ITO, New Delhi V. M/s. Vivsun Properties Pvt. Ltd., New Delhi

ITA 4786/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6549 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 17-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 02-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT GOEL
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Opportunity of being heard; Principle of natural justice; Period of limitation; Additional evidence; Accommodation entries; Non compliance; Onus to prove; Time period of passing order
• Section: 68; 148

Judgement Text

ITA NOS. 4786/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 4786/DEL/2011 A.Y. : 2004-05 INCOME TAX OFFICER, WARD 17(4), ROOM NO. 238, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S VIVSUN PROPERTIES PVT. LTD., 305 (3 RD FLOOR) JAGDAMBA TOWER, 13 COMMERCIAL COMPLEX, PREET VIHAR, NEW DELHI (PAN:AABCV4557C) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. SARABJEET SINGH, SR. DR ASSESSEE BY : SH. AMIT GOEL, CA DATE OF HEARING : 17-02-2016 DATE OF ORDER : 01-3-2016 ORDER PER H.S. SIDHU : JM REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 1.8.2011 PASSED BY THE LD. CIT(A)-XIX, NEW DELHI R ELEVANT TO ASSESSMENT YEAR 2004-05. 2. THE GROUNDS RAISED IN THE REVENUES APPEAL NO. 4 786/DEL/2011 READS AS UNDER:- THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING THE FOLLOWING ADDITIONS BY NOT DECIDING ENTIRELY ON MERITS THE CO NTENTIONS OF THE AO DISCUSSED IN DETAIL IN THE ASSESSMENT ORDER AND BY IGNORING T HAT: ITA NOS. 4786/DEL/2011 2 ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 13200000/- MADE BY THE AO BECAUSE:- A) THE AO MADE NECESSARY ENQUIRIES IN THE CASE OF M /S GEEFCEE FINANCE LTD AND M/S MAHANIVESH (INDIA) LTD BEFORE COMING TO THE CONCLUSION OF THAT CREDITS CLAIMED TO BE ON ACCOUNT OF SHARE APPLICATION MONEY WERE ACTUALLY BOGUS CREDITS REPRESENTING THE ACCOMMODATION ENTRIES. B) THE ASSESSEE COULD NOT REBUT THE ABOVE FINDING E ITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROC EEDINGS. C) MERELY BECAUSE THE ACCOMMODATION ENTRIES WERE RE CEIVED THROUGH PUBLIC LIMITED COMPANY DOES NOT MAKE THE CREDIT A GENUINE CREDIT OR GENUINE SHARE APPLICATION MONEY RECEIPT. D) THE LD CIT (A) FAILED TO APPRECIATE THAT FACTS O F THE CASE WERE SO PECULIAR, ESPECIALLY WITH REGARD TO NON COMPLIANCE TO NOTICES / SUMMONS ISSUED DURING THE ASSESSMENT PROCEEDINGS, {EVEN AFTER THE HON'BLE HIGH COURT HAD HELD THE REOPENING OF ASSESSMENT AS PER LAW AND EXT ENDED THE LIMITATION PERIOD UPTO 28 FEB 2011), THAT HE (LD CIT(A SHOULD HAVE A LLOWED THE AO THE AN OPPORTUNITY OF HEARING BEFORE ALLOWING RELIEF TO TH E ASSESSEE. E) THE LD CIT (A) FAILED TO APPRECIATE THAT THE CAS E LAWS RELIED BY THE AO AND REJECTION OF THE CASE LAW RELIED BY THE ASSESSE E WERE WELL DISCUSSED AND THE ADDITION MADE ON THE BASIS OF PROPER ENQUIRY AND AF TER CONFRONTATION TO THE ASSESSEE COULD NOT BE SAID TO BASED ON SUSPICION, C ONJECTURES OR SURMISES. F) THE LD CIT (A) FAILED TO APPRECIATE THAT THE ASS ESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER RELEVANT DETAILS CA LLED FOR, WHICH WERE NECESSARY TO EXAMINE THE CASE IN FULL DETAILS. ITA NOS. 4786/DEL/2011 3 G) THE LD CIT(A) HAS WRONGLY HELD THAT THE ASSESSEE FILED THE REQUISITE DETAILS AND PRODUCED THE BOOKS OF ACCOUNTS -DURING THE ASSESSMENT PROCEEDINGS. H) THE LD CIT(A) ERRED IN RELYING ON THE VARIOUS CA SE LAWS, WHICH HAD NO SIMILARITIES OF FACTS WITH THE FACTS OF THE ASSESSE E, SPECIALLY IN VIEW OF THE INFORMATION REGARDING BENEFICIARY FOR ACCOMMODATION ENTRIES ON RECORDS AND THE INFORMATION GATHERED DURING THE ASSESSMENT PROC EEDINGS THROUGH PROPER INVESTIGATION. 1.1 'ON THE FACTS AND IN, THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD D ISCHARGED THE ONUS U/S 68, IGNORING THE FACT THAT THE ASSESSEE FAILED TO REBUT THE VARIOUS DISCREPANCIES / FINDING CONFRONTED TO THE ASSESSEE AFTER MAKING ENQ UIRIES IN THE CASES OF MIS GEEFCEE FINANCE LTD AND MIS MAHANIVESH (INDIA) LTD. '. 1.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 132000 00/- MADE BY THE AO BECAUSE: I) THE AO MADE NECESSARY ENQUIRIES IN THE CASE OF M /S GEEFCEE FINANCE LTD AND M/S MAHANIVESH (INDIA) LTD BEFORE COMING TO THE CONCLUSION THAT CREDITS CLAIMED TO BE ON ACCOUNT OF SHARE APPLICATION MONEY WERE ACTUALLY BOGUS CREDITS REPRESENTING THE ACCOMMODATION ENTRIES. II) THE ASSESSEE COULD NOT REBUT THE ABOVE FINDING EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROC EEDINGS. III) MERELY BECAUSE THE ACCOMMODATION ENTRIES WERE RECEIVED THROUGH PUBLIC LIMITED COMPANY DOES NOT MAKE THE CREDIT A GENUINE CREDIT OR GENUINE SHARE APPLICATION MONEY RECEIPT.' 1.3 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS FAILED TO APPRECIATE THAT FACTS OF THE CASE WERE SO PECULIAR, ESPECIALLY ITA NOS. 4786/DEL/2011 4 WITH REGARD TO NON COMPLIANCE TO NOTICES/SUMMONS IS SUED DURING THE ASSESSMENT PROCEEDINGS, {EVEN AFTER THE HON'BLE HIG H COURT HAD HELD THE REOPENING OF ASSESSMENT AS PER LAW AND EXTENDED THE LIMITATION PERIOD UPTO 28 FEB 2011), THAT HE (LD CIT(A SHOULD HAVE ALLOWED T HE AO THE AN OPPORTUNITY OF HEARING BEFORE ALLOWING RELIEF TO THE ASSESSEE.' 1.4 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS FAILED TO APPRECIATE THAT THE CASE LAWS REL IED UPON BY THE AO AND REJECTION OF THE CASE LAW RELIED BY THE ASSESSEE WE RE WELL DISCUSSED AND THE ADDITION WAS MADE ON THE BASIS OF PROPER ENQUIRY AN D' AFTER CONFRONTATION TO THE ASSESSEE WHICH CANNOT BE SAID TO BE BASED ON SU SPICION, CONJECTURES OR SURMISES.' 1.5 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE FAIL ED TO PRODUCE THE BOOKS OF ACCOUNTS AND OTHER RELEVANT DETAILS CALLED FOR, WHI CH WERE NECESSARY TO EXAMINE THE CASE IN FULL DETAILS.' 1.6 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS WRONGLY HELD THAT THE ASSESSEE FILED THE REQUISITE DETAILS AND PRODUCED THE BOOKS OF ACCOUNTS DURING THE ASSESSMEN T PROCEEDINGS.' 1.7 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RELYING ON THE VARIOUS CASE LAW S, WHICH HAD NO SIMILARITIES OF FACTS OF THE ASSESSEE, ESPECIALLY IN VIEW OF THE INFORMATION REGARDING BENEFICIARY FOR ACCOMMODATION ENTRIES ON RECORDS AN D THE INFORMATION GATHERED DURING THE ASSESSMENT PROCEEDINGS THROUGH PROPER IN VESTIGATION. 1.8 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD D ISCHARGED THE ONUS U/S. 68, IGNORING THE FACT THAT THE ASSESSEE FAILED TO REBUT THE VARIOUS DISCREPANCIES / ITA NOS. 4786/DEL/2011 5 FINDINGS CONFRONTED TO THE ASSESSEE AFTER MAKING EN QUIRIES IN THE CASES OF M/S GEEFCEE FINACNE LTD. AND M/S MAHAVINESH (INDIA) LTD . 1.9 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD D ISCHARGED THE ONUS ULS 68, IGNORING THE FACT THAT THE ASSESSEE FAILED TO EVEN PROVIDE THE NAMES AND ADDRESSES AND INCOME TAX PARTICULARS AND CONFIRMATI ON OF OTHER SHARE APPLICANTS, DESPITE BEING CALLED FOR FROM TIME TO T IME, UP TO 31/12/2010, WHEN THE ASSESSMENT WAS TIME BARRING OR EVEN UP TO 28/2/ 2011, THE DATE UP TO WHICH THE ASSESSMENT WAS TO BE COMPLETED AS PER HIGH ORDE R IN ASSESSEE' WRIT PETITION NO CIVIL MISC. PETITION NO 2124/2010 AND WRIT PETIT ION (CIVIL) NO 8260/2010 DATED 10/12/2010 HOLDING THAT THE REOPENING OF THE ASSESSMENT WAS JUSTIFIED. THE HON'BLE HIGH COURT HAD NOT STAYED THE PROCEEDIN GS.' 1.10 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT HAS ERRED IN DELETING THE SAID ADDITION OF RS.L,32, 00,000/- BY SIMPLY QUOTING THE GENERAL PRINCIPLES OF LAW LAID DOWN BY VARIOUS COUR TS, WITHOUT APPRECIATING THE FACTS OF THE PRESENT ASSESSEE'S CASE AS BROUGHT OUT IN THE ASSESSMENT ORDER AND WITHOUT ELABORATING AS TO HOW THE SAID PRINCIPLES C OULD BE APPLIED TO GIVE RELIEF TO THE ASSESSEE.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 15 LAC MADE BY THE AO AS UNEXPLAINED CASH CREDIT WITHOUT APPRECIATING THE FA CTS THAT NONE OF THE PART RECEIPT OF RS 15 LAC WAS RECEIVED FROM KK KAPUR HUF AS REVEALED FROM ENQUIRY MADE BY THE AO'. 2.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT THE CREDIT AMOUNTS WERE REPAYMENT OF LOAN BY KK KAPUR HUF ON F ACE VALUE WITHOUT ITA NOS. 4786/DEL/2011 6 REBUTTING THE FINDING OF THE AO BY THE ASSESSEE DUR ING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROCEEDINGS. 2.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.15 LACS BY OBSERVING THAT THE RECOVERY OF THE ADVANCE IS OUTSIDE THE SCOPE OF S.6 8 WITHOUT APPRECIATING THAT UNLESS THE ASSESSEE EXPLAIN THE NATURE AND SOURCE O F CREDIT TO THE SATISFACTION OF THE AO, THE PROVISIONS OF SECTION 68 WILL APPLY. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 4.50 L AC WITHOUT APPRECIATING THE FACTS OF THE CASE JUST BY ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT THE CREDIT AMOUNTS WAS SALE PROCEEDS OF SHARES'. 3.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 4.50 WITHO UT APPRECIATING THE FACTS THAT THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDEN CE RELATED TO SALE OF SHARES AS CLAIMED'. 3.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 4.50 W ITHOUT APPRECIATING THE FACTS AS REVEALED FROM ENQUIRIES CONDUCTED BY THE AO ACCE PTING THE SUBMISSION AS CORRECT ON FACE VALUE WITHOUT REBUTTING THE FINDING OF THE AO DURING THE ASSESSMENT PROCEEDINGS OR DURING THE APPELLATE PROC EEDINGS.' 3.3 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 4.50 I GNORING THE FACTS REVEALED FROM ENQUIRY AS DISCUSSED IN THE ASSESSMENT ORDER U NDER THE HEADING ''''ENQUIRY FROM STATE BANK OF INDIA, EAST PATEL NAGAR, NEW DEL HI AND HDFC BANK ROSHANARA ROAD.' ITA NOS. 4786/DEL/2011 7 3.4 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS 4.50 WITHO UT ALLOWING THE AO AN OPPORTUNITY OF BEING HEARD'; 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2.25 LAC A ND RS 608850/- MADE BY THE AO BECAUSE WITHOUT APPRECIATING THE FACTS OF THE CA SE JUST BY ACCEPTING THE SUBMISSION OF THE ASSESSEE THAT THE CREDIT AMOUNTS WAS SALE PROCEEDS OF SHARES.' 4.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 2.25 LAC AND RS 608850/- WITHOUT APPRECIATING THE FACTS 'THAT THE ASSESSEE DID NOT P RODUCE ANY DOCUMENTARY EVIDENCE RELATED TO SALE OF SHARES AS CLAIMED.' 4.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT-(A) HAS ERRED IN DELETING THE ADDITION OF RS 2.25 LAC A ND RS 608850/- WITHOUT APPRECIATING THE FACTS AS REVEALED FROM ENQUIRIES C ONDUCTED BY THE AO ACCEPTING THE SUBMISSION AS CORRECT ON FACE VALUE W ITHOUT REBUTTING THE FINDING OF THE AO BY THE ASSESSEE DURING THE ASSESSMENT PRO CEEDINGS OR DURING THE APPELLATE PROCEEDINGS. 4.3 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2.25 L AC AND RS 608850/- IGNORING THE FACTS REVEALED FROM ENQUIRY AS DISCUSSED IN THE ASSESSMENT ORDER UNDER THE HEADING ''''ENQUIRY FROM STATE BANK OF INDIA, EAST PATEL NAGAR, NEW DELHI AND ENQUIRY FROM HDFC BANK ASHOK VIHAR PHASE-1, DELHI A ND THE STANDARD CHARTERED BANK, KAROL BAGH. 4.4 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2.25 L AC AND RS 608850/- WITHOUT ALLOWING THE AO AN OPPORTUNITY OF BEING HEARD.' ITA NOS. 4786/DEL/2011 8 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 10 LAC MADE BY THE AO IGNORING THE FINDING OF THE AO BASED ON THE BANK A/C STATEMENT O F THE ASSESSEE. ' 5.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 10 LAC MAD E BY THE AO IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCO UNTS DESPITE THE ADEQUATE OPPORTUNITY ALLOWED TO THE ASSESSEE.' 5.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 10 LAC ACCEPTING ADDITIONAL EVIDENCE IN FORM OF BANK ALC IN THE BOOKS OF THE AS SESSEE WITHOUT ALLOWING AN OPPORTUNITY TO THE AO TO GIVE HIS COMMENTS IN CONTR AVENTION OF RULE 46A OF THE INCOME TAX RULES.' 6. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 40000/ -- MADE BY THE AO IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE THE BOOK S OF ACCOUNTS DESPITE THE ADEQUATE OPPORTUNITY ALLOWED TO THE ASSESSEE.' 6.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 40000/ - MADE BY THE AO BY ACCEPTING ADDITIONAL EVIDENCE IN FORM OF CONFIRMATI ON OF ALC FROM M/S MODLINE BUILD UP CAP PVT LTD WITHOUT ALLOWING AN OPPORTUNIT Y TO THE AO TO GIVE HIS COMMENTS IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES.' 7. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2 LAC MADE BY THE AO IGNORING THE FACT THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCO UNTS OR ANY OTHER DOCUMENTARY EVIDENCE DESPITE THE ADEQUATE OPPORTUNI TY ALLOWED TO THE ASSESSEE.' ITA NOS. 4786/DEL/2011 9 7.2 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2 LAC MADE BY THE AO BY ACCEPTING THE WRITTEN SUBMISSION OF THE ASSESSEE AS EVIDENCE WITHOUT VERIFYING THE FACTS AS MENTIONED BY THE AO.' 7.3 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS 2 LAC MADE BY THE AO WITHOUT ALLOWING THE AO AN OPPORTUNITY OF BEING HEARD.' 8. 'THE APPELLANT CRAVES LEAVE FOR RESERVING THE RI GHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME B EFORE OR DURING THE HEARING OF APPEAL.' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF SHARES. IN THIS CASE THE ASSESSING OFFICER RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT, THAT CERTAIN COMPANIES WHICH CONTRIBUTED TOWARDS SHARE A PPLICATION MONEY/ SHARE CAPITAL WERE INVOLVED IN PROVIDING ACCOMMODATION E NTRIES. IN VIEW OF THE SPECIFIC INFORMATION, THE ASSESSING OFFICER INITIAT ED ACTION U/S. 148 AND COMPLETED THE ASSESSMENT ON 28.2.2011 DETERMINING T HE TOTAL INCOME AT RS. 1,72,88,770/- BY DISBELIEVING THE SHARE APPLICATIO N MONEY / SHARE CAPITAL AND ALSO CERTAIN CREDIT ENTRIES / DEPOSITS IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY AND MADE VARIOUS ADDITIONS BY PA SSING AN ASSESSMENT ORDER DATED 28.2.2011 U/S. 143(3)/147 OF THE I.T. ACT, 19 61. 4. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSIN G OFFICER DATED 28.2.2011 PASSED U/S. 143(3)/147, ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 01.08.2011 HAD DELETED THE ADDITIONS IN DISPUTE IN FAVOUR OF THE ASSESSEE BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. ITA NOS. 4786/DEL/2011 10 5. AGGRIEVED WITH THE AFORESAID FINDING OF THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE DRAWN OUR ATTENTION TOWARDS THE APPLICATION FILED BY THE ASSESSEE U/R 2 7 OF THE INCOME TAX (APPELLATE TRIBUNAL RULES, 1963) IN WHICH HE HAS ST ATED THAT THE NOTICE U/S. 148 ISSUED IN THE CASE OF ASSESSEE IS BAD IN LAW AND WI THOUT JURISDICTION AS THE REQUISITE SANCTION U/S. 151 OF THE INCOME TAX ACT, 1961 FOR ISSUANCE OF NOTICE U/S. 148 HAS NOT BEEN OBTAINED. SECONDLY, HE ARGUE D THAT NOTICE U/S. 148 ISSUED IN THIS CASE IS BAD IN LAW AND WITHOUT JURISDICTION AS THE REASONS FOR ISSUE OF NOTICE U/S. 148 HAS BEEN RECORDED IN A MECHANICAL M ANNER AND WITHOUT APPLICATION OF MIND AND WITHOUT INDEPENDENT EXAMIN ATION. THEREFORE, HE REQUESTED THAT ON THIS LEGAL ISSUE, THE REASSESSME NT MAY BE QUASHED AND REVENUES APPEAL MAY BE DISMISSED ACCORDINGLY. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE CIT(A) ON THIS ISSUE AND STRONGLY OPPOSED THE APPLICATION FILED BY THE ASSESSEE UNDER RULE 27 OF THE ITAT RULES, 1963 AND STATED THAT ASSESSEE HA S CHALLENGED THE NOTICE U/S. 148 ISSUED BY THE AO IN THE HONBLE HIGH COURT OF D ELHI IN WP(C) NO. 8260/2010 AND CM 2124/2010 IN THE CASE OF VIVSUN PR OPERTIES (P) LTD. VS. CIT & ANR. WHEREIN THE HONBLE HIGH COURT OF DELHI HAS HELD THAT THE REOPENING OF THE ASSESSMENT IS JUSTIFIED. IN VIEW OF THE DEC ISION OF THE HONBLE HIGH COURT, HE REQUESTED THAT LEGAL ISSUE RAISED BY THE ASSESS EE VIDE APPLICATION U/R 27 MAY BE DISMISSED. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE CONTENTIONS RAISED BY THE ASSESSEE IN THE APPLICATION FILED UNDER RULE 27 OF THE ITAT RULES, 1963 ALONGWITH THE ORDER OF THE LD. CIT(A) AND THE ORDER DATED 10.12.2010 OF THE HONBLE HIGH COURT OF DELHI CHALLENGING THE NOTICE U/S. 148 OF THE I.T. ACT IN THE WP(C) NO. 8260/2010 AND CM 2124/2010 IN THE CAS E OF VIVSUN PROPERTIES ITA NOS. 4786/DEL/2011 11 (P) LTD. VS. CIT WHEREIN THE HONBLE HIGH COURT HAS HELD THAT REOPENING OF THE ASSESSMENT WAS JUSTIFIED. KEEPING IN VIEW OF THE AF ORESAID DISCUSSIONS AND PRECEDENT, WE ARE OF THE CONSIDERED VIEW THAT LD. C IT(A) HAS RIGHTLY DISMISSED THIS LEGAL ISSUE OF CHALLENGING THE REASSESSMENT, I N VIEW OF THE HONBLE HIGH COURT OF DELHI DECISION DATED 10.12.2010 AS AFORE SAID, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE APPLICATION MADE U/R 27 OF THE INCOME TAX (APPELLAT E TRIBUNAL RULES, 1963) OF THE ASSESSEE. 9. NOW WE DEAL WITH THE MERIT OF THE CASE IN THE R EVENUES APPEAL. 10. APROPOS DELETION OF ADDITION OF RS. 1,32,00,000 /- MADE U/S. 68 OF THE I.T. ACT. 10.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. IN CONNECTION WITH ADDITION OF RS. 1,32,00,000/- IS CONCERNED, IT WAS THE MAIN CONTENTION OF THE LD. DR THAT RECEIPT OF SHARE APPLICATION MONE Y / SHARE CAPITAL WAS AN ARRANGED AFFAIR AND ASSESSEE FAILED TO PROVE THE C REDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS, THEREFORE, THE AO HAS RIGHTLY HELD THAT INITIAL ONUS CAST UPON THE ASSESSEE WHO HAS NOT BEEN SATISF ACTORILY DISCHARGED, HENCE, THE ADDITION WAS RIGHTLY MADE BY THE AO AND MAY BE UPHELD ACCORDINGLY. 10.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. HE STATED THAT BASIC DETAILS WHICH WERE REQUIRED FOR VERIFICA TION TO FULFILL THE CONDITIONS VIZ. IDENTITY OF THE CREDITOR, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTION AS LAID DOWN BY HIGHER JUDICIAL AUTHORI TIES FOR EXAMINING THE ISSUE U/S. 68. ITA NOS. 4786/DEL/2011 12 10.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT TH E LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE AND GAVE HIS FINDING VIDE PARA NO. 9 TO 18 AT PAGE NOS. 4 TO 9 OF HIS IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE , THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED BELOW:- 9. SHARE APPLICATION MONEY /SHARE CAPITAL: THE ASSESSEE COMPANY RECEIVED SHARE APPLICATION MO NEY / SHARE CAPITAL FROM THE FOLLOWING PERSONS / COMPANIE S AND THE DETAILS FURNISHED ARE AS UNDER:- S.NO NAME & ADDRESS SHARE CAPITAL INCLUDING SHARE PREMIUM (RS.) REMARKS 1. GEEFCEE FINANCE LTD. 13/34, WEA, 4 TH FLOOR, MAIN ARYA SAMAJ ROAD, NEW DELHI 110 005 20,00,000.00 DATE INCORPORATION: 17.5.1990 PAN: AAACG1103H 2 MAH A NI V ESH INDIA LTD. 10 , 00,000 . 00 COPIES O F 1 3 / 3 4 , W EA, 4TH F LOOR , '' ' ' AL E , BALANCE MAIN AR Y A SAMAJ CERTIFICATE ROAD , N E W DELHI - DATE OF INCORPORATION : 110005 PAN: AA A CM 3 COMBINE OVERSEAS LTD. 40 , 00 , 000 . 00 COPIES OF SHARE E - 65 , 6 TH FLOOR , PAN: AAACC HIMALAYA HOUSE , 23 , K . G. M A RG , NEW DELHI - L 10001 4 OJSWI TRAD E RS 7 , 00 , 000 . 00 COPIES OF SHARE INVES T MENT & FINANCE PAN : AAACO L T , 5/5761 , DE V NAGAR , KAROL BAGH , NEW DELH I - L 10005 5 DIPLOMAT INTERNATIONAL 10 , 00 , 000 . 00 COPIES OF SHARE P V T . LTD . AFFIDA V IT OF THE C - I/2 , MODEL TOWN , ACCOUNT COPY DELHI - I 10009 OF INDIA , ANSARI WARD - 1 0(3), NEW ITA NOS. 4786/DEL/2011 13 PAN: AAACD 6 MR . UMESH KHETAN 40 , 00 , 000 . 00 COPIES OF SHARE 57 , MOD E L TOWN, G . T . PAN : AF E PK ROAD, GAZIABAD (U.P) 7 MS . KUSUM AGARWAL 1 , 00 , 000 . 00 COPIES OF SHARE 45A , BLOCK - C , NEW PAN : ACYPA ALIPUR, KOLKATTA 8 MR . NAVEEN AGARWAL 2 , 00 , 000 . 00 COPIES OF SHARE AND MR . P R ADEEP PAN : ACZPA AGARWAL (JOINT HOLDER) 9 MR . VINA Y AGARWAL 2 , 00 , 000.00 COPIES OF SHARE . 45A , BLOCK - C, NEW PAN: AEBPA . ALIPUR , KOLKATTA . _ .: : 10 MR . MANOJ HANSARIA - 990 TREATED AS 318125 , ONKAR NAGAR , TRINAGAR, DELHI - 1 10035 11 LAXMI NARAYAN KHATAN 990 TREATED AS AE - 66, SHALIMAR BAGH , - NEW DELHI-110088 TOTAL 1,32,01,980* *AN ADDITION OF RS.1,32,00,000/- WAS MADE U/S 68 OU T OF RS. 1,32,01,980 BEING SHARE APPLICATION MONEY/SHARE CAPITAL RECEIVED IN F .Y. 2003-04. 10.1 THE ASSESSEE HAS FILED THE FOLLOWING DOCUMENTS IN THE COURSE OF A) ASSESSMENT PROCEEDINGS TO PROVE THE TRANSACTIONS . B) NAME AND ADDRESS OF THE SHAREHOLDERS. C) INCOME TAX PARTICULARS OF SHAREHOLDERS/PAN DETAI LS D) SHARE APPLICATION FORMS E) BANK STATEMENT F) AFFIDAVITS ITA NOS. 4786/DEL/2011 14 10.2 IN A NUTSHELL THE MAIN ALLEGATION OF THE AO IS THAT RECEIPT OF SHARE APPLICATION MONEY/SHARE CAPITAL WAS AN ARRANGED AFF AIR. THE OTHER OBSERVATION OF THE AO IS THAT THE GENUINENESS AND C REDIT WORTHINESS OF THE TRANSACTION REMAINED UNPROVED. ON THE OTHER HAND, T HE MAIN CONTENTION OF THE AR IS' THAT THE BURDEN CAST ON IT WAS DISCHA RGED BY PROVIDING BASIC DETAILS REQUIRED FOR VERIFICATION AS ENVISAGED IX] S 68. THE AR FURTHER STATED THAT PRINCIPLES OF NATURAL JUSTICE WERE NOT FOLLOWED. 10.3 THE ASSESSEE HAS DISCHARGED ITS BURDEN OF PROV IDING BASIC DETAILS WHICH WERE REQUIRED FOR VERIFICATION TO FULFILL THE CONDI TIONS VIZ. IDENTITY OF THE CREDITOR, CREDIT WORTHINESS OF THE CREDITOR AND GEN UINENESS OF TRANSACTION AS LAID DOWN BY HIGHER JUDICIAL AUTHORITIES FOR EXA MINING THE ISSUE IS] S. 68. IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. 207 CTR 38, THE HONBLE JURISDICTIONAL HIGH COURT OBSERVED AS UNDER: 'ON APPEAL THIS COURT HELD THAT: 'THERE CANNOT BE TWO OPINIONS ON THE ASPECT THAT TH E PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MONEY THROUGH THE MASQ UERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUS T BE FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHERE THE PREPONDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND COMPLEXITY OF THE ASSESS EE IT SHOULD NOT BE HARASSED BY THE REVENUE'S INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF PUBLIC ISSUE, THE COMPANY CONCERNED CAN NOT BE EXPECTED TO KNOW EVERY DETAILS PERTAINING TO THE IDENTITY AS WE LL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATUTORY SHARE APPLICATION DOCUME NTS. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WOULD NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTR OPE OF SECTION 68 AND ITA NOS. 4786/DEL/2011 15 69 OF THE INCOME TAX ACT. THE BURDEN OF PROOF CAN S ELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE; IF THE ASSESSING OFFIC ER HARBORS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH INVESTIGATIONS. BUT IF THE ASSESSING O FFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY.' 'FURTHER, A DISTILLATION OF THE PRECEDENTS YIELDS T HE FOLLOWING PROPOSITION OF LAW IN THE CONTEXT OF SECTION 68 OF THE INCOME T AX ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CR EDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY: WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS; (3) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER; ( 4) IF RELEVANT DETAILS OF THE ADDRESS OF PAN IDENTITY OF THE CREDITOR/SUBSCRI BER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE A SSESSEE; (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADV ERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBE FAILS OR NEGLECTS TO RESPOND TO ITS NOTICE; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CRE DITOR/SUBSCRIBER DENIED OF REPUDIATED THE TRANSACTION SET UP BY THE ASSESSE E NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VAL UE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESSEE; (7) THE ASSESSI NG OFFICER IS DUTY- BOUND TO INVESTIGATE THE CREDIT WORTHINESS OF THE C REDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION.' ITA NOS. 4786/DEL/2011 16 WITH REGARD TO THE ISSUE OF SHARE APPLICATION MONEY, WHILE DISMISSING THE SLP FILED BY THE DEPARTMENT, THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (216 CTR 195) OBSERVED AS U NDER: 'CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDIS CLOSED INCOME UNDER S. 68 OF IT ACT, 1961? WE FIND NO MERIT IN TH IS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE AP PLICATION' MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMEN T IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANC E WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT.' IN THE CASE OF ANU INDUSTRIES LTD. VS. ACIT (2009) 19 DTR (DEL) (TRIB) 465 (DATED 28.11.2008) AFTER REFERRING TO DECISIONS IN THE CASES OF CIT VS. VALUE CAPITAL SERVICES (P) LTD. (2009) 221 CTR (DEL) 511, CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195: (2008) 6 DTR (SC) 308 , SHIPRA RETAILERS (P) LTD. (SLP NO. 451 OF 2008, DT. 21 ST JAN. 2008) AND DIVINE LEASING & FINANCE LTD. (SLP NO. 375 OF 2008, DT. 21ST JAN. 2008) THE HON'BLE ITAT OBSERVED AS UNDER: 'WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT IDENTITY OF THE SHARE APPLICANTS ARE NOT IN DISPUTE. THE HON'BLE SU PREME COURT IN CASE OF DIVINE LEASING & FINANCE LTD. (SUPRA) HAS HELD T HAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY EVEN FROM THE BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIV IDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. ACCORDINGLY, ADDITION MADE UND ER S. 68 WHICH WAS DELETED BY THE HON'BLE HIGH COURT WAS UPHELD BY HON 'BLE SUPREME COURT. A PERUSAL OF THE ORDERS OF THE HON'BLE SUPRE ME COURT IN THE CASE ITA NOS. 4786/DEL/2011 17 OF DIVINE LEASING & FINANCE LTD. REFERRED TO SUPRA IS IN REGARD TO SLP FILED BY THE REVENUE AGAINST THE ORDER OF THE HON'B LE JURISDICTIONAL HIGH COURT. THE HON'BLE SUPREME' COURT HAS SPECIFICALLY WITH A SPEAKING ORDER DISMISSED THE SLP. THE HON'BLE SUPREME COURT IN THE VARIOUS DECISIONS REFERRED TO BY THE LEARNED AUTHORIZED REP RESENTATIVE HAS CATEGORICALLY HELD THAT THE ADDITION IN REGARD TO T HE SHARE CAPITAL CANNOT BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSE E IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPA NY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO. FURTHER THE HON'BLE SUPREME -, COURT HAS CATEGORICALLY HELD THA T THE REVENUE IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUCH ALLEGED BOGUS SHAREHOLDERS. THE DECISION OF THE HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF VALUE CAPITAL SERVICES LTD. (SUPRA) HAS ALSO CATEGORICALLY HELD THAT THERE IS ADDITIONAL BURDEN ON THE REVENUE TO SHOW THAT EVEN IF THE APPLICANT DOES NOT HAVE THE MEANS TO MAKE THE I NVESTMENT, BUT THE INVESTMENT MADE BY THE APPLICANT SHOULD BE SHOWN TO HAVE EMANATED FROM THE COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT IS NOTICED T HAT THE REVENUE HAS NOT BEEN ABLE TO SPECIFICALLY SHOW THAT THE INVESTMENTS HAD EMANATED FROM THE COFFERS OF THE ASSESSEE IN THIS CASE. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE DECISION OF THE HON 'BLE JURISDICTIONAL HIGH COURT AS ALSO HON'BLE SUPREME COURT REFERRED TO SUP RA, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(A) IN REGARD TO THE ALLEGED BOGUS SHAREHOLDERS REPRESENTED BY THE INCRE ASE IN SHARE CAPITAL OF THE ASSESSEE CANNOT BE TREATED AS UNEXPLAINED CA SH CREDITS IN THE HANDS OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISIO N OF THE HON'BLE SUPREME COURT WE DIRECT THE AO TO DELETE THE ADDITI ON MADE UNDER S.68. HOWEVER, THE DEPARTMENT IS FREE TO PROCEED TO REOPE N THE INDIVIDUAL ITA NOS. 4786/DEL/2011 18 ASSESSMENTS OF THE SHARE APPLICANTS IN ACCORDANCE W ITH LAW. WE DIRECT ACCORDINGLY.' 11.1 FROM THE DETAILS FURNISHED, ONE CAN CONCLUDE T HAT THE ASSESSEE HAS PROVIDED NECESSARY BASIC DETAILS INCLUDING THE WARD /CIRCLE WHERE THE SHARE APPLICANTS/ INVESTING COMPANIES WERE ASSESSED TO INCOME TAX' AND DISCHARGED THE ONUS CAST ON IT. ALL THE AMOUNTS WER E RECEIVED THROUGH BANKING CHANNELS BY WAY OF CHEQUES ISSUED IN FAVOUR OF THE APPELLANT COMPANY TOWARDS SHARE APPLICATION MONEY / SHARE CAP ITAL. 11.2 BOTH M/ S MAHANIVESH INDIA LTD. AND M/S GEE FCEE FINANCE LTD. ARE PUBLIC LIMITED COMPANIES AND THE INVESTMENT IN THE SHARES OF THE APPELLANT COMPANY WERE DULY REFLECTED IN THEIR BOOK S OF ACCOUNT AS SEEN FROM THE SCHEDULE TO THE RESPECTIVE BALANCE SHEETS FURNISHED. IN THE STATEMENT RECORDED FROM SHRI TARUN GOYAL, THE APPEL LANT COMPANY IS NOT FIGURING AS BENEFICIARY OF ACCOMMODATION ENTRIES. 11.3 THE AO CONDUCTED INQUIRES WITH REGARD TO THE S OURCES OF FUNDS BEFORE ISSUING CHEQUES TO THE APPELLANT BY M/S MAHANIVESH INDIA LTD., AND M/S GEEFCEE FINANCE LTD. THE AO OBSERVED THAT THE TRANS ACTIONS ARE NOT GENUINE. BUT THE FACT REMAINS THAT THE SAID TWO COM PANIES ARE PUBLIC LIMITED COMPANIES AND THEY HAVE INVESTED IN MANY OT HER COMPANIES. 12. THE AO IN THE ASSESSMENT ORDER REPRODUCED EXT ENSIVELY THE NOTINGS OF ORDER SHEET, QUESTIONERS ISSUED AND REPLIES FURNISH ED BY THE APPELLANT. THE AO OBSERVED THAT THE FACTS OF THE CASE ARE DIST INGUISHABLE FROM THE FACTS OF THE CASES WHICH WERE CONSIDERED BY THE VAR IOUS JUDICIAL FORA. IT IS MORE OR LESS SETTLED POSITION OF LAW THAT ONCE IDEN TITY IS ESTABLISHED, THE BETTER COURSE SUGGESTED BY THE JUDICIAL AUTHORITIES IS TO REOPEN THE ITA NOS. 4786/DEL/2011 19 ASSESSMENTS OF SHARE APPLICANTS. IN RESPECT OF SHAR E APPLICANTS OTHER THAN M/ S MAHANIVESH INDIA LTD. AND M/S GEEFCEE FINANCE LTD., NOTHING ADVERSE WAS BROUGHT ON RECORD. 13. THE LAW OF EVIDENCE MANDATES THAT IF THE BES T EVIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENCE CAN BE DRAWN AGAINS T THE PERSON WHO OUGHT TO HAVE PRODUCED IT. AS STATED ABOVE THE ASSE SSEE HAS PRODUCED POSSIBLE/BEST EVIDENCE TO SUPPORT ITS CLAIM. THE AS SESSEE CANNOT BE FASTENED WITH, TAX LIABILITY FOR FAILING TO DO AN I MPOSSIBLE/UNJUSTIFIED ACT OF PRODUCTION OF DIRECTORS OF INVESTING COMPANIES A FTER LAPSE OF 5/6 YEARS. 14. IF THERE IS ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE INVESTING COMPANIES, THERE IS A CASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHAREHOLDERS/INVESTING COMPANIES. 15. THE ASSESSEE CANNOT BE PENALIZED FOR THE MIS TAKES/FAULTS COMMITTED BY THE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISC REPANCY IN THE BOOKS OF ACCOUNT AND BANK ACCOUNTS MAINTAINED BY THE ASSE SSEE. 16. IT IS SETTLED PRINCIPLE OF LAW THAT NO ADDI TION/DISALLOWANCE CAN BE MADE ON SUSPICION, SURMISES AND CONJECTURES AS HELD BY THE HON'BLE SUPREME COURT IN THE FOLLOWING CASES. A) DHIRAJLAL GIRDHARILAL V CIT 26 ITR 736 B) OMAR SALAY MOHAMMED SAIT V CIT 37 ITR 151 C) DHAKESHWARI COTTON MILLS LTD. V CIT 26 ITR 775 D) LALCHAND BHAGAT AMBICA RAM V CIT 37 ITR 288 17. IN THE CASE OF ACCHYALAL SHAW VS. ITO (2009) 30 SOT 44 (KOL.) (URO), THE HON'BLE ITAT OBSERVED AS UNDER: 'SUSPICION CANNOT REPLACE EVIDENTIAL DOCUMENT. SI MPLE ARGUMENT OR ALLEGATION OF MANIPULATION IS NOT SUFFICIENT WITHOU T PROPER EVIDENCE.' ITA NOS. 4786/DEL/2011 20 18. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES A ND AVAILABLE LEGAL POSITION, THE SHARE APPLICATION MONEY/SHARE CAPITAL TO THE EX TENT OF RS. 1,32,00,000/- STANDS EXPLAINED. 10.4 WE FIND THAT THE ASSESSEE HAS FURNISHED THE D ETAILS INCLUDING THE WARD/CIRCLE WHERE THE SHARE APPLICANTS/ INVESTING C OMPANIES WERE ASSESSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. ALL THE AMOUNTS WERE RECEIVED THROUGH BANKING CHANNELS BY WAY OF CHEQUES ISSUED I N FAVOUR OF THE ASSESSEE COMPANY TOWARDS SHARE APPLICATION MONEY / SHARE CAP ITAL. BOTH M/ S MAHANIVESH INDIA LTD. AND M/S GEEFCEE FINANCE LTD. ARE PUBLIC LIMITED COMPANIES AND THE INVESTMENT IN THE SHARES OF THE A SSESSEE COMPANY WERE DULY REFLECTED IN THEIR BOOKS OF ACCOUNT AS SEEN FROM TH E SCHEDULE TO THE RESPECTIVE BALANCE SHEETS FURNISHED. THE AO CONDUCTED INQUIRES WITH REGARD TO THE SOURCES OF FUNDS BEFORE ISSUING CHEQUES TO THE APPELLANT BY M/S MAHANIVESH INDIA LTD., AND M/S GEEFCEE FINANCE LTD. WE FIND THAT THE AO OB SERVED THAT THE TRANSACTIONS ARE NOT GENUINE. BUT THE FACT REMAINS THAT THE SAID TWO COMPANIES ARE PUBLIC LIMITED COMPANIES AND THEY HAVE INVESTED IN MANY OTHER COMPANIES. THE AO IN THE ASSESSMENT ORDER REPRODUCED EXTENSIVE LY THE NOTINGS OF ORDER SHEET, QUESTIONERS ISSUED AND REPLIES FURNISHED BY THE APPELLANT. THE AO OBSERVED THAT THE FACTS OF THE CASE ARE DISTINGUISH ABLE FROM THE FACTS OF THE CASES WHICH WERE CONSIDERED BY THE VARIOUS JUDICIAL FORA. IT IS MORE OR LESS SETTLED POSITION OF LAW THAT ONCE IDENTITY IS ESTABLISHED, THE BETTER COURSE SUGGESTED BY THE JUDICIAL AUTHORITIES IS TO REOPEN THE ASSESSMEN TS OF SHARE APPLICANTS. IN RESPECT OF SHARE APPLICANTS OTHER THAN M/ S MAHANIV ESH INDIA LTD. AND M/S GEEFCEE FINANCE LTD., NOTHING ADVERSE WAS BROUGHT O N RECORD. THE LAW OF EVIDENCE MANDATES THAT IF THE BEST EVIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENCE CAN BE DRAWN AGAINST THE PERSON W HO OUGHT TO HAVE PRODUCED IT. AS STATED ABOVE THE ASSESSEE HAS PRODUCED POSSI BLE/BEST EVIDENCE TO SUPPORT ITA NOS. 4786/DEL/2011 21 ITS CLAIM. THE ASSESSEE CANNOT BE FASTENED WITH, TA X LIABILITY FOR FAILING TO DO AN IMPOSSIBLE/UNJUSTIFIED ACT OF PRODUCTION OF DIRECTO RS OF INVESTING COMPANIES AFTER LAPSE OF 5/6 YEARS. IF THERE IS ANY DISCREPA NCY IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE INVESTING COMPANIES, THERE IS A C ASE FOR REOPENING OF THE ASSESSMENT OF THE RESPECTIVE SHAREHOLDERS/INVESTING COMPANIES. THE ASSESSEE CANNOT BE PENALIZED FOR THE MISTAKES/FAULTS COMMITT ED BY THE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF AC COUNT AND BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. 10.5 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS , WE FIND THAT LD. CIT(A) HAS DISCUSSED EACH AND EVERY ASPECT OF THE ISSUE I N DISPUTE AND HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFE RENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NOS. 1 TO 1. 10 RAISED BY THE REVENUE. 11. APROPOS DELETION OF ADDITION OF RS. 15 LACS. 11.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. 11.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 11.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE ASSESSEE HAD ADVANCED RS. 15,00,000/- TO SH. K.K. KAPUR (HUF) IN FY 2001-02. WE FURTHER NOTE THAT THE ASSESSEE HAS RECEIVED BACK THE ADVANCE IN THE FINAN CIAL YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR THROUGH CHEQUES. SINCE THE ADVANCE WAS NOT DOUBTED BY THE AO, THE RECOVERY OF THE ADVANCE IS OUTSIDE T HE SCOPE OF SECTION 68, THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE A DDITION IN DISPUTE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NOS. 2 TO 2.2. RAISED BY THE REVENUE. ITA NOS. 4786/DEL/2011 22 12. APROPOS DELETION OF ADDITION OF RS. 4,50,000/- AS UNEXPLAINED INVESTMENT. 12.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. IN CONNECTION WITH ADDITION OF RS. 4,50,000/- IS CONCERNED, IT WAS THE MAIN CONTENTION OF THE LD. DR THAT ASSESSEE HAS PURCHASED A CHEQUE FOR R S. 4,49,500/- DATED 10.12.2013 BY BANK DRAFT NO. 810662 AND THAT THE AS SESSEE HAS MADE EXPENDITURE OF RS. 4,50,000/- OUT OF UNEXPLAINED SO URCES FOR GETTING THE CREDIT OF THIS RS. 4,49,500/-. THEREFORE, HE SUBMITTED THA T THE AO HAS RIGHTLY MADE THE ADDITION OF RS. 4,50,000/- MAY BE UPHELD ACCORDING LY. 12.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 12.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT LD. COUNSEL OF THE ASSESSEE HAS EXPLAINED IN THE COURSE OF ASSESSMENT PROCEEDINGS T HAT AMOUNT OF RS. 4,50,000/- AND SHARES OF HIGHTHROW CORP LTD. FOR RS. 50,000/-. THESE ARE ALREADY CREDITED TO THE P&L A/C AS SALE OF SHARES. THE AO SIMPLY BRU SHED ASIDE THE SUBMISSION OF THE AR WITHOUT APPRECIATING THE EVIDENCE BROUGHT ON RECORD. WE FURTHER NOTE THAT AO HAS NOT DISPUTED THE ACQUISITION OF SHARES OF THE ASSESSEE. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISP UTE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAM E AND DISMISS THE GROUND NOS. GROUND NO. 3 TO 3.4 RAISED BY THE REVENUE. 13. APROPOS DELETION OF ADDITION OF RS. 2,25,000/- AND RS. 6,08,850/- AS UNEXPLAINED CREDITS. 13.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. ITA NOS. 4786/DEL/2011 23 13.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 13.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE AO MADE THE ADDITION IN RESPECT OF THE AMOUNTS RECEIVED ON ACCOUNT OF SALE OF SHARES CANNOT BE UPHELD UNLESS THE ACQUISITION OF SHARES IS BOGUS. THE AO S IMPLY DISREGARDED THE EXPLANATION WITH REGARD TO THE AMOUNTS CREDITED IN THE BANK ACCOUNT MAINTAINED. THEREFORE, THE LD. CIT(A) HAS RIGHTLY DELETED THE A DDITIONS IN DISPUTE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NOS. GROUND NO.4 TO 4.4 RAISED B Y THE REVENUE. 14. APROPOS DELETION OF ADDITION OF RS. 10 LACS AS UNEXPLAINED INVESTMENT U/S. 69 IN FDRS. 14.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. HE STATED THAT ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF INVEST MENT OF RS. 10 IN FDR WITH STATE BANK OF MYSORE. THEREFORE, HE STATED THAT THE AO HAS RIGHTLY MADE THE ADDITION OF RS. 10 LACS ON THIS ACCOUNT WHICH MAY BE UPHELD. 14.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 14.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT ASS ESSEE HAS MADE THE FIXED DEPOSIT WITH STATE BANK OF MYSORE AND FDR NO. 01202 0455263 DATED 10.10.2003. THE AO HAS ADDED THE AMOUNT AS UNEXPLA INED INVESTMENT U/S. 69B. WE NOTE THAT THE SAME WAS REFLECTED IN THE BOOKS OF ACCOUNT. WE FURTHER NOTE THAT LD. CIT(A) IN HIS APPELLATE PROCEEDINGS HAS VE RIFIED THE BANK OF PUNJAB ITA NOS. 4786/DEL/2011 24 ACCOUNT MAINTAINED IN THE BOOKS OF ACCOUNT AND FOUN D THAT THE ASSESSE COMPANY HAS ISSUED THE CHEQUES OF BANK OF PUNJAB ON 14.10 .2003. LD. CIT(A) HAS MENTIONED THE NARRATION IN THE BANK ACCOUNT WHICH R EADS AS UNDER: 14.10.2003 BY FDR WITH STATE BANK OF MYSORE CHEQU E NO. 581629, 581619 FOR FDR A/C TO STATE BANK OF MYSORE. FDR NO. 01202045263 DATED 16.2003. IN OUR CONSIDERED OPINION, BASED ON THESE FACTS, L D. CIT(A) HAS RIGHTLY HELD THAT THERE IS NO SCOPE FOR ADDITION OF RS. 10 LACS TOWARDS FIXED DEPOSIT MADE WITH STATE BANK OF MYSORE AND ACCORDINGLY, DEL ETED THE ADDITION, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO. 5 TO 5.2 RAISED BY THE REVEN UE. 15. APROPOS DELETION OF ADDITION OF RS. 40,000/-. 15.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. HE STATED THAT ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE HAS ALSO NOT PRODUCED THE BOOKS OF ACCOUNTS, HENCE, THE AO HAS RIGHTLY MADE T HE ADDITION OF RS. 40,000/- ON THIS ACCOUNT WHICH MAY BE UPHELD. 15.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 15.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT AS SESSEE HAS ISSUED A CHEQUE NO. 581616 FOR RS. 40,000/- ON 21.5.2003 AND THE AM OUNT WAS RECEIVED BACK ON 31.3.2004 VIDE CHEQUE NO. 124066. WE FURTHER NOTE T HAT THE ASSESSEE HAS FURNISHED CONFIRMED ACCOUNT COPY. M/S MODILINE BUI LD CAP PVT. LTD. DOES POSSESS A PAN : AACCM1716A AND LD. CIT(A) HAS VERIF IED THE BANK ACCOUNT ITA NOS. 4786/DEL/2011 25 AND FOUND THAT THE TRANSACTION WERE DULY RECORDED, HENCE, CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 40,000/-, WHICH DOES NO T NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO. 6 TO 6.1 RAISED BY THE REVENUE. 16. APROPOS DELETION OF ADDITION OF RS. 2 LACS 16.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED B Y THE REVENUE. HE STATED THAT ASSESSEE HAS NOT DISCLOSED THIS T4RANSACTION IN TH E BOOKS OF ACCOUNTS, NOR ITS GENUINENESS ESTABLISHED. THEREFORE, HE STATED THAT THE AO HAS RIGHTLY MADE THE ADDITION OF RS. 2 LACS ON THIS ACCOUNT WHICH MAY BE UPHELD. 16.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSE E RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PAS SED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME M AY BE UPHELD. 16.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT ON 12.3.2004, THE ASSESSEE HAS SOLD SHARES OF APARNA CAPITAL SERVICES PVT. LTD. FO R RS. 2 LACS AND THE SAME WAS REFLECTED IN THE SALE OF SHARES CREDITED TO P&L ACC OUNT AND THE TRANSACTION PASSED THROUGH THE BANK ACCOUNT. THEREFORE, THE LD . CIT(A) HAS RIGHTLY HELD THAT THERE IS NO SCOPE FOR ADDITION OF RS. 2 LACS. IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS PASSED A WELL REASONED ORDER ON T HIS ACCOUNT, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO. 7 TO 7.3 RAISED BY THE REVENUE. ITA NOS. 4786/DEL/2011 26 17. IN THE RESULT, THE REVENUES APPEAL NO. 4786/DE L/2011 (AY 2004-05) STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/03/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/03/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES