M/s.. Prinku Landfin (p) Ltd., New Delhi V. ITO, New Delhi

ITA 6004/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3704 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 29-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Source of fund; Question of law; Onus to prove
• Section: 234B; 133(6); 131; 68

Judgement Text

26 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. FOR THE ABOVE REASONS, THIS COURT IS OF OPINION THA T THE REVENUES APPEAL HAS TO SUCCEED. THE QUESTIONS FRAMED ARE ANS WERED IN THE AFFIRMATIVE, IN FAVOUR OF THE REVENUE; THE IMPUGNED ORDER (AND THAT OF THE APPELLATE COMMISSIONER), ARE HEREBY SET ASIDE A ND THE ORDER OF THE AO IS RESTORED. THE APPEAL IS THEREFORE ALLOWED . 8.31. THUS, THE FACTS OF THIS CASE CLEARLY SHOW THAT THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE SHAR E APPLICANTS AS THE APPELLANT FAILED TO PRODUCE THE PERSONS. THE CREDIT WORTHINESS OF THE SAID CREDITORS WITH RESPECT TO THE CASH CREDITS IN QUESTION WAS ALSO NOT PROVED. THE PERSONS GIVING THE LOANS SHOW MEAGRE IN COME AND INSUFFICIENT CASH LEADING TO DOUBTS ABOUT THEIR CRE DITWORTHINESS. IN A LOT OF CASES THERE IS A DEPOSIT OF THE SAME AMOUNT AS WAS INVESTED AND THEN WITHDRAWAL EITHER ON THE SAME DAY ON WITHI N A FEW DAYS. BESIDES THIS DEPOSIT, THE BALANCE AT ANY POINT OF T IME IS VERY NEGLIGIBLE. THE SOURCES OF INCOME HAD NOT BEEN GIVEN. FURTHER, NO EVIDENCE WAS GIVEN TO PROVE THE GENUINENESS OF THE TRANSACTION. 8.32. THE APPELLANT HAS NOT BEEN ABLE TO PRO VE THE IDENTITY OR CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENE SS OF THE TRANSACTIONS. A SUM OF RS.2.44 CRORES WAS FOUND CRE DITED IN THE BOOKS OF THE APPELLANT AS SHARE APPLICATION MONEY A ND NO EXPLANATION WAS GIVEN BY THE APPELLANT ABOUT THE NA TURE AND SOURCE THEREOF. IN VIEW THEREOF THE AMOUNT CREDITED IS CON SIDERED TO BE UNEXPLAINED. I THEREFORE CONFIRM THE ADDITION OF RS .2.44 CRORES MADE BY THE AO. THIS GROUND OF APPEAL IS RULED AGAINST T HE APPELLANT. 27 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. 3.1. THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. PB-2 6 IS LIST OF SHARE APPLICANTS. THE A.O. ISSUED NOTICE US 133(6) TO ALL PARTIES AND MAJORITY OF THEM CONFIRMED MAKING INVESTMENT IN ASSESSEE COMPANY. COPIES OF THE SAME ARE FILED AT PAGES 149 TO 270 OF THE PAPER BOOK. PB-27 TO 148 ARE THE DOCUMENTS FILE D BEFORE A.O. IN RESPECT OF SHARE APPLICANTS WHICH ARE THE C ONFIRMATIONS, BANK STATEMENTS, AUDITED ACCOUNTS, ROC, ETC., AND I NCOME TAX RECORDS TO PROVE THE IDENTITY, CREDITWORTHINESS OF INVESTORS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE S HARES ARE ALLOTTED TO ALL THE PARTIES. STATEMENT OF SHRI TARU N GOEL AND OTHER DOCUMENTS HAVE NOT BEEN CONFRONTED TO THE ASS ESSEE. THE A.O. ASKED THE ASSESSEE TO PRODUCE ALL THE INVESTOR S VIDE ORDER SHEET DATED 16 TH DECEMBER, 2010 AND 20 TH DECEMBER, 2010. THE ASSESSEE FILED REPLY BEFORE A.O. ON 20 TH DECEMBER, 2010 (PB-22) IN WHICH THE ASSESSEE SUBMITTED THAT THE TIME IS VE RY SHORT FOR PRODUCTION OF THE PARTIES AND PARTIES ARE NOT UNDER THE CONTROL OF ASSESSEE. THEREFORE, REQUESTED THE A.O. TO KINDL Y EXERCISE HIS POWERS TO CALL FOR THEM, IN ORDER TO RECORD THEIR S TATEMENTS. HE 28 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. HAS SUBMITTED THAT A.O. DID NOT ISSUE ANY SUMMON UN DER SECTION 131 OF THE I.T. ACT TO ANY OF THE INVESTORS ON THE REQUEST OF THE ASSESSEE AND PASSED THE ASSESSMENT ORDER ON NEXT DAY I.E., ON 21 ST DECEMBER, 2010. THEREFORE, NO ADVERSE INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE. HE HAS SUBMITT ED THAT A.O. GAVE REMAND REPORT TO THE LD. CIT(A) DATED 9 TH JUNE, 2011 IN WHICH HE HAS ADMITTED THAT IDENTITY OF THE INVES TORS ARE NOT IN DISPUTE. NO CASH WAS FOUND TO HAVE BEEN DEPOSITE D IN THE ACCOUNT OF THE INVESTORS. INCOME OF THE INVESTORS I S NOT THE CRITERIA TO REJECT THE EXPLANATION OF ASSESSEE. HE HAS SUBMITTED THAT ITAT, DELHI BENCH IN THE FOLLOWING CASES DELET ED THE ADDITION ON SIMILAR CIRCUMSTANCES. (I) PRABHATAM INVESTMENT PVT. LTD., DELHI VS. ACIT, CENTRAL CIRCLE-15, NEW DELHI, ITA.NO.2523 TO 2525/DEL./2015, DATED 17.04.2017 (II) ACIT, CENTRAL CIRCLE-17, NEW DELHI VS. M/S. TR N ENERGY PVT. LTD., NEW DELHI, ITA.NO.453/DEL./2016 DATED 01.01.2018. 3.2. HE HAS, THEREFORE, PRAYED THAT ADDITION MAY B E DELETED. 29 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. 4. THE LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REFERRED TO PAR A-8 OF THE APPELLATE ORDER IN WHICH THE LD. CIT(A) HAS SPECIFI CALLY NOTED LOW INCOME SHOWN BY THE INVESTORS. HE HAS, THEREFOR E, SUBMITTED THAT THE CREDITWORTHINESS OF THE INVESTOR S HAVE NOT BEEN PROVED. THE LD. D.R. RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF MAF ACADEMY PVT. LTD., 361 ITR 258 AND NAVODYA CASTLE PVT. LTD., 367 ITR 3 06 WHICH IS CONFIRMED BY THE HONBLE SUPREME COURT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSEE AT THE ASSESSMENT STAGE PR ODUCED SUFFICIENT EVIDENCES BEFORE A.O. IN SUPPORT OF THE EXPLANATION TO HAVE RECEIVED GENUINE SHARE CAPITAL MONEY FROM 15 P ARTIES, WHICH ARE, CERTIFICATE OF THEIR INCORPORATION, COPY OF ITR, CONFIRMATIONS, BANK STATEMENTS, BALANCE-SHEET AND P AYMENT DETAILS WHICH ARE ALSO NOTED IN THE WRITTEN SUBMISS IONS OF THE ASSESSEE IN THE APPELLATE ORDER. THE A.O. FILED TH E REMAND REPORT DATED 9 TH JUNE, 2011 BEFORE LD. CIT(A) IN WHICH HE HAS 30 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. MENTIONED ABOUT THE INFORMATION RECEIVED FROM INVES TIGATION WING ABOUT THE SEARCH CONDUCTED IN THE CASE OF SHRI TARUN GOEL THAT ASSESSEE RECEIVED SO MUCH MONEY OF RS.20 LAKHS FROM M/S. TORUS IRON AND STEEL CO. PVT. LTD., WHICH INFORMATI ON NOT AVAILABLE IN SCRUTINY ASSESSMENT AND ASSESSEE DID N OT RECEIVE ANY SUCH AMOUNT FROM THIS COMPANY NOT SHOWN IN BOOK S. THE A.O. IN THE REMAND REPORT ACCEPTED THAT ASSESSEE FI LED CONFIRMATIONS FROM ALL THE PARTIES TO PROVE GENUINE NESS OF THE PARTIES BUT DID NOT PRODUCE THE PARTIES FOR EXAMINA TION. THE NOTICE UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO THE PARTIES AND 07 OF THE INVESTORS HAVE FILED THEIR REPLIES DI RECTLY TO A.O. CONFIRMING INVESTMENTS IN ASSESSEE-COMPANY. THE A.O . THEREFORE, NOTED IN THE REMAND REPORT THAT IT IS NO T DENIED THAT ASSESSEE HAD ESTABLISHED THE IDENTITY OF THESE PART IES BUT THE FACT REMAINED THAT SHARE APPLICANTS HAD NEVER APPEA RED BEFORE A.O. LEARNED COUNSEL FOR THE ASSESSEE PRODUCED ALL THE REPLIES FILED BY THESE 07 INVESTORS BEFORE A.O. IN RESPONSE TO NOTICE UNDER SECTION 133(6) FROM PAGES 149 TO 270 OF PAPER BOOK. ALL THESE INVESTORS HAVE CONFIRMED MAKING INVESTMENTS I N ASSESSEE 31 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. COMPANY AND FILED THEIR AFFIDAVITS, CONFIRMATION CO PY OF PAN, AUDITED ACCOUNTS ETC. THE EXISTENCE OF OTHER PARTIE S HAVE NOT BEEN DISPUTED. THE A.O. IN THE ASSESSMENT ORDER HAS SIMPLY MENTIONED THAT HE HAS ISSUED LETTERS OF ENQUIRY UND ER SECTION 133(6) TO THOSE PARTIES BUT HE DID NOT DELIBERATELY DISCUSSED ANYTHING IN THE ASSESSMENT ORDER ABOUT THE RESULT O F THE ENQUIRY AND REPLIES RECEIVED FROM 07 PARTIES ALONG WITH THE DOCUMENTS FURNISHED BY THEM. THE A.O, THEREFORE, DI D NOT DISCUSS AND CONSIDER ANY MATERIAL EVIDENCE COLLECTE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE ASSESSMENT ORDER. IT IS, THEREFORE, PROVED THAT THE A.O. WITHOUT JUSTIFI CATION WANTED TO FASTEN LIABILITY UPON ASSESSEE TO MAKE ADDITION UNDER SECTION 68 OF THE I.T. ACT. ON THIS REASON ITSELF, THE ENTI RE ASSESSMENT ORDER HAS BEEN VITIATED AND ADDITION IS LIABLE TO B E DELETED. THE LD. CIT(A) CONFIRMED THE ADDITION BECAUSE ASSESSEE DID NOT ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE INVESTORS AND THAT THEY HAVE NOT BEEN PRODUCED BY THE ASSESSEE FO R THEIR STATEMENTS. THE A.O. IN THE ASSESSMENT ORDER NOTED THAT VIDE ORDER SHEET DATED 16 TH DECEMBER, 2010 AND ALSO ON 20 TH 32 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. DECEMBER, 2010 ASSESSEE WAS ASKED TO PRODUCE THE IN VESTORS. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PB -22 WHICH IS REPLY FILED BEFORE A.O. ON DATED 20 TH DECEMBER, 2010 IN WHICH THE ASSESSEE EXPLAINED BEFORE A.O. THAT REQUISITE I NFORMATION HAVE ALREADY BEEN FURNISHED AND TIME GIVEN FOR PROD UCTION OF THE PARTIES WAS VERY SHORT AND THESE PARTIES ARE NO T UNDER THE CONTROL OF THE ASSESSEE. A REQUEST WAS MADE TO THE A.O. TO EXERCISE HIS POWERS TO CALL THEM IN ORDER TO RECORD THEIR STATEMENTS. IT WAS, THEREFORE, PROVED THAT ASSESSEE HAS MADE A REQUEST TO THE A.O. ON 20 TH DECEMBER, 2010 THAT THE INVESTORS MAY BE SUMMONED UNDER SECTION 131 OF THE I.T. ACT F OR THEIR PRODUCTION FOR RECORDING THEIR STATEMENTS AT ASSESS MENT STAGE IN ORDER TO VERIFY GENUINENESS OF THE TRANSACTION I N THE MATTER. HOWEVER, THE A.O. DID NOT ISSUED ANY SUMMONS UNDER SECTION 131 OF THE I.T. ACT ON THE REQUEST OF THE ASSESSEE AND THE A.O. PASSED THE ASSESSMENT ORDER ON NEXT DAY I.E., ON 21 ST DECEMBER, 2010 ITSELF. THE HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF MANNALAL MURALIDHAR 79 ITR 540 HELD THAT A.O. SHOULD ASSIST 33 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. THE ASSESSEE BY EXERCISING POWER TO ENABLE THE ASSE SSEE TO PRODUCE EVIDENCE OTHERWISE ASSESSMENT WOULD VITIATE . 5.1. THE HONBLE M.P. HIGH COURT IN THE CASE OF CI T VS. RAMESH CHANDRA SHUKLA (MAIT.NO.71 OF 2003 DECIDED O N 1 ST APRIL, 2005) HELD THAT IT IS NOW WELL SETTLED THAT WHERE ASSESSEE REQUESTS THE A.O. TO ISSUE SUMMONS, TO ENFORCE ATTE NDANCE OF THE CREDITORS TO ESTABLISH THE GENUINENESS AND CAPACITY OF THE CREDITORS, IT IS THE DUTY OF THE A.O. TO ENFORCE AT TENDANCE OF CREDITORS BY ISSUING SUMMONS. IF THE A.O. DOES NOT CHOOSE TO ISSUE SUMMONS AND EXAMINE THE CREDITORS, HE CANNOT, SUBSE QUENTLY TREAT THE LOANS STANDING IN THE NAME OF SUCH CREDIT ORS AS NON- GENUINE NOR ADD THE AMOUNT THEREOF TO ASSESSEES IN COME. 5.2. SINCE, IN THIS CASE, A.O. AT THE FAG END OF T HE ASSESSMENT ASKED THE ASSESSEE TO PRODUCE THE INVEST ORS AND DID NOT ISSUE SUMMONS US 131 ON THE REQUEST OF ASSESSEE TO ENFORCE THE ATTENDANCE OF THE INVESTORS, NO ADVERSE INFEREN CE COULD BE DRAWN AGAINST THE ASSESSEE AND NO ADDITION COULD BE MADE AGAINST THE ASSESSEE TREATING THE INVESTMENT AS NON -GENUINE FOR 34 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. NON-PRODUCTION OF PARTIES. THE AUTHORITIES BELOW NO TED THAT IDENTITY OF THE INVESTORS HAVE NOT BEEN PROVED AS T HEY HAVE NOT BEEN PRODUCED BUT THE A.O. IN THE REMAND REPORT ADM ITTED THAT ASSESSEE PROVED IDENTITY OF THE INVESTORS. SINCE TH E A.O. DID NOT ISSUE SUMMONS UNDER SECTION 131 OF THE I.T. ACT FOR PRODUCTION OF THE INVESTORS, THEREFORE, IT COULD NOT BE THE GR OUND TO REJECT THE EXPLANATION OF ASSESSEE. THE ASSESSEE ALSO SUBM ITTED BEFORE AUTHORITIES BELOW THAT HE DOES NOT KNOW ANY TARUN G OEL AND HE WAS NOT RELATED TO ASSESSEE IN ANY MANNER AND ASSES SEE HAS NOT RECEIVED ANY SHARE APPLICATION MONEY FROM THE COMPA NIES WHICH ARE CONTROLLED BY SHRI TARUN GOEL. THE ASSESS EE EXPLAINED THAT NO INCRIMINATING MATERIAL WAS PROVID ED TO THE ASSESSEE AND STATEMENT OF SHRI TARUN GOEL WAS NOT A LLOWED CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE. THERE IS NO DENIAL OF THESE FACTS IN THE FINDINGS OF THE AUTHORITIES B ELOW. THEREFORE, IT STANDS ESTABLISHED THAT THE STATEMENT OF SHRI TA RUN GOEL WAS NOT SUBJECTED TO CROSS-EXAMINATION ON BEHALF OF THE ASSESSEE AND NO ADVERSE MATERIAL WAS CONFRONTED TO THE ASSES SEE. THEREFORE, SUCH MATERIAL OR STATEMENT CANNOT BE REA D IN 35 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. EVIDENCE AGAINST THE ASSESSEE. WE, RELY UPON THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF KISHANCHAND CH ELARAM 125 ITR 713. THE LD. CIT(A) IN HIS FINDINGS REJECTE D THE EXPLANATION OF ASSESSEE WITH REGARD TO CREDITWORTHI NESS OF THE CREDITORS BECAUSE THE INCOME SHOWN BY THE INVESTORS WERE LOW. HOWEVER, THE A.O. HAS NOT UNDERTAKEN ANY INVESTIGAT ION OF THE VERACITY OF THE DOCUMENTS FILED BY THE ASSESSEE TO VERIFY THE CREDITWORTHINESS OF THE CREDITORS FROM THEIR BANK S TATEMENTS AND THE BALANCE SHEET FILED ON RECORD PARTICULARLY WHEN ALL THE DOCUMENTARY EVIDENCES IN ALL THE CASES WERE FILED A ND MOST OF THEM ALSO CONFIRMED INVESTMENT IN ASSESSEE-COMPANY THROUGH REPLIES IN RESPONSE TO NOTICE UNDER SECTION 133(6) OF THE I.T. ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VRINDAVAN FARMS FARMS PVT. LTD., ETC., IN ITA.NO.71 OF 2015 D ATED 12 TH AUGUST, 2015 HELD AS UNDER : THE SOLE BASIS FOR THE REVENUE TO DOUBT THEIR CREDITWORTHINESS WAS THE LOW INCOME AS REFLECTED IN THEIR RETURN OF INCOME. IT WAS OBSERVED BY THE ITA T THAT THE AO HAD NOT UNDERTAKEN ANY INVESTIGATION OF 36 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. THE VERACITY OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE, THE DEPARTMENTAL APPEAL WAS DISMISSED BY THE HONBLE HIGH COURT. 5.3. THEREFORE, SUCH POINT COULD NOT BE CONSIDERED AGAINST THE ASSESSEE FOR MAKING THE ADDITION. FURTH ER, IT IS NOT THE CASE OF THE AUTHORITIES BELOW THAT CASH WAS FOU ND DEPOSITED IN THE BANK ACCOUNTS OF THE INVESTORS BEFORE MAKING INVESTMENTS IN ASSESSEE-COMPANY. THE AUTHORITIES BE LOW HAVE ALSO NOT BROUGHT ANY EVIDENCE ON RECORD IF THE INVE STMENTS CAME FROM THE COFFERS OF THE ASSESSEE-COMPANY. THUS ALL THE POINTS RAISED BY THE AUTHORITIES BELOW TO REJECT THE EXPLA NATION OF ASSESSEE ARE NOT JUSTIFIED AND WOULD NOT SUPPORT TH E CASE OF THE REVENUE. THE EVIDENCES ON RECORD CLEARLY SUPPORT TH E EXPLANATION OF ASSESSEE-COMPANY THAT ASSESSEE-COMPA NY PROVED ALL THE INGREDIENTS OF SECTION 68 OF THE I.T . ACT BY PROVING IDENTITY OF THE INVESTORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION IN THE MATTER. 37 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. 5.4. DECISION OF DELHI HIGH COURT IN THE CASE OF C IT VS KAMDHENU STEEL & ALLOYS LTD. & ORS. 361 ITR 0220 (D ELHI) IN WHICH IT WAS HELD AS UNDER : ONCE ADEQUATE EVIDENCE/MATERIAL IS GIVEN, WHICH WO ULD PRIMA FACIE DISCHARGE THE BURDEN OF THE ASSESSEE IN PROVING THE IDENTITY OF SHAREHOLDERS, GENUINENESS OF THE TR ANSACTION AND CREDITWORTHINESS OF THE SHAREHOLDERS, THEREAFTE R IN CASE SUCH EVIDENCE IS TO BE DISCARDED OR IT IS PROVED TH AT IT HAS CREATED EVIDENCE, THE REVENUE IS SUPPOSED TO MAKE THOROUGH PROBE BEFORE IT COULD NAIL THE ASSESSEE AN D FASTEN THE ASSESSEE WITH SUCH A LIABILITY UNDER S.68; AO F AILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHE R INVESTIGATION AND THEREFORE ADDITION UNDER S.68 WAS NOT SUSTAINABLE. 5.5. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. LAXMAN INDUSTRIAL RESOURCES PVT. LTD., ITA. NO.169 OF 2017 DATED 14 TH MARCH, 2017, IN WHICH IT WAS HELD AS UNDER : 38 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. THE CIT(A) TOOK NOTE OF THE MATERIAL FILED BY THE ASSESSEE AND PROVIDED OPPORTUNITY TO THE AO IN REMAND PROCEE DINGS. THE AO MERELY OBJECTED TO THE MATERIAL FURNISHED BU T DID NOT UNDERTAKE ANY VERIFICATION. THE CIT(A) DELETED THE ADDITION BY RELYING UPON THE DECISION OF THE HONBL E APEX COURT IN THE CASE OF LOVELY EXPORTS PVT.LTD. (SUPRA ) AND JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268. THE ITA T CONFIRMED THE OPINION OF THE LD.CIT(A). HONBLE HI GH COURT IN VIEW OF THE ABOVE FINDINGS NOTED THAT THE ASSESS EE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. THE ASSESSEE PROVIDED DETAILS OF SHARE APPLICANTS I.E. COPY OF THE PAN, ASSESSMENT PARTICULARS, MODE OF AMOUNT INV ESTED THROUGH BANKING CHANNEL, COPY OF RESOLUTION AND COP IES OF THE BALANCE SHEET. THE AO FAILED TO CONDUCT ANY SC RUTINY OF THE DOCUMENT, THE DEPARTMENTAL APPEAL WAS ACCORDING LY DISMISSED. 39 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. 5.6. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. (I) DWARAKADHISH INVESTMENT P. LTD., (ITA.N O. 911 OF 2010) AND (II) DWARKADHISH CAPITAL P. LTD., (ITA.NO .913 OF 2010) (2011) 330 ITR 298 (DEL.) (HC), IN WHICH IT WAS HEL D AS UNDER : IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC O NE. THOUGH IN SECTION 68 OF THE INCOME TAX ACT, 1961, THE INIT IAL BURDEN OF PROOF LIES ON THE ASSESSES YET ONCE HE PROVES TH E IDENTITY OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISH ING THEIR PAN NUMBER OR INCOME-TAX ASSESSMENT NUMBER AND SHOW S THE GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO T HE REVENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANT S COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIV E THE REVENUE THE RIGHT TO INVOKE SECTION 68. ONE MUST NO T LOSE SIGHT OF THE FACT THAT IT IS THE REVENUE WHICH HAS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER , IT IS SETTLED LAW THAT THE ASSESSEE NEED NOT TO PROVE THE 'SOURCE 40 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. OF SOURCE'. THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF FINANCING AND TRADING OF SHARES. FOR TH E ASSESSMENT YEAR 2001-02 ON SCRUTINY OF ACCOUNTS, TH E ASSESSING OFFICER FOUND AN ADDITION OF RS.71,75,000 IN THE SHARE CAPITAL OF THE ASSESSEE. THE ASSESSING OFFICE R SOUGHT AN EXPLANATION OF THE ASSESSEE ABOUT THIS ADDITION IN THE SHARE CAPITAL. THE ASSESSEE OFFERED A DETAILED EXPL ANATION. HOWEVER, ACCORDING TO THE ASSESSING OFFICER, THE AS SESSEE FAILED TO EXPLAIN THE ADDITION OF SHARE APPLICATION MONEY FROM FIVE OF ITS SUBSCRIBERS. ACCORDINGLY, THE ASS ESSING OFFICER MADE AN ADDITION OF RS.35,50,000/- WITH THE AID OF SECTION 68 OF THE ACT, 1961 ON ACCOUNT OF UNEXPLAIN ED CASH CREDITS APPEARING IN THE BOOKS OF THE ASSESSEE. HOW EVER, IN APPEAL, THE COMMISSIONER OF INCOME-TAX (APPEALS) DE LETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD PR OVED THE EXISTENCE OF THE SHAREHOLDERS AND THE GENUINENE SS OF THE TRANSACTION. THE INCOME-TAX APPELLATE TRIBUNAL CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME-T AX (APPEALS) AS IT WAS ALSO OF THE OPINION THAT THE AS SESSEE 41 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. HAD BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE AP PLICANTS AND THE SHARE APPLICATION MONEY HAD BEEN RECEIVED B Y WAY OF ACCOUNT PAYEE CHEQUES. ON APPEAL TO THE HIGH COU RT: HELD, DISMISSING THE APPEALS, THAT THE DELETION OF ADDITION WAS JUSTIFIED. 5.7. DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. WINSTRAL PETROCHEMICALS P. LTD., 330 ITR 60 3, IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT IT HAD NOT BEEN DISPUT ED THAT THE SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE - COMPANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NO RMAL BANKING CHANNELS. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE ASSES SING OFFICER. SINCE THE APPLICANT COMPANIES WERE DULY INCORPORATED , WERE ISSUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH M ONEY WAS TRANSFERRED TO THE ASSESSEE BY WAY OF ACCOUNT P AYEE CHEQUES, THEY COULD NOT BE SAID TO BE NON-EXISTENT, E VEN IF THEY, AFTER SUBMITTING THE SHARE APPLICATIONS HAD CHANGED THEIR ADDRESSES OR HAD STOPPED FUNCTIONING. THEREFORE, THE 42 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. COMMISSIONER (APPEALS) AND THE TRIBUNAL WERE JUSTIFI ED IN HOLDING THAT THE GENUINENESS OF THE TRANSACTIONS HA D BEEN DULY ESTABLISHED BY THE ASSESSEE. 5.8. DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. VALUE CAPITAL SERVICES PVT. LTD., (2008) 30 7 ITR 334 (DEL.) (HC), IN WHICH IT WAS HELD AS UNDER : DISMISSING THE APPEAL, THAT THE ADDITIONAL BURDEN WAS ON THE DEPARTMENT TO SHOW THAT EVEN IF THE SHARE APPLICANT S DID NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVESTME NT MADE BY THEM ACTUALLY EMANATED FROM THE COFFERS OF THE A SSESSEE SO AS TO ENABLE IT TO BE TREATED AS THE UNDISCLOSED INCO ME OF THE ASSESSEE. NO SUBSTANTIAL QUESTION OF LAW AROSE. 5.9. CONSIDERING THE FACTS OF THE CASE IN THE LIGH T OF MATERIAL ON RECORD, IT IS CLEAR THAT ASSESSEE-COMPA NY PRODUCED SUFFICIENT DOCUMENTARY EVIDENCES BEFORE A.O. TO PRO VE INGREDIENTS OF SECTION 68 OF THE I.T. ACT. THE ASSE SSEE ALSO ALLOTTED SHARES TO THE INVESTORS. THE A.O. DID NOT MAKE PROPER ENQUIRY ON THE EVIDENCES FILED BY THE ASSESSEE-COMP ANY ON RECORD. WHATEVER ENQUIRY WAS MADE UNDER SECTION 133 (6) OF THE ACT ARE ULTIMATELY REMAINED IN FAVOUR OF ASSESSEE A ND WAS NOT 43 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. DISCUSSED IN THE ASSESSMENT ORDER. THEREFORE, TOTAL ITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, CLEARLY PROVE THAT ASSESSEE- COMPANY DISCHARGED INITIAL ONUS TO PROVE IDENTITY O F THE INVESTOR COMPANIES, THEIR CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THE DECISIONS RELIED UPO N BY THE LD. D.R. ARE CLEARLY DISTINGUISHABLE ON FACTS. THE DECI SIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE SQ UARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.2.44 CRORES UND ER SECTION 68 OF THE I.T. ACT. THE OTHER GROUNDS I.E., CHARGIN G OF INTEREST UNDER SECTIONS 234B AND 234D OF THE I.T. ACT, ARE C ONSEQUENTIAL IN NATURE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 02 ND FEBRUARY, 2018 VBP/- 44 ITA.NO.6004/DEL./2013 M/S. PINKU LANDFIN (P) LTD., NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT F BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSESSMENT. REGISTRAR : ITAT DELHI BENCHES : DELHI.