ITO, WARD- 5(3), NEW DELHI V. CANTON SOFTWARE PVT. LTD., NEW DELHI

ITA 4776/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3344 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Keywords: Reopening of assessment; Income from undisclosed sources; Share purchase agreement; Period of limitation; Question of law; Accommodation entries; Assessment record; Time period of passing order; Reason to believe; Reassessment proceedings
• Section: 143(3); 133A; 133(6); 147; 131; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI SMC BENCH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 4776 /DEL/201 7 [A.Y. 20 0 7 - 0 8 ] THE I . T . O VS. M/S CANTON SOFTWARE PVT. LTD WARD 5(3) 1378/31, 3 RD FLOOR, NAIW ALA NEW DELHI KAROL BAGH, N EW DELHI PAN : A A CCC 6410 F CO NO. 230/DEL/2017 IN ITA NO. 4776 /DEL/2017 [A.Y. 200 7 - 0 8 ] THE I.T. O VS. M/S CANTON SOFTWARE PVT. LTD WARD 5(3) 1378/31, 3 RD FLOOR, NAIWALA NEW DELHI KAROL B AGH, NEW DELHI PAN : AA CCC 6410 F [ ASSESSEE ] [RESPONDENT] DATE OF HEARING : 2 2 . 0 2 .201 8 DATE OF PRONOUNCEMENT : 09 .0 3 .201 8 ASSESSEE BY : SHRI VED JAIN, ADV SHRI ASHISH GOEL , CA MS. DEVINA REVENUE BY : SHRI V.K. JIWANI , SR. DR ORDER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) DATED 23 RD MARCH, 2017 WHEREBY SHE HAS DELETED TH E ADDITION OF RS. 35,00,000/ - MADE BY THE AO. THE ASSESSEE HAS FILED CROSS OBJECTION 2 CHALLENGING THE ORDER OF THE CIT(A), REJECTING ITS CONTENTION ON THE ISSUE OF REOPENING OF THE ASSESSMENT. 2. THE ASSESSEE IS A COMPANY, IT FILED ITS RETURN OF INCOME FO R THE A.Y. 2007 - 08, THE YEAR UNDER CONSIDERATION DECLARING NIL INCOME ON 17 TH OCTOBER, 2007. THE SAID RETURN WAS SELECTED FOR SCRUTINY AND AFTER SCRUTINY, ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED VIDE ORDER DATED 11 TH DECEMBER, 2009. THEREAFTER, THE A SSESSMENT WAS REOPENED BY THE AO BY ISSUE OF NOTICE UNDER SECTION 148 DATED 29 TH MARCH, 2014. THIS NOTICE WAS ISSUED ON THE BASIS OF REASONS RECORDED BY THE AO, WHEREBY IT WAS ALLEGED THAT DURING THE COURSE OF THE SEARCH / SURVEY OPERATION U/S 132 / 133A I NCRIMINATING DOCUMENTS WERE FOUND IN THE CASE OF MR. SURRENDER KUMAR JAIN AND HIS BROTHER VIRENDER KUMAR JAIN. IT WAS ALLEGED THAT DURING INVESTIGATION MR. SK JAIN HAS ADMITTED THAT HE IS ENGAGED IN THE BUSINESS OF ACCOMMODATION ENTRIES. ON THIS BASIS, THE AO WAS OF THE VIEW THAT THE SHARE CAPITAL OF RS. 35 LAKH RECEIVED BY THE ASSESSEE REPRESENTS ITS UNDISCLOSED INCOME. THE ASSESSEE SUBMITTED THE RETURN IN RESPONSE TO THE NOTICE ISSUED BY THE AO UNDER SECTION 148 AND ALSO FILED ITS OBJECTION FOR REOPENING OF THE ASSESSMENT. THE AO THEREAFTER CALLED THE ASSESSEE TO SUBMIT THE EVIDENCE IN SUPPORT OF THE SHARE CAPITAL RAISED. THE ASSESSEE SUBMITTED 3 THE DOCUMENTS. HOWEVER, THE AO WAS NOT SATISFIED WITH THE REPLY OF ASSESSEE AND ACCORDINGLY HE ADDED A SUM OF RS. 35 LAKH AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE ORDER DATED 23 RD MARCH, 2017 REJECTED THE CONTENTION OF THE ASSESSEE ON THE ISSUE O F REOPENING OF THE ASSESSMENT. HOWEVER, SHE DELETED THE ADDITION ON MERIT HOLDING THAT APPELLANT HAS BEEN ABLE TO ESTABLISH THE IDENTITIES AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF THE TRANSACTIONS. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THE FACTS MENTIONED IN THE DETAILED ASSESSMENT ORDER DATED 2 6.3.2015 PASSED BY THE AO U/S 147/143(3). 2 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE/SHARE APPLICANTS TWO COMPANIES HAD FILED ALL THE RELEVANT DOCUMENTS AND DISCHARGED ITS ONUS CAST U/S 68 BUT NO SUCH COMPLETE DOCUMENTS WERE FILED AT ANY STAGE. 4 3 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE CREDITWORTHINESS AND GENUINENESS IS PROVED BUT FAILED TO APPREC IATE THE FACTS THAT BOTH THE ALLEGED SHARE APPLICANTS HAD NO NET WORTH TO INVEST SUCH HUGE AMOUNTS. 4 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN OBSERVING AND HOLDING THAT ONCE THE APPELLANT HAD PROVIDED ALL THE DOCUMENTARY EVIDENCE TO PROVE THE THREE INGREDIENTS OF SECTION 68, THE ONUS SHIFTED TO THE AO AND WHAT WAS THE REQUIRED OF HIM WAS TO REBUT THE EVIDENCES PRODUCED BY THE APPELLANT, WHICH HE HAS NOT BEEN ABLE TO DO SO, BUT THE LD. CIT(A) HAS COMPLE TELY FAILED TO APPRECIATE THE FACT THAT WHEN THE ALLEGED TWO SHARE SUBSCRIBERS HAD NOT SENT THE COMPLETE DOCUMENTS, THEN SUMMONS U/S 131 WERE SENT TWO TIMES TO JAIN BROTHERS WHO WERE CONTROLLING THE SAID ENTITIES BUT NONE OF THEM APPEARED FOR PERSONAL DEPO SITION. 5 . WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE JUDGMENTS RELIED UPON BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ARE NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. 6 . W HETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 35,00,000/ - MADE BY THE AO U/S 68 OF THE I.T. ACT. 7 . THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO AND GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 5 5. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AND HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1 . THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE RESPONDENTS CASE, TH E LEARNED CIT(A) ERRED IN LAW IN HOLDING ASSUMPTION OF JURISDICTION BY THE LD. AO TO REOPEN THE CASE OF THE RESPONDENT U/S OF THE ACT AS VALID, WHICH WAS BARRED BY LIMITATION I.E. AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, WHEREAS THE CASE OF THE RESPONDENT AS ENUMERATED IN FIRST PROVISO OF SECTION 147 OF THE INCOME TAX ACT, 1961. 2 . THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE RESPONDENTS CASE, THE LD. CIT(A) ERRED IN LAW IN HOLDING THE VALIDITY OF INITIATION OF REASSE SSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 IN THE CASE OF RESPONDENT, ONLY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING WITHOUT MAKING ANY INDEPENDENT ENQUIRY ON THE SAME AND WITHOUT HAVING ANY COGENT, DEFINITE MATERIAL ON R ECORD IN SUPPORT OF REASON TO BELIEVE OF THE LD. AO THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. THE RESPONDENT / CROSS OBJECTOR CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF CROSS OBJECTIONS. 6. TAKING THE CROSS OBJECTION FIRST ON THE ISSUE OF THE REOPENING OF THE ASSESSMENT, THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION, IT WAS SUBMITTED BY THE LD. AR THAT CIT(A) HAS GONE WRONG IN 6 REJECTING ITS CONTENTION. IN THIS CASE NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 14.03.2014. THE CAS E OF ASSESSEE COMPANY HAS BEEN REOPENED AFTER FOUR YEARS. REOPENING AFTER A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IS PERMISSIBLE ONLY IF THERE IS FAILURE OF THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. ASSESS MENT HAS ALREADY BEEN COMPLETED IN THE CASE OF ASSESSEE U/S 143(3) OF THE ACT VIDE ORDER DATED 26.03.2015. THUS, IT IS AN ADMITTED FACT ON RECORD THAT THE PROVISO TO SECTION 147 IS APPLICABLE IN THE CASE OF ASSESSEE. THEREFORE, IN SUCH CASES ACTION UNDER S ECTION 147 CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT YEAR ONLY IF ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A.Y. BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. HOWEVER, A PLAIN READING OF THE REASONS RECORDED IN THE CASE OF ASSESSEE WOULD SHOW THAT THERE IS NO ALLEGATION AGAINST THE PETITIONER OF FAILING TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSME NT FOR THE A.Y. 2007 - 08. IT IS A SETTLED LAW THAT MERELY HAVING A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT IS NOT SUFFICIENT TO REOPEN ASSESSMENTS BEYOND THE FOUR YEAR PERIOD. THE ESCAPEMENT OF INCOME FROM ASSESSMENT MUST ALSO BE OCCASIONED BY THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE 7 MATERIAL FACTS, FULLY AND TRULY. THIS IS A NECESSARY CONDITION FOR OVERCOMING THE BAR SET UP BY THE PROVISO TO SECTION 147. IF THIS CONDITION IS NOT SATISFIED, THE BAR WOULD OPERATE AND NO ACTION UNDER SE CTION 147 COULD BE TAKEN. 7. FURTHER, A PERUSAL OF THE REASONS RECORDED BY THE AO WOULD CLEARLY SHOW THAT THE AO HAS MERELY RELIED UPON THE REPORT RECEIVED FROM THE INVESTIGATION WING, AND THERE ARE NO INDEPENDENT FINDINGS OF HIS OWN. THE REASONS RECORDED BY THE AO CLEARLY SHOW THAT THE AO HAS SIMPLY ACTED UPON THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AND DID NOT APPLY HIS OWN MIND TO THE SAID INFORMATION VIS A VIS THE RETURN FILED AND THE ASSESSMENT RECORD. 8. THE LD. AR INVITED ATTENTION TO PB. PG. 22 - 23 WHICH ARE THE REASONS RECORDED. THE LD. AR SUBMITTED THAT ON GOING THROUGH THE REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT THE ISSUE ARISING AND THE ALLEGATION CAN BE SUMMARIZED AS UNDER: A ) PARA 1: INTRODUCTION ABOUT INVESTIGATION S CONDUCTED BY INVESTIGATION WING B ) PARA 2: MODUS OPERANDI OF ENTRY PROVIDERS 8 C ) PARA 3: INFORMATION RECEIVED BY THE AO FROM INVESTIGATION WING IN A CHART D ) PARA 4: CONCLUSION REACHED BY AO THAT AMOUNT OF RS.35,00,000/ - IS UNDISCLOSED INCOME OF ASSESSEE WHICH HAS ESCAPED ASSESSMENT E ) PARA 5: STATEMENT THAT INCOME OF ASSESSEE HAS ESCAPED ASSESSMENT 9. A PERUSAL OF THE ABOVE REASONS WOULD SHOW THAT THE AO HAS STRAIGHT AWAY CONCLUDED THAT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES WITHOUT ANY REFERENCE TO ASSESSMENT RECORD AND APPLICATION OF HIS OWN MIND. THE AO HAS NOT BROUGHT ANY RECORD OR MATERIAL ON THE BASIS OF WHICH ANY NEXUS COULD HAVE BEEN ESTABLISHED BETWEEN THE MATERIAL AND THE ESCAPEMENT OF INCOME. 10. IN THE INSTANT CASE, THE REASONS RECORDED DO NOT SHOW ANY APPLICATION OF MIND NOR THE SAME SHOW ANY BELIEF INDEPENDENTLY ARRIVED AT BY THE AO, WHICH IS THE BASIC PRE - REQUISITE FOR ISSUING NOTICE U/S 148. THE LAW POSTULATES THE AO (AND NOT THE INVESTIGATION WING) TO HAVE REASON TO BELIEVE. 11. T HE LEARNED AR SUBMITTED THAT IT IS A SETTLED LAW THAT BLIND ACCEPTANCE OF THE INFORMATION FURNISHED BY THE INVESTIGATION WING 9 CANNOT FORM REASONS LEADING TO THE BELIEF BY THE AO OF ANY ESCAPEMENT OF INCOME. THIS ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF PR. CIT V. G & G PHARMA INDIA LTD. [2016] 384 ITR 147. 12. THE LEARNED AR FURTHER PLACED RELIANCE ON FOLLOWING JUDGMENTS: ( A ) HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT V. MEENAKSHI OVERSEAS PVT. LTD. [2017] 3 95 ITR 677 ( B ) HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT V. RMG POLYVINYL (I) LTD. [2017] 396 ITR 5 ( C ) ITAT DELHI IN THE CASE OF SIYA REAL ESTATE PVT. LTD. V. ITO IN ITA NO. 865/DEL/2013 DATED 20.12.2017 ( D ) ITAT DELHI IN THE CASE OF METRO DECORATIVE P VT. LTD. V. ITO IN ITA NO. 450/DEL/2014 DATED 24.10.2017 ( E ) ITAT DELHI IN THE CASE OF MRY AUTO COMPONENTS LTD. V. ITO IN ITA NO. 2418/DEL/2014 DATED 15.09.2017 13. ON THE BASIS OF THE ABOVE FACTS AND THE POSITION OF LAW, THE LEARNED AR SUBMITTED THAT THE REA SSESSMENT PROCEEDINGS INITIATED BY THE AO ARE WITHOUT DUE APPLICATION OF MIND, AND THUS, THE REASSESSMENT PROCEEDINGS SHOULD BE QUASHED. 10 14. ON MERIT, IN RESPECT OF THE APPEAL FILED BY THE REVENUE, IT WAS SUBMITTED BY THE LD. AR THAT THE CIT(A) WAS JUSTIFI ED IN HOLDING THAT ASSESSEE HAS DISCHARGED ITS ONUS. THE LD. DR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS RECEIVED SHARE CAPITAL FROM TWO SHAREHOLDERS NAMELY: ( A ) SUNNY CAST & FORGE LTD. RS.25,00,000/ - ( B ) PITAMBRA SECURITIE S PVT. LTD. RS.10,00,000/ - IT IS AN ADMITTED FACT, BOTH BY THE AO AS WELL AS BY THE LD. CIT(A), THAT DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE HAS DULY SUBMITTED THE DETAILS WITH REGARD TO THESE SHARE APPLICANT COMPANIES, WHICH INCLUDED THE FOLLOWING: ( A ) COPIES OF CONFIRMATIONS ( B ) COPIES OF THEIR SHARE APPLICATION FORMS ( C ) COPIES OF THEIR BOARD RESOLUTIONS ( D ) COPIES OF AFFIDAVITS CONFIRMING INVESTMENT IN ASSESSEE COMPANY ( E ) COPIES OF THEIR AUDITED BALANCE SHEETS ( F ) COPIES OF ACKNOWLEDGMENT OF ITR S ( G ) COPIES OF RELEVANT EXTRACTS OF BANK STATEMENTS REFLECTING THE SAID TRANSACTIONS . 11 15. THE LD. AR FURTHER SUBMITTED THAT THE ALLEGATION OF THE AO THAT THE ASSESSEE HAS NOT PRODUCED THE BANK STATEMENTS OF THE PARTIES IS FACTUALLY INCORRECT, AND THIS CONTEN TION OF THE ASSESSEE COMPANY HAS ALSO BEEN APPRECIATED BY THE LD. CIT(A) IN PARA 7.1.4 OF ITS ORDER WHERE IT HAS BEEN STATED BY THE CIT(A) THAT THE APPELLANT HAS FILED THE RELEVANT PORTION OF BANK STATEMENT OF THESE SHAREHOLDERS, DULY SHOWING THE AMOUNT IS SUED AS SHARE APPLICATION MONEY DURING THE YEAR UNDER CONSIDERATION. 16. THE LD. AR FURTHER SUBMITTED THAT THE AO HAD ALSO ISSUED NOTICES U/S 133(6) OF THE ACT TO THE PARTIES, WHICH HAD BEEN DULY REPLIED TO DIRECTLY BY THE PARTIES. THIS FACT HAS ALSO BEEN STATED BY THE AO IN ITS ORDER AT PAGE 4 WHERE THE AO HAS OBSERVED THAT THESE PARTIES IN REPLY TO NOTICE UNDER SECTION 133(6) HAVE MERELY SUBMITTED THE SET OF DOCUMENTS WHICH THE ASSESSEE HAD ALREADY SUBMITTED. 17. THE AO, IN THE ASSESSMENT ORDER AFTER MA KING THE ABOVE ADDITION HAS NOWHERE POINTED OUT ANY DEFECT OR ERROR IN ANY OF THE DOCUMENTS OR EVIDENCES FURNISHED BY THE ASSESSEE OR BY THE PARTIES DIRECTLY IN RESPONSE TO THE NOTICES ISSUED U/S 133(6) OF THE ACT. 12 18. THE LD. AR SUBMITTED THAT IT IS A SE TTLED LAW THAT IF THE ASSESSEE HAS PRODUCED MATERIAL AND EVIDENCES, IT WAS UPTO THE AO TO MAKE PROPER ENQUIRY, AND IF THE AO FAILS TO MAKE ANY EFFORT IN THIS DIRECTION OR IN SUCH ENQUIRY NOTHING ADVERSE TRANSPIRES, NO ADDITION COULD BE MADE ON THIS GROUND. THE ONUS IS UPON AO TO BRING ADVERSE MATERIAL TO DISCREDIT THE EXPLANATION AND THE EVIDENCES SUBMITTED BY THE ASSESSEE. FAILURE ON THE PART OF THE AO TO OBTAIN ANYTHING ADVERSE IN RESPONSE TO INDEPENDENT ENQUIRY SUCH AS ISSUE OF NOTICE UNDER SECTION 133(6 ) CANNOT BE A REASON TO DISCREDIT THE EVIDENCES FILED BY THE ASSESSEE. IT WAS CONTENDED THAT THE LD. CIT(A) HAS RIGHTLY APPRECIATED THE FACTS OF ASSESSEES CASE AND HAS RIGHTLY HELD THAT THE ASSESSEE HAS DULY DISCHARGED THE ONUS CAST UPON IT UNDER SECTION 68 OF THE ACT, AND THUS, THE ORDER OF LD. CIT(A) ON MERIT BE UPHELD. 19. THE LD. AR FURTHER PLACED RELIANCE ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. LAXMAN INDUSTRIAL RESOURCES PVT. LTD. IN ITA NO. 169/2017 DATED 14.03.20 17 AND ON THE RECENT JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT V. PARADISE INLAND SHIPPING PVT. LTD. IN ITA NO. 66 OF 2016 DATED 10.04.2017. 13 20. THE LD. AR ALSO PLACED RELIANCE ON FOLLOWING JUDGMENTS: ( A ) DELHI HIGH COURT IN THE CASE OF CIT V. RUSSIAN TECHNOLOGY CENTRE (P.) LTD. IN ITA NOS. 547/2013 DATED 15.12.2016 ( B ) ITAT DELHI IN THE CASE OF ITO V. SOFTLINE CREATIONS (P.) LTD. IN ITA NO. 744/DEL/2012 DATED 10.02.2015, WHICH HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 504 OF 2016 DATED 31.08.2016 ( C ) DELHI HIGH COURT IN THE CASE OF CIT V. FAIR FINVEST LTD [2013] 357 ITR 146 21. IN REPLY, THE LD. DR SUPPORTED THE ORDER OF THE AO AND THE CIT(A) ON THE ISSUE OF REOPENING OF ASSESSMENT. IT WAS SUBMITTED THAT THE AO HAS RECEIVE D DEFINITE INFORMATION FROM THE INVESTIGATION WING ABOUT THE ACCOMMODATION ENTRY HAVING BEEN RECEIVED BY THE ASSESSEE. THE INVESTIGATION WING HAS RECORDED THE STATEMENT OF ACCOMMODATION ENTRY PROVIDERS WHEREBY THEY HAVE CONFESSED HAVING PROVIDED ACCOMMODAT ION ENTRY TO THE ASSESSEE. IT WAS SUBMITTED THAT AT THE STAGE OF REOPENING OF ASSESSMENT, THE AO NEED TO HAVE ONLY PRIMA FACIE OPINION. IT IS NOT FOR AO TO CONCLUSIVELY ESTABLISH AT THE TIME OF THE RECORDING OF THE REASONS. THE LD. DR PLACED RELIANCE ON TH E JUDGMENT OF THE SUPREME COURT IN THE CASE OF ASSISTANT COMMISSIONER 14 OF INCOME - TAX VERSUS RAJESH JHAVERI STOCK BROKERS P. LIMITED 291 ITR 500. 22. ON THE ISSUE OF MERIT, THE LD. DR SUBMITTED THAT IT IS A CASE OF ACCOMMODATION ENTRY. THE ASSESSEE HAS FAI LED TO DISCHARGE ITS ONUS ABOUT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE SHAREHOLDERS. IT WAS SUBMITTED THAT MERE SUBMISSION OF DOCUMENTS IS NOT SUFFICIENT TO ESTABLISH THE THREE INGREDIENTS OF SECTION 68. IN THE PRESENT CASE, THERE IS A STATEMENT ON RECORD ADMITTING THAT THESE ARE ACCOMMODATION ENTRIES PROVIDED TO THE ASSESSEE COMPANY AND HENCE HEAVY ONUS LIED UPON THE ASSESSEE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS. 23. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ASSESSM ENT ORDER, THE ORDER PASSED BY THE CIT(A) AND THE PAPER BOOK FILED BY THE ASSESSEE. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE ONLY ISSUE IS REOPENING OF THE ASSESSMENT. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT ORIGINAL ASSESSMENT WAS COMPLET ED UNDER SECTION 143(3). THEREAFTER, THE AO HAS REOPENED THE ASSESSMENT ON THE ALLEGATION THAT ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY AS PER THE INFORMATION PROVIDED BY THE INVESTIGATION WING. THIS ASSESSMENT HAS 15 BEEN REOPENED AFTER A PERIOD OF 4 YEARS FROM THE DATE OF THE ASSESSMENT ORDER BY ISSUE OF NOTICE UNDER SECTION 148 ON 29 TH MARCH, 2014. THE PROVISO TO SECTION 147 PUTS A BAR ON REOPENING OF ASSESSMENT AFTER A PERIOD OF 4 YEARS FORM THE END OF THE ASSESSMENT YEAR WHERE ORIGINAL ASSESSMENT HAS BEE N FRAMED UNDER SECTION 143(3) UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THUS, FOR AO TO ASSUME JURISDICTION AND TO AVOID THE BAR OF LIMITATION OF 4 YEARS UNDER THIS PROVISO, THE AO IN THE REASONS RECORDED FIRST HAS TO MAKE AN ALLEGATION THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NE CESSARY FOR ASSESSMENT. AFTER MAKING SUCH ALLEGATION IN THE REASONS RECORDED, THE AO NEED TO ESTABLISH THAT THERE IS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THUS, THERE ARE TWIN CONDITIONS IN PROVISO TO SECTION 147 SO AS TO MEET THE LIMITATION BAR OF 4 YEARS. IN THE PRESENT CASE, ONGOING THROUGH THE REASONS RECORDED, PLACED AT PB. PG. 22 - 23, I NOTE THAT THERE IS NO SUCH AVERMENT IN THE REASONS RECORDED THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE F ULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THUS, THIS PRIMARY CONDITION ITSELF IS NOT FULFILLED BY THE AO WHILE REOPENING THE 16 ASSESSMENT. IT MAY BE IMPORTANT TO POINT OUT THAT THIS CONDITION IS THERE IN THE STATUTE AS AO AFTER RECEIVING TH E INFORMATION AND BEFORE FORMATION OF THE BELIEF HAS TO FIRST LOOK AT THE ASSESSMENT RECORD. IT IS ONLY AFTER EXAMINATION OF THE ASSESSMENT RECORD, THE AO CAN ASCERTAIN THAT WHETHER THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS OR NOT. AFTER A PERIOD OF 4 YEARS, IT IS NOT MERELY THE FORMATION OF THE BELIEF BUT SUCH FORMATION OF BELIEF SHOULD ALSO BE ON THE GROUND THAT ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL AND FACTS WHICH HAVE LED TO THE INCOME HAS ESCAPED ASSESSMENT. THE LIMITATION PERIOD FOR REOPENING OF ASSESSMENT ORDINARILY IS 6 YEARS, HOWEVER, WHERE ORIGINAL ASSESSMENT HAS BEEN FRAMED UNDER SECTION 143, THE LIMITATION PERIOD IS 4 YEARS SUBJECT TO THE EXCEPTION THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL AND FACTS. THUS, THERE IS A BAR THAT NO REASSESSMENT FRAMED UNDER SECTION 143(3) WILL BE REOPENED AFTER A PERIOD OF 4 YEARS UNLESS AO RECORD A SATISFACTION THAT ON THE BASIS OF THE INFOR MATION RECEIVED THAT HE IS OF THE VIEW THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE. NOT MENTIONING OF THIS FORMATION OF BELIEF THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE, IN THE REASONS, MEANS THAT AO HAS NOT APPLIED HIS MIND ON THIS ASPEC T AND MERELY ON THE RECEIPT OF THE INFORMATION FROM INVESTIGATION WING, HE HAS STRAIGHT 17 AWAY REOPENED THE ASSESSMENT. THE APPLICATION OF MIND BY THE AO ON THIS ASPECT OF FAILURE ON THE PART OF THE ASSESSEE IS OF PARAMOUNT IMPORTANCE AFTER RECEIPT OF THE IN FORMATION SO AS TO OVERCOME THE PERIOD OF LIMITATION FROM 4 YEARS TO 6 YEARS. THE INFORMATION PER SE CANNOT BE A REASON FOR REOPENING OF THE ASSESSMENT AFTER 4 YEARS. IT IS THE SATISFACTION OF THE AO AND SUCH SATISFACTION IS TO BE GATHERED ONLY FROM THE RE ASONS RECORDED. IN THE PRESENT CASE, IN THE ABSENCE OF ANY SUCH SATISFACTION BEING RECORDED THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL AND FACTS WHICH LED TO ESCAPEMENT OF INCOME, I AM OF THE VIEW THAT REO PENING OF THE ASSESSMENT FRAMED ORIGINALLY UNDER SECTION 143(3) AFTER A PERIOD OF 4 YEARS WILL BE BARRED BY LIMITATION AND HENCE CANNOT BE SUSTAINED. ACCORDINGLY, THE REOPENING OF THE ASSESSMENT IS HELD TO BE BAD IN LAW AND CROSS OBJECTION FILED BY THE ASS ESSEE IS ALLOWED. 24. NOW COMING TO THE APPEAL FILED BY THE REVENUE ON MERIT WHICH WAS ARGUED AT LENGTH BY BOTH THE SIDE, I NOTE THAT THE ONLY ISSUE IS THE ADDITION OF RS. 35 LAKHS IN RESPECT OF THE SHARE CAPITAL RECEIVED BY THE ASSESSEE COMPANY DURING TH E YEAR. AS PER THE FACTS ON RECORD, THE ASSESSEE COMPANY HAS RECEIVED TOTAL SHARE CAPITAL OF RS. 35,00,000/ - FROM 2 SHAREHOLDERS. THE AO HAS CALLED FOR THE DETAILS FROM THE 18 ASSESSEE AND HAS ALSO MADE INDEPENDENT ENQUIRY BY ISSUE OF NOTICE UNDER SECTION 133 (6). THE AO RECEIVED REPLY FROM BOTH THE SHAREHOLDERS, HOWEVER, HE WAS NOT SATISFIED WITH THE REPLY AS BOTH THESE SHAREHOLDERS HAVE SUBMITTED THE SAME SET OF DOCUMENTS WHICH THE ASSESSEE HAS ALREADY SUBMITTED. 25. THUS, THE REASON AS PER THE ASSESSMENT O RDER FOR WHICH THE AO DREW ADVERSE INFERENCE WAS THAT THE DOCUMENTS RECEIVED ARE THE SAME AS SUBMITTED BY THE ASSESSEE. THE AO HAS NOT POINTED OUT OR REFERRED TO ANY OTHER ADVERSE FEATURE OR MATERIAL IN THE ASSESSMENT ORDER IN RESPECT OF THE EXPLANATION AN D EVIDENCES SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. ONGOING THROUGH THE PAPER BOOK, WE NOTE THAT ASSESSEE HAS SUBMITTED COMPLETE DETAILS IN RESPECT OF BOTH THE SHAREHOLDERS TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS AS U NDER: ( A ) COPIES OF CONFIRMATIONS ( B ) COPIES OF THEIR SHARE APPLICATION FORMS ( C ) COPIES OF THEIR BOARD RESOLUTIONS ( D ) COPIES OF AFFIDAVITS CONFIRMING INVESTMENT IN ASSESSEE COMPANY ( E ) COPIES OF THEIR AUDITED BALANCE SHEETS ( F ) COPIES OF ACKNOWLEDGMENT OF ITRS 19 ( G ) COPIES OF RELEV ANT EXTRACTS OF BANK STATEMENTS REFLECTING THE SAID TRANSACTIONS 26. THE CIT(A) HAS GONE THROUGH EACH OF THE DOCUMENT AND HAS RECORDED A CATEGORICAL FINDING THAT THE APPELLANT HAS BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLIC ANTS AND GENUINENESS OF THE TRANSACTIONS. FURTHER, THE CIT(A) HAS RECORDED A FINDING OF FACT THAT ONUS ON THE APPELLAN T STOOD DISCHARGED UNDER SEC. 68 OF THE ACT AND THE AO HAS NOT BEEN ABLE TO BRING ANY MATERIAL ON RECORD TO REBUT THE EVIDENCES PRODUCED BY THE ASSESSEE. DURING THE COURSE OF THE HEARING BEFORE ME THE LD. DR A LSO COULD NOT POINT OUT ANY ADVERSE FEATURE OR INCONSISTENCY IN THE DOCUMENTS SUBMITTED BY THE ASSESSEE IN SUPPORT OF THE SHARE CAPITAL RECEIVED BY IT. 27. IN VIEW OF THESE DOCUMENTS AND EVIDENCES FILED BY THE ASSESSEE, I AM OF THE OPINION THAT THESE ARE SUFFICIENT TO DISCHARGE ITS ONUS REGARDING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS AS REQUIRED UNDER SECTION 68 OF THE ACT. THE ASSESSEE HAVING DISCHARGED ITS ONUS, IT WAS UPON THE AO TO BRING MATERIAL OR EVIDENCE TO DISCREDIT THE SAME. IN THE PRESENT CASE, FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD EXCEPT THE ALLEGATION AND THE INFORMATION RECEIVED FROM THE INVESTIGATION WING AB OUT THE 20 ACCOMMODATION ENTRY. IT MAY BE RELEVANT TO POINT OUT THAT EXCEPT MENTIONING OF THIS FACT, NOTHING FURTHER HAS BEEN ELABORATED AFTER CONSIDERING THE REPLY AND THE EVIDENCES SUBMITTED BY THE ASSESSEE. THE INFORMATION PER SE RECEIVED BY THE AO CANNOT BE A GROUND FOR SUSTAINING THE ADDITION. ON RECEIPT OF SUCH INFORMATION, THE AO CAN PUT THE SAME TO THE ASSESSEE TO REBUT THE SAME. THE ASSESSEE HAVING SUBMITTED EXPLANATION AND EVIDENCES, REBUTTING THE INFORMATION WITH THE AO, THE ONUS IS UPON THE AO TO D ISCREDIT THE EXPLANATION AND EVIDENCES AND IF NEED BE FURTHER INVESTIGATE ON THE BASIS OF THE INFORMATION AND THE MATERIAL HE IS IN POSSESSION OF. THE AO CANNOT SIMPLY SIT UPON THE INFORMATION AND MAKE THE ADDITION IGNORING THE EXPLANATION AND EVIDENCES. H E HAS TO ANALYZE THE EXPLANATION AND EVIDENCES OF THE ASSESSEE AND RECORD A FINDING HOW THIS EXPLANATION AND EVIDENCES ARE INCORRECT OR CANNOT BE RELIED UPON. THIS CAN BE DONE WHEN HE HAS CARRIED OUT VERIFICATION OF THE EXPLANATION AND EVIDENCES. IN THE PR ESENT CASE, THE AO HAS ALL THE INFORMATION ABOUT THE CREDITORS WHO HAVE CONTRIBUTED TO THE CAPITAL OF THE COMPANY. NO EFFORT WAS MADE TO CROSS VERIFY SUCH INFORMATION FROM THE AO OF THE CONCERNED CREDITOR DESPITE AO HAVING INFORMATION ABOUT ITS ITR, PAN, B ALANCE SHEETS. 21 28. THE AO HAS DRAWN ADVERSE INFERENCE AS IN THE REPLY RECEIVED FROM THE TWO SHAREHOLDERS, THE DOCUMENTS SUBMITTED WERE ON THE SAME LINE AS SUBMITTED BY THE ASSESSEE. I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN DRAWING ADVERSE INFERE NCE ON THIS ACCOUNT. IN CASE AO WAS NOT SATISFIED WITH THE REPLY RECEIVED FROM THESE TWO SHAREHOLDERS, HE COULD HAVE FURTHER MADE THE ENQUIRY. HAVING FAILED TO DO SO, HE CANNOT SHIFT THE BURDEN AND DRAW ADVERSE INFERENCE. ONGOING THROUGH THE ASSESSMENT O RDER I NOTE THAT IT IS NOT THE CASE OF THE AO THAT NOTICES HAVE COME BACK UNSERVED OR THESE SHAREHOLDERS WERE NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. IF THAT BE SO, I AM OF THE VIEW THAT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. THE AO HAVING ISSUE THE NOTICE AND SUCH NOTICE HAVING BEEN SERVED ON THE PERSON CONCERNED, THE AO HAS TO TAKE THE PROCESS TO THE LOGICAL END. SUBMISSION OF THE REPLY IN AN INDEPENDENT ENQUIRY BEING CARRIED OUT BY THE AO BY ISSUE OF NOTICE UNDER SECTION 133 (6) FROM THE PERSON CONCERNED DIRECTLY IS NOT IN THE HANDS OF THE ASSESSEE. THE AO MAY BE JUSTIFIED IN CERTAIN CIRCUMSTANCES WHEN NOTICE IS NOT SERVED OR WHEN AN ADVERSE REPLY IS RECEIVED IN RESPONSE TO NOTICE ISSUED BY HIM UNDER SECTION 133(6). MY VIEW IS SUPPORTED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION 159 22 ITR 78 WHERE A SIMILAR ISSUE HAS COME UP. THE FINDING OF THE HONBLE COURT IN THIS REGARD READS AS UNDER: IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME - TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANC E OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PU RSUE THE SO - CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SU CH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 29. IT IS ALSO A SETTLED LAW THAT DOUBT HOWSOEVER STRONG CANNO T TAKE PLACE OF PROOF AS SUBMITTED BY THE LD. AR RELYING UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF UMACHARAN SHAW & BROS VS. CIT [1953] 37 ITR 271. THE RELEVANT OBSERVATIONS OF THE HONBLE SUPREME COURT ON THIS ISSUE READ AS UNDER: 23 TAKING INTO CONSIDERATION THE ENTIRE CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT THERE WAS NO MATERIAL ON WHICH THE INCOME - TAX OFFICER COULD COME TO THE CONCLUSION THAT THE FIRM WAS NOT GENUINE. THERE ARE MANY SURMISES AND CONJECTURES, AND THE CONCLUSION IS THE RESULT OF SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF IN THESE MATTERS. 30. THERE IS A DIFFERENCE IN MAKING AN ALLEGATION AND SUSTAINING THE ALLEGATION. ON THE BASIS OF ALLEGATION, THE AO CAN CARRY OUT THE INVESTIGATION BUT THE ADDITION CAN BE SUSTAIN ED ONLY WHEN THERE ARE SUFFICIENT EVIDENCES TO SUPPORT THE ALLEGATION. IN THE PRESENT CASE, I AM OF THE VIEW THAT THE ASSESSEE HAS FAIRLY DISCHARGED THIS ONUS. 31. MY ABOVE VIEW FIND SUPPORT FROM THE JUDGMENT OF JURISDICTIONAL DELHI HIGH COURT IN THE CAS E OF CIT VS. LAXMAN INDUSTRIAL RESOURCES PVT. LTD. [2017] 397 ITR 106 WHERE THE HONBLE HIGH COURT HAS HELD AS UNDER: THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEMENTS, CHE QUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIONS AUTHORIZING THE APPLICATIONS, COPIES OF 24 BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS THEIR MASTER DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND RESTED CONTENT BY PLACING RELIANCE MERELY ON A REPORT OF THE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREGARD TO AN AOS DUT IES IN THE REMAND PROCEEDINGS WHICH THE REVENUE SEEKS TO INFLICT UPON THE ASSESSEE IN THIS CASE. 32. SIMILARLY, IN THE CASE OF CIT VS. RAKAM MONEY MATTERS PVT. LTD. IN ITA NO. 778 OF 2015, THE HONBLE DELHI HIGH COURT ON THIS ISSUE HAS HELD AS UNDER: THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEI R PARTICULARS, PAN DETAILS, ASSESSMENT PARTICULARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIONS AUTHORIZING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFI T AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS THEIR MASTER DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMEN TS AND RESTED CONTENT BY PLACING 25 RELIANCE MERELY ON A REPORT OF THE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREGARD TO AN AOS DUTIES IN THE REMAND PROCEEDINGS WHICH THE REVENUE SEEKS TO INFLICT UPON THE ASSESSEE IN THIS CASE. 33. THE BOMBAY HIGH COURT IN A RECENT CASE OF CIT VS. ORCHID INDUSTRIES PVT. LTD. 397 ITR 136 HAD OCCASION TO DEAL WITH A SOMEWHAT SIMILAR ISSUE AND HELD AS UNDER: 6] THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUIN ENESS OF THE PARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, THEIR BANK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECORD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, THEIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF THESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUF FICIENT FUNDS IN THEIR ACCOUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEARED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD. (SUPRA) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 26 34. IN VIEW OF THE ABOVE, I HOLD THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS AND THE ORDER PASSED BY THE CIT(A) DELETING T HE ADDITION IS UPHELD. 35. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 4776/DEL/2017 IS DISMISSED WHEREAS THE CROSS OBJECTION FILED BY THE ASSESSEE IN CO NO. 230/DEL/2017 IS ALLOWED. THE ORDER IS PRO NOUNCED IN THE OPEN COURT ON 09 . 0 3 .201 8 . SD/ - [B.P. JAIN ACCOUNTANT MEMBER DATED: 09 TH MARCH, 2018 VL/ COPY FORWARDED TO: 1 . ASSESSEE 2 . RESPONDENT 3 . CIT ASSISTANT REGISTRAR 4 . CIT(A) ITAT, NEW DELHI 5 . DR