ACIT, New Delhi V. M/s. VIP Growth Fund Pvt. Ltd., New Delhi

ITA 5153/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6716 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 18-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: R C ROY
• Keywords: Principle of natural justice; Accommodation entries; Onus to prove
• Section: 143(3); 68; 69; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5153/DEL/2011 ASSESSMENT YEAR: 2003-04 ASSISTANT COMMISSIONER OF INCOME TAX VS. M/S VIP G ORWTH FUND PVT. LTD. CIRCLE 17(1), NEW DELHI 208, 4855/24, ANSAR ROA D, DARYAGANJ, NEW DELHI 110 002 (PAN:AAACV2851M) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. V.R. SONBHADRA, SR . DR ASSESSEE BY : SH. R.C. ROY, ADVOCA TE DATE OF HEARING : 04-02-2016 DATE OF ORDER : 04-03-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE I MPUGNED ORDER DATED 28.09.2011 OF LD. CIT(A)-XIX, NEW DELHI PERTAINING TO ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 40 ,00,000/- MADE BY THE AO U/S. 68 OF THE I.T. ACT AND RS. 1,00,000/- O N ACCOUNT OF COMMISSION THEREON, WHERE THE ASSESSEE FAILED TO DI SCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. 2. THE APPELLANT CRAVES FOR RESERVING THE RIGHT TO AME ND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME B EFORE OR DURING THE HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FILED RETURN OF INCOME ON 1.3.2004 DECLARING A TOTAL OF RS. 24,68,110/-. THE ASSESSEE IS A COMPANY AND ITA NO.5153/DEL/2011 2 ALSO NON-BANKING FINANCE CO. (NBFC) REGISTERED WITH RBI. DURING THE YEAR, THE ASSESSEE COMPANY HAD SHOWN RECEIPT OF SHARE APP LICATION MONEY / SHARE CAPITAL OF RS. 1,15,00,000/- FROM VARIOUS COMPANIES . THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPA RTMENT, THAT THE COMPANIES / PERSONS WHICH CONTRIBUTED TOWARDS SHARE APPLICATI ON MONEY / SHARE CAPITAL WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. I N VIEW OF THE SPECIFIC INFORMATION, THE AO INITIATED ACTION U/S. 148 AND C OMPLETED THE ASSESSMENT ON 30.12.2010 DETERMINING THE TOTAL INCOME AT RS. 65,8 8,106/- DISBELIEVING A PART OF SHARE APPLICATION MONEY / SHARE CAPITAL OF RS. 4 0,00,000/-. 3. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSI NG OFFICER DATED 30.12.2010 PASSED U/S. 143(3)/147, ASSESSEE FILED A N APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 28.09.2011 HAD DELETED THE ADDITION IN DISPUTE BY PARTLY ALLOWING THE APP EAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID FINDING OF THE LD . CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. APROPOS DELETION OF ADDITION OF RS. 40,00,000/- MADE BY THE AO U/S. 68 OF THE I.T. ACT AND RS. 1,00,000/- ON ACCOUNT OF CO MMISSION THEREON, WHERE THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE TRANSACTIONS. 5.1 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. 40,00,000/- MADE U/S. 68 IS CO NCERNED, IT WAS THE MAIN CONTENTION OF THE LD. DR THAT ASSESSEE FAILED TO DISCHARGE ITS INITIAL ONUS CAST UPON HIM IN ACCORDANCE WITH PROVISIONS OF SECTION 6 8 OF THE I.T. ACT, 1961, AS ITA NO.5153/DEL/2011 3 THE ASSESSEE HAS ONCE AGAIN FILED THE SAME DETAILS AS HAD BEEN FILED EARLIER. THEREFORE, HE STATED THAT THE ADDITION WAS RIGHTLY MADE BY THE AO AND MAY BE UPHELD ACCORDINGLY. MOREOVER, WITH REGARD TO ADDITI ON OF RS. 1,00,000/- IS CONCERNED RELATING TO COMMISSION PAID TO ENTRY OP ERATORS, HE STATED THAT SINCE THE ASSESSEE HAS TAKEN THE ENTRY TO INTRODUCE UNACC OUNTED MONEY OF RS. 40 LACS FOR WHICH THE ASSESSEE HAD PAID COMMISSION TO THE ENTRY OPERATORS WAS RIGHTLY ADDED BY THE AO, WHICH ALSO NEEDS TO BE UPHELD AND ACCORDINGLY, THE ORDER OF THE LD. CIT(A) MAY BE QUASHED. 5.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE 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. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND PRECEDENTS R ELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. WE FIND THAT LD. CIT(A) HAS ELABORATELY ADJUDICATED THE ISSUES IN DISPUTE IN HIS IMPUGNED ORDER VIDE PA RA NOS. 7 TO 19 FROM PAGES 4 TO 9. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUC ING THE PARA NOS. 7 TO 19 FROM PAGES 4 TO 9 AS UNDER:- 7. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE WRITTEN MISSIONS FILED BY THE AR. 8. SHARE APPLICATION MONEY/SHARE CAPITAL: THE ASSESSEE COMPANY RECEIVED SHARE APPLICATION MON EY/SHARE CAPITAL FROM THE FOLLOWING PERSONS/COMPANIES AND THE DETAILS FURNISH ED ARE AS UNDER: S. N. NAME& ADDRESS SHARE CAPITAL (RS.) REMARKS ITA NO.5153/DEL/2011 4 1 CHANAKYA FINVEST PVT. LTD. 5/1, CLIVE ROW, 3 RD FLOOR KOLKATA WEST BENGAL-70000! 5,00,000 COPIES OF CONFIRMATION LETTER, AFFIDAVIT OF DIRECTO R, ITR ACK, BANK A/C COPY, P&L A/C, B/S PAN: AAACC 3760 G DATE OF INCORPORATION 24.08. 1995 2 PCB CONSULTANT PVT. LTD. 301, DHAKA CHAMBER, 2068/39, NAIWALA KAROL BAGH, NEW DELHI- 11 0005 5,00,000 COPIES OF CONFIRMATION LETTER, AFFIDAVIT OF DIRECTO R, ITR ACK, BANK A/C COPY, P&L A/C, B/S PAN :AAACP 0782 H DATE OF INCORPORATION 23.04. 1 993 3 RAMSONS TRAVELS LTD. G- 1/204, UTTAM NAGAR, DELHI- 110059 5,00,000 COPIES OF CONFIRMATION LETTER, AFFIDAVIT OF DIRECTO R, ITR ACK, BANK A/C COPY, P&L A/C, B/S PAN:AAACR 1237 R DATE O F INCORPORATION 29.12.1994 4 FINE FINANCE & LEASING PVT. . LTD. 30 1 , DHAKA CHAMBER, 2068/39, NAIWALA KAROL BAGH, NEW DELHI- 11 0005 5,00,000 COPIES OF CONFIRMATION FETTER, AFFIDAVIT OF DIRECTO R, ITR ACK, BANK A/C COPY, P&L A/C. B/S PAN:AAACF2029H DATE OF INCORPORATION 18.03.1995 5 VINIYAS FINANCE & INVESTMENT PVT. LTD. 2L2,G.F.,I SL MAINROAD CHAMRAJPET, BANGLORE-18, KARNATAKA 5,00,000 COPIES OF SHARE APPLICATION FORM, AFFIDAVIT OF DIRE CTOR, ITR AEK, BANK A/C COPY, P&L A/C, B/S PAN:AAACV 1597 A . 6 DIVYA SECFIN PVT. LTD. 27, WCSTON STREET, 5 IH FLOOR, ROOM NO. 525, KOLKATA WEST BENGAL-700012 5,00,000 COPIES OF CONFIRMATION LETTER, AFFIDAVIT OF DIRECTO R, ITR ACK, BANK A/C COPY, P&L A/C, B/S PAN:AAACD4907G DAT E OF INCORPORATION 02.04.1996 7 RAMSONS DRUGS LTD. 122-J, LAXMI NAGAR EXTN., NEW DELHI- 11 00 18 5,00,000 COPIES OF SHARE APPLICATION FORM, CONFIRMATION LETT ER, ITR ACK, BANK A/C COPY, P&L A/C, B/S PAN:AAACR 5650 E F DATE OF INCORPORATION 07.04. !995 8 JATIN INVESTMENT PVT. LTD. 12, CROOKED LANE, 1 ST FLOOR KOLKATTA, WEST BENGAL-700069 5,00,000 COPIES OF CONFIRMATION LETTER, ITR ACK, AFFIDAVIT O F DIRECTOR, BANK A/C COPY PAN:AAACJ 1585G ; . - ,' DATE OF INCORPORATION 15.03.1993 TOTAL 40,00,000 9. THE ASSESSEE HAS FILED THE FOLLOWING DOCUMENTS IN THE COURSE OF ASSESSMENT PROCEEDINGS TO PROVE THE TRANSACTIONS. A) SHARE APPLICATION FORM RECEIVED FROM SHARPS. B) BOARD RESOLUTION OF SHARE HOLDERS. I C) MEMORANDUM & ARTICLE OF ASSOCIATES OF SHARE HOLD ERS. D) SHARE ALLOTMENT LETTERS E) COPY OF FORM NO.2 I.E. RETURN OF ALLOTMENT OF SH ARE IN ROC F) CONFIRMATIONS FROM SHARE HOLDERS ITA NO.5153/DEL/2011 5 G) COPY OF PAN CARD OF SHARE HOLDERS. H) COPY OF ACKNOWLEDGMENT OF INCOME TAX RETURN OF S HARE HOLDERS I) COPY OF BANK STATEMENT OF SHARE HOLDERS J) COPY OF AUDITED BALANCE SHEET OF SHARE HOLDERS K) AFFIDAVIT FROM SHARE HOLDERS 1) COPY OF ANNUAL RETURN OF ASSESSEE FILED IN ROC S HOWING THE NAME OF THESE APPLICANTS AS SHARE HOLDERS M) COPY OF FORM NO. 18 FILED IN ROC IN CASE OF CHAN GE OF ADDRESS OF SHARE HOLDERS. 10.1 IN A NUTSHELL THE MAIN ALLEGATION OF THE AO I S THAT RECEIPT OF SHARE APPLICATION MONEY/SHARE CAPITAL WAS AN ARRANGED AFF AIR. THE OTHER OBSERVATION OF THE AO IS THAT THE GENUINENESS AND CREDIT WORTHI NESS OF THE TRANSACTION REMAINED UNPROVED. ON THE OTHER HAND, THE MAIN CONT ENTION OF THE AR IS THAT THE BURDEN CAST ON IT WAS DISCHARGED BY PROVIDING B ASIC DETAILS REQUIRED FOR VERIFICATION AS ENVISAGED U/ S 68. THE AR FURTHER S TATED THAT PRINCIPLES OF NATURAL JUSTICE WERE NOT FOLLOWED. ~ 10.2 IT IS VERY MUCH PERTINENT TO MENTION HERE THAT IN THE APPELLANT'S CASE SCRUTINY ASSESSMENT U/S 143(3) WAS MADE ON 28.02.20 06. IN THE COURSE OF THE SAID PROCEEDINGS, THE DETAILS OF SHARE APPLICATION MONEY / SHARE CAPITAL WERE FURNISHED VIDE ITS EXPLANATION DATED 16.11.2005 WHI CH ARE AVAILABLE AT PAGES 40 TO 43 OF THE PAPER BOOK FURNISHED. NOTHING ADVER SE WAS FOUND. THE AO HAS NOT VERIFIED THE DETAILS FURNISHED BY THE ASSESSEE AND I.T. RECORDS OF THE SHAREHOLDERS/INVESTING COMPANIES. THESE FACTS WERE NOT CONTROVERTED BY THE AO. THE ASSESSEE HAS DISCHARGED ITS BURDEN OF PROVI DING BASIC DETAILS WHICH ITA NO.5153/DEL/2011 6 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 EXAMIN ING THE ISSUE IS U/S. 68. IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. 2 07 CTR 38, THE HON'BLE 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 MU ST BE FIRMLY EXCORIATED BY THE REVENUE. EQUALLY, WHERE THE PREPO NDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND COMPL EXITY OF THE ASSESSEE IT SHOULD NOT BE HARASSED BY THE REVENUE'S INSISTEN CE THAT IT SHOULD PROVE THE NEGATIVE. IN THE CASE OF PUBLIC ISSUE, THE COMP ANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAILS PERTAINING TO THE IDENTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COM PANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICE R FOR HIS PERUSAL, ALL THE INFORMATION CONTAINED IN THE STATUTORY SHARE AP PLICATION DOCUMENTS. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME W OULD NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAINED WHILE WALKING THE TIGHTROPE OF SECTION 68 AND 69 OF THE INCOME TAX ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE; I F THE ASSESSING OFFICER HARBORS DOUBTS OF THE LEGITIMACY OF ANY SUBSCRIPTIO N HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH INVESTIGATION S. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILL EGAL DEALINGS, HE ITA NO.5153/DEL/2011 7 CANNOT OBDURATELY ADHERE TO HIS SUSPICIONS AND TREA T 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 C HANNELS; (3) THE CREDIT WORTHINESS OR FINANCIAL STRENGTH OF THE CRED ITOR/SUBSCRIBER; (4) IF RELEVANT DETAILS OF THE ADDRESS OF PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISHED TO THE DEPARTMENT ALONG WITH COPIES O F THE SHAREHOLDERS REGISTER, SHARE APPLICATION FORMS, SHARE TRANSFER R EGISTER ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATI ON BY THE ASSESSEE; (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWIN G AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAIL S OR NEGLECTS TO RESPOND TO ITS NOTICE; (6) THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIED OF REPUDIATED THE TRANSA CTION SET UP BY THE ASSESSEE NOR SHOULD THE ASSESSING OFFICER TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE AS SESSEE; (7) THE ASSESSING OFFICER IS DUTY-BOUND TO INVESTIGATE THE CREDIT WORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRAN SACTION AND THE VERACITY OF THE REPUDIATION.' WITH REGARD TO THE ISSUE OF SHARE APPLICATION MONE Y, WHILE DISMISSING THE SLP FILED BY THE DEPARTMENT, THE HON'BLE SUPREM E COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. (216 CTR 195) OBSERVED AS UNDER: ITA NO.5153/DEL/2011 8 '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 A CCORDANCE WITH LAW. HENCE, WE FIND NO 'INFIRMITY WITH THE IMPUGNED JUDG MENT.' IN THE CASE OF ANU INDUSTRIES LTD. VS. ACIT (2009) 19 DTR (DEL) (TRIB) 465 (DATED 28.11.2008) AFTER REFERRING DECISIONS I N 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. 21ST 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 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 W ITH 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 ITA NO.5153/DEL/2011 9 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 THAT T HE REVENUE IS FREE TO PROCEED TO REOPEN THE INDIVIDUAL ASSESSMENTS OF SUC H 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 I T 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 D ECISION 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 ASSESSMENTS OF THE SHARE APPLICANTS IN ACCORDANCE W ITH LAW. WE DIRECT ACCORDINGLY.' ITA NO.5153/DEL/2011 10 11. I HAVE NO HESITATION TO CONCLUDE THAT THE ASS ESSEE HAS PROVIDED NECESSARY DETAILS INCLUDING THE WARD/CIRCLE WHERE T HE SHARE APPLICANTS/ INVESTING COMPANIES WERE ASSESSED TO INCOME TAX AND DISCHARGED THE ONUS CAST ON IT. ALL THE AMOUNTS WERE RECEIVED, THROUGH BANKI NG CHANNELS BY WAY OF CHEQUES ISSUED IN FAVOUR OF THE APPELLANT COMPANY T OWARDS SHARE APPLICATION MONEY. IT IS FURTHER SEEN THAT SHARES WERE ALLOTTED AS PER THE DOCUMENTS FURNISHED BEFORE ROC. 12. THE LAW OF EVIDENCE MANDATES THAT IF THE BEST 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 ASSESSEE HAS PRODUCED POSSIBLE/BEST EVIDENCE TO SUPPORT ITS CLAIM. 13. THE AO HAS SIMPLY ACTED ON THE INFORMATION REC EIVED FROM THE INVESTIGATION WING WITHOUT VERIFYING THE DETAILS FU RNISHED BY THE ASSESSEE COMPANY AND ALSO NOT PLACING BEFORE THE ASSESSEE TH E INFORMATION AND FINDINGS OF THE INVESTIGATION WING VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 14. IF THERE IS ANY DISCREPANCY IN THE BOOKS OF ACC OUNTS 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 MISTAK ES/FAULTS COMMITTED BY THE SHARE HOLDERS. THE AO HAS NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT AND BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. 16. IT IS SETTLED PRINCIPLE OF LAW THAT NO ADDITION / 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 775 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 V. ITO (2009) 30 SOT 44 (KOL.) (URO), THE HON'BLE ITAT OBSERVED AS UNDER: ITA NO.5153/DEL/2011 11 'SUSPICION CANNOT REPLACE EVIDENTIAL DOCUMENT. SIMP LE ARGUMENT OR ALLEGATION OF MANIPULATION IS NOT SUFFICIENT WITHOU T PROPER EVIDENCE.' 18. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D AVAILABLE LEGAL POSITION, THE SHARE APPLICATION MONEY/SHARE CAPITAL TO THE EX TENT OF RS. 40,00,000/- STANDS EXPLAINED. 19. SINCE THE MAIN ADDITION IS DELETED, THERE IS N O CASE FOR ADDITION OF RS. 1,00,000/- TOWARDS ALLEGED COMMISSION PAYMENT. 7. AFTER GOING THROUGH THE AFORESAID DETAILED FIND ING GIVEN BY THE LD. CIT(A) AND THE PRECEDENTS RELIED UPON BY HIM IN HIS IMPUGNED ORDER ON THE ADDITIONS IN DISPUTE, WE ARE OF THE CO NSIDERED VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A) ON THE DELETION OF ADDITIONS IN DISPUTE, HENCE, WE UPHOLD THE SAME AND DISMISS THE GROUND NO. 1 RAISED BY THE REV ENUE IN ITS APPEAL. 8. IN THE RESULT, THE REVENUES APPEAL STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2016. SD/- SD/- (L.P. SAHU) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 04/03/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSITANT REGISTRAR