ITO, New Delhi V. M/s. Francotyp Postalia India Pvt. Ltd., New Delhi

ITA 671/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0710 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-11-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 12-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAOREM
• Assessee Lawyers: V K TULSIYAN
• Keywords: Bogus Share capital; Share purchase agreement; Onus to prove
• Section: 143(3); 133(6); 195; 208; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T. A. NO.671/DEL/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/S. FRANCOTYP POSTALIA IN DIA PVT. LTD., WARD 11(3), NEW DELHI. VS. 201, NEELKANTH H OUSE, SCHOOL BLOCK, SHAKARPUR, NEW DELHI. PAN: AAACF5859R (APPELLANT) (RESPONDENT) APPELLANT BY: MS. BANITA DEVI NAOREM, SR. DR. RESPONDENT BY: SHRI V.K. TULSIYAN, FCA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPEA L FILED AGAINST THE ORDER DATED 10.12.2009 OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) PERTAINING TO THE ASSESSMENT YEAR 2006-07 IS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.31, 80,000/- U/S. 68 OF THE IT ACT ON ACCOUNT OF UNEXPLAINED SHARE CA PITAL. 2. IN THE ASSESSMENT MADE UNDER SEC. 143(3) OF THE ACT, THE ASSESSING OFFICER MADE THE ADDITION OF RS.31,80,000/- ON ACCO UNT OF UNEXPLAINED SHARE CAPITAL BY INVOKING SECTION 68 OF THE ACT. IT WAS NOTICED BY THE AO THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY AMOUN TING TO RS.54,80,000/- 2 FROM 10 PARTIES OUT OF WHICH, THE SUM OF RS.23,00,0 00/- WAS ACCEPTED BY THE AO TO BE GENUINE AND THE BALANCE OF RS.31,80,000/- WAS TREATED TO BE UNEXPLAINED INCOME OF THE ASSESSEE. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED ALL THE REQUISITE D ETAILS OF ALL THE SHARE APPLICANTS BEFORE THE AO, SUCH AS, FORM OF APPLICAT ION OF SHARES, CERTIFICATE OF INCORPORATION, BANK STATEMENTS, SHARE CERTIFICAT ES, FINANCIAL STATEMENTS, COPY OF PAN, BOARD RESOLUTION, FORM NO.2 OF COMPANY ACT ETC. THE AO ISSUED NOTICES UNDER SEC. 133(6) TO ALL THE SHARE A PPLICANTS. SOME OF THE SHARE APPLICANTS CONFIRMED THE TRANSACTION BUT IN T HE FOLLOWING CASES, NOTICES WERE EITHER RECEIVED BACK OR NOT RESPONDED TO BY TH E SHAREHOLDERS:- S.NO. PARTY/SHAREHOLDER RS. 1. KUBERCO SALES (PVT.) LTD. 5,00,000/- 2. KESRI INDUSTRIAL LAB (PVT.) LTD. 10,00,000/- 3. SRS VIJAY SALES (PVT.) LTD. 1,80,000/- 4. HIMACHAL PETROCHEMICAL INDUSTRIES (PVT.) LTD. 5 ,00,000/- 5. DYNAMICS SOLUTIONS (PVT.) LTD. 5,00,000/- 6. NIPUN INFOTECH (PVT.) LTD. 5,00,000/- TOTAL 31 ,80,000/- 3 3. THE ASSESSING OFFICER ISSUED NOTICE DATED 24.11. 2008 TO THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SHARE CAPITAL MONEY REC EIVED BY THE ASSESSEE BE NOT ADDED TO THE ASSESSEES INCOME AS SHARE APPLICA NTS WERE NOT RESPONDING RATHER SOME OF THE NOTICES SENT, HAVE BEEN RECEIVED BACK. THE ASSESSEE SUBMITTED ITS REPLY DATED 05.12.2008 WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN HIS ORDER. AFTER CONSIDERING THE ASSESSEES SUBMISSION, THE AO STATED THAT THE ASSESSEE HAS NOT BEEN ABLE T O PROVE THE TRANSACTION TO BE GENUINE. HE THEREFORE, MADE THE ADDITION OF RS. 31,80,000/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 5. BEFORE THE LEARNED CIT(A) THE ASSESSEE FURTHER S UBMITTED COPIES OF CONFIRMATION, ACKNOWLEDGEMENT OF INCOME TAX RETURNS FILED BY THE SHARE APPLICANTS FROM WHICH IT IS CLEAR THAT ALL THE TAX PAYERS ARE EXISTING ASSESSEES AND THEY HAD FILED THEIR RETURNS IN DELHI ITSELF. THE ASSESSEE ALSO POINTED OUT THE PORTION OF THE SUBMISSIONS MADE BEFORE THE AO, TO THE LEARNED CIT(A) WHICH READS AS UNDER:- THE COMPANY HAS NOT ALLOTTED ANY FRESH CAPITAL DU RING THE RELEVANT FINANCIAL YEAR, BUT IT HAS RECEIVED SH ARE APPLICATION MONEY FOR ALLOTMENT OF ITS SHARES AMOUN TING TO RS.54,80,000/-, THE SHARE AGAINST WHICH HAS BEEN AL LOTTED IN THE SUBSEQUENT FINANCIAL YEAR. THE COPY OF FORM NO.2 E VIDENCING THE ALLOTMENT OF 81250 SHARES AND LIST OF ALLOTTEES IS ENCLOSED. 4 FURTHER, WE ARE ALSO ENCLOSING HEREWITH LIST OF PER SONS FROM WHOM SUCH SHARE APPLICATION MONEY WAS RECEIVED DURI NG THE RELEVANT FINANCIAL YEA AND THE CONFIRMATIONS, COPY OF THEIR FINANCIAL STATEMENTS, COPY OF INCOME TAX ACKNOWLEDG EMENT AND BANK STATEMENTS OF SUCH PERSONS FOR YOUR PERUSAL AN D RECORD. FURTHER LIST OF PERSONS HOLDING MORE THAN 10% OF TH E VOTING POWER OF THE COMPANY DURING THE RELEVANT FINANCIAL YEAR IS ALSO ENCLOSED HEREWITH. 6. IT WAS, THUS, CONTENDED BY THE ASSESSEE BEFORE T HE LEARNED CIT(A) THAT IF THE SHARE HOLDERS WERE IDENTIFIED AND IT HAS BEE N ESTABLISHED THAT THEY HAVE INVESTED MONEY IN THE PURCHASE OF SHARES, THEN UNDE R NO CIRCUMSTANCES COULD THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLO SED INCOME OF THE ASSESSEE. THE ASSESSEE ALSO SUBMITTED THAT THE DET AILS OF SHAREHOLDERS WERE FILED BEFORE THE ROC, NEW DELHI AND THEREFORE, THE AO HAS NO REASON TO TREAT THE SHARE APPLICATION MONEY AS UNDISCLOSED IN COME OF THE ASSESSEE. THE ASSESSEE HAS GIVEN THE FOLLOWING REASONS IN SUP PORT OF ITS CONTENTION:- I. THAT THE SUBSCRIBERS HAVE SUBSCRIBED TO SHARE A PPLICATION MONEY THROUGH BANK DRAFT OR ACCOUNT PAYEE CHEQUE IN FAVOUR OF THE APPELLANT COMPANY. II. THAT THE APPLICANT COMPANY HAS ALREADY ISSUED A ND ALLOTTED SHARES TO THE SUBSCRIBERS. III. THAT ALL THE SHARE APPLICANTS WERE REGULARLY A SSESSED TO TAX AND HAVE GIVEN THEIR ASSESSMENT DETAILS, PAN AND IN SOME CASES THEIR BANK ACCOUNTS AND COPIES OF THEIR STATEMENT O F AFFAIRS. IN THE CIRCUMSTANCES, ALL THE SHARE APPLICANTS WERE AN D ARE IDENTIFIABLE AND CREDITWORTHY. 5 IV. THAT THE MERE FACT THAT THE QUERIES, AS RAISED BY THE AO COULD NOT BE SERVED ON THE SHAREHOLDERS DIRECTLY CANNOT M AKE THE IDENTITY OF THE SHAREHOLDERS DOUBTFUL. V. THAT IT IS UNDISPUTED THAT ALL THE SHARE APPLICA NTS HAD CONFIRMED THEIR INVESTMENT IN THE SHARE CAPITAL OF THE APPELLANT COMPANY AND ALL HAD GIVEN THEIR PAN AND OTHER RELEV ANT PARTICULARS UNDER WHICH THEY WERE ASSESSED TO TAX R ELIED ON CIT VS. MAKHNI AND TYAGI (P) LTD. REPORTED IN 267 ITR ( 2004) AT PG. 433. 7. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ASSESSING OFFICER S ORDER, THE LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING AND HOLDIN G AS UNDER:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRITT EN SUBMISSIONS, PAPER BOOK AND DETAILS FILED DURING TH E COURSE OF THE PROCEEDINGS. IT IS EVIDENT FROM THE RECORDS OF THE AO THAT COPY OF CONFIRMATIONS, ACKNOWLEDGEMENT OF LATEST RE TURN FILED BY THE APPELLANT COMPANY. ALL THE 6 SHARE APPLICAN TS WERE PRIVATE LIMITED COMPANIES AS IS EVIDENCED BY THE CE RTIFICATE OF INCORPORATION. THE COMPANIES WERE REGULAR ASSESSEE S AND ALL HAVE PAN. ALL THE SHARE APPLICANT COMPANIES FILED THEIR AUDITED FINANCIAL STATEMENTS. IN THE CONFIRMATIONS , IT IS SEEN THAT THE APPLICANT COMPANIES CONTRIBUTED TO SHARE A PPLICATION MONEY THROUGH BANK DRAFT OR ACCOUNT PAYEE CHEQUE. THIS IS ALSO SUPPORTED BY THE BANK STATEMENTS FILED BY THE APPLICANT COMPANIES. THE APPELLANT COMPANY AHS ALSO FILED FO RM NO.2 3VIDENCING SHARE ALLOTMENT WITH THE ROC. FURTHER, SHARE CERTIFICATES IN THE APPELLANT COMPANY HELD BY THE S HARE APPLICANT COMPANIES WERE ALSO FILED IN THE PAPER BO OK. MERELY BECAUSE SHARE APPLICANTS WERE NOT AVAILABLE AT THE GIVEN ADDRESSES CANNOT LEAD TO THE CONCLUSION THAT SHARE APPLICANTS WERE BOGUS AND THE AMOUNT SO CREDITED WERE IN THE B OOKS OF ACCOUNTS WAS ASSESSABLE AS INCOME U/S 68 OF THE IT ACT. THEREFORE, DRAWING SUPPORT FROM THE ABOVE ON FACTS AND NUMEROUS CASES CITED BY THE APPELLANT, I AM OF THE VIEW THAT THE ADDITION MADE BY THE AO, ON THE BASIS OF HIS OBSERV ATION LIKE 6 NON PRODUCTION OF SHARE APPLICANTS DO NOT SUPPORT T HE A.O. BECAUSE THE SHARE APPLICANTS ARE BODIES CORPORATE L IKE INVESTORS, AND IT IS NOWHERE MENTIONED IN THE ORDER WHETHER ANY NOTICE/SUMMONS WERE ISSUED. EVEN IF SO THEN THE AP PELLANT COMPANY CANNOT BE HELD RESPONSIBLE. ON THE OTHER HA ND, THE JUDGEMENTS RELIED UPON BY THE AO HAVE EITHER BEEN O VERRULED OR ARE ON A DIFFERENT FOOTING AND RELATE TO UNSECUR ED LOANS/CREDITORS. FINALLY, THE RECENT JUDGEMENTS OF HONBLE TRIBUNAL IN THE DEPARTMENTS APPEAL IN UP BONE MILL S, STELLAR INVESTMENTS (SUPRA), LOVELY EXPORTS (SUPRA) AND JAY A SECURITIES 166 TAXMAN 7 HAVE CLEARLY HELD THAT NO A DDITION CAN BE MADE IN THE HANDS OF THE INVESTED COMPANY BY INV OKING SECTION 68. THEREFORE THE ADDITIONS OF RS.3180000/ - ARE TO BE DELETED. HOWEVER A.O MAY TAKE APPROPRIATE ACTION I N THE CASE OF SHAREHOLDER, AS DEEM FIT. 8. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 9. TO DECIDE THIS ISSUE IN HAND, WE FIND IT PROPER TO TAKE NOTE OF VARIOUS PROPOSITIONS AND GUIDELINES THAT HAVE RECENTLY BEEN LAID DOWN BY THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE FOLL OWING CASES:- (I) THE HONBLE DELHI HIGH COURT IN THE CASE OF CI T VS. M/S. DWARKADHISH INVESTMENT (P) LTD. IN ITA 911/2010 DEC IDED ON 2 ND AUGUST, 2010, HELD AS UNDER:- 6. IN OUR OPINION, AS SECTION 68 OF THE ACT, 1961 HAS BEEN INTERPRETED AS RECENTLY AS 208 BY A DIVISION BENCH OF THIS COURT IN DIVINE LEASING & FINANCE LTD. (SUPRA) AFTER CONS IDERING ALL THE RELEVANT JUDGMENTS, WE DO NOT HAVE TO RECONSIDE R ALL THE JUDGMENTS REFERRED TO BY MR. SAHNI WHICH ARE PRIOR IN DATE AND TIME TO THE AFORESAID JUDGMENT. IN FACT, A SPECIAL LEAVE PETITION FILED AGAINST THE SAID DIVISION BENCH JUDG MENT WAS DISMISSED BY THE SUPREME COURT BY WAY OF A SPEAKING ORDER IN COMMISSIONER OF INCOME TAX VS. LOVELY EXPORTS (P) L TD., 216 CTR 195 (SC). THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) HAS HELD AS UNDER:- 7 2. CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S 68 OF IT ACT, 1961? 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 REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, WE FIND NO INFIRMITY WITH THE IMPUGNED JUDGMENT 7. CONSEQUENTLY, THE DOCTRINE OF MERGER WOULD APPLY AND THE JUDGMENT OF THE SUPREME COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) WOULD COVER THE FIELD WITH REGARD TO INTERP RETATION OF SECTION 68 OF THE ACT, 1961. 8. IN ANY MATTER, THE ONUS OF PROOF IS NOT A STATIC ONE. THOUGH IN SECTION 68 PROCEEDINGS, THE INITIAL BURDE N OF PROOF LIES ON THE ASSESSEE YET ONCE HE PROVES THE IDENTIT Y OF THE CREDITORS/SHARE APPLICANTS BY EITHER FURNISHING THE IR PAN NUMBER OR INCOME TAX ASSESSMENT NUMBER AND SHOWS TH E GENUINENESS OF TRANSACTION BY SHOWING MONEY IN HIS BOOKS EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY AN Y OTHER MODE, THEN THE ONUS OF PROOF WOULD SHIFT TO THE REV ENUE. JUST BECAUSE THE CREDITORS/SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN, IT WOULD NOT GIVE THE REVENUE THE RI GHT TO INVOKE SECTION 68. ONE MUST NOT LOSE SIGHT OF THE FACT TH AT IT IS THE REVENUE WHICH AHS ALL THE POWER AND WHEREWITHAL TO TRACE ANY PERSON. MOREOVER, IT IS SETTLED LAW THAT THE ASSES SEE NEED NOT TO PROVE THE `SOURCE OF SOURCE. FROM THE AFORESAID DECISION OF THE HONBLE DELHI HI GH COURT IN THE CASE OF M/S. DWARKADHISH INVESTMENT (P) LTD. (SUPRA), IT IS CLEAR TO US THAT INITIAL BURDEN TO PROVE THE IDENTITY OF THE CREDITORS OR SH ARE APPLICANTS CAN BE DISCHARGED BY THE ASSESSEE BY EITHER FURNISHING THE IR PAN NUMBER OR 8 INCOME-TAX ASSESSMENT NUMBER. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS FURNISHED PERMANENT ACCOUNT NUMBER OR COPY OF INCOME-TAX RETURNS OF ALL THE SHARE APPLICANTS AND THE SAME HA S NOT BEEN FOUND TO BE FALSE OR UNTRUE BY THE ASSESSING OFFICER. THE ASSE SSEE HAS ALSO PRODUCED THE CERTIFICATE OF INCORPORATION OF COMPANY UNDER THE C OMPANIES ACT ALONG WITH THEIR IDENTIFICATION NUMBER. ALL THESE DOCUMENTS W ERE DULY FURNISHED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL TO THE CONTRARY. THE AO HAS MERELY STATED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE IDENTITY OF THE SHARE APPLICANTS BECAUSE THEY WERE NOT FOUND AVAILABLE AT THE GIVEN ADDRESSES BUT THAT BY ITSELF IS NOT SUFFICIENT TO CONTROVERT THE VARIOUS DOCUMENTS OR PAPERS FILED BY THE ASSESSEE SUCH AS PERMANENT ACCOUNT NO., COPY OF INCOME-TAX RETURN, C OPY OF CERTIFICATION OF INCORPORATION AND OTHER DETAILS. THEREFORE, IDEN TITY OF THE SHAREHOLDERS CAN SAID TO HAVE BEEN PROVED BY THE ASSESSEE AND DEPART MENT HAS NOT BEEN ABLE TO REBUT THE SAME. IN THAT CASE, BEFORE THE HONBLE HIGH COURT, IT HAS ALSO BEEN HELD THAT GENUINENESS OF THE TRANSACTIONS CAN BE PROVED BY SHOWING THAT THE MONEY IN THE BOOKS HAD BEEN RECEIVED EITHER BY ACCOUNT PAYEE CHEQUE OR BY DRAFT OR BY ANY OTHER MODE, WHICH CONDITION IS S ATISFIED IN THE PRESENT CASE BEFORE US. IT IS NOT IN DISPUTE THAT THE ASSE SSEE HAS RECEIVED THE SHARE APPLICATION MONEY BY ACCOUNT PAYEE CHEQUE, AND DETA ILS OF THE BANK ACCOUNT 9 OF SHARE APPLICANTS AS WELL AS OF THE ASSESSEE HAVE BEEN DULY FURNISHED. THEREFORE, IN THE LIGHT OF THE ABOVE-REFERRED DECIS ION OF HONBLE DELHI HIGH COURT, WE HOLD THAT THE ASSESSEE HAS BEEN ABLE TO D ISCHARGE ITS INITIAL BURDEN TO PROVE THE IDENTITY OF THE SHARE APPLICANTS AND G ENUINENESS OF THE TRANSACTION. THE SAME CANNOT BE REJECTED MERELY BE CAUSE THE SHARE APPLICANTS COULD NOT BE FOUND AT THE ADDRESS GIVEN AND IT WOULD NOT GIVE THE REVENUE THE RIGHT TO INVOKE SEC. 68 OF THE ACT. THE REFORE, IN THE LIGHT OF THE PROPOSITION LAID DOWN BY THE HONBLE DELHI HIGH COU RT IN THIS CASE, THE ORDER OF THE CIT(A) IN DELETING THE ADDITION CANNOT BE SAID TO BE IMPROPER AND UNJUSTIFIED. 10. SIMILARLY, THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD. (2010) 42 DTR (DEL) 152 HELD AS UN DER:- 6. THE SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST HE ABOVE-REFERRED DECISION OF THIS COURT WAS DISMISSED BY THE SUPREME COURT VIDE ITS DECISION IN CIT VS. LOVELY E XPORTS (P) LTD. (2008) 216 CTR (SC) 195 : (2008) 6 DTR (SC) 30 8 WHICH INTER ALIA READS AS UNDER:- CAN THE AMOUNT OF SHARE MONEY BE REGARDED AS UNDISCLOSED INCOME UNDER S. 68 OF IT ACT, 1961? WE FIND NO IN 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 REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW. HENCE, NO INFIRMITY IS FOUND WITH THE IMPUGNED JUDGMENT. 10 7. IT HAS NOT BEEN DISPUTED BEFORE US THAT THE SHAR E APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMP ANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BANKIN G CHANNELS. IT IS NOT THE CASE OF THE REVENUE THAT T HE PAYMENT OF SHARE APPLICATION MONEY WAS NOT MADE FROM THE BANK ACCOUNT OF THE APPLICANT COMPANIES. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE A O. IT IS NOT THE CASE OF THE REVENUE THAT THE SHARE APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE APPLICANT COMPANIES AND WER E FORGED DOCUMENTS. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE SHARES WERE NOT ACTUALLY ALLOTTED TO THE COMPANIES. 8. THE ASSESSEE FILED COPIES OF RESOLUTIONS PASSED BY THE BOARD OF DIRECTORS OF APPLICANT COMPANIES, BESIDES THEIR BANK STATEMENTS AND IT RETURNS. THE ADDRESSES OF THE AP PLICANT COMPANIES ARE RECORDED IN THESE DOCUMENTS. IT IS N OT THE CASE OF THE REVENUE THAT THE COPIES OF BOARD RESOLUTIONS , IT RETURNS AND BANK STATEMENTS WERE NOT GENUINE DOCUMENTS. TH E AO DID NOT MAKE ANY VERIFICATION IN THIS REGARD EITHER FRO M THE INTERNAL RECORD OF THE DEPARTMENT OR FROM THE CONCERNED BANK S. IF HE SO WANTED, HE COULD HAVE CALLED FOR THE IT RETURNS OF THE SHARE APPLICANTS TO ASCERTAIN WHETHER THE INVESTMENT MADE IN THE ASSESSEE COMPANY WAS REFLECTED IN THEIR BALANCE SHE ETS OR NOT. NOTHING PREVENTED THE AO FROM SUMMONING THE RECORD OF THE BANKS ON WHICH CHEQUES ISSUED BY THE APPLICANT COMP ANIES WERE DRAWN. NO SUCH COURSE WAS, HOWEVER, ADOPTED B Y HIM. 9. THERE WAS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR OTHER REPRESENTATIVE OF THE APPLIC ANT COMPANIES BEFORE THE AO. THEREFORE, FAILURE OF ASS ESSEE TO PRODUCE THEM COULD NOT, BY ITSELF, HAVE JUSTIFIED T HE ADDITIONS MADE BY THE AO, WHEN THE ASSESSEE HAD FURNISHED DOC UMENTS, ON THE BASIS OF WHICH, THE AO, IF HE SO WANTED, COU LD HAVE SUMMONED THEM FOR VERIFICATION. NO ATTEMPT WAS MAD E BY THE AO TO SUMMON THE DIRECTORS OF THE APPLICANT COMPANI ES. THE ADDRESSES OF THESE COMPANIES MUST BE AVAILABLE ON T HE SHARE APPLICATIONS, MEMORANDUM AND ARTICLES OF ASSOCIATIO N AND THEIR IT RETURNS. IF THE AO HAD ANY DOUBT ABOUT IDENTITY OF THE SHARE APPLICANTS, HE COULD HAVE SUMMONED THE DIRECTORS OF THE APPLICANT COMPANIES. NO SUCH ATTEMPT WAS, HOWEVER, MADE BY HIM. THEREFORE, THE CIT(A) AND THE TRIBUNAL, IN OU R VIEW WERE 11 JUSTIFIED IN HOLDING THAT THE IDENTITY OF SHARE APP LICANTS AND THE GENUINENESS OF THE TRANSACTIONS HAD BEEN ESTABLISHE D BY THE ASSESSEE. 11. IN THIS DECISION, IN THE CASE OF CIT VS. VICTOR ELECTRODES LTD. (SUPRA), IT HAS BEEN CLEARLY LAID DOWN BY THE HONBLE DELHI HIGH COURT THAT THERE IS NO LEGAL OBLIGATION ON THE ASSESSEE TO PRODUCE SOME DIRECTOR OR REPRESENTATIVE OF THE APPLICANT COMPANIES BEFORE T HE AO, AND, THEREFORE, FAILURE OF ASSESSEE TO PRODUCE THEM COULD NOT, BY I TSELF, HAVE JUSTIFIED THE ADDITIONS MADE BY THE ASSESSING OFFICER, WHEN THE A SSESSEE HAD FURNISHED DOCUMENTS, ON THE BASIS OF WHICH, THE AO, IF HE SO WANTED, COULD HAVE SUMMONED THEM FOR VERIFICATION. SIMILARLY IN THE P RESENT CASE, MERE BECAUSE DIRECTORS OF SHARE APPLICANT COMPANIES WERE NOT FOUND AVAILABLE AT THE ADDRESSES GIVEN, THAT BY ITSELF IS NOT SUFFICIE NT FOR THE AO TO REJECT ASSESSEES CASE WHEN THE ASSESSEE HAS FURNISHED ALL DOCUMENTS RELATING TO SHARE APPLICANTS, SUCH AS THEIR PERMANENT ACCOUNT N O., DETAILS OF INCOME-TAX ASSESSMENT, REGISTRATION OF COMPANIES UNDER COMPANI ES ACT AND BANK DETAILS. THEREFORE, THIS CASE IS ALSO SQUARELY APP LICABLE TO THE PRESENT CASE IN UPHOLDING THE ORDER OF THE CIT(A). 12. FURTHER, THE HONBLE DELHI HIGH COURT IN THE CA SE OF CIT VS. WINSTRAL PETROCHEMICALS PVT. LTD. IN ITA 592/2010, IN THEIR DECISION DELIVERED ON 12.05.2010, HELD AS UNDER:- 12 7. IT HAS NOT BEEN DISPUTED BEFORE US THAT TH E SHARE APPLICATION MONEY WAS RECEIVED BY THE ASSESSEE COMP ANY BY WAY OF ACCOUNT PAYEE CHEQUES, THROUGH NORMAL BANKIN G CHANNELS. IT IS NOT THE CASE OF THE REVENUE THAT T HE PAYMENT OF SHARE APPLICATION MONEY WAS NOT MADE FROM THE BANK ACCOUNT OF THE APPLICANT COMPANIES. ADMITTEDLY, COPIES OF APPLICATION FOR ALLOTMENT OF SHARES WERE ALSO PROVIDED TO THE A SSESSING OFFICER. IT IS NOT THE CASE OF THE REVENUE THAT TH E SHARE APPLICATIONS WERE NOT SIGNED ON BEHALF OF THE APPLI CANT COMPANIES AND WERE FORGED DOCUMENTS. IT IS ALSO NO T THE CASE OF THE REVENUE THAT THE SHARES WERE NOT ACTUALLY AL LOTTED TO THE COMPANIES. THEREFORE, THE COMMISSIONER OF INCOME TA X (APPEALS) AND THE INCOME TAX APPELLATE TRIBUNAL, IN OUR VIEW, WERE JUSTIFIED IN HOLDING THAT THE GENUINENESS OF T HE TRANSACTIONS HAD BEEN DULY ESTABLISHED BY THE ASSES SEE. 8. AS REGARDS IDENTITY OF THE SUBSCRIBERS. THE ASSE SSEE FILED COPIES OF CERTIFICATIONS OF INCORPORATION, PAN CARD S, PAN DETAILS AND COMPANY DETAILS, DOWNLOADED FROM THE SI TE OF DEPARTMENT OF COMPANY AFFAIRS BESIDES WRITTEN CONFI RMATION FROM THE APPLICANTS. IT IS NOT THE CASE OF THE REVE NUE THAT THE COPIES OF CERTIFICATES OF INCORPORATION, PAN CARDS, PAN DETAILS OR COMPANY DETAILS SUBMITTED BY THE ASSESSEE WERE F ORGED DOCUMENTS. IN FACT, THE ASSESSING OFFICER DID NOT EVEN MAKE AN ATTEMPT TO VERIFY THE GENUINENESS OF THESE DOCUMENT S BY SUMMONING THE RECORD OF REGISTRAR OF COMPANIES OR DEPARTMENT OF COMPANY AFFAIRS. IF HE ENTERTAINED A NY DOUBT ABOUT THE GENUINENESS OF THESE DOCUMENTS, NOTHING P REVENTED HIM FROM SUMMONING THE RECORD FROM THESE AUTHORITIE S. IF THE ASSESSING OFFICER SO DESIRED, THE GENUINENESS OF TH E PAN CARDS AND PAN DETAILS COULD EASILY HAVE BEEN VERIFIED BY HIM FROM THE RECORD AVAILABLE WITH THE DEPARTMENT. THE ASSE SSEE COMPANY ALSO FURNISHED WRITTEN CONFIRMATION FROM TH E APPLICANT COMPANIES. ALL THE SHARE APPLICANTS WERE DULY SERV ED WITH THE NOTICES UNDER SECTION 133(6) OF THE ACT. IN THESE CIRCUMSTANCES, THE FINDING OF COMMISSIONER OF INCOM E TAX (APPEALS) AND INCOME TAX APPELLATE TRIBUNAL THAT TH E IDENTITY OF THE SUBSCRIBERS STOOD DULY ESTABLISHED FROM THE DOCUMENTS 13 PRODUCED BY THE ASSESSEE, CANNOT BE SAID TO BE PERV ERSE AND DOES NOT CALL FOR INTERFERENCE BY THIS COURT. 9. THE FINDING OF FACT RECORDED BY THE TRIBUNAL, WH ICH IS THE FINAL FACT FINDING AUTHORITY, CANNOT BE SAID TO BE PERVERSE MERELY BECAUSE SOME OF THE APPLICANTS HAD A COMMON ADDRESS AND THE INSPECTOR DEPUTED BY THE ASSESSING OFFICER TO MAKE FIELD INQUIRIES DID NOT FIND FIVE APPLICANTS FUNCTI ONING AT THE ADDRESSES PROVIDED TO HIM. THERE IS NO LEGAL BAR T O MORE THAN ONE COMPANIES BEING REGISTERED AT THE SAME ADDRESS. SINCE THE APPLICANT COMPANIES WERE DULY INCORPORATED, WERE IS SUED PAN CARDS AND HAD BANK ACCOUNTS FROM WHICH MONEY WAS TRANSFERRED TO THE ASSESSEE BY WAY OF PAYEE ACCOUNT S CHEQUE, THEY CANNOT BE SAID TO BE NON-EXISTENCE, EVEN IF TH EY, AFTER SUBMITTING THE SHARE APPLICATION HAD CHANGED THEIR ADDRESS OR HAD STOPPED FUNCTIONING. 10. IN VIEW OF THE DECISION OF THIS COURT IN THE CA SE OF DIVINE LEASING & FINANCE LTD. (SUPRA), THE IDENTITY OF THE SHARE APPLICANTS WOULD BE ESTABLISHED IF DETAILS OF ADDRE SS OR PAN CARD ARE FURNISHED TO THE DEPARTMENT ALONG WITH THE COPIES OF SHAREHOLDERS REGISTER/ SHARE APPLICATION FORM, SHAR E TRANSFER REGISTER, ETC. IN THIS CASE, SHARE APPLICATION FOR MS WERE DULY PRODUCED BEFORE THE ASSESSING OFFICER AND THIS IS N OT THE CASE OF THE REVENUE THAT THE ASSESSING OFFICER HAD ASKED TH E ASSESSEE TO PRODUCE SHAREHOLDERS REGISTER AND SHARE TRANSFE R REGISTERS, BUT THE ASSESSEE COMPANY HAD FAILED TO D O SO. 11. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDI NG THE AMOUNT OF SHARE APPLICATION MONEY TO THE INCOME OF THE ASSESSEE MERELY BECAUSE THE APPLICANTS DID NOT RESP OND TO THE NOTICE SENT TO THEM. FURTHER THE ASSESSING OFFICER SO WANTED, HE COULD HAVE FOUND OUT THE CORRECT ADDRESS OF THE APPLICANTS, BUT ACCORDING TO THE REPORTS OF THE INSPECTOR, WERE NOT FOUND FUNCTIONING AT THE ADDRESS GIVEN TO THE ASSESSING O FFICER, BY SUMMONING THE DIRECTORS ETC. OF THOSE COMPANIES AND ASKING THEM TO FURNISH THE CURRENT ADDRESS OF THE COMPANY. THE NAMES AND ADDRESSES OF THE DIRECTORS, IF NOT AVAILABLE WI TH THE 14 ASSESSEE, WOULD HAVE BEEN OBTAINED FROM THE OFFICE OF THE REGISTRAR OF COMPANIES OR FROM THE BANKS ON WHICH T HE CHEQUES WERE DRAWN. NO SUCH ATTEMPT HOWEVER WAS MA DE BY THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES WE F OUND NO REASON TO DISTURB THE FINDING OF THE FACT RECORDED BY THE ITAT. 13. IN THE LIGHT OF THE VIEW TAKEN BY THE HONBLE D ELHI HIGH COURT IN THE ABOVE REFERRED CASES AND HAVING REGARD TO THE FACT THAT THE ASSESSEE HAS SUBMITTED VARIOUS EVIDENCES AND DOCUMENTS IN SUPPOR T OF THE SHARE APPLICATION MONEY RECEIVED FROM THE AFORESAID SHARE APPLICANTS SUCH AS COPIES OF CONFIRMATIONS, ACKNOWLEDGEMENT OF INCOME TAX RETURNS FILED BY THE SHARE APPLICANTS, THEIR PAN AND BANK STATEMENTS TO PROVE THAT THE TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNELS, FORM NO.2 EVIDENCING SHARE ALLOTMENT WITH THE ROC WHICH HAS BEEN TAKEN I NTO ACCOUNT BY THE LEARNED CIT(A) WHILE DELETING THE ADDITIONS, WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF RS. 31,80,000/- ON ACCOUNT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE. THE ORDER OF THE CIT(A) IS THUS, UPHELD. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 15. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 7 TH JANUARY, 2011. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH JANUARY, 2011. 15 ITA NO.671/DEL/2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.