE SERVED ON THE INVESTORS EXCEPT IN 2 CASES AND EVEN THEN REPLIES WERE FILED BY ALL OF THEM LATER, AND THEREFORE IT CANNOT BE SAID THAT THE PARTIES DID NOT EXIST AT THEIR ADDRESSES. COPY OF BANK STATEMENT, LEDGER ACCOUNT, SHARE APPLICATION FORM, BOARD RESOLUTION AUTHORIZING INVE STMENTS, INCOME TAX RETURN AND AUDITED ACCOUNTS OF THE INVES TOR COMPANIES HAVE BEEN FILED BEFORE THE ASSESSING OFFI CER AND ALSO IN THE APPELLATE PROCEEDINGS. 4.13. THE INVESTMENT AND THE CORRESPONDING SOURCE O F FUNDS OF INVESTOR AS SEEN FROM THE COPY OF THEIR AUDITED ACCOUNTS FOR FY 2006-07 IS TABULATED BELOW. SR.N O. NAME OF THE SHAREHOLDER TOTAL AMOUNT INVESTED SHARE CAPITAL AND RESERVES PROFIT AS P & L ACCOUNT 1 M/S. KAVYA SHARE 86 SECURITIES PVT. LTD. 30,00,000 2,24,81,101 3,86,824 2 M/S.DEV SHARE TRADING PVT. LTD. 30,00,000 2,46,10,675 5,00,568 3 M/S. PRAJAN TRADING PVT. LTD. 30,00,000 3,03,55,461 5,20,299 4 M/S. ARAWALLI STOCK BROKING PVT LTD 30,00,000 1,63,90,103 4,87,875 5 M/S. COLOURUNION INTERNATIONAL PVT. LTD. 50,00,000 2,30,51,700 3,43,358 6 M/S.RAMDEV SHARES & SECURITIES PVT. LTD. NOW KNOWN AS KOINA TRADING P. LTD 1,00,00,000 2,97,72,514 21,69,240 7 M/S. JASOL MAA SHARE TRADING 1,00,00,000 4,11,30,413 5,32,200 8 YASHITA TRADING PVT. LTD. 95,00,000 41,58,066 PLUS SHARE APPLICATION MONEY 40,00,000 (-) 42177 9 ASHRITA TRADING CO. PVT. LTD. 85,00,000 50,83,061 PLUS SHARE APPLICATION MONEY (-) 40,851 ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 72 50,00,000 10 ACCURATE MULTITRADE PVT. LTD. 25,00,000 42,28,354 PLUS SHARE APPLICATION MONEY 40,00,000 (-) 2,460/- TOTAL 5,75,00,000 IN THE CASE OF KOINA TRADING PVT. LTD., COPY OF ASS ESSMENT ORDER U/S 143(3) FOR AY 12-13 PASSED BY ITO 14(2)(2 ) WAS ALSO FILED. 4.14. IT CAN BE SEEN FROM THE OBSERVATION OF THE AS SESSING OFFICER THAT HE HAS ONLY REFERRED TO THE INFORMATIO N RELATED TO THE OUTCOME OF SEARCH IN THE CASE OF SHRI PRAVIN KU MAR JAIN GROUP WHO WERE PROVIDING ACCOMMODATION ENTRIES BUT THE LD.ASSESSING OFFICER HAS FAILED TO DEMONSTRATE ANY SUCH EVIDENCE THAT THE APPELLANT HAS IN REALITY OBTAINED ANY ACCOMMODATION ENTRIES. THERE IS NO DIRECT SPECIFIC MENTION OF THE APPELLANT BY THE DIRECTOR OR KEY PERSONS OF THE INVESTOR COMPANY. THERE IS NO EVIDENCE OF CASH DEPOSITS LINK ED TO THE INVESTORS. THE ASSESSING OFFICER DID NOT BRING SPEC IFIC INCRIMINATING EVIDENCE LINKING THE INVESTOR TO THE APPELLANT. THE ONLY LINK IS THAT THE INVESTORS HAVE INVESTED I N APPELLANT COMPANY. THAT THE APPELLANT HAS GIVEN CASH TO THE I NVESTORS IN LIEU OF ENTRY IS MERELY ALLEGED BUT NOT DEMONSTR ATED. OPPORTUNITY FOR CROSS EXAMINATION WAS PROVIDED TO T HE APPELLANT IN THE REMAND PROCEEDINGS BUT SHRI PRAVEE N JAIN DID NOT CONFIRM THAT ANY ACCOMMODATION ENTRIES WERE PROVIDED. PAPERS/EVIDENCE FOUND IN THE SEARCH ACTIO N RAISES PRESUMPTION BUT THE SAME IS AVAILABLE IN THE CASE O F PERSON, SEARCHED BUT NOT IN THE CASE OF THIRD PARTIES UNLES S PROVED AND CORROBORATED. SIMILARLY, RETRACTION MAY BE REJE CTED AS MOTIVATED, BUT THE SAME CAN BE CONSIDERED ONLY AGAI NST THE PERSON WHO HAS RETRACTED IN HIS ASSESSMENT. SUCH ST ATEMENT IN THE CASE OF ANOTHER PERSON LOSES ITS SANCTITY UN LESS OPPORTUNITY OF CROSS EXAMINATION IS GRANTED AND /OR IS CORROBORATED WITH OTHER EVIDENCES. IN THE PRESENT C ASE EVEN THE BASIC PREMISE THAT THE INVESTOR COMPANIES BELON G TO PRAVEEN JAIN IS NOT SHOWN. WHEN THE INVESTOR COMPAN Y IS FILING REGULAR RETURN OF INCOME AND THERE IS A TRAN SACTION THROUGH BANKING CHANNEL, NO ADDITION CAN BE MADE WI THOUT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 73 HAVING ANY CONTRARY OR COGENT EVIDENCES IN POSSESSI ON. OVER SUCH ISSUE THERE ARE PLETHORA OF JUDGEMENTS TO SUPP ORT THE APPELLANT. SOME OF THEM ARE DISCUSSED HERE BELOW:- (I) THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/ S LOVELY EXPORTS 6 DTR 308 HAS HELD AS UNDER: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERSWHO'S NAME ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED I NCOME OF ASSESSEE COMPANY'. (II) THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF C IT V/S CREATIVE WORLD TELEFLIMS LTD 333 ITR 100 HAS HELD A S UNDER: 'IF THE SHARE APPLICATION MONEY IS- RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHO'S NAME ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. HELD, DISMISSING THE APPEAL, THAT THERE WAS NO DISP UTE THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAMES AND ADD RESSES OF THE SHAREHOLDERS, THEIR PAN/ GIR NUMBERS AND HAD AL SO GIVEN THE CHEQUE NUMBERS, NAME OF THE BANKERS. THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DET AILS THROUGH PAN CARDS, BANK REHOLDERS. THUS, THE VIEW T AKEN BY THE TRIBUNAL COULD NOT BE FAULTED. (III) THE HON'BLE SUPREME COURT OF INDIA IN THE CAS E OF CIT VS. ORISSA CORPORATION REPORTED IN 159 ITR 78 (SC) HAS HELD AS UNDER: 'THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAM ES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEE'S. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICE UND ER SECTION 131 AT THE INSTANCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WH ETHER THEY ARE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSU E THE SO- CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, T HE RESPONDENT COULD NOT DO ANYTHING FURTHEYN THE PREMI SES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT TH.NE RESP ONDENT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 74 HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN, IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PER VERSE OR BASED ON NO EVIDENCE'. RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISIONS: I. HON'BLE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX V/S. VALUE CAPITAL SERVICES P.LTD. (2008 ) 307 ITR 334 (DELHI). II. HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF COMMISSIONER OF INCOME TAX V/S. GP INTERNATIONAL LT D. (2010) 325 ITR 25 (P&H). III. HON'BLE MADRAS HIGH COURT IN THE CASE OF COMMI SSIONER OF INCOME TAX V/S. ELECTRO POLYCHEM LTD (2007)294 I TR 661 (MAD). IV. HON'BLE RAJASTHAN HIGH COURT IN CASE OF COMMISS IONER OF INCOME TAX V/S. AKJ GRANITES P.LT4. (2008)301 ITR 2 98 (RAJ.) V. HON'BLE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX V/S. OASIS HOSPITALITIES PVT.) LTD. (201 1) 51 DTR 74 (DELHI). SEC. 69 PLACES THE BURDEN OF PROOF ON THE TAX PAYER TO EXPLAIN THE NATURE AND SOURCE OF ANY CREDIT FOUND IN THE BO OKS. BUT, WHEN ASSESSEE PROVES OR SUBMIT THE BASIC INFORMATIO N LIKE IDENTIFICATION, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS, ONUS IS DISCHARG ED BY HIM AND IF ASSESSING OFFICER DISBELIEVE THE GENUINENESS OF THE SAME, HE HAS TO PROVE OTHERWISE, MERELY, DOUBTING O R POINTING OUT SOME DISCREPANCY IS NOT THE FOUNDATION FOR DISCARDING THE GENUINENESS OF THE DEPOSIT OR SHARE MONEY OR SUBSTANCE OF THE MATTER, HELD BY THE HON'BLE SUPREM E COURT IN THE CASE OF CIT V. GUJARAT-HEAVY CHEMICALS LTD. (2002)256 ITR 795 (SC). IN VIEW OF THE ABOVE THE QUESTION OF MAKING ANY ADD ITION U/S. 68 OF THE ACT DOES NOT ARISE.' 4.15.FURTHER, HON'BLE JURISDICTIONAL ITAT IN THE CA SE OF ITO- 10(2)(3) VS. M/S J.J. MULTITRADEPVT.LTD. ITA NO.215 8 & 2159/MUM/2014 ORDER DATED 11.03.2015 HAS DELETED ADDITIONS ON SIMILAR FACTS. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 75 FURTHER, THT: HO'BLE JURISDICTIONAL ITAT IN THE CAS E OF M/S S.D.B. ESTATE PVT.L D. VS ITO-5(3)(2) ITA NO.584/M/ 2015 HAS DELETED SIMILAR ADDITION MADE U/S 68 OF THE I.T. AC T. THE HON'BLE ITAT (JAIPUR BENCH)IN THE CASE OF BHARTI SY NTEX LTD. VS. DCIT ITA NOS. 172 & 173/JP/2010 HAS HELD IN PAR A 24.4 AS UNDER:- '24.4 IN THIS CASE ALSO NO CROSS EXAMINATION WAS AL LOWED TO THE ASSESSEE. THEREFORE, ADVERSE INFERENCE CANNOT B E DRAWN ONLY ON THE STATEMENT OF SHRI MUKESHCHOKSI. WE FURT HER NOTED THAT ALL OTHER NECESSARY DETAILS HAVE BEEN FI LED BEFORE AG. AMOUNTS WERE RECEIVED THROUGH ACCOUNT PAYEE CHE QUE. BOTH THE COMPANIES ARE ASSESSED TO TAX IN MUMBAI. CONFIRMATION ALONG WITH COPIES OF SHARE CERTIFICATE , BANK STATEMENT, MEMORANDUM OF ARTICLES, COPY OF SHARE AP PLICATION MONEY, AUDITED BALANCE SHEET AND P&L A/C OF THESE P ARTIES WERE FILED. THESE ARE SIMILAR DETAILS AS WERE FILED IN CASE OF THREE OTHER COMPANIES FOR ASST. YR. 2005-06. WE HAV E ALREADY DISPOSED OF THE APPEAL FOR ASST. YR. 2005-06 WHEREB Y WE HAVE HELD THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY F ILING NECESSARY DETAILS AND FURTHER HAVE RELIED ON THE DE CISIONS OF HON'BLE SUPREME COURT AND HON'BLE DELHI HIGH COURT ALONGWITH VARIOUS OTHER DECISIONS OF TRIBUNAL AND H AVE HELD THAT ADDITION CANNOT BE MADE UNDER S. 68 IN THE HAN DS OF THE ASSESSEE COMPANY. THEREFORE, IN VIEW OF THE SAME RE ASONING, WE CANCEL THE ENTIRE ADDITION MADE AND CONFIRMED BY THE LOWER AUTHORITIES HERE ALSO. THE ABOVE DECISION OF ITAT ALSO RELATED TO MR.MUKESHCHOKSI'S CASE OF INVESTMENT IN SHARE APPLI CATION MONEY. ON PERUSAL OF ABOVE CASE IT IS CLEAR THAT IF A BOGUS SHAREHOLDER HAS INVESTED THE MONEY AND IF APPELLANT RECEIVES SUCH MONEY AS SHARE APPLICATION MONEY AND APPELLANT DURING ASSESSMENT PROCEEDINGS PROVIDES THE DETAILS LIKE NA ME &ADDRESS OF THE CORPORATE ENTITY, PAN NO., ROC NO., THEN ITAT HELD THAT THIS MAY BE REFERRED TO THE CONCERNE D A. 0. OR PROCEEDING AGAINST SUCH BOGUS SHAREHOLDERS INSTEAD OF ADDING -,AMOUNT U/S 68 OF THE IT ACT IN THE NAME OF THE COMPANY' THE APPELLANT HAS REFERRED TO THE DECISION OF THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S GREEN INFRA LT D. ITA 1162 OF 2014. I HOWEVER FIND THAT THE FACTS IN THAT CASE WERE SOMEWHAT DIFFERENT, THOUGH THE QUESTION REGARDING H IGH ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 76 PREMIUM AT WHICH SHARES WERE ISSUED WAS RAISED BY T HE DEPARTMENT. 4.16. IT IS NOTED THAT NO SPECIFIC INCRIMINATING MA TERIAL LINKING INVESTOR TO THE APPELLANT OR SHOWING THE IN VESTMENT TO BE BOGUS IS PROVIDED. ALSO OPPORTUNITY FOR CROSS EX AMINATION DID NOT ADVANCE THE CASE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO BRING ON REC ORD ANY DIRECT OR CORROBORATIVE EVIDENCE THAT THE SHARE APP LICATION MONEY RECEIVED IS UNEXPLAINED AS COVERED U/S 68 EVE N AFTER OPPORTUNITY WAS GIVEN IN THE REMAND PROCEEDINGS. NO STATEMENT OF SHRI PRAVEEN JAIN NAMES THE APPELLANT SPECIFICALLY. IN ANY CASE, IT IS CARDINAL PRINCIPLE OF NATURAL JUSTICE, THAT BEFORE CONCLUSIONS ARE DRAWN AGAINST A PERSON BASED ON STATEMENT OF A THIRD PARTY, HE MUST BE ALL OWED AN OPPORTUNITY FOR CROSS EXAMINATION. - THIS HAS NOT B EEN PROVIDED. IN THIS FACT MATRIX, AND THE JUDICIAL DEC ISIONS COVERING THE SCOPE OF SECTION 68, THE ADDITION MADE OF RS 575,00,000 LAKHS U/S 68 IN THE CASE OF THE APPELLAN T IS DELETED. THE GROUNDS OF APPEAL IS ALLOWED. 5. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESE NT CASE AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES , WE FIND THAT LD. CIT(A) AFTER APPRECIATING THE FACTS OF THE PRESENT CASE HAD NOTICED FROM THE RECORDS THAT ASSESSEE WAS AN EXISTING PROFIT MAKING COMPANY ENGAGED IN THE BUSIN ESS OF TRADING IN SHARES AND SECURITIES. SINCE THERE WAS A N INCREASE IN SHARE CAPITAL, THEREFORE THE AO OBSERVED THAT SH ARES WERE ALLOTTED TO SISTER CONCERNS, THOUGH AT A PREMIUM, B UT AT LOWER PREMIUM THAN THAT AT WHICH IT WAS ALLOTTED TO OTHER THIRD PARTY COMPANIES. AFTER SEEKING EXPLANATION FROM THE ASSES SEE, MADE THE ADDITIONS U/S 68 OF THE ACT. THE LD. CIT(A ) DURING THE APPELLATE PROCEEDINGS AFTER APPRECIATING THE FA CTS HAD SOUGHT REMAND REPORT FROM THE AO WITH A VIEW TO GIV E FREE HAND TO THE AO FOR BRINGING IN ANY EVIDENCE THAT SP ECIFICALLY LINKED THE ASSESSEE COMPANY RECEIVING SHARE CAPITAL MONEY IN LIEU OF CASH. ALTHOUGH, THE AO HAD RELIED UPON THE STATEMENT OF SHRI PRAVEEN JAIN, BUT COULD NOT POINT OUT ANY P ORTION OF THE STATEMENT OF THE SAID PRAVEEN JAIN TO LINK THE INVESTOR COMPANIES. APART FROM THIS, EVEN NO EVIDENCE HAS BE EN BROUGHT ON RECORD TO LINK THE ASSESSEE COMPANY WITH THE SAID PRAVEEN JAIN. MORE SO, THERE WAS NO EVIDENCES TO SH OW THAT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 77 THERE WAS ANY CASH TRAIL IN RESPECT OF THE AMOUNTS RECEIVED BY THE ASSESSEE COMPANY FROM THE INVESTORS. WE NOTICED THAT THOUGH THE AO WAS SPECIFICALLY ASKED TO FURNISH SPE CIFIC INCRIMINATING EVIDENCES, BUT THE AO WAS UNABLE TO P IN POINT THE SPECIFIC EVIDENCES WHICH COULD CLEARLY SHOW THA T THE SHARE APPLICATION MONEY WAS RECEIVED IN LIEU OF CAS H. IT IS AN ADMITTED FACT THAT THE INVESTOR COMPANIES WERE ASSE SSED TO TAX AND HAD FILED THEIR RETURNS OF INCOME. THE NOTICES U/S 133(6) WERE COMPLIED WITH BY THE PARTIES AND COPY OF BANK STATEMENT, LEDGER ACCOUNT, SHARE APPLICATION FORM, BOARD RESOLUTION AUTHORIZING INVESTMENTS, INCOME TAX RETU RN AND AUDITED ACCOUNTS OF THE INVESTOR COMPANIES WERE FIL ED BEFORE THE ASSESSING OFFICER AND LD. CIT(A). WE ALSO CONSI DERED THE INVESTMENT AND THE CORRESPONDING SOURCE OF FUNDS OF INVESTOR AS SEEN FROM THE COPY OF THEIR AUDITED ACCOUNTS FOR FY 2006- 07, WHICH ARE TABULATED IN PARA NO. 4.13 OF LD. CIT (A) AND THE SAME IS REPRODUCED BELOW. SR.N O. NAME OF THE SHAREHOLDER TOTAL AMOUNT INVESTED SHARE CAPITAL AND RESERVES PROFIT AS P & L ACCOUNT 1 M/S. KAVYA SHARE 86 SECURITIES PVT. LTD. 30,00,000 2,24,81,101 3,86,824 2 M/S.DEV SHARE TRADING PVT. LTD. 30,00,000 2,46,10,675 5,00,568 3 M/S. PRAJAN TRADING PVT. LTD. 30,00,000 3,03,55,461 5,20,299 4 M/S. ARAWALLI STOCK BROKING PVT LTD 30,00,000 1,63,90,103 4,87,875 5 M/S. COLOURUNION INTERNATIONAL PVT. LTD. 50,00,000 2,30,51,700 3,43,358 6 M/S.RAMDEV SHARES & SECURITIES PVT. LTD. NOW KNOWN AS KOINA TRADING P. LTD 1,00,00,000 2,97,72,514 21,69,240 7 M/S. JASOL MAA SHARE TRADING 1,00,00,000 4,11,30,413 5,32,200 8 YASHITA TRADING PVT. LTD. 95,00,000 41,58,066 PLUS SHARE APPLICATION MONEY 40,00,000 (-) 42177 ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 78 9 ASHRITA TRADING CO. PVT. LTD. 85,00,000 50,83,061 PLUS SHARE APPLICATION MONEY 50,00,000 (-) 40,851 10 ACCURATE MULTITRADE PVT. LTD. 25,00,000 42,28,354 PLUS SHARE APPLICATION MONEY 40,00,000 (-) 2,460/- TOTAL 5,75,00,000 6. WE ALSO NOTICED THAT THE AO RECORDED HIS FINDING S BY ONLY REFERRING TO THE INFORMATION RELATED TO THE OU TCOME OF SEARCH IN THE CASE OF SHRI PRAVIN KUMAR JAIN GROUP WHO WERE PROVIDING ACCOMMODATION ENTRIES. HOWEVER, THE AO FA ILED TO LINK THE ASSESSEE IN OBTAINING ANY ACCOMMODATION EN TRIES. WE HAVE SEEN NO EVIDENCE ON RECORD FROM WHICH IT CAN B E SHOWN THAT ANY CASH WAS DEPOSITED BY THE ASSESSEE IN THE ACCOUNTS OF THE INVESTORS. APART FROM ABOVE, NO INCRIMINATING E VIDENCE LINKING THE INVESTOR TO THE ASSESSEE. 7. THE LD. CIT(A) HAD ALSO APPRECIATED THE FACT THA T THOUGH OPPORTUNITY OF CROSS EXAMINATION WAS PROVIDE D TO THE ASSESSEE IN THE REMAND PROCEEDINGS BUT SHRI PRAVEEN JAIN DID NOT CONFIRM THAT ANY ACCOMMODATION ENTRIES WERE PRO VIDED. EVEN THE BASIC PREMISE THAT THE INVESTOR COMPANIES BELONG TO PRAVEEN JAIN WAS ALSO NOT PROVED. IT IS ALSO AN ADM ITTED FACT THAT THE TRANSACTIONS IN THE PRESENT CASE WERE THRO UGH BANKING CHANNEL AND THUS, IN SUCH CIRCUMSTANCES, AS PER THE SETTLED PROPOSITION OF LAW AS MENTIONED IN THE ORDERS OF LD . CIT(A) IN PARA NO. 4.14, NO ADDITIONS COULD BE MADE WITHOU T ANY CONTRARY OR COGENT EVIDENCE. WE HAVE CONSIDERED THE JUDGMENT PASSED BY HONBLE SUPREME COURT IN THE CAS E OF CIT V/S LOVELY EXPORTS 6 DTR 308 , WHEREIN IT WAS HELD AS UNDER: IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERSWHO'S NAME ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED I NCOME OF ASSESSEE COMPANY'. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 79 8. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S CREATIVE WORLD TELEFLIMS LTD 333 ITR 100 HAS HELD AS UNDER: 'IF THE SHARE APPLICATION MONEY IS- RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDERS WHO'S NAME ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT CAN ALWAYS PROCEED AGAINST THEM AND IF NECESSARY REOPEN THEIR INDIVIDUAL ASSESSMENTS. HELD, DISMISSING THE APPEAL, THAT THERE WAS NO DISP UTE THAT THE ASSESSEE HAD GIVEN THE DETAILS OF NAMES AND ADD RESSES OF THE SHAREHOLDERS, THEIR PAN/ GIR NUMBERS AND HAD AL SO GIVEN THE CHEQUE NUMBERS, NAME OF THE BANKERS. THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DET AILS THROUGH PAN CARDS, BANK REHOLDERS. THUS, THE VIEW T AKEN BY THE TRIBUNAL COULD NOT BE FAULTED. 9. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE O F CIT VS. ORISSA CORPORATION REPORTED IN 159 ITR 78 ( SC) HAS HELD AS UNDER: 'THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAM ES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEE'S. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICE UND ER SECTION 131 AT THE INSTANCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WH ETHER THEY ARE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSU E THE SO- CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, T HE RESPONDENT COULD NOT DO ANYTHING FURTHEYN THE PREMI SES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT TH.NE RESP ONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN, IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PER VERSE OR BASED ON NO EVIDENCE'. 10. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECIS IONS: I. HON'BLE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX V/S. VALUE CAPITAL SERVICES P.LTD. (2008 ) 307 ITR 334 (DELHI). II. HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF COMMISSIONER OF INCOME TAX V/S. GP INTERNATIONAL LT D. (2010) 325 ITR 25 (P&H). ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 80 III. HON'BLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V/S. ELECTRO POLYCHEM LTD (2007)294 I TR 661 (MAD). IV. HON'BLE RAJASTHAN HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX V/S. AKJ GRANITES P.LT4. (2008)301 IT R 298 (RAJ.) V. HON'BLE DELHI HIGH COURT IN CASE OF COMMISSIONER OF INCOME TAX V/S. OASIS HOSPITALITIES PVT.) LTD. (201 1) 51 DTR 74 (DELHI). SEC. 69 PLACES THE BURDEN OF PROOF ON THE TAX PAYER TO EXPLAIN THE NATURE AND SOURCE OF ANY CREDIT FOUND IN THE BO OKS. BUT, WHEN ASSESSEE PROVES OR SUBMIT THE BASIC INFORMATIO N LIKE IDENTIFICATION, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS, ONUS IS DISCHARG ED BY HIM AND IF ASSESSING OFFICER DISBELIEVE THE GENUINENESS OF THE SAME, HE HAS TO PROVE OTHERWISE, MERELY, DOUBTING O R POINTING OUT SOME DISCREPANCY IS NOT THE FOUNDATION FOR DISCARDING THE GENUINENESS OF THE DEPOSIT OR SHARE MONEY OR SUBSTANCE OF THE MATTER, HELD BY THE HON'BLE SUPREM E COURT IN THE CASE OF CIT V. GUJARAT-HEAVY CHEMICALS LTD. (2002)256 ITR 795 (SC). IN VIEW OF THE ABOVE THE QUESTION OF MAKING ANY ADD ITION U/S. 68 OF THE ACT DOES NOT ARISE.' 11. APART FROM ABOVE, THE LD. AR HAD ALSO RELIED UP ON OTHER DECISIONS OF THE COORDINATE BENCHES, BUT WHEN WE HAVE ALREADY RELIED UPON THE JUDGMENTS OF HONBLE SUPREM E COURT AND JURISDICTIONAL HIGH COURT, THEREFORE THERE IS N O NEED TO RELY ON THE ORDERS OF THE COORDINATE BENCHES ON THE SAME POINT. 12. MOREOVER, NO NEW FACTS OR CONTRARY JUDGMENTS HA VE BEEN BROUGHT ON RECORD IN ORDER TO CONTROVERT OR RE BUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THER E ARE NO REASONS FOR US TO INTERFERE INTO OR DEVIATE FROM TH E FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE, WE ARE OF THE CON SIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT ( A) ARE JUDICIOUS AND ARE WELL REASONED. RESULTANTLY, THESE GROUNDS RAISED BY THE REVENUE STANDS DISMISSED . ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 81 GROUND NO. 4 & 5. 13. THESE GROUNDS RAISED BY THE REVENUE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 14. IN THE NET RESULT, THE APPEAL FILED BY THE REVE NUE STANDS DISMISSED WITH NO ORDER AS TO COST. 4.3. THE LD. DR RELIED UPON THE DECISION FROM HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS NDR PRO MOTERS PVT. LTD. (ITA NO.49/2018) ORDER DATED 17/01/2019, WHICH IS ALSO REPRODUCED HEREUNDER:- THIS APPEAL BY THE REVENUE UNDER SECTION 260A OF T HE INCOME TAX ACT, 1961 (ACT , FOR SHORT), IN THE CASE OF NDR PROMOTERS PVT. LTD. RELATES TO ASSESSMENT YEAR 2008 -09 AND ARISES FROM THE ORDER DATED 3RD MARCH, 2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (TRIBUNAL , FOR SHORT). 2. THE APPEAL WAS ADMITTED FOR HEARING VIDE ORDER D ATED 17TH JANUARY, 2018 ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW:- WHETHER THE ITAT FELL INTO ERROR IN UPHOLDING THE DELETION DIRECTED BY THE CIT (A) IN RESPECT OF THE AMOUNT OF RS.1,51,50,000/- BROUGHT TO TAX UNDER SECTION 68 OF THE INCOME TAX ACT, 1961, IN THE CIRCUMSTANCES OF THE C ASE ? 3. IT IS AN UNDISPUTED POSITION THAT DURING THE ASS ESSMENT YEAR 2008-09, THE RESPONDENT-ASSESSEE HAD RECEIVED MONEY IN THE FORM OF SHARE CAPITAL/SHARE PREMIUM AS PER T HE FOLLOWING DETAILS:- ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 82 ISSUE RAISED IN THIS APPEAL RELATES TO FIRST FIVE C OMPANIES, WHO HAD INVESTED RS.1,51,50,000/- AS SHARE APPLICATION MONEY WITH PREMIUM AS PER DETAILS GIVEN IN ABOVE TABLE. 4. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATE D 30TH DECEMBER, 2010, MADE AN ADDITION OF RS.1,51,50,000/ - RECORDING THAT THE AFORESAID COMPANIES WERE CREATI ON OF AND DE FACTO OPERATED BY ONE TARUN GOYAL, CHARTERED ACCOUNTANT, WHO HAD SET UP ABOUT 90 COMPANIES/FIRMS INCLUDING THE AFORESAID 5 COMPANIES FOR PROVIDING ACCOMMODATION ENTRIES. PAPER WORK WAS PERFECT BUT T HERE WERE CHINKS, WHICH HAD REVEALED THAT THE TRUE NATUR E OF THE TRANSACTIONS WAS TO CONVERT ILLEGITIMATE MONEY BY P ROVIDING BOGUS OR ACCOMMODATION ENTRIES. THESE EVIDENCES AND DETAILS COLLECTED AND ASCERTAINED DURING THE COURSE OF SEAR CH UNDER SECTION 132 OF THE ACT CONDUCTED BY THE INVESTIGATI ON WING IN THE CASE OF TARUN GOYAL, HAD REVEALED THAT THE REGI STERED OFFICE OF 90 COMPANIES WAS LOCATED AT 13/34, MAIN A RYA SAMAJ ROAD, KAROL BAGH AND THEIR FORMER OFFICE WAS AT 203, ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 83 DHAKA CHAMBERS, 2069/39, NAIWALA, KAROL BAGH, NEW DELHI. THESE COMPANIES WERE NOT CARRYING ON ANY GEN UINE BUSINESS ACTIVITIES. DIRECTORS OF THESE COMPANIES W ERE EMPLOYEES OF TARUN GOYAL, WHO WERE WORKING AS PEONS , RECEPTIONISTS ETC. ENTRIES IN THE BOOKS WERE BOGUS. MODUS OPERANDI IN SUCH CASES IS WELL KNOWN, MONEY IS CIRCULATED BY FIRST DEPOSITING CASH IN THE BANK ACCOUNT OF ONE SU CH COMPANY, AND THEREUPON IT IS TRANSFERRED/CIRCULATED WITHIN THE GROUP COMPANIES BEFORE CHEQUE IS ISSUED TO THE BENEFICIARY. 5. THE ASSESSING OFFICER HAD ASKED THE RESPONDENT-A SSESSEE TO PRODUCE DIRECTORS OF THE SHAREHOLDER COMPANIES F OR EXAMINATION AFTER RECORDING:- (I) MOST OF THE DIRECTORS IN THEIR STATEMENT RECORD ED BY THE INVESTIGATION WING HAD ADMITTED THAT THEY HAD SIGNE D DOCUMENTS/PAPERS ON DIRECTION OF TARUN GOYAL. (II) SHARES OF FACE VALUE OF RS.10/- WERE ISSUED AT A PREMIUM OF RS.40/- (TOTAL RS.50/-). THERE WAS NO JUSTIFICAT ION AND REASON FOR A THIRD PERSON TO PURCHASE SHARES IN THE RESPONDENT-ASSESSEE AND TO PAY SUBSTANTIAL PREMIUM. (III) THE RESPONDENT-ASSESSEE HAD SHOWN RECEIPTS OF RS.16.38 LAKHS AND NIL INCOME IN THE YEAR ENDING 31ST MARCH, 2008 AND 31ST MARCH, 2007, RESPECTIVELY. THERE WERE NO F IXED ASSETS AND THE RESPONDENT-ASSESSEE HAD INCURRED EXP ENSES AMOUNTING TO RS.12.17 LAKHS AND NIL IN THE YEAR ENDING 31ST MARCH, 2008 AND 31ST MARCH, 2007, RESPECTIVELY . (IV) SHARE CAPITAL/SHARE PREMIUM OF RS.168 LAKHS WAS AFT ER DEPOSIT SHOWN AS INVESTMENT PARTLY AS ADVANCE FOR L AND AND AS ADVANCE TO S.M. UDYOG AND GURUJI INDUSTRIES. FDR OF RS.80 LAKHS WAS OBTAINED FROM ORIENTAL BANK OF COMM ERCE. 6. RESPONDENT-ASSESSEE WAS ALSO ASKED TO PRODUCE AL L PAPERS RELATING TO ISSUE OF SHARES; STATE, HOW THE DEALING S HAD STARTED WITH THE SHAREHOLDER COMPANIES; IF DIRECTLY , STATE THE YEAR/DATE SINCE WHEN THEY WERE KNOWN TO EACH OTHER; IF INDIRECTLY, GIVE THE NAME OF THE INTRODUCER AND STA TE THAT SINCE WHEN THE INTRODUCER WAS KNOWN INCLUDING YEARS OF RELATIONSHIP; STATE, WHETHER THE APPLICATIONS FOR A LLOTMENT OF SHARES WERE RECEIVED IN ONE LOT OR ON DIFFERENT DAT ES AND WHETHER THEY WERE RECEIVED BY HAND OR POST. IF ACKNOWLEDGEMENT WAS ISSUED, SUPPORTING EVIDENCE SHO ULD BE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 84 GIVEN; PROVIDE THE PROOF IF ANY OFFER LETTER WAS RE CEIVED OR ISSUED; WHETHER STAMP DUTY WAS PAID ON ALLOTMENT OF SHARES; WHETHER THE SHARE CERTIFICATES WERE DELIVERED BY HA ND OR POST. IF BY HAND, DETAILS OF THE PERSON WHO HAD DELIVERED THE CERTIFICATES. IF SHARE CERTIFICATES WERE ISSUED BY POST, STATE WHETHER THEY WERE RECEIVED BACK; INDICATE WHETHER A NNUAL REPORTS, BALANCE SHEET OR NOTICES OF AGM/EGM OF THE RESPONDENT-ASSESSEE COMPANY WERE SENT TO THE SHAREH OLDERS. 7. THE RESPONDENTS-ASSESSEE DID NOT PRODUCE THE DIR ECTORS FOR EXAMINATION. OTHER DETAILS AND PARTICULARS WERE ALSO NOT FILED AS REQUIRED BY THE ASSESSING OFFICER. HOWEVER , THE RESPONDENT-ASSESSEE HAD FILED:- (I) COPY OF THE LEDGER ACCOUNT OF SHARE APPLICATION . (II) COPY OF THE BANK STATEMENT OF THE ACCOUNT IN W HICH MONEY WAS RECEIVED. (III) COPY OF THE LEDGER ACCOUNT OF SHARE CAPITAL. (IV) COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUN T REFLECTING RECEIPT OF SHARE APPLICATION MONEY. (V) SHARE APPLICATION FORM WITH COMPLETE LIST OF SH AREHOLDERS, OLD AND NEW. (VI) ANNUAL RETURN FILED BEFORE THE REGISTRAR OF C OMPANIES. (VII) COPY OF FORM NO.2 I.E., RETURN OF ALLOTMENT F ILED BEFORE THE REGISTRAR OF COMPANIES. (VIII) AFFIDAVITS OF DIRECTORS OF THE SHAREHOLDER C OMPANIES ALONG WITH PAN DETAILS, COPY OF PAN CARDS, BOARD RESOLUTIONS, CONFIRMATIONS FROM THE PARTIES, SHARE APPLICATION FORMS, BANK ACCOUNT STATEMENTS OF THE SHAREHOLDER COMPANIES, MEMORANDUM AND ARTICLES OF ASSOCIATION, CONFIRMATION OF RECEIPT OF SHARES FROM M/S BHAWANI PORTFOLIO AND CIN DETAILS OF M/S BHAVANI PO RTFOLIO. 8. THE ASSESSING OFFICER MADE AN ADDITION OF RS.1,51,50,000/- AS UNEXPLAINED CASH AFTER REFERRIN G TO THE FACTUAL MATRIX INCLUDING FAILURE TO PRODUCE DIRECTO RS OF THE SHAREHOLDER COMPANIES SO THAT THEY COULD BE EXAMINE D ON OATH. HE OBSERVED THAT NO PRUDENT BUSINESSMAN WOULD INVEST IN THE SHARES OF THE RESPONDENT-ASSESSEE AT FIVE TI MES THE FACE VALUE OF SHARES. THERE WAS SUFFICIENT EVIDENCE TO I NDICATE AND INFER THAT BENEFICIARIES I.E. THE RESPONDENT-ASSESS EE HAD ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 85 INTRODUCED INCOME FROM UNDISCLOSED SOURCES INTO THE IR BUSINESS IN THE GARB OF SHARE CAPITAL/SHARE PREMIUM . 9. THE ADDITION WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND THAT THE RESPONDENT-ASS ESSEE HAD BEEN ABLE TO ESTABLISH IDENTITY, CREDITWORTHINE SS OF THE SHAREHOLDERS AND GENUINENESS OF THE TRANSACTIONS IN TERMS OF SEVERAL DECISIONS OF THIS COURT INCLUDING CIT VS. O ASIS HOSPITALITIES PVT. LTD. DECIDED ON 31ST JANUARY, 20 11. HE HELD THAT ONCE DOCUMENTS LIKE PAN OR BANK ACCOUNT D ETAILS WERE GIVEN, THEN THE ONUS HAD SHIFTED ON THE ASSESS ING OFFICER AND IT WAS UP TO HIM TO REACH THE SHAREHOLDERS. THI S BURDEN COULD NOT BE PASSED ON TO THE ASSESSEE, MERELY ON T HE GROUND THAT THE SUMMONS ISSUED TO THE SHAREHOLDERS WERE RE TURNED. ASSESSING OFFICER HAD ISSUED NOTICE SECTION 133 (6) OF THE ACT AND IN RESPONSE HAD RECEIVED REPLIES CONFIRMING THE INVESTMENT. THE SHAREHOLDER COMPANIES WERE INCORPOR ATED AND HAD INVESTED MONEY THROUGH BANKING CHANNELS, WH ICH WAS REFLECTED IN THE BOOKS. INVESTMENT WAS PROVED B Y THE BANK STATEMENTS THAT DISCLOSED SUFFICIENT BALANCE B EFORE CHEQUES WERE ISSUED. ACCORDINGLY, THE THREE REQUIRE MENTS I.E. IDENTITY OF THE INVESTOR, CREDITWORTHINESS OF THE I NVESTORS AND GENUINENESS OF THE TRANSACTIONS WERE SATISFIED. 10. APPEAL PREFERRED BY THE REVENUE AGAINST THE SAI D DELETION HAS BEEN DISMISSED BY THE IMPUGNED ORDER PASSED BY THE TRIBUNAL, WHICH RECORDS AS UNDER:- 4. IN VIEW OF ABOVE CITATIONS, WHEN WE GO THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEES IN SUPPORT OF GENUINENESS OF THEIR CL AIMS REGARDING RECEIPT OF SHARE APPLICATION MONEYS FROM DIFFERENT PARTIES HAD FURNISHED THEIR CONFIRMATORY LETTERS, P AN DETAILS, COPIES OF INCOME TAX RETURNS AS WELL AS SHARE APPLI CATION FORMS AND COMPLETE NAME AND ADDRESS OF SHARE APPLIC ANTS. THESE DOCUMENTS WERE SUFFICIENT TO ESTABLISH THE ID ENTITY OF SHARE APPLICANTS. IT IS ALSO NOT IN DISPUTE THAT AL L THE TRANSACTIONS HAVE BEEN ROUTED THROUGH BANKING CHANN ELS AND SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH A CCOUNT PAYEE CHEQUES, DETAILS OF WHICH WERE FURNISHED. THE ASSESSEES HAD ALSO FURNISHED RETURNS OF INCOME OF T HE CREDITORS ACCEPTED BY THE DEPARTMENT AND THUS, WE A RE OF THE VIEW THAT IN ABSENCE OF REBUTTAL OF THESE FACTS THE RE WAS NO REASON TO DOUBT THE GENUINENESS OF THE TRANSACTIONS . THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 86 CREDITWORTHINESS OF THE SHARE APPLICANTS WAS ALSO E STABLISHED BY THE ASSESSEE BY FILING THE AUDITED BALANCE SHEET OF EACH OF THE SHARE-HOLDER COMPANY. ON THE CONTRARY, NO EVIDE NCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT SHARE APPLICATION MONEY EMANATED FROM THE COFFERS O F THE ASSESSEES. IT IS ALSO PERTINENT TO NOTE HERE THAT I N RESPONSE TO THE NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT BY THE ASSESSING OFFICER WERE RESPONDED BY THE SHARE APPLI CANTS. MERELY BECAUSE THE ASSESSEE, AS DIRECTED BY THE ASS ESSING OFFICER, COULD NOT PRODUCE ANY OF THE SHARE APPLICA NTS, CANNOT BE A REASON FOR DOUBTING THE GENUINENESS OF THE TRANSACTIONS. THIS VIEW IS WELL SUPPORTED BY THE DE CISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN T HE CASES OF CIT VS. RAKAM MONEY MATTERS PVT. LTD. (SUPRA) AND C IT VS. VICTOR ELECTRODES (SUPRA), RELEVANT EXTRACT THEREOF , ARE RESPECTIVELY REPRODUCED HEREUNDER :- CIT VS. RAKAM MONEY MATTERS PVT. LTD, : ' 12. A PERUSAL OF THE ORDER OF THE AO SHOWS THAT I TS FOUNDATION IS THE REPORT OF THE DIT (INVESTIGATION) . ADMITTEDLY, THE ASSESSEE WAS NOT CONFRONTED WITH TH AT MATERIAL IN THE COURSE OF THE REASSESSMENT PROCEEDI NGS. THE ASSESSEE WAS ALSO NOT CONFRONTED WITH THE STATEMENT S RECORDED IN THE COURSE OF THE INVESTIGATION. ONCE T HAT MATERIAL IS KEPT ASIDE THEN THE SCOPE OF ENQUIRY CA N ONLY BE WHETHER THE ASSESSEE HAS PRODUCED DOCUMENTS TO DISC HARGE THE INITIAL ONUS OF PROVING THE GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES WHO WERE STATED T O HAVE SUBSCRIBED TO THE ASSESSEE'S SHARES. 13. IT IS NOT IN DISPUTE THAT EXTENSIVE MATERIAL WA S PRODUCED BY THE ASSESSEE IN THE PRESENT CASE TO PROVE THE ID ENTITY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANIES W HO HAD SUBSCRIBED TO ITS SHARES. AMONG THE MATERIALS PRODU CED WERE THE INCOME TAX RETURNS AND THE PAN CARD DETAILS OF THE EIGHT COMPANIES. EVEN IF THE DIRECTORS OF THESE COMPANIES DID NOT RESPOND TO THE SUMMONS ISSUED BY THE AO, IT WAS NOT IMPOSSIBLE FOR THE AO TO MAKE PROPER ENQUIRIES TO A SCERTAIN THE GENUINENESS OF THESE ENTITIES AND SATISFY HIMSE LF OF THEIR CREDITWORTHINESS. AS POINTED OUT BY THE CIT(A), THE AO FAILED TO MAKE ANY EFFORT IN THAT DIRECTION. HE DID NOT TA KE TO THE LOGICAL END THE HALFHEARTED ATTEMPT AT GETTING THE DIRECTORS TO APPEAR BEFORE HIM. HE DID NOT EVEN SEEK THE ASSISTA NCE OF THE ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 87 AOS OF THE CONCERNED COMPANIES WHOSE ITRS AND PAN C ARD COPIES HAD BEEN PRODUCED. 14. THE VIEW TAKEN BY THE CIT(A) THAT THE AO FAILED TO COME UP WITH THE MATERIAL TO DISPROVE WHAT HAD BEEN PROD UCED BY THE ASSESSEE IS CERTAINLY A PLAUSIBLE VIEW IN THE F ACTS AND CIRCUMSTANCES OF THE CASE. LIKEWISE, THE VIEW TAKEN BY THE ITAT CONCURRING WITH THE CIT(A) ON FACTS CANNOT BE SAID TO BE PERVERSE. ' CIT VS. VICTOR ELECTRODES : 'THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO P RODUCE SAME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLIC ANT COMPANIES BEFORE THE ASSESSING OFFICER. THEREFORE, FAILURE OF ASSESSEE TO PRODUCE THEN COULD NOT BY ITSELF HAVE J USTIFIED THE ADDITIONS MADE BY A. 0. ' 4.1 AS DISCUSSED ABOVE, WE FIND THAT THE ASSESSEES HAVE BEEN ABLE TO DISCHARGE ITS INITIAL ONUS TO ESTABLISH THE GENUINENESS OF THE CLAIMED TRANSACTIONS OF SHARE APPLICATION MO NEYS BY FURNISHING ALL THE NECESSARY POSSIBLE EVIDENCES AND THUS, THE ONUS TO DISPROVE THOSE EVIDENCES WERE SHIFTED UPON THE ASSESSING OFFICER THE ASSESSING OFFICER HAS FAILED TO DISCHARGE BY NOT DISPROVING THOSE EVIDENCES. THE AS SESSEES WERE THUS, ABLE TO ESTABLISH THE IDENTIFICATION AS WELL AS CREDITWORTHINESS OF THE SHARE APPLICANTS AND THE GE NUINENESS OF THE CLAIMED RECEIPT OF SHARE APPLICATION MONEYS FROM THOSE PARTIES. THE LD. CIT (APPEALS) WAS THUS JUSTIFIED I N DELETING THE ADDITIONS MADE UNDER SECTION 68 OF THE ACT ON A CCOUNT OF THE ALLEGED UNEXPLAINED SHARE APPLICATION MONEY. TH E SAME IS UPHELD. THE GROUNDS QUESTIONING THE ACTION OF TH E ID. CIT (APPEALS) IN THIS REGARD ARE THUS REJECTED. 11. ISSUE OF BOGUS SHARE CAPITAL IN THE FORM OF ACCOMMODATION ENTRIES HAS BEEN SUBJECT MATTER OF SE VERAL DECISIONS OF THIS COURT AND WE WOULD LIKE TO REFER TO DECISION IN COMMISSIONER OF INCOME TAX VS. NAVODAYA CASTLES PVT. LTD. [2014] 367 ITR 306, WHEREIN THE EARLIER JUDGME NTS WERE CLASSIFIED INTO TWO SEPARATE CATEGORIES OBSERVING A S UNDER:- 11. WE HAVE HEARD THE SENIOR STANDING COUNSEL FOR THE REVENUE, WHO HAS RELIED UPON DECISIONS OF THE DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. NOVA PROMOT ERS AND FINLEASE (P) LTD. [2012] 342 ITR 169 (DELHI), COMMISSIONER OF INCOME TAX VS. N.R. PORTFOLIO PVT. LTD., 206 ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 88 (2014) DLT 97 (DB) (DEL) AND COMMISSIONER OF INCOME TAX- II VS. MAF ACADEMY P. LTD., 206 (2014) DLT 277 (DB) (DEL). THE AFORESAID DECISIONS MENTIONED ABOVE REFE R TO THE EARLIER DECISIONS OF DELHI HIGH COURT IN COMMISSION ER OF INCOME TAX VS. SOPHIA FINANCE LTD., [1994] 205 ITR 98 (FB)(DELHI), CIT VS. DIVINE LEASING AND FINANCE LIM ITED [2008] 299 ITR 268 (DELHI) AND OBSERVATIONS OF THE SUPREME COURT IN CIT VS. LOVELY EXPORTS P. LTD. [2008] 319 ITR (ST.) 5 (SC). 12. THE MAIN SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE IS THAT ONCE THE ASSESSEE HAD BEEN ABLE TO SHOW THAT THE SHAREHOLDER COMPANIES WERE DULY INCORPORATED BY THE REGISTRAR OF COMPANIES, THEIR IDENTITY STOOD ESTABL ISHED, GENUINENESS OF THE TRANSACTIONS STOOD ESTABLISHED A S PAYMENTS WERE MADE THROUGH ACCOUNTS PAYEE CHEQUES/B ANK ACCOUNT; AND MERE DEPOSIT OF CASH IN THE BANK ACCOU NTS PRIOR TO ISSUE OF CHEQUE/PAY ORDERS ETC. WOULD ONLY RAISE SUSPICION AND, IT WAS FOR THE ASSESSING OFFICER TO CONDUCT FU RTHER INVESTIGATION, BUT IT DID NOT FOLLOW THAT THE MONEY BELONGED TO THE ASSESSEE AND WAS THEIR UNACCOUNTED MONEY, WHICH HAD BEEN CHANNELIZED. 13. AS WE PERCEIVE, THERE ARE TWO SETS OF JUDGMENTS AND CASES, BUT THESE JUDGMENTS AND CASES PROCEED ON THE IR OWN FACTS. IN ONE SET OF CASES, THE ASSESSEE PRODUCED N ECESSARY DOCUMENTS/EVIDENCE TO SHOW AND ESTABLISH IDENTITY O F THE SHAREHOLDERS, BANK ACCOUNT FROM WHICH PAYMENT WAS M ADE, THE FACT THAT PAYMENTS WERE RECEIVED THOROUGH BANKI NG CHANNELS, FILED NECESSARY AFFIDAVITS OF THE SHAREHO LDERS OR CONFIRMATIONS OF THE DIRECTORS OF THE SHAREHOLDER C OMPANIES, BUT THEREAFTER NO FURTHER INQUIRIES WERE CONDUCTED. THE SECOND SET OF CASES ARE THOSE WHERE THERE WAS EVIDE NCE AND MATERIAL TO SHOW THAT THE SHAREHOLDER COMPANY WAS O NLY A PAPER COMPANY HAVING NO SOURCE OF INCOME, BUT HAD M ADE SUBSTANTIAL AND HUGE INVESTMENTS IN THE FORM OF SHA RE APPLICATION MONEY. THE ASSESSING OFFICER HAS REFERR ED TO THE BANK STATEMENT, FINANCIAL POSITION OF THE RECIPIENT AND BENEFICIARY ASSESSEE AND SURROUNDING CIRCUMSTANCES. THE PRIMARY REQUIREMENTS, WHICH SHOULD BE SATISFIED IN SUCH CASES IS, IDENTIFICATION OF THE CREDITORS/SHAREHOLD ER, CREDITWORTHINESS OF CREDITORS/SHAREHOLDER AND GENUI NENESS OF THE TRANSACTION. THESE THREE REQUIREMENTS HAVE TO B E TESTED ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 89 NOT SUPERFICIALLY BUT IN DEPTH HAVING REGARD TO THE HUMAN PROBABILITIES AND NORMAL COURSE OF HUMAN CONDUCT. 14. CERTIFICATE OF INCORPORATION, PAN NUMBER ETC. A RE RELEVANT FOR PURCHASE OF IDENTIFICATION, BUT HAVE T HEIR LIMITATION WHEN THERE IS EVIDENCE AND MATERIAL TO S HOW THAT THE SUBSCRIBER WAS A PAPER COMPANY AND NOT A GENUIN E INVESTOR. IT IS IN THIS CONTEXT, THE SUPREME COURT IN CIT VS. DURGA PRASAD MORE [1971] 82 ITR 540 (SC) HAD OBSERV ED:- NOW WE SHALL PROCEED TO EXAMINE THE VALIDITY OF TH OSE GROUNDS THAT APPEALED TO THE LEARNED JUDGES. IT IS TRUE THAT THE APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SH OWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT THE REAL. IN A CASE OF THE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS , OTHERWISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS I N DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND R ELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS T O EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFIC IENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLIN KERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS . 15. SUMMARIZING THE LEGAL POSITION IN NOVA PROMOTER S AND FINLEASE (P) LTD.(SUPRA), AND HIGHLIGHTING THE LEGA L EFFECT OF SECTION 68 OF THE ACT, THE DIVISION BENCH HAS HELD AS UNDER:- 32. THE TRIBUNAL ALSO ERRED IN LAW IN HOLDING ASSE SSING OFFICER OUGHT TO HAVE PROVED THAT THE MONIES EMANAT ED FROM THE COFFERS OF THE ASSESSEE- COMPANY AND CAME BACK AS SHARE CAPITAL. SECTION 68 PERMITS THE ASSESSING OFFICER T O ADD THE CREDIT APPEARING IN THE BOOKS OF ACCOUNT OF THE ASS ESSEE IF THE LATTER OFFERS NO EXPLANATION REGARDING THE NATURE A ND SOURCE OF THE CREDIT OR THE EXPLANATION OFFERED IS NOT SAT ISFACTORY. IT PLACES NO DUTY UPON HIM TO POINT TO THE SOURCE FROM WHICH THE MONEY WAS RECEIVED BY THE ASSESSEE. IN A. GOVINDARA JULU MUDALIAR V CIT, (1958) 34 ITR 807, THIS ARGUMENT AD VANCED BY THE ASSESSEE WAS REJECTED BY THE SUPREME COURT. VENKATARAMA IYER, J., SPEAKING FOR THE COURT OBSERV ED AS UNDER (@ PAGE 810): - ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 90 NOW THE CONTENTION OF THE APPELLANT IS THAT ASSUMI NG THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM , IT DOES NOT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN Q UESTION WERE INCOME RECEIVED OR ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS THE DUTY OF THE DEPARTMENT TO ADDUCE EV IDENCE TO SHOW FROM WHAT SOURCE THE INCOME WAS DERIVED AND WH Y IT SHOULD BE TREATED AS CONCEALED INCOME. IN THE ABSEN CE OF SUCH EVIDENCE, IT IS ARGUED, THE FINDING IS ERRONEO US. WE ARE UNABLE TO AGREE. WHETHER A RECEIPT IS TO BE TREATED AS INCOME OR NOT, MUST DEPEND VERY LARGELY ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. IN THE PRESENT CASE THE RECEIPTS ARE SHOWN IN THE ACCOUNT BOOKS OF A FIRM OF WHICH T HE APPELLANT AND GOVINDASWAMY MUDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPLANATION HE PUT FORWA RD TWO EXPLANATIONS, ONE BEING A GIFT OF RS. 80,000 AND TH E OTHER BEING RECEIPT OF RS. 42,000 FROM BUSINESS OF WHICH HE CLAIMED TO BE THE REAL OWNER. WHEN BOTH THESE EXPLA NATIONS WERE REJECTED, AS THEY HAVE BEEN IT WAS CLEARLY UPO N TO THE INCOME-TAX OFFICER TO HOLD THAT THE INCOME MUST BE CONCEALED INCOME. THERE IS AMPLE AUTHORITY FOR THE POSITION T HAT WHERE AN ASSESSEE FAILS TO PROVE SATISFACTORILY THE SOURC E AND NATURE OF CERTAIN AMOUNT OF CASH RECEIVED DURING THE ACCOU NTING YEAR, THE INCOME-TAX OFFICER IS ENTITLED TO DRAW TH E INFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. THE C ONCLUSION TO WHICH THE APPELLATE TRIBUNAL CAME APPEARS TO US TO BE AMPLY WARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTERFERING WITH THAT FINDING, AND THESE APPEAL S ARE ACCORDINGLY DISMISSED WITH COSTS. (EMPHASIS SUPPLIED) SECTION 68 RECOGNIZES THE AFORESAID LEGAL POSITION. THE VIEW TAKEN BY THE TRIBUNAL ON THE DUTY CAST ON THE ASSES SING OFFICER BY SECTION 68 IS CONTRARY TO THE LAW LAID D OWN BY THE SUPREME COURT IN THE JUDGMENT CITED ABOVE. EVEN IF ONE WERE TO HOLD, ALBEIT ERRONEOUSLY AND WITHOUT BEING AWARE OF THE LEGAL POSITION ADUMBRATED ABOVE, THAT THE ASSESSING OFFICER IS BOUND TO SHOW THAT THE SOURCE OF THE UNACCOUNTED MONIES WAS THE COFFERS OF THE ASSESSEE, WE ARE INCLINED TO THINK THAT IN THE FACTS OF THE PRESENT CASE SUCH PROOF HAS BEE N BROUGHT OUT BY THE ASSESSING OFFICER. THE STATEMENTS OF MUK ESH GUPTA AND RAJAN JASSAL, THE ENTRY PROVIDERS, EXPLAINING T HEIR MODUS OPERANDI TO HELP ASSESSEE S HAVING UNACCOUNTED MONIES ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 91 CONVERT THE SAME INTO ACCOUNTED MONIES AFFORDS SUFF ICIENT MATERIAL ON THE BASIS OF WHICH THE ASSESSING OFFICE R CAN BE SAID TO HAVE DISCHARGED THE DUTY. THE STATEMENTS RE FER TO THE PRACTICE OF TAKING CASH AND ISSUING CHEQUES IN THE GUISE OF SUBSCRIPTION TO SHARE CAPITAL, FOR A CONSIDERATION IN THE FORM OF COMMISSION. AS ALREADY POINTED OUT, NAMES OF SEV ERAL COMPANIES WHICH FIGURED IN THE STATEMENTS GIVEN BY THE ABOVE PERSONS TO THE INVESTIGATION WING ALSO FIGURED AS S HARE- APPLICANTS SUBSCRIBING TO THE SHARES OF THE ASSESSE E-COMPANY. THESE CONSTITUTE MATERIALS UPON WHICH ONE COULD REA SONABLY COME TO THE CONCLUSION THAT THE MONIES EMANATED FRO M THE COFFERS OF THE ASSESSEECOMPANY. THE TRIBUNAL, APART FROM ADOPTING AN ERRONEOUS LEGAL APPROACH, ALSO FAILED T O KEEP IN VIEW THE MATERIAL THAT WAS RELIED UPON BY THE ASSES SING OFFICER. THE CIT (APPEALS) ALSO FELL INTO THE SAME ERROR. IF SUCH MATERIAL HAD BEEN KEPT IN VIEW, THE TRIBUNAL C OULD NOT HAVE FAILED TO DRAW THE APPROPRIATE INFERENCE. 12. THE PRESENT CASE WOULD CLEARLY FALL IN THE CATE GORY WHERE THE ASSESSING OFFICER HAD NOT KEPT QUIET AND HAD MA DE INQUIRIES AND QUERIED THE RESPONDENT-ASSESSEE TO EX AMINE THE ISSUE OF GENUINENESS OF THE TRANSACTIONS. THE TRIBU NAL UNFORTUNATELY DID NOT EXAMINE THE SAID ASPECT AND H AS IGNORED THE FOLLOWING FACTUAL POSITION:- (A) THE SHAREHOLDER COMPANIES, 5 IN NUMBER, WERE AL L LOCATED AT A COMMON ADDRESS I.E. 13/34, WEA, FOURTH FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI. (B) THE TOTAL INVESTMENT MADE BY THESE COMPANIES WA S RS.1,51,00,000/-, WHICH WAS A SUBSTANTIAL AMOUNT. (C) EVIDENCE AND MATERIAL ON BOGUS TRANSACTIONS FOU ND DURING THE COURSE OF SEARCH OF TARUN GOYAL. EVIDENC E AND MATERIAL THAT THE COMPANIES WERE PROVIDING ACCOMMOD ATION ENTRIES TO BENEFICIARIES WAS NOT CONSIDERED. (D) THE FINDINGS RECORDED AS MENTIONED IN THE ASSES SMENT ORDER, WHICH READ AS UNDER:- 1. FROM THE FINDING OF SEARCH, IT IS EVIDENT AND U NDENIABLE THAT ALL THE COMPANIES INCLUDING THE ALLEGED SHAREH OLDERS COMPANIES BELONG TO SH. TARUN GOYAL. THIS IS ENFORC ED EVEN MORE FROM THE FOLLOWING:- I. ALL THE COMPANIES ARE OPERATED FROM THE-OFFICE P REMISES OF SH. TARUN GOYAL. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 92 II. ALL THE DIRECTORS ARE EITHER HIS EMPLOYEES OR C LOSE RELATIVES. SH. TARUN GOYAL COULD NEVER PRODUCE THE DIRECTORS NOR FURNISH THEIR RESIDENTIAL ADDRESS. III. THE STATEMENT OF EMPLOYEES OF SH. TARUN GOYAL IS ,ON RECORD, WHEREBY THEY HAVE CLEARLY STATED THAT THEY SIGNED ON THE PAPERS PRODUCED BEFORE THEM BY SH TARUN GOYAL T HEY DO NOT KNOW ABOUT THE BASIC DETAILS OF THE COMPANIES L IKE SHAREHOLDING PATTERNS, NATURE OF BUSINESS OF THESE COMPANIES ETC. IV. THE STATEMENT OF AUDITORS OF SH. TARUN GOYAL IS ON RECORD. THEY HAVE STATED TO HAVE NEVER MEET (SIC) T HE DIRECTORS OF THE COMPANIES AND AUDITED THE ACCOUNTS ONLY ON THE DIRECTIONS OF SH TARUN GOYAL. AS PER THE STATEM ENT OF AUDITORS, THE EMPLOYEES OF SH TARUN GOYAL WERE DIRE CTORS OF THE COMPANIES RUN BY THEM, ALSO THEY COULD NOT ASCE RTAIN THE SO CALLED SHARE CAPITAL SUBSCRIBED BY SH TARUN GOYAL AS DOCUMENTARY PROOF OF THE SAME WAS LACKING. V. DURING THE COURSE OF SEARCH, ALL THE PASSBOOKS, CHEQUE BOOKS, PAN CARDS ETC. WERE ALWAYS IN POSSESSION OF SH TARUN GOYAL. ON HIS DIRECTIONS ALL THE EMPLOYEES SI GNED ALL THE DOCUMENTS. VI. ALL THE BANK ACCOUNT OPENING FORMS APPEAR TO BE IN THE HANDWRITING OF SH TARUN GOYAL. VII. ALL THE BOOKS OF ACCOUNTS OF ALL THE COMPANIES HAVE BEEN RETRIEVED FROM THE COMPUTERS/LAPTOP OF SH TARUN GOY AL. VIII. SH TARUN GOYAL HAS GIVEN LETTERS FOR THE RELE ASE OF BANK ACCOUNTS OF COMPANIES PUT UNDER RESTRAINTS AFTER SE ARCH. NO SUCH APPLICATION WAS RECEIVED FROM SO CALLED DIRECT ORS OF THE COMPANIES. IX. SH TARUN GOYAL APPEARS IN ALL THE SCRUTINY ASSE SSMENTS AS WELL AS APPEALS OF HIS COMPANIES HIMSELF BEFORE VAR IOUS INCOME' TAX AUTHORITIES. FROM VERIFICATION CARRIED OUT IN RESPECTIVE WARDS/ CIRCLES WHERE THE ABOVE MENTIONED COMPANIES ARE ASSESSED, IT IS' EVIDENT THAT SH TARU N GOYAL IS APPEARING IN ALL THE INCOME TAX PROCEEDINGS ON BEHA LF OF ALL THE COMPANIES. HE IS NOT CHARGING ANY FEES FOR APPE ARING IN THESE CASES. X. DURING THE POST SEARCH INVESTIGATION IT WAS REV EALED THAT BESIDES, AIDING AND ABETTING THE EVASION OF TAXES, SH TARUN ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 93 GOYAL HAS BEEN INDULGING IN VIOLATION OTHER PROVISI ONS OF THE LAW OF THE LAND. THIS MATTER HAS ALSO BEEN TAKEN UP BY REIC FOR MULTI-AGENCY PROBE. (E) THE RESPONDENT-ASSESSEE DID NOT HAVE ANY BUSINE SS INCOME IN THE YEAR ENDING 31ST MARCH, 2007 AND HAD INCOME FROM OTHER SOURCES OF RS.16.38 LAKHS IN THE YEAR EN DING 31ST MARCH, 2008. THE RESPONDENT-ASSESSEE HAD NOT INCURR ED ANY EXPENDITURE IN THE YEAR ENDING 31ST MARCH, 2007 AND HAD INCURRED EXPENDITURE OF RS.12.17 LAKHS IN THE YEAR ENDING 31ST MARCH, 2008. (F) SHARES OF FACE VALUE OF RS.10 /- EACH WERE ISSUED AT A PREMIUM OF RS.40/- (TOTAL RS.50/-) . (G) THE RESPONDENT-ASSESSEE HAD FAILED TO PRODUCE D IRECTORS OF THE COMPANIES, THOUGH THEY HAD FILED CONFIRMATIO NS, AND THEREFORE, WERE IN TOUCH WITH THE RESPONDENT-ASSESS EE. THE RESPONDENT-ASSESSEE HAD ALSO FAILED TO PRODUCE THE DETAILS AND PARTICULARS WITH REGARD TO ISSUE OF SHARES, NOT ICES ETC. TO THE SHAREHOLDERS OF AGM/EGM ETC. 13. IN VIEW OF THE AFORESAID FACTUAL POSITION, WE H AVE NO HESITATION IN HOLDING THAT THE TRANSACTIONS IN QUES TION WERE CLEARLY SHAM AND MAKE-BELIEVE WITH EXCELLENT PAPER WORK TO CAMOUFLAGE THEIR BOGUS NATURE. ACCORDINGLY, THE ORD ER PASSED BY THE TRIBUNAL IS CLEARLY SUPERFICIAL AND A DOPTS A PERFUNCTORY APPROACH AND IGNORES EVIDENCE AND MATER IAL REFERRED TO IN THE ASSESSMENT ORDER. THE REASONING GIVEN IS CONTRARY TO HUMAN PROBABILITIES, FOR IN THE NORMAL COURSE OF CONDUCT, NO ONE WILL MAKE INVESTMENT OF SUCH HUGE A MOUNTS WITHOUT BEING CONCERNED ABOUT THE RETURN AND SAFETY OF SUCH INVESTMENT. 14. ACCORDINGLY, THE APPEAL IS ALLOWED. THE SUBSTAN TIAL QUESTION OF LAW FRAMED ABOVE IS ACCORDINGLY ANSWERE D IN FAVOUR OF THE APPELLANT-REVENUE AND AGAINST THE RES PONDENT ASSESSEE. THERE WOULD BE NO ORDER AS TO COSTS. 4.4. IF THE AFORESAID DECISIONS ARE ANALYZED, WE NO TE THAT IN THE CASE OF M/S CHAND MERCHANT PVT. LTD., THE ISSUE RELATES TO SHARE APPLICATION MONEY AND CONSEQUENT ADDITION MADE UNDER SECTION 68 OF THE ACT. IT IS NOTED THAT THIS ADDITION WAS MADE ON THE BASIS OF STATEMENT OF SHRI SK JAIN, RECORDED UNDER SECTION 132(4) OF THE ACT AND DURING SEARCH ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 94 PROCEEDINGS HE TENDERED THAT HE WAS INVOLVED IN PRO VIDING ACCOMMODATION ENTRIES IN THE FORM OF SHARE APPLICATION/UNSECURED LOANS. THE FIRST APPELLATE AU THORITY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WHICH WAS AFFIRMED BY THE TRIBUNAL, DISMISSING THE APPEAL OF THE REVENUE. IDENTICALLY, IN THE CASE OF INCOME TAX OF FICER VS M/S TRISHUL PVT. LTD. ((SUPRA)) THE ADDITION WAS MA DE ON THE BASIS OF SEARCH CARRIED OUT IN THE CASE OF SHRI PRAVIN KUMAR JAIN GROUP. IDENTICAL IS THE SITUATION IN THE CASE BEFORE US. THE FIRST APPELLATE AUTHORITY DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL DULY CONSI DERED VARIOUS DECISIONS AND ULTIMATELY BY PLACING RELIANC E UPON VARIOUS DECISIONS DISMISSED THE APPEAL OF THE REVEN UE BY UPHOLDING THE STAND OF THE LD. COMMISSIONER OF INCO ME TAX (APPEAL). IN THE CASE BEFORE HON'BLE DELHI HIGH COURT, NDR PROMOTER PVT. LTD.((SUPRA)), CITED BY LD. DR, IT WAS FOUND THAT THE CASH WAS DEPOSITED IN THE BANK ACCOU NT OF ONE SUCH COMPANY AND THEREAFTER TRANSFERRED/ CIRCULATED WITHIN THE GROUP COMPANIES BEFORE THE CHEQUE IS ISSUED TO THE BENEFICIARIES . IT IS ALSO NOTED (PAGE-14, PARA-12) THAT THE SHARE HOLDER COMPANIES (FIVE IN NUMBERS) WERE ALL LOCATED AT THE COMMON ADDRESS I.E. 13/34 WEA, FOURTH FLOOR, ARYA SAMAJ ROAD, NEW DELHI . IN THAT SITUATION, HON'BLE DELHI HIGH COURT REACHED TO A PARTICULAR CONCLUSION. IT IS CLEAR THAT THE FACTS I N THE CASE OF NDR PROMOTER PVT. LTD., RELIED UPON BY THE LD. D R, ARE DIFFERENT AND DISTINGUISHABLE. IT IS ALSO NOTED (PA RA-4 OF THE ORDER OF THE HON'BLE DELHI HIGH COURT) THAT THE MON EY WAS ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 95 CIRCULATED BY FIRST DEPOSITING THE CASH IN THE BANK ACCOUNT OF ONE SUCH COMPANY AND THEREAFTER TRANSFERRED/CIRC ULATED (GROUP COMPANIES BEFORE CHEQUE IS ISSUED TO THE BENEFICIARIES), THEREFORE, MAY NOT HELP THE REVEN UE. IN THE LIGHT OF THIS BACKGROUND, NOW WE SHALL ANALYZE THE PROVISIONS OF SECTION 68 OF THE ACT, SO THAT WE CAN REACH TO A FAIR CONCLUSION, WHICH IS REPRODUCED HEREUNDER FO R READY REFERENCE AND ANALYSIS:- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INC OME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIAL LY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SH ARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATIO N OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALS O OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH SUM SO CREDITED; AND ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 96 (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY : PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME TH E SUM REFERRED TO THEREIN IS RECORDED, IS A VENTURE CAPIT AL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAU SE (23FB)OF SECTION 10 . 4.5. AS PER SECTION 68 OF THE ACT, ONUS IS UPON TH E ASSESSEE TO DISCHARGE THE BURDEN SO CAST UPON. FIRS T BURDEN IS UPON THE ASSESSEE TO SATISFACTORILY EXPLA IN THE CREDIT ENTRY CONTAINED IN HIS BOOKS OF ACCOUNTS. TH E BURDEN HAS TO BE DISCHARGED WITH POSITIVE MATERIAL (OCEANIC PRODUCTS EXPORTING COMPANY VS CIT 241 ITR 497 (KERALA.). THE LEGISLATURE HAD LAID DOWN THAT IN TH E ABSENCE OF SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH C REDIT MAY BE CHARGED U/S 68 OF THE ACT. OUR VIEW IS FORTI FIED BY THE RATIO LAID DOWN IN HONBLE APEX COURT IN P. MOH ANKALA (2007)(291 ITR 278)(SC). A CLOSE READING OF SECTION 68 AND 69 OF THE ACT MAKES IT CLEAR THAT IN THE CASE OF SE CTION 68, THERE SHOULD BE CREDIT ENTRY IN THE BOOKS OF ACCOUN T WHEREAS IN THE CASE OF 69 THERE MAY NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WELL SETTLED, THE ONUS OF ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 97 PROVING THE SOURCE OF A SUM, FOUND TO BE RECEIVED/TRANSACTED BY THE ASSESSEE, IS ON HIM AND WHERE IT IS NOT SATISFACTORILY EXPLAINED, IT IS OPEN TO TH E REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FU RTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INCOME IS F ROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSESSEE FAI LED TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF SUCH CREDIT, THE REVENUE IS FREE TO MAKE THE ADDITION. THE PRIN CIPLE LAID DOWN IN GANPATI MUDALIAR (1964) 53 ITR 623/A. GOVIN DA RAJULU MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DU RGA PRASAD MORE (72 ITR 807)(SC) ARE THE LANDMARK DECIS IONS. THE RATIO LAID DOWN THEREIN ARE THAT IF THE EXPLANA TION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE T REATED AS INCOME OF THE ASSESSEE. THE RATIO LAID DOWN IN DAULAT RAM RAWATMAL 87 ITR 349 (SC) FURTHER SUPPORTS THE C ASE OF THE ASSESSEE. IN THE CASE OF A CASH ENTRY, IT I S NECESSARY FOR THE ASSESSEE TO PROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECORD. A HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDE NCE ACT ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 98 AND SECTION 68 OF THE INCOME TAX ACT WILL BE THAT A PART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION A S WELL AS THE CREDITWORTHINESS OF THE CREDITORS. IN CIT V S KORLAY TRADING COMPANY LTD. 232 ITR 820 (CAL.), IT WAS HEL D THAT MERE MENTION OF FILE NUMBER OF CREDITOR WILL NOT SU FFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATELY BY THE AS SESSEE (CIT VS R.S. RATHAORE) 212 ITR 390 (RAJ.). THE HON BLE GUWAHATI HIGH COURT IN NEMI CHANDRA KOTHARI VS CIT (264 ITR 254)(GAU) HELD THAT TRANSACTION BY CHEQUES MAY NOT BE ALWAYS SACROSANCT. HOWEVER, ONCE THE ONUS CAST UPON THE ASSESSEE IS DISCHARGED, IT SHIFTS TO THE REVENUE TO PROVE OTHERWISE. IN THE PRESENT APPEAL, THE ASSESSEE HAS DULY ESTABLISHED THE IDENTITY, GENUINENESS AND CREDITWOR THINESS, THEREFORE, NOW IT IS UP TO THE REVENUE TO BRING ON RECORD ANY ADVERSE MATERIAL. MERELY ON THE BASIS OF STATE MENT, NO ADDITION CAN BE MADE UNLESS AND UNTIL, IT IS CORROB ORATED WITH COGENT MATERIAL. IT IS ALSO NOTED THAT EVEN TH E PERSONS (JAIN BROTHERS) WHO TENDERED THEIR STATEMENTS BEFOR E THE DEPARTMENT, NOWHERE SPECIFICALLY NAMED THE ASSESSEE AND THE STATEMENT IS GENERAL IN NATURE, SUCH TYPE OF GE NERAL ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 99 STATEMENT CANNOT BE THE BASIS FOR MAKING THE ADDITI ON UNLESS AND UNTIL IT IS CORROBORATED WITH TANGIBLE M ATERIAL. EVEN OTHERWISE, THE CASE OF THE ASSESSEE IS COVERED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S TRISHUL TRADER PVT. LTD. ((SUPRA)) AND M/S CHAND MERCHANT PVT. LTD . ((SUPRA)) WHERE THE FACTS ARE IDENTICAL AND THE ISS UE WAS BASED UPON THE STATEMENT OF S. K. JAIN/PRAVIN KUMAR JAIN. THE TRIBUNAL REACHED TO A PARTICULAR CONCLUSI ON BY PLACING RELIANCE UPON THE DECISION IN CIT VS VALUE CAPITAL SERVICE PVT. LTD. (2008) 307 ITR 334 (DEL.), CIT VS G.P. INTERNATIONAL LTD. (2010) 325 ITR 25 (P & H), CIT V S ELECTRO POLYCHEM LTD. (2007) 294 ITR 661 (MADRAS), CIT VS A KJ GRANITES PVT. LTD. (2008) 301 ITR 298 (RAJ.), CIT V S OASIS HOSPITALITIES PVT. LTD. (2011) 51 DTR 74 (DEL.), CI T VS GUJARAT HEAVY CHEMICAL LTD. (2002) 256 ITR 795, CIT VS SUNITA DHADDA 403 ITR 309 (SUPREME COURT), ANDAMAN TIMBERS INDUSTRIES VS COMMISSIONER OF CENTRAL EXCIS E 52 GST 355 (SUPREME COURT) AND VARIOUS OTHER DECISIONS . EVEN OTHERWISE, DURING HEARING OF THESE APPEALS, TH E BENCH ASKED THE LD. DR IS THERE ANY EVIDENCE OF CASH TRAN SACTION, THE LD. DR FAIRLY AND JUDICIOUSLY AGREED THAT THERE WAS NO ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 100 CASH DEPOSIT BEFORE THE ISSUANCE OF CHEQUE. ANOTHER QUESTION RAISED BY THE BENCH, WHETHER IN THE STATEM ENT, THE NAME OF THE ASSESSEE HAS BEEN SPECIFICALLY MENT IONED TO THIS ALSO, THE LD. DR FAIRLY AGREED THAT THE NAM E OF THE ASSESSEE HAS NOT BEEN SPECIFICALLY MENTIONED. THUS, CONSIDERING THE TOTALITY OF FACTS, DISCUSSION MADE IN THE EARLIER PARAS OF THE ORDER AND THE RATIO LAID DOWN IN THE CASES DISCUSSED HEREINABOVE, THE GROUNDS NO. 7 TO 1 0 ARE DECIDED IN FAVOUR OF THE ASSESSEE AND FOR GROUND NO .6, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 5. SO FAR AS GROUND NO.11 WITH RESPECT TO SUSTAINING THE ADDITION OF RS.2,51,000/- (OUT OF RS.20,11,000/-) ASSUMING THAT THE ASSESSEE HAS PAID 2% COMMISSION, IS CONCERNED, THE CRUX OF THE ARGUMENT FROM BOTH SIDES IS THAT IT IS CONSEQUENTIAL IN NATURE, S INCE, WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AN D AFFIRMING THE STAND OF THE LD. COMMISSIONER OF INCO ME TAX (APPEAL) ON GROUND NO.6, THIS GROUND IS CONSEQUENTI AL IN NATURE AND DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 101 6. SO FAR AS, THE APPEAL OF THE REVENUE (ITA NO.4137/MUM/2015), IS CONCERNED, THE FIRST GROUND I S RAISED BY THE REVENUE PERTAINS TO DELETING THE ADDI TION OF RS.2,76,70,000/- AS UNEXPLAINED SHARE PREMIUM/SHARE APPLICATION MONEY OF SURENDRA KUMAR JAIN GROUP, WE NOTE THAT WHILE DELIBERATING UPON THE ISSUE IN HAND IN T HE APPEAL OF THE ASSESSEE, WE HAVE MADE AN ELABORATE DISCUSSION, THEREFORE, THE SAME IS NOT BEING REPEAT ED FOR THE SAKE BREVITY AND MAY BE READ AS PART AND PARCEL OF THIS GROUND, THEREFORE, ON THE BASIS OF SAME REASONING A ND THE JUDICIAL PRONOUNCEMENT, DISCUSSED THEREIN, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF I NCOME TAX (APPEAL), IN DELETING THE IMPUGNED ADDITION, TH EREFORE, THIS GROUND OF THE REVENUE IS DISMISSED. 7. THE NEXT GROUND RAISED BY THE REVENUE IS WITH RE SPECT TO CONFIRMING THE ADDITION MADE UNDER SECTION 69C O F THE ACT ON ACCOUNT OF COMMISSION EXPENSES TO THE TUNE O F RS.2,51,000/- AS AGAINST THE ADDITION OF RS.20,11,0 00/- IS CONCERNED, WE NOTE THAT WHILE DELIBERATING UPON THE ISSUE IN THE APPEAL OF THE ASSESSEE, WE HAVE DELETED THE ADDITION ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 102 BY AN ELABORATE DISCUSSION, THEREFORE, THIS GROUND OF THE REVENUE ALSO FAILS AS THE PART ADDITION SUSTAINED B Y THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS BEEN DELETE D BY THE TRIBUNAL. THUS, THERE IS NO MERIT IN THE IMPUGN ED GROUND RAISED BY THE REVENUE. 8. THE NEXT GROUND PERTAINS TO DELETING THE DISALLOWANCE OF RS.2,57,349/- MADE UNDER SECTION 14 A OF THE ACT R.W.S. 8D OF THE RULES. THE CRUX OF THE ARG UMENT ON BEHALF OF THE REVENUE IS IN SUPPORT OF THE ADDITION MADE BY THE LD. ASSESSING OFFICER, WHEREAS, THE LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORDER. 8.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE STAND OF THE REVENUE IS THAT THE ASSESSEE HAS PAID INTEREST OF RS.3,14,431/-, THEREFORE, IT COMES UNDER SECTION 14 A OF THE ACT AND FURTHER SUCH EXPENDITURE HAS BEEN INCURRED AND DISALLOWANCE HAS BEEN MADE AS PER RULE-8D. THE STAN D OF THE ASSESSEE IS THAT SUCH DISALLOWANCE HAS BEEN MAD E ON NOTIONAL BASIS WITHOUT POINTING OUT AS TO WHETHER T HE ASSESSEE HAS INCURRED ANY EXPENDITURE OR NOT. THE L D. ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 103 COMMISSIONER OF INCOME TAX (APPEAL) NOTED THAT THE LD. ASSESSING OFFICER WRONGLY DISALLOWED THE EXPENDITUR E WITHOUT POINTING OUT AS TO WHICH EXPENDITURE RELATE S TO ANY EXEMPT INCOME. THE INTEREST EXPENDITURE OF RS.3,14, 431/- IS THE INTEREST EXPENDITURE OF THE BANK WHICH WAS N OT UTILIZED FOR ANY INVESTMENT NOR RELATES TO EXEMPT I NCOME. IN VIEW OF THIS FACTUAL MATRIX, WE FIND NO INFIRMITY I N THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (A PPEAL) DECIDED IN FAVOUR OF THE ASSESSEE. FINALLY, (I) THE APPEAL OF THE REVENUE IS DISMISSED (II) THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 24/01/2019. SD/- (N.K. PRADHAN) SD/- (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $%& / VICE PRESIDENT MUMBAI; 1 DATED : 30/01/2019 F{X~{T? P.S/. %.. , ITA NO.4137 & 4144/MUM/2015 VULVAN TRADERS PVT LTD. 104 !'()*+,+-) / COPY OF THE ORDER FORWARDED TO : 1. 234 / THE APPELLANT 2. 534 / THE RESPONDENT. 3. 6 6 ) 7( , ( 2 ) / THE CIT, MUMBAI. 4. 6 6 ) 7( / CIT(A)- , MUMBAI 5. 9$:%(% , 6 2,2 / , ) / DR, ITAT, MUMBAI 6. ;& / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , ) / ITAT, MUMBAI
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