ITO, New Delhi V. M/s. Kautilya Monetary Services Pvt. Ltd., New Delhi

ITA 5975/DEL/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0743 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Unexplained cash credit; Accommodation entries; Sham transactions; Documents seized; Reassessment proceedings
• Section: 143(3); 133(6); 147; 148; 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5975/DEL/2014 ASSESSMENT YEAR: 2005-06 ITO, WARD-5(2), NEW DELHI. VS. KAUTILYA MONETARY SERVICES PVT. LTD., 10, LOCAL SHOPPING CENTRE, KALKAJI, NEW DELHI. PAN: AAACK3995P CO NO.171/DEL/2015 (ITA NO.5975/DEL/2014) ASSESSMENT YEAR: 2005-06 KAUTILYA MONETARY SERVICES PVT. LTD., 10, LOCAL SHOPPING CENTRE, KALKAJI, NEW DELHI. PAN: AAACK3995P VS. ITO, WARD-5(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE & SHRI ASHISH CHADHA, CA REVENUE BY : SMT. NAINA SOIN KAPIL, SR. DR DATE OF HEARING : 08.10.2018 DATE OF PRONOUNCEMENT : 30.11.2018 ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 2 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29 TH AUGUST, 2014 OF THE CIT(A)-8, NEW DELHI, RELATING TO ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION AGAINST THE APPEAL F ILED BY THE REVENUE. FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS COMMON ORDER. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE AS SESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF NON-BANKING FINANCE COMP ANY. IT FILED ITS RETURN OF INCOME ON 31 ST OCTOBER, 2005 DECLARING LOSS OF RS.48,770/-. THE ASSESSMENT U/S 143(3) OF THE IT ACT WAS COMPLETED ON 29.11.2007 ACCEPTING THE RE TURNED INCOME. SUBSEQUENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVE STIGATION WING THAT THE ASSESSEE COMPANY INDULGED IN ACCOMMODATION ENTRIES WHICH WAS FOUND DURING THE COURSE OF POST SEARCH INVESTIGATIONS AND WHILE EXAMINING THE SEIZED RECORDS IN THE CASE OF SHRI S.K. JAIN GROUP OF COMPANIES, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUE OF NOTICE U/S 148 OF THE IT ACT ON 30.03..2012. TH E ASSESSEE, IN RESPONSE TO THE SAME, VIDE HIS LETTER DATED 23 RD APRIL, 2012, REQUESTED THE ASSESSING OFFICER TO TR EAT THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE IT ACT. THE ASSESSEE ALSO RAISED IT S OBJECTION FOR REOPENING OF THE CASE. THE ASSESSING OFFICER, VIDE ORDER DATED 26.11.2012, DISPOSED OF THE OBJECTIONS SO RAISED BY THE ASSESSEE. THEREAFTER, THE ASSESSING O FFICER ASKED THE ASSESSEE TO EXPLAIN ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 3 THE ACCOMMODATION ENTRIES SO OBTAINED BY THE ASSESS EE FROM THE FOLLOWING COMPANIES:- SL.NO. NAME OF THE PARTIES AMOUNT 1. M/S KARISHMA INDUSTRIES LTD. 51,00,000/- 2. M/S STELLERINVESTMENT LTD. 51,00,000/- 3. M/S GRAPH FINANCIAL SERVICES PVT. LTD. 30,00,000/- 4. M/S LOVELY SECURITIES PVT. LTD. 40,50,000/- 5. M/S HILLRIDGE INVESTMENT LTD. 40,50,000/- 3. THE ASSESSEE FILED BANK ACCOUNTS, MEMORANDUM AND ARTICLES OF ASSOCIATION AND THE PANS OF THE ABOVE COMPANIES TO PROVE THE IDENTI TY, GENUINENESS AND CREDIT WORTHINESS OF THE TRANSACTIONS. THE ASSESSEE ALSO FILED THE CONFIRMATION LETTERS OF THE ABOVE PARTIES. 4. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE FUNDS WERE TRAN SFERRED TO THESE COMPANIES FROM M/S GAINWELL PORTFOLIO OUT OF THE TWO ACCOUNTS MAIN TAINED BY THE SAID COMPANY WITH KOTAK MAHINDRA BANK AND BANK OF INDIA ON THE SAME D AY OR ONE OR TWO DAYS IN ADVANCE. AFTER THEN THESE PARTIES ISSUED CHEQUES T O THE ASSESSEE ON ACCOUNT OF SHARE APPLICATION MONEY. THIS FACT, ACCORDING TO THE ASS ESSING OFFICER, PROVES THAT THE ASSESSEE HAS INDULGED IN ACCOMMODATION ENTRIES BY W HICH IT ROUTED ITS UNDISCLOSED INCOME. HE FURTHER NOTED THAT THE INVESTIGATION WIN G OF THE DEPARTMENT HAVE MADE A THOROUGH INVESTIGATION WHICH REVEALED THAT THE CASH BOOK MAINTAINED SHOW THAT THESE ENTRIES WERE MADE THROUGH MEDIATOR RISHI SINGHAL AN D RISHI. HE FURTHER NOTED THAT THE CONFIRMATION LETTERS FILED BY ALL THESE COMPANIES A RE ARRANGED LETTERS BY THE ASSESSEE ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 4 WHICH WAS FILED ON THE SAME DATE AND ARE UNDATED. HE FURTHER OBSERVED THAT WHEN HE HAS NOT ISSUED ANY SUMMON OR LETTER U/S 133(6) OF T HE ACT TO THESE COMPANIES TO FILE CONFIRMATION, IT IS STRANGE THAT THEY HAVE FILED TH E CONFIRMATION ON THE SAME DAY AND, THEREFORE, IT IS BEYOND DOUBT THAT THESE LETTERS HA VE BEEN FILED BY THE ASSESSEE COMPANY ITSELF. REJECTING VARIOUS EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVING THAT THE ASSESSEE COULD NOT DISCHARGE THE ONUS CAST ON IT I. E., CREDIT WORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TRANSACTION, T HE ASSESSING OFFICER MADE AN ADDITION OF RS.2,13,00,000/- U/S 68 OF THE IT ACT. 5. BEFORE THE CIT(A), APART FROM CHALLENGING THE AD DITION ON MERIT, IT WAS ARGUED THAT THE INITIATION OF PROCEEDINGS U/S 147 WAS INVA LID. IT WAS ARGUED THAT THE ASSESSING OFFICER SHOULD HAVE TAKEN RECOURSE TO THE PROVISION S OF SECTION 153C FOR THE COMPLETION OF THE ASSESSMENT AND NOT SECTION 147. IT WAS FURTHER ARGUED THAT WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AND TH ERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR COMPLETION OF THE ASSESSMENT, THE INITIATION OF REASSESSMENT PROC EEDINGS U/S 147 BEYOND A PERIOD OF FOUR YEARS WAS BARRED BY LIMITATION. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAD NOT DISPOSED OF THE OBJECTIONS FILED BY THE ASS ESSEE AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS BY PASSING A SPEAKING ORDE R. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, THE LD.CIT(A) DELETED THE ADDITION ON MERIT. SO FAR AS THE LEGAL GROUND IS C ONCERNED, I.E., VALIDITY OF THE REASSESSMENT PROCEEDINGS, THE LD.CIT(A) QUASHED THE REASSESSMENT PROCEEDINGS ON THE ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 5 GROUND THAT SINCE THE DOCUMENTS WERE SEIZED DURING THE SEARCH U/S 132 OF THE IT ACT, THE ASSESSMENT PROCEEDINGS COULD HAVE BEEN INITIATE D U/S 153C OF THE IT ACT. THE LD.CIT(A) FURTHER HELD THAT SINCE ALL THE DETAILS W ITH REGARD TO SHARE APPLICATION RECEIVED BY THE ASSESSEE WERE ON RECORD OF THE ASSE SSING OFFICER DURING THE COURSE OF PROCEEDINGS U/S 143(3) OF THE IT ACT, THEREFORE, TH E REASSESSMENT PROCEEDINGS INITIATED AFTER A PERIOD OF FOUR YEARS WERE BARRED BY LIMITAT ION. SO FAR AS THE GROUND RELATING TO NON-DISPOSAL OF THE OBJECTIONS BY THE ASSESSEE BY P ASSING A SPEAKING ORDER IS CONCERNED, HE DECIDED THE SAME AGAINST THE ASSESSEE . 6.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE RE VENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 INSTEAD OF U/S 153C OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND LIABLE TO QUASHED? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,1 3,00,000/- MADE BY THE AO U/S 68 OF THE I.T. ACT, 1961 DESPITE HAVING THE ADVERSE INFORMATION AND PROOF FROM THE INVESTIGATION WING THAT THE ASSESSEE HAS RECEIV ED ACCOMMODATION ENTRIES WORTH OF RS.2,13,00,000/-? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2, 13,00,000/- MADE BY THE AO U/S 68 OF THE I.T. ACT, 1961 BY IGNORING THE FACT T HAT INCRIMINATING DOCUMENTS SEIZED DURING THE SEARCH OPERATION IN THE CASE OF S .K. JAIN, WHICH SHOWS/ESTABLISHED THAT THE SHARE APPLICATION MONEY HAS BEEN RECEIVED THROUGH THE SHAM TRANSACTIONS AND WERE NOT FULFILLED THE TWO MA IN CONDITION I.E. GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION? 4. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THE GROUND OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 6 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 7. THE GROUNDS RAISED BY THE ASSESSEE IN THE CO ARE AS UNDER:- 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW I N UPHOLDING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTIO N 147/148 OF THE INCOME TAX ACT, 1961 ONLY ON THE BASIS THAT SUBJECTIVE DEFINIT ION OF SPEAKING ORDER IS VERY WIDE, WHEN THE AO INITIATED REASSESSMENT PROCEEDING S UNDER SECTION 147 WITHOUT DISPOSING OF THE OBJECTION OF THE APPELLANT FOR INI TIATION OF REASSESSMENT PROCEEDINGS IN MECHANICAL MANNER WITHOUT PASSING A SPEAKING ORDER AS PER THE PROCEDURE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LIMITED V INCOME TAX OFFICER [2 003] 259 ITR 19. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW I N NOT ADJUDICATING THE LEGAL GROUND OF APPEAL IN RESPECT OF VALIDITY OF INITIATI ON OF REASSESSMENT PROCEEDINGS UNDER SECTION 147 / 148 OF THE INCOME TAX ACT, 1961 WITHOUT HAVING COGENT AND DEFINITE MATERIAL ON RECORD FOR THE ALLEGED ACCOMMO DATION ENTRIES AND ALSO WITHOUT MAKING ANY INDEPENDENT ENQUIRY ABOUT THE IN FORMATION / REPORT RECEIVED FROM THE INVESTIGATION WING REGARDING ESCAPEMENT OF INCOME . 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THE LD.CIT(A ), IN HIS ORDER, WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF TH E IT ACT, ON MERIT HAS ALSO QUASHED THE REASSESSMENT PROCEEDINGS ON TWO COUNTS, I.E., ( I) THE ASSESSING OFFICER SHOULD HAVE INITIATED THE PROCEEDINGS U/S 153C OF THE IT ACT AN D NOT U/S 147 OF THE IT ACT; AND (II) THE REASSESSMENT PROCEEDINGS INITIATED U/S 147 OF T HE ACT ARE BARRED BY LIMITATION. THE RELEVANT OBSERVATIONS OF THE CIT(A) AT PARA 3.1 ONW ARDS READ AS UNDER:- 3.1 I HAVE CONSIDERED THE FACTS OF THE CASE OF THE APPELLANT AND SUBMISSIONS MADE BY THE AR OF THE APPELLANT BEFORE ME. 3.2 THE CASE OF THE APPELLANT HAS ALREADY ASSESSED UNDER SECTION 143(3) OF THE ACT BY THE THEN AO AT RETURNED LOSS AFTER EXAMINING ALL THE DETAILS /DOCUMENTS / EXPLANATION FILED BY THE APPELLANT DURING THE COURS E OF ASSESSMENT PROCEEDINGS. THE AO ALSO EXAMINED THE DETAILS / DOCUMENTS /EXPLA NATION FURNISHED BY THE APPELLANT IN RESPECT OF SHARE APPLICATION MONEY RECEIVED DURING THE FINANCIAL ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 7 YEAR UNDER CONSIDERATION. THE AO ISSUED NOTICE UNDE R SECTION 148 FOR REASSESSMENT PROCEEDING UNDER SECTION 147 OF THE AC T FOR THE ASSESSMENT YEAR 2005 - 06 WHICH IS BARRED BY LIMITATION I.E. AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR BY ASSERTING THAT THE APPELLANT HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR ASSESSMENT. THE LD. AR OF THE APPELLANT FILED BEFORE THE UNDERS IGNED THAT THE APPELLANT HAS FURNISHED ALL THE DETAILS / DOCUMENTS / EXPLANATION S IN RESPECT OF SHARE APPLICATION MONEY RECEIVED OF RS.9,27,00,000/- SUCH AS NAME OF SHARE APPLICANTS, THEIR CONFIRMATION OF ACCOUNTS, BANK STATEMENTS, PAN, RETURN OF INCOME AND PROOF OF LATEST ADDRESS AS PER ROC RECORDS OF THE APPLICANTS TO PROVE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER SECTION 143( 3) OF THE INCOME TAX ACT, 1961. IN MY CONSIDERED VIEW, THE AO HAS ERRED IN REOPENIN G THE CASE OF THE APPELLANT UNDER SECTION 147 BY ISSUING NOTICE UNDER SECTION 1 48 WHICH IS TIME BARRED BY MAKING BALD ASSERTION THAT THE APPELLANT HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT WITHOUT POI NTING OUT THAT WHAT ARE THE MATERIAL FACTS WHICH THE APPELLANT COMPANY FAILED T O DISCLOSE FULLY AND TRULY DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961. THE APPELLANT HAS ALSO RELIED ON THE RATIO OF CASES DECIDED BY JURISDICTIONAL HIGH COURT OF DELHI, WHICH IS SQUARE LY APPLICABLE IN THE CASE OF THE APPELLANT KEEPING IN VIEW OF THE FACTS AND CIRCUMST ANCES OF THE CASE OF THE APPELLANT. HENCE, IN MY CONSIDERED VIEW, THE ARGUMENTS PUT FOR TH BY THE APPELLANT IS NOTEWORTHY, RELEVANT AND SUSTAINABLE, HENCE THIS GR OUND OF APPEAL IS ALLOWED . 9. IT IS PERTINENT TO NOTE THAT ALTHOUGH THE REVENUE H AS CHALLENGED THE ORDER OF THE CIT(A) QUASHING THE REASSESSMENT PROCEEDINGS ON THE GROUND THAT THE SAME SHOULD HAVE BEEN INITIATED U/S 153C OF THE IT ACT AND HAS ALSO CHALLENGED THE DELETION OF THE ADDITION ON MERIT, HOWEVER, THE REVENUE HAS NOT CHA LLENGED THE ORDER OF THE CIT(A) QUASHING THE REASSESSMENT PROCEEDINGS BY INVOKING T HE 1 ST PROVISO TO SECTION 147 OF THE IT ACT, I.E., BARRED BY LIMITATION. ONCE THE C IT(A) HAS QUASHED THE REASSESSMENT PROCEEDINGS ON ACCOUNT OF LIMITATION AND THE REVENU E HAS NOT CHALLENGED THE SAME, THE ORDER OF THE CIT(A) HAS ATTAINED FINALITY SO FAR AS THE SAME IS BARRED BY LIMITATION. ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 8 ONCE THE REASSESSMENT PROCEEDINGS ARE QUASHED, THE OTHER GROUNDS RAISED BY THE REVENUE IN THE APPEAL AND THE GROUNDS RAISED BY THE ASSESSEE IN THE CO BECOME INFRUCTUOUS AND ACADEMIC IN NATURE. 10. EVEN OTHERWISE ON MERIT ALSO, WE FIND THE LD.CIT(A) WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER HAS OBSERVED AS UNDER :- 4.1 I HAVE CONSIDERED THE FACTS OF THE CASE OF THE APPE LLANT AND SUBMISSIONS MADE BY THE AR OF THE APPELLANT BEFORE ME. 4.2 THE BRIEF FACT OF THE CASE IS THAT A SEARCH & S EIZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT IN THE CASE OF SK JAIN GROUP OF COMPANIES ON 14/09/2010 AND CERTAIN DOCUMENTS / ANN EXURES WERE SEIZED FROM WHICH IT HAS BEEN REVEALED THAT THE APPELLANT HAS R ECEIVED SHARE APPLICATION MONEY FROM FIVE COMPANIES OF RS 2,13,00,000/- DURING THE FINANCIAL YEAR 2004 - 05. THE APPELLANT HAS RECEIVED TOTAL SHARE APPLIC ATION MONEY OF RS 9,27,00,000/- I.E.( 2,47,200 PREFERENCE SHARES @ OF RS 75 EACH AN D PREMIUM OF RS 300/- PER SHARE) FROM THE SHARE APPLICANTS DURING THE FINANCI AL YEAR UNDER CONSIDERATION OUT OF WHICH RS 2,13,00,000/- WERE RECEIVED FROM 5 COMP ANIES WHO WERE ALLEGED TO BE ACCOMMODATION ENTRY PROVIDERS . THE APPELLANT COMPANY ISSUED 2,30,000 PREFERENCE SHARES TO 23 COMPANIES WHICH INTER ALIA INCLUDES 56,800 PREFERENCE SHARES ISSUED TO THE SAID 5 ALLEGED ACCOMMODATION E NTRY PROVIDER COMPANIES DURING THE FINANCIAL YEAR 2007 - 08. HENCE, THE LEA RNED ASSESSING OFFICER HAS TREATED THE BALANCE AMOUNT OF SHARE APPLICATION MON EY RECEIVED FROM OTHER 18 SHARE APPLICANTS WAS GENUINE AND THE PREMIUM CHARGED ON PREFERENCE SHARES ISSUED TO SAID APPLICANTS NOT HIGH OR EXCESSIVE. TH E AO INITIATED THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT AND HAS MA DE ADDITION OF RS 2,13,00,000/- BY TREATING THE SHARE APPLICATION MON EY RECEIVED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 . THE LD. AR OF THE APPELLANT HAS SUBMITTED SUFFICIEN T AND SATISFACTORY EVIDENCE IN RESPECT OF SHARE APPLICATION MONEY OF RS 2,13,00,00 0/- RECEIVED DURING THE FINANCIAL YEAR BEFORE THE LEARNED ASSESSING OFFICER . THE LD AR ALSO SUBMITTED THAT THE APPELLANT HAS SUBMITTED THE NAME OF SHARE APPLI CANTS, THEIR CONFIRMATION OF ACCOUNTS, BANK STATEMENTS, PAN, RETURN OF INCOME AN D PROOF OF LATEST ADDRESS AS PER ROC RECORDS OF THE APPLICANTS TO PROVE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS DURING THE COURSE OF REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 9 THE LD AR ALSO SUBMITTED THAT THE AO HAS HIMSELF AC KNOWLEDGED IN THE IMPUGNED ORDER THAT THE APPELLANT COMPANY HAS FURNISHED ALL THE DOCUMENTS TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE T RANSACTIONS. THE LD AR ALSO SUBMITTED THAT THE AO HAS NOT ISSUED ANY NOTICE /SUMMONS TO THE PARTIES WHO WERE ALLEGED TO BE ACCOMMODATION ENTRY PROVIDERS TO VERIFY THE TRANSACTIONS MADE WITH THE APPELLANT. THE LD AR ALSO SUBMITTED THAT THE AO HAS RELIED UPO N THE FINDINGS IN THE REPORT OF INVESTIGATION WING AND MATERIAL GATHERED BY THEM AN D NOT MADE HIS INDEPENDENT ENQUIRIES. THE AO ALSO FAILED TO CONFRONT THE MATER IAL GATHERED BY THE INVESTIGATION WING WHICH WAS RELIED UPON BY HIM FOR MAKING ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. THE LD. AR OF THE APPELLANT HAS SUBMITTED BEFORE TH E UNDERSIGNED THAT IT IS SETTLED LAW THAT ADDITION OF CASH CREDIT UNDER SECTION 68 O F THE INCOME TAX ACT, 1961 CANNOT BE MADE WHEN THE ASSESSEE DISCHARGED HIS INI TIAL ONUS BY FURNISHING NECESSARY DOCUMENTS TO PROVE THE IDENTITY, CREDITWO RTHINESS AND GENUINENESS OF TRANSACTIONS. THE BURDEN SHIFTS ON AO WHEN ASSESSEE HAS FURNISHED ALL NECESSARY DOCUMENTS TO PROVE THE IDENTITY, CREDITWORTHINESS A ND GENUINENESS OF TRANSACTIONS AND THEN THE AO SHOULD EMBARKED UPON FURTHER INQUIR Y. IF THE ASSESSING OFFICER(S) DID NOT CARE TO DISCHARGE THE ONUS WHICH WAS LAID D OWN, THE ASSESSEE CANNOT BE FASTENED WITH LIABILITY UNDER SECTION 68 OF THE INC OME TAX ACT, 1961 EVEN IN CASE SOME INFORMATION HAS BEEN RECEIVED FROM INVESTIGATI ON WING ETC. THE APPELLANT HAS RELIED ON THE DECISION OF JURISDICTIONAL HONBL E HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V GANGESHWARI METAL PRIV ATE LIMITED [2013] 214 TAXMAN 423 . THE APPELLANT ALSO FURNISHED DECISIONS RENDERED B Y JURISDICTIONAL AS WELL NON-JURISDICTIONAL HIGH COUR T / ITAT. THE RELEVANT PORTION OF CITATION OF THE CASE OF COM MISSIONER OF INCOME-TAX V GANGESHWARI METAL PRIVATE LIMITED [2013] 214 TAXMAN 423 WHICH HAVE BEEN RELIED BY THE ASSESSEE IS AS UNDER: 9 AS CAN BE SEEN FROM THE ABOVE EXTRACT, TWO TYPES OF CASES HAVE BEEN INDICATED. ONE IN WHICH THE ASSESSING OFFICER CARRI ES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSES SING OFFICER SITS BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EV IDENCE 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 FACTS, MERELY R EJECTED 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 TH E 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. ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 10 1,11,50,000/- MAY NOT BE ADDED TO ITS INCOME. IN RE SPONSE, THE ASSESSEE HAS SUBMITTED THAT THERE IS NO SUCH CREDIT IN THE BOOKS OF THE ASSESSEE. RATHER, THE ASSESSEE COMPANY HAS RECEIVED THE SHARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARE. IT WAS STATED THAT THE ACTUAL AMOUNT REC EIVED WAS RS. 55,50,000/- AND NOT RS.1,11,50,000/- AS MENTIONED IN THE NOTICE . THE ASSESSEE HAS FURNISHED DETAILS OF SUCH RECEIPTS AND THE CONTENTI ON 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 FURTHE R TRIED TO EXPLAIN THE SOURCE OF THIS AMOUNT OF RS.55,50,000/- BY FURNISHI NG COPIES OF SHARE APPLICATION MONEY, BALANCE SHEET, ETC. OF THE PARTI ES MENTIONED ABOVE AND ASSERTED THAT THE QUESTION OF ADDITION IN THE INCOM E OF THE ASSESSEE DOES NOT ARISE. THIS EXPLANATION OF THE ASSESSEE HAS BEEN DU LY CONSIDERED AND FOUND NOT ACCEPTABLE. THIS ENTRY REMAINS UNEXPLAINED IN T HE HANDS OF THE ASSESSEE AS HAS BEEN ARRIVED BY THE INVESTIGATION WING OF TH E 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 ASSESSE E AND ADDED TO ITS INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF ITS INCOME, PENALTY PROCEEDINGS UNDER SECTION 271(L )(C) ARE BEING INITIATED SEPARATELY.' 10. THE FACTS OF NOVA PROMOTERS AND FINLEASE (P) LT D. (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) 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 REFERRED TO ABOVE. I N SUCH AN EVENTUALITY NO ADDITION CAN BE MADE UNDER SECTION 68 OF THE ACT. C ONSEQUENTLY, THE QUESTION IS ANSWERED IN THE NEGATIVE. THE DECISION OF THE TR IBUNAL IS CORRECT IN LAW. THE APPEAL IS DISMISSED. THE APPELLANT SUBMITTED COPIES OF RELEVANT SEIZED D OCUMENTS AS PER ALLEGATION OF AO IN THE ASSESSMENT ORDER WHICH IS CONSIDERED CARE FULLY. (A-36/PAGE-6, A-38/10, 11, 12, 33, 34, 35 PAGES) AND BACK SIDE OF PAGE-7 O F A-37, WHICH IS PLACED IN RECORD. IN THESE SEIZED RECORDS, NO CASH DEPOSIT/RE TURN IS WRITTEN ANYWHERE. IN MY CONSIDERED VIEW, THE RATIO OF THE CASE OF COM MISSIONER OF INCOME-TAX V GANGESHWARI METAL PRIVATE LIMITED [2013] 214 TAXMAN 423 IN WHICH TWO TYPES OF CASES HAVE BEEN INDICATED ONE IN WHICH THE ASSES SING OFFICER CARRIES OUT THE EXERCISE WHICH IS REQUIRED IN LAW AND THE OTHER IN WHICH THE ASSESSING OFFICER 'SITS BACK WITH FOLDED HANDS' TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MAT ERIAL IN HIS POSSESSION AND THEN COMES FORWARD TO MERELY REJ ECT THE SAME ON THE PRESUMPTIONS . IN THE FIRST TYPE OF CASES RATIO OF CIT V. NOVA P ROMOTERS & FINLEASE (P) LTD. [2012] 342 ITR 169 (HC - DELHI) IS APPLICABLE AND ADDITION MADE BY THE AO IS SUSTAINABLE WHILE IN OTHER TYPE O F CASE RATIO OF CIT V. DIVINE ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 11 LEASING & FINANCE LTD./LOVELY EXPORTS [2008] 299 IT R 268/[2007] 158 TAXMAN 440 IS APPLICABLE AND ADDITION MADE BY THE AO IS NO T SUSTAINABLE . IN MY CONSIDERED OPINION RATIO OF THE CASE OF CIT V. DIVI NE LEASING & FINANCE LTD./LOVELY EXPORTS [2008] 299 ITR 268/[2007] 158 TAXMAN 440 IS APPLIC ABLE IN THE CASE OF THE APPELLANT COMPANY AS THE AO HAS NOT MADE ANY FURTHER ENQUIRY BY HIS OWN AND BY MAKING ADDITION BY MERE RELYING ON T HE REPORT OF THE INVESTIGATION WING. THE LD. AO HAS ERRED IN REJECTING THE EVIDENC E / DOCUMENTS FURNISHED IN SUPPORT OF IDENTITY, CREDITWORTHINESS AND GENUINENE SS OF THE TRANSACTION WITHOUT MAKING FURTHER EFFORTS TO REVEAL SOME MORE ON THE D OCUMENTS SUBMITTED BY THE APPELLANT, OTHERWISE THE DOCUMENT SUBMITTED BY THE APPELLANT IN DISCHARGING ITS INITIAL ONUS IS SUFFICIENT AND CANNOT BE SAID FALSE . HENCE, BY APPLYING THE RATIO OF THE CASE OF COMMISSIONER OF INCOME TAX V GANGESHWAR I METAL PRIVATE LIMITED (214 TAXMAN 423) AND THE RATIO OF LOVELY EXPORTS PR IVATE LIMITED WHICH IS SQUARELY APPLICABLE IN THE CASE OF APPELLANT COMPAN Y, HENCE THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT, 1961 IS NOT APPLI CABLE IN THE CASE OF THE APPELLANT COMPANY AND ADDITION OF RS 2,13,00,000/- ON ACCOUNT OF UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 IS NOT TENABLE AND IS HEREBY DELETED . THIS GROUND OF APPEAL IS ALLOWED . 11. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD .CIT(A) DELETING THE ADDITION ON THIS ISSUE. WE FIND FROM THE VARIOUS DETAILS FU RNISHED BY THE ASSESSEE THAT IT HAS RECEIVED SHARE APPLICATION MONEY AGGREGATING TO RS. 9.27 CRORE FROM VARIOUS SHARE APPLICANTS. THE ASSESSEE COMPANY HAS ISSUED SHARES @ RS.100/- WITH A PREMIUM OF RS.400/- OUT OF WHICH SHARE AMOUNT OF RS.75/- AND P REMIUM AMOUNT OF RS.300/- HAS BEEN RECEIVED BY THE COMPANY DURING THE YEAR AS SHA RE APPLICATION MONEY. THE ASSESSEE HAS ISSUED 230000 SHARES OUT OF WHICH 5680 0 SHARES HAVE BEEN ISSUED TO THE FIVE PARTIES IN QUESTION. WE FIND THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) AS WELL AS DURING THE COURSE OF PROCEEDINGS U/S 147 OF THE ACT FILED VARIOUS DOCUMENTS IN ORDER TO PROVE THE IDENT ITY AND CREDIT WORTHINESS OF THE PARTIES AS WELL AS THE GENUINENESS OF THE TRANSACTI ONS BY FILING DOCUMENTS SUCH AS FINANCIAL STATEMENTS OF THE PARTIES, BANK STATEMENT S OF THE PARTIES, INCOME-TAX RETURNS ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 12 OF THE PARTIES, PAN NOS. OF THE PARTIES, CONFIRMATI ON OF ACCOUNTS AND MASTER DATA OF THE COMPANIES AS PER THE ROC RECORDS. THE ASSESSING OF FICER HAS NOT POINTED OUT ANY DISCREPANCY IN THE DOCUMENTS SO FILED AND NOT MADE ANY FURTHER ENQUIRIES AND SIMPLY MADE THE ADDITION ON THE BASIS OF THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT. WE FIND, WHILE THE ASSESSING OFFICER H AS ACCEPTED THE SHARE APPLICATION AND SHARE PREMIUM IN CASE OF OTHERS, HE DOUBTED THE PREMIUM AT WHICH THE SHARES HAVE BEEN ISSUED TO THE ABOVE FIVE PARTIES ONLY. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT HE HAS ISSUED ANY NOTICES U/S 133(6) OF THE AC T TO THE PARTIES WHICH WERE RETURNED BACK UNSERVED OR THAT THE SHAREHOLDER COMPANIES ARE NOT AVAILABLE. THE ASSESSING OFFICER, AFTER GOING THROUGH THE EVIDENCES FURNISHE D BY THE ASSESSEE SAT WITH FOLDED HANDS AND DID NOT MAKE ANY EFFORT AND NOT MADE ANY INDEPENDENT ENQUIRY AND MADE THE ADDITION ONLY BY RELYING ON THE REPORT OF THE I NVESTIGATION WING. IT IS THE SETTLED PROPOSITION OF LAW THAT ADDITION U/S 68 OF THE ACT CANNOT BE MADE WHEN THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS CAST ON IT BY FURNI SHING NECESSARY DOCUMENTS TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APP LICANTS/LOAN CREDITORS AND GENUINENESS OF THE TRANSACTION. ONCE THE ASSESSEE SATISFIES THE INITIAL ONUS CAST ON IT, THE BURDEN SHIFTS TO THE REVENUE. HOWEVER, IN THE INSTANT CASE, IT APPEARS THAT THE ASSESSING OFFICER HAS NOT DONE HIS JOB PROPERLY. T HE VARIOUS DECISIONS RELIED ON BY THE ASSESSEE IN THE PAPER BOOK AND THE DECISIONS RE LIED ON BY THE CIT(A) ON THIS ISSUE SUPPORTS THE CASE OF THE ASSESSEE. UNDER THESE CIR CUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) DELETING THE A DDITION ON MERIT ESPECIALLY WHEN NO CONTRARY MATERIAL WAS BROUGHT BEFORE US BY THE LD. DR. ITA NO.5975/DEL/2014 CO NO.171/DEL/2015 13 12. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE AS WEL L AS THE CO FILED BY THE ASSESSEE ARE DISMISSED. THE VARIOUS OTHER GROUNDS R AISED BY THE REVENUE AS WELL AS THE GROUNDS IN THE CO FILED BY THE ASSESSEE BECOME INFR UCTUOUS IN VIEW OF OUR ABOVE DISCUSSION. 13. IN THE RESULT, THE APPEAL FILED BY THE RE VENUE AS WELL AS THE CO FILED BY THE ASSESSEE ARE DISMISSED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 3 0.11.2018. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PAND A) JUDICIAL MEMBER ACCOUNTANT MEMFBER DATED: 30 TH NOVEMBER, 2018 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI