ITO, New Delhi V. M/s. Ganesh Leasefin (P) Ltd., New Delhi

ITA 534/DEL/2012

• Counselvise Citation: 53420114 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-09-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAV
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Unexplained cash credit; Business income; Question of law; Accommodation entries; Onus to prove; Reassessment proceedings
• Section: 14A; 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR ITA NO. 534 & 535/DEL/2012 ASSTT. YR: 2002-03 & 2003-04 INCOME-TAX OFFICER, VS. M/S GANESH LEASEFIN (P) LTD., WARD 12(1), NEW DELHI. 611/6, GOVIND PURI, KALKA JI, NEW DELHI. PAN: AAACG 4292 K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. NIDHI SRIVASTAV SR. DR RESPONDENT BY : SHRI ASHWANI TANEJA ADV. O R D E R PER R.P. TOLANI, J.M : THESE ARE TWO REVENUES APPEALS AGAINST CIT(A)S SE PARATE ORDERS DATED 16-11-2011 AND 14-11-2011 FOR A.Y. 2002-03 & 2003-04 RESPECTIVELY. BOTH THE APPEALS ARE HEARD TOGETHER AND DISPOSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. ONE COMMON GROUND RAISED PERTAINS TO DELETION OF ADDITION OF RS. 10 LACS FOR A.Y. 2002-03 AND RS. 15 LACS FOR A.Y. 2003 -04 U/S 68 OF THE I.T. ACT IN RESPECT OF SALE OF SHARES BY THE ASSESSEE HELD T O BE UNEXPLAINED CASH CREDITS BY THE ASSESSING OFFICER. 2.1. THE OTHER TWO GROUNDS FOR A.Y. 2003-04 ARE AS UNDER: ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 2 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 O F RS. 22,500/- MADE BY THE AO ON ACCOUNT OF COMMISSION PAID TO ENTRY O PERATOR. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 4,970/- OUT OF TOTAL ADDITION OF RS. 8,970/- MADE BY THE AO ON AC COUNT OF EXPENSE U/S 14A OF THE INCOME-TAX ACT. 3. BRIEF FACTS APROPOS THE DELETION OF ADDITION U/S 68 ARE: THE ASSESSEE IS A NON BANKING FINANCE COMPANY AND ALSO ENGAGED IN T HE BUSINESS OF PURCHASE AND SALE OF EQUITY SHARES AS A TRADER. DUR ING THE REGULAR TRADING ACTIVITY OF SALE OF SHARES BY THE ASSESSEE IT SOLD SHARES TO FOLLOWING TWO FIRMS: (I) M/S S.J. CAPITAL LTD.; AND (II) M/S B FINLEASE INDIA PVT. LTD. 3.1. THE SALE PROCEEDS IN BOTH THE YEARS WERE REALI ZED BY THE ASSESSEE FROM ABOVE CONCERNS BY WAY OF A/C PAYEE CHEQUES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED TO SUBSTANTIATE THAT THE SHARES WERE IN FACT PURCHASED AND PAID FOR BY THESE TWO CONCERNS. ASSESSEE FILED EVIDENCE IN THIS BEHALF, DETAILS OF OPENING S TOCK, SALES, PURCHASE CLOSING STOCK IN RESPECT OF THE EQUITY SHARES AND DEMONSTRA TED THAT THESE SHARES WERE SOLD OUT OF THE OPENING STOCK AND DULY INCORPORATED IN THE BOOKS OF THE COMPANY AND THE RESULTANT PROFITS INCURRED THEREON HAS BEEN INCORPORATED IN THE BOOKS OF ACCOUNTS. ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIED, ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 3 THEREFORE, MADE THE ADDITION ON ACCOUNT OF REALIZAT ION OF SALES OF SHARES AND BY ALLEGING THAT THESE WERE ACCOMMODATION ENTRIES. IN A.Y. 2003-04 FURTHER MADE THE ADDITION OF RS. 22,500/- BY PRESUMING THAT THE ASSESSEE MAY HAVE PAID THE COMMISSION FOR THESE TRANSACTIONS. AGGRIEV ED, ASSESSEE PREFERRED FIRST APPEAL, WHERE CIT(A) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: (THE OBSERVATION FOR A.Y. 2002-03 ARE REPRODUCED AN D FOR A.Y. 2003-04 THE OBSERVATIONS ARE VERBATIM THE SAME EXCEPT THE FIGUR ES): 4.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE ASSESS ING OFFICER IN THE ASSESSMENT ORDER AND MATERIAL ON RECORD. DURING THE YEAR UNDER APPEAL, THE APPELLANT HAD SOLD EQUITY SHARES OF RS.8,40,0001- OF PRB FINANCE LTD. TO S.J. CAPITAL L TD. OUT OF THE OPENING STOCK OF EQUITY SHARES OF THE VALUE OF RS. 28,61,0001- IN THE NORMAL COURSE OF ITS BUSINESS. SIMILARLY THE APPELLANT HAD SOLD EQUITY SHARES OF TANITA LEASING AND FINANCE LTD. FOR RS.L,60,0001- IN THIS YEAR OUT OF OPENING STOCK OF INVESTMENTS OF RS. 4,60,0001- TO S.J. CAPITAL LTD. THUS TOTAL SALES OF EQUITY SHARES AND INVESTMENTS MADE TO SJ. CAPITAL LTD. WORKED OUT TO RS. 10 LAKHS IN THIS YEAR. THE APPELL ANT HAD RECEIVED THE SALE PROCEEDS BY TWO ACCOUNT PAYEE CHE QUES EACH BEING OF RS. 5 LAKHS FROM S.J. CAPITAL LTD. ON 18 TH AND 22 ND MARCH, 2002.THE APPELLANT HAD FILED THE CONFIRMATIO NS FROM S.J. CAPITAL LTD. DURING THE ASSESSMENT PROCEEDINGS . IT IS OBSERVED THAT THE AO BASED HIS ARGUMENT PURELY ON T HE BASIS OF INFORMATION FROM DIT (INVESTIGATION), NEW DELHI. HE HAS ENTIRELY RELIED UPON SUCH INFORMATION FOR REACHING SUCH CONCLUSION. THE ABOVE INFORMATION MAY BE A SUFFICIE NT GROUND TO INITIATE REASSESSMENT PROCEEDINGS OF A CASE, BUT TO MAKE AN ADDITION THE AO HAS TO ESTABLISH THE FACT OF FRAUDU LENT NATURE OF SUCH TRANSACTION. PURELY ON SURMISES AND CONJECTURE S NO TRANSACTION CAN BE HELD AS BOGUS UNLESS THE SAME IS PROVED ON THE BASIS OF SOUND REASONING AND EVIDENCE ON THE PA RT OF THE AO ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 4 BEFORE MAKING THE ADDITION. WHEN THE ASSESSEE HAS F URNISHED ALL NECESSARY PROOF IN SUPPORT OF ITS CLAIM, IT IS ALL THE MORE NECESSARY TO REBUT SUCH EVIDENCE WITH COGENT AND CR EDIBLE EVIDENCE ON THE PART OF AO BEFORE MAKING THE ADDITI ON. IT IS ALSO SEEN THAT THE ASSESSING OFFICER COULD NOT POIN T OUT ANY DISCREPANCY IN THE EVIDENCES RELIED UPON BY THE ASS ESSEE. HE HAS NEITHER BROUGHT OUT ANY DIRECT OR INFERENTIAL E VIDENCE TO CONTRADICT THE CONTENTION OF THE ASSESSEE. IT IS FU RTHER OBSERVED THAT EVEN THOUGH A.O. HAS VAST POWERS U/S 131 AND 133(6) OF THE ACT, HE HAS NOT USED ANY OF HIS POWERS TO VERIF Y THE GENUINENESS OF THE CLAIM OF THE ASSESSEE BY VERIFYI NG THE DOCUMENTS FURNISHED BY IT. IF A.O. HAD DOUBTED THE IMPUGNED TRANSACTION AFTER RECEIVING THE EVIDENCES WHICH HAD BEEN PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM IT WAS VERY MUCH OPEN TO THE A.O. TO DO HIS INDEPENDENT ENQUIRY AND VERIFICATION. THIS HAS NOT BEEN DONE BY THE A.O. FU RTHER, WHAT IS THE DESIRED DOCUMENTARY EVIDENCE REQUIRED TO SUP PORT THE CLAIM OF THE ASSESSEE AS REQUIRED BY THE A.O. IS NO T COMING OUT OF THE ORDER OF THE A.O. 4.2 IT IS ALSO OBSERVED THAT THE IMPUGNED SHARES WERE PURCHASED IN THE EARLIER YEARS WHICH WAS DULY REFLE CTED IN THE CLOSING STOCK AND SCHEDULE-C FOR INVESTMENT OF BALA NCE- SHEET AS ON 31-03-2001. THEREFORE, IN THE PRESENT CASE TH E ASSESSEE CAN BE SAID TO HAVE DISCHARGED ITS ONUS UNDER SECTI ON 68 OF THE ACT. THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO DISPUTE THE FACTS/DETAILS FURNISHED BY THE APPEL LANT. IT IS SETTLED PROPOSITION OF LAW THAT ADDITION CANNOT BE MADE ON THE BASIS OF PURE GUESS WORK, SUSPICION, AND CONJECTURE S AND CANNOT BE MADE WITHOUT ANY EVIDENCE OR MATERIALS AS HELD BY THE APEX COURT IN DHAKESWARI COTTON MILLS LTD. V. C IT (1954) 26 ITR 775, DHIRAJLAL GIRDHARILAL V. CIT (1954) 26 ITR 736 (SC) & OMAR SALAY MOHAMED SAIT V. CIT (1959) 37 ITR 151 (SC). 4.3. IN VIEW OF THE DISCUSSION MADE ABOVE, IT IS HE LD THAT THE ADDITION OF RS. 10,00,000/- CANNOT BE SUSTAINED AND ACCORDINGLY, THE SAME IS DIRECTED TO BE DELETED. AGGRIEVED, REVENUE IS BEFORE US. ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 5 4. LD. DR CONTENDS THAT THE ASSESSEE FAILED TO DISC HARGE THE BURDEN CAST ON IT BY SEC. 68 TO SUBSTANTIATE THAT THESE SHARE S ALE TRANSACTIONS WERE GENUINE. 5. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND C ONTENDS AS UNDER: (I) THE IMPUGNED AMOUNT CANNOT BE CONSIDERED AS A FRESH CASH CREDIT INASMUCH AS THEY REPRESENT THE SALE PROCEEDS OF THE CLOSING STOCK/ STOCK IN TRADE OF THE ASSESSEE. THEY ARE NEITHER LO ANS OR BORROWINGS AND IT IS SETTLED PROPOSITION OF LAW THAT THE PROCE EDS REALIZED BY THE ASSESSEE FROM SALES OF ITS STOCK IN TRADE CANNOT BE HELD TO BE CASH CREDIT SO AS TO HOLD AS UNEXPLAINED INCOME OF THE A SSESSEE U/S 68. (II) IT HAS NOT BEEN DISPUTED THAT THE SALES ARE EFFECTE D OUT OF THE STOCK IN TRADE OF THE ASSESSEE. ALL THE CORRESPONDING ENT RIES IN THE SHARE/ STOCK REGISTER, PROFIT & LOSS ACCOUNT AND BOOKS OF ACCOUNTS HAVE BEEN DULY INCORPORATED. THE PAYMENTS HAVE BEEN RECE IVED BY A/C PAYEE CHEQUES. (III) THE DOCUMENTS FILED BY THE ASSESSEE HAVE NOT BEEN R EBUTTED BY ANY COGENT REASONS. NO ADVERSE COMMENT HAS BEEN OFFERED BY THE ASSESSING OFFICER ON THE MATERIAL FILED BY THE ASSE SSEE AND AS THE ASSESSEE COULD NOT PRODUCE SOME OF THE DOCUMENTS IN SISTED BY THE ASSESSING OFFICER, IT HAS BEEN SUMMARILY HELD THAT THE DOCUMENTS FILED BY THE ASSESSEE HAVE NO VALUE WITHOUT APPRECI ATING THE FACTS PROPERLY. BY CITING SOME INAPPLICABLE CASE LAWS, TH E ASSESSING OFFICER HAS MADE THE ADDITIONS. (IV) LD. CIT(A), ON THE OTHER HAND, HAS CATEGORICALLY HE LD THAT THE ONUS CAST ON THE ASSESSEE IS PRIMARY ONE AND STANDS DISC HARGED BY FILING ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 6 THE NECESSARY EVIDENCE. THE ONUS CAN BE CASTED ON THE ASSESSEE WHEN IT IS REFUTED BY ASSESSING OFFICER ON COGENT REASONS. (V) THE GENUINENESS OF THE TRANSACTIONS IS PROVED BY T HE FACT THAT THE SHARES WERE SOLD OUT OF AVAILABLE TRADING STOCK WHI CH IS NOT DISPUTED BY ASSESSING OFFICER AND CORROBORATED BY S UITABLE ACCOUNTING ENTRIES. THE PAYMENT WAS THROUGH ACCOUNT PAYEE CHEQUES WHICH DEMONSTRATE THE GENUINENESS OF THE T RANSACTIONS AND IDENTITY OF THE PURCHASERS. AS FAR AS THE SALE OF SHARES IS CONCERNED, ASSESSEE HAS NO OBLIGATION TO ASK THE P URCHASERS AS TO FROM WHERE HE IS BRINGING THE MONEYS AS LONG AS THE PAYMENT IS MADE THROUGH A/C PAYEE CHEQUES. THUS ASSESSEE DISCH ARGED ITS PRIMARY ONUS CAST U/S 68. CIT(A) HAS NOT RIGHTLY RE LIED ON THE JUDGMENTS AS MENTIONED IN HIS ORDER. 5.1. LD. COUNSEL THEN ADVERTED TO ITAT DELHI BENCH A ORDER DATED 13- 7-2012 RENDERED IN ITA NO. 789/DEL/10 IN THE CASE O F M/S AKSHAY PORTFOLIO (P) LTD. VS. ITO FOR A.Y. 2000-01, DELETING SIMILAR TYPE OF ADDITION BY OBSERVING AS UNDER: 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FACT THA T SHRI SATISH KUMAR PROPRIETOR OF M/S BATRA INVESTMENT EXPIRED ON 8-1-2001 AND DEATH CERTIFICATE IN THIS BEHALF, HAS NOT BEEN DISPUTED, THEREFORE, THE PRODUCTION OF SATISH KUMAR WAS BEYON D POSSIBILITY. THE ASSESSEE PURCHASED THE SHARES IN E ARLIER YEARS FROM MY MONEY SECURITIES PVT. LTD. THROUGH BANKING CHANNELS; THIS FACT HAS NOT BEEN DISPUTED. THUS THE PURCHASE OF THE SHARES IN EARLIER YEARS REMAINS UNDISPUTED. ASSESSING OFFI CER HAS DOUBTED THE SALES MADE BY ASSESSEE TO M/S BATRA IN VESTMENT. ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 7 THERE ARE NO COMMENTS ABOUT THE BANKING TRANSACTION S BETWEEN ASSESSEE AND M/S BATRA INVESTMENT BEING NOT GENUINE . THE ONUS CAST BY SEC. 68 ON THE ASSESSEE IS TO ESTABLISH THE IDENTITY, CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THIS ONUS HAS BEEN DISCHARGED BY ASSES SEE AND SAME CAN BE REBUTTED BY ASSESSING OFFICER ON THE B ASIS OF COGENT REASONS. THE ASSESSEE PRODUCED SALES NOTE OF SHARES TO M/S BATRA INVESTMENTS, SALE PROCEEDS WERE RECEIVED THROUGH BANKING CHANNELS, WHICH, ACCORDING TO ASSESSEE ESTA BLISHES THE GENUINENESS OF TRANSACTION. IN OUR VIEW, THE BURDEN TO PROVE CASH CREDIT U/S 68 STANDS DISCHARGED BY THE ASSESSE E AND HAS BEEN REBUTTED ONLY BY VAGUE FINDINGS THAT SHRI SAT ISH KUMAR HAD INVOLVEMENT WITH MAHESH BATRA AND THERE IS NO INDEPENDENT AGENCY TO PROVE THE TRANSACTION. IN OUR VIEW THE REBUTTAL DOES NOT CARRY EFFECTIVE MEANING TO DISLO DGE ASSESSEES EXPLANATION. ASSESSEE HAVING DISCHARGED HIS BURDEN,, THERE IS NO JUSTIFICATION IN RETAINING THE ADDITION U/S 68 ON VAGUE ASSERTIONS OF LOWER AUTHORITIES. OUR VIEW IS ALSO SUPPORTED BY THE HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF MEDSHAVE HEALTH CARE LTD.(SUPRA). IN VIEW OF THE ABOVE, WE DELETE THE ADDITION. 5.2. LD. COUNSEL THEN PLACED RELIANCE ON HONBLE DE LHI HIGH COURT JUDGMENT DATED 9-2-2010 IN ITA NO. 124/2010 IN THE CASE OF CIT VS. MEDSHAVE HEALTH CARE LTD., OBSERVING AS UNDER: 5. THE TRIBUNAL NOTICED THAT THE ASSESSEE HAD FILE D THE CONFIRMATION LETTER OF M/S RAMESH CHAND INDUSTRIES LTD. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). FURTHER, THE ASSESSEE HAD PRODUCED A COPY OF THE LEDGER ACCOUNT IN THE CASE OF M/S RAMESH CHAND INDUSTRIES LTD. IN THE BOOKS OF M/S SILVER STREAKS TRADING PVT. LTD. BEFORE THE ASSESSING OFFI CER IN REMAND PROCEEDINGS. FURTHER MORE, IT WAS NOTICED BY THE TRIBUNAL THAT THE SALE OF SHARES TO M/S SILVER STRE AKS TRADING PVT. LTD. WAS REFLECTED IN THE BOOKS OF THE ASSESS EE AND THAT THESE AMOUNTS WERE ALSO SHOWN AS ADVANCE IN THE BAL ANCE SHEET OF THE ASSESSEE COMPANY AND A S A CREDIT IN THE BAL ANCE OF M/S ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 8 SILVER STREAKS TRADING PVT. LTD. AS ON THE 31 ST MARCH, 2003. CONCERNING THE PAYMENT MADE BY M/S SILVER STREAKS T RADING PVT. LTD. IT WAS FOUND THAT THE SAME WAS MADE IN OC TOBER NOVEMBER, 2003 BY ACCOUNT PAYEE CHEQUES AND A CERTI FICATE FROM CORPORATE BANK IN THIS REGARD WAS PRODUCED BEF ORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, WHICH WAS FORWARDED TO THE COMMISSIONER OF INCOME TAX (APPEAL S). BY THE ASSESSING OFFICER . THEREFORE, THE TRIBUNAL CAM E TO THE CONCLUSION THAT IT WAS CLEAR THAT T HE ASSESSEE COM PANY HAD BEEN HOLDING THE SHARES WHICH WERE SOLD BY IT DURIN G THE YEAR AND THAT IT WAS ON THIS BASIS THAT THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS). HAD ARRIVED AT A CONCLUSION T HAT THERE WAS NO REASON TO HOLD THAT THE ASSESSEE COMPANY DID NOT OWN THESE SHARES. THEREFORE, THE TRIBUNAL OBSERVED THAT THERE WAS NO REASON TO HOLD THESE TRANSACTIONS TO BE SHAM TRA NSACTIONS OR THE CREDITS TO BE UNEXPLAINED CASH CREDITS. 6. THE FINDINGS ARRIVED AT BY THE TRIBUNAL ARE PURE FINDINGS OF FACT AND WE DO NOT FIND ANY ERROR IN THEM SO AS TO WARRANT INTERFERENCE BY THIS COURT. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION AND CONSEQUENTLY THE APPEAL I S DISMISSED. 5.3. LD. COUNSEL FURTHER STATES THAT THE ISSUE ABOU T M/S S.J. CAPITAL LTD. AND M/S B. FINLEASE INDIA PVT. LTD. BOTH BEING GENU INE CONCERNS, CAME UP BEFORE THE ITAT DELHI BENCH D IN THE CASE OF M/S LAXMAN INDUSTRIAL RESOURCES LTD. FOR A.Y. 2003-04, RENDERED IN ITA NO . 2259/DEL/2010 & CO NO. 195/DEL/2010. VIDE ORDER DATED 24-9-2010 THE IT AT UPHELD THEIR SALE OF SHARES TO THESE CONCERNS AND THE GENUINENESS OF THE TRANSACTIONS BY FOLLOWING OBSERVATIONS: 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF BOT H THE PARTIES AND HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. IN THIS ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 9 CASE THE ASSESSEE HAS SHOWN THE SUM OF RS. 91,25,00 0/- BEING RECEIVED FROM S.J. CAPITAL LTD. AND M/S B. FINLEASE INDIA PV T. LTD. TOWARDS SALE PROCEEDS OF SHARES SOLD BY THE ASSESSEE TO THESE TWO PARTIES. THE ASSESSEE HOLDS TOTAL INVESTMENT IN SHARES TO THE EX TENT OF RS. 1,57,70,000/- AS ON 31.3.2002 WHICH HAS BEEN REDUCE D TO RS.33,00,000/- AS ON 31.3.2003. THE AFORESAID INVES TMENT OF RS. 1,57,70,0001- WAS MADE BY THE ASSESSEE DURING FINAN CIAL YEAR FROM 1.4.2001 TO 31.3.2002 AS SHOWN IN THE BALANCE- SHEET OF THE ASSESSEE COMPANY FOR THE YEAR ENDED ON 31.3.2002. T HE PART OF THIS INVESTMENT OF RS.L,57, 70,000/- HAS BEEN SOLD OUT BY THE ASSESSEE DURING THE F.Y. 2002-03 AS SO CLEARLY STAT ED IN THE STATEMENT OF ACCOUNT AND BALANCE- SHEET FOR THE YEA R ENDED ON 31.3 .2003 I.E. FOR THE ASSESSMENT YEAR UNDER CONSI DERATION. THE ASSESSEE HAD RECEIVED PAYMENTS TOWARDS SALE OF INVESTMENT FROM THE ABOVE MENTIONED TWO PARTIES WHICH WERE CRE DITED IN THE ASSESSEE'S BANK ACCOUNT. IT IS THUS CLEAR THAT NO NEW CAPITAL OR SHARE APPLICATION MONEY HAS BEEN CREDITED IN THE ASSESSEE'S BANK ACCOUNT BUT THE AMOUNT HAS BEEN RECEIVED BY TH E ASSESSEE TOWARDS SALE CONSIDERATION OF THE SHARES SOLD BY TH E ASSESSEE. IT IS NOT DISPUTED BY THE ASSESSING OFFICER THAT THE A SSESSEE COMPANY WAS NOT HAVING INVESTMENT IN SHARES TO THE EXTENT OF RS.L,57,70,OOOI- AS ON 31.3.2002 WHICH HAS BEEN REDUCED TO RS.33,00,0001- AS AT THE END OF THE CURRENT YEAR DURING WHICH SHARES OF RS.91,25,000/- HAVE BEEN SOLD. THE TOTAL SHARES SOLD DURING THE YEAR ARE OFRS.L,24,70,0001- (I.E. RS.L,57,70,0001- AS ON 31.3.2002 - RS.33,00,0001- AS ON 31.3.2003) AND THIS AMOUNT OFRS.L,24,70,000/- HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OUT OF WHICH A SUM OF RS.91,25,OOO/- WAS RECEIVED FROM THE AFORESAID TWO PARTIES. THE AFORESAID TWO P ARTIES HAD ALSO CON FINNED THE ABOVE TRANSACTIONS BY FURNISHING CONFIRMATION LETTERS AND THEIR BANK STATEMENTS. THE CIT(A) HAS ALSO RECORDED A FINDING THAT HE FOUND A LETTER DATE D 16.12.2008 RECEIVED BY THE ASSESSING OFFICER FROM M/S . B. FINLEASE INDIA PVT. LTD. WHEREBY M/S. B. FINLEASE INDIA PVT. LTD. FURNISHED CONFIRMATION OF ACCOUNT FOR THE PERIOD FROM 1.4.200 2 TO 31.3.2003 CONFIRMING TRANSACTIONS AMOUNTING TO RS.39,25,0001- MADE WITH THE ASSESSEE AND ALSO FURNISHED ITS PAN AS WELL AS PRESENT ADDRESS. THE LEARNED CIT(A) ALSO FOUND THAT M/S . B. FINLEASE INDIA PVT. LTD. ALSO FURNISHED COPY OF INCOME-TAX RETURN FOR THE ASSESSMENT YEAR 2004-05 S HOWING THE ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 10 EXISTENCE OF THAT COMPANY. M/S B. FINLEASE (1) PVT. LTD. ALSO FURNISHED COPY OF ITS PROFIT & LOSS ACCOUNT AND BAL ANCE SHEET AND ALSO A BANK STATEMENT RELATING TO THE CURRENT A CCOUNT WITH THE STATE BANK OF INDORE, ROHINI, DELHI BRANCH. SIM ILARLY THE LEARNED CIT(A) FOUND THAT LETTER DATED 15.12.2008 W AS RECEIVED BY THE AO FROM M/S. SJ. CAPITAL LTD. WHERE ALSO THE CONFIRMATION OF ACCOUNT, COPY OF INCOME-TAX RETURN AND COPY OF PROFIT & LOSS ACCOUNT AND BALANCE-SHEET OF M/S. SJ. CAPITAL LTD. WERE FURNISHED. 5.4. IN THE CASE OF M/S LAXMAN INDUSTRIAL RESOURCES LTD. (SUPRA), THUS THE ITAT HAS HELD THE SALE OF SHARES SOLD TO THE ABOVE TO CONCERNS M/S S.J. CAPITAL LTD. AND M/S B. FINLEASE INDIA PVT. LTD. WE RE GENUINE. THE IMPUGNED YEARS IN ASSESSEES CASE ARE 2002-03 AND 2 003-04. THE CONCERNS WHICH ARE GENUINE IN A.Y. 2003-04 IN ONE CASE, CANN OT BE ASSUMED FOR A.Y. 2002-03 TO BE AS NOT GENUINE IN ASSESSEES CASE. TH US, THE ASSUMPTIONS OF LD. ASSESSING OFFICER STAND TOTALLY DEMOLISHED, NOT ON LY FROM THE FACTS AND DOCUMENTS PRODUCED BY THE ASSESSEE TO CORROBORATE T HE TRANSACTIONS AND THE OBSERVATIONS OF ITAT IN M/S LAXMAN CASE IN RESPECT OF THE SAME PURCHASERS OF SHARES INDUSTRIAL RESOURCES LTD. (SUPRA). THE OR DER OF CIT(A) IS RELIED ON. 5.5. LD. COUNSEL FURTHER CONTENDS THAT THE SHARE TR ANSACTIONS TOOK PLACE PRIOR TO 31-3-2003 WHEREAS THE ASSESSMENT FOR A.Y. 2002-03 HAS BEEN MADE AFTER SIX YEARS I.E. ON 29-12-2009. THE EXACT INFOR MATION DESIRED BY THE ASSESSING OFFICER COULD NOT BE PRODUCED DUE TO ELAP SE OF TIME AND IT WAS NOT POSSIBLE FOR THE ASSESSEE TO PROCURE THAT INFORMATI ON SO LATE FOR WHICH NO ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 11 ADVERSE INFERENCE CAN BE DRAWN. THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER WILL TURN A BLIND EYE TO THE FACTS AND DOCU MENTS FURNISHED BY THE ASSESSEE AND SUMMARILY ASSUME WHAT IS CONTRARY TO T HE RECORD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD. FACTS HAVE BEEN NARRATED IN DETAIL ABOVE. I T HAS NOT BEEN DISPUTED THAT THE ASSESSEE IS SHARE TRADING COMPANY. THE IMPUGNE D SALE OF SHARES TO M/S S.J. CAPITAL LTD. AND M/S B. FINLEASE INDIA PVT. LT D. HAS BEEN EFFECTED OUT OF THE STOCK IN TRADE OF THE ASSESSEE. THE PAYMENTS FO R REALIZATION OF SALE OF SHARES HAS BEEN RECEIVED THROUGH BANKING CHANNELS. ALL THE CORRESPONDING ENTRIES ARE INCORPORATED IN THE BOOKS OF ACCOUNTS, WHICH ARE NOT DISPTUED. IN THE CASE OF M/S LAXMAN INDUSTRIAL RESOURCES LTD. ( SUPRA) FOR THE SAME ASSESSMENT YEAR THE ITAT, UNDER SAME FACTS AND CIRC UMSTANCES, HAS HELD THE SALE OF SHARES TO THESE CONCERNS TO BE GENUINE. REL YING ON ITAT ORDER IN THE CASE OF M/S AKSHAY PORTFOLIO (P) LTD. (SUPRA) AND HONBLE DELHI HIGH COURT JUDGMENT IN THE CASE OF MEDSHAVE HEALTH CARE LTD(SUPRA), WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) ON THE ISSUE IN QU ESTION. ACCORDINGLY, ORDER OF CIT(A) ON THE ISSUE FOR THE ASSESSMENT YEARS IN QUESTION IS UPHELD. 6.1. COMING TO THE ISSUE OF ADDITION ON ACCOUNT OF COMMISSION PAID TO ENTRY OPERATOR, RAISED IN A.Y. 2003-04, SINCE WE HA VE UPHELD THE ORDER OF CIT(A), DELETING THE ADDITION MADE ON ACCOUNT OF AC COMMODATION ENTRY, THE ITA NOS. 534 & 535/DEL/12 GANESH LEASEFIN (P) LTD. 12 ISSUE OF PAYMENT OF POSSIBLE COMMISSION DOES NOT SU RVIVE. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) ON THE ISSUE IN QUESTION IN DELETING THE ADDITION. 6.2. AS REGARDS THE ISSUE OF ADDITION ON ACCOUNT OF EXPENSES U/S 14A RAISED FOR A.Y. 2003-04, THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION VARIOUS CASE LAWS; FACTS AND CIRCUMSTANCES OF THE CASE, RESTRI CTED THE PROPORTIONATE DISALLOWANCE U/S 14A OF THE ACT TO RS. 5,000/-. IN OUR VIEW THE REASONS GIVEN BY THE CIT(A) IN ALLOWING PART RELIEF ARE JUSTIFIED , WE SEE NO REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THE ISSUE IN QU ESTION. 7. IN THE RESULT, REVENUES APPEALS FOR BOTH THE AS SESSMENT YEARS IN QUESTION STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20-09-2013. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20TH SEPT. 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR