DCIT, GONDA V. M/S Tulsyan Vastralaya Pvt. Ltd., Basti

ITA 473/LKW/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70562 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-10-2013
• Assessment Year: misc
• Appeal Filed On: 04-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Unexplained cash credit; Bogus Share capital; Business income; Share purchase agreement; Deemed to accrue or arise in india; Question of law; Onus to prove
• Section: 68; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER ITA NO. 473 /LKW/201 1 A.Y.: 2007 - 08 DY. C.I.T., CIRCLE GONDA. VS. M/S TULSYAN VASTRALAYA (P) LTD., CHOWK, GANDHI NAGAR, BASTI. PAN:AABCT8612K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D.R. RESPONDENT BY SHRI RAKESH GARG, ADVOCATE DATE OF HEARING 12/09/2013 DATE OF PRONOUNCEMENT 1 2 / 1 1 / 2 0 1 3 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED ON FACTS BY DELETING ADDITION OF RS. 1 CRORE MADE U/S 68 OF THE IT ACT. 2. THE LD. CIT(A) HAS ERRED ON FACTS BY IGNORING THE FACT THAT AS PER SHAREHOLDERS REGISTER, THE DIRECTORS OF THE COMPANY PURCHASED SHARES FROM INITIAL INVESTORS AFTER CLOSE OF THE FINANCIAL YEAR WHILE ENQUIRIES REVEALED THAT INITIAL INVESTORS HAD SOLD SHARES TO SOME OTHER COMPANIES DU RING THE ACCOUNTING YEAR ITSELF. [ 2 ] 3. BY DOING SO, THE LD. CIT(A) ACCEPTED A SELF CONTRADICTORY SITUATION AS PRESENTED IN THE SECOND TABLE AT PAGE 5 AND 6 OF THE ASSESSMENT ORDER AND WRONGLY ALLOWED RELIEF TO THE ASSESSEE. 4. THE LD. CIT(A) DISTINGUISHED T HE CASE OF SUMATI DAYAL VS. CIT (214 ITR 801)(SC) ON FACTS OF THE PRESENT CASE IGNORING THE OBSERVATION OF THE APEX COURT IN THIS CASE THAT TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT REALITY AND MATTER HAS TO BE CONSIDERED BY APPLYING TEST OF HUMAN PROBABILITIES. THE LD. CIT(A) WAS THUS IN ERROR IN NOT APPRECIATING THAT TRANSACTIONS PERTAINING TO SHARES HAD TO BE LOOKED AT IN LIGHT OF THE ATTENDING CIRCUMSTANCES AND WHEN THIS IS DONE THE ASSESSEES EXPLANATIONS AR E TOTALLY INADEQUATE AND INCAPABLE OF BELIEF. ANY OTHER GROUND OF APPEAL WHICH MAY BE TAKEN SUBSEQUENTLY. 2. THOUGH VARIOUS GROUNDS ARE RAISED BUT THEY ALL RELATE TO DELETION OF ADDITION OF RS. ONE CRORE MADE U/S 68 OF THE ACT (HEREINAFTER REFERRED TO AS THE ACT) AFTER DISBELIEVING THE GENUINENESS OF SHARE SUBSCRIPTION. THE FACTS IN BRIEF, BORNE OUT FROM THE RECORD, ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS RECEIVED RS. ONE CRORE TOWARDS SHARE CAPITAL AND SHARE PREMIUM ACCOUNT. THE ASSESSEE WAS ASKED TO EXPLAIN THE GENUINENESS OF THE SUBSCRIPTION TOWARDS SHARE CAPITAL BY PRODUCING THE COPIES OF AUDITED AC COUNTS OF THE INVESTOR COMPANIES, SHARE APPLICATION FORMS, BANK DETAILS AND PAN ETC. THE ASSESSEE HAS FILED THE REQUISITE INFORMATION BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ALSO DEPUTED THE INSPECTORS TO MAKE THE ENQUIRIES WITH REGARD TO THE SHAREHOLDERS. THE REPORT WAS SUBMITTED BY THE INSPECTOR AND HAVING RELIED UPON THE REPORT , THE ASSESSING OFFICER HAS CONCLUDED THAT THE GENUINENESS OF THE WHOLE TRANSACTION IS NOT ESTABLISHED DUE TO VARIOUS DISCREPANCIES AND HE ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND TREATED THE ENTIRE AMOUNT OF RS. ONE CRORE AS U NEXPLAINED CASH [ 3 ] CREDIT HAVING APPLIED THE TEST OF HUMAN PROBABILITIES AS WAS PROPOUNDED BY HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC). 3. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WITH THE SUBMISSIONS THAT I T CARRIED ON BUSINESS OF PURCHASE AND SALE OF CLOTH ON WHOLESALE BASIS AND TOTAL SALES DISCLOSED FOR THE YEAR UNDER CONSIDERATION WAS RS.9,89,91,838/ - . DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ISSUED FOR SUBSCRIPTION OF 50,000 EQUITY SHARES OF FA CE VALUE OF RS.100/ - EACH WITH A PREMIUM OF RS.100/ - PER SHARE. THE DETAILS OF THE SHARES ISSUED I.E. THE NAME AND ADDRESS OF THE PERSONS, NUMBER OF SHARES APPLIED AND ALLOTTED, THE AMOUNT RECEIVED, MODE OF RECEIVING THE SHARE APPLICATION MONEY AND THE DA TE OF ALLOTMENT WERE FURNISHED TO THE ASSESSING OFFICER. CONFIRMATIONS FROM APPLICANTS OF SHARE APPLICATION IN RESPECT OF SHARE MONEY RECEIVED AND SHARE ALLOTTED WERE FILED. INDEPENDENT ENQUIRY WAS ALSO MADE BY THE ASSESSING OFFICER WITH REGARD TO THE RESPECTIVE PERSONS TO WHOM THE SHARES WERE ALLOTTED AND THE ASSESSING OFFICER HIMSELF HAS OBSERVED IN HIS ORDER THAT COPIES OF AUDITED ACCOUNTS OF THE INVESTOR COMPANIES, SHARE APPLICATION FORMS, CHEQUE NO. , BANK, PAN ETC. WERE FILED. IT WAS FURTHER SUBMI TTED THAT T HE ASSESSING OFFICER DOUBTED THE GENUINENESS OF INTRODUCTION OF SHARE CAPITAL FOR THE REASONS THAT THE SHARES ALLOTTED TO THE SAID COMPANIES WERE NOT HELD BY THE COMPANIES ON THE DATE WHEN THE INSPECTOR VISITED AND SUBMITTED THE REPORT. THE SAI D COMPANIES HAD SOLD THE SHARES TO SOME OTHER COMPANIES WHICH IN TURN WERE PURCHASED BY THE TWO DIRECTORS OF THE APPELLANT COMPANY. THE ASSESSING OFFICER, ON THE BASIS OF INSPECTO R S REPORT, CONCLUDED THAT THE COMPANIES WERE NON FUNCTIONING. IT WAS ALSO CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF THE PERSONS TO WHOM SHARES HAVE BEEN ALLOTTED, WHICH ON VERIFICATION HAVE NOT BEEN FOUND TO BE [ 4 ] INCORRECT. THE IDENTITY OF THE SHAREHOLDERS, NATURE AND CAPACITY AND GENUINENESS OF THE TRANSACTIONS WERE STAND PROVED . ALL THE PERSONS TO WHOM THE SHARES HAVE BEEN ALLOTTED WERE ASSESSED TO TAX. 3.1 THE CIT(A) RE - EXAMINED THE ISSUE OF GENUINENESS OF TH E SHARE TRANSACTION IN THE LIGHT OF DETAILED WRITTEN SUBMISSIONS FILED BY THE A SSESSEE AND FINDING FORCE THEREIN, THE CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE AFTER TREATING SHARE TRANSACTIONS TO BE GENUINE. CONSEQUENTLY, THE ADDITION WAS DELETED. WHILE DEALING WITH THE ISSUE, THE CIT(A) HAS EXAMINED THE VARIOUS JUDICIAL PRONOUNCE MENTS RENDERED BY THE APEX COURT AND VARIOUS HIGH COURTS. THE RELEVANT OBSERVATIONS OF THE CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 9(1) I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND RECORDS OF THE CASE BEFORE ME. THE APPELLANT COMPANY RECEIVED A SUM OF RS. ONE CRORE TOWARDS SHARE APPLICATION MONEY COMPRISING SUBSCRIPTION TOWARDS SHARE CAPITAL OF RS. 50 LAKHS AND TOWARDS SHARE PREMIUM OF RS. 50 LAKHS DURING THE YEAR FROM AS MANY AS 15 SHARE APPLICANTS. THIS AMOUNT OF RS. 1 CRORE WAS TREATED AS UNEXPLAINED B Y THE ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. NOW IT IS WELL ESTABLISHED THAT THE APPELLANT IS EXPECTED UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 TO SATISFACTORILY EXPLAIN TO THE AO A CREDIT APPEARING IN ITS BOOKS OF ACCOUNTS BY HAVING CONSIDERATION OF THREE ASPECTS, V IZ., A. IDENTITY OF THE CREDITOR IN WHOSE NAME THE CREDIT IS REFLECTED IN THE BOOKS OF THE APPELLANT. B. CREDITWORTHINESS OF THE PERSON IN WHOSE NAME THE CREDIT IS REFLECTED IN THE BOOKS OF THE APPELLANT . [ 5 ] C. GENUINENESS OF THE TRANSA CTION RESULTING IN THE CREDIT IN THE BOOKS OF THE APPELLANT. 9(2) T HE APPELLANT ON ITS PART FURNISHED COMPLETE DETAILS OF NAME AND ADDRESS OF THE APPLICANTS, THE NUMBER OF SHARES APPLIED FOR, THE AMOUNT RECEIVED, MODE OF PAYMENT AND THE DATE WHEN RECEIVED WITH PROOF OF THE SAME BEING DEPOSITED IN BANK. THE SHARES HAVE BEEN ALLOTTED TO ALL THE SHARE APPLICANTS WHO HAD APPLIED FOR SHARE. THE APPELLANT HAS ALSO FURNISHED THE DETAILS OF TAX ASSESSMENTS OF ALL THE 15 APPLICANTS. ALL THE APPLICANTS ARE LIMITED/P RIVATE LIMITED COMPANIES AND ARE ASSESSED TO TAX. THEY HAVE FILED THE RETURNS OF INCOME WITH THE INCOME TAX DEPARTMENT AND HAVE ALSO FILED REGULATORY AND MANDATORY FILINGS WITH THE REGISTRAR OF COMPANIES, HAVING JURISDICTION OVER THEM. THE APPELLANT FURNISHED BEFORE THE AO ALL THE NECESSARY DOCUMENTS SUCH AS SHARE APPLICATION FORM, COPY OF THE BOARD MEETINGS, DETAILS OF SHARE ALLOTMENT AND COPY OF THE ANNUAL RETURN AS FILED WITH THE ROC. THE APPELLANT HAS ALSO PROVIDED THE COPY OF THE ACKNOWLEDGMENTS AND THE BALANCE SHEETS AS WELL AS THE PAN OF THE SHARE APPLICANTS. NONE OF THE ABOVE HAS BEEN DISPUTED BY THE AO. 9(3) THE ASSESSING OFFICER DEPUTED THE INSPECTOR TO MAKE AN ON THE SPOT ENQUIRY WITH REGARD TO THE IDENTITY OF THE APPLICANTS. THE ITI HAS F URNISHED HIS REPORT DATED 24.12.2009. THE ITI HAS ALSO NOT DISPUTED THE EXISTENCE OF THE SAID COMPANIES. THE SHORTCOMINGS POINTED OUT BY THE ITI, WITH REGARD TO NON - AVAILABILITY OF THE DIRECTORS OF THE COMPANIES MAKING SUBSCRIPT ION TO SHARE ISSUE B Y THE AP PELLANT COMPANY OR WITH REGARD TO THE LOW PROFILE ACTIVITIES OF THE SAID COMPANIES IS OF NO SIGNIFICANCE. THE INFORMATION DESIRED BY THE AO HAVE ALL BEEN PROVIDED TO THE IT I BY THE CHARTERED ACCOUNTANTS OF THE COMPANIES MAKING SUBSCRIPTION TO THE ISSUE OF SHARES BY THE APPELLANT COMPANY. THE FACT REMAINS THAT THE SHARE APPLICANTS ARE IDENTIFIABLE, THEY ARE ASSESSED TO TAX AND THEY HAVE APPLIED FOR SHARES THROUGH PROPER BANKING CHANNELS. FURTHER, THE SHARES HAVE BEEN ALLOTTED TO ALL THE APPLICANTS AND THE DE TAIL OF SUCH ALLOTMENT IS AVAILABLE ON THE RECORD AND HAS ALSO BEEN FILED IN THE OFFICE OF THE ROC. THE [ 6 ] SHARE CERTIFICATES HAVE BEEN ISSUED IN THE NAME OF THE RESPECTIVE APPLICANTS. 9(4) TO SUM UP, THE APPELLANT COMPANY HAS PROVED THE IDENTITY OF THE APPL ICANTS TO ITS ISSUE OF SHARES. IT HAS PROVED THE CREDITWORTHINESS BY FURNISHING THE DETAILS OF PAN N UMBERS AND INCOME TAX ASSESSMENTS OF THE APPLICANTS TO ITS ISSUE OF SHARES. IT HAS ALSO PROVED THE GENUINENESS OF THE TRANSACTION BY FURNISHING NECESSARY DOCUMENTS A N D SHOWING THAT THE SUBSCRIPTION HAS BEEN EFFECTED THROUGH BANKING CHANNELS. ALL THE THREE INGREDIENTS RELEVANT FOR THE PURPOSES OF SECTION 68 OF THE INCOME TAX ACT, 1961 HAVE BEEN DULY EXPLAINED BY THE APPELLANT. IN SUCH CIRCUMSTANCES THE EXPLA NATION OF THE APPELLANT CANNOT BE SAID TO BE UNSATISFACTORY. THE AO HAS HIMSELF ACCEPTED IN HIS ASSESSMENT ORDER AT PAGE 4 THAT 'THE INSPECTOR WAS DEPUTED TO MAKE ENQUIRIES IN THIS REGARD. HIS ENQUIRY REPORT DATED 24.12.209 IS PLACED ON RECORD. MOST OF THE DETAILS FOUND WERE AS PER THE ASSESSEE.' THE AO HAS THEREAFTER GONE ON TO DISCUSS EXTRANEOUS FACTS TO DOUBT THE SUBMISSIONS OF THE APPELLANT. 9(5) THE ASSESSING OFFICER HAS DISPUTED THE GENUINENESS OF THE PROCESS OF ISSUE AND SUBSCRIPTION OF SHARES ON TH E GROUND THAT SOON AFTER THE ALLOTMENT OF SHARES BY THE APPELLANT COMPANY; THE SHARE APPLICANTS HAVE SOLD THEIR SHARES FIRST TO SOME OTHER COMPANY AND THEN SUBSEQUENTLY, THOSE COMPANIES HAVE SOLD THE SHARES TO THE DIRECTORS OF THE APPELLANT COMPANY. I DO N OT CONSIDER IT AS HAVING ANY SIGNIFICANCE BECAUSE ANY TRANSACTION SUBSEQUENT TO THE TRANSACTION UNDER CONSIDERATION IS INDEPENDENT AND HAS NO RELEVANCE IN CONSIDERING THE THREE INGREDIENTS OF SECTION 68 OF THE INCOME TAX ACT, 1961. FOR THE PURPOSE OF SECTI ON 68 OF THE INCOME TAX ACT, 1961 THE BASIC ISSUE THAT NEEDS TO BE EXAMINED IS THE AMOUNT RECEIVED AND FOUND CREDITED IN THE BOOKS OF THE APPELLANT. ON PERUSAL OF THE BALANCE SHEETS OF THE RESPECTIVE SHARE APPLICANTS, IT IS FOUND, THAT THE INVESTMENT IN SH ARES MADE BY ALL THE APPLICANTS IN THE APPELLANT COMPANY IS DULY REFLECTED IN THEIR BALANCE SHEETS. IN VIEW OF ABOVE I DO NOT FIND MERIT IN THE ACTION OF THE AO IN DOUBTING THE SHARE [ 7 ] SUBSCRIPTION MADE BY THE APPLICANT COMPANIES TO THE ISSUE OF SHARES BY TH E APPELLANT COMPANY. 9(6) THE RELIANCE PLACED BY THE AO ON THE DECISION OF SMT. SUMATI DAYAL VS. CIT 214 ITR 801 (SC) IS TOTALLY MISPLACED. THE FACTS OF THE CASE OF SMT . SUMATI DAYAL VS. CIT CITED BY THE AO ARE TOTALLY DIFFERENT FROM THE IMPUGNED CASE. IN THE CASE CITED BY THE AO THE INDIVIDUAL, SMT SUMATI DAYAL EXPLAINED CASH CREDITS AS PROCEEDS OF WINNING TICKET OF A RACE, WHICH WAS NOT ACCEPTED BY THE AO. IN THE INSTANT CASE, THE CASH CREDITS RELATE TO AN ISSUE OF SHARES BY A COMPANY AND THE LAW AS IT STANDS FOR ISSUE OF SHARE CAPITAL IS ALTOGETHER DIFFERENT AND DOES NOT SPEAK OF TEST OF HUMAN POSSIBILITIES. 9(7) I NOW DISCUSS A FEW CASE AUTHORITIES, WHICH ARE RELEVANT TO THE PRESENT CASE. IN THE CASE OF MIDAS GOLDEN DISTILLERIES (P) LTD. VS. CIT (2 009) 25 DTR (CHENNAI)(TRIB.) 337, HON'BLE ITAT, CHENNAI BENCH HELD THAT 'MERE SUBJECTIVE OPINION OF THE AO THAT THE SOURCE OF MONEY WITH THE SHAREHOLDERS OR THEIR CREDITWORTHINESS IS NOT ESTABLISHED IS NOT SUFFICIENT TO TREAT THE SHARE CAPITAL AS DEEMED IN COME UNDER S. 68'. FURTHER, LUCKNOW BENCH OF HON'BLE ITAT HAS AGAIN HELD IN THE CASE OF ORACLE HEALTH PARK (P) LTD . V S . ACIT RANGE - II, LUCKNOW ITA NO 732/LKW/2010 ORDER DATED 07.04.2011 HAS HELD THAT THE SHARE APPLICATION MONEY RECEIVED IN CASH ALSO CANNOT BE ADDED IN THE HANDS OF THE COMPANY. AGAIN, THE JABALPUR BENCH OF THE INCOME TAX TRIBUNAL, THROUGH THIRD MEMBER DECISION IN THE CASE OF DCIT VS . DOLPHINE MARBLES (P) LTD 129 ITD 163 HAS AGAIN REAFFIRMED THE ABOVE PROPOSITION. IN SAID CASE, ON REVENUE'S APPEAL, IT WAS NOTED THAT ASSESSEE HAD OFFERED AN EXPLANATION ABOUT NATURE AND SOURCE OF SUM FOUND CREDITED IN ITS BOOKS AND SAID EXPLANATION WA S SATISFACTORY. FURTHER, ASSESSEE HAD NOT O NLY ESTABLISHED IDENTITY OF EACH OF SHARE HOLDER BUT HAD ALSO PROVED THAT EACH OF THEM WAS AN INCOME TAX ASSESSEE AND, SHARE APPLICATION MONEY CREDITED IN ITS ACCOUNTS WAS DULY REFLECTED IN THEIR INCOME TAX RETURN S AND BALANCE SHEETS AS WELL. THE COMMISSIONER (APPEALS) WAS HELD AS JUSTIFIED IN DELETING IMPUGNED ADDITION. [ 8 ] 9(8) H ON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ORBITAL COMMUNICATION (P) LTD. [2010] 327 ITR 560 (DELHI) HELD THAT WHERE SUBSTANTIAL EVIDE NCE WAS PRODUCED BY THE COMPANY TO PROVE CREDIT WORTHINESS OF CREDITOR AND GENUINENESS OF SHARE APPLICATION, FAILURE TO PRODUCE CREDITOR IS NOT MATERIAL. ADDITION OF SHARE APPLICATION MONEY WAS DELETED. HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF JAYA SECU RITIES LTD. VS. CIT [2008] 166 TAXMAN 7 (ALL) HAS ALSO OBSERVED THAT NO ADDITION UNDER SECTION 68 CAN BE MADE IN THE CASE OF A COMPANY LIMITED BY SHARES IN RESPECT OF INVESTMENT IN SHARE CAPITAL OF THE COMPANY. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P.) LTD. (2008) 216 CTR H ELD THAT ' IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY.' 9(9) VARIOUS BENCHES OF HON'BLE INCOME TAX APPELLATE TRIBUNAL, HON'BLE HIGH COURTS AS WELL AS HON'BLE SUPREME COURT ARE UNANIMOUS IN THEIR OPINION THAT IN THE CASE OF A COMPANY THE WORKING OF PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 REQUIRES A DIFFE RENT APPROACH. UNEXPLAINED SHARE CAPITAL OF THE COMPANY CANNOT BE TREATED AS DEEMED INCOME OF THE COMPANY UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. YET, IN THE PRESENT CASE, THE SHARE CAPITAL IS NOT EVEN UNEXPLAINED. THE APPELLANT HAS COMPLETELY DISCHA RGED ITS ONUS BY ESTABLISHING THE IDENTITY OF THE SHARE HOLDERS AND BY DEMONSTRATING THAT THE CAPITAL SUBSCRIBED WAS RECEIVED THROUGH NORMAL BANKING CHANNELS. IN VIEW OF THE DECISIONS CITED BY ME IN PARAGRAPHS ABOVE, NO ADDITION CAN THEREFORE BE MADE IN TH E CASE OF THE APPELLANT COMPANY. I THEREFORE DIRECT THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL AND SHARE PREMIUM AS DEEMED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 BE DELETED. THE APPELLANT COMPANY GETS THE CONSEQUE NTIAL RELIEF. THESE THREE GROUNDS OF APPEAL ARE DECIDED IN FAVOUR OF THE APPELLANT. [ 9 ] 4. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND BESIDES PLACING RELIANCE UPON THE ASSESSMENT ORDER, THE LEARNED D.R. SHRI ALOK MITRA HAS INVITE D OUR ATTENTION TO THE INSPECTORS REPORT WHO CONDUCTED ENQUIRY PURSUANT TO THE DIRECTION OF THE ASSESSING OFFICER, WHICH IS AVAILABLE AT PAGE NO. 59 OF THE COMPILATION OF THE ASSESSEE WITH THE SUBMISSION THAT THE INSPECTOR HAS VISITED THE ADDRESS GIVEN I N THE SHARE APPLICATION FORM BUT DID NOT FIND THE BUSINESS ESTABLISHMENT OF THE SHARE APPLICANTS. HE HAS ALSO STATED THAT THESE COMPANIES, WHO APPLIED FOR SHARES, DID NOT SHOW THE PHYSICAL COPY OF THE SHARE AND HAS STATED THAT THE CHARTERED ACCOUNTANTS OF THESE COMPANIES HAVE SOLD THE SHARES TO OTHER COMPANIES AS PER DEBIT VOUCHERS PRODUCED BY THEM. THE INSPECTOR HAS ALSO DOUBTED THE GENUINENESS OF THE TRANSACTION AND SUBMITTED A REPORT. THE LEARNED D.R. FURTHER CONTENDED THAT THE SHARES WERE TRANSFERRED TO SOME OTHER COMPANIES AND THEREAFTER IN TURN THE SHARES WERE PURCHASED BY THE DIRECTORS OF THE ASSESSEE COMPANY. IT WAS FURTHER CONTENDED THAT IF THE SURROUNDING CIRCUMSTANCES ARE EXAMINED ONLY ONE INFERENCE WILL BE DRAWN THAT THE ENTIRE TRANSACTION WAS BOGUS THEREFORE; THE ASSESSING OFFICER HAS RI GHTLY TREATED THE ENTIRE TRANSACTION TO BE BOGUS AND MADE ADDITION U/S68 OF THE ACT. THE LEARNED D.R. HAS PLACED RELIANCE IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. 342 ITR 169 (DEL) AND CIT VS. GANGESHWARI METAL (P) LTD. [2013] 214 TAXMA N 423/30 TAXMANN.COM 328 (DELHI). 5. THE LEARNED COUNSEL FOR THE ASSESSEE BESIDES PLACING HEAVY RELIANCE UPON THE ORDER OF CIT(A) HAS INVITED OUT ATTENTION TO THE ORDERS OF THE LOWER AUTHORITIES WITH THE SUBMISSIONS THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE HAS FURNISHED [ 10 ] COMPLETE DETAILS AND WHEREABOUTS OF THE SHARE APPLICANT AS AVAILABLE WITH IT, WHICH CONSISTS OF SHARE APPLICATION FORM, DETAILS OF SHARE APPLICATION MONEY RECEIVED, PERSON APPLYING FOR ALLOTM ENT OF SHARES AND BALANCE SHEET. ALL THESE SHARE APPLICANTS ARE NOT ONLY ASSESSED TO TAX WITH I.T. DEPARTMENT BUT THEY HAVE FILED DECLARATION IN THE SHAPE OF ANNUAL RETURN WITH THE REGISTRAR OF COMPANIES, THEREFORE, THE SHARE APPLICANTS ARE IDENTIFIABLE A ND GENUINE. THE CONFIRMATIONS WERE ALSO FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS SIMPLY DOUBTED THE GENUINENESS OF A LL THE INTRODUCTION OF SHARE CAPITAL ON THE BASIS OF INSPECTORS REPORT WHO DID NOT FIND THE SIGNBOARD OF THE COMPANI ES BUT AT THE TIME OF INSPECTION, THE INSPECTOR WAS SUPPLIED WITH THE COPIES OF AUDITED ACCOUNTS AND OTHER REQUISITE DOCUMENTS. THESE COMPANIES COULD NOT SHOW THE PHYSICAL COPY OF THE SHARES AS BY THAT TIME THE SHARES WERE SOLD TO OTHER COMPANIES AND THE VOUCHERS IN THIS REGARD WERE PRODUCED BY THE CHARTERED ACCOUNTANTS OF THE COMPANIES AND THE SAME WERE ALSO FILED BEFORE THE ASSESSING OFFICER. IN SUPPORT OF HIS CONTENTION THAT IN CASE OF SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM TH E ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THE ASSESSMENT IN ACCORDANCE WITH THE LAW BUT NO ADDITION CAN BE MADE IN THE HANDS OF THE RESPECTIVE COMPANIES , T HE RELIANCE WAS PL ACED ON THE FOLLOWING JUDGMENT: (1) CIT VS. LOVELY EXPORTS (P.) LTD. (2008) 216 CTR 195 5.1 THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: [ 11 ] (2) DWARKADHISH INVESTMENT (P) LTD. [2010] 6 TAXMANN.COM 84 (DELHI) (3) CIT VS. SAMIR BIO - TECH P. LTD.[2010] 325 ITR 294 (DEL) (4) MIDAS GOLDEN DISTILLERIES (P) LTD. VS. CIT [2009] 25 DTR (CHENNAI) (TRIB.) 337 (5) CIT VS. G.P. INTERNATIONAL LTD. [2010] 325 ITR 25 (P&H) (6) CIT VS. WINSTRAL PETROCHEMICALS (P) LTD. [2010] 41 DTR (DEL) 139 (7) JAYA SECURITIES LTD. VS. CIT [2008] 166 TAXMAN 7 (ALL) (8) CIT VS. ORBITAL COMMUNICATION (P) LTD. [2010] 327 ITR 560 (DEL) (9) CIT VS. MISRA PRESERVERS (P) LTD. [2013] 350 ITR 222 (ALL) (10) CIT VS. JAY DEE SECURITIES AND FINANCE LTD. [2013] 350 ITR 220 (ALL) (11) ACIT, CIRCLE - S ULTANPUR VS. M/S DEVENDRA SHEETGRAH PVT. LTD. I.T.A.NO.533/LKW/2011 (12) CIT VS. KANDHENU STEEL & ALLOYS LTD. 206 TAXMAN 254 (13) CIT VS. VALUE CAPITAL SERVICES P. LTD. [2008] 307 ITR 334 (DEL) 6. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE RECORD, WE FIND THAT THE ASSESSEE COMPANY ISSUED FOR SUBSCRIPTION OF 50,000 EQUITY SHARES OF FACE VALUE OF RS.100/ - EACH WITH A PREMIUM OF RS.100/ - PER SHARE AND THE TOTAL AMOUNT RECEIVED BY THE ASSESSEE COMPANY WAS RS. ONE CRORE (RS.50 LAKHS TOWARDS SHARE CAPITAL AND RS. 50 LAKHS TOWARDS SHARE PREMIUM), WHICH WAS TREATED TO BE UNEXPLAINED BY THE ASSESSING OFFICER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS PLACED THE COPIES OF THE AUDITED ACCOUNTS OF THE INVESTORS SHARE APPLICATION FORM, CHEQUE NUMBER AND BANK, PAN ETC. OTHER DETAILS OF THESE COMPANIES WERE ALSO PLACED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER MADE AN ENQUIRY THROUG H INSPECTOR WHO REPORTED THAT THE SIGNBOARDS OF THE COMPANIES WERE NOT DISPLAYED AT THE OFFICE PREMISES OF THOSE COMPANIES AND MOST OF THE COMPANIES OFFICE ADDRESS [ 12 ] IS SAME. HE HAS ALSO REPORTED THAT THE PHYSICAL COPY OF THE SHARES WERE NOT SHOWN BY THESE COMPANIES. THESE FACTORS CREATED DOUBT IN THE MIND OF THE ASSESSING OFFICER BUT WHILE DOUBTING THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSING OFFICER HAS IGNORED THE OTHER POINTS MENTIONED IN THE INSPECTORS REPORT THAT THE ACCOUNT OF THESE COMPANIES, TO WHOM THE SHARES WERE ALLOTTED, WERE PRODUCED BY THE CHARTERED ACCOUNTANTS. THE REASONS FOR NOT FURNISHING THE COPY OF SHARES WAS ALSO EXPLAINED TO THE INSPECTOR THAT THE SHARES WERE SOLD TO OTHER COMPANIES. 6.1 OUR ATTENTION WAS INVITED TO VARIOUS JUDICIAL PRONOUNCEMENTS RENDERED UPON THE SUBJECT. IN THE CASE OF CIT VS. LOVELY EXPORTS (SUPRA), THEIR LORDSHIPS OF THE APEX COURT HAVE HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO REOPEN THE INDIVIDUAL ASSESSMENT IN ACCORDANCE WITH LAW BUT THE AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCLOSED INCOME U/S 68 OF THE ACT. T HE JUDGMENT OF APEX COURT WAS EXAMINED BY VARIOUS HIGH COURT. 6.2 IN THE CASE OF CIT VS. DWARKADHISH INVESTMENT (SUPRA), THEIR LORDSHIPS OF HON'BLE DELHI HIGH COURT HAVE OBSERVED THAT THOUGH IN SECTION 68 PROCEEDINGS, THE INITIAL BURDEN OF PROOF LIES ON T HE ASSESSEE YET ONCE HE PROVES THE IDENTITY OF THE CREDITORS BY EITHER FURNISHING THEIR PAN OR INCOME TAX ASSESSMENT NUMBER AND SHOWS THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS OF ACCOUNT EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT, THEN T HE ONUS OF PROOF SHIFTS TO THE REVENUE. JUST BECAUSE THE CREDITORS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SECTION 68 OF THE ACT. ONE MUST LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWERS TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE SOURCE OF [ 13 ] SOURCE. SIMILAR VIEW WAS AGAIN EXPRESSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMIR BIO - TECH (SUPRA) BY HOLDING THAT WHERE THE IDENTIT IES OF THE SHARE SUBSCRIBERS WERE NOT IN DOUBT AND THE TRANSACTIONS HAD ALSO BEEN UNDERTAKEN THROUGH BANKING CHANNELS AND THE CREDITWORTHINESS HAS BEEN ESTABLISHED BESIDES FURNISHING COMPLETE DETAILS WITH REGARD TO ASSESSMENT, THE DEPARTMENT COULD NOT DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE ONLY BECAUSE THE SUBSCRIBERS DID NOT INITIALLY RESPOND TO THE SUMMONS. 6.3 IN THE CASE OF JAYA SECURITIES (SUPRA) WHILE DEALING AN ISSUE ON ADDITION U/S 68 OF THE ACT IN RESPECT OF SUBSCRIPTION AMOUNTS TOWARDS TH E SHARE CAPITAL OF A COMPANY, THEIR LORDSHIPS OF HON'BLE ALLAHABAD HIGH COURT OBSERVED AS UNDER: '4. LEARNED COUNSEL FOR THE APPELLANT SUBMITTED THAT NO ADDITION UNDER SECTION 68 COULD BE MADE IN RESPECT OF THE SUBSCRIPTION AMOUNT TOWARDS THE SHARE CAPITA L OF A COMPANY LIMITED BY SHARES WHETHER IT IS PRIVATE OR PUBLIC AND IN SUPPORT THEREOF A DIVISION BENCH DECISION OF DELHI HIGH COURT HAS BEEN REFERRED IN THE CASE OF CIT VS. STELLER INVESTMENT LTD. [1991] 192 ITR 287 WHICH DECISION HAS BEEN UPHELD BY THE APEX COURT IN THE CASE OF CIT VS. STELLER INVESTMENT LTD. [2001] 251 ITR 263. 5. SHRI R.K. UPADHYA ON THE OTHER HAND SUBMITTED THAT THE DEHLI HIGH COURT HAD ONLY DECLINED TO CALL FOR A REFERENCE ON THE GROUND THAT NO QUESTION OF LAW ARISES WHICH O R DER HAS BEEN UPHELD BY THE APEX COURT WHICH DOES NOT BENEFIT THE APPELLANT. 6. THE SUBMISSION OF SHRI R.K. UPADHYA IS NOT CORRECT. THE DELHI HIGH COURT WHILE DECLINING TO CALL FO R REFERENCE HAD GIVEN THE FOLLOWING REASONS: 'IT IS EVIDENT THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT [ 14 ] GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES, CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE AR E SOME BOGUS SHAREHOLDERS IN WHOSE NAME SHARES HAD BEEN ISSUED AND THE MONEY MAY HAVE BEEN PROVIDED BY SOME OTHER PERSONS. IF THE ASSESSMENT OF THE PERSONS WHO ARE ALLEGED TO HAVE ASSESSMENT OF THE PERSONS WHO ARE ALLEGED TO HAVE REALLY ADVANCED THE MONEY IS SOUGHT TO BE REOPENED, THAT WOULD HAVE MADE SOME SENSE BUT WE FAIL TO UNDERSTAND AS TO HOW THIS AMOUNT OF INCREASED SHARE CAPITAL CAN BE ASSESSED IN THE HANDS OF THE COMPANY ITSELF.' 7. THE MATTER WAS CARRIED BY THE REVENUE BEFORE THE APEX COURT IN CI VIL APPEAL NO. 7668 OF 1996. THE APEX COURT WHILE DISMISSING THE APPEAL HAD CLEARLY HELD THAT 'WE ARE IN AGREEMENT WITH THE HIGH COURT'. IT CLEARLY MEANS THAT THE REASONING GIVEN BY THE DELHI HIGH COURT REPRODUCED ABOVE, STAND CONFIRMED BY THE APEX COURT A ND, THEREFORE, THE PRINCIPLE WHICH EMERGES IS THAT NO ADDITION TO SECTION 68 CAN BE MADE IN THE INVESTMENT IN THE SHARE CAPITAL OF A COMPANY LIMITED BY SHARES WHETHER PUBLIC OR PRIVATE. 8. IT MAY BE MENTIONED HERE THAT THE APEX COURT HAD DECIDED THE CIVI L APPEAL AND HAD NOT PASSED THE ORDER WHILE CONSIDERING THE SPECIAL LEAVE PETITION. WHILE DECIDING THE SPECIAL LEAVE PETITION, IT MAY NOT HAVE AMOUNTED TO CONFIRMATION OF THE REASONING GIVEN BY THE DELHI HIGH COURT BUT AS THE APEX COURT HAS DECIDED THE CIV IL APPEAL EXPRESSING IN AGREEMENT WITH REASONING GIVEN BY THE DELHI HIGH COURT, IT WOULD AMOUNT TO CONFIRMATION OF THE PRINCIPLES LAID DOWN BY THE DELHI HIGH COURT.' 6.4 SIMILAR VIEW WAS AGAIN EXPRESSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. WINDSTRAL PETROCHEMICAL (P) LTD. (SUPRA). 6.5 IN THE CASE OF CIT VS. ORBITAL COMMUNICATION (P) LTD.[2010] 327 ITR 560 (DELHI), THEIR LORDSHIPS OF DELHI HIGH COURT HAVE HELD THAT WHERE [ 15 ] SUBSTANTIAL EVIDENCE WAS PRODUCED BY THE ASSESSEE COMPANY TO PROVE CRED ITWORTHINESS OF CREDITOR AND GENUINENESS OF THE SHARE APPLICATION , FAILURE TO PRODUCE CREDITOR IS NOT MATERIAL AND ADDITION TO SHARE APPLICATION MONEY IS NOT SUSTAINABLE. 6.6 IN THE CASE OF CIT VS. JAY DEE SECURITIES AND FINANCE LTD. (SUPRA), THEIR LORDSH IPS OF JURISDICTIONAL HIGH COURT HAVE HELD THAT IF THE ASSESSEE PRODUCES THE NAMES, ADDRESSES AND PERMANENT ACCOUNT NUMBERS OF THE SHAREHOLDERS, THE ONUS ON THE ASSESSEE TO PROVE THE SOURCE OF SHARE APPLICATION MONEY STANDS DISCHARGED. IF THE ASSESSING AU THORITY IS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE SHAREHOLDERS, IT IS OPEN TO THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE HANDS OF THE SHAREHOLDERS CONCERNED. 6.7 AGAIN IN THE CASE OF CIT VS. MISHRA PRESERVERS (P) LTD. 350 ITR 220 (ALL), THE IR LORDSHIPS OF ALLAHABAD HIGH COURT HAVE HELD THAT WHERE THE ASSESSEE PRODUCES RELEVANT EVIDENCE BEFORE THE CIT(A) ESTABLISHING THAT ALL THE PERSONS WHO HAD DEPOSITED THE SHARE APPLICATION MONEY WERE NOT FICTITIOUS PERSONS, ADDITION MADE HAS TO BE DELETED . 6.8 FOLLOWING THE AFORESAID JUDGMENTS, THE TRIBUNAL HAS TAKEN A SIMILAR VIEW IN THE CASE OF ACIT VS. DEVENDRA SHEETGRAH PVT. LTD. IN I.T.A.NO.533/LKW/2011. IN THAT CASE THERE WAS NOTHING TO DISPUTE THE FACT OF THE ASSESSEE HAVING RECEIVED THE MONEY AS SHARE CAPITAL BUT DOUBTS HAVE BEEN RAISED TO MAKE THOSE INVESTMENTS. THE TRIBUNAL, WHILE DELETING THE ADDITIONS, HAVE OBSERVED THAT NOTHING PREVENTED THE ASSESSING OFFICER TO SUMMON THESE SHAREHOLDERS AND SATISFY HIMSELF ABOUT THEIR CAPACITY WHERE ALL THE RELEVANT DETAILS WERE BEFORE HIM. [ 16 ] 6.9 IN THE CASE OF CIT VS. KA M DHENU STEEL & ALLOYS LTD. [2012] 206 TAXMAN 254 TAXMANN.COM 26 (DELHI), THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHERE ASSESSEE HAD GIVEN PARTICULARS OF REGISTRATION OF INVESTING/APPLICANT COMPANIES, CONFIRMATION FO R M OF SHARE APPLICANTS, BANK ACCOUNTS DETAILS AND SHOWN PAYMENT THROUGH ACCOUNT PAYEE CHEQUES ETC., IT COULD NOT BE SAID THAT ASSESSEE HAD DISCHARGED ITS INITIAL ONUS AND JUST BECAUSE SOME OF THE CREDITORS/SHARE APPLICANT COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE REVENUE A RIGHT TO INVOKE SECTION 68 WITHOUT ANY ADDITIONAL MATERIAL TO SUPPORT SUCH A MOVE. 6.10 OUT ATTENTION WAS ALSO INVITE D BY THE REV TO THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. A ND CIT VS. GANGESHWARI METALS (P . ) LT D . [2013] 214 TAXMAN 423 TAXMANN.COM 328 (DELHI). IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. , T HE SHARE CAPITAL INTRODUCED WAS CONSIDERED TO BE THE BOGUS AND ADDITION MADE U/S 68 BY THE REVENUE AUTHORITIES WAS CONFIRMED. WHILE ANSWERING THE QUESTION, THEIR LORDSHIPS OF DELHI HIGH COURT HAVE EXAMINED VARIOUS ASPECTS. IN THAT CASE THE ASSESSMENT WAS REOPENED ON THE BASIS OF INFORMATION RECEIVED AND THEREAFTER THE ASSESSEE WAS ASKED TO PRODUCE THE SHARE APPLICANTS AND THE ASSESSEE COULD NOT PRODUCE THE SAME. BESIDES OTHER INFORMATION AS SOUGHT BY THE ASSESSING OFFICER WERE NOT FURNISHED. WHILE ADJUD ICATING THE ISSUE, THEIR LORDSHIPS OF DELHI HIGH COURT HAVE OBSERVED THAT THE MATERIAL PLACED BY THE ASSESSEE TO PROVE THE GENUINENESS OF HIS CLAIM WAS NOT SUFFICIENT AND ACCORDINGLY THE HON'BLE HIGH COURT DID NOT APPROVE THE GROUND ON WHICH THE TRIBUNAL H AD CANCELLED THE ADDITION AND OBSERVED THAT THE JUDGMENT OF FULL BENCH OF DELHI HIGH COURT IN COMMISSIONER OF INCOME - TAX VS SOPHIA FINANCE LTD. [ 17 ] [1994] 205 ITR 98 (DEL) COULD NOT BE UNDERSTOOD THAT WHEN IDENTITY OF THE SHAREHOLDER IS PROVED, THERE COULD NO T BE ANY ADDITION IN THE HANDS OF THE COMPANY WHICH RECEIVED THE SHARE APPLICATION MONEY. THIS JUDGMENT WAS CONSIDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF GANGESHWARI (SUPRA) AND THEIR LORDSHIPS OF HON'BLE DELHI HIGH COURT VIDE JUDGMENT DATED 21/0 1/2013 HAVE HELD THAT WHERE ASSESSEE IN SUPPORT OF TRANSACTION OF RECEIPT OF SHARE APPLICATION MONEY BROUGHT ON RECORD VARIOUS DOCUMENTS SUCH AS NAMES AND ADDRESSES OF SHARE APPLICANTS, THEIR CONFIRMATORY LETTERS, COPIES OF BANK STATEMENTS ETC., THE SAID TRANSACTION WAS TO BE REGARDED AS GENUINE AND, CONSEQUENTLY NO ADDITION COULD BE MADE IN RESPECT OF S AME U/S 68 OF THE ACT. 7. TURNING TO THE FACTS OF THE CASE, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHENEVER ASSESSEE WAS ASKED TO PRODUCE THE DETAILS WITH REGARD TO THE SHARE APPLICANTS, THE COPIES OF AUDITED ACCOUNTS OF THE INVESTORS CO MPANY, SHARE APPLICATION FORM , CHEQUE NUMBER AND BANK, PAN ETC. WERE FILED. THE CONFIRMATION FO R M OF THE SHARE APPLICANTS IN RESPECT OF SHARE MONEY RECEIVED AND SHARE ALLOTTED WERE FILED. DURING THE COURSE OF INDEPENDENT ENQUIRIES BY THE INSPECTOR, THE C HARTERED ACCOUNTANT OF THE CONCERNED SHARE APPLICANTS HAVE ALSO FURNISHED THE COPIES OF THE AUDITED ACCOUNTS OF THE INVESTOR COMPANY GIVING CHEQUE NUMBER AND BANK ETC. THE ASSESSING OFFICER HAS SIMPLY DOUBTED THE GENUINENESS OF THESE TRANSACTIONS ON THE B ASIS OF THE INSPECTORS REPORT WHO STATED IN HIS REPORT THAT SIGNBOARDS OF THE COMPANY WERE NOT AVAILABLE AND ADDRESSES OF THE SHARE APPLICANTS ARE COMMON AND THE OFFICE WERE OWNED IN ONE PROPERTY. BESIDES, HE HAS NOT BROUGHT ANY OTHER EVIDENCE ON RECORD TO DOUBT THESE TRANSACTIONS. NOTHING HAS BEEN BROUGHT ON [ 18 ] RECORD TO DISPUTE THE IDENTITY OF THE SHARE APPLICANTS AND THEIR CREDITWORTHINESS. THE ASSESSING OFFICER HAS SIMPLY DOUBT ED ON THE BASIS OF THE ENQUIRY REPORT BUT NO FURTHER INVESTIGATION OR ENQUIR Y WAS MADE TO COLLECT MORE EVIDENCE TO DISBELIEVE THE GENUINENESS OF THESE TRANSACTIONS. ONE OF THE REASONS FOR DOUBTING OF THE GENUINENESS IS THAT THE SHARE APPLICANT HAVE SOLD THEIR SHARES TO SOME OTHER COMPANIES, WHO AFTER SOMETIME SOLD IN TURN TO THE DIRECTORS OF THE ASSESSEE COMPANY. THERE IS NO LEGAL BAR THAT S HARE APPLICANTS CANNOT S ELL ITS SHARE AFTER ITS PROPER ALLOTMENT IN HIS FAVOUR. T H E INITIAL SHARES WERE ALLOTTED IN NOVEMBER AND DECEMBER 2006, WHICH WERE LATER ON SOLD TO SOME OTHER COMPANIE S IN 2007 AND 2008 AND THOSE COMPANIES IN TURN FURTHER SOLD TO DIRECTORS OF THE ASSESSEE COMPANY. BEFORE HOLDING THESE TRANSACTIONS TO BE BOGUS, THE ASSESSING OFFICER IS REQUIRED TO BRING SOME MORE EVIDENCE ON RECORD TO ESTABLISH THAT THE INVESTMENT IN FA CT BELONGS TO THE ASSESSEE WHICH HAS ROUTED THROUGH THESE SHARE APPLICANTS IN INVESTMENT IN SHARES OF THE ASSESSEE COMPANY BUT NOTHING HAS BEEN BROUGHT ON RECORD IN THIS REGARD. THROUGH VARIOUS JUDICIAL PRONOUNCEMENTS IT HAS REPEATEDLY BEEN HELD BY THE JU RISDICTIONAL HIGH COURT AND OTHER HIGH COURTS THAT WHERE THE ASSESSEE HAS PRODUCED THE RELEVANT EVIDENCE BEFORE THE REVENUE AUTHORITIES TO ESTABLISH THAT ALL THE PERSONS WHO HAVE DEPOSITED THE SHARE APPLICATION MONEY WERE NOT FICTITIOUS PERSONS AND MOST OF THEM WERE IDENTIFIABLE AND THE PAYMENTS WERE MADE THROUGH CHEQUE AND MOST OF THEM WERE ASSESSED TO INCOME TAX, THE ADDITION IS LIABLE TO BE DELETED. IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS, WE ARE OF THE VIEW THAT IN THE INSTANT CASE, THE ASSESSEE HAS PLACED MATERIAL ON RECORD TO ESTABLISH IDENTITY, CREDITWORTHINESS OF THE SHARE APPLICANTS. THEREFORE, THERE IS NO VALID REASON TO HOLD THE SHARE APPLICATION MONEY AS BOGUS AND [ 19 ] UNEXPLAINED CREDIT U/S 68 OF THE ACT. WE HAVE ALSO EXAMINED THE ORDER OF CIT(A) AND FIND THAT HE HAS PROPERLY ADJUDICATED THE ISSUE. SINCE WE DO NOT FIND INFIRMITY THEREIN, WE UPHOLD HIS ORDER. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON 1 2 / 1 1 / 2 0 1 3 ) SD/. SD/. (SHAMIM YAHYA) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 2 / 1 1 / 2 0 1 3 *SINGH COPY OF THE O RDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A ) 5. DR, ITAT, LUCKNOW ASSTT. REGISTRAR 1. DATE OF DICTATION - 11 / 10 /2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 1 / 10 /2013 3. DATE ON WHICH THE APPROVED D RAFT COMES TO THE SR.P.S./P.S. 22/10/2013 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTA TING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FILE GO ES TO THE BENCH CLERK 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER