M/s. Renu Builders & Promoters (P) Ltd., Delhi V. DCIT, New Delhi

ITA 4908/DEL/2013

• Counselvise Citation: 490820114 RSA 2013
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SALESH GUPTA
• Keywords: Unexplained cash credit; Gift; Accommodation entries; Onus to prove
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A.NO.4908/DEL/2013 ASSESSMENT YEAR : 2009-10 RENU BUILDERS & PROMOTERS PVT. LTD. VS. DCIT 31, JAGPURA ROAD, CENTRAL CIRCLE-17 BHOGAL, NEW DELHI. NEW DELHI. PAN: AACCR7481H. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL AGGAR WAL & SHRI SALESH GUPTA, C. A, RESPONDENT BY : MS. MEENAKSHI VOHR A.SR.DR. O R D E R PER J. S. REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, NE W DELHI DATED 24.07.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. FACTS IN BRIEF :- THE ASSESSEE IS A COMPANY AND IS IN THE BUSINES S OF REAL ESTATE. IT FILED ITS RETURN OF INCOME ON 17.08.2010 DECLARING NIL INCOME. A RETURN OF INCOME WAS SELECTED FOR SCRUTINY. 3. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD RECEIVED SHARE CAPITAL, WHICH WAS ISSUED AT THE PREMIUM. THE ASSESSEE WAS A SKED ON 23.12.2011 TO 2 EXPLAIN THIS RECEIPT OF SHARE PREMIUM MONEY AND ALS O TO PRODUCE ON 29/12/2011, A PERSON FROM THE INVESTOR COMPANY , M/S VIP LEASING AND FINANCE (PVT.) LTD. IN THE MEAN TIME ON 27.12.2011 A LETTER THROUGH POST W AS RECEIVED FROM THIS COMPANY BY THE ASSESSING OFFICER, DIRECTLY FROM M/S VIP LEASING AND FINANCE (PVT.) LTD., ENCLOSING THEREWITH A CONFIRMATION LETTER OF HAVING INVESTED IN SHARES AT A PREMIUM AND ALSO ENCLOSING A COPY OF ITS BALANCE SHEET. THE ASSESSING OFFICER EXAMINED THE FINANCIAL STATEMENT OF THE COMPANY M/S VIP LEASIN G AND FINANCE (PVT.) LTD. AND CAME TO A CONCLUSION THAT THEY HAVE NEGLIGIBLE PROFITS AND ARE NOT DOING ANY REAL BUSINESS. HE CAME TO A CONCLUSION THAT THE COM PANY IN QUESTION IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. AT PARA 3 THE ASSE SSING OFFICER CONCLUDED AS FOLLOWS: 3. SINCE THE ASSESSEE HAD NOT PRODUCED THE ABOVE PERSON FOR VERIFICATION, THE CREDIT WORTHINESS AND GENUINENESS OF THIS CREDIT IS NOT PROVED. ACCORDINGLY, I AM LEFT WITH NO OTHER ALTERN ATIVE BUT TO ADD THIS AMOUNT OF RS.50,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 68. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE MADE VARIOUS SUBMISSIONS BE FORE THE FIRST APPELLATE AUTHORITY WHO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE FAIL TO SUBSTANTIATE ITS CLAIM THAT THE SHARE APP LICATION MONEY OF RS.50,00,000 RECEIVED, FROM M/S VIP LEASING AND FINANCE (PVT.) L TD. WAS GENUINE BY PRODUCING THE PARTY BEFORE THE ASSESSING OFFICER AN D THAT HE FAILED TO FURNISH A SATISFACTORY EXPLANATION WITH REGARD TO THIS RECEI PT OF SHARE CAPITAL, THUS INVITING 3 THE APPLICATION OF SECTION 68. HE FURTHER OBSERVED THAT SINCE THE TRANSACTIONS INVOLVED PVT. COMPANIES, THE SHARE SUBSCRIPTION IS BY PRIVATE PLACEMENT AND IT NECESSARILY IMPLIES KNOWLEDGE AND CLOSE RELATIONS HIP BETWEEN THE PARTIES. HE HELD THAT THE ASSESSEE FAIL TO EXPLAIN THE TRANSAC TIONS AND BY FILING OF NAME, ADDRESS, PAN NO. AND CONFIRMATION AND CLAIMING THAT THE TRANSACTION ARE THROUGH BANKING CHANNEL IS NOT ENOUGH TO BESTOW THE STAMP O F GENUINENESS TO THE TRANSACTION IN QUESTION. HE RELIED ON THE FOLLOWING CASE LAWS: 1) CIT VS P. MOHANKALA REPORTED IN 291 ITR 278. 2) CIT VS. TITAN SECURITY LTD. REPORTED IN 32 TAXM ANN.COM 306. 3) CIT VS. NIPUN BUILDERS AND DEVELOPERS PVT. LTD. REPORTED IN 30 TAXMANN. COM 292. 4) CIT VS. NR PORTFOLIA PVT. LTD. REPORTED 29 TAXM ANN. COM 291. 5. THEREAFTER, HE CONCLUDED AS FOLLOWS: CONSIDERING THESE DECISIONS OF THE JURISDICTIONAL HIGH COURT, THERE IS NO MERIT IN THE CLAIM OF THE APPELLANT THAT NON-PRO DUCTION OF THE PARTY BEFORE THE ASSESSING OFFICER DID NOT COMPRISE ITS B URDEN OR THAT THE FAILURE OF THAT PARTY TO ATTEND BEFORE THE ASSESSIN G OFFICER SHOULD NOT RESULT IN APPLICATION OF SECTION 68 IN ITS CASE. TH E ADDITION OF RS.50,00,000/- ON THE GROUND OF NON-APPEARANCE OF V IP LEASING AND FINANCE PVT. LTD. IS UPHELD SINCE THE APPELLANT FAI LED TO RENDER SATISFACTORY EXPLANATION WITH REGARD TO ITS CLAIM O F SHARE APPLICATION. THE CASE LAWS RELIED BY THE APPELLANT ARE NOT APPLI CABLE TO THE FACTS OF THE CASE. THUS, GROUND 1-5 ARE DISMISSED. 6. AGGRIEVED THE ASSESSEE IS IN APPEAL ON THE FOLLO WING GROUNDS: 4 A) THAT THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF RS.50,00 ,000/- U/S 68 OF THE ACT ON THE ALLEGATION OF ACCOMMODATION ENTRIES ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE CO MPANY DURING THE INSTANT YEAR. B) THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT NON PRODUCTION OF THE SHARE APPLICANT BEFORE THE ASSESSING OFFICER AMOUNTED TO FURNISHING OF A NON SATISFACTORY EXPLANATION WITH R EGARD TO THE SHARE CAPITAL, EVEN THOUGH THE ASSESSEE HAD DISCHARGED TH E ONUS TO PROVE THE COMPLETE IDENTITY INCLUDING THE INCOME TAX PARTICUL ARS AND CREDIT WORTHINESS OF THE SHARE APPLICANT AS WELL AS THE GE NUINENESS OF THE TRANSACTION. C) THAT THE LD. CIT (A) HAS ERRED IN FAILING TO AP PRECIATE THE FACT THAT THE ALLEGATION OF ACCOMMODATION ENTRIES MADE B Y THE ASSESSING OFFICER IS WHOLLY WRONG AND NOT BORNE OUT OF ANY MA TERIAL ON RECORD AND THAT THE SHARE APPLICANT HAD DIRECTLY CORRESPON DED WITH THE ASSESSING OFFICER AND HAS CONFIRMED THE FACT OF HAV ING MADE THE PAYMENT OF SHARE APPLICATION MONEY TO THE ASSESSEE COMPANY AND HAD ALSO FILED THE COPY OF HIS BANK ACCOUNT, INCOME TAX RETURN FOR THE INSTANT YEAR AS WELL AS ITS AUDITED ACCOUNTS BEFORE THE ASSESSING OFFICER. D) THAT THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE DIRECTOR OF THE APPELLANT COMPANY COULD NOT EXPLAIN THE CIRCUMS TANCES IN WHICH THE TRANSACTION OF RS.50,00,000/- HAD TAKEN PLACE A ND THAT HE ADMITTED THAT HE DID NOT KNOW THE DIRECTORS OR ANY OTHER PER SON IN VIP LEASING & FINANCE PVT. LTD. THAT THE AFORESAID FINDING OF T HE LD. CIT (A) IS WHOLLY WRONG, ARBITRARY AND CONTRARY TO THE MATERIA L ON RECORD. 2. THAT THE APPELLANT CRAVES THE RIGHT TO AMEND, A PPEND, DELETE ANY OR ALL GROUNDS OF APPEAL. 7. THE COUNSEL FOR THE ASSESSEE MR. SALIL AGGARWAL SUBMITTED THAT THE ONLY BASIS FOR MAKING THIS ADDITION IS ADMITTEDLY NON PR ODUCTION OF THE INVESTOR BEFORE THE ASSESSING OFFICER. HE REFERRED TO VARIOUS DETAI LS FILED BY THE ASSESSEE AND 5 SUBMITTED THAT THE ASSESSING OFFICER AND THE LD. CI T(A) HAD NOT MADE ANY EFFORT TO MAKE ENQUIRIES OR OBTAINED DETAILS FROM THE INVE STORS. 8. HE POINTED OUT THAT THE ASSESSEE HAS REQUESTED T HE ASSESSING OFFICER TO USE HIS POWERS UNDER THE ACT, TO ENFORCE THE ATTENDANCE OF THE WITNESS, M/S VIP LEASING & FINANCE PVT. LTD., AFTER GIVING PAN NO., COMPLETE NAME AND ADDRESS AND THAT THE SAME HAS NOT BEEN DONE. HE ARGUED THAT MERE REJECTION OF THE PAPERS SUBMITTED BY THE ASSESSEE, WITHOUT POINTING OUT AN Y DEFECT IN THEM AND WITHOUT STATING AS TO WHY SUCH EVIDENCES ARE NOT BEING CONS IDERED AND WITHOUT CONDUCTING ANY ENQUIRY OR INVESTIGATION, IS CONTRARY TO THE VA RIOUS PROPOSITIONS LAID DOWN BY THE HONBLE COURT. HE RELIED ON THE FOLLOWING CASE LAWS: I. JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. GOEL SONS GOLDEN ESTATE PVT. LTD. IN ITA NO.212/2012. II. JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. GANGESHWARI METAL PVT. LTD. REPORTED IN 214 TAXMAN 423. III. ORDER OF HONBLE DELHI ITAT IN THE CASE OF IT O VS M/S EXCELLENT TOWN PLANNERS PVT. LTD. IN ITA NO.871/DEL/2010. IV. ORDER OF HONBLE DELHI ITAT IN THE CASES OF IT O VS. M/S APOGEE INVESTMENTS P. LTD. IN ITA NO.2751/DEL/2011. V. ORDER OF HONBLE DELHI ITAT IN THE CASE OF ITO VS. M/S FABRIC WORLD PVT. LTD. IN ITA NO.2552/DEL/2010. VI. ORDER OF HONBLE DELHI ITAT IN THE CASE OF ACI T VS. M/S PANCHANAN INTERNATIONAL PVT. LTD. IN ITA NO. 50/DEL/2011. 9. HE FURTHER RELIED ON THE CASE LAWS REPORTED IN 3 06 ITR 35 (DEL) & 357 ITR 184. 6 10. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND, MS. VOHRA VEHEMENTLY OPPOSED THE CONTENTIONS OF THE ASSESSEE. SHE SUBMITTED THAT THE ASSESSEE IS A PRIVATE COMPANY AND A COMPANY IN THE PRIVATE SECTOR HAS INVESTED IN THE SHARES OF ASSESSEE COMPANY . SHE SUBMITTED TH AT UNDER THOSE CIRCUMSTANCES, IT IS THE BOUNDEN DUTY OF THE ASSESSEE TO PRODUCE T HE DIRECTORS OF THE INVESTING COMPANY BEFORE THE A.O. TO PROVE THE GENUINENESS O F THE TRANSACTION. SHE RELIED ON THE ORDER OF THE CIT (A) AND SUBMITTED THAT THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF NOVA PROMOTERS (SUPRA) COVERS THE ISSUE ON HAND. SHE ALSO RELIED ON THE VARIOUS DECISIONS CITED BY THE CIT (A ) IN HIS ORDER AND ARGUED THAT THE ISSUE IS COVERED IN FAVOUR OF THE REVENUE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF T HE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, AS WELL AS CASE L AWS CITED, WE HOLD AS FOLLOWS: 11.1. THIS IS A CASE WHERE THE ASSESSING OFFICER, NOR THE CIT(A), ATTEMPTED TO CONDUCT ANY ENQUIRY OR INVESTIGATION TO NEGATE THE CLAIM OF THE ASSESSEE. NO SUMMON WAS SENT TO THE INVESTOR ADDRESS. THE ASSE SSEE REQUEST TO SUMMON THE INVESTOR WAS IGNORED, THOUGH THE ADDRESS WAS GIVEN. THEY MERELY REJECTED VARIOUS EVIDENCES FILED BY THE ASSESSEE. IN OUR VIEW, THE ASSESSEE HAD DISCHARGED THE INITIAL BURDEN OF PROOF THAT LAY ON IT. THE INVES TOR COMPANY M/S VIP LEASING & FINANCE PVT. LTD. DIRECTLY SENT A CONFIRMATION LETT ER TO THE ASSESSING OFFICER, ALONG 7 WITH ITS BALANCE SHEET. THE ASSESSING OFFICER HAD T HE PAN NO. AND COMPLETE ADDRESS OF THE INVESTOR COMPANY. HENCE THIS IS A C ASE WHERE THE ASSESSEE PRODUCED ALL THE DOCUMENTS AND EVIDENCES WHICH HE COULD AND WHEREAS, THE REVENUE FAILED IN CONDUCTING ANY ENQUIRY OR IN GATHERING ANY EVIDENCE AGAINST THE ASSESSEE. 11.2. ON THIS FACTS AND CIRCUMSTANCES, WE EXAMINE T HE CASE LAW CITED. (A) IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD. 329 ITR 271, (DELHI), IN PARA 8 AT PAGE 274 AND 275 HELD AS UNDER: HELD, DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUTED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASS ESSEE BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BANKING CH ANNELS. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSESSING OFFICER. IT WAS THE CASE OF THE REVENUE THAT THE SHARE APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE REVENUE THAT THE SHARES WERE NOT ACTUALLY ALLOT TED TO THE COMPANIES. IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE IDENTITY OF THE SHARE APPLICANTS, HE COULD HAVE SUM MONED THE DIRECTORS OF THE APPLICANT-COMPANIES. NO SUCH ATTE MPT WAS, HWOEVER, MADE BY HIM. THEREFORE, THE CIT(A) AND TH E TRIBUNAL WERE JUSTIFIED IN HOLDING THAT THE IDENTITY OF THE SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS HAD BEEN ES TABLISHED BY THE ASSESSEE. THE AMOUNT WAS NOT ASSESSABLE UNDER SECTION 68. (B) HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PR ADEEP GUPTA 207 CTR 115, HAS BEEN RELIED UPON BY THE DELHI ITA T IN THE ORDER IN THE CASE OF BABITA GUPTA, IN ITA NO. 2897/06, WHEREIN IT IS HELD THAT IN THE FACTS OF THE CASE B EFORE US IT MAY BE SEEN THAT FROM THE VERY BEGINNING LD. ASSESSING OFF ICER HAD SHIFTED ENTIRE BURDEN UPON THE ASSESSEE AND NO MATE RIAL WAS BROUGHT BY HIM TO PROVE HIS ALLEGATION THAT THE IMP UGNED AMOUNT 8 REPRESENTED ASSESSEE COMPANYS UNDISCLOSED INCOME. THEREFORE, ON THE GROUND ALONE THE ENTIRE ADDITION DESERVES TO BE DELETED AND MAY KINDLY BE HELD SO. (EMPHASIS OURS). (C ) IN CASE OF CIT VS. JAY DEE SECURITIES AND FIN ANCE LTD. ITA 327/2010 & 159/2010 (ALLAHABAD HIGH COURT), THE HON BLE COURT HELD AS FOLLOWS: THE TRIBUNAL RECORDED FINDINGS THAT THE ASSESSEE H AD PRODUCED THAT RETURN OF INCOME FILED BY THE RELEVANT SHAREHO LDERS WHO HAD PAID SHARE APPLICATION MONEY. THE ASSESSEE HAD ALSO PRODUCED THE CONFIRMATION OF SHARE HOLDERS INDICATING THE DE TAILS OF ADDRESSES, PAN AND PARTICULARS OF CHEQUES THROUGH W HICH THE AMOUNT WAS PAID TOWARDS THE SHARE APPLICATION MONEY . THE TRIBUNAL THEREAFTER RELIED UPON THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS VS. CIT (216 CTR 195 SC) WH EREIN IT WAS HELD THAT IF THE ASSESSEE PRODUCES THE NAMES, A DDRESSES, PAN DETAILS OF THE SHARE HOLDERS THEN THE ONUS ON THE A SSESSEE TO PROVE THE SOURCE OF SHARE APPLICATION MONEY STAND DISCHAR GED. IF THE ASSESSING AUTHORITY TO VERIFY THE SAME IN THE HANDS OF THE SHAREHOLDERS CONCERNED. THE TRIBUNAL HAS RELIED UPO N AN ORDER OF THE SUPREME COURT IN THE CASE OF DEVINE LEASING COMPANY REPORTED IN 207 CTR 38 (2007). IN VIEW OF THE DECISION OF THE SUPREME COURT, WE DISMISS THE APPEALS RETURNING THE QUESTION IN FAVOUR OF THE ASS ESSEE. (D) IN THE CASE OF CIT VS. GANGESHWARI METAL P.LTD. IN ITA NO.597/2012 JUDGEMENT DT. 21.1.2013, THE HONBLE HIGH COURT AFT ER CONSIDERING THE DECISIONS IN THE CASE OF NOVA PROMOTERS AND FINLEAS E PVT.LTD. 342 ITR 169 AND JDUGEMENT IN THE CASE OF CIT VS. LOVELY EXPORTS 319 ITR (SAT.5)(S.C.) HELD AS FOLLOWS. AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARR IES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSES SING OFFICER SITS BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL T HE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJ ECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER NOTING THE FACTS, MERELY RE JECTED THE SAME. THIS 9 WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EFFECT:- INVESTIGATION MADE BY THE INVESTIGATION WING OF TH E DEPARTMENT CLEARLY SHOWED THAT THIS WAS NOTHING BUT A SHAM TRA NSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXP LAIN AS TO WHY THE SAID AMOUNT OF RS.1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RESPONSE, THE ASSESSEE HAS SUBMITTED TH AT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FO R ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RE CEIVED WAS RS.55,50,000/- AND NOT RS.1,11,50,000/- AS MENTIONE D IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE T AKEN AT RS.55,50,000/-. THE ASSESSEE HAS FURTHER TRIES TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/- BY FURNISHI NG COPIES OF SHARE APPLICATION MONEY, BALANCE4 SHEET, ETC. OF TH E PARTIES MENTIONED ABOVE AND ASSERTED THAT THE QUESTION OF A DDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLAN ATION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACC EPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE HANDS OF THE ASSES SEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT . AS SUCH ENTRIES OF RS.55,50,000/- RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSE E AND ADDED TO ITS INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME, PENALTY PROCE EDINGS UNDER SECTION 271(1)(C ) ARE BEING INITIATED SEPARATELY. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CA SE ARE CLEARLY DISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WA S A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSES SEE HAD FURNISHED ALL THE MATERIAL WHICH WE HAVE ALREADY REFERRED TO ABOVE. I N SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. CONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGAT IVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW. 10 E) IN THE CASE OF FINLEASE PVT.LTD. 342 ITR 169 (SU PRA) IN ITA 232/2012 JUDGEMENT DT. 22.11.2012 AT PARA 6 TO 8, IT IS HELD AS FOLLOWS. 6. THIS COURT HAS CONSIDERED THE SUBMISSIONS OF TH E PARTIES. IN THIS CASE THE DISCUSSION BY THE COMMISSIONER OF INCOME TAX (A PPEALS) WOULD REVEAL THAT THE ASSESSEE HAS FILED DOCUMENTS INCLUDING CER TIFIED COPIES ISSUED BY THE ROC IN RELATION TO THE SHARE APPLICATION, AFFIDAVIT S FO THE DIRECTORS, FORM 2 FILED WITH THE ROC BY SUCH APPLICANTS CONFIRMATIONS BY THE APPLICANT FOR COMPANYS SHARES, CERTIFICATES BY AUDITORS ETC. UN FORTUNATELY, THE ASSESSING OFFICER CHOSE TO BASE HIMSELF MERELY ON THE GENERAL INFERENCE TO BE DRAWN FROM THE READING OF THE INVESTIGATION REPORT AND TH E STATEMENT OF MR.MAHES GARG. TO ELEVATE THE INFERENCE WHICH CAN BE DRAWN ON THE BASIS OF READING OF SUCH MATERIAL INTO JUDICIAL CONCLUSIONS WOULD BE IMPROPER, MORE SO WHEN THE ASSESSEE PRODUCED MATERIAL. THE LEAST THAT THE ASSESSING OFFICER OUGHT TO HAVE DONE WAS TO ENQUIRE INTO THE MATTER BY, IF NECESSARY, INVOKING HIS POWERS UNDER SECTION 131 SUMMONING THE SHARE APPLIC ANTS OR DIRECTORS. NO EFFORT WAS MADE IN THAT REGARD. IN THE ABSENCE OF ANY SUCH FINDING THAT THE MATERIAL DISCLOSED WAS UNTRUSTWORTHY OR LACKED CRED IBILITY THE ASSESSING OFFICER MERELY CONCLUDED ON THE BASIS OF ENQUIRY RE PORT, WHICH COLLECTED CERTAIN FACTS AND THE STATEMENTS OF MR.MAHESH GARG THAT THE INCOME SOUGHT TO BE ADDED FELL WITHIN THE DESCRIPTION OF S.68 OF THE INCOME TAX ACT, 1961. 7. HAVING REGARD TO THE ENTIRETY OF FACTS AND CIRCU MSTANCES, THE COURT IS SATISFIED THAT THE FINDING OF THE TRIBUNAL IN THIS CASE ACCORDS WITH THE RATIO OF THE DECISION OF THE SUPREME COURT IN LOVELY EXPORTS (SUPRA). 8. THE DECISION IN THIS CASE IS BASED ON THE PECULI AR FACTS WHICH ATTRACT THE RATIO OF LOVELY EXPORTS (SUPRA). WHERE THE ASS ESSEE ADDUCES EVIDENCE IN SUPPORT OF THE SHARE APPLICATION MONIES, IT IS OPEN TO THE ASSESSING OFFICER TO EXAMINE IT AND REJECT IT ON TENABLE GROUNDS. IN CA SE HE WISHES TO RELY ON THE REPORT OF THE INVESTIGATION AUTHORITIES, SOME MEANI NGFUL ENQUIRY OUGHT TO BE CONDUCTED BY HIM TO ESTABLISH A LINK BETWEEN THE AS SESSEE AND THE ALLEGED HAWALA OPERATORS, SUCH A LINK WAS SHOWN TO BE PRESE NT IN THE CASE OF NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) RELIED UPON B Y THE REVENUE. WE ARE THEREFORE NOT TO BE UNDERSTOOD TO CONVEY THAT IN AL L CASES OF SHARE CAPITAL ADDED UNDER SECTION 68, THE RATIO OF LOVELY EXPORTS (SUPRA) IS ATTRACTED, IRRESPECTIVE OF THE FACTS, EVIDENCE AND MATERIAL. 11 11.3. COMING TO THE DECISION RELIED UPON BY THE DEP ARTMENTAL REPRESENTATIVE AS WELL AS THE LD. CIT (A), WE FIND THAT IN THE CASE OF CIT VS. MOHANKALA (SUPRA) THE SUPREME COURT WAS DEALING WIT H GIFTS AND NOT SHOWN CAPITAL INVESTMENT. ON THE FACTS OF THAT CASE, PR EPONDERANCE PROBABILITIES WERE THE BASIS OF THE HONBLE COURT COMING TO A CON CLUSION THAT THE NUMEROUS GIFTS RECEIVED ARE BOGUS. IN THE CASE OF NIPUN BUILDERS AND DEVELOPERS PVT. LTD, THE CREDITWORTHINESS OF THE IN VESTORS WAS FOUND TO BE INADEQUATE. SURROUNDING CIRCUMSTANCES WERE FOUND TO SHOW THAT M/S NIPUN BUILDERS AND DEVELOPERS DO NOT HAVE FINANCIAL CAPAB ILITY. IN THE CASE N. R. PORTFOLIO PVT. LTD. (SUPRA), THE ASSESSING OFFICER MADE CERTAIN ATTEMPTS TO CONTACT THE SHARE HOLDERS AND THAT WAS WITHOUT SUC CESS. THE COURT OBSERVED AS FOLLOWS IF ON VERIFICATION, OR DURING THE PROCE EDINGS, THE ASSESSING OFFICER CANNOT CONTACT THE SHARE APPLICANT, OR THA T THE NONE OF THE DOCUMENTS ARE UNVERIFIABLE OR THEY ARE FURTHER DOU BT IN DETAILS, THE ONUS SHIFTS BACK TO THE ASSESSEE . IN THE CASE ON HAND THERE IS NO VERIFICATION WHATSOEVER DONE BY THE ASSESSING OFFICER AND THUS THE ONUS DOES NOT SHIFT TO THE ASSESSEE. HENCE THESE CASE LAWS DO NOT APPL Y TO THE FACTS OF THIS CASE.. 11.4. THE JUDGMENT IN THE CASE OF NOVA PROMOTORS RE PORTED IN 341 ITR 169 IS ALSO NOT APPLICABLE TO THE FACTS OF THIS CASE A S THAT WAS A CASE WHERE 12 ADMISSIONS MADE WAS SOUGHT TO BE RETRACTED. THERE IS NO ADMISSION IN THIS CASE. 11.5. IN VIEW OF THE ABOVE DISCUSSIONS, WE APPLY TH E PROPOSITION LAID DOWN BY THE JURISDICTIONAL HIGH COURT DISCUSSED ABOVE TO THE FACTS OF THIS CASE, AND AS THE ASSESSEE HAS DISCHARGED ITS INITIAL BURD EN OF PROOF AND AS THE REVENUE DID NOT DO ANY ENQUIRY OR INVESTIGATION AN D HENCE DID NOT DISCHARGE THE ONUS THAT SHIFTED TO IT, WE UPHOLD TH E CONTENTIONS OF THE ASSESSEE AND DELETE THE ADDITION IN QUESTION. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2014 SD/- SD/- (RAJPAL YADAV) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST MARCH, 2014. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER ASST. REGISTRAR, ITAT. S. SINHA