ITO, New Delhi V. M/s Apple Green Power Ltd., New Delhi

ITA 4354/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9710 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Search and seizure; Additional evidence; Accommodation entries; Bogus loan
• Section: 143(3); 142(1); 133(6); 143(1); 143(2); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO. 4354/DEL/2015 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD 3(1), ROOM NO. 381, C.R. BUILDING, I.P. ESTATE, NEW DELHI- 110 0002 VS. M/S APPLE GREEN POWER LTD., T-1, 3 RD ANUPAM PLAZA, NEAR IIT CROSSING, KALU SARAI, HAUZ KHAS, NEW DELHI 110 016 (PAN: AAICA2112N) (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 29.5.2015 PASSED BY THE LD. CIT(A)-I, NEW DELHI REL ATING TO ASSESSMENT YEAR 2012-13 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 18,48,00,000/- MADE BY DISALLOWING UNSECURED LOAN AND ADDED BACK BY THE AO U/S. 68 WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS OR PROVIN G THE GENUINENESS OF THE TRANSACTION IN THE FOLLOWING MANNER:- A) M/S SHIRIN EXPORTS PVT. LTD., WHO HAS PROVIDED BOGUS LOAN FOR A SUM OF RS. 8.78 CRORE, HAS NOT DEPARTMENT BY SMT. SULEKHA VERMA, CIT(DR) ASSESSEE BY SH. AMIT GOEL, CA 2 PROVIDED COPY OF BANK STATEMENT INSPITE OF BOTH THE CREDITORS I.E. M/S SHIRIN EXPORTS PVT. LTD. AND M/S VIGOROUS TRADE LINK PVT. LTD. HAS NOT BEEN PROVED, AS BOTH THE COMPANIES FAILED TO COMPLY WITH NOTICE DATED 19.3.2015. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 13,86,000/- MADE BY DISALLOWING COMMISSION PAID FOR OBTAINING THE ABOVE GROUNDS UNSECURED LOAN AND ADD ED BACK BY THE AO U/S. 68 WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TH E TRANSACTION. 3. IT APPEARS THAT LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES AND NO OPPORTUNITY WAS GIVEN T O THE AO FOR EXAMINATION. 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S ) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME AT NIL ON 16.09.2012 AND THE SA ME WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGL Y, NOTICE U/S. 143(2) OF THE ACT WAS ISSUED ON 14.8.2013 AND THEREAFTER THE CASE WAS TRANSFERRED TO WARD 2(1) ON 7.10.2013. SUBSEQUENTLY, NOTICE U/ S 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WERE ISSUED. IN RESPONSE T O THE SAME, THE AR OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME. LETTERS SEEKING INFORMATION U/S. 133(6) OF THE ACT DATED 19 .3.2015 WERE SENT TO M/S SHIRIN EXPORTS PVT. LTD. AND M/S VIGOROUS TRA DE LINK PVT. LTD. WHO HAD TENDERED UNSECURED LOAN TO THE ASSESSEE COMPANY AMOUNTING TO RS. 3 8,78,00,000/- AND RS. 9,70,00,000/- RESPECTIVELY. IN RESPONSE TO THE SAME, M/S VIGOROUS TRADE LINK PVT. LTD. HAS SUBMIT TED A LETTER ON 24.3.2015. AO ON PERUSAL OF THE STATEMENT OF STATE BANK OF INDIA CA 32383244692 OF M/S VIGOROUS TRADE LINK PVT. LTD., R ECEIVED FROM THEM ON 18.3.2015 IN RESPONSE TO AN EARLIER LETTER REGAR DING SEEKING INFORMATION U/S. 133(6) OF THE ACT, DETAIL THEREOF IS MENTIONED AT PAGE NO. 3 OF THE ASSESSMENT ORDER. THE AO FURTHER OBSE RVED THAT M/S VIGOROUS TRADE LINK PVT. LTD. WAS INCORPORATED ON 0 5.7.2011 AND DURING THE PERIOD 1.4.2011 TO 31.3.2012 THEY WERE NOT HAVI NG EITHER ANY SELF OWNED OR RENTED BUSINESS PREMISES. AO FURTHER OBS ERVED THAT AS PER THEIR BALANCE SHEET AS ON 31.3.2012, TOTAL LIABILIT IES WAS RS. 30,83,87,792/- OUT OF WHICH TRADE PAYABLES WAS RS. 30,76,20,342/- AND UNDER SUCH FINANCIAL CONDITIONS THEY WOULD NOT HAVE BEEN ABLE TO TENDER INTEREST FREE UNSECURED LOANS OF RS. 9,70,00 ,000/- TO THE ASSESSEE COMPANY UNLESS FUNDS HAD BEEN RECEIVED FROM M/S PRO MART RETAIL PVT. LTD. THE ASSESSEE COMPANY, M/S APPLE GREEN POWER LT D., HELD 93.49% SHARES OF M/S PROMART RETAIL INDIA PVT. LTD. AS ON 31.3.2012. THEREFORE, AO NOTED THAT IT BECOMES APPARENT THAT FUNDS OF THE ASSESSEE COMPANY WAS ROUTED BACK VIA M/S VIGOROUS TRADE LINK PVT. LT D. IN THE FORM OF UNSECURED LOAN. AO FURTHER OBSERVED THAT VIDE LETT ER DATED 05.01.2015 WHICH WAS ISSUED BY THE DDIT(INV.), UNIT-I, NOIDA, WHEREIN IT WAS INFORMED THAT SEARCH AND SEIZURE OPERATIONS WAS CO NDUCTED ON M/S APPLE GROUP OF COMPANIES ON 11.11.2014 BY HIS UNIT. IN T HE PRELIMINARY SEARCH REPORT DATED 27.11.2014 OF THE DIRECTOR OF I NCOME TAX (INV.), KANPUR IT WAS STATED THAT DURING THE SEARCH AND SEI ZURE OPERATIONS, INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED FROM THE RESIDENCE AND CORPORATE OFFICES OF THE M/S APPLE GROUP OF COMPANI ES. THESE DOCUMENTS SHOW THAT THE GROUP HAS INTRODUCED BOGUS UNSECURED LOANS FROM DOMESTIC AS WELL AS COMPANIES BASED ON HONG KONG. THEREFORE, AO BY RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NIPUN BUILDERS & DEVELOPERS PVT. LTD. 2013-TIOL-32-HC-DEL -IT, DATED 07.01.2013 AND THE CASE OF CIT VS. NR PORTFOLIO PV T. LTD. 2013-TIOL- 4 955-HC-DEL-IT DATED 22.11.2013 AND HONBLE APEX COU RT DECISIONS IN THE CASE OF CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 AND SUMATI DAYAL VS. CIT (1995) 80 TAXMAN 89/214 ITR 801(SC) & CIT VS. SRI MEENAKSHI MILLS LTD. 63 ITR 609, HAS OBSERVED THAT ASSESSEE COMPANY RECEIVED ACCOMMODATION ENTRIES RS. 18,48,00,000/- I .E. FROM M/S SHIRIN EXPORTS PVT. LTD. AMOUNTING TO RS. 8,78,00,000/- AN D M/S VIGOROUS TRADE LINK PVT. LTD. AMOUNTING TO RS. 9,70,00,000/- AND F URTHER OBSERVED THAT THE ACCOMMODATION ENTRY GIVERS USUALLY CHARGE 0.75% OF THE CHEQUE AMOUNT AS COMMISSION FOR PROVIDING ACCOMMODATION EN TRY. THEREFORE, HE OBSERVED THAT IN ADDITION OF RS. 18,48,00,000/- THE ASSESSEE COMPANY MUST HAVE GIVEN RS. 13,86,000/- AS COMMISSION FOR P ROVIDING ACCOMMODATION ENTRY. AS THE PAYMENT OF RS. 18,61,8 6,000 (RS. 18,48,00,000/- PLUS RS. 13,86,000/- HAS NOT BEEN D ISCLOSED BY THE ASSESSEE COMPANY IN THEIR BOOKS OF ACCOUNTS, HENCE, HE ADDED BACK THE AMOUNT OF RS. 18,61,86,000/- TO THE INCOME OF THE A SSESSEE FROM UNDISCLOSED SOURCES AS PER PROVISIONS OF SECTION 68 OF THE I.T. ACT,. 1961 AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 18,6 1,86,000/- U/S. 143(3) OF THE ACT VIDE ASSESSMENT ORDER DATED 25.03 .2015. AGAINST THE ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 29.05.2015 HAS PARTLY ALLOWE D THE APPEAL OF THE ASSESSEE AND DIRECTED TO DELETE THE ADDITIONS IN DI SPUTE. AGGRIEVED WITH THE IMPUGNED ORDER, REVENUE IS IN APPEAL BEFORE TH E TRIBUNAL. 3. DURING THE HEARING, LD. CIT DR RELIED UPON THE O RDER OF THE ASSESSING OFFICER. SHE SUBMITTED THAT LD. CIT(A) HA S WRONGLY DELETED THE ADDITION OF RS. 18,48,00,000/- MADE BY DISALLOWING UNSECURED LOAN WHICH WAS ADDED BACK BY THE AO U/S. 68 WHEN THE ASSESSEE HAD FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TH E TRANSACTION BECAUSE M/S SHIRIN EXPORTS PVT. LTD., WHO HAS PROVIDED BOGU S LOAN FOR A SUM OF RS. 8.78 CRORE, HAS NOT PROVIDED COPY OF BANK STATE MENT IN SPITE OF BOTH THE CREDITORS I.E. M/S SHIRIN EXPORTS PVT. LTD. AND M/S VIGOROUS TRADE LINK PVT. LTD. HAS NOT BEEN PROVED, AS BOTH THE COMPANIE S FAILED TO COMPLY WITH NOTICE DATED 19.3.2015. SHE FURTHER SUBMITTED THAT LD. CIT(A) HAS 5 ALSO ERRED IN DELETING THE ADDITION OF RS. 13,86,00 0/- MADE BY DISALLOWING COMMISSION PAID FOR OBTAINING THE ABOVE GROUNDS UN SECURED LOAN AND ADDED BACK BY THE AO U/S. 68 OF THE ACT WHEN THE AS SESSEE HAD FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TH E TRANSACTION. SHE FURTHER SUBMITTED THAT IT APPEARS FROM THE RECORDS THAT LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCES AND NO OPPORTUNIT Y WAS GIVEN TO THE AO FOR EXAMINATION. IN SUPPORT OF HER CONTENTION, LD. CIT(DR) FILED A PAPER BOOK CONTAINING PAGES 1 TO 106 IN WHICH SHE HAS A TTACHED THE COPY OF WRITTEN SUBMISSION ON THE MERITS OF THE CASE INCLUD ING VARIOUS CASE LAWS TO SUPPORT THE CASE OF THE DEPARTMENT; COPY OF OR DER SHEET ENTRY; REPLY OF SHIRIN EXPORT IN RESPONSE OF NOTICE U/S. 133(6); ACKNOWLEDGEMENT OF RETURN OF INCOME OF SHIRIN EXPORT OF AY 2012-13; AU DIT REPORT OF SHIRIN EXPORT OF AY 2012-13; REPLY OF VIGROUS TRADE LINK P VT. LTD. IN RESPONSE TO NOTICE U/S. 133(6); BANK ACCOUNT FURNISHED BY VI GOROUS TRADE LINK PVT. LTD. OF AY 2012-13; AUDIT REPORT OF VIGOROUS TRADE LINK PVT. LTD. OF AY 2012-13; LETTER OF AO TO VIGOROUS TRADE LINK PVT. L TD. 19.3.2015; LETTER OF AO TO SHIRIN EXPORT DATED 19.3.2015; LETTER OF AO WRITTEN TO THE PROMPART RETAIL DATED 5.1.2015; REPLY OF PROMART RE TAIL INDIA PVT. LTD. DATED 16.3.2015; LETTER OF AO WRITTEN TO THE APPEL LANT DATED 12.3.2015; ACKNOWLEDGEMENT OF RETURN OF INCOME OF PROMART RETA IL OF AY 2012-13; AUDIT REPORT OF PROMART RETAIL OF AY 2012-13; REPLY OF PROMART RETAIL TO AO REGARDING CHANGE OF ADDRESS; SHARE HOLDING OF PR OMART RETAIL AS ON 31.3.2012; DETAILS OF PROMART RETAIL FROM MCA WEBSI TE; LETTER OF AO TO NORMAN STELCO PVT. LTD. TO AO DATED 12.1.2015; LETT ER OF THE APPELLANT TO AO DATED 6.1.2015; CONFIRMATION OF ACCOUNTS OF NIRM ANSTELCO PVT. LTD; ACKNOWLEDGEMENT OF RETURN OF INCOME OF NORMANSTELCO PVT. LTD. OF AY 2012-13; LETTER OF THE APPELLANT TO THE AO DATED 12 .12.2014 AND DETAILS OF UNSECURED AMOUNT OF PROMART HOLDING LTD. SHE R ELIED UPON ON THE VARIOUS CASE LAWS INCLUDING THE FOLLOWING DECISIONS :- 6 - PR. CIT VS. NDR PROMOTERS PVT. LTD. (DHC) DECIDED IN ITA NO. 49/2018 VIDE ORDER DATED 17.1.2019. - PR. CIT VS. NRA IRON STEEL PVT. LTD. IN SLP (CIVI L) NO. 9855/2018 VIDE ORDER DATED 5.3.2019 (HONBLE SUPREME COURT OF INDIA). - PR. CIT VS. MATCHLESS GLASS SERVICES (P) LTD. 65 TAXMANN.COM 310 (DELHIL) DATED 18.12.2015 (DHC). - ONASSIS AXLES (P) LTD. VS. CIT 44 TAXMANN.COM 408 (DELHI). (DHC) DATED 13.2.2014. - CIT VS. N. TARIKA PROPERTIES PVT. LTD. 40 TAXMANN.COM 525 (DELHI) DATED 28.11.2013. - CIT VS. NIPUN BUILDERS & DEVELPERS PVT. LTD. 30 TAXMANN.COM 291 (DELHI) DATED 7.1.2013. - CIT VS. MAF ACADEMY (P) LTD. - CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. - CIT VS. YOUTH CONSTRUCTION (P) LTD. - CIT VS. ULTRA MODERN EXPORTS (P) LTD. - CIT VS. NR PORTFOLIO (P) LTD. - CIT VS. FROSTAIR (P) LTD. - BEUTEX INDIA P LTD. VS. CIT - CIT VS. RELIANCE INTERNATIONAL CORPORATION P LTD. - CIT VS. P. MOHANKALA - PR. CIT VS. BIKRAM SINGH 7 - CIT VS. PRECISION FINANCE P LTD. - CIT VS. DK GARG - ACIT VS. SARASWATI INTERNATIONAL LTD. - CIT VS. JANSAMPARTK ADVERTISING & MARKETING P. LTD. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE ORDER OF THE LD. CIT(A) AND IN SUPPORT OF HIS CONTENTION, HE FILED A COPY OF SYNOPSIS WHEREIN HE HAS RELIED UPON VARIOUS CASE LA WS AND ALSO RELIED UPON THE CASE LAWS MENTIONED IN THE IMPUGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE IMPUGNED ORDER, WRITTEN SUBMISSION OF BOTH THE PARTIES AND THE CASE LAWS CITED BY THEM. IN THIS CASE, WE FIND THAT DURI NG THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RECEIVED LOANS FROM THE FOLLOWING PARTIES:- (I) SHIRIM EXPORTS PRIVATE LTD. RS.8,78,00,000/- (II) VIGOROUS TRADE LINK PVT. LTD. RS.9,70,00,000 /- 5.1 WE NOTE THAT THE ASSESSEE HAS FURNISHED THE FOL LOWING DOCUMENTS/DETAILS BEFORE THE ASSESSING OFFICER IN R ESPECT OF THESE LOANS: - COMPLETE NAME AND ADDRESS OF LOAN CREDITORS. - CONFIRMATION OF ACCOUNTS BY THE LOAN CREDITORS. - COPY OF BANK STATEMENTS OF LOAN CREDITORS REFLECT ING THE LOANS GIVEN TO ASSESSEE COMPANY. - INCOME TAX PARTICULARS OF LOAN CREDITORS ALONGWIT H COPY OF THEIR ITR. - COPY OF AUDITED STATEMENT OF ACCOUNTS OF LOAN CRE DITORS. 8 5.2 IN OUR VIEW, THE ASSESSEE HAS, THUS DISCHARGED THE ONUS CAST UPON IT UNDER SECTION 68 OF INCOME TAX ACT, 1961. THE AS SESSING OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE ABOVE DOCUME NTS. THE ASSESSING OFFICER ISSUED NOTICES TO THE LOAN CREDITORS FOR IN DEPENDENT VERIFICATION OF THE LOAN TRANSACTIONS. THE NOTICES ISSUED BY THE AS SESSING OFFICER WERE DULY SERVED UPON THE LOAN CREDITORS AND IN RESPONSE TO SUCH NOTICES THE LOAN CREDITORS FILED THEIR REPLIES BEFORE THE ASSES SING OFFICER CONFIRMING THE LOANS GIVEN BY THEM TO THE ASSESSEE COMPANY. IN SPITE OF AVAILABILITY OF ALL THE AFORESAID INFORMATION, AND EVEN THE CONF IRMATION BY CREDITORS IN COMPLIANCE TO NOTICE ISSUED BY THE ASSESSING OFFICE R, IN OUR OPINION, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE I MPUGNED ADDITION OF LOANS WITHOUT REBUTTING THE EVIDENCES FURNISHED BY THE ASSESSEE. IT IS OBSERVED THAT THE ASSESSING OFFICER, BEFORE MAKING THE ADDITIONS, DID NOT EVEN ISSUE ANY SHOW CAUSE NOTICE TO THE ASSESSEE. S UCH ACTION IS NOT TENABLE. THE ASSESSING OFFICER HAS MADE REMARKS THA T SOME ALLEGED INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED DURIN G SEARCH AND SURVEY RELATING TO APPLE GROUP OF COMPANIES. ACCORDING TO THE ASSESSEE, THESE REMARKS ARE HIGHLY VAGUE AND ARBITRARY. THE ASSESSI NG OFFICER WAS DUTY BOUND TO BRING ON RECORD ANY SUCH ALLEGED INCRIMINA TING DOCUMENT, IF ANY. THERE IS SUBSTANCE IN THE SUBMISSION OF ASSESSEE TH AT HAD THERE BEEN ANY SEARCH RELATING TO THE CASE OF ASSESSEE, THE A.O. C OULD NOT HAVE MADE ASSESSMENT U/S 143(3) AS IN TERMS OF PROVISIONS OF SECTION 153A, THE ASSESSMENT PROCEEDINGS WOULD HAVE GOT ABATED. IT IS A SETTLED LAW THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE PLACE OF EVI DENCE. IT IS UNDISPUTED FACT THAT BOTH THE CREDITORS ARE COMPANI ES INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT 1956 AND ARE EXISTI NG INCOME TAX ASSESSEE. THEY HAVE BEEN ALLOTTED PAN BY DEPARTMENT . THEY ARE HAVING BANK ACCOUNTS. THE LOAN TRANSACTIONS HAVE TAKEN PLA CE BY ACCOUNT PAYEE CHEQUES. THERE IS NO CASH DEPOSIT OR UNEXPLAINED DE POSIT IN THE BANK ACCOUNTS OF THE CREDITORS. THE LOANS GIVEN BY THE C REDITORS ARE REFLECTED NOT ONLY IN THEIR BANK STATEMENTS BUT ALSO IN THEIR AUDITED STATEMENT OF ACCOUNTS FURNISHED BEFORE THE ASSESSING OFFICE. IT IS GERMANE TO NOTE THAT 9 IT IS NOT MERELY A CASE OF NECESSARY DOCUMENTARY EV IDENCES FURNISHED BY THE ASSESSEE. THE IMPORTANT ASPECT OF THE MATTER IS THAT THE ASSESSING OFFICER HAS INDEPENDENTLY VERIFIED THE TRANSACTIONS BY ISSUING NOTICES TO THE LOAN CREDITORS. IN FACT, THE MATTER DOES NOT EN D HERE. THE ASSESSING OFFICER WENT ONE STEP FURTHER AND MADE INDEPENDENT CONFIRMATION FROM THE CREDITOR OF THE CREDITOR I.E. 'SOURCE OF SOURCE '. AS IS EVIDENT FROM THE BANK STATEMENTS OF THE LOAN CREDITORS AS ALSO NOTED BY THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER, THAT THE C REDITORS COMPANY RECEIVED THE AMOUNT FROM A COMPANY NAMELY PROMART R ETAIL INDIA PVT. LTD. THE ASSESSING OFFICER ISSUED NOTICE TO PROMART RETAIL INDIA PVT. LTD. AND MADE INDEPENDENT INQUIRIES FROM IT. IN RESPONSE TO SUCH NOTICE PROMART RETAIL INDIA PVT. LTD. FILED THEIR REPLY TO THE ASSESSING OFFICER AND DULY CONFIRMED THE FACT OF THEIR HAVING GIVEN AMOUN TS TO THE TWO CREDITORS OF ASSESSEE COMPANY. THUS, THE ASSESSING OFFICER HA S MADE INDEPENDENT VERIFICATION NOT ONLY FROM THE 'SOURCE' (I.E. THE L OAN CREDITOR OF THE APPELLANT) BUT ALSO FROM THE 'SOURCE OF SOURCE'(I.E . CREDITOR OF THE LOAN CREDITOR). THE ASSESSING OFFICER HAS MADE REMARKS THAT THE LOAN CREDITORS RECEIVED THE AMOUNTS FROM PROMART RETAIL INDIA PVT. LTD. IN WHICH THE ASSESSEE COMPANY HOLDS 93.49% SHARES. IN OUR VIEW, THIS CANNOT BE A GROUND FOR MAKING THE ADDITIONS. ON THE CONTRARY, I T ESTABLISHES THE SOURCE OF CREDIT AND GENUINENESS OF THE TRANSACTION S. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT AMOUNT INVESTED BY ASSES SEE COMPANY IN THE SHARE CAPITAL OF PROMART RETAIL PVT. LTD. IS THE UN ACCOUNTED MONEY OF THE APPELLANT COMPANY. THE SAID INVESTMENTS MADE BY THE ASSESSEE HAS BEEN FOUND BY THE ASSESSING OFFICER TO BE FULLY EXPLAINE D AND THE ASSESSING OFFICER HAS NOT MADE ANY ADVERSE INFERENCE IN RESPE CT OF SUCH INVESTMENTS. THE ASSESSING OFFICER HAS ALSO VERIFIE D THIS INVESTMENT BY MAKING INDEPENDENT 'INQUIRIES FROM THE PROMART RETA IL INDIA PVT. LTD. THEREFORE, THERE IS NO RATIONALE FOR THE ASSESSING OFFICER TO MAKE THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS MADE I NVESTMENT IN PROMART RETAIL INDIA PVT. LTD. AS PER THE AUDITED STATEMEN TS OF ACCOUNTS OF SHIRIN EXPORTS PVT. LTD. IT IS HAVING TURNOVER OF MORE THA N RS. 25 CRORE FOR A. Y. 10 2012-13. IT HAS ALSO FILED ITS RETURN OF INCOME AND PAID THE TAXES THEREON. SIMILARLY AS PER THE AUDITED STATEMENTS OF ACCOUNTS OF VIGOROUS TRADE LINK PVT. LTD. IT IS HAVING TURNOVER OF MORE THAN R S. 27 CRORE FOR A.Y. 2012-13 AND IT HAS FILED ITS RETURN OF INCOME AND P AID THE TAXES THEREON. THEREFORE, THE LOAN CREDITOR COMPANIES CANNOT BE AL LEGED TO BE PAPER COMPANIES OR FAKE COMPANIES. EVEN THE 'SOURCE' OF ' SOURCE' I.E. PROMART RETAIL INDIA PVT. LTD. IS A COMPANY HAVING TURNOVER OF MORE THAN RS.73 CRORES FOR A.Y. 2012-13. IT HAS FILED RETURN OF INC OME DECLARING INCOME OF RS.3,24,88,166/- AND PAID TAXES OF RS.1,15,05,860/- . WE NOTE THAT THE LD. CIT(DR) HAS REFERRED TO THE JUDGMENTS OF HON'B LE DELHI HIGH COURT IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD AND N.R. PORTFOLIOS (P) LTD. IT IS SEEN THAT THE CASE LAWS RELIED UPON BY A .O. ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEE'S CASE. IN THE CASE LAWS RELIED UPON BY LD. CIT(DR) AS WELL AS BY THE A.O., THE HON'BLE HIGH CO URT WHILE RELYING UPON ITS EARLIER JUDGEMENT IN CASE OF NOVA PROMOTERS & F INANCE PVT. LTD., DISTINGUISHED THE JUDGEMENT OF APEX COURT IN CASE O F LOVELY EXPORTS LTD. BY HOLDING AS UNDER :- '27. THE DECISION IN THE CASE OF LOVELY EXPORTS LTD . (SUPRA) WAS CONSIDERED IN NOVA PROMOTERS AND FINLEASE (P) L TD. (SUPRA) AND IT WAS ELUCIDATED:- '38. THE RATIO OF A DECISION IS TO BE UNDERSTOOD AN D APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPL ETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR N AMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSIN G OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOS E PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THE N NO 11 ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC. 68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LA W. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE , SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHE S THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPL ICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CAR RIED OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF S UCH 'ENTRY PROVIDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIP TIONS WERE COLLECTED AS PART OF A PRE-MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, T HE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTIO N OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLAC ED UPON HIM UNDER SEC.68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICAN T AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT T HE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQU IRY 12 INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFOR E US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. ' 28. IN NOVA PROMOTERS & FINLEASE (SUPRA), IT WAS HE LD THAT IN VIEW OF THE LINK BETWEEN THE ENTRY PROVIDER S AND INCRIMINATING EVIDENCE, MERE FILING OF PAN NUMBER, ACKNOWLEDGEMENT OF INCOME TAX RETURNS OF THE ENTRY PROVIDER, BANK ACCOUNT STATEMENTS ETC. WAS NOT SUFFICIENT TO DISCHARGE THE ONUS. ' 5.3 FROM THE ABOVE, IT IS APPARENT THAT THE HON'BL E DELHI HIGH COURT IN THE AFORESAID CASE LAWS, DISTINGUISHED THE JUDGMENT OF LOVELY EXPORTS, BECAUSE FOLLOWING FACTS WERE FOUND BY THE COURT: 'THE SHAREHOLDERS WERE SELF-CONFESSED ENTRY OPERATO RS. THE NOTICE ULS 131/133(6) ISSUED BY A.O. TO THE SHAREHO LDER WAS RETURNED BACK UNSERVED WITH THE REMARKS 'NO SUCH CO MPANY'. THUS THE IDENTITY / EXISTENCE OF SHAREHOLDER WAS IN DOUBT. THE ASSESSING OFFICER HAD IN HIS POSSESSION MATERIAL ES TABLISHING THE LINK BETWEEN SELF-CONFESSED ENTRY PROVIDERS. TH E ASSESSING OFFICER WAS FOUND TO BE IN POSSESSION OF VALID MATE RIAL WITH REGARD TO INVOLVEMENT OF ASSESSEE WITH SUCH ENTRY P ROVIDERS. AS PER THE INVESTIGATION CARRIED OUT BY THE INVESTI GATION WING, THE SHAREHOLDERS WERE FOUND TO BE ENTRY PROVIDERS. IN VIEW OF THE AVAILABILITY OF INCRIMINATING MATERIAL, LINK BE TWEEN THE ASSESSEE AND ENTRY PROVIDERS WAS FOUND. 5.4 HOWEVER, IN THE ASSESSEES CASE THE ASSESSING O FFICER HAS NOT BROUGHT ON RECORD ANY SUCH FEATURE. IT IS A CASE OF RECEIPT OF LOANS AND NOT OF ISSUE OF SHARES. FURTHER, IT IS NOT A CASE W HERE ANY LOAN CREDITOR IS FOUND TO BE ENTRY OPERATOR. THE A.O. HAS NOT BROUGH T ON RECORD ANY INCRIMINATING OR ADVERSE MATERIAL/INFORMATION IN HI S POSSESSION IN RELATION 13 TO THE LOAN CREDITORS. THE IDENTITY OF THE LOAN CRE DITORS HAS NOT EVEN BEEN DOUBTED BY THE ASSESSING OFFICER. THE NOTICES ISSUE D BY THE ASSESSING OFFICER U/S 133(6) OF THE INCOME TAX ACT, 1961, HAV E BEEN DULY SERVED ON THE LOAN CREDITORS AND THEY HAVE CONFIRMED ABOUT THEIR HAVING GIVEN LOANS TO THE ASSESSEE COMPANY. THEREFORE, THE CASE LAWS RELIED UPON AS REFERRED ABOVE ARE NOT APPLICABLE. WE NOTE THAT TH E ASSESSING