Badrinath Steels Private Limited, Hyderabad V. ITO,Ward 1(1), Hyderabad

ITA 436/HYD/2014

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2278 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 28-11-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Unexplained cash credit; Opportunity of being heard; Accommodation entries; Onus to prove; Liquidation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 436/HYD/2014 ASSESSMENT YEAR: 2006-07 BADRINATH STEELS PRIVATE LIMITED, HYDERABAD [PAN: AACCB9596P] VS INCOME TAX OFFICER, WARD-1(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SUNIL KUMAR JAIN, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 28-11-2019 DATE OF PRONOUNCEMENT : 04-12-2019 O R D E R PER D.KARUNAKARA RAO, A.M. : THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, HYDERABAD, DATED 02-12-2013, FOR THE AY.2006-07. 2. THE GROUND(S) OF APPEAL RAISED BY ASSESSEE ARE E XTRACTED AS UNDER: 1. FROM THE FACTS AND CIRCUMSTANCES, THE ORDER OF THE LEARNED ASSESSING OFFICER WAS WHOLLY BAD, ILLEGAL AND UNJUSTIFIED, TH E LEARNED CIT(A)-II, HYDERABAD HAS MADE ADDITION OF RS.41,52,000/- TREAT ING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT U/S.68 OF THE INCOME TAX ACT, 1961. ITA NO. 436/HYD/2014 :- 2 -: A) THE CIT(APPEALS) HYDERABAD HAS WRONGLY UPHELD THE A DDITION MADE BY THE AO I.E., TREATING THE SHARE APPLICATION MONEY AS UNEXPLAINED CASH CREDIT AMOUNTING TO RS.41,52,000/- . 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE - COMPANY, ENGAGED IN THE BUSINESS OF STEEL TRADING, FIL ED ITS RETURN OF INCOME FOR THE AY.2006-07 ON 06-11-2001 DECLARING NI L INCOME. IN THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER (AO) MA DE AN ADDITION OF RS.68,52,000/- U/S.68 OF THE INCOME TAX A CT [ACT] ON ACCOUNT OF SHARE APPLICATION MONEY, WITHOUT PREMIUM. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE AO NOTED THAT THERE I S A SHARE APPLICATION MONEY OF RS.80,52,000/-. THE FOLLOWING COMPANIES/PERSONS SUBSCRIBED TO THE SHARE APPLICATION MONEY FOR SHARES OF RS.1,000/- FACE VALUE WITH A PREMIUM OF R S.9,000/-. THE DETAILS ARE AS UNDER: S.NO NAME (M/S. S/SHRI/SMT) RS. 1. KASTURI REDDY 8,00,000 2. P. SAMBASIVA RAO 27,02,000 3. BUNIYAD CHEMICALS LTD., 20,00,000 4. TALENT INFOWAY LTD., 20,00,000 5. DURBAL CORP. 1,50,000 6. PAWAN KUMAR SHARMA 2,00,000 7. RATAN SHARMA 2,00,000 4. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH THE BACKGROUND FACTS OF EACH SUBSC RIBER AND THE TRANSACTIONAL DETAILS OF THE SHARE CAPITAL INTRODUCED BY EACH OF THEM. THERE IS A REFERENCE TO MR.MUKESH CHOKSI, DIREC TOR OF M/S.MAHASAGAR SECURITIES PRIVATE LIMITED AND OTHER COMP ANIES, MUMBAI AND VARIOUS OTHER COMPANIES. M/S.BUNIYAD CHEM ICALS LTD., & TALENT INFOWAY LTD., ARE PART OF HIS GROUP. THE SE COMPANIES SUBSCRIBED SHARE CAPITAL TO THE PART OF EIGHT COMPANIE S/PERSONS, ITA NO. 436/HYD/2014 :- 3 -: LISTED ABOVE. THERE IS A DISCUSSION ABOUT EACH OF TH E SUBSCRIBER AND THEIR CAPACITY, THE NATURE OF SHELL COMPANIES, ACCOMM ODATION ENTRIES, INVESTMENT ETC. ANOTHER SUBSCRIBER BY NAME SH RI PAWAN KUMAR SHARMA WAS ALSO SUMMONED AND HIS STATEMENT WAS RECORDED. AFTER COMPLETING THE ASSESSMENT, THE AO SUMME D UP HIS FINDINGS AND THE SAME ARE EXTRACTED AS UNDER: 6.0 THE OBJECTIONS RAISED, BY THE ASSESSEE HAVE BE EN CONSIDERED BUT ARE NOT ACCEPTED IN THE LIGHT OF THE FINDINGS AS DISCUS SED BELOW: 1. THE BANK ACCOUNT EXTRACTS OF THE TWO COMPANIES S HOW THE FOLLOWING ENTRIES. A/C NO.000405022074 OF TALENT INFOWAY LTD. IN ICICI BANK ' SL DATE PARTICULARS WITHDRAWALS RS. DEPOSITS RS. BALANCE RS. 1 15-09-2005 BUNIYAD 1000000.00 -- 13494.00 2 19-09-2005 BY CASH BAHETY -- 500000.00 513494.00 3 19-09-2005 TRFR FROM DK BROTHERS -- 500000.00 1013494.00 4 20-09-2005 BADRINATH STEELS PVT. LTD 1000000.00 -- 13494.00 A/C NO.000405022074 OF TALENT INFOWAY LTD. IN ICICI BANK SL DATE PARTICULARS WITHDRAWALS RS. DEPOSITS RS. BALANCE RS. 1 11-10-2005 INW.RTN CHGS 276.00 -- 13,218.00 2 15-10-2005 TRFR FROM BAHETY -- 1000000.00 10013218.00 3 15-10-2005 BADRINATH STEELS PVT. LTD. 1000000.00 -- 13218.00 THE BANK ACCOUNTS OF BAHETY ENTERPRISES (6279050006 598) AND D K BROTHERS (00070501124) IN ICICI BANK, KOLKATA WERE OBTAINED. IT WAS SEEN FROM THE ACCOUNT OF BAHETY THAT THERE WAS A BALANCE OF RS.1446.00 ON 14.10.2005 FOLLOWED BY CASH DEPOSIT OF RS.10,05,000 /- ON 15.10.2005 WHICH WAS TRANSFERRED TO TALENT INFOWAY'S A/ C ON T HE SAME DATE. IN THE ACCOUNT OF D K BROTHERS, THERE ARE CASH DEPOSITS TO TALING RS. 23 LAKHS ITA NO. 436/HYD/2014 :- 4 -: (APPROX) ON 16.10.2005 AND 17.10.2005 OUT OF WHICH CHEQUES WERE ISSUED TO VARIOUS PARTIES INCLUDING TALENT INFOWAY ON 19.0 9.2005. A/C NO. 000405022108 OF BUNIYAD CHEMICALS LTD. IN I CICI BANK SL DATE PARTICULARS WITHDRAWALS RS. DEPOSITS RS. BALANCE RS. 1 11-10- 2005 INW. RTN CHGS 276.00 10339.50 2 14-10- 2005 TRFR FROM 627905006598 (BAHETY ENTERPRISES) -- 900000.00 910339.50 3 14-10- 2005 TRFR FROM MANASI EXIM PVT. LTD. 276.00 100000.00 1010663.50 4 14-10- 2005 INW. RTN CHGS 276.00 -- 1010063.50 5 17-10- 2005 BADRINATH STEELS PVT. LTD. 1000000.00 -- 10063.50 THE BANK ACCOUNT OF BAHETY SHOWED THAT THERE WAS A DEPOSIT OF CASH OF RS.9,00,000/- ON 14.10.2005 WHICH WAS TRANSFERRED B Y CHEQUE TO BUNIYAD'S A/C. SIMILARLY, THE BANK ACCOUNT OF MANAS I EXIM (627905006805) IN ICICI BANK, KOLAKATA SHOWED THAT THERE WAS A CREDIT OF RS.25,40,000/- WITH THE NARRATION 'TRFR FROM :VA RIOUS' OUT OF WHICH CHEQUES WERE ISSUED TO BUNIYAD AND ONE OTHER PARTY. THE STRIKING SIMILARITY IN THE TRANSACTIONS IN THE BANK ACCOUNTS OF THE ABOVE ENTITIES WHICH ARE THE IMMEDIATE AND NEXT TO IMMEDI ATE SOURCE OF THE SHARE APPLICATION MONEY IS NOT A COINCIDENCE. THIS APPEAR S TO BE A WELL ORGANIZED ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES TO BRIN G UNACCOUNTED MONIES INTO THE SYSTEM IN A CIRCUITOUS WAY TO ESCAPE THE T AX RADAR. 2. MR. MUKESH CHOKSI, PROMOTER AND DIRECTOR OF TALE NT INFOWAY LTD. AND BUNIYAD CHEMICALS LTD. HAD CONFESSED THAT THESE TWO COMPANIES WERE INDULGING IN PROVIDING ACCOMMODATION ENTRIES. THOUG H THE NAME OF THE ASSESSEE IS NOT APPEARING IN THE STATEMENT RECORDED FROM THE DIRECTOR, IT IS PART OF THE EVIDENCE FOUND DURING THE SEARCH OPERAT ION IN THAT CASE. 3. AS IN THE OTHER CASES, THE SOURCE FOR THE INVEST MENTS MADE BY THE 2 COMPANIES ARE FUNDS DEPOSITED IN THEIR ACCOUNTS IMM EDIATELY PRIOR TO THE INVESTMENT. THE FUNDS WERE DEPOSITED BY ENTITIES LI KE BAHETY ENTERPRISES, D K BROTHERS, MANASI EXIM PVT. LTD. ETC. WHICH WERE NOT EXISTING AT THEIR KNOWN ADDRESSES AND WHOSE GENUINENESS IS UNDER QUES TION AS PER ENQUIRIES CONDUCTED BY WAY OF PERSONAL VISIT BY INS PECTOR TO THEIR PREMISES IN KOLKATA. NOTICES ISSUED U/S 133 (6) OF THE ACT T O THESE PARTIES SEEKING INFORMATION REGARDING TRANSACTIONS WITH TALENT INFO WAY LTD. AND BUNIYAD CHEMICALS LTD. CAME BACK UNSERVED. ITA NO. 436/HYD/2014 :- 5 -: 4. AS PER INFORMATION AVAILABLE ON INTERNET, BUNIYA D CHEMICALS LTD. IS IN LIQUIDATION W.E.F 09.07.1999. 5. PREMIUM OF RS.9,000/- FIXED FOR THE SHARES IS WI THOUT ANY REASONABLE BASIS AND WAS OBVIOUSLY AIMED AT FACILITATING THE I NTRODUCTION OF LARGE AMOUNT OF UNACCOUNTED MONIES IN THE NAMES OF A HAND FUL OF PERSONS. 6. THE FLOW OF FUNDS FROM DUBIOUS ENTITIES SUCH AS BAHETY ENTERPRISES, D K BROTHERS, MANASI EXIM PVT. LTD. INTO COMPANIES LIKE TALENT INFOWAY LTD. AND BUNIYAD CHEMICALS LTD. WHICH WERE THEN INTRODUC ED AS SHARE APPLICATION MONEY INTO THE ASSESSEE COMPANY CLEARLY PROVES THAT UNACCOUNTED MONIES OF THE ASSESSEE HAVE BEEN ROUTED IN A CIRCUITOUS MANNER TO ESCAPE TAX SCRUTINY AND INTRODUCED INTO T HE BOOKS IN THE GUISE OF SHARE APPLICATION MONEY. THAT THE NAME, PAN AND ADD RESS OF THE INVESTORS WAS FURNISHED OR THAT THE MONEY WAS RECEIVED THROUG H ACCOUNT PAYEE CHEQUES IS IMMATERIAL IN THE LIGHT OF THE OVERWHELM ING EVIDENCE AS DISCUSSED ABOVE. 4.1. EVENTUALLY, THE AO MADE ADDITION OF RS.68,52,0 00/- OUT OF THE TOTAL SUM OF RS.80,52,000/-. THE CONTENTS OF PARA 6 AR E RELEVANT AND THE SAME READS AS UNDER: 6.0 FOR REASONS STATED ABOVE, THE SHARE APPLICATIO N MONEY INVESTED BY PAWAN KUMAR SHARMA (RS.4,50,000/-), RATAN SHARMA (R S.4,50,000/-), ANIL KUMAR SHARMA (RS.2,52,000/-), P. SAMBASIVA RAO (RS.27,00,000/-), TALENT INFOWAY LTD. (RS.20,00,000/-) AND BUNIYAD CH EMICALS LTD., (RS.10,00,000/-) TOTALING RS.68,52,000/- IS TREATED AS UNEXPLAINED CASH CREDITS U/S.68 IN THE HANDS OF THE ASSESSEE AND IS ASSESSED ACCORDINGLY. 5. AGGRIEVED WITH THE ABOVE FINDINGS OF AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(A). 6. IN THE INITIAL PARAS OF THE CIT(A)S ORDER, THERE WA S A DISCUSSION OF THE COMPANIES OF SHRI MUKESH CHOKSI, SEARCH PROCE EDINGS AND THE OUTCOME OF THE SAID SEARCH PROCEEDINGS. THERE WAS ALSO A DISCUSSION ABOUT FRAUDULENT TRANSACTION AMONG THE SAI D ACCOMMODATION ENTRIES, NATURE OF SHELL COMPANY OF SHRI MUKESH CHOKSI. THE CIT(A) EXTRACTED THE STATEMENT OF SHRI MUKESH CHOKSI ITA NO. 436/HYD/2014 :- 6 -: IN HIS ORDER. IN PARA 3.2, THERE WAS A DISCUSSION AB OUT THE RE- OPENING OF THE ASSESSMENT AND THE PRESENT ASSESSEE TO H IS TRANSACTIONAL NEXUS WITH THE COMPANY OF SHRI CHOKSI. T HE CIT(A) ANALYSED EACH OF THE SUBSCRIBERS, CONTRIBUTED THE SAID SUM OF RS.68,52,000/- IN PARA 4 ONWARDS. AT THE END OF THE P ROCEEDINGS, THE CIT(A) ALLOWED ASSESSEES CLAIM SO FAR AS THE SUB SCRIPTION BY SHRI SAMBASIVA RAO IS CONCERNED. REST OF THE SHARE APPLICA TION SUBSCRIPTIONS IN FAVOAUR OF M/S.TALENT INFOWAY LTD., M/S.BUNIYAD CHEMICALS, SHRI PAWAN KUMAR SHARMA, SHRI RATAN KUMAR SHARMA AND SHRI ANIL KUMAR SHARMA, ADDED BY THE AO, WERE CO NFIRMED BY THE CIT(A) IN HER DETAILED ORDER. THUS, THE CIT(A) PA RTLY ALLOWED THE APPEAL OF ASSESSEE, CONFIRMING THE ADDITION OF RS.41 ,52,000/- AGAINST THE ADDITION OF RS.68,52,000/-. 7. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE GROUNDS MENTIO NED ABOVE. 8. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMITTED TH AT FOR ADJUDICATION, THERE ARE TOTAL OF SIX CREDITORS, WHO CON TRIBUTED THE SHARE CAPITAL TO THE COMPANY AND THE SAME IS AS UNDER: S.NO NAME (M/S. S/SHRI/SMT) RS. 1. P. SAMBASIVA RAO 27,00,000 2. TALENT INFOWAY LTD., 20,00,000 3. BUNIYAD 10,00,000 4. PAVAN KUMAR SHARMA 4,50,000 5. RATAN KUMAR SHARMA 4,50,000 6. ANIL KUMAR SHARMA 2,52,000 TOTAL: 68,52,000 ITA NO. 436/HYD/2014 :- 7 -: OUT OF THE THAT, THE CIT(A) ALREADY GRANTED RELIEF IN R ESPECT OF INVESTMENT BY SHRI SAMBASIVA RAO TO THE EXTENT OF RS.27 LAKHS. THE REVENUE IS NOT IN APPEAL ON THIS ISSUE. TO THAT EX TENT, THE INVESTMENT OF SHARE APPLICATION MONEY INTRODUCED BY SHR I SAMBASIVA RAO IS NOW A SETTLED ISSUE. THAT LEAVES FI VE OTHER SUBSCRIBERS OF SHARE CAPITAL FOR ADJUDICATION BEFORE US. SUBSCRIBER- WISE ADJUDICATION IS TAKEN UP IN THE PROCEEDING PARAG RAPHS OF THE ORDER. 8.1. REFERRING TO INVESTMENT BY TWO COMPANIED CONNECT ED TO SHRI MUKESH CHOKSI (I.E., M/S.BUNIYAD CHEMICALS LTD., AND M/S.TALENT INFOWAY LTD.,), LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE TOOK PLACE VARIOUS DEVELOPMENTS SUBSEQUENT TO THE EVENT S OF SEARCH ACTION U/S.132 OF THE ACT AND THE IMPUGNED STATEMENT OF SH RI CHOKSI. FURTHER IN CONNECTION WITH SHRI CHOKSI AND THE SAID TWO COMPANIES, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E STATEMENT GIVEN BY SHRI CHOKSI STANDS RETRACTED AND THE N UMBER OF ORDERS OF THE TRIBUNAL WERE PASSED IN CASES OF THOSE PEOPLE, WHO HAVE TAKEN SIMILAR BENEFIT OF THE ENTRIES FROM THE VARIO US COMPANIES OF SHRI CHOKSI INCLUDING THAT OF M/S.BUNIYAD CHEMICA LS AND M/S.TALENT INFOWAY LTD. FURTHER, IT IS THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE THAT HE IS NOT IN A POSITION TO PRODUCE ANY SUCH DECISIONS FOR THE TIME BEING. HOWEVER, LD.A R MENTIONED THAT IF THOSE APPEALS ARE CONSIDERED, THE ADDITION IS M ADE BY THE AO WILL UNDERGO CHANGE SO FAR AS THE GENUINENESS OF THE TRANSACTION OF THE CAPACITY OF THE COMPANIES TO SUBSCRIBE FOR THE SHAR E APPLICATION MONEY. ITA NO. 436/HYD/2014 :- 8 -: REFERRING TO REST OF THE THREE SUBSCRIBERS, LD.COUNSE L FOR THE ASSESSEE ARGUED VEHEMENTLY THAT THE ORDER OF THE CIT(A ) IS TO BE REVERSED AND RELIED HEAVILY ON THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. 9. ON THE OTHER HAND, LD.DR FOR THE REVENUE RELIED O N THE ORDERS OF THE AO AND THE CIT(A). 10. WE SHALL NOW TAKE UP EACH OF THE SUBSCRIBERS AND THE DECISION THEREOF IN THE FOLLOWING PARAGRAPHS: M/S.TALENT INFOWAY LTD., AND M/S.BUNIYAD CHEMICALS: IT IS AN UNDISPUTED FACT THAT THESE TWO COMPANIES BELONG ING TO SHRI MUKESH CHOKSI GROUP OF COMPANIES AND M/S.MAHASAGAR SECURITIES PRIVATE LIMITED. MUCH AMOUNT OF LITIGATION EXISTED RELATI NG TO THESE COMPANIES AND THE ACCOMMODATION ENTRIES PROVIDED BY TH E GROUP OF COMPANIES OF SHRI CHOKSI. NUMBER OF ORDERS ARE I N EXISTENCE AS ON DATE. HOWEVER, BOTH THE COUNSELS FAILED TO FILE ANY OF SUCH ORDERS OF THE TRIBUNAL ON SIMILAR FACTS. IT IS A SETTLED LEGAL PROPOSITION LAID DOWN BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. N.R.PORTFOLIO (P) LTD., [264 CTR 258] (DELHI). THE RELEVANT LINES AT PARA 31 OF THE HON'BLE HIGH COURTS ORDER ARE AS UNDE R: 31. IT WOULD BE INCORRECT TO STATE THAT THE ONUS TO PROVE THE GENUINENESS OF THE TRANSACTION AN D CREDITWORTHINESS OF THE CREDITOR STANDS DISCHARGED IN ALL CASES IF PAYMENT IS MADE THROUGH BANKING CHANNELS . WHETHER OR NOT ONUS IS DISCHARGED DEPENDS UPON FA CTS OF EACH CASE. IT DEPENDS ON WHETHER THE TWO PARTIES ARE RELATED OR KNOWN TO EACH; THE MANNER OR MODE BY WHICH THE PARTIES AP PROACHED EACH OTHER, WHETHER THE TRANSACTION WAS ENTERED INTO THROUGH WR ITTEN DOCUMENTATION TO PROTECT THE INVESTMENT, WHETHER THE INVESTOR PROFES SES AND WAS AN ANGEL INVESTOR, THE QUANTUM OF MONEY, CREDITWORTHINESS OF THE RECIPIENT, THE OBJECT AND PURPOSE FOR WHICH PAYMENT/INVESTMENT WAS MADE E TC. THESE FACTS ARE BASICALLY AND PRIMARILY IN KNOWLEDGE OF THE ASSESS EE AND IT IS DIFFICULT FOR ITA NO. 436/HYD/2014 :- 9 -: REVENUE TO PROVE AND ESTABLISH THE NEGATIVE. CERTIF ICATE OF INCORPORATION OF COMPANY, PAYMENT BY BANKING CHANNEL, ETC. CANNOT IN ALL CASES TANTAMOUNT TO SATISFACTORY DISCHARGE OF ONUS. THE FACTS OF THE PRESENT CASE NOTICED ABOVE SPEAK AND ARE OBVIOUS. WHAT IS UNMISTAKABLY V ISIBLE AND APPARENT, CANNOT BE SPURRED BY FORMAL BUT UNRELIABLE PALE EVI DENCE IGNORING THE PATENT AND WHAT IS PLAIN AND WRIT LARGE. THAT THERE IS A REQUIREMENT OF GOING DEEP INTO THE TRANSA CTIONAL GENUINENESS AND NOT TO BE CARRIED AWAY BY MERE BANK TR ANSACTIONS AND THE OTHER DOCUMENTATIONS. IN THIS KIND OF TRANSACTION S, SHIFTING OF ONUS TO THE AO INVOLVES HUGE EXERCISE BY THE ASSESS EE. ACCORDINGLY, AO IS DIRECTED TO APPLY THE RATIO LAID DOW N BY THE HON'BLE HIGH COURT IN THE SAID ORDER. ASSESSEE IS AL SO DIRECTED TO FURNISH RELEVANT ORDERS OF THE TRIBUNAL, INVOLVING SH RI CHOKSI ON ONE SIDE AND M/S.BUNIYAD CHEMICALS AND M/S.TALENT INFOWA Y LTD., ON THE OTHER. AO SHALL PASS PROPER SPEAKING ORDER, AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE GROUNDS RAISED BY ASSESSEE IN THIS REGARD ARE TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. 11. CONTRIBUTION OF SHARE CAPITAL TO THE COMPANY BY THE REMAINING THREE PERSONS I.E., SHRI PAVAN KUMAR SHAR, SHRI RATAN KUMAR SHARMA AND SHRI ANIL KUMAR SHARMA: SHRI PAVAN KUMAR SHARMA: HE INVESTED AN AMOUNT OF RS.4.5 LAKHS. THE PAYMENTS A RE INVOLVED UNDER MERCANTILE CO-OPERATIVE URBAN BANK LTD., SECUNDE RABAD (A/C NO.7891). THERE ARE CASH DEPOSITS IN THE SAID A CCOUNT. THE ACCOUNT WAS OPENED IN THE YEAR 2005 AND SOURCE OF INC OME OF SHRI PAVAN KUMAR SHARMA IS ONLY THE COMMISSION INCOME. SH RI PAVAN KUMAR SHARMA WAS SUMMONED AND HIS STATEMENT WAS RECORD ED. ITA NO. 436/HYD/2014 :- 10 -: THE CIT(A) NOTED THAT THAT ARE CASH DEPOSITS MADE JUS T BEFORE THE CHEQUES WERE ISSUED. RETURNED INCOME FOR THE AY.2 006-07 IS ONLY RS.97,180/-. THE SAME IS THE PATTERN IN THE CASE S OF SHRI RATAN KUMAR SHARMA AND SHRI ANIL KUMAR SHARMA. IN THE CASE OF SHRI ANIL KUMAR SHARMA, THOUGH THE ASS ESSEE RELIED ON VARIOUS DECISIONS SUCH AS CIT VS. LOVELY EXPORTS PVT LTD., (2008) [216 CTR 195] (SC), THE CIT(A) HELD THAT THE SA ID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AND RELI ED ON THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CAS E OF CIT VS. TITAN SECURITIES LTD., (2013) [84 CCH 184] (DELHI HC ). 11.1. FINALLY, THE CIT(A) CONFIRMED THE ADDITIONS MADE BY THE AO IN FAVOUR OF THESE THREE PERSONS I.E., SHRI PAVAN KUMAR SHAR, SHRI RATAN KUMAR SHARMA AND SHRI ANIL KUMAR SHARMA. RELE VANT PARA OF THE CIT(A)S ORDER IS EXTRACTED HERE UNDER: 10.4. GOING BY THE ABOVE AMENDMENT IT IS MUST FOR THE SHARE SUBSCRIBERS TO OFFER THE EXPLANATION ABOUT THE NATURE AND SOURC ES OF SHARE CAPITAL TO THE SATISFACTION OF THE ASSESSING OFFICER. 12. BEFORE US, LD.COUNSEL FOR THE ASSESSEE RELIED HE AVILY ON THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A). 13. ON THE OTHER HAND, LD.DR FOR THE REVENUE DUTIFULL Y RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 14. ON EXAMINATION OF FACTS NARRATED ABOVE AND ON HEAR ING BOTH THE PARTIES, WE FIND THE ALL IS NOT WELL WITH THE TRANS ACTIONS INVOLVED IN THESE THREE CASES UNDER CONSIDERATION. WE FIND THA T NEITHER THE CREDITORS ARE SUBSTANTIALLY CREDITWORTHY NOR THE TRANSACTI ONS ARE ITA NO. 436/HYD/2014 :- 11 -: SATISFACTORILY GENUINE. THE ISSUE IS NOW SETTLED BY THE LEGAL PROPOSITION OF LAW AS PER THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. N.R.PORTFOLIO (P) LTD., (S UPRA) IN THE MATTERS OF THIS KIND. MERE BANK TRANSACTIONS ARE COUPLE D WITH EXISTENCE OF WELL STRUCTURED DOCUMENTS IS NOT ADEQUATE W HEN THERE IS CASH DEPOSITS INTO THE BANK ACCOUNT FEW DAYS BEFORE THE DATE OF ISSUE OF THE CHEQUE TO THE ASSESSEE. THESE QUESTIONS A RE NOT ANSWERED EVEN BEFORE US. THEREFORE, THERE IS A FAIL URE ON THE PART OF THE ASSESSEE TO DEMONSTRATE THE GENUINENESS OF THE TRANSAC TION AND CREDITWORTHINESS OF THE SUBSCRIBERS TO THE SHARE CAPITAL . CONSIDERING THE SAME, WE ARE OF THE VIEW THAT THE DEC ISION OF THE CIT(A) IN THIS REGARD IS FAIR AND REASONABLE AND DOE S NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, WE SUSTAIN THE ADDITION MA DE BY THE AO AND CONFIRMED BY THE CIT(A). THE GROUNDS RAISED BY A SSESSEE IN THIS REGARD ARE DISMISSED. 15. IN THE RESULT, THE APPEAL OF ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2019 SD/- SD/- (V. DURGA RAO) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH DECEMBER, 2019 TNMM ITA NO. 436/HYD/2014 :- 12 -: COPY TO : 1. M/S.BADRINATH STEELS PRIVATE LIMITED, 1-8-673, 4 TH FLOOR, INDUSTRIAL ESTATE, AZAMABAD, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1(1), HYDERABAD. 3. CIT(APPEALS)-II, HYDERABAD. 4. CIT-I, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.