ACIT, New Delhi V. M/s. TRN Energy Pvt. Ltd., New Delhi

ITA 453/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4209 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAJJAN KUMAR TULSIYAN
• Keywords: Income from undisclosed sources; Search and seizure; Question of law; Onus to prove
• Section: 131; 68; 143(3); 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES B: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NO.453/DEL./2016 ASSESSMENT YEAR 2012-2013 THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.101, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN.NEW DELHI. VS., M/S. TRN ENERGY PVT. LTD., 18, VASANT ENCLAVE, RAO TULA RAM MARG, VASANT VIHAR, NEW DELHI. PAN AACCT7295B (APPELLANT) (RESPONDENT) C.O.NO.96/DEL./2016 ARISING OUT OF ITA.NO.453/DEL./2016 ASSESSMENT YEAR 2012-2013 M/S. TRN ENERGY PVT. LTD., 18, VASANT ENCLAVE, RAO TULA RAM MARG, VASANT VIHAR, NEW DELHI. PAN AACCT7295B VS., THE ACIT, CENTRAL CIRCLE - 17, ROOM NO.101, HALL NO.1, 1 ST FLOOR, ARA CENTRE, E-2, JHANDEWALAN.NEW DELHI. (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : MS. RACHNA SINGH, CIT - D.R. FOR CROSS-OBJECTOR : SHRI SAJJAN KUMAR TULSIYAN, ADVOCATE MS. NISHA RACHH, C.A., SHRI KARAN KUMAR, C.A. DATE OF HEARING : 07.12.2017 DATE OF PRONOUNCEMENT : 0 1 .01.2018 2 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. ORDER PER BHAVNESH SAINI, J.M. THE DEPARTMENTAL APPEAL AS WELL AS CROSS OBJECTIO NS BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-27, NEW DELHI, DATED 09.11.2015, FOR THE A.Y. 2012-2013. 2. SEARCH AND SEIZURE AND SURVEY OPERATION UNDER S ECTION 132/133A OF THE I.T. ACT WAS CONDUCTED ON 12 TH APRIL, 2012 IN THE CASE OF THE ASSESSEE-COMPANY ALONG WITH OTHER GROUP CASES OF ARYAN GROUP AT VARIOUS RESIDENTIAL AND BUSINESS PREMISES. THE ASSESSEE- COMPANY FILED RETURN OF INCOME DECLARING LOSS OF RS .2,75,807. THE A.O. ISSUED NOTICES UNDER SECTION 143(2) AND 142(1) OF THE I.T. ACT. THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSID ERATION, THE ASSESSEE-COMPANY HAS RECEIVED FRESH SHARE APPLICATI ON MONEY OF RS.10,63,50,000 FROM M/S. JAISRI PROPERTIES EXPORTS PVT. LTD., THE ASSESSEE WAS ASKED TO FURNISH EVIDENCE IN SUPPORT O F THE GENUINENESS OF THE SHARE APPLICATION MONEY. THE ASSESSEE IN SUP PORT OF THE GENUINENESS OF THE SHARE APPLICATION RECEIVED FROM THE INVESTOR COMPANY, FILED NAME OF THE PARTY, ADDRESS, P AN, BANK STATEMENT, CONFIRMATION OF THE INVESTOR AND ITR OF THE INVESTO R FOR THE YEAR UNDER 3 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. CONSIDERATION. THE A.O. FURTHER NOTED THAT AUDITED ACCOUNTS OF THE INVESTOR WAS NOT FILED. THE A.O. NOTED FROM THE BAN K STATEMENT OF THE PARTY, MOSTLY FOR THE DATE OF TRANSACTION AND A DAY OR TWO PRIOR TO THE DATE OF TRANSACTION, THERE ARE HIGH VALUE TRANSACTI ONS IN THOSE BANK STATEMENT. THERE ARE NUMEROUS CREDITS APPEARING IN THE BANK ACCOUNT. THE INVESTOR FILED RETURN OF INCOME AT RS. 2,80,610. THEREFORE, FINANCIAL CAPACITY IS NOT PROVED. IN THE ABSENCE OF BALANCE SHEET, SOURCE OF THE CREDIT ENTRY WAS NOT PROVED. A .O, THEREFORE, WAS OF THE VIEW THAT CREDITWORTHINESS OF THE INVESTOR C OMPANY HAS NOT BEEN PROVED. MERE PRODUCTION OF THE DOCUMENTARY EVI DENCE WOULD NOT PROVE THE GENUINENESS OF THE TRANSACTION IN THE MATTER. THE A.O. ACCORDINGLY, TREATED THE SHARE APPLICATION MONEY AS UNEXPLAINED AND MADE THE ADDITION. 3. THE ASSESSEE CHALLENGED THE ADDITION OF RS.10,6 3,50,000 BEFORE THE LD. CIT(A). THE SUBMISSIONS OF THE ASS ESSEE-COMPANY ARE REPRODUCED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE-COMPANY REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESS ING OFFICER. IT WAS BRIEFLY EXPLAINED THAT A.O. NOTED THAT THERE ARE HI GH VALUE TRANSACTIONS CONDUCTED BY THE INVESTOR BUT THERE WE RE NO CASH 4 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. DEPOSITS TO PROVE THAT IN THE BANK ACCOUNT OF THE I NVESTOR THAT MAY LEAD TO SUSPICION. THE OBSERVATION OF THE A.O. ARE INCORRECT THAT THERE WERE NEGLIGIBLE BALANCE IN THE ACCOUNT OF THE INVES TOR. THE FINANCIAL CAPACITY OF THE INVESTOR IS VERY SOUND BECAUSE IN A SSESSMENT YEAR UNDER APPEAL, THE INVESTOR COMPANY WAS HAVING SHARE CAPITAL AND RESERVE AND SURPLUS OF RS.40,18,26,586. THE ASSESSE E-COMPANY HAS PROVIDED BALANCE SHEET OF THE INVESTOR COMPANY. FUR THER, THE DATA IS AVAILABLE IN PUBLIC DOMAIN OF THE REGISTRAR OF COMP ANIES. ONCE ASSESSEE-COMPANY FILED COMPLETE DETAILS BEFORE A.O, THEN INITIAL ONUS UPON ASSESSEE-COMPANY HAS BEEN DISCHARGED TO PROVE THE IDENTITY OF THE INVESTOR, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. 4. THE ASSESSEE-COMPANY RELIED UPON SEVERAL DECISI ONS IN SUPPORT OF THE CONTENTION THAT IT HAS RECEIVED GENU INE SHARE APPLICATION MONEY. THE LD. CIT(A) CONSIDERING THE M ATERIAL ON RECORD IN THE LIGHT OF VARIOUS DECISIONS, DELETED THE ADDI TION AND ALLOWED THE APPEAL OF ASSESSEE-COMPANY. HIS FINDINGS IN PARAS 8 AND 9 OF THE ORDER ARE REPRODUCED AS UNDER : 5 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 8. FINDINGS : I HAVE CONSIDERED THE WRITTEN SUBMISSIONS OF THE AP PELLANT, CASE LAWS AND HAVE GONE THROUGH THE ASSESSMENT ORDE R PASSED U/S 143(3) R.W.S. 153A OF THE ACT. I HAVE AL SO EXAMINED THE SUBMISSIONS OF THE ARS W.R.T THE ASSES SMENT RECORDS THAT WERE REQUISITIONED FROM THE AO. THE AP PELLANT HAD RECEIVED SHARE APPLICATION MONEY OF RS. 10,63,5 0,000/-. THE AO HAS TREATED THE ENTIRE AMOUNT OF RS. 10,63,5 0,000/- U/S 68 OF THE IT ACT . HE HAS MADE THIS ADDITION DU E TO REASON OF NON SUBMISSION OF AUDITED ACCOUNTS OF THE PARTY FOR THE YEAR UNDER CONSIDERATION. IN THE ABSENCE OF AVAILABILITY OF AUDITED ACCOUNTS THE CREDIT WORTHINESS OF THE INVESTORS COU LD NOT BE SAID TO BE ESTABLISHED. THE APPELLANT HAS FAILED TO EXPLAIN THE SOURCE OF THE SOURCE. AND THAT ALL THE ABOVE IN VESTORS WERE BASED IN KOLKATA. 8.1. THERE IS NO DOUBT THAT THE INITIAL BURDEN/ONUS OF P ROVING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF A TRANSACTION REST WITH THE APPELLANT. ONCE THE APPELLANT DISCHAR GES THIS OBLIGATION, THE ONUS TO EXAMINE THE TRANSACTION, SH IFTS TO THE AO. 6 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 8.2. IN THE INSTANT CASE, THE APPELLANT HAD PROVED THE I DENTITY, CREDITWORTHINESS AND GENUINENESS OF SHARE APPLICANT S, BY SUBMITTING THEIR NAME, ADDRESS, PAN, BANK STATEMENT S AND BALANCE CONFIRMATIONS AND ITR ACKNOWLEDGEMENTS. THE APPELLANT IS NOT EXPECTED TO KEEP THE AUDITED BALAN CE SHEETS OF THIRD PARTIES IN ITS POSSESSION. 8.3. IT IS SEEN THAT A.O. HAD CALLED UPON THE APPELLANT TO PROVIDE ASSESSMENT PARTICULARS OF INVESTORS VIDE QUESTIONNAIRE DATED 21.01.2015. THE APPELLANT HAD D ULY PROVIDED THE ASSESSMENT PARTICULARS. IN FACT, THE A PPELLANT HAD EVEN PROVIDED THE ITRS OF INVESTOR. 8.4. THE INVESTOR IS ASSESSEE AND MOREOVER IT IS A CORPO RATE ENTITY. THE INFORMATION INCLUDING BALANCE SHEETS AN D AUDITED ACCOUNTS ARE AVAILABLE IN PUBLIC DOMAIN ON THE PORT ALS OF REGISTRAR OF COMPANIES/ MINISTRY OF CORPORATE AFFAI RS. THUS, NON-SUBMISSION OF AUDITED ACCOUNTS OF INVESTORS COM PANIES CANNOT BE HELD AS A VALID GROUND FOR MAKING ADDITIO NS U/S 68. 7 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 8.5. THE AMENDMENT TO SEC. 68 REQUIRING THE APPELLANT TO EXPLAIN THE SOURCE OF THE SOURCE CAME INTO EFFE CT FROM A.Y. 2013-14. THE SAME CANNOT BE APPLIED RETROSPECTIVELY IN A.Y. 2007-08. 8.6. THERE IS NO DOUBT THAT THE DEPARTMENT HAS COME ACRO SS SEVERAL CASES WHERE KOLKATA BASED COMPANIES HAVE BE EN IDENTIFIED AS INDULGING INTO PROVIDING ACCOMMODATIO N ENTRIES. HOWEVER, THE AO NEEDS TO LOOK BEYOND THE PLACE OF D OMICILE OF A COMPANY TO DRAW AN INFERENCE THAT THE COMPANY IS NOT GENUINE. 8.7. THE APPELLANT HAS PLACED RELIANCE ON SEVERAL JUDICI AL PRONOUNCEMENTS INCLUDING THOSE FROM THE APEX COURT AS WELL AS THE JURISDICTIONAL HIGH COURT. RESPECTFULLY FOLLOWI NG THE JUDICIAL PRONOUNCEMENTS OF JURISDICTIONAL HIGH COURT AND KEE PING IN VIEW THE FACTS OF THE CASE, THE ADDITION OF RS.10,6 3,50,000/- STANDS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. 8 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 5. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. AND ALSO FILED WRITTEN SUBMISSIONS AND SUBMITTED THAT MERE F ILING OF INCOME TAX DETAILS ARE NOT ENOUGH TO PROVE GENUINENESS OF THE CASH CREDITS. MERELY BECAUSE TRANSACTIONS ARE CONDUCTED THROUGH B ANKING CHANNEL IS NO GROUND TO DELETE THE ADDITION. THE LD. D.R. R ELIED UPON THE FOLLOWING DECISIONS. (I) CIT VS. INDEPENDENT MEDIA (P) LTD., (2012) 25 TAXMANN.COM 276. (II) CIT VS. NIPUN BUILDERS & DEVELOPERS (P.) LTD., (2013) 30 TAXMANN.COM 292. (III) CIT VS. ULTRA MODERN EXPORTS (P.) LTD., (2013 ) 40 TAXMANN.COM 458. (IV) CIT VS. EMPIRE BUILTECH (P.) LTD., (2014) 366 ITR 110. (V) CIT VS. FOCUS EXPORTS (P.) LTD., (2014) 51 TAXM ANN.COM 46. 6. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND SUBMITTED THAT ASSESSEE-COMPANY FILED COMPLETE DETA ILS BEFORE A.O. AS WELL AS FILED BALANCE SHEET OF THE INVESTOR COMP ANY WHICH WAS EXAMINED BY THE LD. CIT(A) ALSO. THE TRANSACTION WA S CONDUCTED THROUGH BANKING CHANNEL. THERE WERE NO ADVERSE MATE RIAL FOUND 9 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. DURING THE COURSE OF SEARCH TO PROVE THAT SHARE APP LICATION MONEY WAS BOGUS. A.O. DID NOT MAKE ANY ENQUIRY ON THE DOC UMENTS FILED BY ASSESSEE-COMPANY AND EVEN DID NOT ASK FOR PRODUCTIO N OF THE INVESTOR. THE LEARNED COUNSEL FOR THE ASSESSEE RELI ED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. ORISSA CORPORATION PVT. LTD., 159 ITR 78 AND OTHER DECISIO NS IN THE WRITTEN SUBMISSIONS. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSMENT UN DER SECTION 143(3) HAVE BEEN PASSED ON SCRUTINY ASSESSMENT. THE A.O. F ROM THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY FOUND THAT ASSES SEE-COMPANY HAS RECEIVED FRESH SHARE APPLICATION MONEY OF THE I MPUGNED AMOUNT FROM M/S. JAISRI PROPERTIES EXPORTS PVT. LTD., THE A.O. ASKED THE ASSESSEE-COMPANY TO PROVE THE GENUINENESS OF THE TR ANSACTION IN THE MATTER WITH SUPPORTING DOCUMENTARY EVIDENCE. THE AS SESSEE- COMPANY FILED CONFIRMATION OF THE INVESTOR COMPANY ALONG WITH ITS PARTICULARS, BANK STATEMENT AND COPY OF THE INCOME TAX RETURN FILED WITH THE DEPARTMENT. THE A.O. NOTED THAT THERE WERE HIGH VALUE TRANSACTIONS CONDUCTED BY THE INVESTOR COMPANY. THE INVESTOR 10 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. COMPANY HAS FILED RETURN OF INCOME AT RS.2,80,610 A ND COPY OF THE BALANCE SHEET IS NOT FILED. THE ASSESSEE-COMPANY HA S FILED COPY OF THE BALANCE SHEET BEFORE THE AUTHORITIES BELOW. COPY OF THE SAME IS ALSO FILED IN THE PAPER BOOK. PAGE-53 OF THE PAPER BOOK IS BALANCE SHEET OF THE INVESTOR COMPANY TO SHOW THAT IT HAS TOTAL CAPI TAL OF RS.40,18,20,586 WHICH WAS MORE THAN ENOUGH TO MAKE INVESTMENT IN SHARE APPLICATION MONEY WITH THE ASSESSEE-COMPAN Y. THUS, THE OBJECTIONS OF THE A.O. HAVE BEEN CLEARLY MET BY THE ASSESSEE- COMPANY. IT MAY ALSO BE NOTED THAT THE A.O. DID NOT DISPUTE THE IDENTITY OF THE INVESTOR COMPANY AND MERELY ON ACCO UNT OF LOW INCOME DECLARED BY THE INVESTOR COMPANY WAS OF THE VIEW THAT ITS CREDITWORTHINESS IS NOT EXPLAINED. THE A.O. ON THE ONE HAND HAS MENTIONED IN THE ASSESSMENT ORDER THAT BANK ACCOUNT OF THE INVESTOR COMPANY REVEAL THAT THERE ARE HIGH VALUE TRANSACTIO NS CARRIED OUT THROUGH THE BANK. THEREFORE, CREDITWORTHINESS OF TH E INVESTOR COMPANY SHOULD NOT HAVE BEEN DOUBTED. THE ASSESSEE- COMPANY PRODUCED SUFFICIENT EVIDENCE BEFORE A.O. TO DISCHAR GE THE INITIAL ONUS UPON IT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. FURTHER, THE A.O. DID NO T MAKE ANY 11 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. INVESTIGATION ON THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE- COMPANY. THE A.O. DID NOT ASK FOR THE PRODUCTION OF THE INVESTOR COMPANY FOR EXAMINATION UNDER SECTION 131 OF THE I. T. ACT. NO ENQUIRY HAVE BEEN MADE DIRECTLY OR INDIRECTLY BY TH E A.O. ON THE DOCUMENTS FILED BY THE ASSESSEE-COMPANY AT THE ASSE SSMENT STAGE. NO ADVERSE MATERIAL WAS FOUND DURING THE COURSE OF SEARCH TO PROVE THAT SHARE APPLICATION MONEY RECEIVED BY THE ASSESS EE-COMPANY WAS BOGUS OR WAS AN ARRANGED AFFAIR OF THE ASSESSEE-COM PANY. WE MAY REFER TO FOLLOWING DECISIONS IN SUPPORT OF OUR FIND INGS. 7.1. DECISION OF THE HONBLE SUPREME COURT CIT VS LOVELY EXPORTS P.LTD. [2008] 216 CTR 0195 IN WHICH IT WAS HELD AS UNDER : IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PRO CEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW , BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSE E COMPANY. 12 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 7.2. DECISION OF DELHI HIGH COURT IN THE CASE OF C IT VS KAMDHENU STEEL & ALLOYS LTD. & ORS. 361 ITR 0220 (D ELHI) IN WHICH IT WAS HELD AS UNDER : ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WO ULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVI NG THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTER IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED THAT IT HAS CREATED EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AND FASTEN THE AS SESSEE WITH SUCH A LIABILITY UNDER S.68; AO FAILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHER INVESTIGATION AND THE REFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE. 7.3. JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS VRINDAVAN FARMS P.LTD. ETC. IN ITA NO.71/2015 DATED 12.08.2015 (DELHI) IN WHICH IT WAS HELD AS UNDER : T HE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INCOME AS REFLECTED IN THEIR RETURN OF INCOME. IT WAS OBSERVED BY THE ITAT THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF THE VERACIT Y OF THE 13 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DEPARTMENT AL APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT. 7.4. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. LAXMAN INDUSTRIAL RESOURCES PVT. LTD., ITA.NO.169 O F 2017 DATED 14 TH MARCH, 2017, IN WHICH IT WAS HELD AS UNDER : THE CIT(A) TOOK NOTE OF THE MATERIAL FILED BY THE ASSESSEE AND PROVIDED OPPORTUNITY TO THE AO IN REMAND PROCEEDING S. THE AO MERELY OBJECTED TO THE MATERIAL FURNISHED BUT DID N OT UNDERTAKE ANY VERIFICATION. THE CIT(A) DELETED THE ADDITION BY RELYING UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF LOVELY EXPORTS PVT.LTD. (SUPRA) AND JUDGEMENT OF DELHI HIG H COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268. THE ITAT CONFIRMED THE OPINION OF THE LD.CIT(A). H ONBLE HIGH COURT IN VIEW OF THE ABOVE FINDINGS NOTED THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. THE A SSESSEE PROVIDED DETAILS OF SHARE APPLICANTS I.E. COPY OF T HE PAN, ASSESSMENT PARTICULARS, MODE OF AMOUNT INVESTED THR OUGH BANKING CHANNEL, COPY OF RESOLUTION AND COPIES OF T HE BALANCE 14 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. SHEET. THE AO FAILED TO CONDUCT ANY SCRUTINY OF TH E DOCUMENT, THE DEPARTMENTAL APPEAL WAS ACCORDINGLY DISMISSED. 7.5. DECISION OF HONBLE SUPREME COURT IN THE CASE OF EARTHMETAL ELECTRICAL PVT. LTD., VS. CIT DATED 30 TH JULY, 2010 IN SLP.NO.21073 OF 1999, IN WHICH IT WAS HELD AS UNDER : WE HAVE EXAMINED THE POSITION, WE FIND THAT THE SH AREHOLDERS ARE GENUINE PARTIES. THEY ARE NOT BOGUS AND FICTIT IOUS THEREFORE, THE IMPUGNED ORDER IS SET ASIDE. 7.6. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. DIVINE LEASING & FINANCE LTD., 299 ITR 268, IN WHIC H IT WAS HELD AS UNDER : NO ADVERSE INFERENCE SHOULD BE DRAWN IF SHAREHOLDE RS FAILED TO RESPOND TO THE NOTICE BY A.O. 7.7. DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PEOPLES GENERAL HOSPITAL LTD., (201 3) 356 ITR 65, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEALS, THAT IF THE ASSESSEE HAD R ECEIVED SUBSCRIPTIONS TO THE PUBLIC OR RIGHTS ISSUE THROUGH BANKING 15 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. CHANNELS AND FURNISHED COMPLETE DETAILS OF THE SHAR EHOLDERS, NO ADDITION COULD BE MADE UNDER SECTION 68 OF THE INCO ME-TAX ACT, 1961, IN THE ABSENCE OF ANY POSITIVE MATERIAL OR EV IDENCE TO INDICATE THAT THE SHAREHOLDERS WERE BENAMIDARS OR F ICTITIOUS PERSONS OR THAT ANY PART OF THE SHARE CAPITAL REPRE SENTED THE COMPANY'S OWN INCOME FROM UNDISCLOSED SOURCES. IT W AS NOBODY'S CASE THAT THE NON-RESIDENT INDIAN COMPANY WAS A BOGUS OR NON-EXISTENT COMPANY OR THAT THE AMOUNT SU BSCRIBED BY THE COMPANY BY WAY OF SHARE SUBSCRIPTION WAS IN FAC T THE MONEY OF THE ASSESSEE. THE ASSESSEE HAD ESTABLISHED THE I DENTITY OF THE INVESTOR WHO HAD PROVIDED THE SHARE SUBSCRIPTION AN D THAT THE TRANSACTION WAS GENUINE. THOUGH THE ASSESSEE'S CONT ENTION WAS THAT THE CREDITWORTHINESS OF THE CREDITOR WAS ALSO ESTABLISHED, IN THIS CASE, THE ESTABLISHMENT OF THE IDENTITY OF THE INVESTOR ALONE WAS TO BE SEEN. THUS, THE ADDITION WAS RIGHTLY DELE TED. CIT V. LOVELY EXPORTS P. LTD. [2009] 319ITR (ST.) 5 (SC) A PPLIED. 7.8. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. (I) DWARAKADHISH INVESTMENT P. LTD., (ITA.NO. 911 O F 2010) AND (II) 16 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. DWARKADHISH CAPITAL P. LTD., (ITA.NO.913 OF 2010) ( 2011) 330 ITR 298 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC O NE. THOUGH IN SECTION 68 OF THE INCOME TAX ACT, 1961, THE INITIAL BURDEN OF PROOF LIES ON THE ASSESSES YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THE IR PAN NUMBER OR INCOME-TAX ASSESSMENT NUMBER AND SHOWS THE GENUI NENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT TH E ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO I NVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERS ON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PRO VE THE 'SOURCE OF SOURCE'. THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR THE ASSESSM ENT YEAR 2001-02 ON SCRUTINY OF ACCOUNTS, THE ASSESSING OFFI CER FOUND AN ADDITION OF RS.71,75,000 IN THE SHARE CAPITAL OF TH E ASSESSEE. THE 17 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. ASSESSING OFFICER SOUGHT AN EXPLANATION OF THE ASSE SSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OF FERED A DETAILED EXPLANATION. HOWEVER, ACCORDING TO THE ASSESSING OF FICER, THE ASSESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE AP PLICATION MONEY FROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY, T HE ASSESSING OFFICER MADE AN ADDITION OF RS.35,50,000/- WITH THE AID OF SECTION 68 OF THE ACT, 1961 ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE. HOWEVER, IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE AD DITION ON THE GROUND THAT THE ASSESSEE HAD PROVED THE EXISTENCE O F THE SHAREHOLDERS AND THE GENUINENESS OF THE TRANSACTION . THE INCOME-TAX APPELLATE TRIBUNAL CONFIRMED THE ORDER O F THE COMMISSIONER OF INCOME-TAX (APPEALS) AS IT WAS ALSO OF THE OPINION THAT THE ASSESSEE HAD BEEN ABLE TO PROVE TH E IDENTITY OF THE SHARE APPLICANTS AND THE SHARE APPLICATION MONE Y HAD BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEALS, THAT THE DELET ION OF ADDITION WAS JUSTIFIED. 18 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. 7.9. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. WINSTRAL PETROCHEMICALS P. LTD., 330 ITR 603, IN WH ICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUT ED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSE E-COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BAN KING CHANNELS. ADMITTEDLY, COPIES OF APPLICATION FOR AL LOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSESSING OFFICER. SINCE THE APPLICANT COMPANIES WERE DULY INCORPORATED, WERE IS SUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH MONEY WAS TR ANSFERRED TO THE ASSESSEE BY WAY OF ACCOUNT PAYEE CHEQUES, TH EY COULD NOT BE SAID TO BE NON-EXISTENT, EVEN IF THEY, AFTER SUB MITTING THE SHARE APPLICATIONS HAD CHANGED THEIR ADDRESSES OR HAD STO PPED FUNCTIONING. THEREFORE, THE COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE GENUINE NESS OF THE TRANSACTIONS HAD BEEN DULY ESTABLISHED BY THE ASSES SEE. 7.10. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD., (2008) 307 ITR 33 4 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : 19 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANT S DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTME NT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE ASSE SSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCOME O F THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. 8. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF MATERIAL ON RECORD, IT IS CLEAR THAT ASSESSEE-COMPANY PRODUCED SUFFICIENT DOCUMENTARY EVIDENCE BEFORE A.O. TO PROVE THE INGRE DIENTS OF SECTION 68 OF THE I.T. ACT. THE A.O. HOWEVER, DID NOT MAKE ANY FURTHER ENQUIRY ON THE DOCUMENTS FILED BY THE ASSESSEE-COMPANY. THE A.O. THUS, FAILED TO CONDUCT ANY ENQUIRY AND SCRUTINY OF THE D OCUMENTS AT ASSESSMENT STAGE AND MERELY SUSPECTED THE TRANSACTI ON BETWEEN THE INVESTOR COMPANY AND ASSESSEE-COMPANY BECAUSE THE I NVESTOR COMPANY WAS FROM KOLKATA. THE A.O. THUS, DID NOT PE RFORM HIS DUTIES AT THE ASSESSMENT STAGE SO AS TO MAKE ADDITI ON AGAINST THE ASSESSEE-COMPANY. NO CASH WAS FOUND DEPOSITED IN TH E ACCOUNT OF THE INVESTOR. THEREFORE, THE TOTALITY OF THE FACTS AND CIRCUMSTANCES CLEARLY PROVE THAT ASSESSEE-COMPANY DISCHARGED INIT IAL ONUS TO PROVE 20 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. IDENTITY OF THE INVESTOR COMPANY, ITS CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE L D. CIT(A) ON PROPER APPRECIATION OF THE EVIDENCE BEFORE HIM CORR ECTLY DELETED THE ADDITION. NO INTERFERENCE IS CALLED FOR IN THE MATT ER. THE DECISIONS RELIED UPON BY THE LD. D.R. WOULD NOT SUPPORT THE C ASE OF THE REVENUE IN VIEW OF THE FACT THAT NO ENQUIRY HAVE BEEN CONDU CTED BY THE A.O. IN THIS CASE TO DISPUTE THE DOCUMENTARY EVIDENCE FI LED BY THE ASSESSEE-COMPANY. THE DEPARTMENTAL APPEAL HAS NO ME RIT AND IS ACCORDINGLY DISMISSED. 9. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CROSS OBJECTION IS FILED IN SUPPORT OF THE ORDER OF THE L D. CIT(A). THEREFORE, THE CROSS OBJECTION IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT AS WEL L AS CROSS OBJECTION OF THE ASSESSEE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 1 ST JANUARY, 2018 VBP/- 21 ITA.NO.453/DEL./2016 & CO.NO.96/DEL./2016 M/S. TRN ENERGY PVT. LTD., NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT B BENCH 6. GUARD FILE //BY ORDER// ASST. REGISTRAR : ITAT : DELHI BENCHES : DELHI.