ITO, New Delhi V. M/s G.R.G. Steels Pvt. Ltd., New Delhi

ITA 5625/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7517 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-10-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Unexplained cash credit; Gift; Search and seizure; Question of law; Accommodation entries
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL , VICE - PRESIDENT AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 5625/DEL/2012 (ASSESSMENT YEAR - 2004 - 0 5 ) ITO VS. G. R. G. STEELS P. LTD , WARD - 1 2( 2 ) ROOM NO. 337 B - 3, KALINDI COLONY, C. R. BUILDING NEW DELHI - 100 6 5 NEW DELHI, PAN:AA BCG3145J (APPELLANT) (RESPONDENT) C.O. NO. 475/DEL/2012 (IN I.T.A .NO. - 5625/DEL/2012 ) (ASSESSMENT YEAR - 2004 - 05) G. R. G. STEELS P. LTD, VS. ITO B - 3, KALINDI COLONY, WARD - 12(2) C. R. BUILDING ROOM NO. 337 NEW DELHI - 10065 NEW DELHI, PAN:AABCG3145J (APPELLANT) (RESPONDENT) REVENUE BY: - SH. SATPAL SINGH , SR. DR ASSESSEE BY: - SH. RAJAN BHATI A, CA. ORDER PER C. M. GA RG, JM. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A) - XV, NEW DELHI, VIDE DATED 0 1 . 08 .201 2 IN APPEAL NO.305/11 - 12 FOR ASSESSMENT YEAR 2004 - 05. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL: - 2 1. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.30,00,000/ - MADE BY THE AO U/S 68 OF THE I.T. ACT BEING UNEXPLAINED CREDITS. 2. LD. COMMISSIONER OF INCOME TAX (APPEALS) E RRED, IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IN DELETING THE ADDITION OF RS.30,00,000/ - IGNORING THE FACTS AND FINDINGS THAT THE INVESTORS ARE MERE ENTRY OPERATORS. 3. BRIEFLY STATED THE FACTS GIVING RISE TO REVENUE S APPEAL ARE THAT ON TH E INFORMATION RECEIVED FROM INVES TIGATION WING OF THE DEPARTMENT T HE AO INITIATED PROCEEDING U/S 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.30 LAC FROM VARIOUS FOUR ENTITIES. THE ASSESSEE SUBMITTED EXPLANATION ALONGWITH PAN NOS., COPIES OF THE ITR, AUDIT REPORTS AND AFFIDAVITS OF THE D IRECTOR OF THE ALLEGED INVESTOR COMPANIES . THE AO REJECTED THE EXPLANATION OF THE ASSESSEE COMPANY AND MADE AN ADDITION OF RS.30 LAC U/S 68 OF THE ACT WITH FOLLOWING CONCLUSION: ALL THE SUBMISSIONS MADE BY THE ASSESSE E HAVE BEEN CONSIDERED CAREFULLY, BUT NOT FOUND ACCEPTABLE. FIRST OF ALL, WE SHOULD CONSIDER THE FACT THAT THE FACTS AND CIRCUMSTANCES OF A CASE MAY VARY WITH THE OTHER ONE. IT CANNOT BE SAID THAT ALL THE FACTS OF CASE ARE SIMILAR TO THE REFERRED CASES: - F URTHER, WE SHOULD NOT IGNORE THE FACTS EMERGED FROM THE SURVEY/SEARCH OPERATION CONDUCTED ON VARIOUS COMPANIES / INDIVIDUALS ETC. BY THE INVESTIGATION WING OF THE DEPARTMENT. IT WAS FOUND DURING THESE OPERATIONS AND POST ENQUIRIES THAT MANY COMPANIES / IN DIVIDUALS AND OTHER ENTITIES ARE INVOLVED IN GIVING 3 OR TAKING ACCOMMODATION ENTRIES. THE PURPOSE OF TAKING / GIVING THESE ENTRIES WAS NOTHING BUT TO ROUTE THROUGH UNACCOUNTED MONEY INTO BUSINESS. THE FINDINGS WERE REFERRED TO ALL THE ASSESSING OFFICER S ALO NG WITH LIST OF NAME OF THE PERSONS AND DETAILS OF TRANSACTIONS FOR FURTHER NECESSARY ACTION. THE DETAILS WERE NOT PREPARED BASELESSLY. IN FACT, IT WAS BASED ON FACTS REVEALED DURING & AFTER SEARCH / SURVEY OPERATIONS. EXTENSIVE ENQUIRIES WERE MADE BY THE INVESTIGATION WINGS BY LOOKING INTO NUMEROUS BANK ACCOUNTS, THE ACCOUNT HOLDERS, THE PERSONS OPERATING THESE ACCOUNTS AND THE PERSONS FOR WHOM SUCH ACCOUNT HOLDERS ARE W ORKING . SUMMING UP, THE REPORT WAS AS A RESULT OF THESE EXTENSIVE ENQUIRIES CARRIED OUT BY THE D.I.T. (INV.), NEW DELHI HAS ASSAILED GENUINENESS OF TRASACTIONS, WHETHER SHOWN BY BENEFICIARIES AS INFLOW OF SHARE CAPITAL / LOAN OR RECEIPT OF GIFTS OR CONSIDERATION FOR SALE OR PURCHASE. IT HAS ALSO DEALT A BODY BLOW TO THE CREDITWORTHINESS OF THE PERSONS / PERSONS CONTROLLING THE CONCERNS WHO HAVE GIVEN THESE CREDIT ENTRIES / SHARE CAPITAL / GIFTS / SALE CONSIDERATIONS AS THEY HAVE BEEN SEEN TO BE PERSONS OF NO MEANS . THE NAME OF THE ASSESSEE COMPANY WAS ALSO APPEARING IN THE LIST OF CASES REFERRED BY THE INVESTIGATION WING OF THE DEPARTMENT. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSEE COMPANY HAS NOT DENIED ANY OF THE ENTRY I.E. AMOUNT, DATED AND NAME OF THE PARTY REFERRED BY THE INVESTIGATION WING OF THE DEPARTMENT. IT WAS THE REASONS BEHIND TAKING ACTION U/S 147/148 AGAINST THE ASSESSEE COMPANY. IT IS THEREFORE IT CANNOT BE SAID AS BASELESS. WHEN THE FINDINGS & FACTS WERE CONFRONTED TO THE ASSESSEE, THEN ONUS LIE S ON THE ASSESSEE TO PROVE ITS CONTENTIONS. 4 THE FACTS AND FINDINGS OF THE INVESTIGATION WING OF THE DEPARTMENT HAVE ALREADY BEEN NARRATED ABOVE IN THE REASONS RECORDED AND MADE AVAILABLE TO THE ASSESSEE. THERE IS NO DOUBT THAT THE ASSESSEE WAS ONE OF THE COMPANY INVOLVED IN SUCH ACTIVITIES OF TAKING ACCOMMODATION ENTRIES TO ROUTE THROUGH ITS OWN UNACCOUNTED MONEY INTO BUSINESS WITHOUT GIVING ANY TAXES. THE SUPPORTING DOCUMENTS FURNISHED BY THE ASSESSEE CANNOT PROVE THE CREDITWORTHINESS OF INVESTORS. I HONO UR THE JUDGMENTS / DECISIONS OF VARIOUS HON BLE COURTS, BUT HERE IN THIS CASE HOW CAN ONE DIGEST THE FACT THAT PARTIES ARE INVESTING ITS HARD EARNED MONEY IN A COMPANY WHO WAS / IS NOT DOING ANY BUSINESS ACTIVITY AND EVEN IT WAS NOT FILING ITS INCOME TAX R ETURNS. IT IS, THEREFORE GENUINENESS OF TRANSACTIONS ARE NOT PROVED. OPPORTUNITIES WERE ALLOWED TO THE ASSESSEE TO PROVE THE GENUINENESS / CREDITWORTHINESS OF THE PERSON, BUT IT HAS FAILED IN EVERY RESPECT TO DISCHARGE ITS ONUS. IT IS, THEREFORE, NOT ONLY THE AMOUNT OF RS.15,00,000/ - AS REFERRED IN SHOW CAUSE BUT THE ENTIRE AMOUNT OF RS.30,00,000/ - REMAINED UNEXPLAINED. HENCE, IT CANNOT BE PROVED THAT THE AMOUNT OF RS.30,00,000/ - CREDITED IN ITS BOOKS OF ACCOUNT / BANK ACCOUNTS ARE NOT UNACCOUNTED MONEY OF THE ASSESSEE COMPANY. IN VIEW OF THE ABOVE, THE SUM OF RS.30,00,000/ - IS ADDED IN THE INCOME OF THE ASSESSEE BEING UNEXPLAINED CREDITS U/S 68 OF THE I.T. ACT. 4. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A) WHICH WAS ALLOWED WITH FOLLOWING OBSERVATIONS AND FINDINGS: 8.13 IN VIEW OF THE FACTUAL POSITION AS WELL AS THE JUDICIAL PRONOUNCEMENT ON THE SUBJECT, DISCUSSED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE 5 APPELLANT HAS DISCHARGED THE INITIAL ONUS OF ESTABLISHING THE BONA FIDES OF THE TR ANSACTIONS AND THE AO WAS NOT JUSTIFIED IN IGNORING VARIOUS EVIDENCES PROVIDED TO HIM BY THE APPELLANT. NOTHING ADVERSE HAS BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE AMOUNT OF SHARE APPLICATION MONEY OF RS.30,00,000/ - RECEIVED BY THE APPELLANT FROM THE SAID PARTIES REPRESENTS ITS OWN UNDISCLOSED INCOME. 8.14 IF THERE WAS DOUBT ABOUT THE SOURCE OF INVESTMENT OF THE SAID COMPANY, THEN ADDITIONS SHOULD HAVE BEEN MADE IN THE CASE OF INVESTOR COMPANY AND NOT IN THE HANDS OF THE APPELLANT COMPANY. THE HON BLE SUPREME COURT IN CIT VS. DIVINE LEASING & FINANCE LTD. (CC 375/2008) DATED 21/01/2008 HAS HELD - WE FIND NO MERIT IN THIS SPECIAL LEAVE PETITION FOR THE SIMPLE REASON THAT IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE - COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTMENT, IS FREE TO PROCEED TO RE - OPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW . RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE CIT VS. PONDY METAL AND ROLLING MILL PVT. LTD. (DELHI) (ITA NO.788/2006) DATED 19.02.2007, WHEREIN THE HON BLE COURT CONCURRED WITH THE FINDINGS OF THE APPELLATE TRIBUNAL, DELHI BENCH F THAT ONCE THE IDENTITY OF THE INVESTOR HAS BEEN MANIFEST AND IS PROVED, THE INVESTMENT CANNOT BE SAID TO BE THE UNDISCLOSED INCOME OF THE ASSESSEE. AT BEST, THE AMOUNT COULD BE ADDED IN THE HANDS OF THE INVESTOR BUT IT CERTAINLY COULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE APPEAL FILED AGAINST THE S AID DECISION, WAS DISMISSED BY THE HON BLE SUPREME COURT IN C.C. 12860/2007 DATED 08/01/2008. 8.15 ON THE SIMILAR FACTS IN THE RECENT DECISION OF HN BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOEL SONS GOLDEN ESTATE PVT. LTD (ITA 6 212/2012) DATED 11 TH APRIL, 2012 HAVE DELETED THE ADDITION MADE BY HOLDING IN PARA 3 OF THEIR ORDER AS UNDER: WE HAVE EXAMINED THE SAID CONTENTION AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS FILED CONFIRMATION LETTERS FROM THE COMPANIES, THEIR PAN NO., COPY OF BANK STATEMENTS, AFFIDAVITS AND BALANCE SHEET. THEREAFTER THE ASSESSING OF FICER HAD ASKED THE ASSESSEE TO PRODUCE THE SAID DIRECTORS / PARTIES. ASSESSEE EXPRESSED ITS INABILITY TO PRODUCE THEM. THE ASSESSING OFFICER DID NOT CONSEQUENT THERETO CONDUCT ANY INQUIRY AND CLOSED THE PROCEEDINGS. THIS IS A CASE WHERE THE ASSESSING OFFI CER HAS FAILED TO CONDUCT NECESSARY INQUIRY, VERIFICATION AND DEAL WITH THE MATTER IN DEPTH SPECIALLY AFTER THE AFFIDAVIT / CONFIRMATION ALONG WITH THE BANK STATEMENTS ETC. WERE FILED. IN CASE THE ASSESSING OFFICER HAD CONDUCTED THE SAID ENQUIRIES AND INVE STIGATION PROBABLY THE CHALLENGE MADE BY THE REVENUE WOULD BE JUSTIFIED. IN THE ABSENCE OF THESE INQUIRIES AND NON - VERIFICATION OF THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS, THE FACTUAL FINDINGS RECORDED BY THE ASSESSING OFFICER WERE INCOMPLETE AND SPARSE. THE IMPUGNED ORDER PASSED CANNOT BE TREATED AND REGARDED AS PERVERSE. THE APPEAL IS DISMISSED AS NO SUBSTANTIAL QUESTION OF LAW ARISES........ . 8.16 IN THE LIGHT OF THE ABOVE DISCUSSION AND IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF GOEL SONS GOLDEN ESTATE (SUPRA), I AM INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELLANT TO SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE APPLICATION MONEY RECEIVED BY IT WAS GENUINE TRANSACTIONS AND THE SAME WAS N OT ACCOMMODATION ENTRY. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE AO WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE APPELLANT AS ITS UNDISCLOSED INCOME. 7 IN VIEW O F OUR AFORESAID DISCUSSION, I DELETE THE ADDITION OF RS.30,00,000/ - MADE BY THE AO UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE AO RIGHTLY OBSERVED THAT THE ASSESSEE COMPANY WAS ONE OF THE COMPANY WHICH WAS INVOL VED IN SUCH ACTIVITIES OF TAKING ACCOMMODATION ENTRIES TO ROUTE THROUGH ITS OWN UNACCOUNTED MONEY INTO BUSINESS AND SUPPORTING DOCUMENTS FURNISHED BY THE ASSESSEE DID NOT PROVE THE CREDITWORTHINESS OF THE ALLEGED INVESTORS AND GENUINENESS OF TRANSACTIONS . THE LD. DR FURTHER CONTENDED THAT THE AO PROVIDED DUE OPPORTUNITIES TO THE ASSESSEE TO PROVE GENUINENESS OF IMPUGNED TRANSACTIONS AND CREDITWORTHINESS OF THE SHARE APPLICATION MONEY CONTRIBUTOR COMPANIES BUT IT WAS FAILED IN EVERY RESPECT TO DISCHARGE ITS ONUS. THE LD. DR FURTHER CONTENDED THAT THE AO WAS QUITE JUSTIFIED IN MAKING AN ADDITION OF RS.30 LAC U/S 68 OF THE ACT. 6. THE LD. DR FURTHER POINTED OUT THAT THE LD. CIT(A) GROSSLY ERRED IN HOLDING THAT THE ACTION OF THE AO WAS ERRONEOUS AND THE ASSESSE E SUBSTANTIATED THAT THE TRANSACTION REGARDING SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY WAS GENUINE AND THE SAME WAS NOT AN ACCOMMODATION ENTRY. 7. THE LD. A SSESSEE S REPRESENTATIVE (AR) REPLIED THAT THE ASSESSEE SUBMITTED ALL DETAILS AND EVIDENCE REGARDING ALLEGED INVESTORS ALONGWITH DETAILS OF NAMES, ADDRESSES, PAN NOS. COPIES OF THE AUDIT REPORTS, INCOME TAX 8 RETURNS AND AFFIDAVITS OF THE DIRECTORS OF THE INVESTOR COMPANIES BUT THE AO WITHOUT MAKING ANY FURTHER ENQUIRIES AND VERIFICATION AND SIMPLY RELYING ON THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT MADE ADDITION U/S 68 OF THE ACT. PLACING RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN CASE OF CIT VS. DIVINE LEASING AND FINANCE LTD. IN CO NO. 375/2008 DATED 21/01/2008 A ND DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. GOEL SONS GOLDEN ESTATE PVT. LTD. IN ITA NO.212/2012 DATED 11/04/2012 AND SUBMITTED THAT IN ABSENCE OF ANY FURTHER ENQUIRIES AND NON - VERIFICATION OF THE DETAILS OF EVI DENCE SUBMITTED BY THE ASS ESSEE , T HE AO WAS NOT JUSTIFIED IN THE MAKING ADDITION U/S 68 OF THE ACT. 8. ON CAREFUL CONSIDERATION OF THE ABOVE SUBMISSIONS , CONTENTIONS AND RATIO OF THE DECIS IONS RELIED BY BOTH THE PARTIES W E NOTE THAT THE AO ISSUED NOTICE U/S 148 OF THE ACT AND THE ASSESSEE SUBMITTED ALL DETAILS REGARDING ALLEGED INVESTOR COMPANY SUCH AS NAMES, ADDRESSES, PAN NOS , COPIES OF THE INCOME TAX RETURNS, AUDIT REPORTS AND AFFIDAVITS OF THE DIRECTORS OF THE RESPECTIVE INVESTOR COMPANIES. BUT THE AO WITHOUT MAKING AN Y FURTHER VERIFICATION OR ENQUIRIES ABOUT THE SAID DETAILS AND EXPLANATION OF THE ASSESSEE SIMPLY RELIED ON THE INFORMATION OF THE INVESTIGATION WING AND ACCEPTED THE SAME AS GOSPEL TRUTH FOR MAKING IMPUGNED ADDITION U/S 68 OF THE ACT. 9. COMING TO THE CO NSIDERATION OF THE RATIO OF THE DECISIONS AS RELIED BY BOTH THE PARTIES WE NOTE THAT THE LD. DR HAS PLACED RELIANCE ON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. NOVA 9 PROMOTERS AND FIN L EASE P. LTD. (2012) 342 ITR 169 AND ON THE OTHER HAND THE LD. AR HAS PLACED RELIANCE ON THE DECISIONS OF HON BLE SUPREME COURT IN THE CASE OF DIVINE LEASING (SUPRA), THE DECISIONS OF HON BLE HIGH COURT OF DELHI IN THE CASES OF CIT VS. GOEL SONS (SUPRA) AND CIT VS. GANGESHWARI METAL (P.) LTD. (2013) 30 TAXMAN.COM 328 (DELHI). WE FURTHER OBSERVE THAT THE HON BLE HIGH COURT OF DELHI IN THE CASE OF GANGESHWARI METAL (SUPRA) WHEREIN AFTER CONSIDERING THE RATIO OF THE RELEVANT DECISIONS INCLUDING THE DECISION OF HON BLE SUPREME COURT IN THE CAS E OF NOVA PROMOTERS (SUPRA) HAS HELD AS UNDER THUS: 8. MR. SABHARWAL, APPEARING ON BEHALF OF THE REVENUE/ APPELLANT SOUGHT TO PLACE RELIANCE ON A DIVISION BENCH DECISION OF THIS COURT IN CIT V. NOVA PROMOTERS AND FINLEASE (P) LTD. : (2012) 342 ITR 169 /206 TAXMAN 207/18 TAXMANN.COM 217 (DEL .). HOWEVER, ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) WE FIND THAT THE FACTS ARE CLEARLY DISTINGUISHABLE. IN FACT, IN NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) ITSELF THIS COUR T HAS OBSERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SUPRA) , AS UNDER: - THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, 10 THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO G O AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE AS SESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED ACCOMMODATION ENTRY PROVIDERS , WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE R ATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE, WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED OUT BY THE REVE NUE AUTHORITIES INTO THE ACTIVITIES OF SUCH ENTRY PROVIDERS . THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE - MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIV ANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABILITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC.68 TO PROVE AND ES TABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND T HEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS 11 CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY. (UNDERLINING ADDED) 9. AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER SITS BACK WI TH 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 THE FAC TS, MERELY REJECTED THE SAME. THIS WOULD BE APPARENT FROM THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER TO THE FOLLOWING EFFECT: - INVESTIGATION MADE BY THE INVESTIGATION WING OF THE DEPARTMENT CLEARLY SHOWED THAT THIS 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 THAT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. R ATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT RECEIVED WAS RS. 55,50,000/ - AND NOT RS . 1,11,50,000/ - AS MENTIONED IN THE NOTICE. THE ASSESSEE HAS FURNISHED DETAILS OF SUC H RECEIPTS AND THE CONTENTION OF THE ASSESSEE IN RESPECT OF THE AMOUNT IS FOUND CORRECT. AS SUCH THE UNEXPLAINED AMOUNT IS TO BE TAKEN AT RS. 55,50,000/ - . THE ASSESSEE HAS FURTHER TRIED TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS. 55,50,000/ - BY FURNISHING CO PIES OF SHARE APPLICATION MONEY, BALANCE SHEET, ETC. OF THE PARTIES MENTIONED ABOVE AND ASSERTED 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 HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF THE DEPARTMENT. AS SUCH ENTRIES OF RS. 55,50,000/ - RECEIVED BY THE ASSESSEE ARE TREATED AS AN UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE AND ADDED TO ITS 12 INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE BEING INITIATED SEPARATELY. 10. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LTD. (SUPRA) FALL IN THE FORMER CATEGORY AND THAT IS WHY THIS COURT DECIDED IN FAVOUR OF THE REVENUE IN THAT CASE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE AND FALL IN THE SECOND CATEGORY AND ARE MORE IN LINE WITH FACTS OF LOVELY EXPORTS (P) L TD. (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 REFERRED TO ABOVE. IN SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. CONSEQ UENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TRIBUNAL IS CORRECT IN LAW. 10. ON VIGILANT PERUSAL OF THE ABOVE DECISION OF HON BLE HIGH COURT IN THE CASE OF GANGESHWARI METAL (SUPRA) WE NOTE THAT THERE ARE TWO TYPES OF CASES, FIRST , THE CASES IN WHICH THE AO CARRIES OUT THE EXERCISE OF FURTHER VERIFICATION AND EXAMINATION OF DETAILS AND EVIDENCE FURNISHED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE THE TRUTHFULNESS AND GENUINENESS OF THE IMPUGNED TRANSACTIONS AND SECONDLY, THE CASES IN WHICH THE AO SITS OVER THE DETAILS, EVIDENCE AND EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT MAKING ANY FURTHER ENQUIRY OR VERIFICATION OF THE DETAILS, EVIDENCE AND EXPLANATION PROCEEDS TO REJECT AND DISMISS THE CASE AND EXPLANATION OF THE ASSESSEE AND TO MAKE ADDITION U/S 68 OF THE ACT. THEIR LORDSHIP SPEAKING FOR THE HON BLE HIGH COURT OF DELHI FURTHER HELD THAT IN THE CASE OF SECOND CATEGORY WHEREIN THE AO MAKE ADDITION WITHOUT ANY FURTHER VERIFICATION AND EXAMINATION OF THE EVIDENCE AND EXPLANAT ION OF THE 13 ASSESSEE, THE ADDITIONS SO MADE BY THE AO NOT SUSTAINABLE AS IN THAT CASE AS THERE WAS CLEAR LACK OF ENQUIRY ON THE PART OF THE AO AND IN SUCH SITUATION ADDITION U/S 68 OF THE ACT CANNOT BE HELD AS PROPER AND VALID. 11. IN THE LIGHT OF ABOVE DIS CUSSIONS AND UNDER PECULIAR FACTS AND CIRCUMSTANCES OF THE EXT A NT CASE , WE REACH TO A LOGICAL CONCLUSION THAT THE PRESENT CASE FALLS IN THE SECOND CATEGORY AS THE AO HAS NOT MADE ANY FURTHER ENQUIRY OR VERIFICATION IN REGARD TO DETAILS, EVIDENCE AND EXPLAN ATION SUBMITTED BEFORE HIM REJECTED AND DISMISSED THE SAME BY ONLY RELYING ON THE INFORMATION OF THE INVESTIGATION WING PROCEEDED TO MAKE ADDITION U/S 68 OF THE ACT. HENCE, WE ARE INCLINED TO HOLD THAT THE PRE SENT CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. GANGESHWARI METAL (SUPRA) AND WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER OF THE CIT(A). ACCORDINGLY, THE GROUN D NOS. 1 & 2 OF THE REVENUE ARE DISMISSED. C ROSS - O BJECTION . NO. 475/DEL/2012 12. WE HAVE ALSO HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. 13. DURING THE ARGUMENTS THE LD. AR FAIRLY SUBMITTED THAT THE C.O. HAS BEEN FILED TO SUPPORT THE IMPUGNED ORDER AND TO KEEP ALIVE THE LEGAL ISSUE OF QUASHING OF NOTICE U/S 148 OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT IF THE 14 DEPARTMENTAL APPEAL DOES NOT SU CCEED THEN THE ASSESSEE IS NOT SERIOUSLY PRESSING THE C ROSS - OBJECTION . 14. SINCE WE HAVE DISMISSED APPEAL OF THE REVENUE BY THE EARLIER PART OF THIS ORDER, HENCE, IN VIEW OF LD. AR S AFOREMENTIONED SUBMISSIONS CROSS - OBJECTION DOES NOT SURVIVE FOR ADJUDICA TION ON MERITS AND WE DISMISS THE SAME. 1 5 . IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS CROSS - OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER P RONOUNCED IN THE OPEN COURT ON 11 /12/2014. SD/ - SD/ - (G. D. AGRAWAL) (C. M. GARG) VICE - PRESIDENT JUDICIAL MEMBER DATED: 11 /12/2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR