ITO, New Delhi V. M/s Om Machines (P) Ltd., New Delhi

ITA 5779/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91237 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P DUM KANUNJANA
• Keywords: Bogus Share capital; Gift; Search and seizure; Principle of natural justice; Accommodation entries
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A. NO.5779/DEL/2012 ASSESSMENT YEAR : 2008-09 ITO, WARD 13(4), VS. M/S. OM MACHINES (P) LTD., NEW DELHI C-115, MANSAROVAR GARDEN, NEW DELHI-110 015 GIR / PAN:AAACO1693G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. DUM KANUNJANA, SR. DR RESPONDENT BY : SHRI RAJESH JAIN, FCA DATE OF HEARING : 13.05.2015 DATE OF PRONOUNCEMENT : 25.06.2015 ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY REVENUE FOR THE ASSESSM ENT YEAR 2008-09 AGAINST HT ORDER OF LD. CIT(A) - XVI, NEW DELHI DAT ED 16.07.2012 RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.30, 00,000/- U/S 68 OF THE ACT AS UNEXPLAINED SHARE CAPITAL /SHARE PREMIUM BY NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE PHYSICAL IDENTITY, THE CREDIT WORTHINESS AND GENUINENESS OF TRANSACTIONS AS THE IDENTIFY OF SHARE APPLICANTS IS NOT PROVED BY THE M ERE FILING OF SOME PAPERS. 2. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 30,00,000/- U/S 68 OF THE ACT APPRECIATING THE FACT THAT THE DETAILS F ILED BY THE ASSESSEE WERE NOT ENOUGH TO PROVE THE CREDITWORTHINESS IN VI EW OF THE FACT THAT NO SUBSTANTIVE EVIDENCE WAS PRODUCED TO SHOW THAT A NY BUSINESS WAS BEING CARRIED OUT BY THE ALLEGED SHAREHOLDERS OR TH E SOURCES OF ITA NO.5779/DEL/2012 2 DEPOSIT IN THE BANKS EXISTING IN THEIR NAMES AND AL SO OF THE FACT THAT THE SEARCH CONDUCTED U/S132DISCLOSED THAT SAID THREE COMPANIES ARE BOGUS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 WAS FILED ON 15 TH OCTOBER 2008 DECLARING INCOME OF RS.1,856/-. THE SAID RETURN OF INCOME WAS PROCESSED UNDER THE PROVISIONS OF SECTION 143(1) AND THEREAFT ER, THE CASE OF ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT. FINALLY, THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 21.12.2010 A T A TOTAL INCOME OF RS.30,01,856/-. THE DISPARITY BETWEEN THE RETURNED AND ASSESSED INCOME WAS ON ACCOUNT OF ADDITION OF SHARE APPLICATION MON EY RECEIVED FROM THE FOLLOWING COMPANIES TREATING IT AS UNDISCLOSED INCO ME U/S 68 OF THE ACT. S.NO. NAME AND ADDRESS OF COMPANY FROM WHOM CLAIM OF SHARE CAPITAL/SHARE PREMIUM MADE VALUE OF SHARES AT PAR (AS CLAIMED) SHARE PREMIUM (AS CLAIMED) TOTAL SHARE HOLDERS FUND CLAIMED TO HAVE BEEN RAISED DURING THE YEAR 1 M/S. TAURAS IRON & STEELS CO. PVT. LTD. 13/34, WEA, IV FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI 1,00,000 9,00,000 10,00,000 2 M/S. BHAWANI PORTFOLIO P. LTD. 13/34, WEA, IV FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI 1,00,000 9,00,000 10,00,000 3 M/S. THAR STEELS P. LTD. 13/34, WEA, IV FLOOR, MAIN ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI 1,00,000 9,00,000 10,00,000 3,00,000 27,00,000 30,00,000 ITA NO.5779/DEL/2012 3 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE RESPONDENT ASSESSEE COMPANY WAS CALLED UPON TO PROVE THE IDENTITY, GENU INENESS AND CREDITWORTHINESS OF ABOVE SHARE APPLICANTS. THE A. O. DOUBTED THE GENUINENESS OF THESE TRANSACTIONS AS HE RECEIVED IN FORMATION FORM INVESTIGATION WING OF THE DEPARTMENT THAT THE BUSIN ESS PREMISES OF THE ABOVE COMPANIES IS THE SAME AS THE ADDRESS OF THE COMPANY BELONGING TO ONE SHRI TARUN GOYAL WHO IS ALLEGED TO BE ENGAGED IN THE BUS INESS OF PROVIDING ACCOMMODATION ENTRIES AND THOSE THREE COMPANIES ALL EGED TO BE BELONGING TO SHRI TARUN GOYAL AND, THEREFORE, HE PRESUMED THAT T HE APPELLANT COULD HAVE USED HIS UNACCOUNTED MONEY FOR THE PURPOSE OF OBTAI NING THESE BOOK ENTRIES FROM THOSE COMPANIES AND HE, THEREFORE, DOUBTED THE GENUINENESS AND CREDITWORTHINESS OF THOSE THREE COMPANIES. EVEN TH E RESPONDENT ASSESSEE WAS ASKED TO PRODUCE THE DIRECTORS OF THOSE COMPANI ES BEFORE THE A.O. THE RESPONDENT ASSESSEE HAD NOT PRODUCED DIRECTORS BEFO RE THE A.O. THE RESPONDENT ASSESSEE SUBMITTED THAT ALL THE SHARE AP PLICANTS ARE CORPORATE ASSESSEES, WHICH ARE DULY INCORPORATED UNDER THE PR OVISIONS OF COMPANIES ACT, 1956 AND ASSESSED TO INCOME TAX AND THEY FILED COPIES OF THEIR RETURN OF INCOME AND FURNISHED PARTICULARS OF PAN. THE SUB MISSIONS MADE BY THE RESPONDENT ASSESSEE COMPANY DID NOT FIND FAVOUR WIT H THE A.O. THE A.O. HELD THAT RECEIPT OF SHARE APPLICATION MONEY FROM T HOSE COMPANIES IS A DEVICE FOR CONVERTING BLACK MONEY INTO WHITE THROUG H ENTRY PROVIDERS AND HENCE, A.O. MADE ADDITION OF RS.30 LACS TO THE INCO ME OF ASSESSEE COMPANY U/S 68 OF THE ACT. 4. AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, AN APPE AL WAS FILED BEFORE LD. CIT(A) XVI, NEW DELHI, WHO VIDE ORDER DATED 16. 07.2012 ALLOWED THE APPEAL BY HOLDING THAT THE RESPONDENT ASSESSEE COMP ANY HAD DISCHARGED ITS ITA NO.5779/DEL/2012 4 ONUS OF PROVING THE IDENTITY BY FILING COPIES OF IN COME TAX RETURNS AND THEIR BANK STATEMENT AND COPIES OF SHARE APPLICATION MONE Y PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F LOVELY EXPORTS PVT. LTD. 216 CTR 195 AND HON'BLE DELHI HIGH COURTS DEC ISION IN THE CASE OF CIT VS VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334 . AGGRIEVED BY THIS ORDER, REVENUE HAS COME IN THE PRESENT APPEAL BEFOR E US. 5. IT WAS ARGUED BY LD. D.R. THAT LD. CIT(A) HAS FA ILED TO PROPERLY APPRECIATE THE EVIDENCE GATHERED BY THE DEPARTMENT AGAINST THE ASSESSEE AND HE FURTHER ARGUED THAT MERELY BY FILING COPIES OF S HARE APPLICATION FORMS AND CONFIRMATION LETTERS DO NOT ESTABLISH CONCLUSIVELY THAT THE TRANSACTIONS ARE GENUINE AND THE MERE FACT THAT THE PAYMENTS WERE RE CEIVED THROUGH BANKING CHANNEL IS NOT THE SACROSANCT AND THE A.O. IS VERY MUCH ENTITLED TO PROBE THE MATTER FURTHER. THE ASSESSEE HAD ALSO FAILED TO RE BUT THE EVIDENCES GATHERED BY INVESTIGATION WING OF THE DEPARTMENT AND THESE T HREE COMPANIES WERE AMONG 90 COMPANIES OPERATED BY MR. TARUN GOYAL FOR THE PURPOSE OF CARRYING OUT THE BUSINESS OF ENTRY PROVIDERS. 6. LD. A.R. PLACED HEAVY RELIANCE ON THE ORDER OF L D. CIT(A) AND SUBMITTED THAT THE ASSESSEE COMPANY HAD DISCHARGED ITS ONUS THAT WAS LYING UPON IT AND THEREFORE, NO ADDITION WAS WARRANTED. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE IDENTICAL ISSUE WAS CONSIDERED BY HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS NOVA PROMPTERS AND FINL EASE (P) LTD. 342 ITR 169 (DEL.). AFTER CONSIDERING SUBMISSIONS MADE THE REIN, HON'BLE HIGH COURT HELD AS UNDER: SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMP LETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRES SES, INCOME TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICA TION FORMS AND ITA NO.5779/DEL/2012 5 SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ET C. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POS SESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTE D UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UN DER SEC.68 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE S HARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE AFRAID THAT WE CANNOT A PPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSIN G OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHE S THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF- CONFESSED 'ACCOMMODATION ENTRY PROVIDERS', WHOSE BU SINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT TH EIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AN D THE ASSESSEE. THE RATIO 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 B Y THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROV IDERS'. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE-MEDIT ATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNI VANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABIL ITY 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 ESTABLISH THE ID ENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GEN UINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVI DENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJE CT THE SAME, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY IN TO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JU STICE TO EXPRESS A VIEW TO THE CONTRARY. THE CASE OF CIT VS ORISSA CORPORATION (1986) 159 IT R EXEMPLIFIES THE CATEGORY OF CASES WHERE NO ACTION IS TAKEN BY T HE ASSESSING OFFICER TO VERIFY OR CONDUCT AN ENQUIRY INTO THE PA RTICULARS ABOUT THE CREDITORS FURNISHED BY THE ASSESSEE, INCLUDING THEI R INCOME-TAX FILE NUMBERS. IN THE SAME CATEGORY FALL CASES DECIDED BY THIS COURT IN DOLPHIN CANPACK (2006) 283 ITR 190, CIT V MAKHNI AN D TYAGI P. ITA NO.5779/DEL/2012 6 LTD. (2004) 267 ITR 433, CIT V ANTARTICA INVESTMENT P. LTD. (2003) 262 ITR 493 AND CIT V ACHAL INVESTMENT LTD. (2004) 268 ITR 211. TO PUT IT SIMPLY, IN THESE CASES THE DECISION WAS BASE D ON THE FUNDAMENTAL RULE OF LAW THAT EVIDENCE OR MATERIAL A DDUCED BY THE ASSESSEE CANNOT BE THROWN OUT WITHOUT ANY ENQUIRY. THE RATIO DOES NOT EXTEND BEYOND THAT. THE BOUNDARIES OF THE RATIO CAN NOT BE, AND SHOULD NOT BE, WIDENED TO INCLUDE THEREIN CASES WHERE THER E EXISTS MATERIAL TO IMPLICATE THE ASSESSEE IN A COLLUSIVE ARRANGEMENT W ITH PERSONS WHO ARE SELF-CONFESSED 'ACCOMMODATION ENTRY PROVIDERS'. 40. REFERENCE WAS ALSO MADE ON BEHALF OF THE ASSESS EE TO THE RECENT JUDGMENT OF A DIVISION BENCH OF THIS COURT IN CIT V . OASIS HOSPITALITIES PRIVATE LIMITED, (2011) 333 ITR 119. WE HAVE GIVEN UTMOST CONSIDERATION TO THE JUDGMENT. IT DISPOSES O F SEVERAL APPEALS IN THE CASE OF DIFFERENT ASSESSEES. EXCEPT THE CASE OF CIT V OASIS HOSPITALITIES P LTD. (ITA NOS.2093 & 2095/2010), TH E OTHER CASES FALL UNDER THE CATEGORY OF ORISSA CORPORATION (SUPRA). H OWEVER, IN THE CASE OF OASIS HOSPITALITIES P LTD., THERE IS REFERE NCE TO INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE INVESTIG ATION WING OF THE REVENUE ON THE BASIS OF WHICH IT WAS FOUND THAT SIX INVESTORS BELONG TO ONE MAHESH GARG GROUP WHO WERE NOT CARRYING ON ANY REAL BUSINESS ACTIVITY AND WERE ENGAGED IN THE BUSINESS OF PROVID ING ACCOMMODATION ENTRIES. THEY WERE ENTRY OPERATORS AN D THE ASSESSEE IN THAT CASE WAS ALLEGED TO BE A BENEFICIARY. WHILE DISPOSING OF THESE APPEALS, THIS COURT OBSERVED: - 'THE ASSESSEES FILED COPIES OF PAN, ACKNOWLEDGEMENT OF FILING INCOME TAX RETURNS OF THE COMPANIES, THEIR BANK ACCOUNT ST ATEMENTS FOR THE RELEVANT PERIOD, I.E., FOR THE PERIOD WHEN THE CHEQ UES WERE CLEARED. HOWEVER, THE PARTIES WERE NOT PRODUCED IN SPITE OF SPECIFIC DIRECTION OF THE AO INSTEAD OF TAKING OPPORTUNITIES IN THIS B EHALF. SINCE THE SO- CALLED DIRECTORS OF THESE COMPANIES WERE NOT PRODUC ED ON THIS GROUND COUPLED WITH THE OUTCOME OF THE DETAILED INQUIRY MA DE BY THE INVESTIGATING WING OF THE DEPARTMENT, THE AO MADE T HE ADDITION. THIS ADDITION COULD NOT BE SUSTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING PAN NUMBER, BANK ACCOU NT, COPIES OF INCOME TAX RETURNS OF THE SHARE APPLICANTS, ETC. WE ALSO FIND THAT THE ASSESSING OFFICER WAS INFLUENCED BY THE INFORMATION RECEIVED BY THE INVESTIGATING WING AND ON THAT BASIS GENERALLY MODU S OPERANDI BY SUCH ENTRY OPERATORS IS DISCUSSED IN DETAIL. HOWEVE R, WHETHER SUCH ITA NO.5779/DEL/2012 7 MODUS OPERANDI EXISTED IN THE PRESENT CASE OR NOT W AS NOT INVESTIGATED BY THE AO. THE ASSESSEE WAS NOT CONFRO NTED WITH THE INVESTIGATION CARRIED OUT BY THE INVESTIGATING WING OR WAS GIVEN AN OPPORTUNITY TO CROSS-EXAMINE THE PERSONS WHOSE STAT EMENTS WERE RECORDED BY THE INVESTIGATING WING.' THESE QUOTED OBSERVATIONS CLEARLY DISTINGUISH THE P RESENT CASE FROM CIT V OASIS HOSPITALITIES P LTD. (SUPRA). EXCEPT FO R DISCUSSING THE MODUS OPERANDI OF THE ENTRY OPERATORS GENERALLY, TH E ASSESSING OFFICER IN THAT CASE HAD NOT SHOWN WHETHER ANY LINK BETWEEN THEM AND THE ASSESSEE EXISTED. NO ENQUIRY HAD BEEN MADE IN T HIS REGARD. FURTHER, THE ASSESSEE HAD NOT BEEN CONFRONTED WITH THE MATERIAL COLLECTED BY THE INVESTIGATION WING OR WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PERSONS WHOSE STATEMENTS WERE REC ORDED BY THE INVESTIGATION WING. 41. IN THE CASE BEFORE US, NOT ONLY DID THE MATERIA L BEFORE THE ASSESSING OFFICER SHOW THE LINK BETWEEN THE ENTRY P ROVIDERS AND THE ASSESSEE- COMPANY, BUT THE ASSESSING OFFICER HAD AL SO PROVIDED THE STATEMENTS OF MUKESH GUPTA AND RAJAN JASSAL TO THE ASSESSEE IN COMPLIANCE WITH THE RULES OF NATURAL JUSTICE. OUT O F THE 22 COMPANIES WHOSE NAMES FIGURED IN THE INFORMATION GIVEN BY THE M TO THE INVESTIGATION WING, 15 COMPANIES HAD PROVIDED THE S O-CALLED 'SHARE SUBSCRIPTION MONIES' TO THE ASSESSEE. THERE WAS THU S SPECIFIC INVOLVEMENT OF THE ASSESSEE-COMPANY IN THE MODUS OP ERANDI FOLLOWED BY MUKESH GUPTA AND RAJAN JASSAL. THUS, ON CRUCIAL FACTUAL ASPECTS THE PRESENT CASE STANDS ON A COMPLETELY DIFFERENT F OOTING FROM THE CASE OF CIT V OASIS HOSPITALITIES P. LTD. (SUPRA). 42. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE UN ABLE TO UPHOLD THE ORDER OF THE TRIBUNAL CONFIRMING THE DELETION OF TH E ADDITION OF RS.1,18,50,000 MADE UNDER SECTION 68 OF THE ACT AS WELL AS THE CONSEQUENTIAL ADDITION OF RS.2,96,250. WE ACCORDING LY ANSWER THE SUBSTANTIAL QUESTIONS OF LAW IN THE NEGATIVE AND IN FAVOUR OF THE DEPARTMENT. THE ASSESSEE SHALL PAY COSTS WHICH WE A SSESS AT RS.30,000/-. ITA NO.5779/DEL/2012 8 8. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY HO N'BLE HIGH COURT IN THE CASE OF NOVA PROMOTERS AND FINLEASE (P) LTD. (S UPRA), WE HOLD THAT LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF R.30 LACS IN AS MUCH AS THE RESPONDENT ASSESSEE HAD FAILED TO ESTABLISH CON CLUSIVELY THREE ESSENTIAL INGREDIENTS IDENTITY, GENUINENESS AND CREDITWORTHI NESS OF SHARE APPLICANTS. FURTHER, LD. CIT(A) HAD ALSO FAILED TO NOTICE THAT THE RESPONDENT ASSESSEE COMPANY FAILED TO PRODUCE THE DIRECTORS OF SHARE AP PLICANTS BEFORE THE A.O. AS HELD BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NOVA PROMOTERS AND FINLEASE (P) LTD. THAT THE RATIO LAID DOWN BY H ON'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS PVT. LTD. IS NOT APPLICA BLE AND CIT(A) ADOPTED WRONG APPROACH IN ALLOWING THE APPEAL BY HOLDING TH AT THE A.O. HAD FAILED TO POINT OUT SOURCE FROM WHICH MONEY WAS RECEIVED BY T HE ASSESSEE COMPANY BEFORE MAKING ADDITION U/S 68. THIS OBSERVATION GO ES AGAINST THE RATIO LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF A. GO VINDARAJULU MUDALIAR VS CIT 34 ITR 807 (S.C.), THIS ARGUMENT ADVANCED BY THE ASSESSEE WAS REJECTED BY THE HON'BLE SUPREME COURT VENKATARAMA A IYAR J., SPEAKING FOR THE COURT, OBSERVED AS UNDER (AT PAGE 810): NOW, THE CONTENTION OF THE APPELLANT IS THAT ASSUM ING THAT HE HAD FAILED TO ESTABLISH THE CASE PUT FORWARD BY HIM , IT DOES NOT FOLLOW AS A MATTER OF LAW THAT THE AMOUNTS IN QUESTION WER E INCOME RECEIVED OR ACCRUED DURING THE PREVIOUS YEAR, THAT IT WAS TH E DUTY OF THE DEPARTMENT TO ADDUCE EVIDENCE TO SHOW FROM WHAT SOU RCE THE INCOME WAS DERIVED AND WHY IT SHOULD BE TREATED AS CONCEAL ED INCOME. IN THE ABSENCE OF SUCH EVIDENCE, IT IS ARGUED, THE FINDING IS ERRONEOUS. WE ARE UNABLE TO AGREE. WH4ETHER A RECEIPT IS TO BE T REATED AS INCOME OR NOT, MUST DEPEND VERY LARGELY ON THE FACTS AND CIRC UMSTANCES OF EACH CASE. IN THE PRESENT CASE, THE RECIPES ARE SHOWN I N THE ACCOUNT BOOKS OF AFFIRM OF WHICH THE APPELLANT AND GOVINDASWAMY M UDALIAR WERE PARTNERS. WHEN HE WAS CALLED UPON TO GIVE EXPLANAT ION HE PUT FORWARD TWO EXPLANATIONS, ONE BEING A GIFT OF RS.80 ,000 AND THE OTHER BEING RECEIPT OF RS.42,000 FROM BUSINESS OF WHICH H E CLAIMED TO BE THE ITA NO.5779/DEL/2012 9 REAL OWNER. WHEN BOTH THESE EXPLANATIONS WERE REJE CTED, AS THEY HAVE BEEN IT WAS CLEARLY OPEN TO THE INCOME TAX OFFICER TO HOLD THAT THE INCOME MUST BE CONCEALED INCOME. THERE IS AMPLE AU THORITY FOR THE POSITION THAT WHERE AN ASSESSEE FAILS TO PROVE SATI SFACTORILY THE SOURCE AND NATURE OF CERTAIN AMOUNT OF CASH RECEIVED DURIN G THE ACCOUNTING YEAR, THE INCOME TAX OFFICER IS ENTITLED TO DRAW TH E INFERENCE THAT THE RECEIPT ARE OF AN ASSESSABLE NATURE. THE CONCLUSIO N TO WHICH THE APPELLATE TRIBUNAL CAME APPEARS TO US TO BE AMPLY W ARRANTED BY THE FACTS OF THE CASE. THERE IS NO GROUND FOR INTERFER ING WITH THAT FINDING, AND THESE APPEALS ARE ACCORDINGLY DISMISSED WITH CO STS. 9. THEREFORE, WE ARE UNABLE TO UPHOLD THE ORDER OF CIT(APPEALS) AND HEREBY CONFIRM THE ADDITION MADE BY A.O. 10. IN THE RESULT, APPEAL FILED BY REVENUE IS ALLOW ED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2015. SD./- SD./- ( I. C. SUDHIR) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 25.06. 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.5779/DEL/2012 10 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23/6 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 24,24, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 25/6/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 25/6 SR. PS/PS 7 FILE SENT TO BENCH CLERK 25/6 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER