DCIT, New Delhi V. M/s. Senorita Enterprises Pvt. Ltd., New Delhi

ITA 5388/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7361 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Bogus Share capital; Principle of natural justice; Deemed to accrue or arise in india; Question of law; Tangible material; Difference of opinion; Accommodation entries; Competent authority; Onus to prove; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 143(3); 133(6); 143(1); 250; 147; 131; 68; 148; 15

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 5388/DEL/2015 A.Y. : 2007-08 DCIT, CIRCLE 23(2), NEW DELHI ROOM NO. 248, C.R. BUILDING, I.P. ESTATE, NEW DELHI 11 0002 VS. SENORITA ENTERPRISES PVT. LTD., V-6/1, FIRST FLOOR, GREEN PARK EXTEN., NEW DELHI 110016 (PAN : AAJCS7373P) (ASSESSEE) (RESPONDENT) REVENUE BY : SH. AMIT KATOCH, SR. DR. ASSESSEE BY : SH. YOGESH JAGIA, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 10.6.2015 OF THE LD. CIT(A)-8, NEW DELHI RELE VANT TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AO HAS WR ONGLY ASSUMED THE JURISDICTION OVER THE ASSESSEE U/S. 148 OF THE I.T. ACT. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF R S. 4,60,00,000/- MADE BY THE AO U/S. 68 OF THE I.T. AC T. III) THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE O R DURING THE HEARING OF HIS APPEAL. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FI LED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 6,43,630/-, W HICH WAS PROCESSED BY THE ASSESSING OFFICER U/S. 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) ON 27.2.2009. AO NOTED IN THE ASSESSMENT ORD ER THAT THE DIRECTORATE OF INCOME TAX (INVESTIGATION)-I, NEW D ELHI VIDE ITS LETTER DATED 19.3.2014 INFORMED THE ASSESSING OFFICER THA T INVESTIGATION WING CARRIED OUT ENQUIRIES IN THE MATTER OF THE ASSESSEE BASED UPON THREE STRS IN THE NAME OF VALIANT AGENCIES, SENORITA ENTERPRIS ES PVT. LTD. AND ENLIVEN DEVELOPERS PVT. LTD. DATED 5.3.2018, DETAIL S OF WHICH, AO HAS REPRODUCED IN THE ASSESSMENT ORDER AT PAGE NO. 2. ON THE BASIS OF THESE STRS AND UPON FURTHER INVESTIGATION CONDUCTED BY TH E INVESTIGATION WING, IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD TAKEN SHARE CAPITAL OF RS. 465.98 LACS FROM INVESTEE COMPANIES, BUT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS REMAINED DOUBTFUL , IN VIEW OF THE VARIOUS REASONS MENTIONED BY THE AO IN THE ASSESSMENT ORDER AT PAGE NO. 1 TO 3. ON THE BASIS OF THE AFORESAID INFORMATION, THE AO R ECORDED THE REASONS U/S. 147 OF THE ACT FOR REOPENING OF THE CASE, WHIC H THE AO HAS REPRODUCED IN THE ASSESSMENT ORDER AT PAGE NO. 3-4. AFTER OBTAINING THE APPROVAL FROM THE COMPETENT AUTHORITY, AO ISSUED NO TICE U/S. 148 OF THE ACT ON 25.3.2014 AND IN RESPONSE TO THE SAME, ASSES SEE FILED A LETTER DATED 28.3.2014 REQUESTED TO ACCEPT THE RETURN FILE D BY THE ASSESSEE U/S. 139(1) OF THE ACT. AO PROVIDED THE REASONS TO THE ASSESSEE AND ISSUED NOTICE U/S. 143(2) OF THE I.T. ACT DATED 11.6.2014 AND FIXED THE CASE OF THE ASSESEE FOR HEARING ON 23.6.2014. ON 23.6.2014 ON THE REQUEST OF THE ASSESSEE, SATISFACTION OBTAINED U/S. 151(2) WAS PROVIDED AND ASSESSEE WAS DIRECTED TO COMPLY WITH NOTICE U/S. 14 3(2) ON 24.6.2014. SUMMONS U/S. 131(1) OF THE ACT WERE ISSUED TO BOTH THE DIRECTORS FOR 24.6.2014. THE NOTICE OF THE SAME REMAINED UNATTEN DED BECAUSE OF WHICH FINAL SHOW CAUSE NOTICE WAS SERVED UPON THE A SSESSEE ON 25.6.2014 DIRECTED IT TO APPEAR ON 26.6.2014 AT 10 AM AND TO SHOW CAUSE AS TO WHY AN ADDITION OF RS. 4,65,98,000/- RECEIVED FROM VARIOUS 3 COMPANIES AS MENTIONED IN THE AFORESAID NOTICE ALO GNWITH THEIR PAN NUMBER BE NOT MADE TO THE INCOME OF THE ASSESSEE. 3.1 ON 27.6.2014, AR OF THE ASSESSEE APPEARED AND F ILED THE OBJECTIONS AGAINST THE NOTICE ISSUED U/S. 148 OF THE ACT AND F URNISHED THE REPLY TO THE FINAL SHOW CAUSE NOTICE DATED 25.6.2014. HE RE QUESTED FOR INSPECTION OF THE RECORD ON 24.6.2014 AND FURTHER REQUESTED FO R COPY OF THE SATISFACTION AS RECEIVED IN PROFORMA FROM ADDL. C OMMISSIONER OF INCOME TAX, RANGE-8, NEW DELHI AND THE COUNSEL OF THE AS SESSEE WAS ALLOWED INSPECTION AND ALSO PROVIDED COPY OF THE SATISFACTI ON OBTAINED U/S. 151(2) OF THE ACT. THEREAFTER, PROCEEDINGS WERE ADJOURNED FOR 30.6.2014 AND ON 27.6.2014 AT ABOUT 5.00 PM LD. COUNSEL FOR THE ASSE SSEE APPEARED AND FILED SUPPLEMENTARY OBJECTIONS WHICH WERE PRIMARILY BASED ON THE INSPECTION OF RECORD CARRIED OUT BY HIM IN THE MORN ING OF THE SAME DATE. ON 30.6.2014 LD. COUNSEL FOR THE ASSESSEE FILED A L ETTER PROVIDING DETAILS AS ASKED FOR BY THE ORDER SHEET ENTRY DATED 23.6. 2014 AND NOTICE DATED 25.6.2014. AO DISPOSED OFF THE OBJECTIONS FILED B Y THE ASSESSEE ON 27.6.2014 ALONGWITH SUPPLEMENTARY OBJECTIONS ON THE SAME DATE I.E. 27.6.2014 AS MENTIONED IN THE ASSESSMENT ORDER DATE D 30.6.2014 AT PAGE NO. 6-8 AND FIXED THE CASE OF THE ASSESSEE FO R HEARING ON 30.6.2014 AT 10 AM AND INFORMED THAT NO FURTHER ADJOURNMENT W OULD BE POSSIBLE. SOME DOCUMENTS WERE FILED BY THE ASSESSEES COUNSEL ON 30.6.2014 OF SHARE HOLDERS AS ON 31.3.2007 ALONGWITH THEIR CONFI RMATIONS, BANK STATEMENTS, ITR ACKNOWLEDGEMENTS, BALANCE SHEET AS ON 31.3.2007 ETC. SO AS TO JUSTIFY THREE INGREDIENTS AS REQUIRED U/S . 68 OF THE I.T. ACT AS IDENTITY, GENUINENESS, CREDITWORTHINESS ETC. OF THE INVESTORS. AFTER EXAMINING ALL THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE AND THE OBJECTION FILED BY THE ASSESSEE, THE AO HAD MADE TH E ADDITION OF RS. 4,60,00,000/- U/S. 68 OF THE ACT ON THE BASIS O F THE DETAILS FORWARDED BY THE INVESTIGATION WING, VIDE ORDER DATED 30.6.20 14 PASSED U/S. 143(3) R.W.S. 147 OF THE I.T. ACT, 1961. AGGRIEVED BY THE AFORESAID ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED 4 ORDER DATED 10.6.2015 HAS ALLOWED THE APPEAL OF TH E ASSESSEE ON THE MERIT AS WELL AS ON THE LEGAL GROUND. AGAINST THE IMPUGNED ORDER DATED 10.6.2015, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 4. AT THE TIME OF HEARING, LD. SR. DR RELIED UPON T HE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUND S OF APPEAL. IN ADDITION TO THAT LD. DR HAS ALSO FILED THE WRITTEN SUBMISSIONS IN WHICH HE HAS SUPPORTED THE ORDER OF THE AO WITH THE HELP OF VARIOUS CASE LAWS MENTIONED IN THE SAID WRITTEN SUBMISSION. FOR THE SAKE OF CONVENIENCE, THE THREE WRITTEN SUBMISSIONS FILED BY THE LD. SR. DR ARE REPRODUCED AS UNDER :- SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. THE FOLLOWING POINTS MAY KINDLY BE TAKEN INTO CONSI DERATION IN RESPECT OF THE ABOVE MENTIONED PROCEEDINGS: THE ASESSEE HAS TAKEN CERTAIN PLEADINGS BEFORE THE LD. CIT(A) WHICH ARE BEING RESPONDED TO AS BELOW: AT PAGE 5 OF THE ORDER OF CIT (A), AND THEN AGAI N AT PAGE 9, THE ASSESSEE HAS MENTIONED THAT THE AO HAS BEEN DIRECTED BY THE INV. WING TO INITIATE REASSESSMENT PROCEEDINGS U/S 148. THE CONTENTION IS FACTUALLY INCORRECT. THE EXACT WORDINGS IN THIS REGARD ARE PLACED AT PAGE 7 OF THE ORDER ITSELF WHICH, INTER ALIA, READS THAT THE ITO HAS BEEN DIRE CTED TO REQUEST THE AO TO CONSIDER THE CASE FOR REOPENING B ASED ON THE FINDINGS CONTAINED IN THE REPORT OF THE ITO. HE NCE IT IS CLEAR THAT THERE IS NO DIRECTION WHATSOEVER TO THE AO REGARDING REOPENING AND THE SAME IS BEING MIS-REPRE SENTED BY THE ASSESSEE. AT PAGE 9, THE ASSESSEE HAS CONTENDED THAT RE- ASSESSMENT PROCEEDINGS BASED ONLY ON TWO DOCUMENTS - STR AND LETTER CONTAINING THE REPORT OF ITO(LNV) ARE NO T ENOUGH FOR REOPENING. IN THIS REGARD, IT MAY BE MENTIONED THAT THERE ARE A PLETHORA OF DECISIONS WHERE IT HAS BEEN HELD THAT INFORMATION RECEIVED FROM THE INVESTIGATION WING IS A VALID REASON FOR REOPENING OF CASES. SUPPORTING CASE LAWS IN THIS REGARD ARE ALSO BEING SUBMITTED. THE ASSESSEE HAS PROJECTED AS IF THE ONLY BASIS OF REOPENING IS THAT THE THREE MENTIONED COMPANIES ARE SITUATED AT THE SAME ADDRESS. THE SAME IS NOT TRUE. THE REAS ONS WHY ASSESSEES CLAIMS ARE NOT FOUND SUFFICIENT AND WARR ANT FURTHER 5 ENQUIRY ARE CLEARLY EXPLAINED BY THE ITO. THE BELIE F OF THE AO IS BASED ON HIS OWN APPLICATION OF MIND TO THE ELAB ORATE DISCUSSION BY THE ITO(LNV) IN THIS REGARD. AT PAGE 10 OF THE ORDER, THE ASSESSEE HAS CLAIME D THAT THE FOLLOWING REASONS MENTIONED IN THE RELEVANT REP ORT ARE NOT ENOUGH TO WARRANT REASON TO BELIEVE FOR REOPENING: 1. HUGE RESERVES WITH NO CORRESPONDING BUSINESS ACTIVITY; 2 ) NON- FURNISHING OF P&L A/C BY MOST INVESTING COMPANIES; 3) PROFIT SHOWN BY ALL INVESTING COMPANIES IS EITHER VERY SMA LL OR LOSS; 4) MOST INVESTEE COMPANIES NOT DOING ANY WORTHWHILE BUSINESS; 5) MOST INVESTEE COMPANIES APPEAR TO BE S HAM AND EXISTING ONLY ONPAPERS, HOW HAVE THEY RAISED SUCH H UGE SHARE PREMIUM, AND 6) THE CASE ONLY HAVING BEEN PROCESSED EARLIER U/S 143(1) AND NO ENQUIRY U/S 143(3) HAVING BEEN DO NE. .. IN THIS REGARD, IT MAY BE MENTIONED HERE THAT RECENT D ECISIONS OF THE HONBLE SUPREME COURT, THE HONBLE JURISDICTION AL HIGH COURT AS WELL AS THE HONBLE DELHI TRIBUNAL VERY CL EARLY DEMONSTRATE THE IMPORTANCE OF THESE FACTORS IN ARRI VING AT THE TRUE STATE OF AFFAIRS AS REGARDS THE SHARE PREMIUM RECEIVED. PR. CIT (CENTRAL-1) VS NRA IRON & STEEL PVT LTD (SC ] ITO (EXEMPTION), WARD 7(4), NEW DELHI VS. M/S SYNER GIE FINLEASE PVT LTD. [DELHI TRIB ] ITO WARD-9(1), NEW DELHI VS. SOHAIL FINANCIALS LTD [DELHI TRIB.] THE SECOND REASON MENTIONED BY THE ASSESSEE IS TH AT THERE IS NO TANGIBLE MATERIAL FOR FORMING REASON T O BELIEVE. IN THIS REGARD, AS SUBMITTED ABOVE, THERE WERE NUMEROU S GAPS IN THE SUBMISSIONS MADE AND DETAILS PROVIDED BY THE AS SESSEE TO THE INV. WING WHICH FORMED THE REASON TO BELIEVE. H ERE IT MAY BE MENTIONED, AS HAS BEEN DEALT WITH SUBSEQUENTLY, THAT EVEN UPTO THE APPELLATE STAGE, THERE IS NO SUFFICIENT MA TERIAL AVAILABLE TO GRANT ANY BENEFIT OF DOUBT TO THE ASSE SSEE IN ITS TRANSACTIONS AND THAT IN LIGHT OF THE MATERIAL AVAI LABLE, THE ONLY CONCLUSION POSSIBLE IS THE CULPABILITY OF THE ASSESSEE U/S 68 AS ARRIVED AT BY THE AO. IT MAY ALSO BE MENTIONED IN THIS REGARD THAT AT T HE STAGE OF RE-OPENING, SUFFICIENY OR OTHERWISE OF THE MATERIAL IS NOT TO BE SEEN. THE ONLY REQUIREMENT IS THAT THERE SHOULD BE PRIMA FACIE MATERIAL ON THE BASIS OF WHICH THE DEPA RTMENT COULD REOPEN THE CASE. HONBLE SUPREME COURT HAS CL EARLY SPELT IT OUT IN THE CASE OF RAYMOND WOOLLEN MILLS 2 36 ITR 34. UNDER THESE CIRCUMSTANCES, NO REFUGE LIES TO THE AS SESSEE AS SOUGHT BY IT UNDER CIT VS. ORIENT CRAFT LTD. 6 THE ASSESSEE HAS CLAIMED IN THE THIRD GROUND AT P AGE 12 OF THE IMPUGNED ORDER THAT POWER U/S 147 HAS BEEN U SED AS A SUBSTITUTE TO 143(2). IT NEEDS NO MENTION HERE THAT AS PER THE PROVISIONS OF THE INCOME-TAX ACT, FOR A RETURN PERT AINING TO AY 2007-08, THE ONLY MANNER PERMITTED BY THE ACT TO DE TERMINE THE CORRECT INCOME IN 2014 IS BY WAY OF SEC 147/148 . HOW 143(2) COULD HAVE BEEN THE RECOURSE IN SUCH CIRCUMS TANCES IS BEYOND ANY EXPLANATION UNDER THE EXTANT LAW. IT MAY ALSO BE MENTIONED HERE THAT PROCESSING OF RETURN U/S 143(1) IS NOT ASSESSMENT, AND HENCE WHERE AN IS SUE HAS NOT EVER BEEN THE SUBJECT MATTER OF ANY SCRUTINY WH ATSOEVER UNDER ANY ASSESSMENT PROCEEDINGS, IT CANNOT BE CLAI MED THAT THE SAME IS NOT RELEVANT WHILE ACQUIRING JURISDICTI ON TO REOPEN THE CASE. ATTENTION IN THIS REGARD IS DRAWN TOWARDS THE HONBLE DELHI HIGH COURT JUDGMENT IN INDU LATA RANG WALA VS. DCIT 384 ITR 337 WHEREIN IT HAS BEEN HELD THAT WHER E INITIAL RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1), IT IS NOT NECESSARY IN SUCH A CASE FOR THE AO TO COME ACROSS SOME FRESH TANGIBLE MATERIAL TO FORM REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE FOURTH GROUND RAISED IS THAT THE SATISFACTIO N OF THE ADDL. CIT IS A PRETENDED SATISFACTION. IN THIS REGA RD, IT MAY BE MENTIONED THAT THE ADDL. CIT HAD THE ENTIRE MATERIA L AVAILABLE AT HIS DISPOSAL WHILE RECORDING HIS SATISFACTION. T HE SAME HAS BEEN PROVIDED TO THE ASSESSEE ALSO DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS. THE FACTS HAVE BEEN CLEARLY SPELLED OUT BY THE AO WHILE PUTTING UP HIS CASE FOR APPROVA L ACCOMPANIED WITH THE DETAILS OF THE CASE SENT BY TH E INVESTIGATION WING. THE DETAILS ARE SELF EXPLANATOR Y AND BASED ON APPRECIATION AND ANALYSIS OF THE SAME, THE ADDL. CIT HAS STATED THAT HE IS SATISFIED THAT IT IS A FIT CASE F OR ISSUANCE OF NOTICE U/S 148. HE HAS NOT MERELY STATED YES BUT CLEARLY STATED THAT HE IS SATISFIED THAT ITS A FIT CASE. I T MAY ALSO BE MENTIONED AGAIN AT THE COST OF REPETITION THAT EXAC T ACCURACY OF THE QUANTUM IN REASONS TO BELIEVE IS NOT REQUI RED AT THE STAGE OF REOPENING AND THE ASSESSEE CANNOT BE ALLOW ED RELIEF ONLY ON THE BASIS THAT THE FINAL AMOUNT ADDED IS DI FFERENT FROM THE AMOUNT BELIEVED TO HAVE BEEN SUBJECT TO TAX, PA RTICULARLY WHEN THE BASIS AND THE TRANSACTIONS INVOLVED WERE O F THE SAME NATURE WITH THE SAME PARTIES AS ALLEGED. THE FIFTH GROUND IS REGARDING THE SPEEDY DISPOSA L OF THE OBJECTIONS ON THE SAME DAY. IN THIS REGARD IT MAY B E MENTIONED HERE THAT WHEN THE ASSESSEE CAN INSPECT T HE RECORD, FILE OBJECTIONS AND SUPPLEMENTARY OBJECTION S ON THE SAME DAY, THERE IS NO REASON WHY THE AO CANNOT DISP OSE OF 7 THE SAME ON THE SAME DAY PARTICULARLY WHEN ALL THE FACTS ARE ALREADY ON RECORD AND THE OBJECTIONS OF THE ASSESEE E ARE OF A REPETITIVE NATURE. THESE WERE ALL A DELAYING TACTIC S ADOPTED BY THE ASSESSEE INSTEAD OF FILING THE RELEVANT DETAILS AND SUBSTANTIATION TO THE AO HOW HIS REASONS TO BELIEVE WERE NOT WELL FOUND. THE ASSESSEE CLAIMS THAT THERE IS VIOLA TION OF THE SETTLED PRINCIPLES OF LAW IN DISPOSING OF THE OBJEC TIONS ALSO. HOWEVER, IT HAS FAILED TO SUBSTANTIATE WHAT THOSE S ETTLED PRINCIPLES ARE AND HOW THEY HAVE BEEN VIOLATED HERE . AT PAGE NO. 13 OF THE IMPUGNED ORDER, IN GROUND NO.2, THE ASSESSEE HAS CLAIMED THAT MANDATORY NOTICE U/S 143(2) HAS NOT BEEN SERVED IN ACCORDANCE WITH GKN DRIVESHA FT. IT MAY BE MENTIONED THAT THE HONBLE COURT HAS ONLY GI VEN A FINDING THAT THE OBJECTIONS MUST BE DISPOSED OFF BE FORE THE AO PROCEEDS WITH THE ASSESSMENT. THE SAME HAS BEEN DON E HERE. THE AO HAS, ON FILING OF LETTER BY ASSESSEE IN RESP ONSE TO THE NOTICE U/S 148, ISSUED A NOTICE U/S 143(2) AS REQUI RED BY LAW. THE LAW NOWHERE REQUIRES THAT THE AO SHOULD KEEP WA ITING FOR THE ASSESSEE TO FILE OBJECTIONS, THEN SUPPLEMENTARY OBJECTIONS, AND ONLY ONCE THE ASSESSEE ASSURES THE AO OF NO FURTHER OBJECTIONS, SHOULD THE AO ISSUE A NOTICE U/ S 143(2). WHAT THE ASSESSEE IS PROPOSING HERE AS A PROCEDURE TO BE FOLLOWED IS NOT ONLY DEVOID OF ELEMENTARY LOGIC BUT HAS NEITHER BEEN PROVIDED FOR UNDER THE ACT NOR DIRECTED BY WAY OF JUDICIAL DECISIONS AS IS BEING CLAIMED HERE. THE AO HAS FOLLOWED THE CORRECT COURSE OF ACTION AND AS PER TH E ENTRY IN THE ORDER SHEET, THE SAID NOTICE HAS BEEN RECEIVED BY THE AR OF THE ASSESSEE. KIND ATTENTION IS DRAWN TO THE HON 'BLE SUPREME COURT DECISION IN THAKORDAS MAGANBHAI PATEL 245 TAXMAN 333 WHERE REOPENING OF ASSESSMENT WAS HELD T O BE VALID DESPITE THE AO NOT PASSING SPEAKING ORDER AGA INST THE OBJECTIONS FILED BY THE ASSESSEE. IT CLEARLY SHOWS THAT THE OBJECTIONS FILED BY THE ASSESSEE DO NOT GO TO THE C ORE OF THE VALIDITY OF THE RELEVANT PROCEEDINGS. THE THIRD GROUND AT PAGE 14 OF THE ORDER TAKEN B Y THE ASSESSEE IS THAT IT HAS DISCHARGED THE BURDEN IN LI GHT OF THE DECISION IN LOVELY EXPORTS. IN THIS CASE, REFERENCE IS DRAWN TO THE RECENT DECISION OF THE HONBLE SUPREME COURT IN NRA IRON (SUPRA), SEVERAL DECISIONS OF THE HIGH COURTS AND O F THE HONBLE TRIBUNAL WHEREIN THE MANNER IN WHICH THE BU RDEN HAS TO BE DISCHARGED BY THE ASSESSEE HAS BEEN CLEARLY S PELLED OUT. THE SAME ARE BEING SUBMITTED HEREWITH. HOW THE ASSE SSEE HAS FAILED TO DISCHARGE ITS BURDEN AND HOW THE CIT( A) HAS FAILED NOT ONLY TO APPRECIATE THE FACTS PROPERLY, B UT ALSO TO MAKE ANY REASONABLE ENQUIRY AT HIS END IS ALSO BEIN G DISCUSSED IN THIS SUBMISSION. 8 THE LD CIT(A) IN HIS FINDINGS AT PAGE 16 ONWARDS OF THE IMPUGNED ORDER HAS STATED AS FOLLOWS: 1. FROM THE LETTER DATED 5-11-2012, IT APPEARS THA T THE INVESTIGATION WING HAS ENQUIRED ALL THE BANK DEPOSI TS OF THE APPELLANT - THE ID. CIT(A) HAS OMITTED TO MENTION A ND ALSO TO UNDERSTAND THAT IN ORDER TO DETERMINE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS U/S 68, IT IS IMPE RATIVE TO HAVE A DETAILED ANALYSIS OF THE BANK DETAILS OF THE INVESTORS AND MERELY STATING THAT FROM THE BANK ACCOUNT OF TH E ASSESSEE, IT CAN BE SEEN THAT AMOUNTS HAVE COME THR OUGH BANKING CHANNELS IS NOT ENOUGH. 2. THE LD. CIT(A) HAS STATED THAT VIDE LETTER DATE D 16.11.2012, THE ASSESSEE HAS FURNISHED ALL RELEVANT DETAILS AND ALSO FURNISHED COPY OF FORM NO. 2. THE SAID LET TER IS PLACED AT PAGES 83-87 OF THE PAPER BOOK FILED BY TH E ASSESSEE. A PERUSAL OF THE SAME WILL REVEAL THAT IT CONTAINS NOT EVEN ONE DETAIL WHICH IS RELEVANT FOR DETERMINING THE ISSUE AT HAND I.E. THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF T HE INVESTEE COMPANIES. IT HAS AGAIN MENTIONED ITS OWN BANK STAT EMENT, WHICH, AS PER THE SETTLED POSITION, IS NOT SUFFICIE NT TO DISCHARGE ITS ONUS. NO OTHER RELEVANT DETAIL HAS BE EN SUBMITTED IN THIS LETTER. HOW THE CIT(A) CONSIDERS THIS LETTER AS SUPPORTING THE CAUSE OF THE ASSESSEE IS BEYOND COMPREHENSION. IT MAY ALSO BE MENTIONED THAT APPARE NTLY THE SAME HAVE NOT BEEN FILED BEFORE THE AO IN RESPONSE TO HIS QUERIES EVEN THOUGH THE ASSESSMENT PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND THE ASSESSEE OUGHT TO F ILE RELEVANT DETAILS IN RESPONSE TO THE QUERIES OF THE AO. IT MAY ALSO BE MENTIONED THAT IN THE PAPER BOOK FIL ED BY THE ASSESSEE, IT HAS NOT EVEN MENTIONED WHICH DOCUMENTS WERE SUBMITTED BEFORE THE AO AND WHICH WERE SUBMITTED BE FORE THE CIT(A). UNDER THESE CIRCUMSTANCES, IT IS NOT UNDERS TOOD AS TO HOW THE CIT(A) HAS EVEN ATTEMPTED TO GIVE CREDIT TO THE ASSESSEE IN RESPECT OF THE DOCUMENTS WHICH ARE CLAI MED TO HAVE BEEN FILED BEFORE THE ITO(LNV.) AND THERE IS N OT EVEN A MENTION WHETHER THEY WERE EVER BROUGHT TO THE NOTIC E OF THE AO AT ALL. IT CLEARLY SHOWS NON-APPLICATION OF MIND BY THE CIT(A) WHO HAS SIMPLY REITERATED THE CLAIM OF THE A SSESSEE WITHOUT USING HIS OWN ANALYSIS BOTH REGARDING THE ADMISSIBILITY OF SUCH DOCUMENTS AS WELL AS THEIR ME RIT. 3. THE LD. CIT(A) HAS FURTHER GIVEN CREDIT TO THE ASSESSEE THAT VIDE LETTER DATED 29.11.2012, IT HAS PROVIDED NECESSARY DETAILS OF SHARE APPLICATION MONEY ALONG WITH COPY OF BALANCE 9 SHEET FOR THE YEAR FY 2008-09 TO 2011-12. THE SAID LETTER IS PLACED AT PAGES 88-93 OF THE PAPER BOOK. IT MAY BE MENTIONED THAT THE SAID LETTER DOES NOT CONTAIN ANY DETAILS WHICH CAN THROW LIGHT ON THE GENUINENESS OF THE TRA NSACTIONS AND THE CREDITWORTHINESS OF THE INVESTING COMPANIES . IT IS IMPOSSIBLE TO COMPREHEND THE MERIT NOTICED BY THE C IT(A) IN SUCH DOCUMENTS WHICH ARE ESSENTIALLY ONLY SELF-SERV ING DOCUMENTS READILY AVAILABLE IN PUBLIC DOMAIN. IT MAY ALSO BE MENTIONED THAT IN THE PAPER BOOK FIL ED BY THE ASSESSEE, IT HAS NOT EVEN MENTIONED WHICH DOCUMENTS WERE SUBMITTED BEFORE THE AO AND WHICH WERE SUBMITTED BE FORE THE CIT(A). UNDER THESE CIRCUMSTANCES, IT IS NOT UNDERS TOOD AS TO HOW THE CIT(A) HAS EVEN ATTEMPTED TO GIVE CREDIT TO THE ASSESSEE IN RESPECT OF THE DOCUMENTS WHICH ARE CLAI MED TO HAVE BEEN FILED BEFORE THE ITO(LNV.), AND THERE IS NOT EVEN A MENTION WHETHER THEY WERE EVER BROUGHT TO THE NOTIC E OF THE AO AT ALL. IT CLEARLY SHOWS NON-APPLICATION OF MIND BY THE CIT(A) WHO HAS SIMPLY REITERATED THE CLAIM OF THE A SSESSEE WITHOUT USING HIS OWN ANALYSIS BOTH REGARDING THE ADMISSIBILITY OF SUCH DOCUMENTS AS WELL AS THEIR ME RIT. 4. THE LD. CIT(A) HAS MENTIONED THAT THE AO DID NO T MAKE ANY ENQUIRIES HIMSELF, AND HAS REPRODUCED THE CONTENTS OF THE LETTER OF THE INVESTIGATION WING. AS DISCUSS ED IN THIS NOTE BEFORE, A PERUSAL OF THE NOTE RECEIVED FROM TH E INVESTIGATION WING REVEALED THAT DETAILS ASKED FOR BY THE ITO(LNV.) WERE NOT PROVIDED COMPLETELY, AND WHATEVE R DETAILS WERE PROVIDED ONLY SHOWED THAT THE INVESTING COMPAN IES DID NOT HAVE THE FINANCIAL CAPACITY AND REQUISITE STREN GTH TO MAKE HUGE INVESTMENTS IN THE ASSESSEE COMPANY. IT WAS AL SO MENTIONED THAT THE ASSESSEE HAD FAILED TO PROVIDE A NY JUSTIFICATION AS TO HOW THE EXORBITANT SHARE PREMIU M OF RS. 240/- WAS COMMANDED BY THE NEWLY FORMED COMPANY. IT WAS IN LIGHT OF THESE DETAILS THAT THE AO ARRIVED AT HI S OWN CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT FOR W HICH HE FORMED HIS REASON TO BELIEVE. IN LIGHT OF THE FINDI NGS OF THE INV. WING, IT WAS NOT NECESSARY FOR THE AO TO CONDU CT FURTHER ENQUIRY IN ORDER TO ARRIVE AT HIS SATISFACTION. IT MAY BE MENTIONED AGAIN THAT AT THE TIME OF REASSESSMENT, T HE SUFFICIENCY OR COMPLETE ACCURACY IS NOT REQUIRED AN D ONLY A PRIMA FACIE CASE NEEDS TO BE MADE AS HAS BEEN HELD BY THE HONBLE SUPREME COURT IN RAYMOND WOOLLEN MILLS (SUP RA). THE AO HAD SUFFICIENT DETAILS AVAILABLE AT HIS DISPOSAL FROM WHICH HE FORMED HIS OPINION. 5. THE LD. CIT(A) HAS GIVEN BENEFIT TO THE ASSESSE E EVEN AS REGARDS THE DIFFERENCE IN THE AMOUNT MENTIONED R EGARDING 10 SHARE PREMIUM IN THE REASONS RECORDED AND THE FINAL ASSESSMENT ORDER. THE CIT(A) APPEARS TO HAVE ONLY R EITERATED THE CLAIM OF THE ASSESSEE WITHOUT APPRECIATING THE CORRECT POSITION OF LAW. THE ABSOLUTE ACCURACY OF THE FINAL AMOUNT IS NOT A PRE-REQUISITE AT THE TIME OF OPENING. THE INV ESTING COMPANIES ARE CORRECTLY APPRECIATED, THE NATURE OF TRANSACTIONS IS CORRECTLY RECORDED, THE SHARE PREMI UM HAS BEEN CORRECTLY MENTIONED AND THE DIFFERENCE APPEARS TO BE ONLY EMANATING FROM THE AMOUNT OF FACE VALUE OF THE SHARES. EVEN OTHERWISE, THIS CANNOT FORM A BASIS OF IMPUGNI NG THE ASSESSMENT PROCEEDINGS AND THE CONSEQUENT ORDER. 6. THE LD CIT(A) HAS STATED THAT THE AO HAS NOT IN DICATED THAT HOW THE CHARGING OF HEAVY PREMIUM INDICATES ESCAPEMENT OF INCOME. THE CIT HAS CONVENIENTLY IGNO RED THE FACT THAT JUSTIFICATION OF HIGH SHARE PREMIUM IS VE RY RELEVANT IN CASES LIKE THESE TO UNDERSTAND THE GENUINENESS O F THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE INVESTORS. THE AO HAS ON MORE THAN ONE OCCASION SOUGHT JUSTIFI CATION FROM THE ASSESSEE IN THIS REGARD, WHICH HAS BEEN IG NORED BY THE CIT(A). 7. THE CIT(A) HAS MADE A MENTION OF CHART AT PAGE 13 OF THE IMPUGNED ORDER SAYING THAT SEQUENCE OF EVENTS S HOWS THAT SUFFICIENT OPPORTUNITY WAS NOT GIVEN TO THE AS SESSEE TO FILE THE OBJECTIONS. IN THIS REGARD IT MAY BE MENTI ONED, FIRSTLY THAT ASSESSEE NOT ONLY FILED OBJECTIONS BUT SUPPLEM ENTARY OBJECTIONS ALSO WHICH WERE DULY DISPOSED OF. THE CI T CLAIMS THAT THE OBJECTIONS DISPOSED OF ARE NOT SPEAKING ON E. HOWEVER, AS CAN BE SEEN THAT WHILE THE OBJECTIONS M AY BE LENGTHY, THE MAIN ISSUE THAT THEY RAISE ARE THE SAM E AND HAVE BEEN ADDRESSED BOTH TIMES BY THE AO. 8. THE CIT(A) HAS STATED THAT AS PER GKN DRIVESHAF T, A NOTICE WAS REQUIRED U/S 143(2) EVEN AFTER THE DISPO SING OF OBJECTIONS. THE PREMISE IS WRONG. A NOTICE U/S 143( 2) IS REQUIRED AFTER THE ASSESSEE FILES A RETURN IN RESPO NSE TO NOTICE U/S 148 OR WRITES A LETTER TO THIS EFFECT. THE AO H AS ISSUED THE SAME PROPERLY. A SERIES OF OBJECTIONS THAT THE ASSE SSEE MAY KEEP FILING TILL THE LATER PART OF THE PROCEEDINGS CANNOT BE AN EXCUSE TO PREVENT THE AO FROM ACQUIRING JURISDICTIO N TO ASSESS THE INCOME OF THE ASSESSEE. THE ARGUMENT IS FALLACI OUS AND SO IS THE ACCEPTANCE OF THE SAME BY CIT(A). 9. THE CIT(A) STATES THAT THE AO HAS NOT MADE ANY ENQUIRIES OTHER THAN ASKING JUSTIFICATION FOR THE H IGH SHARE PREMIUM. THE CLAIM IS TOTALLY WRONG AND CLEARLY SHO WS TOTAL NON-APPLICATION OF MIND BY THE LD. CIT(A). A PERUSA L OF THE 11 ORDER SHEET DATED 23.06.2014 CLEARLY PROVES THAT SE VERAL DETAILS WERE ASKED FROM THE AO WHICH INCLUDED-A) JU STIFICATION FOR SHARE PREMIUM, B) COPIES OF THE P& L A/C OF THE INVESTING COMPANIES, C) NOTE ON BUSINESS OF THE INVESTING COM PANIES, D) COPIES OF BANK A/C SHOWING THE DETAILS OF INVESTMEN TS, E) PRODUCE THE DIRECTORS OF THE INVESTING COMPANIES. F URTHER SUMMONS U/S 131 WERE ALSO ISSUED IN CASE OF CERTAIN DIRECTORS OF INVESTING COMPANIES. THE LD. CIT(A) APPEARS TO H AVE ONLY RELIED ON THE CLAIM OF THE ASSESSEE WITHOUT MAKING ANY EFFORT WHATSOEVER TO DETERMINE THE TRUTH. IT APPEARS THAT HE HAS NOT EVEN MADE AN EFFORT TO UNDERSTAND THAT IF NO ENQUIR IES WERE MADE BY THE AO, HOW DID THE ASSESSEE FILE ITS REPLY DATED 30.06.2014 AND IN RESPONSE TO WHAT. 10. THE LD. CIT(A) HAS ARRIVED AT THE CONCLUSION TH AT THE REPLY FILED BY THE ASSESSEE ON 30.06.2014 FULFILLS ALL THE REQUIREMENTS OF SECTION 68. HOWEVER, HE HAS NOT MAD E EVEN A SLIGHT EFFORT TO EXAMINE THE SAID REPLY ON MERITS. ACCORDING TO HIM, JUSTIFICATION OF CHARGING HIGH PREMIUM CAN BE ASKED FROM THE INVESTING COMPANIES AND NOT TO BE EXAMINED VIS A VIS THE ASSESSEE. IT APPEARS THAT THE RATIO OF NUMEROUS CAS ES INCLUDING NR PORTFOLIO, NIPUN BUILDERS, NAVODYA CAS TLE, NOVA PROMOTERS, ULTRA MODERN EXPORTS AND NDR PROMOTERS ( ALL DECISIONS OF HONBLE DELHI HIGH COURT) HAS NOT BEEN EXPLORED BY THE LD. CIT (A). IT IS FOR SUCH GLARING OMISSION S BY THE CIT(A) THAT THE HONBLE SUPREME COURT OF INDIA IN N RA IRON HAS RECENTLY SPELLED OUT IN UNEQUIVOCAL TERMS HOW M ATTERS RELATING TO EXORBITANT SHARE PREMIUMS HAVE TO BE AP PRECIATED. 11. IN SO FAR AS THE DETAILS SUBMITTED BY THE ASSE SSEE VIDE LETTER DATED 30.06.2014 ARE CONCERNED, THE FOLLOWIN G MAY BE NOTED: (I) THE JUSTIFICATION REGARDING EXORBITANT SHARE PR EMIUM IS THAT SHARES OF KOUTONS WERE SOLD IN APRIL AND PROFI T OF RS. 125 PER SHARE WAS EARNED AS STCG. IT MAY BE MENTIONED H ERE THAT NO DETAIL WHATSOEVER HAS BEEN FILED WHICH CAN SUBSTANTIATE HOW A NEW COMPANY CAN COMMAND SUCH A PREMIUM. AS REGARDS EARNING PROFIT ON SALE OF SHARE S IS CONCERNED TO ESTABLISH THE CREDENTIALS, IT MAY BE N OTED THAT THE SHARE PREMIUM HAS BEEN RECEIVED IN FY 2006-07 W HICH WAS BEFORE ANY CLAIMED STCG WAS EARNED. IT CAN BE APPRECIATED THAT ONE CANNOT TAKE PREMIUM BASED ON A N EVENT WHICH HAS NOT EVEN HAPPENED AT THE TIME THE INVESTM ENT OF PREMIUM HAS BEEN RECEIVED BY THE ASSESSEE COMPANY. THAT THE LD. CIT(A) HAS GIVEN CREDENCE TO THIS ARGUMENT AND INCORPORATED THE SAME IN HIS FINDINGS CLEARLY SHOWS THAT HE HAS NOT ANALYSED THE SUBMISSIONS OBJECTIVELY WHILE ARRIVING AT 12 HIS FINDING. THE ASSESSEE HAS FAILED TO PRODUCE EVE N ONE DIRECTOR EVEN THOUGH CATEGORICALLY ASKED FOR BY THE AO. THERE IS NOT EVEN A MENTION REGARDING THAT IN THE LETTER. HERE IT IS PERTINENT TO RESPOND TO THE ATTEMPT BY THE ASSESSEE TO SEEK REFUGE IN LOVELY EXPORTS CASE. ASSESSEE IS A PRIVAT E LIMITED COMPANY WHERE INVESTMENT IS INVITED BY WAY OF APPRO ACHING PEOPLE WHO ARE KNOWN TO THE DIRECTORS OR MEMBERS OF THE COMPANY. LINDER THESE CIRCUMSTANCES, IT IS NOT ACCE PTABLE THAT THEY ARE NOT READY TO COME OUT AND STATE THE FACTS EVEN THOUGH THEY HAVE MADE HUGE INVESTMENTS IN THE ASSES SEE COMPANY. THE ONUS ON THE ASSESSEE IS NOT DISCHARGED BY SIMPLY PROVIDING CERTAIN DETAILS WITH RESPECT TO TH ESE ENTITIES. IF THESE PEOPLE CAN PROVIDE CONFIRMATIONS, BANK STA TEMENTS, HUGE FUNDS TO THE ASSESSEE, IT IS INCOMPREHENSIBLE HOW NOT EVEN ONE OF THEM COULD BE PRODUCED BEFORE THE AO. I T MAY BE REITERATED THAT THE ASSESSEE IS NOT A PUBLIC LIMITE D COMPANY WHERE ALL INVESTORS CANNOT BE EXPECTED TO BE KNOWN TO THE INVESTEE. IT MAY ALSO BE MENTIONED THAT THE CIT(A) HAS NOT MADE EVEN ONE ENQUIRY, EITHER FROM THE ASSESSEE OR FROM THE AO. HE HAS NOT EVEN BOTHERED TO FIND OUT THAT CERTA IN LETTERS BEING CITED BEFORE HIM MAY OR MAY NOT HAVE BEEN SUB MITTED BEFORE THE ITO(LNV) BUT THEY WERE APPARENTLY NOT SU BMITTED BEFORE THE AO AND HENCE WOULD HAVE CONSTITUTED FRES H EVIDENCE TO BE DEALT WITH UNDER RULE 46A. EVEN THOU GH THOSE LETTERS ARE OF NO HELP TO THE ASSESSEE IN DISCHARGI NG ITS ONUS, BUT RELIANCE ON THEM BY CIT SHOWS THAT THERE HAS NO T BEEN ADEQUATE APPRECIATION OF THE FACTS AND LAW BY HIM. (III) AS REGARDS THE DETAILS SUBMITTED BY THE ASSES EE, IT APPEARS THAT THE SAME HAS NOT BEEN LOOKED INTO IN D ETAIL BY THE CIT(A). THE FOLLOWING POINTS NEED TO BE NOTED: A) CERTAIN COMPANIES WHICH HAVE NO FINANCIAL STREN GTH APPEAR TO HAVE COMMON DIRECTORS AND AUTHORIZED SIGN ATORIES. E.G. INCORP SECURITIES PVT LTD AND RAAHUL FINANCIAL SERVICES PVT LTD HAVE ONE RAJESH AGGARWAL AS THE COMMON DIRE CTOR AND SIGNATORY; JYOTI SOFTSULES PVT LTD AND KIRTHI H ITECH TEXTILES HAVE DHARMENRA KUMAR AS THE COMMON DIRECTOR AND AUTHORIZED SIGNATORY; ANU COLONISERS PVT LTD AND SC INDUSTRIES LTD HAVE PURSHOTTAM DAS AS THE COMMON DI RECTOR AND AUTHORIZED SIGNATORY. THIS IS BEYOND HUMAN PROB ABILITIES THAT SAME PEOPLE CAN FORM DIFFERENT ENTITIES WITH N O FINANCIAL STRENGTH AND INVITE HUGE PREMIUMS WHICH ARE THEN PA SSED ON TO THE ASSESSEE COMPANY. THE DECISIONS OF THE HONB LE SUPREME COURT IN SUMATI DAYAL AND DURGA PRASAD MORE APPLY TO A SITUATION LIKE THIS. 13 B) THE FINANCIAL STRENGTH AND TRUE STATE OF AFFAIR S OF THE DETAILS FILED BY THE ASSESSEE AS REGARDS THE INVEST ING COMPANIES IS AS FOLLOWS: (I) ANU COLONISERS TOTAL INCOME -34,998/- NO REAL/FIXED ASSETS SHARE A PPLICATION AND PREMIUM RECEIVED WHICH IS FURTHER INVESTED IN C OMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN DCREDIT ENTRIES NO REAL BUSINESS ACTIVITY. (II) INDCORP SECURITIES NET PROFIT 79,161/- THE B/S DOES NOT EVEN MENTION FIXED ASSETS AS APPAR ENTLY THERE ARE NONE. SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. NO REAL BUSINESS ACTIVITY. (III) JYOTI SOFTSULES RS. 40 LACS INVESTED BY A COMPANY WITH TOTAL INCOME OF RS. 33,788/- ONLY ONE COMPUTER AS FIXED ASSET. SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. BALANCE OF RS. 1,239/- NO REAL BUSINESS AC TIVITY. (IV) GEWAPUR WATER PURIFICATION NO B/S FILED NO P&L FILED NO ITR FILED NO BANK STATEMENT FILED. (V) KIRTI HITECH 35 LACS INVESTED BUT NO B/S FILED NO P&L FILED NO I TR FILED (VI) MMJ INVESTMENT ONLY ONE FIXED ASSET IN COMPUTER 14 SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. (VII) NAMO RESORTS (P) LTD. NO RELEVANT DETAILS FILED. (VIII) NIPUN INFOTECH 45 LACS INVESTED WITH A TOTAL INCOME OF RS. 19,890/ - ONLY ONE FIXED ASSET IN COMPUTER. SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE AFTER CIRCULATING THE FUND S IS RS. 9,863/- (IX) NEPOSTEL (INDIA) 25 LACS INVESTED BUT NO RELEVANT DETAILS SUPPLIED. (X) PUSHPANJALI IMPEX 50 LACS INVESTED BY A COMPANY WITH TOTAL INCOME OF RS. 20,019/- NO ANNEXURES TO B/S FILED. NO P&L FILED SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE AFTER CIRCULATING THE FUND S IS RS. 2,372/- (XI) RAAHUL FINANCIAL NO P&L FILED NO FIXED ASSET SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. (XII) SC INDUSTRIES 15 NO RELEVANT DETAIL PROVIDED. (XIII) SHARDA INDIA 35 LACS INVESTED ON A TOTAL INCOME OF RS. 8540/- ON LY ONE AC IN FIXED ASSETS SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE OF 1,600/-. NO REAL BUSINESS ACTIVITY. (XIV) SONY FINANCIAL SERVICES NO RELEVANT DETAIL P ROVIDED (XV) SHRI VISHNUPRIYA TOTAL INCOME OF 51,670/- SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE OF NIL. ONLY ONE COMPUTER AND SOME FURNITURE IN FIXED ASSET . NO REAL BUSINESS ACTIVITY. (XVI) SMB SECURITIES TOTAL INCOME OF 99,444/- SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE OF 23,688/-. ALMOST NIL FIXED ASSETS. NO REAL BUSINESS ACTIVITY. (XVII) UDHAV FASHION TOTAL INCOME OF 24,988/- SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE OF 1,950/-. 16 NIL FIXED ASSETS. NO REAL BUSINESS ACTIVITY. (XVIII) WARSI OVERSEAS TOTAL INCOME OF 27,833/- SHARE APPLICATION AND PREMIUM RECEIVED WHICH IS FUR THER INVESTED IN COMPANIES INCLUDING THE ASSEESSEE. BANK ACCOUNT STATEMENT SHOWS CORRESPONDING DEBIT AN D CREDIT ENTRIES. CLOSING BALANCE OF 2,371/-. ONLY ONE COMPUTER AND AC IN FIXED ASSETS. NO REAL BUSINESS ACTIVITY. A PERUSAL OF THE ABOVE DETAILS CLEARLY SHOW THAT TH E INVESTING COMPANIES DO NOT HAVE THE REQUISITE CREDITWORTHINES S TO PAY SUCH HUGE PREMIUM. AT THE SAME TIME, THE ASSESSEE C OMPANY HAS NO JUSTIFICATION TO CHARGE THE HUGE PREMIUM OF RS. 240/- PER SHARE. THE ONUS ON THE ASSESSEE U/S 68 HAS NOT BEEN DISCHARGED. THE CIT(A) HAS NOT EVEN GONE THROUGH TH E SUBMISSIONS OF THE ASSESSEE IN DETAIL. HAD HE DONE SO, HE WOULD HAVE REALISED THAT SEVERAL DETAILS WHICH HAVE BEEN CLAIMED BY THE ASSESSEE TO HAVE BEEN FILED HAVE ACT UALLY NOT BEEN INCLUDED IN THE SUBMISSIONS. HE WOULD HAVE EAS ILY DISCOVERED THAT THE SO CALLED INVESTING COMPANIES L ACK THE CREDITWORTHINESS TO MAKE HUGE INVESTMENTS, THAT THE TRANSACTIONS ENTERED INTO BY THEM WITH THE ASSESEE COMPANY ARE NOT GENUINE. HE WOULD HAVE OBSERVED THAT ASSESS EE IS TAKING REFUGE IN SUBMISSIONS MADE BEFORE THE ITO (I NV.) WHICH HAVE APPARENTLY NOT BEEN PRESENTED BEFORE THE AO (EVEN THOUGH THEY ARE DEVOID OF MERIT) AND THAT IF SO, THEY WOULD CONSTITUTE NEW EVIDENCE TO BE DEALT WITH AS P ER RULE 46A. THE LD. CIT(A) HAS FAILED TO REMEMBER THAT HE HAS CO- TERMINUS POWERS WITH THE AO AND HE CANNOT HIDE BEHI ND THE ALLEGED GAP IN THE ENQUIRIES OF THE AO WITHOUT HIMS ELF MAKING ANY EFFORT WHATSOEVER TO ARRIVE AT THE TRUTH. THE C IT (A) HAS FAILED TO APPRECIATE THAT THERE ARE A CATENA OF CAS ES WHICH EXPLAIN THE MANNER IN WHICH THE ONUS HAS TO BE DISC HARGED BY THE ASSESSEE IN SUCH CASES AND HOW THE ASSESSEE HAS FAILED TO DO SO. IN ANY CASE, THE MATTER HAS NOW GAINED CLARI TY WITH THE DECISION OF THE HONBLE SUPREME COURT IN NRA IRON ( SUPRA). IN LIGHT OF THE ABOVE, IT IS SUBMITTED THAT SINCE T HE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS U/S 68, IN LIGHT O F THE ABOVE SUBMISSIONS DEMONSTRATING LACK OF CREDITWORTHINESS OF THE INVESTOR COMPANIES AND NON-GENUINENESS OF THE TRANS ACTIONS, 17 THE ORDER OF THE AO BE RESTORED BY DELETING THE FIN DINGS OF THE LD. CIT(A). SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH REGARD TO R EOPENING OF CASES U/S 147 OF I.T.ACT: 1 PCIT VS PARAMOUNT COMMUNICATION (P.) LTD. (2017- TIQL-253-SC-IT) WHERE HONBLE SUPREME COURT DISMISS ED SLP OF ASSESSEE. INFORMATION REGARDING BOGUS PURCHASE B Y ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS 'TANGIBLE MATERIAL OUTSIDE RECORD' TO INITIATE VALID REASSESSMENT PROCEEDINGS. PCIT VS PARAMOUNT COMMUNICATION (P.) LTD.[2017] 79 TAXMANN.COM 409 (DELHI)/R20171 392 ITR 444 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD THAT INFORMATIO N REGARDING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DR I FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS 'TANGIBLE MATERIAL OUTSIDE RECORD' TO INITIATE VALID REASSESS MENT PROCEEDINGS. 2 ARADHNA ESTATE (P.) LTD.VS PCIT [2018] 91 TAXMANN.COM H9 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE REASSESSMENT PROCEEDINGS WERE INITI ATED ON BASIS OF INFORMATION RECEIVED FROM INVESTIGATION W: NG THAT ASSESSEE HAD RECEIVED CERTAIN AMOUNT FROM SHELL COM PANIES WORKING AS AN ACCOMMODATION ENTRY PROVIDER, MERELY BECAUSE THESE TRANSACTIONS WERE SCRUTINISED BY ASSESSING OF FICER DURING ORIGINAL ASSESSMENT, REASSESSMENT COULD NOT BE HELD UNJUSTIFIED 3. PUSHP BULLION (P.) LTD. VS DCIT [2017] 85 TAXMAN N.COM 84 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE INVESTIGATION WING OF DEPARTMENT HAD DURING COURSE OF INVESTIGATION IN CASE OF A THIRD PARTY FOUND THAT H E WAS INDULGED IN PROVIDING ACCOMMODATION ENTRIES AND BOG US BILLS, AND ASSESSEE HAD MADE SIZEABLE PURCHASES FROM HIM, REOPENING NOTICE AGAINST ASSESSEE WAS JUSTIFIED 4 ANKIT FINANCIAL SERVICES LTD. VS DCITR20171 78 TAXMANN.COM 58 (GUJARAT) 18 WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE MA TERIAL RECOVERED IN SEARCH OF ANOTHER PERSON INDICATED THA T ASSESSEE HAD RECEIVED BOGUS SHARE APPLICATIONS THROUGH ACCOMMODATION ENTRIES, SINCE ASSESSEE WAS BENEFICIA RY, INITIATION OF RE-OPENING WAS JUSTIFIED. 5. AASPAS MULTIMEDIA LTD. VS DCIT[20171 83 TAXMANN.COM 82 (GUJARAT) WHERE HONBLE GUJARAT HIGH COURT HELD THAT WHERE REASSESSMENT WAS MADE ON BASIS OF INFORMATION RECEI VED FROM PRINCIPAL DIT (INVESTIGATION) THAT ASSESSEE WAS BEN EFICIARY OF ACCOMMODATION ENTRIES BY WAY OF SHARE APPLICATION P ROVIDED BY A THIRD PARTY, SAME WAS JUSTIFIED. 6. MOHAMMEDALLYNOORBHOYBANDUKWALA TRUST VS ITO (2017-TIQL-341-HC-MUM-IT) WHERE HONBLE MUMBAI HIGH COURT HELD THAT ASSESSMEN T CANNOT BE TERMED AS INVALID FOR NON-CONSIDERATION O F ASSESSEE'S OBJECTIONS, IF THERE WAS UNDUE DELAY ON THE PART OF ASSESSEE IN OBJECTING TO THE REASONS. 7. YOGENDRAKUMAR GUPTA VS ITO (51 TAXMANN.COM 383) (SC)/2014/227 TAXMAN 374 (SC) WHERE HONBLE SUPREME COURT HELD THAT WHERE SUBSEQUENT TO COMPLETION OF O RIGINAL ASSESSMENT, ASSESSING OFFICER, ON BASIS OF SEARCH C ARRIED OUT IN CASE OF ANOTHER PERSON, CAME TO KNOW THAT LOAN TRANSACTIONS OF ASSESSEE WITH A FINANCE COMPANY WER E BOGUS AS SAID COMPANY WAS ENGAGED IN PROVIDING ACCOMMODAT ION ENTRIES, IT BEING A FRESH INFORMATION, HE WAS JUSTI FIED IN INITIATING REASSESSMENT PROCEEDING IN CASE OF ASSES SEE. 8 RAYMOND WOOLLEN MILLS LTD. V. ITO AND OTHERSF236 ITR 34] WHERE HONBLE SUPREME COURT HELD THAT IN DETERMININ G WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WA S VALID IT HAS ONLY TO BE SEEN WHETHER THERE WAS PRIM A FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS STAGE. 9 R.K. MALHOTRA ITO VS KASTURBHAILALBHAIRI9771 109 ITR 537 (SC) WHERE HONBLE SUPREME COURT HELD THAT THE INTIMATION WHICH THE INCOME-TAX OFFICER RECEIVED FR OM THE AUDIT DEPARTMENT WOULD CONSTITUTE 'INFORMATION' WIT HIN THE MEANING OF SECTION 147(B). 19 10.ACIT VS RAJESH JHAVERI STOCK BROKERS (P.) LTDR20 071 161 TAY ' 316 (SC)/[2007] 291 ITR 500 (SC)/R20071 210 C TR 30 (SC) WHERE HONBLE SUPREME COURT HELD THAT SO LONG AS TH E CONDITIONS OF SECTION 147 ARE FULFILLED, THE ASSESS ING OFFICER IS FREE TO INITIATE PROCEEDINGS UNDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS, EVEN WHEN INTIMATION UNDER SECTION 143(1) HAS BEEN ISSUE D. ADANI EXPORTS V. DCIT[1999] 240 ITR 224 (GUJ) WAS DISTING UISHED. 11 YUVRAJ V. UNION OF LNDIA[315 ITR 841 (BOM) WHERE HONBLE COURT HELD THAT POINTS NOT DECIDED WH ILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) WAS N OT A CASE OF CHANGE OF OPINION. IT WAS HELD THAT ASSESSM ENT WAS REOPENED VALIDLY. 12. CIT VS. MADHYA BHARAT ENERGY CORPORATION LTD. 245 CTR 35 (DELHI) HIGH COURT. WHERE HON'BLE DELHI HIGH COURT HELD THAT ISSUANCE O F NOTICE U/S 143(2) SUBSEQUENT TO 148 NOTICE NOT MANDATORY. 13. THAKORBHAI MAGANBHAI PATEL VS. ITO 245 TAXMAN 3 33 (SC) WHERE THE HON SUPREME COURT DISMISSED ASSESSEE SLP AGAINST HIGH COURT'S RULING WHERE REOPENING OF ASSE SSMENT U/S 147 WAS HELD TO BE VALID DESPITE THE AO NOT PAS SING SPEAKING ORDER AGAINST OBJECTIONS FILED BY THE ASSE SSEE. 14 HOME FINDERS HOUSING LTD. VS ITO T20181 256 TAXM AN 59 (SC) SLP DISMISSED AGAINST HIGH COURT'S ORDER THAT NON-C OMPLIANCE OF DIRECTION OF SUPREME COURT IN GKN DRIVESHAFTS (I NDIA) LTD. V. ITO [2002] 125 TAXMAN 963 THAT ON RECEIPT OF OBJ ECTION GIVEN BY ASSESSEE TO NOTICE UNDER SECTION 148, ASSE SSING OFFICER IS BOUND TO DISPOSE OF OBJECTIONS BY PASSIN G A SPEAKING ORDER, WOULD NOT MAKE REASSESSMENT ORDER V OID AB INITIO. 15. INDU LATA RANGWALA VS. DCIT (2017) 80 TAXMANN. COM 102 (DELHI) 384 ITR 337 (DELHI)/(2016) 286 CTR 474 (DELHI). WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE INIT IAL RETURN OF INCOME IS PROCESSED UNDER SECTION 143(1), IT IS NOT NECESSARY IN SUCH A CASE FOR ASSESSING OFFICER TO C OME ACROSS 20 SOME FRESH TANGIBLE MATERIAL TO FORM 'REASONS TO BE LIEVE' THAT INCOME HAS ESCAPED ASSESSMENT 16. ARAVALILNFRAPOWER LTD. VS DCIT(2017-TIQL-42-SC -IT) WHERE HONBLE SUPREME COURT CONFIRMED THE DECISION OF HIGH COURT, WHEREBY IT WAS HELD THAT REOPENING OF ASSESS MENT IS JUSTIFIED, WHEN THE BANK STATEMENTS AS WELL AS THE ITR FORM DISCLOSING RETURNS, RAISES MORE QUESTIONS THAN SATI SFYING THE QUERIES ALREADY RAISED. ARAVALILNFRAPOWER LTD. VS DCIT T20171 77 TAXMANN.CO M 372 (DELHI)/[2017] 390 ITR 456 (DELHI) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSEE- COMPANY FURNISHED ONLY CHEQUE NUMBERS, BUT FAILED T O PROVIDE BANK DETAILS OF SHARE APPLICANTS AND IT WAS FOUND THAT SHARE APPLICANTS HAD MEAGER INCOME WHILE INVESTING HUGE SUM OF RS. 8 CRORES, REOPENING NOTICE WAS JUSTIFIED . SUB: WRITTEN SUBMISSION IN THE ABOVE CASE- REG. IN THE ABOVE CASE, IT IS HUMBLY SUBMITTED THAT THE FOLLOWING DECISIONS MAY KINDLY BE CONSIDERED WITH REGARD TO A DDITION MADE U/S 68 OF I.T.ACT: 1. PCIT VS NRA IRON & STEEL (P.) LTD. T20191 103 TAXMANN.COM 48 (SC) (COPY ENCLOSED) WHERE HONBLE SUPREME COURT REVERSE ORDER OF LOWER AUTHORITIES HOLDING THAT WHERE THERE WAS FAILURE OF ASSESSEE TO ESTABLISH CREDIT WORTHINESS OF INVESTOR COMPANIES, ASSESSING OFFICER WAS JUSTIFIED IN PASSING ASSESSMENT ORDER M AKING ADDITIONS UNDER SECTION 68 FOR SHARE CAPITAL / PREM IUM RECEIVED BY ASSESSEE COMPANY. MERELY BECAUSE ASSESS EE COMPANY HAD FILED ALL PRIMARY EVIDENCE, IT COULD NO T BE SAID THAT ONUS ON ASSESSEE TO ESTABLISH CREDIT WORTHINES S OF INVESTOR COMPANIES STOOD DISCHARGED 2. PCIT VS NDR PROMOTERS PVT LTD (F20191 102 TAXMANN.COM 182 (DELHI)/R20191 261 TAXMAN 270 (DELHI)/R20191 410 ITR 379 (DELHI)) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSING OFFICER MADE ADDITIONS TO ASSESSEE'S INCOME UNDER S ECTION 68 IN RESPECT OF AMOUNT RECEIVED AS SHARE CAPITAL FROM SEVERAL COMPANIES, IN VIEW OF FACT THAT ALL OF THESE COMPAN IES WERE MAINTAINED BY ONE PERSON WHO WAS ENGAGED IN PROVIDI NG ACCOMMODATION ENTRIES THROUGH PAPER COMPANIES AND A LL SUCH 21 COMPANIES WERE LOCATED AT SAME ADDRESS, IMPUGNED AD DITION WAS JUSTIFIED 3. ITO VS SYNERGY FINLEASE PVT. LTD (ITA NO.4778/DEL/2013) WHERE HONBLE ITAT DELHI HELD THAT WHERE INVESTOR O F SHARE APPLICATION MONEY HAD NOMINAL INCOME AND CHEQUES HA D BEEN RECEIVED JUST BEFORE ISSUE OF CHEQUES FOR SHARE APP LICATION MONEY, CREDITWORTHINESS WAS NOT PROVED AND ADDITION U/S 68 WAS SUSTAINED. 4. CIT VS NAVODAYA CASTLE PVT LTD T20141 367 ITR 30 6 (DEL) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT ACCEPTED THAT SINCE THE ASSESSEE WAS UNABLE TO PRODUCE THE DIRECTORS AND TH E PRINCIPAL OFFICERS OF THE SIX SHAREHOLDER COMPANIES AND ALSO THAT AS PER THE INFORMATION AND DETAILS COLLECTED B Y THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSE SSING OFFICER HAD OBSERVED THAT THERE WERE GENUINE CONCER NS ABOUT IDENTITY, CREDITWORTHINESS OF SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACTIONS. '20. NOW, WHEN WE GO TO THE ORDER OF THE TRIBUNAL I N THE PRESENT CASE, WE NOTICE THAT THE TRIBUNAL HAS MEREL Y REPRODUCED THE ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS) AND UPHELD THE DELETION OF THE ADDITION. IN FACT, THEY SUBSTANTIALLY RELIED UPON AND QUOTED THE DECIS ION OF ITS CO-ORDINATE BENCH IN THE CASE OF MAF ACADEMY P. LTD ., A DECISION WHICH HAS BEEN OVERTURNED BY THE DELHI HIG H COURT, VIDE ITS JUDGMENT IN CIT V. MAF ACADEMY P. LTD. [20 14] 206 DLT 277; [2014] 361 ITR 258 (DELHI)). IN THE IMPUGN ED ORDER IT IS ACCEPTED THAT THE ASSESSEE WAS UNABLE TO PROD UCE DIRECTORS AND PRINCIPAL OFFICERS OF THE SIX SHAREHO LDER COMPANIES AND ALSO THE FACT THAT AS PER THE INFORMA TION AND DETAILS COLLECTED BY THE ASSESSING OFFICER FROM THE CONCERNED BANK, THE ASSESSING OFFICER HAS OBSERVED THAT THERE WERE GENUINE CONCERNS ABOUT IDENTITY, CREDITWORTHINESS O F SHAREHOLDERS AS WELL AS GENUINENESS OF THE TRANSACT IONS. 21. IN VIEW OF THE AFORESAID DISCUSSION, WE FEEL TH AT THE MATTER REQUIRES AN ORDER OF REMIT TO THE TRIBUNAL F OR FRESH ADJUDICATION KEEPING IN VIEW THE AFORESAID CASE LAW .' NAVODAYA CASTLE PVT LTD VS CIT (T20151 56 TAXMANN.C OM 18 (SC)/R20151 230 TAXMAN 268 (SC)) (COPY ENCLOSED) SLP OF ASSESSEE DISMISSED BY HONBLE SUPREME COURT 22 5. PRATHAM TELECOM INDIA PVT LTD VS DCIT (2018-TIQL - 1983-HC-MUM-IT) WHERE HONBLE BOMBAY HIGH COURT HELD THAT MERE PROD UCTION OF PAN NUMBERS & BANK STATEMENTS IS NOT SUFFICIENT ENOUGH TO DISCHARGE THE BURDEN ON TAXPAYER TO ESCAPE THE REAL MS OF SECTION 68 6 CIT VS NIPUN BUILDERS & DEVELOPERS (P.) LTD (30 TAXMANN.COM 292, 214 TAXMAN 429, 350 ITR 407, 256 CTR 34) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE ASSE SSEE FAILED TO PROVE IDENTITY AND CAPACITY OF SUBSCRIBER COMPANIES TO PAY SHARE APPLICATION MONEY, AMOUNT SO RECEIVED WAS LIABLE TO BE TAXED UNDER SECTION 68. IT WAS HELD AS FOLLOWS: 12. A PERUSAL OF THE ORDER OF THE TRIBUNAL SHOWS T HAT IT HAS GONE ON THE BASIS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE BEFORE THE AO AND HAS HELD THAT IN THE LIG HT OF THOSE DOCUMENTS, IT CAN BE SAID THAT THE ASSESSEE HAS EST ABLISHED THE IDENTITY OF THE PARTIES. IT HAS FURTHER BEEN OB SERVED THAT THE REPORT OF THE INVESTIGATION WING CANNOT CONCLUS IVELY PROVE THAT THE ASSESSEE'S OWN MONIES WERE BROUGHT BACK IN THE FORM OF SHARE APPLICATION MONEY. /AS NOTED IN THE E ARLIER PARAGRAPH, IT IS NOT THE BURDEN OF THE AO TO PROVE THAT CONNECTION. THERE HAS BEEN NO EXAMINATION BY THE TR IBUNAL OF THE ASSESSMENT PROCEEDINGS IN ANY DETAIL IN ORDER T O DEMONSTRATE THAT THE ASSESSEE HAS DISCHARGED ITS ON US TO PROVE NOT ONLY THE IDENTITY OF THE SHARE APPLICANTS , BUT ALSO THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. NO ATTEMPT WAS MADE BY THE TRIBUNAL T O SCRATCH THE SURFACE AND PROBE THE DOCUMENTARY EVIDENCE IN S OME DEPTH, IN THE LIGHT OF THE CONDUCT OF THE ASSESSEE AND OTHER SURROUNDING CIRCUMSTANCES IN ORDER TO SEE WHETHER T HE ASSESSEE HAS DISCHARGED ITS ONUS UNDER SECTION 68. WITH RESPECT, IT APPEARS TO US THAT THERE HAS ONLY BEEN A MECHANICAL REFERENCE TO THE CASE-LAW ON THE SUBJECT WITHOUT ANY SERIOUS APPRAISAL OF THE FACTS AND CIRCUMSTANCE S OF THE CASE. 13. WE, THEREFORE, ANSWER THE SUBSTANTIAL QUESTION OF LAW FRAMED BY US IN THE NEGATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. THE APPEAL OF THE REVENUE IS ALLOWED WITH NO ORDER AS TO COSTS. 7 CIT VS NOVA PROMOTERS & FINLEASE (P) LTD (18 TAXM ANN.COM 217, 206 TAXMAN 207, 342 ITR 169. 252 CTR 187) 23 WHERE HONBLE DELHI HIGH COURT HELD THAT AMOUNT REC EIVED BY ASSESSEE FROM ACCOMMODATION ENTRY PROVIDERS IN GARB OF SHARE APPLICATION MONEY, WAS TO BE ADDED TO ITS TAX ABLE INCOME UNDER SECTION 68. IT WAS HELD AS FOLLOWS: 41. IN THE CASE BEFORE US, NOT ONLY DID THE MATERI AL BEFORE THE ASSESSING OFFICER SHOW THE LINK BETWEEN THE ENT RY PROVIDERS AND THE ASSESSEE-COMPANY, BUT THE ASSESSI NG OFFICER HAD ALSO PROVIDED THE STATEMENTS OF MUKESH GUPTA AND RAJAN JASSAL TO THE ASSESSEE IN COMPLIANCE WITH THE RULES OF NATURAL JUSTICE. OUT OF THE 22 COMPANIES WHOSE NAME S FIGURED IN THE INFORMATION GIVEN BY THEM TO THE INVESTIGATI ON WING, 15 COMPANIES HAD PROVIDED THE SO-CALLED 'SHARE SUBSCRI PTION MONIES' TO THE ASSESSEE. THERE WAS THUS SPECIFIC IN VOLVEMENT OF THE ASSESSEE- COMPANY IN THE MODUS OPERANDI FOLL OWED BY MUKESH GUPTA AND RAJAN JASSAL. THUS, ON CRUCIAL FAC TUAL ASPECTS THE PRESENT CASE STANDS ON A COMPLETELY DIF FERENT FOOTING FROM THE CASE OF OASIS HOSPITALITIES (P.) L TD. (SUPRA). 42. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE UN ABLE TO UPHOLD THE ORDER OF THE TRIBUNAL CONFIRMING THE DEL ETION OF THE ADDITION OF RS. 1,18,50,000 MADE UNDER SECTION 68 O F THE ACT AS WELL AS THE CONSEQUENTIAL ADDITION OF RS. 2,96,2 50. WE ACCORDINGLY ANSWER THE SUBSTANTIAL QUESTIONS OF LAW IN THE NEGATIVE AND IN FAVOUR OF THE DEPARTMENT. THE ASSES SEE SHALL PAY COSTS WHICH WE ASSESS AT RS. 30,000/-. 8 CIT VS ULTRA MODERN EXPORTS (P.) LTD (40 TAXMANN. COM 458, 220 TAXMAN 165) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE IN O RDER TO ASCERTAIN GENUINENESS OF ASSESSEE'S CLAIM RELATING TO RECEIPT OF SHARE APPLICATION MONEY, ASSESSING OFFICER SENT NOTICES TO SHARE APPLICANTS WHICH RETURNED UNSERVED, HOWEVER, ASSESSEE STILL MANAGED TO SECURE DOCUMENTS SUCH AS THEIR INC OME TAX RETURNS AS WELL AS BANK ACCOUNT PARTICULARS, IN SUC H CIRCUMSTANCES, ASSESSING OFFICER WAS JUSTIFIED IN D RAWING ADVERSE INFERENCE AND ADDING AMOUNT IN QUESTION TO ASSESSEE'S TAXABLE INCOME UNDER SECTION 68. IT WAS HELD AS FOLLOWS: 9. AS NOTICED PREVIOUSLY, THE CIT (A) WAS OF THE O PINION THAT THE ASSESSEE HAD DISCHARGED THE BASIC ONUS WHICH WA S CAST UPON IT AFTER CONSIDERING THE RULING IN LOVELY EXPO RTS (P.) LTD. 'S CASE (SUPRA). THE MATERIAL AND THE RECORDS IN TH IS CASE SHOW THAT NOTICE ISSUED TO THE 5 OF THE SHARE APPLI CANTS WERE RETURNED UNSERVED. THE PARTICULARS OF RETURNS MADE AVAILABLE BY THE ASSESSEE AND TAKEN INTO CONSIDERATION IN PAR AGRAPH 3.4 BY THE AO IN THIS CASE WOULD SHOW THAT THE SAID 24 PARTIES/APPLICANTS HAD DISCLOSED VERY MEAGER INCOME . THE AO ALSO NOTICED THAT BEFORE ISSUING CHEQUES TO THE ASS ESSEE, HUGE AMOUNTS WERE TRANSFERRED IN THE ACCOUNTS OF SAID SH ARE APPLICANTS. THIS DISCUSSION ITSELF WOULD REVEAL THA T EVEN THOUGH THE SHARE APPLICANTS COULD NOT BE ACCESSED T HROUGH NOTICES, THE ASSESSEE WAS IN A POSITION TO OBTAIN D OCUMENTS FROM THEM. WHILE THERE CAN BE NO DOUBT THAT IN LOVE LY EXPORTS (P.) LTD. (SUPRA), THE COURT INDICATED THE RULE OF 'SHIFTING ONUS' I.E. THE RESPONSIBILITY OF THE REVE NUE TO PROVE THAT SECTION 68 COULD BE INVOKED ONCE THE BASIC BUR DEN STOOD DISCHARGED BY FURNISHING RELEVANT AND MATERIAL PART ICULARS, AT THE SAME TIME, THAT JUDGMENT CANNOT BE SAID TO LIMI T THE INFERENCES THAT CAN BE LOGICALLY AND LEGITIMATELY D RAWN BY THE REVENUE IN THE NATURAL COURSE OF ASSESSMENT PROCEED INGS. THE INFORMATION THAT ASSESSEE FURNISHES WOULD HAVE TO BE CREDIBLE AND AT THE SAME TIME VERIFIABLE. IN THIS C ASE, 5 SHARE APPLICANTS COULD NOT BE SERVED AS THE NOTICES WERE RETURNED UNSERVED. IN THE BACKDROP OF THIS CIRCUMSTANCE, THE ASSESSEE'S ABILITY TO SECURE DOCUMENTS SUCH AS INCO ME TAX RETURNS OF THE SHARE APPLICANTS AS WELL AS BANK ACC OUNT PARTICULARS WOULD ITSELF GIVE RISE TO A CIRCUMSTANC E WHICH THE AO IN THIS CASE PROCEEDED TO DRAW INFERENCES FROM. HAVING REGARD TO THE TOTALITY OF THE FACTS, I.E., THAT THE ASSESSEE COMMENCED ITS BUSINESS AND IMMEDIATELY SOUGHT TO IN FUSE SHARE CAPITAL AT A PREMIUM RANGING BETWEEN RS. 90-1 90 PER SHARE AND WAS ABLE TO GARNER A COLOSSAL AMOUNT OF R S. 4.34 CRORES, THIS COURT IS OF THE OPINION THAT THE CIT ( APPEALS) AND THE IT AT FELL INTO ERROR IN HOLDING THAT AO COULD NOT HAVE ADDED BACK THE SAID AMOUNT UNDER SECTION 68. THE QU ESTION OF LAW CONSEQUENTLY IS ANSWERED IN FAVOUR OF THE RE VENUE AND AGAINST THE ASSESSEE. 9. CIT VS FROSTAIR (P.) LTD (26 TAXMANN.COM 11. 210 TAXMAN 221) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE DETA ILS FURNISHED BY ASSESSEE ABOUT SHARE APPLICANTS WERE I NCORRECT, ADDITION UNDER SECTION 68 WAS PROPER. IT WAS HELD A S FOLLOWS: 12 THE APPLICATION OF THE RATIO OF EVERY DECISION B Y A QUASI- JUDICIAL BODY LIKE THE IT AT HAS TO BE NUANCED, AND CONTEXTUAL. THUS, WHILE THE FINDINGS IN DIVINE LEASING, OASIS I NTERNATIONAL OR EVEN LOVELY EXPORTS MIGHT BE PRECEDED BY A GENER AL DISCUSSION OF THE CORRECT APPROACH TO BE ADOPTED BY THE AO, IN A GIVEN CASE WHERE ADDITIONS ARE SOUGHT TO BE MADE ON ACCOUNT OF SHARE APPLICATION MONEYS NOT FOUND TO BE GENUINE, THE BASIC FACTS OF THE CASE CANNOT BE LOST SIGHT OF . ON A PROPER APPLICATION OF THE RATIO IN OASIS - AND SUBSEQUENTL Y, THE DIVISION BENCH RULING IN CIT V. NOVA PROMOTERS & FI NLEASE (P) 25 LTD [2012] 206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI ) IT IS EVIDENT THAT THE AO TOOK INTO ACCOUNT - IF WE MAY S AY SO, IN EXHAUSTIVE DETAIL, AFTER A PAINSTAKING EXAMINATION OF THE RECORDS AFTER TWO OR THREE LAYERS OF SCRUTINY- ALL THE MATERIALS AND HELD THAT THE CLAIM THAT THE AMOUNTS CLAIMED TO BE RECEIVED ON ACCOUNT OF SHARE APPLICATIONS WERE NOT BASED ON GENUINE TRANSACTIONS. THE CIT (A) UPHELD THAT ORDER , AFTER CALLING FOR A REMAND REPORT. IN THESE CIRCUMSTANCES , THE CONCLUSION OF THE TRIBUNAL, THAT THE ASSESSEE HAD D ISCHARGED ITS ONUS, APPEARS TO BE BASED ON A SUPERFICIAL UNDE RSTANDING OF THE LAW, AND AN UNINFORMED ONE ABOUT THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE. 13. IN VIEW OF THE ABOVE REASONS, THE QUESTIONS OF LAW IN THESE APPEALS ARE ANSWERED IN FAVOUR OF THE REVENUE . THE ORDERS OF THE ASSESSING OFFICER ARE RESTORED. THE A PPEALS ARE TO SUCCEED AND ARE THEREFORE ALLOWED. 10. CIT VS N R PORTFOLIO PVT LTD T20141 42 TAXMANN. COM 339 (DELHI)/R2014L 222 TAXMAN 157 (DELHI)(MAG)/R201 41 264 CTR 258 (DELHI) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT IF AO DOUB TS THE DOCUMENTS PRODUCED BY ASSESSEE, THE ONUS SHIFTS ON ASSESSEE TO FURTHER SUBSTANTIATE THE FACTS OR PRODUCE THE SH ARE APPLICANT IN PROCEEDING. IT WAS HELD AS FOLLOWS: 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITIO N OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOU T THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTION. THE ONUS TO PROVE THE THREE FACTUM IS ON THE ASSESS EE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRO DUCTION OF INCORPORATION DETAILS, PAN NOS. OR THE FACT THAT TH IRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHEN SURROUND ING AND ATTENDING FACTS PREDICATE A COVER UP. THESE FACTS I NDICATE AND REFLECT PROPER PAPER WORK OR DOCUMENTATION BUT GENU INENESS, CREDITWORTHINESS, IDENTITY ARE DEEPER AND OBTRUSIVE . COMPANIES NO DOUBT ARE ARTIFICIAL OR JURISTIC PERSO NS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEHIND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS T HE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 11 CIT VS EMPIRE BUILTECH (P.) LTD (366 ITR 110) WHERE HONBLE DELHI HIGH COURT HELD THAT U/S 68 IT IS NOT SUFFICIENT FOR ASSESSEE TO MERELY DISCLOSE ADDRESS AND 26 IDENTITIES OF SHAREHOLDERS; IT HAS TO SHOW GENUINEN ESS OF SUCH INDIVIDUALS OR ENTITIES. 12. CIT VS FOCUS EXPORTS (P.) LTD (51 TAXMANN.COM 46 (DELHI)/R20151 228 TAXMAN 88) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE IN R ESPECT OF SHARE APPLICATION MONEY, ASSESSEE FAILED TO PROVIDE COMPLETE ADDRESS AND PAN OF CERTAIN SHARE APPLICANTS WHEREAS IN CASE OF SOME OF SHARE APPLICANTS, THERE WERE TRANSACTION S OF DEPOSITS AND IMMEDIATE WITHDRAWALS OF MONEY FROM BA NK, IMPUGNED ADDITION MADE UNDER SECTION 68 WAS TO BE CONFIRMED 13. PCIT VS BIKRAM SINGH F20171 85 TAXMANN.COM 104 (DELHI)/R20171 250 TAXMAN 273 (DELHI)/R20171 399 IT R 407 (DELHI) (COPY ENCLOSED) WHERE HONBLE DELHI HIGH COURT HELD THAT EVEN IF A TRANSACTION OF LOAN IS MADE THROUGH CHEQUE, IT CANN OT BE PRESUMED TO BE GENUINE IN THE ABSENCE OF ANY AGREEMENT, SECURITY AND INTEREST PAYMENT. MERE SUBMISSION OF PAN CARD OF CREDITOR DOES NOT ESTABLI SH THE AUTHENTICITY OF A HUGE LOAN TRANSACTION PARTICU LARLY WHEN THE ITR DOES NOT INSPIRE SUCH CONFIDENCE. MERE SUBMISSION OF ID PROOF AND THE FACT THAT THE LOAN TRANSACTIONS WERE THROUGH THE BANKING CHANNEL, DOES NOT ESTABLISH THE GENUINENESS OF TRANSACTIONS. LOAN ENTRIES ARE GENERALLY MASKED TO PUMP IN BLACK MONEY INTO BANKING CHANNELS AND SUCH PRACTICES CONTINUE T O PLAGUE INDIAN ECONOMY. 4.1 FINALLY, LD. SR. DR STATED THAT THE CASE OF TH E ASSESSEE WAS REOPENED ON THE BASIS OF THE VARIOUS DOCUMENTARY EV IDENCES AND ON THE INFORMATION RECEIVED FROM THE DIRECTORATE OF INCO ME TAX (INVESTIGATION) BY THE ASSESSING OFFICER WHEREIN, IT WAS MENTIONED THAT BASED UPON THREE STRS IN THE NAME OF VALIANT AGENCIES, SENORIT A ENTERPRISES PVT. LTD. AND ENLIVEN DEVELOPERS PVT. LTD., THE ASSESSEE COM PANY HAD TAKEN SHARE CAPITAL OF RS. 465.98 LACS FROM INVESTEE COMP ANIES, BUT IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTORS R EMAINED DOUBTFUL, HENCE, THE AO MADE THE ADDITION IN DISPUTE AS PER L AW AND THE LD. CIT(A) HAS WRONGLY DELETED THE SAME WHICH ARE CONTRARY TO THE MATERIAL AVAILABLE 27 ON RECORD AS WELL AS VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT OF INDIA AND THE HONBLE HIGH COURT AS MENTIO NED BY HIM IN THE WRITTEN SUBMISSIONS. HE REQUESTED THAT THE APPEAL F ILED BY THE REVENUE MAY BE ALLOWED BY CANCELLING THE ORDER PASSED BY TH E LD. CIT(A) AND RESTORE THE ASSESSMENT ORDER PASSED BY THE ASSESSIN G OFFICER. 5. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT HE HAS FILED THE WRITTEN SUBMISSIONS BEFORE THE LD. CIT(A) AND THE SAME MAY BE TREATED A S HIS ARGUMENTS BEFORE THIS BENCH. HE DRAW OUR ATTENTION TOWARDS T HE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHICH ARE AT PAGES 23-52 OF THE PAPER BOOK FILED BEFORE THE BENCH WHICH CONTAIN S PAGES 1-149 IN WHICH HE HAS ATTACHED THE VARIOUS DOCUMENTARY EVIDE NCES SUPPORTING THE IMPUGNED ORDER. IN ADDITION TO THE SAID DOCUMENTARY EVIDENCES FILED BY THE ASSESSEES COUNSEL, HE HAS ALSO FILED THE VARIO US COPIES OF THE ORDERS PASSED BY THE TRIBUNAL INCLUDING THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF PR. CIT-6 VS. MEENAKSHI OVERSEAS PVT. LTD. DECIDED IN ITA NO. 692/2016 DATED 26.5.2017 AND STATED THAT IN THIS CA SE THE HONBLE HIGH COURT HAS DISCUSSED THE JURISPRUDENCE APPLICABILITY OF SECTION 147/148 OF THE ACT FOR REOPENING OF ASSESSMENT WHICH ARE TOTAL LY APPLICABLE ON THE FACTS OF THE PRESENT CASE OF THE ASSESSEE. HE FURTH ER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT-6 V S. MEENAKSHI OVERSEAS PVT. LTD. (SUPRA) HAS DISCUSSED THE VARIOUS CASE L AWS AND EXACTLY ON SIMILAR ISSUE AS INVOLVED IN THE PRESENT APPEAL AN D DISMISSED THE APPEAL OF THE REVENUE. HENCE, HE REQUESTED THAT BY RESPE CTFULLY FOLLOWING THE ABOVE RATIO, THE APPEAL OF THE REVENUE MAY BE DIS MISSED. IN THIS ADDITION TO THIS, HE HAS ALSO FILED THE FOLLOWING VARIOUS ORDERS PASSED BY THE ITAT, DELHI BENCH ON THE ISSUE IN DISPUTE WHICH HAS BEEN DECIDED IN THE CASE OF ASSESSEE AND AGAINST THE REVENUE. - (ON THE ISSUE OF MECHANICAL SATISFACTION U/S. 151 OF THE ACT YES I AM SATISFIED, IT IS A FIT CASE FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT.) 28 ITAT, DELHI DECISION DATED 6.8.2018 IN THE CASE OF PIONEER TOWN PLANNERS PVT. LTD. VS. DCIT IN ITA NO. 132/DEL/2018 - PARAS LAND DEVELOPERS PVT. LTD. VS. ITO IN ITA NO . 6522/DEL/2018 OF ITAT, NEW DELHI DATED 30.4.2019. - (ON THE ISSUE WHERE AO COULD NOT PROCEED WITHIN 4 WEEKS FROM SERVICE OF ORDER DISPOSING OFF OBJECTIONS) ASIAN PAINTS LTD. VS. DCIT & ANR. (2008) 296 ITR 90 (BOMBAY). - (ON THE ISSUE OF DISCHARGE OF ONUS U/S. 68 OF THE ACT) CIT VS. GANGESHWARI METAL PVT. LTD. IN ITA NO. 597/2012 OF HONBLE DELHI HIGH COURT DATED 21.1.2013. BABA BHOOTNATH TRADE & COMMERCE LTD. VS. ITO IN ITA NO. 1494/KOL/2017 OF ITAT, KOLKATA DATED 5.4.2019. CIT VS. MS. MAYAWATI 338 ITR 563 (DELHI). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE WRITTEN SUBMISSIONS/ CASE LAWS RELIED BY BOTH THE PARTIES. WE NOTE THAT IN THIS CASE A COMPLAINT WAS RECEIVED IN THE INVESTIGATION WING AND IT HAS STARTED INVESTIGATION ON 14.8.2008 BY ISSUING A SUMMON U/S. 131(1A). VIDE LETTER DATED 04-09-2008, ASSESSEE FILED WRITTEN DETAILS A BOUT THE FUNCTIONING OF THE COMPANY TO THE INVESTIGATION WING. APART FROM E NQUIRING THE FACTS OF THE ASSESSEE BY THE INVESTIGATION WING, NOTICE U/S 133(6) WAS ALSO ISSUED TO THE PARTIES WHICH WERE DULY RESPONDED AND COMPLI ED WITH BY THEM. FROM THE LETTER DT. 05-11-2012, IT APPEARS THAT INV ESTIGATION WING HAS ENQUIRED ALL THE BANK DEPOSIT ENTRIES ABOVE RS.5,00 00/- OF THE ASSESSEE. VIDE LETTER DT. 16-11-2012, ASSESSEE FURNISHED ALL THE DETAILS BEFORE THE INVESTIGATION WING AND ALSO FURNISHED THE COPY OF F ORM NO.2 FILED WITH THE REGISTRAR OF COMPANIES, DELHI AND HARYANA TO COMPLY THE ALLOTMENT OF 29 SHARES. VIDE LETTER DT. 29-11-2012, THE DETAILS OF SHARE APPLICATION MONEY AMOUNTING TO RS. 4.60 CRORES WAS AGAIN INFORMED TO THE INVESTIGATION WING ALONGWITH COPY OF BALANCE SHEET AND FINANCIAL FOR THE FY 2008-09 TO 2011-12. AFTER THAT THERE WAS NO QUERY FROM THE INV ESTIGATION WING. IT IS NOTED THAT THE INVESTIGATION WING VIDE LETTER DT. 1 9-03-2014 INTIMATED TO THE AO ABOUT THE INVESTIGATION MADE BY THE WING AND ALSO SUGGESTED FOR FURTHER INVESTIGATION. AO REPRODUCED THE LETTER OF THE INVESTIGATION WING IN THE ASSESSMENT ORDER. FROM THE REASONS RECORDED IT IS VERY CLEAR THAT AO HAS NOT MADE ANY ENQUIRIES ABOUT THE SUSPICION A ND DOUBT RAISED BY THE INVESTIGATION WING. HE HAS SIMPLY REPRODUCED TH E LETTER UNDER THE COLUMN REASONS RECORDED U/S 147 OF THE IT ACT AND A LSO WRITTEN THAT 'SINCE THE SHARE CAPITAL WAS NOT SCRUTINIZED, I HAV E REASON TO BELIEVE THAT AN INCOME AMOUNTING TO RS.4,65,98,000/- WHICH IS CH ARGEABLE TO TAX, HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE IT ACT'. THESE WORDS CLEARLY INDICATE THAT AO HAS NOT APPLI ED HIS MIND ON THE INFORMATION RECEIVED FROM THE INVESTIGATION WI NG. HE HAS PRODUCED THE CONTENT OF THE LETTER OF THE INVESTIGATION WING . THERE IS NO REASON TO BELIEVE FOR ESCAPEMENT OF ANY INCOME. CONTENT OF TH E LETTER CLEARLY INDICATES THAT THIS COMPANY HAS NOT STARTED A BUSIN ESS HOW IT HAS CHARGED A PREMIUM OF RS.240/- PER SHARE? THIS CREATES A SUS PICION AND THE DOCUMENTS OF THE INVESTING COMPANIES ALSO INDICATE THAT THEY HAVE RECEIVED A HUGE AMOUNT AS A SHARE CAPITAL AND THAT AMOUNT IS FORWARDED TO THE ASSESSEE COMPANY AS A SHARE APPLICATION MONE Y. ON THE BASIS OF THIS FACT, INVESTIGATION WING WAS HAVING DOUBT ABOU T THE IDENTITY OF THE ALLOTTEES COMPANIES, GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE ALLOTTEE COMPANIES. THE CONTENT OF THE LETTE R CLEARLY INDICATES THAT INVESTIGATION WING WAS HAVING SOME SUSPICION AND DO UBT AND IT WAS FORWARDED TO THE ASSESSING OFFICER. WITHOUT MAKING ANY ENQUIRIES, ASSESSING OFFICER RECORDED THE REASON ON THE BASIS OF ONLY SUSPICION AND DOUBT. EVEN ASSESSING OFFICER HAS NOT FORMED HIS O WN OPINION BASED ON ANY INFORMATION GATHERED OR BASED ON ANY INFORMATIO N AFTER PERUSAL OF THE RETURN FILED BY THE APPELLANT. FROM THE RETURN OF I NCOME FILED BY THE 30 APPELLANT, IT IS CLEARLY MENTIONED THAT THE SHARE C APITAL AMOUNT ALONGWITH PREMIUM WAS ONLY RS.4.60 CRORES, HOWEVER, IN THE RE ASONS RECORDED ASSESSING OFFICER HAS MENTIONED THE SHARE CAPITAL A MOUNT AS RS.4,65,98,OOO/-. ASSESSING OFFICER HAS COPIED THI S FIGURE FROM THE LETTER OF THE INVESTIGATION WING. THIS CLEARLY INDICATES T HAT AO HAS NOT FORMED ITS OWN REASON OF BELIEF AND HE HAS ONLY BELIEVED T HE CONTENT OF THE LETTER OF THE INVESTIGATION WING. THIS CONTENT ALSO CLEARL Y INDICATES THAT WHILE GRANTING THE SATISFACTION BY THE ADDL. CIT, HE HAS NOT GONE THROUGH THE RECORDS AND NOT VERIFIED THE FACTS SENT BY THE INVE STIGATION WING. THE MISMATCH OF THE FIGURE OF SHARE CAPITAL, WHETHER OR ITS RS.4,65,98,OOO/- HAS NOT BEEN LOOKED INTO BY THE ADDL.CIT, AT THE TI ME OF GIVING APPROVAL FOR ISSUING THE NOTICE U/S 148 OF THE IT ACT. THERE FORE, THE LD. CIT(A) HAS AGREED WITH THE CONTENTION OF THE AR OF THE ASSESSE E THAT THERE IS NO TANGIBLE MATERIAL AVAILABLE AT THE TIME OF RECORDIN G THE REASONS FOR REOPENING THE CASE. THE MAIN OBSERVATION OF THE IN VESTIGATION WING IS THAT ASSESSEE COMPANY HAS CHARGED SHARE PREMIUM @RS .240/- PER SHARE WHICH IS VERY HIGH BUT HOW THIS CHARGING OF HEAVY S HARE PREMIUMS INDICATE THE ESCAPEMENT OF INCOME IS NOT NARRATED I N THE LETTER. AO HAS ALSO NOT APPLIED HIS MIND TO FIND OUT HOW THERE IS AN ESCAPEMENT OF INCOME IN THE FORM OF SHARE CAPITAL AND SHARE PREMI UM. AFTER CONSIDERING THESE FACTS, WE FIND THAT AO HAS WRONGLY ASSUMED T HE JURISDICTION U/S 147 OF THE IT ACT. THE SEQUENCE IN THE CHART WHICH IS APPEARING ON PAGE 13 OF THIS ORDER ALSO CLEARLY INDICATES THAT AO HA S NOT GIVEN PROPER OPPORTUNITY TO THE ASSESSEE TO FILE THE OBJECTION A GAINST THE ISSUE OF NOTICE U/S 148 OF THE ACT. THE OBJECTIONS DISPOSED OFF BY THE AO ARE ALSO NOT A SPEAKING ONE. AO HAS RELIED UPON THE CASE OF HON'BLE SUPREME COURT CIT V. RAJESH JHAVERI STOCK BROKERS PVT. LTD. 291 ITR 500 (SC) AND REJECTED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THIS JUDGEMENT AND ALSO INFORMATION RECEIVED FROM THE INVESTIGATION WI NG. HE HAS NOT CONSIDERED THE FACTS, OBJECTIONS AND CASE LAWS CITE D BY THE LD. AR OF THE ASSESSEE. THE DIRECTIONS GIVEN BY THE HON'BLE SUPRE ME COURT IN GKN DRIVESHAFTS (INDIA) LTD. V. ITO (2003) 259 ITR 83 ( SC) WAS NOT FOLLOWED 31 IN THE CASE OF THE ASSESSEE. IT IS ALSO IMPORTANT T O NOTE THAT NOTICE U/S 143(2) WAS ISSUED ON 11-06-2014 AND THE OBJECTIONS WERE DISPOSED OFF ON 27-06-2014. AFTER 27-06-2014, NO NOTICE U/S 143( 2) WAS ISSUED. THE ORDER WAS PASSED ON 30-06-2014, HOWEVER, IT WAS GET TING TIME BARRED ON 31-03-2015. THE ACTION OF THE AO CLEARLY INDICATES THAT PROPER OPPORTUNITY TO THE ASSESSEE WAS NOT GIVEN. EVEN AFT ER DISPOSING OFF THE OBJECTIONS, NO NOTICE U/S 143(2) WAS ISSUED. HENCE, THE LD. CIT(A) AGREED WITH THE CONTENTIONS OF THE LD. ARS OF THE ASSESSEE THAT NOTICE ISSUED U/S 143(2) OF THE IT ACT IS PREMATURE AND HENCE NONEST. AFTER CONSIDERING THE FACTS AS NARRATED ABOVE, LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE AO HAS WRONGLY ASSUMED THE JURISDICTION U/S 147 OF THE IT ACT AND ALSO NOT GIVEN PROPER OPPORTUNITY TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. WE DRAW SUPPORT FROM THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT V. MEENAKSHI OVERSEAS (P) LTD. V. ITO 395 ITR 677 (DEL) WHICH IS DIRECTLY APPLICABLE IN THE P RESENT CASE WHEREIN IT HAS BEEN HELD AS UNDER:- 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE REASONS TO BELIEVE CONTAIN NOT THE REASONS BUT THE CONCLUSIONS OF THE AO ONE AFTER THE OTHER. THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO TO THE TANGIBLE MATERIAL WHICH FORMS THE BASIS OF THE REAS ONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT. INDEED IT I S A BORROWED SATISFACTION'. THE REASONS FAIL TO DEMONS TRATE THE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORM ATION OF THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SATISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, NO ERROR HAS BEEN COMMITTED BY THE ITAT IN THE IMPUGNED ORDER IN CONCLUDING THAT THE INITIATION OF THE PROCEEDINGS UNDER SECTION 147/148 OF THE ACT TO REO PEN THE ASSESSMENTS FOR THE AYS IN QUESTION DOES NOT SA TISFY THE REQUIREMENT OF LAW. 38. THE QUESTION FRAMED IS ANSWERED IN THE NEGATIVE , I.E., IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE. 32 THE APPEAL IS, ACCORDINGLY, DISMISSED BUT WITH NO O RDERS AS TO COSTS. 6.1 THE JUDICIAL DECISIONS RELIED UPON BY THE LD. D R HAVE BEEN DULY CONSIDERED. IN OUR CONSIDERED VIEW, WE DO NOT FIND ANY PARITY IN THE FACTS OF THE DECISIONS RELIED UPON WITH THE PECULIAR FACT S OF THE CASE IN HAND. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCE S OF THE CASE, THE GROUNDS RAISED AGAINST THE ASSUMPTION OF JURISDICTI ON U/S 147 WERE RIGHTLY ALLOWED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE LEGAL ISSUE AND REJECT THE GROUND NO. 1 RAISED BY THE REVENUE BEFOR E US. 6.2 AS REGARDS GROUND NO. 2 ON MERITS OF THE CASE I S CONCERNED, WE NOTE THAT AO HAS NOT MADE ANY ENQUIRIES ON HIS OWN. HE H AS ONLY ASKED THE QUESTION ABOUT THE REASON FOR CHARGING THE HIGH PRE MIUM @RS.240/- PER SHARE. THE ASSESSEE HAS FILED ITS REPLY VIDE LETTER DT. 30-06-2014. WITHOUT CONSIDERING THE FACTS MENTIONED BY THE LD. ARS OF T HE ASSESSEE, AO ADDED THE AMOUNT WITH THE FOLLOWING REMARKS: ' DOCUMENTS WERE FILED BY COUNSEL OF ASSESSEE ON 30-0 6-2014 OF SHARE HOLDERS AS ON 31-03-2007 ALONGWITH THEIR CONFIRMATIONS, BANK STATEMENT, ITR ACKNOWLEDGEMENTS , BALANCE SHEETS AS ON 31.03.2007 ETC SO AS TO JUSTIF Y THREE INGREDIENTS REQUIRED U/S 68 OF THE ACT SUCH AS IDEN TITY, GENUINENESS, CREDITWORTHINESS ETC OF THE INVESTORS. THE SAME WERE EXAMINED AND FOUND TO BE ROUTINE DOCUMENTS AS FILED BEFORE INVESTIGATION WING. HENCE REPLY OF THE ASSES SEE IS NOT ACCEPTABLE AND THE ASSESSEE HAS FAILED IN DISCHARGI NG ITS ONUS U/E 68 OF THE IT ACT, 1961. 8. ASSESSEE IN ITS OBJECTIONS FILED ON 27-06-2014 M ENTIONED FILING OF THESE DOCUMENTS BEFORE INVESTIGATION WING AND VERIFICATION CAUSED BY INVESTIGATION WING. SINCE RE -ASSESSMENT PROCEEDINGS ARE INDEPENDENT AND SEPARATE PROCEEDING S, THEREFORE, ASSESSEE WAS REQUIRED TO DISCHARGE ITS O NUS BEFORE THE AO. IT IS OBVIOUS FROM THE ABOVE FACTS THAT TRA NSACTIONS OF ASSESSEE WITH THE INVESTEE COMPANIES HAVING RECEIVE D CAPITAL OF RS.4.60 CRORES AT A PREMIUM OF RS.240 PER SHARE WITHOUT ANY JUSTIFICATION IS NOT GENUINE. THE RATIO OF THE FOLLOWING CASE LAWS ARE IN FULL SUPPORT WITH THIS CASE. 33 I) CIT V. NUPUR BUILDERS & DEVELOPERS PVT. LTD. ITA NO.120/2012, DELHI HIGH COURT. II) CIT V. NR PORTFOLIO PVT. LTD. ITA NO.1018 OF 20 11, DELHI HIGH COURT. 9. THEREFORE, AFTER CAREFUL EXAMINATION OF DETAILS FORWARDED BY THE INVESTIGATION WING AND ALSO AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE, RS. FOUR CRORES SIXTY LAKHS RECEIVED BY ASSESSEE AS CAPITAL IS ADDED BACK TO TH E INCOME OF THE ASSESSEE U/S. 68 OF THE IT ACT. 6.3 WE FIND THAT THE REMARKS OF THE AO CLEARLY INDI CATE THAT ASSESSEE HAS FILED ALL THE NECESSARY DOCUMENTS BEFORE THE IN VESTIGATION WING TO PROVE THE IDENTITY OF THE COMPANIES, THEIR CREDITWO RTHINESS AND GENUINENESS OF THE TRANSACTION. AO HAS REJECTED THE SE DOCUMENTS ON THE GROUND THAT THESE ARE ROUTINE DOCUMENTS. REGARDING THE CHARGING OF PREMIUM @RS.240/- PER SHARE, AO COMMENTED THAT THI S EXPLANATION WAS FILED BEFORE THE INVESTIGATION WING, SINCE REASSESS MENT PROCEEDING IS DIFFERENT FROM THE PROCEEDINGS OF THE INVESTIGATION WING, APPELLANT HAS NOT DISCHARGED ITS ONUS. FROM THE COMMENTS MENTIONE D IN PARA 8 REPRODUCED ABOVE CLEARLY INDICATES THAT ASSESSEE HA S GIVEN EXPLANATION FOR CHARGING THE HIGH RATE OF PREMIUM. WITHOUT CON SIDERING THOSE FACTS AND EXPLANATION, HE HAS JUST SET ASIDE THE EXPLANAT ION ON THE GROUND THAT THESE EXPLANATIONS WERE FILED BEFORE THE INVESTIGAT ION WING. HOWEVER, THE AO WAS SUPPOSED TO GIVE REASONS FOR NOT ACCEPTING T HOSE EXPLANATIONS. AO HAS RELIED UPON THE CASE OF (I) CIT V. NUPUR BUI LDERS & DEVELOPERS PVT. LTD. ITA NO.120/2012, DELHI HIGH COURT (II) CIT V. NR PORTFOLIO PVT. LTD. ITA NO.1018 OF 2011, DELHI HIGH COURT. THE FACTS OF THESE CASES ARE ENTIRELY DIFFERENT FROM THE FACTS OF THIS CASE. IN THE PRESENT CASE, AO HAS 34 PROCEEDED ENTIRELY ON THE FINDINGS OF THE INVESTIGA TION WING AND NO INVESTIGATION WAS MADE BY HIM. HE HAS NOT MADE ANY ENQUIRY DURING THE RE-ASSESSMENT PROCEEDINGS. HE HAS EVEN NOT DISCLOSE D THE FACTS ON WHICH HE HAS TREATED THAT AMOUNT OF RS. 4.60 CRORES AS A DEEMED INCOME OF THE ASSESSEE. CHARGING OF HIGH RATE OF PREMIUM, EVEN IF ASSESSEE HAS NOT STARTED ITS BUSINESS HAS NO BEARING ON THE ACCEPTAN CE OF THE SHARE APPLICATION MONEY AND SHARE PREMIUM. ONLY THE COMPA NIES WHICH HAVE APPLIED FOR THE SHARES AND PAID THE PREMIUM CAN EXP LAIN THE REASONS FOR PAYING SO MUCH HIGH PREMIUM. AO HAS NOT MADE ANY EN QUIRIES FROM THOSE COMPANIES. THE ENQUIRIES CONDUCTED BY THE INV ESTIGATION WING ALSO DO NOT INDICATE ANY ADVERSE FINDINGS AGAINST THE AS SESSEE. AFTER CONSIDERING THE WHOLE ISSUE, THE ASSESSEE HAS ESTAB LISHED ALL THE INGREDIENTS REQUIRED U/S 68 OF THE IT ACT. 6.4 WE FURTHER FIND THAT THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. GANGESHWARI METAL (P) LTD. (2013) 214 TAXMAN 42 3 (DELHI) (HC) HAS DEALT THE SIMILAR ISSUE AND DISTINGUISHED THE CA SE LAW OF NOVA PROMOTERS AND FINLEASE (P) LTD. AS UNDER:- AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES O F CASES HAVE BEEN INDICATED ONE IN WHICH THE ASSESSING OFFI CER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE O THER IN WHICH THE ASSESSING OFFICER 'SITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJECT THE SAME ON THE PRESUMPTIONS. THE PRESENT CASE FALLS IN THE LATTER CATEGORY. HERE THE ASSESSING OFFICER AFTER NOTING T HE FACTS, MERELY REJECTED THE SAME. THIS WOULD BE APPARENT FR OM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESS MENT ORDER TO THE FOLLOWING EFFECT- 35 INVESTIGATION MADE BY THE INVESTIGATION WING OF TH E DEPARTMENT CLEARLY SHOWED THAT WAS NOTHING BUT A SHAM TRANSACTION OF ACCOMMODATION ENTRY. THE ASSESSEE WAS ASKED TO EXPLAIN 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 THA T THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSE E. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WA S STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS.55,50,000/- AND NOT RS. 1,11,50,000/- AS MENTION ED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS O F SUCH RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN OF T HE PARTIES MENTIONED IN THE NOTICE. THE ASSESSEE HA S FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENT ION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORR ECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS . 55,50,000/-. THE ASSESSEE HAS FURTHER TRIED TO EXP LAIN THE SOURCE OF THIS AMOUNT OF RS. 55,50,000/- BY FURNISHING COPIES OF SHARE APPLICATION MONEY, BALAN CE SHEETS ETC. OF THE PARTIES MENTIONED ABOVE AND ASSE RTED THAT THE QUESTION OF ADDITION IN THE INCOME OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE ASSESSEE HAS BEEN DULY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN THE H ANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRI ES OF RS. 55,50,000/- RECEIVED BY THE ASSESSEE ARE TRE ATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS INCOME. SINCE I AM SATIS FIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF ITS INCOME/ PENALTY PROCEEDINGS UNDER SECTION 271(1 ) 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. HOWE VER THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHAB LE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) LTD. (SUPRA). THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESSEE HAD FURNISHED ALL THE MATERIAL WHICH WE HAVE ALREADY RE FERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MA DE 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. 36 6.5 THE JUDICIAL DECISIONS RELIED UPON BY THE LD. D R HAVE BEEN DULY CONSIDERED. IN OUR CONSIDERED VIEW, WE DO NOT FIND ANY PARITY IN THE FACTS OF THE DECISIONS RELIED UPON WITH THE PECULIAR FACT S OF THE CASE IN HAND. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCE S OF THE CASE, THE ADDITION MADE BY THE AO WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREF ORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AN D REJECT THE GROUND NO. 2 RAISED BY THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISM ISSED ORDER PRONOUNCED ON 26/07/2019. SD/- SD/- [B.R.R. KUMAR] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 26/07/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENC HES