DCIT, New Delhi V. M/s Independent Media (P.) Ltd., New Delhi

ITA 470/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5481 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 02-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 06-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NAVNEET SON I
• Assessee Lawyers: SURESH ANANTRAM
• Keywords: Share purchase agreement; Accommodation entries; Assessment record; Reassessment proceedings
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI D.R.SINGH, JM AND SHRI R.C.SHARMA, AM ITA NO.470/DEL/2009 ASSESSMENT YEAR : 2004-05 DY.COMMISSIONER OF INCOME TAX, CIRCLE-11(1), NEW DELHI. VS. M/S INDEPENDENT MEDIA (P) LTD., 75-AMRIT NAGAR, 3 RD FLOOR, SOUTH EXTENSION, PART-I, NEW DELHI. PAN NO.AAACI2225C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVNEET SONI, CIT-DR. RESPONDENT BY : SHRI M.P.RASTOGI AND SHRI SURESH ANANTRAM, ADVOCATES. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF CIT(A) DATED 14.11.2008 FOR THE ASSESSMENT YEAR 2004-05. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSES SEE FILED ITS RETURN OF INCOME ON 1.11.2004 SHOWING TOTAL INCOME OF RS.49.51 LAKHS. THE RETURN WAS ACCOMPANIED BY COPIES OF AUDITED ACCOUNTS AND TAX AUDIT REPORT U/S 44AB. THE RETURN WAS PROCESSED U/S 143(1) ON 20.3.2005. THEREAFTER, A N OTICE WAS ISSUED U/S 148. THE ASSESSEE VIDE LETTER DATED 20.4.2007 SUBMITTED THAT THE RETURN FILED ON 1.11.2004 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTIC E U/S 148. THEREAFTER, AO ISSUED NOTICE U/S 143(2). IN RESPONSE TO NOTICE U/S 143(2 ) AND 142(1), SHRI RAKESH CHADHA AND SHRI PRAVIN AGGARWAL, CA AND AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED AND FURNISHED THE DETAILS CALLED FOR. THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE W AS IN RECEIPT OF SHARE CAPITAL. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF PERSON S FROM WHOM THE SHARE CAPITAL ITA-470/D/2009 2 WAS RECEIVED AND ALSO TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE SAID PERSONS. THE ASSESSEE SUBMITTED THE DETAILS OF SUBS CRIPTION OF EQUITY SHARES RECEIVED BY THE ASSESSEE COMPANY WHICH INCLUDES PAN NUMBER, SHARE APPLICATION FORMS, BOARDS RESOLUTION, COPY OF BANK STATEMENT, PAY ORDER, CONFIRMATION FROM SUBSCRIBERS, INCOME TAX RETURNS, COPY OF BALANCE SH EET ETC. OF THE APPLICANT COMPANIES AND CLAIMED THAT THE SHARE APPLICATION MO NEY SHOULD BE TREATED AS GENUINE. AS PER AO, INVESTIGATIONS WERE CARRIED OUT BY THE INVESTIGATION WING OF I.T. DEPARTMENT WHERE THE PERSONS APPLYING FOR SHAR E CAPITAL ADMITTED THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES AFTER RECEIPT OF CASH FROM THE PARTIES AND CHARGING THEIR COMMISSION THEREON. AO ALSO NOTED T HAT ASSESSEE HAD NOT FILED CONFIRMATION FROM THE COMPANIES APPLYING FOR SHARE CAPITAL OF ASSESSEE COMPANY. ON THE BASIS OF INVESTIGATION REPORT BY THE INVESTI GATION WING OF THE DEPARTMENT WITH REGARD TO SHARE APPLICANT COMPANIES, THE AO DI D NOT ACCEPT THE GENUINENESS OF SHARE CAPITAL MONEY PAID BY THESE COMPANIES. BE ING NOT SATISFIED WITH THE ASSESSEES CONTENTION, THE AO ADDED THE ENTIRE SHAR E APPLICATION MONEY AND ALSO COMMISSION ALLEGED TO BE PAID FOR PROCURING THE SAM E IN THE ASSESSEES INCOME. 3. BY THE IMPUGNED ORDER, CIT(A) DELETED THE ADDITI ON BY OBSERVING THAT THE ASSESSEE HAS FILED PARTICULARS WITH RESPECT TO EACH SHAREHOLDER, THEIR SHARE APPLICATION FORMS, BOARDS RESOLUTION OF THE INVEST EE COMPANIES FOR SUBSCRIBING TO THE EQUITY CAPITAL OF THE ASSESSEE, RESOLUTION OF T HE BOARD OF DIRECTORS OF THE COMPANY APPROVING THE ALLOTMENT OF SHARES, SHARE CE RTIFICATE NUMBER, DISTINCTIVE NUMBER OF SHARES, COPIES OF PAY ORDERS REPRESENTING MONEYS PAID BY THE INVESTEE COMPANY ON ACCOUNT OF SHARE CAPITAL, COPIES OF BANK STATEMENT OF THE INVESTEE COMPANIES, COPY OF MEMORANDUM AND ARTICLES OF ASSOC IATION TOGETHER WITH CERTIFICATE OF INCORPORATION ISSUED BY THE REGISTRA R OF COMPANIES OF THE INVESTEE COMPANY, COPY OF LATEST BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF THE INVESTEE COMPANY, PARTICULARS OF PAN NUMBERS, COPIES OF INCO ME TAX RETURNS OF THE INVESTEE COMPANIES, COPIES OF INTIMATION ISSUED BY THE INCOME-TAX DEPARTMENT IN RESPECT OF THE INVESTEE COMPANIES, RETURNS OF ALLOT MENT OF SHARES FILED WITH THE REGISTRAR OF COMPANIES. THE CIT(A) ALSO OBSERVED T HAT BANK STATEMENT OF THE ITA-470/D/2009 3 INVESTEE COMPANIES CLEARLY REVEALS THAT ALL INVESTE E COMPANIES HAD EITHER SUFFICIENT MONEY AVAILABLE BEFORE SUBSCRIBING TO THE EQUITY CA PITAL OF THE ASSESSEE COMPANY OR THAT SUCH COMPANIES BANK ACCOUNTS WERE CREDITED WITH THE AMOUNTS ON TRANSFER FROM THIRD PARTIES, WHEREUPON AMOUNTS WERE REMITTED TO THE ASSESSEE AS SHARE APPLICATION MONEY. THE CIT(A) ALSO RECORDED A FIND ING TO THE EFFECT THAT AS PER THE BANK STATEMENT PRIOR TO THE SUBSCRIPTION OF THE SHARE CAPITAL, THERE WERE NO CASH DEPOSITS IN THE BANK ACCOUNTS OF THE INVESTEE COMPA NY. WITH REGARD TO AOS OBSERVATION THAT ASSESSEE COMPANY HAS NOT FILED CON FIRMATION OF SHAREHOLDERS, THE CIT(A) OBSERVED THAT IT IS CONTRARY TO THE FACTS ON RECORD AND THAT COPIES OF SHARE APPLICATIONS IN EACH CASE OF SHAREHOLDERS INDICATIN G THEIR NAMES, ADDRESSES, PAN NUMBERS, AMOUNT OF REMITTANCE, THE AMOUNT REMITTABL E WITH RESPECT TO THE SHARES APPLIED FOR, PO OR BANKERS CHEQUE NUMBER WERE FILE D BEFORE THE AO. THE CIT(A) ALSO OBSERVED THAT THE SAID APPLICATION FORM SIGNED BY THE COUNTER PARTY IS ITSELF A CONFIRMATION OF THE REMITTANCE MADE TO THE ASSESSEE COMPANY AND COULD NOT HAVE BEEN IGNORED FOR ELICITING A RESPONSE, OTHER THAN W HAT THE DOCUMENT PURPORTS. HE AFTER RELYING ON THE DECISION OF HONBLE SUPREME CO URT IN THE CASE OF LOVELY EXPORTS 260 CTR 185 AFFIRMING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF LOVELY EXPORTS 299 ITR 268 W HEREIN IT WAS HELD THAT WHERE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, NO A DDITION CAN BE MADE IN THE HANDS OF ASSESSEE COMPANY BUT THE DEPARTMENT IS FRE E TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. THE REAFTER, HE RELIED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF DIVINE LEASING & FINANCE LTD., GENERAL EXPORTS AND CREDIT LTD. AND S HIPRA RETAILERS PVT.LTD., AGAINST WHICH SLP FILED BY THE REVENUE WAS DISMISSE D BY THE HONBLE SUPREME COURT VIDE THEIR JUDGMENT DATED 21.1.2008, 10.3.200 8 AND 21.1.2008 RESPECTIVELY. AGGRIEVED BY THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. IT WAS CONTENDED BY THE LEARNED CIT-DR SHRI NAVN EET SONI THAT INVESTIGATION WING OF THE DEPARTMENT HAS COLLECTED INFORMATION WITH REGARD TO ITA-470/D/2009 4 PERSONS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY ACCEPTING CASH. HE FURTHER STATED THAT THE PERSONS PROVIDING SUCH ENTR IES HAVE ADMITTED DURING THE COURSE OF INVESTIGATION THAT CHEQUES/DDS ON ACCOUNT OF SHARE CAPITAL WERE ISSUED AFTER RECEIPT OF CASH. ACCORDINGLY, AS PER LEARNED DR, THESE COMPANIES WERE EXCLUSIVELY ENGAGED IN PROVIDING ACCOMMODATION ENTR IES AND THERE WAS NO REAL BUSINESS BEING CARRIED ON BY THESE COMPANIES. ACCO RDINGLY, REQUEST WAS MADE FOR REVERSING THE ORDER OF CIT(A) AND CONFIRMING THE OR DER OF THE AO MAKING ADDITION U/S 68 OF THE IT ACT. 5. ON THE OTHER HAND, LEARNED AR SHRI M.P.RASTOGI S UBMITTED THAT ASSESSEE HAS DULY DISCHARGED ITS ONUS WITH REGARD TO IDENTIT Y OF THE SHAREHOLDERS BY FURNISHING NAME AND ADDRESS OF THE SHARE APPLICANTS , COPIES OF THEIR PAN NUMBERS, BOARDS RESOLUTION AND COPY OF BANK STATEMENT OF TH E ALLEGED SHAREHOLDERS ALONGWITH THEIR INCOME TAX RETURNS AND COPIES OF BA LANCE SHEET. AS THE SHARE APPLICATION MONEY WAS GIVEN BY ISSUE OF CHEQUE/PAY ORDER, THE GENUINENESS OF THE TRANSACTION IS WELL PROVED. AS PER LEARNED AR, FRO M THE BANK STATEMENT OF THE SHAREHOLDERS, THERE WAS SUFFICIENT BALANCE IN THE A CCOUNTS AND NO CASH WAS DEPOSITED BEFORE THE ISSUE OF CHEQUE, ACCORDINGLY C REDITWORTHINESS OF THE SHAREHOLDERS IS WELL PROVED. HE FURTHER SUBMITTED THAT AO HAS MERELY RELIED ON THE INVESTIGATION REPORT OF THE INVESTIGATION WING WITHOUT EXAMINING THE CORRECTNESS OF STATEMENT RECORDED BY THEM. NOR ANY OPPORTUNITY WAS PROVIDED TO CROSS EXAMINE SUCH PERSONS. LEARNED AR FURTHER STA TED THAT EVEN STATEMENTS GIVEN BY SUCH PERSONS WERE GENERAL STATEMENTS WITHOUT SPE CIFICALLY MENTIONING THE NAME OF ASSESSEE COMPANY. AS PER LEARNED AR, SUCH GENER AL STATEMENTS CANNOT BE USED AGAINST ASSESSEE WITHOUT AFFORDING REASONABLE OPPOR TUNITY TO ASSESSEE TO CROSS EXAMINE THE CORRECTNESS AND TRUTHFULNESS OF SUCH ST ATEMENT. IN VIEW OF DECISION OF HON'BLE SUPREME COURT IN THE CASE OF ., I T WAS SUBMITTED THAT NO SUCH INFORMATION AND EVIDENCE CAN BE USED A GAINST THE ASSESSEE. HE PLACED HEAVY RELIANCE ON THE FINDINGS RECORDED BY CIT(A) A ND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (SUPRA) , WHEREIN IT WAS HELD THAT THE AMOUNT OF SHARE APPLICATION MONEY CANNOT BE REGARDE D AS UNDISCLOSED INCOME OF ITA-470/D/2009 5 THE ASSESSEE U/S 68 OF THE IT ACT. IT WAS ALSO HEL D BY HON'BLE SUPREME COURT THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE A SSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO , THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS I N ACCORDANCE WITH LAW. AS PER LEARNED AR, SINCE THE ASSESSEE HAS DULY FURNISHED T HE NAMES OF ALL THE SHAREHOLDERS ALONGWITH THEIR ADDRESSES AND COPIES OF ALLOTMENT O F SHARES FILED WITH THE REGISTRAR OF COMPANIES, COPIES OF THEIR BALANCE SHEET, INCOME TAX RETURNS, COPIES OF THEIR BANK STATEMENT, THE ASSESSEE HAS DISCHARGED ITS PRI MARY ONUS AND NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE COMPANY. IF T HERE IS ANY DOUBT WITH REGARD TO GENUINENESS OF THE ALLEGED SHAREHOLDERS, THE DEPART MENT HAS ALL THE LIBERTY TO REOPEN THEIR ASSESSMENTS AND TO VERIFY THE AVAILABI LITY OF SUFFICIENT BALANCE IN THEIR HANDS TO FIND OUT THEIR CREDITWORTHINESS AND TO VER IFY THE GENUINENESS OF TRANSACTION ENTERED INTO BY THEM. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATED UPON DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AND HON'BLE SUPREME COURT RELIED ON BY CIT(A) IN HIS APPELLATE ORDER AND CITED BY LEARNED AR DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD, WE FOUND THAT DURING THE YEAR, THE ASSESSEE HAS FILED ITS RETURN AT INCOME OF RS.49.51 LAKHS. AS THE ASSESSEE WAS IN R ECEIPT OF SHARE APPLICATION MONEY, ON THE BASIS OF INFORMATION BY THE INVESTIGA TION WING WITH REGARD TO PROVIDING OF ACCOMMODATION ENTRIES BY SOME OF THE B OGUS COMPANIES, THE AO REOPENED THE ASSESSMENT BY ISSUE OF NOTICE U/S 148. IN THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAS FURN ISHED DETAILS OF SUBSCRIPTION OF EQUITY SHARES RECEIVED BY THE ASSESSEE COMPANY WHIC H INCLUDED PAN NUMBERS, SHARE APPLICATION FORMS, BOARDS RESOLUTION, COPY O F BANK STATEMENT, PAY ORDER, CONFIRMATION FROM SHAREHOLDERS, INCOME TAX RETURNS, COPY OF BALANCE SHEET ETC. HOWEVER, THE AO STATED THAT SINCE THE ASSESSEE HAS NOT FURNISHED CONFIRMATION OR EVIDENCE TO PROVE THE GENUINENESS OR CREDITWORTHINE SS OF THE PERSONS WHO APPLIED FOR SHARES OF THE ASSESSEE COMPANY, THERE WAS REASO N TO BELIEVE THAT THESE SHAREHOLDERS WERE BOGUS WHO HAD PROVIDED ACCOMMODAT ION ENTRIES TO THE ITA-470/D/2009 6 ASSESSEE. WITH REGARD TO AOS OBSERVATION THAT ASS ESSEE COMPANY HAS NOT FURNISHED CONFIRMATION FROM THE ALLEGED SHAREHOLDER S, THE CIT(A) HAS RECORDED A FINDING TO THE EFFECT THAT ALLEGATION OF THE AO IS FACTUALLY INCORRECT INSOFAR AS SHARE APPLICATION FORM DULY SIGNED BY THE SHAREHOLDERS AS FILED BEFORE AO ITSELF IS A CONFIRMATION OF THE REMITTANCE MADE TO THE ASSESSEE AND COULD NOT HAVE BEEN IGNORED FOR ELICITING A RESPONSE, OTHER THAN WHAT T HE DOCUMENT PURPORTS. SINCE THE COPIES OF SHARE APPLICATION FORMS DULY SIGNED BY TH E RESPECTIVE APPLICANTS WERE ALREADY ON THE ASSESSMENT RECORDS AND ALSO THE BANK STATEMENT OF THE SHARE APPLICANTS INDICATING SUFFICIENT CREDIT BALANCE IN THE RESPECTIVE BANK ACCOUNT, THERE IS NO REASON FOR STATING THAT ASSESSEE HAS NOT ESTA BLISHED IDENTITY AND CREDITWORTHINESS OF THE SHAREHOLDERS. THE CIT(A) I N HIS ORDER HAS ALSO RECORDED A CATEGORICAL FINDING WITH RESPECT TO EACH SHAREHOLDE RS INDICATING THAT ASSESSEE HAS FILED APPLICATION FORMS, BOARDS RESOLUTION OF THE INVESTEE COMPANY FOR SUBSCRIBING TO THE EQUITY CAPITAL OF THE ASSESSEE, RESOLUTION O F THE BOARD OF DIRECTORS OF THE ASSESSEE COMPANY APPROVING THE ALLOTMENT OF SHARES, SHARE CERTIFICATE NUMBERS, DISTINCTIVE NUMBER OF SHARES ALLOTTED TO THEM, COPI ES OF THE PAY ORDER REPRESENTING MONEY PAID BY THE INVESTEE COMPANIES ON ACCOUNT OF SHARE CAPITAL, COPIES OF THE BANK STATEMENT OF THE INVESTEE COMPANIES, COPIES OF MEMORANDUM AND ARTICLE OF ASSOCIATION TOGETHER WITH CERTIFICATE OF INCORPORAT ION ISSUED BY THE REGISTRAR OF COMPANIES OF THE INVESTEE COMPANIES, COPIES OF LATE ST AVAILABLE BALANCE SHEET AND PROFIT & LOSS ACCOUNT OF THE INVESTEE COMPANIES, PA RTICULARS OF PAN NUMBERS, COPY OF INCOME TAX RETURNS, COPY OF INTIMATION ISSUED BY THE DEPARTMENT IN RESPECT OF THE INVESTEE COMPANIES ON FILING THEIR RETURN OF IN COME AND RETURN OF ALLOTMENT OF SHARES FILED WITH THE REGISTRAR OF COMPANIES. WITH REGARD TO CREDITWORTHINESS OF THE SHAREHOLDERS, THE CIT(A) HAD CATEGORICALLY RECO RDED A FINDING TO THE EFFECT THAT ALL THE INVESTEE COMPANIES HAD EITHER SUFFICIENT CR EDIT BALANCE IN THEIR RESPECTIVE BANK ACCOUNT BEFORE SUBSCRIBING TO THE EQUITY CAPIT AL OF THE ASSESSEE COMPANY OR THAT SUCH COMPANIES BANK ACCOUNTS WERE CREDITED WI TH AMOUNTS ON TRANSFER FROM THIRD PARTIES, WHEREUPON AMOUNTS WERE REMITTED TO T HE ASSESSEE AS SHARE APPLICATION MONEY. A CATEGORICAL FINDING HAS ALSO BEEN RECORDED BY THE CIT(A) TO THE EFFECT THAT PRIOR TO THE SUBSCRIPTION OF THE SH ARE CAPITAL, THERE WAS NO CASH ITA-470/D/2009 7 DEPOSIT IN THE BANK OF THE INVESTEE COMPANIES. THU S, THE ALLEGATION OF AO THAT CASH WAS DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE BY INVESTING COMPANY, DOES NOT SURVIVE ANY MORE. NONE OF THESE FINDINGS OF CIT(A) HAS BEEN CONTROVERTED BY THE DEPARTMENT. IN VIEW OF ALL THE SE DOCUMENTARY EVIDENCE FILED BEFORE THE AO AND CATEGORICAL FINDING RECORDED BY T HE CIT(A) IN HIS APPELLATE ORDER WITH REGARD TO ALL THESE DOCUMENTS, WHICH HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT, WE CAN SAY THAT ASSESSEE HAS DISCHARGED ITS ONUS OF RECEIPT OF SHARE APPLICATION MONEY, THEREFORE NO ADDITION CAN BE MAD E IN THE HANDS OF THE ASSESSEE COMPANY. HOWEVER, AT THE VERY SAME TIME, THERE IS A REPORT BY THE INVESTIGATION WING TO THE EFFECT THAT THE COMPANIES FROM WHOM SHA RE APPLICATION MONEY HAS BEEN RECEIVED BY THE ASSESSEE COMPANY WERE INVOLVED IN GIVING ACCOMMODATION ENTRIES BY ACCEPTING CASH. WE CANNOT SHUT OUR EYES TO THE INVESTIGATION REPORT AVAILABLE WITH THE AO. FURTHERMORE, A DUTY IS CAST ED ON THE AO TO VERIFY THE CORRECTNESS OF SUCH REPORT/STATEMENTS WHEREIN THESE PERSONS HAVE STATED THAT THEY HAD MADE INVESTMENT IN SHARE CAPITAL AFTER ACCEPTIN G CASH. ONLY AFTER BRINGING CORROBORATIVE MATERIAL ON RECORD AND GIVING OPPORTU NITY TO CROSS-EXAMINE, ADDITION CAN BE CONSIDERED IN THE HANDS OF THE PERSONS WHO H AD GIVEN SUCH MONEY TO THESE BOGUS COMPANIES FOR MAKING FURTHER INVESTMENT IN TH E FORM OF SHARE CAPITAL. HOWEVER, NO SUCH INQUIRY HAD BEEN DONE BY AO NOR AN Y CORROBORATIVE MATERIAL HAS BEEN BROUGHT ON RECORD. IN THIS REGARD, THE OB SERVATION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VALUE CAPI TAL SERVICES 307 ITR 334 IS VERY IMPORTANT WHEREIN HONBLE HIGH COURT HAD OBSER VED THAT WHERE THE CIT(A) HAVING ACCEPTED THE EXISTENCE OF SHARE APPLICANTS A ND THE REVENUE HAVING NOT SHOWN THAT APPLICANTS DID NOT HAVE THE MEANS TO MAK E THE INVESTMENT, THE ADDITIONAL BURDEN IS ON THE REVENUE TO SHOW THAT IN VESTMENT ACTUALLY EMANATED FROM THE COFFERS OF THE ASSESSEE COMPANY. MEANING THEREBY, WHENEVER DEPARTMENT WANTS TO MAKE ANY ADDITION IN THE HANDS OF ASSESSEE COMPANY WHO HAS RECEIVED SHARE APPLICATION MONEY, THEN BURDEN IS ON THE DEPA RTMENT TO SHOW THAT MONEY SO INVESTED DID NOT BELONG TO THE INVESTING COMPANY BU T HAS COME FROM THE COFFERS OF THE ASSESSEE COMPANY. SINCE IN THE INSTANT CASE NO THING HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT TO ESTABLISH THAT THE MONE Y HAS COME FROM THE COFFERS OF ITA-470/D/2009 8 THE ASSESSEE COMPANY, NO ADDITION IS WARRANTED IN T HE HANDS OF THE ASSESSEE COMPANY. ACCORDINGLY, THE DEPARTMENT IS DIRECTED T O LOOK INTO THE ACTUAL SOURCE FROM WHERE MONEY HAS COME FOR INVESTMENT BY THESE C OMPANIES. IF AFTER INVESTIGATION SUCH MONEY IS PROVED TO BE UNACCOUNTE D MONEY, THEN DEPARTMENT IS EQUALLY COMPETENT AND EMPOWERED TO CONSIDER THE ADD ITION IN THE HANDS OF THOSE PERSONS WHO HAD PROVIDED MONEY AND WHICH HAS COME T O THE COFFERS OF THESE BOGUS SHAREHOLDERS FOR INVESTMENT IN SHARE CAPITAL. IN THE INSTANT CASE, THE AO HAS NOT MADE INDEPENDENT ENQUIRY WITH REGARD TO STATEME NT RECORDED BY THE INVESTIGATION WING WHEREIN IT WAS ALLEGED THAT THES E PERSONS WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES AFTER ACCEPTING CAS H. NO OPPORTUNITY WAS PROVIDED TO CROSS-EXAMINE SUCH STATEMENT AND THE PE RSONS WHO HAVE GIVEN SUCH STATEMENT. WITHOUT BRINGING CORROBORATIVE MATERIAL ON RECORD WITH REGARD TO TRUTHFULNESS OF SUCH STATEMENT AND WITHOUT GIVING O PPORTUNITY TO CROSS-EXAMINE THESE PERSONS, NO ADDITION CAN BE MADE. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THE MATTER BACK TO THE FILE OF AO TO VERIFY THE SOURCE OF SUCH MONEY HAVING BEEN COME TO THESE ALLEGED BOGUS SHARE HOLDERS AND AFTER ESTABLISHING THE FACT OF MONEY HAVING BEEN COME FRO M THE COFFERS OF SUCH PERSONS, THE ADDITION MAY BE CONSIDERED IN THE HANDS OF SUCH PERSONS WHO HAD PROVIDED MONEY TO SUCH BOGUS COMPANY FOR INVESTING THE SAME AS SHARE CAPITAL. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED IN PART IN TERMS INDICATED HEREINABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.03.2010. VK. ITA-470/D/2009 9 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR