M/s. Par Excellence Leasing and Financial Services Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4515/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9012 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Bogus Share capital; Income from undisclosed sources; Source of fund; Accommodation entries; Onus to prove
• Section: 153A; 251; 13; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DLEHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITANOS. 4515, 4516 & 4517/DEL/2015 ASSESSMENT YEARS: 2010-11, 2011-12 & 2012-13 M/S. PAR EXCELLENCE LEASING AND VS. ACIT, CENTRAL CIRCLE-21, FINANCIAL SERVICES PVT. LTD., D-4, NEW DELHI. RECTANMGLE-1, SAKET DISTRICT CENTRE, SAKET, NEW DELHI PAN AAACP 0373N (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SMT. SULEKHA VERMA, CIT/DR DATE OF HEARING: 02/12/2019 DATE OF ORDER : 14/01/2020 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE COMMON ORDER DATED 15/5/2015 IN AP PEAL NOS.68 TO 70/14-15 PASSED BY THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS)-XXVI, NEW DELHI (LD. CIT(A)) FOR THE AS SESSMENT YEARS 2010- 11 TO 2012-13, M/S PAR EXCELLENCE LEASING AND FINAN CE SERVICES PRIVATE LIMITED (THE ASSESSEE) FILED THESE THREE APPEALS ON IDENTICAL GROUNDS. SINCE ALL THESE APPEALS EMANATE FROM A COMMON ORDER , WE DEEM IT JUST AND CONVENIENT TO DISPOSE THEM OF BY WAY OF THIS CO MMON ORDER. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. THERE IS AN ACTION UNDER SECTION 132 OF TH E INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT THE BUSINESS PREMISES OF ABW GROUP OF CASES AND ATTHE RESIDENTIAL PREMISES OF THEIR DIRE CTORS AND VARIOUS DOCUMENTS/BOOKS OF ACCOUNTS ETC WERE FOUND AND SEIZ ED DURING THE COURSE OF SEARCH. DURING THE PRE-SEARCH ENQUIRIES I T WAS FOUND THAT UNACCOUNTED INCOME EARNED BY THE ABW GROUP WAS ROOT ED BACK IN THE BOOKS OF ACCOUNTS OF THE DIFFERENT COMPANIES OF THE GROUP THROUGH BOGUS SHARE CAPITAL AND THE SHARE PREMIUM. ENQUIRIES WERE CONDUCTED TO FIND OUT THE SHAREHOLDING PATTERN OF THE GROUP COMPANIES WHICH INDICATED THAT SHARE CAPITAL/SHARE PREMIUM OF THE COMPANIES W ERE PRIMA FACIE BOGUS AND RECEIVED FROM THE COMPANIES WHICH ARE BOG US AND ARE ONLY PAPER COMPANIES. WHILE EXAMINING THE SEIZED MATERIA L OF THE GROUP OF CASES IN THE CAPACITY OF THE ASSESSING OFFICER OF T HE PERSON SEARCHED, LEARNED ASSESSING OFFICER FOUND DOCUMENTS BELONGING TO THE ASSESSEE COMPANY IN THIS CASE ALSO, AND THEREFORE, AFTER REC ORDING THE SATISFACTION NOTE ON 19/1/2014 INDICATING THAT THE SAID DOCUMENT S BELONG TO THE ASSESSEE COMPANY AND THAT ACTION UNDER SECTION 153C OF THE ACT WAS REQUIRED. SAID DOCUMENTS WERE EXAMINED IN THE CAPAC ITY OF THE ASSESSING OFFICER OF THE PERSON OTHER THAN THE SEARCHED PERSO N AND A FRESH SATISFACTION NOTE WAS PREPARED ON 22/1/2014 INDICAT ING THE SATISFACTION THAT THE SAID DOCUMENTS BELONG TO THE ASSESSEE COMP ANY AND THEREFORE, PROVISIONS OF SECTION 153C OF THE ACT WERE ATTRACTE D. NOTICE UNDER SECTION 153C OF THE ACT READ WITH SECTION 153A OF T HE ACT WAS ISSUED AND PROCEEDINGS WERE TAKEN UP ACCORDINGLY. 3 3. DETAILS OF SHARE CAPITAL AND SHARE PREMIUM OBTAI NED BY THE ASSESSEE IN THE FINANCIAL YEARS 2009-10 TO 2011-12 IN THE FOLLOWING WAY:- S. NO PARTY ADDRESS FY 09-10 (AY 10-11) NO OF SHARES SHARE AMOUNT @ RS 10 /SHARE SHARE PREMIUM @RS 190/SHARE TOTAL (SHARE CAPITAL + SHARE PREMIUM) 1 GOLDEN MERCANTILES LTD A 32, SECTOR 17, NOIDA, UP 160,000 1,600,000 30,400,000 32,000,000 2 MNR SHARES & INV P LTD 208, CHANAKYA COMPLEX, SUBHASH CHOWK, LAXMI NAGAR, DELHI 100,000 1,000,000 19,000,000 20,000,000 3 OLYMPUS VISION P LTD 32/34,5 FLOOR, BOMBAY CHAMBER, DHOBITALAO, MUMBAI 50,000 500,000 9,500,000 10,000,000 4 ONE2E SOLUTIONS INDIA P LTD 25,000 250,000 4,750,000 5,000,000 5 OSHINE INVESTMENTS & FIN P LTD B - 501, PUSHPAK APTMTS, WESTERN EXP HIGHWAY, DAHISAR -EAST, MUMBAI 175,000 1,750,000 33,250,000 35,000,000 6 GYANESHWAR TRADING & FIN P LTD 37,500 375,000 7,125,000 7,500,000 7 SIDH HOUSING DEVELOPERS CO 75,000 750,000 14,250,000 15,000,000 8 ARTILLEGENCE BIOINNOVATIONS P LTD AMRITDHAM, SUITE 5 & 6, NITYANAND NAGAR,BAKULTALA, KOLKATA 25,000 250,000 4,750,000 5,000,000 9 STOCKNET INTERNATIONAL P LTD 25,000 250,000 4,750,000 5,000,000 10 ARROW DISTRIBUTION P LTD D 195, GALI NO 8, LAXMI NAGAR, DELHI 220,000 2,200,000 41,800,000 44,000,000 11 ASHISH MEHRA 11,630 116,300 2,209,700 2,326,000 12 AMIT PANDEY 13,035 130,350 2,476,650 2,607,000 TOTAL 917,165 9,171,650 174,261,350 183,433,000 4 S NO PARTY ADDRESS FY 10-11 (AY 11-12) NO OF SHARES SHARE AMOUNT @RS 10 /SHARE SHARE PREMIUM @ RS 190 / SHARE TOTAL (SHARE CAPITAL + SHARE PREMIUM) 1 PRRANETA INDUSTRIES S 574, 5 TH FLOOR, RING ROAD, SURAT 75,000 750,000 14,250,000 15,000,000 2 EMPORIS PROJECTS LTD 209, SARTHIK 2, AHMEDABAD 17,500 175,000 3,325,000 3,500,000 TOTAL 92,500 925,000 17,575,000 18,500,000 4. AFTER NOTICING THAT THE NO BUSINESS ACTIVITIES W ERE GOING ON AT THE ADDRESS AS GIVEN IN RESPECT OF THE INVESTOR COMPANI ES AND DENOTING THE RESULT OF THE FIELDENQUIRIES WHICH PROVIDES THAT TH E SAID COMPANIES WERE JUST PAPER CONCERNS WHICH HAVE BEEN USED FOR PROVID ING ACCOMMODATION ENTRIES THROUGH SHARE CAPITAL AND SHARE PREMIUM, LE ARNED ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 142 (1) OF THE ACT REQUESTING THE ASSESSEE COMPANY TO PROVIDE THE IDENTITY OF THE PAR TIES, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS. A QUESTIONNAIRE WAS ALSO ISSUED ALONG WITH SUCH NOTIC E. S. NO PARTY ADDRESS FY 11 - 12 (AY 12 - 13) NO OF SHARES SHARE AMOUNT @RS 10/SHARE SHARE PREMIUM @RS 190/SHARE TOTAL (SHARE CAPITAL + SHARE PREMIUM) 1 ARTILLEGENCE BIOINNOVATIONS P LTD AMRITDHAM, SUITE 5 & 6, NITYANAND NAGAR,BAKULTALA KOLKATA 100,000 1,000,000 19,000,000 20,000,000 2 STOCKNET INTERNATIONAL P LTD 100,000 1,000,000 19,000,000 20,000,000 TOTAL 200,000 2,000,000 38,000,000 40,000,000 5 5. ASSESSEES CONTENTION WAS THAT ALL THE SHAREHOLD ERS ARE CORPORATE ENTITIES REGISTERED WITH THE REGISTRAR OF COMPANIES AND DULY ASSESSED TO TAX AND THAT ENTIRE MONEY WAS RECEIVED BY CHEQUES A ND PAN OF THE PARTIES WERE GIVEN. ASSESSEE FURTHER CONTENDED THAT IT HAS FILED COMPLETE EVIDENCE TO ESTABLISH THE IDENTITY OF THE SHAREHOLD ERS EXISTENCE. ACCORDING TO THE ASSESSEE SINCE IT HAD PROVIDED THE PAN AND ADDRESS OF THE PARTIES, THE DOCUMENTS FOR PROVING THE IDENTITY ALONE IS SUFFICIENT FOR EXAMINING THE TEST OF SECTION 68 OF THE ACT. ASSESS EE WAS REQUIRED TO PRODUCE THE CONTROLLING PERSONS OF THE INVESTORS AL ONG WITH THE DETAILS OF SHARES ALLOTTED TO THEM. NOTICES UNDER SECTION 133( 6) OF THE ACT WERE ISSUED, BUT IN SOME CASES THOSE WERE RECEIVED BACK ANSWERED WHEREAS IN SOME CASES NO COMPLIANCE WAS RECEIVED, DUE TO WHICH , THE ASSESSING OFFICER EXPRESSED THAT THE BANK ACCOUNTS COULD NOT BE EXAMINED. LEARNED ASSESSING OFFICER INFERRED FROM THE FACTS AND CIRCU MSTANCES OF THE CASE THAT THE COMPANIES ARE DECLARING INCOME JUST NOMINA L AND THEIR DOCUMENTS RELATING TO BALANCE SHEET STATEMENTS, AS SUBMITTED BY THE ASSESSEE, IT COULD BE SEEN THAT THE COMPANIES ARE J UST RECEIVING FUNDS FROM SOME PRIVATE LIMITED COMPANIES AND THEN TRANSF ERRING THE SAME TO OTHER PRIVATE LIMITED COMPANIES WHICH GIVES THE IDE A THAT THESE COMPANIES ARE NOTHING BUT PAPER COMPANIES CREATED T O CONDUIT COMPANIES TO FACILITATE THESE TYPE OF TRANSACTIONS. 6. LEARNED ASSESSING OFFICER ANALYSED THE FACTS IN THE LIGHT OF THE DECISION DATED 21/12/2012 OF THE HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. NR PORTFOLIO PRIVATE LIMITED, ONASS IS AXLES PRIVATE LIMITED VS. CIT IN ITA NO. 31/2013 AND CIT VS. ODIAN BUILDE RS PRIVATE LIMITED AND CONCLUDED THAT,- 6 I. THE INVESTORS WERE FOUND TO HAVE NO LEGITIMATE INCO ME FOR INVESTING IN THE ASSESSEE COMPANY; II. THE ASSESSEE WAS REQUIRED TO PRODUCE THE DIRECTORS /CONTROLLING PERSONS WITH SUPPORTIVE DOCUMENTARY EVIDENCE SUCH A S BOOKS OF ACCOUNT, BANK STATEMENTS TO PROVE IDENTITY, CREDITW ORTHINESS AND GENUINENESS OF TRANSACTIONS, BUT THE ASSESSEE FAILE D TO DISCHARGE THE ONUS UPON IT; AND III. THE DECISIONS IN THE CASE OF NR PORTFOLIO PRIVATE L IMITED (SUPRA) ONASSIS AXIL (SUPRA) AND ODIAN BUILDERS (SUPRA) ARE APPLICABLE TO THE FACTS OF THE CASE ON HAND. 7. LEARNED ASSESSING OFFICER ACCORDINGLY HELD THAT THE SHARE CAPITAL CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE I S UNEXPLAINED, AND HAS TO BE ADDED TO THE INCOME OF THE ASSESSEE UNDER SEC TION 68 OF THE ACT. 8. AGGRIEVED BY SUCH FINDINGS OF THE ASSESSING OFFI CER, ASSESSEE PREFERRED APPEALS BEFORE THE LD. CIT(A) IN RESPECT OF THESE THREE ASSESSMENT YEARS. HAVING CONSIDERED THE CASE ON ITS MERITS ON A THOROUGH REAPPRAISAL OF THE MATERIAL BEFORE HER, LD. CIT(A) ISSUED NOTICE FOR ENHANCEMENT UNDER SECTION 251 (2) OF THE ACT FOR AL L THESE ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13 GIVING AN OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 9. CIT(A) FOUND THAT THE ASSESSEE WAS REQUIRED BY T HE LEARNED ASSESSING OFFICER TO SUBSTANTIATE ITS CLAIM WITH RE GARD TO THE SHARE CAPITAL AND SHARE PREMIUM BY WAY OF QUERIES AND WAS SPECIFI CALLY ASKED TO PROVIDE THE SHAREHOLDING PATTERN OF THE COMPANY, TH E DETAILS OF SHARE CAPITAL, SHARE APPLICATION, SHARE TRANSFER, NAME AN D ADDRESS OF SHAREHOLDERS AND ALSO TO PROVIDE THE IDENTITY AND C REDITWORTHINESS OF THE INVESTORS AND ALSO GENUINENESS OF THE TRANSACTION W HILE DRAWING THE SPECIFIC ATTENTION OF THE ASSESSEE TOWARDS THE FIND INGS OF THE 7 INVESTIGATION WING, MUMBAI IN THE CASE OF THE SO-CA LLED SHARE INVESTORS THAT ARE COMMON TO IT AND THE GANGA DHAR S SHETTY G ROUP, AND WHICH WAS FOUND TO BE BOGUS. ASSESSEE IS ALSO REQUIRED TO PRO DUCE THE PERSONS CLAIMED AS INVESTORS BEFORE THE LEARNED ASSESSING O FFICER FOR EXAMINATION AND VERIFICATION OF DOCUMENTARY EVIDENCES. 10. IT IS THE FINDING OF THE LD. CIT(A) THAT IN RES PONSE TO THE VARIOUS QUERIES RAISED BY THE LEARNED ASSESSING OFFICER, TH E ASSESSEE MERELY FILED A TABULAR CHART GIVING THE NAMES AND ADDRESSES OF T HE SHAREHOLDERS, AND OPENING BALANCE, ADDITION DURING THE YEAR AND CLOSI NG BALANCE OF THE SHARE CAPITAL AND ENCLOSED ONLY IN RESPECT OF 9 COM PANIES THE PHOTO COPIES OF SHARE APPLICATION FORMS, BOARD RESOLUTION , CONFORMATION AND MEMORANDUM AND ARTICLES OF ASSOCIATION, WHEREAS IN RESPECT OF 7 CASES COPY OF RETURN OF INCOME ALONG WITH THE FINANCIAL S TATEMENT FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 WAS ALSO FILED. CIT(A) FURTHER NOTED THAT WHILE PLACING RELIANCE ON THE DECISION IN THE CASE OF LOVELY EXPORTS PRIVATE LIMITED 319 ITR 5 (SC) ASSESSEE PLEADED THA T THE SHAREHOLDERS WERE CORPORATE ENTITIES, REGISTERED WITH REGISTRAR OF COMPANIES AND ALSO DULY ASSESSED TO TAX; AND THE ENTIRE MONEY WAS RECE IVED BY THE ACCOUNT PAYEE CHEQUES AND THEREFORE NO ADDITION COULD BE MA DE. 11. LD. CIT(A) FURTHER NOTED THAT THE LEARNED ASSES SING OFFICER CONFRONTED THE ASSESSEE BY LETTER DATED 17/2/2014 W ITH THE FINDINGS OF THIS SEARCH IN RESPECT OF ABW GROUP AND ALSO THE PO ST SEARCH ENQUIRIES IN MUMBAI AND DELHI WHERE IN SEVERAL CASES SUMMONS ADD RESSED TO THE SO- CALLED INVESTOR COMPANIES WERE RETURNED ANSWERED BY THE POSTAL AUTHORITIES AND ALSO THE ENQUIRIES CONDUCTED AT THE ADDRESSES OF SOME OF THE INVESTOR COMPANIES WHICH REVEALED THE ADDRESSES AS RESIDENTIAL, 8 WHERE NO BUSINESS ACTIVITY WAS BEING CARRIED OUT. A SSESSEE WAS REQUIRED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE P ARTIES AND THE GENUINENESS OF THE TRANSACTIONS BY PRODUCING THE PA RTIES ALONG WITH THE SUPPORTIVE DOCUMENTARY EVIDENCES FOR EXAMINATION, B UT, INSTEAD OF COMPLYING WITH THE REQUIREMENTS OF THE LEARNED ASSE SSING OFFICER AND PROVE ITS CASE, THE ASSESSEE CLAIMED THAT THE FINDI NGS WERE NOT CONFRONTED TO IT. 12. IN THE CIRCUMSTANCES, LD. CIT(A) HELD THAT THE LEARNED ASSESSING OFFICER RIGHTLY REJECTED THE CONTENTIONS OF THE ASS ESSEE. FURTHER, THE ASSESSEE WAS NOT FORTHCOMING IN PRESENTING THE FACT S OF ITS CASE BEFORE THE ASSESSING OFFICER IN A TIMELY, ORDERLY AND COGE NT MANNER. GIVEN THE FACTS OF THE CASE AND THE MANNER IN WHICH THE ASSES SEE RESPONDED TO THE QUERIES OF THE ASSESSING OFFICER DURING THE ASSESSM ENT PROCEEDINGS, LD. CIT(A) CONCLUDED THAT THE CLAIM OF SHARE CAPITAL AN D SHARE PREMIUM BY THE ASSESSEE WAS BOGUS. LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE DID NOT BRING ON RECORD THE BASIS ON WHICH THE SHARE PR EMIUM AT PAR VALUE OF RS. 10/-WAS COMPLETED AT THE RATE OF RS. 190/-PER S HARE AND THE ASSESSEE DID NOT CARE TO EXPLAIN THE CIRCUMSTANCES IN WHICH THE VARIOUS PRIVATE ENTITIES, UNRELATED TO IT, FOUND SUCH A PROPOSITION ATTRACTIVE TO COMMIT FUNDS RUNNING INTO CRORES OF RUPEES, MORE PARTICULA RLY ON THE FACE OF THE FACT THAT SUCH INVESTORS HAD NOT RECEIVED ANY WRITT EN ON THEIR SUBSTANTIAL INVESTMENT, AS REFLECTED IN THE BOOKS OF THE ASSESS EE. FURTHER CONSIDERING THE NONAPPEARANCE OF THE INVESTORS BEFORE THE ASSES SING OFFICER TO REITERATE AND ESTABLISH THEIR CLAIM, GIVEN THEIR SU BSTANTIAL INVESTMENTS IN THE ASSESSEE COMPANY, LD. CIT(A) HELD THAT THE TEST OF IDENTITY OF THE PARTIES WAS FAILED, THE TEST OF CREDITWORTHINESS IS ALSO A COMPLETE FAILURE 9 AND TEST FOR GENUINENESS OF THE SHARE CAPITAL AND S HARE PREMIUM CONTRIBUTIONS ALSO COLLAPSED ON ACCOUNT OF NONAPPEA RANCE OF THE PARTIES BEFORE THE ASSESSING OFFICER. 13. LD. CIT(A) FURTHER FOUND THAT WHILE COMPUTING T HE DISALLOWANCE FOR THE ASSESSMENT YEAR 2010-11, LEARNED ASSESSING OFFI CER CONSIDERED THE DISALLOWANCE OF RS. 11.45 CRORES BUT OMITTED TO CON SIDER THE INVESTMENT RELATING TO SIDH HOUSING DEVELOPERS COMPANY, STOCKN ETINTERNATIONAL PRIVATE LIMITED, ARROW DISTRIBUTION PRIVATE LIMITED , ASHISH MEHRA, AND AMIT PANDEY TO THE TUNE OF RS. 6,89,33,000/-. SO AL SO, IN RESPECT OF ASSESSMENT YEAR 2011-12, LD. CIT(A) FOUND THAT THE CLAIM RELATING TO PANETTA INDUSTRIES REMAINED UNSUBSTANTIATED TO THE TUNE OF RS.1.5 CRORES. IN RESPECT OF ASSESSMENT YEAR 2012-13, LD. CIT(A) F OUND THAT THE ASSESSEE FAILED TO PROVIDE ANY EXPLANATION IN RESPECT OF STO CKNETINTERNATIONAL PRIVATE LIMITED TO THE TUNE OF RS.2 CRORES. ACCORDI NG TO LD. CIT(A), IN RESPECT OF THESE THREE ASSESSMENT YEARS, SUCH AMOUN TS WERE ALSO TO BE ADDED. 14. FINALLY,WHILE CONFIRMING THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 68 OF THE ACT, LD. CIT(A) ENHANCED THE ADDITIONS TO RS. 6,89,33,000/-IN RESPECT OF ASSESSM ENT YEAR 2011-12, RS. 1.5 CRORES IN RESPECT OF ASSESSMENT YEAR 2011-12 AN D RS. 2 CRORES IN RESPECT OF ASSESSMENT YEAR 2012-13. 15. AGGRIEVED BY THE CONSERVATION OF THE ADDITIONS AND ALSO MAKING FURTHER ADDITIONS, ASSESSEE PREFERRED THESE APPEALS . HOWEVER, WHEN THE MATTER IS CALLED, NEITHER THE ASSESSEE NOR ANY AUTH ORISED REPRESENTATIVE ENTERED APPEARANCE. IT COULD BE SEEN FROM THE RECOR D THAT THE NOTICE 10 SENT TO THE ADDRESS GIVEN IN FORM NO. 36 IS RETURNE D WITH THE ENDORSEMENT OF THE POSTAL SERVANT STATING THAT THE ASSESSEE REFUSED TO RECEIVE THE SAME. WHEN THE NOTICE SENT BY REGISTERE D MAIL WITH THE POSTAGE PREPAID, AND IT IS RETURNED WITH THE ENDORS EMENT OF THE POSTAL SERVANT THAT THE ASSESSEE REFUSED TO RECEIVE THE SA ME, THERE IS NO REASON FOR US NOT TO BELIEVE THE ENDORSEMENT OF THE PUBLIC SERVANT. THERE IS A PRESUMPTION UNDER LAW THAT JUDICIAL AND OFFICIAL AC TS HAVE BEEN REGULARLY PERFORMED; AND THAT THE COMMON COURSE OF BUSINESS H AS BEEN FOLLOWED IN PARTICULAR CASES. UNLESS OTHERWISE PROVED, THERE IS NO REASON FOR US NOT TO BELIEVE THE ENDORSEMENT OF THE POSTAL SERVANT. I N THE CIRCUMSTANCES WE FIND NO OPTION BUT TO PROCEED WITH THE MATTER ON MERITS BASING ON THE MATERIAL AVAILABLE ON RECORD, AFTER HEARING THE REV ENUE. 16. IT IS THE SUBMISSION OF THE LD. DR THAT THE DEC ISIONS RELIED UPON BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW HAVE NO R ELEVANCE TO THE FACTS OF THE CASE, AND MORE PARTICULARLY IN VIEW OF THE D ECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. N DR PROMOTERS PRIVATE LIMITED (2019) 14 ITR 379 AND HONBLE SUPREME COURT IN THE CASE OF PCIT VS. NRA IRON AND STEEL (P) LTD ( 2019) 412 ITR 161, MERE FILING OF THE DOCUMENTS DOES NOT ABSOLVE THE ASSESSEE OF THE RESP ONSIBILITY OF PROVING THE THREE INGREDIENTS OF SECTION 68, NAMELY, THE ID ENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS AND THE GENUIN ENESS OF THE TRANSACTION. LD. DR SUBMITTED THAT THE AUTHORITIES BELOW CONSISTENTLY OBSERVED THAT THOUGH THE ASSESSEE HAD COMPLETED THE PAPERWORK METICULOUSLY, NO REASONS ARE AFFORDED FOR NON-PRODU CTION OF THE PARTIES. SHE SUBMITTED THAT RECORD MUST BE HAD TO THE FACT T HAT FIELD QUERIES REVEALED THAT SUCH COMPANIES WERE JUST AND PROPER C ONCERNS WHICH WERE 11 USED FOR PROVIDING ACCOMMODATION ENTRIES THROUGH SH ARE CAPITAL AND THE SHARE PREMIUM. SHE DREW OUR ATTENTION TO THE REASON S RECORDED BY THE LEARNED ASSESSING OFFICER AT PARAGRAPH NO. 3.2 OF H IS ORDER AS TO THE STATUS OF THESE COMPANIES. SHE FURTHER SUBMITTED TH AT THE AUTHORITIES BELOW CONSISTENTLY OBSERVED THAT THE NONAPPEARANCE OF THE INVESTORS BEFORE THE ASSESSING OFFICER TO REITERATE AND ESTAB LISH THEIR CLAIMS, GIVEN THEIR SUBSTANTIAL INVESTMENTS IN THE ASSESSEE COMPA NY, IS YET ANOTHER RELEVANT FACT THAT MILITATES AGAINST THE CLAIM OF T HE GENUINENESS OF THE SHARE SUBSCRIPTIONS. SHE READ OUT THE RELEVANT PORT IONS OF THE ORDERS OF THE AUTHORITIES BELOW SUPPORTING THE CONCLUSION THA T THE PLEA TAKEN BY THE ASSESSEE BASING ON SOME PAPERWORK IS UNTRUSTWOR THY. 17. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE BY THE LD. DR. THE FACT REMAINS THAT BY LETTER DATED 18/3/2014 THE LEARNED ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE THE CONTROLLING PERSONS OF THE SHARE APPLICANT COMPANIE S ALONG WITH SUPPORTIVE DOCUMENTARY EVIDENCE FOR EXAMINATION, BU T THE ASSESSEE THOUGH FILED CERTAIN PARTIES DETAILS, FAILED TO PR ODUCE THEM. NO VALID REASONS ARE FORTHCOMING FOR SUCH CONDUCT OF THE ASS ESSEE. THE IMPUGNED ASSESSMENT ORDER SPEAKS THAT THE FIELD ENQUIRIES IN RESPECT OF THE SHARE APPLICANT COMPANIES REVEAL THAT SUCH COMPANIES NEVE R EXISTED IN THE GIVEN ADDRESSES AND THE PEOPLE IN THE VICINITY NEVE R KNEW OF THE SAME. ON THE FACE OF THIS FACT FINDING BASING ON THE FIEL D VISITS, WE FIND IT DIFFICULT TO HOLD THAT MERELY BECAUSE CERTAIN DOCUMENTS ARE F ILED BY THE ASSESSEE, THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPL ICANTS AND THE GENUINENESS OF THE TRANSACTIONS STOOD PROVED. 12 18. IT IS PERTINENT TO NOTE THAT, IN THIS CASE, ENQ UIRIES WERE MADE AS TO THE GENUINENESS OF THE SHARE CAPITAL AND SHARE PREM IUM RECEIVED BY THE ABW GROUP FROM CERTAIN COMPANIES BASED AT MUMBAI AN D INVESTIGATION REVEALED THAT THERE WAS NO RESPONSE INASMUCH AS THE SUMMONS WELL- WRITTEN AND ANSWERED BY THE POSTAL AUTHORITIES WITH THE REMARKS THAT ANSWERED, NOT KNOWN, LEFT ETC. FURTHER DURING THE COURSE OF SEARCH IN RESPECT OF THE ABW GROUP OF COMPANIES ALL DOCUMENTS RELATING TO THE INVESTING COMPANIES INCLUDING THE BLANK SHARE TRANS FER FORMS, MEMORANDUM OF ASSOCIATION, BALANCE SHEET, BOARD RES OLUTION PASSED BY BOARD OF DIRECTORS OF SUCH A INVESTOR COMPANIES WER E FOUND AND A CONCLUSION WAS DRAWN THAT THESE COMPANIES WERE NOTH ING BUT OPERATORS ENGAGED IN GIVING ACCOMMODATION ENTRIES. IN SUCH CO NTEXT, THE LEARNED ASSESSING OFFICER REQUIRED THE PRESENCE OF THE CONT ROLLING PERSONS OF SUCH COMPANIES ALONG WITH THE SUPPORTING DOCUMENTS IN OR DER TO SATISFY HIMSELF AS TO THE IDENTITY AND CREDITWORTHINESS OF SUCH COMPANIES AND ALSO ABOUT THE GENUINENESS OF THE TRANSACTION. IN S UCH SITUATION, THE ASSESSEE SHOULD HAVE PRODUCED SUCH PERSONS FOR EXAM INATION BY THE LEARNED ASSESSING OFFICER OR AT LEAST SHOULD HAVE F URNISHED THECURRENT ADDRESS AND DETAILS OF SUCH PERSONS. WITHOUT DOING SO, THE ASSESSEE CANNOT INSIST THAT MERELY BECAUSE CERTAIN DOCUMENTS ARE FILED, THE IDENTITY AND CREDITWORTHINESS OF THE PARTIES AND TH E GENUINENESS OF THE TRANSACTION, IPSO FACTO, SHALL BE TAKEN TO HAVE PRO VED. 19. IT IS LEGITIMATE FOR THE LEARNED ASSESSING OFFI CER TO MAKE ENQUIRIES RELATING TO FIND ANSWERS TO THE QUESTIONS LIKE - WH ETHER THE TWO PARTIES ARE RELATED OR KNOWN TO EACH OTHER, OR MODE BY WHIC H PARTIES APPROACHED EACH OTHER? WHETHER THE TRANSACTION IS E NTERED INTO THROUGH 13 WRITTEN DOCUMENTATION TO PROTECT INVESTMENT? WHETHE R THE INVESTOR WAS AN ANGEL INVESTOR? WHAT IS THE QUANTUM OF MONEY INV ESTED? HOW THE PARTY BELIEVED THE CREDIT-WORTHINESS OF THE RECIPIE NT? WHAT IS THE OBJECT AND PURPOSE OF PAYMENT/INVESTMENT? WHETHER THE SHA RE APPLICANT IS IN EXISTENCE AND AN INDEPENDENT ENTITY? HOW THE FINANC IAL CAPACITY OF THE SHARE APPLICANT TO INVEST FUNDS IS PROVED? HOW THE SOURCE OF FUNDS FROM WHICH THE HIGH SHARE PREMIUM WAS INVESTED IS DEALT WITH BY THE ASSESSEE? WHY THE INVESTOR COMPANIES HAD APPLIED FO R SHARES OF THE ASSESSEE COMPANY AT A HIGH PREMIUM? IN CASE THE FIE LD ENQUIRY CONDUCTED BY THE AO REVEALED THAT THE INVESTOR COMP ANIES WERE FOUND TO BE NON-EXISTENT, AND THE ONUS TO ESTABLISH THE IDEN TITY OF THE INVESTOR COMPANIES, WAS NOT DISCHARGED BY THE ASSESSEE? WHET HER THE ASSESSEE DISCHARGED THEIR LEGAL OBLIGATION TO PROVE THE RECE IPT OF SHARE CAPITAL/PREMIUM TO THE SATISFACTION OF THE AO? WHET HER THE ASSESSEE DISCHARGED THE ONUS TO ESTABLISH THE CREDIT WORTHIN ESS OF THE INVESTOR COMPANIES? DID THE ASSESSEE DO ANYTHING MORE THAN MERE MENTION OF THE INCOME TAX FILE NUMBER OF AN INVESTOR TO DISCHA RGE THE ONUS UNDER SECTION 68 OF THE ACT? DID THE ASSESSEE DO ANYTHING MORE THAN MERE FILING ALL THE PRIMARY EVIDENCE IN DISCHARGE OF THEIR ONUS TO PROVE THE IDENTITY OF THE INVESTEE? ETC. 20. ORDERS OF THE AUTHORITIES BELOW REVEAL, AND THE RE IS NOTHING CONTRARY ON RECORD TO SHOW THAT THE ASSESSEE HAS CO MPLIED WITH THE REQUIREMENTS OF THE LEARNED ASSESSING OFFICER IN TH E EXERCISE OF FORMING SATISFACTION AS TO THE IDENTITY AND THE CREDITWORTH INESS OF THE SHARE APPLICANTS OR THE GENUINENESS OF THE TRANSACTION. M ERE PAPERWORK BY THE ASSESSEE DOES NOT TAKE THE AUTHORITIES ANYWAY, WHEN THE AUTHORITIES 14 SUSPECTED THE EXISTENCE OF THE ENTITIES THAT APPLIE D AND PAID FOR SHARE APPLICATION AND SHARE PREMIUM AND INSISTED THAT A H IGHER DEGREE OF PROOF IS REQUIRED IN THAT RESPECT. 21. IN VIEW OF THE DECISIONS OF THE HONBLE JURISDI CTIONAL HIGH COURT AND HONBLE SUPREME COURT IN THE CASE OF NDR PROMOT ORS PVT. LTD. (SUPRA) AND NRA IRON AND STEEL (P) LTD (SUPRA) WE A RE OF THE CONSIDERED OPINION THAT THE ACTION OF THE LEARNED ASSESSING OF FICER WAS ILLEGAL AND NON-COMPLIANCE WITH THE SAME HAD RIGHTLY LED TO THE INFERENCE THAT THE ASSESSEE HAD ROOTED THEIR OWN MONEY IN THE BOOKS OF ACCOUNTS THROUGH THE FICTITIOUS AND BOGUS COMPANIES. ON THIS PREMISE WE SUSTAIN THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER UNDE R SECTION 68 OF THE ACT. WE FURTHER FIND THAT THE LD. CIT(A) HAD FOLLOW ED THE PROCEDURE ESTABLISHED UNDER LAW FOR ENHANCING THE ADDITIONS A ND SUCH ADDITIONS ARE JUSTIFIED BY RECORD. CONSEQUENTLY, WE DISMISS THE G ROUNDS OF APPEALS. 22. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISM ISSED. PRONOUNCED IN OPEN COURT ON THIS THE 14 TH JANUARY, 2020. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 14/01/2020 AKS