OFFICER HAS REFERRED TO THE JUDGMENTS OF HON'BLE APEX COURT IN THE CASE OF CIT V DURGA PRASAD MORE (1971) 62 ITR 640 AND SUMATI DAYA L V CIT (1995) 80 TAXMAN 89. HOWEVER, THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESEE ARE DIFFERENT FROM THE FACTS AND CIRCUMSTAN CES OF THE CASE RELIED UPON BY THE A.O. IN THE CASE LAWS RELIED UPON BY TH E A.O., THE APEX COURT HAS HELD THAT HUMAN PROBABILITIES AND CIRCUMSTANTIA L EVIDENCE CAN BE CONSIDERED WHEN THE EVIDENCES FURNISHED WERE CONTRA RY TO THE HUMAN PROBABILITIES AND CIRCUMSTANTIAL EVIDENCE. IN THE A SSESSEE'S CASE, THE A.O. HAS NOT ESTABLISHED AS TO HOW THE DOCUMENTARY EVIDE NCES FURNISHED BY THE ASSESSEE WERE CONTRARY TO THE HUMAN PROBABILITI ES AND CIRCUMSTANTIAL EVIDENCES. THE ASSESSING OFFICER HAS NOT ESTABLISHE D AS TO WHAT ARE THE REASONS AND EVIDENCES ON THE BASIS OF WHICH HE IS A LLEGING THE LOAN CREDITORS AS PAPER COMPANIES AND THE TRANSACTIONS A S FAKE LOANS. SIMILARLY, THE RELIANCE PLACED BY THE ASSESSING OFF ICER TO THE CASE OF CIT V MEENAKSHI MILLS LTD (63 ITR 609) IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. IN THIS CASE LAW RELIED UPON BY T HE A.O., THE ISSUE WAS WITH REGARD TO LIFTING OF CORPORATE VEIL FOR TAXABI LITY OF INTEREST INCOME EARNED IN NON-TAXABLE TERRITORIES. IN THE ASSESSEE S CASE, THERE ARE NO SUCH FACTS. FURTHER THE JUDICIAL DECISIONS RELIED U PON BY THE LD. CIT(DR) AS REFERRED ABOVE HAVE BEEN DULY CONSIDERED. IN OUR CONSIDERED VIEW, WE DO NOT FIND ANY PARITY IN THE FACTS OF THE DECISION S RELIED UPON WITH THE PECULIAR FACTS OF THE CASE IN HAND. THEREFORE, IN VIEW OF THE AFORESAID FACTUAL MATRIX AND LEGAL POSITION, THE ADDITION OF RS.18,48,00,000/- MADE BY ASSESSING OFFICER WAS RIGHTLY DELETED BY THE L D. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UP HOLD THE ACTION OF THE 14 LD. CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY, REJECT THE GROUND NO. 1 RAISED BY THE REVENUE. 7. AS REGARDS GROUND NO. 2 RELATES TO ADDITION OF RS.13,86,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION P AID. WE NOTE THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.13,86 ,000/- AS ALLEGED COMMISSION PAID FOR OBTAINING ALLEGED ACCOMMODATION ENTRY OF RS.18,48,00,000/-. IN VIEW OF FINDINGS GIVEN FOR GR OUND NO. 1 AS AFORESAID, THE ADDITION OF RS.13,86,000/- MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES N OT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTI ON OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND ACCORDINGLY, REJECT THE GR OUND NO. 2 RAISED BY THE REVENUE. 8. AS REGARDS GROUND NO. 3 IS CONCERNED, THE LD. CI T(DR) DID NOT ESTABLISH THAT WHICH ADDITIONAL EVIDENCES WERE ADMI TTED BY THE LD. CIT(A) FOR WHICH OPPORTUNITY WAS NOT PROVIDED TO THE AO, H ENCE, THIS GROUND IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED ON 18-09-2019. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:18/09/2019 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES