DCIT, Circle - 6, Kolkata, Kolkata V. M/s. Great Wall Marketing (P) Ltd., Kolkata

ITA 660/KOL/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3146 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 29-04-2011
• Court: TRIBUNAL
• Assessee Lawyers: S M SURANA
• Keywords: Accommodation entries; Assessment record; Onus to prove; Reassessment proceedings
• Section: 142(1); 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM] ITA NO.660/KOL/2011 ASSESSMENT YEAR : 2002-03 D.C.I.T.,CIRCLE-6, .-VERSUS- GREAT WALL MARKETING (P)LTD. KOLKATA KOLKATA (PAN:AACCG 0768 Q) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : NONE FOR THE RESPONDENT : SHRI S.M.SURANA, ADVOCATE. DATE OF HEARING : 22.01.2016. DATE OF PRONOUNCEMENT : 03.02.2016. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE REVENUE DIRECT ED AGAINST THE ORDER DATED 24.02.2011 OF CIT(A)-VI, KOLKATA RELATING TO A.Y.2002-03. 2. THE ASSESSEE IS A COMPANY. FOR A.Y.2002-03 THE A SSESSEE FILED RETURN OF INCOME ON 31.10.2002 DECLARING TOTAL LOSS OF RS.1,5 3,241/-. RETURN WAS PROCESSED U/S 143(1)(A) ON 31.03.2003 AND ASSESSED AT A TOTAL INC OME OF RS.1,12,000/-. THEREAFTER THE AO RECEIVED INFORMATION FROM DIRECTOR OF IT (IN VESTIGATION), NEW DELHI THAT THE ASSESSEE WAS A BENEFICIARY OF ACCOMMODATION ENTRIES FOR RECEIPT OF SHARE APPLICATION MONEY FROM FOUR COMPANIES. THE INFORMATION RECEIVED WAS TO THE EFFECT THAT THE FOUR COMPANIES WERE NON-EXISTENT AND THEIR CAPACITY TO I NVEST (CREDITWORTHINESS) COULD NOT BE ESTABLISHED. BASED ON THIS INFORMATION RECEIVED AO RECORDED THE REASONS FOR ISSUING NOTICE U/S 148 OF THE ACT AND NOTICE U/S 14 8 OF THE ACT DATED 23.03.2009 WAS ISSUED. ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 2 3. IN THE PROCEEDINGS U/S 148 OF THE ACT AO CALLED UPON THE ASSESSEE TO EXPLAIN THE RECEIPT OF RS.1,74,00,000/- AS SHARE APPLICATIO N MONEY TOWARDS SHARE CAPITAL DURING THE PREVIOUS YEAR. 3.1. THE AO FIRSTLY HELD THAT THE FOUR COMPANIES RE FERRED TO BY THE DIRECTOR OF INCOME TAX (INVESTIGATION) NEW DELHI WERE NON-EXIST ENT COMPANIES AND DID NOT HAVE CAPACITY TO INVEST IN THE SHARE CAPITAL OF THE ASSE SSEE. ACCORDINGLY THE FOLLOWING AMOUNTS RECEIVED AS SHARE APPLICATION MONEY FROM T HE FOLLOWING COMPANIES WERE TREATED AS UNEXPLAINED BY THE AO A) RAM SONS DRUGS LTD. 1/56, SUNDER VIHAR, N.DELHI-8 7 RS. 5,00,000/- B) PRATEEK SECURITIES (P)LTD. RS. 5,00,000/- C) ROOPIN CAPITAL (P)LTD-301, DHAKA CHAMBER, N.DELHI-5 . RS.10,00,000/- D) ENPOL (P)LTD-1756 NAYA GATAI, N.DELHI. RS. 6,00, 000/- RS.26,00,000/- 3.2. THEREAFTER THE AO ISSUED NOTICE U/S 133(6) OF THE ACT TO THE OTHER SHARE APPLICANTS. THE RESULT OF EXERCISE CARRIED OUT BY T HE AO HAS BEEN SUMMARIZED IN THE FOLLOWING CHART GIVEN BY THE AO IN THE ORDER OF ASS ESSMENT. SL.NO. NAME OF APPLICANT & ADDRESS AS IN APPLICATION REASON FOR RETURN OF QUERY U/S 133(6) AS MENTIONED BY POSTAL AUTHORITY APPLICATION AMOUNT 1. KAILASH CHAND SHARMA 765, CHABIGANJ, KASH MERE GATE, DELHI-110006. THIS NAME DOES NOT EXIST IN THIS ADDRESS. GIVE FULL ADDRESS. MENTION C/O. RS.2,50,000/- 2. ARGENT FINVEST (P)LTD. SFS 256 4-5-B, PASCHIM VIHAR, N.DELHI-110063. HOUSE IS CLOSED FOR LONG TIME. RS.10,00,000/- 3. NEMI CHAND SAWANI NEAR MAHADEV TEMPLE, UMED CHOWK(JODHPUR),RAJASTHAN ADDRESS NOT FOUND. RS.2,50,000/- 4. WELKIN COMMERCIALS (P)LTD. SFS 256 A-5/B-4, GALI NO.7, PASCHIM VIHAR, N.DELHI-110063. HOUSE IS CLOSED FOR THE LAST 1 YEAR RS.12,50,000/- 5. LIONINE PACKAGING (P)LTD. SFS 256 4-5-B, PASCHIM VIHAR, N.DELHI-110063. HOUSE IS CLOSED FOR THE LAST 1 YR. RS.9,50,000/- 6. SAVIOUR LEASING (P)LTD. SFS 256 4-5-B, PASCHIM VIHAR, N.DELHI-110063. HOUSE IS CLOSED FOR THE LAST 1 YR. RS.8,00,000/- 7. N.S.R.CONSULTANCY (P)LTD. NO SUCH FIRM IN THIS R S.12,50,000/- ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 3 21/18, 2 ND FLR. SHAKTI NAGAR, NEW DELHI-110007. ADDRESS. 8. ISSANT PHARMACEUTICALS (P)LTD. 2250,NAYA BAZAR, N.DELHI-110006. NO SUCH FIRM THIS ADDRESS RS.6,00,000/- 9. OMNI PRESENT CREDITS (P)LTD. 208/27, V.S.BLOCK, VIKAS MARG, SHAKARPUR,N.DELHI-110092. LEFT RS.1,00,000/- 10. PRIYA FINANCIAL SERVICES (P)LTD. 208/27, V.S.BLOCK, VIKAS MARG, SHKARPUR,N.DELHI-110092. LEFT RS.1,00,000/- 11. ASIJA SECURITIES (P)LTD. FF-43, MANGAL BAZAR, LAXMI NAGAR, NEW DELHI. LEFT RS.10,00,000/- 12. RIDHKARAN GOLLCHA A-156, GERAWAL NAGAR, N.DELHI- 110009. NO SUCH PERSON AT THIS ADDRESS RSL.2,50,000/- 13. KAUSHALYA DEVI SHARMA SADAR BAZAR, MAKRANA, RAJASTHAN INCOMPLETE ADDRESS ES.2,50,000/- 14. MANJU DEVI BHAMA SADAR BAZAR, MADRANA, RAJASTHAN INCOMPLETE ADDRESS RS.2,50,000/- 15. PROFOUND EXPORTS (P)LTD B-4456 GALI NIHAL SINGH, 3 RD FLR., PAHARI DHIRAJ, N.DELHI-110006. NOTHING FOUND AT THIS ADDRESS. MAY BE LEFT FROM THIS PLACE. RS.12,00,000/- 16. PROTEND SERVICES (P)LTD. B-4456 GALI NIHAL SINGH, 3 RD FLR., KAJARO DJORAK., N.DELHI-110006. NOTHING FOUND AT THIS ADDRESS. MAY BE LEFT FROM THIS PLACE. RS.10,00,000/- 17. ASSOCIATED FINLEASE LTD. SAWAK HOUSE, 1E/12, JHANDEWATAN EXTENSION, N.DELHI-110055. NOTHING FOUND AT THIS ADDRESS MAY BE LEFT FROM THIS PLACE. RS.5,00,000/- 18. ECO STAR SECURITIES & CREDITS (P)LTD. 205,J.J.COMPLEX, G-29, LAXMI NAGAR, N.DELHI-110092. NOTHING FOUND AT THIS ADDRESS RS.9,00,000/- 19. JOVIAL SUPPLIERS (P)LTDL 21/18, 3 RD FLR., SHAKTI NAGAR, N.DELHI-110007. NO SUCH FIRM IN THIS ADDRESS. RS.11,00,000/- 20. JAY SHREE GROWTH FUNDS (P)LTD. 18/24, 1 ST FLOOR., SHAKTI NAGAR, N.DELHI-110007. NO SUCH FIRM IN THIS ADDRESS. RS.5,00,000/- 21. TOTAL INF.SOLUTION (P)LTD. 208, AGARWAL CHAMBER-IV, 27-VER SAVARKAR BLOCK , SHAKARPUR, N.DELHI-110092. NO REPLY RS.1,00,000/- 22. SAHRI-KAHRI INVESTMENT(P)LTD., E- 4/21, 1 ST FLR. KRIHNA NAGAR, N.DELHI-110051. NO REPLY RS.8,00,000/- ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 4 3.2. THE RESULTS OF THE INQUIRY CONDUCTED BY THE A O WAS CONFRONTED TO THE ASSESSEE. THE ASSESSEE GAVE NEW ADDRESSES FOR 15 OF THE 22 PA RTIES WHICH WERE AS FOLLOWS :- SL.NO . NAME OF THE COMPANY PRESENT ADDRESS AS PER ROC 1. ASIJA SECURITIES PVT. LTD. 204/1,CHITRA GUPTA ROAD, PAHARGANJ,NEWDELHI-55. 2. SAHRI-KAHRI INVESTMENTS PVT. LTD. 203/H,OSIAN BUILD ING,12, NEHRU PLACE,NEW DELHI- 19. 3. TOTAL INFO. SOLUTION PVT. LTD. 8-35, EAST KRISHNA N AGAR,DELHI-110051. 4. PRIYA FINANCIAL SERVICES PVT.LTD. J-8,MILAP MARKET, BERIWALA BAGH, SUBHASH NAGAR, NEW DELHI-64. 5. OMNI PRESENT CREDITS PVT. LTD. FLAT NO.304,2 ND FLOOR, SHRI RAM BHAWAN, RANJEET NAGAR, NEW DELHI-08. 6. BASIL INVESTMENT & HOSPITALITY AK-94, 1 ST FLOOR,SHAILIMAR BAGH,DELHI-88. SERVICES (P)LTD(FORMERLY KNOWN AS JOVIAL SUPPLIERS PVT.LTD.) 7. AGENT FINVEST PRIVATE LTD. 192, SECTOR-23,POCIKET- 1,ROHINI,DELHI-85. 8. PROFOUND EXPORTS PRIVATE LTD. 1/18-B, ASAF ALI ROAD , DARYAGANJ, DELHI-1. 9. NSR CONSULTANCY SERVICES(P)LTD. 8-M.M.ROAD, NEW DEL HI-55. 10. LIONINE PACKAGING(P)LTD. 192, SECTOR-23,POCKER-1,R OHINI,DELHI-85. 11. JAYSHREE GROWTH FUNDS PVT.LTD. AK-94, 1 ST FLOOR, SHALIMAR BAGH, DELHI-88. 12. WELKIN COMMERCIAL PVT.LTD. 2023/7, GALI NO.7, CHUNA MANDI,PAHARGANJ, DELHI. 13. ECO STAR SECURITIES PRIVAGTE LTD. 2023/7, GALI NO.7 , CHUNA MANDI,PAHARGANJ, DELHI. 14. PROTEND SERVICES PRIVATE LTD. B-40, MADHU VIHAR ITO EXTN.NEW DELHI-92. 15. SVIOUR LEASING PRIVATE LTD. AG-415,GROUND FLOOR, S HALIMAR BAGH, DELHI-88. 3.3. NOTICES U/S133 (6) WERE AGAIN SENT TO ALL THE ABOVE PARTIES ON 11-11-2009. OUT OF WHICH THE FOLLOWING NOTICES CAME BACK UNSERVED IN T HE NEW ADDRESS PROVIDED BY THE ASSESSEE. NO FURTHER ADDRESS WAS PROVIDED BY THE AS SESSEE IN RESPECT OF OTHER PARTIES. 1. TOTAL INFO. SOLUTION PVT. LTD. 2. ARGENT FINVEST PVT. LTD. 3. NSR CONSULTANCY SERVICES (P)LTD. 4. SAVIOUR LEASING PRIVATE LTD. 5. ECO STAR SECURITIES PVT. LTD. 6. WELKIN COMMERCIAL PVT. LTD. 7. OMNI PRESENT CREDITS PVT. LTD. 3.4. IN THE ABOVE CIRCUMSTANCES, THE AO CAME TO TH E CONCLUSION THAT THE ASSESSEE HAS FAILED TO PROVIDE ANY SATISFACTORY EXPLANATION REGA RDING RECEIPT OF MONEY AS SHARE APPLICATION MONEY AND/OR SOURCE AND/OR CREDITWORTHI NESS OF THE FOLLOWING PARTIES APART ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 5 FROM THE 4 PARTIES WHICH ARE FOUND TO BE NON-EXISTE NT BY INVESTIGATING OF I.TAX, NEW DELHI. SL.NO. NAME OF ASSESSEE & ADDRESS AMOUNT OF INVEST MENT 1. KAILASH CHAND SHARMA 765, CHABIGANJ, KASH MERE GATE, DELHI-110006. RS.2,50,000/- 2. ARGENT FINVEST (P)LTD. SFS 256 4-5-B, PASCHIM VIHAR, N.DELHI-110063. RS.10,00,000/- 3. NEMI CHAND SAWANI NEARMAHADEVTEMPLE,UMED CHOWK(JODHPUR),RAJASTHAN RS.2,50,000/- 4. WELKIN COMMERCIALS (P)LTD. SFS 256 A-5/B-4, GALI NO.7, PASCHIM VIHAR, N.DELHI- 110063. RS.12,50,000/- 5. SAVIOUR LEASING (P)LTD. SFS 256 4-5-B, PASCHIM VIHAR, N.DELHI-110063. RS.8,00,000/- 6. N.S.R.CONSULTANCY (P)LTD. 21/18, 2 ND FLR. SHAKTI NAGAR, NEW DELHI-110007. RS.12,50,000/- 7. ISSANT PHARMACEUTICALS (P)LTD. 2250,NAYA BAZAR, N.DELHI-110006. RS.6,00,000/- 8. OMNI PRESENT CREDITS (P)LTD. 208/27, V.S.BLOCK, VIKAS MARG, SHAKARPUR,N.DELHI-110092. RS.1,00,000/- 9. RIDHKARAN GOLLCHA A-156, GERAWAL NAGAR, N.DELHI-110009. RS.2,50,000/- 10. KAUSHALYA DEVI SHARMA SADAR BAZAR, MAKRANA, RAJASTHAN ES.2,50,000/- 11. MANJU DEVI BHAMA SADAR BAZAR, MADRANA, RAJASTHAN RS.2,50,000/- 12. ASSOCIATED FINLEASE LTD. SAWAK HOUSE, 1E/12, JHANDEWATAN EXTENSION, N.DELHI-110055. RS.5,00,000/- 13. ECO STAR SECURITIES & CREDITS (P)LTD. 205,J.J.COMPLEX, G-29, LAXMI NAGAR, N.DELHI-110092. RS.9,00,000/- 14. JAY SHREE GROWTH FUNDS (P)LTD. 18/24, 1 ST FLOOR., SHAKTI NAGAR, N.DELHI-110007. RS.5,00,000/- 15. TOTAL INF.SOLUTION (P)LTD. 208, AGARWAL CHAMBER-IV, 27-VER SAVARKAR BLOCK , SHAKARPUR, N.DELHI-110092. RS.1,00,000/- TOTAL RS.77,50,000/- 3.5 SOME OF THE ABOVE MENTIONED PERSONS SENT LETT ER TO THE OFFICE OF AO CONFIRMING THAT HAD INVESTED MONIES IN THE FORM OF SHARE APPLI CATION MONEY FOR SUBSCRIPTION OF SHARE CAPITAL OF THE ASSESSEE. THE LETTERS CONTAIN ED THE FOLLOWING FORM: ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 6 I AM BEING INFORMED BY M/S. GREAT WALL MARKETING P RIVATE LIMITED THAT THEIR ASSESSMENT FOR THE A.Y. 2002-03 HAS BEEN RE-OPENED AND AS I WAS ONE OF THE APPLICANT THEY WANT ME TO SEND THE FOLLOWING THE AO THEREFORE CONCLUDED THAT FROM THE CONTENTS O F THESE LETTERS IT WAS EVIDENT THAT THE ASSESSEE ITSELF SENT THESE LETTERS WHERE THE NO TICES SENT BY THE DEPARTMENT CAME UNSERVED FROM THE ADDRESSES FURNISHED BY THE ASSESS EE. THEREFORE, THE AO DID NOT TAKE COGNIZANCE TO SUCH LETTERS, WHICH WERE NOT IN RESPONSE TO OUR NOTICE U/S 133(6). THE AO ACCORDINGLY HELD THAT THE EXISTENCE AND DEFI NITELY THE CREDITWORTHINESS (THE CAPACITY TO INVEST) IS VERY MUCH DOUBTFUL IN RESPEC T OF ABOVE MENTIONED 15 PARTIES AND THE 4 PARTIES REPORTED BY THE DIT(INV.) NEW DELHI. THEREFORE, RS.77,50,000/- INTRODUCED AS SHARE APPLICATION MONEY OF SUCH THESE 15 PARTIES AND RS.26,00,000/- INTRODUCED BY 4 PARTIES ARE TREATED AS CASH CREDIT U/S 68 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDI TY OF INITIATION OF PROCEEDINGS U/S 147 OF THE ACT BY THE AO. IT WAS SUBMITTED THAT THE REASONS RECORDED BY THE AO WERE VAGUE AND CANNOT BE THE BASIS ON WHICH THE AO COULD HAVE FORMED A BELIEF THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAS ESCAPE D ASSESSMENT. THE CIT(A) DID NOT AGREE WITH THE SUBMISSIONS SO MADE BY THE ASSESSEE. CIT(A) HELD THAT THE INFORMATION RECEIVED FROM THE D.I.T.(INVESTIGATION), NEW DELHI THAT THE ASSESSEE WAS A BENEFICIARY OF A RACKET INVOLVED IN PROVIDING ACCOMMODATION ENT RIES RELATED TO SHARE CAPITAL WAS SUFFICIENT FOR THE AO TO INITIATE PROCEEDINGS U/S 1 48 OF THE ACT. CIT(A), HOWEVER ON MERITS OF THE ADDITION MADE BY THE AO U/S 68 OF THE ACT HELD THAT THE SAME CANNOT BE SUSTAINED. THE FOLLOWING WERE THE CONCLUSIONS OF TH E CIT(A) :- 1. IN RESPECT OF 4 PARTIES ABOUT WHOM THE AO GOT IN FORMATION FROM DIT (LNV) DELHI THE AO DID NOT CONDUCT ANY SEPARATE INQUIRY BUT MAD E ADDITION ON THE BASIS OF MERE INFORMATION PROVIDED BY THE INVESTIGATION WING DELH I. 2. WITH REFERENCE TO THE 26 PARTIES, FROM WHOM THE A SSESSEE RECEIVED SHARE APPLICATION MONEY, THE CIT(A) FOUND THAT DURING THE ASSESSMENT PROCEEDINGS VIDE A LETTER DTD. 10.07.2009 THE ASSESSEE PROVIDED THE COPIES OF THE SHARE APPLICATIONS MADE BY ALL THE 26 PARTIES (INCLUDING THE 4 PARTIES) AND THE DE TAILS OF THE SHARE APPLICATION MONEY SENT BY THESE PARTIES. IN THE SHARE APPLICATION LET TERS THE NAME, ADDRESS AND PAN/GIR ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 7 NOS OF ALL THESE PARTIES WERE GIVEN. HOWEVER THE AO DID NOT MAKE ANY INQUIRIES FROM THESE PARTIES. SUBSEQUENTLY VIDE ITS LETTER DT D. 17.12.2009 THE ASSESSEE ALSO FURNISHED THE COPIES OF THE RETURN OF INCOME, BALAN CE SHEET AND PROFIT & LOSS ACCOUNT IN RESPECT OF SOME OF THESE PARTIES FOR THE RELEVANT ASSESSMENT YEAR AND ALSO CONFIRMATION LETTERS .FROM THESE PARTIES) CERT IFICATES OF THEIR INCORPORATION AS A COMPANY ETC. FOR SOME PARTIES THE COPY OF THE BANK STATEMENT FROM WHERE CHEQUE WAS ISSUED TO THE ASSESSEE WAS ALSO SUBMITTED. HOWE VER, THE AO DID NOT ACCEPT THESE EVIDENCES AS SATISFACTORY AND TREATED THE SHARE APP LICATION MONEY FROM THESE 4 PARTIES AS UNEXPLAINED. THE CIT(A) WAS OF THE VIE W THAT BY FILING THESE' DOCUMENTS THE ASSESSEE DISCHARGED ITS, ONUS TO PROVE THE GENU INENESS OF THE SHARE APPLICATION MONEY RECEIVED FROM THESE PARTIES. THE ONUS WAS ON THE AO TO PROVE IT OTHERWISE. THE CIT(A) HELD THAT THE AO HAS FAILED, TO BRING AN Y EVIDENCE ON RECORD TO SHOW THAT THE SHARE APPLICATION MONEY RECEIVED BELONGED TO THE ASSESSEE. 3. AS REGARDS 15 PARTIES WHOSE SHARE APPLICATION MON EY HAS BEEN TREATED BY THE AO AS UNEXPLAINED ON THE BASIS OF HIS OWN INQUIRIES, THE CIT(A) WAS OF THE VIEW THAT IN RESPECT OF THE 5 INDIVIDUAL PARTIES LISTED AT NOS. 1,3,9, 10 AND 11 IN THE LIST MADE ON PAGE 4 OF THE, ASSESSMENT' ORDER( AND REPRODUCED IN THE EARLIER PART OF THIS ORDER) THAT IN THE ASSESSMENT RECORDS THE LETTERS OF CONFIRMATI ONS SENT BY THEM THROUGH 'POST' WERE AVAILABLE. THE AO HAS REJECTED THEIR CONFIRMAT IONS ONLY ON THE GROUND THAT IN THEIR LETTERS THEY HAVE MENTIONED TO HAVE SENT THES E LETTERS ON THE ADVICE OF THE ASSESSEE. THE CIT(A) WAS OF THE VIEW THAT THIS APPR OACH WAS WRONG. THE CIT(A) ALSO OBSERVED THAT SHARE APPLICATION MONEY WAS GIV EN IN THE YEAR 2001-02 AND HENCE IT WAS ABOUT 7-8 YEARS OLD MATTER. IN SUCH SI TUATION IF THE ASSESSEE ASKS THE SHAREHOLDERS TO SEND THEIR CONFIRMATIONS THERE CANN OT BE ANYTHING WRONG IN THAT. \ 4. AS REGARDS THE COMPANIES LISTED AT SR.NO. 2,4,5,6, 7,8,12,13, 14 AND 15 IN THE LIST ON PAGE 4 OF THE ASSESSMENT ORDER THE AO AND SET OUT I N THE EARLIER PART OF THIS ORDER, THE CIT(A) WAS OF THE VIEW THAT THE NOTICES SENT TO THE SE PARTIES WERE RETURNED UN- SERVED. HOWEVER, IN RESPECT OF ALL THE 26 PARTIES T HE ASSESSEE SUBMITTED A FULL SET OF DOCUMENTS CONTAINING DIFFERENT TYPES OF EVIDENCES S UCH AS IDENTITY PROOFS, ADDRESS PROOFS I.T. RETURNS, BALANCE SHEETS AND PROFIT & LO SS ACCOUNT, CONFIRMATION LETTERS, COPIES OF BANK STATEMENTS ETC. IN THESE DOCUMENTS T HE EVIDENCE ABOUT THESE 10 COMPANIES WERE ALSO AVAILABLE. HENCE THE CIT(A) HEL D THAT BY PROVIDING THESE DOCUMENTS THE ASSESSEE DISCHARGED ITS ONUS TO PROVE THE GENUINENESS OF THESE SHARE ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 8 HOLDERS. IT WAS NOT JUSTIFIED ON THE PART OF THE AO TO REJECT THE GENUINENESS OF THESE SHARE HOLDERS ON THE GROUND THAT-NOTICES TO THEM WE RE NOT SERVED. HE ALSO HELD THAT THE ASSESSEE HAS PROVIDED THE NAMES, ADDRESSES AND CONFIRMATIONS FROM THESE COMPANIES, THE COPIES OF THEIR CERTIFICATES OF INC ORPORATION AND PAN NUMBERS. IN MANY OF THE CASES THE COPIES OF THE RETURNS OF INCO ME, BALANCE SHEET, P& L ACCOUNT, AND BANK STATEMENT HAVE ALSO BEEN FURNISHED. IN VIE W OF THESE EVIDENCES THE EXISTENCE OF THESE PARTIES CANNOT BE REFUTED. FOR THE REASONS GIVEN AS ABOVE, THE CIT(A) HELD THA T THE SHARE APPLICATION MONEY RECEIVED FROM THE ABOVE DISCUSSED 19 PARTIES CANNOT BE TREATED AS UNEXPLAINED IN THE HANDS OF THE ASSESSEE U/S 68 OF THE 1. T. ACT. HENC E, THE ADDITION OF RS. 1,02,80,000 MADE BY THE AO ON THIS ACCOUNT WAS DELETED BY THE C IT(A). 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E HAS PREFERRED THE SECOND APPEAL BEFORE THE TRIBUNAL. 6. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. THAT THE LD. CIT(A)-VI, KOLKATA HAS ERRED IN LA W AS WELL AS ON THE FACTS BY DELETING THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF CAS H CREDIT U/S 68 OF RS.1,02,50,000/- IN SPITE OF THE FACT THAT THE PARTIES (SHAREHOLDERS ) COULD NOT BE FOUND AND THEIR CREDITWORTHINESS AND GENUINENESS COULD NOT BE ESTAB LISHED BY THE ASSESSEE. 7. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE F ILED A PETITION UNDER RULE 27 OF ITAT RULES. AS PER RULE 27 OF ITAT RULES 1963, A R ESPONDENT IN AN APPEAL, THOUGH HE MAY NOT HAVE APPEALED, MAY SUPPORT THE ORDER APP EALED AGAINST ANY OF THE GROUNDS RAISED AGAINST HIM. SINCE THE ISSUE WITH REGARD TO THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 148 OF THE ACT WAS DECIDED AGAINST THE ASESSEE, THE ASSESSEE WITHOUT FILING A CROSS OBJECTION HAS SOUGHT TO CHALLENGE TH E ORDER OF CIT(A) UPHOLDING THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S 148 OF THE ACT. THE APPLICATION UNDER RULE 27 HAS THEREFORE TO BE DECIDED. 8. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE BOTH ON THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS AS WELL AS THE MERITS OF THE APPEAL. NONE APPEARED ON BEHALF OF THE DEPARTMENT. ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 9 8.1.WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE ASSESSEE. AS FAR AS THE VALIDITY OF INITIATION OF RE-ASSESSMENT PROC EEDINGS ARE CONCERNED THE REASONS RECORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 1 48 ARE AS FOLLOWS :- NO.DCIT/CIR-6/REASONS FOR REOPENING/09-10 DATED 22/04/2009 TO THE PRINCIPAL OFFICER GREATWALL MARKETING (P) LTD. CLO SRI. S.M. DAGA 11, CLIVE ROW, ROOM NO. 2 .Z-. FIR. KOLKATA- 700001. SIR. SUB: RECORDED REASONS FOR REOPENING IN THE CASE OF GREATWALL MARKETING (P) LTD. FOR ASST. YR. 02-03 REF: YOUR LETTER DATED 02/04/09 PLEASE REFER TO THE ABOVE. AS PER INFORMATION RECEIVED FROM INVESTIGATION WING NEW DELHI THE INTRODUCED SHARE CAPITAL DURING THE YEAR. HAD BEEN RECEIVED FROM COR PORATE BODIES WHICH ARE NON EXISTENT AND WHOSE CAPACITY TO INVEST ( CREDIT WORTHINESS ) COULD NOT BE ESTABLISHED . THEREFORE I HAVE REASONS TO BELIEVE THAT UNEXPLAINED CASH CREDI T HAD BEEN INTRODUCED IN YOUR BOOKS OF ACCOUNTS IN THE NAME OF INTRODUCTION OF SHARE CA PITAL AND RECEIPT OF SHARE APPLICATION MONEY. IN ABSENCE OF SATISFACTORY IDENTITY AND CRED IT WORTHINESS OF THE OTHER PARTIES. THE ENTIRE INTRODUCED CAPITAL AND SHARE APPLICATION MON EY WILL BE TREATED AS YOUR INCOME FOR THAT YEAR. I WILL THEREFORE CONTINUE THE PROCEEDINGS FOR REASS ESSMENT OF YOUR RETURN U/S 147. STATUTORY NOTICES U/S 143(2) AND 142(1) ARE ENCLOSE D HEREWITH. YOURS FAITHFULLY. SD/- ( SANJAY MUKHERJEE) DCIT /CIR-6/KOL 8.2. THE SUBMISSIONS OF THE LEARNED COUNSEL FOR T HE ASSESSEE BEFORE US WAS THAT THE REASONS RECORDED BY THE AO WERE MERE INFORMATION RE CEIVED FROM D.I.T.(INVESTIGATION), NEW DELHI. THERE WAS NO INDE PENDENT APPLICATION OF MIND BY THE AO BASED ON WHICH IT CAN BE SAID THAT HE ARRIVE D AT THE SATISFACTION THAT THE INCOME OF THE ASSESSEE IS CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT. IT WAS SUBMITTED THAT ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 10 INFORMATION RECEIVED BY THE AO WAS VAGUE AND UNCERT AIN AND CANNOT BE CONSTRUED TO BE SUFFICIENT AND RELEVANT MATERIAL ON THE BASIS OF WHICH REASONABLE PERSON CAN FORM BELIEF REGARDING ESCAPEMENT OF INCOME. RELIANCE WAS PLACED BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF CIT VS INSCETICIDES (INDIA) LTD 357 ITR 330 AND CIT VS SFI L STOCK BROKING LTD. 325 ITR 285 (DELHI). IN BOTH THE AFORESAID DECISIONS THE RE ASONS RECORDED BY THE AO FOR INITIATING PROCEEDINGS U/S 148 OF THE ACT THE HONB LE DELHI HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL QUASHING THE PROCEEDINGS. REL IANCE WAS ALSO PLACED ON THE DECISION OF ITAT, KOLKATA C BENCH IN THE CASE OF M/S. CONTROLLA ELECTROTECH (P)LTD VS DCIT IN ITA NOS.1443 & 1444/KOL/2014 WHEREIN ON IDENTICAL FACTS THE TRIBUNAL WAS PLEASED TO QUASH THE REASSESSMENT PROCEEDINGS. ON MERITS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A). 9. WE HAVE GIVEN A CAREFUL CONSIDERATION OF THE SUB MISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS CLEAR FROM THE REAS ONS RECORDED BY THE AO THAT THE AO ACTED ONLY ON THE BASIS OF A LETTER RECEIVED FROM I NVESTIGATION WING , NEW DELHI. THE REASONS RECORDED DOES NOT GIVE AS TO WHO HAS GIVEN THE BOGUS ENTRIES TO THE ASSESSEE. THE REASONS RECORDED ALSO DOES NOT MENTION AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES WERE MADE BY THE ASSESSEE. T HE REASONS RECORDED WHICH ARE EXTRACTED IN THE EARLIER PART OF THE ORDER DOES NOT SHOW, WHAT WAS THE INFORMATION GIVEN BY DIT(INV.),NEW DELHI. THE DATE OF THE INFOR MATION RECEIVED BY THE AO WERE NOT SPELT OUT IN THE REASONS RECORDED. THE INVOLVEM ENT OF THE ASSESSEE IS ALSO NOT SPELT OUT, EXCEPT MENTIONING THE CORPORATE BODIES WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF THE ASSESSEE WERE NON-EXISTENT AND NOT CREDITWORTHY . ON IDENTICAL FACTS THE HONBLE DLEHI HIGH COURT IN THE CASE OF CIT VS INSECTICIDES (INDIA) LTD (SUPRA) HAS TAKEN A VIEW THAT THE REASONS RECORDED WERE VAGUE AND UNCER TAIN AND CANNOT BE CONSTRUED AS SATISFACTION ON THE BASIS OF THE RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON CAN FORM A BELIEF THAT INCOME HAS ESCAPED AS SESSMENT. THE HONBLE DELHI HIGH COURT HAS ALSO COME TO THE CONCLUSION THAT THE REAS ONS RECORDED DID NOT DISCLOSE THE AOS MIND REGARDING ESCAPEMENT OF INCOME. THE HONB LE DELHI HIGH COURT ULTIMATELY HELD THAT INITIATION OF PROCEEDINGS U/S 148 OF THE ACT WAS NOT VALID AND ITA NO.660/KOL/2011 GREAT WALL MARKETING (P)LTD. A.YR.2002-03 11 JUSTIFIED IN THE EYES OF LAW. THE FACTS AND CIRCUMS TANCES IN THE PRESENT CASE ARE IDENTICAL TO THE CASE DECIDED BY THE HONBLE DELHI HIGH COURT. FOLLOWING THE SAID DECISION WE HOLD THAT INITIATION OF RE-ASSESSMENT P ROCEEDINGS IS NOT VALID. ON THIS GROUND, THE ASSESSMENT IS LIABLE TO BE ANNULLED. 9.1. EVEN ON MERITS WE HOLD THAT THE CONCLUSION DRA WN BY CIT(A) ARE JUSTIFIED AND DO NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY THE APPE AL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 03.02.2016. SD/- SD/- [M.BALAGANESH] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 03.02.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. GREAT WALL MARKETING (P)LTD., 7, SWALLOW LANE, K OLKATA-700001. 2 THE D.C.I.T., CIRCLE-6, KOLKATA. 3. THE CIT-II, KOLKATA, 4 . THE CIT(A)-VI, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES