Deem Roll Tech Limited, Ahmedabad V. The DCIT, Circle- 1(1)(2), Ahmedabad

ITA 437/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9156 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 22-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Unexplained cash credit; Additional evidence; Fair market value; Accommodation entries
• Section: 143(2); 113; 73; 13; 119; 68

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO.437/AHD/2018 / ASSTT.YEAR : 2013-14 DEEM ROLL TECH LTD. C/3/301, ANUSHRUTI APARTMENT OPP: NEW YORK TOWER NR.JAIN MANDIR, S.G.HIGHWAY THALTEJ, AHMEDABAD 380 054. PAN : AABCD 9176 A VS. DCIT, CIR.1(1)(2) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI P.F.JAIN, AR REVENUE BY : SHRI VINOD TANWANI, SR.DR / DATE OF HEARING : 05/08/2020 ! / DATE OF PRONOUNCEMENT: 11/08/2020 / O R D E R PER RAJPAL YADAV, VICE-PRESIDENT ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A) PASSED FOR THE ASSTT.YEAR 2013-14. 2. THE ASSESSEE HAS TAKEN NINE GROUNDS OF APPEAL, B UT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE LD.CIT(A) H AS ERRED IN CONFIRMATION THE ADDITION OF RS.2.00 CRORES WHICH W AS ADDED BY THE AO WITH AID OF SECTION 68 OF THE INCOME TAX ACT. ITA NO.437/AHD/2018 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN MANUFACTURING OF IRON & STEEL ROLL. IT H AS FILED ITS RETURN OF INCOME ELECTRONICALLY ON 30.9.2013 DECLARING TOTAL INCOME AT RS.75,91,120/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON VERIFICATION OF BALANCE SHEET ALO NG WITH RETURN, THE LD.AO CAME TO KNOW THAT THE ASSESSEE HAS RECEIVED S HARE APPLICATION MONEY OF RS.2.00 CRORES FROM 28 PERSONS/ENTITIES. HE HAS NOTED THE DETAILS VIZ. NAMES OF PERSONS FROM WHOM SUCH MONEY WAS RECEIVED AND THE AMOUNT RECEIVED BY THE ASSESSEE FROM EACH INDIV IDUAL. THEREFORE IN A BRIEF ASSESSMENT ORDER THE LD.AO RECORDED THAT TH E ASSESSEE FAILED TO DISCHARGE ONUS CAST UPON IT BY VIRTUE OF SECTION 68 , AND MADE ADDITION OF RS.2.00 CORES. HE DETERMINED TAXABLE INCOME AT RS. 2,75,91,120/- AS AGAINST RETURNED INCOME OF RS.75,91,117/-. DISSATI SFIED WITH THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE THE LD.CIT(A). ASSESSEE HAD FILED APPLICATION FOR PERM ISSION TO LEAD ADDITIONAL EVIDENCE. SUCH APPLICATION WAS ALLOWED AND THE ASSESSEE WAS PERMITTED TO PLACE ON RECORD ADDITIONAL EVIDENCE. THE LD.CIT(A) PROVIDED OPPORTUNITY OF HEARING TO THE LD.AO FOR AD MISSION OF SUCH EVIDENCE AND FOR REBUTTING EVIDENCE SUBMITTED BY TH E ASSESSEE. THE AO HAS SUBMITTED TWO REMAND REPORTS, WHICH ARE BEING R EPRODUCED BY THE LD.CIT(A) IN PARA-2.4 AND PARA-7.7 OF THE IMPUGNED ORDER. ON THE COMMENTS OF THE AO, THE LD.CIT(A) TOOK EXPLANATION OF THE ASSESSEE ALSO. AFTER GOING THROUGH ALL MATERIAL, THE LD.CIT (A) CONCURRED WITH THE AO, AND CONFIRMED THE ADDITION OF RS.2.00 CRORES. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDER OF THE LD.REVENU E AUTHORITIES RAISED TWO FOLD CONTENTIONS. HE SUBMITTED THAT THOUGH CHE QUES BY THE SHARE ITA NO.437/AHD/2018 3 APPLICANTS BORE THE DATES BEFORE 31.3.2013 I.E. 25 TH MARCH AND 26 TH MARCH, 2013, IN THE BALANCE SHEET A JOURNAL ENTRY W AS PASSED RECOGNIZING THE RECEIPT OF SHARE APPLICATION PENDING ALLOTMENT. BUT ACTUALLY NEITHER THESE CHEQUES WERE PRESENTED TO THE BANK NOR WERE E NCASHED BEFORE 31 ST MARCH. THE DETAILS TO THIS EFFECTS WERE SUBMITTED BEFORE THE LD.CIT(A) EXHIBITING THE FACT THAT THESE CHEQUES ERE ENCASHED IN THE MONTH OF MAY AND JUNE, 2013. THEREFORE, THE ISSUE REGARDING GEN UINENESS OF THESE TRANSACTIONS CANNOT BE VERIFIED IN THE ASSTT.YEAR 2 013-14. FOR BUTTRESSING THIS CONTENTION, HE RELIED UPON THE ORD ER OF THE ITAT, CHANDIGARH BENCH RENDERED IN ITA NO.316/CHD/2019 IN THE CASE OF LUXMI FOODGRAINS P.LTD, WHERE ONE OF US (JUDICIAL M EMBER) IS THE AUTHOR. SIMILARLY, HE RELIED UPON THE ORDER OF ITA T, KOLKATTA BENCH IN THE CASE OF BHAGVAT MARCOM P.LTD., REPORTED IN 178 ITD 684. HE THEREAFTER MADE REFERENCE TO HONBLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT CO., 206 ITR 718. HE HAS PLACED O N RECORD COPIES OF THESE THREE DECISIONS. ON THE STRENGTH OF THESE DE TAILS, HE PROPOUNDED THAT NO REAL INFLOW OF CASH WAS MATERIALIZED BEFORE 31 ST MARCH, 2013, AND THEREFORE NO INVESTIGATION ON THIS ISSUE UNDER SECT ION 68 COULD BE MADE. 4. IN HIS NEXT FOLD OF SUBMISSIONS, HE HAS SUBMITTE D THAT THE ASSESSEE HAS DISCHARGED THE BURDEN CAST UPON IT BY VIRTUE OF SECTION 68. FOR THIS PURPOSE, HE DREW OUR ATTENTION TOWARDS DETAILS PLAC ED ON RECORD IN TABULATED FORM FROM PAGES (A) TO (K) IN THE PAPER B OOK FILED. FOR THE FACILITY OF REFERENCE, WE TAKE NOTE OF THESE DETAIL S ALONG WITH BRIEF NOTE SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE EXPLAI NING AS TO HOW SUCH ADDITION UNDER SECTION 68 COULD NOT BE MADE ON MERI T ALSO. SUCH DETAILS READ AS UNDER: ITA NO.437/AHD/2018 4 SR. NO. NAME OF THE SHARE APPLICANT ADDRESS PAN AMOUNT DATE OF DEPOSIT OF CHEQUE IN BANK DOCUMENTS FURNISHED IN SUPPORT OF SHARE APPLICATION MONEY 1. ALPESH C. GAJJAR A-7,JAIMIN PARK, NR. PICNIC PARK, VATVA, AHMEDABAD. ABYPG5546J 7,50,000/- 03/06/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF SYNDICATE BANK (PBP NO. 15 TO 22) 2. ATUL L. RATHOD B-1/2, SHAYONA CITY, PART-1, GHATLODIA, AHMEDABAD ADSPR7042N 7,50,000/- 03/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 23 TO 30) 3. ATUL L. RATHOD- HUF B-1/2, SHAYONA CITY, PART-1, GHATLODIA, AHMEDABAD AAHHA6717M 7,50,000/- 26/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 31 TO 38) 4. BHARAT CHIMANBHA I PATEL 8,HARIDARSHAN TENAMENT, GHODASAR, AHMEDABAD ARLPP4162E 7,50,000/- 30/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF BANK OF BARODA (PBP NO. 39 TO 46) 5. BHARAT KANTILAL VAIDYA B-2, SHAYONA CITY, PART-1, GHATLODIA, AHMEDABAD ACCPV7442B 5,00,000/- 10/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, RELEVANT EXTRACT OF BANK STATEMENT OF CANARA BANK (PBP NO. 47 TO 51) 6. DAHYABHAI P. SUTHAR B-1/12, SHAYONA CITY, PART-1, GHATLODIA, AJBPS2388B 5,00,000/- 18/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITA NO.437/AHD/2018 5 AHMEDABAD ITR ACK., RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 52 TO 57) 7. DHARMISTH A R. MAKWANA C/80/956, SHREENATH APPARTMENT, NAVA WADAJ, AHMEDABAD AMCPM0246J 7,50,000/- 23/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF CANARA BANK (PBP NO. 58 TO 65) 8. GEETABEN I. PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, SAIJPUR BOGHA, AHMEDABAD BCHPP8534L 7,50,000/- 27/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF SBI (PBP NO. 66 TO 72) 9. HARESH I. PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, SAIJPUR BOGHA, AHMEDABAD ANQPP9723J 7, 50,000/- 27/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF BANK OF INDIA (PBP NO. 73 TO 79) 10. HEENABEN HARESHBHAI PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, SAIJPUR BOGHA, AHMEDABAD BBOPP6467J 7,50,000/- 15/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF BANK OF BARODA (PBP NO. 80 TO 86) 11. HEMANT CHUNIBHAI MISTRY NILGIRI SOCIETY, PART-1, B/H. RAJARAM HIGH SCHOOL, VATVA, AHMEDABAD AAKHR1360Q 5,00,000/- 12/05/2013 SHARE APPLICATION FORM, PAN CARD. (PBP NO. 87 TO 88) 12. ISHWARBHAI B. PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, ANQPP9643P 7,50,000/- 18/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., AADHAAR ITA NO.437/AHD/2018 6 SAIJPUR BOGHA, AHMEDABAD CARD (PBP NO. 89 TO 95) 13. JIGAR D. SUTHAR B-1/12, SHAYONA CITY, PART-1, GHATLODIA, AHMEDABAD BMWPS6238K 7,50,000/- 12/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 96 TO 102 ) 14. JIGARBHAI ISHWARBHAI PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, SAIJPUR BOGHA, AHMEDABAD ALCPP7787Q 7,50,000/- 26/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., RELEVANT EXTRACT OF BANK STATEMENT OF SBI (PBP NO. 103 TO 108) 15. KHUSHBOO ENGINEERIN G AND ENTERPRISE 10,00,000/ - 06/04/2013 CHEQUE CLEARED ON 08/04/2013 IN ICICI CC A/C NO. 2451000150. 16. MEHUL D. SUTHAR B-1/12, SHAYONA CITY, PART-1, GHATLODIA, AHMEDABAD BMWPS6239J 5,00,000/- 10/04/2013 CONFIRMATION, SHARE APPLICATION FORM, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 109 TO 112) 17. NEERAJ J. PARIKH 6, SHASWAT BUNGALOW, SATELLITE, AHMEDABAD AASPP5826F 12,50,000/ - 08/05/2013 SHARE APPLICATION FORM, PAN CARD. CHEQUE CLEARED IN ICICI BANK CC A/C 2451000150 ON 10/05/2013. (PBP NO. 113 TO 114) 18. RACHNA PATEL A-1, RAMKRISHNA APARTMENTS, HIRAWADI, SAIJPUR BOGHA, AHMEDABAD CCRPP5743E 7,50,000/- 30/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF BANK OF BARODA, AADHAAR CARD (PBP NO. 115 TO 124) ITA NO.437/AHD/2018 7 19. RAJESH M. MAKWANA C/80/956, SHREENATH APPARTMENTS, NAVA WADAJ, AHMEDABAD AJPPM9595G 7,50,000/- 23/05/2013 SHARE APPLICATION FORM, PAN CARD, (PBP NO. 125 TO 126) 20. RAJESH M. MAKWANA HUF C/80/956, SHREENATH APPARTMENTS, NAVA WADAJ, AHMEDABAD AAKHR1360Q 7,50,000/- 07/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 127 TO 134) 21. REENA N. PARIKH 6, SHASWAT BUNGALOW, SATELLITE, AHMEDABAD AAUPP1502C 10,00,000/ - 01/05/2013 SHARE APPLICATION FORM, PAN CARD, (PBP NO. 135 TO 136) 22. SAVAN D. CONTRACTOR 262/B, SUNDARVAN APPARTMENTS, SOLA ROAD, NARANPURA, AHMEDABAD. ALVPC8020E 7,50,000/- 04/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF CANARA BANK (PBP NO. 137 TO 146) 23. SHAKUNTALA BEN PATEL 120,SONI NO VAS, VILLAGE:- OGNAJ, AHMEDABAD BBKPP2721D 7,50,000/- 15/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 147 TO 153) 24. SHANABHAI RATHOD SILVER OAK STAFF QUARTERS, S.G.HIGHWAY, GOTA, AHMEDABAD ASCPR9977P 5,00,000/- 18/04/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF VIJAYA BANK (PBP NO. 154 TO 161) ITA NO.437/AHD/2018 8 25. SHREE SHIV ENTERPRISE (BABULAL R. GHANCHY) PLOT NO. 552, AMBICA ESTATE, NARODA, DEHGAM ROAD, AHMEDABAD. AEEPG5636A 10,00,000/ - 06/04/2013 CHEQUE CLEARED IN ICICI BANK CC A/C 2451000150 ON 08/04/2013. 26. VISHNUBHAI GANDABAHA I PRAJAPATI 5,00,000/- 06/04/2013 CHEQUE CLEARED IN ICICI BANK CC A/C 2451000150 ON 08/04/2013. 27. VISHNU GORDHANBH AI PATEL 120,SONI NO VAS, VILLAGE:- OGNAJ, AHMEDABAD AQDPP0056G 7,50,000/- 18/05/2013 CONFIRMATION, SHARE APPLICATION FORM, PAN CARD, ITR ACK., STATEMENT OF INCOME, RELEVANT EXTRACT OF BANK STATEMENT OF CANARA BANK (PBP NO. 162 TO 169) RETURN OF ALLOTMENT OF SHARES IN PR ESCRIBED FORM NO. PAS-3 AS PER THE COMPANIES ACT, 2013 HAS BEEN FILED WITH ROC ALONG W ITH THE DETAILS OF ABOVE SHARE APPLICANTS AND THE RESOLUTION OF THE COMPANY, PLACED AT PAPER BOOK PAGE NO. 225 TO 236. FOR VERIFICATION OF ABOVE DOCUMENTS, NO INQUIRY WAS MADE BY THE A.O. EXCEPT ISSUING SUMMONS TO THE DEPOSITORS. BUT THE L D. A.O. HAS NOT CARRIED OUT ANY INQUIRY WITH REGARD TO DOCUMENTS PLACED BEFORE HIM WHICH INCLUDED BANK EXTRACT OF MOST OF THE DEPOSITORS AND SIMPLY ON THE BASIS O F DOUBT AND SUSPICION, HE JUSTIFIED THE ADDITION IN HIS REMAND REPORT TO THE CIT(APPEAL). NO VERIFICATION OF BANK DETAILS OF DEPOSITORS, NO INQUIRY FROM THE A.O . OF THE DEPOSITORS ON THE BASIS OF RETURN RECEIPT FURNISHED, ETC WAS MADE AND THE ENTI RE ADDITION U/S 68 HAS BEEN JUSTIFIED SIMPLY BECAUSE SHARE APPLICANTS DID NOT R ESPOND TO THE SUMMONS ISSUED. FURTHER HE HAS NOT DISCUSSED ANYTHING WITH REGARD T O THE FACT THAT NO MONEY WAS RECEIVED DURING THE YEAR AND THERE WAS ONLY JOURNAL ENTRY WITHOUT RECEIPT OF MONEY AND THE FACTS OF NON RECEIPT OF MONEY IN THIS YEAR ARE AMPLY PROVED FROM THE BANK SLIPS OF SUBSEQUENT YEAR BY WHICH THESE CHEQUES WER E DEPOSITED AND THE RESPECTIVE ENTRIES APPEARING IN THE BANK STATEMENTS OF SUBSEQU ENT YEAR. THE LD. CIT(APPEALS) HAS ALSO NEITHER DISCUSSED ANYTHING REGARDING NON R ECEIPT OF MONEY DURING THIS YEAR, NOR HAS GIVEN ANY FINDING IN THIS REGARD AND THE APPEAL ORDER IS SILENT ON THIS CORE ISSUE. HE BASED HIS FINDING BY EXTENSIVELY QUO TING FROM THE DECISION OF NOVA PROMOTERS, BUT DIDNT APPRECIATE THE DECISION OF OA SIS HOSPITALITIES PRIVATE LIMITED MENTIONED IN THIS VERY DECISION POINTING OU T THAT WHEN ASSESSEE PRODUCED PAN, BANK ACCOUNT, COPIES OF ITR RETURNS, PRIMARY O NUS OF ASSESSEE IS DISCHARGED AND ADDITION U/S 68 WAS NOT HELD TO BE SUSTAINABLE BUT IN THE CASE OF NOVA PROMOTERS, THE AO HAS MADE INVESTIGATION OF ALL THE FACTS WHICH IN THE CASE OF ASSESSEE HAS NOT BEEN MADE AND HENCE THE DECISION O F NOVA PROMOTERS IS NOT APPLICABLE TO THE FACTS OF ASSESSEE. THEREFORE IT I S SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT U/S 68 AND IN THIS C ONNECTION RELIANCE IS ALSO PLACED ON THE FOLLOWING DECISIONS: ITA NO.437/AHD/2018 9 1.) ITA NO. 3619/A/2015, A.Y. 2011-12 IN THE CASE O F ASSESSEE ITSELF. THE HONBLE TRIBUNAL AFTER DISCUSSING VARIOUS DECIS IONS FOR ADDITION U/S 68, IN PARA 11 OF THE ORDER HAS HELD THAT A.O. HAS TO CARR Y OUT INVESTIGATION AND DEMONSTRATE THAT MATERIALS ARE NOT SUFFICIENT FOR D ISCHARGING THE ONUS BUT NO SUCH STEPS WERE TAKEN AND REFERRING TO DECISIONS OF DELH I HIGH COURT HAS OBSERVED THAT SHARE APPLICANTS ARE INDIVIDUALS AND THEY ARE NOT S HELL COMPANIES FROM KOLKATA WHO ARE INDULGED IN THE ACCOMMODATION ENTRIES AND C ONSIDERING ALL THESE FACTS, THE ITAT HELD THAT A.O. FAILED TO CARRY OUT ANY INQUIRY FOR FALSIFYING EVIDENCE SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS EXPLANATION AND T HEREFORE ADDITION WAS DELETED. THIS DECISION SQUARELY APPLIES TO THE FACTS OF A.Y. 2013-14 ALSO. 2.) NRA IRON AND STEEL PRIVATE LIMITED (2019) 412 I TR 161 (SUPREME COURT) IN THIS CASE ALSO THE APEX COURT REFERRING TO VARIO US DECISIONS OF HIGH COURTS HAS OBSERVED THAT A.O. OUGHT TO CONDUCT AN INDEPENDENT INQUIRY TO VERIFY THE GENUINENESS OF CREDIT ENTRIES. IN THE CASE OF ASSES SEE, NO SUCH INDEPENDENT INQUIRY WAS MADE. 3.) OASIS HOSPITALITIES PRIVATE LIMITED (2011) 333 ITR 119 (DELHI) ITA NO. 2093 AND 2095 OF 2010 (DELHI HIGH COURT). IN THIS CASE, THE HONBLE DELHI COURT HAS HELD THAT WHEN ASSESSEE PRODUCED PAN, BANK ACCOUNT, COPIES OF IT RETURNS OF SHARE APPLICA NTS , PRIMARY ONUS OF ASSESSEE IS DISCHARGED. THEREFORE ADDITION NOT SUSTAINABLE U /S 68. 4.) CIT V/S KANNAN KUNHI (SUPREME COURT) 87 ITR 395 . THE HONBLE APEX COURT HAS DISAPPROVED THE ADDITION U/S 68 BECAUSE ACCORDING TO THE COURT WHERE THE EXPLANATION OF THE ASSESSEE WAS NOT ABSURD AND IT WAS CAPABLE OF BEING EXAMINED, IT AUTHORITIES ACTED ARBITRARILY IN REJECTING THE EXPLANATION WITHOUT MAKING PROPER INQUIRY, THE EXPLANATION WAS JUST BRUSHED ASIDE WITH THE OBSERVATION, THAT THE ASSESSEE HAS NO PROPER OR SA TISFACTORY EXPLANATION FOR THE SOURCE OF THESE AMOUNTS. IN THE CASE OF ASSESSEE A LSO, NO PROPER INQUIRY HAS BEEN MADE AND ALL THE EVIDENCE PLACED ON RECORD HAVE SIM PLY BEEN REJECTED OUT OF DOUBT AND SUSPICION. 5.) RANCHHOD JIVABHAI NAKHAVA TA NO. 50 OF 2011 GUJ ARAT HIGH COURT. 6.) M/S. DATAWARE PRIVATE LIMITED ITA NO. 263 OF 2011 GA NO. 2856 OF 2011 CALCUTTA HIGH COURT. 7.) FOR ALTERNATIVE SUBMISSION WHICH CAN BE TAKEN B Y THE ASSESSEE, DECISION RELIED UPON IS GHAI LIME STONE COM. HIGH COURT OF M.P. 1 44 -ITR 140 8.) WHEN AMOUNT IS NOT RECEIVED, ADDITION U/S 68 CA NNOT BE MADE. DECISIONS RELIED UPON ARE: I) M/S LUXMI FOODGRAINS PRIVATE LIMITED ITAT BENC H A CHANDIGARH ITA NO. 316/CHD/2019 A.Y. 2013-14 DATED 07/11/2019. ITA NO.437/AHD/2018 10 II) JATIA INVESTMENT CO. 206 ITR 718 HIGH COURT OF CALCUTTA. III) BHAGVAT MARCOM PRIVATE LIMITED ITA NO. 223 ( KOL) 178 ITD -684. IV) MAHENDRAKUMAR AGARWAL ITAT JAIPUR -142 TTJ (J.P.)(UO) -35. V) ORISSA CORPORATION PRIVATE LIMITED 159 ITR 78 (SUPREME COURT) 5. ON THE OTHER HAND THE LD.DR RELIED UPON THE ORDE RS OF THE REVENUE AUTHORITIES. HE SUBMITTED THAT THE AO HAS MADE REF ERENCE TO THE BALANCE SHEET OF THE ASSESSEE, WHERE THE ASSESSEE ITSELF HA S COGNIZED THE RECEIPT OF MONEY BEFORE 31 ST MARCH. THEREFORE, IT IS UNDER AN OBLIGATION TO EXPLAIN THE SOURCE OF SUCH RECEIPT, CREDIT WORTHINE SS OF THE PRESENT PERSON FROM WHOM MONEY WAS RECEIVED AS WELL AS TO P ROVE GENUINENESS OF THE TRANSACTION. THE LD.AO HAS SUBMITTED DETAIL ED COMMENTS IN HIS REMAND REPORT, WHICH HAS BEEN REPRODUCED BY THE LD. CIT(A), AND BASICALLY HE DREW OUR ATTENTION TOWARDS PARA-2.10 O N PAGE NO.31 OF THE CIT(A)S ORDER. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. ON PAGE NO.8 OF THE IMPUGNED THE LD.CIT(A) HAS REPRODUCED DETAILS OF ALLEGED SHARE APPLICATION IN TABULAR FORM. SUCH DETAILS INDICATE THE NAMES OF APPLICANTS, CHEQUE NU MBER, AMOUNT, NAME OF BANK AND DATE OF DEBIT IN THE BANK OF SHARE APPL ICANTS. WE TAKE NOTE OF THESE DETAILS, WHICH READ AS UNDER: SR. NO. AS PER ORDER NAME OF APPLICANT CHEQUE NO. AMOUNT HIS BANK NAME DATE OF DEBIT IN HIS BANK 1 ALPESH C GAJJAR 401574 750,000 SYND BANK, GHODASAR 04/06/2013 2 ATUL L RATHOD 801964 750,000 VIJAYA 04/05/2013 3 ATUL L RATHOD (HUF) 925073 750,000 VIJAYA 27/04/2013 ITA NO.437/AHD/2018 11 4 BHARAT CHIMANBHAI PATEL 000036 750,000 BOB 31/05/2013 5 BHARAT KANTILAL VAIDYA 169573 500,000 CANARA 12/04/2013 6 DAYABHAI P SUTHAR 930648 500,000 VIJAYA 20/04/2013 7 DHARMISHTA RAJESH MAKWANA 171246 750,000 CANARA 24/05/2013 8 GEETABEN ISHWARBHAI PATEL 639508 750,000 SBI 28/05/2013 9 HARESH ISHWARBHAI PATEL 000025 750,000 BOB 28/05/2013 10 HEENABEN HARESHBHAI PATEL 000026 750,000 BOB 17/05/2013 11 HEMANT C MISTRY 434694 500,000 ICICI 14/05/2013 12 ISHWARBHAI B PATEL 169679 750,000 CANARA 20/05/2013 13 JIGAR D SUTHAR 802528 750,000 VIJAYA 14/05/2013 14 JIGAR ISHWARBHAI PATEL 369507 750,000 SBI 27/04/2013 15 KHUSHBOO ENGINEERING & ENTERPRISE 750085 1,000,000 UNION CO-OP 08/04/2013 16 MEHUL D SUTHAR 802502 500,000 VIJAYA 12/04/2013 17 NEERAJ J PARIKH 327211 1,250,000 ICICI 10/05/2013 18 RACHNA JIGAR PATEL 000007 750,000 BOB 31/05/2013 19 RAJESH M MAKWANA 179602 750,000 CANARA 24/05/2013 20 RAJESH M MAKWANA (HUF) 900755 750,000 VIJAYA 08/05/2013 21 REENA N PARIKH 254502 1,000,000 ICICI 01/05/2013 23 SAVAN DINESHBHAI CONTRACTOR 386522 250,000 CANARA 10/04/2013 SAVAN DINESHBHAI CONTRACTOR 386523 500,000 CANARA 09/05/2013 24 SHAKUNTALABEN V PATEL 907206 750,000 VIJAYA 17/05/2013 25 SHANABHAI ROTHOD 959287 500,000 VIJAYA 20/04/2013 26 SHREE SHIV ENTERPRISE 687889 1,000,000 UNION CO-OP 08/04/2013 ITA NO.437/AHD/2018 12 27 VISHNUBHAI GANDABHAI PRAJAPATI 148927 500,000 UNION CO-OP 08/04/2013 28 VISHNU G PATEL 397963 750,000 CANARA 20/05/2013 TOTAL AMOUNT (RS.) 2,00,00,000 7. ON PAGE 7 PARA 7.7, THE LD.CIT(A) TOOK NOTE OF I DENTICAL DETAILS THAT CONTAINED THE DATE OF PRESENTATION OF CHEQUE A LSO. IN ORDER TO AVOID THE REPETITION, WE OBSERVE THAT PRESENTATION OF CHE QUES IS JUST ONE OR TWO DAYS BEFORE ITS CLEARANCE, I.E. IN THE CASE OF SHRI ALPESH C. GAJJAR CHEQUE WAS ENCASHED ON 4.6.2013. IT WAS PRESENTED IN THE BANK OF ASSESSEE ON 3.6.2013. SIMILAR IS THE EFFECT IN OTHER CASES. T HERE IS A VARIATION OF ONE OR TWO DAYS BETWEEN THE PRESENTATION AND ENCASHMENT . A PERUSAL OF THE TABLE WOULD INDICATE THAT ALL THE CHEQUES WERE PRES ENTED AFTER 31.3.2013 AND THEY WERE ENCASHED AFTER 31 ST MARCH. IN OTHER WORDS, THE CHEQUES WERE NEITHER PRESENTED NOR ENCASHED IN THE ACCOUNTI NG YEAR RELEVANT TO THE ASSESSMENT. THE DATE OF ISSUANCE OF CHEQUE IS I MMATERIAL. THUS, THE ASSESSEE HAS NOT RECEIVED ANY MONEY ON ACCOUNT OF S HARE APPLICATION DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSTT.YE AR 2013-14, AND IT WAS A NOTIONAL RECEIPT ONLY, THEREFORE, ITS SOURCE CANNOT BE INQUIRED IN THIS YEAR. A SOMEWHAT IDENTICAL ASPECT WAS EXAMINE D BY ITAT, CHANDIGARH BENCH IN THE CASE OF LUXMI FOODS (SUPRA) . THE BENCH HAS PUT RELIANCE UPON THE DECISION OF ITAT, KOLKATTA BE NCH IN THE CASE OF ITO VS. BHAGWAT MARCOM P.LTD. THE FACT IN THE CASE OF LUXMI FOODS WAS THAT THE ASSESSEE HAS ISSUED 13,115 EQUITY SHAR ES HAVING FACE VALUE OF RS.10/- EACH. IT CHARGED SHARE PREMIUM OF 590 P ER EQUITY SHARES RESULTING INCREASE IN SHARE APPLICATION BY RS.1,13, 150/- AND IN SHARE PREMIUM BY RS.77,37,850/-. THE LD.AO WAS OF THE VI EW THAT FAIR MARKET VALUE OF PER SHARE TO BE CALCULATED UNDER RULE 11UA WHICH COMES TO ITA NO.437/AHD/2018 13 RS.156/- PER SHARE, AND THEREFORE, EXCESSIVE RATE A T RS.444/- PER SHARE RECEIVED BY THE ASSESSEE AMOUNTING TO RS.58,23,060/ - IS REQUIRED TO BE TREATED AS INCOME OF THE ASSESSEE FROM OTHER SOURCE S. THE ASSESSEE TOOK THE PLEA THAT IT HAD JUST PASSED A JOURNAL ENTRY. THE CHEQUES WERE NOT ENCASHED AND ULTIMATELY CHEQUES WERE RETURNED. THE REFORE, IT HAS NOT RECEIVED ANY MONEY WHICH REQUIRES ADDITION. THIS A SPECT WAS EXAMINED BY THE TRIBUNAL, AND FOLLOWING FINDING HAS BEEN REC ORDED: 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND G ONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGARD T O THE FACT THAT CHEQUES FOR SALE OF THESE SHARES REPRESENTING PREMI UM HAVE NOT BEEN ENCASHED BY THE ASSESSEE. IN OTHER WORDS, THE AMOUN T HAS NOT BEEN ACTUALLY RECEIVED BY THE ASSESSEE, AND CREDITED IN ITS ACCOUNTS. LET US TAKE NOTE OF SECTION 56(2)(VIIB) OF THE ACT, WHICH READS AS UNDER: '56(2)(VIIB) WHERE A COMPANY, NOT BEING A COMPANY I N WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, RECEIVES, IN A NY PREVIOUS YEAR, FROM ANY PERSON BEING A RESIDENT, ANY CONSIDE RATION FOR ISSUE OF SHARES THAT EXCEEDS THE FACE VALUE OF SUCH SHARES, THE AGGREGATE CONSIDERATION RECEIVED FOR SUCH SHARES AS EXCEEDS THE FAIR MARKET VALUE OF THE SHARES: 7. A PERUSAL OF THIS SECTION WOULD REVEAL THAT THE EXPRESSION 'RECEIVE' EMPLOYED IN THIS CLAUSE WOULD INDICATE THAT THE ASS ESSEE SHOULD HAVE ACTUALLY RECEIVED THE AMOUNTS, AND NOT A NOTIONAL O NE, BECAUSE IN VARIOUS AUTHORITATIVE PRONOUNCEMENTS IT HAS BEEN CO NSTRUED THAT THE AMOUNTS SHOULD HAVE BEEN ACTUALLY RECEIVED. ITAT, K OLKATTA BENCH HAS CONSIDERED IDENTICAL ASPECT, AND MADE FOLLOWING DIS CUSSION: '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OB SERVED THAT ITS SHARES WERE ISSUED BY THE ASSESSEE-COMPANY DURING T HE YEAR UNDER CONSIDERATION AT PREMIUM TO CERTAIN COMPANIES IN LIEU OF THE SHARES HELD BY THE SAID COMPANIES AND THERE WAS THUS NO INFLOW OF CASH INVOLVED IN THESE TRANSACTIONS. THE SAID TRANSACTIONS WERE ENTERED INTO IN THE BOOKS OF ACCO UNT OF THE ASSESSEE-COMPANY BY WAY OF JOURNAL ENTRIES AND IT D ID NOT INVOLVE ANY CREDIT TO THE CASH AMOUNT. THE LEARNED DR AT THE TIME OF HEARING HAS NOT BROUGHT ANYTHING ON RECORD TO REBUT OR ITA NO.437/AHD/2018 14 CONTROVERT THIS POSITION. HE HOWEVER HAS CONTENDED BY RELYING ON THE DECISION OF HON'BLE MADHYA PRADESH HIGH COURT I N THE CASE OF V.I.S.P. (P) LTD. (SUPRA) AS WELL AS THE DECISIO N OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF PANNA S. KHAT AU (SUPRA) THAT SECTION 68 WAS STILL APPLICABLE IN THE PRESENT CASE INVOLVING CREDIT TO THE SHARE CAPITAL AND SHARE PREMIUM ITA N O NO.316/CHD/2019 AMOUNT. IT IS HOWEVER OBSERVED THAT THE FACTS INVOLVED IN THE CASE OF V.I.S.P. (P.) LTD. (SUPRA) WERE DIFFERENT INASMUCH AS THE LIABILITY IN QUESTION IN THE SAID C ASE REPRESENTED TRADING LIABILITY OF THE ASSESSEE ACCRUING AS A RES ULT OF PURCHASES MADE BY THE ASSESSEE DURING THE RELEVANT YEAR AND S INCE THE SAID LIABILITY WAS FOUND TO BE A BOGUS LIABILITY, ADDITI ON MADE BY THE AO WAS HELD TO BE SUSTAINABLE BY THE HON'BLE MADHYA PRADESH HIGH COURT. 7. IN THE CASE OF PANNA S. KHATAU (SUPRA) CITED BY THE LEARNED DR, BOTH SECTIONS 68 AND 56(2)(VI) WERE HELD TO BE APPLICABLE BY THE TRIBUNAL BUT NO CONCRETE OR COGENT REASONS WERE GIVEN TO JUSTIFY THE APPLICABILITY OF SECTION 68 TO THE CRED ITS NOT INVOLVING ANY RECEIPT OR INFLOW OF CASH IN THE RELEVANT YEAR. MOREOVER, THE VIEW TAKEN BY THE TRIBUNAL IN THE SAID CASE IS CONT RARY TO THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JATIA INVESTMENT CO. (SUPRA) RELIED UPON BY THE LD. CIT(A ) TO GIVE RELIEF TO THE ASSESSEE ON ISSUE UNDER CONSIDERATION IN THE PRESENT CASE. IN THE SAID CASE, THE THREE NBFCS HAD TAKEN L OANS FROM PROPRIETARY CONCERN BELONGING TO THE SAME GROUP. SI NCE THE SAID LOANS WERE REQUIRED TO BE LIQUIDATED AS PER THE RBI GUIDELINES AND THERE WAS NO CASH AVAILABLE WITH THE NBFCS TO R EPAY THE LOANS, THE SHARES HELD BY THE THREE NBFCS WERE TRAN SFERRED TO A PARTNERSHIP FIRM NAMELY JATIA INVESTMENT CO., AND T HE AMOUNT RECEIVABLE AGAINST THE SAID SALE OF SHARES WAS ADJU STED BY THE NBFCS AGAINST THE LOAN AMOUNT PAYABLE TO PROPRIETAR Y CONCERN. THE PARTNERSHIP FIRM OF M/S. JATIA INVESTMENT CO. T HUS RECEIVED SHARES FROM THE THREE NBFCS AND ALSO TOOK OVER THE LOANS PAYABLE BY THE SAID NBFCS TO THE PROPRIETARY CONCER N. THESE TRANSACTIONS WERE ENTERED INTO IN ITS BOOKS OF ACCO UNT BY THE PARTNERSHIP FIRM THROUGH CASH BOOK BY DEBITING THE INVESTMENT IN SHARES AND CREDITING THE LOAN AMOUNT OF THE PROPRIE TARY CONCERN. THIS CREDIT APPEARING IN THE BOOKS OF ACCOUNT OF TH E PARTNERSHIP FIRM, M/S. JATIA INVESTMENT CO. WAS TREATED BY THE AO AS UNEXPLAINED CASH CREDIT U/S 68 AND ON CONFIRMATION OF THE SAME, WHEN THE MATTER REACHED TO THE HON'BLE CALCUTTA HIG H COURT, IT WAS HELD BY THEIR LORDSHIP THAT WHEN THE CASH DID N OT PASS AT ANY ITA NO.437/AHD/2018 15 STAGE AND SINCE THE RESPECTIVE PARTIES DID NOT RECE IVE CASH NOR DID PAY ANY CASH, THERE WAS NO REAL CREDIT OF CASH IN THE CASH BOOK AND THE QUESTION OF INCLUSION OF THE AMOUNT OF THE ENTRY AS UNEXPLAINED CASH CREDIT COULD NOT ARISE. IN OUR OPI NION, THE RATIO OF THIS DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF JATIA INVESTMENT CO. (SUPRA) IS SQUARELY AP PLICABLE IN THE FACTS OF THE PRESENT CASE AND THE LD. CIT(A) WAS FU LLY JUSTIFIED IN DELETING THE ADDITION ITA NO NO.316/CHD/2019 MADE B Y THE AO U/S 68 BY HOLDING THAT THE SAID PROVISION WAS NOT A PPLICABLE.' 8. SINCE ASSESSEE HAS NOT RECEIVED ACTUAL CONSIDERA TION, IT HAS ONLY RECEIVED CHEQUES WHICH HAVE NOT BEEN ENCASHED, THER EFORE, THE PROPOSITION LAID DOWN IN THE ABOVE ORDER OF THE ITA T, KOLKATA BENCH IS CLEARLY APPLICABLE ON THE FACTS OF THE PRESENT CASE . WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE ADDITION. 8. THE LD.DR DURING THE COURSE OF HEARING WAS UNABL E TO CONTROVERT THE PROPOSITION LAID DOWN IN THESE TWO JUDGMENTS. IN THE PRESENT CASE ALSO NO ACTUAL MONEY WAS RECEIVED DURING THIS YEAR. THE ASSESSEE HAS JUST PASSED JOURNAL ENTRY AND ULTIMATELY SHARE APPL ICATION WAS RECEIVED IN THE SUBSEQUENT YEAR I.E. ASSTT.YEAR 2014-15. THERE FORE, NO INQUIRY COULD BE MADE IN THIS YEAR. AS FAR AS SECOND POINT RAISE D BY THE LD.COUNSEL FOR THE ASSESSEE IS CONCERNED, I.E. WHETHER THE ASSESSE E IS ABLE TO DISCHARGE OF ITS ONUS OF EXPLAINING THE SOURCE OF ALLEGED MON EY RECEIVED BY IT OR NOT; OR WHETHER THIS AMOUNT IS REQUIRED TO BE ADDED WITH AIDE OF SECTION 68 OR NOT ? IN THIS REGARD WE FIND THAT THE ASSESS EE HAS FILED A PAPER BOOK CONTAINING 287 PAGES. WE HAVE TAKEN NOTE OF A LL THE DETAILS TABULATED BY THE LD.COUNSEL FOR THE ASSESSEE IN HIS PAPER BOOK WITH RESPECT TO EACH SHARE APPLICANT. HOWEVER, WE DO NO T DEEM IT NECESSARY TO GO THROUGH ALL THESE DETAILS, AND RECORD SOME FI NDING OF FACT BECAUSE ULTIMATELY EVEN IF IT IS HELD THAT ASSESSEE WAS NOT ABLE TO PROVE THE IDENTITY OR CREDIT-WORTHINESS OR GENUINENESS OF THE TRANSACTION, THEN ALSO IN THIS ACCOUNTING YEAR THIS AMOUNT CANNOT BE ADDED ; BECAUSE SECTION 68 ITA NO.437/AHD/2018 16 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY S UM 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 THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THE ASSESSEE HAS DEMONSTRATED THAT IT HAS NOT RECEIVED ANY MONEY ON ACCOUNT OF SHARE APPLICATION DURING THIS YEAR. THIS STATEMENT HAS B EEN PROVED BY THE ASSESSEE FROM THE DETAILS OBTAINED FROM THE BANK, W HICH WE HAVE TAKEN NOTE OF. THUS, IT IS TO BE CONSTRUED THAT NO AMOU NT IN REAL SENSE HAS BEEN FOUND TO BE CREDITED IN THE ACCOUNTS OF THE AS SESSEE FOR THE ASSTT.YEAR 2013-14 AND IF THAT BE SO, THEN HOW AN I NQUIRY FOR THE PURPOSE OF SECTION 68 CAN BE MADE. THEREFORE, THERE IS NO NEED TO EXAMINE THIS EVIDENCE I.E. CONFIRMATION, CAPACITY A ND GENUINENESS OF 28 APPLICANTS. FOR REASONS STATED ABOVE, WE ARE OF TH E VIEW THAT THIS ADDITION IS NOT SUSTAINABLE IN THE ASSTT.YEAR 2013- 14 AND IT IS DELETED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 11 TH AUGUST, 2020 AT AHMEDABAD. S D / - (WASEEM AHMED) ACCOUNTANT MEMBER S D / - (RAJPAL YADAV) VICE-PRESIDENT AHMEDABAD; DATED 11/08/2020