Sadhana Phosphates & Chemicals Ltd., New Delhi V. ITOW, New Delhi

ITA 5066/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3152 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-03-2017
• Assessment Year: 2000-2001
• Appeal Filed On: 18-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Depreciation; Opportunity of being heard; Additional evidence; Reasonable cause; Accommodation entries; Assessment record; Retraction; Reassessment proceedings
• Section: 69C; 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 5066/DEL/2010 (ASSESSMENT YEAR: 2000-01) A A N D ITA NO. 5486/DEL/2010 (ASSESSMENT YEAR: 2000-01) A APPELLANT BY : SH. K. SAMPATH, SR. ADV. SH. V. RAJ KUMAR, ADV. RESPONDENT BY : SH. N. K. BANSAL, SR.DR DATE OF HEARING : 22.03.2017 DATE OF PRONOUNCEMENT : 11.05.2017 S ADHANA PHOSPHATES & CHEMICAL LTD. 304, SOUTH DELHI HOUSE 12, ZAMRUDPUR COMMUNITY CENTRE, KAILASH COLONY NEW DELHI VS. ITO WARD-7(2) NEW DELHI GIR/PAN: AABCS5840G (APPELLANT) (RESPONDENT) ITO WARD-7(2) NEW DELHI VS. SAD HANA PHOSPHATES & CHEMICAL LTD. 304, SOUTH DELHI HOUSE 12, ZAMRUDPUR COMMUNITY CENTRE, KAILASH COLONY NEW DELHI GIR/PAN: AABCS5840G (APPELLANT) (RESPONDENT) 2 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) O R D E R PER BEENA A. PILLAI, J.M : 1. THE PRESENT CROSS APPEALS HAVE BEEN FILED BY ASSES SEE AS WELL AS REVENUE AGAINST ORDER DATED 28.09.2010 PASS ED BY LD. CIT(A)-X FOR ASSESSMENT YEAR 2000-01 ON FOLLOWING G ROUNDS OF APPEAL: ITA NO. 5066/DEL/2010 1. THAT THE ORDER OF THE ASSESSING OFFICER WAS NO T 1 A SPEAKING ORDER AND THEREFORE TANTAMOUNT TO NULLITY IN THE EYES OF LAW. 2. THAT THERE WAS NO GROUND FOR ESTIMATES OF RS. 12,50,000/- AS THE BOOK ENTRIES WAS PROPERLY EXPLAINED. 3. THAT THERE WAS NO OVER- INVOICING OR IN INFLAT ION OF BILLS. 4. THAT THE DEPRECIATION WAS PROPERLY CLAIMED AND NO ADDITION CAN BE MADE ON ESTIMATED OVER INVOICING AND KEEPING THE DISALLOWANCE TO THE EXTEN T OF 50% OF DEPRECIATION DISALLOWED BY THE ASSESSING OFFICER AMOUNTING TO RS.4,79,615/-. ITA NO. 5486/DEL/2010 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN LAW AS WELL AS ON MERITS IN ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTION TO RULE 46A OF I. T. RULES, 1962.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW AS WELL AS ON MERITS IN DELETING THE ADDITION OF RS. 55,50,000/- MADE BY AO BY TREATING SHARE CAPITAL ADDITION OF RS. 55,50,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961.' 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN LAW AS WELL AS ON MERITS IN DELETING THE ADDITION OF RS.38,00,501/- MADE BY AO 3 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) TREATING FRESH UNSECURED LOANS OF RS. 38, 00, 501/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961.' 4. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW AS WELL AS ON MERITS IN REDUCING THE ADDITION OF RS. 69,42,000/- MADE BY AO ON ACCOUNT OF OVER INVOICING AND BOGUS EXPENSES U7S 69C OF THE INCOME TAX ACT, 1961, TO RS. 12,50,000/-.' 5. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) ERRED IN LAW AS WELL AS ON MERITS IN REDUCING THE ADDITION OF RS.4,79,615/- MADE BY AO BY DISALLOWING DEPRECIATION ON ACCOUNT OF OVER INVOICING OF THE FIXED ASSETS, TO RS. 2,39,808/-. 6. 'THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL.' 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 97,85,985/- AND THE SAME WAS PROCESSED UNDER SECTIO N 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. THEREAFTER, L D. AO PASSED ASSESSMENT ORDER ON 28.03.2003 MAKING ADDITI ON IN THE HANDS OF ASSESSEE AT RS.7,07,070/-. AGAINST ASSESSMENT ORDER PASSED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A), WHO VIDE ORDER DATED 30.0 4.2004 CONFIRMED ADDITIONS. AGGRIEVED BY ORDER OF LD. CIT(A), ASSESSEE PREFERRE D APPEAL BEFORE THIS TRIBUNAL. THIS TRIBUNAL VIDE ORD ER DATED 21.09.2007 PASSED IN ITA NO. 3119/DEL/2004 RESTORED THE FILE 4 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) BACK TO LD. AO FOR DECIDING AFRESH AFTER GIVING ASS ESSEE AN OPPORTUNITY. 2.1 SUBSEQUENTLY NOTICE UNDER SECTION 143(2) WAS IS SUED AND SERVED UPON ASSESSEE. IN RESPONSE TO WHICH REPRESENTATIVE OF ASSESSEE ATTENDED ASSESSMENT PROC EEDINGS. ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE UNDER SE CTION 274 READ WITH SECTION 271 OF THE ACT REQUESTING ASSESSE E TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271 (1)(B) OF THE ACT SHOULD NOT BE IMPOSED FOR NON-COMPLIANCE OF NOTICE UNDER SECTION 143(2) DATED 09.04.2008 WITHOUT REASONABLE CAUSE. HOWEVER, LD. AO OBSERVED THAT NONE ON BEHALF OF ASS ESSEE APPEARED ON 26.08.2008, BEING SCHEDULED DATE OF HEA RING. LD. AO AGAIN PASSED ASSESSMENT ORDER, BY MAKING ADDITIO N IN THE HANDS OF ASSESSEE AMOUNTING TO RS. 70,07,070/-. HE LEVIED PENALTY UNDER SECTION 271(1)(B) OF THE ACT FOR NON- COMPLIANCES STATUTORY NOTICES WITHOUT ANY REASONABLE CAUSE. 3. AGGRIEVED BY ADDITION MADE BY LD. AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). LD. CIT(A) DELE TED ADDITION MADE IN REGARDS TO SHARE APPLICATION AND UNSECURED LOANS. HE, HOWEVER, SUSTAINED ADDITION ON ALLEGED OVER INV OICING, TO AN EXTENT OF RS.12,50,000/-, AND 50% OF DEPRECIATIO N CLAIMED ON PLANT AND MACHINERY. AGAINST THIS, BOTH ASSESSEE AS WELL AS REVENUE ARE IN APPEAL BEFORE US. WE SHALL 1 ST TAKE UP THE APPEAL FILED BY ASSESSEE. ITA NO. 5066/DEL/2010 5 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) 4. GROUND NO. 1 RAISED BY ASSESSEE IS GENERAL IN NATURE AND HENCE DO NOT REQUIRE ANY ADJUDICATION. 5. GROUND NO. 2 AND 3 IS ON ADDITIONS OF SUSTAINED BY LD. CIT(A) ON ACCOUNT OF ALLEGED OVER INVOICING OF BILL S. GROUND NO. 4 IN APPEAL FILED BY REVENUE IS ON BALANCE AMOUNT TH AT HAS BEEN DISALLOWED IN HANDS OF ASSESSEE. AS THIS G ROUND IN APPEAL FILED BY ASSESSEE AND GROUND NO. 4 OF REVENU E OF RELATES TO SAME ISSUE, THEY ARE DISPOSED OFF TOGETH ER. 6. LD. COUNSEL SUBMITTED THAT ASSESSEE HAD WITHDRAWN AN AMOUNT OF RS.1,35,16,165/- FROM ORIENTAL BANK OF CO MMERCE, SOUTH EXTENSION BRANCH, NEW DELHI, OUT OF WHICH AN AMOUNT OF RS. 61,42,000/-, WAS SENT TO UDAIPUR, IN ORDER T O AVOID CLEARING DELAYS AND COMMISSION. HE SUBMITTED THAT T HERE IS NO UNACCOUNTED CASH IN UDAIPUR TO TREAT CASH SENT TO A S UNDISCLOSED INCOME. LD. COUNSEL SUBMITTED THAT ADDI TION HAS BEEN MADE ON BASIS OF SOME PAPERS BELONGING TO CONT RACT. HE SUBMITTED THAT DURING SURVEY, ACCOUNTING PERSONS AD MITTED THIS TRANSACTION INDICATED OVER INVOICING REGARDING ERECTION OF PLANT AND CONSTRUCTION OF BUILDING. LD. COUNSEL SUB MITTED THAT ASSESSING OFFICER DID NOT PROVIDE OPPORTUNITY OF CROSS- EXAMINING WITNESSES OF WHOM STATEMENTS HAVE BEEN RE CORDED. HE FURTHER SUBMITTED THAT THIS TRIBUNAL VIDE ORDER DATED 21.09.2007 RESTORED THE ISSUE BACK TO FILE OF LD. C IT(A) WITH A DIRECTION TO PASS FRESH ORDER AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. 7. LD. COUNSEL SUBMITTED THAT ASSESSEE HAD FURNISHED BANK STATEMENTS SHOWING DAY TWICE CASH WITHDRAWN FROM TH E BANK 6 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) AT DELHI WHICH HAS BEEN TRANSFERRED TO AIRPORT ALON GWITH BANK STATEMENT WHICH SHOWS CASH WITHDRAWN. HE CLAIMED TH AT TRANSFER OF CASH HAS NO RELEVANCE WITH ANY BOGUS PU RCHASES OR OVER INVOICING. HE FURTHER SUBMITTED THAT ALL PAYME NTS MADE TO VARIOUS PARTIES HAS BEEN DULY ACCOUNTED FOR. LD. COUNSEL SUBMITTED THAT COPIES OF BANK STATEMENT IN SUPPORT OF CONTENTIONS THAT CASH WAS TRANSFERRED FROM DELHI TO UDAIPUR IN ORDER HANDLE DAY TO DAY EXPENSES LIKE SALARIES, ADMINISTRATIVE EXPENSES, CURRENT EXPENSES ETC., HAV E BEEN FURNISHED. HE SUBMITTED THAT, AS SOURCE OF CASH DEP OSIT IN BANKS DULY EXPLAINED ADDITIONS MADE ON ACCOUNT OF MERE SUSPICION, CANNOT STAND TEST OF LAW. HE FURTHER SUB MITTED THAT ASSESSING OFFICER HAS NEVER REJECTED BOOKS OF ACCOU NT AND ADDITIONS HAVE BEEN MADE ON IMAGINARY GROUND THAT B ILLS WERE INFLATED AND CASH WAS RECEIVED BACK AND DEPOSITED I N THE BANK. HE ALSO PLACED HIS RELIANCE UPON RETRACTED ST ATEMENTS OF WITNESSES THAT WERE RECORDED DURING REMAND PROCEEDI NGS. 8. ON THE CONTRARY LD. DR SUBMITTED THAT ENTIRE ADDIT ION MADE BY ASSESSING OFFICER DESERVES TO BE SUSTAINED, AS SURVEY REPORT PREPARED BY INVESTIGATION WING, UDAIPUR, SHO WS THAT THERE ARE INSTANCES WHERE PAPERS FOUND DURING COURS E OF SURVEY REVEALED THAT AGAINST ISSUE OF CHECKS, CASH HAS BEEN RECEIVED BACK WHICH POINTS TOWARDS SOME EXTENT OF O VER INVOICING. 9. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 7 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) 10. IT IS OBSERVED THAT WITNESSES EXAMINED BY ASSESSIN G OFFICER DURING ASSESSMENT PROCEEDINGS RETRACTED THE IR STATEMENTS DURING REMAND PROCEEDINGS. HOWEVER, FROM THE SURVEY REPORT PREPARED BY INVESTIGATING WING REVEAL S THAT CASH HAS BEEN TRANSFERRED FROM HEAD OFFICE TO UDAIPUR. I T IS DIFFICULT TO AGREE THAT IT WAS MERELY FOR RUNNING DAY-TO-DAY AFFAIRS OF COMPANY AND TO AVOID ANY DELAY IN REACHING MONEY TO UDAIPUR THAT THE CASH WAS WITHDRAWN AND SENT. THERE IS A CA TEGORICAL FINDING OF LD. CIT(A) WHICH READS AS UNDER: 22. WITH REGARD TO THE BALANCE, AFTER CONSIDERING ALL THE ABOVE EVIDENCES, THE SURVEY REPORT, THE SUBMISSIONS OF THE APPELLANT, THE TWO REMAND REPORTS OF THE AO AND THE STATEMENTS OF THE CONCERNED PERSONS, I AM OF THE CONSIDERED VIEW THAT IN SPITE THE FACT THAT THERE IS A RETRACTION O F THE STATEMENTS BY THE ABOVE MENTIONED PERSONS, THE SAME CANNOT BE ENTIRELY ACCEPTED AT THEIR FACE VALUE. ANY REASONABLE PERSON GOING THROUGH THE RECORDS OF THE APPELLANT'S CASE, NOTWITHSTANDING THE EXPLANATION OF TRANSFER OF MONEY FROM DELHI TO UDAIPUR, WOULD REASONABLY COME TO THE CONCLUSION THAT OVER INVOICING AND INFLATION OF EXPENSES TO SOME EXTENT .WAS DEFINITELY BEING CARRIED ON BY THE APPELLANT COMPANY. THERE ARE SOME SPECIFIC INSTANCES CITED AT PAGE 4 OF THE DDIT (INV.)'S REPORT WHERE FIGURES OF AMOUNTS OF CHEQUES ISSUED HAVE BEEN MENTIONED ALONGWITH THE FIGURES OF THE CASH RECEIVED BACK. IN ONE INSTANCE, CHEQUE WAS ISSUED FOR RS.31,20,000/- AND CASH OF RS.29,80,000/- WAS RECEIVED SHOWING A DIFFERENCE OF RS.1,40,000/-. IN ANOTHER INSTANCE, CHEQUES OF RS. 21,05,501/- WERE ISSUED AND CASH OF RS. 16,80,760/- WAS RECEIVED BACK SHOWING A DIFFERENCE OF RS. 4,24,751/-. FROM THE SURVEY REPORT IT IS ALSO SEEN THAT CERTAIN OTHER 8 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) PAPERS WERE ALSO FOUND DURING THE COURSE OF SURVEY WHICH POINT TOWARD INFLATION OF EXPENSES AND PURCHASES. HENCE, NO REASONABLE PERSON CAN CONCLUDE UNDER THESE CIRCUMSTANCES THAT THE APPELLANT IS ENTIRELY CORRECT WHEN IT IS ASSERTED THAT THERE WAS NO OVER INVOICING OR INFLATION OF BILLS. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE INCLUDING THE STATEMENTS OF THE WITNESSES AND THE REMAND REPORT OF THE AO, THE ADDITION MADE BY THE AO AMOUNTING TO RS.61,42,000/- (AFTER REDUCING RS.8 LACS DELETED AS ABOVE) IS UPHELD TO THE EXTENT OF RS.12,50,000/- AND THE BALANCE IS DELETED. THE APPELLANT GETS RELIEF OF RS.48.92 LACS. 11. WE AGREE WITH ABOVE FINDINGS OF LD. CIT(A). FURTHE R, IT IS VERY HARD TO BELIEVE THAT ASSESSEE WOULD INCUR SUCH HUGE AMOUNT OF ADMIN/OFFICE EXPENSES AT UDAIPUR, AS HAS BEEN ADVOCATED BY LD. COUNSEL. ASSESSEE HAS NOT ESTABLIS HED BY WAY OF ANY EVIDENCE TO PROVE WHAT WAS THE KIND/NATU RE OF EXPENSES THAT IT HAD INCURRED WITH THESE MONIES THA T HAS HAVE BEEN TRANSFERRED FROM DELHI TO UDAIPUR. IN OUR VIEW, REQUIREMENT UNDER SECTION 69C OF THE ACT HAS NOT BEEN FULFILLED BY ASSESSEE AT ALL. IT IS OB SERVED THAT LD. CIT(A) HAS SUSTAINED ADDITION TO AN EXTENT OF RS.12 ,50,000/- REGARDLESS THE REPORT OF DDIT INVESTIGATION WITHOUT ANY BASIS. ASSESSEE HAS ALSO NOT BEEN ABLE TO PROVE THAT IT IS NOT A CASE OF OVER INVOICING AND INFLATION OF EXPENSES. LD. CI T(A) RECORDS THAT CHEQUES WERE ISSUED FOR RS. 31,20,000/- AND CA SH OF RS. 29,80,000/- WAS RECEIVED SHOWING DIFFERENCE OF RS.1 ,40,000/- SIMILAR INSTANCES WERE REPORTED BY DIRECTOR INVESTI GATION WING. ON PERUSAL OF STATEMENTS RECORDED BY SH. RAVI CHAND RAN, 9 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) PROPRIETOR OF M/S M.R CONSULTANTS AND ENGINEERS SHO WS THAT BOGUS EXPENSES RELATING TO OTHER PARTIES HAVE BEEN INVOICED BY ASSESSEE. 12. IT IS OBSERVED THAT ASSESSING OFFICER HAS INITIATE D PROCEEDINGS UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT FOR NON-COMPLIANCE OF NOTICES UNDER SECTION 143 (2) FOR WHICH PENALTY ALSO HAS BEEN LEVIED UNDER SECTION 27 1(1)(B) OF THE ACT. WE DO NOT SEE ANY REASON TO SET ASIDE THIS ISSUE TO LD. AO AGAIN FOR ANY FURTHER VERIFICATION AS IT WOULD N OT SERVE ANY PURPOSE. ASSESSEE HAS FAILED TO COOPERATE TWICE WIT H ASSESSING OFFICER IN THE PAST. 13. WE ARE CONVINCED WITH FINDINGS OF LD. AO REGARDING EXPENDITURE THAT HAS NOT BEEN EXPLAINED BY ASSESSEE AS REQUIRED UNDER SECTION 69C OF THE ACT. INVOICES RAI SED BY ASSESSEE FOR AN AMOUNT OF RS.61,42,000/-, DURING TH E YEAR UNDER CONSIDERATION, THE SAME DESERVES TO BE ADDED AS INCOME IN THE HANDS OF ASSESSEE AS UNEXPLAINED. ACCORDINGL Y, WE ALLOW GROUND NO. 4, RAISED BY REVENUE AND DISMISS G ROUND NO. 2 & 3 RAISED BY ASSESSEE. 14. GROUND NO. 4 RAISED BY ASSESSEE IS IN RESPECT OF DISALLOWANCE TO AN EXTENT OF 50% OF DEPRECIATION DI SALLOWED BY ASSESSING OFFICER AMOUNTING TO RS.4,79,615/- AND GROUND NO. 5 IN APPEAL FILED BY REVENUE RELATES TO THE BALANCE AMOUNT THAT HAS BEEN ALLOWED TO ASSESSEE. AS THESE GROUNDS RELATES TO COMMON ISSUE THESE ARE DISPOSED OF TOGETHER. 15. LD. COUNSEL SUBMITTED THAT NO DISALLOWANCE CAN BE MADE IN RESPECT OF DEPRECIATION CLAIMED ON PLANT AND MAC HINERY, AS 10 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) THESE ARE FIXED ASSETS THAT HAS BEEN ADDED DURING Y EAR UNDER CONSIDERATION. 16. ON THE CONTRARY LD. DR RELIED UPON ORDER OF LD. CI T(A). 17. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 18. IT IS OBSERVED THAT LD. CIT(A) HAS SUSTAINED THAT 50% DISALLOWANCE BY OBSERVING AS UNDER: 23. THE NEXT GROUND RELATES TO ADDITION OF RS.4,79,615/- ON ACCOUNT OF DEPRECIATION. FROM THE ASSESSMENT ORDER DT. 28-03-2003 IT IS SEEN THAT THERE IS AN ADDITION OF RS.1,34,26,276/- IN THE FIXED ASSETS DURING THE YEAR AND THE DEPRECIATION OF RS. 16,78,286/- HAS BEEN CLAIMED ON PLANT AND MACHINERY. THE AO HAS MADE THE DISALLOWANCE OUT OF DEPRECIATION KEEPING IN VIEW THE OVER INVOICING ALLEGED TO HAVE BEEN INDULGED IN BY THE APPELLANT. THE AO HAS NOTED THAT IN VIEW OF THE PURCHASES MADE FROM MR CONSULTANTS (RS.28,30,000/-), JAIN LAXMI CONSTRUCTION CO. (RS.8,90,000/-) AND RAJU BUILDERS (RS. 1,17,0007-) THE CLAIM OF DEPRECIATION IS NOT FULLY ALLOWABLE. NO EVIDENCE HAS BEEN DISCUSSED IN THE SECOND ASSESSMENT ORDER WITH REGARD TO THE BASIS ON WHICH THE CLAIM OF DEPRECIATION HAS BEEN DISALLOWED. HOWEVER, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DISCUSSION RELATING TO M.R. CONSULTANTS IN THE SURVEY REPORT AND THE ASSESSMENT ORDER, THE DISALLOWANCE MADE BY THE AO IS REDUCED TO THE EXTENT OF 50% ON ACCOUNT OF THE FACT THAT AS HELD IN THE FOREGOING PARAS, SOME EXTENT OF OVER INVOICING IN PLANT AND MACHINERY IS EVIDENT AND CANNOT BE OVERLOOKED OR DENIED AND FOR WHICH A PART OF THE ADDITION HAS BEEN SUSTAINED, AS ABOVE. 19. AS WE HAVE ALREADY OBSERVED IN THE ABOVE PARAGRAPHS THAT ASSESSEE HAS BEEN INVOLVED IN OVER INVOICING I TS PURCHASE 11 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) BILLS FOR PLANT AND MACHINERY. IN OUR CONSIDERED VI EW LD. AO HAS CORRECTLY DISALLOWED THE CLAIM OF DEPRECIATION. ASSESSEE HAS ALSO FAILED TO ESTABLISH BY WAY OF EVIDENCES RE GARDING PURCHASE PRICE OF THESE PLANT AND MACHINERIES BEFOR E AUTHORITIES BELOW. EVEN WHEN MATTER WAS REMANDED BA CK TO LD. AO FOR FRESH VERIFICATION, ASSESSEE HAS NOT UND ERTAKEN ANY INITIATIVE TO PROVIDE ANY DOCUMENTATION IN RESPECT OF SAME. IT IS OBSERVED THAT ASSESSING OFFICER HAS INITIATED PR OCEEDINGS UNDER SECTION 274 READ WITH SECTION 271 OF THE ACT FOR NON- COMPLIANCE OF NOTICES UNDER SECTION 143 (2), FOR WH ICH PENALTY HAS BEEN LEVIED UNDER SECTION 271(1)(B) OF THE ACT. WE DO NOT SEE ANY REASON TO SET ASIDE THIS ISSUE TO LD. AO FO R ANY FURTHER VERIFICATION AS ASSESSEE HAS FAILED TO COOPERATE TW ICE WITH ASSESSING OFFICER. 20. ACCORDINGLY, WE UPHOLD ADDITION MADE BY LD. AO AMOUNTING TO RS.4,79615/-. IN THE RESULT, GROUND RAISED BY ASSESSEE STANDS DISMISSED AND GROUND RAISED BY REVENUE STANDS ALLOW ED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS DISMI SSED. ITA NO. 5486/DEL/2010 21. GROUND NO. 1 ,2 & 3 THE ONLY GROUND THAT REMAINS TO BE ADJUDICATED IS UPON DELETION OF RS. 55,50,000 MADE BY LD. AO BY TREATING IT AS UNEXPLAINED SHARE CAPITAL AND AN AMOUNT OF RS. 38,00,501/- TREATING IT AS UNEXPLAINED CASH CRE DITS AND UNSECURED LOANS UNDER SECTION 68 OF THE ACT. THE RE VENUE IS ALSO AGGRIEVED WITH ADDITIONAL EVIDENCES BEING ADMI TTED IN CONTRAVENTION TO RULE 46A OF THE ACT. THIS TRIBUNAL REMANDED 12 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) THE ISSUE BACK TO FILE OF LD. AO TO DECIDE IN ACCOR DANCE WITH RATIO LAID DOWN BY HONBLE DELHI HIGH COURT VIDE ORDER DATED 30.07.2007 DECIDED IN THE CASE OF CIT VS HIMALAYA INTERNATIONAL LTD . 22. LD. DR SUBMITS THAT IN ACCORDANCE WITH DIRECTIONS OF THIS TRIBUNAL, ASSESSING OFFICER ISSUED NOTICE TO ASSESS EE UNDER SECTION 143(2) OF THE ACT. HE SUBMITTED THAT REPRES ENTATIVE OF ASSESSEE ATTENDED ASSESSMENT PROCEEDINGS ONCE, SUBS EQUENTLY NONE APPEARED BEFORE ASSESSING OFFICER AND ACCORDIN GLY, ASSESSING OFFICER WAS LEFT WITH NO CHOICE BUT TO IS SUE SHOW CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 27 1 OF THE ACT AS TO WHY PENALTY UNDER SECTION 271(1)(B) OF TH E ACT SHOULD NOT BE IMPOSED FOR NON-COMPLIANCE WITHOUT RE ASONABLE CAUSE. LD. DR SUBMITTED THAT IT IS VERY MUCH APPARE NT THAT ASSESSEE FAILED TO COOPERATE WITH ASSESSING OFFICER TO COMPLETE ASSESSMENT AS PER DIRECTIONS OF THIS TRIBUNAL. HE S UBMITTED THAT SUFFICIENT OPPORTUNITIES WERE GRANTED TO ASSES SEE, WHICH WAS A FUTILE EXERCISE. HE SUBMITTED THAT ASSESSING OFFICER WAS LEFT WITH NO CHOICE BUT TO COMPLETE ASSESSMENT ON T HE BASIS OF HIS OBSERVATIONS MADE IN ORIGINAL ASSESSMENT ORDER. 23. LD. DR OBJECTED TO ADMISSION OF ADDITIONAL EVIDENC E BY LD. CIT(A) ON THE GROUND THAT ASSESSEE HAS NOT MADE OUT SUFFICIENT REASON AS TO WHY ASSESSEE COULD NOT APPE AR BEFORE ASSESSING OFFICER, AND UNDER RULE 46A THESE DOCUMEN TS CANNOT BE ACCEPTED. 27. ON THE CONTRARY, LD. COUNSEL SUBMITTED THAT NO OPPORTUNITY WAS GRANTED TO ASSESSEE TO FILE RELEVAN T 13 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) DOCUMENTS IN REASSESSMENT PROCEEDINGS WHICH EMANATE S FROM REMAND REPORT OBTAINED BY LD. CIT(A). 28. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 29. LD. CIT(A) HAD CALLED FOR REMAND REPORT IN WHICH ASSESSING OFFICER DENIED ACCEPTANCE OF THESE DOCUME NTS. LD. CIT(A) WHILE ADMITTING EVIDENCES OBSERVED AS UNDER: AS STATED EARLIER, THESE SUBMISSIONS OF THE APPELLANT ALONGWITH ANNEXURES WERE FORWARDED TO THE AO FOR HIS REMAND REPORT. IN HIS REMAND REPORT DT. 09-08-2010, THE AO HAS STATED THAT THESE AMOUNTS OF SHARE CAPITAL ARE 'APPARENTLY ACCOMMODATION ENTRIES'. IT HAS BEEN STATED BY THE AO THAT THOUGH THE ASSESSEE IS CLAIMING THAT THESE ARE ADMISSIBLE AMOUNTS ON THE BASIS THE RATIO OF M/S LOVELY EXPORTS, STELLER ETC, THE AMOUNTS HAVING BEEN RECEIVED THROUGH BANK, AND THE IDENTITIES OF SHAREHOLDERS OF THE COMPANIES AND THEIR PAN CONFIRMATIONS ETC HAVING BEEN FILED BY THE APPELLANT. IT IS SEEN THAT THE AO IN HIS REMAND REPORT HAS SUBMITTED THAT ADDITIONAL EVIDENCE FILED BY THE APPELLANT SHOULD NOT BE ACCEPTED. THE AO HAS STATED THAT THE TRIBUNAL HAS SET ASIDE THE CASE TO DECIDE THE ISSUE AFRESH AFTER AFFORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IN THIS REGARD, THE AO HAS DENIED THAT NO OPPORTUNITY WAS GIVEN TO THE APPELLANT DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS. BUT HE HAS ALSO ADMITTED THAT THE ASSESSMENT WAS COMPLETED IN THE MONTH OF SEPTEMBER WITHOUT AFFORDING ANOTHER OPPORTUNITY TO THE APPELLANT. IT HAS BEEN STATED THAT AS PER THE ORDERSHEET THERE WAS ONE ATTENDANCE OF THE AR DURING THE REASSESSMENT 14 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) PROCEEDINGS. LASTLY ON THIS ISSUE THE AO HAS REQUESTED NOT TO ADMIT ANY ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES. A COPY OF THIS REMAND REPORT WAS FORWARDED TO THE APPELLANT WHO VIDE THEIR REJOINDER FILED ON 16-09-2010 HAS CLAIMED THAT PROPER OPPORTUNITY WAS NOT GIVEN TO THEM. HOWEVER, WITH REGARD TO THE SPECIFIC ISSUE OF ADDITION ON ACCOUNT OF SHARE CAPITAL, IT HAS BEEN STATED BY THE APPELLANT THAT ONCE THE IDENTITY OF THE CREDITORS/SHARE APPLICANTS IS PROVED AND THE TRANSACTION IS THROUGH THE BANK ACCOUNT THE ONUS OF THE ASSESSEE IS DISCHARGED AS PER THE NUMEROUS RECENT JUDICIAL PRONOUNCEMENTS. THE ASSESSEE CLAIMED THAT HE HAS ALSO FILED CONFIRMATIONS FROM ALL PARTIES DURING THE APPELLATE PROCEEDINGS AND THE SAME WERE ALSO AVAILABLE ON ASSESSMENT RECORDS AND THE AO SHOULD HAVE TAKEN NOTE OF THE SAME. THE APPELLANT HAS ALSO RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT LTD 216 CTR 195 (SC) WHEREIN IT HAS BEEN HELD THAT IF THE DEPARTMENT HAS ANY SUSPICION OF ALLEGED BOGUS SHAREHOLDERS OR SHARE APPLICANTS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. IT HAS ALSO BEEN STATED BY THE APPELLANT THAT WHERE THE SHARE APPLICATION MONEY HAS COME THROUGH BANKING CHANNELS, THE ASSESSEE HAS TO PROVE THE EXISTENCE OF THE PERSON IN WHOSE NAME THE SHARE APPLICATION IS RECEIVED/MADE. THE APPELLANT HAS ARGUED THAT ONCE THE EXISTENCE OF THE ENTITIES IS PROVED, THE BURDEN OF THE ASSESSEE TO PROVE WHETHER THAT PERSON ITSELF OR SOME OTHER PERSON HAS MADE THE ALLEGED SHARE APPLICANTS STANDS DISCHARGED. IT IS ALSO STATED THAT ONCE THE RECEIPT OF THE CONFIRMATION LETTER FROM THE CREDITORS IS PROVED AND THE IDENTITY 15 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) AND THE EXISTENCE OF THE INVESTOR HAS NOT BEEN DISPUTED, NO ADDITION ON ACCOUNT OF SHARE APPLICATION MONEY IN THE NAME OF SUCH INVESTOR CAN BE MADE IN THE ASSESSEE'S CASE (SHRI BARKHA SYNTHETICS LTD VS. ACIT (2006) 155 TAXMAN 289)(RG). THE ABOVE SUBMISSIONS OF THE APPELLANT AND THE LATEST JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPLICANT HAVE BEEN CAREFULLY CONSIDERED. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, AND RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT CITED ABOVE AND THE VARIOUS DECISIONS OF HIGH COURTS INCLUDING DELHI HIGH COURT, THE SHARE APPLICATION MONEY IN THE PRESENT CASE CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE U/S 68 OF THE ACT. HENCE, THE ADDITION OF RS. 55,50,000/- IS LIABLE TO BE DELETED. HELD ACCORDINGLY. 30. IN THE FACTS OF PRESENT CASE BEFORE US, IT HAS BEE N ARGUED BY LD. COUNSEL THAT, MONIES CREDITED INTO BOOKS OF ACCOUNT OF ASSESSEE, ARE INVESTED BY RESPECTIVE SHAREHOLDERS, AND ARE SHARE CAPITAL IN THE HANDS OF ASSESSEE. IF THAT IS SO, ASSESSEE IS DUTY BOUND TO ESTABLISH TRUE NATURE OF CREDIT, B Y PROVIDING EVIDENCES ABOUT IDENTITY, CREDITWORTHINESS AND MOST IMPORTANTLY GENUINENESS OF THE TRANSACTION, WHICH C OULD DISCHARGE THE INITIAL ONUS CAST UPON ASSESSEE UNDER SECTION 68 OF THE ACT. ON PERUSAL OF ORDER PASSED BY LD. CI T(A), IT IS OBSERVED THAT HE HAS MERELY DELETED ADDITIONS WITHO UT THE INITIAL ONUS BEING DISCHARGED BY ASSESSEE AS PER SE CTION 68. LD. CIT(A) ON THE BASIS OF SCANTY EVIDENCES PLACED BEFORE HIM, DELETED ADDITIONS UNDER SECTION 68 . 16 ITA NO. 5066 & 5486/DEL/2010 (AY 2000-01) 31. WE ARE OF CONSIDERED OPINION THAT LD. AO AND LD. C IT(A) HAVE NOT MADE ANY ENQUIRY TOWARDS AMOUNT CREDITED, EITHER AS SHARE CAPITAL OR AS SALE OF SHARES IN THE PROFIT AND LOSS ACCOUNT. LD. COUNSEL AND LD. DR AGREED THAT SUCH EN QUIRIES CAN ONLY BE CONDUCTED AT THE LEVEL OF ASSESSING OFF ICER. THEREFORE, WE SET ASIDE ISSUE FOR EXAMINATION OF CA SH CREDITS EITHER AS SHARE CAPITAL AND PREMIUM OR AS SALE OF S HARES, OR UNSECURED LOANS BACK TO FILE OF LD. AO. LD. AO SHAL L FIRST GRANT OPPORTUNITY TO ASSESSEE TO DISCHARGE ITS INITIAL ON US BY PROVING IDENTITY, CREDITWORTHINESS AND MOST IMPORTANTLY GEN UINENESS OF TRANSACTION AS PER SECTION 68 OF THE ACT. AFTER DISCHARGE OF INITIAL ONUS BY ASSESSEE, LD. AO MAY CONDUCT ANY OT HER ENQUIRY THAT HE MAY DEEM FIT AND PROPER TO INQUIRE ABOUT THE VERACITY OF THE EVIDENCES/INFORMATION SUBMITTED BY ASSESSEE IN RESPECT OF CREDIT ENTRIES. LD. AO MAY TAKE ALL N ECESSARY STEPS, IN ORDER TO IDENTIFY, EXAMINE THE CREDITORS AND DECIDE THE ISSUE ON MERITS. NEEDLESS TO SAY THAT, ADEQUATE OPPORTUNITY MAY BE GRANTED TO ASSESSEE TO SUPPORT I TS CASE. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES WITH ABOVE DIRECTION. IN THE RESULT APPEAL FILED BY REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2017. SD/- SD/- (R. K.PANDA) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 11.05.2017 @M!T